Good afternoon, and welcome to this Investor Presentation and Q&A with Pharma Equity Group. With us today, we have the CEO, Thomas Kaas Selsø. First, there will be a presentation, and afterwards, a Q&A, where the CEO will answer questions submitted via Stokk.io. There have already been pre-submitted questions on Stokk.io, and the Q&A is still open so that you can submit questions live as well. I will now hand over the mic to Thomas to start the presentation. Thomas, your line is now open.
Thank you, Anders, and welcome to this presentation. I think it has been necessary to go through why we have made the capital increase and what is the technicalities behind the first of all to make a capital reduction and afterwards a capital increase. So I have said that the presentation's name should be how, why, and what is the next step in relation to the capital increase. So I will try to present the thoughts behind all this. If we take the capital reduction first, and I should try to explain why we had to do that before the capital increase.
We have to do it because the nominal value of each share was higher than the share price, and you cannot make a capital increase with that relation. So that's why we have reduced the nominal value from one kroner per share to oh point one, as a ten øre. But we should remember that we still have the same number of shares, which is one billion, twenty-two million, nine hundred and sixty-three, eighty three shares. When you see and when you look at the capital reduction, it is very important to understand that it has no impact on the equity. So you only have the transaction between the share capital and other reserves.
So I've tried to show that in the figures here. You have the same, the exact same kind of equity here in the two pieces, but you can see that there's a difference between the share capital in the first picture and the picture after we have made the capital reduction. Then you can see the share capital has decreased from one billion to about one hundred and two thousand. And the transaction, you know, has also, you can also see that in other reserves. So, you know, the technique and the causes is that you have the same number of shares afterwards.
And it is also important to say that no one will be richer or poorer by this reduction in capital. We have only done this because you cannot make a capital increase, which I told you before. It's also very important to say that we have an outlook which shows that we expect to have a profit of approximately minus 24 to minus 29 million DKK in 2024. And if you look at the equity, you can see that you have to have a capital increase in connection to that. So that's also one of the reasons why we were thinking about increasing the capital after we have made the capital reduction.
So that's one of the main reason why we first made the capital reduction, and then we made the capital increase. It all happened on the same day, which was Friday, the fourth of October, where we issued 204 million new shares. So and it's also important to say here that the subscription price was 0.5 per share, corresponding to a premium approximately of 20% above the market price, relative to the closing price on the third of October. The new shares in connection to the capital increase was subscribed by a limited group of new investors and existing shareholders.
Someone has also talked about the dilution of the share price, and you can calculate that it's about 17%, which is diluted of the shares. But what does this really mean for an investor? You know, when the number of outstanding shares increases in a capital increase, then each existing shareholder will own a smaller diluted percentage of the total company. than they did before. So that, of course, will make each share worth less. But in the, you know, on the contrary, a capital increase will secure the financial position and make the company more robust, which should cause the price of the share to rise. So normally, when you see something like this, you will also see an increase in share price.
Yes, the capital increase was with an amount of total DKK 51 million Danish crowns, and it was divided between cash flowing, conversion of loans, and conversion of loan with a convertible bond. So, if you look at the debt side, you have almost removed DKK 38.5 million Danish crowns from the debt, and then now you have strengthened the equity with the same amount here. So you have a much more robust capital structure now than before. And the company had received almost DKK 30 million in connection to the capital increase. So what's the next step? Yeah, we have to secure additional funding for the development of the drug candidates in Reponex.
We also have to get even more and bigger investors into our share. And we would like to have some institutional investors. We also have to create a better framework for existing studies. We have to create larger studies with a larger patient base, which will, you know, provide us with a greater security for the investors and for the possible licensing partners. We also, you know, have to optimize the formulation work, including ensuring the stability and availability of the substances being worked with in the different drug candidates. So that's, you know, some of the steps that we will look into for the next twelve months.
So, Anders, maybe there will be some Q&A here. I know that some of the listeners has asked some questions, so maybe we should take this now.
Yeah. Perfect. Thank you for that presentation, Thomas, and let's start with the first question here: Why are you conducting a capital increase, and how does it relate to the fact that you first made a capital reduction and then a capital increase?
Yeah. I think that I already have answered that question, but, you know, it's technicalities. You have to have a nominal value, which is below the share price, so to speak. Before you have a nominal value, which was much higher than the share price, and it's not... You cannot make a capital increase when it's like that. So that's why the first thing to do was to reduce the capital in relation to the nominal value. So we had, you know, the nominal value of one crown per share, and we reduced that to ten øre per share.
So then, you know, you have a share price which is higher than the nominal value, and then it's all right to make a capital increase. And why have we made the capital increase? I have tried to answer that through the presentation, but it's because, you know, you have to strengthen the capital. We are a development company, so it's important that, you know, that we strengthen the capital because we do not have any kind of revenue right now. We hope to have that revenue streams in late 2025, as we have talked about before.
