Quarterly Report • Sep 7, 2020
Quarterly Report
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This report is prepared in accordance with article 13 of the Belgian Royal Decree of November 14, 2007. Hyloris publishes its Interim Financial Report in English and French. In the event of differences of interpretation between the English and the French versions of the Report, the original English version will prevail.
| INTERIM MANAGEMENT REPORT 3 | |
|---|---|
| Company information 3 | |
| First half 2020 operational highlights and relevant post-period events 4 | |
| Corporate highlights 5 | |
| Selected key financial information 5 | |
| Operating capital requirements 6 | |
| Principal risks and uncertainties 6 | |
| Related party transactions 6 | |
| RESPONSIBILITY STATEMENT 7 STATUTORY AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF HYLORIS PHARMACEUTICALS |
|
| ON THE REVIEW OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION AS AT | |
| JUNE 30, 2020 AND FOR THE 6-MONTH PERIOD THEN ENDED 8 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 9 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE |
|
| INCOME FOR THE 6-MONTH PERIOD ENDED JUNE 30 10 | |
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6-MONTH PERIOD | |
| ENDED JUNE 30, 2020 11 | |
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE 6-MONTH PERIOD ENDED JUNE 30 12 |
|
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 13 |
This management's discussion and analysis is designed to provide you with a narrative explanation of Hyloris Pharmaceuticals' ("Hyloris" or "the Company") interim condensed consolidated financial statements. It should be read in conjunction with the unaudited financial information and the notes thereto included in this Interim Financial Report and the audited financial information and the notes thereto included in our Initial Public Offering Prospectus issued on June 16, 2020 and available on the Company's website.
All amounts included herein with respect to the six-month periods ended June 30, 2020 and 2019 are derived from our interim condensed consolidated financial statements. The consolidated financial statements for the six month periods ended June 30, 2020 and 2019 are prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in accordance with the IFRS issued by the IASB as adopted for use in the European Union, and with IAS 34, Interim Financial Reporting.
Except for the historical information contained herein, the matters discussed in this Interim Financial Report may be deemed to be forward-looking statements that involve certain risks and uncertainties as described infra. This discussion and analysis is dated as of the date of this Interim Financial Report.
Hyloris Pharmaceuticals SA (Euronext: HYL) is an early-stage innovative specialty pharmaceutical company, headquartered in Liège, Belgium. Hyloris is focused on adding value to healthcare systems by reformulating well-known pharmaceuticals. Hyloris develops proprietary products it believes offer significant advantages compared to currently available alternatives, with the aim of addressing the underserved medical needs of patients, hospitals and physicians, and delivering value to payors and other stakeholders in the healthcare system.
Hyloris' development strategy focuses on the reformulation of pharmaceuticals for which the safety and efficacy of the molecule has already been established. This regulatory pathway (named 505(b)(2) regulatory pathway in the United States (US)) can reduce the clinical burden required to bring a product to the market, significantly shorten the development timelines and reduce costs and risks.
Hyloris stands for "high yield, lower risk" and relates to the 505(b)(2) regulatory pathway for product approval on which the Company focuses, and not to the investment in its shares.
Hyloris' portfolio, composed of 14 products, spans three areas of focus: IV1 Cardiovascular, Other Reformulations and Established Market (high-barrier generics).
Hyloris currently has two early commercial-stage products:
The remaining twelve product candidates are in various stages of development and expected to be registered by 2024. In addition, Hyloris aims to initiate four or more new product candidates per year starting in 2021.
1 IV stand of intravenous
Hyloris intends to market its IV Cardiovascular Portfolio through its own commercial team (with the exception of Sotalol IV) in the US. For its other products, Hyloris intends to appoint partners for commercialization, in which case, Hyloris will receive license fees and sales related payments from these commercial partners.
Hyloris has three fully owned subsidiaries: Hyloris Developments SA, Dermax SA and RTU Pharma US.
For further details on the development strategy and product portfolio, please refer to the Company website (www.hyloris.com).
Hyloris continued to successfully develop its product portfolio over the first six months of 2020. The following elements were identified as key highlights:
2 Maxigesic® IV is a novel combination of paracetamol (also called acetaminophen in the United States) and ibuprofen in an intravenous form
Since January 2020, Hyloris successfully raised €79.54 million gross proceeds. In March and April, the Company issued convertible bonds totaling €15.15 million. On June 29, the Company completed an Initial Public Offering on Euronext Brussels, raising €61.81 million. At the end of July, the Company received an additional €2.58 million from the exercise of the over-allotment option, bringing the total gross proceeds of the IPO to €64.39 million. The bonds were converted into equity on June 30, at a 30% discount of the IPO price.
The funding provided by these transactions is expected to provide the required funding for the completion of the development of the existing product portfolio, the establishment of a commercial infrastructure in the United States for the commercialization of the IV Cardiovascular Portfolio under development, and for the expansion of the pipeline, both internally and through business development opportunities.
Over the first half of 2020, the Company also expanded its management team with the recruitment of an experienced Chief Legal Officer and Chief Financial Officer, who both bring extensive industry expertise in strategic legal, finance and business development planning and execution. The Company also expanded its Board of directors with the addition of Leon Van Rompay and three independent directors, namely Carolyn Myers, James Gale and Marc Foidart.
| Selected key financial figures (in € thousand) | June 30, 2020 | June 30, 2019 | December 31, 2019 |
|---|---|---|---|
| Revenue | 82 | 75 | 91 |
| Research and development expenses | (1,172) | (819) | (4,577) |
| General and administration expenses | (2,454) | (316) | (808) |
| Other income/(expenses) | 20 | 72 | 86 |
| Operating loss | (3,633) | (1,026) | (5,274) |
| Loss of the period | (3,742) | (1,314) | (5,768) |
| Net cash used in operations | 95 | (911) | (4,562) |
| Net cash inflow/(outflow) of the period | 66,578 | (1,539) | (2,482) |
| Cash and cash equivalents | 66,783 | 1,147 | 205 |
3 Hyloris and Alter Pharma have some common shareholders (which don't have a controlling stake in Alter Pharma)
4 Abbreviated New drug Application; application for a US generic drug approval for an existing licensed medication or approved drug
Revenue for the period corresponded to royalties due on the sales of Sotalol IV made in the US by Hyloris' distribution partner, AltaThera.
Research and development expenses amounted to €1.2 million for the first half of 2020, an increase of €0.3 million compared to the same period in 2019, resulting from additional outsourced product development, pre-clinical and clinical expenses on our product candidates.
