Quarterly Report • Nov 22, 2012
Quarterly Report
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Corporate Identity Number 556707-5048
In connection with Karolinska Development's IPO last year, I made it clear that the commercialization of the company's portfolio is our highest priority. With every passing day, our shareholders naturally grow more impatient for evidence of the value we have created in the company. I therefore wish to emphasize that we are committed to our goal to announce our first commercial agreement by year-end.
The foundation for a successful business is making progress in the portfolio. During the third quarter, Pergamum took its drug candidate LL-37 to clinical development. With LL-37 the company hopes to help patients with hard-to-heal wounds, a condition that places a great burden on both the patient and the healthcare system. Pergamum also reported top-line Phase II data with PXL-01, which unfortunately did not meet the primary end point and has negatively affected the reported valuation of Karolinska Development's total portfolio holding. The company is now awaiting a complete analysis of the data before making a decision on further development.
In addition, Aprea reported promising data from a Phase I/II study of the drug candidate APR-246. The study was primarily designed to evaluate the drug's safety profile, but also gave an indication that APR-246 can reduce the tumor burden in patients with advanced cancer. The next step for Aprea is now to initiate a proof-of-concept study in patients with ovarian cancer. This positive news is especially gratifying since we increased our ownership interest in the company to 69 percent during the third quarter after completing the share swap announced in June. We previously expected to announce data from the Phase I/II study with Akinion's AKN-028 before year end. However, patient recruitment has been somewhat slower than expected and we now believe this study to be completed during the first quarter of 2013.
In 2012, several portfolio companies have taken important steps forward. Three projects have entered clinical development and two Phase II studies have been launched; Pharmanest's SHACT for pain relief in connection with intrauterine device (IUD) insertion and Pergamum's DPK-060 to treat outer ear infections. In total, eleven projects in our active portfolio are now in clinical development for diseases with unmet medical needs.
Torbjörn Bjerke Chief Executive Officer
| Group | 2012 | 2011 | 2012 | 2011 |
|---|---|---|---|---|
| Amounts in SEKm | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep |
| Income statement | ||||
| Revenue | 1.8 | 1.9 | 7.4 | 7.1 |
| Profit/loss after tax | -126.7 | -140.5 | -315.9 | -271.3 |
| Earnings per share before and after dilution (SEK) | -2.47 | -2.64 | -5.99 | -5.88 |
| Balance sheet | ||||
| Cash and cash equivalents | 202.7 | 165.4 | ||
| Short-term investments | 213.2 | 526.5 | ||
| Total cash, cash equivalents and short-term investments | 415.9 | 691.9 | ||
| Share information | ||||
| Net asset value per share (SEK) (Note 5) | 40.4 | 46.7 | ||
| Share price, last trading day in the reporting period (SEK) | 16.3 | 25.8 | ||
| Portfolio information | ||||
| Investments in portfolio companies (Note 7) | 91.3 | 11.6 | 207.0 | 237.9 |
| Of which investments not affecting cash flow (Note 7) | 72.8 | 2.4 | 72.8 | 86.5 |
| Valuation of total portfolio holdings (Note 2) | 1,535.6 | 1,563.9 |
In July, Pergamum announced top-line results from a randomized Phase II clinical trial of PXL-01 for prevention of post-surgical adhesions. The study showed that the drug was safe and well tolerated. The primary end point was not met, but the data suggest that treatment with PXL-01 may improve hand mobility following surgery. The company is now awaiting a complete analysis based on the data before making a decision on the project's continued development.
To evaluate the safety and tolerability of a promising new treatment for chronic leg ulcers, Pergamum has initiated a Phase I/II double blind study where three different doses of the drug candidate LL-37 will be compared with a placebo. In September, Pergamum announced that the first of a total of 32 patients has been dosed.
In September, Aprea announced positive data from a completed Phase I/II clinical study with its investigational drug APR-246. The results from the study have been published in the Journal of Clinical Oncology. In the trial, escalating doses of APR-246 were administered as monotherapy to 22 patients with advanced blood or prostate cancer during up to four consecutive days. Doselimiting toxicity was shown at plasma levels well above predicted therapeutic plasma levels. The study also demonstrated doseproportional and time-independent pharmacokinetics for APR-246 over the dose range studied. In addition to reporting that the drug was well tolerated, the authors concluded from the study that APR-246 induces biological effects and that there are cases of clinical effects on the tumor burden. One patient with advanced blood cancer demonstrated a 50 percent reduction in the number of blast cells in their bone marrow. Based on the positive data, Aprea is planning to initiate a Phase II proof-of-concept study in ovarian cancer.
No significant events after the end of the reporting period.
Many of Karolinska Development's portfolio companies took important steps forward during the year. Two of the projects, LL-37 and AKN-028, advanced into Phase I/II studies, Pharmanest completed a full Phase I study and initiated a Phase II study with SHACT, and Pergamum initiated a Phase II trial with DPK-060. Furthermore, Aprea reported the results from a Phase I/II trial with APR-246 and Pergamum reported data from a Phase II trial with PXL-01. Two new companies were added during the year through investments in the companies GliGene AB and Oss-Q AB. In addition, the holdings in Oncopeptides AB and ProNoxis AB were divested. KDev Oncology AB was established during the year and currently comprises GliGene AB and Akinion Pharmaceuticals AB.
| PHARMACEUTICALS | Ownership* | Concept development |
Lead discovery |
Lead optimization |
Preclinical development |
Phase I | Phase II | Phase III | Launch |
|---|---|---|---|---|---|---|---|---|---|
| ONCOLOGY | |||||||||
| Axelar AB | 45% | ||||||||
| Aprea AB | 69% | ||||||||
| KDev Oncology AB (Akinion, AKN-028) | 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 | 55% | ||||||||
| Pharmanest AB | 60% | ||||||||
| Umecrine Mood AB | 43% | ||||||||
| INFECTIOUS DISEASE | |||||||||
| Dilaforette AB | 66% | ||||||||
| Biosergen AS | 60% | ||||||||
| CARDIOVASCULAR | |||||||||
| Athera Biotechnologies AB (Annexin A5) | 65% | ||||||||
| Athera Biotechnologies AB (PC-mAb) | 65% | ||||||||
| CNS | |||||||||
| BioChromix Pharma AB | 76% | ||||||||
| Umecrine Cognition AB | 54% | ||||||||
| INFLAMMATION | |||||||||
| NovaSAID AB | 89% | ||||||||
| OPHTHALMOLOGY | |||||||||
| Clanotech AB | 88% |
Solid colored area = completed phase *Includes indirect ownership Shaded colored area = ongoing phase
Consolidated revenue during the nine-month period amounted to SEK 7.4m, compared with SEK 7.1m in the same period in 2011. During the third quarter, consolidated revenue amounted to SEK 1.8m, compared with SEK 1.9m in the same period in 2011.
