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Active Biotech — Annual Report 2009
Apr 20, 2010
3133_10-k_2010-04-20_5a208359-67a1-4ee3-80e0-1bcb8ad20876.pdf
Annual Report
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Annual Report 2009
Contents
| Active Biotech in brief | 3 |
|---|---|
| Comments from the CEO | 4 |
| Directors' report | 6 |
| T H E G R O U P | |
| Income statement | 13 |
| Cash-flow statement | 13 |
| Comprehensive income | 13 |
| Financial position | 13 |
| Changes in shareholders' equity | 14 |
| T H E PA R E N T CO M PA N Y | |
| Income statement | 14 |
| Cash-flow statement | 14 |
| Balance sheet | 15 |
| Changes in shareholders' equity | 15 |
| Notes to the financial reports | 16 |
| Audit report | 37 |
| Financial development | 38 |
| The share | 39 |
| Intellectual property rights | 42 |
| Corporate Governance Report 2009 43 | |
| Board of Directors and Auditors | 46 |
| Management Group | 47 |
| Glossary | 48 |
| Business concept, goals and business strategy |
48 |
Financial information
| Interim report (Q1) | April 22, 2010 |
|---|---|
| Annual General Meeting | May 6, 2010 |
| Interim report (Q2) | Aug 11, 2010 |
| Interim report (Q3) | Oct 27, 2010 |
| Year-end report for 2010 Feb 10, 2011 |
Financial information can be requested from Active Biotech AB, PO Box 724, SE-220 07 Lund, Sweden. Telephone +46 (0)46-19 20 00, fax +46 (0)46-19 11 00. Information can also be obtained from our website www.activebiotech.com.
This Annual Report contains forward-looking information regarding Active Biotech. Although we believe that our expectations are based on reasonable assumptions, forward-looking statements could be affected by factors causing the actual outcome and trend to differ materially from the forecast. The forward-looking statements comprise various risks and uncertainties. There are significant factors that could cause the actual outcome to differ from that implied by these forward-looking statements, some of which are beyond our control. These include the risk that patent rights might expire or be lost, exchange-rate movements, the risk that research and development operations do not result in commercially successful new products, competition effects, tax risks, effects resulting from the failure of a third party to deliver products or services, difficulties in obtaining and maintaining official approval for products, and environmental responsibility risks.
Annual General Meeting
The Annual General Meeting of Active Biotech AB (publ) is to be held on Thursday, May 6, 2010 at 5:00 p.m. at the company's premises at Scheelevägen 22 in Lund, Sweden. Shareholders who wish to participate in the Meeting must (a) be recorded in the register of shareholders maintained by Euroclear Sweden AB (formerly VPC AB) on Thursday, April 29, 2010 and (b), notify the company of their intention to participate in the Meeting not later than 4:00 p.m. on Thursday, April 29, 2010.
Shareholders who have trustee-registered shares must temporarily re-register the shares in their own name with Euroclear Sweden to be entitled to participate in the Meeting. This registration must be completed not later than Thursday, April 29, 2010. Accordingly, shareholders must inform the trustee of this request in ample time prior to this date.
Notice of participation
Notice of participation can be made in writing to Active Biotech AB (publ), Attn. Susanne Jönsson, PO Box 724, SE-220 07 Lund, Sweden, by fax +46 (0)46-19 20 50, by telephone to +46 (0)46-19 20 00 or by e-mail to [email protected]. The notice shall include name, personal/corporate registration number, number of shares held, daytime telephone number and, if applicable, the number of advisors (two at the most) that will accompany the shareholder at the Meeting.
The notice of the Annual General Meeting is available in its entirety on the company's website www.activebiotech.com.
Active Biotech in brief 3
Active Biotech currently has five projects in clinical phase, two of which are outlicensed. Three of the projects relate to drugs for the treatment of the autoimmune diseases MS, SLE and RA, and two of the projects focus on drugs for the treatment of cancer, mainly renal cell cancer and prostate cancer. In addition, Active Biotech pursues a preclinical project, ISI.
- n Laquinimod is a compound under development for the treatment of autoimmune diseases, including MS. Compared with existing treatment alternatives, laquinimod has the advantage of being orally administered. Active Biotech has signed an agreement with the Israeli pharmaceutical company Teva for the development and commercialization of laquinimod. Clinical Phase III trials are currently under way and include more than 2,000 patients. In February 2009, fast-track status was granted by the US Food and Drug Administration, FDA, which means that laquinimod may be launched in the US in 2011.
- n With the TASQ project, Active Biotech is developing an antiangiogenic compound that attacks the tumor's growth by inhibiting the formation of blood vessels in the tumor. The development of TASQ is mainly focused on the treatment of prostate cancer. In December 2009, the first results were presented from the ongoing Phase II trial with slightly more than 200 patients. The primary endpoint – to show a higher fraction of patients with no disease progression following a six-month period of treatment with TASQ – was achieved. Planning for pivotal Phase III trials is under way.
- n ANYARA is a protein drug that makes the treatment of cancer tumor-specific. The development of ANYARA is primarily focused on renal cell cancer, but the compound has also demonstrated favorable results in connection with the treatment of, for example, non-small cell lung cancer. The compound is currently undergoing pivotal Phase III trials encompassing just over 500 renal cell cancer patients. The results from the study are expected to be presented during the first half of 2011.
- n 57-57 is a compound for treatment of SLE, a disease that causes inflammation and damage to the connective tissue of many organs in the body with serious secondary symptoms, such as renal failure. Phase I clinical trials were concluded in 2008. In 2009, an explorative clinical study that will include up to 20 SLE patients in Sweden and Denmark was initiated. The aim of the trial is to study how the parameters that correlate with disease activity are affected by the treatment.
- n ISI is a project that was launched in 2008. The aim of the project is to utilize the company's own preclinical results that were generated around a target molecule, S100A9, for the quinoline compounds and their biological mode of action. The objective of the project it to produce new, patentable chemical compounds that interact with S100A9. The selection of a candidate drug is expected to take place in 2011.
- n RhuDexTM is a compound that is primarily intended to be used as a drug for the treatment of RA. Active Biotech has entered into a licensing agreement with the German pharmaceutical company MediGene AG, which grants MediGene the exclusive right to further develop and market the product. Phase II clinical trials were concluded in 2008. In December 2009, MediGene announced that further preclinical studies were to be conducted in 2010 to optimize the continued clinical development program. Clinical trials are expected to be resumed at the end of 2010 or beginning of 2011.
An exceptional year
Active Biotech had a highly successful year and this should be a source of gratification to us all. At the same time, I would like to emphasize that it is the long-term approach and perseverance of our shareholders that is now yielding results in the form of an appreciation in the value of the company after nearly a decade. This appreciation in value is based on successes in our projects.
It is also important to keep mind that the aim of our work is to provide improved treatment alternatives for patients affected by serious diseases. If we achieve this goal, the company's value will continue to increase accordingly.
The year 2009 was a very positive 12 months for Active Biotech's shareholders. On the last trading day in 2008, the share was valued at SEK 31.00, while the same share was valued at SEK 100.75 one year later. Since the company implemented a rights issue in 2009, it is more relevant to compare the company's market capitalization on both of these dates. With such an analysis at hand, we can see that the company had a total value of about SEK 1.6 billion at the end of 2008 – and about SEK 6.5 billion at the close of 2009.
Active Biotech's market capitalization has thus increased in value by 306 percent. At a time such as this, it is important to take a step back and reflect on what is company-specific and what is governed by the external environment; I will come back to the company's project-related events below. We can start by noting that the Stockholm general index rose 47 percent during the period, with its biotech index recording an 88-percent rise. It is also worth noting that the value of the share at the beginning of the year was depressed due to the ongoing financial crisis and a generally turbulent financial market. Finally, we can see that at the end of 2009, the company's value was the highest since its foundation, with the previous highest value noted in 2000 (about SEK 4.2 billion).
Focus on the company's financing
Active Biotech remains a loss-making company. According to current plans, the company will continue in this manner until 2011/2012. The primary focus for management and the Board must therefore be to ensure the company's financing. Consequently, the approval of a renewed mandate authorizing the Board to issue new shares will be requested at the AGM. In 2009, we implemented a rights issue which generated SEK 249 million in net proceeds for the company. Leasing of premises and commissioned research work also yielded revenues of nearly SEK 11 million. At the beginning of April 2010, Active Biotech raised a further SEK 149 million through a directed share issue placed in funds managed by Sectoral Asset Management. As a result, the company has secured financing for the period until the first half of 2011. According to plan, we are expecting to receive revenues in
2010/11 from the out-licensing of the TASQ project and nonrecurring payments linked to the laquinimod agreement. Based on this scenario, Active Biotech currently has no plans for additional financing activities.
Laquinimod proceeding according to plan
Our lead project, laquinimod, is proceeding according to plan. In June 2009, together with our partners Teva, we announced that a second Phase III trial ("Bravo") for the treatment of multiple sclerosis (MS) was fully enrolled. This means that more than 2,000 patients are now participating in pivotal studies for this indication. The patients will be treated over a period of two years after which laquinimod's effect on disease progression will be determined. At the end of 2010, treatment of the final patient in the first Phase III study ("Allegro") will be complete. We can thus look forward to receiving final data with respect to laquinimod's effect on MS.
Teva also initiated clinical Phase II trials for the treatment of Crohn's disease with laquinimod and is also planning to initiate Phase II trials for the treatment of lupus nephritis and systemic lupus erythematosus (SLE) prior to summer 2010 (www.clinicaltrials.gov). All of these diseases are chronic, inflammatory diseases with an underlying autoimmune component. Active Biotech takes a very positive view of this development, since these increased investments in laquinimod could generate additional royalty revenues for the company in the long term, while Teva bears the entire cost of development. We look forward to following the progression of these clinical programs.
Fast-track status for laquinimod
Another important event during the year was the Active Biotech and Teva announcement that laquinimod has been granted fast-track status by the FDA. This will facilitate and thus accelerate the future registration process for laquinimod. In the same press release, it was mentioned that laquinimod could be available in the market as early as at the end of 2011. Finally, it can be noted that Teva published positive results during the year from the follow-up study of the earlier Phase II trial of laquinimod. A sustained effect on MS could be observed following nine months of treatment and the highly
favorable safety profile was retained. Several preclinical trials were also published that show that laquinimod confers both neuroprotective and anti-inflammatory properties.
New partnership agreement with Teva
In February 2010, Active Biotech and Teva announced that Teva had acquired the marketing and distributions rights for laquinimod in Active Biotech's territory. I am very pleased with this agreement for two reasons. Firstly, the royalties the company will receive in the Nordic/Baltic countries are very attractive and, secondly, it is my understanding that Teva will be a very efficient partner for sales in our territory. Furthermore, Active Biotech will avoid further increasing its costs to build up a sales organization.
57-57 – Exploratory study in progress
In February 2009, Active Biotech announced that the planned Phase II/III trial to be conducted by the company for the treatment of Systemic Lupus Erythematosus (SLE) within the 57-57 project would not go ahead. The reason for this decision was not based on scientific or medical arguments but on the necessity to limit the financial risk in the company. We initiated a small-scale, explorative study to further validate some of the effects on various biomarkers that were observed in the concluded Phase I study. This explorative study will be completed in 2010. Our partner Teva's growing interest in lupus-related indications means that Active Biotech will undertake a strategic review of the 57-57 project in 2010 to identify a maximum synergy with Teva's development program for laquinimod. I expect to announce a definite decision on our plans before the end of the year.
Approval for RhuDexTM – Continued significant potential against RA
The development of RhuDex is pursued by our partner MediGene. MediGene has concluded a Phase IIa trial and prepared a Proof of Concept Phase IIb trial for the treatment of rheumatoid arthritis (RA).
In 2008, a death unfortunately occurred in a Phase I trial during treatment with RhuDex in healthy volunteers. This death has been considered by MediGene to be unrelated to the compound, but following consultation with the concerned regulatory authority, a decision was made to compile supplementary documentation of the safety of RhuDex. In October 2009, MediGene announced that it had successfully concluded this supplementary preclinical documentation and was subsequently granted approval by the regulatory authority to continue the clinical development program. MediGene is planning to perform further preclinical studies on a proprietary basis in 2010, to then initiate new Phase II trials at the end of 2010 or beginning of 2011. The belief is still that RhuDex has significant potential to be an important therapy alternative for patients affected by RA.
ANYARA proceeding according to plan
The ANYARA project, for the treatment of renal cancer, proceeded according to plan during the year. In June 2009, we could announce that the ongoing Phase III trial was fully enrolled, meaning that more than 500 patients are included in the study. The primary endpoint of this study is overall survival. This means that the length of the trial will not have a set endpoint, but will be governed by events. Consequently, we cannot determine when it will be concluded, but my current assessment is that we will see results during first half of 2011. In 2009, Phase I results were also published for ANYARA from patients with renal cell cancer, pancreatic cancer and lung cancer in a scientific journal (Journal of Clinical Oncology).
TASQ reached the primary endpoint
For TASQ, Active Biotech's project for the treatment of prostate cancer, a Phase II clinical trial was fully enrolled in June 2009. Complete Phase I results were also published in a scientific journal (British Journal of Cancer). In the Phase II study, patients with metastasized, hormone-resistant prostate cancer are treated with either 1 mg/day TASQ or placebo over a period of six months. The primary endpoint was, through treatment with TASQ, to increase the proportion of patients who did not display disease progression. Disease progression includes increase in the size of the tumor, new metastases or serious pain that requires treatment with cytotoxins, radiation and or morphine. In December 2009, we were able to announce that the primary endpoint had been reached with high statistical significance. This means that we can now plan for the further clinical development of TASQ. In parallel with this activity, we will initiate discussions with potential partners for the project, which represents the greatest commercial challenge for the company in 2010.
Thank you for an exceptional year
In conclusion I can say that 2009 was an exceptional year for Active Biotech and for our projects. We have fully enrolled three major clinical trials, achieved proof of concept for the second time in the company's history, and published a first target molecule for quinolines. It only remains for me to extend my gratitude to all employees who, with a high degree of expertise and loyalty, help to advance this complicated business forward; and all shareholders whose confidence in Active Biotech allows us to develop new drugs.
Lund, Sweden April 2010 Tomas Leanderson, President and CEO O
Directors' report
The Board of Directors and President & CEO of Active Biotech AB (publ), Swedish corporate registration number 556223-9227, hereby submit their Annual Report and consolidated financial statements for the fiscal year January 1, 2009 to December 31, 2009. Active Biotech conducts operations as a limited liability company and has its registered office in Lund, Sweden.
Operations
Active Biotech is a company that focuses on pharmaceutical research and development in medical fields in which the immune system plays a central role. The company's research portfolio primarily includes projects for the development of drugs for the treatment of autoimmune/ inflammatory diseases and cancer.
The Group
The Group's legal structure is built around the Parent Company Active Biotech AB, which comprises Group-wide functions and asset management, as well as the wholly owned subsidiary Active Biotech Research AB, which conducts pharmaceutical research in Lund, and Active Forskaren 1 KB in Lund, which owns the property in which Active Biotech conducts operations.
Active Biotech's research operations
Active Biotech's field of expertise mainly comprises the human immune system. This knowledge is used to develop drugs for the treatment of autoimmune/inflammatory diseases and cancer.
The company currently has five projects in clinical development. Three of these projects involve the development of potential drugs intended for the treatment of autoimmune/ inflammatory diseases. The projects address the indications multiple sclerosis, MS (laquinimod), systemic lupus erythematosus, SLE (57-57) and rheumatoid arthritis, RA (RhuDexTM). The project portfolio also includes two potential drugs for treatment of the indications renal cell cancer (ANYARA) and prostate cancer (TASQ). In addition to these five clinical projects, the company pursues one preclinical project, called ISI, aimed at exploring the company's own preclinical results generated around a target molecule for quinoline (Q) compounds and their biological mode of action. The project aims at producing new, patentable chemical substances that interact with the target molecule of the Q compounds.
In general, research operations performed very favorably in 2009.
Progress in brief for each project
Laquinimod
Laquinimod is the project that has progressed furthest in the clinical development process. It is a new, immunomodulatory, disease-modifying oral drug for the treatment of MS. Following the completion of Phase I and Phase II trials by Active Biotech on a proprietary basis, an agreement was signed with Teva Pharmaceutical Industries Ltd (Teva) in June 2004 covering the development and commercialization of laquinimod. According to the agreement, Teva performs and funds the continued clinical development of laquinimod. If all the milestones in the clinical development are achieved, Teva will pay USD 92 million to Active Biotech, USD 17 million of which has been received to date. Active Biotech will also receive tiered double-digit royalty payments on future sales. The agreement grants Teva the exclusive rights to develop, register, produce and commercialize laquinimod globally, with the exception of the Nordic and Baltic countries, where Active Biotech retains all commercial rights.*
In September 2006, Teva successfully concluded an additional Phase II trial ahead of pivotal Phase III trials. The aim was to further evaluate the safety and efficacy of laquinimod and to establish the clinical dose for Phase III trials.
In the latter part of 2007, the clinical Phase III study Allegro (assessment of oral laquinimod in preventing progression of multiple sclerosis) commenced, which is a global, pivotal, 24/30-month, double-blind trial designed to evaluate the efficacy, safety and tolerability of laquinimod versus placebo in the treatment of relapsing-remitting multiple sclerosis (RRMS). In November 2008, Teva announced that the study, comprising 1,000 patients, was fully enrolled. Efficacy, safety and tolerability in laquinimod are also being studied in a second Phase III study focused on RRMS, Bravo (benefit-risk assessment of Avonex® and laquinimod). The Bravo trial is a global, multi-center, randomized, placebocontrolled trial with parallel groups, in which the effects of laquinimod are compared with placebo. The study will also generate data that assesses the risk and benefits with once-daily administered laquinimod compared with an injectable product presently established in the market (Avonex®). In June 2009, Teva announced that the Bravo study was fully enrolled, which means that the study encompasses about 1,200 patients that will be monitored for a period of 24 months.
In February 2009, Teva received a fast-track status from the US Food and Drug Administration, FDA, for laquinimod, which could facilitate the development and accelerate the registration process. This may mean that laquinimod will be available in the market as early as the end of 2011. In September 2009, new data was presented that demonstrates that laquinimod displays both neuroprotective and antiinflammatory properties.
Teva also announced that the company initiated a Phase II program for laquinimod in Crohn's disease and Lupus.
* In February 2010, Active Biotech announced that Teva had acquired the commercial rights for laquinimod in the Nordic and Baltic regions. The agreement means that Active Biotech will significantly higher royalty rate on future sales in the Nordic and Baltic regions that the royalty rate set for the rest of the world.
TASQ
In the TASQ (Tumor Angiogenesis Suppression by Quinolines) project, Active Biotech is developing an antiangiogenic substance that attacks the tumor's growth through inhibition of the formation of blood vessels in the tumor. TASQ can be administered orally for the treatment of prostate cancer.
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An initial clinical Phase I trial involving healthy volunteers was concluded in February 2004. In November 2004, the clinical Phase I dose-escalation program with prostate cancer patients commenced, with the purpose of studying the safety of TASQ. The study comprised a total of 32 patients with hormone-refractory prostate cancer. TASQ was well tolerated by all patients with only mild and transient side effects. Patients continued treatment in a follow-up study that aimed to document long-term tolerance and safety.
The US Food and Drug Administration's review of the IND (Investigational New Drug) application was completed in August 2007. A Phase II proof of concept study was initiated during the latter part of the year. This is a randomized, placebo-controlled, double-blind Phase II study of 1 mg/ day of TASQ versus placebo in just over 200 patients. The study comprises symptom-free patients with metastatic, hormone-resistant, prostate cancer. The primary endpoint of the study is to measure the proportion of patients that do not display disease progression after six months of TASQ therapy compared with placebo. Secondary clinical endpoints of importance for this group of patients include time to clinical progression and initiation of treatment with cytostatics.
In September 2009, the results from the Phase I trial were published in the British Journal of Cancer. The results showed that long-term continuous oral administration of TASQ seems to be safe and that TASQ might delay disease progression.
It was announced in December 2009 that the primary endpoint of the Phase II clinical study, to show a lower fraction of patients with disease progression during the six-month period of treatment using TASQ, had been reached. The percentage of patients with disease progression during the six-month period was 43 percent for patients treated with TASQ compared with 67 percent for placebo-treated patients. TASQ treatment also had a positive effect on several biomarkers relevant for prostate cancer progression and was generally well tolerated. Complete results from the trial will be presented in 2010 at a scientific conference and in scientific journals.
ANYARA
In the ANYARA project, Active Biotech is developing an immunological targeted treatment of cancer that stimulates the immune system to eradicate tumor cells. Following the optimization of the first-generation candidate drug, the ANYARA project now comprises a compound that is designed to provide an improved anti-tumor effect and lower toxicity, which can therefore be administered at significantly higher doses. In 2006, three clinical Phase I studies of ANYARA for the treatment of advanced non-small cell lung cancer (NSCLC), renal cell carcinoma (RCC) and pancreatic cancer (PC) were successfully concluded. The median survival of 26.2 months observed for patients with advanced renal cell cancer and treated with ANYARA is twice the expected length. In July 2007, ANYARA was granted Orphan Drug Status for the treatment of renal cell cancer patients by the EMEA's (European Medicines Agency) expert committee. The EMEA's decision to grant Orphan Drug Status was an important step in the development of ANYARA and provides a variety
of incentives, including market exclusivity for up to ten years following registration approval.
A combined Phase II/III trial for the treatment of renal cell cancer was initiated prior to year-end 2006 at about 50 clinics in Europe. The trial is a randomized study of ANYARA in combination with interferon-alpha, compared with only interferon-alpha, in patients with advanced renal cell cancer. The primary endpoint for this study is extended overall survival and the trial includes just over 500 patients. In May 2008, following the enrolment of approximately 250 patients in the trial, an interim analysis was conducted with positive results. In July 2009, the results from two Phase I studies of ANYARA were published in the Journal of Clinical Oncology, where ANYARA was studied both as a single agent (monotherapy) and in combination with an established tumor therapy – docetaxel (Taxotere®). The results showed that ANYARA was well tolerated both as monotherapy and in combination with docetaxel. The ongoing, pivotal, Phase II/III trial of ANYARA is fully enrolled since June 2009 and in proceeding as planned. The length of the trial will depend on disease progression in patients and a report is expected to be presented during the first six months of 2011.
57-57
In the company's 57-57 project, Active Biotech is developing an immunomodulatory compound primarily for the treatment of systemic lupus erythematosus (SLE), a disease that causes inflammation and damage to the connective tissue of many organs in the body with serious secondary symptoms, such as renal failure.
