Annual Report • Feb 20, 2013
Annual Report
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Corporate Identity Number 556707-5048
In December, we announced a strategic deal worth SEK 220m. A syndicate of well-respected investors will acquire a minority share in Karolinska Development's holdings in 13 of its 25 portfolio companies. The deal demonstrates the value that Karolinska Development has created in recent years. The consideration gives the companies comprised by the transaction a total implied value of approximately SEK 1,500m, about twice Karolinska Development's investment in the same portfolio and a premium of 23 percent on the reported fair value on the transaction date. Our financial position has strengthened significantly.
In 2012, Karolinska Development's portfolio companies took several important steps forward. In total, eleven projects in our active portfolio are now in clinical development for disorders where current treatments fall short or are lacking. Pharmanest finalized a Phase I trial with SHACT for pain relief in connection with IUD insertion and launched a clinical Phase II trial during the year. Pergamum passed clinical milestones in all three clinical projects in 2012 and Aprea announced positive Phase I/II data with APR-246 against cancer. After the end of the year, Pergamum also entered into a strategic collaboration with Cadila Pharmaceuticals on an early-stage project where Cadila is financing the entire development through clinical Phase II and where the companies share the global marketing rights.
Our deal flow agreement with Karolinska Institutet Innovations AB, as well as agreements with other leading universities in the Nordic region, gives us the opportunity to evaluate a significant number of medical innovations in this region. In February, we announced that Karolinska Development has started a collaboration with Mayo Clinic in the US. This is the first step in expanding our inflow of new life science innovations from the best research institutions outside the Nordic region as well.
During the year, Karolinska Development worked intensely to push the portfolio companies' projects forward, identify attractive new investments and entered into an important commercial collaboration. As a whole, this improves our ability to build further value by taking development projects forward to the point where we can line up collaborations with pharmaceutical companies or exit portfolio companies.
Torbjörn Bjerke Chief Executive Officer
| Group | 2012 | 2011 | 2012 | 2011 |
|---|---|---|---|---|
| Amounts in SEKm | Oct-Dec | Oct-Dec | Full-year | Full-year |
| Income statement | ||||
| Revenue | 2.6 | 3.4 | 9.9 | 10.5 |
| Profit/loss after tax | 85.8 | -114.4 | -230.2 | -385.7 |
| Earnings per share before and after dilution (SEK) | 1.60 | -2.16 | -4.39 | -8.07 |
| Balance sheet | ||||
| Cash and cash equivalents | 117.0 | 163.3 | ||
| Short-term investments | 174.2 | 457.2 | ||
| Total cash, cash equivalents and short-term investments, Group | 291.2 | 620.6 | ||
| Cash and cash equivalents to be transferred to KDev Investments Group | 59,6 | - | ||
| Total cash, cash equivalents and short-term investments | 350.8 | 525.6 | ||
| Share information | ||||
| Net asset value per share (SEK) (Note 5) | 43.9 | 44.7 | ||
| Share price, last trading day in the reporting period (SEK) | 15.3 | 25.8 | ||
| Portfolio information | ||||
| Investments in portfolio companies (Note 7) | 24.6 | 59.7 | 231.6 | 297.6 |
| Of which investments not affecting cash flow (Note 7) | 4.5 | 8.4 | 77.8 | 94.9 |
| Valuation of total portfolio holdings (Note 2) | 1,827.2 | 1,546.9 |
In December, Karolinska Development announced a strategic deal with Rosetta Capital Limited (Rosetta), an investor in life science. A syndicate managed by Rosetta will acquire a minority share in Karolinska Development's holdings in 13 of its 25 portfolio companies for SEK 220m. The consideration gives KDev Investments' portfolio a total implied value of approximately SEK 1,500m, about twice Karolinska Development's investment in the same portfolio and a premium of 23 percent on the reported fair value on the transaction date.
As part of the transaction, Karolinska Development transferred its holdings in 13 portfolio companies to a new investment company, KDev Investments AB, in February 2013. KDev Investments' portfolio includes ten companies in pharmaceutical development with some early-stage projects and others in clinical phases, as well as three technology companies. Rosetta acquires 7.33 percent of the common shares in KDev Investmentsfor SEK 110m and all of the preference shares (a further 6.83% of the total shares) in the same company for an additional SEK 110m. The conditions for the preference shares include a gradual reduction in the possible return for Rosetta. This places a cap on Rosetta's future return in exchange for certain protection if the return is low.
Pergamum AB reported that the primary end-point was met in the randomized Phase II trial of DPK-060 for treatment of acute external otitis. Data from the trial, which comprised 69 patients, demonstrated that a topical treatment with DPK-060 is safe and well-tolerated. In addition, a complete cure was reported after 10 days in a large percentage of patients treated with DPK-060.
External otitis, also called swimmer's ear, is one of the most common ear, nose and throat infections in outpatient settings. The clinical signs of the condition can range from mild inflammation and discomfort to life-threatening symptoms. DPK-060 is a novel anti-microbial peptide, which is unlikely to evoke antibiotic resistance.
Pergamum AB and Cadila Pharmaceuticals Ltd announced a strategic collaboration to develop a novel treatment for infections with a unique targeting mechanism clearly distinguished from conventional antibiotics.
The two companies will collaborate on the preclinical and clinical development of a novel therapeutic peptide developed by Pergamum AB. Development work will be conducted at Cadila Pharmaceuticals' facilities in Ahmedabad, India. Cadila will be responsible for all costs related to the development of the product up to clinical Phase II and global rights will be shared by the companies.
Karolinska Development and Mayo Clinic entered into an agreement with the aim of identifying commercialization opportunities in Mayo Clinic's life science innovations. Mayo Clinic is one of the finest medical institutions in the world and a globally recognized source of innovation in life sciences and new treatment methods, similar to the Karolinska Institutet and other institutions with which Karolinska Development has cooperation agreements. The collaboration will strengthen the flow of new ideas and projects, while also allowing Karolinska Development to showcase its own innovations for a first-class investor in life science.
In January 2013, Dilaforette announced it had received approval from the regulatory authorities in India to start a Phase II study with sevuparin in patients with severe malaria. Dilaforette and its partner, the Mahidol Oxford Tropical Medicine Research Unit (MORU), plan to include 50 patients in India, where severe malaria remains an important problem. The primary objective of the study is to evaluate safety along several efficacy parameters. The study design has been discussed at a pre-IND meeting with the US Food and Drug Administration (FDA). The first study site is open for enrollment and the first patients are expected in connection with the coming rain season. A separate clinical trial in uncomplicated falciparum malaria is ongoing in Thailand since 2011.
In 2012, several of Karolinska Development's portfolio companies took important steps forward. Three projects advanced into the first clinical development phase and two Phase II trials were initiated. Data from clinical trials were announced for Pergamum's DPK-060 and PXL-01 and Aprea's APR-246. Two new companies were added during the year through investments in GliGene AB and Oss-Q AB, while the holdings in Oncopeptides AB and ProNoxis AB were divested.
At the time this report was published, Karolinska Development's portfolio consisted of 34 projects in various stages. Of the pharmaceutical projects, 15 were in clinical trials.
