Annual Report • Feb 20, 2018
Annual Report
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| January – December 2017 |
2 | Interim Report Jan – Mar, Apr 26, 2018 |
|---|---|---|
| Financial summary | 2 | Annual Report 2017, week commencing |
| About BioArctic | 3 | Apr 23, 2018 |
| CEO's comments | 4 | Annual General Meeting 2018, May 15, 2018 |
| Project portfolio | 5 | Interim Report Jan – Jun, Aug 23, 2018 |
| Comments on the report | 7 | Interim Report Jan – Sep, Nov 8, 2018 |
| Other information | 8 | |
| Financial reports | 10 | |
| Notes | 13 | |
| Consolidated quarterly data | 15 | |
| Calculation of key figures | 15 | |
| Glossary and definitions | 17 |
Unless otherwise stated in this report, all data refers to the Group. Figures in parentheses relate to the corresponding period in 2016.
• BioArctic received US patent protection for a method with a medical device, which is one of the components in the product candidate SC0806, for treatment of patients with Complete Spinal Cord Injury
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| SEKm | 2017 | 2016 | 2017 | 2016 |
| Net sales | 51.0 | 94.4 | 140.7 | 105.6 |
| Other operating income | 10.4 | 32.6 | 19.0 | 39.1 |
| Operating profit | 14.7 | 97.3 | 19.3 | 74.6 |
| Profit for the period | 11.8 | 75.0 | 15.2 | 57.6 |
| Earnings per share, SEK 1, 2 | 0.16 | 1.19 | 0.22 | 0.91 |
| Equity per share, SEK 1, 2 | 7.22 | 0.96 | 7.22 | 0.96 |
| Cash flow from operating activities | -45.7 | 705.6 | -135.3 | 675.1 |
| Cash flow from operating activities per | ||||
| share, SEK 1, 2 | -0.60 | 11.19 | -1.99 | 10.71 |
| Equity/assets ratio, % | 55.8% | 8.6% | 55.8% | 8.6% |
| Return on equity, % | 3.4% | 98.9% | 4.3% | 68.1% |
| Number of shares | 88,059,985 | 4,203,999 | 88,059,985 | 4,203,999 |
1 There are no potential shares, thus there is no dilutive effect.
2 The comparative figures have been recalculated as a result of the 15:1 split executed on August 1, 2017.
For further information, please contact: Gunilla Osswald, CEO, [email protected], telephone + 46 (0)8 695 69 30 Jan Mattsson, CFO, [email protected], telephone + 46 (0)703 52 27 72
BioArctic invites to an audiocast with teleconference (in English) for investors, analysts and media today, February 20, at 09:30 – 10:30 a.m. CET.
CEO Gunilla Osswald and CFO Jan Mattsson present BioArctic, comment on the Full Year Report and answer questions.
Webcast:https://tv.streamfabriken.com/bioarctic-q4-2017
Dial-in telephone number from: Sweden: + 46 8 566 426 62 Belgium: + 32 240 406 35 Germany: + 49 692 222 290 46 The Netherlands: + 31 207 168 416 Norway: + 47 235 002 53 Switzerland: + 41 225 675 548 UK: + 44 203 008 9811 US: + 1 855 831 5946
BioArctic AB (publ) is a research based biopharmaceutical company focusing on disease modifying treatments and diagnostics for neurodegenerative diseases, such as Alzheimer's disease and Parkinson's disease. The company also develops a treatment for complete spinal cord injury. The company focuses on new types of treatments in areas with great unmet medical needs.
The company has high scientific competence and experience in developing drugs from idea to market through employees and key consultants. Collaborations with universities are of great importance to the company together with the strategically important global partners in the Alzheimer and Parkinson projects. BioArctic conducts its own clinical development in the field of complete spinal cord injury. Through long-term collaboration agreements with global pharmaceutical companies, BioArctic has demonstrated high skills and good ability to deliver innovative pharmaceutical projects.
In Alzheimer's disease, BioArctic has collaborated with Eisai since 2005. The company has entered into a total of three research collaboration agreements and two license agreements relating to the antibodies BAN2401 and BAN2401 Back-up. The total aggregated value of these agreements may amount to EUR 218 million in addition to royalties. So far, EUR 47 million has been received. In Parkinson's disease, BioArctic has collaborated with AbbVie since 2016, when a research collaboration agreement was concluded including, among other things, the antibody BAN0805. AbbVie is entitled to acquire a license to develop and commercialize the antibodies. The total aggregated value of the agreement may amount to USD 755 million in addition to royalty payments, of which USD 80 million has so far been received.
The project portfolio is a combination of fully funded projects run in partnership with global pharmaceutical companies and innovative in-house projects with significant market and out-licensing potential. For information about the projects, see the section Project portfolio. BioArctic's B-share is listed on Nasdaq Stockholm Mid Cap (ticker: BIOA B).
BioArctic's most important task is to improve the quality of life of patients with diseases affecting the central nervous system. As we prepared the company during last year for the IPO, we further developed the company's strategy. This was done in order to be able take full advantage of the opportunities and manage the challenges that lie ahead. BioArctic is today well equipped to drive our projects forward towards further successful collaboration and continued growth.
