TPI provides its latest research note on Midatech Pharma plc (MTPH.L).

Midatech Pharma has announced it has raised c.£1.8m from a UK Placing of new ordinary shares at a price of 27p each. Attached to each Placing share is a 1-for-1 warrant which is exercisable at 34p for five years and six months from Admission.

A simultaneous Registered Direct Offering (‘RDO’) of American Depositary Shares (‘ADSs’) plus warrants has raised a further US$3.0m* (£.2.5m). Based on current strategy, existing cash plus new funding (which TPI estimates totals c.£6m) is expected to sustain a runway for the Group’s continuing operations into Q2 2021 and reflects recognition of the value and potential retained within its technologies and clinical/pre-clinical developments.

While the Group’s formal sale process (announced 20 April 2020) remains ongoing with no additional human trials set to commence, shareholders might still anticipate news flow from ongoing clinical programs.

Meanwhile, the ‘cash cushion’ now secured is intended to fund current obligations, including the clinical programme of MTX110 and pipeline development of Q-SpheraTM formulations, while also providing a ‘negotiating window’ within which to continue to seek and review available opportunities for the disposal or partnership of all or any of its assets.

Sale proceeds could potentially result in a return of cash to shareholders and/or permit Midatech to continue partnered/funded development(s) of those remaining, while also looking to secure licensing opportunities from its pipeline products and/or technologies.

As such, this new funding removes a level of near-term uncertainty, potentially positioning it to recover at least part of an otherwise lost opportunity.

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We would draw your attention to the various disclaimers in the document both at the beginning and at the end of the note. Retail clients (as defined by the rules of the FCA) must not rely on the research document. In particular you should note that the research document is a non-independent marketing communication. The analyst who has prepared the research is aware that TPI provides research to Midatech Pharma plc. Accordingly the research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibitions on dealing ahead of its dissemination.

The information in the document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The material contained in the document is general information intended for recipients who understand the risks associated with equity investment in smaller companies. It does not constitute a personal recommendation as defined by the FCA or take into account the particular investment objectives, financial situation or needs of individual investors nor provide any indication as to whether an investment, a course of action or the associated risks are suitable for the recipient.

Copyright © 2020 Turner Pope Investments (TPI) Limited, all rights reserved.

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