NEW YORK – Biocartis announced on Tuesday that its secured creditors are recapitalizing its operating subsidiaries and restructuring its balance sheet through €40 million ($42.4 million) of new equity capital.
The recapitalization and restructuring transaction will reduce the company's debt burden by €132 million and recapitalize it with new equity capital under the ownership of the secured creditors, the Belgium-based firm said in a statement. The new capital is expected to fund the business through EBITDA break-even by the end of 2024 and support execution of the growth strategy toward profitability, the company said.
Under the transaction, the company's €116 million 4.5 percent second ranking secured convertible bonds will be equitized into a new entity — New Biocartis — and the bondholders will become the primary owners of Biocartis' operating business. Substantially all of Biocartis' assets will be transferred to New Biocartis, the company said. The interests and claims of €16 million of unsecured 4 percent convertible bonds will be written down to zero.
In addition, lenders under the company's first lien convertible term loan facility have agreed to roll over their debt into New Biocartis and release claims against the company. Shareholders will receive no distribution from the security enforcement and are expected to receive nothing at the time of its wind down, it said.
After the equitization of the €132 million in bonds and the €40 million injection of equity capital, New Biocartis will have approximately €44.5 million of gross debt and net debt of approximately zero. The equity capital will be used to fund working capital, capital expenditures, and investments, and to pay the costs of the transaction, the company said. The transaction is expected to be finished by the end of the year, subject to certain regulatory approvals.
"This announced recapitalization and balance sheet restructuring plan follows an extensive process by the board and management to address Biocartis' leverage and liquidity position," Biocartis CEO Roger Moody said in a statement. "Following that process, it became evident that the difficult market conditions combined with the company's balance sheet and historic burn rate made outside funding unattainable."
Separately, the company also reported that its first-half 2023 revenues rose 12 percent to €29.5 million from €26.4 million in the first half of 2022. Product-related revenues rose 10 percent to €23.5 million, while collaboration revenue grew 18 percent to €6.0 million. Revenue from oncology cartridge sales grew 22 percent year over year, while revenue from Idylla SARS-CoV-2 tests declined to €700,000 from €1.7 million in the same period of 2022.
The firm placed 133 new Idylla instruments in the first half of 2023, increasing the global installed base to 2,218.
Biocartis reported a net loss of €31.3 million, or €.34 per share, compared to a loss of €28.8 million, or €.50 per share, in the year-ago period. The company ended the first half of 2023 with €25.2 million in cash and cash equivalents.
The firm also said that the operational reorganization and cost reduction plan it announced in June is in its final phase. In total, approximately 125 positions will be reduced and the role of about 20 positions has significantly changed. The company is increasing its focus on partner-funded test menu expansion and a more targeted US commercial strategy to increase cancer test utilization, it said.