| PHARMACEUTICALS | Ownership* | Concept development |
Lead discovery |
Lead optimization |
Preclinical development |
Phase I | Phase II | Phase III | Launch |
|---|---|---|---|---|---|---|---|---|---|
| ONCOLOGY | |||||||||
| Axelar AB | 45% | ||||||||
| Aprea AB | 69% | ||||||||
| Akinion Pharmaceuticals AB | 90% | ||||||||
| KDev Oncology AB (GliGene) | 35% | ||||||||
| DERMATOLOGY AND WOUND HEALING | |||||||||
| Pergamum AB (DPK-060, infected eczema) | 62% | ||||||||
| Pergamum AB (DPK-060, external otitis) | 62% | ||||||||
| Pergamum AB (PXL01) | 62% | ||||||||
| Pergamum AB (LL-37) | 62% | ||||||||
| WOMENS's HEALTH | |||||||||
| Dilafor AB | 56% | ||||||||
| Pharmanest AB | 60% | ||||||||
| Umecrine Mood AB | 43% | ||||||||
| INFECTIOUS DISEASE | |||||||||
| Dilaforette AB | 66% | ||||||||
| Biosergen AS | 65% | ||||||||
| CARDIOVASCULAR | |||||||||
| Athera Biotechnologies AB (Annexin A5) | 65% | ||||||||
| Athera Biotechnologies AB (PC-mAb) | 65% | ||||||||
| OPHTHALMOLOGY | |||||||||
| Clanotech AB | 89% | ||||||||
| CNS | |||||||||
| BioChromix Pharma AB | 76% | ||||||||
| Umecrine Cognition AB | 54% | ||||||||
| INFLAMMATION NovaSAID AB |
89% | ||||||||
| TECHNOLOGY | Ownership* | Concept development | Prototype | Development | Product | Launch | |||
| IMPLANTS | |||||||||
| Promimic AB | 31% | ||||||||
| Oss-Q AB | 16% | ||||||||
| DIAGNOSTICS | |||||||||
| Athera Biotechnologies AB (CVDefine®) | 65% | ||||||||
| BioChromix AB | 14% | ||||||||
| PHARMACEUTICAL FORMULATION | |||||||||
| Inhalation Sciences Sweden AB | 75% | ||||||||
| XSpray Microparticles AB | 62% | ||||||||
| Lipidor AB | 46% | ||||||||
| MEDICAL EQUIPMENT NeoDynamics AB (Fourier/AS) |
21% | ||||||||
| NeoDynamics AB (Terapi/PRFA) | 21% | ||||||||
Solid colored area = completed phase *Includes indirect ownership Shaded colored area = ongoing phase
On 21 December 2012, Karolinska Development announced a deal with Rosetta Capital lV LP, whereby Karolinska Development has transferred the holdings in 13 of its portfolio companies to a new private holding company, KDev Investments AB. Karolinska Development will own 92.67% of the common shares in KDev Investments, while 7.33% will be owned by Rosetta Capital IV LP, the company that a syndicate led by Rosetta Capital Limited is investing in. Rosetta is acquiring 7.33% of the common shares in KDev Investments AB for SEK 110m and 6.83% of the preference shares for an additional SEK 93m. In addition, the first SEK 17m of the total cumulative return from KDev Investments' portfolio will accrue to Karolinska Development. The transaction is expected to be completed during the first quarter 2013 whereby Karolinska Development will receive SEK 203m.
The transaction comprises 13 companies representing a selection of development projects in various phases and a variety of areas. Seven of the companies develop pharmaceuticals and have projects in clinical trials: Akinion Pharmaceuticals AB, Aprea AB and Axelar AB, which are active in oncology; Dilafor AB and Umecrine Mood, which are developing treatments in the area of women's health; Dilaforette Holding AB Group, which is developing sevuparin for use against malaria and sickle cell anemia; and Pergamum AB, which is developing Karolinska Development's wound healing and dermatology portfolio. Three companies are involved in pharmaceutical projects in or prior to the preclinical phase: Biosergen AS (systemic fungal infections), Clanotech AB (ophthalmology) and NovaSAID AB (inflammatory disorders). Another three companies conduct development of technology products: Inhalation Sciences in Sweden AB, NeoDynamics AB and Promimic AB.
Karolinska Development will be the majority owner of KDev Investments AB and management of the joint venture will be governed by a shareholders' agreement between the parties. The parties will cooperatively manage the holdings in KDev Investments. The transaction gives Karolinska Development access to the expertise and experience in the life science area that Rosetta's management team has gained through many years of developing and commercializing companies and products. Board resources will be distributed as needed to the companies to provide expertise and experience in specific medical areas and development phases. The transaction does not change the operations of any of the companies involved. Karolinska Development and Rosetta have both committed to further investments in the portfolio in line with the plans Karolinska Development had for these portfolio companies before the deal was announced.
The consideration paid implies a value of KDev Investments' portfolio of approximately SEK 1,500m, corresponding to a premium of 23% to the reported fair value as of 30 September 2012. Including the consideration, Karolinska Development's cash, cash equivalents and short-term investments will amount to approximately SEK 440m. As a result of the transaction, KDev Investments and its portfolio companies will be classified as a joint venture and, when the deal closes, will be recognized at fair value. Of the 13 companies included in KDev Investments, several are subsidiaries at the end of the reporting period.
Rosetta's preference shares will have priority to future profit distributions and other returns as well as in liquidation, as outlined below. Subsequent allocations will be divided between the common shareholders, with 92.67% to Karolinska Development and 7.33% to Rosetta.
Consolidated revenue during the year amounted to SEK 9.9m, compared with SEK 10.5m in the previous year. During the fourth quarter, consolidated revenue amounted to SEK 2.6m, compared with SEK 3.4m in the previous year.
During the year, the Group's operating loss amounted to SEK -253.8m (-400.7), a change of SEK 146.9m compared with the previous year. The loss was mainly due to the portion of the change in fair value affecting income, which amounted to SEK -86.8m (-243.8) during the year, as well as increased development costs in subsidiaries. The change in fair value was affected when Pergamum announced Phase II data from PXL-01 that unfortunately did not meet the primary end point, which has also affected the valuation of the reported total portfolio holding negatively. As indicated in Note 2, the value of companies reported as subsidiaries appreciated by SEK 208.2m (67.8). These changes are not recognized in the consolidated income statement and statement of financial position, since the subsidiaries are consolidated and not measured at fair value.
During the year, a share swap was completed with Industrifonden through which Karolinska Development exchanged its shares in Oncopeptides AB for Industrifonden's shares in Aprea AB. The share swap gave Karolinska Development a controlling interest in Aprea AB, which has therefore been consolidated as a subsidiary as of the closing date, 27 August 2012. The transaction has had no effect on the consolidated operating results other than Aprea´s operational costs post closing (Note 4).
The Group's loss before tax for the year amounted to SEK -276.0m (-405.7), of which Parent Company costs SEK -55.8m (-61.8), fair value change SEK -86.8m (-243.8), subsidiary costs SEK -111.2m (-95.1) and financial net SEK -22.2m (-5.0).
The Group's loss before tax for the fourth quarter amounted to SEK 49.9m (-123.3), a change of SEK 173.2m year-over-year. The change was mainly due to the portion of the change in fair value affecting income, which amounted to SEK 102.1m (-76.0) during the fourth quarter. As indicated in Note 2, the value of companies reported as subsidiaries appreciated by SEK 164.9m (6.3) during the fourth quarter.
The Group's profit before tax during the fourth quarter amounted to SEK 50.7m (-119.1).
The Group's net profit for the fourth quarter amounted to SEK 85.8m (-114.4) and was affected positively by SEK 35.1m by deferred tax revenue attributable to the upcoming reduction in the Swedish company tax rate.
The Group's investments during the year amounted to SEK 231.6m (297.6), of which SEK 153.8m (202.7) affected cash flow.
The largest investments (SEKm) during the year were in Aprea AB at SEK 72.6m through the share swap with Industrifonden (Note 4), Axelar AB at SEK 25.0m, Athera Biotechnologies AB at SEK 22.6m, Dilaforette Holding AB at SEK 17.3m (of which SEK 17.3m in Dilaforette AB) and SEK 15.0m in Akinion Pharmaceuticals AB.
The Group's investments during the fourth quarter amounted to SEK 24.6m (59.7).
The largest investments (SEKm) during the fourth quarter were in Dilaforette Holding AB at SEK 7.3m (of which SEK 7.3m in Dilaforette AB), Dilafor AB at SEK 4.5m and Athera Biotechnologies AB at SEK 3.7m.
As of December 31, 2012 assets and liabilities attributable to KDev Investments Group are recognized in accordance with the accounting standard IFRS 5 as available-for-sale holdings (Note 9).
The Group's equity to total assets ratio was 91 (93) percent on 31 December 2012 and equity amounted to SEK 2,026.2m (2,173.9).
Cash, cash equivalents and short-term investments in the Group amounted to SEK 291.2m (620.6), in addition to SEK 59.6m in cash and cash equivalents reclassified as available-for-sale assets.
Total assets amounted to SEK 2,215.0m (2,345.9).
The Parent Company's revenue during the year amounted to SEK 4.0m (2.5).
During the fourth quarter, the Parent Company's revenue amounted to SEK 1.3m (0.7).
During the year the Parent Company's operating loss amounted to SEK -132.6m (-181.6), a change of SEK 49.0m compared with the previous year. The operating loss for the year includes impairment losses on the holdings in Pergamum AB (SEK -106.5m), KDev Exploratory AB (formerly Actar AB) (SEK -9.2m), Limone AB (SEK -4.3m) and Avaris AB (SEK -0.1m). The impairment related to Pergamum AB was recognized after the results of the randomized Phase II clinical trial of PXL-01 for prevention of post-surgical adhesions proved inconclusive.
