Life sciences firm DeepVerge sees shares dive by 40%

Shares in DeepVerge plunged Wednesday after the life sciences company warned it might not be able to raise enough capital to meet its debt obligations.

In a statement on Thursday, the Dublin-based company, which tests skincare products and develops water-based technology, confirmed it was making a capital increase.

The proceeds from such an increase would be used to pay off a loan taken out in March with Riverfort Global Opportunities and investment group Ya II Pn.

This credit facility is worth up to £25million, of which the company initially borrowed £4million and is due to make the first repayment of approximately £500,000 this Sunday.

It also plans to spend some of the money on “working capital requirements” pending achieving profitability and positive cash generation sometime in 2023.

Last year, DeepVerge completed a successful £10m capital raise as part of efforts to expand its various businesses, including Modern Water, which was bought two years ago.

However, the company told shareholders that “although the institutional equity roadshow is progressing well with positive feedback, there can be no guarantees that sufficient equity funds will be raised, nor the terms thereof.”

Following the announcement, DeepVerge Shares fell 40 percent to 3.38p by early afternoon, meaning their value is down more than three-quarters so far in 2022.

The group said it had agreed with lenders that there would be no default event if the Riverfort loan was not repaid by Nov. 14, as long as payments were made in full after the completion of a fundraiser.

DeepVerge – formerly Integumen – is a personal health company that uses artificial intelligence and internet of things technology to analyze bacteria, viruses and toxins.

One of its divisions, Labskin, is often used by pharmaceutical and cosmetic manufacturers to test the effect of their products on human skin.

Labskin was recently selected to participate by a division of the US Director of National Intelligence in a three-year project to evaluate radiation exposure of civilians and military personnel.

Another arm of the company, the environmental division Modern Water, recently won a contract to provide equipment that can monitor water toxicity and pollution in Qatar ahead of the FIFA World Cup, which begins in November.

In its most recent interim results, DeepVerge reported that revenues are up 94 percent to £6.4 million thanks to stronger demand for water monitoring and membrane technology.

However, the group still suffered losses of £2.2 million, in part as administrative costs were driven up by a larger workforce and increasing orders for its goods and services.