The listing of the company on Nasdaq Stockholm Mid Cap on October 12 received a lot of positive attention in the media. Since then intensive work has continued with the aim of increasing knowledge of and interest in BioArctic externally. Together with colleagues I have met a number of investors and participated in Life Science events in Sweden, other European countries and the US. We are delighted and find it inspiring that great interest continues to be shown in BioArctic after the IPO process.
Of BioArctic's five projects for the treatment of patients in the early stages of Alzheimer's disease, it is BAN2401, in collaboration with Eisai, that is the most advanced. On December 21, BioArctic announced that the Phase 2bstudy on BAN2401 (Study 201) in 856 patients in the early stages of Alzheimer's disease is progressing towards final analysis after 18 months of treatment. The antibody BAN2401, which selectively binds amyloid-beta protofibrils, did not meet the efficacy criteria in ADCOMS (primary endpoint) at the 12 month interim analysis based on an innovative Bayesian design with high requirements for meeting the effect criteria. In accordance with a predetermined study protocol, the study will continue blinded until completion. 18 months is considered to be a more relevant treatment period for demonstrating a clinical effect in a disease-modifying drug for Alzheimer's disease. We look forward to the full results
once the study has been completed after 18 months of treatment. These results are expected to be available in the second half of 2018.
The research collaboration with AbbVie regarding Parkinson's disease is very intense and has led to that BioArctic has hired more employees, increased resources and has the ability to run the BAN0805 project considerably faster towards future clinical studies. BioArctic has had a robust patent strategy since the company was formed in 2003. A patent was granted in Europe during the period for the company's drug candidate BAN0805 for Parkinson's disease.
The company's treatment for Complete Spinal Cord Injury, SC0806, is undergoing clinical trials in Phases 1/2 at specialist clinics in Sweden and work is ongoing to include clinics in Finland, Estonia and Norway. There is no effective treatment for these patients today. We look forward to continuing the important activities in this treatment area.
When I look back at the past year, I am proud of the fact that so much has happened in such a short timeframe. In 2017 we took the important strategic step of carrying out a successful IPO – the largest within the biotech sector in Sweden since 2000. We continued to run the company's projects in three treatment areas, all with great unmet medical needs, well in line with our objectives. Finally, I would like to thank all investors for their confidence in the company, collaboration partners and all the employees at BioArctic who have contributed to a successful 2017.
President and CEO, BioArctic AB
| PRODUCT CANDIDATE | INDICATION | PARTNER | DISCOVERY | PRE-CLINICAL | PHASE 1 | PHASE 2 | PHASE 3 | |
|---|---|---|---|---|---|---|---|---|
| BAN2401 (anti-Aß antibody) |
Alzheimer's Disease | Biogen. 1) Eisai |
||||||
| BAN2401 (anti-Aß antibody) |
Down's Syndrome 2) Traumatic Brain Injury |
|||||||
| BAN2401 Back-up (anti-Aß antibody) |
Alzheimer's Disease | Eisai | ||||||
| NEURODEGENERATIVE DISEASES | AE1501 (undisclosed) |
Alzheimer's Disease | Eisai | |||||
| AD1502 (undisclosed) |
Alzheimer's Disease | |||||||
| AD1503 (undisclosed) |
Alzheimer's Disease | |||||||
| BAN0805 (anti-alpha-synuclein antibody) |
Parkinson's Disease | abbvie | ||||||
| Imaging and biochemical biomarkers (AB) |
Alzheimer's Disease | |||||||
| DIAGNOSTICS & TECHNOLOGY |
Imaging and biochemical biomarkers (alpha-synuclein) |
Parkinson's Disease | abbvie | |||||
| BBB-technology (blood-brain barrier) |
Multiple application areas | |||||||
| SPINE | SC0806 (FGF1/device) |
Complete Spinal Cord Injury |
1) Partner with Eisai on BAN2401 for treatment of Alzheimer's Disease. Eisai partnered with Biogen on BAN2401 in 2014 2) Dementia and cognitive impairment associated with Down's syndrome
BioArctic has two projects in the clinical phase: BAN2401 for Alzheimer's disease and SC0806 for patients with Complete Spinal Cord Injury.
The company has four projects in pre-clinical development: BAN2401 for Down's Syndrome with dementia and Traumatic Brain Injury (TBI), BAN2401 Back-up for Alzheimer's disease, BAN0805 for Parkinson's disease and biomarker and diagnostics projects for Alzheimer's disease.
There are three projects in the research phase for Alzheimer's disease (AE1501, AD1502, AD1503), Parkinson's disease follow-up projects, biomarker and diagnostics projects for Parkinson's disease, as well as a blood-brain barrier technology project.
The key molecular event in Alzheimer's disease and Parkinson's disease is believed to be protein misfolding and aggregation. The spreading of soluble aggregates leads to neuronal dysfunction, cell death, brain damage and symptoms of disease. Each neurodegenerative disease is characterized by its unique aggregated protein. The hallmark of Alzheimer's disease is amyloid-beta, whereas alpha-synuclein is the signature protein of Parkinson's disease. BioArctic's disease modifying treatment strategy is to eliminate toxic aggregated forms of amyloid beta (oligomers/protofibrils) in the brain by means of the company's selective antibodies.