General and administrative expenses amounted to €2.4 million, compared to €0.3 million in H1 2019. The €2.1 million increase was mainly driven by transaction costs associated to fundraises completed in H1 2020 and, to a lesser extent, to expenses associated to the ESOP warrants and to the strengthening of the management structure of the Company.
Net operating cash flow was marginally up for H1 2020 (€0.1 million) compared to a cash burn of €0.9 million for H1 2019. Higher operating expenses incurred in H1 2020 were compensated by the proceeds of the sale of the rights of HY-REF-038 (in vial form) to Alter Pharma.
The cash position of the Company increased to €66.8 million on June 30, 2020 compared to €0.2 million on December 31, 2019, resulting mainly from the issuance of convertible bonds in March and April 2020 for respectively €10.8 million and €4.4 million, and from the IPO completed on June 29, 2020 for €61.8 million.
Further explanation on the condensed interim financial statements is available in the Notes of this report.
After due consideration of the detailed budget and cash flow forecasts for the years 2020 and 2021, the Board of directors of the Company concluded on the business continuity of the Company over at least the next 12 months from the approval date of this interim report, and hence on the appropriateness to prepare the financial statements on a going concern basis. Based on the current scope of activities, the cash balance of Hyloris as of the balance sheet date is expected to be enough to cover the needs of the Company at least until the end of 2023.
A detailed list of risks and uncertainties the Company faces is set out in the IPO Prospectus dated June 16, 2020 and available on the Hyloris website.
Over the course of the first half of 2020, the Company received loans from shareholders for a total amount of €3.2 million, and reimbursed shareholders loans for a total amount of €8.1 million, of which €7.5 million was reimbursed in the second quarter of 2020. The Company agreed with the lenders of the remaining shareholder loans to reimburse such loans, including interest at the end of December 2022 or when the Company will generate a positive EBIT, whichever occurs first.
On February 2 2020, Hyloris and Alter Pharma entered into an "Asset Purchase Agreement" whereby Hyloris sold to Alter Pharma, for a total amount of €1.4 million, all rights, title and interest in the product HY-REF-038 in vial form. Hyloris has retained the ownership of HY-REF-038 in the form of prefilled syringes.
Other than the above transactions, there were no other significant transactions with related parties entered into by Hyloris.
We hereby certify that:
August 5, 2020 – on behalf of the Board of Directors,
As statutory auditor of Hyloris Pharmaceuticals SA, we provide you with our review report on the condensed consolidated interim financial information as at 30 June 2020 and for the six-month period then ended.
We have reviewed the accompanying condensed consolidated statement of financial position of Hyloris Pharmaceuticals SA as at 30 June 2020, the condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended, and notes to the interim financial information ("the condensed consolidated interim financial information"). The board of directors is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.
We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information as at 30 June 2020 and for the six-month period then ended is not prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union.
Zaventem, August 5 2020
KPMG Réviseurs d'Entreprises Statutory auditor represented by Olivier Declercq Réviseur d'Entreprises
| ASSETS (in € thousand) |
Note | June 30, 2020 | December 31, 2019 |
|---|---|---|---|
| Non-current assets | 2,757 | 2,245 | |
| Intangible assets | 6 | 2,648 | 2,138 |
| Property, plant and equipment | 28 | 32 | |
| Right-of-use assets | 73 | 66 | |
| Financial assets | 9 | 9 | |
| Current assets | 69,056 | 3,739 | |
| Trade and other receivables | 7 | 427 | 333 |
| Other financial assets | 6 | - | |
| Other current assets | 8 | 1,839 | 3,200 |
| Cash and cash equivalents | 66,783 | 205 | |
| TOTAL ASSETS | 71,813 | 5,983 | |
| EQUITY AND LIABILITIES (in € thousand) |
Note | June 30, 2020 | December 31, 2019 |
| Equity attributable to owners of the parent | 9 | 59,666 | (10,188) |
| Share capital | 128 | 89 | |
| Share premium | 101,114 | 23,982 | |
| Retained earnings | (39,823) | (36,081) | |
| Other reserves | (1,753) | 1,822 | |
| Non-current liabilities | 7,948 | 22 | |
| Borrowings | 10 | 26 | 22 |
| Other financial liabilities | 10 | 7,922 | - |
| Current liabilities | 4,198 | 16,149 | |
| Borrowings | 10 | 47 | 44 |
| Other financial liabilities | 10 | 409 | 13,130 |
| Trade and other liabilities | 11 | 3,694 | 2,927 |
| Current tax liabilities | 47 | 47 | |
| Total liabilities | 12,147 | 16,171 | |
| TOTAL EQUITY AND LIABILITIES | 71,813 | 5,983 |
| in € thousand | Note | 2020 | 2019 |
|---|---|---|---|
| Revenue | 12 | 82 | 75 |
| Cost of sales | 13 | (109) | (37) |
| Gross profit | (27) | 38 | |
| Research and development expenses | 13 | (1,172) | (819) |
| General and administrative expenses | 13 | (2,454) | (316) |
| Other operating income | 20 | 72 | |
| Operating profit/(loss) | (3,633) | (1,026) | |
| Financial income | 14 | 620 | 91 |
| Financial expenses | 14 | (729) | (380) |
| Profit/(loss) before taxes | (3,741) | (1,314) | |
| Income taxes | (1) | - | |
| PROFIT/(LOSS) FOR THE PERIOD | (3,742) | (1,314) | |
| Other comprehensive income | - | - | |
| TOTAL COMPREHENSIVE INCOME OF THE PERIOD | (3,742) | (1,314) | |
| Profit/(loss) for the period attributable to the owners of the Company |
(3,742) | (1,078) | |
| Profit/(loss) for the period attributable to the non controlling interests |
- | (237) | |
| Total comprehensive income for the period attributable to the owners of the Company |
(3,742) | (1,078) | |
| Total comprehensive income for the period attributable to the non-controlling interests |
- | (237) | |
| Basic and diluted earnings/(loss) per share (in €) | 15 | (0.21) | (0.07) |
| in € thousand | Attributable to equity holders of the Company | Equity attributable to owners of the parent |
Non controlling interests |
Total Equity | |||||
|---|---|---|---|---|---|---|---|---|---|
| Share | Share | Other reserves | Retained | ||||||
| capital | premium | Share-based payment reserve |
Cost of Capital |
Other reserves |
earnings | ||||
| Balance at December 31, 2018 | 89 | 23,982 | 1,329 | - | 450 | (28,097) | (2,246) | (2,216) | (4,462) |
| Issuance of shares | - | - | - | - | - | - | - | - | - |
| Contribution by shareholder | - | - | - | - | 28 | - | 28 | - | 28 |
| Total comprehensive income | - | - | - | - | (1,078) | (1,078) | (237) | (1,314) | |
| Balance at June 30, 2019 | 89 | 23,982 | 1,329 | - | 478 | (29,175) | (3,296) | (2,453) | (5,748) |
| Balance at December 31, 2019 | 89 | 23,982 | 1,329 | - | 493 | (36,081) | (10,188) | - | (10,188) |
| Initial Public Offering | 29 | 61,784 | - | (3,656) | - | - | 58,156 | - | 58,156 |