During the year, a share swap with Industrifonden was completed through which Karolinska Development exchanged its shares in Oncopeptides AB for Industrifonden's shares in Aprea AB. The transaction has positively affected the operating result by SEK 49.7m (Note 8). Furthermore, the shareholding in the portfolio company ProNoxis AB has been divested with a negative effect on the operating result of SEK -6.5m.
The Parent Company's operating loss for the year amounted to SEK -152.7m (-187.7).
During the fourth quarter, the Parent Company's operating profit amounted to SEK 0.1m (-17.5), a change of SEK 17.6m compared with the same period in 2011. The fourth quarter's operating profit includes a reversal of impairment losses on the holdings in Pergamum AB (SEK 18.9m) and Avaris AB (SEK 0.4m) as well as impairment losses on KDev Exploratory AB (formerly Actar AB) (SEK - 3.7m) and Limone AB (SEK -0.7m).
The Parent Company's net profit during the fourth quarter amounted to SEK 1.8m (-14.0).
The Parent Company invested a total of SEK 81.9m (83.7) in subsidiaries during the year. The largest investments (SEKm) were in Axelar AB at SEK 25.0m, Akinion Pharmaceuticals AB at SEK 15.0m, KDev Exploratory AB (formerly Actar AB) at SEK 13.0m and Clanotech AB at SEK 9.5m.
The Parent Company invested SEK 148.2m (210.0) in associated companies and joint ventures during the year. The largest investments (SEKm) were in Aprea AB at SEK 72.6m through the share swap with Industrifonden (Note 4), Athera Biotechnologies AB at SEK 22.6m and Dilaforette Holding AB at SEK 17.3m (of which SEK 17.3m in Dilaforette AB).
The Parent Company invested SEK 1.5m (3.9) in other long-term securities holdings during the year.
During the fourth quarter, the Parent Company invested a total of SEK 24.6m (59.7). The largest investments (SEKm) were in Dilaforette Holding AB at SEK 7.3m (of which SEK 7.3m in Dilaforette AB), Dilafor AB at SEK 4.5m and Athera Biotechnologies AB at SEK 3.7m.
The Board of Directors proposes that no dividend be paid to the shareholders for the financial year 2012.
Companies active in pharmaceutical development and medical technology at an early phase are, by their very nature, difficult to value, as lead times are very long and the development risks are high. Due to the uncertainty in these assessments, the estimated value of the portfolio may deviate substantially from the future generated value.
Risks and uncertainties are primarily associated with investments in portfolio companies and the development of projects in these companies. The operations of the portfolio companies consist of the development of early stage pharmaceutical projects. By their very nature, such operations are distinguished by very high risk and great uncertainty in terms of results.
Financial risks consist of investments in portfolio companies as well as risks in the management of liquid assets.
Future investments in new and current portfolio companies will require capital. There is no guarantee that such capital can be obtained on favorable terms or that such capital can be obtained at all.
For a description of other risks and uncertainties, refer to the annual report 2011
The CEO hereby certifies that the year-end report gives a true and fair view of the operations, financial position and results of operations of the Parent Company and the Group and describes the material risks and uncertainties faced by the Parent Company and the companies included in the Group.
Solna, 20 February 2013
Torbjörn Bjerke
CEO
| April week 15, 2013 |
|---|
| May 10, 2013 |
| May 14, 2013 |
| August 22, 2013 |
| November 21, 2013 |
Karolinska Development is required to make public the information in this year-end report in accordance with the Securities Market Act. The information was released for publication on 20 February 2013.
This year-end report, together with additional information, is available on Karolinska Development's website, www.karolinskadevelopment.com
For further information, please contact: Torbjörn Bjerke, CEO +46 (0) 72 744 41 23
Robin Wright, CFO +44 7720 300 025
See also www.karolinskadevelopment.com
Karolinska Development AB (publ) Fogdevreten 2A SE-171 65 Solna, Sweden
This year-end report has not been reviewed by the company's auditors.
Note: This report is a translation of the Swedish interim report. In case of any discrepancies, the Swedish version shall prevail.
| 2012 | 2011 | 2012 | 2011 | ||
|---|---|---|---|---|---|
| Amounts in SEK 000 | Note | Oct-Dec | Oct-Dec | Full-year | Full-year |
| Revenue | 2,572 | 3,364 | 9,943 | 10,479 | |
| Other external expenses | -34,966 | -33,194 | -108,980 | -104,056 | |
| Personnel costs | -18,597 | -16,391 | -62,818 | -59,871 | |
| Depreciation and amortization of tangible and intangible non-current assets |
-1,245 | -1,040 | -5,163 | -3,431 | |
| Change in fair value of shares in joint ventures and associated companies |
2 | 101,783 | -72,432 | -87,694 | -236,621 |
| Change in fair value of other long-term securities holdings |
2 | 319 | -3,598 | 902 | -7,175 |
| Operating profit/loss | 49,866 | -123,291 | -253,810 | -400,675 | |
| Financial net | 3 | 835 | 4,149 | -22,161 | -4,985 |
| Profit/loss before tax | 2 | 50,701 | -119,142 | -275,971 | -405,660 |
| Deferred taxes | 35,051 | 4,758 | 45,807 | 19,987 | |
| Current taxes | 0 | 0 | 0 | 0 | |
| NET PROFIT/LOSS FOR THE PERIOD | 85,752 | -114,384 | -230,164 | -385,673 | |
| Attributable to: | |||||
| Parent Company's shareholders | 77,840 | -104,917 | -212,852 | -354,147 | |
| Non-controlling interests* | 7,912 | -9,467 | -17,312 | -31,526 | |
| TOTAL | 85,752 | -114,384 | -230,164 | -385,673 |
*Non-controlling interests is a term defined by IFRS 3 and has a similar meaning to the term previously used, which was minority interests
| 2012 | 2011 | 2012 | 2011 | ||
|---|---|---|---|---|---|
| Amounts in SEK 000 | Note | Oct-Dec | Oct-Dec | Full-year | Full-year |
| Earnings per share attributable to Parent Company's shareholders, weighted average, before and after dilution |
1.60 | -2.16 | -4.39 | -8.07 | |
| Number of shares, weighted average | 5 | 48,524,869 | 48,531,417 | 48,529,767 | 43,908,951 |
| 2012 | 2011 | 2012 | 2011 | |
|---|---|---|---|---|
| Amounts in SEK 000 Note |
Oct-Dec | Oct-Dec | Full-year | Full-year |
| Net profit/loss for the period | 85,752 | -114,384 | -230,164 | -385,673 |
| Total comprehensive income for the period | 85,752 | -114,384 | -230,164 | -385,673 |
| Attributable to: | ||||
| Parent Company's shareholders | 77,840 | -104,917 | -212,852 | -354,147 |
| Non-controlling interests | 7,912 | -9,467 | -17,312 | -31,526 |
| TOTAL | 85,752 | -114,384 | -230,164 | -385,673 |
| Amounts in SEK 000 | Note | 31 Dec 2012 | 31 Dec 2011 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Intangible non-current assets | 9,864 | 702,957 | |
| Tangible non-current assets | 4,985 | 1,663 | |
| Shares in joint ventures and associated companies | 2,4 | 219,173 | 980,276 |
| Other long-term securities holdings | 2,4 | 26,949 | 24,587 |
| Loans receivable joint ventures and associated companies | 12,856 | 3,675 | |
| Other financial assets | 4 | 8,907 | 0 |
| Total non-current assets | 282,734 | 1,713,158 | |
| Current assets | |||
| Accounts receivable | 513 | 1,462 | |
| Other short-term receivables | 3,955 | 8,757 | |
| Prepaid expenses and accrued income | 4,578 | 1,886 | |
| Short-term investments | 174,160 | 457,249 | |
| Cash and cash equivalents | 117,033 | 163,347 | |
| Total current assets | 301,255 | 632,701 | |
| Assets to be transferred to KDev Investments Group | 9 | 1,632,025 | 0 |
| TOTAL ASSETS | 2,214,998 | 2,345,859 | |
| Equity and liabilities | |||
| Equity | |||
| Share capital | 5 | 24,266 | 24,266 |
| Share premium | 1,768,179 | 1,768,179 | |
| Retained earnings including current period result | -122,547 | 86,442 | |
| Equity attributable to Parent Company's shareholders | 1,669,898 | 1,878,887 | |
| Non-controlling interests* | 354,294 | 295,041 | |
| Total equity | 2,024,192 | 2,173,928 | |
| Long-term liabilities | |||
| Deferred taxes | 0 | 143,586 | |
| Interest-bearing liabilities | 0 | 2,000 | |
| Other financial liabilities | 4 | 10,889 | 0 |
| Total long-term liabilities | 10,889 | 145,586 | |
| Current liabilities | |||
| Accounts payable | 4,215 | 9,563 | |
| Other short-term liabilities | 2,775 | 2,796 | |
| Accrued expenses and prepaid income | 8,166 | 13,986 | |
| Total current liabilities | 16,172 | 26,345 | |
| Liabilities attributable to assets to be transferred to KDev Investments | |||
| Group | 9 | 164,761 | 0 |
| Total liabilities | 191,822 | 171,931 | |
| TOTAL EQUITY AND LIABILITIES | 2,214,998 | 2,345,859 |
*Non-controlling interests is a term defined by IFRS 3 and has a similar meaning to the term previously used, which was minority interests.