The goal is to increase the effect of the treatment without increasing the risks of side effects.
Alzheimer's disease: BAN2401 is a disease modifying drug candidate (an anti-amyloid beta protofibril selective antibody) for the treatment of early Alzheimer's disease. A clinical Phase 2b study is ongoing in the US, Canada, Europe, Japan and South Korea comprising 856 patients. The 17th and final interim analysis has been carried out and in accordance with a predetermined study protocol, the study will continue blinded with 18 months of treatment and 3 months follow up, followed by final analysis of the study
results. The efficacy criteria at the 12-month interim analysis of ADCOMS (primary endpoint) were not met, as announced on December 21, 2017. The results from the interim analysis at 12 months were based on an innovative Bayesian design with high requirements for meeting the efficacy criteria. The results from the final analysis of the entire study are expected during the second half of 2018. Eisai is responsible for the clinical development. The project is based on research at Uppsala University, Sweden.
Down's syndrome with dementia: BAN2401, which is now being clinically evaluated for the treatment of Alzheimer's disease, can potentially also be used for other indications, such as Down's syndrome with dementia, as these patients develop dementia at around 40 years of age.
Traumatic brain injury (TBI): BioArctic has submitted a patent application for the antibodies BAN2401/BAN2401 Back-up for the treatment of Traumatic Brain Injury. Some of these patients develop dementia after the injury.
The antibody is a further developed version of BAN2401 for the treatment of Alzheimer's disease. The antibody was developed by BioArctic in collaboration with Eisai, which led to a new license agreement in 2015. The project is in the late pre-clinical phase.
In 2015 the collaboration with Eisai was extended to also include a project jointly owned by BioArctic and Eisai. The aim is to develop a future disease modifying treatment of Alzheimer's disease with a different target than those targeted in the projects BAN2401 and BAN2401 Back-up.
At BioArctic research is in progress to develop new antibodies for the treatment of Alzheimer's disease aimed at slowing down or
stopping disease progression by addressing two new targets.
BAN0805 is a drug candidate (an antibody) for the treatment of Parkinson's disease. The aim is to develop a disease modifying treatment that stops or slows down disease progression. Collaboration with AbbVie was started in 2016 regarding the continued development of the company's Parkinson program, focusing on BAN0805 with follow-up projects and diagnostics. The project is based on research at Uppsala University.
Alzheimer's disease diagnostics: In collaboration with Uppsala University, BioArctic is developing a new type of PET tracer for imaging of the brain in Alzheimer's disease by using BioArctic's antibodies. The goal is to create tools to better diagnose the disease, follow the disease progression and objectively measure the effect of drug treatment.
Improved biochemical methods: BioArctic develops improved biochemical methods for the identification and precise measurement of responses to treatment of Alzheimer's disease and Parkinson's disease, and for the measurement of disease progression in the individual patient. This is done in collaboration with the University of Gothenburg, Sweden. Blood-brain barrier technique: Together with Uppsala University, BioArctic is developing a technique that enables better passage of antibodies and other substances into the brain across the blood-brain barrier. This technique has great technical and economic potential and could be a general technique for improved and more effective treatment of brain disease.
SC0806 is an innovative potential treatment for patients with traumatic Complete Spinal Cord Injury. The product candidate is a combination of a biodegradable medical device and a drug substance (FGF1). The first patient was treated in 2016 at Karolinska University Hospital, Sweden, with subsequent rehabilitation for 18 months. Since August 2017, the patients receiving SC0806 treatment in the ongoing Phase 1/2 clinical trial have been given the option of 12 months additional rehabilitation in an extension study. Work is ongoing to include clinics in Finland, Estonia and Norway in the study. The product obtained orphan drug designation in 2010 in the EU and in 2011 in the US, which gives the company 10 and 7 years of market exclusivity in Europe and the US, respectively.
Securing patent protection is the foundation for all new drug and product projects, whether a project derives from BioArctic's laboratories or is in-licensed. Patents and other exclusive rights are crucial to the company's future commercial opportunities. BioArctic has an active patent strategy covering all major geographic markets, including the US, EU, Japan and China. BioArctic's intellectual property right portfolio consisted at the end of the year of 11 patent families with 112 granted patents.
The Group is referred to unless otherwise stated in this interim report. Figures in parentheses refer to the corresponding period last year. Amounts are expressed in kSEK (SEK thousands) unless otherwise stated. All amounts stated are rounded up or down, which may lead to some totals not matching exactly.
Because of the nature of the business operations, there may be large fluctuations between revenue for different periods.
Net sales in the fourth quarter amounted to SEK 51.0 million (94.4), a decrease of SEK 43.4 million compared with the same period the previous year. The decrease during the fourth quarter is attributable to the one-time payment booked when the research
collaboration with AbbVie regarding Parkinson's disease started in 2016. Net sales for the period January – December amounted to SEK 140.7 million (105.6), which is an increase of SEK 35.1 million for the period January – December. The increase is mainly attributable to revenues from the research collaboration with AbbVie in Parkinson's disease.
