(BFM Bourse) – The company provided a progress update on Thursday on its operational and commercial activity. The group has indicated that it wants to open an office in the United States and enter into a production subcontracting contract. The title fell sharply over two sessions.
It is perhaps one of the most promising biotechs on the Parisian coast: Abivax. The biotechnology company based in Paris and Montpellier also displays a fairly substantial market capitalization for its sector, around 700 million euros.
The group’s main molecule is obefazimod (ABX464), an experimental drug that aims to treat ulcerative colitis, an inflammatory disease that affects the rectum and often the colon. This disease affects 1 million people in the United States and as many in Europe.
Potential “blockbuster”, obefazimod could generate revenues of more than 1 billion euros in very varied indications, explained last year to BFM Bourse Mohamed Kaabouni, analyst at the Portzamparc research office.
Nevertheless, the Abivax title lost 8.7% on Thursday and fell again this Friday by 4.4% around 2:30 p.m. (after having reached a low in the morning at -8.2%). Since January 1, the stock still shows an increase of 168%.
This recent cold spell on the market is linked to an activity update carried out by the company on Thursday. The company has indicated that it has cash of 118 million euros, a figure which should enable it to finance its operations until the second quarter of 2024.
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Towards an office in Boston
At the start of the year, the group raised 130 million euros from American and European investors. Abivax had then tied, in May, two structured financings for an amount of 150 million euros, notably via bonds convertible into shares with share subscription warrants (OCABSA). These latter instruments are generally accompanied by a strong dilution for the shareholders because the financial intermediary who subscribes to these securities then sells the shares obtained on the market.
Abivax can further extend its funding horizon into the fourth quarter of 2024 by raising €90 million accessible from existing debt financing agreements.
Beyond cash, the company has announced its development ambitions in the United States, by creating an office in the Boston region, a global biotech hub, at the end of the year. Abivax will also establish a “CMO” (contract manufacturing organization) in North America, a form of production outsourcing in the pharmaceutical industry. This CMO will complement the one already established in Europe and will thus allow double supply.
Soon on Wall Street?
For Invest Securities, it is these latest announcements in North America that have seized up the market.
“If nothing new has been announced on the R&D aspects, what probably explains the drop is the announcement of the establishment of a site in Boston in the United States. It is therefore the fear of significant costs associated with the creation of an American team on site but especially the construction or purchase of a CMO (manufacturing site) which caused the price to react downwards”, explains the research office.
“Remember that the company already needs a significant amount still to be raised to carry out its phase III (that is to say the last stage of clinical trials before a potential marketing, Ed. ) in progress in ulcerative colitis, in fact, the addition of significant new costs for this strategy oriented towards the United States should generate higher cash-outs than anticipated until now. This therefore means new levies to medium term at relatively high levels and therefore a significant risk of dilution for shareholders”, continues the research office.
Abivax, like many biotech companies, actually finds a lot of support from American investors to finance its development.
As evidenced by its announcement at the beginning of August: the company had submitted a draft registration document to the American stock market watchdog (SEC) to issue ADSs on Wall Street. These ADS (“American depositary shares”) are certificates of deposit which allow shareholders based in the United States to invest in foreign companies.
This financing lever has already been activated, again, by numerous French biotechs (Genfit, Cellectis, Biophytis, Innate Pharma, etc.)
Julien Marion – ©2023 BFM Bourse
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