(News Bulletin 247) – The inventor of the first artificial heart announces a new fundraising effort to give himself some financial breathing room in the short term. With an initial amount of 15 million euros that can be increased to nearly 20 million at most, Carmat hopes to extend its financial visibility at least until the beginning of May.

Running out of money at the end of the month, Carmat announced the launch of a capital increase to rebuild its finances. This announcement is not a surprise for the markets. The company founded in 2008 warned on Monday that it needed to solicit markets again to have the resources necessary to deploy its artificial heart.

In detail, this fundraising takes the form of a capital increase for an initial amount of 15 million euros. This amount can be increased to a maximum amount of 19.8 million euros in the event of full exercise of the extension clause and the over-allotment option. Carmat has set the subscription price at 3.99 euros, a discount of 30% compared to the average volume-weighted average price of the last five trading sessions preceding the setting of this price. The subscription period is open since Thursday, January 18 and runs until January 25, 2024.

This operation received subscription commitments and guarantee commitments amounting to 9.17 million euros, representing 61.13% of the initial amount of the operation. Including those of three historic shareholders, namely Lohas, Santé Holdings and Therabel Invest for 3.25 million euros.

“Carmat has received commitments from certain investors for a total amount of 9.2 million euros, but the raising is not guaranteed. If the total subscriptions represent less than 11 million euros, the offer will be canceled,” warns Degroof Petercam.

On the Paris Stock Exchange, Carmat shares fell 15.4% to 4.465 euros around 10:30 a.m. after the announcement of this crucial operation for the medtech’s finances.

Fundraising to support development

The main purpose of the issue announced today by Carmat is to strengthen the company’s equity and finance its short-term working capital needs. To date, the company says it has cash of 8 million euros allowing it to finance its activities until the end of January 2024. Carmat’s financial situation is critical since it has financial resources that do not allow it to finance its activities. only until the end of the month. In other words tomorrow.

The medtech plans to use the proceeds from the fundraising to support the development of its activities and in particular, the ramp-up of its production, and the growth in sales of Aeson, its artificial heart. The funds raised will also be dedicated to financing its EFICAS clinical trial in France.

As a reminder, this study aims to demonstrate the effectiveness and safety of the Carmat total artificial heart in patients suffering from irreversible biventricular heart failure as a bridge to transplantation, and its superiority compared to existing treatments for the same target patient population. in terms of cost and effectiveness. One of the objectives of the EFICAS study is the collection of medico-economic data and obtaining reimbursement for the device, particularly in France.

“Planets aligned” for an analyst

The operation announced this Thursday thus offers new financial visibility to Carmat, until May 2024. However, the situation remains complicated for Carmat, even if the offer is successful. The company has in fact wanted to warn the market that this fundraising will be insufficient to ensure the financing of its activity over the next 12 months.

“Carmat will continue to face the critical challenge of its financing in the short term, with a net shortfall to finance understood, depending on the results of its ongoing discussions with these financial creditors (in particular the European Investment Bank) between 37 and 55 million euros to ensure its activities over the next 12 months”, warns the medtech.

And in the event that the offer does not materialize and the company does not have access to any other additional financing by January 31, 2024, its financing shortfall would materialize from that date, taking into account its cash level, estimated at 8 million to date. Carmat estimates, on the basis of its business plan, that it will need to secure around 65 million euros in financing to ensure all of its activities over the next 12 months.

The company says it is working on “a progressive extension of its financing horizon to 12 months” including the realization of the capital increase announced today, and other “complementary initiatives”. Carmat refers to “one or more other capital increases”, to discussions with the European Investment Bank the terms of its loan contracted in 2018 and to talks with its creditor banks.

However, Invest Securities advises subscribing to this fundraising, in order to “take advantage of the discount” even if the capital increase only covers 30% of Carmat’s needs for the current year.

The research office believes at this stage that the “planets are aligned” for a revaluation of the stock in 2024. Invest Securities cites several arguments in favor of the company, namely that it has an industrial tool that is fully operational, a breakthrough technology meeting a significant need with its artificial heart. He also suggests a future newsflow which should be more comprehensive and positive.

On Monday, the company communicated its ambitions for the current financial year. From this year onwards, it intends to reach a production capacity of 500 artificial hearts per year and thus hopes to end the year 2024 with a turnover of between 14 to 20 million euros. “This objective assumes a strong acceleration in implementations in 2024, with an almost doubling (estimated) of the quarterly implementation rate compared to the fourth quarter of 2023”, argued Invest Securities in its previous note devoted to Carmat.

With this gradual ramp-up, Carmat maintains its objective of submitting to the FDA (Food and Drug Administration, the American health authority) by the end of 2026, its file aimed at obtaining authorization allowing it to start the marketing of Aeson in the United States in 2027. The company also specified at the start of the week that it intended to reach the break-even point in 2027.