| Issuance of convertible bonds | 4,531 | 4,531 | 4,531 | ||||||
| Conversion of convertible bonds | 10 | 15,347 | - | (102) | (4,585) | - | 10,671 | - | 10,671 |
| Amortized costs on shareholders loans | - | - | - | - | (5) | - | (5) | - | (5) |
| Share-based payments | - | - | 243 | - | - | - | 243 | - | 243 |
| Total comprehensive income | - | - | - | - | - | (3,742) | (3,742) | - | (3,742) |
| Balance at June 30, 2020 | 128 | 101,113 | 1,572 | (3,758) | 434 | (39,823) | 59,666 | - | 59,666 |
| in € thousand | Note | 2020 | 2019 |
|---|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Net result for the period | (3,742) | (1,314) | |
| Adjustments for: | |||
| Depreciation, amortization and impairments | 52 | 51 | |
| Equity-settled share-based payment expense | 16 | 243 | - |
| Interest expenses on Convertible Bonds | 235 | - | |
| Interest expenses on shareholders loans | 317 | 193 | |
| Change in maturity of shareholders loans | (381) | - | |
| Change in fair value of derivative instruments | (81) | - | |
| Equity transaction costs | 13 | 1,408 | - |
| Income taxes | 1 | - | |
| Other non-cash adjustments | (59) | 28 | |
| Changes in working capital: | |||
| Trade and other receivables | (94) | 558 | |
| Other financial assets | (6) | 3 | |
| Other current assets | 1,361 | (1) | |
| Trade and Other Payables | 723 | (976) | |
| Other current liabilities | - | 1 | |
| Other financial liabilities | 119 | 549 | |
| Cash generated from operations | 96 | (911) | |
| Taxes paid | (1) | - | |
| Net cash generated from operating activities | 95 | (911) | |
| CASH FLOW FROM INVESTING ACTIVITIES | |||
| Purchases of property, plant and equipment | - | - | |
| Purchases of Intangible assets | (487) | (603) | |
| Proceeds from other financial assets | - | - | |
| Net cash provided by/(used in) investing activities | (487) | (603) | |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Reimbursements of shareholders loans | 10 | (8,050) | - |
| Proceeds from shareholders loans | 3,250 | - | |
| Reimbursements of borrowings | 10 | (26) | (26) |
| Net proceeds from the Initial Public Offering | 3 | 56,803 | - |
| Net proceeds from the Convertible Bonds | 3 | 14,994 | - |
| Interests paid | (1) | (1) | |
| Net cash provided by/(used in) financing activities | 66,970 | (26) | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 66,578 | (1,539) | |
| CASH AND CASH EQUIVALENTS at beginning of the period | 205 | 2,687 | |
| CASH AND CASH EQUIVALENTS at end of the period | 66,783 | 1,147 |
Hyloris Pharmaceuticals SA (the "Company" or "Hyloris") is a limited liability company governed by Belgian law. The address of its registered office is Blvd Gustave Kleyer 17, 4000 Liège, Belgium.
The Company and its subsidiaries (together referred as the "Group") are focused on adding value to the healthcare system by reformulating well-known pharmaceuticals. Hyloris develops proprietary innovative products it believes offer significant advantages compared to currently available alternatives, with the aim to addressing the underserved medical needs of patients, hospitals, physicians, payors and other stakeholders.
Hyloris' development strategy focuses on the FDA's 505(b)(2) regulatory pathway for pharmaceuticals where safety and efficacy of the molecule has been established, with the aim to reduce the clinical burden required to bring a product to the market and to significantly shorten the development timelines, and reduce costs and risks, when compared to traditional NDAs (New Drug Applications) using the FDA's 505(b)(1) regulatory pathway.
Hyloris has two commercial products (Maxigesic® IV and Sotalol IV) as well 12 product candidates in various stages of development. Hyloris' products and product candidates can be divided into the following areas:
These interim condensed consolidated financial statements were authorized for issue by the Board of Directors on 5 August 2020.
The Group's condensed consolidated financial statements for the 6-month period ended June 30, 2020 have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting as endorsed by the European Union ("IFRS") and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2019 ('last annual financial statements') as disclosed in the Initial Public Offering (IPO) Prospectus of the Company issued on June 16, 2020 and available on the website of the Company.
The interim report does not include all information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.
The condensed consolidated financial statements are presented in thousands of Euros (except when otherwise indicated; Euro is the Company's functional currency). All values are rounded to the nearest thousand (€'000) which may result in minor discrepancies in the totals and sub-totals disclosed in the financial tables and percentages may not precisely reflect the absolute figures.
These financial statements are prepared on an accrual basis and on the assumption that the entity is in going concern and will continue in operation in the foreseeable future (see here below).
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Group accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.
The same accounting policies, presentation and methods of computation have been applied in these interim condensed financial statements as were applied in the preparation of the Group's financial statements for the
year ended December 31, 2019, except for the impact of the adoption of new Standards and Interpretations as described below:
Following the issuance of convertible bonds in March and April 2020, a new accounting policy has been defined and described here below.
In the application of the Group's accounting policies, which are described above, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The followings are areas where key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:
The 2019 consolidated results of the Group present a negative result, and the consolidated statement of financial position includes a loss carried forward. The Board has examined the statements and accounting standards in light of (i) detailed budgets and cash flow forecasts for the years 2020 and 2021 prepared by the management of the Company, and (ii) the cash position of the Company as of June 30, 2020.
The budget and cash flow forecasts reflect the strategy of the Group and include significant expenses and cash outflows in relation to the development of the ongoing clinical programs and pipeline of products candidates.
Based on its current scope of activities and the significant cash inflows recorded in the first half of 2020 as a result of the issuance of convertible bonds and the completion of the Initial Public Offering, the Board of Directors is of the opinion that it has an appropriate basis to conclude on the business continuity over the next 12 months from the reporting date, and hence it is appropriate to prepare the financial statements on a going concern basis.
The uncertainly raised by the COVID-19 pandemic is not materially impacting going concern and the ability of the Company to continue its operations, as detailed infra.
