Annual Report • Apr 29, 2022
Annual Report
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FINANCIAL REPORT 2021
| 1. | GENERAL INFORMATION 6 | |
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| 1.1 LANGUAGE OF THIS ANNUAL REPORT 6 | ||
| 1.2 STATUTORY AUDITOR 6 | ||
| 1.3 FORWARD-LOOKING STATEMENTS 6 | ||
| 1.4 MARKET AND INDUSTRY INFORMATION 6 | ||
| 1.5 OTHER AVAILABLE INFORMATION 6 | ||
| 1.6 AVAILABILITY OF THE ANNUAL REPORT 7 | ||
| 2. | ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE CONSOLIDATED FINANCIAL STATEMENTS OF BONE THERAPEUTICS SA FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2021 8 |
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| 2.1. LETTER TO SHAREHOLDERS 8 |
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| 2.2. BUSINESS OVERVIEW 9 |
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| 2.3. OPERATIONAL AND CORPORATE AND FINANCIAL HIGHLIGHTS OF 2021 14 |
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| 2.4. FINANCIAL REVIEW OF THE YEAR ENDING 31 DECEMBER 2021 16 |
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| 2.5. HEADCOUNT EVOLUTION 22 |
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| 2.6. RISKS22 |
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| 2.7. GOING CONCERN23 |
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| 2.8. EVENTS OCCURRED AFTER THE END OF THE FINANCIAL YEAR 25 |
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| 2.9. OUTLOOK FOR THE REMAINDER OF 202225 |
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| 3. | ||
| ORGANIZATIONAL STRUCTURE27 | ||
| 4. | CORPORATE GOVERNANCE 28 | |
| 4.1. GENERAL 28 |
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| 4.2. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE 28 |
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| 4.3. BOARD OF DIRECTORS 30 |
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| 4.3.1. Composition of the Board of Directors 30 |
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| 4.3.2. Activity Report33 |
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| 4.3.3. Performance Evaluation of the Board33 |
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| 4.3.4. Committees within the Board of Directors 34 |
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| 4.4. EXECUTIVE COMMITTEE38 |
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| General 38 4.4.1. |
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| Executive Committee38 4.4.2. |
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| 4.4.3. Operation41 |
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| 4.5. INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS42 |
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| 4.5.1. Internal Mechanism 42 |
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| Risk Analysis42 4.5.2. |
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| 4.5.3. Financial Risk Management46 |
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| 4.5.4. Controls, Supervision and Correctives Actions47 |
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| 4.6. MARKET ABUSE REGULATIONS 47 |
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| 4.7. REMUNERATION REPORT 48 |
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| Procedure 48 4.7.1. |
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| 4.7.2. Remuneration report 48 |
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| 5. | RELATED PARTY TRANSACTIONS59 | |
| 5.1. GENERAL 59 5.2. |
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| CONFLICTS OF INTEREST OF DIRECTORS59 5.3. EXISTING CONFLICTS OF INTEREST OF MEMBERS OF THE BOARD OF DIRECTORS AND OF THE EXECUTIVE |
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| COMMITTEE AND RELATED PARTY TRANSACTIONS 59 | ||
| 5.4. RELATED PARTY TRANSACTIONS 59 |
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| 5.4.1. | Transactions with SCTS59 | ||
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| 5.4.2. | Transactions with Bone Therapeutics USA Inc60 | ||
| 5.4.3. | Transactions with the Walloon Region60 | ||
| 5.4.4. | Transactions with the Executive Committee60 | ||
| 5.5. | TRANSACTIONS WITH AFFILIATES60 | ||
| 6. | SHARES AND SHAREHOLDERS 61 | ||
| 6.1. | HISTORY OF CAPITAL—CAPITAL INCREASE AND ISSUANCE OF SHARES61 | ||
| 6.1.1. | Securities Issued by the Company 61 | ||
| 6.1.2. | History of Capital since IPO 61 | ||
| 6.2. | AUTHORIZED CAPITAL64 | ||
| 6.3. | CHANGES IN CAPITAL66 | ||
| 6.3.1. | Changes to the Share Capital by the Shareholders of the Company 66 | ||
| 6.3.2. | Capital Increases by the Board of Directors of the Company66 | ||
| 6.4. | WARRANT PLANS66 | ||
| 6.4.1. | Warrant Plans Issued 66 | ||
| 6.4.2. | Summary of the Outstanding Warrant Plans 67 | ||
| 6.5. | ELEMENTS WHICH BY THEIR NATURE WOULD HAVE CONSEQUENCES IN CASE OF A PUBLIC TAKE-OVER BID ON THE | ||
| COMPANY 68 | |||
| 6.6. | TRANSPARENCY 69 | ||
| 6.7. | SHAREHOLDERS 69 | ||
| 6.8. | DIVIDENDS AND DIVIDEND POLICY70 | ||
| 6.8.1. | Entitlement to Dividends 70 | ||
| 6.8.2. | Dividend Policy70 | ||
| 7. | CONSOLIDATED FINANCIAL STATEMENTS71 | ||
| 7.1. | RESPONSIBILITY STATEMENT 71 | ||
| 7.2. | STATUTORY AUDITOR'S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 | ||
| DECEMBER 2021 72 | |||
| 7.3. | CONSOLIDATED FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021 AND 2020 UNDER IFRS79 | ||
| 7.3.1. | Consolidated Statement of Financial Position79 | ||
| 7.3.2. | Consolidated Statement of Comprehensive Income 80 | ||
| 7.3.3. | Consolidated Statement of Cash Flow81 | ||
| 7.3.4. | Consolidated Statement of Changes in Equity82 | ||
| 8. | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS83 | ||
| 8.1. | GENERAL INFORMATION 83 | ||
| 8.2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 83 | ||
| 8.3. | CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS 94 | ||
| 8.4. | OPERATING SEGMENT INFORMATION 96 | ||
| 8.5. | NOTES RELATING TO THE STATEMENT OF FINANCIAL POSITION 97 | ||
| 8.6. | NOTES RELATING TO THE STATEMENT OF COMPREHENSIVE INCOME 109 | ||
| 8.7. | FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT 117 | ||
| 8.8. | RELATED-PARTY TRANSACTIONS 121 | ||
| 8.9. | COMMITMENTS 121 | ||
| 8.10. | FEES PAID TO AUDITORS FOR AUDIT AND OTHER ACTIVITIES 122 | ||
| 8.11. | EVENTS AFTER THE REPORTING PERIOD122 | ||
| 9. | STATUTORY ACCOUNTS123 | ||
| 9.1. | CONDENSED STATUTORY ANNUAL ACCOUNTS123 |
Bone Therapeutics publishes its Annual Report in French in accordance with the Belgian Code of Companies and Associations. The Company has also prepared an English version of this Annual Report and is responsible for the consistency between the French and English version of this Annual Report. In case of difference in interpretation, the French version shall prevail.
Deloitte Réviseurs d'Entreprises SRL, a civil company having the form of a company with limited liability organized and existing under the laws of Belgium, with registered office at Gateway building, Luchthaven Nationaal 1, boite J, 1930 Zaventem, Belgium, represented by Mr. Pieter-Jan Van Durme (member of the Belgian Institut des Réviseurs d'Entreprises/Instituut voor Bedrijfsrevisoren) is appointed statutory auditor of the Company, for a term of three years ending immediately following the adjournment of the annual general shareholders' meeting of the Company to be held in 2022, resolving upon the financial statements for the fiscal year ended on 31 December 2021.
Certain statements in this Annual Report are not historical facts and are forward-looking statements. Forwardlooking statements include statements concerning the Company's plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditure, research and development, financing needs, plans or intentions relating to partnership or acquisitions, competitive strengths and weaknesses, business strategy and the trends which the Company anticipates in the industries and the political, economic, financial, social and legal environment in which it operates and other information that is not historical information.
Words such as "believe", "anticipate", "estimate", "expect", "intend", "predict", "project", "could", "may", "will", "plan" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. These risks, uncertainties and other factors include, amongst other things, those listed in the Section "Risk Factors".
Information relating to markets and other industry data pertaining to the Company's business included in this Annual Report has been obtained from internal surveys, scientific publications, section association studies and government statistics. The Company accepts responsibility for having correctly reproduced information obtained from publications or public sources, and, in so far as the Company is aware and has been able to ascertain from information published by those industry publications or public sources, no facts have been omitted which would render the reproduced information inaccurate or misleading. However, the Company has not independently verified information obtained from industry and public sources. Certain other information in this Annual Report regarding the industry reflects the Company's best estimates based on information obtained from industry and public sources. Information from the Company's internal estimates and surveys has not been verified by any independent sources.
The Company has filed its deed of incorporation and must file its restated articles of association and all other deeds and resolutions that are to be published in the Belgian Official Gazette (Moniteur Belge) with the clerk's office of the commercial court of Charleroi (Belgium), where such documents are available to the public. The Company is registered with the register of legal entities of Charleroi under company number 0882.015.654. A copy of the most recent restated articles of association, the reports of the Board of Directors and the minutes of the shareholders' meeting are also available on the Company's website (www.bonetherapeutics.com) or can be provided upon request to Bone Therapeutics SA, Investor Relations, Rue Granbonpré 11 - Bâtiment H (bte 24), 1435 Mont-St-Guibert, Belgium (e-mail: [email protected] and tel: +32 493 09 73 66).
The Company prepares annual audited and consolidated financial statements. All financial statements, together with the reports of the Board of Directors and the statutory auditor are filed with the National Bank of Belgium, where they are available to the public. Furthermore, as a Company with shares listed and admitted to trading on Euronext Brussels and Paris, the Company publishes an annual financial report (included its financial statements and the reports of the Board of Directors and the statutory auditor) and an annual announcement prior to the publication of the annual financial report, as well as a half-yearly financial report on the first six months of its financial year. Copies of these documents will be made available on the Company's website (www.bonetherapeutics.com) and STORI, the Belgian central storage platform which is operated by the FSMA and can be accessed via its website (www.fsma.be).
The Company must also disclose price-sensitive information and certain other information relating to the public. In accordance with the Belgian Royal Decree of 14 November 2007 relating to the obligations of issuers of financial instruments admitted to trading on a Belgian regulated market (Arrêté royal relatif aux obligations des émetteurs d'instruments financiers admis à la négociation sur un marché réglementé), such information and documentation will be made available through the Company's website (www.bonetherapeutics.com), press releases and the communication channels of Euronext Brussels.
The Annual Report is available in English and in French. The Annual Report will be made available, free of charge, for the public upon request to:
Bone Therapeutics SA To the attention of Investor Relations Rue Granbonpré 11 - Bâtiment H (bte 24) 1435 Mont-St-Guibert Belgium Tel: +32 493 09 73 66 E-mail: [email protected]
An electronic version of the Annual Report is also available on Bone Therapeutics' website (www.bonetherapeutics.com). The posting of this Annual Report on the internet does not constitute an offer to sell or a solicitation of an offer to buy any of the shares to any person in any jurisdiction in which it is unlawful to make such offer or solicitation to such person. The electronic version may not be copied, made available or printed for distribution. Other information on the website of the Company or on another website does not form part of the Annual Report.
