Translation: Original published in Finnish on 08/21/2026 at 08:00 am EEST

Herantis' H1 report did not offer any significant news. The company is preparing for the initiation of Phase 2 during H1'27, for which negotiations to secure the missing financing are underway. Costs for preparing the upcoming study exceeded our estimates in H1. As a result, we are moderately revising our earnings estimates for the coming years downwards. In line with our estimate revisions, we adjust our target price to EUR 2.0 (was EUR 2.2). As the share price has fallen, we believe that the risk/reward ratio has become attractive again, so we raise our recommendation to Accumulate (was Reduce).

Preparations for Phase 2 progressed as planned

Operationally, H1 was eventful. The Phase 1b biomarker results reported in January indicated HER-096's biological activity in the central nervous system. In February, the company received a 8.0 MEUR Horizon Europe grant. In May, the company agreed with Indivi on the use of a digital platform, which improves the ability to detect treatment effects, and in June, Herantis appointed a Chief Medical Officer and a contract research organization (CRO) The feedback from the FDA meeting was also positive and aligns Herantis' plans with the guidance of the U.S. Food and Drug Administration. The company's focus for H2 is on the investigational new drug application, manufacturing of the investigational drug, and partnership discussions. The first treatments are scheduled to begin in H1'27, with results expected in H1'29.

In terms of figures, H1 EBIT was -3.06 MEUR (H1'25: -2.96 MEUR) and fell short of our -1.9 MEUR estimate. We had expected costs to decrease from the comparison period, as Phase 1 patient visits ended in 2025 and patient visits for the upcoming study will not begin until next year. However, trial preparations, such as investigational drug production and production validation, raised costs upfront.

Current funding is sufficient for the first half of 2027

Cash and cash equivalents at the end of the period amounted to 3.51 MEUR after the 4.2 MEUR directed issue in February. According to the company, funds are sufficient until the end of H1’27, which suggests a decrease in costs from the H1 level. The remaining funding needed for the upcoming study is around 20 MEUR (with administrative costs ~30 MEUR), of which an 8.0 MEUR EU grant and a 10.8 MEUR commitment from the EIC Fund have been secured Our model includes a 12 MEUR share issue for this year, which, together with the EU grant and cash, we estimate would cover most of the financing need of the Phase 2 study. The financing situation still contains binary risk: non-dilutive solutions (partnership or grants) support the share price, while a potential large share issue could put pressure on it.

We make moderate adjustments to our cost estimates

We revise our EBIT estimate for the current year to -5.7 MEUR (was -4.1 MEUR) as a result of the high cash burn in the early part of the year. For 2027-28, we make only minor revisions, as we assume the cost increase in H1 was more timing-related than structural. The majority of the costs of the study occur in 2027-29. Our estimates for HER-096's launch timeline (2034/2035), probability of drug development success (~15%), and potential peak sales (~6 BEUR) remain unchanged.

Risk/reward ratio is attractive again

After the share price decline, we believe the stock's risk/reward ratio is attractive again. The baseline scenario in our DCF model gives the stock a value of EUR 2.0. We estimate the fair value range of the share to be EUR 0.7–5.1. Our assessment is based on DCF scenarios, where the positive scenario relies on favorable clinical results, non-dilutive research funding, and a rapid timeline. The negative scenario, on the other hand, represents mediocre results, a greater increase in the number of shares than our estimates, and a delay in commercialization.