BioPorto — Annual Report 2010

Mar 10, 2011

Annual Report 2010

Content

Management review

NGAL: a key issue 3
Highlights and expectations 5
Key figures 6
The routine diagnostics market 7
Activities
NGAL 11
Facts about The NGAL Test™ 16
APC-PCI 17
MBL 17
Antibody portfolio: AntibodyShop® 18
Intellectual Resources 19
Shareholder Information 20
Corporate Governance 23
Strategy and future prospects 25
Financial Statements 27

Statements

Statement by the Management
and Board of Directors 30
Report of the Independent Auditor 31

The BioPorto Group

Comprehensive Income Statement 32
Balance Sheet 33
Statement of Changes in Equity 35
Cash Flow Statement 36
Note Index 37

BioPorto A/S

Income Statement 65
Balance Sheet 66
Statement of Changes in Equity 68
Note Index 2 69
Glossary 82

NGAL: a key issue

In 2010, BioPorto saw revenues grow by 26%—a handsome increase, especially in light of the general downsizing of the health sector caused by cutbacks in public sector finances in industrialized countries. This growth continues to be borne by the group's NGAL product portfolio, which increased 44% in 2010 and now constitutes 28% of the group's overall growth. But this is expected to be just the first incipient beginnings of sales that, in our estimation, will occur once the group's recently launched renal injury immunoassay, "The NGAL Test™", starts to be implemented in hospitals around the world. In 2010, the development of the immunoassay was followed up by a production scale-up, validation studies, and prelaunch, which in early 2011 led to the crucial CE-marking of The NGAL Test™, making it possible to market the immunoassay for diagnostic use in Europe. In the beginning of March 2011, the test is also registered in Canada.

NGAL immunoassay for diagnosing acute renal injury

The NGAL Test™ was prelaunched in November 2010. On the basis of laboratory preferences, BioPorto has developed a new renal-injury marker focused on ensuring that results can be obtained quickly. The NGAL Test™ makes it possible for doctors to get a quick analysis of the patient's condition. As the assay is designed for use on automated analyzers already found in the laboratory, hospitals are not required to invest in new equipment in order to use The NGAL Test™.

Substantial resources have been earmarked for establishing sales channels for the assay. In November, BioPorto entered into a non-exclusive global distribution agreement with Dako A/S, which will be offering the NGAL test via Dako's distribution network in more than 80 countries, starting in 2011. In addition, BioPorto has also set up agreements with its own distributors in a number of countries, such as Germany, France and the Czech Republic. Moreover, distribution collaboration is being discussed with multinational diagnostics companies that are interested in marketing the renal injury marker as an important product in their assay portfolio for their own analyzers.

The marketing of The NGAL Test™ for routine diagnostics is contingent on the immunoassay being registered with national drug agencies. BioPorto's primary goal in 2011 is to continue these registration efforts, including obtaining registration with the US-FDA, in addition to the CE-mark in Europe.

By launching The NGAL Test™, we have succeeded in following the strategic direction planned and adopted by BioPorto in 2009: to develop and launch a renal injury marker that is expected to be capable of gaining the biggest share of the NGAL market.

At the same time, we have sold the first patent license to Instrumentation Laboratory. The licensing agreement gives this multinational player non-exclusive access to BioPorto's NGAL IP rights to develop and market NGAL assays in all non-homogenous formats. Thus, BioPorto, at the same time as launching The NGAL Test™, has taken the first step towards winning shares of the routine diagnostics market by entering into licensing agreements to ensure the broadest possible coverage of the NGAL market.

Other products

Several other BioPorto products have also contributed to our growth. For instance, under the AntibodyShop® trademark, BioPorto markets about three hundred different monoclonal antibodies, primarily to the basic research market. These antibody sales continue to comprise a large share of total revenues, and BioPorto's sales increased 16% in 2010.

One of the group's upcoming products is the APC-PCI assay. According to the results of preliminary studies, the assay is expected to enable the selection of patients with sepsis (blood poisoning) for treatment using an activated C-protein (a treatment marketed by Eli Lilly under the brand name Xigris). An ELISA kit has been developed for the research market that is intended for purposes like validating the measurement method for which BioPorto has applied for a patent.

Major validation studies using the APC-PCI assay have been launched, and many key opinion leaders and companies in the sepsis field have shown keen interest in the assay. Future collaboration to further develop the assay for diagnostic use will depend on the results of ongoing clinical studies, which are expected to be available in the course of 2011.

BioPorto—and what the future will bring

By means of a private placement in the fall of 2010, BioPorto issued convertible bonds with a total loan amount of almost DKK 14 million. The implementation of the private placement safeguarded the group's capital resources and laid the groundwork on which to continue the group's operations as planned, including the funding of increased activities for protecting crucial IP rights for NGAL and ensuring the successful launch, registration and marketing of The NGAL Test™. The group expects its continued financing to be secured through increasing sales income, primarily from The NGAL Test™. It is positive to note that institutional investors, key private investors and BioPorto's entire management were willing and able to take part in the private placement and thus assist in securing the group's liquidity.

Compared to the rest of the sector, the Biotek index, NASDAQ OMX Copenhagen, BioPorto achieved a stockprice increase of around 10% over the past year, against an overall decline in the rest of the sector. We aim to continue generating sound value for the group's investors in 2011 and the years ahead.

Scientific progress, new technology and altered demographics are the factors behind the growth of the healthcare sector. At the same time, the increased pressure on healthcare costs puts greater demands on the efficacy and cost-effectiveness of the drugs used. Diagnostics goes well with these trends by converting scientific insight into assays, which give patients genuine medical advantages and at the same time help to provide substantial cost savings for the healthcare sector resulting from correctly applied and reduced medical treatment.

The combined in-vitro diagnostics market is around USD 40 billion, and continued growth is forecast for the years ahead. One of the factors contributing to this growth is the enlargement taking place through the establishment of new diagnostic markers, exemplified by BioPorto's NGAL immunoassay. Another important factor for continued growth is the increasing wish for customized medical treatment for the individual patient, which intensifies the demand for more accurate comprehensive diagnoses, such as by using BioPorto's APC-PCI assay, for instance.

BioPorto will constantly seek to achieve greater access to the lucrative routine diagnostics market. Gaining a share of this market is quite relevant, because a new diagnostic immunoassay usually retains its market shares for a long time once it has been accepted by and implemented in the market, thus providing the basis for larger, more stable sales volumes. Once BioPorto's immunoassays, initially The NGAL Test™, have been established in the diagnostics market, we can expect a financially sustainable business.

In 2010, BioPorto's employees carried out activities and achieved goals that seemed beyond our reach compared to the size of our group. Naturally, we of the management are very pleased with this effort. To ensure that The NGAL Test™ obtains the best platform for sales to the routine diagnostics market in 2011 and the years ahead, we have increased our sales and marketing activities, we have further widened and bolstered our important IP rights, we continue to optimize our manufacturing quality and we continue to establish partnerships and contracts. This expansion will lead to requirements for a substantial staff increase, including the influx of additional knowledge resources. This expansion will be continuously incorporated into management planning from 2011. In 2010, the board actively participated in the group's activities, and we greatly benefit from sparring with the entire board of directors.

It is crucial for BioPorto to improve its renal injury diagnostics and thus reduce the mortality rate of patients suffering from renal injury. By launching The NGAL Test™, we have taken a big step closer to implementing the new routine diagnostic marker for analyzing acute renal injury at hospitals all over the world. The CE-marking in January 2011 is a prerequisite for marketing the assay for diagnostic use in Europe, and, in 2011, the group will continue the registration process in many other countries, including the US, so that The NGAL

Thea Olesen, administrerende direktør

Test™ can also be marketed in routine diagnostics markets outside Europe. In our assessment, the results achieved in 2010 and the activities planned for 2011 constitute a solid foundation for the group's future development.

This annual report contains statements regarding forecasts for future developments, including in particular future revenues and net financial results. Such statements are uncertain and risky as many factors, some of which are out of BioPorto's control, may cause actual trends to deviate from the forecasts contained in the report.

Please also note that this is a translated version. In case of discrepancy, the original Annual Report in Danish should be referred to for the correct wording and/or figures.

Highlights

2010 fiscal year

• » The group's net revenues increased 25% in 2010 to a total of DKK 13.8 million, from DKK 11 million in 2009. The revenues are on a par with the most recently announced expectations.
• » The financial result for 2010 was a loss of DKK 14.2 million, compared to a loss of DKK 16 million in 2009. The loss is in line with the most recently announced expectations.
• » BioPorto's renal injury assay—The NGAL Test™—was successfully launched in 2010 for research use, and was subsequently, in early 2011, CE-marked and thus also launched for diagnostic use in Europe. In March 2011, the test was also registered in Canada.
• » To ensure quick direct access for The NGAL Test™ to most of the world market, BioPorto concluded a distribution agreement with Dako A/S. From now on The NGAL Test™ will be distributed by Dako and BioPorto's own distributors to more than 80 countries.
• » Moreover, BioPorto continued its collaboration discussions with multinational diagnostics companies that are interested in marketing the renal injury marker for their own analyzers. Several of these companies have received The NGAL Test™ for internal validation and adaptation to their respective analyzers.
• » The NGAL cut-off patent for protecting NGAL as a method for detecting acute renal injury was issued in a number of additional countries, and the processing of the patent application has begun in the US.
• » In March 2011, BioPorto concluded a non-exclusive licensing agreement with Instrumentation Laboratory concerning access to BioPorto's NGAL IP rights. The agreement does not include the homogeneous assay format.
• » The launch of a Pig NGAL kit brings the animal NGAL portfolio up to four products. It will be complete once a Monkey NGAL kit is launched in 2011.
• » Major studies using BioPorto's APC-PCI ELISA kit have been launched to validate the use of APC-PCI as biomarkers in patients with sepsis (blood poisoning) for the purpose of selecting patients who can be treated using an activated C-protein (the drug Xigris, marketed by Eli Lilly).
• » A private placement was carried out by issuing convertible bonds for almost DKK 14 million. The bonds are quoted in the official list of NASDAQ OMX Copenhagen. The private placement generated proceeds of DKK 13.1 million for BioPorto.

Forecast for 2011

• » As the NGAL Test™ is a brand-new immunoassay, the rapidity with which the market will be penetrated is uncertain. Accordingly, it is still too early for BioPorto to predict the level of sales for 2011. At present, the assay is in its introductory phase and is primarily being provided for validation and trial set-ups, which means the group is not expecting a high level of sales in the first half of 2011. Concurrent to becoming familiar with market developments, the company will report on its activities and sales. BioPorto expects the sales of the rest of its product portfolio to continue to grow.
• » In the future, the group expects its financing to be secured through proceeds obtained by issuing the convertible bonds in 2010 and by increasing sales earnings, primarily from sales of The NGAL Test™. The group's long-term financing structure is integrally related to sales of The NGAL Test™.
• » In relation to the group's IP rights to the NGAL measuring method, BioPorto expects to conclude agreements concerning other vendors' use of these rights to develop and market the NGAL assay in other assay formats.
• » The most important tasks for 2011 will be to continue and widen the registration of The NGAL Test™ for diagnostic use and the implementation of the assay in routine diagnostics.

Key figures

(DKK thousand)	2010	2009	2008	2007	2006
Net revenues	13,802	11,008	9,875	8,340	5,554
Net income/loss, ordinary operating act. (EBIT)	(13, 411)	(16, 017)	(15, 477)	(14, 045)	$-14,659$
Income/loss from net financials	(796)	63	735	(219)	$-1,068$
Net income/loss from ordinary operating activities before tax	(14, 207)	(15,954)	(14, 742)	(14, 264)	$-15,727$
Net income/loss for the period	(14, 207)	(15, 954)	(14, 742)	(14, 264)	$-15,727$
Long-term assets	764	882	1,206	1,182	694
Short-term assets	20,210	19,336	17,951	32,718	4,108
Total assets	20,974	20,218	19,157	33,901	4,802
Capital stock	126,398	126,398	114,908	114,908	73,059
Equity	3,309	15,411	15,501	29,456	$-17,617$
Long-term liabilities	11,924	0	0	0	10,764
Short-term liabilities	5,741	4,807	3,655	4,445	11,654
Total liabilities	20,974	20,218	19,157	33,901	4,802
Cash generated by operations	(13, 379)	(13,288)	(13, 717)	(14, 129)	$-13,456$
Cash generated by investment, net	(207)	(21)	(363)	(738)	-69
Of which for investment in property,
plant and equipment	(201)	(14)	(391)	(880)	-265
Cash generated by financing	13,168	14,746	(507)	46,377	248
Total cash flow	(418)	1,437	(14, 587)	31,510	$-13,277$
Revenue growth	25%	11%	18%	50%	27%
Gross margin ratio	61%	57%	54%	45%	56%
Operating margin	$-97%$	$-145%$	$-157%$	$-168%$	-264%
Equity interest (equity ratio)	15.8%	76.2%	80.9%	86.9%	Negative
Return on equity	Negative	Negative	Negative	Negative	Negative
Average no. of employees	23	22	20	20	16
Average no. of shares (1,000)	42,120	39,245	38,290	31,505	24,340
Earnings per share (EPS) DKK	$-0.34$	$-0.41$	$-0.39$	$-0.45$	$-0.65$
Cash Flow Per Share (CFPS), DKK	$-0.32$	$-0.34$	$-0.36$	$-0.45$	$-0.55$
Equity value per share, closing, DKK	0.08	0.39	0.40	0.77	$-0.72$
Listed price, closing, DKK	7.85	7.05	5.25	4.91	3.94

See note 1 of the consolidated accounts for the calculation of the individual financial ratios

The routine diagnostics market

BioPorto's markers are measured with in vitro diagnostics (IVD), a diagnostic procedure that takes place away from the body, e.g. by analyzing blood and urine samples in a laboratory, as opposed to in vivo diagnostics, which are performed on the patient, such as a prick test in the skin or an X-ray. IVD is an essential objective source of information that can help doctors to detect disease, choose suitable treatments and monitor patients' response to treatment. In addition, scientists can use new assays to better understand the causes of a specific disease and to discover and develop new treatment methods.

The IVD market is estimated to be around USD 40 billion. The IVD market is divided into four sub-segments: 1) research laboratories; 2) clinical laboratories; 3) general practitioner laboratories; and 4) assays performed in the home. Clinical laboratories, the target group of BioPorto's The NGAL Test™, constitute the biggest segment with revenues of around USD 17 billion. This market is expected to keep growing in the years ahead. The most significant factor contributing to this growth is the establishment of new markers, such as The NGAL Test™. Another important factor for continued growth is a wish for effective purposedesigned treatment for each patient, which intensifies the demand for accurate, comprehensive diagnostics by using BioPorto's APC-PCI assay, for instance. Moreover, factors like longer life expectancy and the general growth in new markets like China and India are also expected to play an important role in the growth of the IVD market.

IVD registration

Like most pharmaceutical products, diagnostic products are regulated/controlled in most countries by the health authorities in the individual countries. All countries have legislation that sets out guidelines for manufacturing methods, product safety, labeling/packet inserts and the registration of diagnostic analyses, either as separate legislation or as part of the rules for either medical equipment or drugs. This means that diagnostic products cannot be sold for diagnostic use by hospitals or laboratories, for instance, unless the products have been registered with the health authorities of the country in question. The requirements of the health authorities and the certification process itself vary from one country to another and can last anywhere from a few months to several years.

The registration of an IVD test involves the preparation of technical documentation describing the product, i.e. manufacturing methods, specifications, testing and validation results, stability studies, clinical validation, etc. All of this technical documentation must be in place and, in addition, quality assurance of the manufacturing methods and testing must be established before the product can be released and registered. These tasks are managed by the company's Quality Assurance/Regulatory Affairs (QA/ RA) Department, which is also responsible for the quality assurance processes and carrying out audits relating to ISO certification. Achieving ISO certification and similar qualityassurance requirements is often part of the requirements for obtaining IVD registration.

To initiate the actual local registration procedures, the manufacturer must be able to document that the product complies with the principal requirements for safety, labeling and performance, and must establish market surveillance and reporting systems in order for the product to be registered. The application requirements and amount of documentation to be submitted vary greatly from one country to another.

Registration in Europe

In order for an IVD product to be marketed in Europe, it must be CE-marked in accordance with the EU directive concerning IVD medical equipment. The directive requires manufacturers to be able to document that the equipment complies with the most important requirements for safety and performance in order to legally be able to CE-mark one's equipment. In Europe, the vast majority of diagnostic products, including The NGAL Test™, are within the category of general products, which may be marketed with a self-declared CE mark. This means that the manufacturer signs an EU declaration of conformity which is submitted to the national drug agency, after which the authorities in the other European countries are notified that the product will be marketed in their respective countries.

• 1. For general IVD products, CE-marking requires no processing and opens up the way for sales throughout the European Economic Area (EEA). The fact that no third-party certification is required for the category of general diagnostic equipment in Europe may seem to be not very strict. However, two significant factors are decisive for the safety and documentation requirements imposed on IVD manufacturers:The equipment may never come in direct contact with the human body; and
• 1. The results of an IVD test must always be assessed by a doctor or other healthcare professional. This means that the doctor draws conclusions from the assay results in the light of the patient's general condition. Equipment intended for use at home is exempted from this.

The European certification system benefits both manufacturers and patients, as new technology is generally available almost two years before it is available in the US and up to five years before it is available in Japan.

