Canaccord updateClosing the funding gap, but warrants are dilutive ProMetic has secured a US$80 million credit facility with its largest shareholder, ThomVest; this line of credit will bear interest at 8.5%. As consideration for this transaction, ProMetic will grant ThomVest an initial 10 million warrants at an exercise price of C$1.70. Additional warrants (at the same exercise price) will vest as the company draws upon each US$10 million tranche from the credit facility, up to a total of 54 million warrants. While we view this as dilutive, we believe this financing is necessary to close the funding gap as the company transitions to the commercial sale of Ryplazim. With a burn rate approaching $100 million annually, we believe this line of credit should remove a significant financing overhang and provide some flexibility as the company moves to launch its first major drug next year. Although timelines have slipped recently, we continue to see a number of catalysts lined up for ProMetic in coming months, including more data from PBI-4050, the initiation of clinical studies for PBI-4050 in IPF and DKD and, ultimately, the expected FDA approval of Ryplazim. Following this transaction, we have included the dilution from the 54 million warrants, as well as debt from the credit facility and cash received from the exercise of the warrants (which largely offset each other). As a result of these changes, we are lowering our target price to C$4.00 from C$4.25. Investment highlights • Impact on capital structure will have similar dilution to an equity offering. If ProMetic fully draws upon this credit facility, the company will issue a total of 54 million warrants at a strike price of C$1.70. The proceeds from the exercise of the warrants would be ~C$92 million and sufficient to repay most of the principal from the credit facility. As such, we view the impact on ProMetic’s capital structure as not dissimilar from an equity offering at a modestly higher share price. • Looking for ProMetic to control its burn rate. We believe that the key risk for ProMetic is its cash burn. While a Priority Review voucher likely has some value and there is the potential for non-dilutive licensing deals, we are nonetheless looking for a reduced burn rate ahead of the expected approval of Ryplazim early next year. • We think Ryplazim still has a good chance of approval. The FDA recently granted Ryplazim a PDUFA date of April 14, 2018. The Ryplazim BLA is supported by strong clinical data, Orphan Drug status, an Accelerated Approval pathway, and a Rare Pediatric Disease designation. As such, we believe the drug could address an unmet clinical need and we see a strong likelihood that Ryplazim will be approved next year, providing a significant potential catalyst for the stock. Valuation We value ProMetic based on a sum-of-the-parts. We value the resin business using a DCF analysis (8.1% WACC and 2.0% terminal growth), plasma-derived therapeutics with an explicit NPV, and the small molecule pipeline with a pNPV. After adding in the dilution from the warrants, we are lowering our target price to C$4.00 (from C$4.25)