But there's a lot of different factors involved in all this, so we have to secure that we have enough capital to run the business for at least the next twelve months.
Yeah. And the next question is, there will be a dilution of approximately 17% for existing shareholders. What does this mean in practice for an investor, and is the investor negatively affected by a capital increase at market price?
Normally, it's like this, that you. When you have a capital increase, you, of course, will be diluted, and in this case, we can see, yeah, that it's about 17%. Contrary, you can also say that, you know, that after you have made a capital increase, we have a much more robust capital structure. We have decreased the debt side almost with DKK 39 million. So it's about, I think, 70% or 75% of the debt, which is removed from the debt side to the equity. So that's a very strong signal. And when you also take a look at the price which the new and the existing shareholders was paying, new shares off.
Then you could see that they were paying a price which were higher than you can buy in the market. So that also gives a signal, a strong signal to the market that, you know, you have a lot of people here who believes in this case. I can also mention, you know, that both our chairman and me as CEO has converted our loans to shares. So my point is that, you know, this should also bring some very good news to the share, and this should also, you know, do something with the share price in a positive way. So a dilution is one thing, but afterwards, when you have the securing of the capital, then it should go the opposite way.
Yeah, and as you explained, now you have created a much more robust capital structure with increased equity and more than 75% reduced debt, but how will you ensure long-term financing?
We still have the possibility of offering convertible loans, so that's one of the things that we will use as a tool to secure the finance in the future, but hopefully we will also have a deal with a licensing partner in 2025, which also will give us some possibilities to have the needed finance for the development of the different product candidates, but we also, of course, try to reach out for large investors so they can be a part of the development process.
Yeah. If we maybe take the question around that, what will you do to attract larger investors to the company?
Yeah, I think it was on the last slide. We have to secure the capital moving forward, and we have to do everything we can to reach out for a licensing partner, to make a deal with one of them. And I can say in connection to this that we have a dialogue right now with a huge company which have contacted us. So we have also identified and analyzed the market, and we know who we will get in contact with. So I think that the next half year will be used in connection to reach out for those partners. But right now we actually have a good dialogue with a potential partner.
So that's one of the... That's some of the things that we will try to do to reach out for new investors. We have to, you know, make very good data, and we have to set up new studies. And of course, we need to have good results from the studies that we are preparing right now. We expect to have data from the different development projects, the studies that we are expecting to start with in the beginning of 2025. We expect to have some data in the late 2025 as well in relation to those studies.
Yeah. And I think you have already answered this question: How is the work with the licensing partners progressing? So maybe we should jump to the next part of that. When should investors expect to see you land the first licensing partner?
Hopefully in the late 2025, we will have a deal with a licensing partner. That is our goal, but it's also very important to remember that it's a very, very difficult market right now for everyone in the pharma business. So but we are doing everything that we can to make a deal with the right partner, so to speak. So but, you know, in 2025, we hopefully have a deal with a licensing partner.
Yeah. Do you have a strategy to find additional funding paths that do not dilute shareholders, such as grants or likewise?
Yeah, I'm, like I mentioned before, we have the possibility of the convertible loans, which has also been digitalized in VP, Værdipapircentralen, so to speak. So now it's possible to get into one of the convertible loans, and then you can see it digitalized in Værdipapircentralen. And that means that you actually can invest in this convertible loan through pension funds and so on. So that's one of the things that we would like to use. We also, you know, hope to find new big investors who can also be a part of this development process. So that's some of the things that we expect to do in, yeah, 2025.
What key milestones do you expect to achieve within the next twelve months, and how will these impact your prospects for future funding?
First of all, one of our main goals is to find the real licensing partner. So that's our main goal. But we also wish to have very good data, of course, from the different studies that we expect to begin with here in the beginning of 2025. So that's the main issue, and of course, I also hope that we can keep on the good job in relation to secure the finance in a longer term, so to speak. Because we all know that, you know, that it's expensive to run a development business like this, so we have to secure the finance all the time.
That’s. I think that will be the things for us to focus on.
Yeah. And then we have the final question here: Can you put some more words to the news today about the Japanese patent?
Yeah, we were very proud to announce that here this morning because we already have a patent in Europe. So you have a you know a huge market in Japan where they have 123 million people living there. And you can see that they have seen so many patients there and they expect to see a lot more patients in the future because of lifestyle you know what they eat and all of that. So I think it's a very strong signal and it's also something that we will use in connection to our talk with the licensing partners.
Because it also mean a lot to them that we have secure everything that we can with patent in both Europe and in the part of the world where we are, you know, which we are trying to deal with when the product is finished.
Yeah. And that was, actually all the questions, so that finalizes the Q&A. And, just before we end the webcast, I will just hand over the word for you for your final remarks.
Thank you. I will just say thank you for listening, and you will always be welcome to email me, investor@pharmaequitygroup.dk. So thank you!