Registration in the US

The US Food and Drug Administration (FDA) requires IVD manufacturers to have a functioning quality-management system. IVD products are classified into two different groups. At present, no NGAL immunoassay is classified by the FDA, but other renal markers are categorized in class II, under which The NGAL Test™ is also expected to be designated. Technically, class II products are not certified by the FDA, but are cleared for marketing. In order for a product to be cleared by the FDA, the first step is to identify a so-called "predicate device", i.e. another IVD product with the same diagnostic purpose and based on the same measurement principle. In practice, the manufacturer must submit a marketing application that compares the product which the manufacturer wishes to market with an already cleared product and demonstrate that the new product is at least just as safe and effective as the existing product.

The manufacturer does this using a "510(k)" application form, which is submitted to the FDA. Once the FDA has received a 510(k) application, it takes 90 days to evaluate it. In the event explanatory questions need to be answered, the processing time will be suspended until a response has been submitted. If the FDA assesses that the equipment being applied for is comparable to the already cleared equipment, the applicant receives a "clearance letter" providing permission to market the product for diagnostic use in the US.

Registration in other countries

The time required for obtaining registeration in various countries varies from one or two months to several years, which can be decisive in determining which markets should be given top priority. After this, the registration process is easier in many countries if the product is already CE-marked and/or FDA certified and ranges from local distributors applying for an import license for an already CE-marked or FDA-certified product to extensive product testing and applications that have to include technical documentation and validation results, as well as official inspection of the manufacturer before certification.

IVD reimbursement

Once a diagnostic product has been registered with the health authorities, the unraveling of how to manage the economic aspects must begin. In some countries, it is the patient who pays to have a test performed, while in other countries, these assays are covered by the patient's health insurance or by the public healthcare system.

Reimbursement (economic compensation) for a diagnostic assay is available via public or private health insurance. The application process for being reimbursed for a diagnostic assay varies from one country to another. The request to the health insurance system for reimbursement can be submitted by doctors who are interested in implementing the assay, and by suppliers/distributors of the assay in question.

New diagnostic assays are often put into use before reimbursement for the assay is available, and as a result, the costs must be covered by other means, e.g. by a research budget, private payment or a limited budget set aside for new assays. Widespread use of a new assay will therefore usually take place once reimbursement has been granted for the use of the assay.

From launch to implementation in routine diagnostics

Figure: How the process looks in several European countries

In order for a diagnostic assay to be considered for reimbursement from public or private health insurance, an assessment is made of whether the assay in question can contribute in one or more of the following ways:

The new assay can contribute to optimizing healthcare quality by:

• » enabling early or better treatment,
• » averting unnecessary treatment,
• » reducing costs,
• » reducing the spread of disease.

The new assay can shorten the hospitalization period by: » increasing the effectiveness of a treatment,

• » ensuring that any further treatment is relevant and cost-effective.

In many countries, centralized clinical validation and health economics calculations are also decisive for whether the health insurance body in question recommends and grants reimbursement for a new diagnostic assay.

The actual reimbursement process varies. In some countries, it is up to the individual doctor to assess whether there is a need for an assay, and if the doctor assesses that this is the case, the reimbursement is granted (often in markets whether healthcare services are paid via a tax system, such as the Czech Republic). In other countries, the decisionmaking relating to reimbursement is a lengthy, complicated process lasting up to two or three years, exemplified by markets like Germany and the UK. It is faster and easier to obtain reimbursement for an assay if a comparable product is already on the market, however.

Achieving reimbursement for an IVD product is the final seal of approval of a new biomarker and the final milestone to be passed before a diagnostic test can be implemented in routine diagnostics. Higher volumes are expected to be achieved after doctors and/or clinical forums have drawn up guidelines for how an assay should be used as recommended in the country in question (specifying patients, number of measurements per patient, etc.). Once such guidelines have been prepared, training and informing doctors in the individual wards can commence, thereby paving the way for widespread, routine implementation.

Diagnostics - the path to better treatment

NGAL - the new diagnostic marker of acute kidney injury

• NGAL is relevant for the diagnosis of acute kidney injury
• 5 7% of all hospitalized patients may develop acute kidney injury
• With present methods, kidney damage is diagnosed after 24-72 hours whereas measuring NGAL can diagnose it within few hours
• There is currently no competing test for diagnosing acute kidney injury
• BioPorto offers several NGAL tests and has obtained IP rights for the diagnostic method

NGAL - a marker of nephrotoxicity

• NGAL is important to the pharmaceutical industry for toxicological testing of new candidate drugs
• BioPorto markets products for measuring NGAL in rats, mice, dogs, pigs and monkeys

APC-PCI - a marker for sepsis treatment

• APC-PCI is a marker with potential for selecting severe sepsis patients
• There are an estimated 2.3 mil. severe sepsis cases per year in the western world
• Sepsis treatment is expensive and may have serious side effects. Only certain patiens seem to benefit from the
• treatment and these may be identified by BioPorto's test
• BioPorto is the only company to market an APC-PCI ELISA Kit and has a patent application in the area currently undergoing examination

MBL - a marker of immunodeficiency

• MBL determination can demonstrate a subtle defect in the innate immune system which contributes to susceptibility to infections
• MBL determination is especially relevant in children with recurrent severe infections, and patients undergoing chemotherapy
• More than 12% of the average population have MBL deficiency
• BioPorto markets an MBL ELISA kit

Monoclonal antibodies for research and development

BioPorto markets a large number of monoclonal antibodies, including antibodies for the following research areas:

• Type-2 diabetes / obesity
• Influenza
• Mikrobiology

Under the brand AntibodyShop(R) BioPorto markets a portfolio of approximately 300 antibodies and this is under continuing expansion

NGAL for human diagnostics

NGAL (neutrophil gelatinase-associated lipocalin) is a protein secreted by the kidneys when exposed to harmful action. NGAL is also secreted to a lesser extent by other organs or tissue in the presence of other illnesses, but in the event of renal injury, the level of NGAL rises sharply and quickly. Today, there is no competing technology for early diagnosis of acute renal injury. The existing methods for measuring renal injury, including the most frequently used measurement of serum creatinine, do not indicate renal failure as a consequence of a previous renal injury until much later (24 to 72 hours). By comparison, a measurement of NGAL can indicate a harmful renal effect only a few hours after the harmful effect occurs.

The patient base for NGAL utilization encompasses all critically ill patients, as well as post-operative patients after major surgery, including heart operations. More than 10% of all hospitalized patients run the risk of renal failure, and 5-7% of them will experience acute renal failure during hospitalization. The total number of NGAL immunoassays is estimated to be 150–200 million a year. The use of NGAL assays for diagnosing acute renal injury will strikingly improve the treatment process and make it possible to perfect new therapies.

The NGAL Test™

Assay format

It is possible to develop biomarkers in different assay formats designed for the routine diagnostics market, where the ideal format for one marker can easily be less suitable for another. It is possible to develop NGAL for all assay formats: fully automated assays (heterogeneous and homogeneous tests), point-of-care and manual methods such as ELISA kits. Homogeneous assays are expected to constitute the largest segment of the NGAL market due to the assay's utilization on most of the major automated analyzers already set up in hospitals all over the world.

In 2010, BioPorto completed the development of and prelaunched The NGAL Test™, BioPorto's homogeneous renal injury assay. The NGAL Test™ makes it possible for doctors to obtain quick analysis results concerning a patient's condition, and, as the test is designed as an application for analyzers already found in the laboratory, the hospital does not have to invest in new equipment to start using The NGAL Test™. In this way, the assay provides rapid access to the attractive NGAL market for most of the major vendors of assay systems.

Launch

In 2010, the assay was scaled up, thereby enabling largescale standard manufacture of the product. The validation of the assay itself has therefore been successfully implemented and stability studies are currently in progress so that the longevity of the assay can be lengthened to 24 months, from the present 12 months.

In November 2010, BioPorto prelaunched The NGAL Test™ for research use and the assay was subsequently tested at selected hospitals in Europe, the US and south-east Asia. In January 2011, The NGAL Test™ was CE-marked, which gave the go-ahead for marketing the test throughout Europe.

Sales channels

Leading up to the launch, BioPorto strongly focused on optimizing its sales channels for the new NGAL assay. In November, BioPorto entered into a non-exclusive global distribution agreement with Dako A/S, which will be offering The NGAL Test™ via Dako's distribution network starting in January 2011. Dako markets its products in more than 80 countries and has decades of experience in marketing diagnostic assays. Besides securing fast, direct access for The NGAL Test™ to most of the world market, the Dako agreement will significantly help to ensure an invaluable level of technical support for launching a brand-new type of test. The agreement with Dako does not prevent BioPorto from optimizing sales of The NGAL Test™ by setting up additional distributor agreements. For this reason, BioPorto has also entered into agreements with its own distributors in a number of countries, such as the UK, Germany, France, the Czech Republic, South Korea and India.

The company is taking decisive steps towards collaborating with multinational diagnostics companies interested in marketing the renal injury marker as an important product in their assay portfolio for their own analyzers. A number of major multinational corporations have received The NGAL Test™ for in-house validation and adaptation of the assay to their respective fully automated analyzers, and the results of this will lay the groundwork for setting up a working relationship for marketing and distribution.

In connection with the CE-marking, The NGAL Test™ was validated and accepted for use on selected analyzers made by Roche, Siemens, Abbott and Beckman Coulter. Further validation efforts on additional analyzers are ongoing, and it is expected that protocols for an additional 5–10 analyzers will be available to BioPorto's customers during the course of 2011.

By launching The NGAL Test™, we have succeeded in following the strategic direction planned and laid out by BioPorto in 2009: to develop and launch a renal marker that is expected to be capable of gaining the biggest share of the NGAL market: the homogeneous assay "The NGAL Test™". The product can lead BioPorto directly into the routine diagnostics market—quite independently of other players' use of NGAL assays and patent licenses.

Market penetration

New diagnostic markers with NGAL's potential of 150 to 200 million assays a year are rarely introduced into the market. BioPorto has made great strides since it submitted its first NGAL patent application in 2004 and the first NGAL ELISA assay was launched in 2005 up to the present where the proper format of the assay—The NGAL Test™—has been launched and CE-marked. There is still a way to go before NGAL is generally accepted as a marker and The NGAL Test™ is implemented for full routine diagnostic utilization. There are several factors that could affect the market penetration, the most important of which are the following:

• » registration
• » reimbursement
• » clinical acceptance
• » guidelines for use
• » distribution
• » the competition
• » analyzers
• » treatment possibilities.

In order to be able to market a diagnostic product, the product must complete a registration process with the health authorities in each individual market. The registration of The NGAL Test™ commenced with the CE-marking in Europe and registration in Canada, which makes it possible to market The NGAL Test™ for diagnostic use in these countries. The assay can be registered in the US by submitting an application to the FDA, which is expected to be processed and approved this year. General information about the application processes are found on page 7.

Diagnostic assays are often eligible for economic reimbursement via the public healthcare system or private health insurance. Naturally, an assay can be marketed and sold without obtaining such reimbursement, but in order for an assay to become a widely used routine marker, reimbursement would be an important incentive for this implementation. Via several distributors, BioPorto has begun to apply for reimbursement for The NGAL Test™, a process lasting several years in some countries, whereas in other countries, like the Czech Republic, it is possible to obtain reimbursement for the assay already this year.

Doctors and/or clinical forums draw up guidelines for how the assay should be used as recommended in the country in question (specifying patients, number of analyses per patient, etc.). Once such guidelines have been prepared, training and informing doctors in the individual wards can commence, thus paving the way for widespread, routine implementation. This process will be ongoing for The NGAL Test™ for many years ahead.

Clinical acceptance by doctors and hospitals is related to qualifying for reimbursement, but largely depends on doctors' familiarity with the assay as well. Over the past 5–8 years, doctors around the world have been studying the clinical use of NGAL as a diagnostic marker for acute renal injury. So far, this has resulted in more than 200 scientific articles describing the NGAL molecule from several angles, including how NGAL can be used in diagnostic contexts. It should be noted, however, that this pioneering group of doctors and researchers in the NGAL field represents only a small section of the doctors who will have the opportunity to use NGAL in routine diagnostics in the years ahead, after which general acceptance of The NGAL Test™ would occur.

This explains why establishing a proper distribution network is also important for creating rapid market penetration. For this reason, BioPorto is working to set up distributors in

Figure: Registration of The NGAL Test™ in selected countries. The time schedule is based on the shortest processing time possible. The registration authorities may require additional information, which would lengthen the processing time.

Anticipated registration process for The NGAL Test™

the individual markets and is also in the process of setting up collaboration with multinational diagnostics corporations. The national distributors benefit from their thorough knowledge of local situations and hospitals, whereas the multinationals benefit from higher sales volumes and the fact that they are marketing combined portfolios of diagnostic products for their own analyzers. BioPorto's sales channels are described in more detail above.

Currently, there are two other vendors of NGAL assays for the diagnostics market: Abbott (marketing a heterogeneous assay) and Alere/Biosite (marketing a point-of-care assay). There are several factors that differentiate these assays from BioPorto's The NGAL Test™, which is apparent in the product specification on page 16. Abbott's and Alere's marketing of their respective NGAL assays has helped to generate acceptance of NGAL as a valid renal-injury marker, and the two corporations are also expected to ensure quicker processing of The NGAL Test™ through various registration and reimbursement processes, as one of these two other NGAL assays will have presumably already paved the way. As a competitive parameter, BioPorto has both the most applicable assay in the homogeneous format and the decisive IP rights to NGAL, including a cut-off patent (see p. 14 for further details).

The NGAL Test™ is designed as an application for analyzers already found in the laboratories of just about every hospital. The assay has already been adapted to the most widely used systems, but there will always be analyzers in which it is more complicated to get the assay to work than others. Moreover, it is crucial that several of the major multinational diagnostics corporations with their own analyzers perform their own in-house validation of the NGAL assay, which can last a number of months once such efforts have been started by these companies. At the same time, BioPorto is continuing efforts to adapt The NGAL Test™ to additional systems/models in order to encourage proliferation of the use of The NGAL Test™ as quickly as possible.

The use of NGAL assays for diagnosing acute renal injury will strikingly improve treatment and make it possible to perfect new therapies. Diagnostics and therapy are mutually interdependent, and the lack of an outright renal injury therapy is deemed to be closely related to the previously limited options for detecting renal injury in time. Great advances have been made in developing therapies in this area, and the possibility of earlier diagnosis already enables several other measures for treating renal-injury patients.

Thus, there are several unknown factors in the equation concerning the anticipated market penetration of The NGAL Test™. The assay is new in the market and must undergo registration and reimbursement processes in the various markets; the major diagnostics companies must first include the assay in their portfolio, and the assay must gain widespread acceptance as a renal-injury marker among hospitals and doctors. Due to these many uncertain factors, BioPorto will refrain from announcing specific sales targets for The NGAL Test™ for 2011. At present, the assay is in its introductory phase and is primarily being delivered for validation and trial set-ups, which is why BioPorto does not anticipate a high level of sales in the first half year of 2011. Concurrent to becoming familiar with market developments, the company will report on its activities and sales.

NGAL: manual methods

Manual analysis methods, like ELISA kits, must be carried out by a well-trained technician and take a relatively long time per sample, by contrast with The NGAL Test™ which can be used in large volumes on fully automated analyzers with only limited effort by a laboratory employee.

BioPorto was the first player on the NGAL market to launch an NGAL ELISA kit (in 2005), and in 2006 the group launched a rapid version of the kit (one-hour procedure), which was CE-marked so it could be used for routine diagnostics in Europe. The marketing and sale of BioPorto's NGAL ELISA kits has been crucial for analyzing samples from clinical studies and clinical documentation for NGAL as a fast, specific biomarker of acute renal injury.

Sales of BioPorto's ELISA kits for identifying NGAL in patient samples grew by 50% in 2010, and comprised 29% of the company's combined sales in 2010.

In August 2010, the Mayo Clinic (US) announced that laboratories are now offering NGAL assays. The Mayo Clinic has validated and implemented the assay based on so-called home-brew approval, which means that BioPorto's NGAL test is the first and only NGAL assay to be implemented for diagnostic use in the US.

Sales of Human NGAL ELISA Kits are expected to continue to grow in 2011. The Group is focusing its marketing efforts on large new growth economies like India, China, Russia and Brazil. The ELISA format is used for routine diagnostics more frequently in these countries than in mature markets where routine markers are typically implemented on fully automated analyzers or point-of-care. At the same time, these growth economies are interesting for BioPorto at a time when the IVD market is notably growing in these countries by 10–15% a year, compared to 1–3% growth in the traditional industrialized countries. In 2011, BioPorto will focus especially on establishing a market in China, the world's second-largest economy, where it is expected that large volumes of both NGAL ELISA kits and The NGAL Test™ could be marketed once registration for IVD use has been obtained.

BioPorto has obtained IVD registration of its diagnostic ELISA kits in Brazil, Canada, Egypt, India and Iran, while registration is underway in Russia.

Intellectual property rights

The group expends much of its resources on continuously seeking to protect the group's technologies by obtaining patent rights and on defending, optimizing and extending these patent rights.

BioPorto has obtained patent rights within the NGAL field. The group's NGAL cut-off patent is the principal patent in BioPorto's portfolio of NGAL IP rights and is crucial to the group's strategy in the promising NGAL market. The NGAL patents make it possible to guarantee BioPorto's sales of its own products and to exercise BioPorto's rights vis-à-vis competitors in the event the competitors sell NGAL assays for acute renal-injury diagnosis without having licensing access to these patents. It is unnecessary, however, to obtain a patent for all markets until it is possible to sell BioPorto's own products, i.e. The NGAL Test™ and the existing ELISA kits. The NGAL IP strategy is to retain the patent rights to the homogeneous assay format, and to grant licenses for NGAL assays in other assay formats.