In accordance with IFRS 2 – Share-based Payment, the fair value of the warrants at grant date is recognized as an expense in the consolidated statement of comprehensive income over the vesting period, the period of service. Subsequently, the fair value is not re-measured.
The fair value of each warrant granted during the year is calculated using the Black-Scholes pricing model. This pricing model requires the input of subjective assumptions, which are detailed in note 16.
On March 31, 2020, the Company issued automatically convertible bonds for an amount of € 10,800 thousand. On April 30, 2020, the Company issued additional convertible bonds of an amount of € 4,350 thousand, bringing the total subscription to € 15,150 thousand. The bonds bear interest at a rate of 6% per annum. The bonds were converted on June 30, 2020 using a conversion price corresponding to 70% of the IPO price, i.e. €7.53 per share.
Management concluded that the automatically convertible bonds are hybrid financial instruments containing a host debt instrument and an embedded derivative instrument to be separated as not closely related to the host contract. Whereas the debt instrument was subsequently measured at amortized cost using the effective interest rate method, the derivative was measured at fair value with changes in fair value recognized in profit or loss. Management also concluded that the difference between the initial value of the two instruments (the debt instrument and the derivative) and the proceeds from the bonds was a transaction between the shareholders and the bondholders in their capacity as future shareholders of the Company. As a result, this difference has been recognized in equity (4,531 thousands in total).
The transaction costs amounting to € 156 thousand, that have been incurred on the issuance of the bonds, have been allocated to the debt component and the equity component on the basis of their relative initial values. At conversion the costs directly attributable to the issuance of new shares were recognized in equity, as cost of capital (€102 thousand). The remaining part of the transaction costs were expensed.
An embedded derivative was recognized in the statement of financial position at the respective issuance dates, and was remeasured end of June, ahead of the conversion in equity, resulting into a financial income of €81 thousand. At conversion, embedded derivatives were offset against equity (other reserves) and the difference between interest accrued and interest paid in shares were recognized as 'other reserves' in equity (€27 thousand).
Costs associated to equity transactions such as investment bank, legal and audit fees are expensed when incurred and recorded as General and Administrative expenses. Only the one-time costs related to the issuance of new shares are capitalized in the equity as costs of capital. When transactions costs are related to all shares, then such costs are recognized in both equity and profit and loss account using new shares/exiting shares the ratio.
| Equity transactions (in '000 €) | Gross proceeds | Capitalized costs related to issuance of new shares |
Costs expensed in P&L |
Net proceeds |
|---|---|---|---|---|
| Initial Public Offering | 61,813 | (3,656) | (1,354) | 56,803 |
| Convertible bonds | 15,150 | (102) | (54) | 14,994 |
| Total | 76,963 | (3,758) | (1,408) | 71,797 |
In 2020, the Company incurred the following transactions costs associated to the Convertible bonds and the Initial Public Offering.
In previous years, the Group was granted several shareholders' loans as disclosed in note 10.2. The shareholders' loans bear a fixed interest rate of 4%, which is considered to be below market rates if the Group would finance itself on the market. As such, based on the principles of IFRS 9 Financial Instruments, the Company remeasured the shareholders' loans at fair value (at the date the loan has been originated or at transition date). Subsequently the loans are measured at amortized cost based on the market-related rate. As such the Group recognizes the interest expense it would need to pay if it would finance itself on the market. The differential between the fair value of the loans and the nominal amount is considered as a capital contribution, which is recognized immediately in equity.
In March 2020, the Company and the lenders agreed to review the terms of the shareholder loans. The loans were originally repayable by year end 2020. Following the terms of the new agreements, the Company shall reimburse €7.5 million in Q2 2020 (on top of the earlier reimbursement of €0.6 million made in Q1 2020) and repay the remaining part of the loans (including interest) the earlier of year end 2022 or when the Company will generate an operating profit.
Quantitative assessment - The net present value of the cash flows under the new terms differs by less than 10% from the present value of the remaining cash flow under the original terms. Hence, the changes in the contractual terms were not considered as a substantial modification of the terms of the shareholders loans.
The revised amortized cost of the shareholders loans was recalculated by discounting the revised estimated future cash flows at the loan's original effective interest rate and the difference was recognized as a financial income in the statement of profit or loss (€532 thousand).
The anticipated reimbursement of €8.1 million made during the first half of 2020 led to the recognition of a financial expense in the statement of profit or loss (€151 thousand).
Deferred tax assets are recognized only if management assesses that these tax assets can be offset against taxable income within a foreseeable future.
This judgment is made on an ongoing basis and is based on budgets and business plans for the coming years, including planned commercial initiatives.
Since inception, the Company has reported losses, and as a consequence, the Company has unused tax losses. Therefore, management has concluded that deferred tax assets should not be recognized as of June 30, 2020 considering uncertainties regarding future taxable profits relating to the commercialization of the development projects.
On March 11, 2020 the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide.
As of June 30 2020, the development activities of the Group were slightly impacted, notably the Company noted some delays in the clinical trials associated with the patient' containment, in active pharmaceutical ingredients (APIs) production and in preclinical development.
Hyloris has implemented work-from-home policies for all of its employees until end of June 2020. As of the date of this report, none of the Company's employees suffered from COVID-19.
The effects of local lockdown orders, government-imposed quarantines, travel restrictions, business closures and work-from-home policies have restricted Hyloris' access to active pharmaceutical ingredients (APIs), delayed two clinical programs (Maxigesic® IV and HY-REF-004), disrupt product development or approval timelines.
During the second quarter of 2020, supply chain disruptions resulting from the COVID-19 situation have impacted two of Hyloris' products. The APIs used in the manufacture of Metolazone IV and of Atomoxetine Oral Liquid are respectively sourced in India and China where nationwide lockdowns have only recently been relaxed. As a result, Hyloris has experienced delays in obtaining certain amounts of API required for the production of Metolazone IV. A first batch of the API required for the production of Atomoxetine Oral Liquid has been received by Hyloris' CDO.
Likewise, the commencement of clinical trials in respect of HY-REF-004 has been similarly delayed due to delays encountered in the regulatory process and is not foreseen to start end of August.
Product development of Tranexamic Acid RTU has been delayed because of the limited availability of the manufacturer, leading Hyloris to reschedule its anticipated FDA filing date for that product candidate to beginning of Q4 2020.
Hyloris believes that the overall impact of COVID-19 on its business and operations has so far been minimal; however, the ongoing magnitude of such impact will depend, in part, on the length and severity of the restrictions and other limitations on Hyloris' ability to conduct its product development activities.
