Translation: Original published in Finnish on 03/06/2026 at 07:00 am EET

The main theme for Herantis in 2025 was the completion of the Phase I study. All objectives of the study were achieved, which provides a good scientific basis for the future. The company's estimate for the remaining financing needed for the Phase II study is 20-25 MEUR, which is in line with our estimate The next critical step is securing financing for the study, which, in our view, involves significant binary risk depending on the solution achieved. We model our estimate for additional financing and revise our target price to EUR 2.4 (was EUR 2.5). We raise our recommendation to Accumulate (was Reduce) as the share price decline has improved the risk/reward ratio.

Solid scientific basis for Phase II

In October 2025, Herantis published the main results of the Phase I study. Based on these results, the Parkinson's disease drug candidate, HER-096, was deemed safe and well-tolerated in short-term dosing. The candidate also crossed the blood-brain barrier, reaching its target in the central nervous system. The company supplemented the results with a biomarker analysis, the results of which suggested biological activity of the candidate. Overall, the company achieved Phase I targets. The company tested the tolerability and safety of long-term dosing in an animal model. According to Herantis, no safety concerns arose in the study. The company previously aimed to start the Phase II study during H2'26. Based on management's comments, the timing now appears more uncertain, but we estimate that any potential shift will be of minor significance.

Progress made in financing, but more is needed

We believe the scientific section strongly supports advancing the study to clinical Phase II. The most critical issue for Herantis to resolve next is the financing of the upcoming trial. In the webcast, the company said that the remaining financing need is 20-25 MEUR, which includes all of the company's costs until the end of Phase II. This figure is in line with our estimates. Herantis conducted a directed issue of 4.2 MEUR in early 2026, which will ensure current financing is sufficient until Q1’27. The company also received an 8 MEUR EU grant for the Phase II study. Regarding the remaining financing, Herantis has several options, including at least a potential partnership agreement, a share issue, and grants from, e.g., foundations. The financing situation involves binary risk. In our view, financing solutions that do not increase the number of shares, such as a partnership agreement or grants, support the share price. A potential large share issue, in turn, could put pressure on the share.

We add the share issues and the EU grant to our model

We model a 12 MEUR share issue for this year, which represents about half of the estimated financing need. The company has previously been very successful in securing non-dilutive financing, such as grants. Thus, we see realistic opportunities for co-financing Phase II through grants as well. In a positive scenario, Herantissucceeds in concluding a partnership agreement, through which Phase II will be fully financed.

With the price drop, the risk/reward ratio is again attractive

Our DCF model suggests a value of EUR 2.4 per share, indicating an attractive risk/reward. Modeling share issues has a decreasing effect on the DCF value. On the other hand, the impact of the EU grant raises the value. In a good scenario, a partnership agreement or a tender offer could unlock value for investors in the short term. Long-term value creation is based on advancing research, increasing the probability of commercialization, and future cash flows. The investment has high return potential, but the risk of capital loss is also very high if research results disappoint.