The NGAL cut-off patent was validated in Europe in Q1, and is now valid in twenty European countries. The patent was certified for issuance in South Korea and Australia in Q2 and Q3 respectively. Moreover, the patent has already been issued in New Zealand, Singapore, Hong Kong and South Africa. Patent applications have been submitted in a number of other countries, including the US, and are either pending or being processed.

In Q3, the European Patent Office (EPO) announced four objections to the NGAL cut-off patent issued in Europe. It is common practice for companies operating in a patent's field to submit objections to key patents. Accordingly, the fact that objections were submitted by companies like Abbott, Alere (previously Inverness/Biosite), Phadia and Getica corroborated the patent's significance and the necessity of having fixed cut-offs. The objections in the main case concerned the cut-off value of 250 ng/mL or above, as specified in BioPorto's conclusive patent. It is assessed that, as NGAL is increasingly utilized as a diagnostic marker in practice and is no longer used only in studies of selected patient categories, the patented cut-off will be confirmed. This assumption is supported notably by the Mayo Clinic's validation and utilization of NGAL, which states that "NGAL concentrations in urine above approximately 300 ng/mL provide a clear indication of renal injury." In December, BioPorto submitted a detailed response to the EPO concerning all points raised by the four objections.

Abbott and Alere have launched their respective NGAL immunoassays—a heterogeneous urine assay on Abbott's Architect platform for central hospital laboratories, and a blood assay for Biosite's Triage POC platform. The products are accessible in certain European countries and a few other regions around the world, but not in the US where registration for diagnostic utilization has yet to take place. It is not possible to use these assays for diagnosing acute renal injury without using the cut-off values to differentiate between positive and negative results insofar as they relate to renal injury and other diseases resulting in elevated NGAL values and normal values. So far, Biosite and Abbott have been reluctant to specify the actual NGAL values for the diagnostic utilization of these new assays.

In Q2, BioPorto received the first notification concerning the processing of the cut-off patent from the US Patent and Trademark Office (USPTO), which rejected the patent. A response to the USPTO was drawn up and submitted in Q3. In December, this application received a final rejection from the USPTO. "Final rejection" during a patent-application process in the US means only that further charges must be paid before the application will be processed further. The most important rejection point in the second response from the USPTO concerning "inventive step" has been verbally processed with an examiner, and BioPorto's written statement of case in the matter has been submitted to the USPTO. The examiner's continued processing of the patent application is awaited. It is anticipated by both BioPorto and the group's patent consultant, Højbjerg A/S, that the cut-off patent will be accepted for issuance.

In addition, BioPorto has submitted other patent applications in the NGAL area:

• » The NGAL-exclusion patent application is complementary to the cut-off patent and involves lower NGAL values, which preclude a direct risk of renal injury.
• » The NGAL-triage patent application involves the use of rapid point-of-care NGAL determination for triage (immediate assignment of degree of urgency to determine further examination or treatment) of persons injured in an accident, a natural disaster, or acts of war or terrorism.
• » The NGAL-ratio patent application involves the use of a ratio between NGAL concentrations in urine and plasma for achieving increased diagnostic specificity and predictive value for acute renal injury. The application received a favorable written opinion for the initial PCT processing.
• » The patent application for NGAL molecular types involves a determination of the individual molecular types of NGAL in urine and blood to increase the diagnostic specificity for acute renal injury.

Other parties' NGAL rights

NGAL is widely accepted as a renal injury marker and has great market potential, which also explains the existence of patents and patent applications from other sector players.

The ongoing invalidity action filed by BioPorto against Phadia is still in process with positive progress, and in 2010 this primarily involved the completion of a second expert appraisal, carried out by the same expert used in the first appraisal, i.e. a doctor with specialized knowledge of such aspects as the molecular weight indication of proteins, and by a patent expert. The result of the second expert appraisal was largely in BioPorto's favor. In other words, the expert appraisal is satisfactorily completed and the case continues its judicial review. BioPorto expects the Phadia patent—which in Europe covers the diagnostic use of NGAL for all human diseases—to be declared invalid due to its failure to fulfill the novelty requirement. During the case, Phadia filed a claim that BioPorto is violating Phadia's patent rights. Phadia has further demanded that BioPorto's NGAL products be withdrawn from the market and that compensation be paid for any units already sold. BioPorto's lawyer in the case considers it unlikely that the court will concur with Phadia's claim. At the same time, BioPorto's patent consultant, Høiberg A/S, has stated that it is highly probable Phadia's claims will be ruled invalid.

CCH's various NGAL patents and patent applications in Europe and the US are not expected to affect BioPorto's market access, in the event that, contrary to expectation, they are issued or upheld after a challenge to validity. BioPorto is constantly monitoring existing and new patent applications in the sector and assessing their potential impact on BioPorto's market access.

Licensing

With the products and IP rights in the NGAL field that BioPorto has today, the group expects to follow two routes towards achieving shares of the routine diagnostics market: by marketing its own products (The NGAL Test™ and NGAL ELISA kits) and by entering into licensing and collaboration agreements with other diagnostics companies concerning the marketing of NGAL immunoassays in other formats (POC and heterogeneous). BioPorto is willing to enter into licensing agreements for NGAL IP rights for assay formats other than homogeneous.

The first licensing agreement concerning access to the group's NGAL IP rights was entered into in March 2011 with Instrumentation Laboratory. The overarching financial terms comprise total downpayments of EUR 2 million, divided into several milestone payments, and a royalty rate of 5.5%. The first EUR 250,000 falls due for payment on the date on which the agreement is signed. As the licensing agreement is non-exclusive, BioPorto can enter into additional licensing agreements concerning access to NGAL IP rights, thereby ensuring that the market gets the widest possible access to NGAL.

BioPorto believes that an NGAL assay for diagnosing renal injury in relevant patients cannot be marketed without the manufacturer having to pay for licensing access to BioPorto's patent rights. Competitive vendors without a license who violate BioPorto's patent rights could face an injunction and claims for damages.

NGAL for measurements in animals

Today, the NGAL biomarker is in the process of becoming a recognized routine diagnostic marker for renal injury. As part of the process of recognizing a new biomarker, it is important to influence the greatest number of prospective users of the immunoassay. Exerting influence on several different market segments (the IVD market and the pharmaceutical industry) at the same time increases the probability of achieving widespread market acceptance more quickly. For this reason, it is important for BioPorto to target its marketing of NGAL tests on the pharmaceutical industry, which constitutes a potential routine-diagnostics market for an assay like NGAL in connection with the development and testing of new medicines. Sales to the pharmaceutical industry can often provide a quicker route to recognition, because of the enthusiasm for trying out new, cost-saving methods.

The cost of developing a new medicine can be reduced if the proper tools are available in an early development phase to weed out prospective medicines that are ineffective or produce undesirable side-effects such as being harmful to the kidneys. This means that there is a potentially large and important market for NGAL for testing experimental animals. By comparison with present methods, the NGAL test could reduce the number of experimental animals used per prospective medicine, which would benefit the pharmaceutical industry both ethically and economically.

Sales of the animal NGAL product line more than doubled in 2010, compared to 2009. The product line was enlarged in September to include an ELISA kit which enables measurement of the NGAL renal injury marker in pigs. With the launch of the Pig NGAL ELISA Kit, the portfolio now comprises four animal NGAL ELISA kits—for analyzing NGAL in rats, mice, dogs and pigs, all of which are relevant species in clinical research and are also commonly used as experimental animals in the pharmaceutical industry.

In 2011, BioPorto expects to complete its portfolio of animal NGAL ELISA kits by including a product for analyzing NGAL in monkeys. This will enable BioPorto to offer assays for experimental animals used throughout a medicine's development process, starting with the discovery phase, through the pre-clinical phase and actual testing of higher primates and ending with clinical tests involving human beings.

Measuring NGAL for diagnosing renal injury in dogs paves the way for entering the diagnostics market in veterinary medicine. Renal injury, particularly in dogs kept as pets, is a big problem. BioPorto's strategy in this area is to enter into partnerships with veterinary diagnostics companies already established in the market.

Facts about The NGAL Test™

NGAL: Neutrophil-gelatinase-associated lipocalin

NGAL is a protein secreted by the kidneys when exposed to harmful action. Renal injury causes the level of NGAL to rise sharply and quickly and can be measured in both blood and urine samples. BioPorto discovered the level (cut-off) above which NGAL is an indicator of acute renal injury and a higher cut-off which indicates renal injury requiring dialysis. In addition, NGAL may turn out to have other diagnostic uses.

The NGAL Test™ Reagent Kit. BioPorto also offers a calibrator kit and a control kit.

The NGAL Test™ is based on turbidimetry and can be used by a wide range of automated clinical-chemical analyzers. Turbidimetry is a simple, fast and precise technique which accommodates the high demand for quick NGAL measurements in both urine and plasma. With The NGAL Test™, BioPorto has significantly shortened the time-to-market for any diagnostics companies that have not already focused on NGAL, but which might be interested in collaboration.

BioPorto's NGAL ELISA kits and NGAL antibodies were the precursors of The NGAL Test™. A range of studies have been carried out using NGAL ELISA kits, and these kits have also been used as a reference for the development of new immunoassays. There are currently three providers of NGAL immunoassays for the routine diagnostics market (not including ELISA kits), and the characteristics of these three immunoassays are summed up below.

Fully automated assays (homogeneous and heterogeneous assays) are performed on highly specialized analyzers located in central hospital laboratories. Typically, one analyzer can perform 100 different assays, can process up to several thousand patient samples per hour, and is largely self-operating. It is estimated that 80% of all assays at hospitals are performed by such systems. Two types of immunoassays are available for fully automated systems: homogeneous and heterogeneous. A homogeneous assay comprises only one analysis step. Therefore, this assay is adaptable to several systems. By comparison, a heterogeneous assay requires a separation step, which in practice means that the assay is developed for one specific analyzer and cannot be transferred to other systems. For this reason, the systems are also referred to as open (homogeneous) and closed (heterogeneous). Therefore, BioPorto's The NGAL Test™ is expected to be widely used and constitute approximately 75% of the fully automated market segment.

A point-of-care (POC) assay can be performed on a small analyzer located near the patient and does not require appreciable laboratory facilities. Each assay must be processed individually, which means that only one assay can be performed at a time; this is best suited for situations where a quick response is required. These assays are typically less accurate and more expensive than assays performed on fully automated systems.

The overlap between POC and fully automated systems is expected to be minor. This is due to format differences (described above) and the requirements imposed on the assay by different markets and end-users.

	BioPorto Diagnostics	Abbott	Abbott
Name of test	The NGAL Test™	ARCHITECT Urine NGAL test	Triage NGAL test
Test platform	(Central) laboratory test Clinical chemistry (Specific protein)	(Central) laboratory test Immunoassay	Point of care (POC)
Assay principle	Homogenous	Heterogenous	Point-of-care
Required instrument	Most chemistry analyzers	Abbott ARCHITECT analyzers	Triage MeterPro/Plus
Plasma samples	Yes	No	Yes
Urine samples	Yes	Yes	No
Assay time	10 min	36 min	20 min
Measuring range	25 ng/mL - 5000 ng/mL	10 ng/mL - 1500 ng/mL	60 ng/mL - 1300 ng/mL
Precision	CV <4%	CV <7%	CV <18%

APC-PCI stands for "Activated Protein C with Protein C Inhibitor Complex", tiny amounts of which form in the blood once the blood coagulation process is triggered and Protein C (blood-coagulant regulator) is also activated. Activated Protein C (APC) has coagulating and anti-inflammatory effects.

BioPorto markets an APC-PCI ELISA kit for research use, measuring the APC-PCI complex in blood plasma. Introductory studies in this area have spurred great expectations for the use of APC-PCI as a biomarker for sepsis (bloodpoisoning) patients with a view to selecting patients suitable for treatment with Activated Protein C (Xigris, a drug marketed by Eli Lilly). Severe sepsis is a complex, dangerous condition with a very high mortality rate. There are an estimated 2.3 million severe sepsis cases each year in the western world.

Xigris is the only medicine, except for antibiotics, to be approved by the FDA for reducing mortality among patients with severe sepsis. Xigris has not been commercially successful, however, because only a few patients respond to the treatment, but most of all because it has not been possible to identify in advance which patients would benefit from the treatment. In addition, Xigris treatments are relatively expensive. Because of its ability to select the minority of sepsis patients who can benefit from APC

MBL

Mannan-binding lectin (MBL) is an important molecule in the innate immune response. An MBL deficiency can affect a patient's effective ability to combat a foreign organism such as a virus or a bacterium. For genetic reasons, 12% of the population in the Western world is fully or partially deficient in MBL. This is of no importance, provided that the adaptive immune response functions optimally, but during treatment or chemotherapy, for instance, the presence or deficiency of MBL can be crucial, as one's immune response is severely weakened during such treatment. From the age of 0 to 2, children can in some instances be affected by MBL deficiency, which manifests itself as recurring severe or unusual infections. In addition to the two categories already mentioned, the list of patient categories affected by MBL deficiency includes transplant patients, patients with cystic fibrosis and people suffering from other genetic immune deficiencies. The primary MBL market is estimated to be around 440,000 assays a year.

Since 2000, BioPorto has marketed an ELISA kit for measuring the level of MBL in humans, and the kit is the most frequently used product of the five or six on the market. In 2010, the MBL kit generated revenues of DKK 1.8 million, an increase of 7%.

treatment, the APC-PCI assay is expected to triple the cost-effectiveness of sepsis treatment, making it possible to reduce by two-thirds the present costs of superfluous treatment of patients who cannot benefit from it, and thus also avoid serious, unnecessary side effects. At the same time, the cost reduction is expected to be able to establish APC treatment as an effective therapy for selected patients with severe sepsis, making hospitals and doctors more willing to use it in situations in which it is not used at all at present.

BioPorto has applied for a patent concerning the diagnostic use of the APC-PCI marker for selecting patients with severe sepsis for special treatment. Applications are being processed in Europe, the US, Japan and Canada.

BioPorto is the only company to commercially offer a method for measuring this marker in human plasma samples. In 2010, major studies were set up to validate the assay with a view to its utilization for measuring the Protein-C activation in patients with severe sepsis and thrombotic patients (increased risk of blood clotting). The first results of these studies are expected to be available in 2011. The validation of the assay, the examination of the prospects of establishing R&D collaboration and the concluding of licensing agreements with central players in the field will continue in 2011.

Antibody portfolio: AntibodyShop®

Under the AntibodyShop® trademark, BioPorto markets about 300 different monoclonal antibodies, primarily to the basic research market. Sales of monoclonal antibodies account for roughly 60% of BioPorto's combined revenues, and in 2010 BioPorto achieved a 16% sales increase in this area.

The research market is in the process of regaining its level of activity from before the financial crisis, which is why we are seeing a rising demand for BioPorto's antibodies. Particular growth has been noted within a number of the unique antibodies marketed by BioPorto.

BioPorto markets a portfolio of antibodies targeting, inter alia, peptide hormones. One of the most familiar peptide hormones is GLP-1 (glucagon-like peptide 1). GLP-1 products are in demand because this same peptide plays an important part in the development of a new generation of products for treating Type II diabetes. Companies like Novo Nordisk, Pfizer and Eli Lilly devote considerable resources to developing new drugs in this field. BioPorto's antibody portfolio contains highly specialized antibodies targeting the GLP-1 molecule, etc., for which a large number of pharmaceutical companies are customers.

Four new antibody products were added to the portfolio in 2010. Two of these products were developed by BioPorto and target peptide hormones, and the two others, which were in-licensed, target proteins in the primary immune system. BioPorto expects to launch 4–6 new monoclonal antibodies in 2011.

BioPorto is continuously monitoring antibody sales and compares these with new scientific publications and feedback received from the basic research market. This feedback helps to ensure that BioPorto can follow up on new markers in the areas of focus, create a continuous influx of new products into the market and form the basis on which to develop new biomarkers for routine diagnostics.

2 3 Figure: Schematic depiction of the GLP-1 peptide and its various forms found in the body. It is important for the R&D of new medicines that significant forms of peptide like GLP-1 can be reliably measured. The figure shows where BioPorto's antibodies bind to the GLP-1 peptide and its different forms, indicated by product numbers like HYB 011-05 and ABS 033-04.

9 36(amide)

Intellectual Resources

The biotech sector is characterized by high complexity, fluctuation and intense competition. Thus, the Group's success depends on having the appropriate intellectual resources. The management has identified and follows up the four key areas of importance to the Group's future development:

Scientific areas of focus

The group's scientific expertise must identify the types of products to be developed and also possess the knowledge required for successfully developing the product or to find relevant collaboration partners. In addition, it must be possible to assess the accessibility of intellectual propertyright protection and the consequences of existing patent protection, if any.

Development and production processes

The group's development, production, and quality assurance expertise must ensure that the finished product conforms to official specifications of requirements, that the development and production processes are straightforward and cost-effective and that the development processes are reproducible.

Financing and IR

The Group's financing expertise must enable the Group to plan and act in relation to the scientific development process characterized by high complexity and low predictability, and in relation to the commercialization of new markers including expectations of market potential and penetration, which may lead to significant deviations in relation to the budget. Knowledge of IR and communication serves to strengthen the relationship and dialogue with investors, analysts, the press and other stakeholders.