The carrying amounts of financial instruments that are not reported at fair value in the interim financial statements were as follows for the current and comparative periods:
| in € thousands | IFRS 9 Category | June 30, 2020 | December 31, 2019 |
|---|---|---|---|
| Financial assets | At amortized cost | 9 | 9 |
| Trade receivables | At amortized cost | 38 | 58 |
|---|---|---|---|
| Cash and cash equivalents | At amortised cost | 66,783 | 205 |
| Total financial assets | 66,831 | 272 | |
| Non-current financial liabilities | |||
| Lease liabilities | At amortized cost | 26 | 22 |
| Other financial liabilities | At amortized cost | 7,922 | - |
| Current financial liabilities | |||
| Lease liabilities | At amortized cost | 47 | 44 |
| Other financial liabilities | At amortized cost | 409 | 13,130 |
| Trade and other liabilities | |||
| Trade payables | At amortized cost | 3,616 | 2,866 |
| Total financial liabilities | 12,020 | 16,062 |
For the above-mentioned financial assets and liabilities, the Company considers that the carrying amounts of financial assets and financial liabilities recognized in the condensed consolidated financial statements approximate their fair values.
According to IFRS 8, reportable operating segments are identified based on the "management approach". This approach stipulates external segment reporting based on the Group's internal organizational and management structure and on internal financial reporting to the chief operating decision maker.
The Group's activities are managed and operated in one segment, pharmaceuticals. There is no other significant class of business, either individual or in aggregate. As such, the chief operating decision maker reviews the operating results and operating plans and makes resource allocation decisions on a company wide basis.
The revenue generated currently relates to royalties generated from one third party customer, AltaThera, as well as a revenue related to the sales of an asset to Alter Pharma group in 2020.
Revenue reported in the consolidated statement of profit or loss and other comprehensive income and noncurrent assets recorded in the consolidated statement of financial position are located in Belgium, country of domicile of the Company.
In 2020, the significant movements in intangible assets are related to additions of € 532 thousand, mainly relating to own product candidates (Maxigesic® IV, Tranexamic RTU and HY-EMP-016).
The Group incurred € 1,172 thousand of research and development expenses in the 6-month period ended June 30, 2020 (2019: € 819 thousand) that have been fully recognized in the profit and loss statement.
Capitalized borrowing costs were computed on asset purchased and on capitalized development costs using a 6% interest rate, in line with the weighted average borrowing rate applicable to the Group. The intangible assets relating to capitalized development are not amortized until the moment they are available for use as intended by management, i.e. ready for commercialization. The development costs of Sotalol IV, for which amortization already started, have a remaining useful life of 6 years.
As long as the assets are not amortized, they are tested for any impairment losses on an annual basis or more frequently if specific indicators require it. The impairment test conducted is performed by product and consists in measuring the recoverable amount. No impairment loss has been recognized during the period.
No intangible assets have been pledged in the context of financial liabilities.
| in € thousand | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Trade receivables | 38 | 58 |
| Less: allowance for impairment of trade receivables | - | - |
| Trade receivables - net | 38 | 58 |
| Prepayments | - | - |
| Other receivables | 389 | 275 |
| Prepaid expenses and other receivables | 389 | 275 |
| Trade and other receivables - Current | 427 | 333 |
The trade receivables as at June 30, 2020 mostly relates to royalties earned in the 6-month period ended June 30, 2020.
An impairment analysis of trade receivables is done on an individual level, and there are no individual significant impairments.
The carrying amount of the Group's trade receivables (gross) is denominated in Euro.
During the period, the payment terms for the receivables have neither deteriorated nor been renegotiated. The maximum credit risk exposure at the end of the reporting period is the carrying value of each caption of receivables mentioned above. The Group does not hold any collateral as security.
Other receivables mainly include recoverable VAT.
| in € thousand | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Pre-paid R&D expenses | 1,770 | 3,150 |
| Other pre-paid expenses | 69 | 50 |
| Other current assets | 1,839 | 3,200 |
Other current assets
Pre-paid R&D expenses relate to payments made by the Company for research and development projects conducted by third parties and will be recorded in profit and loss when incurred. The decrease of € 1,4 million compared to 31 December 2019, is mainly related to the sale of the vial-form of HY-REF-038 to Alter Pharma. This transaction is accounted for as an asset deal with Alter Pharma as Alter Pharma takes over all rights and obligations associated with the asset transferred. As of the date of the sale, Hyloris had not incurred any expenses on the assets transferred.
Pre-paid R&D expenses of € 1,770 thousand per June 30, 2020 relate mostly to:
| In € thousand | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Share capital | 128 | 89 |
| Share premium | 101,114 | 23,982 |
| Retained earnings | (39,823) | (36,081) |
| Other reserves | (1,753) | 1,822 |
| Total Equity attributable to owners of the parent | 59,666 | (10,188) |
As per June 30, 2020, the share capital of the Company amounts to € 127.963,16 represented by 25.592.632 shares, without nominal value, each representing 1/25.592.632th of the share capital of the Company. The share capital of the Company is fully and unconditionally subscribed for and is fully paid up. All shares rank equally with regard to the Company's residual assets. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company.
The following capital transactions have taken place since January 1st, 2017:
| Date | Transaction | Increase of share capital (incl. share premium) (€) |
Number of securities issued |
Issue price / share (rounded, incl. share premium) (€) |
Number of Shares after the transaction |
|---|---|---|---|---|---|
| 7 June 2012 | Incorporation | 50,000 | 10,000 Shares | 5.00 | 10,000 |
| 31 March 2017 | Capital increase | 11,500 | 2,300 Shares | 5.00 | 12,300 |
| 12 May 2017 | Share split | - | - | 3,075,000 | |
| 12 May 2017 | Warrants issue | - | 300,000 Transaction Warrants |
- | 3,075,000 |
| 31 May 2018 | Capital increase | 2,750,000 | 248,711 Shares | 11.06 | 3,323,711 |
| 31 May 2018 | Warrants issue | - | 5 Adjustment Warrants | - | 3,323,711 |
| 31 May 2018 | Warrants issue | - | 5 Anti-dilution Warrants | - | 3,323,711 |
| 31 May 2018 | Capital increase | 3,000,000 | 271,322 Shares | 11.06 | 3,595,033 |
| 31 December 2019 | Capital increase | 18,259,7835 | 855,409 Shares | 21.35 | 4,450,442 |
| 31 December 2019 | Warrants issue | - | 90,825 ESOP Warrants | - | 4,450,442 |
| 31 March 2020 | Convertible bonds issue |
- | 500 convertible bonds | - | 4,450,442 |
| 8 June 2020 | Share split | - | Share split (1 to 4) | - | 17,801,768 |
| 30 June 2020 | Warrants cancellation |
5 Adjustment Warrants | - | 17,801,768 | |
| 30 June 2020 | Warrants cancellation |
5 Anti-dilution Warrants | - | 17,801,768 | |
| 30 June 2020 | IPO on Euronext | 61,821,500 | 5,750,000 shares | 10.75 | 23,551,768 |
| 30 June 2020 | Conversion of convertible bonds |
15,358,025 | 2,040,864 shares | 10.75 | 25,592,632 |
On June 29, 2020, the Company completed its Initial Public Offering (IPO) on Euronext Brussels, resulting in the issuance of 5,750,000 new shares at €10.75 per share for a total gross proceeds of €61,821,500. The completion of the IPO triggered the conversion of the convertible bonds issued on March 31 2020 and April 30 2020 for respectively €10,800,000 and €4,350,000. The bonds were converted using a €7.525 value per share, corresponding to a 30% discount to the IPO price as contractually agreed at the issuance of the bonds. The Bonds bear a 6% interest rate as from their issue date. Accrued interest as of the date of the conversion were paid in shares, together with the principal amount, totaling together €15,358,025.