Other operating income relates to rental revenues, research grants and one-time payment for subleasing and amounted to SEK 10.4 million (32.6) for the fourth quarter and SEK 19.0 million (39.1) for the period January – December. The reason for the decrease during 2017 is due to the fact that accrued revenues from Horizon 2020 are lower and that BioArctic had large exchange rate gains during 2016.
Operating costs amounted to SEK 46.7 million (29.4) for the fourth quarter and to SEK 140.2 million (69.8) for the period January – December. The increase during both the quarter and the full year are explained by increased research costs as a result of the collaboration agreement with AbbVie and increased expenses as BioArctic is now a listed company.
Administrative expenses increased, primarily due to the work in connection with the IPO, and amounted to SEK 13.0 million (6.9) during the fourth quarter and to SEK 31.5 million (14.5) during the period January – December. Of the increase, the expenses attributable to the company's IPO amounted to SEK 5.0 million (0.0) during the fourth quarter and to SEK 11.0 million (0.0) for the period January – December. In addition to expenses for the IPO which have been recorded in the income statement, transaction costs of SEK 39.8 million have been recorded in equity. The total costs for the IPO including the acquisition of capital thus amount to SEK 50.8 million.
Other operating expenses consisted of exchange rate losses, which in the fourth quarter became a revenue item, as provisions made previously were reversed in the quarter. As BioArctic does not meet all the conditions to capitalize R&D, these costs have been expensed in their entirety.
Operating profit before financial items (EBIT) amounted to SEK 14.7 million (97.3) for the fourth quarter and SEK 19.3 million (74.6) for the period January – December.
The decrease in the operating profit is primarily attributable to the one-time payment received from AbbVie which was booked during 2016.
Net financial items totaled SEK 0.6 million (-0.9) for the fourth quarter and SEK 0.4 million (-0.5) for the period January – December.
Profit for the period amounted to SEK 11.8 million (75.0) for the fourth quarter and SEK 15.2 million (57.6) for the period January – December.
Earnings per share before and after dilution amounted to SEK 0.16 (1.19) for the fourth quarter and to SEK 0.22 (0.91) for the period January – December.
Equity amounted to SEK 636.1 million (60.8) at December 31, 2017. This corresponds to an equity per outstanding share of SEK 7.22 (0.69) before and after dilution.
The equity/assets ratio has increased from 8.6% at December 31, 2016 to 55.8% at the same point of time in 2017. The increase is due to the acquisition of capital that took place in connection with the listing of BioArctic on Nasdaq Stockholm in October 2017.
Consolidated cash and cash equivalents consist of bank balances and at the end of the period they amounted to SEK 1,110.4 million (692.5). There were no loans as of December 31, 2017, and no loans have been taken since
this date. The Group has no other credit facility or loan commitments.
The Group's liquid funds are intended to be used mainly for agreed commitments and for daily operating activities. In order to reduce foreign exchange exposure some liquid funds are invested in foreign currency. This has reporting effects in connection with the recalculation of currency to the current rate. These effects are recognized in the operating profit and in financial income and expenses.
The Board of Directors proposes that no dividend is paid for the financial year 2017.
Investments in the period October – December 2017 amounted to SEK 0.1 million (1.7) and for the period January – December to SEK 2.8 million (3.0). The investments are mainly related to laboratory equipment.
Cash flow from operating activities for the fourth quarter amounted to SEK -45.7 million (705.6) and for the period January – December to SEK -135.3 million (675.1). Towards the end of 2016, an upfront payment of USD 80 million was received in accordance with the collaboration agreement with AbbVie. This one-time payment had a positive effect on the cash flow. Similar one-time payments have not been received in 2017.
According to the resolution of the Annual General Meeting 2017, the Nomination Committee for the 2018 Annual General Meeting has been appointed and announced. The Nomination Committee comprises: Anki Dahlin (Demban AB), Claes Andersson (Ackelsta AB) and Gunnar Blix (The Third Swedish National Pension Fund).
In connection with the listing, investors were invited, in accordance with the conditions of
the prospectus, to subscribe for no more than 25,000,000 newly issued B-shares in BioArctic, as authorized by the Annual General Meeting on May 31. As a result of the offering, the number of shares increased to 88,059,985, of which 14,399,996 are A-shares and 73,659,989 B-shares. This corresponded to dilution of 28.4% of the total number of shares and 11.5% of the total number of votes. The issue of the 25,000,000 shares generated SEK 600 million, which after a deduction for transaction costs generated SEK 549 million for BioArctic.
The new share issue enables BioArctic to allocate further resources to its in-house projects and thus conduct the continued development work in a more focused and efficient manner.
BioArctic's B-share began trading on Nasdaq Stockholm on October 12, 2017 under the ticker "BIOA B". The initial listing price was SEK 24. Market capitalization at the end of 2017 was SEK 2.3 billion. During 2017 BioArctic's share saw positive development of 8.33%. The BioArctic B-share reached its highest level of SEK 32.00 on October 13 whereas it recorded its lowest price of SEK 22.90 on December 22. BioArctic's share price was SEK 26.00 on the last trading day of December 2017.