The first clinical Phase I dose-escalation study, comprising 30 healthy volunteers, was started at the Karolinska University Hospital in Stockholm in November 2004 and was successfully completed in July 2005. The results showed that 57-57 is very well tolerated at all of the tested dosage levels in single and multiple doses and that the compound is suitable to be administered as an oral, daily treatment. The clinical development program continued with a Phase Ib trial of SLE patients, which commenced in December 2005. The study primarily documented safety and pharmacokinetic properties, but also monitored a number of biological markers to determine the effect of 57-57 on disease progression. The study was concluded in 2008 and data from the trial confirmed the previously exhibited favorable safety profile, and demonstrates effects on markers for the SLE disease. During 2008 and 2009, follow-up data from the concluded Phase Ib trial was presented at scientific conferences. The results show that by treating patients with 57-57, it is possible to affect signaling pathways that are essential for the progression of SLE. At the beginning of 2009, an announcement was made that the continued clinical development of 57-57 on a proprietary basis would be discontinued and that activities to out-license 57-57 had been initiated. In 2009, an exploratory clinical study was initiated that will include up to 20 patients in Sweden and Denmark. The aim of the study is to examine several parameters that correlate with the disease activity.
RhuDex™
RhuDex is a orally active compound for the treatment of rheumatoid arthritis (RA), originating from Active Biotech's patented CD80 antagonists, out-licensed in 2002 to Medi-Gene AG's (MediGene) subsidiary Avidex Ltd. Following successful preclinical development work, a candidate drug was selected in 2004 under the name of RhuDex, an orally administered small molecule primarily intended for the treatment of RA. Phase I studies of RhuDex commenced during the spring of 2005, which entailed a small milestone payment to Active Biotech and in March 2006, the company could report that RhuDex had successfully concluded two Phase I studies in which safety, tolerability and pharmacokinetic properties had been studied in healthy volunteers. A Phase IIa dose-escalation study in 35 RA patients was initiated in early 2007 and in June 2008, it was announced that the clinical trial had achieved its endpoint. Following approval in October 2009 to continue the clinical development, MediGene announced that further preclinical studies were to be conducted in 2010 to optimize the clinical program. Clinical trials are expected to be resumed at the end of 2010 or beginning of 2011.
MediGene is responsible for the development and carries the related costs of the clinical program. If the project continues to market launch, milestone revenues could total GBP 5.8 million. In addition, Active Biotech will receive royalties on future sales.
ISI-projektet
Active Biotech's ISI project was initiated in the second quarter of 2008. Previous work has shown that quinoline compounds will inhibit the interaction between a defined target, S100A9, and at least two endogenous, pro-inflammatory receptors. An in-house library and commercially available libraries of compounds have been screened for binding to the target molecule using a surface plasmon resonance assay (Biacore). Hits have been defined from two different, non-quinoline chemical classes that are currently being refined. The objective of the ISI project is to define new, patentable target-binding small molecule compounds with superior pharmacological properties compared to the existing quinolines. In 2009, a lead substance has been chosen for further preclinical optimization. The target for filing of new patents and selection of a first candidate drug is 2011.
Comments on the income statement
The Group's net sales amounted to SEK 10.8 million (53.5) and comprised service and rental revenues of SEK 10.8 million (10.6). The corresponding period in the preceding year included a milestone payment from Teva totaling SEK 41.2 million and a research grant from Vinnova of SEK 1.7 million. Research and administrative costs amounted to SEK 230.3 million (238.1), corresponding to a 3-percent decrease in costs. Research and development costs increased by SEK 4.6 million from SEK 207.4 million to SEK 212.0 million. The increase in costs is attributable to intensified clinical research activities and more extensive trials in later clinical phases,
particularly the ongoing Phase II/III study for the ANYARA project, and the Phase II study for the TASQ project. Administrative expenses decreased from SEK 30.7 million to SEK 18.3 million as a result of the change of CEO in 2008, which had full effect in 2009. The cost outcome in 2009 was negatively impacted by the weakening of the Swedish krona, since about 37 percent of research expenses comprise research services purchased abroad, mainly within the areas of clinical development and manufacture of clinical material.
At year-end, the clinical development program comprised a total of five projects, of which laquinimod and RhuDex are financed by partners and the three other projects ANYARA, TASQ and 57-57 are financed by Active Biotech. In addition to the clinical development program, the company also pursues the preclinical research project ISI, the aim of which is to utilize the Active Biotech's own preclinical results that were generated around a target molecule for the quinoline compounds and their biological mode of action.
The consolidated operating loss amounted to SEK 219.6 (loss: 184.6). The deterioration in earnings is attributable to reduced revenues, since earnings in 2008 included a milestone payment from Teva totaling SEK 41.2 million.
Consolidated net financial items amounted to an expense of SEK 4.4 million (income: 4.0). The development in net financial items was mainly due to the inclusion in 2008 earnings of a capital gain totaling SEK 7.4 million recognized in connection with the divestment of the minority shareholding in the UK research company Isogenica Ltd. Interest income amounted to SEK 6.3 million (10.2) and interest expenses totaled SEK 10.7 million (6.2), of which SEK 3.5 million relates to the market valuation of interest-rate swaps entered into in 2009. The interest-rate swaps are revalued continuously and had no impact on cash flow in 2009. The Group's loss after tax amounted to SEK 224.0 million (loss: 181.6).
Comments on the balance sheet
The Group's total assets amounted to SEK 498.5 million (472.9), of which tangible fixed assets amounted to SEK 319.0 million (324.6) and comprised the property in which the company conducts operations, amounting to SEK 309.4 million (316.6), and equipment, tools, fixtures and fittings totaling SEK 9.6 million (8.0). At year-end, cash and cash equivalents totaled SEK 156.0 million (138.7).
Comments on the cash-flow statement
The Group's positive cash flow for full-year 2009 amounted to SEK 17.3 million (0.1). The negative cash flow from operating activities amounted to SEK 224.8 million (neg: 159.5). Cash flow from investing activities amounted to a negative SEK 0.1 million (pos: 7.0) and the cash flow from financing activities amounted to SEK 242.1 million (152.6). Investments in tangible fixed assets amounted to SEK 4.0 million (6.3), of which SEK 3.9 million (3.5) was financed through financial leasing agreements.
A research company such as Active Biotech is characterized by a high operational and financial risk, since the projects in which the company is involved are at the clinical phase, and there are a number of factors that have an impact on the likelihood of commercial success. The earlier in the development chain the project is, the higher the risk, while the risk decreases and the likelihood of reaching the market increases as each project completes the various specified development phases. The risk level of projects must be weighed against the potential that the projects will result in the development of a drug in the major indication areas addressed by the company. Active Biotech specializes in the development of pharmaceuticals. However, none of the company's products have yet been approved for sale, and operations to date have therefore been loss-making. The Active Biotech projects that have advanced the furthest in terms of development into a finished drug entered Phase III trials in 2007, which means it could take until 2011 before any of these products are registered and approved for sale. As a result, Active Biotech will continue to recognize operating losses for several years to come, and there is a risk that the company may never report a profit.
Risks in operations
Risk factors
Although preclinical and clinical studies conducted for Active Biotech's candidate drugs to date have produced positive outcomes, there are no guarantees that the continued requisite clinical studies will produce results that are sufficiently positive to secure approval. Neither are there any guarantees that the company will find necessary partners or that these partnerships will achieve the planned outcome. If approval is obtained, there is no guarantee that the approved product will achieve sales success. Competing products with better properties can be launched in the market or the company may prove incapable of marketing its product, either by itself or via partners. While Active Biotech is constantly working to improve patent protection for its compounds, methods and applications, there is no guarantee that the patents will in fact provide the necessary protection or that competitors will not somehow circumvent the patents or in some other manner use the research findings or other intellectual rights that the company has built up. Both the extent and timing of the Group's future capital requirements will depend on a number of factors, such as possibilities to enter into partnership agreements and the degree of success for development projects.
Official requirements
Active Biotech currently holds all the permits required to conduct its operations. Operations are naturally conducted in accordance with applicable legislation, and also meet high environmental and ethical standards. However, there is no guarantee that new requirements introduced by authorities will not make it more difficult to conduct operations. Neither is there any guarantee that the currently applicable permits will be renewed on the same terms or that the company's insurance cover, which is deemed adequate today, will prove adequate.
Cash and cash equivalents and financial position
At year-end, cash and cash equivalents amounted to SEK 156.0 million (138.7). A rights issue was implemented in 2009, providing the company with a capital infusion of SEK 249.0 million after issue expenses. The Board of Active Biotech has established a policy for the investment of the Group's cash and cash equivalents, which stipulates that these be invested at low credit risk, primarily in short-term Swedish securities, commercial papers and fixed-income and bond funds with high liquidity. Interest-bearing liabilities amounted to SEK 255.5 million (258.4), of which SEK 246.7 million (251.9) is represented by a property loan and SEK 8.8 million (6.5) by liabilities to leasing companies. At year-end, consolidated shareholders' equity amounted to SEK 188.6 million (163.6). The Group's equity/assets ratio was 37.8 percent at year-end 2009, compared with 34.6 percent at year-end 2008.
The Active Biotech share
Share capital and ownership structure
In February 2010, following the exercise of employees stock options, Active Biotech AB's share capital amounted to SEK 241.7 million distributed among 64,120,760 shares. The company has one class of share. All shares carry equal rights to participation in the company's assets and dividends. For further information regarding shareholders, see page 41.
Corporate governance
Active Biotech AB's Articles of Association stipulate that the election of the Board shall always take place at the Annual General Meeting. Apart from this, the Articles of Association do not contain any stipulations governing how Board members are appointed or dismissed, or regarding changes to the Articles of Association.
A shareholder can vote for the full number of shares he or she holds or represents at General Meetings of Active Biotech. Shares that have been issued are freely transferable without restrictions pursuant to legislation or Active Biotech's Articles of Association. The company is not aware of any agreements among shareholders that can entail restrictions on the entitlement to transfer shares in the company. For a more detailed description of how Active Biotech manages corporate governance issues, refer to the Corporate Governance Report on pages 43–45.
Parent Company
The operations of the Parent Company Active Biotech AB comprise Group-coordinative administrative functions. The Parent Company's net sales for the year amounted to SEK 3.5 million (46.4). Operating expenses for the year amounted to SEK 22.2 million (expense: 33.2). Net financial income for the period amounted to SEK 2.3 million (50.5), with the difference between the years mainly attributable to a share in profits from subsidiaries and the divestment of the minority shareholding in the UK company Isogenica Ltd. Only marginal investments were made during the period. At year-end, the Parent Company's cash and cash equivalents, including short-term investments, amounted to SEK 144.2 million, compared with SEK 131.6 million at the beginning of the year.
Financial risks
The Group has a currency exposure since operations are conducted in Sweden and research services are purchased internationally. Earnings are exposed to exchange-rate fluctuations with regard to the procurement of clinical trial services, research services and production of clinical materials. Operating costs amounted to SEK 230.3 million during the fiscal year, of which about 37 percent corresponded to costs in foreign currencies. The proportion of costs in foreign currencies, principally in USD and EUR, may fluctuate as projects enter later phases of clinical development with more clinical studies potentially being conducted abroad. Since the Group does not make use of forward contracts or options to hedge foreign-exchange risk, exchange-rate effects may impact the income statement. The company's credit risks are marginal, since its operations are only subject to low invoicing levels by virtue of the fact that it currently engages primarily in research and development. For further information on financial risks, see Note 16 on pages 33-34.
The organization
At year-end, the number of employees in the Group amounted to 89 (90), of whom 52 (51) were women. The average age of employees was 49 (48) with an average employment period of 17.9 years (16.8). The education level of the personnel is high; 26 hold a PhD and 47 have university/college education. During the year, the Group incurred average education costs of SEK 9,402 per employee. The number of employees in research and development was 74 (74). Sickness absence during the year amounted to 1.6 percent (1.0). The number of reported work injuries (including travel accidents) totaled 2 (3).
Incentive programs
An Extraordinary General Meeting on December 8, 2003 resolved to implement a free employee stock options program comprising a total of 1.0 million shares for all employees of the Active Biotech Group. The options program, combined with the hedging of future social-security costs and following the expiry of the series 1 options, comprises a total of 778,685 options, entailing a maximum dilution for existing shareholders of 1.5 percent. The incentive program is described in greater detail under the section "The share" on page 39 and in Note 5.
Environmental information
Active Biotech conducts its operations in accordance with the permits issued by the authorities for the company. The company has, for example, a permit from the Swedish Radiation Protection Institute for the handling of radioactive materials, and from the Swedish Board of Agriculture and the Swedish Work Environment Authority regarding genetically modified organisms.
In accordance with the Swedish Environmental Code, the company has registered its operations with the County Administrative Board. Inspections by the Swedish Work Environment Authority, the Lund Municipal Environmental Administration and the Swedish Radiation Protection
Institute all achieved satisfactory results. Active Biotech has a well-developed program for the sorting of waste at source and for the destruction of environmentally hazardous waste, and works actively to minimize energy consumption and the use of environmentally hazardous substances. Active Biotech is not involved in any environmental disputes.
Proposed appropriation of earnings
The Board of Directors and the President & CEO propose that no dividend be paid for the 2009 fiscal year. The proposed treatment of the company's loss is detailed on page 12.
Report on the work of the Board
The Board decides on the Group's overall strategy, the Group's organization and management in accordance with the Swedish Companies Act. At year-end, the Board comprised five members elected by the Annual General Meeting, two employee representatives and two deputy employee representatives. Other white-collar employees in the company participate in Board meetings in a reporting capacity or in administrative functions. During the year, nine meetings were held at which minutes were taken. The President & CEO continuously informed the Chairman of the Board and the other Board members of developments in the company. Important issues addressed by the Board included:
- n Development of research projects
- n Business development projects
- n Strategic focus
- n Information concerning financial statements
- n Budgets and forecasts for the operation
n Partnership strategy and partnership discussions The work of the Board and how Active Biotech is governed is described in detail in the "Corporate Governance Report" section on pages 43-45. With regard to the Group's and Parent Company's results and financial position, reference is made to the subsequent income statements and balance sheets with the accompanying notes to the financial statements.
The Board's proposed guidelines for remuneration of senior executives
The Board proposes that the Annual General Meeting to be held on May 6, 2010 decides on the following guidelines for remuneration of senior executives. These guidelines essentially conform to those that have been applied to date within the company. Senior executives are defined as the President & CEO and other members of Group management. The guidelines shall apply to employment contracts entered into subsequent to the Board's decision on guidelines and in those instances amendments are made in existing terms and conditions following the Board's decision. Active Biotech shall offer total remuneration on market terms, facilitating the recruitment and retention of competent senior executives. Remuneration to senior executives may comprise fixed salary, any variable salary, pensions and other benefits. If the Board also determines that new share-based incentives should be introduced (e.g. employee options), a proposal
concerning this shall be submitted to the Annual General Meeting for approval.
A description of the guidelines applied in 2009 and the remuneration paid are described in Note 5 on pages 21–24.
Fixed salary
The fixed salary shall take into consideration the individuals' area of responsibility and experience. This shall be reviewed on an annual basis.
Variable salary
When necessary, the variable salary shall depend on the individuals' fulfillment of quantitative and qualitative goals. No variable salary shall be paid to the President & CEO. For other senior executives, the variable salary shall amount to not more than 25 percent of fixed salary, whereby the highest level should be based on such factors as the position held by the specific individual.
Pension
Pension benefits shall comprise defined-contribution schemes. The pension premium shall correspond to not less than that applicable for the ITP plan or not more than 25 percent of fixed salary.
Severance pay, etc
Senior executives shall observe a termination period of not more than 12 months. No severance pay will be issued. However, the President & CEO shall be entitled to extra remuneration corresponding to four annual salaries in the event of an ownership change that entails that the company in its entirety is acquired or taken over by another party.
Other benefits
Senior executives may be awarded other customary benefits, such as a company car, company healthcare, etc.
Drafting and approval
The President & CEO's remuneration shall be drafted and approved by the Board of Directors. Other senior executive's remuneration shall be drafted by the President & CEO, who shall submit a proposal to the Board for approval. The Board of Directors is entitled to deviate from the above principles if it deems that there are particular grounds for doing so in individual cases.
Earlier adopted remuneration packages
The President & CEO is entitled to extra remuneration such as that referred to above under the heading Severance pay, etc. In other respects, there are no earlier adopted remuneration packages that have not fallen due for payment. However, the company's outstanding employee stock options may entail costs for the company (social-security costs) in accordance with the information presented in the Annual Report.
Events after the balance-sheet date
n Teva acquires marketing rights for laquinimod in the Nordic region and Baltic States
Teva Pharmaceutical Industries Ltd and Active Biotech announced on February 8, 2010 that they had amended the marketing and distribution agreement for oral laquinimod, an investigational treatment for relapsing-remitting multiple sclerosis (RRMS). Under the new agreement, Teva extended its marketing and distribution rights to include the Nordic and Baltic regions, previously held by Active Biotech. Active Biotech will receive a higher royalty rate for sales in these territories compared with the royalty rate set under the original licensing agreement signed in 2004 for sales in the rest of the world.
n Exploratory data presented for Active Biotech's ANYARA project
On February 10, Active Biotech presented results from exploratory preclinical studies at the Keystone Symposia "Molecular and Cellular Biology of Immune Escape in Cancer" held in Keystone, Colorado, USA, February 7–12. The results of the study demonstrate that TTS therapy can be further enhanced by specifically modulating the immune response in this experimental model.
n Directed share issue
On April 1, 2010, the Board of Directors – pursuant to the authorization given by the 2009 AGM – resolved to implement a directed share issue comprising 1,418,000 shares placed in funds managed by Sectoral Asset Management. The shares were issued at a subscription price of SEK 105 per share, corresponding to issue proceeds of approximately SEK 149 million.
Outlook for 2010
Against the background of the continued positive development of the project portfolio, the Board of Directors has determined that available liquidity, revenues from existing and anticipated partnership agreements and liquidity from the directed share issue implemented by the Board totaling approximately SEK 149 million will provide sufficient financial resources to finance the company's operations until the first half of 2011. Since the timing for the signing of additional partnership agreements and the receipt of milestone payments from existing agreements is uncertain, no earnings forecast is being issued for fiscal year 2010.
Proposed treatment of loss
The following amount stated in SEK is at the disposal of the Annual General Meeting
| Share premium reserve | 339,714,542 |
|---|---|
| Accumulated loss | -341,914,058 |
| Loss for the year | -16,334,903 |
| Total | 18,534,419 |
The Board of Directors proposes that the above loss totaling SEK 18,534,419 at the disposal of the Annual General Meeting be carried forward to a new account.
Approval and adoption
The Annual Report and the consolidated financial statements were approved for issue on April 1, 2010. The consolidated income statement, statement of comprehensive income and statement of financial position and the Parent Company's income statement and balance sheet will be subject for adoption by the Annual General Meeting on May 6, 2010.
Statement by the Board of Directors
The Board of Directors and the President & CEO affirm that the Annual Report was prepared in accordance with generally accepted accounting principles in Sweden and the consolidated accounts were prepared in accordance with the international accounting standards referred to in regulation (EC) No. 1606/2002 of the European Parliament and the Council dated July 19, 2002 governing the application of international accounting standards. The annual accounts and the consolidated accounts provide a true and fair view of the Group's and Parent Company's financial position and results of operations. The Directors' Report for the Group and the Parent Company provides a true and fair view of the Group's and the Parent Company's operations, position and results, and describes significant risks and uncertainty factors that the Parent Company and Group companies face.
Lund, April 1, 2010 The Board of Directors of Active Biotech AB (publ)
| mats arnh ög Chairman |
klas kärre |
magnhild sandberg -wollheim |
|---|---|---|
| Peter Sjöstrand |
peter str öm |
tomas nicolin |
| karin hallbeck |
anette sundstedt |
|
| tomas leanderson President & CEO |
We submitted our Audit Report on April 1, 2010. KPMG AB
| JANUARY 1 – DECEMBER 31 | |||
|---|---|---|---|
| SEK thousands | Note | 2009 | 2008 |
| Net sales | 2 | 10 772 | 53 456 |
| Administrative expenses | 3,4 | -18 300 | -30 658 |
| Research and development expenses | 3 | -212 046 | -207 399 |
| Operatingloss | 5 | -219574 | -184 601 |
| Financial income | 6 301 | 10 159 | |
| Financial expenses | -10 704 | -6 182 | |
| Netfinancial income/expense | 6 | -4403 | 3 977 |
| Lossbeforetax | -223977 | -180 624 | |
| Tax | 7 | - | -962 |
| Lossfortheyear | -223977 | -181 586 | |
| Lossfortheyear attributableto: | |||
| Parent Company's shareholders | -223 977 | -181 586 | |
| Minority interests | – | – | |
| Earningspershare | 11 | ||
| before dilution (SEK) | -3,81 | -3,66 | |
| after dilution (SEK) | -3,81 | -3,66 |
Statement of consolidated comprehensive income
| JANUARY 1 – DECEMBER 31 | |||
|---|---|---|---|
| SEK thousands Note |
2009 | 2008 | |
| Lossfortheyear | -223977 | -181 586 | |
| Other comprehensiveincome | |||
| Change in the revaluation reserve | -1 314 | -1 317 | |
| Change in the translation reserve | – | -639 | |
| Tax attributable to other comprehensive income | 346 | 1 328 | |
| Total other comprehensivelossfortheyear | -968 | -628 | |
| Total comprehensivelossfortheyear | -224945 | -182 214 | |
| Totalothercomprehensivelossfortheyearattributableto: Parent Company's shareholders |
-224 945 | -182 214 | |
| Minority interests | _ | _ |
Consolidated income statement 13 Consolidated statement of cash flows
| JANUARY 1 – DECEMBER 31 | |||
|---|---|---|---|
| SEK thousands | Note 19 | 2009 | 2008 |
| Operating activities | |||
| Loss before tax | -223 977 | -180 624 | |
| Adjustments for non-cash items | 9 603 | 5 351 | |
| Cashflowfromoperatingactivities | |||
| beforechangesinworkingcapital | -214374 | -175 273 | |
| Cash flow from changes in working capital | |||
| Increase(-)/Reduction(+) in operating receivables | -13 816 | 8 683 | |
| Increase(+)/Reduction(-) in operating liabilities | 3 418 | 7 127 | |
| Cashflowfromoperatingactivities | -224772 | -159 463 | |
| Investing activities | |||
| Acquisition of tangible fixed assets | -72 | -2 855 | |
| Reduction in financial fixed assets | - | 9 816 | |
| Cashflowfrominvestingactivities | -72 | 6 961 | |
| Financing activities | |||
| New share issue | 256 208 | 157 668 | |
| Issue expenses | -7 200 | - 3 816 | |
| Borrowings | - | 3500 | |
| Amortization of loan | -5 191 | -3 784 | |
| Amortization of leasing liabilities | -1 679 | -938 | |
| Cashflowfromfinancingactivities | 242138 | 152 630 | |
| Cashflowfortheyear | 17294 | 128 | |
| Cashandcashequivalents,January1 | 138741 | 138 613 | |
| CASH AND CASH EQUIVALENTS AT YEAR-END | 156 035 | 138 741 |
Consolidated statement of financial position
| AT DECEMBER 31 | ||
|---|---|---|
| SEK thousands Note |
2009 | 2008 |
| ASSETS | ||
| Land and buildings 8 |
309 434 | 316 613 |
| Equipment, tools, fixtures and fittings 8 |
9 558 | 7 939 |
| Long-term receivables | 1 | 1 |
| Total fixedassets | 318993 | 324 553 |
| Accounts receivable | 547 | 1 671 |
| Tax receivables | 3 882 | 3 882 |
| Other receivables | 7 562 | 1 120 |
| Prepaid expenses and accrued income 9 |
11 479 | 2 981 |
| Cash and cash equivalents 19 |
156 035 | 138 741 |
| Total current assets | 179505 | 148 395 |
| TOTAL ASSETS | 498 498 | 472 948 |
| AT DECEMBER 31 | |||
|---|---|---|---|
| SEK thousands | Note | 2009 | 2008 |
| SHAREHOLDERS' EQUITY | |||
| Share capital | 241 435 | 193 148 | |
| Other capital contributed | 2 272 909 | 2 072 188 | |
| Reserves | 40 730 | 41 698 | |
| Loss carryforwards including loss for the year | -2 366 433 | -2 143 424 | |
| Totalshareholders'equity | 10 | 188641 | 163 610 |
| LIABILITIES | |||
| Liabilities to credit institutions | 12 | 241 068 | 246 726 |
| Long-term interest-bearing liabilities | 12 | 6 888 | 5 000 |
| Total long-termliabilities | 247956 | 251 726 | |
| Short-term interest-bearing liabilities | 12 | 7 523 | 6 652 |
| Accounts payable | 13 325 | 16 213 | |
| Tax liabilities | 251 | 460 | |
| Other liabilities | 13 | 12 999 | 2 797 |
| Accrued expenses and deferred income | 14 | 27 803 | 31 490 |
| Totalshort-termliabilities | 61901 | 57 612 | |
| TOTAL LIABILITIES | 309 856 | 309 338 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 498 498 | 472 948 |
For information pertaining to pledged assets and contingent liabilities, see Note 17.