Commercialization

Knowledge of the diagnostics market is needed for commercializing new markers, including the estimate of market potential and penetration, and optimizing sales. Furthermore, knowledge of marketing and sales through major diagnostic companies is essential to establishing the right partnerships with these actors. Insight into the sale of licenses to the company's own rights or products is essential, as is the ability to negotiate the proper terms and conditions for such licenses.

The group's existing intellectual resources are focused in the following areas: scientific development processes; methods for developing diagnostic analyses; negotiating and concluding contracts; financing and investment; commercialization; communications; providing information; quality and certification requirements; clinical relevance; immunology; antibody development; immunochemical analysis; molecular biology; protein chemistry; and manufacturing processes. In addition to the group's own expertise, the group's activities are conducted in close cooperation with permanent scientific employees and an external staff of senior researchers and alliance partners, as well as external consultants in business development, licensing, communications, etc., which thus increases the organization's knowledge base.

The company needs to continue developing, retaining and actively applying its knowledge. The group's HR accounting established for in-house use is part of the management's tools. Among the main achievements in 2010, BioPorto's quality management system was designed and certified for ISO standard13485: 2003, which has involved a significant learning experience for the entire group. Also, new resources have been added to QA/RA, which with the current registration work is a central feature of the implementation of The NGAL Test™ on the market. To ensure that The NGAL Test™ achieves the best starting point for sale for routine diagnostics, the group has expectations of increased activity in almost all areas in 2011 onwards. This expansion will lead to demands for a significant expansion of the workforce, including obtaining additional knowledge resources.

Shareholder Information

Capital, votes and share performance

The share capital amounts to nominally DKK 126,397,872 comprised of 42,132,624 shares at a nominal value of DKK 3.00, each of which are entitled to one vote. BioPorto's shares are listed on the NASDAQ OMX Copenhagen. The shares are traded under the symbol (BIOPOR). The securities identification code is DK0011048619. 2000000 2500000 No.

On December 30, 2010, the closing price of BioPorto's shares was DKK 7.85 equivalent of a 11% rise in 2010. BioPorto's market capitalization on December 30, 2010 was DKK 331 million. In 2010, the turnover of shares was DKK 255 million and 37 million shares were traded. 500000 1000000 1/4/10 2/4/10 3/4/10 5/4/10 6/4/10 7/4/10 8/4/10 9/4/10

Ownership structure

On December 31, 2010, BioPorto had 3,398 registered shareholders, whose accumulated shareholding equates to 70% of the share capital. 12 DKK

On December 31, 2010, the following investor has notified BioPorto of a share holding of 8.4%: T. Bernt Nielsen and associates, Helsinge, Denmark. POC Heterogene tests Homogene tests ELISA 6

BioPorto Biotek index NASDAQ OMX Cph (rebased)

Convertible bonds

In September 2010, BioPorto conducted a private placement by issuing convertible bonds. The issue generated gross revenue of almost DKK 14 million. The bonds were traded on Nasdaq OMX Copenhagen in December 2010.

The bond loan is nominally DKK 13,950,000 and is divided into 93 bonds of nominally DKK 150,000. 8% BioPorto Konvertibel 2013 are listed on the NASDAQ OMX Copenhagen under the securities identification code DK0030263454.

By full use of the conversion right, a total of 1,992,804 new shares with a nominal value of DKK 3.00 are issued.

Warrant program

With a view to establish an incentive for retaining the current skilled employees and their active effort for the company and more attractive to prospective employees, the board established a new warrant program in 2008. At the same time, it serves as an incentive for the company's management and board of directors.

The board is authorized to issue, on one or more occasions, a number of warrants for shares at a nominal value of DKK 3.00, equivalent to up to 5% of the company's nominal share capital at the time in question with no priority subscription right for the company's shareholders.

On April 16, 2009, 483,250 warrants were issued, equivalent of 1.26% of the total nominal share capital.

There are not issued new warrants under the existing warranprogram in 2010. By the end of 2010, 1,000,750 warrants are outstanding equivalent of 2.38% of BioPorto's total 42,132,624 shares.

Dividend

BioPorto A/S's policy is that shareholders should receive a return on their investment in the form of a price increase based on the group's performance. The payment of dividend must always consider the requisite consolidation of equity as the basis of the group's continued expansion.

In consequence of the group's need for capital for marketing and registration of The NGAL TestTM as well as the continued protection and expansion of the important, no dividend is expected to be disbursed in 2010.

Investor Relations (IR)

BioPorto aims to give the market open, satisfactory information about the company's operations, strategy and results with a view to ensuring fair pricing of the share and to contribute to ensuring good corporate governance. All stakeholders should have fast, equal access to important information about BioPorto's development and growth. One of the ways this is effectuated is by publicizing in-house knowledge in company announcements to NASDAQ OMX, Copenhagen, which are subsequently made available at the company's website, www bioporto.com.

Other publicized information, including general corporate and investor presentations, are made available to the general public at the website. BioPorto offers a news subscription service. Investors and other interested can sign up for notification of published company announcements, newsletters and other material in the investor section of the website.

To ensure an efficient, expedient dialog with our share holders, BioPorto encourages its share holders to let their share holding be registered and to participate in annual general meetings. The IR Department is also responsible for ensuring that information from the company's IR stakeholders is passed on to the management and the board of directors.

Company announcements

Date	Announcement
12.03.2010	Annual Report 2009
25.03.2010	Annual General Meeting
26.03.2010	Insider's dealings
20.04.2010	Development of Annual General Meeting
26.05.2010	Interim financial report for Q1
08.08.2010	BioPorto's patent rights for NGAL – opposition to the European patent
12.08.2010	BioPorto's NGAL test approved for use by leading U.S. reference laboratory
26.08.2010	Interim financial report for Q2
26.08.2010	Subscription and issue of convertible bonds
07.09.2010	BioPorto completes the subscription of convertible bonds
03.11.2010	BioPorto pre-launches pioneering kidney injury test
23.11.2010	Dako brings BioPorto's kidney injury test to the world market
24.11.2010	Interim financial statement for Q3
09.12.2010	Prospectus
15.12.2010	Financial Calendar for 2011

Financial calendar

Date	Announcement
10.02.2011:	Quiet period prior to the annual report begins
10.03.2011:	Annual report from 01.01.2009 – 31.12.2009
07.04.2011:	Shareholders meeting
11.05.2011:	Quiet period prior to the interim report begins
25.05.2011:	Interim report – 3 months
11.08.2011:	Quiet period prior to the interim report begins
25.08.2011:	Interim report – 6 months
10.11.2011:	Quiet period prior to the interim report begins
24.11.2011:	Interim report – 9 months

Contact

Additional information is available at the company's website, www.bioporto.com. For Investor Relations, please contact:

Christina Thomsen Investor Relations

Tel.: +45 4529 0000 Fax: +45 4529 0001 E-mail: investor@bioporto.com

Annual general meeting

The annual general meeting is held on April 7, 2011 at 3 p.m. at the company address

Corporate Governance

The management and board of directors of BioPorto A/S focus on investor relations, and the company's board of directors gives high priority to exercising good corporate governance. Following the recommendations for good corporate governance generates value for the company in the long term and ensures the immediate publicizing of information to stockholders and the stock market. In 2010, the board implemented the new recommendations, and a joint statement for the period from January 1 to December 31, 2010, is available on the company's website www.bioporto.com/investors\_\_1/ company\_documents/corporate\_governance

Six board meetings were held in 2010, including one lengthy strategy meeting, and three conference calls. Six meetings and three conference calls are also planned for 2011, in accordance with the board's annual schedule, which obviously can be changed at any time to allow for additional meetings, if the need arises.

The members of the board are selected and put up for election on the basis of their specific qualifications and experience that are relevant to BioPorto. Thus, the board is composed with a view to ensuring an optimal combination of professional experience in the sector in general, in research and development, in IP rights and conclusion of contracts, in sales and marketing, as well as in finance and economics. The board complies with the recommendation for diversity with a reasonable age spread and gender proportion. All board members are assessed by the board as being independent. The election term is one year at a time and the age limit is set at 70 years. Each member's unique competencies can be seen on the company's website http://www.bioporto.com/about\_us/board\_of\_directors

The chairman of the board is responsible for evaluating the management and the board of directors every year. The evaluation also includes the working relationship with the management. The result of the evaluation process is subsequently presented to and discussed at a board meeting. The results of the evaluation in 2010 were generally positive. They noted orderliness and structure in the board's work and the control procedures performed, and only showed a need for minor adjustments, which will be incorporated into the board's work in 2011.

Social responsibility

BioPorto is aware of its social responsibility and endeavors to improve its social and environmental conditions. BioPorto has acceded to the Global Compact, and the recent communication on progress, which also constitutes the company's report on corporate social responsibility, is available on the company's website http://www.bioporto.com/investors\_\_1/ company\_documents/corporate\_social\_responsibility

BioPorto's internal control and risk-management systems The board and management have overarching responsibility for the group's risk management and internal control related to financial reporting. BioPorto's policy is to identify and minimize the risks deriving from the group's operations and to establish sufficient scope of insurance coverage. The group's control and risk-management systems can create a reasonable, but not absolute, certainty that unlawful use of assets, omissions and/or material misstatement relating to the presentation of the financial statements are avoided.

The management assesses that all significant elements of risk have been identified and addressed.

A review of the company's risk management is available on the company's website http://www.bioporto.com/investors\_\_1/ company\_documents/risk\_management

Remuneration of the management and board of directors

The basic fee of the board is set at a level assessed as being competitive and reasonable compared to the sector in general and the company's current situation. The annual board fee in 2010 was DKK 125,000 and the chairman of the board receives twice this fee. It is proposed that this remuneration remain the same for 2011. The board takes part in the company's warrant program (see note 5). The AGM considers the proposal concerning the board's remuneration during the discussion of the 2010 Annual Report.

The management consists of one person, employed on a contract basis. In 2010, the management was paid DKK 1,252,000 in salary, inclusive of pension (contribution-based). An already concluded bonus agreement will continue in 2011 so that the payment of a bonus takes place if down-payment or milestone payments are achieved in connection with negotiations concerning access to the group's NGAL IP rights or APC-PCI rights, or if marketing/distribution agreements with major diagnostics companies are established for The NGAL Test™. The management takes part in the company's warrant program (see note 5). The company has not assumed any obligation to disburse severance pay to the management at the time of termination of the employment relationship, besides possible remuneration for the conclusion of a non-competition clause. The employment relationship may be terminated by the company by giving twelve months' notice to the end of a month and i special instances by giving twenty-four months' notice.

BioPorto's remuneration policy can be found on the company's website http://www.bioporto.com/investors\\_1/company\ documents/remuneration\_policy

From the left: Carsten Lønfeldt, Peter Nordkild, Niels T. Foged and Marianne Weile

Board of directors and executive management

The company's board members and executive management have the following shareholdings in BioPorto A/S and hold the following directorships in other companies as listed below. Directorships in wholly owned subsidiaries are not included.

The board of directors				Directorship in other companies
Carsten Lønfeldt (1947) Chairman Director in KCBL management ApS Joined the board in 2007	Shares	Warrants1	Bonds2	ATP Invest III F.M.B.A. (BM), Bolux A/S (BM), Carmo A/S (BM), EMD Invest F.M.B.A. (BM), Fonden Dansk Standard (BM), Global Evolution Invest FMBA (BM), Gypsum Recycling International A/S (BF), Inv. foreningen Investin (BM), Inv. foreningen Nykredit Invest (BNF), Inv. foreningen Nykredit Invest Engros (BM), Investin Pro FMBA (BM), Investin Prof. Forening (BM), Labflex
No.	93,000	52,000	DKK 300,000	A/S (BM), Ll. Colbjørnsensgade 6-10 ApS (BM), NKB Invest 106
Changes 2010 - - +DKK 300,000				ApS (D), Nykredit AIDA II FMBA (BM), Nykredit, MIRA II-VI FMBA (BM), Pirutech ApS (BF), Placeringsforeningen Nykredit Invest (BM), Polaris Invest II ApS (BM), Polaris Management A/S (BM), Pro-Target Invest FMBA (BM), Specialforeningen Nykredit Invest (BM), Placeringsforeningen Investin, Specialforeningen Investin
Peter Nordkild (1955) Consultant Joined the board in 2007				Dansk Biotek (BM), K/S Asschenfeldt, Lange Strasse, Delmen horst (BM), K/S Asschenfeldt, Redcote Lane, Leeds (BM), K/S Asschenfeldt, the Pentagon, Derby (BM), K/S Asschenfeldt, Tyskland Super II (BF), K/S Asschenfeldt, Tyskland Super VIII (BM)
	Shares	Warrants1	Bonds2
No.	200,000	26,000	DKK 300,000
Changes 2010	-	-	+DKK 300,000
Niels Tækker Foged (1961) CSO, Visiopharm A/S Joined the board in 2007				Visiopharm A/S (BM), In Situ RCP A/S (BM)
	Shares	Warrants1	Bonds2
No.	50,000	26,000	DKK 300,000
Changes 2010	-	-	+DKK 300,000
Marianne Weile (1960) Director, Patent & Licensing, Novozymes A/S Joined the board in 2009
	Shares	Warrants1	Bonds2
No.	35,000	0	DKK 300,000
Changes 2010	-	-	+DKK 300,000
Executive management				Directorship in other companies

Thea Olesen (1966)

CEO of BioPorto A/S since 2005

	Shares	Warrants1	Bonds2
No.	235,664	101,675	DKK 300,000
Changes 2010	-	-	+DKK 300,000

Chairman of the board (CB), Member of the board (MB), Managing director (D)

1: Exercise price for warrants DKK 6.15, see note 5

2: Each bond of DKK 150,000 can be converted to 21,520 shares, see note 5

3: Exercise price for warrants DKK 4.18, see note 5

Olesens A/S (BF)

Strategy and future prospects

The group's goal for 2011 and the years ahead is to win a major share of the routine diagnostics market—a market which is lucrative because, once a new diagnostic assay has achieved market acceptance and implementation, the market share is upheld for a long time, providing the basis for a stable, large-scale sales volume. With the launch of The NGAL Test™, this goal has come closer and the path to achieving it has been opened further. In light of the NGAL Test's market potential of 150–200 million assays a year, BioPorto's strategy will naturally be concentrated on moving forward and following up within this specific area.

Follow-up strategy

In the event of major activity in the basic research market and the clinical research market and in the event that new knowledge emerges in the routine diagnostics market, BioPorto will be kept continually informed of the group's existing markers and areas of focus from all three markets. By collecting data from all three markets, BioPorto seeks to develop, validate and market new and better markers in the proper assay formats. The selection will be made taking into account market potential and the option of protecting intellectual property rights or any other competitive advantage.

The group will continue to operate on all three markets, but will concentrate its strategy more on follow-up and development within existing areas of focus in order to ensure the products get access to the routine diagnostics market, where necessary by developing the existing assays for the appropriate assay format while continually seeking to optimize and secure important patent rights, and in order to achieve access to or develop new and improved markers within an existing field of interest where BioPorto has already gained knowledge and expertise.

By virtue of the products and IP rights BioPorto possesses

today, the group expects to follow two routes for obtaining shares of the routine diagnostics market: via sales of its own products and by entering into licensing and collaboration agreements with major diagnostics companies.

Income from sales on the routine-diagnostics market is expected to be generated by direct sales of NGAL IVD products and by licensing agreements concerning partners' sales of either NGAL IVD products in other assay formats or APC-PCI assays. The profits from sales of the group's own assays are estimated to be higher than royalties which could be generated by selling licenses. At the same time, The NGAL Test™ is expected to be capable of gaining the largest share of the combined NGAL market, as the assay is suitable for measuring equipment that already exists and because it will be possible to produce and market it at competitive prices. In addition, it is assumed that the NGAL assay will be marketed in other formats, such as heterogeneous and POC assays, as well a small market for ELISA.

Anticipated split of the market for NGAL tests

Future Prospects

Once BioPorto's immunoassays, including The NGAL Test™, have gained a foothold on the diagnostics market, we expect a financially sustainable business that is independent of licensing income.

The group's aims are:

• » to generate organic growth, including by selling The NGAL Test™, so that the revenue ensures an economically viable business, also without licensing income from intellectual property rights;
• » to follow up and develop products within our existing areas of focus;
• » to lay the groundwork for selling new products, including especially The NGAL Test™;
• » to establish optimal licensing agreements concerning access to the group's patent rights (NGAL, APC-PCI, etc.);

» to expand our activities by purchasing technologies or by means of acquisitions, provided that such expansions are favorable for growth and earnings.

As the group gradually achieves the goals it has set, and sufficient capital is available for the envisioned enlargements, the group expects to strengthen its toehold in individual markets and expand its activities. The primary goal in the years ahead is to have The NGAL Test™ incorporated into routine diagnostics by means of registering and achieving reimbursement for the assay in every major market, by setting up the assay for various automated analyzers and by entering into agreements with major multinational players concerning marketing and distribution of The NGAL Test™. The aim of this is to achieve a larger share of the combined NGAL market and thus ensure very positive developments for BioPorto.

Financial Statements

Income Statement

Net revenues

The group's net revenues increased 25% in 2010 to a total of DKK 13.8 million (DKK 11.0 million). The sale of monoclonal antibodies increased 20% to a total of DKK 7.9 million (DKK 6.6 million). Sales of ELISA kits increased 32% to a total of DKK 5.3 million (DKK 4.0 million).