The number of employees in the Group was 25 (24) at the end of the period. Of these employees 10 (9) are men and 15 (15) are women. Of the total employees about 95
percent are active in R&D. About 80 percent of the company's 25 employees are PhDs, and of these two are Associate Professors and one is a Professor.
In order to run efficient operations with a cost efficient organization BioArctic hires key consultants for specific assignments and for tasks in competence areas that the company lacks or only has a need for periodically. As of December 31, 2017, these amounted to a total corresponding to 12 (5) full-time positions.
The management makes assumptions, judgments and estimates that affect the content of the financial statements. Actual results may differ from these assumptions and estimates, as is also stated in the accounting principles. The objective of the Group's risk management is to identify, measure, control and limit the risks of the business. Significant risks are the same for the Parent Company and the Group. The risks can be divided into financial risks on the one hand and operational and external risks on the other. BioArctic's operational and external risks mainly consist of risks related to research and development, clinical trials and dependence on key employees.
A detailed description of exposure and risk management is presented in the Annual Report for 2016, pages 7-9.
All the Group's business operations are conducted in the Parent Company.
| kSEK | Oct-Dec 2017 |
Oct-Dec 2016 |
Jan-Dec 2017 |
Jan-Dec 2016 |
|---|---|---|---|---|
| Net sales (Note 4) | 51,021 | 94,439 | 140,706 | 105,613 |
| Cost of goods sold | - | -238 | -266 | -238 |
| Gross Profit | 51,021 | 94,201 | 140,441 | 105,375 |
| Other operating income | 10,366 | 32,557 | 19,044 | 39,073 |
| Marketing expenses | -485 | -342 | -1,397 | -1,370 |
| Administrative expenses | -12,969 | -6,856 | -31,522 | -14,544 |
| Research and development costs | -36,839 | -22,084 | -101,583 | -53,665 |
| Other operating expenses | 3,637 | -143 | -5,689 | -238 |
| Operating profit | 14,731 | 97,333 | 19,294 | 74,631 |
| Financial income | 905 | -437 | 1,043 | 8 |
| Financial expenses | -340 | -500 | -647 | -503 |
| Profit before tax | 15,297 | 96,396 | 19,690 | 74,136 |
| Tax | -3,461 | -21,431 | -4,534 | -16,556 |
| Profit for the period | 11,836 | 74,965 | 15,157 | 57,580 |
| Earnings per share | ||||
| Earnings per share, SEK 1, 2 | 0.16 | 1.19 | 0.22 | 0.91 |
1 There are no potential shares. Thus there is no dilutive effect.
2 The comparative figures have been recalculated as a result of the 15:1 split executed on August 1, 2017.
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| kSEK | 2017 | 2016 | 2017 | 2016 |
| Profit for the period | 11,836 | 74,965 | 15,157 | 57,580 |
| Other comprehensive income | - | - | - | - |
| Comprehensive income for the period | 11,836 | 74,965 | 15,157 | 57,580 |
| Dec 31, | Dec 31, | |
|---|---|---|
| kSEK | 2017 | 2016 |
| ASSETS | ||
| Tangible fixed assets | 7,093 | 5,644 |
| Deferred tax assets | 230 | 172 |
| Other financial assets | 2,675 | 2,675 |
| Current assets excluding cash and cash equivalents | 20,119 | 6,955 |
| Cash and cash equivalents | 1,110,367 | 692,530 |
| TOTAL ASSETS | 1,140,483 | 707,976 |
| EQUITY AND LIABILITIES | ||
| Equity | 636,134 | 60,760 |
| Deferred tax liabilities | 5,487 | 4,136 |
| Other current liabilities | 12,160 | 19,744 |
| Accrued expenses and deferred income | 486,702 | 623,336 |
| EQUITY AND LIABILITIES | 1,140,483 | 707,976 |
| Dec 31, | Dec 31, | |
|---|---|---|
| kSEK | 2017 | 2016 |
| Opening balance at 1 January | 60,760 | 108,285 |
| Comprehensive income for the period | 15,157 | 57,580 |
| Transactions with shareholders: | ||
| Share issue | 600,000 | - |
| Expenses for share issue | -39,782 | - |
| Purchase of minority shares | - | -5 |
| Paid dividend | - | -105,100 |
| Closing balance | 636,134 | 60,760 |
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| kSEK | 2017 | 2016 | 2017 | 2016 |
| Cash flow from operating activities | ||||
| before changes in working capital | -49,110 | 86,195 | -132,481 | 54,029 |
| Change in working capital | 3,411 | 619,395 | -2,846 | 621,102 |
| Cash flow from operating activities | ||||
| after changes in working capital | -45,699 | 705,590 | -135,327 | 675,131 |
| Cash flow from investing activities | 521 | -1,733 | -2,813 | -2,972 |
| Cash flow from financing activities | 560,218 | -105,100 | 560,218 | -105,100 |
| Cash flow for the period | 515,040 | 598,757 | 422,078 | 567,059 |
| Cash and cash equivalents at beginning | ||||
| of period | 590,677 | 82,477 | 692,530 | 113,831 |
| Exchange rate differences in cash and | ||||
| cash equivalents | 4,650 | 11,296 | -4,241 | 11,640 |
| Cash and cash equivalents at end of | ||||
| period | 1,110,367 | 692,530 | 1,110,367 | 692,530 |
| kSEK | Oct-Dec 2017 |