2021 was another intense year. Many countries around the world were hit by multiple resurging waves of the COVID-19 pandemic due to the ever-evolving nature of the underlying SARS-Cov-2 virus. The global economy, including the broader healthcare sector, was substantially affected by the associated containment measures throughout the year. 2022 also experiences a turbulent start marked by a heightened geopolitical tension, disturbance in global supply chain and volatility on financial markets.
Despite the unprecedented challenging circumstances, we have been able, with the relentless dedication of our teams, to efficiently complete the large Phase III knee osteoarthritis study with our non-cellular product, the enhanced viscosupplement JTA-004, in more than 700 patients in multiple clinical centers in Europe and Hong Kong. Disappointingly, despite confirming the favorable safety profile of the earlier Phase IIb study, the Phase III trial did not meet the primary and key secondary endpoints. No statistically significant difference in pain reduction could be observed between the treatment, placebo and comparator groups, as all treatment arms showed a similar efficacy.
Following the unexpected JTA-004 Phase results, we have conducted a thorough evaluation of our portfolio and have decided to redefine Bone Therapeutics priorities to concentrate specifically on the development of our most advanced clinical asset, the allogeneic cell therapy platform, ALLOB, to maximally leverage on our core strength in innovative cell therapies.
Annually, hundreds of thousands of patients worldwide are suffering of dissatisfactory fracture healing in spite of the recent advances in fracture treatments. With its ability to respark halted bone healing and an optimized manufacturing process and logistics, ALLOB could provide these patients a convenient treatment option with a potentially superior outcome. Having successfully completed two clinical studies showing a promising safety profile and efficacy signals in more than 60 patients, we firmly believe that ALLOB has the highest potential of near-term value creation. We are currently collecting additional evidence for the clinical benefits of ALLOB in a Phase IIb study in patients with high-risk tibial fractures across Europe.
In order to deliver the results from the Phase IIb clinical study expected in the first half of 2023, we are continuing our efforts to establish value adding business collaborations and to strengthen our financial position. With your highly valued support and the tireless commitment of our teams and collaborators, we continue to advance our ongoing mission to develop better treatments to patients in need.
Sincerely,
Jean Stéphenne, Chairman
Miguel Forte, CEO
Bone Therapeutics is a leading Belgium-based biotech company focused on the development of innovative products to address high unmet needs in orthopedics. Currently Bone Therapeutics is concentrating specifically on the development of its most advanced clinical asset, the allogeneic cell therapy platform, ALLOB, targeting markets with large unmet medical needs and limited innovation.
Bone Therapeutics' core technology is based on its cutting-edge allogeneic cell and gene therapy platform with differentiated bone marrow sourced Mesenchymal Stromal Cells (MSCs) which can be stored at the point of use in the hospital. Its leading investigational medicinal product, ALLOB, represents a unique, proprietary approach to bone regeneration, which turns undifferentiated stromal cells from healthy donors into boneforming cells. These cells are produced via the Bone Therapeutics' scalable manufacturing process. ALLOB is currently being evaluated in a randomized, double-blind, placebo-controlled Phase IIb study in patients with high-risk tibial fractures, using its optimized production process. ALLOB continues to be evaluated for other orthopedic indications including spinal fusion.
Bone therapeutics has built a strong IP protected by 12 patent family worldwide covering methods, products and applications.
ALLOB is Company's off-the-shelf, allogeneic cell therapy platform consisting of human allogeneic boneforming cells derived from ex-vivo cultured bone marrow mesenchymal stromal cells (MSC) from healthy adult donors, offering numerous advantages in product quality, injectable quantity, production, logistics and cost as compared to an autologous approach.
To address critical factors for the development and commercialization of cell therapy products, Bone Therapeutics has established a proprietary, optimized production process that improves consistency, scalability, cost effectiveness and ease of use of ALLOB. This optimized production process significantly increases the production yield, generating 100,000 of doses of ALLOB per bone marrow donation. Additionally, the final ALLOB product will be cryopreserved, enabling easy shipment and the capability to be stored in a frozen form at the hospital level. The process will therefore substantially reduce overall production costs, simplify supply chain logistics, improve patient accessibility, and facilitate global commercialization.
Currently, ALLOB targets two indications: difficult tibial fractures and lumbar spinal fusion.
Although most fractures heal normally, some fractures may not heal within the usual time frame and is known as delayed bone healing within 4 to 6 months and absence of bone healing within 9 to 12 months in the most severe cases. Several factors can increase the risks of delayed healing complications like, for example, smoking, violent shocks (for example, due to a road accident) or even the type of fracture (an open fracture). The location of the fracture is also an important factor: among the bones of the arms and legs, the tibia is known for being the most at risk for complications. Tibial fractures with several risk factors could lead to complications such as delayed union and greatly reduce the quality of life. To date, there is no treatment for fractures considered at risk of delayed complications. The current practice on diagnosis of complications is to wait at least 6-12 months before considering alternative interventions to promote fracture healing.
Constituted of bone cells produced from the bone marrow of healthy adult donors, ALLOB, has shown to be capable of forming bone and repairing fractures in preclinical studies. When directly injected into a fracture, ALLOB should therefore promote the healing of the fracture by re-establishing a healthy environment, stimulate bone healing, reduce healing time, reduce complications, and improve the quality of life for the patient.
ALLOB has shown preliminary evidence of effectiveness in the treatment of delayed bone healing fractures in a Phase I/IIa study involving 21 patients. The study demonstrated efficacy in bone formation and improvement of general health status. At six months post administration, 100% of the patients met the primary endpoint, defined as an increase of at least two points on the radiological Tomographic Union Score (TUS) or an improvement of at least 25% of the clinical Global Disease Evaluation (GDE) score vs. baseline. Radiological evaluation of fracture healing showed an improvement of 3.9 points on average on the TUS scale, nearly twice the required minimum of 2.0 points. This minimum two-point increase was achieved by 16 out of 21 patients (76%). The Global Disease Evaluation (GDE) score to assess the general health condition of the patient, improved 48% on average. The minimum 25% improvement was achieved by 16 out of 21 patients (76%).
ALLOB is currently being evaluated in a Phase IIb study in patients with difficult-to-heal tibial fracture. The Phase IIb study is a randomized, double-blind, placebo-controlled study. In this study, the potential of ALLOB to accelerate fracture healing and prevent late-stage complications in patients with difficult fractures in the shinbone (tibia), will be tested and compared to placebo, on top of standard of care after a follow-up period of 6 months. ALLOB will be applied by a single percutaneous injection 24-96 hours post reduction surgery in patients with fresh tibial fractures at risk for delayed or non-union. The study has been approved in 7 European countries (Belgium, Czech Republic, France, Germany, Hungary, Poland and Spain). The study is expected to enroll 178 patients in over 40 sites. Following the CTA approval by regulatory authorities in Europe, the Company has initiated patient recruitment in January 2021.
Due to ageing populations and sedentary lifestyles, the number of people suffering from degenerative spine disorders continues to increase. Today, spinal fusion procedures are performed to relieve pain and improve patient daily functioning in a broad spectrum of degenerative spine disorders. Spinal fusion consists of bridging two or more vertebrae with the use of a cage and graft material, traditionally autologous bone graft or demineralized bone matrix – placed into the intervertebral space – for fusing an unstable portion of the spine and immobilizing a painful intervertebral motion segment.
Over 1,000,000 spinal fusion procedures are performed annually in the US and EU, of which half at lumbar level and the market is growing at a rate of 5% per year. Although spinal fusion surgery is routine, non-fusion, slow progression to fusion and failure to eliminate pain are still frequent with up to 35% of patients not being satisfied with their surgery.
A multi-center, open-label proof-of-concept Phase IIa study was designed to evaluate the safety and efficacy of ALLOB administered in addition to the standard of care procedure in which an interbody cage with bioceramic granules is implanted into the spine to achieve fusion of the lumbar vertebrae. The main endpoints of the 24-month follow-up analysis included safety and radiological assessments to evaluate vertebrae fusion (continuous bone bridges) and clinical assessments to evaluate improvement in patients' functional disability as well as reduction in back and leg pain. The study evaluated 30 patients treated with ALLOB, 29 patients attended the 24-month visit.
In the Phase IIa study, ALLOB Lumbar Spinal Fusion showed promising 24-month results in bone formation and disability reduction. The 24-month data showed a high percentage of successful lumbar vertebrae fusion of 90%. Patients also continued to experience important clinical improvements in function and pain, from as early as six months after treatment, up to the 24-month follow-up period.
JTA-004 is a next generation of intra-articular injectable for the treatment of osteoarthritic pain in the knee. Consisting of a unique patented mix of plasma proteins, hyaluronic acid - a natural component of knee synovial fluid, and a fast-acting analgesic, JTA-004 intends to provide added lubrication and protection to the cartilage of the arthritic joint and to alleviate osteoarthritic pain.
Osteoarthritis (OA), also known as degenerative joint disease, is the most common chronic joint condition in which the protective cartilage in the joints progressively break down resulting in joint pain, swelling, stiffness and limited range of motion. The knee is one of the joints that are mostly affected by osteoarthritis, with an estimated 250 million cases worldwide1 . The prevalence of knee osteoarthritis (KOA) is expected to increase in the coming years due to increasingly aging and obese population. Currently, there is no cure for KOA and treatments focus on relieving and controlling pain and symptoms, preventing disease progression, minimizing disability, and improving quality of life. Most drugs prescribed to KOA patients are topical or oral analgesics and anti-inflammatory drugs. Ultimately, severe KOA led to highly invasive surgical interventions such as total knee replacement.
In a completed Phase IIb study involving 164 patients, JTA-004 showed an improved pain relief at 3 and 6 months compared to Hylan G-F 20, the global market leader in osteoarthritis treatment.
1 Vos et al., A systematic analysis for the Global Burden of Disease Study 2010. Lancet 2012; 380:2163-96
In August 2021, Bone Therapeutics announced the topline results from the multicenter, randomized, doubleblind, placebo- and active-controlled Phase III study. The study was conducted in 7 European countries and Hong Kong and included a total of 743 patients. Despite JTA-004's favorable safety profile, the study did not achieve its main objectives as no statistically significant difference in pain reduction could be observed between any of the treatment, placebo and comparator groups, with all treatment arms showing similar efficacy. A statistically significant difference in favor of JTA-004 and the active comparator versus placebo was seen in a post-hoc analysis in a subset of patients with higher pain scores at entry.