Statement of changes in consolidated equity
| SEK thousands | Note 10 | Share capital |
Other capital contributions |
Translation reserve |
Revaluation reserve |
Profit/loss brought forward incl. profit/loss for the year |
Total shareholders' equity |
|---|---|---|---|---|---|---|---|
| Opening shareholders' equity, January 1, 2008 | 178 290 | 1 933 194 | 639 | 41 687 | -1 964 240 | 189 570 | |
| Total comprehensive income/loss for the year Transfer to revaluation reserve New share issue Equity-settled share-based payments, IFRS 2 Closing shareholders' equity, December 31, 2008 |
– – 14 858 – 193 148 |
– – 138 994 – 2 072 188 |
-639 – – – – |
11 – – – 41 698 |
-181 586 949 – 1 453 -2 143 424 |
-182 214 949 153 852 1 453 163 610 |
|
| Opening shareholders' equity, January 1, 2009 Total comprehensive loss for the year Transfer to revaluation reserve |
193 148 – – |
2 072 188 – – |
– – – |
41 698 -968 – |
-2 143 424 -223 977 968 |
163 610 -224 945 968 |
|
| New share issue Closing shareholders' equity, December 31, 2009 |
48 287 241 435 |
200 721 2 272 909 |
– – |
– 40 730 |
– -2 366 433 |
249 008 188 641 |
Parent Company income statement
| JANUARY 1 – DECEMBER 31 | |||
|---|---|---|---|
| SEK thousands | Note | 2009 | 2008 |
| Net sales | 2 | 3 500 | 46 354 |
| Administrative expenses | 3,4 | -22 157 | -33 225 |
| Operatingprofit/loss | 5 | -18657 | 13 129 |
| Profit/loss from financial items: | |||
| Profit/loss from participations in | |||
| Group companies | 6 | - | 37 635 |
| Profit from other securities | |||
| and receivables that are fixed assets | 6 | - | 7 363 |
| Interest income and similar items | 6 | 2327 | 5 508 |
| Interest expense and similar items | 6 | -5 | -3 |
| Profit/loss afterfinancial items | -16335 | 63 632 | |
| Profit/lossbeforetax | -16335 | 63 632 | |
| Tax | 7 | - | – |
| Profit/lossfortheyear | -16335 | 63 632 | |
Cash-flow statement for the Parent Company
| JANUARY 1 – DECEMBER 31 | ||
|---|---|---|
| SEK thousands Note 19 |
2009 | 2008 |
| Operating activities Profit/loss after financial items |
-16335 | 63 632 |
| Adjustments for non-cash items | - | -43 541 |
| Cashflowfromoperatingactivities | ||
| beforechangesinworkingcapital | -16335 | 20 091 |
| Cash flow from changes in working capital | ||
| Increase(-)/Reduction(+) in operating receivables | -6665 | 8 625 |
| Increase(+)/Reduction(-) in operating liabilities | -8474 | -3 616 |
| Cashflowfromoperatingactivities | -31474 | 25 100 |
| Investing activities | ||
| Reduction in financial fixed assets | - | 9 816 |
| Cashflowfrominvestingactivities | - | 9 816 |
| Financing activities | ||
| New share issue | 256208 | 157 667 |
| Issue expenses | -7200 | -3 815 |
| Group contributions paid | -205 000 | -180 000 |
| Cashflowfromfinancingactivities | 44008 | -26 148 |
| Cashflowfortheyear | 12534 | 8 768 |
| Cashandcashequivalents,January1 | 131625 | 122 857 |
| CASH AND CASH EQUIVALENTS AT YEAR-END | 144159 | 131 625 |
Parent Company balance sheet
| AT DECEMBER 31 | |||
|---|---|---|---|
| SEK thousands | Note | 2009 | 2008 |
| ASSETS | |||
| Fixedassets | |||
| Equipment, tools, fixtures and fittings | 8 | 351 | 351 |
| Financial fixed assets | |||
| Participations in Group companies | 18 | 202 450 | 202 450 |
| Other long-term receivables | 1 | 1 | |
| Total financial fixedassets | 202451 | 202 451 | |
| Total fixedassets | 202802 | 202 802 | |
| Current assets | |||
| Short-term receivables | |||
| Receivables from Group companies | 7 813 | 7 813 | |
| Tax receivables | 1 638 | 1 638 | |
| Other receivables | 6 611 | 95 | |
| Prepaid expenses and | |||
| accrued income | 9 | 891 | 742 |
| Totalshort-termreceivables | 16953 | 10 288 | |
| Short-term investments | 19 | 50 000 | – |
| Cash and bank balances | 19 | 94 159 | 131 625 |
| Total current assets | 161112 | 141 913 | |
| TOTAL ASSETS | 363 914 | 344 715 | |
| AT DECEMBER 31 | |||
|---|---|---|---|
| SEK thousands | Note | 2009 | 2008 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders'equity | |||
| Restricted equity | |||
| Share capital | 241 435 | 193 148 | |
| Statutory reserve | 118 871 | 118 871 | |
| Unrestricted equity | |||
| Share premium reserve | 339 715 | 138 994 | |
| Loss carryforwards | -341 915 | -200 547 | |
| Profit/loss for the year | -16 335 | 63 632 | |
| Totalshareholders'equity | 10 | 341 771 | 314 098 |
| Short-termliabilities | |||
| Accounts payable | 176 | 640 | |
| Liabilities to Group companies | 1 000 | 16 000 | |
| Other liabilities | 13 | 7 539 | 790 |
| Accrued expenses and | |||
| deferred income | 14 | 13 428 | 13 187 |
| Totalshort-termliabilities | 22143 | 30 617 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 363 914 | 344 715 | |
| Pledgedassets andcontingentliabilitiesfortheParent Company | |||||
|---|---|---|---|---|---|
| AT DECEMBER 31 | |||||
| SEK thousands | Note | 2009 | 2008 | ||
| Assets pledged | 17 | 7 399 | 6 644 | ||
| Contingent liabilities | 17 | 246 726 | 251 917 |
Statement of changes in Parent Company's equity
| Restricted equity | Unrestricted equity | ||||||
|---|---|---|---|---|---|---|---|
| Share | Statutory | Share premium | Profit/loss | Profit/loss | Total share | ||
| SEK thousands | Note 10 | capital | reserve | reserve | brought forward | for the year | holders' equity |
| Opening shareholders' equity, January 1, 2008 | 178 290 | 359 458 | 308 562 | -521 193 | -27 956 | 297 161 | |
| Profit for the year | – | – | – | – | 63 632 | 63 632 | |
| Treatment of profit/loss in preceding year | – | -240 587 | -308 562 | 521 193 | 27 956 | – | |
| Group contributions paid | – | – | – | -202 000 | – | -202 000 | |
| New share issue | 14 858 | – | 138 994 | – | – | 153 852 | |
| Equity-settled share-based | |||||||
| payments, IFRS 2 | – | – | – | 1 453 | – | 1 453 | |
| Closing shareholders' equity. December 31. 2008 | 193 148 | 118 871 | 138 994 | -200 547 | 63 632 | 314 098 | |
| Opening shareholders' equity, January 1, 2009 | 193 148 | 118 871 | 138 994 | -200 547 | 63 632 | 314 098 | |
| Loss for the year | – | – | – | – | -16 335 | -16 335 | |
| Treatment of profit/loss in preceding year | – | – | – | 63 632 | -63 632 | – | |
| Group contributions paid | – | – | – | -205 000 | – | -205 000 | |
| New share issue | 48 287 | – | 200 721 | – | – | 249 008 | |
| Closing shareholders' equity. December 31. 2009 | 241 435 | 118 871 | 339 715 | -341 915 | -16 335 | 341 771 |
16 Notes to the financial statements
Note 1 Accounting policies
Conformitywithstandards andlegislation
The consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and interpretations from the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the European Union. In addition, the Group applied the recommendation of the Swedish Financial Accounting Standards Council RFR 1.2 Supplementary Accounting Rules for Groups.
The Parent Company applies the same accounting policies as the Group, except in the instances specified below in the section "Accounting policies of the Parent Company."
The Annual Report and the consolidated accounts were approved for issue by the Board on April 1, 2010. The consolidated income statement and statement of financial position and the Parent Company's income statement and balance sheet will be subject for adoption by the Annual General Meeting on May 6, 2009.
Conditionsfor preparingtheParent Company's andGroup'sfinancialstatements
The Parent Company's functional currency is Swedish kronor, which is also the reporting currency for the Parent Company and the Group. Accordingly, the financial statements are presented in Swedish kronor, SEK. All amounts, unless otherwise stated, are rounded off to the nearest thousand. Assets and liabilities are recognized at historical acquisition value (cost), except for the Group's property Forskaren 1, and certain financial assets and liabilities, which are measured at fair value. Financial assets and liabilities measured at fair value comprise financial assets classified as financial assets measured at fair value in profit or loss.
The preparation of financial statements in accordance with IFRS requires company management to make assessments and evaluations that affect the application of the accounting policies and the recognized amounts of assets, liabilities, revenues and expenses. The actual outcome may deviate from these evaluations and assessments. The evaluations and assumptions are reviewed regularly. Changes to the assessments are recognized in the period in which the change is made if it is the only period affected by the change, but if it also affects future periods, it is recognized in the period the change is made and in future periods.
Assessments made by company management when applying IFRS that may considerably influence the financial statements together with estimates made that may entail significant adjustments to financial statements in forthcoming years are described in more detail in Note 20.
The accounting policies for the Group detailed below were applied consistently in all periods presented in the consolidated financial statements, unless otherwise specified below. The Group's accounting policies were applied consistently in the reporting and consolidation of the Parent Company and subsidiaries.
Changedaccountingpolicies
Since January 1, 2009, the Group applies revised IAS 1 Presentation of Financial Statements (2007). The amendment has meant that income and expenses previously recognized directly in equity are now recognized in other comprehensive income, which the company presents in a separate statement entitled Statement of comprehensive income presented directly after the income statement. The company has chosen to use the new titles for the statements introduced in IAS 1 (2007) – Statement of comprehensive income, Statement of financial position, Statement of changes in equity and Statement of cash flows. Comparative periods have been changed throughout the Annual Report to comply with the new presentation format. Since the changes only impact the presentation format, no amounts were changed, neither with respect to earnings per share nor other items in the financial statements. The application of IFRS 8 did not entail any change with respect to the definition of the Group's segments, since Active Biotech is a single-segment company.
Amendments to IFRS 7 Financial instruments; Disclosures, with application from January 1, 2009, affects the company's financial reporting as of the 2009 Annual Report. The changes mainly entail new disclosure requirements for financial instruments measured at fair value in the statement of financial position. Instruments are divided into three levels depending of the quality of the input data used in the measurements. The division into levels determines how, and what type of, disclosures should be made regarding the instruments; where level 3 with the lowest quality of input data is covered by more extensive disclosure requirements than the other levels. These disclosure
requirements have mainly impacted Note 15. Moreover, the amendments to IFRS 7 require a number of changes to be made to disclosures regarding liquidity risk. According to the transition rules in IFRS 7, it is not mandatory to present comparative disclosures required by the amendment during the first year of application. Nonetheless, the company has decided to voluntarily submit comparative data for 2008 for the disclosures required under the amendment. Since the amendments do not affect how recognized amounts are to be determined, no adjustments have been made to the amounts in the financial statements.
IAS 23 Borrowing Costs, with changes to the rules governing the capitalization of borrowing costs, has not had any impact on Active Biotech's financial reporting.
It has been deemed that no new IFRS or interpretations that have not yet come into effect will have any material impact on Active Biotech's financial reporting.
Segmentreporting
An operating segment is a part of the Group that conducts operations from which it can generate revenues and incur costs and from which independent financial information is available. In addition, an operating segment's results are followed up by the company's chief operating decision-maker to assess earnings and to be able to allocate resources to the operating segment. Since operations within the Active Biotech Group are organized as a cohesive unit, with similar risks and opportunities for the products and services produced, the Group's entire operation comprises a single operating segment. All operations are conducted in Sweden.
Classification, etc.
Fixed assets and long-term liabilities in the Parent Company and Group primarily consist of amounts that are expected to be recovered or paid more than 12 months after the balance-sheet date. Current assets and liabilities in the Parent Company and Group primarily consist of amounts that are expected to be recovered or paid within 12 months from the balance-sheet date.
Consolidationprinciples
Subsidiaries
A subsidiary is a company in which the Parent Company Active Biotech AB has a controlling influence. Controlling influence entails a direct or indirect right to formulate a company's financial and operative strategies with the aim of obtaining financial benefits. When determining if a controlling influence exists, consideration is given to potential shares that carry voting rights, which can be utilized or converted without delay.
Subsidiaries are recognized in accordance with the purchase method. The method entails that the acquisition of a subsidiary is regarded as a transaction whereby the Group indirectly acquires the subsidiary's assets and takes over its liabilities and contingent liabilities. With regard to the Group, the cost is established through an acquisition analysis in connection with the acquisition. In the analysis, the cost is established for the shares or operations, both the fair value on the acquisition date of acquired identifiable assets as well as assumed liabilities and contingent liabilities. The cost for the subsidiary's shares and operations comprises the fair values on the transfer date for assets, accrued or assumed liabilities and equity instruments issued as payment for the acquired net assets, as well as transaction expenses that are directly attributable to the acquisition. If, in a business acquisition, the cost exceeds the net value of acquired assets and assumed liabilities and contingent liabilities, the difference is recognized as goodwill. When the difference is negative, it is recognized in profit and loss. The subsidiaries' financial statements are included in the consolidated financial statements from the date of acquisition until the date the controlling influence ceases.
Transactions to be eliminated at consolidation
Intra-Group receivables and liabilities, revenues and expenses and unrealized gains or losses that arise from transactions between Group companies are eliminated in their entirety when preparing the consolidated financial statements.
Foreigncurrency
Transactions in foreign currency
Transactions in foreign currency are translated to the functional currency at the exchange rate prevailing on the transaction date. The functional currency is the currency in the primary economic environment in which the company conducts operations. Monetary assets and
liabilities in foreign currencies are translated to the functional currency at the exchange rate prevailing on the balance-sheet date. Exchange-rate differences that arise in translation are recognized in profit and loss. Non-monetary assets and liabilities that are recognized at historical cost are translated at the exchange rate prevailing at the date of the transaction. Non-monetary assets and liabilities that are recognized at fair value are translated to the functional currency at the exchange rate that prevails at the date of measurement at fair value.
Recognitionof revenues
Active Biotech currently receives revenues for out-licensing of research projects, for invoiced research services and rental income. In the out-licensing of research projects, nonrecurring revenues in connection with contracts are recognized on the contract date. Any milestone payments are recognized as revenue as and when Active Biotech meets the agreed criteria and agreement has been reached with the counterparty. Possible future royalty revenues are recognized in accordance with the financial content of the agreements. Invoicing of research services are recognized as revenue in the accounting period during which the work was performed. Dividends are recognized as revenue when the right to receive payment is considered certain.
Operatingexpenses andfinancial revenues andexpenses
Operational leasing agreements
Costs pertaining to operational leasing agreements are recognized straight-line in profit or loss over the leasing period. Benefits received in connection with the signing of an agreement are recognized in profit or loss as a reduction of leasing expenses straight-line over the duration of the leasing agreement.
Financial leasing agreements
Minimum lease payments are divided between interest expenses and amortization of the outstanding liability. The interest expense is divided over the leasing period so that each accounting period is charged with an amount that corresponds to a fixed interest rate for the recognized liability in each period. Variable fees are expensed in the periods in which they arise.
Financial income and expenses
Financial income and expenses include interest income on bank deposits, receivables and interest-bearing securities, interest expense on loans, income from dividends, exchange-rate differences and unrealized and realized profits on financial investments.
Interest income on receivables and interest expenses on liabilities are calculated using the effective interest method. Effective interest is the interest that discounts estimated future receipts and payments during a financial instrument's anticipated duration to the financial asset's or liability's recognized net value. The interest component in financial leasing payments is recognized in profit and loss through the application of the effective interest method. Interest income includes the allocated amounts of transaction expenses and any discounts, premiums and other differences between the original value of the receivable and the amount received at maturity.
Interest expenses include an allocated amount of issue expenses and similar direct transaction expenses required to raise a loan.
Exchange-rate gains and losses are recognized net.
Dividend income is recognized when the right to receive payments has been secured.
Financial instruments
Financial instruments recognized in the asset side of the statement of financial position include cash and cash equivalents, accounts receivable, shares and other equity instruments, loan receivables and bond receivables. Liabilities and equity include accounts payable, issued debt and equity instruments, as well as loan liabilities.
Recognition in, and derecognition from, the balance sheet
A financial asset or financial liability is recognized in the statement of financial position when the company is party to the contractual conditions of the instrument. Accounts receivable are recognized in the statement of financial position when the invoice has been sent. Liabilities are recognized when the other contracting party has fulfilled its obligations and payment is due, although the invoice has not yet been received. Accounts payable are recognized when the invoice is received.
A financial asset is derecognized from the statement of financial position when the contractual rights are realized, mature or the company loses control over them. The same applies to parts of financial assets. A financial liability is derecognized from the statement of financial position when the contractual obligation is met or otherwise ended. This also applies to parts of financial liabilities. Acquisition and divestment of financial assets are recognized on the transaction
date, which is the date the company commits to the acquisition or divestment of the asset. Cash and cash equivalents comprise liquid funds and immediately accessible balances in banks and corresponding institutes, as well as short-term liquid investments that have a maturity of three months or less from the acquisition date, which are exposed to only an insignificant risk of fluctuation in value.
Classification and valuation
Financial instruments are initially recognized at cost representing the fair value of the instrument, with transaction costs added for all financial instruments, except those defined as financial assets and recognized at fair value in profit or loss, which are recognized at fair value excluding transaction expenses. Accordingly, the recognition of financial instruments depends on how they have been classified, which is specified below.
Loan and accounts receivables
Loan and accounts receivables are financial assets, which do not comprise derivatives, with fixed or determinable payments that are not quoted in an active market. Assets in this category are measured at amortized cost. Amortized cost is based on the effective interest calculated at the date of acquisition. Assets with a short duration are not discounted. This category comprises accounts receivable, long-term receivables and other receivables. Accounts receivable are recognized at the amount that is expected to be received, that is, after the deduction of doubtful receivables, which are determined individually. Impairment of accounts receivable is recognized in operating expenses. Other receivables are classified as long-term receivables if the duration is longer than one year, and if it is shorter, as other receivables. Any impairment of long-term receivables is recognized as a financial item.
Investments held to maturity
Investments held to maturity comprise financial assets that encompass interest-bearing securities with fixed or determinable payments and fixed maturities that the company has an express intention and ability to hold to maturity. Assets in this category are measured at amortized cost.
Financial assets measured at fair value in profit or loss
This category consists of the sub-group Financial assets held for trading and contains the Group's derivatives with negative fair values. Changes in the fair values are recognized in profit/loss for the year.
Other financial liabilities
Loans and other financial liabilities, such as accounts payable, are included in this category. Liabilities are measured at amortized cost. Accounts payable have a short expected duration and are valued without discounting to the nominal amount. Long-term liabilities have an expected duration of more than one year, while shortterm liabilities have a duration of less than one year.
Derivatives and hedge accounting
The Group's derivative instruments have been acquired to financially hedge the risk of interest-rate exposure experienced by the Group. To hedge the risk in highly probable forecast interest-rate flows of loans with floating interest rates, interest-rate swaps are used in which the company receives floating interest rate payments and pays fixed interest rates. Derivatives are initially measured at fair value meaning that the transaction costs are charged to earnings for the period. The Group has chosen not to apply hedge accounting, which means that current changes in the fair value of derivatives are recognized in profit/loss for the year.
Tangiblefixedassets
Assets owned
The Group values tangible fixed assets using the acquisition method with the exception of the company's property, which is valued using the revaluation method. Tangible fixed assets that are recognized using the acquisition method are recognized in the consolidated accounts at cost, less a deduction for accumulated depreciation and any impairment losses. The cost includes the purchase price and expenses directly attributable
to the asset to bring the asset to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the cost are delivery and handling costs, installation, acquisition registration, consultancy services and legal services.
