Translation: Original published in Finnish on 3/30/2026 at 8:06 am EEST.

Bioretec announced the terms and conditions of its rights issue on Friday. The company aims to raise a maximum of 14.8 MEUR. The minimum target of 5 MEUR for the issue is guaranteed by the main owner. Shares will be traded without subscription rights on Monday, so we have incorporated the offering into our model. While our revenue and earnings forecasts remain unchanged, we are raising our required return in line with the persistently high level of risk. We reiterate our Accumulate recommendation because, despite significant commercialization headwinds over the past year, we believe the company is doing the right things and still has the potential to succeed. We revise our target price to EUR 0.018 (was EUR 0.32).

Main shareholder has guaranteed a portion of the 14.8 MEUR target

Bioretec aims to raise 14.8 MEUR in capital before expenses through the issue. One share entitles the holder to one subscription right, which in turn allows the holder to subscribe for 48 shares at a price of EUR 0.01. The subscription price represents a discount of approximately 21% relative to Friday's closing price (EUR 0.137), taking the ex-rights price into account. A maximum of 1.48 billion new shares will be issued in the offering if it is fully subscribed. The lower end of the target range is 5 MEUR, as committed by the majority shareholder, Stephen Industries. Bioretec announced on Thursday that the Finnish Financial Supervisory Authority had granted the principal owner an exemption from the obligation to launch a mandatory tender offer if the ownership stake were to exceed the threshold requiring a public takeover bid as a result of the offering. Thus, the minimum target of the offering is on solid ground. Subscription rights will be traded from April 7 to April 15. We recommend that holders of subscription rights either subscribe for shares or sell them. Any unused subscription rights will become void when the trading period ends. More detailed information on the share issue can be found in the company’s release.

Funding is used to propel commercialization forward

Bioretec is raising funds to execute its 2026–28 strategy, announced in December. Practically speaking, the company is accelerating the commercialization of the trauma screw in the US and Europe while advancing its product development pipeline. While we believe the steps taken by the company after summer 2025 have been appropriate (e.g., strengthening sales management), they have also led to an increase in operational costs. The company's financial situation is indeed challenging as pursuing a commercial breakthrough means it continues to burn through cash for the time being. At the same time, past failures in commercialization have eroded market confidence, weighing on the stock’s market value and now leading to a sharp increase in the number of shares following the offering.

Reaching the lower limit, i.e., 5 MEUR, would mean cash reserves would last until December 2026. Meanwhile, raising the full amount of 14.8 MEUR would provide enough cash to last until Q4’27. Even after the offering, the company’s financial risk will remain high, as it is still difficult to reliably assess when cash flows will turn around. In an optimistic scenario, the company would now successfully raise the full 14.8 MEUR in funding, in which case the next funding round could be the last. In less favorable scenarios, multiple funding rounds may be necessary.

Valuation is low, but risks are also high

We model a full-scale offering into our estimates and raise the required return (WACC 15%) in line with the high-risk profile. The revenue-based valuation (2026e EV/S 2.4x) is low compared to the company's history and its growth and profitability potential. However, the company’s risk profile is extremely high in terms of commercialization uncertainties and financing. In our view, the company has taken the right steps, which should also be reflected in gradual growth over the course of the year, although visibility of that growth is low. We consider the stock's risk/reward ratio to be sufficient despite the high uncertainty.