In March 2022, Bone Therapeutics announced it was redefining its strategic priorities to concentrate specifically on the development of its most advanced clinical asset, ALLOB. As a result, Bone Therapeutics will focus its R&D activities to support the clinical development of ALLOB and all activities related to the development of the pre-clinical iMSCg platform as well as all other non ALLOB related activities, including the further development of JTA-004, will be stopped.
Dear Shareholders,
We are pleased to present you our annual report including the consolidated financial statements for the accounting year that ended 31 December 2021 prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union.
In January, 2021, Bone Therapeutics initiated the treatment of patients in the Phase IIb study of its allogeneic cell therapy product, ALLOB, in patients with difficult tibial fractures. Bone Therapeutics anticipates finalizing patient recruitment of this study in 2022. This finalization is subject, as across the industry, to evolution of the ongoing COVID-19 pandemic and the associated containment measures. Although early recruitment rates were very promising, the recruitment rates have temporarily slowed in subsequent months due to pandemicrelated factors, such as reduced site activities due to staff availability and the number of available patients due to less occurrence of accidents. Bone Therapeutics has implemented several mitigating measures in collaboration with the involved clinical research organization to improve and facilitate recruitment. These measures include site expansion, training, information, best practices sharing and close monitoring of progress. As a result of these measures Bone Therapeutics continues to currently expect the release of topline data by Q1 2023.
In January, 2021, Bone Therapeutics signed an initial agreement for a process development partnership with the mesenchymal stromal cell (MSC) specialist, Rigenerand. This first collaboration will focus on further developing and enhancing Bone Therapeutics' bone-forming cells with the potential to broaden therapeutic targets and explore new mechanisms of action with potential gene modifications for Bone Therapeutics' therapeutic portfolio.
In June, 2021, Bone Therapeutics published the positive results of its Phase I/IIa clinical trial with ALLOB in patients with delayed union fractures. The results were published in Stem Cell Research & Therapy, the international peer-reviewed journal focusing on translational research in stem cell therapies. ALLOB was generally well-tolerated and that all patients met the primary endpoint.
In August, 2021, Bone Therapeutics announced topline results from the Phase III knee osteoarthritis study with its enhanced viscosupplement JTA-004, its legacy non-MSC product. JTA-004 had a favourable safety profile. However, the study did not meet the primary and key secondary endpoints. No statistically significant difference in pain reduction could be observed between the treatment, placebo and comparator groups, with all treatment arms showing similar efficacy.
In September, 2021, Bone Therapeutics signed a research evaluation agreement with Implant Therapeutics, the developer of hypoimmunogenic and safe harbour engineered IPSC derived cells. The agreement enables Bone Therapeutics to access, evaluate and materially transfer Implant Therapeutics' Induced Pluripotent Stem Cell (iPSC) derived, genetically engineered MSCs, including lines, media, differentiation protocols and expertise.
In November 2021, Bone Therapeutics signed a non-binding term sheet for the global rights for ALLOB, Bone Therapeutics' allogeneic osteoblastic cell therapy product, with one of its current Chinese partners, Link Health Pharma Co., Ltd (Link Health). The negotiations for the global rights agreement are still ongoing but take longer than expected. The envisaged completion of a final binding agreement has been delayed and is now contemplated over the course of Q2 2022.
In March 2021, Bone Therapeutics appointed the stem cell therapy industry veteran, Anthony Ting, PhD, as Chief Scientific Officer. Dr. Ting is responsible for Bone Therapeutics' research activities.
In July 2021, Bone Therapeutics appointed Dr. Anne Leselbaum as Chief Medical Officer. Dr. Leselbaum brings three decades of experience in strategic international clinical development, clinical operations and medical affairs. As CMO, she will take responsibility for the leadership of all clinical development and medical affairs strategies and activities across the entire Bone Therapeutics' pipeline and will oversee the regulatory interactions.
In September 2021, Bone Therapeutics appointed Lieve Creten, as interim Chief Financial Officer (CFO), succeeding Jean-Luc Vandebroek. Lieve's extensive financial experience will ensure the continued optimal financial control, oversight and compliance.
In October 2021, Bone Therapeutics appointed key experts to its Scientific Advisory Board (SAB). The members of the SAB consist of world-recognized scientists and clinicians in the cell and gene therapy field.
The following table includes information relating to the Company's audited statement of comprehensive income for the years ended 31 December 2021 and 31 December 2020.
| (in thousands of euros) | For the year ended 31 December |
|
|---|---|---|
| 2021 | 2020 | |
| Revenue Other Operationg income |
1,000 1,745 |
1,000 2,666 |
| Total revenues and operating income | 2,745 | 3,666 |
| Research and development expenses General and administrative expenses |
(11,684) (3,087) |
(15,416) (3,267) |
| Operating profit/(loss) | (12,026) | (15,017) |
| Financial income Interest income Financial expenses Exchange gains/(losses) Share of profit/(loss) of associates |
333 25 (1,147) (20) 0 |
0 24 (747) (13) 0 |
| Result Profit/(loss) before taxes | (12,836) | (15,754) |
| Income taxes | (89) | (78) |
| Net Income (Loss) from continuing operations | (12,925) | (15,832) |
| Net Income (Loss) from discontinued operations | 0 | 3,891 |
| TOTAL COMPREHENSIVE INCOME/(LOSS) OF THE PERIOD | (12,925) | (11,940) |
| Basic and diluted loss per share (in euros) - continuing operations | (0.77) | (1.35) |
| Basic and diluted loss per share (in euros) - discountinued operations | 0.00 | 0.33 |
| Profit/(loss) for the period attributable to the owners of the Company Total comprehensive income/(loss) for the period attributable to the |
(12,925) | (11,940) |
| owners of the Company | (12,925) | (11,940) |
The total revenues and operating income for 2021 amounted to €2.74 million compared to €3.67 million in 2020 or a decrease of €0.92 million. In 2021, the Company invoiced the second milestone payment covering the submission by Pregene of the IND application to the Chinese National Medical Products Administration for an amount of €1.00 million in line with the License agreement executed on October 5th , 2020. The Company granted an exclusive license to Link Health and Pregene for the development and commercialization of ALLOB in Greater China and a few other major Asian countries.
The reduction in other operating income for 2021 is mainly driven by the reduction of the income related grants received from the Walloon Region (Recoverable Cash Advances – RCAs). This decrease is due to the decreased investments in JTA following the disappointing Phase 3 results published mid 2021 and the negative equity position of the company since mid 2021. A positive equity position is one of the mandatory criteria to apply for new recoverable tax advance conventions with the Walloon Region which is no longer the case since 2021
The Non-recoverable Cash Advances amounted only €0.5 million in 2021 compared to €1.20 million in the year before, which represent a Year-on-Year decrease of approximately €0.7 million. Other non-refundable grants and Patent grant income amounted €0.16 million in 2021 compared to €0.18 million in 2020. Yearon-Year, the total combined other operating income with the Walloon Region have dropped by 0.725 million in 2021 compared to the prior year.
Next to grant income, the company generates other operating income from other sources for a total of € 1,1 million, compared to €1,3 million EUR in prior year representing a slight decrease of €0.19 million compared to the year before.
In 2021, other operating income has been generated by the company benefiting from the special regime employing scientific staff through the recovery of company withholding tax for an amount of €0.32 million, an investment tax credit for an amount of €0.6 million and €0.16 million other income related reinvoicing.
R&D expenses in 2021 amounted to €11.68 million compared to €15.42 million in 2020. The decrease is mainly related to the reduction in R&D operating expenses for clinical operations following the completion of the Phase III JTA study in June 2021 and the fact that the enrollment of patients for the ALLOB TF2 Phase IIb study has been impacted by the ongoing COVID-19 pandemic and associated containment measures.
General and administrative expenses for the full year 2021 amounted to €3.09 million compared to €3.27 million over the same period last year, largely in line with the previous year.
The operating loss in 2021 was at € 12.03 million versus an operating loss of € 15.02 million in the prior year.
In 2021, the Company presented a net financial loss of €0.8 million compared to a net financial loss of €0.7 million in the year before. The net financial loss in 2020 was mainly impacted by the recognition of the interest paid throughout the year. In 2021, the interest costs were substantially higher following the full year interest charges due on the loans from both Integrale (€ 2 million) and Patronale (€ 2 million), signed in May 20 in combination with the interest due on the loan signed with the European Investment bank (€ 8 million) in June 2021. The higher interest costs in 2021 are partially offset by a favorable revaluation of the financial liabilities by € 0.33 million measured at fair value at closing, mainly driven by the share price decrease component in accordance with IFRS 9.
In 2020, the Company presented profit for an amount €3.89 in relation to the discontinued activities. In November 2020, the Company sold its subsidiary Skeletal Cell Therapy Support SA ("SCTS") to Catalent Gosselies SA.
The reported net loss in 2021 amounted to €12.92 million or €0.77 loss per share for the continuing operations compared to €11.94 million or €1.02 loss per share in the prior year.
The table below shows the audited consolidated balance sheet on 31 December 2021 and 2020.
| Consolidated Assets IFRS per: (in thousands of euros) |
Note | 31/12/21 | 31/12/20 |
|---|---|---|---|
| Non-current assets | 5,481 | 6,019 | |
| Intangible assets | 8.5.1 | 24 | 28 |
| Property, plant and equipment | 8.5.2 | 863 | 226 |
| Investments in associates | 8.5.3 | 12 | 12 |
| Financial assets | 8.5.4 | 96 | 1,296 |
| R&D Tax Credits | 4,486 | 4,456 | |
| Current assets | 14,291 | 18,817 | |
| Trade and other receivables | 8.5.3 | 2,581 | 3,840 |
| Financial assets | 8.5.4 | 1,200 | 0 |
| Other current assets | 8.5.5 | 1,000 | 328 |
| Cash and cash equivalents | 8.5.6 | 9,510 | 14,648 |
| TOTAL ASSETS | 19,772 | 24,835 |
Total assets at the end of December 2021 amounted to €19.77 million compared to €24.84 million at the end of December 2020, mainly impacted by the current assets.
Current assets decreased by €4.53 million, from € 18.82 million at the end of December 2020 compared to € 14.29 million at the end of December 2021, mainly driven by a decrease in cash position of €5.1 million compared to the prior year.
Cash and cash equivalents showed a significant decrease in December 2021 due to the ongoing cash burn. Furthermore, last year a capital raise with a total gross amount of €9.92 million occurred in December 2020 compared to a lower private placement concluded in December 2021 for a total gross amount of only €3.3 million.
The trade receivables comprise the second milestone payment from Link Health & Pregene to be received in 2022 for an amount of €0.93 million net of taxes. In addition, the other receivables decreased by €1.3 million mainly explained by:
Other current assets are showing an increase of € 0.67 million and are mainly driven by advanced invoicing by Nordic Bioscience NBCD A/S for an amount of € 0.78 million.