As a result of the IPO and the conversion of the bonds, the share premium increases by €77,132 thousand
5 Accounting wise, the share issue of December 2019 was accounted for as from the date of establishment of common control in -Dermax
Other reserves
| In € thousand | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Share based payment | 1,572 | 1,329 |
| Cost of Capital | (3,758) | - |
| Other | 434 | 493 |
| Total Other reserves | (1,753) | 1,822 |
The main movement of the other reserves over the period can be explained as follow:
| In € thousand | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Lease liabilities | 73 | 66 |
| Total borrowings | 73 | 66 |
| of which as: | ||
| Non-current borrowings | 26 | 22 |
| Current borrowings | 47 | 44 |
The Group is not subject to financial covenants. The underlying leased assets act as pledge in the context of the lease liabilities.
The other financial liabilities can be detailed as follows:
| in € thousand | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Loans from shareholders | 7,922 | 12,721 |
| Other loans (recoverable cash advances) | 409 | 409 |
| Other financial liabilities | 8,332 | 13,130 |
| of which as: | ||
| Non-current other financial liabilities | 7,922 | - |
| Current other financial liabilities | 409 | 13,130 |
The loans from shareholders are unsecured and bear a fixed nominal interest rate of 4% which are payable the earlier of 31 December 2022 or if and when the Company will generate a positive EBIT. In its IFRS financial statements, the Company reassessed the interest rate under the shareholders loan agreements and considered that a 6% interest rate represented a fair estimate at which it could obtain similar loans based on benchmarking obtained from peer companies with a similar profile and the rate applied in its convertible bonds.
Over the first half of 2020, the Company received additional loans from its shareholders for a total of € 3.3 million and made repayments of € 8.1 million, of which €7.5 million in Q2 2020. The shareholders loans are presented in the June 30, 2020 financial statements as a non-current other financial liabilities as pursuant to the loan agreements signed in June 2020.
The recoverable cash advance ('RCA') received by the Company from the Walloon Region gives rise to a financial liability in the scope of IFRS 9 - Financial Instruments as the advance needs to be settled by paying back the cash received or transfer all relating intellectual property rights and titles. At June 30 2020, the research program for which the advance was granted was abandoned due to unsatisfactory results. The Company judges that the
financial liability of the effectively received € 488 thousand will be settled by paying back the unutilized cash received for an amount of € 409 thousand.
| in € thousand | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Trade payables | 3,616 | 2,866 |
| Employee benefit liabilities | 66 | 52 |
| Other payables | 12 | 8 |
| Trade and other liabilities - Current | 3,694 | 2,927 |
The trade payables relate mainly to transaction costs associated to the IPO completed on June 29, 2020 and the outstanding management fee of the CEO Stijn Van Rompay. Fees owned to the CEO were paid in July.
The fair value of trade payables approximates their carrying amount.
Other payables relate to VAT payables.
The revenue for the 6-month period ended June 30, 2020 relates to the royalties received from Alta Thera, our US distributor of Sotalol IV.
Expenses by nature represent an alternative disclosure for amounts included in the consolidated statement of comprehensive income. They are classified under "Cost of sales", "Research and development expenses", "General and administrative expenses" and "Other operating expenses" in respect of the 6-months period ended June 30:
| In € thousand | H1 2020 | H1 2019 |
|---|---|---|
| Amortization expense of intangible assets | 22 | 22 |
| Impairment losses on intangible assets | - | - |
| Depreciation expense of property, plant and equipment |
4 | 3 |
| Depreciation expense of right-of-use assets | 25 | 26 |
| Employee benefit expenses and Management fees | 653 | 348 |
| Share based payments | 243 | - |
| Equity transaction costs | 1,408 | - |
| Legal & paralegal fees | 76 | 86 |
| Office expenses | 45 | 36 |
| Out-sourced R&D | 961 | 629 |
| Travel expenses | 14 | 7 |
| Other expenses | 288 | 14 |
| Total operating expenses | 3,735 | 1,172 |
| of which as: | ||
| Cost of sales | 109 | 37 |
| Research and development expense | 1,172 | 819 |
| General and administrative expenses | 2,454 | 316 |
In accordance with IAS 38, we do not capitalize our research and development expenses until we receive the marketing authorization for the applicable product candidate. Research and development expenditures incurred during the interim period were accounted for as operating expenses.
Hyloris' research and development expenses increased by 43%, from € 819 thousand H1 2019 to € 1,172 thousand H1 2020. The increase was principally driven by additional out-sourced R&D expenses related to existing product-candidates.
Hyloris' General and administrative expenses increased by 675% (or €2,138 thousand), from € 316 thousand H1 2019 to € 2,454 thousand H1 2020. The increase was principally driven by (i) the transaction costs of the IPO and the convertible bonds (that were not capitalized as cost of capital; €1,408 thousand), (ii) the vesting cost of the ESOP warrants (€243 thousand - refer to Note 16), and (iii) the enlargement of the management structure of the Company (€305 thousand).
| In € thousand | H1 2020 | H1 2019 |
|---|---|---|
| Gain related to the extension of the maturity of the shareholder loans |
532 | - |
| Change in fair value of embedded derivates | 81 | - |
| Exchange differences | 8 | 87 |
| Other | - | 4 |
| Financial income | 620 | 91 |
| Interest expense on other financial liabilities | 317 | 192 |
| Interest expense on Convertible Bonds | 235 | - |
| Interest expense on lease liabilities | 4 | 1 |
| Total Interest expense | 556 | 193 |
| Fair value adjustment of the shareholder loans | 151 | - |
| Exchange differences | 12 | 179 |
| Bank and other fees | 9 | 8 |
| Total financial expenses | 729 | 380 |
The various items comprising the net finance cost are as follows:
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent (after adjusting for the effects of all dilutive potential ordinary shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. As disclosed in Note 9, the Company performed a stock split on June 8, 2020. On June 8 2020, every existing share/option gave right to 4 shares/options. The stock split had no dilutive effect.