During the nine-month period, the Group's operating loss amounted to SEK -303.7m (-277.4), a change of SEK -26.3m compared with the same period in 2011. The loss was mainly due to the portion of the change in fair value affecting income, which amounted to SEK -188.9m (-167.8) during the period, as well as increased development costs in subsidiaries. Pergamum announced Phase II data from PXL-01 that unfortunately did not meet the primary end point and has negatively affected the valuation of the reported total portfolio holding. As indicated in Note 2, the value of companies reported as subsidiaries appreciated by SEK 43.3m (59.5). These changes are not recognized in the consolidated income statement and statement of financial position, since the subsidiaries are consolidated and therefore are not measured at fair value.
During the nine-month period, 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 share swap gave Karolinska Development a controlling interest in Aprea AB, which has therefore been consolidated as a subsidiary as of the closing date of the transaction, 27 August 2012. The transaction has had no effect on the consolidated operating results (Note 4).
The Group's loss before tax during the nine-month period amounted to SEK -326.7m (-286.5) of which parent company costs SEK -41.0m (-46.1), fair value change SEK -188.9m (-167.8), subsidiary costs SEK -73.8m (-63.5) and financial net SEK -23.0 (-9.1).
The Group's operating loss for the third quarter amounted to SEK -101.2m (-143.0), a change of SEK 41.8m compared with the same period in 2011. The change was mainly due to the portion of the change in fair value affecting income, which amounted to SEK - 65.5m (-104.9) during the third quarter. As indicated in Note 2, the value of companies reported as subsidiaries appreciated by SEK 18.0m (2.3) during the third quarter.
The Group's loss before tax amounted to SEK -129.9m (-147.3) during the third quarter.
The Group's investments during the nine-month period amounted to SEK 207.0m (237.9) of which SEK 134.2m were cash flow affecting investments.
The largest investments during the nine-month period 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 19.0m, the KDev Oncology AB Group at SEK 18.0m (of which SEK 15.0m in Akinion Pharmaceuticals AB and SEK 3.0m in GliGene AB) and Dilaforette Holding AB at SEK 10.0m (of which SEK 10.0 in Dilaforette AB).
The Group's investments during the third quarter amounted to SEK 91.3m (11.6).
The largest investments during the third quarter were in Aprea AB at SEK 72.6m through the share swap with Industrifonden (Note 4), BioChromix Pharma AB at SEK 8.5m, Clanotech AB at SEK 4.5m and Pharmanest AB at SEK 4.4m.
The Group's intangible assets have increased by SEK 306.4m. Following the share acquisition in Aprea AB, it was reclassified as a subsidiary during the third quarter. As a result, intangible assets have increased by SEK 307.1m (Note 4). Other changes are related to the capitalization and amortization of patents in other subsidiaries.
The Group's equity to total assets ratio was 90 percent (93) on 30 September 2012 and equity amounted to SEK 1,940.7m (2,173.9).
Cash, cash equivalents and short-term investments amounted to SEK 415.9m (620.6).
Total assets amounted to SEK 2,161.4m (2,345.9).
* Comparable figures refer to 31 December 2011
The Parent Company's revenue during the nine-month period amounted to SEK 2.7m (1.8).
During the third quarter, the Parent Company's revenue amounted to SEK 1.0m (0.4).
During the nine-month period, the Parent Company's operating loss amounted to SEK -132.7m (-164.0), a change of SEK 31.3m compared with the same period in 2011. The operating loss for the period includes impairment losses on the holdings in Pergamum AB (SEK -125.4m), KDev Exploratory AB (formerly Actar AB) (SEK -5.5m), Limone AB (SEK -3.6m) and Avaris AB (SEK -0.4m). The impairment loss 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 nine-month period, 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 nine-month period amounted to SEK -154.6m (-173.7).
During the third quarter, the Parent Company's operating profit amounted to SEK 6.3m (-64.5), a change of SEK 70.8m compared with the same period in 2011. The third quarter's operating profit includes impairment losses on the holdings in Pergamum AB (SEK - 20.5m), KDev Exploratory AB (formerly Actar AB) (SEK -2.1m) and Limone AB (SEK -1.3m). The share swap with Industrifonden has positively affected the operating result by SEK 49.7m (Note 8). The divestment of ProNoxis AB has negatively affected the operating result by SEK -6.5m.
The Parent Company's net loss was SEK -21.7m (-69.0) during the third quarter.
The Parent Company invested a total of SEK 75.9m (69.0) in subsidiaries during the nine-month period. The largest investments were in Axelar AB at SEK 25.0m, the KDev Oncology AB Group at SEK 18.0m (of which SEK 15.0m in Akinion Pharmaceuticals AB and SEK 3.0m in GliGene AB) and KDev Exploratory AB (formerly Actar AB) at SEK 10.0m.
The Parent Company invested SEK 129.6m (165.9) in associated companies and joint ventures during the nine-month period. The largest investments were in Aprea AB at SEK 72.6m through the share swap with Industrifonden (Note 4), Athera Biotechnologies AB at SEK 19.0m and Dilaforette Holding AB at SEK 10.0m (of which SEK 10.0m in Dilaforette AB).
The Parent Company invested SEK 1.5m (3.0) in other long-term securities holdings during the nine-month period.
During the third quarter, the Parent Company invested a total of SEK 91.3m (11.6). The largest investments were in Aprea AB at SEK 72.6m through the share swap with Industrifonden (Note 4), BioChromix Pharma AB at SEK 8.5m, Clanotech AB at SEK 4.5m and Pharmanest AB at SEK 4.4m.
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, see the annual report 2011.
The CEO hereby certifies that this interim 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, 22 November 2012
Torbjörn Bjerke CEO
| Year-end report January – December 2012 | February 2013 |
|---|---|
| Annual report 2012 | April 2013 |
Karolinska Development is required to make public the information in this interim report in accordance with the Securities Market Act. The information was released for publication on 22 November 2012.
This interim report, together with additional information, is available on Karolinska Development's website, www.karolinskadevelopment.com
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
Note: This report is a translation of the Swedish interim report. In case of any discrepancies, the Swedish version shall prevail.