| Equity attributable to Parent Company's | |||||||
|---|---|---|---|---|---|---|---|
| shareholders | |||||||
| Retained | |||||||
| earnings | |||||||
| incl. | Non | ||||||
| Share | current | controlling | Total | ||||
| Amounts in SEK 000 | Note | Share capital | premium | year result | Total | interests | equity |
| Opening equity at 1 Jan 2012 | 24,266 | 1,768,179 | 86,442 | 1,878,887 | 295,041 | 2,173,928 | |
| Net loss for the year | -212,852 | -212,852 | -17,312 | -230,164 | |||
| Total comprehensive income for the year | 0 | 0 | -212,852 | -212,852 | -17,312 | -230,164 | |
| Business combinations | 4 | 0 | 78,435 | 78,435 | |||
| Change in non-controlling interests | 6,106 | 6,106 | -1,870 | 4,236 | |||
| Share repurchase | -2,243 | -2,243 | 0 | -2,243 | |||
| Closing equity at 31 Dec 2012 | 5 | 24,266 | 1,768,179 | -122,547 | 1,669,898 | 354,294 | 2,024,192 |
| Opening equity at 1 Jan 2011 | 16,666 | 1,212,611 | 454,484 | 1,683,761 | 33,414 | 1,717,175 | |
| Net loss for the year | -354,147 | -354,147 | -31,526 | -385,673 | |||
| Total comprehensive income for the year | 0 | 0 | -354,147 | -354,147 | -31,526 | -385,673 | |
| Business combinations | 0 | 222,834 | 222,834 | ||||
| Change in non-controlling interests | -13,895 | -13,895 | 70,319 | 56,424 | |||
| New share issue | 7,600 | 600,400 | 608,000 | 608,000 | |||
| Issue costs | -44,949 | -44,949 | -44,949 | ||||
| Warrants | 117 | 117 | 117 | ||||
| Closing equity at 31 Dec 2011 | 5 | 24,266 | 1,768,179 | 86,442 | 1,878,887 | 295,041 | 2,173,928 |
| 2012 | 2011 | ||
|---|---|---|---|
| Amounts in SEK 000 | Note | Full-year | Full-year |
| Operating activities | |||
| Operating loss | -253,810 | -400,675 | |
| Adjustments for depreciation, amortization and impairment losses | 5,163 | 3,431 | |
| Adjustments for changes in fair value | 2 | 86,792 | 243,796 |
| Realized changes in value of short-term investments | 9,868 | 6,435 | |
| Interest paid | -56 | -36 | |
| Interest received | 3,345 | 3,302 | |
| Cash flow from operating activities before changes in working capital |
-148,698 | -143,747 | |
| Cash flow from changes in working capital | |||
| Increase (-)/Decrease (+) in operating receivables | -2,516 | 6,223 | |
| Increase (+)/Decrease (-) in operating liabilities | -1,431 | 4,087 | |
| Cash flow from operating activities | -152,645 | -133,437 | |
| Investing activities | |||
| Investments in intangible non-current assets | -1,963 | -2,546 | |
| Investments in tangible non-current assets | -5,233 | -288 | |
| Acquired liquid assets in subsidiaries | 4 | 5,363 | 12,878 |
| Investments in shares in joint ventures and associated companies | 7 | -70,564 | -115,077 |
| Investments in other long-term securities | 7 | -1,460 | -3,915 |
| Change in short-term investments | 278,555 | -317,040 | |
| Sale of shares in joint ventures and associated companies | 3,217 | 24,833 | |
| Sale of other long-term securities | 0 | 540 | |
| Loans provided to associated companies | -43,467 | -29,805 | |
| Cash flow from investing activities | 164,448 | -430,420 | |
| Financing activities | |||
| Non-controlling interests' share of subsidiary issue | 4,137 | 56,711 | |
| New share issue | 0 | 608,000 | |
| Issue costs | 0 | -44,949 | |
| Warrants | 0 | 117 | |
| Amortization of interest-bearing liabilities | -425 | 0 | |
| Share repurchase | -2,243 | 0 | |
| Cash flow from financing activities | 1,469 | 619,879 | |
| Cash flow for the year | 13,272 | 56,022 | |
| Cash and cash equivalents at beginning of year | 163,347 | 107,325 | |
| Cash and cash equivalents to be transferred to KDev Investments Group | 9 | -59,586 | 0 |
| CASH AND CASH EQUIVALENTS AT YEAR-END | 117,033 | 163,347 |
Supplemental disclosure
| CASH AND CASH EQUIVALENTS AT YEAR-END | 117,033 | 163,347 |
|---|---|---|
| Cash and cash equivalents to be transferred to KDev Investments Group | 59,586 | 0 |
| Short-term investments, market value on closing date | 174,160 | 457,249 |
| CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS AT YEAR-END | 350,779 | 620,596 |
| 2012 | 2011 | 2012 | 2011 | ||
|---|---|---|---|---|---|
| Amounts in SEK 000 Note |
Oct-Dec | Oct-Dec | Full-year | Full-year | |
| Net sales | 1,285 | 660 | 3,986 | 2,467 | |
| Revenue | 1,285 | 660 | 3,986 | 2,467 | |
| Other external expenses | -6,707 | -7,416 | -28,156 | -32,174 | |
| Personnel costs | -9,382 | -8,971 | -31,650 | -32,066 | |
| Depreciation of tangible non-current assets | -2 | -17 | -6 | -67 | |
| Impairment losses on shares in subsidiaries, joint ventures, associated companies and other long-term |
|||||
| securities holdings | 14,888 | -8,023 | -120,078 | -125,961 | |
| Result from sale of portfolio companies | 8 | 0 | 6,239 | 43,269 | 6,239 |
| Operating profit/loss | 82 | -17,528 | -132,635 | -181,562 | |
| Financial net | 3 | 1,762 | 3,501 | -20,076 | -6,183 |
| NET PROFIT/LOSS FOR THE PERIOD | 1,844 | -14,027 | -152,711 | -187,745 |
| 2012 | 2011 | 2012 | 2011 | |
|---|---|---|---|---|
| Amounts in SEK 000 Note |
Oct-Dec | Oct-Dec | Full-year | Full-year |
| Net profit/loss for the period | 1,844 | -14,027 | -152,711 | -187,745 |
| Total comprehensive income for the period | 1,844 | -14,027 | -152,711 | -187,745 |
| Attributable to: | ||||
| Parent Company's shareholders | 1,844 | -14,027 | -152,711 | -187,745 |
| TOTAL | 1,844 | -14,027 | -152,711 | -187,745 |
| Amounts in SEK 000 Note |
31 Dec 2012 | 31 Dec 2011 |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Tangible non-current assets | 9 | 42 |
| Shares in subsidiaries, joint ventures, associated companies and other | ||
| long-term securities holdings 4 |
962,243 | 879,819 |
| Loans receivable joint ventures and associated companies | 12,856 | 3,675 |
| Other financial assets | 2,623 | 2,080 |
| Total non-current assets | 977,731 | 885,616 |
| Current assets | ||
| Accounts receivable | 409 | 49 |
| Group receivables | 260 | 74 |
| Other receivables | 2,476 | 5,766 |
| Prepaid expenses and accrued income | 2,463 | 881 |
| Short-term investments | 174,160 | 457,249 |
| Cash and cash equivalents | 108,680 | 68,319 |
| Total current assets | 288,448 | 532,338 |
| TOTAL ASSETS | 1,266,179 | 1,417,954 |
| Equity and liabilities | ||
| Equity | ||
| Restricted equity | ||
| Share capital 5 |
24,266 | 24,266 |
| Unrestricted equity | ||
| Share premium reserve | 1,778,253 | 1,778,253 |
| Retained earnings | -397,269 | -207,281 |
| Net loss for the year | -152,711 | -187,745 |
| Total equity | 1,252,539 | 1,407,493 |
| Long-term liabilities | ||
| Pension obligations | 2,623 | 2,080 |
| Total long-term liabilities | 2,623 | 2,080 |
| Current liabilities | ||
| Accounts payable | 2,510 | 807 |
| Group liabilities | 474 | 0 |
| Other current liabilities | 1,512 | 1,530 |
| Accrued expenses and deferred income | 6,521 | 6,044 |
| Total current liabilities | 11,017 | 8,381 |
| Total liabilities | 13,640 | 10,461 |
| TOTAL EQUITY AND LIABILITIES | 1,266,179 | 1,417,954 |
| Amounts in SEK 000 | Note | 31 Dec 2012 | 31 Dec 2011 |
|---|---|---|---|