The group's NGAL products contributed growth of 44% (43%). Thus, in 2010, the total revenues in this area amounted to DKK 3.9 million (DKK 2.7 million) and now represent 28% of total sales. Sales of The NGAL Test™ (the group's new NGAL assay) were not significant in 2010.

(figurer som i den danske, dog ny tekst under (se nedenfor). Figur 2: produkter rettes til products. Figur 3: produkter ændres til products, øvrige ændres til other). Figur 4: Landeændres: Europe, North America, Asia, Other)

Sales of peptide hormone antibodies (PHMABS) amounted to DKK 2.8 million (DKK 2.7 million), equivalent to 3% growth.

Sales increased in every geographic region in 2010. BioPorto increased its sales in the US and Canada by 34%, and the

North American market now accounts for 49% of BioPorto's total sales. Asian markets contributed growth of 26%.

Operating costs

Total operating costs rose 1% to DKK 27.2 million (DKK 27.0 million).

Manufacturing and quality-assurance costs rose 12% as a result of the growth in units sold and preparations for launching The NGAL Test™. Manufacturing and quality costs totaled DKK 5.3 million in 2010 (DKK 4.8 million).

The gross profit in 2010 was DKK 8.5 million (DKK 6.3 million), equating to a 35% increase since 2009. The gross margin rose to 61%, compared to 57% in 2009. Higher capacity utilization and selling prices contributed to the improved gross margin.

Sales and marketing costs amounted to DKK 4.7 million in 2010 (DKK 5.7 million). In 2010, BioPorto introduced electronically accessible product catalogues, etc., which substantially reduced expenditure for printed matter and freight.

R&D costs amounted to DKK 8.9 million in 2010 (DKK 8.6 million). Substantial costs were incurred in 2010 for the final

development of The NGAL Test™ and for developing and defending the group's IP rights.

Administration costs amounted to DKK 8.3 million in 2010 (DKK 8.0 million). In 2010 there were lump-sum costs relating to the offering and subsequent listing of convertible bonds and for concluding the case filed against BioPorto by PHM revision (16 August 2005).

Two new employees were engaged in the quality assurance and process development units in 2010. There were 24 employees in BioPorto at the end of 2010 (2009: 22). No costs were incurred for stock-based remuneration in 2010 (2009: DKK 1.1 million).

Result from primary operations

The result from primary operations improved by 16% to a loss of DKK 13.4 million, compared to a loss of DKK -16.0 million in 2009.

Financial income and expenses

Financial income amounted to DKK 93,000 in 2010 (DKK 124,000).

Financial expenses amounted to DKK 899,000 (DKK 61,000), primarily interest expenditure and amortized transaction costs concerning convertible bonds issued in September 2010.

Interest expenses for the convertible bonds are recognized in the total amount of DKK 0.6 million, equating to an effective rate of interest of 14.9%. The actual interest expense of this amounts to DKK 0.4 million.

Net loss for the year

The net loss for the year in 2010 was DKK -14.2 million (DKK -15.9 million).

Balance Sheet

At the end of 2010, the balance sheet total was DKK 20.9 million (DKK 20.2 million).

In 2010, convertible bonds totaling DKK 13.95 million were offered. The net proceeds, minus the deduction of transaction costs, were DKK 13.2 million. The loans attract interest at a fixed annual rate of 8%. The lender may choose to convert the bond within four weeks from publication of the annual report or in the four weeks leading up to the date of maturity. The charging of interest ceases on the date of conversion or maturity. The conversion may take place at the market price of 6.97 per DKK 3.00 share. The full amount matures on September 20, 2013, at a price of 100.

See Note 16 (Convertible bond loan) and Note 1 (Accounting Policies) for additional information.

Assets

Investments were made in property, plant and equipment in 2010 totaling DKK 0.2 million (< DKK 0.1 million). At the end of 2010, the book value of property, plant and equipment amounted to DKK 0.5 million (DKK 0.7 million).

At the end of 2010, inventories totaled DKK 3.4 million (DKK 3.3 million). Production overhead totaling DKK 0.3 million is recognized in the inventories (DKK 0.3 million).

At the end of the fiscal year, receivables from sales and other receivables amounted to DKK 2.9 million (DKK 1.7 million). BioPorto had no bad debts in 2010.

Equity

The group's equity amounted to DKK 3.3 million at the end of 2010 (DKK 15.4 million).

The equity trend is primarily attributable to the negative operating result. Reserves relating to the convertible bond loan of DKK 2.1 million are entered under equity.

At year end, the capital stock amounted to DKK 126.4 million, dispersed over 42,132,624 stocks. The group owns 13,000 shares of treasury stock, equivalent to 0.03% of the capital stock.

Liabilities

DKK 11.9 million relating to the convertible bond loan is entered under long-term liabilities.

At the end of the fiscal year, short-term liabilities amounted to DKK 5.7 million (DKK 4.8 million). The group's liabilities are primarily composed of supplier debt, provisions for salary and holiday pay obligations, and outstanding debts, including accountants and lawyers. Outstanding interest relating to the convertible bonds has been calculated in the amount of DKK 0.4 million. No lease obligations or bank debt have been assumed by the group.

Cash Flow Statement

The cash flow from the group's operating activities during the fiscal year was DKK -13.4 million (DKK -13.3 million).

The cash flow from the group's investment activities was DKK -0.2 million (DKK -0.1 million).

The cash flow from the group's financing activities was DKK 13.2 million (DKK 14.7 million) from the taking out of the convertible bond loan.

At the end of 2010, the group had cash and cash equivalents (primarily as bank deposits) totaling DKK 13.9 million (DKK 14.3 million).

Capital Resources

The management and board of directors aim to ensure the BioPorto Group's continued development through maintaining adequate capital resources for meeting long-term needs.

On August 26, 2010, the board of directors of BioPorto A/S decided to issue convertible bonds—with a total loan amount of at least DKK 7 million and at most DKK 20 million—by means of a private placement, as stated in announcement no. 09 of August 26, 2010.

Subscriptions to the convertible bonds totaled DKK 13.95 million, and the board decided to issue bonds for the full subscription amount. The transaction costs amounted to DKK 0.8 million, and thus the net proceeds totaled DKK 13.2 million. The convertible bonds were accepted for trading on NASDAQ OMX in December 2010.

At the end of 2010, cash funds, in the form of bank deposits, totaled DKK 13.9 million. The group's total cash flow was DKK -0.4 million in 2010. Cash flow from operations and investments was DKK -13.6 million.

In the assessment of the management, the capital resources are adequate for continuing the planned operation of the group, which includes financing activities to protect the crucial NGAL IP rights and successful market penetration by BioPorto's The NGAL Test™. The group's consolidated financial statements for 2010 are therefore presented on a "going concern" basis.

BioPorto launched The NGAL Test™ in early 2011. The management expects the future financing of the group's operation and liabilities to be safeguarded through increasing operating income, primarily from The NGAL Test™. The factors crucial for market penetration of The NGAL Test™ are described on pages 11-12.

Capital structure

As of December 31, 2010, the group's consolidated equity amounted to DKK 3.3 million, equating to an equity ratio of 15.8%. During the course of 2011, the group's consolidated equity may be reduced further, as a result of a negative contribution from operations. The management expects increasing operating income to contribute to reversing this trend before the end of 2011.

Statement by the Management and Board of Directors

As of today, the management and the board of directors have discussed and approved the annual report for BioPorto A/S for January 1 – December 31, 2010.

The consolidated financial statements are presented in accordance with International Financial Reporting Standards (IFRS) as approved by the EU. The parent company financial statements are presented in accordance with the Danish Financial Statement Act. In addition, the annual report has been prepared in accordance with the additional Danish disclosure requirements for annual reports by listed companies.

In our opinion, the selected accounting policies are appropriate, so that the Annual Report presents a true and fair view of the company's assets, liabilities and financial position as of December 31, 2010, and of the financial result of the group's and parent company's activities and the group's cash flow for the fiscal year from January 1 – December 31, 2010.

In our opinion, the management review presents a true and fair view of developments in the group's and the parent company's activities, economic factors, financial result and financial position, and also describes the most significant risks and elements of uncertainty facing the group and the parent company.

The annual report is hereby submitted to the annual general meeting for approval.

Gentofte, Denmark, March 10, 2011

Executive Management:

___________________________

Thea Olesen CEO

Board of Directors:

Carsten Lønfeldt Peter Nordkild Chairman

___________________________ ___________________________

___________________________ ___________________________

Niels T. Foged Marianne Weile

Report of the Independent Auditor

To the stockholders of BioPorto A/S

Endorsement of the financial statements

We have audited the consolidated financial statements and the annual financial statements for BioPorto A/S for the fiscal year January 1 – December 31, 2010, comprising the comprehensive income statement for the group, the income statement for the parent company, the balance sheet, and the statement of changes in equity and notes, including the accounting policies applied for both the Group and the parent company and the cash flow statement for the Group. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as approved by the EU, and the annual financial statements for the parent company are prepared in compliance with the Danish Financial Statements Act. In addition, the consolidated financial statements and the annual financial statements are prepared in compliance with other Danish disclosure requirements for listed companies.

Management's responsibility for the financial statements

The management is responsible for preparing and presenting the consolidated financial statements and the annual financial statements which give a true and fair view in conformity with the International Financial Reporting Standards as approved by the EU insofar as this concerns the consolidated financial statements and with the Danish Financial Statements Act insofar as this concerns the financial statements of the parent company, as well as with other Danish disclosure requirements for listed companies. This responsibility includes the wording, implementation and maintenance of internal controls relevant to preparing and presenting consolidated financial statements and annual financial statements which give a true and fair view without material misstatement, regardless of whether the misstatement is due to fraud or error, as well as the choice and application of appropriate accounting policies and the exercise of accounting estimates that are reasonable under the circumstances.

Responsibility of the auditor and the audit performed

We are responsible for submitting our opinion of the consolidated financial statements and the annual financial statements on the basis of our audit. We have performed our audit in accordance with Danish and international auditing standards. As demanded by these standards, we live up to ethical requirements, as well as plan and carry out our audit for the purpose of obtaining a high degree of certainty that the consolidated financial statements and the annual financial statements are free of material misstatement.

An audit includes actions performed to obtain audit evidence of the amounts and information specified in the consolidated financial statements and the annual financial statements. The actions chosen depend on the auditor's assessment, including the assessment of risk of material misstatement in the consolidated financial statements and the annual financial statements, regardless of whether the misstatement is due to fraud or error. In making the assessment of risk, the auditor considers the internal controls that are relevant to the Group's preparation and presentation of the consolidated financial statements and the annual financial

statements that provide a true and fair view for the purpose of drawing up audit procedures that are suitable under the circumstances, but not for the purpose of expressing a conclusion regarding the efficiency of the company's internal control. Our audit also includes an assessment and an opinion of whether the accounting policies applied by the management and the board of directors are appropriate, whether the accounting estimates of the management and board of directors are reasonable, as well as an assessment of the overall presentation of the consolidated financial statements and the annual financial statements.

In our view, the audit evidence is sufficient and suitable as a basis for our conclusion.

Our audit has not given cause for qualification.

Opinion

In our opinion, the consolidated financial statements and the annual financial statements present a true and fair view of the Group's assets, liabilities and financial position as of December 31, 2010, and of the financial result of the Group's activities and cash flow for the fiscal year from January 1 – December 31, 2010, in accordance with the International Financial Reporting Standards as approved by the EU and with additional Danish disclosure requirements for listed companies.

It is also our opinion that the annual financial statements present a true and fair view of the parent company's assets, liabilities and financial position as of December 31, 2010, and of the financial result of the parent company's activities for the fiscal year from January 1 – December 31, 2010, in accordance with the Danish Financial Statements Act, Danish accounting standards and other Danish disclosure requirements for listed companies.

Opinion of the Review by the Management and Board

The management is responsible for preparing a Review by the Management and Board which includes a true and fair account in conformity with the Danish Financial Statements Act.

The audit did not include the Review by the Management and Board, but pursuant to the Danish Financial Statements Act, we have read the Review by the Management and Board. We have not taken other measures in addition to the audit performed of the consolidated financial statements and the annual financial statements.

On this basis and in our view, the information in the Review by the Management and Board is in conformity with the consolidated financial statements and the annual financial statements.

Copenhagen, Denmark, March 10, 2011

Deloitte

Statsautoriseret Revisionsaktieselskab

Jens Sejer Pedersen Martin Faarborg

State Authorized Public Accountant State Authorized Public Accountant

Comprehensive Income Statement

The BioPorto Group

January 1 – December 31, 2010

Note		2010 DKK thousand	2009 DKK thousand
3	Net Revenues	13,802	11,008
	Production and distribution costs	(5, 344)	(4,750)
	Gross income/loss	8,458	6,258
4,6	Sales and marketing costs	(4,705)	(5,666)
4,6	Research and development costs	(8,903)	(8,642)
4,6	Administration expenses	(8, 261)	(7,967)
	Earnings before interest (EBIT)	(13, 411)	(16, 017)
8	Financial income	93	124
8	Financial expenses	(889)	(61)
	Earnings before tax	(14, 207)	(15, 954)
15	Income taxes relating to net loss	$\boldsymbol{0}$	0
	Net income/loss for the period / comprehensive income	(14, 207)	(15, 954)
	Earnings per Share (eps)	DKK	DKK
9	Earnings per share (eps/deps)	$-0.34$	$-0.41$

Balance Sheet

The BioPorto Group

December 31, 2010

Note	ASSETS Long-term assets	2010 Dec. 31 DKK thousand	2009 Dec. 31 DKK thousand
	Tangible assets
10	Other plant, operating equipment and fit u es	526	649
	Tangible assets	526	649
	Other long-term assets
	Deposits	238	233
	Other long-term assets, total	238	233
	Long-term assets, total	764	882
	Short-term assets
11	Inventories	3,433	3,296
12	Receivables, sales	1,526	1,166
12	Other receivables	1.325	530
	Receivables	6,284	4,992
	Cash resources	13,926	14,344
	Short-term assets, total	20,210	19,336
	ASSETS, TOTAL	20,974	20,218

Balance Sheet

The BioPorto Group

December 31, 2010

Note	LIABILITIES	2010 Dec. 31 DKK thousand	2009 Dec. 31 DKK thousand
	Equity
13	Capital stock	126,398	126,398
16	Other reserves	2,105	0
5	Share-based payment	1,985	1,985
14	Treasury stock	(44)	(44)
	Retained income/loss	(127, 135)	(112,928)
	Equity, total	3,309	15,411
	Liabilities
	Long-term liabilities
16	Convertible Bond Loans	11,924	0
	Long-term liabilities, total	11,924	0
	Short-term liabilities
16	Short-term segment of long-term liabilities	364	0
	Suppliers of goods and services	1,611	1,516
	Other debt	3,766	3,291
	Short-term liabilities, total	5,741	4,807
	Liabilities, total	17,665	4,807
	LIABILITIES, TOTAL	20,974	20,218

The BioPorto Group

January 1 - December 31, 2010

	Capital stock DKK thousand	Treasury stock DKK thousand	Premium DKK thousand	Other reserves DKK thousand	Share-based payment DKK thousand	Retained income/loss DKK thousand	Total DKK thousand
Equity, January 1, 2010	126.398	(44)	0	$\mathbf 0$	1.985	(127, 135)	15,411
Comprehensive income for the period	0	0	$\mathbf{0}$	0	$\mathbf{0}$	(14, 207)	(14, 207)
Equity component of convertible bond loan	$\Omega$	$\mathbf 0$	$\mathbf{0}$	2.105	$\Omega$	$\mathbf{0}$	2,105
Equity December 31, 2010	126,398	(44)	$\mathbf{0}$	2.105	1,985	(127, 135)	3,309

	Capital stock DKK thousand	Treasury stock DKK thousand	Premium DKK thousand	Other reserves DKK thousand	Share-based payment DKK thousand	Retained income/loss DKK thousand	Total DKK thousand
Equity, January 1, 2009	114,908	(44)	0	0	1,855	(101, 217)	15,502
Comprehensive income for the period	$\Omega$	0	$\mathbf 0$	0	$\mathbf 0$	(15,954)	(15, 954)
Capital increase	11,490	$\mathbf 0$	3.715	$\Omega$	$\mathbf 0$	$\mathbf 0$	15,205
Issue costs	$\mathbf 0$	$\mathbf 0$	(459)	$\mathbf 0$	$\mathbf{0}$	$\mathbf 0$	(459)
Share-based payment	$\Omega$	$\mathbf 0$	$\mathbf 0$	0	1,117	$\mathbf 0$	1,117
Transferred to"retained income"		$\mathbf 0$	(3,256)	0	(987)	4,243	0
Equity December 31, 2009	126,398	(44)	0	0	1,985	(112,928)	15,411

Cash Flow Statement

The BioPorto Group

January 1 – December 31, 2010

Note	2010 DKK thousand	2009 DKK thousand
Earnings before interest (EBIT)	(13, 411)	(16, 017)
Depreciation, amortization, write-downs and impairment	325	345
Share-based payment	$\mathbf 0$	1,117
Cash generated by primary operations before change in working capital	(13,086)	(14, 555)
Change in working capital 19	(136)	1,204
Cash generated by primary operations	(13, 222)	(13, 351)
Interest income, included	93	124
Interest expenses, paid	(250)	(61)
Cash generated by operating activities	(13, 379)	(13, 286)
Purchase of tangible assets	(201)	(14)
Prepayment	(6)	(9)
Cash generated by investment activities	(207)	(23)
Issue of convertible bonds	13,168	0
Cash issue, direct placement	$\Omega$	15,205
lssue cost ………………………………………………………………………………………………	0	(459)
Cash generated by financing activities	13,168	14,746
Cash flow for the period	(418)	1,437
Cash resources at the beginning of the year	14,344	12,907
Cash resources at the end of the period	13,926	14,344

Note Index

• 1. Accounting policies
• 1. Accounting estimates and assessments
• 1. Segment information
• 1. Staff costs
• 1. Incentive schemes
• 1. Depreciation, amortization, write-downs and impairment
• 1. Fee for auditors elected by the general meeting
• 1. Financial income and expenses
• 1. Earnings per share (eps)
• 1. Other plant, operating equipment and fixtures
• 1. Inventories
• 1. Receivables
• 1. Share capital
• 1. Treasury stock
• 1. Deferred tax
• 1. Convertible bonds
• 1. Financial risks and financial instruments
• 1. Operational lease commitments
• 1. Change in working capital
• 1. Contingent liabilities
• 1. Related parties and ownership
• 1. Events occurring after the end of the financial year

Accounting Policies

The annual report for the BioPorto Group is presented in accordance with International Financial Reporting Standards (IFRS) as approved by the EU and in accordance with additional Danish disclosure requirements for the annual reports of listed companies as per the Executive Order on IFRS issued pursuant to the Danish Financial Statements Act.