The Group's properties are recognized at fair value less deductions for accumulated depreciation and adjustments due to revaluation. Revaluation is conducted with the regularity that is required to ensure that the carrying amount shall not significantly deviate from what is established as the fair value on the balance-sheet date. The fair value of properties is based on valuations conducted by independent external appraisers. When an asset's carrying amount increases as a result of a revaluation, the increase is recognized directly in comprehensive income in the "Revaluation reserve." If the increase entails a reversal of the previously recognized value impairment with regard to the same asset, the reduction is recognized as a reduced expense in profit or loss. When the carrying amount of an asset is reduced as a result of a revaluation, the reduction is recognized as an expense. If there is a balance in the revaluation reserve attributable to the asset, the reduction is firstly recognized directly against the revaluation reserve. The difference between depreciation based on the revalued value and depreciation using the original cost is transferred from the revaluation reserve to profit/loss brought forward.
Accumulated depreciation at the time of revaluation is eliminated against the asset's cost (or, where appropriate, in the revaluated cost) after which the remaining net amount is adjusted to achieve conformity with the amount to which the asset was revalued (the asset's fair value).
When an asset is divested, the revaluation reserve is transferred to profit/loss brought forward with no impact on the income statement.
Tangible fixed assets comprising components with varying useful lifetimes are treated as separate components of tangible fixed assets.
The carrying amount of a tangible fixed asset is derecognized from the statement of financial position when it is disposed of, divested, or when no future financial benefits are expected from the disposal/divestment of the asset. Profit or loss arising from divestment or disposal comprises the difference between the sale price and the asset's carrying amount, less deductions for direct sales expenses. Profit or loss is recognized as other operating revenues/expenses.
Leased assets
Leases are classified in the consolidated financial statements as either financial leases or operational leases. Financial leases exist when the financial risks and benefits associated with ownership are essentially transferred to the lessee. If this is not the case, the lease is considered to be an operational lease.
Assets leased through financial leasing agreements are recognized as assets in the consolidated statement of financial position. The commitment to pay future leasing fees is recognized as long-term and short-term liabilities. These assets are depreciated over the contractual leasing period while leasing fees are recognized as interest and amortization of liabilities.
Leasing fees for operational leases are expensed straight-line over the term of the lease based on the value in use, which may differ from that which has actually been paid as a leasing fee during the year.
Additional expenses
Additional expenses are added to the cost only if it is probable that the company will recover the future economic benefits associated with the assets and the cost can be calculated in a reliable manner. All other additional expenses are recognized as expenses in the period in which they arise.
Pivotal in the assessments of when an additional expense is added to the cost is whether the expense refers to the replacement of identifiable components or parts thereof, which is when such expenses are capitalized. Expenses are also added to cost when new components are created. Any undepreciated carrying amounts of replacement components, or parts of components, are disposed of and expensed in connection with the replacement. Repairs are expensed on an ongoing basis.
Borrowing costs
Borrowing costs attributable to the construction of qualifying assets are capitalized as a part of the qualifying asset's cost. A qualifying asset is an asset that that necessarily takes a substantial period of time to get ready for its intended use. Firstly, borrowing costs that have accrued on loans that are specific to the qualifying asset are capitalized. Secondly, borrowing costs that have accrued on general loans that are not specific to any other qualifying asset are capitalized.
Depreciation principals
Depreciation is calculated using the straight-line method over the estimated useful life of the assets. The Group applies component depreciation, which means that the estimated useful life of the components is the basis for depreciation. Estimated useful life of:
| – Buildings, operating properties | 35 –100 years |
|---|---|
| – Equipment, tools, fixtures and fittings | 3 –10 years |
The operating properties comprise a number of components, whose useful life varies. The main category is land and buildings. No depreciation is recognized for the component land, since its useful life has been determined as unlimited. However, a building comprises a number of components whose useful life varies.
The useful life of these components has been estimated to vary between 35 and 100 years.
The following main categories of components have been identified and form the basis for the depreciation of buildings:
| – Framework | 100 years |
|---|---|
| – Non-structural elements, interior walls, etc. | 50 years |
| – Glass roof | 40 years |
| – Fire seal | 40 years |
| – Installations; heating, electricity, plumbing, ventilation, etc. | 50 years |
| – Elevators | 35 years |
Assessment of an asset's residual value and useful life is conducted annually.
Intangibleassets
Research and development
Expenses for research with the purpose of acquiring new scientific or technical knowledge are expensed when they arise.
Expenses for developments, in which the research result or other knowledge is applied to produce new or improved products or processes, is recognized as an asset in the statement of financial position, if the product or process is technically and commercially useful and the company has adequate resources to pursue development and thereafter use and sell the intangible asset. Other expenses for development are recognized in profit and loss as a cost as they arise.
Since the period in which the company's research and development projects are expected to be registered is some way off in the future, there is considerable uncertainty as to when any financial benefits will accrue to the company. Development expenses are capitalized only on the condition that it is technically and financially possible to complete the asset, that the intention is, and the conditions exist, for the asset to be used in operations or sold and that it can be valued in a reliable manner. Expenses pertaining to patents, technology and trademark rights and other similar assets are not capitalized, but are offset against earnings on an ongoing basis.
No assets of this character were acquired.
Carrying amounts of Group assets are tested at each balance-sheet date to establish whether there are any impairment indicators.
Impairment testing of tangible and intangible assets and participations in subsidiaries and associated companies
If there is an indication that an impairment requirement exists, the asset's recoverable amount (see below) is calculated in accordance with IAS 36. If it is not possible to establish fundamentally independent cash flows attributable to a specific asset, when testing for impairment, the assets shall be grouped at the lowest level whereby it is possible to identify fundamentally independent cash flows — a so-called cash-generating unit.
An impairment loss is recognized when an asset's or cash-generating unit's (group of units) carrying amount exceeds the recoverable amount. An impairment loss is charged to profit or loss. Impairment loss in assets attributable to a cash-generating unit (group of units) is first allocated to goodwill. Thereafter, a proportional impairment is conducted of other assets included in the cash-generating unit (group of units).
The recoverable amount is the highest of fair value less selling costs and value in use. In calculating value in use, future cash flows are discounted at an interest rate that takes into account the market's assessment of risk-free interest and risk related to the specific asset.
Impairment testing of financial assets
At each reporting occasion, the company assesses if there is objective evidence that an impairment requirement exists for a financial asset or group of financial assets. Objective evidence comprises observable events that have taken place that have had a negative impact on the prospect of recovering the cost, and a significant or extensive reduction of the fair value of an investment in a financial investment classified as a financial asset available for sale.
The recoverable amount for assets included in the loans receivable and accounts receivable category, which are recognized at amortized cost, is calculated as the present value of future cash flows discounted by the effective interest rate that applied when the asset was initially recognized. Assets with a short duration are not discounted. Impairment losses are charged to the income statement.
Reversal of impairment
An impairment loss is reversed if there is both an indication that the impairment requirement no longer exists and if there has been a change in the assumptions that formed the basis for the calculation of the recoverable amount. However, impairment of goodwill is never reversed. Reversal of impairment is only conducted to the extent that the asset's carrying amount after the reversal does not exceed the carrying amount that would have been recognized, less depreciation, where applicable, had no impairment taken place.
Impairment losses of investments held to maturity or loan receivables and accounts receivable that are recognized at amortized cost are reversed if a later increase of the recoverable amount can be attributed to an event that occurred after the impairment was conducted.
Employeeremuneration
Post-retirement benefits
Both defined-benefit and defined-contribution pension plans exist within the Group. For defined-benefit plans, remuneration to current and former employees is based on their salary at the time of retirement as well as the number of years of service. The Group assumes responsibility for ensuring that promised remuneration is paid. For defined-contribution plans, the company pays pension premiums to separate legal entities and has no legal commitment or informal obligation to pay further premiums (if these should lack the assets necessary to provide the promised benefits). The company's obligations relating to fees for defined contribution pension plans are expensed in the profit or loss as they are accrued due to the employee performing services for the company over a period.
All defined-benefit pension plans are secured through insurance with Alecta, which is a multi-employer defined-benefit plan. For the 2008 and 2009 fiscal years, the company did not have access to information that would make it possible to recognize this plan as a defined-benefit plan. The pension plan conforming to ITP and secured through an Alecta insurance policy is therefore recognized as a defined-contribution plan.
Severance pay
An expense for remuneration in connection with termination of employment of personnel is recognized only if the company is unquestionably obligated, without any realistic possibility of withdrawal, by a formal detailed plan to eliminate a position in advance of when that position would normally expire. When remuneration is paid as an offer to encourage voluntary termination of employment, a cost for this is recognized if it is probable that the offer will be accepted and the number of employees that will accept the offer can be reliably estimated.
Current employee remuneration
Current remuneration to employees is calculated without discounting and is recognized as an expense when the related services are received.
A provision is recognized for the anticipated cost for bonus payments when the Group has an applicable legal or informal obligation to make such payments, as a result of services received from employees, and the obligation can be reliably estimated.
Share-based payments
At an Extraordinary General Meeting on December 8, 2003, an employee stock options program was implemented, with allocations in 2003, 2005 and 2006, through which all Active Biotech Group employees were offered the opportunity to acquire shares in the company. Employee stock options are allocated without payment. The stock options program was recognized in accordance with IFRS 2 and UFR 7.
A stock options program permits the employees to acquire shares in the company. The fair value of allotted options is recognized as a personnel cost with a corresponding increase in the shareholders' equity. The fair value is calculated at the time of the allocation and is distributed across the period of service. The fair value of the allocated options is calculated using the Black & Scholes model, taking into account the terms and conditions that applied at the time of allotment. The amount that is recognized as an expense is adjusted to reflect the actual number of earned options.
Social-security costs attributable to share-based instruments for employees as remuneration for purchased services are expensed over the periods in which the services were performed. Provisions for social-security costs are based on the fair value of the options at the time of recognition. The fair value is calculated with the same valuation model used when the options were allocated.
Recognitionof earningspershare
The calculation of earnings per share is based on profit/loss for the year in the Group attributable to the Parent Company's shareholders and on the weighted average number of shares outstanding during the year. When calculating earnings per share after dilution, earnings and the average number of shares are adjusted to take into account the effects of dilutive potential ordinary shares, which during the reported periods, were derived from options issued to employees. Dilution only occurs when the exercise rate is lower than the trading price, and grows in pace with the increase of the difference between the exercise rate and the trading price. The exercise rate is adjusted by adding the value of future services connected to the equity-settled employee options program, which was recognized as share-based remuneration in accordance with IFRS 2.
Provisions
A provision is recognized in the statement of financial position when the company has an existing legal or constructive obligation resulting from past events and it is probable that an outflow of financial resources will be required to settle the obligation and the amount can be reliably estimated. When the effect of the timing of when the payment will be made is significant, provisions are calculated by discounting the anticipated future cash flows to an interest rate before tax that reflects the actual market estimate of the moneys value over time and, if applicable, the risks that are associated with the liability.
Taxes
Income taxes comprise current tax and deferred tax. Income taxes are recognized in profit or loss for the year except where the underlying transaction is recognized in other comprehensive income or in shareholders' equity, whereby the associated tax effect is recognized in other comprehensive income or shareholders' equity.
Current tax is tax that is to be paid or recovered in relation to the current year, applying tax rates determined or announced at the balance-sheet date. Adjustment to current tax relating to previous periods is also recognized here.
Deferred tax is calculated using the balance-sheet method based on the temporary differences between the carrying amount and the value for tax purposes of assets and liabilities. The following temporary differences are not recognized: temporary differences are not recognized in consolidated goodwill and also not for the difference that arises during initial recognition of assets and liabilities that do not constitute a business acquisition which, at the time of the transaction, do not have an impact on recognized or taxable earnings. Furthermore, temporary differences are not recognized that are attributable to shares in subsidiaries and participations in associated companies that are not expected to be reversed in the foreseeable future. Estimates of deferred tax are based on how carrying amounts of assets and liabilities are expected to be realized or settled. Deferred tax is calculated applying tax rates and legislation determined or announced at the balance-sheet date.
Deferred tax receivables pertaining to deductible temporary differences and loss carryforwards are recognized to the extent that it is probable that they will be utilized. The carrying amount of deferred tax receivables is reduced when it is no longer judged probable that they will be utilized.
Any additional income tax arising from dividends is recognized at the same date as when the dividend was recognized as a liability.
Contingentliabilities
A contingent liability is recognized when a possible commitment exists arising from events that have occurred, the validity of which can only be confirmed by the occurrence or absence of one or more future events, or where there is a commitment not recognized as a liability or provision due to the low probability that an outflow of resources will be required.
Parent Company's accountingpolicies
The Parent Company prepared its annual financial statements in accordance with the Annual Accounts Act (1995:1554) and the recommendations of the Swedish Financial Reporting Board RFR 2.1, Accounting for Legal Entities. Statements issued by the Swedish Financial Reporting Board concerning listed companies were also applied. RFR 2.2 entails that in the annual accounts for a legal entity, the Parent Company shall apply all of the IFRS regulations and statements approved by the European Union to the greatest possible extent, within the framework of the Annual Accounts Act, the Pension Obligations Vesting Act and with consideration given to the relationship between accounting and taxation. The recommendation stipulates what exceptions and additions shall be made to IFRS.
Changedaccountingpolicies
Since January 1, the company applies the amendments in IAS27, which means that the Parent Company now always recognizes dividends from subsidiaries in their entirety as income in profit or loss for the year. Since no dividends have been received, the amendment has had no impact on the company's financial statements.
DifferencesbetweentheGroup's andtheParent Company's accountingpolicies
The differences between the Group's and the Parent Company's accounting policies are presented below. The accounting policies presented below for the Parent company were applied consistently in all periods presented in the Parent Company's financial statements.
Classificationandpresentationforms
The presentation of the Parent Company's income statement and balance sheet is in line with arrangement specified in the Annual Accounts Act. The difference in relation to IAS 1 Presentation of financial statement, which is applied in the preparation of the consolidated financial statements, is primarily the recognition of financial income and expenses shareholders' equity and the occurrence of provisions as a separate heading in the balance sheet.
Subsidiaries
Participations in subsidiaries are recognized by the Parent Company using the cost method. The Parent Company always recognizes dividends from subsidiaries as income in profit or loss for the year.
Anticipateddividends
Anticipated dividends from subsidiaries are recognized when the Parent Company alone has the right to determine the size of the dividend and the Parent Company has determined the size of the dividend prior to the Parent Company publishing its financial statements.
Financial guaranteecontracts
The Parent Company's financial guarantee contracts mainly comprise guarantees for the benefit of subsidiaries. Financial guarantees mean that the company has an obligation to compensate the holder of a promissory instrument for losses that it incurs because a specific debtor fails to pay by the due date in accordance with the terms and conditions of the agreement. For recognition of financial guarantee contracts, the Parent Company applies one of the regulations permitted by the Swedish Financial Reporting Board that entails a relaxation compared with IAS 39 as regards financial guarantee contracts issued for the benefit of subsidiaries. The Parent Company records financial guarantee contracts as a provision in the balance sheet when the company has an obligation for which it is probable that payment will be required to settle the obligation.
Tangiblefixedassets
Owned assets
Tangible fixed assets in the Parent Company are recognized at cost less deductions for accumulated depreciation and any impairment losses in the same manner as for the Group, but with the addition of any write-ups.
Leased assets
In the Parent Company, all leasing agreements are recognized in accordance with the regulations for operational leasing.
Intangiblefixedassets
Research and development
In the Parent Company, all expenses for development are recognized as expenses in profit or loss.
Taxes
Untaxed reserves include deferred tax liabilities when recognized in the Parent Company. However, in the consolidated financial statements, untaxed reserves are divided into deferred tax liability and shareholders' equity.
Groupcontributions andshareholders'contributionsforlegal entities
The company recognizes Group contributions and shareholders' contributions in accordance with the statement by the Swedish Financial Reporting Board. Shareholders' contributions are recognized directly against shareholders' equity for the recipient and are capitalized in shares and participations at the contributor to the extent that impairment is not required.
Group contributions are recognized in accordance with their financial impact. This means that Group contributions paid to reduce the total tax of the Group, are recognized directly against profit brought forward less deductions for its tax effect.
Group contributions that are comparable to a dividend are recognized as a dividend. This means that Group contributions received and the tax effects are recognized in profit or loss. Group contributions paid and the tax effects are recognized directly against profit brought forward.
Group contributions that are comparable to shareholders' contributions are recognized by the recipient directly against profit brought forward, taking into account the tax effects. The contributor recognizes the Group contribution and its tax effect as an investment in participations in Group companies to the extent that impairment is not required.
Note 2 Distribution of Sales
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 | |
| Licensing revenues | – | 41 187 | – | 41 187 | |
| Research services | 3379 | 4 235 | – | – | |
| Rental and service revenue | 7393 | 6 367 | – | – | |
| Administrative services | – | – | 3500 | 3 500 | |
| Government grant, Vinnova | – | 1 667 | – | 1 667 | |
| Total | 10772 | 53 456 | 3500 | 46 354 |
Note 3 Operating expenses distributed by type of cost
| SEK thousands | Group | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Personnel costs 1) | 84314 | 88 857 | 16373 | 24 527 |
| Depreciation | 9580 | 11 462 | – | 4 |
| Impairment | -296 | 440 | – | – |
| Operating expenses | 15387 | 17 187 | 2220 | 3 427 |
| Property expenses | 18452 | 17 063 | 980 | 1 044 |
| Administrative expenses | 1359 | 1 793 | 1357 | 1 793 |
| External R&D services | 98686 | 97 602 | – | – |
| Other external services | 2864 | 3 653 | 1227 | 2 430 |
| Total | 230346 | 238 057 | 22157 | 33 225 |
1) Personnel costs include costs of SEK 2,927 thousand (1,656) pertaining to the employee stock options program.
Note 4 Auditors' remuneration
| Group and Parent Company | |||
|---|---|---|---|
| SEK thousands | 2009 | 2008 | |
| KPMG, auditing assignments1) | 638 | 758 | |
| KPMG, other assignments | 175 | 222 |
1) Review of prospectus recognized in shareholders' equity: SEK 77 thousand (109).
Auditing assignments pertain to the auditing of the annual report and accounts, including the Board's and the President & CEO's administration, other assignments that the company's auditors are required to perform and advice or other support brought about by observations from auditing or conducting similar tasks. Everything else pertains to other assignments.
Note 5 Employee and personnel costs, and remuneration of senior executives
| Costsforremunerationof employees | Group | Parent Company | ||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 |
| Salaries and remuneration, etc. | 49288 | 52 340 | 7595 | 12 466 |
| Share-based payment 1) (see below) | 2927 | 1 656 | 2927 | 1 656 |
| Pension costs, defined-benefit plans (see below) | – | – | – | – |
| Pension costs, defined-contribution plans 2) 3) (see below) | 10799 | 12 697 | 2625 | 6 045 |
| Social-security costs | 18252 | 18 855 | 2880 | 3 887 |
| Non-monetary remuneration | 2106 | 2 186 | ||
| Total | 83372 | 87 734 | 16027 | 24 054 |
1) Of which, social-security costs totaled SEK 2,927 thousand (202).
2) Of the Parent Company's pension costs, SEK 1,434 thousand (4,481) pertains to the Board of Directors and President & CEO.
3) The Group's pension costs include SEK 3.9 million (3.1) pertaining to the ITP plan financed in Alecta. See the section "Remuneration of employees after the termination of employment" for further information.
| Averagenumber of employees | 2009 | 2008 | ||
|---|---|---|---|---|
| No. of employees | Of whom, women | No. of employees | Of whom, women | |
| Parent Company | ||||
| Sweden | 5 | 1(20%) | 6 | 1 (17%) |
| Total, Parent Company | 5 | 1(20%) | 6 | 1 (17%) |
| Subsidiaries | ||||
| Sweden | 85 | 51(60%) | 84 | 50 (60%) |
| Grouptotal | 90 | 52(58%) | 90 | 51 (57%) |
| Gender distributioninmanagement | 2009 | 2008 |
|---|---|---|
| Of whom, women | ||
| Parent Company | ||
| Board of Directors | 38% | 43% |
| Other senior executives | 0% | 0% |
| Grouptotal | ||
| Board of Directors | 38% | 43% |
| Other senior executives | 0% | 0% |
| Personnel,sickness absence | 2009 | 2008 |
|---|---|---|
| Group total | Sickness absence in percent | |
| All employees | 1,6% | 1,0% |
| Men | 0,2% | 0,1% |
| Women | 2,7% | 1,7% |
| Employees under 30 years of age | 1,0% | 0,0% |
| Employees 30-49 years of age | 1,9% | 1,2% |
| Employees over 49 years of age | 0,9% | 0,8% |
| Absence of at least 60 days | ||
| as % of total sickness absence | 17,4% | 14,1% |
Sickness absence in the Parent Company is not reported, since the number of employees is less than ten.
Salaries andotherremunerationsubdividedbycountry
andbetweensenior executivesandother employees,
| andsocial-securitycostsintheParent Company | 2009 | 2008 | ||||
|---|---|---|---|---|---|---|
| Senior executives |
Other | Senior executives |
Other | |||
| SEK thousands | (Nine individuals) | employees | Total | (Nine individuals) | employees | Total |
| Salaries and other remuneration | ||||||
| Sweden | 6537 | 1058 | 7595 | 11 382 | 1 084 | 12 466 |
| (of which, bonus and similar) | – | – | – | – | – | – |
| Parent Company,total | 6537 | 1058 | 7595 | 11 382 | 1 084 | 12 466 |
| (of which, bonus and similar) | – | – | – | – | – | – |
| Social-security costs 1) | 5151 | 3281 | 8432 | 8 983 | 949 | 9 932 |
| 1) of which, pension costs | 2407 | 218 | 2625 | 5 837 | 208 | 6 045 |
Salaries andotherremuneration, pensioncosts
| forsenior executivesintheGroup | 2009 | 2008 |
|---|---|---|
| Group | Senior executives |
Senior executives |
| SEK thousands | (Ten individuals) | (Ten individuals) |
| Salaries and other remuneration (of which, bonus and similar) |
7492 – |
12 224 – |
| Pension costs | 2706 | 5 980 |
Severancepayandloanstosenior executivesandotherterms andconditions No agreement exists covering severance pay or loans to Board members. The company and the President are subject to a mutual period of termination notice of 12 months. No severance pay will be issued and no loans exist. The company and other senior executives shall be subject to a mutual period of termination notice of six months. No severance pay will be issued and no loans exist. If the company, within a three-year period from the date on which the President & CEO assumed his position, is acquired or taken over in its entirety and the President & CEO is still employed, a cash payment corresponding to four annual salaries shall be paid. If the above does not occur within a three-year period, the parties shall, in good faith, negotiate and agree upon the customary performance-related variable remuneration for that time.