| Pledged assets | 6 | 2,623 | 2,080 |
| Contingent liabilities | 6 | 1,200 | 900 |
| Total | 3,823 | 2,980 |
| Restricted equity | Unrestricted equity | |||||
|---|---|---|---|---|---|---|
| Share | ||||||
| premium | Retained | Net loss for | ||||
| Amounts in SEK 000 | Note | Share capital | reserve | earnings | the periodl | Total equity |
| Opening equity at 1 Jan 2012 | 24,266 | 1,778,253 | -207,281 | -187,745 | 1,407,493 | |
| Appropriation of loss | -187,745 | 187,745 | 0 | |||
| Net loss for the year | -152,711 | -152,711 | ||||
| Total | 24,266 | 1,778,253 | -395,026 | -152,711 | 1,254,782 | |
| Share repurchase | -2,243 | -2,243 | ||||
| Closing equity at 31 Dec 2012 | 5 | 24,266 | 1,778,253 | -397,269 | -152,711 | 1,252,539 |
| Opening equity at 1 Jan 2011 | 16,666 | 1,222,685 | -95,932 | -111,349 | 1,032,070 | |
| Appropriation of loss | -111,349 | 111,349 | 0 | |||
| Net loss for the year | -187,745 | -187,745 | ||||
| Total | 16,666 | 1,222,685 | -207,281 | -187,745 | 844,325 | |
| New share issue | 7,600 | 600,400 | 608,000 | |||
| Issue costs | -44,949 | -44,949 | ||||
| Warrants | 117 | 117 | ||||
| Closing equity at 31 Dec 2011 | 5 | 24,266 | 1,778,253 | -207,281 | -187,745 | 1,407,493 |
This report has been prepared in accordance with the International Accounting Standard (IAS) 34 Interim Financial Reporting and the Annual Accounts Act. The accounting principles applied to the Group and the Parent Company correspond, unless otherwise stated below, to the accounting principles and valuation methods applied in the preparation of the previous annual report.
New or revised IFRS standards and interpretations by IFRIC have had no impact on the Group or, to the extent that these recommendations are applied to legal entities, on the Parent Company's income or financial position.
Net asset value per share: Estimated fair value of the total portfolio, cash and cash equivalents, and financial assets less interestbearing liabilities in relation to the number of shares outstanding on the closing date.
First In Class: The first approved medicine with a defined mechanism for a specific target or a specific disease.
Portfolio companies: Companies owned fully or in part by Karolinska Development (subsidiaries, joint ventures, associated companies and other long-term securities holdings) which are active in pharmaceuticals, medtech, theranostics and formulation technology.
Fair value: The NASDAQ OMX regulations for issuers require companies listed on NASDAQ OMX to apply the International Financial Reporting Standards, IFRS, in their consolidated financial statements. The application of the standards allows groups of an investment company nature to apply so-called fair value in the calculation of the carrying amount of certain assets. These calculations are made on the basis of established principles and are not included in the opening accounts of the Group's legal entity, nor do they affect cash flows.
Fair value is estimated according to the International Private Equity and Venture Capital Valuation Guidelines. According to these guidelines, fair value can be calculated using different methods, depending on which is considered to provide the best estimate of market value in each case. For Karolinska Development, this means that the fair value of many portfolio companies is determined using a model to calculate the value of discounted and risk-adjusted cash flows. In other cases, Karolinska Development's total investment is used as the best estimation of fair value. In one other case, the valuation at the time of the last capital contribution is used.
Interim period: The period from the beginning of the financial year through the closing date.
Reporting period: Current quarter.
The Board of Directors is the function that determines the allocation of resources to investments in portfolio companies and to the Parent Company. The Board of Directors monitors each investment at the project level as well as the Parent Company's results and financial position.
Karolinska Development's investments are primarily steered to companies that yield the best returns. Regardless of a project's maturity, therapeutic area and whether the company is active within pharmaceuticals or medical technology, each company's projects are evaluated by Karolinska Development in the same manner, because of which Karolinska Development has aggregated all the portfolio companies into a single reportable segment.
Karolinska Development's measure of profit is the aggregate change in the fair value of its shares in the portfolio companies, including those consolidated as subsidiaries. The Board of Directors and management monitor the investments based on changes in their fair value independently of the company's level of influence. Consequently, the Board of Directors and management monitor subsidiaries, associated companies, joint ventures and other holdings based on changes in their fair value and not on their historical acquisition costs as subsidiaries recognized in the consolidated financial statements. The accounting principles applied in the internal reporting otherwise correspond to the Group's accounting principles as described in Note 1.
| Profit/loss from change in fair value of portfolio companies |
||||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Amounts in SEK 000 | Oct-Dec | Oct-Dec | Full-year | Full-year |
| Subsidiaries | ||||
| Change in fair value | 164,874 | 6,253 | 208,201 | 67,819 |
| Joint ventures and associated companies | ||||
| Change in fair value | 82,508 | -72,432 | 18,847 | -118,789 |
| Impairment losses¹ | 19,275 | 0 | -106,541 | -117,832 |
| Other long-term securities holdings | ||||
| Change in fair value | 319 | -1,098 | 902 | -4,675 |
| Impairment losses¹ | 0 | -2,500 | 0 | -2,500 |
| Total change in fair value of total portfolio holdings | 266,976 | -69,777 | 121,409 | -175,977 |
| Group eliminations | ||||
| Less change in fair value of subsidiaries | -164,874 | -6,253 | -208,201 | -67,819 |
| Net result from changes in fair value | 102,102 | -76,030 | -86,792 | -243,796 |
| Consolidated revenue and other expenses (including financial net) |
-51,401 | -43,112 | -189,179 | -161,864 |
| Consolidated profit/loss before tax | 50,701 | -119,142 | -275,971 | -405,660 |
¹In the Group's internal follow-up the change in the value of discontinued projects is recognized as impairments
The aggregate result from changes in the fair value of the portfolio companies amounted to SEK 121.4m (-176.0) during the year, which includes a positive change in the fair value of subsidiaries of SEK 208.2m (67.8). The change in the fair value of subsidiaries is not recognized in the consolidated income statement or statement of financial position, since the subsidiaries are consolidated and therefore are not measured at fair value. The Group's reported result from changes in the fair value of joint ventures, associated companies and other long-term securities holdings amounted to SEK -86.8m (-243.8).
