Last Friday, IRLAB announced that it had entered into an agreement with Formue Nord regarding a loan facility of up to SEK55m. The first tranche of SEK30m was paid upon signing and the second tranche of SEK25m can be signed at IRLABs discretion, contingent upon IRLABs market cap exceeding SEK550m (today SEK330m). Further details “the loan matures for payment on May 22, 2025. The lender has the right to convert SEK 10 million of the loan to shares at a share price corresponding to 130 per cent of the the volume-weighted average price during 10 trading days preceding the date of signing of the loan agreement. The loan is subject to a set-up fee of 5 percent of the loan facility and carries an annual interest rate of STIBOR 3M + 10 percent of the outstanding loan amount and will be paid at the end of each calendar quarter.”

Overall, we think the structure is in line with recent loan agreements we have seen and should extend IRLABs cash runway beyond Q2 2024 (potentially through Q3), depending on cost development going forward and whether the second tranche is utilized. In other words, the company should be able to receive feedback from the FDA from the end-of-phase II meeting regarding Mesdopetam and should also reach top-line data with Pirepemat according to the current timeline. These are IRLAB's key catalysts for 2024, and the company now has the flexibility to leverage positive outcomes for further financing potentially. Business development is also a priority for IRLAB, and a licensing agreement, either for Mesdopetam or, for example, IRL757 and IRL942, could also be in the works. Today, it was announced that the board has extended CEO Gunnar Olsson's tenure but is in the process of finding a (permanent) CEO. Overall, this further indicates that there are a lot of processes ongoing that the current management team is working on, we believe. We make no immediate changes to our valuation but argue that the added runway gives the company additional breathing room to reach important catalysts, potentially improving the near-term sentiment in the share.