Oct-Dec 2016 |
Jan-Dec 2017 |
Jan-Dec 2016 |
|---|---|---|---|---|
| Net sales | 51,021 | 94,440 | 140,706 | 105,613 |
| Cost of goods sold | - | -238 | -266 | -238 |
| Gross profit | 51,021 | 94,202 | 140,441 | 105,375 |
| Marketing expenses | -485 | -342 | -1,397 | -1,370 |
| Administrative expenses | -12,969 | -6,856 | -31,521 | -14,544 |
| Research and development costs | -36,839 | -22,084 | -101,583 | -53,665 |
| Other operating income | 10,366 | 32,556 | 19,044 | 39,073 |
| Other operating expenses | 3,637 | -143 | -5,689 | -238 |
| Operating profit | 14,731 | 97,333 | 19,295 | 74,631 |
| Financial income | 905 | -437 | 1,043 | 8 |
| Financial expenses | -340 | -500 | -647 | -503 |
| Profit after financial items | 15,296 | 96,396 | 19,691 | 74,136 |
| Change in tax allocation reserves | -6,141 | -18,800 | -6,141 | -18,800 |
| Profit before tax | 9,155 | 77,596 | 13,550 | 55,336 |
| Tax | -2,110 | -17,295 | -3,183 | -12,420 |
| Profit for the period | 7,046 | 60,301 | 10,367 | 42,916 |
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| kSEK | 2017 | 2016 | 2017 | 2016 |
| Profit for the period | 7,046 | 60,301 | 10,367 | 42,916 |
| Other comprehensive income | - | - | - | - |
| Comprehensive income for the period | 7,046 | 60,301 | 10,367 | 42,916 |
| Dec 31, | Dec 31, | |
|---|---|---|
| kSEK | 2017 | 2016 |
| ASSETS | ||
| Tangible fixed assets | 7,093 | 5,644 |
| Deferred tax assets | 230 | 172 |
| Other financial assets | 2,775 | 2,775 |
| Current assets excluding cash and cash equivalents | 20,119 | 6,955 |
| Cash and cash equivalents | 1,110,269 | 692,430 |
| TOTAL ASSETS | 1,140,484 | 707,976 |
| EQUITY AND LIABILITIES | ||
| Equity | 616,682 | 46,096 |
| Tax allocation reserve | 24,941 | 18,800 |
| Other current liabilities | 12,160 | 19,744 |
| Accrued expenses and deferred income | 486,702 | 623,336 |
| EQUITY AND LIABILITIES | 1,140,484 | 707,976 |
This Full Year Report covers the Swedish Parent Company BioArctic AB, Swedish corporate identity number 556601-2679, and the two fully owned subsidiaries SpineMedical AB, corporate identity number 559003-7080, and LPB Sweden AB, corporate identity number 559035-9112. All the Group's business operations are conducted in the Parent Company.
The Parent Company is a Swedish limited liability company registered in and with its registered office in Stockholm. The head office is located at Warfvinges väg 35, SE-112 51, Stockholm, Sweden.
The BioArctic Group's Full Year Report for the period January – December 2017 was approved by the Board on February 19, 2018.
The consolidated financial statements for BioArctic AB have been prepared in accordance with IFRS (International Financial Reporting Standards) as adopted by the EU, the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's RFR 1 Supplementary Accounting Rules for Groups. The Parent Company's financial statements are presented in accordance with the Swedish Annual Accounts Act and RFR2, Accounting for Legal Entities.
The Full Year Report is presented in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. Disclosures in accordance with IAS 34 are presented both in notes and elsewhere in the Full Year Report.
The guidelines of the European Securities and Markets Authority (ESMA) on alternative performance measures have been applied. This involves disclosure requirements for financial measures that are not defined by IFRS. For performance measures not defined by IFRS, see the Calculations of key figures section.
IFRS 15 Revenue from Contracts with Customers regulates the reporting of revenues and came into force on January 1, 2018. IFRS 15 replaces IAS 18 Revenue and IAS11 Construction Contracts as well as the appropriate SIC and IFRIC. Most of BioArctic's revenues from agreements with customers comprise research collaboration and milestone payments. These are reported under the current rules in accordance with to what extent work has been completed. This reporting of revenues coincides with the reporting of revenues over time under IFRS 15. In exceptional cases BioArctic also receives one-time payments from customers which are then reported when entitlement to payment has been determined. This point in time corresponds with the point in time when performance obligations have been met under IFRS 15. The Group has thus not identified any differences in reporting when transferring to IFRS 15 with the exception of extended disclosure requirements.
IFRS 9 Financial instruments replaces IAS 39 Financial instruments: Recognition and Measurement. IFRS 9 comes into force for financial years commencing on January 1, 2018 or later. BioArctic has elected not to apply this standard in advance. In principle BioArctic always receives payment from agreements with customers in advance. There are thus no bad debt losses. The Group has thus not identified any differences in reporting when transferring to IFRS 9.