The annual report for the group also meets the International Financial Reporting Standards (IFRS) issued by IASB.

The annual report is presented in Danish kroner (DKK), which is regarded as the primary currency for the group's activities and the functional currency of the parent company and the subsidiary alike.

The annual report is presented on the basis of historical costs, except for share-based payment, which is measured at fair value.

The accounting policies, which remain unchanged, compared to last year, are otherwise as described below.

Implementation of new and modified standards and interpretations

The following new and modified standards and new interpretations, which apply to fiscal years 2010, are implemented by BioPorto.

IAS 1 (Amendment) - Clarification of a convertible bond whoch can be converted by the holder within 12 months but not redeemed by payment of cash, is long term. This clarification is consistent with past accounting practices.

Other new and revised international accounting standards issued by IASB and approved by the EU which are valid for year 2010, did not affect recognition, measurement or performance in the annual report for 2010.

Standards and interpretations in issue not yet in force IASB has issued a number of new or revised standards and interpretations that are not approved by the EU or not entered into force. The management has assessed the impact of these new and revised standards and interpretations and does not expect the adoption of these standards will have any significant impact on the consolidated financial statements for the coming year.

General principles of recognition and measurement

Earnings are recognized in the income statement concurrent with their realization. In addition, all costs incurred to achieve the income for the year are recognized in the financial statements, including depreciation, amortization, write-downs, impairment and provisions, as well as carry backs resulting from modified accounting estimates of amounts previously recognized in the financial statements.

Assets are recognized on the balance sheet when it is likely that future financial benefits will accrue to the company and the asset's value can be measured reliably.

Liabilities are recognized on the balance sheet when it is likely that future economic benefits will flow from the company and the liability's value can be measured reliably.

Assets and liabilities are measured at the cost on initial recognition. Subsequently assets and liabilities are measured as described below for each item.

For recognition and measurement, predictable gains, loss and risk occurring before the submission of the annual report and which confirm or disprove the situation on the balance sheet date are taken into consideration.

Consolidated financial statements

The consolidated financial statements include the parent company, BioPorto A/S, and the subsidiaries in which BioPorto A/S has a controlling interest, i.e. controlling influence on financial and operating policies for achieving returns or other benefits for its activities. Controlling interest is achieved by directly or indirectly owning or having at one's disposal more than 50% of the voting rights or otherwise controlling the company concerned. Companies in which the group exercises significant but not controlling influence are regarded as affiliated companies. Significant influence is typically achieved by directly or indirectly owning or having at one's disposal more than 20% but less than 50% of the voting rights. The assessment of whether BioPorto A/S has controlling or significant influence considers potential voting rights that could be exercised on the balance sheet date.

The consolidated financial statements integrate the financial statements for the parent company and the individual subsidiaries, which are accounted for in accordance with the group's accounting policies, with the elimination of intercompany income and expenses, intercompany share holdings, intercompany balances and dividends, as well as realized and unrealized earnings for transactions between the consolidated companies. Unrealized earnings from transactions with affiliated companies are eliminated in proportion to the group's ownership interest in the company. Unrealized losses are eliminated according to the same procedure as unrealized earnings to the extent that an impairment has not occurred.

Foreign currency translation

A functional currency is determined for each of the group's reporting companies. The functional currency is the currency used in the primary financial environment in which the specific reporting company operates. Transactions in other currencies than the functional currency are transactions in foreign currency.

Transactions in foreign currency are translated on initial recognition to the functional currency according to the exchange rate prevailing on the date of the transaction. Currency differences arising between the rate on the date of the transaction and the rate on the date of payment are recognized in the income statement under financial income or expenses.

Receivables, debt and other monetary items in foreign currency are translated into the functional currency according to the exchange rate prevailing on the balance sheet date. The difference between the rate on the balance sheet date and the rate on the date on which the receivable or debt arose or was recognized in the most recent annual report is included in the income statement under financial income and expenses.

Incentive programs

The company has granted warrants (share subscription rights) to the board of directors, the management and employees. Share-based incentive programs in which the employees alone have the option of choosing to subscribe to new shares in the parent company (equity-settled sharebased payment arrangements) are measured at the fair value of the equity instruments on the date of granting and are recognized in the income statement when the employees acquire the right to subscribe to the new shares. The set-off for this is recognized directly in the equity as a separate reserve until utilized.

Leases

Payments in conjunction with operating leases are recognized in the income statement over the term of the lease. Segment information

Segmentation reflects the main product groups in the group: monoclonal antibodies and ELISA kits. The product groups are measured primarily on gross margin level as distribution, sales and marketing, research and development, and administration relates to both segments. There is no internal settlement between the segments.

As in 2009, information is included on the break down of net revenues into geographical and therapeutic areas.

There are no long-term assets or investments outside Denmark.

Comprehensive Income Statement

Revenues

Revenues from sales of finished goods are recognized in the income statement if the goods have been delivered and the risk has been passed on to the customer before the end of the year, and if said income can be reliably accounted for and receipt of payment is expected.

Net revenues from development and cooperation contracts are recognized in the income statement if the general criteria for revenue recognition are observed.

This is considered to be the case when:

• » delivery has taken place before the end of the fiscal year;
• » a binding sales agreement exists;
• » the selling price is fixed; and
• » payment has been received or is expected to be received with reasonable certainty.

The revenues are recognized exclusive of VAT and after the deduction of any discount connected to the sale.

Production and distribution costs

Production costs include costs incurred for achieving the year's net revenues, including fixed and indirect overhead for raw materials and consumables, wages and salaries, freight, royalties, rent and leasing as well as depreciation of plant.

Sales and marketing costs

Costs recognized under sales and marketing costs are those incurred for marketing products sold during the year and sales campaigns, etc., that have been carried out. Costs for sales staff, advertising and exhibition costs, as well as depreciation and amortization are included here. Research and development costs

Wages and salaries, laboratory materials, patent expenses, rent, leasing and other costs relating to the company's research and development activities are recognized under research and development costs.

Administration expenses

Costs incurred during the year for the management and administration of the company, including costs for administrative staff, management, office facilities and office costs, depreciation, amortization, etc., are recognized under administration expenses.

Financial income and expenses

Financial income and expenses include interest, capital gains and losses, as well as write-downs and impairment concerning debt, securities and foreign currency transactions, amortization of financial assets and liabilities, as well as charges and refunds under the tax prepayment scheme, etc.

Income taxes relating to the net loss

The tax for the year, consisting of the year's current tax and the change in the deferred tax, is recognized in the income statement by the amount attributable to the net loss and directly to the equity by the amount attributable to entries under equity.

To the extent the group obtains deductions by means of the accounting of the taxable income resulting from sharebased payment, the tax effect of the schemes is recognized under income taxes relating to net income. If the total tax deduction exceeds the total accounting cost, the tax effect of the surplus deduction is recognized directly to the equity, however.

Balance Sheet

Intangible assets

Development projects

In accordance with "IAS 38, Intangible Assets", intangible assets arising from development projects must be recognized on the balance sheet when the development project is clearly defined and identifiable where technical utilization options are demonstrated and adequate resources can be documented for completing the development work and marketing or using the product, and the company's management has acknowledged its intention to manufacture and market or use the product.

Finally, it must be possible to document with adequate certainty that the future earnings from the development project will exceed the costs of production and development as well as for selling and administering the product. Development costs concerning individual projects are only recognized as assets in the event it is adequately certain that the future income of the individual projects will exceed not only the production, selling and administration costs, but also the development costs for the product.

In the opinion of the management and board of directors, a large risk is generally associated with the company's products and for this reason it is not possible to obtain adequate certainty for future earnings at present. The future financial advantages associated with product development cannot be calculated with reasonable certainty until the development activities have been completed. As a result of this, development costs are expensed concurrent to being incurred during the year.

Tangible assets

Other plant, machinery and equipment are measured at the original cost, minus the accumulated depreciation, amortization, write-downs and impairment.

The cost includes the acquisition price as well as expenses directly associated with the acquisition up to the date on which the asset is ready for use.

Depreciation and amortization are carried out on a straightline basis over the expected useful life of the assets, which are assessed as having the following terms of years:

Other plant, operating equipment and fixtures 3–5 years

The basis for depreciation and amortization is the original cost, minus the expected residual value at the end of the useful life. The original cost of a total asset is divided into smaller components that are depreciated/amortized separately if their useful life differs. Depreciation and amortization methods, useful lives and residual values are reassessed each year.

Depreciation and amortization are recognized in the income statement under production costs, research and development costs, selling and marketing costs and administration expenses respectively to the extent the depreciations/amortizations are not included in the original cost for inventory as indirect production overhead (IPO).

Impairment of assets

Intangible assets with an indefinable useful life are reviewed at least once a year for impairment, the first time before the end of the year of acquisition. Ongoing development projects are similarly reviewed for impairment once a year.

The accounting value of intangible assets with an indefinable useful life and development projects in process is reviewed at least once a year for impairment together with the other qualifying assets belonging to the cash-generating unit to which the asset is allocated and written down to the recoverable amount in the income statement, in the event the accounting value is higher. The recoverable amount is usually accounted for as the present value of the anticipated future net cash flow from the enterprise or activity (cash-generating unit) to which the asset is associated.

Deferred tax assets are assessed yearly and recognized only to the extent it can be rendered probable that they will be utilized in the near future.

The book value of other qualifying assets (including investments in subsidiaries) is assessed annually to determine whether there is an indication of impairment. If an indication is present, the asset's recoverable value is calculated. The recoverable value is the highest value of the asset's fair value, minus the expected costs of disposal and the value in use.

An impairment loss is recognized when the book value of an asset or a cash-generating unit respectively exceeds the asset's or the cash-generating unit's recoverable value. Impairment loss is recognized in the income statement under production, selling and distribution costs respectively or administration costs. Write-down relating to goodwill is recognized on a separate line of the income statement, however.

Write-downs relating to other assets is reversed to the extent changes occur in the prerequisites and estimates that led to the impairment. Impairment is only reversed to the extent that the asset's new book value does not exceed the book value the asset would have had after depreciation or amortization if the asset had not been impaired.

Inventories

The cost of inventories is measured according to the FIFO method. If the net realizable value is lower than the cost, the inventory in question is written down to this lower value.

The cost for raw materials and consumables is calculated at cost with the addition of transportation and similar costs.

The cost of finished goods and goods in progress includes the cost of raw materials, consumables, direct wages and indirect production overhead (IPO). Indirect production overhead includes indirect costs such as materials and wages, as well as costs for maintenance of and depreciation/amortization of machinery and equipment used in the production process, as well as costs for production administration and management.

The net realizable value of inventories is calculated as the selling price minus completion costs and costs incurred to effectuate sales and are determined under consideration of marketability, obsolescence and developments relating to the loss expected.

Receivables

Receivables are measured at the amortized cost or a lower net realizable value, which usually equates to the nominal value, minus impairment for meeting a loss.

A provision account is used to reduce the carrying value of receivables from sales, impaired due to risk of loss. Write-downs for bad and doubtful debts are based on an individual assessment of each receivable.

Prepaid expenses

Prepaid expenses recognized under assets include expenses to be incurred in the subsequent fiscal year. Prepaid expenses are measured at cost.

Equity

Treasury stock

Acquisition and disposal costs as well as the dividend for treasury stock are recognized directly in equity. The capital reduction by cancelling treasury stock reduces the share capital by an amount equivalent to the nominal value of the equity investment.

Warrants

Proceeds received from the exercise of warrants are booked directly under equity.

Payable and deferred tax

Current tax liabilities and payable current tax are recognized in the balance sheet as the tax calculated for the year's taxable income, adjusted for the tax on taxable earnings of previous years and for tax paid on account.

Deferred tax is measured according to the balance-sheet liability method by temporary differences between the book value and the tax value of assets and liabilities. However, deferred tax is not recognized for temporary differences concerning tax-related non-deductible goodwill and other entries in which temporary differences – apart from corporate acquisitions – have occurred after the date of acquisition without affecting the financial results or the taxable income. In the cases where the determination of the tax value can be performed according to different taxation rules, deferred tax is measured on the basis of the utilization of the asset or repayment of the debt respectively as planned by the management and board of directors.

Deferred tax assets, including the tax value of tax losses allowed to be carried forward, are recognized under other qualifying assets by the value at which they are expected to be used, either by means of an elimination in tax of future earnings or by offsetting in deferred tax liabilities within the same legal tax unit or jurisdiction (joint taxation).

Deferred tax concerning eliminations of unrealized intercompany profits and losses is adjusted.

Deferred tax is measured on the basis of the tax rules and rates of income tax that will apply when the deferred tax is expected to create a tax liability as a current tax according to the law in force on the balance sheet date. Any change to the deferred tax resulting from changes to rates of taxation is recognized in the income statement. The tax rate used for the current fiscal year is 25%.

Financial liabilities

Convertible bonds

Convertible bonds are considered as compound instruments, consisting of a financial liability measured at amortized cost, and an equity instrument in the form of the embedded conversion option.

At the date of issue, the fair value of the financial liability is determined by using a market rate for similar non-convertible debt. The difference between the proceeds from the issuance of the convertible bond and the fair value of the financial liability, representing the embedded option to convert the obligation to equity, is recognized in equity.

Issue costs are allocated between the liability component and equity component of the convertible debt based on their relative carrying amounts at the date of issue. The part relating to the equity component is recognized directly in equity.

Interest expense on the liability component is calculated using the prevailing market rate for similar non-convertible debt. Any difference between the estimated interest cost and the actual interest paid under the bond's coupon rate is attributed to the carrying value of the liability. The financial liability is subsequently measured at amortized cost.

Other financial liabilities

Debts to banks etc., are recognized at the time of taking out the loan at the fair value of the obligation component, minus the transaction costs incurred. In subsequent periods, the financial liabilities are measured at the amortized cost by applying the effective interest method so the difference between the proceeds and the nominal value is recognized in the income statement under financial expenses during the term of the loan.

Other liabilities are measured at net realizable value.

Advance receipts

Advance receipts recognized under liabilities include payments received for income in subsequent years. Advance receipts are measured at cost.

Cash Flow Statement

The cash flow statement is presented according to the indirect method and shows cash flow broken down by operating, investment and financing activities for the year, the year's change in cash and cash equivalents and the company's cash and cash equivalents at the beginning and end of the year.

The cash flow from operating activities is accounted for as EBIT, adjusted for non-cash operating items, changes in working capital and corporate income tax paid.

Cash generated by investment activity includes the purchase and sale of intangible, tangible and financial assets.

Cash generated by financing activity includes changes to the amount or composition of BioPorto A/S's share capital and costs connected with this, as well as the raising of loans, payments on interest-bearing debt and the payment of dividends to share holders.

Cash and cash equivalents include cash at bank and cash in hand.

Financial Ratios

Earnings per share (eps) and diluted earnings per share (deps) are accounted for in accordance with IAS 33.

The financial ratios stated under the key financial data are calculated as follows:

Revenue growth	Revenue year 1 – revenue year 0 Revenue year 0
Gross margin ratio	Gross income x 100 Net revenues
Operating margin	EBIT x 100 Net revenues
Equity ratio	Equity, closing x 100 Total liabilities, closing
Return on equity	Result for the year x 100 Average equity
Earnings per share (eps)	Result for the year Average number of shares
Cash flow per share	Cash generated by operations Average number of shares

The financial ratios were prepared in accordance with "Anbefalinger & Nøgletal 2010" (Recommendations & Financial Ratios 2010) by the Den Danske Finansanlytikerforening (Danish Association of Financial Analysts).

Accounting Estimates and Assessments

An assessment of how future events will affect the value of certain assets and liabilities on the balance sheet date is required for determining the book value of these assets and liabilities. Assessments significant to the financial reporting are performed by determining development costs, convertible bonds, incentive schemes, inventories, deferred tax, etc.

The assessments used are based on assumptions deemed justifiable by the management and the board of directors, but which are inherently uncertain and unpredictable. The assumptions may be incomplete or inaccurate, and unforeseen events or circumstances may occur. In addition, the company is subject to risks and uncertainties that could cause the actual results to deviate from the estimates. BioPorto's special risks are discussed in the review by the management and the board of directors.