The non-current assets increased from € 6.02 million to €6.68 million at the end of December 2021 mainly driven by Property, plant and equipment. The increase is the result of the application of the IFRS 16 principle with the signing of the new office rent contract for Mont-Saint-Guibert in May 2021.
Following this new standard, lease and rental obligations need to be reported on the balance sheet of the company increasing the long term assets by € 0.64 million compared to prior year. The financial non-current assets have decreased by the reclassification of the anticipated reimbursement of the bank guarantee of €1.20 million in relation with the deal with Catalent in 2022 to the current financial assets. This guarantee expires on 13 May 2022 and will be released by the banks provided no demand for payment of a claim is made by Catalent before that date.
R&D tax credits totaling €4.86 million represent a tax credit on investment in R&D reimbursable in the foreseeable future (spread over the next seven years) and remain largely in line with prior year.
| Consolidated Equity & Liabilities IFRS per: (in thousands of euros) |
31/12/21 | 31/12/20 |
|---|---|---|
| Equity attributable to owners of the parent | (6,765) | 3,325 |
| Share capital | 4,924 | 8,415 |
| Share premium | 69,499 | 67,594 |
| Accumulated losses | (81,488) | (73,080) |
| Other reserves | 301 | 396 |
| Total Equity | (6,765) | 3,325 |
| Non-current liabilities | 19,864 | 11,720 |
| Interest bearing borrowings | 19,752 | 11,720 |
| Other non-current liabilities | 112 | 0 |
| Current liabilities | 6,673 | 9,790 |
| Interest bearing borrowings | 1,046 | 3,077 |
| Trade and other payables | 4,822 | 5,514 |
| Other current liabilities | 804 | 1,199 |
| Total liabilities | 26,537 | 21,510 |
| TOTAL EQUITY AND LIABILITIES | 19,772 | 24,835 |
Equity decreased from €3.3 million at the end of December 2020 to a negative equity of €6.7 million at the end of December 2021 due to current year incurred losses for a total amount of € 12,92 million. This equity decrease is partially offset by the share capital and share premium's increase following the December 2021 capital Raise (amounting €3.3 million) including the transaction costs for the recent equity transactions for an amount of € 0.28 million. In addition, the recognition of a specific reserve linked to the convertible bonds, warrants and other reserves reduce the total equity further by another € 0.18 million. In February 21, the company also incorporated losses into the share capital amounting to € 4,6 million. For more details with regards to the equity changes, we refer to the section 8.5.6. and section 7.3.4.
Liabilities amounted to €26.54 million in 2021 compared to €21.51 million at the end of December 2020, representing an increase of €5.03 million. The total Non-current Liabilities have increased from €11.7 million at the end of December 2020 to €19.86 million at the end of December 2021 or an increase of €8.14 million, mainly driven by the non-convertible loan with the European Investment bank concluded in June 2021 for a total gross amount of €8 million. The loan has been measured at amortized cost in accordance with IFRS 9.
The fair value of the accompanying warrants for both EIB and Patronale have been recognized under noncurrent liabilities for an amount of € 0.112 million per December 2021. The non-current liabilities for convertible bonds have decreased from € 3.6 million at the end of December 2020 to € 1.9 million at the end of December 2021 following the conversion of the 2020 Patronale loan into a non-convertible loan in alignment with the EIB loan. Considering the Issuer has no Cash Alternative Election (choice over how the share conversion option will be settled), the share conversion option for the Integrale loan is an own equity instrument (cfr IAS 32.26). As a result the equity component has been calculated at fair value from the start and recorded accordingly. The total balance at December 2021 for the non-current liability of Integrale amounts € 1.9 million. Other noncurrent liabilities for public loans decreased by € 0.39 million.
In addition, our other non-current financial liabilities now also include € 0.49 million indicating our long term rental obligations with Watson Creek for our new offices in Mont-Saint Guibert (in accordance with IFRS16 requirements).
Current financial liabilities decreased by € 2.03 million mainly driven by the reimbursed loans from SambrInvest and Novallia for € 0.59 million and € 1.5 million loan reimbursement from BNP Fortis and ING partially offset by the short term lease liabilities for the new offices in Mont-Saint-Guibert (IFRS 16).
Trade and other payables decreased by € 0.69 million, from € 5.51 million at the end of December 2020 compared to 4.8 million at the end of December 2021.
Other current liabilities decreased from € 1.2 million at the end of December 2020 to € 0.8 million at the end of December 2021 following the ongoing reimbursement of the outstanding recoverable cash advances towards the Walloon Region throughout 2021.
The following table sets forth the Company's consolidated cash flow statement for the years ended 31 December 2021 and 2020. This table is presented in further detail under the section "Consolidated statement of cash flows" of the consolidated financial statements for the period ended 31 December 2021.
| Consolidated Statements of Cash Flows (in thousands of euros) |
For the 12-months period ended 31 December |
|
|---|---|---|
| 2021 | 2020 | |
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Operating profit/(loss) | (12,026) | (17,448) |
| Adjustments non-cash | (1,231) | (1,576) |
| Movements in working capital: | (1,308) | 708 |
| Cash received from grants/licenses | 1,870 | 2,312 |
| Income tax paid | (89) | (78) |
| Net cash used in operation activities | (12,784) | (16,082) |
| CASH FLOW FROM INVESTING ACTIVITIES Cash flow from other investing activities |
(204) | (92) |
| Proceeds from the sale of SCTS | 0 | 12,000 |
| Net cash used in investing activities | (204) | 11,908 |
| CASH FLOW FROM FINANCING ACTIVITIES | ||
| Proceeds from government loans | 201 | 748 |
| Proceeds from loans from bank/related parties | 8,000 | 5,550 |
| Repayment of loans and interests paid | (3,360) | (7,557) |
| Payments to acquire Non-controlling interests | 0 | (1,956) |
| Guarantee facilities | 0 | (1,200) |
| Net Proceeds from equity instruments/convertible bonds/subordinated loans | 3,009 | 14,603 |
| Net cash generated from financing activities | 7,850 | 10,188 |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (5,138) | 6,015 |
| CASH AND CASH EQUIVALENTS at beginning of the period | 14,648 | 8,633 |
| CASH AND CASH EQUIVALENTS at end of the period | 9,510 | 14,648 |
Cash used for operating activities amounted to €12.78 million for the full year 2021 compared to €16.09 million for the full year 2021.
Total operating loss for the period amounted to a loss of €12.03 million compared to a loss of €17.45 million over the same period in 2020. The decrease of the net loss in 2021 is mainly explained by the decrease of the clinical expenses incurred for the JTA-004 clinical trial Phase III and ALLOB clinical trial Phase IIB in tibial fractures due to the delay in patient recruitments in an ongoing COVID-19 context.
Adjustments for non-cash items amounted to €1.23 million compared to €1.58 million during the previous year relating to depreciation, share-based payments and recognition of grant income from RCA's, patent subsidies and tax credit. Working capital was negatively impacted for the full year 2021 for an amount of €1.3 million mainly explained by a decrease of trade and other payables and liabilities in the current year compared to the prior year. Due to the negative equity of the company as from mid 2021 onwards, no new conventions for recoverable cash advances have been signed anymore while the company continues to reimburse the outstanding liabilities for RCAs in progress.
Actual cash received in 2021 for the grants and regulatory milestones amounted to €1.87 million compared to €2.31 million in 2020.
Cash flow from investing activities in 2020 was positively impacted by a non-recurring one-off proceed obtained from Catalent Gosselies SA for the sale of SCTS for an amount of €12.00 million.
Cash flow from financing activities amounted to €7.85 million for 2021 compared with €10.19 million in 2020.
Financial cash inflows during 2021 are as follows:
Financial cash outflows during 2021 are as follows:
• reimbursements of bank loans and recoverable cash advances for an amount of €3.4 million in 2021 compared to €7.5 million in the prior year;
On 31 December 2021, the Group employs 20 employees in total. The table below shows the evolution of employment since 2019 and does not take into account the temporary workers, consultants and the management members. 17 FTE moved to Catalent Gosselies SA as part of the sale of SCTS, in 2020
| 2021 | 2020 | 2019 | |
|---|---|---|---|
| As of 31 December, 2021 | |||
| R&D | 15 | 25 | 53 |
| Administration | 5 | 5 | 5 |
| Total of Bone Therapeutics SA | 20 | 30 | 58 |
Sixteen percent of employees have obtained a doctorate and 30% a master's degree. Scientific specialization domains include cellular and molecular biology, pharmaceutical sciences, veterinary medicine, physiology and life sciences.
Reference is made to Section 4.7.2 "Risks Analysis".
The outbreak of the novel strain of coronavirus (SARS-CoV-2) causing the severe respiratory illness, coronavirus disease 2019 (COVID-19), originated in Wuhan, China, in December 2019 and has since spread to multiple countries, including the United States and Europe. On 11 March 2020, the World Health Organization declared the outbreak of a global pandemic and recommended containment and mitigation measures worldwide. The spread of COVID-19 and the resulting health measures have impacted the global economy and our business operations, including potential delay of our clinical trial activities. Some factors from the COVID-19 outbreak that have adversely affected and may continue to affect the timely enrolment and continuation of its clinical trials, at least on a temporary basis, include:
In addition, when advised or imposed by health authorities in the following waves of the CVID-19 pandemic, the Company would need to reinstate temporary precautionary measures intended to help minimize the risk of the virus to its employees, including temporarily requiring all employees to work remotely, suspending all non-essential travel worldwide for its employees and discouraging employee attendance at industry events and in-person work-related meetings, which could negatively affect the Company's business.
The extent to which the recent global COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among other things, but prolonged closures or other business disruptions may negatively affect its operations and the operations of its agents, contractors, consultants or collaborators, which could have a material adverse impact its business, results of operations and financial condition.
The consolidated balance sheet on 31 December 2021 shows a negative equity in the amount of € 6.8 million and a cash position of €9.5 million. The company is still in a development phase conducting clinical trials to achieve regulatory approval and pre-clinical development which implies various risks and uncertainties. Based on the 2022 revised projected cash forecast considering an operating cash burn of €8 million to €10 million and a projected financing cash burn of around €1.6 million, the Company anticipates having sufficient cash to carry out its revised strategic focus, namely achieving an efficacy outcome milestone with ALLOB TF2 Phase IIb clinical study by early 2023 taking into account the following relevant assumptions:
allogeneic cell therapy platform, ALLOB and abandon all other activities. In this context disciplined cost and cash management with further restructuring of any excess capacity is assumed. The board and the current CEO are working on a replacement plan re. CEO/CFO. The related cost is included in the cash projections. Until proper replacement is in place, the current CEO remains in function.
