Pharma Equity Group (Investment case): Partnerships key to de-risk the investment case

In connection with the publication of Pharma Equity Group's annual report for 2025, 2026 guidance and ongoing clinical developments, we have published our investment case.

Our investment case covers the key investment reasons and risks and valuation perspectives.

PEG's investment case centres on de-risking its pipeline through clinical progress and strategic partnerships, while diversifying into revenue-generating assets through its expanded Life Science consolidator strategy. The drug repositioning approach — repurposing previously approved active pharmaceutical ingredients for new therapeutic applications — aims to reduce clinical risk relative to de novo drug development, and the out-licensing model post-Phase II is designed to limit capital requirements and execution risk.

The near-term catalyst is the conclusion of advanced RNX-051 (colorectal cancer) partnership discussions, expected in H1 2026. The discussions cover licensing structures and co-development of an international Phase IIb trial of over 900 patients, with trial initiation and first patient enrolment expected in Q2/Q3 2026. For RNX-011 (peritonitis), regulatory approval for a pivotal Phase IIb study was obtained in September 2025, and first patient enrolment in a 32-patient study is expected in H1 2026 following study adjustments to sharpen clinical endpoints in line with partner requests.

In parallel, PEG is pursuing portfolio diversification through the potential acquisition of Otiom A/S (EV DKK 15m, primarily share-for-share). If completed, Otiom's approximately DKK 8m in revenue and near break-even profile would provide PEG with its first revenue-generating asset and reduce reliance on external financing while the Reponex pipeline matures.

The key risks include the inherent uncertainty of investing in life science products, with PEG's valuation concentrated in two lead Phase II programs where clinical failure or unfavourable partnership terms on either would materially impact the case. The cash position is highly strained at DKK 0.5m at year-end 2025 with operations financed through convertible loans, making dilutive capital raises highly likely. Additionally, the Portinho receivable remains in arbitration and was written down in 2025 to DKK 33.7m against a principal and interest value of DKK 92.7m, and further delays or an adverse ruling would lead to greater dilution.

From a valuation perspective, our implied probability of success model — based on company-guided and HCA assumptions around peak sales and pipeline commercialisation — indicates a base-case PoS of 16%, significantly below the approximately 29% historical Phase II-to-launch benchmark. A below-benchmark implied PoS, especially given the lower clinical risk of a repositioning strategy, could partly be explained by the market pricing in high levels of future financing risk via additional capital raises and/or lower confidence in commercialisation in line with stated assumptions. One or more partnership agreements would provide greater visibility on the path to break-even and reduce the likelihood of a large dilutive capital raise.

Disclaimer: HC Andersen Capital receives payment from Pharma Equity Group for a Digital IR agreement. /Philip Coombes, kl. 13.46, 08/04-2026.