Translation: Original published in Finnish on 04/29/2026 at 07:00 am EEST

Bioretec announced the result of its rights issue on Friday. The company will raise 12.9 MEUR in gross proceeds from the issue. We consider the outcome a success, as it is clearly closer to the 14.8 MEUR target ceiling than the 5 MEUR minimum target. We estimate that the issue secures the company's funding until Q3'27. We now include the share issue in our estimate after the merger of the share classes. We reiterate our Accumulate recommendation and EUR 0.018 target price.

The raised financing provides breathing room

The completed share issue is significant given the company's size, and the success of the financing round was critical. The success was based on the low subscription price, which strongly incentivized participation, and the commitment of the main owner.

As a result of the issue, Bioretec's number of shares will increase from just over 30 million shares to around 1,342 million shares at a subscription price of EUR 0.01. Of the subscriptions, around 861 million were made with unit rights and 103 million without them. In addition, the remaining around 323 million shares were subscribed for based on the underwriting commitment provided by the main owner, Stephen Industries Inc Oy. We consider it important that the main owner is committed to financing the company in a situation where a commercial breakthrough and turning cash flow positive still require time. We consider the 12.9 MEUR gross funding raised a positive achievement, as the company has been in an uncertain situation, and market confidence has weakened. The company previously commented that a full 14.8 MEUR share issue would have been sufficient until late 2027, so we estimate that the funding achieved now will provide the company with operational breathing room until Q3'27.

The funds will be used for commercialization and product development

According to the prospectus, the funds raised from the issue are intended to be used for four purposes: 1) commercial expansion of the company's products, particularly in the US, 2) advancing the product development pipeline and launching three new products within the next 18 months, 3) improving the company's operational and production capacity, and 4) covering working capital and general administrative expenses.

Bioretec's US commercialization costs have increased front-loaded due to the implementation of its growth strategy and the construction of its sales representative model. In addition, rapid advancement of the R&D pipeline is essential for creating long-term growth conditions, which requires resources. In our view, it is crucial for the investment case that the company succeeds in showing concrete and preferably strong signs of increasing sales during this year to restore market confidence and increase income financing.

We will update our estimates with the issue information

We will update the issue figures in our estimates. Otherwise, we make no changes to our model in connection with this update. We will next assess the company's performance at the latest in connection with the Q1 business review on May 15, when the company will also report its key financial figures.

Valuation is low, but risks are also high

The valuation of the share is uncertain due to the unpredictability of earnings and cash flow turnaround. The valuation relies heavily on future projections, which carry a high degree of forecasting risk. The revenue-based valuation (2026e EV/S 2.7x) is low compared to the company's history and its growth and profitability potential. The DCF model also indicates upside potential for the stock. However, the company’s risk profile is extremely high in terms of commercialization uncertainties and financing. In our view, Bioretec has taken the right steps, which should also be reflected in gradual growth over the course of the year, although visibility of that growth is low. We consider the stock's risk/reward ratio to be sufficient despite the uncertainties.