The assumptions made above comprise various risks and uncertainties, mainly but not limited to the timing of collection of certain funds, the uncertainty about the ALLOB top line results, including but not limited to the uncertainty of the clinical trial development process for ALLOB and the uncertainty related to the equity. Based on cash flow forecasts for the next twelve months including significant expenses and cash outflows for the ongoing clinical trials and the issuance of the Convertible Bond in the amount of € 5 million, the cash runway of the company is expected into Q1 2023. Hence the Company will continue to require additional financing to continue its operations in the longer turn. The Company also continues to evaluate other options with a potential positive impact on the going concern which are however currently not included in the 2022 revised projected cash forecast.
• Completion of business deal with a Chinese partner:
Discussions are still ongoing with a Chinese partner for the global rights for ALLOB, Bone Therapeutics' allogeneic osteoblastic cell therapy product. If the licensing deal is concluded, the partner would be responsible for all future costs of development of ALLOB, including the ongoing ALLOB TF2 Phase IIb trial and costs related to development, process development (scale up) and manufacturing of the product. The negotiations for the global rights agreement are taking longer than expected. The envisaged completion of a final binding agreement has been delayed and is now foreseen to be potentially completed in the second quarter 2022 after approval by the Board of directors. Milestone payment from the licensees Link Health-Pregene of €0,930 million is a condition precedent to this new potential global rights deal.
• Interim analysis ALLOB clinical study
Management is currently assessing the possibility to anticipate the assessment of the efficacy of ALLOB through an interim analysis of the clinical results at about 66 patients with 3 months followup. Although no formal decision has been taken by the Board yet, this would give the opportunity to define at an early stage the value proposition of ALLOB and hence optimizing the ongoing study costs while at the same time providing an opportunity to initiate strategic discussions with potential partners based on positive clinical results.
• Potential M&A options
The Board is still investigating various M&A options to secure BT for the longer term. These options could increase the asset portfolio of Bone and would provide further potential for the repayment of outstanding debts of which first capital repayments are due in June 2023.
Based on the completion of the current CB financing operation as mentioned above and the announced sole focus on the completion of the ALLOB TF2 study with related downsizing of the company, the Board is of the opinion that it is appropriate to prepare the 2021 financial statements of the Company under the assumption of going concern, considering a projected operational cash burn of €8 to 10 million for 2022 and a cash runway till Q1 2023. The latter should allow the achievement of an efficacy outcome milestone in the ALLOB TF2 study. In the event that the Chinese deal is not concluded in the meantime, positive topline results should lead to strategic discussions with partners who already expressed their interest to top line results when available. The assumptions, risks and uncertainties mentioned above, however, indicate the existence of material uncertainties which may cast significant doubt about the Company's ability to continue as a going concern. The Board of Directors however, remain confident about the strategic focus taken and have decided, after due consideration, that the application of the valuation rules in the assumption of a "going concern" is justified. The latter is reinforced by the nature of the ongoing discussions potentially further strengthening the going concern beyond the results of the Phase IIb ALLOB clinical study as the Company's ability to continue operations also depends on its ability to raise additional capital and to refinance existing debt in order to fund operations and assure the solvency of the Company.
The annual consolidated financial statements on 31 December 2021 were authorized for issue by the Board of Directors of the Company on 28 April 2022. Accordingly, events after the reporting period are those events that occurred between 1 January 2022 and 25 April 2021.
In Q1 2022, Bone Therapeutics has officially relocated its corporate offices to the Louvain-la-Neuve Science Park in Mont-Saint-Guibert (Louvain-la-Neuve), Belgium. Louvain-la-Neuve is home to the Catholic University of Louvain (UCLouvain), one of Belgium's premier academic research institutes. Bone Therapeutics is now part of a vibrant biotech ecosystem with a high concentration of cell therapeutic companies.
In March 2022, Bone Therapeutics announced it was redefining its strategic priorities to concentrate specifically on the development of its most advanced clinical asset, ALLOB. Based on the positive results of the previous clinical studies of ALLOB and the extensive preclinical data set, Bone Therapeutics firmly believes that ALLOB has the highest potential of near-term value creation. In order to deliver the results from the Phase IIb clinical study, Bone Therapeutics has implemented a number of actions to reduce its cost base to enable completion of its Phase IIb study. As a result, Bone Therapeutics will focus its R&D activities to support the clinical development of ALLOB and all activities related to the development of the pre-clinical iMSCg platform as well as all other non ALLOB related activities, will be stopped. In this context, some members of Bone Therapeutics' management team will transition to depart Bone Therapeutics in the following months in alignment with the focus in activity. This includes Miguel Forte (CEO), Tony Ting (CSO), Stefanos Theoharis (CBO) and Lieve Creten (CFO). The CEO, Miguel Forte, will remain in function for the transition. The Scientific Advisory Board was also dissolved.
In April 2022, Bone Therapeutics signed a binding term sheet for a EUR 5 million convertible bonds (CBs) facility arranged by ABO Securities. The proceeds of the financing will be used to advance the clinical development of Bone Therapeutics' lead asset, the allogeneic bone cell therapy, ALLOB. ABO Securities, on behalf of the CB investor, commits to subscribe to up to EUR 5 million in CBs. The CBs will be issued and subscribed in seven tranches. A first tranche with an aggregate principal amount of EUR 1.5 million will be issued on the Closing Date, followed by a tranche of up to EUR 1 million after 40 trading days from Closing. The issue and subscription of the remaining five tranches with a principal amount of EUR 500,000 each can be requested at Bone Therapeutics' sole discretion over an eighteen-month period, subject to customary conditions to be met. Subject to the fulfilment of conditions precedent, Bone Therapeutics and ABO Securities aim to agree on and execute the final subscription agreement for the CBs and to issue the first tranche of CBs by the beginning of May 2022.
In the ongoing Phase IIb ALLOB clinical study in difficult tibial fractures, Bone Therapeutics' clinical team, in partnership with its clinical research organization, is continuing to institute measures to mitigate the impact of the pandemic and will closely monitor the recruitment progress. As a result of the initial mitigation actions, Bone Therapeutics continues to expect to report topline results as scheduled by the first quarter of 2023. However, a delay cannot be excluded. Should the pandemic continue to have impact on patient availability, Bone Therapeutics may have to re-evaluate this timeline and, in that eventuality, will communicate again to the market.
The negotiations for ALLOB, with one of Bone Therapeutics' current Chinese partners, for the global rights agreement are still ongoing but are taking longer than originally anticipated. The potential completion of a final binding agreement has been delayed into Q2 2022.
Subsequent to some preliminary contacts, the board of directors of Bone Therapeutics is currently examining various opportunities to combine certain activities within Bone Therapeutics, taking into account the interests of its shareholders and other stakeholders. Further announcements will be made in due course, if and when circumstances so allow or require.
Following the restructuring of the management team announced on 12 April 2022, the Company has initiated the search for a new CEO and CFO.
Disciplined cost and cash management will remain a key priority. The operating cash burn for the full year 2022 is expected to be in the range of €8-10million, assuming normal operations as the effect of the ongoing COVID-19 epidemic cannot be excluded. The situation will be actively and closely monitored. The company anticipates having sufficient cash to carry out its business objectives into Q1 2023, assuming amongst other full issuance of the new convertible bond facility. We refer to the going concern statement for all key assumptions taken.
At the date of this Annual Report, the Company has the following affiliate:
• Bone Therapeutics USA Inc. incorporated on 26 March 2015.
This section summarizes the rules and principles on the basis of which the corporate governance of the Company has been organized pursuant to Belgian Code of Companies and Associations, and the Company's corporate governance charter (the "Corporate Governance Charter") adopted by the Board of Directors on 25 August 2020 in accordance with the new Belgian Corporate Governance Code 2020 (the "Corporate Governance Code" or "CGC" ) by the Royal Decree of 12 May 2019 designating the corporate governance code to be complied with by listed companies published on 17 May 2019 in the Belgian Official Gazette (Moniteur belge). The Corporate Governance Charter is available on the Company's website (www.bonetherapeutics.com, under the section Investors / Governance). A copy of the Corporate Governance Charter can be obtained free of charge at the registered office of the Company.
The text of the Corporate Governance Code is available on the website of the Corporate Governance Committee at https://www.corporategovernancecommittee.be/en/over-de-code-2020/2020-belgian-code-corporategovernance.
The Board of Directors intends to comply with the provisions of the Corporate Governance Code but believes that the size and the current state of development of the Company justifies certain deviations. These deviations are further detailed hereinafter.
The Corporate Governance Charter includes the following main chapters:
The Appendices to the Corporate Governance Charter include the following:
The Board of Directors of the Company intends to comply with the Belgian Corporate Governance Code, except in relation to the following matters:
Existence of a succession plan in place for the executives (principle 2.10): There is currently no detailed succession plan in place within the Company for the CEO, the CFO and the other members of the executive management However, the Company will assess the need to implement such succession plan in the future, and will review it periodically.
Assessment of a relationship agreement with the significant or controlling shareholder(s) (principle 8.7): As indicated in the "Shareholders" section of the report, the Company has no significant or controlling shareholders and therefore a relationship agreement is not appropriate.
Article 7:86 of the Belgian Code of Companies and Associations imposes that at least one third of the board members are of a different gender than the other board members. The minimum is rounded to the closest unit and if the director is a legal person, his or her gender shall be determined by that of its permanent representative. The Board of Directors of the Company complies with Belgian laws on gender as it is currently composed of 7 Directors, out of which two are of a different gender.
In addition, except for the Remuneration and Nomination Committee, one third of the members of the Executive Committee are of a different gender and half of the members of the Audit Committee are of a different gender.
As regards the employees not included above, the Company records 69% female employees and 31% male employees.
In accordance with the Corporate Governance Code, the Board of Directors will review the Corporate Governance Charter from time to time and adopt such amendments thereto as it deems necessary and appropriate. The Corporate Governance Charter and the Company's articles of association are available at the Company's website and at its registered office and can be obtained free of charge.
The Board of Directors is the main decision-making body of the Company and has full power to perform all acts that are necessary or useful to accomplish the Company's corporate purpose, save for those acts for which only the shareholders' meeting of the Company has the required powers in accordance with applicable laws or the Company's articles of association. The responsibility for the management of the Company is entrusted to the Board of Directors as a collegial body.
The Board of Directors pursues the long-term success of the Company by providing entrepreneurial leadership, while assessing and managing the risks of the Company.
The Board of Directors is composed of at least three members as set out in the articles of association and the Corporate Governance Charter.
At least half of the members of the Board of Directors are Non-Executive Directors, and at least three members of the Board of Directors are Independent Directors, within the meaning of inter alia Article 7:87 §1 of the Belgian Code of Companies and Associations.
The members of the Board of Directors are appointed by the shareholders' meeting of the Company for a renewable term of maximum four years. If a director mandate becomes vacant, the remaining members of the Board of Directors will have the right to temporarily appoint a new director to fill the vacancy. The shareholders' meeting can revoke the mandate of any director at any time.