Liquidity

For further details concerning the group's anticipated liquidity trend and capital structure, and thus the basis of the group's continued activities, see the Annual Report's section about the group's capital resources.

The NGAL Test™'s market penetration

The BioPorto Group's long-term financing structure is considerably interrelated with sales of The NGAL Test™. There are several unknown factors in the equation concerning the anticipated market penetration of The NGAL Test™. The assay is new in the market and must undergo registration and reimbursement processes in the various markets; the major diagnostics companies must first include the assay in their portfolio, and the assay must gain widespread acceptance as a renal-injury marker among hospitals and doctors. See also the section concerning market penetration (pp. 11-12).

Convertible bonds

Convertible loans are regarded as a combined financial instrument classified as an equity component and a debt component. Both components are recognized and presented separately. Interest for the debt component (effective rate of interest) is calculated over the term of the bond so that the debt specified on the balance sheet on the maturity date reflects the total debt. The effective rate of interest for the convertible debt included is calculated at 14.87%. The determination of the equity component and the effective rate of interest is based on discretionary assessments. If the assumptions applied are changed, this will influence the recognized interest expenses and the proportion between the equity component and the debt component.

Deferred tax

A significant deferred tax asset has been calculated (see Note 15). In the view of the management and the board of directors, however, the option of using the tax asset in the near future is not sufficiently plausible, based on IFRS. For this reason, the management and board of directors have chosen not to recognize the calculated tax asset on the balance sheet.

Contingent liabilities

See Note 20 of the consolidated financial statements for non-recognized contingent liabilities.

The other notes disclose information about the assumptions and prerequisites for the future and other discretionary uncertainties on the balance sheet date that entail a significant risk of changes which could lead to a significant adjustment of the book value of assets or liabilities within the next fiscal year.

Segment information

2010	ELISA	MABS DKK thousand DKK thousand	Shared DKK thousand	Total DKK thousand
Net revenues	5,293	7,879	630	13,802
Production and distribution costs	(2,345)	(2,611)	(388)	(5,344)
Gross income/loss	2,948	5,268	242	8,458
Sales and marketing costs	0	$\mathbf{0}$	(4,705)	(4,705)
Research and development costs	0	0	(8,903)	(8,903)
Administration expenses	0	0	(8,261)	(8,261)
Earnings before interest (EBIT)	2,948	5,268	(21, 627)	(13, 411)
Purchase of tangible assets	$\Omega$	0	201	201
Investment activities, total	0	0	201	201
2009	ELISA	MABS DKK thousand DKK thousand	Shared DKK thousand	Total DKK thousand
Net revenues	3,998	6,562	448	11,008
Production and distribution costs	(2,011)	(2,351)	(388)	(4,750)
Gross income/loss	1,987	4,211	60	6,259
Sales and marketing costs	0	$\mathbf{0}$	(5,666)	(5,666)
Research and development costs	0	0	(8,642)	(8,642)
Administration expenses	0	0	(7, 967)	(7, 967)
Earnings before interest (EBIT)	1,987	4,211	(22, 215)	(16, 017)
Purchase of tangible assets	$\mathbf 0$	0	(14)	(14)

Segment information, cont.

	2010 DKK thousand	2009 DKK thousand
The geographical dispersion of the net revenues is as follows:
Denmark	314	244
EU Member States	4,439	4,191
North America	6,300	4,685
Asia	1,620	1,288
Other	1,129	600
Net revenues, total	13,802	11,008
Allocation of net revenues:
NGAL products	3,878	2,684
Peptide hormone products	2,793	2,703
MBL products	1,817	1,702
Other products	5,314	3,919
Net revenues, total	13,802	11,008

Major customers

Revenues from the largest customer in BioPorto Diagnostics A/S totals 16% of the total revenue (22% in 2009).

Staff Costs

	2010 DKK thousand	2009 DKK thousand
Wages and salaries	11,486	9,987
Contribution based pensions	1,395	1,523
Other social secutiry costs	157	136
Other staff costs	(158)	675
Share-based payment	0	1,117
Staff costs	12,880	13,438
Average number of employees	23	22
Staff costs are comprised of the following:
Production and distribution costs	1,538	1,744
Sales and marketing costs	3,472	3,979
Administration expenses	4,394	4,241
Research and development costs	3,476	3,474
	12,880	13,438
Payment to the management and board of directors breaks down as follows:
Management
Salaries and pensions	1,320	1,252
Share-based payment	$\boldsymbol{0}$	131
	1,320	1,383
Board of directors
Remuneration	625	594
Share-based payment	0	0
	625	594

Incentive Schemes

For the purpose of motivating and retaining employees, senior staff, management and board, BioPorto A/S established a warrant program in 2008 and 2009, as an incentive and bonus scheme. The scheme, which solely may be exercised by the issuance of new shares (equity scheme) entitles the holder to subscribe to a number of new shares in the parent company at a prearranged price. Warrants may be exercised from 2 up to 5 years after the granting date, though only for a period of 4 weeks after the date of the parent company's preliminary announcement of financial statements for the previous fiscal year.

	2010	Fair value 2010	2009	Fair value 2009
The granting of warrants breaks down as follows:	No.	DKK thousand	No.	DKK thousand
Outstanding warrants, January 1	1,000,750	1,985	1,288,660	1,855
Granted in the period	0	0	483.250	1,117
Lapsed in the period	0	0	(771)	(987)
Outstanding warrants, December 31	1,000,750	1,985	1,000,750	1,985

	Nominal value ea. DKK	subscriptions price ea. DKK	no. of warrants stk.	Nominal value, total DKK thousand
Employees	3.00	4.66	341,460	1,024
Management	3.00	4.66	69,700	209
Board of Directors	3.00	4.66	360,000	1,080
Total, December 31, 2007			771,160	2,313
Employees	3.00	4.18	342,500	1,028
Management	3.00	4.18	45,000	135
Board of Directors	3.00	6.15	130,000	390
Total, December 31, 2008			1,288,660	3,866
Employees	3.00	3.50	426,575	1,280
Management	3.00	3.50	56,675	170
Lapsed	3.00	4.66	(771, 160)	(2,313)
Total, December 31, 2009			1,000,750	3,003
Total, December 31, 2010			1,000,750	3,003

Depreciation, Amortization, Write-downs and Impairment

	2010 DKK thousand DKK thousand	2009
Tangible assets (see note 10)	(325)	(345)
Depreciation, amortization, write-downs and impairment, total	(325)	(345)
Depreciation, amortization, write-downs and impairment are recognized in the income statement as follows:
Production and distribution costs	(144)	(148)
Sales and marketing costs	(18)	(22)
Research and development costs	(144)	(148)
Administration expenses	(19)	(27)
	(325)	(345)

Note 7

Fee for auditors elected by the general meeting

	2010 DKK thousand	2009 DKK thousand
Total fees, Deloitte State authorized partnership of public accountants	324	304
Itemized as follows:
Audit	253	252
Assurance engagements	9	48
Tax consultancy	17	16
Other services and regulation relating to previous years	45	(12)
Total fees for auditors elected by the general meeting	324	304

Financial Income and Expenses

Interest income, financial activities not measures at fair value
Other financial income

Interest costs, financial activities not measures at fair value
Other financial expenses

Earnings per Share (eps)

	2010 DKK thousand	2009 DKK thousand
Net income/loss for the year	(14, 207)	(15, 954)
	no.	no.
Average number of shares	42,132,624	39,257,501
Average number of treasury stocks	$-13,000$	$-13,000$
Average number of shares in circulation	42,119,624	39,244,501
Diluted average number of shares in circulation	42,119,624	39,244,501
	DKK	DKK
Earnings per share (eps/deps)	$-0.34$	$-0.41$
The eps for 2010 is calculated on the basis of the equivalent main figures for eps:
BioPorto A/S' shareholders' share of:

Net income/loss for the year	(14.207)	(15, 954)

Other Plant, Operating Equipment and Fixtures

	2010 DKK thousand	2009 DKK thousand
Cost, January 1	3.849	3,835
Addition during the year	201	14
Disposals during the year	(849)	0
Cost, December 31	3,201	3,849
Depreciation and amortization, January 1	(3, 199)	(2,854)
Depreciation and amortization for the year	(325)	(345)
Reverse decpreciation and amortization of disposals during the year	849	0
Depreciation and amortization, December 31	(2,675)	(3, 199)
Book value, December 31	526	649

Inventories

	2010 DKK thousand	2009 DKK thousand
Finished products	3,092	3,006
Indirect production overhead	341	290
	3,433	3,296
The following adjustmens were made to inventories
Opening inventory	3,297	3,128
Cost of sales, recognized under production costs	(2,072)	(1,934)
Consumption and depreciation of goods for development purposes	(329)	(46)
Write-downs for slowly marketable products	(55)	(36)
Adjustment for indirect production overhead	50	(4)
Addition to inventories	2,542	2,188
Closing inventory	3,433	3,296

Inventory that is expected to be sold after twelve months	.906	2.101
-----------------------------------------------------------	------	-------

Receivables

	2010 DKK thousand	2009 DKK thousand
Receivables from sales and services	1,576	1.216
Other receivables	1,325	530
Write-downs for meeting loss	(50)	(50)
	2,851	1,696

Write-down account for meeting loss	2010 DKK thousand	2009 DKK thousand
Opening balance of write-down account for meeting loss	(50)	(50)
Change during the year	0	0
Closing balance or write-down account for meeting loss	(50)	(50)

A provision account is used to reduce the carrying value of receivables from sales, impaired due to risk of loss. Write-downs for bad and doubtful debts are based on an individual assessment of each receivable.

Share capital

	2010 ea.	2009 ea.
January 1	42.132.624	38.302.624
Capital increase by means of cash issue	0	3,830,000
December 31	42,132,624	42,132,624

The capital increase in the 2009 fiscal year is made up of the following:

	No. of shares	Nominal DKK	Price DKK
Cash issue, private placement	3.830.000	з	3.97

The capital increase in the 2007 fiscal year is made up of the following:

	No. of shares	Nominal DKK	Price DKK
Cash issue, private placement	10,322,225	3	4.84
Conversion of bonds	3,539,708	3	4.10
Capital increase by means of exercising warrants	87,840	3	4.66
	13 040 773

Treasury Stock

Nominal value	2010	2009 DKK thousand DKK thousand
January 1	39	39
December 31	39	39
Number of shares	no.	no.
January 1	13,000	13,000
December 31	13,000	13.000
% of share capital	$\%$	$\%$
January 1	0.03	0.03
December 31	0.03	0.03

BioPorto A/S has not aquired treasury stock in the fiscal yeah or in the base year

Deferred Tax

	2010	2009 DKK thousand DKK thousand
Tax asset value	26,449	22,852
Write-down to assessed value	(26, 449)	(22, 852)
Book value

Deferred tax, December 31, net	26.449	22.852
Tax losses allowed to be carried forward	20,940	17,865
Shortterm assets	260	147
Tangible assets	636	555
Intangible assets	4,613	4.285

Earnings before tax	(14, 207)	(15, 954)
Calculated (25%) tax	(3,551)	(3,988)
Adjustments, non-deductible expenses/income	(46)	277
Changes is tax assets not recognized as income	3,597	3.711
Total ………………………………………………………………………………………………
Tax rate	n nn%	0.00%

Convertible bonds

In 2010, BioPorto raised convertible loans of DKK 13,950 thousand. The loans bear an interest at a fixed annual rate of 8%. Lender may choose to convert the bond within 4 weeks from the publication of the annual reports for 2010, 2011 and 2012 or for 4 weeks prior to the due date. Payment of interest cease on conversion or maturity date. The conversion can be done at a rate of 6.97 per share. The full amount is due on September 20, 2013 at par.

	2010 Dec. 31 DKK thousand	2009 Dec. 31 DKK thousand
Nominal value of issued convertible bonds	13,950	0
Fair value of equity component	(2,230)	0
Fair value of the obligation at the time of issue	11,720	0
Calculated interest expense in the period	568	0
Liability December 31, amortized cost	12,288	0
Breaks down as follows:
Convertible loans, long-term	11,720	$\mathbf 0$
Calculated interest expenses, long-term part	204	$\Omega$
Calculated interest expenses, short-term part	364	0
Liability December 31, amortized cost	12,288	0
Convertible bonds, equity share
Convertible bonds, fair value of equity component	2,230	$\Omega$
Transaction costs	(125)	0
Book value	2,105	0

Convertible loans are considered as a compound financial instrument classified as an equity component and a liability component. It includes an interest rate (effective rate) to the liability component of the bond so that the obligation in the balance at maturity reflects the total commitment. The effective rate for the convertible debt is calculated to 14.87%.

The fair value of the convertible bonds amounted to DKK 12,099 as of December 31, 2010. Fair value is calculated at the present value of future installments and interest payments using the assessed market rate of 15.5% as the discount rate. The used market rate is equivalent to 14.87% adjusted for changes in the risk-free rate (10 year government bond) in the period since issuance.

Convertible bonds, continued

Transaction costs	2010 Dec. 31	2009 Dec. 31 DKK thousand DKK thousand
Equity share	125
Loan component, amortized over the loan period	657
Transaction costs, total	782
Transaction costs expensed in the period	71

Financial Instruments and Financial Risks

For receivables due for payment within one year after the end of the fiscal year, the nomibal value is deemed equivalent to

the fair value.

Cash resources			Dec 31 2010	Dec 31 2009
	Currency	Yield	DKK thousand DKK thousand
Deposits with variable interest	DKK	$0.3\%$	13.926	14,344
Sensitivity at the time of variable interest fluctuation		1.0%	139	143

Note 17, continued

Financial Instruments and Financial Risks

Financial liabilities

Convertible bonds are explained separately in note 16

Commitments under sales and other creditors are due within 1 year after the year end. For these liabilities the nominal value is considered equivalent to fair value.

Financial risks

See the general sections of the Annual Report regarding the Group's risk management policy and objectives as well as the section regarding the Group's capital resources and management

Currency risk

As the Group exports its products to a number of different markets, it is vulnerable to changes in currency exchange rates. All foreign customers are invoiced in EUR, which reduces the direct risk. Indirectly, the fluctuations can influence BioPorto's competitiveness which is not recognized in the sensitivity analysis. Otherwise, the Group does not hedge exposure til currency fluctuations.

	Currency	Exchange rate	2010 DKK thousand	2009 DKK thousand
Revenue settled in	EUR	7.45	13.336	10,316
Sensitivity to change in currency	0.15%	0.01	149	115

Interest rate exposure

The Group's cash resources earn interest at a variable interest rate on market terms. The Group's risk is limited, according to the statement in this note under financial instruments.

The convertible bond loan totaling DKK 13.95 million carries a fixed rate of 8% until the due date.

Credit risk

At present, the Group's credit risk is primarily related to the subsidiary's receivables. The customers' financial situation and ability to pay are known by the Group and the credit risk entailed by each receivable is assessed as modest. Prepayment of deliveries may be necessary for new customers. Otherwise, the Group does not hedge the credit risk in any other way.

Note 17, continued

Financial Instruments and Financial Risks

Maturities of financial liabilities are specified below by the temporal intervals used in the Group's cash management. The specified amount represents the amount due and payable including interest, etc.

	Within	Between	After	Total
2010	1 year	2 and 5 years DKK thousand DKK thousand DKK thousand DKK thousand	5 years
Convertible bonds	$\mathbf 0$	13,950	$\Omega$	13,950
Interest on convertible bonds	1,168	2,232	0	3,400
Sales and other creditors	3,681	0	0	3,681
Financial liabilities	4,849	16,182	0	21,031
2009
Convertible bonds	$\Omega$	0	$\Omega$	0
Interest on convertible bonds	$\mathbf 0$	0	$\Omega$	0
Sales and other creditors	3,333	0	$\mathbf 0$	3,333
Finansielle forpligtelser	3,333	$\mathbf{0}$	0	3,333

See also the section about the Group's capital resources.

Operational Lease Commitments

A lease has been concluded for the lease of office, laboratory and production facilities. BioPorto has a notice period of 6 months. The lease is non-terminable by the lessor until 2010, with fixed lease payments, which are annually index linked.

	2010 DKK thousand DKK thousand	2009
Less than 1 year	484	472

	2010 DKK thousand DKK thousand	2009
Less than 1 year	591	563
1-5 years	1.925	2,060
Over 5 years	982	.438

Other research and licensing agreements: A fixed annual minimun royalty included in the obligation. The agreement is non-terminable within the period mentioned and includes a renewal option.

	2010 DKK thousand DKK thousand	2009
Less than 1 year
1-5 years	60

	2010 DKK thousand DKK thousand	2009
Minimum lease payment recognized in the net income/loss	1,527	1.477

Change in Working Capital

	2010	2009 DKK thousand DKK thousand
Change in inventories	(137)	(168)
Change in receivables	(568)	220
Change in supplier debt	95	189
Change in other debt	474	963
	(136)	1.203

Note 20

Contingent Liabilities

Bioporto has chosen to take legal action against the company Phadia for revocation of the company's European NGAL patent, initially in Denmark. Phadia has countered this by claiming that BioPorto violates Phadia's patent rights and has demanded that BioPorto's NGAL kits be withdrawn from the market and that compensation be paid for units already sold.

The Phadia case and the expectations of the management are described in the management review under Intellectual property rights.

The management does not expect the patent case to lead to financial or other liabilities for the Group.

