Navamedic's Big Bet on Addiction Treatment: A High-Risk, High-Reward Play Ahead of the EGM

The healthcare sector is never short on drama, but today we're talking about a move that could make or break a Nordic drugmaker's future. Navamedic ASA (OSE: NAVA) is doubling down on addiction treatment with its acquisition of dne pharma AS, a deal that could cement its position as a leader in a critical, fast-growing market—if it can navigate the risks. Let's dig into why this deal matters, the financial engineering at play, and why investors should keep a close watch on the July 14 EGM vote.

The Strategic Play: A Lifeline for a Lifeline

Addiction treatment isn't just a market—it's a mission. Navamedic is buying dne pharma to gain Ventizolve®, an intranasal naloxone spray for opioid overdoses, plus methadone and levomethadone products critical for opioid substitution therapy. These drugs address a $30 billion global market growing at 6–8% annually, fueled by rising opioid-related deaths and policy shifts toward harm reduction.

CEO Kathrine Gamborg Andreassen calls this “a natural extension of our mission,” and she's right. Navamedic's existing portfolio of specialty drugs for hospitals and pharmacies now gains a proprietary, high-margin product line with direct societal impact. The acquired business generated NOK 62 million in sales in 2024, but the real prize is the NOK 25 million annual EBITDA accretion Navamedic expects once synergies kick in. That's a meaningful boost for a company targeting NOK 1 billion in annual revenue.

But here's the catch: 50% of the purchase price is contingent on hitting sales targets. If dne's products don't perform, Navamedic's total payout could drop to NOK 185 million from NOK 225 million. Investors, take note—this is a performance-based bet, not just a straight-up buyout.

The Financial Tightrope: Debt, Equity, and a 5% Penalty Clause

Let's unpack how Navamedic is paying for this. The NOK 185 million upfront cost is being funded by a NOK 110 million loan from Nordea Bank, a bridge loan, and—critically—a partially underwritten rights issue. Here's where it gets tricky:

• The Rights Issue: Navamedic aims to raise NOK 110–130 million by issuing new shares at NOK 21.50 per share, with its largest shareholder, Kistefos AS, backing the minimum NOK 110 million. If shareholders reject this at the EGM, Navamedic must pay dne pharma a NOK 5 million termination fee—a small price, but a hit to credibility.
• Debt Burden: The new loans push Navamedic's leverage ratio higher, but the underwritten equity ensures the company won't be strangled by interest payments.

Synergies or Smoke? The Real Deal-Maker

The success of this deal hinges on operational synergies. Navamedic claims combining dne's products with its existing distribution network and tender management systems will slash costs and boost margins. Specifically:

1. Logistics Overhaul: Shared warehouses and routes could cut logistics expenses by 10–15%.
2. Geographic Reach: Expanding dne's products into Navamedic's markets (Nordics, Baltics, Benelux, Greece) could supercharge sales.
3. Tender Power: In markets like Greece, where public procurement dominates, Navamedic's clout could secure better contracts for dne's drugs.

If these synergies materialize, the NOK 25 million EBITDA target is achievable—and that's before any organic growth. But if execution falters, this could turn into a costly distraction.

The Risks: A 5% Penalty Isn't the Only Worry

• EGM Approval: Shareholders must approve the rights issue. If they balk at dilution (new shares could add ~14% to the company's equity), Navamedic's hands are tied.
• Sales Targets: Missing the contingent payment milestones means less cash out the door, but also signals that the acquired business isn't as strong as marketed.
• Regulatory Hurdles: While the deal is primarily domestic, any missteps in compliance could derail integration.

Investment Takeaway: Buy Before the EGM—But Keep an Eye on the Ball

Here's my call: Buy Navamedic ahead of the EGM vote, but set a tight stop-loss. If the rights issue passes, the stock could rally as the market prices in the EBITDA upside. If it fails? The NOK 5 million penalty is manageable, but the company's credibility takes a hit, and shares could plummet.

Key Catalyst Dates:
- July 14: EGM vote on the rights issue.
- July 15: Acquisition closes (if approved).
- Late September: Rights issue subscription opens.

Target Price: If the EGM passes and synergies hit, Navamedic's valuation could rise to NOK 30–35 per share from its current ~NOK 22.

Final Thought: This is a high-conviction, high-risk trade. Navamedic is playing to win big in addiction treatment—a market with real, growing demand—but one misstep could derail the whole strategy. If you're all-in on healthcare innovation, this is your shot. But if you're risk-averse? Wait for the EGM outcome first.

Disclosure: No positions in Navamedic at the time of writing. Always do your own research.