In principle the Board of Directors meets at least four times a year and whenever a meeting is deemed necessary or advisable for its proper functioning. A meeting of the Board of Directors is validly constituted if there is a quorum, which requires that at least half of the members of the Board of Directors or present or represented during the board meeting. In any event, the Board of Directors can only validly deliberate if at least two Directors are present in person.
At the IPO, the board was composed of eleven, mostly local members. In 2017, the Board was adapted to include international experts in cell therapy, biotech and orthopedics. From 2018, the number of members has been reduced to nine members, 7 Independent and 2 Executive Directors. From 2019, the number of members has been further reduced to seven members, 5 Independent and 2 Executive Directors.
The table below provides an overview of the mandates held in 2021 and the current mandates at the date of the Annual Report:
| Name | Position | Start or renewal of mandate |
End of mandate |
Nature of mandate |
Professional address |
|---|---|---|---|---|---|
| Innoste S.A., with as permanent representative Jean Stéphenne |
Chairman | 2018 | 2025 | Independent | Avenue Alexandre 8, 1330 Rixensart, Belgium |
| mC4Tx SRL, with as permanent representative Miguel Forte |
Managing Director |
2020 | 20222 | Executive | Rue du Moulin 12, 1330 Rixensart, Belgium |
| Claudia D'Augusta | Director | 2018 | 2023 | Independent | Calle Estrelas 5, 28224 Pozuelo De Alarcon, Madrid, Spain |
| Castanea Management SARL with as permanent representative Damian Marron |
Director | 2020 | 2023 | Independent | 401 Chemin du Val Martin, 06560 Valbonne, France |
| ClearSteer Consulting LLC with as permanent representative Gloria Matthews |
Director | 2020 | 2023 | Independent | 880 Roswell Rd, Suite 430, Roswell, GA, United States |
| Jean-Paul Prieels | Director | 2017 | 2025 | Independent | Chemin du Gros Tienne 61, 1380 Lasne, Belgium |
| Finsys Management SRL with as permanent representative Jean-Luc Vandebroek |
Director | 2018 | 20223 | Non-Executive4 | Rue Charles Plisnier 25, 1420 Braine-l'Alleud, Belgium |
A brief overview of the relevant experience of the Independent Directors in place at the date of the Annual Report is set out below.
• Mr. Jean Stéphenne (permanent representative of Innoste S.A.) is a highly experienced life sciences executive, who has served in senior leadership roles at a large number of biotechnology and pharmaceutical companies, most recently as Chairman of TiGenix. Together with the Board of TiGenix, he oversaw the clinical development and European marketing authorization of its most advanced allogeneic cell therapy product for the treatment of complex perianal fistulas in Crohn's disease. Jean Stéphenne was also previously a Member of the Corporate Executive Team of GlaxoSmithKline (GSK) and Chief Executive of GSK Biologicals (now GSK Vaccines). During his 40 year tenure, he grew a company of 50 people into a fully integrated worldwide leader in vaccine development, with 12,000 employees. Jean Stéphenne currently serves on the Board of various life sciences companies including OncoDNA, CureVac, Vaxxilon and Bepharbel. Previous board positions include Besix Group, BNP Paribas Fortis, GBL and IBA. For his contribution to the Belgian economy
2 This mandate is not planned to be renewed
3 This mandate is planned to be renewed
4 Non-Executive as of 20 September 2021
and global public health, he has received diverse business recognitions and was honored with various titles by the Belgian and British governments.
family holding with an annual revenue of around EUR 1.7 billion. Until 2021 Jean-Luc was active within Bone Therapeutics as CFO. Today he is Chief Financial Officer at Hyloris Pharmaceuticals.
At the date of this Annual Report, none of the Directors and the members of the Executive Committee have at any time within at least the past five years:
In 2021, the Board of Directors met 11 times discuss and decide on specific matters such as financial operations, business strategy development, clinical trials progress, R&D developments as well as other operational elements. Below is the detail of the attendance:
| BOARD OF DIRECTORS | Number of attendances5 |
|---|---|
| Innoste SA, represented by M. Jean Stéphenne | 11/11 |
| mC4Tx SRL, represented by Miguel Forte | 11/11 |
| Claudia D'Augusta | 11/11 |
| Castanea Management SARL, represented by M. Damian Marron | 11/11 |
| ClearSteer Consulting LLC, represented by Mrs Gloria Matthews | 10/11 |
| M. Jean-Paul Prieels | 11/11 |
| Finsys Management SRL, represented by Jean-Luc Vandebroek | 11/11 |
Out of the activity report included above, it is clear that the Board as a Company organ has been very active with a strong participation and contribution of all its members during the course of 2021.
It was decided that when board seats become available in the years to come, special efforts will be done to attract new board members of the other gender in accordance with Article 3:6 § 2, 6° of the Belgian Companies Code (and with the law of 28 July 2011) to assure that by 01/01/2021 (for newly listed companies, the legal quota is applicable as from their sixth year on the stock market) the appropriate quorum will be reached. This quota applies to the board as a whole, comprising both executive and non-executive directors. The Company's board currently counts 7 board members of which 2 women. As one third of the board must be female and
5 Number of attendances compared to the maximum number of attendances considering time of appointment and conflicts of interest. All Directors who were not present, were excused.
the minimum is rounded to the closest unit, Bone Therapeutics is currently compliant with the gender diversity requirement.
The Board is responsible for a periodic assessment of its own effectiveness with a view to ensuring continuous improvement in the governance of the Company. The contribution of each director is evaluated periodically in order to, taking into account changing circumstances, be able to adapt the composition of the Board. In order to facilitate such evaluation, the directors give their full assistance to the Nomination and Remuneration Committee and any other persons, whether internal or external to the Company, entrusted with the evaluation of the Directors.
Furthermore, the Board will assess the operation of the Committees at least every two to three years. For this assessment, the results of the individual evaluation of the Directors are taken into consideration. The Chairman of the Board and the performance of his role within the Board are also carefully evaluated. The Nomination and Remuneration Committee should, where appropriate and if necessary, in consultation with external experts, submit a report commenting on the strengths and weaknesses to the Board and make proposals to appoint new Directors or to not re-elect Directors. A director not having attended half the number of meetings of the Board will not be considered for re-election at the occasion of the renewal of his mandate.
In addition, the Non-Executive Directors should regularly (preferably once a year) assess their interaction with the Executive Directors and the Executive Committee. At different occasions, the board together with the executive directors took the opportunity to reflect on how to streamline the interactions between both the non-executive directors and the executive directors including the implementation of a reporting on key performance indicators.
The Board of Directors has established a nomination and remuneration committee (the "Nomination and Remuneration Committee") and an Audit Committee (the "Audit Committee"). These committees (the "Committees") have a mere advisory role.
The Board of Directors has determined the terms of reference of each Committee with respect to its respective organization, procedures, policies and activities.
4.3.4.2. Audit Committee
4.3.4.2.1. Role
The Audit Committee supports the Board of Directors in fulfilling its monitoring responsibilities in respect of control in the broadest sense.
The Audit Committee is the main contact point of the external auditor. Without prejudice to the legal duties of the Board of Directors, the Audit Committee is entrusted with the development of a long-term audit program encompassing all of the Company's activities, and is in particular entrusted with:
monitoring the effectiveness of the Company's internal control and risk management systems;
monitoring the internal audit and its effectiveness, including advising the Board of Directors on its annual assessment of the need for an internal auditor;
The final responsibility for reviewing and approving the Company's interim and annual financial statements, as presented to the shareholders, remains with the Board of Directors.
The Corporate Governance Charter of the Company states that the Audit Committee is composed out of at least three members, all its members being Non-Executive Directors. At least one of the members of the Audit Committee is an independent Director, who has accounting and auditing expertise. This expertise in accounting and auditing implies a degree of higher studies in economics or finance or relevant professional experience in those matters.
The Audit Committee is chaired by one of its members, who may not be the chairman of the Board of Directors.
The duration of the mandate of a member of the Audit Committee will not exceed the duration of his/her mandate as director of the Company.
The composition of the Audit Committee is as follows:
| Name | Position | Professional address |
|---|---|---|
| Claudia D'Augusta | President—Independent Director | Calle Estrelas 5, 28224 Pozuelo De Alarcon, Madrid, Spain |
| Jean-Paul Prieels | Member—Independent Director | Chemin du Gros Tienne 61, 1380 Lasne, Belgium |
Currently the Audit Committee is counting 2 members. Claudia D'Augusta and Jean-Paul Prieels qualify both in respect of having the necessary competences and qualifications in respect of accounting and audit matters as well as both members having an extensive experience in the management of biotech companies.
The Audit Committee will meet at least four times a year and whenever a meeting is deemed necessary or advisable for its proper functioning. Decisions are taken by a majority vote. The Chairman of the Board of Directors has a permanent invitation to attend the meetings of the Audit Committee. The Audit Committee may also invite other persons to attend its meetings.
The Audit Committee meets with the external auditor and the internal auditor (if any) at least twice a year, to discuss matters relating to its terms of reference, issues falling within the powers of the Audit Committee and any issues arising from the audit process and, in particular, any material weaknesses in the internal audit.
During 2021, the Audit Committee met four times, discussing various topics such as financial reporting, accounting policies, regulatory compliance or risk management.
The Nomination and Remuneration Committee makes recommendations to the Board of Directors with respect to the appointment of Directors, the Executive Directors and other members of the Executive Committee. In addition, the Nomination and Remuneration Committee makes recommendations to the Board of Directors on the Company's remuneration policy, on any remuneration whatsoever granted to the Directors and members of the Executive Committee and on any agreements or provisions relating to the early termination of employment or collaboration with the Directors and members of the Executive Committee.
The Nomination and Remuneration Committee must ensure in general that the appointment and re-election process of the members of the Board of Directors, the Executive Directors and the members of the Executive Committee is organized objectively and professionally and, in particular and notwithstanding the legal powers of the Board of Directors, has the following duties:
o key elements of the remuneration, including the:
prepare and assess proposals to the Board of Directors regarding the individual remuneration of members of the Board of Directors and the Executive Committee, including, depending on the situation, on variable remuneration and long-term incentives, whether or not stock-related, in the form of stock options or other financial instruments, and, where applicable, on the resulting proposals to be submitted by the Board of Directors to the shareholders;
When performing its duties relating to the composition of the Board of Directors, the Nomination and Remuneration Committee takes into account the criteria for the composition of the Board of Directors, as stated in the terms of reference of the Board of Directors.
The Nomination and Remuneration Committee is composed of two Directors. All members of the Nomination and Remuneration Committee are Non-Executive Directors, with a majority being independent Directors. The majority of the members has the necessary expertise with regard to remuneration policies, i.e. has a degree in higher education and has at least three years' experience in personnel management matters or matters related to the remuneration of Directors and managers of companies. The Board of Directors considers that all members of the Nomination and Remuneration Committee have sufficient experience in personnel management and matters related to remuneration.