The aggregate result from changes in the fair value of the portfolio companies amounted to SEK 267.0m (-69.8) during the fourth quarter, which includes a positive change in the fair value of subsidiaries of SEK 164.9m (6.3). The Group's reported result from changes in the fair value of joint ventures, associated companies and other long-term securities holdings amounted to SEK 102.1m (- 76.0). During the fourth quarter, impairments of SEK 18.9m related to Pergamum and SEK 0.4m related to Avaris were reversed.
| Fair value of portfolio | ||
|---|---|---|
| companies | ||
| 31 Dec | 31 Dec | |
| Amounts in SEK 000 | 2012 | 2011 |
| Fair value of total portfolio holdings | ||
| Subsidiaries | 1,010,663 | 542,001 |
| Joint ventures and associated companies | 789,578 | 980,276 |
| Other long-term securities holdings | 26,949 | 24,587 |
| Total fair value of total portfolio holdings | 1,827,190 | 1,546,864 |
| Less fair value in subsidiaries | -1,010,663 | -542,001 |
| Less fair value of joint ventures and associated companies to be transferred to KDev Investments Group | -570,405 | 0 |
| Group | 246,122 | 1,004,863 |
| Joint ventures & associated |
Other long term |
Total portfolio |
||
|---|---|---|---|---|
| Amounts in SEK 000 | Subsidiaries | companies | securities | holdings |
| Opening balance at 1 Jan 2011 | 209,108 | 1,220,791 | 24,761 | 1,454,660 |
| Investments (Note 7) | 83,711 | 209,955 | 3,915 | 297,581 |
| Reclassifications(Note 4) | 182,173 | -185,799 | 3,626 | 0 |
| Sale of shares | -810 | -28,050 | -540 | -29,400 |
| Changes in fair value and impairment losses | 67,819 | -236,621 | -7,175 | -175,977 |
| Closing balance at 31 Dec 2011 | 542,001 | 980,276 | 24,587 | 1,546,864 |
| Opening balance at 1 Jan 2012 | 542,001 | 980,276 | 24,587 | 1,546,864 |
| Investments (Note 7) | 81,949 | 148,189 | 1,460 | 231,598 |
| Reclassifications(Note 4) | 178,512 | -178,512 | 0 | 0 |
| Sale of shares | 0 | -72,681¹ | 0 | -72,681 |
| Changes in fair value and impairment losses | 208,201 | -87,694 | 902 | 121,409 |
| Closing balance at 31 Dec 2012 | 1,010,663 | 789,578 | 26,949 | 1,827,190 |
¹Of which SEK 72,636 thousand relates to Oncopeptides AB (Note 4)
| 31 Dec | 31 Dec | |
|---|---|---|
| Amounts in SEK 000 | 2012 | 2011 |
| Aggregate fair value of total portfolio holdings | 1,827,190 | 1,546,864 |
| Less fair value of subsidiaries | -1,010,663 | -542,001 |
| Other consolidated assets | 1,398,471 | 1,340,996 |
| Total consolidated assets | 2,214,998 | 2,345,859 |
| Group | |||||
|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | ||
| Amounts in SEK 000 | Oct-Dec | Oct-Dec | Full-year | Full-year | |
| Interest income | 1,941 | 1,275 | 5,827 | 6,247 | |
| Interest expenses | -31 | -12 | -57 | -36 | |
| Change in value of short-term investments | 798 | 5,517 | 7,334 | 10,036 | |
| Exchange rate gains and losses | 794 | 99 | -1,307 | -2 | |
| Revaluation of financial liability related to Aprea (Note 4) | -1,982 | 0 | -1,982 | 0 | |
| Impairment of loans receivable from joint ventures and | |||||
| associated companies | -685 | -2,730 | -31,976¹ | -21,230 | |
| Financial net | 835 | 4,149 | -22,161 | -4,985 |
¹ Refers to write-down of loan receivables from Pergamum
| Parent Company | ||||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Amounts in SEK 000 | Oct-Dec | Oct-Dec | Full-year | Full-year |
| Interest income | 1,454 | 686 | 4,624 | 5,017 |
| Interest expenses | 0 | -2 | -4 | -6 |
| Change in value of short-term investments | 936 | 5,517 | 7,334 | 10,036 |
| Exchange rate gains and losses | 57 | 30 | -54 | 0 |
| Impairment of loans receivable from joint ventures and associated companies |
-685 | -2,730 | -31,976¹ | -21,230 |
| Financial net | 1,762 | 3,501 | -20,076 | -6,183 |
¹ Refers to write-down of loan receivables from Pergamum
| 31 Dec 2012 31 Dec 2011 Subsidiaries Akinion Pharmaceuticals AB³ 90.32 88.09 Aprea AB², ³ 69.43 - Aprea Personal AB (dormant)³ 69.43 - Avaris AB⁴ 94.87 - Axelar AB³ 45.29 40.03 Clanotech AB³ 88.85 86.94 HBV Theranostica AB (dormant) 100.00 - Inhalation Sciences Sweden AB³ 74.72 72.11 KCIF Fund Management AB 37.50 37.50 KD Incentive AB 100.00 100.00 KDev Exploratory AB (formerly Actar AB) 100.00 100.00 KDev Investments AB (formerly Daffodil AB) 100.00 - KDev Oncology AB 100.00 100.00 GliGene AB 34.65 10,13 Limone AB 100.00 100.00 NovaSAID AB³ 88.91 88.91 Pharmanest AB 60.24 56.53 Joint ventures Aprea AB² - 41.12 Athera Biotechnologies AB 65.02 62.19 Avaris AB⁴ - 68.40 BioChromix Pharma AB 76.47 68.77 Bioneris AB (in liquidation) 26.31 26.31 Biosergen AS³ 60.26 60.26 Dilafor AB³ 55.86 54.76 Dilaforette Holding AB³ 66.34 57.96 Dilaforette AB³ 66.34 57.96 HBV Theranostica AB (dormant) - 72.52 Lipidor AB 46.13 39.98 NeoDynamics AB³ 20.72 25.74 Oncopeptides AB (divested) (Note 8) - 43.36 Pergamum AB³ 61.93 61.93 DermaGen AB³ 61.93 61.93 Laurantis Pharma OY³ 3.44 6.07 Lipopeptide AB³ 61.93 61.93 PharmaSurgics in Sweden AB (divested) - 61.93 XImmune AB³ 5.16 5.36 ProNoxis AB (divested) - 19.83 Umecrine Cognition AB 54.17 54.17 Umecrine Mood AB³ 42.54 42.87 XSpray Microparticles AB 61.81 60.80 Associated companies KCIF Co-Investment Fund KB 26.00 26.00 Oss-Q AB 15.63 15.69 Promimic AB³ 30.12 24.50 Other long-term securities holdings BioArctic NeuroScience AB 3.17 3.17 BioChromix AB 13.94 9.34 BioResonator AB (in liquidation) 7.62 7.62 CytoGuide ApS 9.06 9.06 NephroGenex Inc. 0.58 0.58 Umecrine AB 10.41 10.41 |
Total ownership%¹ | |
|---|---|---|
¹ Including indirect ownership through Aprea AB, KDev Oncology AB, Dilaforette Holding AB, Pergamum AB, KCIF Co-Investment Fund KB, BioChromix AB and Umecrine AB. ²Karolinska Development has a controlling interest in Aprea as of 27 August 2012; see below under "Business combinations".
³ These companies will be transferred to KDev Investments Group during the first quarter 2013. ⁴Reclassified during the fourth quarter.
| Book value in Parent | ||
|---|---|---|
| Company | ||
| Amounts in SEK 000 | 31 Dec 2012 | 31 Dec 2011 |
| Subsidiaries | ||
| Akinion Pharmaceuticals AB² | 63,070 | 48,070 |
| Aprea AB¹, ² |
119,235 | - |
| Avaris AB³ | 369 | 0 |
| Axelar AB² | 73,343 | 48,343 |
| Clanotech AB² | 46,692 | 37,194 |
| HBV Theranostica AB (dormant) | 50 | - |
| Inhalation Sciences Sweden AB² | 28,238 | 24,238 |
| KCIF Fund Management AB | 143 | 43 |
| KD Incentive AB | 200 | 200 |
| KDev Exploratory AB (formerly Actar AB) | 7,500 | 3,679 |
| KDev Investments AB (formerly Daffodil AB) | 50 | - |
| KDev Oncology AB | 4,000 | 1,000 |
| Limone AB | 8 | 296 |
| NovaSAID AB² | 74,407 | 74,407 |
| Pharmanest AB | 23,174 | 15,075 |
| Total book value subsidiaries | 440,479 | 252,545 |
| Total fair value subsidiaries | 1,010,663 | 542,001 |
| Joint ventures | ||
| Aprea AB¹ | - | 46,199 |
| Athera Biotechnologies AB | 97,438 | 74,797 |
| Avaris AB³ | - | 0 |
| BioChromix Pharma AB | 27,850 | 19,350 |
| Bioneris AB (in liquidation) | 0 | 0 |
| Biosergen AS² | 21,370 | 21,370 |
| Dilafor AB² | 93,376 | 88,831 |
| Dilaforette Holding AB² | 24,438 | 7,188 |
| HBV Theranostica AB (dormant) | - | 0 |
| Lipidor AB | 12,998 | 9,000 |
| NeoDynamics AB² | 11,097 | 11,097 |
| Oncopeptides AB (divested) (Note 8) | - | 22,914 |
| Pergamum AB² | 104,400 | 210,850 |
| ProNoxis AB (divested) | - | 5,500 |
| Umecrine Cognition AB | 14,700 | 14,700 |
| Umecrine Mood AB² | 31,007 | 25,112 |
| XSpray Microparticles AB | 36,628 | 33,708 |
| Associated companies | ||
| KCIF Co-Investment Fund KB | 13,871 | 10,527 |
| Oss-Q AB | 3,650 | 3,650 |
| Promimic AB² | 13,100 | 8,100 |
| Total book value joint ventures and associated companies | 505,923 | 612,893 |
| Total fair value joint ventures and associated companies | 789,578 | 980,276 |
| Other long-term securities holdings | ||
| BioArctic NeuroScience AB | 600 | 600 |
| BioChromix AB | 3,834 | 2,374 |
| BioResonator AB (in liquidation) | 0 | 0 |
| CytoGuide ApS | 3,300 | 3,300 |
| NephroGenex Inc. | 709 | 709 |
| Umecrine AB | 7,398 | 7,398 |
| Total book value other long-term securities holdings | 15,841 | 14,381 |
| Total fair value other long-term securities holdings | 26,949 | 24,587 |
¹ Karolinska Development has obtained a controlling interest in Aprea as of 27 August 2012; see below under "Business combinations".