We have reviewed the condensed financial information (interim report) for Karolinska Development AB (publ) as per 30 September 2012 and the nine-month period ended on this date. The Board of Directors and the CEO are responsible for the preparation and presentation of this financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this financial information based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISA) and other generally accepted auditing standards. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the interim report for the Group is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, and for the Parent Company in accordance with the Swedish Annual Accounts Act.
Stockholm, 22 November 2012
Deloitte AB
Thomas Strömberg Authorized Public Accountant
| 2012 | 2011 | 2012 | 2011 | 2011 | ||
|---|---|---|---|---|---|---|
| Amounts in SEK 000 | Note | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Revenue | 1,822 | 1,936 | 7,371 | 7,115 | 10,479 | |
| Other external expenses | -21,083 | -25,722 | -74,014 | -70,862 | -104,056 | |
| Personnel costs | -14,461 | -13,499 | -44,221 | -43,480 | -59,871 | |
| Depreciation and amortization of tangible and intangible non-current assets |
-1,970 | -792 | -3,918 | -2,391 | -3,431 | |
| Change in fair value of shares in joint ventures and associated companies |
2 | -66,968 | -98,294 | -189,477 | -164,189 | -236,621 |
| Change in fair value of other long-term securities holdings |
2 | 1,508 | -6,608 | 583 | -3,577 | -7,175 |
| Operating loss | -101,152 | -142,979 | -303,676 | -277,384 | -400,675 | |
| Financial net | 3 | -28,718 | -4,317 | -22,996 | -9,134 | -4,985 |
| Loss before tax | 2 | -129,870 | -147,296 | -326,672 | -286,518 | -405,660 |
| Deferred taxes | 3,159 | 6,773 | 10,756 | 15,229 | 19,987 | |
| Current taxes | 0 | 0 | 0 | 0 | 0 | |
| NET LOSS FOR THE PERIOD | -126,711 | -140,523 | -315,916 | -271,289 | -385,673 | |
| Attributable to: | ||||||
| Parent Company's shareholders | -119,879 | -128,081 | -290,692 | -249,230 | -354,147 | |
| Non-controlling interests | -6,832 | -12,442 | -25,224 | -22,059 | -31,526 | |
| TOTAL | -126,711 | -140,523 | -315,916 | -271,289 | -385,673 |
| 2012 | 2011 | 2012 | 2011 | 2011 | ||
|---|---|---|---|---|---|---|
| Amounts in SEK 000 | Note | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Earnings per share attributable to Parent Company's shareholders, weighted average, before and after dilution |
-2.47 | -2.64 | -5.99 | -5.88 | -8.07 | |
| Number of shares, weighted average | 5 | 48,531,417 | 48,531,417 | 48,531,417 | 42,351,917 | 43,908,951 |
| 2012 | 2011 | 2012 | 2011 | 2011 | |
|---|---|---|---|---|---|
| Amounts in SEK 000 Note |
Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Net loss for the period | -126,711 | -140,523 | -315,916 | -271,289 | -385,673 |
| Total comprehensive income for the period | -126,711 | -140,523 | -315,916 | -271,289 | -385,673 |
| Attributable to: | |||||
| Parent Company's shareholders | -119,879 | -128,081 | -290,692 | -249,230 | -354,147 |
| Non-controlling interests | -6,832 | -12,442 | -25,224 | -22,059 | -31,526 |
| TOTAL | -126,711 | -140,523 | -315,916 | -271,289 | -385,673 |
| Amounts in SEK 000 | Note | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 |
|---|---|---|---|---|
| Assets | ||||
| Non-current assets | ||||
| Intangible non-current assets | 1,009,081 | 702,672 | 702,957 | |
| Tangible non-current assets | 5,254 | 1,946 | 1,663 | |
| Shares in joint ventures and associated companies | 2,4 | 669,561 | 1,017,651 | 980,276 |
| Other long-term securities holdings | 2,4 | 26,630 | 27,272 | 24,587 |
| Loans receivable joint ventures and associated companies | 12,103 | 8,400 | 3,675 | |
| Other financial assets | 4 | 8,907 | 0 | 0 |
| Total non-current assets | 1,731,536 | 1,757,941 | 1,713,158 | |
| Current assets | ||||
| Accounts receivable | 890 | 975 | 1,462 | |
| Other short-term receivables | 7,546 | 10,249 | 8,757 | |
| Prepaid expenses and accrued income | 5,608 | 3,430 | 1,886 | |
| Short-term investments | 213,136 | 526,534 | 457,249 | |
| Cash and cash equivalents | 202,720 | 165,367 | 163,347 | |
| Total current assets | 429,900 | 706,555 | 632,701 | |
| TOTAL ASSETS | 2,161,436 | 2,464,496 | 2,345,859 | |
| Equity and liabilities | ||||
| Equity | ||||
| Share capital | 5 | 24,266 | 24,266 | 24,266 |
| Share premium | 1,768,179 | 1,768,179 | 1,768,179 | |
| Retained earnings including current period result | -198,043 | 195,187 | 86,442 | |
| Equity attributable to Parent Company's shareholders | 1,594,402 | 1,987,632 | 1,878,887 | |
| Non-controlling interests | 346,262 | 300,288 | 295,041 | |
| Total equity | 1,940,664 | 2,287,920 | 2,173,928 | |
| Long-term liabilities | ||||
| Deferred taxes | 186,329 | 148,344 | 143,586 | |
| Interest-bearing liabilities | 0 | 2,000 | 2,000 | |
| Other financial liabilities | 4 | 8,907 | 0 | 0 |
| Total long-term liabilities | 195,236 | 150,344 | 145,586 | |
| Current liabilities | ||||
| Interest-bearing liabilities | 1,675 | 0 | 0 | |
| Accounts payable | 6,995 | 8,096 | 9,563 | |
| Other short-term liabilities | 3,989 | 4,531 | 2,796 | |
| Accrued expenses and prepaid income | 12,877 | 13,605 | 13,986 | |
| Total current liabilities | 25,536 | 26,232 | 26,345 | |
| Total liabilities | 220,772 | 176,576 | 171,931 | |
| TOTAL EQUITY AND LIABILITIES | 2,161,436 | 2,464,496 | 2,345,859 |
| Equity attributable to Parent Company's shareholders | |||||||
|---|---|---|---|---|---|---|---|