The Nomination and Remuneration Committee is chaired by the chairman of the Board of Directors or by another non-executive member of the Nomination and Remuneration Committee. The chairman of the Board of Directors has a permanent invitation to attend the meetings of the Nomination and Remuneration Committee, except for meetings at which his own appointment, removal or remuneration is discussed. The chairman of the Board of Directors does not chair the Nomination and Remuneration Committee when dealing with the designation of his or her successor. The CEO also attends the Remuneration Committee to discuss remuneration of the executive management.
The duration of the term of a member of the Nomination and Remuneration Committee will not exceed the duration of his mandate as director of the Company.
The following Directors are members of the Nomination and Remuneration Committee:
| Name | Position | Professional address |
|---|---|---|
| Innoste SA, with as permanent representative Jean Stéphenne |
Chairman—Independent Director | Avenue Alexandre 8, 1330 Rixensart, Belgium |
The Nomination and Remuneration Committee meets at least twice a year, and whenever a meeting is deemed necessary and advisable for its proper functioning. Decisions are taken by a majority vote. The Nomination and Remuneration Committee may invite other persons to attend its meetings (it being understood that a member of the Board of Directors may not attend the meeting of the Nomination and Remuneration Committee which handles his remuneration).
During 2021, the Nomination and Remuneration Committee met three times with particular emphasis on:
The Board of Directors has established an Executive Committee (the "Executive Committee"), which advises the Board of Directors, and which therefore does not constitute a management committee (comité de direction) under article 7:104 of the Belgian Companies Code and Associations. The terms of reference of the Executive Committee have been determined by the Board of Directors.
As announced on March 29, 2022, some members of the Executive Committee will transition out of their function and leave the organisation in the coming months. This includes Miguel Forte (CEO), Tony Ting (CSO), Stefanos Theoharis (CBO) and Lieve Creten (CFO). The CEO, Miguel Forte, will remain in function until the transition to the new organisation in line with the strategic refocus. In addition, all non-executive members of the Board of Directors have decided to suspend their compensation for the first quarter of 2022 and until further notice.
The Executive Committee assists the Executive Directors in the management of the Company. The Executive Committee reports to and is accountable to the Board of Directors for the discharge of its responsibilities.
The Executive Committee has the following tasks:
The Executive Committee reports to and is accountable to the Board for the discharge of its responsibilities.
The Executive Directors (CEO and CFO) together with the senior managers (CMO, CBO, CSO and COO) are members of the Executive Committee. The Executive Committee is chaired by the CEO of the Company and in his absence by the CFO. The members of the Executive Committee are appointed and may be dismissed by the Board of Directors at any time. The Board of Directors appoints them on the basis of the recommendations of the Nomination and Remuneration Committee, which also assists the Board of Directors on the remuneration policy for the members of the Executive Committee, as well as their individual remunerations.
The remuneration, duration and the conditions of the resignation of the members of the Executive Committee are governed by the agreements entered into between the Company and each member of the Executive Committee in respect of their function within the Company.
| Name | Title |
|---|---|
| mC4Tx SRL, represented by Miguel Forte | Chief Executive Officer and Executive Director |
| Lieve Creten B.V, represented by Lieve Creten | Interim Chief Financial Officer from 20 September 2021 |
| Venture Advances Therapies Limited, represented by Stefanos Theoharis |
Chief Business Officer |
| Anthony Ting | Chief Scientific Officer from 1 April 2021 |
| Clinical Drug Development S.L, represented by Anne Leselbaum |
Chief Medical Officer from 23 August 2021 |
| Anne-Sophie Lebrun | Chief Operations Officer |
The current members of the Executive Committee are listed in the table below:
• mC4Tx SRL, represented by Mr. Miguel Forte, (62) (CEO). Dr. Forte has significant experience in regenerative medicine and in the cell therapy industry, most recently as Chief Executive Officer of Zelluna Immunotherapy, a biopharma company focusing on developing transformative T cell receptors (TCR) based cellular immunotherapies for the treatment of cancers. He is currently also serving as Chief Commercialization Officer and Chair of the Commercialization Committee of the International Society of Cellular Therapy (ISCT).
Dr. Forte held in the past a senior position at the European Medicines Agency (EMA), was Vice-President Global Medical Affairs Inflammation at UCB, Chief Medical Officer (CMO) at TxCell, a cellular therapy company, where he played a key role in TxCell's 2014 IPO, and served as Chief Medical Officer of Bone Therapeutics in 2017. In this last position, Dr. Forte was responsible for the Company's clinical development strategy and advancing its products towards the market. He played a key role in increasing the visibility of the Company throughout the medical community.
With over 20 years professional activity in Clinical, Academic and Pharmaceutical Industry environments with deep experience in the management of operational and strategic functions across Research & Development, Manufacturing, Medical and General Management, Dr. Forte is a recognized leader in the regenerative medicine field who has gained broad expertise in medical and regulatory affairs and commercialization, leading early and late stage clinical trials to market authorization and the launch of new biologic products for various indications.
Dr. Forte graduated in Medicine from the University of Lisbon, specializing in infectious diseases. He then obtained a PhD in Immunology at the University of Birmingham. He is a Fellow of the Faculty of Pharmaceutical Medicine of the Royal College of Physicians, UK and Associate Professor in Health Sciences and Pharmacy at the University of Lisbon.
in stromal cell-based therapeutics. He is currently the Chief Commercialization Officer on the board of directors for the International Society for Cell and Gene Therapy (ISCT) and is serving on committees for the Alliance for Regenerative Medicine (ARM) and the Health and Environmental Sciences Institute (HESI). Most recently, Dr. Ting served in the senior management team of Athersys, a Nasdaq-listed clinical-stage cell therapy company. As Vice President of Regenerative Medicine and Head of Cardiopulmonary Programs, he was responsible for all stages of development, from the bench to the bedside for the cardiovascular and pulmonary programs with Athersys' most advanced cell therapy product MultiStem®, an allogeneic adult bone marrow-derived stem cell product. Prior to joining Athersys, Dr. Ting was a Principal Investigator and Head of the Novel Inhibitors Screening Group at the Institute of Molecular and Cell Biology (IMCB) at the National University of Singapore, which identified new therapeutic targets through high-throughput screening. Dr. Ting received his PhD in Cell Biology from Johns Hopkins University and his B.A. in Biology from Amherst College.
The Executive Committee meets regularly whenever it is required for its proper functioning.
The CEO and the CFO have been appointed as Executive Directors of the Company and can be removed by the Board of Directors of the Company regarding their management function mandates. The CEO and the CFO are entrusted by the Board of Directors with the day-to-day management of the Company.
The role of the Executive Directors & Executive Committee is to develop and maintain adequate control system to assure:
The Audit Committee has guiding, supervisory and monitoring role with respect to the Executive Directors & Executive Committee, as regards the development, maintenance and execution of internal controls and:
No internal audit role has been assigned at this point in time as the size of the business does not justify a permanent role in this respect—typical internal audit activities will be outsourced from time to time whereby the Audit Committee will determine frequency of these audits and select topics to be addressed.
The Company took measures to improve the controls and the efficiency of the payment process and implemented tools to allow for a more detailed budget follow-up.
Based on observations made by the external auditors in respect of payroll process, the recoverable cash advances process, the expenditure process and the process for capitalization of the R&D costs, an action plan was established for implementation in the course of 2016.
A new budgeting process was implemented. Each department was asked to provide a separate budget which were subsequently integrated into a global company budget. The new budgeting procedure was designed to provide a stronger involvement to the departments of the Company providing a more accurate forecast of the spending on a more granular level. A monthly reporting of the actual spending was also installed such that each department could follow their spending compared to their budgets creating an additional level of cost awareness.
The Company also improved its ERP with the integration of the new ERP system for the formalization of the purchase orders and the approval of the orders and the invoices.
Investing in securities involves a high degree of risk. Any prospective investor should carefully consider the following risks and all other information contained in the Prospectus before making an investment decision regarding the Company's securities. The risks and uncertainties described below are significant risk factors, currently known and specific to the Company, which the Company believes are relevant for an investment in its securities. If any of these risks actually occurs, the business, financial condition or results of operations of the Company would likely be materially and/or adversely affected. In such case, the price of the securities could decline, and an investor could lose all or part of its investment. These risks and uncertainties include the following:
Research programs and product candidates of the Company must undergo rigorous preclinical tests and clinical trials, of which the start, timing of completion, number and results are uncertain and could substantially delay or prevent the products from reaching the market. Clinical trials may be delayed for a variety of reasons, including, but not limited to, delays in obtaining regulatory approval to commence a trial, in reaching agreement on acceptable terms with prospective clinical research organizations, contract manufacturing organizations and clinical trial sites, in obtaining approval of the Competent Authority, in recruiting suitable patients to participate in a trial, in having patients complete a trial, in obtaining sufficient supplies of clinical trial materials or clinical sites dropping out of a trial and in the availability to the Company of appropriate clinical trial insurances. In particular, the clinical trials related to orthopedics require longer follow-up periods of up to 24 months.
may have greater financial, human and other resources than the Company does. If the Company fails to comply with its obligations under the agreement pursuant to which it licenses intellectual property rights from third parties, or otherwise experiences disruptions to its business relationships with its licensors, the Company could lose the rights to intellectual property that is important to its business. The Company's activities are dependent—at least in part—on the use of intellectual property rights which are for some projects not owned by it, but have been granted to it pursuant to license agreements and which are important to the business.
• The Company may need substantial additional funding which may not be available on acceptable terms when needed if at all. These future financing needs will depend on many factors, including the progress, costs and timing of its clinical trials, the costs and timing of obtaining regulatory approval, the costs of obtaining, maintaining and enforcing its patents and other intellectual property rights, the costs and timing of maintaining or obtaining manufacturing approval for its products and product candidates, the costs and timing of establishing sales and marketing capabilities. If the necessary funds are not available, the Company may need to seek funds through collaborations and licensing arrangements, which may require it to reduce or relinquish significant rights to its research programs and product candidates, to grant licenses on its technologies to partners or third parties or enter into new collaboration agreements, the terms could be less favorable to the Company than those it might have obtained in a different context.
• Failure to successfully identify, develop and commercialize additional products or product candidates could impair the Company's ability to grow.
Certain significant shareholders of the Company after the Offering may have different interests from the Company and may be able to control the Company, including the outcome of shareholder votes.
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The Company's main sources of cash inflows at current are obtained through capital increases, subsidies, government loans, convertible bonds and where appropriate loans from commercial banks to finance longterm requirements (investment in infrastructure). A key objective of the Board together with the Executive Directors is to ensure that the Company remains adequately financed to meet its immediate and medium-term needs.
If necessary and appropriate, the Company assures itself of short-term borrowing facilities to cover short-term cash requirements.