²These companies will be transferred to KDev Investments Group during the first quarter 2013.
³Reclassified during the fourth quarter.
Karolinska Development has completed the share swap with Industrifonden through which Karolinska Development has received shares in Aprea AB in exchange for Karolinska Development's holding in Oncopeptides AB. The share swap has given Karolinska Development a controlling interest in Aprea AB. Aprea AB was previously reported as a joint venture and measured at fair value with changes in fair value through profit or loss. Because of this controlling interest, Aprea AB is classified as a subsidiary and consolidated in the Group as of 27 August 2012. This means that the full income statement, statement of financial position and cash flows for this company are now consolidated and that the holding is no longer recognized at fair value. The net assets are recognized in the consolidated financial statements, including non-controlling interests.
| Subsidiary | Operations | Acquisition date | Share of acquired equity that carries voting rights, % |
Acquisition cost |
|---|---|---|---|---|
| Biotechnological research and |
||||
| Aprea AB | development | 27 August 2012 | 69.43% | 178,140 |
| Total consolidated value, SEK 000 | 178,140 |
| Amounts in SEK 000 | |
|---|---|
| Book value of previous holding in Aprea AB | 46,199 |
| Share swap with Industrifonden | 72,636 |
| Change in fair value¹ | 59,305 |
| Total consolidated value | 178,140 |
¹ The change in fair value has previously been recognized through profit or loss
Through the share swap, Karolinska Development received Industrifonden's holding in Aprea AB, representing 28.31% of the total number of shares outstanding, in exchange for Karolinska Development's holding of shares in Oncopeptides AB. No cash consideration was paid.
The transaction also contains a provision whereby Karolinska Development AB can receive a 5% share of any future revenue Industrifonden receives from Oncopeptides up to SEK 80m, while Industrifonden can receive a 5% share of any future revenue Karolinska Development receives from Aprea AB up to SEK 80m as contingent consideration. In the statement of financial position, they have been recognized at an estimated market value of SEK 8,907 thousand on the acquisition date. During the fourth quarter, the financial liability was revalued at SEK 10,889 thousand.
Acquisition-related costs have amounted to SEK 400 thousand and are recognized as other external expenses in the Group's total comprehensive income.
Aprea has issued 21,160 warrants to its employees. These warrants have not been taken into consideration on the acquisition date, since they are not expected to have a significant effect on the acquisition cost.
| Aprea AB | |
|---|---|
| Amounts in SEK 000 | Fair value |
| Patents | 324 |
| Development projects in progress | 306,811 |
| Equipment | 31 |
| Financial non-current assets | 1 |
| Deferred tax assets from fiscal deficit | 24,307 |
| Accounts receivable | 23 |
| Other short-term receivables | 592 |
| Prepaid expenses and accrued income | 97 |
| Cash and cash equivalents | 5,363 |
| Deferred tax liabilities on development projects in progress | -77,807 |
| Accounts payable | -1,066 |
| Other current liabilities | -228 |
| Accrued expenses and deferred income | -1,873 |
| Net identifiable assets and liabilities | 256,575 |
| Less non-controlling interests | -78,435 |
| Acquisition cost | 178,140 |
Revenue and loss before tax since the acquisition date included in the consolidated statement of comprehensive income
| Amounts in SEK 000 | Revenue | Loss before tax |
|---|---|---|
| Aprea AB | 326 | -5,896 |
| Revenue and loss before tax if the acquisition date had been at the beginning of the financial year |
| Amounts in SEK 000 | Revenue | Loss before tax |
|---|---|---|
| Aprea AB | 577 | -16,350 |
| Year | Transaction | Number of shares |
Increase in share capital |
Share capital |
Number of A shares |
Number of B shares |
Subscripti on price |
Par value |
|---|---|---|---|---|---|---|---|---|
| Total as of 1 Jan 2011 | 33,331,417 | 16,665,709 | 1,503,098 | 31,828,319 | 0.5 | |||
| New share | ||||||||
| April 2011 | issue | 15,200,000 | 7,600,000 | 24,265,709 | 15,200,000 | 40 | 0.5 | |
| Total as of 31 Dec 2011 | 48,531,417 | 24,265,709 | 1,503,098 | 47,028,319 | 0.5 | |||
| Total as of 31 Dec 2012 | 48,531,417 | 24,265,709 | 1,503,098 | 47,028,319 | 0.5 |
During the fourth quarter 2012, the Parent Company and the Group repurchased 150,600 shares with a par value of SEK 0.5. These shares represent SEK 75,300 of the share capital and the consideration paid totals SEK 2,243,879. The shares were repurchased to cover the social security expenses in the incentive program PSP 2012 resolved by the Annual General Meeting in 2012.
| Group | ||
|---|---|---|
| Amounts in SEK 000 | 31 Dec 2012 | 31 Dec 2011 |
| Net assets | ||
| Cash and cash equivalents | 117,033 | 163,347 |
| Short-term investments | 174,160 | 457,249 |
| Loans receivable joint ventures and associated companies | 12 856 | 3,675 |
| Financial liabilities | -1,982 | -2,000 |
| Total net assets | 302,067 | 622,271 |
| Estimated fair value of portfolio companies including subsidiaries | 1,827,190 | 1,546,864 |
| Total net asset value | 2,129,257 | 2,169,135 |
| Number of shares | 48,531,417 | 48,531,417 |
| Net asset value per share | 43.87 | 44.70 |
Karolinska Development has entered into an investment commitment of SEK 26.6m related to Axelar AB.
| Parent Company | ||
|---|---|---|
| Amounts in SEK 000 | 31 Dec 2012 | 31 Dec 2011 |
| Pledged assets | ||
| Endowment insurance | 2,623 | 2,080 |
| Total pledged assets | 2,623 | 2,080 |
| Investment commitments | ||
| Biocelex | 1,000 | 500 |
| Uminova | 200 | 400 |
| Total contingent liabilities | 1,200 | 900 |
| Total | 3,823 | 2,980 |
Axelar AB acquired the rights to its project's patent applications from another legal entity during 2005. If Axelar sells its project to another third party in the future, the legal entity has the right to receive repayment for its development costs up to a maximum of SEK 26m (26m).