Post-retirement benefits
Defined-benefit plans
Retirement pension and family pension obligations for salaried workers in Sweden are secured through insurance with Alecta, which is a multi-employer, defined-benefit plan. For the 2008 and 2009 fiscal years, the company did not have access to information that would make it possible to recognize this plan as a defined-benefit plan. Accordingly, pension plans conforming to ITP and secured through an Alecta insurance policy are recognized as a defined-contribution plan. The year's fees for pension insurance subscribed to in Alecta totaled SEK 3.9 million (3.1). Alecta's surplus can be allocated to the policyholders and/or the insured. At year-end 2009, Alecta's surplus at the collective funding ratio amounted to 141 percent (112). The collective funding ratio comprises the market value of Alecta's assets as a percentage of insurance obligations based on Alecta's actuarial calculations, which do not conform to IAS 19.
Defined-contribution plans
In Sweden, the Group has defined-contribution plans for the employees that are fully paid by the company. Payment to these plans is conducted on an ongoing basis and in accordance with the regulations for each plan.
Share-basedpayments
The Extraordinary General Meeting of December 8, 2003 resolved to introduce an employee stock options program, according to which employees of the Active Biotech Group will be offered the opportunity to jointly acquire not more than 1,000,000 shares in the company. It was also decided, in connection with the commitments entailed by the employee stock options program, to issue a total of not more than 1,330,000 options for subscription for new shares to a wholly owned subsidiary on the same conditions as those applicable to the employee stock options program. Full exercise of the employee stock options will entail a dilution of approximately 1.5 percent of the share capital.
The principal conditions for the employee stock options are as follows:
Series 1 employee stock options were issued in December 2003 and grant employees the opportunity to acquire at most 330,000 shares during the period June 1, 2006 to May 31, 2009. Series 2 employee stock options were issued in June 2005 and grant the employees the opportunity to acquire at most 330,000 shares during the period June 1, 2007 to May 31, 2010. Series 3 employee stock options were issued in June 2006 and grant the employees the opportunity to acquire at most 340,000 shares during the period June 1, 2008 to May 31, 2011.
Series 1 employee stock options expired on May 31, 2009 without any exercise having taken place. The exercise price for Series 2 employee stock options was originally set at SEK 46.90, but as a consequence of the implementation of the new share issues in 2005, 2007, 2008 and 2009, the exercise price was recalculated at SEK 38.20. The exercise price for Series 3 employee stock options was originally set at SEK 68.80, but as a consequence of the implementation of the new share issues in 2007, 2008 and 2009, the exercise price was recalculated at SEK 58.40.
The employee stock options are allotted free of charge. The options shall not be considered securities and are not transferable to a third party. The exercise of the options primarily requires that the holder is employed by the Active Biotech Group at the time of exercise. The Board may, pending a special decision, permit holders to exercise their options even after their employment has terminated. The estates of option holders have the right to exercise the options on condition that the holder remained in the employment of Active Biotech at the time of his/her death or was granted right of exercise through a special decision by the Board.
Issue of debentures linked to options to subscribe for new shares and disposition of options Connected to the commitments entailed by the employee stock options program described above, debentures have been issued linked to options to subscribe for new shares on the following principal conditions:
Debentures of a nominal amount not exceeding SEK 1,330 associated with at most 438,900 Series 1 options, 1,438,900 Series 2 options and 452,200 Series 3 options for subscription for new shares were issued to a wholly owned subsidiary of Active Biotech AB (publ), waiving the rights of existing shareholders. The debentures were issued at a price corresponding to their nominal value without interest and matured for payment on March 31, 2004.
Series 1 options have expired.
Each Series 2 option entitles the holder to subscribe for 1.23 shares share during the period June 1, 2007 to May 31, 2010 at a recalculated exercise price of SEK 38.20.
Each Series 3 option shall entitle the holder to subscribe for 1.23 shares during the period June 1, 2008 to May 31, 2011 at a recalculated exercise price of SEK 58.40.
In the event that the Articles of Association permit the issue of different classes of shares at the time at which the subscription price and the exercise of the options are determined, the subscription price and the shares purchased using the options shall be Class B shares.
After having subscribed for debentures with options, the subsidiary has detached the options and held them in order to meet the commitments under the employee stock options program described above. Following the expiry of series 1 options, the subsidiary shall have the right to divest at most 221,100 options with the purpose of financing possible social security charges, etc., in connection with the implementation of the employee stock options program.
| Dateof allocation/personnel category | Series1 | Series2 | Series3 | Total Conditionsof entitlement | Duration | |
|---|---|---|---|---|---|---|
| Allocation, Dec. 2003/President | 11 200 | – | – | 11 200 | Remains in service | 3 years |
| Allocation, Dec. 2003/Other senior executives | 22 500 | – | – | 22 500 | Remains in service | 3 years |
| Allocation, Dec. 2003/Other employees | 296 125 | – | – | 296 125 | Remains in service | 3 years |
| Outstanding at Dec. 31, 2003 | 329 825 | – | – | 329 825 | ||
| Forfeited 2004/Other employees | -10 375 | – | – | -10 375 | ||
| Outstanding at Dec. 31, 2004 | 319 450 | – | – | 319 450 | ||
| Allocation, June 2005/President | – | 11 200 | – | 11 200 | Remains in service | 3 years |
| Allocation, June 2005/Other senior executives | – | 60 500 | – | 60 500 | Remains in service | 3 years |
| Allocation, June 2005/Other employees | – | 167 375 | – | 167 375 | Remains in service | 3 years |
| Förverkade 2005 / Övriga anställda | -7 000 | -1 500 | – | -8 500 | ||
| Forfeited 2005/Other employees | 312 450 | 237 575 | – | 550 025 | ||
| Allocation, June 2006/President | – | – | 11 200 | 11 200 | Remains in service | 3 years |
| Allocation, June 2006/Other senior executives | – | – | 41 100 | 41 100 | Remains in service | 3 years |
| Allocation, June 2006/Other employees | – | – | 287 700 | 287 700 | Remains in service | 3 years |
| Outstanding at Dec. 31, 2006 | 312 450 | 237 575 | 340 000 | 890 025 | ||
| Forfeited 2007/Other employees | -3 375 | -3 375 | -9 225 | -15 975 | ||
| Outstanding at Dec. 31, 2007 | 309 075 | 234 200 | 330 775 | 874 050 | ||
| Forfeited 2008/Other employees | -2 000 | -2 000 | -2 315 | -6 315 | ||
| Outstanding at Dec. 31, 2008 | 307 075 | 232 200 | 328 460 | 867 735 | ||
| Expired 2009/President | -11 200 | – | – | -11 200 | ||
| Expired 2009/Other senior executives | -22 500 | – | – | -22 500 | ||
| Expired 2009/Other employees | -273 375 | – | – | -273 375 | ||
| Forfeited 2009/Other employees | – | – | -3 075 | -3 075 | ||
| Outstanding at Dec. 31, 2009 | – | 232 200 | 325 385 | 557 585 | ||
| Exercisable at Dec. 31, 2009 | – | 232 200 | 325 385 | 557 585 |
Remaining duration
The options' weighted average remaining duration is 7.9 months.
Valuation of options
At the request of the Board, Handelsbanken Capital Markets has valued the options. The fair value of equity-settled options at the time of allotment was calculated using the Black & Scholes model. In the model, the following input data was used:
| Series1 | Series2 | Series3 | |
|---|---|---|---|
| Share price (SEK) | 60,45 | 39,05 | 57,30 |
| Exercise price (SEK) | 90,70 | 46,90 | 68,80 |
| Anticipated volatility (%) | 45 | 42 | 45 |
| Duration (years) | 5,42 | 5,00 | 5,00 |
| Risk-free interest (%) | 4,34 | 2,76 | 3,64 |
| Forecast dividend | – | – | – |
The calculation results in a fair value of SEK 21.10 for Series 1 options, SEK 13.50 for Series 2 options and SEK 22.00 for Series 3 options. The volatility assumption is based on forecasts and the historical volatility of the Active Biotech share.
Dilution effect and costs for the program
Full exercise of the proposed options would increase the share capital by at most SEK 3,610,209, with reservation for the increase that could be caused by the recalculation of the number of shares to which each option provides purchase rights, which may occur as a consequence of share issues, etc. The dilution effect on full exercise of the options corresponds to about 1.5 percent. The proposed options give rise to costs, partly in the form of social-security costs (UFR7), of which SEK 2,927 thousand was charged against consolidated earnings in 2009 and SEK 6,192 thousand in previous years, and partly accounting costs in accordance with IFRS 2, which did not impact consolidated earnings in 2009, but were charged in the amount of SEK 13,889 thousand to consolidated earnings in previous years.
The reasons for the proposal
The reasons for the options program, which involves the waiving of the preferential rights of existing shareholders, are as follows: A share-based incentive program contributes to the employees' continued focus on the growth of value in the company's projects and creates the conditions whereby all employees are able to share in the future growth in the value of the company generated through the employees' efforts.
Remunerationofsenior executives
Guidelines adopted at the 2009 Annual General Meeting on May 7, 2009 Active Biotech shall offer total remuneration on market terms, facilitating the recruitment and retention of competent senior executives. Remuneration of senior executives shall comprise fixed salary, any variable salary, pensions and other benefits. If the Board also determines that new share-based incentives should be introduced (e.g. employee options), a motion concerning this shall be submitted to the Annual General Meeting for approval.
Fixed salary
The fixed salary shall take into consideration the individuals' area of responsibility and experience. This shall be reviewed on an annual basis.
Remuneration and other benefits during 2009
Variable salary
The variable salary shall, where applicable, depend on the individuals' fulfillment of quantitative and qualitative goals. No variable salary shall be paid to President & CEO. For other senior executives, the variable salary shall amount to not more than 25 percent of fixed salary, whereby the highest level should be based on such factors as the position held by the specific individual.
Pension
Pension benefits shall comprise defined-contribution schemes. The pension premium shall correspond to not less than that applicable for the ITP plan and not more than 25 percent of fixed salary.
Severance pay, etc.
The company and the President & CEO shall observe a mutual period of termination notice of 12 months. The company and other senior executives shall observe a mutual period of termination notice of six months. No severance amounts will be payable. However, the President & CEO shall be entitled to extra remuneration corresponding to four annual salaries in the event of an ownership change that entails that the company in its entirety is acquired or taken over by another party.
Deviations from the guidelines
Employers' contributions totaling SEK 6.4 million for Active Biotech's former President and CEO, Sven Andréasson, for the years 2003 to 2008 have been repaid to the company by the Swedish Tax Authority as a result of his affiliation with a foreign social insurance scheme. The amount is cost neutral for the company and will, in accordance with an agreement in conjunction with Sven Andréasson's termination of employment, be paid as a pension premium.
Other benefits
Senior management may be awarded otherwise customary benefits, such as a company car, company healthcare, etc.
Preparation and approval
The President & CEO's remuneration shall be prepared and approved by the Board. Other senior executive's remuneration shall be prepared by the President & CEO, who shall submit a proposal to the Board for approval. The Board is entitled to deviate from the above principles if it deems that there are particular grounds for doing so in individual cases.
| SEK thousands | Basic salary/ | Variable | Other | Salary | Pension | Financial | Other | |
|---|---|---|---|---|---|---|---|---|
| Board fee remuneration | benefits | exchange | costs | instruments remuneration | Total | |||
| Chairman of the Board; Mats Arnhög 1) | 250 | – | – | – | – | – | – | 250 |
| Board member; Magnhild Sandberg-Wollheim 1) | 125 | – | – | – | – | – | – | 125 |
| Board member; Klas Kärre 1) | 125 | – | – | – | – | – | – | 125 |
| Board member; Peter Sjöstrand 1) | 125 | – | – | – | – | – | – | 125 |
| Board member; Peter Ström 1) | 125 | – | – | – | – | – | – | 125 |
| Board member; Tomas Nicolin 1) | 83 | – | – | – | – | – | – | 83 |
| President & CEO | 2 967 | – | 80 | 510 | 924 | – | – | 4 481 |
| Other senior executives (3 individuals) | 3 692 | – | 234 | 274 | 997 | – | – | 5 197 |
| Total | 7492 | – | 314 | 784 | 1921 | – | – | 10511 |
1) Apart from Board fees, no additional remuneration was paid to Board members.
Remuneration and other benefits during 2008
| SEK thousands | Basic salary/ | Variable | Other | Salary | Pension | Financial | Other | |
|---|---|---|---|---|---|---|---|---|
| Board fee remuneration | benefits | exchange | costs | instruments remuneration | Total | |||
| Chairman of the Board; Mats Arnhög 1) | 250 | – | – | – | – | – | – | 250 |
| Board member; Magnhild Sandberg-Wollheim 1) | 125 | – | – | – | – | – | – | 125 |
| Board member; Klas Kärre 1) | 125 | – | – | – | – | – | – | 125 |
| Board member; Peter Sjöstrand 1) | 125 | – | – | – | – | – | – | 125 |
| Board member; Peter Ström 1) | 125 | – | – | – | – | – | – | 125 |
| President & CEO Sven Andréasson, Jan 1-Aug 31 | 2 287 | – | 6 | – | 583 | – | – | 2 876 |
| President & CEO Sven Andréasson, final remuneration | 2 900 | – | – | 1 000 | 2 434 | – | – | 6 334 |
| President & CEO Tomas Leanderson, Sept 1-Dec 31 | 1 062 | – | 30 | 79 | 283 | – | – | 1 454 |
| Tomas Leanderson, Jan 1-Aug 31 | 1 634 | – | 61 | 170 | 448 | – | – | 2 313 |
| Other senior executives (3 individuals) | 3 591 | – | 236 | 133 | 850 | – | – | 4 810 |
| Total | 12224 | – | 333 | 1382 | 4598 | – | – | 18537 |
1) Apart from Board fees, no additional remuneration was paid to Board members.
Employee stock options
| SEK thousands | Employee stock options Series 2 | Employee stock options Series 3 | ||||||
|---|---|---|---|---|---|---|---|---|
| Amount | Value | Acquisition price | Remuneration | Amount | Value | Acquisition price | Remuneration | |
| President & CEO, | ||||||||
| Tomas Leanderson | 42 500 | 574 | – | 574 | 25 000 | 550 | – | 550 |
| Other senior | ||||||||
| executives (3 individuals) | 23 000 | 311 | – | 311 | 21 490 | 473 | – | 473 |
| Total | 65500 | 885 | – | 885 | 46490 | 1023 | – | 1023 |
Note 6 Net financial items
| Group | |||
|---|---|---|---|
| SEK thousands | 2009 | 2008 | |
| Accounts and loans receivable | |||
| - Interest income from bank balances | 496 | 2501 | |
| Other interest income | 342 | 45 | |
| Assets and liabilities measured at fair value | |||
| - Held for trading: derivatives | 3904 | 3 304 | |
| - Held for trading: short-term investments | 1412 | – | |
| Investments held to maturity | 147 | 3 562 | |
| Exchange-rate fluctuations | – | 747 | |
| Financial income | 6301 | 10 159 | |
| Financial liabilities valued at amortized cost | |||
| - Interest expenses relating to bank loans | -6957 | -13 201 | |
| - Other interest expenses | -208 | -344 | |
| Assets and liabilities measured at fair value | |||
| - Held for trading: derivatives | -3471 | – | |
| Exchange-rate fluctuations | -68 | – | |
| Financial expense | -10704 | -13 545 | |
| Capital gain on sale of associated company | – | 7 363 | |
| Netfinancial items | -4403 | 3 977 | |
| Of which: | |||
| Interest income from doubtful financial assets | – | – | |
| Interest income from instruments | |||
| measured at amortized cost | 643 | 6 063 | |
| Interest expense from instruments | |||
| measured at amortized cost | -7165 | -13 545 |
| Earnings from other securities and receivables | ||||
|---|---|---|---|---|
| Parent Company | that comprise fixed assets | |||
| SEK thousands | 2009 | 2008 | ||
| Capital gain on sale of shares | ||||
| in Isogenica Ltd | – | 7 363 | ||
| Total | – | 7 363 |
| Parent Company | Interest income and similar items | ||
|---|---|---|---|
| SEK thousands | 2009 | 2008 | |
| Interest income from Group companies | – | – | |
| Interest income, bank balances | 2327 | 5 508 | |
| Total | 2327 | 5 508 |
| Parent Company | Interest expense and similar items | |||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | ||
| Interest expenses from Group companies | – | – | ||
| Exchange-rate differences | -5 | -3 | ||
| Total | -5 | -3 |
| Parent Company | Earnings from participations in Group companies | |
|---|---|---|
| SEK thousands | 2009 | 2008 |
| Liquidation of subsidiary | – | 37 635 |
| Total | – | 37 635 |
| affecting earnings | Group | Parent Company | ||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 |
| Exchange-rate differences | ||||
| affecting operating profit/loss | 98 | -100 | -8 | -20 |
| Financial exchange-rate differences | -68 | 747 | -5 | -3 |
| Total | 30 | 647 | -13 | -23 |
Note 7 Taxes
| Recognized in profit and loss | Group | Parent Company | ||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 |
| Aktuell skattekostnad (-)/skatteintäkt (+) | ||||
| Periodens skattekostnad/skatteintäkt | – | – | – | – |
| Justering av skatt hänförlig till tidigare år | – | – | – | – |
| Current tax expense (-)/tax income (+) | ||||
| Deferred tax expense as a result of utilization | ||||
| of loss carryforwards previously capitalized | -346 | -368 | – | – |
| Deferred tax expense as a result of change in tax rate | – | -962 | – | – |
| Deferred tax income attributable to | ||||
| depreciation of revaluation of property | 346 | 368 | – | – |
| Total recognizedtaxexpense/income | – | -962 | – | – |
Exchange-rate differences
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 |
| Reconciliation of effective tax | ||||
| Profit/loss before tax | -223977 | -180 624 | -16335 | 63 632 |
| Tax on the Parent Company according to current rates 26.3% (28%) | 58906 | 50 575 | 4296 | -17 817 |
| Non-deductible expenses | -316 | -1 918 | -364 | -1 715 |
| Non-taxable revenues | 90 | 2 075 | 89 | 12 606 |
| Increase in loss carryforwards without equivalent | ||||
| capitalization of deferred taxes | -59082 | -50 732 | -4021 | – |
| Increase/decrease in temporary differences for which | ||||
| deferred tax is not recognized | 402 | – | – | – |
| Effect of changed tax rate | – | -962 | – | |
| Utilization of loss carryforwards previously not capitalized | – | – | – | 6 926 |
| Recognizedeffectivetax | – | -962 | – | – |
| Taxitemsrecognizeddirectlyinother comprehensiveincome | Group | Parent Company | ||||
|---|---|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 | ||
| Deferred tax attributable to change in tax rate | – | 962 | – | – | ||
| Recognizedinthestatementoffinancial position Deferred tax receivable Deferred tax receivables and liabilities |
Group | Deferred tax liability Group |
Net Group |
|||
| SEK thousands | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
| Tangible fixed assets | – | – | -14535 | -14 881 | -14535 | -14 881 |
| Loss carryforwards | 14535 | 14 881 | – | – | 14535 | 14 881 |
| Tax receivables/liabilities | 14535 | 14 881 | -14535 | -14 881 | – | – |
| Offsetting | -14535 | -14 881 | 14535 | 14 881 | – | – |
| Taxreceivables/liabilities, net | – | – | – | – | – | – |
Change in deferred tax in temporary differences and loss carryforwards
| SEK thousands | Balance at Jan 1, 2009 |
Recognized in profit and loss |
Recognized in other comprehensive income |
Balance at Dec 31, 2009 |
|---|---|---|---|---|
| Tangible fixed assets | -14 881 | 346 | – | -14 535 |
| Loss carryforwards | 14 881 | -346 | – | 14 535 |
| – | – | – | – |
Due to the Group's activities with considerable research and development costs, the company is not liable for tax. At the end of 2009, the Group's accumulated loss carryforwards amounted to SEK 2,095 million and was attributable to the Group's Swedish companies. The Parent Company's loss carryforwards amounted to SEK 1,896 million. Since the time at which the Parent Company and the Swedish subsidiaries may be expected to generate revenues cannot yet be specified, only the portion of the taxable effects of the loss carryforwards corresponding to the deferred tax liability was recognized.
Note 8 Tangible fixed assets
Group
| Equipment,tools, | ||||
|---|---|---|---|---|
| SEKthousands | Buildings andland | fixtures andfittings | ||
| Recognition based on revaluation method | Recognition based on purchase method | Total | ||
| Cost | ||||
| Opening balance, January 1, 2008 | 341 202 | 154 351 | 495 553 | |
| Other acquisitions | - | 6 314 | 6 314 | |
| Divestments | - | - | - | |
| Closing balance, December 31, 2008 | 341 202 | 160 665 | 501 867 | |
| Opening balance, January 1, 2009 | 341 202 | 160 665 | 501 867 | |
| Other acquisitions | - | 4 043 | 4 043 | |
| Divestments | - | -29 151 | -29 151 | |
| Closing balance, December 31, 2009 | 341 202 | 135 557 | 476 759 | |
| Depreciationandimpairmentlosses | ||||
| Opening balance, January 1, 2008 | -17 177 | -148 676 | -165 853 | |
| Depreciation for the year | -7 412 | -4 050 | -11 462 | |
| Divestments | - | - | - | |
| Closing balance, December 31, 2008 | -24 589 | -152 726 | -177 315 | |
| Opening balance, January 1, 2009 | -24 589 | -152 726 | -177 315 | |
| Depreciation for the year | -7 179 | -2 401 | -9 580 | |
| Divestments | - | 29 128 | 29 128 | |
| Closing balance, December 31, 2009 | -31 768 | -125 999 | -157 767 | |
| Carryingamounts | ||||
| January 1, 2008 | 324 025 | 5 675 | 329 700 | |
| December 31, 2008 | 316 613 | 7 939 | 324 552 | |
| January 1, 2009 | 316 613 | 7 939 | 324 552 | |
| December 31, 2009 | 309 434 | 9 558 | 318 992 | |
| Taxassessment value | ||||
| Group | Dec. 31, 2009 | Dec. 31, 2008 | ||
| Tax assessment value, buildings (Forskaren 1, Municipality of Lund) | 74 000 | 74 000 | ||
| Tax assessment value, land (Forskaren 1, Municipality of Lund) | 8 191 | 8 191 | ||
| Buildings andlandrecognitionbased | Historical | Carrying amount | Historical | Carrying amount |
| ontherevaluationmethod | carrying amount | after revaluations | carrying amount | after revaluations |
| Dec. 31, 2009 | Dec. 31, 2009 | Dec. 31, 2008 | Dec. 31, 2008 | |
| Cost | 280 316 | 341 202 | 280 316 | 341 202 |
| Accumulated depreciation | -27 105 | -31 768 | -20 582 | -24 589 |
| Carrying amount | 253 211 | 309 434 | 259 734 | 316 613 |
26
statements
27
Revaluationmethod
The Group applies the revaluation method with regard to the Group's owner-occupied property. At the time of the acquisition, the property was revalued using the revaluation method based on an appraisal conducted by PricewaterhouseCoopers. In conjunction with the divestment of land in April 2006, a new valuation was conducted. The value assessment assumes that Active Biotech utilizes approximately 80 percent of the premises for its own operations. The value of the laboratory equipment and other special premises was not considered in the valuation. The value assessment was conducted using a market simulation via yield-based market value assessment and via the local market price method.
