Johan Widmark | Date: 2021-07-27 | This research is for informational purposes only. It does not constitute investment advice and is not a solicitation to buy shares. For more information and disclaimer, please see emergers.se.
The 1,6 MSEK order for partially processed microalgae biomass marks the first important step in Simris’ three-pronged development plan to commercialize its algae platform. While the announcement did not reveal if the order was related to BIOMIMETICS or NOVEL FOODS, it confirms Simris’ qualifications as a B2B-supplier that can offer both a biotech algae platform for discovery, production, and extraction of various bioactive substances for advanced skin care and pharmaceuticals, as well as dry microalgae biomass for further extraction of high-value nutraceuticals and other food supplements.
This order was for freeze-dried microalgae, and as Simris Alg already hold significant stock of this raw material, which they produce for the extraction of omega-3 supplements, this implies that the profitability of this order is high and offers an immediate boost to the company’s strained liquidity.
Build-up to refinancing in 2022
Earlier this month, Simris secured bridge financing of 7 MSEK while also communicating its plan to raise additional capital in 2022. This will most likely be a good point in time, when we expect that Simris will have some more B2B-contracts under its belt, preferably some that clearly demonstrate the quality, competitiveness and commercial potential of their algae platform, especially within BIOMIMETICS.
We also hope that future deals, and particularly the deal announcements, more clearly reflect the actual value embedded in the company’s platform rather than just the volume value of the individual products or ingredients it can produce.
With Simris’ founder, algae pioneer Fredrika Gullfot stepping down as CEO, effective from September 17th, 2021, international cosmetics veteran Steven Schapera, who joined the company as Chairman just two months ago (but has been a major shareholder since mid-2020) will take on a more executive role until a new CEO is appointed. Together with Simris’ CFO, Christoffer Tell (who also joined earlier this year) the company is now well on track building infrastructure and capability to execute on its broadened strategic roadmap. The appointment of the new CEO will surely be the last major piece of the puzzle.
All in all, we see a fair chance for the investor sentiment and focus to transition away from the tunnel vision on short-term sales development that has hampered the share, to instead focus more on Simris’ position at the forefront of the marine microalgae space as a vertically integrated, B2B-focused microalgae biotech. Therefore we continue to see a high but difficult-to-quantify potential for the stock.
Read more about Simris Alg here
Following its major breakthrough with omega-3 products in the United States, Simris is harvesting the initial results of development efforts in its second vertical, cosmeceuticals. The company is also evaluating a number of exciting pharmacological applications, and now that it has reinforced its finances, the way is paved for a revaluation of the share.