No effects of dilution affect the net profit attributable to ordinary equity holders of the Group. The table below reflects the income and share data used in the basic and diluted earnings per share computations for the 6 months period ended June 30:
| In € thousands | H1 2020 | H2 2019 |
|---|---|---|
| Basic earnings | ||
| Profit from continuing operations attributable to owners of the parent |
(3,742) | (1,078) |
| Diluted earnings | ||
| Dilution effect of share-based payments | - | - |
| Profit from continuing operations attributable to owners of the parent, after dilution effect |
(3,742) | (1,078) |
Earnings per share based on the existing number of ordinary shares
| Number of shares | H1 2020 | H1 2019 |
|---|---|---|
| Weighted average number of ordinary shares outstanding during the period (post stock split) |
17,844,575 | 14,380,132 |
| Basic earnings per share | (0.21) | (0.07) |
| Diluted earnings per share | (0.21) | (0.07) |
|---|---|---|
| ---------------------------- | -------- | -------- |
Earnings per share based on the number of shares as adjusted for the common control of Dermax SA
| Number of shares | H1 2020 | H1 2019 |
|---|---|---|
| Weighted average number of ordinary shares outstanding during the period (post stock split) as adjusted for the common control of Dermax SA |
17,844,575 | 17,801,768 |
| Basic earnings per share | (0.21) | (0.06) |
| Diluted earnings per share | (0.21) | (0.06) |
As the Company is suffering operating losses, the stock options have an anti-dilutive effect. As such, there is no difference between basic and diluted earnings per ordinary share. There are no other instruments that could potentially dilute earnings per share in the future.
The Company has a stock option scheme for the employees, consultants and directors of the Company and its subsidiaries for rendered services. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below per ordinary share.
Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
| Expiry Date | Exercise Price per stock option (€) (before stock split) |
Fair value at grant date (€) (before stock split) |
Options per June 30, 2020 (post stock split) |
Options per December 31, 2019 (as adjusted by stock split of June 8, 2020) |
Options per December 31, 2019 (before stock split) |
|
|---|---|---|---|---|---|---|
| PLAN 2017 | ||||||
| Options | 4/05/2022 | 9.44 | 4.43 | 1,200,000 | 1,200,000 | 300,000 |
| PLAN 2019 | ||||||
| Options | 31/12/2024 | 21.35 | 9.88 | 333,000 | 313,000 | 78,250 |
The following share-based payment arrangements were in existence during the current and prior periods:
The 2017 plan is fully vested immediately as no vesting conditions were required.
On December 31 2019, The Company issued a new plan of 90,825 options (before stock split) in the context of an employee stock ownership plan (ESOP warrants). The 2019 plan is subject to services conditions so that it will vest gradually over the next four years (25% after 1 year, and 1/48 for every additional month). The Company offered in total 353,000 options (88,250 options before stock split) to the beneficiaries. As of 30 June 2020, all options offered were accepted and 20,000 options (5,000 options before stock split) lapsed. The remainder options of the 2019 plan (2,575 options before stock split) lapsed as at June 30, 2020.
The fair value of the stock options has been determined based on the Black Scholes model. Expected volatility is based on the historical share price volatility over the past 5 years of listed peer companies.
Below is an overview of all the parameters used in this model:
| PLAN 2017 | PLAN 2019 | |
|---|---|---|
| Share price (€) (before stock split) | 9.44 | 21.35 |
| Exercise Price (€) (before stock split) | 9.44 | 21.35 |
| Expected volatility of the shares (%) | 55% | 55% |
| Expected dividends yield (%) | 0% | 0% |
| Risk free interest rate (%) | 0.60% | 0.10% |
The following reconciles the options outstanding at the beginning and end of the year:
| Average exercise price (€) (after stock split) |
Number of options (after stock split) |
Average exercise price (€) (before stock split) |
Number of options (before stock split) |
|
|---|---|---|---|---|
| Closing balance at December 31, 2018 | 2.36 | 1,200,000 | 9.44 | 300,000 |
| Warrants accepted in December 2019 | 5.34 | 118,000 | 21.35 | 29,500 |
| Closing balance at December 31, 2019 | 2.63 | 1,318,000 | 10.51 | 329,500 |
| Warrants accepted in H1 2020 | 5.34 | 235,000 | 21.35 | 58,750 |
| Warrants lapsed in H1 2020 | 5.34 | 20,000 | 21.35 | 5,000 |
| Closing balance at June 30, 2020 | 3.01 | 1,533,000 | 12.03 | 383,250 |
The 1,200,000 Transaction warrants are exercisable during the periods set out in the terms and conditions thereof, including notably an annual window during the 60 calendar days preceding the Annual General Shareholders' Meeting to be held in that year, and immediate exercisability in the event of an IPO of the Company. However, in the Shareholders' Agreement, all holders have committed not to exercise their Transaction Warrants (i) during the 60 calendar days' period prior to the Annual General Shareholders' Meeting to be held in 2020 regarding the financial year 2019 and (ii) from the first day of trading of the Shares on Euronext Brussels until closing of the Offering, without prejudice to the right of each holder of Transaction Warrants to exercise its Transaction Warrant(s) as from the closing of the Offering in accordance with the terms and conditions of the Transaction Warrants.
As of June 30, 2020, the Group was not involved in any claim or dispute incidental to the activities of the Group.
End of June 2020, Hyloris had contractual commitments and contingent liabilities for a maximum amount of € 4.2 million (among which € 0,25 million and \$4.4 million converted in EUR at a rate of 1.1198) related to asset purchase, licenses and developments agreements recorded under intangible assets. The amounts due to the counterparties are due upon reaching certain milestones dependent on successful completion of development stages of the different product candidates (including FDA approval) or on meeting specified sales targets, and which represent the maximum that would be paid if all milestones and sales targets, however unlikely, are achieved. The amounts are not risk-adjusted or discounted.