Conditions and assumptions for valuation:
- Inflation assumption of 2.0 percent for the calculation period
- Rental increases for rented premises in accordance with agreed rental terms
- Rental increases for internal premises, 100 percent of CPI
- Annual increase of operation/maintenance, 100 percent of CPI
- Nominal cost of capital, total capital 9.65 percent
- Direct yield last year's net operating income, 7.5 percent
The conditions on the local property market have not changed in a decisive manner. At the end of 2008, a new property valuation was conducted by PricewaterhouseCoopers. The market value of the property is within a value interval that does not significantly differ from the market value established in 2006, SEK 345 million. During the last quarter of 2009, a complete value estimation was conducted, which confirmed the above-mentioned value interval.
Financial leasingintheGroup
Since 2002, the company leases machines and other technical facilities under various financial leasing agreements in which the main terms of the agreement are as follows: rental period 36-60 months, final residual value 3-10 percent of the cost and an interest rate linked to a floating market rate. The Group has also signed agreements on the financial leasing of cars. Property leased through the above-mentioned agreements is recognized in the consolidated balance sheet under equipment, tools, fixtures and fittings. At December 31, 2009, the carrying amount of property covered by financial leasing agreements was SEK 6,126 thousand. See also Note 12, Interest-bearing liabilities.
Operational leasingintheGroup
The Group has operational leasing agreements for telephone switchboards and photocopying machines. Payments pertaining to these operating agreements are due as follows: Within one year SEK 460 thousand, between one and five years SEK 920 million, and after five years SEK 0.
| Parent Company | ||
|---|---|---|
| SEK thousands | Equipment, tools, | |
| fixtures and fittings | Total | |
| Cost | ||
| Opening balance, January 1, 2008 | 1 034 | 1 034 |
| Other acquisitions | – | – |
| Divestments | – | – |
| Closing balance, December 31, 2008 | 1 034 | 1 034 |
| Opening balance, January 1, 2009 | 1 034 | 1 034 |
| Other acquisitions | - | – |
| Divestments | -549 | -549 |
| Closing balance, December 31, 2009 | 485 | 485 |
| Depreciationandimpairmentlosses | ||
| Opening balance, January 1, 2008 | -679 | -679 |
| Depreciation for the year | -4 | -4 |
| Divestments | – | – |
| Closing balance, December 31, 2008 | -683 | -683 |
| Opening balance, January 1, 2009 | -683 | -683 |
| Depreciation for the year | – | – |
| Divestments | 549 | 549 |
| Closing balance, December 31, 2009 | -134 | -134 |
| Carryingamounts | ||
| January 1, 2008 | 355 | 355 |
| December 31, 2008 | 351 | 351 |
| January 1, 2009 | 351 | 351 |
| December 31, 2009 | 351 | 351 |
Note 9 Prepaid expenses and accrued income
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 |
| Interest | 198 | – | 147 | – |
| Prepaid rent | 79 | 51 | 27 | – |
| Prepaid insurance | 1139 | 1 046 | 527 | 486 |
| Accrued revenues | 15 | 52 | – | – |
| Prepaid clinical trials | 8156 | 111 | – | – |
| Other prepaid expenses and accrued income | 1892 | 1 721 | 190 | 256 |
| Total | 11479 | 2 981 | 891 | 742 |
Note 10 Shareholders' equity
Consolidatedshareholdersequity
Specificationofshareholders'equityitemReserves
| Translationreserve | ||
|---|---|---|
| SEK thousands | 2009 | 2008 |
| Translation reserve, January 1 | – | 639 |
| Less exchange-rate differences attributable to | ||
| divested/wound-up operations | – | -639 |
| Change in translation reserve for the year | – | – |
| Translation reserve, December 31 | – | – |
| Revaluationreserve | ||
| SEK thousands | 2009 | 2008 |
| Revaluation reserve, January 1 | 41698 | 41 687 |
| Effect of changed tax rate | – | 960 |
| Transfer to loss carryforwards | -968 | -949 |
| Total reserves | |||
|---|---|---|---|
| SEK thousands | 2009 | 2008 | |
| Reserves, January 1 | 41698 | 42 326 | |
| Change in reserves for the year: | |||
| Translation reserve | – | -639 | |
| Revaluation reserve | -968 | 11 | |
| Reserves, December 31 | 40730 | 41 698 | |
| Sharecapital | Ordinary shares | ||
| Thousands of shares | 2009 | 2008 | |
| Issued at January 1 | 51242 | 47 300 | |
| Cash issue | 12810 | 3 942 | |
| Issued at December 31 – paid | 64052 | 51 242 |
At December 31, 2009, the registered share capital comprised 64,052,238 ordinary shares with a quotient value of SEK 3.77 issued in one series. Holders of ordinary shares are entitled to dividends determined successively and the shareholding entitles the holder to voting rights at the Annual General Meeting of one vote per share.
At the Extraordinary General Meeting on December 8, 2003, it was decided to introduce an employee stock options program, according to which all employees of the Active Biotech Group will be offered the opportunity to acquire a combined maximum of 1,000,000 shares in the company. Due to the commitments entailed by the employee stock options program, it was also decided to issue a total of a maximum of 1,330,000 options for subscription for new shares to a wholly owned subsidiary on the same conditions as those applicable to the employee stock options.
Other capital contributions
Refers to shareholders' equity contributed by the owners in addition to share capital. This includes the share premium reserves transferred to the statutory reserve at December 31, 2005. Effective January 1, 2006 and onward, allocations to the statutory reserve will also be recognized as contributed capital.
Reserves
Translation reserve
The translation reserve includes all exchange-rate differences that arise when translating financial statements from foreign operations that have prepared their financial statements in a currency other than that used in the consolidated financial statements. The Parent Company and Group present their financial statements in Swedish kronor. Revaluation reserve
The revaluation reserve includes value changes attributable to tangible and intangible fixed assets.
Profit/lossbroughtforwardincludingprofit/lossfortheyear
Profit/loss brought forward including profit/loss for the year includes accumulated earnings/losses in the Parent Company and its subsidiaries and associated companies. Earlier provisions to statutory reserves, excluding transferred share premium reserves, are included in this equity item.
Dividend
The Board of Directors proposes that no dividend be paid for the 2009 fiscal year.
Capital management
In accordance with the Board's policy, the Group's financial objective is to maintain a solid capital structure and financial stability, thereby retaining the confidence of investors and credit providers in the market, and to function as a platform for the continued development of the business operation. Capital is defined as total equity. With reference to the focus of the operation, no specific target for debt/equity has been defined. Neither the Parent Company nor any if its subsidiaries are subject to any external capital requirements.
Parent Company'sshareholders'equity
Restrictedfunds
Restricted funds may not be reduced through the distribution of profits.
Statutory reserve
The purpose of the statutory reserve is to retain a portion of net profit that is not used to cover losses brought forward. Amounts that were allocated to the share premium reserve before January 1, 2006 have been transferred and are now included in the statutory reserve.
Unrestrictedequity
In addition to profit/loss for the year, the following funds comprise unrestricted equity, meaning the amount that is available for distribution to shareholders.
Share premium reserve
When shares are issued at a premium, that is, payment is required for the shares in excess of their quotient value, an amount corresponding to the proceeds received in excess of the shares' quotient value shall be transferred to the share premium reserve. Amounts allocated to the share premium reserve from January 1, 2006 are included in unrestricted equity.
Profit/loss brought forward
Profit/loss brought forward comprises the preceding year's profit/loss brought forward, less any dividends paid during the year.
Note 11 Earnings per share
| Before dilution | After dilution | ||||
|---|---|---|---|---|---|
| SEK | 2009 | 2008 | 2009 | 2008 | |
| Earnings per share | -3,81 | -3,66 | -3,81 | -3,66 |
Calculation of the numerator and the denominator used in the above calculation of earnings per share is specified below.
Earningspersharebeforedilution
The calculation of earnings per share in 2009 was based on loss for the year attributable to the Parent Company's ordinary shareholders amounting to SEK 223,977 thousand (loss: 181,586) and on a weighted average number of shares outstanding during 2009 totaling 58,752,574 (49,604,811). The two components were calculated in the following manner:
| Loss attributable to the Parent Company's shareholders, before dilution | ||
|---|---|---|
| SEK thousands | 2009 | 2008 |
| Loss for the year attributable to the Parent Company's shareholders | -223977 | -181 586 |
| Weighted average number of outstanding common shares, before dilution | ||
| Thousands of shares | 2009 | 2008 |
| Total number of ordinary shares at January 1 | 51242 | 47 300 |
| Effect of new share issue | 7511 | 2 305 |
| Weighted average number of ordinary shares during the year, before dilution | 58753 | 49 605 |
Earningspershareafter dilution
The calculation of earnings per share in 2009 is based on loss for the year attributable to the Parent Company's shareholders amounting to SEK 223,977 thousand (loss: 181,586) and on a weighted average number of outstanding shares during 2009 totaling 58,752,574 (49,604,811). The two components were calculated in the following manner:
Loss attributable to the Parent Company's shareholders, after dilution
| SEK thousands | 2009 | 2008 |
|---|---|---|
| Loss attributable to the Parent Company's shareholders | -223977 | -181 586 |
| Effect of share warrants | – | – |
| Loss attributable to the Parent Company's shareholders, after dilution | -223977 | -181 586 |
| Weighted average number of outstanding common shares, after dilution | ||
| Thousands of shares | 2009 | 2008 |
| Weighted average number of common shares during the year, before dilution | 58753 | 49 605 |
| Effect of share warrants | – | – |
| Weighted average number of ordinary shares during the year, after dilution | 58753 | 49 605 |
Instrumentsthat couldpotentiallycauseadilutioneffect andchanges afterthebalance-sheet date
The company's employee stock option program is deemed to have a dilution effect only if it results in lower earnings per share than before dilution. Since earnings for 2009 and 2008 were negative, the loss per share would be lower if the employee stock option program was taken into account. For further information on the company's employee stock option program, see Note 5.
Note 12 Interest-bearing liabilities
| Group | ||
|---|---|---|
| SEK thousands | 2009 | 2008 |
| Long-termliabilities | ||
| Bank loan | 241068 | 246 726 |
| Financial leasing liabilities | 6888 | 5 000 |
| Total | 247956 | 251 726 |
| Currentliabilities | ||
| Short-term portion of bank loan | 5658 | 5 191 |
| Short-term portion of financial leasing liabilities | 1865 | 1 461 |
| Total | 7523 | 6 652 |
Financial leasing
The portion of long-term interest-bearing liabilities that pertains to financial leasing in the Group comprises future leasing fees attributable to agreements under financial leasing. The obligations pertaining to financial leasing mature as follows:
| SEK thousands | Amortization | Interest | Total payment |
|---|---|---|---|
| Within one year | 1 865 | 214 | 2 079 |
| Between one and five years | 6 888 | 515 | 7 403 |
| Later than five years | – | – | – |
| 8753 | 729 | 9482 |
Amortization due within one year is recognized as a short-term liability. Interest on financial leasing agreements is linked to the floating market interest rates. For further information concerning interest and maturity structures, see Note 16.
Note 13 Other short-term liabilities
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 |
| Personnel tax at source | 1415 | 1 461 | 283 | 290 |
| VAT | 1066 | 836 | 209 | – |
| Derivatives held for hedging purposes | 3471 | – | – | – |
| Other personnel costs | 6647 | – | 6647 | – |
| Other short-term liabilities | 400 | 500 | 400 | 500 |
| Total | 12999 | 2 797 | 7539 | 790 |
Note 14 Accrued expenses and deferred income
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 |
| Accrued vacation liability, including social-security costs | 7263 | 7 171 | 1946 | 1 888 |
| Accrued employer's contributions | 1244 | 1 288 | 165 | 193 |
| Accrued employer's contributions for employee stock options program | 9120 | 6 192 | 9120 | 6 192 |
| Accrued severance pay | – | 2 848 | – | 2 848 |
| Other accrued personnel costs | 2428 | 2 171 | 484 | 557 |
| Accrued Board fees, including social-security costs | 1111 | 993 | 1111 | 993 |
| Accrued auditors' fees | 340 | 340 | 300 | 300 |
| Accrued fees for legal services | 200 | 504 | 200 | 104 |
| Accrued interest | 444 | 1 498 | – | – |
| Accrued expenses, clinical trials | 2884 | 5 243 | – | – |
| Accrued property expenses | 2426 | 2 402 | – | – |
| Other items | 343 | 840 | 102 | 112 |
| Total | 27803 | 31 490 | 13428 | 13 187 |
Note 15 Valuation of financial assets and liabilities at fair value
The fair values and carrying amounts are recognized in the balance sheet below:
| Group 2009 | |||||||
|---|---|---|---|---|---|---|---|
| SEK thousands | Accounts and | Financial assets/ liabilities measured at fair value |
Investments held | Financial assets held |
Other financial |
Total carrying |
Fair |
| loans receivable | in profit or loss | to maturity | for sale | liabilities | amount | value | |
| Other long-term receivables | 1 | – | – | – | – | 1 | 1 |
| Accounts receivable | 547 | – | – | – | – | 547 | 547 |
| Cash and cash equivalents | 14 623 | 91 412 | 50 000 | – | – | 156 035 | 156 036 |
| Total | 15171 | 91412 | 50000 | – | – | 156583 | 156583 |
| Long-term interest-bearing liabilities | – | – | – | – | 247 956 | 247 956 | 247 956 |
| Short-term interest-bearing liabilities | – | – | – | – | 7 523 | 7 523 | 7 523 |
| Accounts payable | – | – | – | – | 13 325 | 13 325 | 13 325 |
| Other liabilities | – | 3 471 | – | – | 444 | 3 915 | 3 915 |
| Total | – | 3471 | – | – | 269251 | 272719 | 272719 |
Group 2008
| SEK thousands | Financial assets/ | ||||||
|---|---|---|---|---|---|---|---|
| liabilities measured | Financial | Other | Total | ||||
| Accounts and | at fair value | Investments held | assets held | financial | carrying | Fair | |
| loans receivable | in profit or loss | to maturity | for sale | liabilities | amount | value | |
| Other long-term receivables | 1 | – | – | – | – | 1 | 1 |
| Accounts receivable | 1 671 | – | – | – | – | 1 671 | 1 671 |
| Cash and cash equivalents | 138 741 | – | – | – | – | 138 741 | 138 741 |
| Total | 140413 | – | – | – | – | 140 413 | 140 413 |
| Long-term interest-bearing liabilities | – | – | – | – | 251 726 | 251 726 | 251 726 |
| Short-term interest-bearing liabilities | – | – | – | – | 6 652 | 6 652 | 6 652 |
| Accounts payable | – | – | – | – | 16 213 | 16 213 | 16 213 |
| Other liabilities | – | – | – | – | 1 498 | 1 498 | 1 498 |
| Total | – | – | – | – | 276 089 | 276 089 | 276 089 |
Disclosureregardingthedeterminationof fair value
Group 2009
| Level 1 | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| Short-term investments – on a par with cash and cash equivalents | 91 412 | 91 412 | ||
| Short-term liability – derivatives | 3 471 | 3 471 |
Level 1: according to quoted prices on an active market for the same instrument
Level 2: based on directly or indirectly observable market inputs other than those included in Level 1
Level 3: according to inputs not based on observable market data
Parent Company 2009
| SEK thousands | Financial | Other | Total | |||
|---|---|---|---|---|---|---|
| Accounts and | Investments held | assets held | financial | carrying | Fair | |
| loans receivable | to maturity | for sale | liabilities | amount | value | |
| Long-term receivables | - | - | 1 | - | 1 | 1 |
| Short-term investments | - | 50 000 | - | - | 50 000 | 50 000 |
| Cash and bank balances | 94 159 | - | - | - | 94 159 | 94 159 |
| Total | 94159 | 50000 | 1 | - | 144160 | 144 160 |
| Accounts payable | - | - | - | 176 | 176 | 176 |
| Total | - | - | - | 176 | 176 | 176 |
Parent Company 2008
| SEK thousands | Financial | Other | Total | |||
|---|---|---|---|---|---|---|
| Accounts and | Investments held | assets held | financial | carrying | Fair | |
| loans receivable | to maturity | for sale | liabilities | amount | value | |
| Long-term receivables | – | – | 1 | – | 1 | 1 |
| Cash and bank balances | 131 625 | – | – | – | 131 625 | 131 625 |
| Total | 131 625 | – | 1 | – | 131 626 | 131 626 |
| Accounts payable | – | – | – | 640 | 640 | 640 |
| Total | – | – | – | 640 | 640 | 640 |
The following text summarizes the methods and assumptions primarily used to establish the fair value of the financial instruments entered in the table above.
Securities
For listed securities, the determination of fair value is based on the listed price of the asset on the balance-sheet date, excluding transaction expenses at the time of acquisition. Potential transaction expenses in connection with the divestment of an asset are also disregarded.
Derivative instruments
The fair value of interest-rate swaps is based on the valuation of the intermediary credit institution, the fairness of which is tested by discounting estimated future cash flows in accordance with the terms and maturities of the contract and based on the market interest rate for similar instruments on the balance-sheet date.
Note 16 Financial risks and financial policies
Through its operations, the Group is exposed to various forms of financial risk. Financial risk denotes fluctuations in the company's earnings and cash flow resulting from changes in exchange rates, interest rates, refinancing and credit risks.
The Group's financial policy for the management of financial risk has been formulated by the Board and acts as a framework of guidelines and regulations in the form of risk mandates and limits for financing activities. Responsibility for the Group's financial transactions and risks is managed centrally by the Parent Company's finance department. The overriding objective for the finance function is to provide
Interest-bearing liabilities
The calculation of fair value of financial liabilities that do not constitute derivative instruments is based on future cash flows of principal and interest discounted to the prevailing market interest rate on the balance-sheet date.
Financial leasing liabilities
Fair value is based on the present value of future cash flows discounted to the market interest rate for similar leasing agreements.
Accounts receivable and accounts payable
For accounts receivable and accounts payable with a remaining economic life of less than six months, the carrying amount is deemed to reflect the fair value.
cost-efficient financing and to minimize negative effects on the Group's earnings from market fluctuations. The Board of Active Biotech has established a policy for the investment of the Group's cash and cash equivalents, which, in view of the operational risks associated with the business, stipulates a conservative investment policy. The Group's cash and cash equivalents shall be invested in liquid assets with low credit risk, primarily in short-term Swedish securities, commercial papers and fixed-income and bond funds with high liquidity.
Interest-raterisk
Interest-rate risk relating to borrowings
The interest-rate risk relates to the risk that Active Biotech's exposure to fluctuations in market interest rates can have a negative impact on net earnings. The fixed-interest term on the Group's financial assets and liabilities is the most significant factor that influences the interest-rate risk. Active Biotech's view is that a short fixed-interest term is, in terms of risk, consistent with the company's operative position. However, the Board can choose to extend the period of fixed interest with the aim of limiting the effect of any rise in interest rates.
The Group's financing sources mainly comprise shareholders' equity, bank loans for financing of property holdings and financial leasing commitments. Outstanding interestbearing liabilities are recognized in Note 13 and the maturity structure of liabilities is presented below.
Derivative instruments
Derivative instruments in the form of interest-rate swaps are used to control fixed interest without altering the underlying loan. The market value is recognized in financial expenses.
Group 2009
| Nominal amount, | Within | 1–3 | 3 months | 5 years and | |||
|---|---|---|---|---|---|---|---|
| SEK thousands | original currency | Total | 1 month | months | –1 year | 1–5 years | longer |
| Bank loans, SEK | 246 726 | – | 1 414 | 4 243 | 16 585 | 224 484 | |
| Financial leasing liabilities, SEK | 8 753 | 158 | 471 | 1 236 | 6 888 | – | |
| Accounts payable, SEK | 5 724 | 5 592 | 132 | – | – | – | |
| Accounts payable, EUR | 535 | 5 534 | 5 534 | – | – | – | – |
| Accounts payable, GBP | 3 | 40 | 40 | – | – | – | – |
| Accounts payable, NOK | 79 | 98 | 98 | – | – | – | – |
| Accounts payable, USD | 267 | 1 929 | 1 929 | – | – | – | – |
| Total | 268804 | 13351 | 2017 | 5479 | 23473 | 224484 | |
| Group 2008 | |||||||
| Bank loans, SEK | 251 917 | – | 1 298 | 3 894 | 15 576 | 231 149 | |
| Financial leasing liabilities, SEK | 6 461 | 125 | 359 | 977 | 5 000 | – | |
| Accounts payable, SEK | 5 971 | 5 792 | 179 | – | – | – | |
| Accounts payable, EUR | 628 | 6 867 | 6 867 | – | – | – | – |
| Accounts payable, GBP | 36 | 401 | 401 | – | – | – | – |
| Accounts payable, NOK | 11 | 12 | 12 | – | – | – | – |
| Accounts payable, USD | 382 | 2 962 | 2 962 | – | – | – | – |
| Total | 274591 | 16159 | 1836 | 4871 | 20576 | 231149 |
Interest-rate risks in relation to cash and cash equivalents
The Group's cash and cash equivalents, which totaled SEK 156,035 thousand at December 31, 2009, were invested at a floating interest rate, which during 2009, fluctuated between 0 and 2 percent.
Liquidity risk relates to the risk that the Group will encounter difficulties in fulfilling its commitments that are associated with financial liabilities. For short-term purposes, the Group has a rolling 12-month liquidity plan that is updated on a continuous basis. For medium-term planning, future revenue and cash flows are forecast continuously based on the projects' anticipated development phase. The long-term liquidity forecast is presented on a regular basis to the Board.