IFRS 16 replaces IAS 17 Leases and the appropriate interpretations IFRIC 4, SIC-15 and SIC-27. This standard requires that assets and liabilities attributable to all leasing agreements, with a few exceptions, are recognized in the balance sheet. This reporting is based on the view that an asset is used for a specific period of time and at the same time an obligation arises to pay for this right. The standard is to be applied for financial years commencing on January 1, 2019 or later. BioArctic has elected not to apply the standard in advance. An evaluation of its impact is ongoing.
The accounting principles and calculation methods applied are in all other respects in line with those described in the Annual Report for 2016.
The Group conducts research and development in immunotherapy for degenerative diseases and is also developing an innovative treatment with a combination of a biodegradable medical device and a drug substance (FGF1) for treatment of traumatic Complete Spinal Cord Injury. The Group's business is assessed to comprise one segment as the business is followed at an aggregate level. Thus no separate segment reporting is provided.
The Board of Directors has been identified as the principal executive decision-maker within the Group.
A breakdown of the Group's net sales is shown below:
| kSEK | Oct-Dec 2017 |
Oct-Dec 2016 |
Jan-Dec 2017 |
Jan-Dec 2016 |
|---|---|---|---|---|
| One-time payment | - | 70,400 | - | 70,400 |
| Milestone payment | - | - | - | 7,932 |
| Income from research collaborations | 51,021 | 23,677 | 140,275 | 26,913 |
| Other items | - | 362 | 431 | 368 |
| Net sales | 51,021 | 94,439 | 140,706 | 105,613 |
BioArctic's net sales essentially consist of income from the research collaborations concerning Parkinson's disease with AbbVie and Alzheimer's disease with Eisai.
Under the collaboration agreement with AbbVie, BioArctic received an initial payment of SEK 704 million (USD 80 million). This payment related to compensation for the pre-clinical development work that BioArctic will carry out under the agreement. Of the initial payment, SEK 70.4 million was reported as a one-time payment in 2016. The rest of the payment will be accrued based on the costs incurred up until December 2019. The project is continuously evaluated with the regard to status and remaining costs.
In 2016 SEK 22.7 million was entered as a revenue in addition to the above-mentioned SEK 70.4 million and in the period January – December 2017 SEK 135.5 million was entered as a revenue. The remaining amount to be entered as a revenue is SEK 473.1 million up until December 31, 2019.
The former Board member Mikael Smedeby is a lawyer and co-owner of Advokatfirman Lindahl KB, which provides ongoing business legal advice to BioArctic against compensation in line with market rates. During 2016, Advokatfirman Lindahl invoiced fees amounting to approximately SEK 0.9 million and during the period January – December 2017 to approximately SEK 5.2 million which mainly consisted of costs due to the IPO during the year.
In addition to the compensation described above, salaries and director fees, no significant transactions have taken place between the Group and related parties. All transactions have been in line with market rates.
| 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | |
|---|---|---|---|---|---|---|---|---|
| SEKm | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Income statement | ||||||||
| Net sales | 51.0 | 31.5 | 32.0 | 26.2 | 94.4 | 1.2 | 1.0 | 9.0 |
| Other operating income | 10.4 | 2.8 | 5.2 | 0.7 | 32.6 | 1.1 | 3.2 | 2.1 |
| Operating profit | 14.7 | 0.6 | 2.5 | 1.5 | 97.3 | -10.2 | -11.2 | -1.3 |
| Profit for the period | 11.8 | -0.1 | 2.3 | 1.1 | 75.0 | -7.8 | -8.7 | -0.9 |
| Balance sheet | ||||||||
| Fixed assets | 10.0 | 10.5 | 8.2 | 8.2 | 8.5 | 12.8 | 12.0 | 12.5 |
| Current assets | 20.1 | 9.8 | 8.6 | 13.2 | 7.0 | 8.5 | 6.5 | 3.4 |
| Cash and cash equivalents | 1,110.4 | 590.7 | 622.1 | 650.3 | 692.5 | 82.5 | 93.4 | 104.5 |
| Equity | 636.1 | 64.1 | 64.2 | 61.9 | 60.8 | 90.9 | 98.7 | 107.4 |
| Deferred tax liabilities | 5.5 | 4.1 | 4.1 | 4.1 | 4.1 | - | - | - |
| Current liabilities | 498.9 | 542.7 | 570.5 | 605.7 | 643.1 | 13.0 | 13.2 | 13.0 |
| Cash flow | ||||||||
| From operating activities | -45.7 | -23.6 | -27.6 | -38.4 | 705.6 | -9.8 | -11.3 | -9.4 |
| From investing activities | 0.5 | -2.8 | -0.4 | -0.1 | -1.7 | -1.2 | - | - |
| From financing activities | 560.2 | - | - | - | -105.1 | - | - | - |
| Cash flow for the period | 515.0 | -26.4 | -28.1 | -38.5 | 598.8 | -11.1 | -11.3 | -9.4 |
| Data per share, SEK 1, 2 | ||||||||
| Earnings per share, SEK | 0.16 | 0.00 | 0.04 | 0.02 | 1.19 | -0.12 | -0.14 | -0.01 |
| Equity per share, SEK | 7.22 | 1.02 | 1.02 | 0.98 | 0.96 | 1.44 | 1.56 | 1.70 |
| Cash flow operating activities | -0.60 | -0.37 | -0.44 | -0.61 | 11.19 | -0.16 | -0.18 | -0.15 |