The following table details the total maximum contractual commitments and contingent liabilities at June 30, 2020 per product candidates if such products are successfully marketed (in'€000):
| Product-Candidate | \$ | € | Converted in € |
|---|---|---|---|
| Metolazone IV | 1,750 | - | 1,563 |
| Dofetilide IV | 1,267 | - | 1,132 |
| HY-CVS-073 | 625 | - | 558 |
| HY-CVS-074 | 325 | - | 290 |
| Atomoxetine Liquid | 250 | - | 223 |
| HY-REF-004 | 225 | - | 221 |
| To be assigned | - | 150 | 150 |
| HY-REF-075 | - | 100 | 100 |
| TOTAL | 4,442 | 250 | 4,217 |
As of June 30 2020, out of the total value of €4.2 million, \$1.8 million (or €1.6 million) should be considered as contingent liabilities as they are not triggered by a performance obligation from the counterparty (\$1.3 million for Metolazone IV, \$0.3 million for Atomoxetine Liquid and \$0.2 million for HY-REF-004).
Contingent liabilities attached to profit split and royalties which percentage varies based on achieved profit and/or sales are not considered in the above table as no maximum amount can be determined.
The reference shareholder is Stijn Van Rompay.
As part of the business, the Company has entered into several transactions with related parties.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
The related parties presented below are identified as:
The following table presents the total amount of transactions made with entities controlled by or related to key management and the transactions occurred during the first half of 2020. The underlying assets of the transactions made with related parties are presented as intangibles or prepaid expenses in the Consolidated Statement of Financial Position.
| in € thousand | Nature of assets | Transactions of the period |
|---|---|---|
| Other related parties | Licensing | - |
| Asset Purchase | - | |
| Development services | (1,280) | |
| Total | (1,280) |
At June 30, 2020, there were outstanding trade payables related to transactions with related parties:
| in € thousand | Type of services | June 30, 2020 | December 31, 2019 |
|
|---|---|---|---|---|
| Other related parties | Licensing | - | 175 | |
| Asset Purchase | - | - | ||
| Development Agreement | 101 | 1,700 | ||
| Total | 101 | 1,875 |
The outstanding trade payables related to the Development Agreement of Maxigesic IV® to Alter Pharma NV and Neogen NV (both subsidiaries of the Alter Pharma group).
At June 30 2020, there were no outstanding trade receivables related to transactions with related parties.
The following loans from related parties were outstanding at June 30, 2020:
| in € thousand | June 30, 2020 | December 31, 2019 | |
|---|---|---|---|
| Loans from shareholders (excluding accrued interest) | 6,476 | 11,651 | |
| Total | 6,476 | 11,651 |
The reference Shareholder and CEO Stijn Van Rompay has an outstanding amount (principal loan) of € 4,160 thousand as per June 30, 2020.
Pieter Van Rompay, Shareholder and sibling of Stijn Van Rompay has an outstanding amount (principal loan) of € 889 thousand as per June 30, 2020.
GRNR Invest BVBA, entity controlled by Thomas Jacobsen, Shareholder and executive director, has an outstanding amount (principal loan) of € 1,019 thousand as per June 30, 2020.
Stijn Van Rompay and his spouse have an outstanding amount (principal loan) of € 181 thousand as per June 30, 2020.
Ellen Delimon, spouse of Stijn Van Rompay has an outstanding amount (principal loan) of €226 thousand, as per June 30, 2020.
As per December 31, 2019 Stijn Van Rompay, Pieter Van Rompay, GRNR Invest BVBA, entity controlled by Thomas Jacobsen, Stijn Van Rompay and his spouse respectively had amount outstanding (loan principals) of €9,652 thousand, €1,422 thousand, €377 thousand and €201 thousand.
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.
The above loans bear fixed interest rates (nominal rate of 4% and effective interest rate of 6%). The amount of accrued interest at June 30, 2020 amounted to €1,446 thousand.
Hyloris has contractual commitments for a maximum amount of €0.25 million with related parties related to licenses and development agreements recorded under intangible assets. The amounts are due upon reaching certain milestones dependent on successful completion of development stages of the different product candidates (including FDA approval) or on meeting specified sales targets, and which represent the maximum that would be paid if all milestones and sales targets, however unlikely, are achieved. The amounts are not riskadjusted or discounted.
The following table details the total maximum contractual commitments (milestone payments only) at June 30 2020 per product candidates if such products are successfully marketed (in'€000). The profit split and royalties, which percentage varies based on achieved profit, are not included in the table:
| Product-Candidate | Related party | € |
|---|---|---|
| To be assigned | Neogen | 150 |
| HY-REF-075 | Nordic Speciality Pharma | 100 |
| TOTAL | 250 |
Executive management team personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Group. As of June 30 2020, members of the Executive Management Team are:
The table below presents the compensation of all members of Executive Management Team by type of compensation:
| in € thousand | H1 2020 | H1 2019 | |
|---|---|---|---|
| Short-term compensation | 411 | 169 | |
| Post-employment benefits | 2 | 1 | |
| Share based payments | 115 | - |
6 Mr. Passanisi left the Company on 3 July 2020
| Total | 528 | 170 | |
|---|---|---|---|
As of June 30 2020, members of the Executive Management Team owned the following securities of the Company:
| Shares | Warrants | |||
|---|---|---|---|---|
| Number (#) | Pct. (%) | Number (#) | Pct. (%) | |
| Mr. Stijn Van Rompay (CEO) | 6,711,838 | 26.23 | 920,096 | 60.02 |
| Mr. Thomas Jacobsen (Executive director) | 3,437,760 | 13.43 | 163,512 | 10.67 |
| Mr. Edward Maloney (CBDO) | 428,828 | 1.68 | - | - |
| Mr. Maurizio Passanisi (CCLO)(1) | 190,524 | 0.74 | 46,000 | 3.00 |
| Mr Koenraad Van der Elst (CLO) | 27,443 | 0.11 | 50,000 | 3.26 |
| Mrs. Astrid Heiremans (acting CFO) | - | - | - | - |
| TOTAL | 10,796,393 | 42.19 | 1,179,608 | 76.95 |
In March and April 2020, Mr Van Rompay and Mr Van der Elst subscribed to the Convertible Bonds issued by the Company for respectively EUR 1.0 million and EUR 0.1 million, giving right to respectively 134,240 shares and 13,490 shares at the conversion of the bonds on June 30, 2020.
Total outstanding shares and warrants existing as of June 30 2020 are respectively 25,592,632 and 1,533,000.
On July 29 2020, KBC Securities, acting as stabilization agent, exercised the over-allotment options for a total amount of €2.58 million, bringing the final gross proceeds of the IPO to €64.39 million.
There were no other material events occurred after the end of the reporting period.
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