Financingrisk
Financing risk relates to the risk that financing of Active Biotech's capital requirements and refinancing of loans outstanding may be made more difficult or more expensive. Since Active Biotech has loans that mature on different dates, the financing risk can be reduced. The liabilities comprise a long-term property loan and a smaller number of financial leasing liabilities. The company has no short-term loan financing in the form of overdraft facilities. Active Biotech secures short-term access to funds by having good access to liquid funds.
Currencyrisks
Currency risk comprises the risk that changes in exchange rates will have a negative impact on the Group's income statement, balance sheet and/or cash flow Exchangerate risks exist in the form of transaction and translation risks.
The Group has a currency exposure, since operations are primarily conducted within Sweden. Earnings are exposed to fluctuations in exchange rates in the procurement of clinical trials, research services and clinical materials. Operating costs for the fiscal year amounted to SEK 230.3 million, of which approximately 37 percent consisted of costs in foreign currencies. The proportion of costs in foreign currencies, primarily USD and EUR, may fluctuate as projects advance to later stages of development, potentially necessitating an increased number of clinical trials abroad.
Creditrisks
The Group is exposed to the risk of not receiving payment from customers. The Group's credit risks are marginal, since operations have a low invoicing level, due to the fact that the business activities currently comprise mainly research and development. Credit losses or impairment of possible credit losses were charged against earnings for 2009 in the amount of SEK 0.0 million.
Credit risks also arise when investing cash and cash equivalents. Cash and cash equivalents are principally invested in short-term Swedish securities, commercial papers and fixed-income and bond funds with high liquidity in well-established banks.
Maturityanalysis, accountsreceivablethat
| havematured, but areunimpaired | 2009 | 2008 | ||
|---|---|---|---|---|
| SEK thousands | Carrying | Carrying | ||
| amount, | amount, | |||
| unimpaired | unimpaired | |||
| receivable | Collateral | receivable | Collateral | |
| Accounts receivable, not matured | 547 | – | 1 349 | – |
| Accounts receivable, matured 0 – 30 days | – | – | 104 | – |
| Accounts receivable, matured > 30 days – 90 days | – | – | – | – |
| Accounts receivable, matured > 90 days – 180 days – | – | – | – | |
| Accounts receivable, matured > 360 days | – | – | 218 | – |
| 547 | – | 1 671 | – |
Note 17 Pledged assets, contingent liabilities and contingent assets
| Pledgedassets | Group | Parent Company | |||
|---|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 | |
| In the form of assets pledged for own liabilities and provisions | |||||
| Property mortgage | 260000 | 260 000 | – | – | |
| Assets with ownership reservation | 10444 | 8 143 | 1691 | 1 682 | |
| Total | 270444 | 268 143 | 1691 | 1 682 | |
| Other collateral provide and pledged assets | |||||
| Pension insurances | 5708 | 4 962 | 5708 | 4 962 | |
| Total pledgedassets | 276152 | 273 105 | 7399 | 6 644 | |
| Contingentliabilities | Group | Parent Company | |||
| SEK thousands | 2009 | 2008 | 2009 | 2008 | |
| Guarantees for the benefit of Group companies | – | – | 246726 | 251 917 | |
| Total contingentliabilities | – | – | 246726 | 251 917 |
Note 18 Group companies
Holdings in subsidiaries
| December 31, 2009 (SEK thousands) | Corp. Reg. No. | Registered office | No. of shares/percentage | Nominal value | Carrying amount |
|---|---|---|---|---|---|
| Active Biotech Research AB | 556541-8323 | Lund | 1 000 / 100% | 100 | 161 900 |
| Active Forskaren 1 KB | 969646-4677 | Lund | 40 000 | ||
| Actinova AB | 556532-8860 | Lund | 1 000 / 100% | 100 | 100 |
| Active Security Trading AB | 556092-7096 | Lund | 400 / 100% | 400 | 450 |
| Total | 202 450 |
Changeincarryingamount ofsharesinsubsidiaries
| SEK thousands | 2009 | 2008 |
|---|---|---|
| Cost, January 1 | 202450 | 229 400 |
| Winding up | – | -26 950 |
| Accumulated cost, December 31 | 202450 | 202 450 |
| Carrying amount, December 31 | 202450 | 202 450 |
Note 19 Supplementary data to the cash-flow statement
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK thousands | 2009 | 2008 | 2009 | 2008 |
| Interest paidanddividendsreceived | ||||
| Interest received | 2198 | 6 475 | 2180 | 5 508 |
| Interest paid | -4314 | -10 278 | – | – |
| Total | -2116 | -3 803 | 2180 | 5 508 |
| Adjustmentsfor non-cashitems | ||||
| Depreciation and impairment of assets | 9580 | 11 901 | – | 4 |
| Capital gain on sale of fixed assets | – | -7 363 | – | -7 363 |
| Disposal of fixed assets | 23 | – | – | – |
| Winding up of subsidiary | – | – | – | -37 635 |
| Costs for employee stock options program | – | 1 453 | – | 1 453 |
| Unrealized exchange-rate differences | – | -640 | – | – |
| Total | 9603 | 5 351 | – | -43 541 |
| Transactionsnotinvolvingpayment | ||||
| Acquisition of assets through financial leasing | 3971 | 3 458 | ||
| Cashandcashequivalents | ||||
| Cash and cash equivalents consist of the following components: | ||||
| Cash and bank balances | 106035 | 138 741 | 94159 | 131 625 |
| Short-term investments | 50000 | – | 50000 | – |
| Total | 156035 | 138 741 | 144159 | 131 625 |
Note 20 Important estimates and assessments
Carrying amounts are based partly on assessments and estimates. The area in which estimates and assessments could imply adjustments to carrying amounts in forthcoming fiscal years is primarily the valuation of the Forskaren 1 property where the company's operations are conducted. In 2006, on assignment from the company, PricewaterhouseCoopers performed a valuation of the property (see Note 8) prior to the company's sale of land. The estimated market value is based on assumptions on future revenues, expenses, vacancy levels and the value trend of similar properties. The conditions in the local property market have not changed decisively and the market value of the property is deemed to be within the value interval, which does not deviate significantly from the market value established in 2006, SEK 345 million.
Note 21 Events after the balance-sheet date
Teva acquires marketing rights for laquinimod in the Nordic region and Baltic States
Teva Pharmaceutical Industries Ltd and Active Biotech announced on February 8, 2010 that that they had amended the marketing and distribution agreement for oral laquinimod, an investigational treatment for relapsing-remitting multiple sclerosis (RRMS). Under the new agreement, Teva extended its marketing and distribution rights to include the Nordic and Baltic regions, previously held by Active Biotech. Active Biotech will receive a higher royalty rate for sales in these territories compared with the royalty rate set under the original licensing agreement signed in 2004 for sales in the rest of the world.
Exploratory data presented for Active Biotech's ANYARA project
On February 10, Active Biotech presented results from exploratory preclinical studies at the Keystone Symposia "Molecular and Cellular Biology of Immune Escape in Cancer" held in Keystone, Colorado, USA, February 7-12. The results of the study demonstrate that TTS therapy can be further enhanced by specifically modulating the immune response in this experimental model.
Directed share issue
On April 1, 2010, the Board of Directors – pursuant to the authorization given by the 2009 AGM – resolved to implement a directed share issue comprising 1,418,000 shares placed in funds managed by Sectoral Asset Management. The shares were issued at a subscription price of SEK 105 per share, corresponding to issue proceeds of approximately SEK 149 million.
Note 22 Related-party transactions
Closerelationships
With regard to the Group's and Parent Company's subsidiaries, see Note 18. The composition of the Board and information relating to senior executives is presented on pages 46 and 47.
Related-partytransactions
During the year, no transactions with shareholders or members of the Board took place, with the exception of payment to MGA Holding AB and Nordstjernan AB relating to the guarantee provision for the rights issue in 2009.
For information concerning transactions with key individuals in managerial positions, see Note 5.
In 2009, the Parent Company's sales of services to Group companies totaled SEK 3,500 thousand. The Parent Company's purchases of services from subsidiaries amounted to SEK 951 thousand in 2009. The Parent Company's receivables and liabilities relative to the subsidiaries as per December 31 are presented in the Parent Company's balance sheet.
Note 23 Information relating to the Parent Company
Active Biotech AB is a Swedish-registered limited liability company with its registered office in Lund, Sweden. The Parent Company's shares are listed on NASDAQ OMX Nordic Exchange Stockholm. The address to the head office is Scheelevägen 22, Lund, Sweden. The consolidated financial statements for the 2009 fiscal year comprise the Parent Company and its subsidiaries, referred to jointly as the Group.
Financial definitions
Capital employed: Total assets less non-interest bearing provisions and liabilities.
Earnings per share after tax: Recognized consolidated earnings, divided by the average number of shares.
Equity/assets ratio: Shareholders' equity plus minority interests, as a percentage of total assets.
Interest-coverage ratio: Operating profit/loss after financial items plus financial expenses, divided by financial expenses.
Net debt/equity ratio: Net interest-bearing liabilities divided by shareholders' equity, including minority interests.
Net indebtedness: Net interest-bearing liabilities, that is, interestbearing liabilities and provisions less cash and cash equivalents, short-term investments and other interest-bearing long-term holdings of securities.
Net worth per share: Shareholders' equity and surplus values in shortterm investments, divided by the number of shares at year-end.
Proportion of risk-bearing capital: Shareholders' equity plus minority interests and deferred tax liabilities as a percentage of the total assets.
Return on capital employed: Operating profit/loss after net financial items plus financial expenses, as a percentage of average capital employed.
Return on shareholders' equity: Profit/loss for the year as a percentage of average shareholders' equity.
Shareholders' equity per share: Recognized consolidated shareholders' equity, divided by the number of shares at year-end.
Surplus value in short-term investments: The difference between the market value of short-term investments and the carrying amount. Due to the Group's tax situation, no deduction was made for deferred tax.
Unrestricted liquidity per share: Cash and cash equivalents and shortterm investments, divided by the number of shares at year-end.
Audit report 37
To the Annual General Meeting of shareholders of Active Biotech AB Corporate Registration Number 556223-9227
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President & CEO of Active Biotech AB for 2009. The company's annual accounts are included in the printed version of this document on pages 6–36. The Board of Directors and the President are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards, IFRS, as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain high, but not absolute, assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting policies used and their application by the Board of Directors and the President & CEO and significant estimates made by the Board of Directors and the President & CEO when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any Board
member or the President & CEO. We also examined whether any Board member or the President & CEO has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.
The annual accounts have been prepared in accordance with the Annual Accounts Act and, thereby, give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRS as adopted by the EU and the Annual Accounts Act and give a true and fair view of the Group's financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.
We recommend to the Annual General Meeting of shareholders that the income statement and balance sheet of the Parent Company and the income statement and statement of financial position of the Group be adopted, that the loss of the Parent Company be treated in accordance with the proposal in the Directors' report and that the members of the Board of Directors and the President & CEO be discharged from liability for the fiscal year.
Malmö, April 1, 2010 KPMG AB
David Olow Authorized Public Accountant
Summary of financial development
| SEKmillions | 2009 | 2008 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|
| Incomestatement | |||||
| Net sales | 10,8 | 53,5 | 12,1 | 66,4 | 9,2 |
| Operating expenses | -230,4 | -238,1 | -214,8 | -191,0 | -142,4 |
| (of which, depreciation) | -9,6 | -11,5 | -18,9 | -20,0 | -20,1 |
| Operatingloss | -219,6 | -184,6 | -202,7 | -124,6 | -133,2 |
| Participations in the earnings of associated companies | – | – | – | – | -1,1 |
| Net financial items | -4,4 | 4,0 | -5,0 | -17,2 | -15,0 |
| Lossbeforetax | -224,0 | -180,6 | -207,7 | -141,8 | -149,3 |
| Tax | – | -1,0 | – | 2,6 | 13,9 |
| Lossfortheyear | -224,0 | -181,6 | -207,7 | -139,2 | -135,4 |
| Balancesheet | |||||
| Tangible fixed assets | 319,0 | 324,6 | 329,7 | 347,7 | 376,9 |
| Financial fixed assets | 0,0 | 0,0 | 2,5 | 2,8 | 2,9 |
| Other current assets | 23,5 | 9,6 | 18,7 | 14,0 | 9,7 |
| Cash and cash equivalents | 156,0 | 138,7 | 138,6 | 97,9 | 178,4 |
| Total assets | 498,5 | 472,9 | 489,5 | 462,4 | 567,9 |
| Shareholders' equity | 188,6 | 163,6 | 189,6 | 60,4 | 176,8 |
| Interest-bearing provisions and liabilities | 255,5 | 258,4 | 256,1 | 358,7 | 360,5 |
| Non interest-bearing provisions and liabilities | 54,4 | 50,9 | 43,8 | 43,3 | 30,6 |
| Totalshareholders'equityandliabilities | 498,5 | 472,9 | 489,5 | 462,4 | 567,9 |
| Condensedcash-flowstatement | |||||
| Cash flow from operating activities before changes in working capital | -214,4 | -175,3 | -184,2 | -117,2 | -181,1 |
| Changes in working capital | -10,3 | 15,8 | -2,5 | 17,1 | -11,4 |
| Cash flow from investing activities | -0,1 | 7,0 | 0,2 | 25,0 | -15,1 |
| Cash flow from financing activities | 242,1 | 152,6 | 227,2 | -5,4 | 171,2 |
| Cashflowfortheyear | 17,3 | 0,1 | 40,7 | -80,5 | -36,4 |
| Keyfigures | |||||
| Capital employed (SEK million) | 447,6 | 422,0 | 445,7 | 419,1 | 537,3 |
| Net indebtedness (SEK million) | 103,0 | 119,7 | 117,5 | 259,3 | 180,6 |
| Surplus value in short-term investments (SEK million) | – | – | – | – | – |
| Return on shareholders' equity (%) | -127 | -103 | -166 | -117 | -96 |
| Return on capital employed (%) | -50 | -39 | -45 | -26 | -25 |
| Equity/assets ratio (%) | 38 | 35 | 39 | 13 | 31 |
| Proportion of risk-bearing capital (%) | 38 | 35 | 39 | 13 | 31 |
| Net debt/equity ratio (multiple) | 0,53 | 0,73 | 0,62 | 4,29 | 1,02 |
| Interest-coverage ratio (multiple) | neg | neg | neg | neg | neg |
| Research and development expenses (SEK million) | -212,0 | -207,4 | -189,7 | -165,7 | -169,5 |
| Average number of employees | 90 | 90 | 89 | 89 | 92 |
| Salary expenses, incl. social security costs (SEK million) | -84,3 | -88,9 | -84,4 | -85,2 | -84,1 |
| Datapershare | |||||
| Loss after tax (SEK) | -3,81 | -3,66 | -4,47 | -3,50 | -3,70 |
| Shareholders' equity (SEK) | 2,95 | 3,19 | 4,01 | 1,52 | 4,47 |
| Net worth (SEK) | 2,95 | 3,19 | 4,01 | 1,52 | 4,47 |
| Unrestricted liquidity (SEK) | 2,44 | 2,71 | 2,93 | 2,46 | 4,51 |
| Market price of share at year-end (SEK) | 100,75 | 31,00 | 58,40 | 77,54 | 81,27 |
| Dividends (SEK) | 0 | 0 | 0 | 0 | 0 |
| Share price/shareholders' equity (%) | 34153 | 972 | 1 456 | 5 101 | 1 818 |
| Share price/net worth (%) | 34153 | 972 | 1 456 | 5 101 | 1 818 |
| Number of shares at end of period (thousands) | 64052 | 51 242 | 47 300 | 39 795 | 39 592 |
| Weighted average number of ordinary shares before dilution (thousands) | 58753 | 49 605 | 46 427 | 39 755 | 36 610 |
| Number of shares at end of period including subscription rights (thousands) | 65010 | 52 572 | 48 630 | 41 125 | 40 922 |
39 The Share
General information about the Active Biotech share
Shares in Active Biotech AB are listed on Nasdaq OMX Nordic Exchange Stockholm (Mid Cap). The share was originally listed on December 1, 1986, on what was then known as the O-list of the Stockholm Stock Exchange. The company was converted into a dedicated biotechnology company in 1997. The latest price information is available on NASDAQ OMX's website under the symbol ACTI. The shares are traded in lots of 200. The Active Biotech share is included in NASDAQ OMX Nordic Exchange Stockholm's Pharmaceuticals, Biotech & Life Science index. The diagram in this section shows the price trend for the Active Biotech share for the period January 2005 – January 2010.
Share capital
The company's share capital is quoted in SEK and distributed among the shares issued by the company with a quotient value that is also quoted in SEK. In January 2010, the share capital in Active Biotech amounted to approximately SEK 241,434,833 distributed among 64,052,238 shares. Accordingly, the share's quotient value is SEK 3.77. In addition, the share capital and number of shares may increase through the exercise of options in a manner that is described under the heading "Employee stock options." In the event that these options are exercised, the number of shares in Active Biotech will increase to a maximum of approximately 65.0 million shares.
Employee stock options
An Extraordinary General Meeting of shareholders on December 8, 2003 decided on the introduction of an employee stock option program, according to which all employees in the Active Biotech Group are issued with employee stock options at no charge in accordance with a separate plan. The program covers a maximum of 1,000,000 stock options in total, with each option carrying entitlement to purchase approximately one share. To secure the undertakings pursuant to the employee stock option program, it was decided to issue to a wholly owned subsidiary of Active Biotech a debenture in a nominal value of SEK 1,330 attached to a maximum of 1,330,000 warrants for subscription of shares on conditions corresponding to those applying to the employee stock options (see below). Upon full exercise of the outstanding warrants, the share capital will increase by SEK 3,610,209 and the number of shares by 957,782, corresponding to a dilution effect of approximately 1.5 percent of the total number of votes and capital in the company.
The options were allotted on three occasions: Series 1 encompassing 329,825 options was allotted in December 2003, Series 2 encompassing 239,075 options was allotted in June 2005 and Series 3 encompassing 340,000 was allotted in June 2006. Series 1 employee stock options expired on May 31, 2009 without any exercise having taken place. Each Series 2 option entitles the holder to subscribe for 1.23 shares during the period June 1, 2007 to May 31, 2010 at a recalculated price of SEK 38.20. Each Series 3 option entitles the holder to subscribe for 1.23 shares during the period June 1, 2008 to May 31, 2011 at a recalculated price of SEK 58.40. From June 1, 2007 until December 31, 2009, no Series 2 or 3 options were exercised.
hare
Price trend
On December 31, 2008, the share price was SEK 31.00, while at the same date in 2009, it was SEK 100.75. The highest price paid for the share during the year was SEK 101.50 (December 29, 2009).
Change in share capital
The table on the next page shows the changes in Active Biotech's share capital from 2000 to December 31, 2009.
Dividend policy
In view of Active Biotech's financial position and negative earnings, the Board of Directors does not intend to propose that any dividends be paid for the next few years. The company's financial assets will be principally used to finance existing and new research programs.
Swedish analysts covering Active Biotech
- n ABG Sundal Collier
- n Carnegie
- n Enskilda Securities
- n Handelsbanken
- n Redeye
- n Öhman Fondkommission
Shareholders
On January 29, 2010, the number of shareholders in Active Biotech amounted to 9,791. The table on the next page shows the company's ten largest shareholders at January 29, 2010.
Shareholders
The following reflects circumstances as known to the company at January 29, 2010.
| Owner | No. of shares | Holding, % |
|---|---|---|
| MGA Holding AB | 19 224 416 | 30,0 |
| Nordstjernan AB | 9 839 478 | 15,4 |
| Brummer & Partners | 3 075 000 | 4,8 |
| Carlsson Funds | 1 631 254 | 2,5 |
| JP Morgan Bank | 1 622 878 | 2,5 |
| Skandia Funds | 1 236 756 | 1,9 |
| Danske Bank International | 1 188 944 | 1,9 |
| Easy Bay AB | 1 000 000 | 1,6 |
| Futuris | 769 091 | 1,2 |
| Catella | 710 944 | 1,1 |
| Total, ten largest owners | 40 298 761 | 62,9 |
| Total | 64 052 238 | 100,00 |
Shareholder statistics, January 29, 2010
| Shareholding interval |
No. of shareholders |
% of all shareholders |
No. of shares |
% of share capital |
Average per shareholder |
|---|---|---|---|---|---|
| 1–1,000 | 7 939 | 81,1 | 2 014 758 | 3,1 | 254 |
| 1,001–10,000 | 1 587 | 16,2 | 4 480 682 | 7,0 | 2 823 |
| 10,001–100,000 | 210 | 2,1 | 5 487 370 | 8,6 | 26 130 |
| 100,001– | 55 | 0,6 | 52 069 428 | -81,3 | 946 717 |
| Total | 9 791 | 100,0 | 64 052 238 | 100,0 | 6 542 |
Trend in share capital
| Year | Transaction | Change in number | Change in share | Total no. of shares | Total share | Quotient | |
|---|---|---|---|---|---|---|---|
| of shares | capital, SEK | Class A shares | Class B shares | capital, SEK | value, SEK | ||
| Opening balance | 1 963 745 | 9 282 547 | 281 157 300 | 25,00 | |||
| 2000 Reclassification A as B | 0 | 0 | 1 287 531 | 9 958 761 | 281 157 300 | 25,00 | |
| 2001 Reclassification A as B | 0 | 0 | 1 169 691 | 10 076 601 | 281 157 300 | 25,00 | |
| 2002 Reclassification A as B | 0 | 0 | 1 145 024 | 10 101 268 | 281 157 300 | 25,00 | |
| 2003 Reduction of share capital (June) | 0 | -168 694 380 | 1 145 024 | 10 101 268 | 112 462 920 | 10,00 | |
| 2003 Rights issue (June) | 22 492 584 | 224 925 840 | 1 145 024 | 32 593 852 | 337 388 760 | 10,00 | |
| 2003 Reclassification A as B | 0 | 0 | 1 128 174 | 32 610 702 | 337 388 760 | 10,00 | |
| 2003 Reorganization as a single share class (Dec.) |
0 | 0 | 33 738 876 | 337 388 760 | 10,00 | ||
| 2005 Conversion (Jan.-May) | 1 681 | 16 810 | 33 740 557 | 337 405 570 | 10,00 | ||
| 2005 Rights issue (June/July) | 5 623 426 | 56 234 260 | 39 363 983 | 393 639 830 | 10,00 | ||
| 2005 Conversion (Aug./Sept.) | 228 241 | 2 282 410 | 39 592 224 | 395 922 240 | 10,00 | ||
| 2006 Conversion (Jan./May) | 160 644 | 1 606 440 | 39 752 868 | 397 528 680 | 10,00 | ||
| 2006 Reduction of share capital (May) | 0 | -247 686 499 | 39 752 868 | 149 842 181 | 3,77 | ||
| 2006 Conversion (June-Dec.) | 42 553 | 160 397 | 39 795 421 | 150 002 578 | 3,77 | ||
| 2007 Conversion (Jan.) | 204 579 | 771 128 | 40 000 000 | 150 773 706 | 3,77 | ||
| 2007 Rights issue (Feb.) | 4 000 000 | 15 077 371 | 44 000 000 | 165 851 077 | 3,77 | ||
| 2007 Conversion (Mar.) | 3 300 115 | 12 439 264 | 47 300 115 | 178 290 341 | 3,77 | ||
| 2008 Rights issue (June) | 3 941 676 | 14 857 527 | 51 241 791 | 193 147 869 | 3,77 | ||
| 2009 Rights issue (June) | 12 810 447 | 48 286 964 | 64 052 238 | 241 434 833 | 3,77 |
42 Intellectual property rights
A key aspect of Active Biotech's strategy is to protect its knowledge through strong patents. The patent protection covers inventions of chemical compounds, biotechnological structures, target organs, methods and processes related to the company's operation in key markets.