| Retained | |||||||
| earnings | |||||||
| Share | Share | incl. current |
Non controlling |
Total equity | |||
| Amounts in SEK 000 | Note | capital | premium | year result | Total | interests | |
| 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 period | -290,692 | -290,692 | -25,224 | -315,916 | |||
| Total comprehensive income for the | |||||||
| period | 0 | 0 | -290,692 | -290,692 | -25,224 | -315,916 | |
| Business combinations | 4 | 0 | 78,435 | 78,435 | |||
| Change in non-controlling interests | 6,207 | 6,207 | -1,990 | 4,217 | |||
| Closing equity at 30 Sep 2012 | 5 | 24,266 | 1,768,179 | -198,043 | 1,594,402 | 346,262 | 1,940,664 |
| 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 period | -249,230 | -249,230 | -22,059 | -271,289 | |||
| Total comprehensive income for the | |||||||
| period | 0 | 0 | -249,230 | -249,230 | -22,059 | -271,289 | |
| Business combinations | 0 | 222,834 | 222,834 | ||||
| Change in non-controlling interests | -10,067 | -10,067 | 66,099 | 56,032 | |||
| New share issue | 7,600 | 600,400 | 608,000 | 608,000 | |||
| Issue costs | -44,949 | -44,949 | -44,949 | ||||
| Effect of warrants | 117 | 117 | 117 | ||||
| Closing equity at 30 Sep 2011 | 5 | 24,266 | 1,768,179 | 195,187 | 1,987,632 | 300,288 | 2,287,920 |
| 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 | Jan-Sep | Jan-Sep |
| Operating activities | |||
| Operating loss Adjustments for depreciation, amortization and |
-303,676 | -277,384 | |
| impairment losses | 3,918 | 2,391 | |
| Adjustments for changes in fair value | 2 | 188,894 | 167,766 |
| Realized changes in value of short-term investments | 8,684 | 0 | |
| Interest paid | -26 | -25 | |
| Interest received | 3,053 | 2,650 | |
| Cash flow from operating activities before changes in working capital |
-99,153 | -104,602 | |
| Cash flow from changes in working capital | |||
| Increase (-)/Decrease (+) in operating receivables | -3,310 | -205 | |
| Increase (+)/Decrease (-) in operating liabilities | -5,651 | 3,976 | |
| Cash flow from operating activities | -108,114 | -100,831 | |
| Investing activities | |||
| Investments in intangible non-current assets | -1,772 | -1,190 | |
| Investments in tangible non-current assets | -4,611 | -283 | |
| Acquired liquid assets in subsidiaries | 4 | 5,363 | 12,878 |
| Investments in shares in joint ventures and associated companies | 7 | -56 951 | -79,362 |
| Investments in other long-term securities | 7 | -1,460 | -3,002 |
| Change in short-term investments | 238,431 | -385,408 | |
| Sale of shares in joint ventures and associated companies | 3,217 | 21,811 | |
| Sale of other long-term securities | 0 | 540 | |
| Loans provided to associated companies | -38,542 | -23,400 | |
| Cash flow from investing activities | 143,675 | -457,416 | |
| Financing activities | |||
| Non-controlling interests' share of subsidiary issue | 4,137 | 53,121 | |
| New share issue | 0 | 608,000 | |
| Issue costs | 0 | -44,949 | |
| Warrants | 0 | 117 | |
| Amortization of interest-bearing liabilities | -325 | 0 | |
| Cash flow from financing activities | 3,812 | 616,289 | |
| Cash flow for the period | 39,373 | 58,042 | |
| Cash and cash equivalents at beginning of period | 163,347 | 107,325 | |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 202,720 | 165,367 |
Supplemental disclosure
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 202,720 | 165,367 |
|---|---|---|
| Short-term investments, market value on closing date | 213,136 | 526,534 |
| CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS AT END OF PERIOD | 415,856 | 691,901 |
| 2012 | 2011 | 2012 | 2011 | 2011 | ||
|---|---|---|---|---|---|---|
| Amounts in SEK 000 | Note | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Net sales | 976 | 411 | 2,701 | 1,807 | 2,467 | |
| Revenue | 976 | 411 | 2,701 | 1,807 | 2,467 | |
| Other external expenses | -5,939 | -4,407 | -21,449 | -24,758 | -32,174 | |
| Personnel costs | -7,887 | -6,512 | -22,268 | -23,095 | -32,066 | |
| Depreciation of tangible non-current assets | -1 | -17 | -4 | -50 | -67 | |
| Impairment losses on shares in subsidiaries, joint ventures, associated companies and other long-term |
||||||
| securities holdings | -24,031 | -53,984 | -134,966 | -117,938 | -125,961 | |
| Result from sale of portfolio companies | 8 | 43,222 | 0 | 43,269 | 0 | 6,239 |
| Operating loss | 6,340 | -64,509 | -132,717 | -164,034 | -181,562 | |
| Financial net | 3 | -28,030 | -4,525 | -21,838 | -9,684 | -6,183 |
| NET LOSS FOR THE PERIOD | -21,690 | -69,034 | -154,555 | -173,718 | -187,745 |
| 2012 | 2011 | 2012 | 2011 | 2011 | |
|---|---|---|---|---|---|
| Amounts in SEK 000 Note |
Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Net loss for the period | -21,690 | -69,034 | -154,555 | -173,718 | -187,745 |
| Total comprehensive income for the period | -21,690 | -69,034 | -154,555 | -173,718 | -187,745 |
| Attributable to: | |||||
| Parent Company's shareholders | -21,690 | -69,034 | -154,555 | -173,718 | -187,745 |
| TOTAL | -21,690 | -69,034 | -154,555 | -173,718 | -187,745 |
| Amounts in SEK 000 | Note | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 |
|---|---|---|---|---|
| Assets | ||||
| Non-current assets | ||||
| Tangible non-current assets | 11 | 59 | 42 | |
| Shares in subsidiaries, joint ventures, associated companies and other | ||||
| long-term securities holdings | 4 | 922,753 | 828,128 | 879,819 |
| Loans receivable joint ventures and associated companies | 12,103 | 8,400 | 3,675 | |
