Herantis H1'25: New results expected in the coming weeks

Translation: Original published in Finnish on 8/21/2025 at 7:57 pm EEST.

Herantis' early part of the year proceeded as expected and on schedule. The ongoing clinical trial is in its final stages, and key results are expected by mid-October. Based on the well-progressed trial, we are moderately raising our estimate for the success of Phase I. We reiterate our Accumulate recommendation and raise our target price to EUR 2.1 (was EUR 1.9) based on DCF model.

No big surprises in the figures

In terms of figures, there were no surprises in the earnings release, and operating expenses were in line with our expectations. However, other operating income was lower than our estimate and the comparison period. As a result, the EBIT (-2.96 MEUR) was slightly below our estimate (-2.14 MEUR), which is of minor practical significance. Herantis had increased its staff, with which the company is particularly strengthening investor communications and aiming for more international visibility.

Research in Parkinson’s disease has progressed according to plans and on schedule

Herantis is conducting a clinical trial whose main objective is to evaluate the safety and tolerability of subcutaneously administered HER-096 in both healthy volunteers and patients with Parkinson's disease. The company recently announced that the final patient visit for the study had been completed on schedule. Initial results are expected by mid-October and a full analysis of the results at the end of the year. Results have been promising so far. Based on the data so far, it appears that the company would have no obstacles to moving to Phase II in terms of results. However, more robust conclusions can only be drawn once the full results of Phase I are available.

Current funding sufficient to prepare for Phase II

Cash reserves at the end of H1’25 were 4.56 MEUR, and we estimate them to be sufficient until late H1’26. The implementation of Phase II requires additional funding, which the company is seeking through a partnering agreement, although Herantis has other options available. Securing funding, alongside future research results, is crucial for the development of the investment story over the next year.

We increase the probability of success

Our earnings estimates decline moderately in the coming years based on our assessment of increasing operating costs and a lower level of other operating income. We raise the probability of success for the Phase I study in our model by five percentage points to 75%, based on the trial’s progress and promising results. The increased probability increases the likelihood of future cash flows materializing and increases the share's value in the DCF model.

Risk-adjusted DCF modeling suggests that the stock is attractively priced considering the risks

Our DCF model gives the share a value of EUR 2.1 and suggests attractive pricing. Our risk-adjusted forecasts consider the significant risk of failure in drug development, which we estimate is almost 90%. The value of the share can be realized not only through licensing-based cash flows, but also through a partnership agreement or a takeover bid. New trial results available in October may lower the share’s risk profile if the results are favorable. The investment profile is characterized by a significant return potential with a lower probability and a possibility of loss of capital with a higher probability.