Hyloris Governance overhang weighs down the case

Following the FSMA statements and outcome of the independent forensic investigation of the QliniQ transactions, Hyloris will initiate a transition process to a new CEO, and the CFO and CLO will step down. Last week, the stock resumed trading (-75% intraday) following publication of the 2023 annual report, which included a qualified opinion regarding the Pleco agreement. Additionally, the QliniQ transactions case has been referred to the public prosecutor's office. We took a step back to evaluate the recent developments, and note that they have created a governance overhang for Hyloris. This has negatively impacted investor confidence, which we believe will make it difficult for the company to secure additional financing in the future. All in all, while we see value in the pipeline, we believe the governance overhang will weigh down the business case (and stock) going forward, and resume coverage with a new TP of € 5 (previously N/A), and a Hold rating (previously Under Review). Our recommendation is based on the condition that the corporate governance situation does not deteriorate.