| Other financial assets | 2,301 | 1,959 | 2,080 | |
| Total non-current assets | 937,168 | 838,546 | 885,616 | |
| Current assets | ||||
| Accounts receivable | 413 | 228 | 49 | |
| Group receivables | 247 | 1,523 | 74 | |
| Other receivables | 2,425 | 8,071 | 5,766 | |
| Prepaid expenses and accrued income | 2,732 | 2,138 | 881 | |
| Short-term investments | 213,136 | 526,532 | 457,249 | |
| Cash and cash equivalents | 108,445 | 57,235 | 68,319 | |
| Total current assets | 327,398 | 595,727 | 532,338 | |
| TOTAL ASSETS | 1,264,566 | 1,434,273 | 1,417,954 | |
| Equity and liabilities | ||||
| Equity | ||||
| Restricted equity | ||||
| Share capital | 5 | 24,266 | 24,266 | 24,266 |
| Unrestricted equity | ||||
| Share premium reserve | 1,778,253 | 1,778,253 | 1,778,253 | |
| Retained earnings | -395,026 | -207,281 | -207,281 | |
| Net loss for the period | -154,555 | -173,718 | -187,745 | |
| Total equity | 1,252,938 | 1,421,520 | 1,407,493 | |
| Long-term liabilities | ||||
| Pension obligations | 2,301 | 1,959 | 2,080 | |
| Total long-term liabilities | 2,301 | 1,959 | 2,080 | |
| Current liabilities | ||||
| Accounts payable | 1,906 | 2,252 | 807 | |
| Group liabilities | 70 | 0 | 0 | |
| Other current liabilities | 1,676 | 3,593 | 1,530 | |
| Accrued expenses and deferred income | 5,675 | 4,949 | 6,044 | |
| Total current liabilities | 9,327 | 10,794 | 8,381 | |
| Total liabilities | 11,628 | 12,753 | 10,461 | |
| TOTAL EQUITY AND LIABILITIES | 1,264,566 | 1,434,273 | 1,417,954 |
| Amounts in SEK 000 | Note | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 |
|---|---|---|---|---|
| Pledged assets | 6 | 2,301 | 4,984 | 2,080 |
| Contingent liabilities | 6 | 1,200 | 900 | 900 |
| Total | 3,501 | 5,884 | 2,980 |
| Condensed statement of changes in equity for the Parent Company | |||||
|---|---|---|---|---|---|
| ----------------------------------------------------------------- | -- | -- | -- | -- | -- |
| Restricted equity | Unrestricted equity | |||||
|---|---|---|---|---|---|---|
| Share | ||||||
| premium | Retained | Net loss for | ||||
| Amounts in SEK 000 | Note | Share capital | reserve | earnings | the period | 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 period | -154,555 | -154,555 | ||||
| Closing equity at 30 Sep 2012 | 5 | 24,266 | 1,778,253 | -395,026 | -154,555 | 1,252,938 |
| 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 period | -173,718 | -173,718 | ||||
| Total | 16,666 | 1,222,685 | -207,281 | -173,718 | 858,352 | |
| New share issue | 7,600 | 600,400 | 608,000 | |||
| Issue costs | -44,949 | -44,949 | ||||
| Warrants | 117 | 117 | ||||
| Closing equity at 30 Sep 2011 | 5 | 24,266 | 1,778,253 | -207,281 | -173,718 | 1,421,520 |
| 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 | 2011 | |
| Amounts in SEK 000 | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Subsidiaries | |||||
| Change in fair value | 17,982 | 2,259 | 43,327 | 59,472 | 67,819 |
| Joint ventures and associated companies | |||||
| Change in fair value | -46,431 | -36,894 | -63,661 | -44,289 | -118,789 |
| Impairment losses¹ | -20,537 | -61,400 | -125,816 | -119,900 | -117,832 |
| Other long-term securities holdings | |||||
| Change in fair value | 1,508 | -6,608 | 583 | -3,577 | -4,675 |
| Impairment losses¹ | 0 | 0 | 0 | 0 | -2,500 |
| Change in fair value of total portfolio holdings | -47,478 | -102,643 | -145,567 | -108,294 | -175,977 |
| Group eliminations | |||||
| Less change in fair value of subsidiaries | -17,982 | -2,259 | -43,327 | -59,472 | -67,819 |
| Net loss from changes in fair value | -65,460 | -104,902 | -188,894 | -167,766 | -243,796 |
| Consolidated revenue and other expenses (including | |||||
| financial net) | -64,410 | -42,394 | -137,778 | -118,752 | -161,864 |
| Consolidated loss before tax | -129,870 | -147,296 | -326,672 | -286,518 | -405,660 |
¹In the Group's internal follow-up the change in the value of discontinued projects is recognized as impairments
The aggregate loss from changes in the fair value of the portfolio companies amounted to SEK -145.6m (-108.3) during the ninemonth period, which includes a positive change in the fair value of subsidiaries of SEK 43.3m (59.5). 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 net loss from changes in the fair value of joint ventures, associated companies and other long-term securities holdings amounted to SEK -188.9m (-167.8).
| Fair value of portfolio companies | ||||
|---|---|---|---|---|
| Amounts in SEK 000 | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 | |
| Fair value of total portfolio holdings | ||||
| Subsidiaries | 839,417 | 518,943 | 542,001 | |
| Joint ventures and associated companies | 669,561 | 1,017,651 | 980,276 | |
| Other long-term securities holdings | 26,630 | 27,272 | 24,587 | |
| Fair value of total portfolio holdings | 1,535,608 | 1,563,866 | 1,546,864 | |
| Less fair value in subsidiaries | -839,417 | -518,943 | -542,001 | |
| Group | 696,191 | 1,044,923 | 1,004,863 |
| Joint ventures & |
Other long | Total | ||
|---|---|---|---|---|
| associated | term | portfolio | ||
| Amounts in SEK 000 | Subsidiaries | companies | securities | holdings |
| Accumulated fair value | ||||
| Opening balance at 1 Jan 2011 | 209,108 | 1,220,791 | 24,761 | 1,454,660 |
| Investments (Note 7) | 69,000 | 165,862 | 3,002 | 237,864 |
| Reclassifications | 182,173 | -185,799 | 3,626 | 0 |
| Sale of shares | -810 | -21,811 | -540 | -23,161 |
| Reversal of profit share from KCIF Co-Investment Fund KB | 0 | 2,797 | 0 | 2,797 |
