Monthly report May 2025

Performance

Adrigo Small & Midcap L/S Class A and Class C declined by 10.2% in May after fees. The Carnegie Small Cap Return Index Nordic rose by 3.0% over the month.

Among the fund’s larger holdings, Ossdsign (medical technology) made a solid contribution. Among the smaller and mid-sized positions, we noted strong contributions from Rugvista (e-commerce), Nobia (kitchen interiors), and Sinch (software). The fund’s short positions, as a group, had a positive impact on performance.

Since inception, Adrigo Small & Midcap L/S Class A, has returned 46.3% after fees. Over the same period, the benchmark interest rate STIBOR 1M returned 8.3%, and the Carnegie Small Cap Return Index Nordic (not a benchmark index) returned 100.2%.

Market Overview

Global equity markets performed positively in May. The EURO STOXX 50 rose by 5.4%, while the MSCI World and S&P 500 increased by 6.0% and 6.3%, respectively. Among emerging markets, the Hang Seng and Taiwan rose by 5.9% and 5.5%, respectively. In the Nordics, the Danish market performed strongly with a gain of 5.5%. Finland and Norway each rose by 5.0%, while the Swedish market increased by 2.3%. Overall, small-cap stocks underperformed large-cap stocks.

Companies and Performance Highlights

We are, of course, very disappointed with the fund’s performance during the month, as it fell short of our expectations. A significant negative contributor was our holding in Initiator Pharma, where in our view an unfortunate decision to carry out a rights issue had a strong negative impact on the stock's weak performance.

We have been invested in Initiator Pharma since spring 2021, when we - together with specialist investor Linc - participated in a directed share issue. Since then, we have also taken part in an additional financing round. The company’s drug candidate, Pudafensine, was initially developed to target male sexual dysfunction (ED), specifically the 30–35% of men who do not respond to currently available medications (PDE5 inhibitors such as Viagra, Cialis, etc.). At the end of 2023, the program was expanded to include female sexual dysfunction (FSD). In May 2025, the FSD program was further expanded to include vulvodynia, a chronic condition affecting approximately 10% of all women globally. Currently, there is no approved treatment for this condition. According to the company, this program has a peak sales potential in Europe and the U.S. of USD 1.2 to 2.2 billion. A Phase IIa study, funded through a convertible note issued to shareholder MAC Clinical Research, is planned to start in the second half of 2026 and conclude by year-end 2026.

Since early 2024, the company has been in discussions with a number of potential partners, and our best assessment was that an agreement would be signed during 2024. However, this has not occurred, and the stock has shown weak performance since last summer. In March, the very positive news was announced that Dr. Göran Ando, former Chairman of Novo Nordisk, has joined the company as Senior Advisor in Business Development and as a board member. Göran Ando has a long track record in the pharmaceutical industry and brings invaluable connections.

Unfortunately, the board also chose to carry out a rights issue instead of a directed issue (which would have been more proactive). The rights issue will raise approximately SEK 50 million and has cast a shadow over the stock, which declined sharply following the announcement. The company continues to engage in discussions with several players in the ED space, and a partnership agreement during the year cannot be ruled out. However, market focus has shifted from an imminent partnership to a timeline pointing toward late 2026. Our fundamental belief in the company and its potential remains unchanged, though we question the board’s choice of financing method.

Shortly after the end of the month, Ossdsign carried out a directed share issue, during which an updated strategy and revised financial targets were also announced. The issue raised approximately SEK 150 million for the company. Ossdsign, whose sales are entirely U.S.-based, plans to double its salesforce by 2026. The ambition is to deliver sales exceeding SEK 400 million in 2028 (compared to SEK 134 million in 2024), as well as to achieve positive cash flow and positive EBIT during the second half of the strategic period (2025–2028). Furthermore, the company intends to launch two new products targeting new programs for its Catalyst platform. We also note that the board has been further strengthened, with Tomas Blomquist, former CEO of Biotage, elected at this year’s AGM.

Finally, as always, we would like to thank our co-investors for your continued trust. We are fully aware of the fund’s recent weak performance, but we also note that we have gone through similar periods in the past. Please do not hesitate to reach out with any comments or questions.