Related Parties and Ownership

Carsten Lønfeldt	Boards of directors, Chairman
Peter Nordkild	Board of directors
Niels Foged	Board of directors
Marianne Weile	Board of directors
Thea Olesen	Management
Lars Otto Uttenthal	Board of directors, BioPorto Diagnostics A/S

	ZUIU	zuuy
	DKK thousand DKK thousand
Scientific rainagement: Lars $\Phi$ to U tent hal	$94 -$	942

Note 22

Events occurring after the end of the financial year

Market-leading diagnostic player Instrumentation Laboratory has bought a license to BioPorto's NGAL patents. The parties have entered into a non-exclusive agreement in which the broad economic terms include down payments totaling 2 million Euro divided into milestone payments plus a royalty rate of 5.5%. First payment is a signing fee of 250,000 Euro. The agreement allows Instrumentation Laboratory to develop and market NGAL tests in all non-homogeneous test formats.

Income Statement

BioPorto A/S

January 1 – December 31, 2010

Note		2010 DKK thousand	2009 DKK thousand
3	Net revenues	1,775	1,680
	Gross income/loss	1,775	1,680
$4 - 5$	Administration ecpenses	(6,001)	(5, 116)
	Earnings before interest (EBIT)	(4,226)	(3,436)
6	Financial income	5,472	4,599
6	Financial expenses	(634)	(5)
	Earnings before tax	612	1,158
10	Income taxes relating to net loss	$\mathbf 0$	$\mathbf 0$
	Net income/loss for the year	612	1,158
	Recommended appropiation of proft:
	Carried forward to the coming year	612	1,158
		612	1,158

Balance Sheet

BioPorto A/S

December 31, 2010

Note	ASSETS	2010 Dec. 31 DKK thousand	2009 Dec. 31 DKK thousand
	Long-term assets
	Tangible assets
$\overline{7}$	Other plant, operating equipment and fixtures	$\mathbf 0$	$\mathbf{1}$
	Tangible assets, total	$\bf{0}$	1
	Financial assets
9	Receivables, subsidiary	99,669	84,754
8	Investment in subsidiary	48,000	48,000
	Deposits	237	231
	Financial assets, total	147,906	132,985
	Long-term assets, total	147,906	132,986
	Current assets
9	Other receivables	780	22
	Receivables	780	$22 \,$
	Cash resources	13,013	13,843
	Current assets, total	13,793	13,865
	ASSETS, TOTAL	161,699	146,851

Balance Sheet

BioPorto A/S

December 31, 2010

Note	LIABILITIES	2010 Dec. 31	2009 Dec. 31
			DKK thousand DKK thousand
	Equity
	Capital stock	126,398	126,398
	Retained income	19,803	19,191
	Equity, total	146,201	145,589
	Liabilities
	Long-term liabilities
12	Convertible bond loans	13,950	0
	Long-term liabilities, total	13,950	$\mathbf 0$
	Short-term liabilities
12	Convertible bonds	364	$\Omega$
	Supplier of goods and services	294	378
	Other debt	890	884
	Short-term liabilities, total	1,548	1,262
	Liabilities, total	15,498	1,262
	LIABILITIES, TOTAL	161,699	146,851

Statement of Changes in Equity

BioPorto A/S

			Retained
	Capital stock	Premium	income/loss	Total
	DKK thousand	DKK thousand	DKK thousand	DKK thousand
Equity, January 1, 2010	126,398	0	19,191	145,598
Net income/loss for the year	0	0	612	612
Egenkapitalbevægelser 2010 i alt	$\mathbf{0}$	$\mathbf{0}$	612	612
Equity December 31, 2010	126,398	$\mathbf{0}$	19,803	146,201

			Retained
	Capital stock	Premium	income/loss	Total
	DKK thousand	DKK thousand	DKK thousand	DKK thousand
Equity, January 1, 2009	114,908	$\mathbf 0$	14,776	129,684
Net income/loss for the year	$\Omega$	$\mathbf 0$	1,158	1,158
Capital increase	11,490	3,716	$\mathbf 0$	15,206
Issue costs	$\mathbf 0$	(459)	$\mathbf 0$	(459)
Transferred to "retained income"	$\mathbf 0$	(3,257)	3,257	$\Omega$
Change in equity 2009, total	11,490	$\bf{0}$	4,415	15,905
Equity December 31, 2009	126,398	$\bf{0}$	19,191	145,589

Note Index

• 1. Accounting policies
• 1. Accounting estimates and assessments
• 1. Net revenues
• 1. Staff costs
• 1. Depreciation, amortization, write-downs and impairment
• 1. Financial income and expenses
• 1. Other plant, operating equipment and fixtures
• 1. Investment in subsidiaries
• 1. Receivables
• 1. Deferred tax
• 1. Operational lease commitments
• 1. Convertible bonds
• 1. Fee for auditors elected by the general meeting
• 1. Other notes

Accounting Policies

The Annual Report for the parent company, BioPorto A/S, was prepared in accordance with the provisions of the Danish Financial Statements Act for large companies in reporting class D.

The Annual Report is presented in Danish kroner (DKK), which is the functional currency of the company.

The accounting policies of the parent company are unchanged compared to last year.

Differences from the group's accounting policies

The company's accounting policies for recognition and measurement are in accordance with the consolidated accounting policies, with the following exceptions:

Income statement

The result of investments in subsidiaries

Dividend from subsidiaries is recognized in the parent company's income statement when the stockholders' right to receive dividend has been approved, after deduction of any write-downs on the investments.

Share-based remuneration

The value of share-based remuneration is not recognized in the income statement. The board and management's share-based remuneration is accounted for in the notes to the financial statements.

Balance sheet

Investment in subsidiaries

Investment in subsidiaries is measured at cost in the parent company's financial statements. If the cost exceeds the investment's recoverable amount, the investment is written down to this lower value.

The cost is also written down to the extent that the distributed profit exceeds the accumulated earnings after the date of acquisition.

Convertible bonds

Convertible bonds are treated solely as a debt instrument.

Cash flow statement

Pursuant to Section 86(4) of the Danish Financial Statements Act, no cash flow statement has been prepared, as this is included in the cash flow statement for the group.

Tax

The parent company is taxed jointly with the company's domestic (Danish) subsidiaries. The jointly taxed Danish companies are included in the Danish Tax Prepayment Scheme. The actual tax for the year for jointly taxed companies is recognized in the individual companies.

Accounting Estimates and Assessments

By determining the carrying value of certain assets and liabilities, an estimate of how future events will affect the value of these assets and liabilities at the balance sheet date is required. Estimates that are material to the financial statements are made, including in determining the value of employment equity in the subsidiary claims of the subsidiary and deferred tax.

The estimates are based on assumptions that management considers reasonable, but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate and unanticipated events or circumstances may occur. Furthermore, the company is subject to risks and uncertainties that could cause actual results to differ from estimates.

See note 2 under consolidated financial statements of accounting estimates and judgments that are shared with the group.

Investment and receivables BioPorto Diagnostics A/S

The management and board of directors have assessed the investment in the subsidiary BioPorto Diagnostics A/S and the parent company's receivable in the subsidiary with a view to possible impairment of the assets recognized. The two items comprise the following:

Investment, December 31, 2010 DKK 48,000 thousand Receivables, December 31, 2010 DKK 99,669 thousand

The management and board of directors have assessed the following areas of the subsidiary:

Products and product development

BioPorto Diagnostics' sales of own products grew by 25% in 2010.

In November 2010, BioPorto Diagnostics pre-launched The NGAL Test™ for research use, and the test was further tested at selected hospitals in Europe, USA and Southeast Asia. In January 2011 the NGAL test was CE-marked, which has allowed the sale of test on the entire European market.

Financing

The company has a financial reserve of DKK 13,926 thousand as of December 31. See the part about capital resources for further detail.

Market value

The share holders' assessment of the group represents a market-related measurement for the group's combined activities and assets. As the majority of the group's activities and IP rights are placed in the subsidiary, the measurement (reduced for cash at bank and in hand) is also an approximate value for BioPorto Diagnostics A/S.

The conclusions are as follows:

• » The outlook for earnings potential of existing products is positive. Sales are increasing and potential revenues from The NGAL Test make it possible to achieve a positive cash flow in 2011.
• » The Company's pipeline of new products is promising. The company continuously designs new products and has in addition obtained a number of intellectual property rights which will contribute significantly to the Company's future development.
• » Financial reserves are deemed sufficient to implement the Company's activities in accordance with the planned strategy, including ensuring a solid basis for negotiations about the use of Company's IP rights.
• » At the end of 2010, BioPorto A/S' market value was approx. DKK 331 million. Minus cash resources this results in a derived "market value" of approx. USD 317 million.

On the basis of this, the management and board of directors assess that there is no incentive for writing down the parent company's investment in BioPorto Diagnostics A/S or the parent company's receivable in the same company.

Net Revenues

	2010 DKK thousand DKK thousand	2009
The geographical dispersion of the net revenues is as follows:
Denmark	1.775	1,680
Net revenues, total	1,775	1,680
The net revenues break down as follows:
Sale of servies	1,775	1,680
	1.775	1,680

Staff Costs

	2010 DKK thousand	2009 DKK thousand
Wages and salaries	3,811	2,962
Defined contribution, pensions	387	606
Other social secutiry costs	30	27
Other staff costs	(16)	211
Staff costs	4,212	3,806
Average number of employees	5
Staff costs are recognized as:
Administration expenses	4,212	3,806

Note 5

Depreciation, Amortization, Write-downs and Impairment

	2010 DKK thousand	2009 DKK thousand
Tangible assets (see note 8)
Depreciation, amortization, write-downs and impairment, total
Depreciation, amortization, write-downs and impairment are recognized in the income statement as follows:
Administration expenses		(4)
		(4)

Financial Income and Expenses

	2010	2009 DKK thousand DKK thousand
Interest income, subsidiaries	5,389	4,486
Interest income from bank	34	113
Other francial income	49
Financial income, total	5,472	4.599

	2009 DKK thousand DKK thousand	2009
Interest expenses, convertible bonds	(364)
other francial expenses	(270)	(5)
Financial expenses, total	(634)

Other Plant, Operating Equipment and Fixtures

	2010 DKK thousand DKK thousand	2009
Cost, January 1	174	174
Addition during the year	0
Cost, December 31	174	174
Depreciation and amortization, january 1	(173)	(169)
Depreciation and amortization for the year	(1)	(4)
Depreciation and amortization, December 31	(174)	(173)
Book value, December 31	0

Investment in Subsidiaries

		2010	2009 DKK thousand DKK thousand
Cost, January 1		48,000	48,000
Cost, December 31		48,000	48,000
Book value, December 31		48,000	48,000
		Ownership	Ownership
Name	Registered office	and voting interest 2010	and voting interest 2009
BioPorto Diagnostics A/S	Gentofte, Copenhagen	100%	100%
BioPorto Diagnostics A/S works with the development, production and sale of antibodies and diagnostic kits for analysis purposes			0.000

Recent accounts for BioPorto Diagnostics A/S	2009 DKK thousand
Equity ………………………………………………………………………………………………	(82, 179)
Net loss	(15.994)

Receivables

	2010	2009 DKK thousand DKK thousand
Intercompany receivables	99,669	84,754
Other receivables and prepayments	780	22
	100,449	84,776

	2010 DKK thousand DKK thousand	2009
Intercompany receivables	99.669	84.754

Deferred Tax

	2010 DKK thousand DKK thousand	2009
Tax asset value	1,012	1.167
Write-down to assessed value	(1,012)	(1, 167)
Book value

Tangible assets	59	59
Tax losses allowed to be carried forward	953	1.108
Deferred tax, December 31, net	1.012	1.167

Operational Lease Commitments

A lease has been concluded for the lease of office, laboratory and production facilities. BioPorto has a notice period of 6 months. The lease is non-terminable by the lessor until 2010, with fixed lease payments, which are annually index linked.

	2010	2009 DKK thousand DKK thousand
Less than 1 year	484	472
	2010	2009 DKK thousand DKK thousand
Minimum lease payment recognized in the net income/loss	949	926

Convertible bonds

	2010 Dec. 30	2009 Dec. 31 DKK thousand DKK thousand
Convertible loan, long-term part of debt	13,950	$\Omega$
Convertible loan, interest due	364	$\mathbf{0}$
Book value	14,314	$\Omega$
Interest, convertible loans in 2010	364	0
Transaction costs
Transaction costs at the issue, amortized	782	$\mathbf{0}$
Transaction costs expensed in the period	81	0
Refer to the consolidated ccounts note 16 for further details.

Note 13

Fee for auditors elected by the general meeting

	2010	2009 DKK thousand DKK thousand
Total fees, Deloitte State authorized partnership of public accountants	220	220
Itemized as follows:
Audit	176	176
Assurance engagements	9	48
Tax consultancy	8	8
Other services and regulation relating to previous years	27	(12)
Total fees, auditors elected by the general meeting	220	220

Other Notes

Refer to note 13-14 of the BioPorto consolidated accounts for share capital and treasury stock.

Refer to note 21-22 of the BioPorto consolidated accounts for further details concerning related parties, as well as the management's and the board of directors' managerial posts.

APC-PCI	The complex between activated protein C and the protein C inhibitor. Analyzing this complex in plasma will contrib ute to the diagnosis of thrombosis and related diseases and the complex also has other utilization possibilities for which BioPorto has patent applications pending.
Biomarker/ diagnostic marker	Theoretically, any analyzable phenomenon that can be used for indicating a biological condition (e.g. pulse, body temperature). Most often used for a molecule whose level in a patient sample (blood, tissue) indicates the existence of a disease and possibly its seriousness.
Central laboratory	Many hospitals have a central laboratory which handles a wide range of analyses and typically many at a time – by contrast with the relatively few analyses that can be carried out in the individual wards. A central laboratory usually has a number of large automated machines for handling the analyses.
Diagnostics	Diagnostics is the process whereby a disease and possibly its cause are identified. Fast, accurate diagnostics are decisive for the subsequent treatment (therapy). Certain diagnostic tests can be used for monitoring the patient's response to treatment and possible needs for changing the treatment.
ELISA kit	"Enzyme-linked immunosorbent assay" kit, a laboratory assay format that can determine the content of a biomarker in body fluids such as blood or urine samples.
FDA approval	The "Food and Drug Administration", is the US authority that authorizes the use of medicines, including diagnostic products.
GLP-1	"Glucagon-like peptide-1", is a peptide hormone secreted from the intestines during eating. GLP-1 stimulates the secretion of insulin and is relevant for the treatment of type-2 diabetes and other diseases.
Homogeneous/ heterogeneous tests	Homogeneous analysis is performed in a single phase (liquid), whereas heterogeneous assays use both a liquid and a solid phase. Homogeneous analysis is simpler and can be performed on automated equipment from different manufacturers. Heterogenous analysis typically requires a wash step and have different designs in the various automated equipment supplied by various manufacturers why a particular heterogeneous analysis typically cannot be transferred to another manufacturer's equipment.
IVD	"In vitro diagnostic(s)", a diagnostic procedure that takes place outside the body, e.g. by analyzing blood and urine samples in a laboratory, as opposed to "in vivo diagnostics", which are performed on the patient, such as a prick test in the skin or an X-ray.
Clinical acceptance	Recognition by the medical profession and the implementation of (a test) in the health system, eg the inclusion of a new diagnostic test.
MBL	"Mannan-binding lectin", a blood protein that binds to foreign organisms and contributes to congenital (innate) immune response.
Monoclonal	Derived from a single "clone", in this case a single cell line. A monoclonal antibody thus consists of antibody molecules which are all identical, whereas a polyclonal antibody consists of many different antibody molecules produced by many different cell lines in the body.
NGAL	"Neutrophil gelatinase-associated lipocalin", a biomarker that can indicate renal injury already at an early stage.
OEM	"Original equipment manufacturer", used in the opposite sense of the word for distributors, for instance, who market products of other companies under their own name.
PCT application/ treatment	"Patent Cooperation Treaty" deals with international patent cooperation that makes it possible to apply for patents in a large number of countries in one application.
Preclinical / clinical phase	Different stages of developing a new drug. The preclinical phase includes development and testing in laboratory animals and precedes the clinical phases I-IV, where the drug is tested in humans.
Routine diagnostics	Diagnostic analyses that are performed on a routine basis at the time of hospitalization.
Sandwich antibody pair	A pair of antibodies targeting the same biomarker which can be used in the sensitive and specific "sandwich" ELISA method whereby the biomarker is identified by two different antibodies.
Specificity	The degree to which an antibody molecule, for example, binds only to a unique structure on another molecule and not to other structures or molecules, or the degree to which a diagnostic procedure only diagnoses a given pathological condition and does not give a positive result in other conditions, including the normal state.
Therapy/Therapeutic products	Treatment of diseases and the products used for this, typically medicines.
Toxicology	Study of the toxicity of substances and the way in which they are capable of causing harmful effects in the body. Toxicological studies are an indispensable part of developing registerable medicines.
Turbidimetry	A homogeneous analysis method by which a fluid sample from the patient mixed with a reagent fluid containing substances, often antibodies, that react with the biomarker in the sample to form a haze in the liquid (turbidity), which can be measured through radiation of light.

BioPorto develops and markets antibodies and antibody-based products, including tests to diagnose human disease, both for the benefit of individual patients and to promote efficiency in the health sector.

The Company's developments include a test (NGAL) to diagnose and monitor acute kidney damage.

www.bioporto.com

BioPorto A/S Grusbakken 8 DK-2820 Gentofte Denmark

Phone (+45) 4529 0000 Fax (+45) 4529 0001 E-mail info@bioporto.com Web www.bioporto.com

cvr. nr. 17500317