| Changes in fair value and impairment losses | 59,472 | -164,189 | -3,577 | -108,294 |
| Closing balance at 30 Sep 2011 | 518,943 | 1,017,651 | 27,272 | 1,563,866 |
| 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 | 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 |
| Investements (Note 7) | 75,949 | 129,587 | 1,460 | 206,996 |
| Reclassifications (Note 4) | 178,140 | -178,140 | 0 | 0 |
| Sale of shares | 0 | -72,685¹ | 0 | -72,685 |
| Changes in fair value and impairment losses | 43,327 | -189,477 | 583 | -145,567 |
| Closing balance at 30 Sep 2012 | 839,417 | 669,561 | 26,630 | 1,535,608 |
¹ Of which SEK 72,636 thousand relates to Oncopeptides AB (Note 4)
| Amounts in SEK 000 | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 |
|---|---|---|---|
| Aggregate fair value of total portfolio holdings | 1,535,608 | 1,563,866 | 1,546,864 |
| Less fair value of consolidated subsidiaries | -839,417 | -518,943 | -542,001 |
| Other consolidated assets | 1,465,245 | 1,419,573 | 1,340,996 |
| Consolidated total assets | 2,161,436 | 2,464,496 | 2,345,859 |
| Group | ||||||
|---|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | 2011 | ||
| Amounts in SEK 000 | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year | |
| Interest income | 1,881 | 4,096 | 3,886 | 4,972 | 6,247 | |
| Interest expenses | -6 | -16 | -26 | -24 | -36 | |
| Change in value of short-term investments | 1,827 | -2,100 | 6,536 | 4,519 | 10,036 | |
| Exchange rate gains and losses | -1,129 | 203 | -2,101 | -101 | -2 | |
| Impairment of loans receivable from joint ventures and | ||||||
| associated companies | -31,291¹ | -6,500 | -31,291 | -18,500 | -21,230 | |
| Financial net | -28,718 | -4,317 | -22,996 | -9,134 | -4,985 |
¹ Refers to write-down of loan receivables from Pergamum
| Parent Company | ||||||
|---|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | 2011 | ||
| Amounts in SEK 000 | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year | |
| Interest income | 1,506 | 3,893 | 3,170 | 4,331 | 5,017 | |
| Interest expenses | 0 | -3 | -4 | -4 | -6 | |
| Change in value of short-term investments | 1,866 | -2,100 | 6,398 | 4,519 | 10,036 | |
| Exchange rate gains and losses | -111 | 185 | -111 | -30 | 0 | |
| Impairment of loans receivable from joint ventures and associated companies |
-31,291¹ | -6,500 | -31,291 | -18,500 | -21,230 | |
| Financial net | -28,030 | -4,525 | -21,838 | -9,684 | -6,183 |
¹ Refers to write-down of loan receivables from Pergamum
| Total ownership interest, %¹ | ||||
|---|---|---|---|---|
| 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 | ||
| Subsidiaries | ||||
| Aprea AB² | 69.43 | - | - | |
| Aprea Personal AB (dormant) | 69.43 | - | - | |
| Axelar AB | 45.29 | 40.03 | 40.03 | |
| Clanotech AB | 88.31 | 86.32 | 86.94 | |
| Daffodil AB (dormant) | 100.00 | - | - | |
| HBV Theranostica AB (dormant) | 100.00 | - | - | |
| Inhalation Sciences Sweden AB | 74.72 | 68.75 | 72.11 | |
| KCIF Fund Management AB | 37.50 | 37.50 | 37.50 | |
| KD Incentive AB | 100.00 | 100.00 | 100.00 | |
| KDev Exploratory AB (formerly Actar AB) | 100.00 | 99.96 | 100.00 | |
| KDev Oncology AB | 100.00 | 100.00 | 100.00 | |
| Akinion Pharmaceuticals AB | 90.32 | 88.09 | 88,09 | |
| GliGene AB | 34.65 | - | 10,13 | |
| Limone AB | 100.00 | 100.00 | 100.00 | |
| NovaSAID AB | 88.91 | 88.91 | 88.91 | |
| Pharmanest AB | 60.24 | 53.57 | 56.53 | |
| Joint ventures | ||||
| Aprea AB² | - | 41.12 | 41.12 | |
| Athera Biotechnologies AB | 64.57 | 62.19 | 62.19 | |
| Avaris AB | 94.87 | 68.40 | 68.40 | |
| BioChromix Pharma AB | 76.47 | 58.96 | 68.77 | |
| Bioneris AB (in liquidation) | 26.31 | 26.31 | 26.31 | |
| Biosergen AS | 60.26 | 56.79 | 60.26 | |
| Dilafor AB | 54.76 | 54.76 | 54.76 | |
| Dilaforette Holding AB | 62.12 | 54.02 | 57.96 | |
| Dilaforette AB | 62.12 | 54.02 | 57,96 | |
| HBV Theranostica AB (dormant) | - | 72.52 | 72.52 | |
| IMED AB (divested) | - | 57.38 | - | |
| Lipidor AB | 46.13 | 39.98 | 39.98 | |
| NeoDynamics AB | 20.72 | 25.74 | 25.74 | |
| Oncopeptides AB (divested) (Note 8) | - | 42.32 | 43.36 | |
| OncoReg AB (liquidated) | - | 88.91 | - | |
| Pergamum AB | 61.93 | 61.75 | 61.93 | |
| DermaGen AB | 61.93 | 61.75 | 61,93 | |
| Laurantis Pharma OY | 6.07 | 6.07 | 6,07 | |
| Lipopeptide AB | 61.93 | 61.75 | 61,93 | |
| PharmaSurgics in Sweden AB | 61.93 | 61.75 | 61,93 | |
| XImmune AB | 5.16 | 6.18 | 5,36 | |
| ProNoxis AB (divested) | - | 17.60 | 19.83 | |
| Umecrine Cognition AB | 54.17 | 46.25 | 54.17 | |
| Umecrine Mood AB | 42.88 | 42.87 | 42.87 | |
| XSpray Microparticles AB | 61.81 | 60.80 | 60.80 | |
| Associated companies | ||||
| KCIF Co-Investment Fund KB | 26.00 | 26.00 | 26.00 | |
| Oss-Q AB | 15.63 | - | 15.69 | |
| Promimic AB | 28.42 | 24.50 | 24.50 | |
| Other long-term securities holdings | ||||
| BioArctic NeuroScience AB | 3.17 | 3.17 | 3.17 | |
| BioChromix AB | 13.94 | 6.40 | 9.34 | |
| BioResonator AB (in liquidation) | 7.62 | 7.62 | 7.62 | |
| CytoGuide ApS | 9.06 | 9.06 | 9.06 | |
| NephroGenex Inc. | 0.58 | 0.58 | 0.58 | |
| Umecrine AB | 10.41 | 10.41 | 10.41 |
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 controlling interest of Aprea as of 27 August 2012; see below under "Business combinations"
| Book value in Parent Company | |||
|---|---|---|---|
| Amounts in SEK 000 | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 |
| Subsidiaries | |||
| Aprea AB¹ | 119,235 | - | - |
| Axelar AB | 73,343 | 48,343 | 48,343 |