| 2012 | 2011 | 2012 | 2011 | |
|---|---|---|---|---|
| Amounts in SEK 000 | Oct-Dec | Oct-Dec | Full-year | Full-year |
| Investments in subsidiaries | ||||
| Akinion Pharmaceuticals AB | 0 | 0 | 15,000 | 30,000 |
| Axelar AB | 0 | 0 | 25,000 | 20,000 |
| Clanotech AB | 3,000 | 2,499 | 9,500 | 2,499 |
| HBV Theranostica AB | 0 | 0 | 200 | 0 |
| Inhalation Sciences Sweden AB | 0 | 4,500 | 4,000 | 7,000 |
| KCIF Fund Management AB | 0 | 0 | 100 | 0 |
| KD Incentive AB | 0 | 100 | 0 | 100 |
| KDev Exploratory AB (formerly Actar AB) | 3,000 | 2 | 13,000 | 2 |
| KDev Investments AB (formerly Daffodil AB) | 0 | 0 | 50 | 0 |
| KDev Oncology AB | 0 | 1,000 | 3,000 | 1,000 |
| Limone AB | 0 | 1,500 | 4,000 | 3,000 |
| NovaSAID AB | 0 | 0 | 0 | 12,000 |
| Pharmanest AB | 0 | 5,110 | 8,099 | 8,110 |
| Total investments in subsidiaries | 6,000 | 14,711 | 81,949 | 83,711 |
| Investments in joint ventures and associated companies | ||||
| Aprea AB (Note 4) | 0 | 0 | 72,636 | 12,470 |
| Athera Biotechnologies AB | 3,650 | 0 | 22,641 | 8,760 |
| Avaris AB | 0 | 0 | 444 | 1,800 |
| BioChromix Pharma AB | 0 | 7,000 | 8,500 | 10,000 |
| Biosergen AS | 0 | 2,357 | 0 | 6,256 |
| Dilafor AB | 4,545 | 0 | 4,545 | 9,000 |
| Dilaforette Holding AB | 7,250 | 7,000 | 17,250 | 7,188 |
| Eribis Pharmaceuticals AB | 0 | 0 | 0 | 2,490 |
| HBV Theranostica AB | 0 | 0 | 0 | 200 |
| KCIF Co-Investment Fund KB | 0 | 0 | 3,360 | 5,834 |
| Lipidor AB | 0 | 0 | 3,998 | 4,997 |
| NeoDynamics AB | 0 | 0 | 0 | 3,546 |
| Oncopeptides AB | 0 | 4,378 | 0 | 4,378 |
| Oss-Q AB | 0 | 3,650 | 0 | 3,650 |
| Pergamum AB | 0 | 12,208 | 0 | 108,065 |
| Promimic AB | 0 | 0 | 5,000 | 0 |
| ProNoxis AB | 0 | 1,000 | 1,000 | 2,500 |
| Umecrine Cognition AB | 0 | 6,500 | 0 | 7,700 |
| Umecrine Mood AB | 3,157 | 0 | 5,895 | 5,286 |
| XSpray Microparticles AB | 0 | 0 | 2,920 | 5,835 |
| Total investments in joint ventures and associated companies | 18,602 | 44,093 | 148,189 | 209,955 |
| Investments in other long-term securities holdings | ||||
| BioChromix AB | 0 | 913 | 1,460 | 2,915 |
| Umecrine AB | 0 | 0 | 0 | 1,000 |
| Total investments in other long-term securities holdings | 0 | 913 | 1,460 | 3,915 |
| Total investments | 24,602 | 59,717 | 231,598 | 297,581 |
| 2012 | 2011 | 2012 | 2011 | |
|---|---|---|---|---|
| Amounts in SEK 000 | Oct-Dec | Oct-Dec | Full-year | Full-year |
| Conversions of previously issued loans | ||||
| Aprea AB | 0 | 0 | 0 | 5,900 |
| Biosergen AS | 0 | 0 | 0 | 2,425 |
| Dilafor AB | 4,545 | 0 | 4,545 | 0 |
| Dilaforette Holding AB | 0 | 4,000 | 0 | 4,000 |
| NeoDynamics AB | 0 | 0 | 0 | 546 |
| Oncopeptides AB | 0 | 4,378 | 0 | 4,378 |
| Pergamum AB | 0 | 0 | 0 | 77,629 |
| Other investments not affecting cash flow | 0 | 0 | 0 | 0 |
| Aprea AB (Note 4) | 0 | 0 | 72,636 | 0 |
| Avaris AB | 0 | 0 | 444 | 0 |
| HBV Theranostica AB | 0 | 0 | 150 | 0 |
| Total investments not affecting cash flow during the period | 4,545 | 8,378 | 77,775 | 94,878 |
| Parent Company | ||||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Amounts in SEK 000 | Oct-Dec | Oct-Dec | Full-year | Full-year |
| Capital gain/loss | ||||
| Oncopeptides AB | 0 | 0 | 49,722 | 0 |
| ProNoxis AB | 0 | 0 | -6,500 | 0 |
| Independent Pharmaceutica AB | 0 | 3,022 | 47 | 3,022 |
| IMED AB | 0 | 3,217 | 0 | 3,217 |
| Gain/loss on sale of portfolio companies | 0 | 6,239 | 43,269 | 6,239 |
The capital gain on Oncopeptides AB has arisen as a result of the share swap with Industrifonden. The disclosure of the transaction is based on the fair value of the shares received in Aprea. No cash consideration was paid.
On 21 December2012, Karolinska Development signed an agreement with Rosetta Capital Limited on the sale of a minority share in Karolinska Development's holdings in 13 of its portfolio companies. The transaction will be finalized during the first quarter 2013. Karolinska Development will transfer the holdings in 13 of its portfolio companies to a new investment company, KDev Investments AB. Karolinska Development will be the majority owner of KDev Investments AB. The shareholders will enter into a shareholders agreement on the management of KDev Investments AB, whereby Karolinska Development will relinquish controlling interest in the KDev Investments Group. After the transaction, Karolinska Development will share control with Rosetta, due to which the KDev Investments Group will be a joint venture to Karolinska Development and will be recognized at fair value in the consolidated statement of financial position. The assets and liabilities attributable to KDev Investment Group have been recognized separately in the statement of financial position, in accordance with accounting standard IFRS 5.
| Group | |
|---|---|
| Amounts in SEK 000 | 31 Dec 2012 |
| Intangible assets | 998,776 |
| Tangible assets | 362 |
| Shares in joint ventures and associated companies | 570,405 |
| Other current assets | 2,896 |
| Cash and cash equivalents | 59,586 |
| Total | 1,632,025 |
| Group | |
|---|---|
| Amounts in SEK 000 | 31 Dec 2012 |
| Deferred taxes | 151,278 |
| Interest-bearing liabilities | 1,575 |
| Accounts payable | 3,878 |
| Other short-term liabilities | 8,030 |
| Total | 164,761 |
During the reporting period, the Group did not have any material transactions with or commitments to related parties beyond the normal business transactions described in the annual report for 2011 and as indicated in Notes 6 and 11.
On 23 May 2012, the Annual General Meeting decided on a Performance Share Program for management based on the participants acquiring shares ("Saving Shares") on the open market. For each Savings Share, participants will be allotted, free of charge, one Matching Share Right and a maximum of five Performance Share Rights. The maximum number of Performance and Matching Share Rights is 480,000. The program comprises a maximum of ten participants.
Each Performance and Matching Share Right is entitled to the allocation of one subscription option. Each subscription option entitles its holder to acquire one series B share at a subscription price corresponding to the share's par value and assuming that the option is exercised as soon as possible after receiving the subscription option. Subscription options will be allocated after publication of the company's interim report for the first quarter 2015, though no earlier than three years after the agreement on PSP 2012 was signed (vesting period).
There are no performance conditions for the Matching Share Rights, but each participant must remain an employee during the vesting period and may not have sold their Savings Shares. The Performance Share Rights have the same terms as the Matching Share Rights. In addition, there is a target related to Karolinska Development's share price performance and a comparison between the so-called Start Price and End Price. The Start Price is measured as the average over ten trading days. The Board of Directors determines the measurement period. However, the measurement must be made not later than 23 November 2012. The established measurement period was 27 August 2012 through 7 September 2012. The Start Price was set at SEK 15.70. The End Price is measured as the average over 10 trading days beginning on 2 May 2015. For any allotment to be made, the share price must rise by six percent annually. For a maximum allotment (five Performance Shares per Saving Share), the share price must rise by 30 percent. Within this span, allotments will be made proportionately. Allotments are capped at ten times the Start Price, after which the number of allotted Performance Share Rights is reduced. The participants will be compensated in cash for dividends paid during the period.
In December 2012, the participants acquired 80,000 Savings Shares. The fair value of a Matching Share Right on the allotment date in December 2012 has been set that SEK 14 based on the Black-Scholes option pricing model. The inputs in the model were a share price of SEK 14.65, an exercise price of SEK 0.5, an anticipated maturity 3.1 years, an anticipated volatility of 42.5%, an anticipated
dividend of zero percent and a risk-free rate of interest of 0.87%. The fair value of a Performance Share Right on the allotment date in December 2012 was set at SEK 7.20 based on a Monte Carlo simulation. The inputs in the model were a share price of SEK 14.65, an exercise price of SEK 0.5, an anticipated maturity 3.1 years, an anticipated dividend of zero percent and a risk-free rate of interest of 0.87%. The condition related to share price performance has been taken into account in the valuation of the Performance Share Rights.
Anticipated volatility is based on historical volatility and comparisons with comparable companies.
The company will cover the social security contributions related to the program by acquiring and transferring not more than 150,600 of its own shares. The Performance Share Program has not had any impact on the company's results and financial position as of 31 December 2012.
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