Active Biotech has built up its position in the area of patents through strategically defined patent families, primarily in the areas of autoimmunity/inflammation and cancer. Patents and patent applications refer primarily to such commercially important markets as Europe, the US and Japan.
| Number of patent families | |||||||
|---|---|---|---|---|---|---|---|
| Active Biotech holder of patent or patent application |
Other projects | Laquinimod, TASQ, 57-57, ANYARA, CD80/RhuDexTM and ISI | 19 3 |
||||
| Total | 22 | ||||||
| Of which, out-licensed | Laquinimod, CD80 Other |
6 0 |
|||||
| Total | 6 | ||||||
| Active Biotech licensee | ANYARA Other |
2 0 |
|||||
| Total | 2 | ||||||
| Patent protection for laquinimod | Patent protection for TASQ | ||||||
| (out-licensed to Teva) Patent family |
Priority | Status | Year of | Patent family Type of protection area |
Priority | Status | Year of expiry |
| Type of protection area "product" |
Europe US Japan |
Granted Granted Granted |
expiry 2019 2019 2019 |
"product" | Europe US Japan |
Granted Granted Granted |
2019 2019 2019 |
| "method" | Europe US Japan |
Granted Granted In progress |
2023 2023 2023 |
"application" | Europe US Japan |
Granted Granted Granted |
2020 2020 2020 |
| "product and method" |
Europe US Japan |
In progress Granted In progress |
2025 2027 2025 |
"method" | Europe US Japan |
Granted Granted In progress |
2023 2023 2023 |
| Patent protection for ANYARA | |||||||
| Patent protection for 57-57 Patent family |
Priority | Status | Year of | Patent family Type of protection area |
Priority | Status | Year of expiry |
| Type of protection area "product" |
Europe US Japan |
Granted Granted Granted |
expiry 2019 2019 2019 |
"product" | Europe US Japan |
Granted Granted Granted |
2011 2016 2011 |
| "method" | Europe US Japan |
Granted Granted In progress |
2023 2023 2025 |
"product" "product" |
Europe US Japan Europe |
Granted Granted Granted Granted |
2015 2015 2015 2017 |
| "product and method" |
Europe US |
In progress Granted |
2025 2027 |
US Japan |
Granted Granted |
2016 2017 |
|
| Japan | In progress | 2025 | "product and method" |
Europe US |
Granted Granted |
2018 2017 |
|
| "product" | Europe US Japan |
In progress Granted In progress |
2022 2021 2022 |
||||
| "method" | Europe US |
In progress In progress |
2024 2024 |
Corporate Governance Report 2009
Active Biotech AB (publ) 556223-9227 shall, in accordance with its Articles of Association, engage in research, development, production, marketing and sales of medical, chemical and biotechnology products, conduct administrative services for the Group, own and manage properties, and undertake any other operations compatible therewith. On December 31, 2009, the company had approximately 10,000 shareholders, the majority of whom held fewer than 500 shares. Each share entitles the holder to one vote. This corporate governance report, together with the Board's description of internal control and risk management relating to financial reporting, was not reviewed by the company's auditors.
Application of and deviations from the Code
Active Biotech applies the Swedish Code of Corporate Governance. The company has deviated from item 2.4, first paragraph, second sentence of the Code. The Election Committee has appointed the Chairman of the Board to be the Chairman of the Election Committee. The reason given by the Election Committee for this deviation is that it has deemed that it is natural that the person who is indirectly the largest owner of Active Biotech should also lead the work of the Election Committee.
Annual General Meeting
The Annual General Meeting (AGM) is Active Biotech's supreme decision-making body. At the AGM, which is held not more than six months after the close of the fiscal year, the annual accounts for the preceding year are approved, the Board of Directors is elected, auditors are elected when necessary and other statutory matters are addressed. Between AGMs, the Board of Directors is the company's highest decision-making body. The Board appoints a President & CEO to head the management of the company.
Election Committee
The 2009 Annual General Meeting assigned the Chairman of the Board the task of convening an Election Committee, in consultation with the company's major shareholders, for the 2010 Annual General Meeting. According to the decision, the Election Committee shall comprise representatives of each of the three largest shareholders in the company based on the ownership structure at September 30, as well as the Chairman of the Board. The members of the Election Committee receive no remuneration for their work. The tasks of the Election Committee include:
- n Evaluation of the Board's composition and work.
- n Drafting of proposals to the AGM regarding election of Board members, Chairman of the Board and the Chairman of the Meeting.
n Drafting of proposals to the AGM concerning fees to Board members.
The composition of the Election Committee was announced on November 5, 2009. The Election Committee was convened on one occasion ahead of the 2010 AGM.
| Members | Represents | Board member or not |
|---|---|---|
| Mats Arnhög | Chairman of the Board | Chairman |
| Johnny Sommarlund | MGA Holding AB | Not a member |
| Tomas Billing | Nordstjernan AB | Not a member |
| Peter Thelin | Brummer & Partners | Not a member |
Board of Directors
In accordance with Active Biotech's Articles of Association, the Board shall comprise between three and nine members with at most nine deputies. Each year, two employee representatives and two deputies are appointed prior to the AGM through decisions made by the trade-union organizations at the company. The 2009 AGM elected the current Board, which consists of six ordinary members with no deputies. Mats Arnhög was elected Chairman of the Board.
The AGM decided that remuneration of the Board's ordinary members shall be paid in the amount of SEK 125,000 per member and year, while remuneration of the Chairman of the Board shall be paid in the amount of SEK 250,000 per year. For a more detailed presentation of the Board members, see page 46 of this Annual Report.
Of the current Board members elected by the AGM, all are independent in relation to the company's owners, the company and executive management, with the exception of the Chairman of the Board Mats Arnhög and Board member Tomas Nicolin. Mats Arnhög is not independent in relation to the shareholder MGA Holding AB, in which he is Chairman of the Board and owner. Furthermore, he is not independent in relation to the shareholder Nordstjernan, in which he is a Board member. Tomas Nicolin is also a Board member of the shareholder Nordstjernan AB, and is therefore dependent.
| Board member | Attendance at | Annual Board meetings remuneration, SEK Company |
Independent/dependent | Owners |
|---|---|---|---|---|
| Mats Arnhög | 9 out of 9 | 250,000 | dependent | dependent |
| Klas Kärre | 8 out of 9 | 125,000 | independent | independent |
| Tomas Nicolin | 5* out of 9 | 125,000 | independent | dependent |
| Magnhild Sandberg 9 out of 9 | 125,000 | independent | independent | |
| Peter Sjöstrand | 7 out of 9 | 125,000 | independent | independent |
| Peter Ström | 9 out of 9 | 125,000 | independent | independent |
* Tomas Nicolin was elected at the AGM on May 7, 2009
0 09
The work of the Board and formal work plan
The Board works in accordance with an established formal work plan, which describes the minimum number of Board meetings to be held each year, routines for the preparation of the agenda and minutes of the meetings as well as the distribution of material. One section of the formal work plan regulates the division of duties in the Board and describes the responsibilities of the Board, the Chairman and the President & CEO. The Board shall principally devote itself to general and long-term issues as well as to issues of a material nature or of otherwise substantial importance. The Chairman directs the work of the Board and represents the Board both externally and internally.
The formal work plan also identifies the Board members who, in accordance with specific decisions, have been appointed as the management's contacts in the event of a crisis. At each scheduled Board meeting, the President & CEO and senior management shall report on operations. The report shall comprise information on project development, plans and progress in research activities, financial reporting with forecasts as well as business development. The Board decides on issues in which the Swedish Companies Act and the Articles of Association require the Board's decision as well as on such issues as policy matters, strategy, business decisions (such as research plans), budget, business plans and key agreements.
In 2009, nine meetings were held at which minutes were taken. Important issues addressed by the Board included development of research projects, business development projects, partner strategy, financial statements and budget and financing matters.
Minutes were recorded by the Board's secretary, a role that was filled by the company's CFO Hans Kolam during the year. The Chairman of the Board ensures that an annual assessment of the Board's work is conducted that provides the Board members with the opportunity to present their views on work procedures, Board material, their own efforts and the efforts of other Board members and the scope of the task. The assessment is that the Board's collective expertise is favorably compatible with the company's strategic visions and goals. The Board functions well and all members make a constructive contribution to the strategic discussions and the governance of the company. The dialog conducted between the Board and management was also deemed to be productive.
Remuneration and Audit Committee
At the AGM on April 21, 2004, it was decided that the company shall not have separate committees for remuneration and audit matters and that these matters shall instead be dealt with by the Board in its entirety. Salaries, remuneration, terms and conditions of employment and so forth, for the Board, President & CEO and company management are detailed in Note 5.
Organization and internal control
In accordance with the Companies Act and the Code, the Board of Directors is responsible for the company's internal control. Active Biotech's work on internal control is designed to provide a reasonable assurance that the company's goals are achieved in terms of an appropriate and efficient operation, reliable financial reporting and compliance with applicable legislation and regulations. Active Biotech's business is primarily operated at one site and is therefore deemed to be of limited complexity. In turn, this means that the organization is uncomplicated and it is easy to gain an overview of its structure. The internal control as regards financial reporting is based on how the operation is managed and how the organization is built up. Authorizations and responsibilities are documented, such as the division of work between the Board and the President, and instructions for attestation rights and accounting and reporting instructions.
This also helps to minimize the risk for irregularities and inappropriate benefiting of another party at the expense of the company. The risks identified by Active Biotech regarding the financial reporting are presented on a monthly/ quarterly basis by the finance function to the President & CEO, who in turn reports to the Board. Active Biotech has no internal audit function. The Board has determined that no special circumstances or other conditions exist that motivate the introduction of such a function.
Financial reporting
In accordance with Active Biotech's Investor Relations policy, which has been approved by the Board, the company regularly presents information on its financial position. The information presented comprises quarterly interim reports, year-end reports and annual reports, as well as press releases in conjunction with important events. The company management meets analysts, investors and the media on a regular basis through-
out the year. All information distributed via press releases is also available on the company's website, in addition to other information that is deemed to be valuable. The Board of Active Biotech ensures the quality of financial reporting by ensuring that the company has an appropriate organization combined with procedures and instructions for its work on financial reporting. Each month, the Board is presented with a report regarding such aspects as the company's earnings and financial position, including comments relating to its development. The Board reviews interim reports and annual reports prior to publication.
Auditors
At least one and at most two auditors and at most two deputy auditors are appointed by the AGM for a period of normally four years. At the AGM in 2005, the KPMG Bohlins AB firm of auditors was elected with authorized auditor Stefan Holmström as auditor-in-charge for the period until 2009. At the AGM on 7 May 2009, KPMG was reappointed, now with David Olow as auditor-in-charge, for the period until 2013. Information concerning auditors' fees is presented in Note 4 on page 21. The interim report for the third quarter of 2009 was the subject of review by the auditors.
Policies
Information policy
With the aim of determining principles for the company's communication, the Board has established an information policy. This summarizes overriding goals and responsibilities for the external publication of Active Biotech's information. The goal when providing information to the stock market is to achieve a correct valuation of the company's share that reflects the company's underlying values, growth and earnings capacity in as stable a manner as possible. An unconditional requirement is that the information to the stock market complies with NASDAQ OMX Nordic's issuer rules and regulations and applicable legislation and ordinances. The required competence shall exist in the company's Board, management and among those responsible for operations, and the company shall have an organization that ensures the rapid and correct dissemination of stock market information.
Environmental policy
Within Active Biotech, environmental and safety work is important and the company has therefore established an environmental policy. Responsibility is decentralized in the various departments in the Group so that each manager and employee is responsible for fulfilling objectives relating to both the internal and external environment, as well as safety. This applies to all areas from proprietary research to contract manufacturing of candidate drugs and production. In addition, Active Biotech attaches great importance to ensuring that external partners have their own environmental and safety requirements that conform to the company's values.
Responsible treatment of laboratory animals
Despite a rapid advance in non-animal based models for medical research, no alternative can yet entirely replace the complex system represented by a living organism. Accordingly, the responsible treatment of laboratory animals in scientific research is ethically justified. Active Biotech endeavors to replace, reduce and refine the use of laboratory animals to the greatest possible degree. When no alternative exists, testing shall be properly planned and shall take ethical requirements into consideration in the implementation phase. Pain, suffering and stress shall be minimized – and preferably eliminated. All who work with laboratory animals are trained and skilled in the area. Animals are treated with care and the greatest possible degree of consideration is given to their health and well-being in a careful balance between ethical and scientific requirements. Furthermore, animal keeping and management is conducted in a manner that maximizes well-being and prevents the spread of infection. All work involving animals complies with the applicable strict local procedures and national and international legislation. Legislation and other ethical considerations with respect to the care and well-being of laboratory animals are carefully monitored and continuously reviewed to harmonize laboratory animal operations in the company.
09
Board of Directors and Auditors
Mats Arnhög, Chairman of the Board Born 1951, Board member since 2000, Chairman of the Board since 2003. Hon. Phd. in Economics, M.Sc. Stockholm School of Economics. Other Board assignments: Chairman of MGA Holding AB with subsidiaries. Chairman of Situation Stockholm AB, Sturehof AB, Ahlströmska Skolans Byggnads AB and Föreningen Carlssons skola. Board member of Nordstjernan AB, Brofågel Support AB and Switcher Holding S.A. with subsidiaries. Member of the Advisory Board of the Stockholm School of Economics, the non-profit organization Situation Stockholm and the Swedish Press Council. Holding:
19,224,416 shares through MGA Holding AB
Magnhild Sandberg-Wollheim Born 1937, Board member since 2007. Associate Professor of Neurology and Consultant at the neurological clinic at Lund University Hospital. Other Board assignments: Board member of Magnhild S. Wollheim AB and European MS Foundation. Holding: None
Karin Hallbeck Born 1956, employee representative since 2008, employed in Active Biotech since 1998. Laboratory engineer Other Board assignments: None Holding: 1,516 shares and 4,450 employee stock options
Klas Kärre Born 1954, Board member since 2003. Professor of Molecular Immunology at the Karolinska Institute in Stockholm, Medical Degree, Karolinska Institute in Stockholm. Other Board assignments: Board member of Accuro Immunology AB (until June 2009), Karolinska Institute, The Foundation Wenner-Grenska Samfundet, The Axel Wenner-Gren Foundation for International Exchange of Scientists, The Georg and Eva Klien Foundation and a member of the Nobel Assembly at Karolinska Institute. Holding:
11,941 shares
Peter Sjöstrand
Born 1946, Board member since 2000. B.Sc. Stockholm School of Economics, Medical Degree, Karolinska Institute in Stockholm. Other Board assignments:
Chairman of Gambro Lundia AB, Incentive AB, the Oscar Hirsch's Memory Foundation and Byggnads AB S:t Erik. Board member of Aleris Holding AB, Peter Sjöstrand AB, Ringens Varv AB, Karolinska Development AB and the School of Technology and Health (Royal Institute of Technology).
Holding:
Anette Sundstedt Born 1967, employee representative since 2008, employed in Active Biotech since 2001. Biologist, Doctor of Medical Science, Lund University. Other Board assignments: None Holding: 4,575 employee stock options
Tomas Nicolin
Born 1954, Board member since 2009. M.Sc. from Stockholm School of Economics and master's degree from MIT Sloan School of Management.
Other Board assignments:
Board member of SE-Banken, Nordstjernan, Q-Med, the Nobel Foundation, the Axel and Margaret Ax:son Johnson Foundation the Research Institute of Industrial Economics, the Swedish Industry and Commerce Stock Exchange Committee, the Advisory Board of the Stockholm School of Economics and the Center for Justice. Holding:
30,000 shares (privately and via companies)
Peter Ström Born 1952, Board member since 2003. M.Sc. Stockholm School of Economics. Other Board assignments: Chairman of LIDDS AB. Board member of Comtax AB, Oasmia Pharmaceutical AB and Stockholm Corporate Finance. Holding: 24,275 shares
Auditors KPMG AB with David Olow as auditor-in-charge. Born 1963 Company auditor at Active Biotech AB since 2009. Authorized Public Accountant KPMG.
Management Group
at KabiGen, Pharmacia and the University of Adelaide in Australia.
Göran Forsberg has been employed at Active Biotech since 1998. He has worked in the pharmaceuticals industry for 20 years and held various positions
Hans Kolam Chief Financial Officer Born 1951
Tomas Leanderson President and CEO Born 1956
since 1990.
Holding: 67,500 employee stock options
Tomas Leanderson has been employed at Active Biotech since 1999.
He has held a number of academic research positions both in Sweden and internationally. Tomas Leanderson has held the position of Professor of Immunology at Lund University
Holding: 12,440 shares, 17,050 employee stock options
Hans Kolam has worked for Active Biotech since 2000. He has more than 20 years of experience in the pharmaceuticals industry, having held different positions in Pharmacia's financial organization, most recently as Vice President of Finance, Europe.
Helén Tuvesson Head of Preclinical Development Born 1962 Holding: 6,850 employee stock options
Helén Tuvesson has been employed at Active Biotech since 1998. She has worked in the pharmaceutical industry for almost 20 years and held various positions at Pharmacia.
Glossary
Angiogenesis: The formation of new blood vessels.
Autoimmunity: When the body's immune system reacts against structures in the body itself. Autoimmune diseases arise when the immune system combats the body itself, despite it being otherwise healthy.
Candidate Drug (CD): A specific substance selected during the preclinical phase. The candidate drug is the compound that will continue on to clinical testing in humans.
Clinical studies: Studies of the effects of a drug on human beings.
FDA: Food and Drug Administration, the US pharmaceuticals authority.
IND: Investigational New Drug. The application, submitted to the pharmaceutical authority, for permission to commence pharmaceutical studies in humans.
Inflammation: The body's response to localized damage.
MediGene: MediGene AG, Active Biotech's partner for RhuDexTM.
MS: Multiple sclerosis, a chronic autoimmune disease.
Patent: Exclusive rights to a discovery or invention.
Pharmacokinetics: Study of how drugs change in the body from absorption to excretion; studies how and when the drug is distributed to the target organ and how it is absorbed there.
Pharmacology: The study of pharmaceuticals.
Phase I studies: The first studies on humans are carried out on a small group, normally 20-80 healthy volunteers. The purpose of these studies is mainly to show that the compound is safe for humans.
Phase II studies: Phase II studies test the compound on patients suffering from the disease that the potential drug is designed to treat. Tests are normally conducted on 100-300 patients. The primary aim of a Phase II study is to show that the compound has the intended medical effect and determine an optimal dosage.
Phase III studies: In Phase III, the compound is tested on a large number of patients, often between 1,000 and 3,000 patients. The primary aim of Phase III studies is to show that a new drug is at least as good as, or better than, previously approved treatments for the specific disease.
Placebo: A substance with no effect, a "sugar pill". Used for comparative purposes, for example when studying the effect of a new drug.
Preclinical: The part of drug development that takes place prior to the drug being tested on human beings.
Proof of Concept: When a candidate drug has a proven biological effect in humans.
RA: Rheumatoid arthritis.
SLE: Systemic lupus erythematosus. A life-threatening autoimmune disease.
TASQ: Tumor Angiogenesis Suppression by Quinolines. Active Biotech's prostate cancer project.
Teva: Teva Pharmaceutical Industries Ltd. Active Biotech's partner for laquinimod.
Tumor cell: A cell that divides uncontrollably.
Business concept
Active Biotech's business concept is to utilize specialist knowledge of the immune defense system and cancer to develop pharmaceuticals in areas where medical needs are extensive.
Goals
Active Biotech's goal is to generate value for shareholders through the successful development of pharmaceutical products.
Business strategy
The key components of the company's business strategy are to:
- n Progress the clinical development of the company's compounds that have advanced furthest. The company is driving the development of its two projects, ANYARA against renal cell cancer and TASQ against such diseases as prostate cancer, on a proprietary basis.
- n Achieve the greatest possible growth in value in each project and seek cooperation with strong partners for each project at the appropriate stage.
Active Biotech has secured development and commercialization partners for two of its five projects; Teva for laquinimod, currently in Phase III trials for the treatment of MS, and MediGene for RhuDex, currently in Phase II trials for the treatment of RA. Active Biotech plans to selectively choose partners for the remaining projects at the optimal point in time for each project.
n Advance additional compounds into clinical development. Active Biotech has considerable potential to generate attractive candidate products for further development within the company's areas of focus.
In addition to:
- n generating revenue through research cooperation, out-licensing, product sales and royalties.
- n limiting costs through the utilization of partnerships, outsourcing and external expertise.
- n maintaining market rights for future sales in selected markets.
- n aiming to achieve growth organically and through acquisitions and alliances.
- n securing and strengthening expertise by being an attractive employer offering a creative atmosphere with opportunities for individual development.
- n creating an organization that, in addition to specialist medical expertise, is able to conduct research projects professionally from candidate drugs through to registration and market launch.
- n protecting its expertise through strong patents and an active patent strategy.
- n creating financial sustainability through well-established partnerships and strong and active owners.
A c t i v e B i o t e ch A B ( p u b l )
| Addres | Scheelevägen 22 | |
|---|---|---|
| P.O. Box 724, SE-220 07 | ||
| Lund, Sweden | ||
| Telephone +46 (0)46-19 20 00 | ||
| Fax | +46 (0)46-19 11 00 | |
| Internet | www.activebiotech.com | |