| Clanotech AB | 43,694 | 34,695 | 37,194 |
| Daffodil AB (dormant) | 50 | - | - |
| HBV Theranostica AB (dormant) | 50 | - | - |
| Inhalation Sciences Sweden AB | 28,238 | 19,738 | 24,238 |
| KCIF Fund Management AB | 143 | 43 | 43 |
| KD Incentive AB | 200 | 100 | 200 |
| KDev Exploratory AB (formerly Actar AB) | 8,180 | 6,511 | 3,679 |
| KDev Oncology AB | 67,070 | 0 | 1,000 |
| Akinion Pharmaceuticals AB | - | 48,070 | 48,070 |
| Limone AB | 733 | 1,500 | 296 |
| NovaSAID AB | 74,407 | 74,407 | 74,407 |
| Pharmanest AB | 23,174 | 9,966 | 15,075 |
| Total book value subsidiaries | |||
| 438,517 | 243,373 | 252,545 | |
| Total fair value subsidiaries | 839,417 | 518,943 | 542,001 |
| Joint ventures Aprea AB¹ |
- | 46,199 | 46,199 |
| Athera Biotechnologies AB | 93,787 | 74,797 | 74,797 |
| Avaris AB | 0 | 0 | 0 |
| BioChromix Pharma AB | 27,850 | 12,350 | 19,350 |
| Bioneris AB (in liquidation) | 0 | 0 | 0 |
| Biosergen AS | 21,370 | 19,013 | 21,370 |
| Dilafor AB | 88,831 | 88,831 | 88,831 |
| Dilaforette Holding AB | 17,188 | 188 | 7,188 |
| Eribis AB (divested) | - | 0 | - |
| HBV Theranostica AB (dormant) | - | 0 | 0 |
| IMED AB (divested) | - | 0 | - |
| Lipidor AB | 12,998 | 9,000 | 9,000 |
| NeoDynamics AB | 11,097 | 11,097 | 11,097 |
| Oncopeptides AB (divested) (Note 8) | - | 18,536 | 22,914 |
| OncoReg AB (liquidated) | - | 0 | - |
| Pergamum AB | 85,475 | 198,643 | 210,850 |
| ProNoxis AB (divested) | - | 4,500 | 5,500 |
| Umecrine Cognition AB | 14,700 | 8,200 | 14,700 |
| Umecrine Mood AB | 27,850 | 25,112 | 25,112 |
| XSpray Microparticles AB | 36,628 | 33,708 | 33,708 |
| Associated companies | |||
| KCIF Co-Investment Fund KB | 13,871 | 10,513 | 10,527 |
| Oss-Q AB | 3,650 | - | 3,650 |
| Promimic AB | 13,100 | 8,100 | 8,100 |
| Total book value joint ventures and associated companies | 468,395 | 568,787 | 612,893 |
| Total fair value joint ventures and associated companies | 669,561 | 1,017,651 | 980,276 |
| Other long-term securities holdings | |||
| BioArctic NeuroScience AB | 600 | 600 | 600 |
| BioChromix AB | 3,834 | 1,461 | 2,374 |
| BioResonator AB (in liquidation) | 0 | 2,500 | 0 |
| CytoGuide ApS | 3,300 | 3,300 | 3,300 |
| Independent Pharmaceutica AB (liquidated) | - | 0 | - |
| NephroGenex Inc. | 709 | 709 | 709 |
| Umecrine AB | 7,398 | 7,398 | 7,398 |
| Total book value other long-term securities holdings | 15,841 | 15,968 | 14,381 |
| Total fair value other long-term securities holdings | 26,630 | 27,272 | 24,587 |
¹Karolinska Development has controlling interest of Aprea as of 27 August 2012; see below under "Business combinations"
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 controlling interest of 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.
| Share of acquired equity that carries a |
||||
|---|---|---|---|---|
| Subsidiary | Operations | Acquisition date | 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 revenue Industrifonden receives from Oncopeptides up to SEK 80m, while Industrifonden can receive a 5% share of any 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.
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 | 18 | -969 |
| Amounts in SEK 000 | Revenue | Loss before tax |
|---|---|---|
| Aprea AB | 268 | -11,350 |
The number of shares has changed as follows:
| Increase | Number | |||||||
|---|---|---|---|---|---|---|---|---|
| Number of | in share | Share | of A | Number of | Subscription | Par | ||
| Year | Transaction | shares | capital | capital | shares | B shares | price | 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 30 Sep 2012 | 48,531,417 | 24,265,709 | 1,503,098 | 47,028,319 | 0.5 |
| Group | ||||
|---|---|---|---|---|
| Amounts in SEK 000 | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 | |
| Net assets | ||||
| Cash and cash equivalents | 202,720 | 165,367 | 163,347 | |
| Short-term investments | 213,136 | 526,534 | 457,249 | |
| Loans receivable joint ventures and associated companies | 12,103 | 11,425¹ | 3,675 | |
| Financial liabilities | -1,675 | -2,000 | -2,000 | |
| Total net assets | 426,284 | 701,326 | 622,271 | |
| Estimated fair value of portfolio companies including subsidiaries | 1,535,608 | 1,563,866 | 1,546,864 | |
| Total net asset value | 1,961,892 | 2,265,192 | 2,169,135 | |
| Number of shares | 48,531,417 | 48,531,417 | 48,531,417 | |
| Net asset value per share | 40.43 | 46.67 | 44.70 |
¹The amount includes a restricted account with a balance of SEK 3,025 thousand. In the statement of financial position, the amount is included in other current receivables.
Karolinska Development has entered into an investment commitment of SEK 25.0m related to Axelar AB. No additional financing commitments to portfolio companies exist other than to Axelar AB.
| Parent Company | |||||
|---|---|---|---|---|---|
| Amounts in SEK 000 | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 | ||
| Pledged assets | |||||
| Restricted account | 0 | 3,025 | 0 | ||
| Endowment insurance | 2,301 | 1,959 | 2,080 | ||
| Total pledged assets | 2,301 | 4,984 | 2,080 | ||
| Investment commitments | |||||
| Biocelex | 1,000 | 500 | 500 | ||
| Uminova | 200 | 400 | 400 | ||
| Total contingent liabilities | 1,200 | 900 | 900 | ||
| Total | 3,501 | 5,884 | 2,980 |
. Axelar AB acquired the rights to its projects patent applications from another legal entity during 2005. If Axelar transfers its project to another third party in the future the seller has the right to receive repayment of its development costs up to a maximum of SEK 26m.