1 There are no potential shares. Thus there is no dilutive effect.
2 The comparative figures have been recalculated as a result of the 15:1 split executed on August 1, 2017.
In this financial report BioArctic reports key financial figures, some of which are not defined by IFRS. The Company's assesses that these key figures are important additional information, since they enable investors, securities analysts, management of the company and other stakeholders to better analyze and evaluate the company's business and financial trends. These key figures should not be analyzed separately or replace key figures that have been calculated in accordance with IFRS. These key figures should not be compared to other key figures with similar names applied by other companies. This is due to the fact that key figures cannot always be defined in the same way and other companies may calculate them in a different way than BioArctic.
The key figures "Net sales", "Result for the period", "Earnings per share" and "Cash flow from operating activities" are defined according to IFRS.
| Key figures | Definition |
|---|---|
| Other income | Other income than net sales |
| Operating profit | Result before financial items |
| Cash flow from operating activities | The period's cash flow from operating activities divided by |
| per share, SEK | the weighted number of shares |
| Equity/assets ratio | Adjusted equity as a percentage of the balance sheet total |
| Return on equity | Net income divided by equity as a percentage |
| Equity per share before and after | Adjusted equity divided by the number of shares at the end of |
| dilution | the period |
The Board and the CEO confirm that this interim report provides a true and fair overview of the Company and the Group's operations, position and earnings and describes the material risks and uncertainly factors faced by the Parent Company and the companies within the Group.
This interim report has not been reviewed by BioArctic's auditors.
Stockholm, Sweden, February 19, 2018
Wenche Rolfsen Ivar Verner
Chairman Deputy Chairman
Hans Ekelund Pär Gellerfors
Board member Board member
Board member Board member CEO
Lars Lannfelt Eugen Steiner Gunilla Osswald
Alzheimer's Disease Composite Score – A cognition scale consisting of parts from three different scales (CDR-SB, ADAS-cog and MMSE) developed by Eisai
A protein in the nervous system, present in Lewy bodies in some structures of the brain in Parkinson's Disease
A 40-42 amino acids long peptide, split from the parent protein APP, amyloid precursor protein. Aβ is the main constituent of the plaques found in the brain of Alzheimer patients
Protein used by the body's immune system to detect and destroy foreign substances
A study where collected data is combined with known facts for a complete conclusion
A measurable indicator of a medical condition
A physiological mechanism in which merged capillary walls in the brain's blood vessels regulate the transport of molecules between the blood and the brain tissue, with the function to protect the brain against viruses and other harmful agents
The central nervous system consists of the brain and the spinal cord
Clinical studies Drug trials performed in human subjects
A complete injury means that the spinal cord is complete severed. In an incomplete injury there are still a few nerve contacts left
A treatment that interferes with the processes of the disease and changes it in a positive way
A drug under development that has not yet gained marketing approval
An antibody in which the sequence has been changed to resemble a human antibody
In clinical trials and other scientific studies, an interim analysis is an analysis of data that is conducted before data collection has been completed
Molecule that binds to the desired target in the body
A medical device that is intended to be totally or partially introduced, surgically or medically, into the human body, or through a medical procedure in a body opening, and intended to remain there after the operation
Financial compensation obtained within the framework of a project or collaboration agreement when a certain specified objective has been achieved
An antibody that can be produced so that all copies are exactly alike
A monomer is the starting molecule in polymerization. The monomers are joined into long molecular chains through the polymerization, resulting a in a polymer with the monomer as the repeating unit
Disease in which the nervous system atrophies
Oligomer A molecular chain consisting of several monomers aggregated
Orphan drugs Drugs for patients with rare and serious disease
A molecule made up of amino acids connected into a short chain
Positron emission tomography, an investigation imaging method
Studies mainly of the safety and tolerability of a drug. Performed on a limited number of healthy human volunteers or patients
Studies of the safety and efficacy of a drug and dose finding. Performed on a limited number of patients
Confirmatory studies of the safety and efficacy of a drug in a clinical setting. Performed on a large number of patients
Pre-clinical studies Studies performed in model systems, i.e. not in humans
A product under development that has not yet gained marketing approval
A molecular chain consisting of several monomers aggregated
Early research is focused on studying and elucidating the underlying molecular disease mechanisms and development of potential drug candidates
This information is information that BioArctic AB (publ) is obliged to disclose pursuant to the EU Market Abuse Regulation. The information was released for public disclosure through the agency of Christina Astrén, IR & Communications Director, at 08:00 a.m. CET on February 20, 2018.
Swedish Corporate Identify No. 556601-2679 Warfvinges väg 35, SE-112 51, Stockholm, Sweden Telephone + 46 (0)8 695 69 30 www.bioarctic.com
This report has been prepared in a Swedish original version and translated into English. In the event of any inconsistency between the two versions. the Swedish language version should have precedence.
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