| 2012 | 2011 | 2012 | 2011 | 2011 | |
|---|---|---|---|---|---|
| Amounts in SEK 000 | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Investments in subsidiaries | |||||
| Akinion Pharmaceuticals AB | 0 | 0 | 0 | 30,000 | 30,000 |
| Axelar AB | 0 | 0 | 25,000 | 20,000 | 20,000 |
| Clanotech AB | 4,500 | 0 | 6,500 | 0 | 2,499 |
| Daffodil AB | 0 | 0 | 50 | 0 | 0 |
| HBV Theranostica AB | 150 | 0 | 200 | 0 | 0 |
| Inhalation Sciences Sweden AB | 0 | 0 | 4,000 | 2,500 | 7,000 |
| KCIF Fund Management AB | 100 | 0 | 100 | 0 | 0 |
| KD Incentive AB | 0 | 0 | 0 | 0 | 100 |
| KDev Exploratory AB (formerly Actar AB) | 0 | 0 | 10,000 | 0 | 2 |
| KDev Oncology AB | 0 | 0 | 18,000 | 0 | 1,000 |
| Limone AB | 0 | 0 | 4,000 | 1,500 | 3,000 |
| NovaSAID AB | 0 | 0 | 0 | 12,000 | 12,000 |
| Pharmanest AB | 4,380 | 0 | 8,099 | 3,000 | 8,110 |
| Total investments in subsidiaries | 9,130 | 0 | 75,949 | 69,000 | 83,711 |
| Investments in joint ventures and associated companies | |||||
| Aprea AB (Note 4) | 72,636 | 0 | 72,636 | 12,470 | 12,470 |
| Athera Biotechnologies AB | 0 | 0 | 18,991 | 8,760 | 8,760 |
| Avaris AB | 0 | 0 | 444 | 1,800 | 1,800 |
| BioChromix Pharma AB | 8,500 | 0 | 8,500 | 3,000 | 10,000 |
| Biosergen AS | 0 | 3,899 | 0 | 3,899 | 6,256 |
| Dilafor AB | 0 | 0 | 0 | 9,000 | 9,000 |
| Dilaforette Holding AB | 0 | 0 | 10,000 | 188 | 7,188 |
| Eribis Pharmaceuticals AB | 0 | 0 | 0 | 2,490 | 2,490 |
| HBV Theranostica AB | 0 | 0 | 0 | 200 | 200 |
| KCIF Co-Investment Fund KB | 1,080 | 1,888 | 3,360 | 5,834 | 5,834 |
| Lipidor AB | 0 | 0 | 3,998 | 4,997 | 4,997 |
| NeoDynamics AB | 0 | 0 | 0 | 3,546 | 3,546 |
| Oncopeptides AB | 0 | 0 | 0 | 0 | 4,378 |
| Oss-Q AB | 0 | 0 | 0 | 0 | 3,650 |
| Pergamum AB | 0 | 0 | 0 | 95,857 | 108,065 |
| Promimic AB | 0 | 0 | 5,000 | 0 | 0 |
| ProNoxis AB | 0 | 0 | 1,000 | 1,500 | 2,500 |
| Umecrine Cognition AB | 0 | 0 | 0 | 1,200 | 7,700 |
| Umecrine Mood AB | 0 | 0 | 2,738 | 5,286 | 5,286 |
| XSpray Microparticles AB | 0 | 5,835 | 2,920 | 5,835 | 5,835 |
| Total investments in joint ventures and associated | |||||
| companies | 82,216 | 11,622 | 129,587 | 165,862 | 209,955 |
| Investments in other long-term securities holdings | |||||
| BioChromix AB | 0 | 0 | 1,460 | 2,002 | 2,915 |
| Umecrine AB | 0 | 0 | 0 | 1,000 | 1,000 |
| Total investments in other long-term securities holdings | 0 | 0 | 1,460 | 3,002 | 3,915 |
| Total investments | 91,346 | 11,622 | 206,996 | 237,864 | 297,581 |
| 2012 | 2011 | 2012 | 2011 | 2011 | |
|---|---|---|---|---|---|
| Amounts in SEK 000 | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Conversions of previously issued loans | |||||
| Aprea AB | 0 | 0 | 0 | 5,900 | 5,900 |
| Biosergen AS | 0 | 2,425 | 0 | 2,425 | 2,425 |
| Dilaforette Holding AB | 0 | 0 | 0 | 0 | 4,000 |
| NeoDynamics AB | 0 | 0 | 0 | 546 | 546 |
| Oncopeptides AB | 0 | 0 | 0 | 0 | 4,378 |
| Pergamum AB | 0 | 0 | 0 | 77,629 | 77,629 |
| Other investments not affecting cash flow | 0 | ||||
| HBV Theranostica AB | 150 | 0 | 150 | 0 | 0 |
| Aprea AB (Note 4) | 72,636 | 0 | 72,636 | 0 | 0 |
| Total investments not affecting cash flow during the period | 72,786 | 2,425 | 72,786 | 86,500 | 94,878 |
| Parent Company | |||||
|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | 2011 | |
| Amounts in SEK 000 | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Full-year |
| Capital gain/loss | |||||
| Oncopeptides AB | 49,722 | 0 | 49,722 | 0 | 0 |
| ProNoxis AB | -6,500 | 0 | -6,500 | 0 | 0 |
| Independent Pharmaceutica AB | 0 | 0 | 47 | 0 | 3,022 |
| IMED AB | 0 | 0 | 0 | 0 | 3,217 |
| Gain/loss on sale of portfolio companies | 43,222 | 0 | 43,269 | 0 | 6,239 |
The capital gain on Oncopeptides AB has arisen as a result of the share exchange with Industrifonden. The disclosure of the transaction is based on the fair value of the shares received in Aprea. No cash consideration was paid.
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 Note 6.
On 23 May 2012, the Annual General Meeting resolved on a Performance Share Program for management based on the participants acquiring shares ("Saving Shares") on the open market. Under certain conditions, the participants will be allotted, free of charge, a maximum of five Performance Share Rights and one Matching Share Right by the company for each Saving Share they acquire. The Matching and Performance Share Rights will be allotted after three years. The total number of Performance and Matching Share Rights is 480,000. The program comprises a maximum of ten participants.
There are no performance conditions for the Matching Share Rights, but each participant must remain an employee on the allotment date. The conditions for the Performance Share Rights are related to Karolinska Development's share price performance and a comparison between what are called the Start Price and the 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 ten trading days beginning on 2 May 2015. For any allotment to be made at all, 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.
The company intends to cover the social security contributions related to the program by acquiring and transferring not more than 150,800 of its own shares. As of 30 September 2012, no Saving Shares had been acquired. The Performance Share Program has not had any impact on the company's results and financial position as of 30 September 2012.
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