The Company has limited interest rate risk on long-term loans granted by regional investment bodies but also including the turnover independent reimbursements (30%) related to RCA's concluded as of 2009 are carrying fixed interest rates. The group at current does not undertake any hedging.
The Company believes that its credit risk, relating to receivables, is limited because currently almost all of its receivables are with public institutions. Cash and cash equivalent and short-term deposits are invested with highly reputable banks and financial institutions.
The maximum credit risk, to which the Group is being exposed is being reviewed on an ongoing basis considering the carrying amount of the financial assets. Based on this ongoing evaluation no financial assets were subject to impairment.
The Company is currently not exposed to any significant foreign currency risk.
However, should the Company enter into long-term collaboration agreements with third parties for which revenues would be expressed in a foreign currency, the Company might in such case consider entering into a hedging arrangement to cover such currency exposure (in case the related expenditure is planned in local currency). The Company will also monitor exposure in this respect following the establishment of its US subsidiary. At current, there is no significant exposure in USD.
Within the Board of Directors, an annual strategy meeting is organized:
The Executive Directors develop a long-term financial plan (at least 3 years looking forward) incorporating the strategy decided upon—this plan is updated on a regular basis to keep it in line with the strategy plans.
The Executive Directors develop an annual budget which is approved by the board and which is closely monitored during the year. Deviations are reported to the board and corrective action is taken when necessary.
The Company has implemented an ERP system in support of its financial and logistics management. This system will be evaluated at regular intervals in how far it meets the needs of the organization. Where and when necessary, the system will be further upgraded to address new needs or to strengthen controls.
In general supervision and monitoring of the operations of the Company is done on a permanent/daily basis at all levels within the Company. As a general policy, deviations are reported at all times to the supervisory level.
In its Governance Charter, the Company established several rules to prevent illegal use of inside information by Directors, shareholders, management members and employees, or the appearance of such use.
These prohibitive provisions and the monitoring of compliance with them are primarily intended to protect the market. Insider dealing attacks the very essence of the market. If insiders are given the opportunity to make profits on the basis of inside information (or even if the mere impression thereof is created), investors will turn their back on the market. A decreased interest may affect the liquidity of listed shares and prevents optimal company financing.
An insider can be given access to inside information within the scope of the normal performance of his duties. The insider has the strict obligation to treat this information confidentially and is not allowed to trade financial instruments of the Company to which this inside information relates.
The Company keeps a list of all persons (employees or persons otherwise working for the Company) having (had) access, on a regular or occasional basis, to inside information. The Company will regularly update this list and transmit it to the FSMA whenever the FSMA requests the Company to do so.
The Company complies with the new law of 28 April 2020. This new law combines new rules that have been introduced in Belgian company law, implementing the EU Directive 2017/828 as regards the encouragement of long-term shareholder engagement. The report complies with Article 3:6 of the Companies and Associations Code.
The Nomination and Remuneration Committee (or Remco), set up by the Board, is responsible for outlining a remuneration policy for the Executive and Non-Executive Directors.
Board members are remunerated based on a benchmarking exercise done on a regular basis by the Remco with other peer companies to ensure that this remuneration is fair, reasonable and competitive and is sufficient to attract, retain and motivate the Directors of the Company. In this respect the Remco and the Board shared the view that all board members independent and non-independent should be compensated equally with a fixed compensation. For the chairman and the chairs of the committees the board proposed a supplementary compensation.
At the date of the publication of the annual report, all non-executive members of the Board of Directors have decided to suspend their compensation for the first quarter of 2022 and until further notice.
Without prejudice to the powers granted by law to the shareholders meeting, the Board of Directors may set and revise at regular intervals the rules and the level of compensation for its Directors.
The remuneration of the Executive Directors and the remuneration of the members of the Executive Committee are determined by the Board of Directors on recommendations made by the Nomination and Remuneration Committee, further to recommendations made by the Executive Directors (except where their own remuneration is concerned). The Company strives to offer a competitive remuneration within the sector.
The remuneration of the Directors is determined by the shareholders' meeting upon proposal of the Board of Directors on the basis of the recommendations made by the Nomination and Remuneration Committee. The following remuneration policy is in place for the Non-Executive Directors' remuneration. There has not been a deviation from the remuneration policy.
The Non-Executive Directors received a fixed remuneration in consideration for their membership of the Board of Directors and their membership of the Committees.
The Nomination and Remuneration Committee recommends the level of remuneration for Non-Executive Directors, subject to approval by the Board of Directors and, subsequently, by the shareholders' meeting. The Nomination and Remuneration Committee benchmarks Directors' compensation against peer companies to ensure that it is competitive. Remuneration is linked to the time committed to the Board of Directors and its various committees.
The shareholders' meeting decides to maintain the resolution approved in 2016 concerning the remuneration of the non-executive Directors, as follows: a fixed annual remuneration for the members of the Board of Directors of €20,000; an additional annual remuneration for the Chairman of the Board of Directors of €20,000; and an additional annual remuneration for membership of each committee of the Board of Directors of €5,000 for committee members and €10,000 for the chairman of the committee.
The shareholders' meeting also decides to approve the proposal of the Company's Nomination and Remuneration Committee to grant each year: 6,666 subscription rights to the Chairman of the Board of Directors; 1,000 subscription rights to each non-executive Director of the Company; 500 subscription rights to each committee or sub-committee Chairman; as well as 500 additional subscription rights to any Director in charge of a special mandate within the Board of Directors. The characteristics of the plan can be found in chapter 6.4. The shareholders' meeting confirms that the granting of subscription rights cannot be considered as variable remuneration. Any changes to these fees will be submitted to the shareholders' meeting for approval. The Executive Directors will not receive any specific remuneration in consideration for their membership of the Board of Directors.
The total remuneration for the Non-Executive Directors for 2021 amounts to €150,000. The table below provides an overview of the remuneration per Independent Director.
| Fixed Remuneration (€) | Variable Remuneration (€) |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name, Position | Base compensation |
Attendance fees |
Other benefits |
One year variable |
Multi year variable |
Extra ordinary items (€) |
Pension expense (€) |
Total remu neration (€) |
Fixed | Variable |
| Innoste S.A., with as permanent representative Jean Stéphenne |
50,000 | / | / | / | / | / | / | 50,000 100% | 0% | |
| Claudia D'Augusta | 30,000 | / | / | / | / | / | / | 30,000 100% | 0% | |
| Castanea Management SARL with as permanent representative Damian Marron |
25,000 | / | / | / | / | / | / | 25,000 100% | 0% | |
| Jean-Paul Prieels | 25,000 | / | / | / | / | / | / | 25,000 100% | 0% | |
| ClearSteer Consulting LLC with permanent representative Gloria Matthews |
20,000 | / | / | / | / | / | / | 20,000 100% | 0% | |
| Total | 150,000 | / | / | / | / | / | / | 150,000 100% | 0% |
All Directors will be entitled to a reimbursement of out-of-pocket expenses actually incurred as a result of participation in meetings of the Board of Directors.
There are no loans outstanding from the Company to the members of the Board of Directors. There are no employment or service agreements that provide for notice periods or indemnities between the Company and Non-Executive Directors.
Also, any agreement, entered or extended on or after 3 May 2010, between the Company and a Non-Executive Director, which would provide for a variable remuneration, must be submitted for approval to the next annual shareholders' meeting.
The table below provides an overview of significant positions of shares held directly or indirectly on 31 December 2021 by the Non-Executive Members of the Board of Directors. The overview must be read together with the notes referred to below.
| Shares | |||
|---|---|---|---|
| Non-Executive Directors | Number | %* | |
| Innoste S.A., with as permanent representative Jean Stéphenne | 47,038 | 0.21% | |
| * calculated as the percentage of all outstanding shares and warrants totalling to 22,508,074, of which 21,310,520 are shares and 1,197,554 are warrants) at the date of the Document |
The table below provides an overview of the main condition of the warrant plans as well as information related to the financial year 2020 regarding Non-Executive Members of the Board of Directors. The characteristics of the plan can be found in chapter 6.4.
| Main condition of the warrant plans | Information related to the financial year 2021 | |||||||
|---|---|---|---|---|---|---|---|---|
| Name Position6 |
Plan ID | Grant date | Vesting Date | Retention period |
Exercise period |
A) Number of options vested; B) Value at exercise price (€) |
A) Number of options exercised ; B) Date of exercise |
Number of options expired |
| Jean Stéphenne, Chairman |
Plan A | 28-02-19 | 1/3 at 28-02-2020 2/3 at 28-02-2021 3/3 at 28-02-2022 |
- | 28-02-2019 - 28/02/2029 |
A) 6,666 B) 4.11 |
- | - |
| Jean Stéphenne, Chairman |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 14,332 B) 2.55 |
- | - |
| Claudia D'Augusta, Director |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 3,000 B) 2.55 |
- | - |
| Jean-Paul Prieels, Director |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 3,0007 B) 2,74- |
- | - |
| Damian Marron, Director |
Plan A | 28-02-19 | 1/3 at 28-02-2020 2/3 at 28-02-2021 3/3 at 28-02-2022 |
- | 28-02-2019 - 28/02/2029 |
A) 666 B) 4.11 |
- | - |
| Damian Marron, Director |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 2,000 B) 2.55 |
- | - |
| Gloria Matthews, Director |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 2,000 B) 2.55 |
- | - |
6 Please note that the warrants have been offered to the Company of the representative named in the table, which is the case for Jean Stéphenne, Damian Marron and Gloria Matthews
7 Jean-Paul Prieels refused the warrants in February 2021
The remuneration package applicable in 2021 for the Executive Directors and the members of the Executive Committee is in line with the remuneration levels in comparable companies for these functions.
Due to a challenging economic environment, no variable remuneration was granted for the year 2021 to the Executive Directors and the members of the Executive Committee.
The key components of this policy can be summarized as follows:
| Performance factor | Weight |
|---|---|
| Financial (cash position end of year, budget management, funding strategy development) |
35% |
| Business development & Commercialization strategy development (commercial deal, scientific partnership) |
30% |
| Clinical trials progress (recruitment timelines, sites initiations and activations) |
25% |
| Regulatory Strategy development | 10% |
The maximum variable remuneration is set at [50% * base salary] for the CEO. For the other Executive Directors eligible for variable remuneration, the maximum variable remuneration is set between [25% and 30% * base salary] depending on the positions.
The Company's articles of association explicitly allow to deviate from what has been defined under Article 7:91 of the Belgian Companies Code and Associations (by decision of the General meeting date: 5 February 2015). Article 7:91 stipulates that: "Unless otherwise provided for in the articles of association or expressly approved by the general meeting, at least one quarter of the variable remuneration of an Executive Director in a listed company must be based on predetermined and objectively measurable performance criteria over a period of at least two years, and another quarter must be based on predetermined and objectively measurable criteria over a period of at least three years.
In accordance with Article 3:6 of the Belgian Code of Companies and Associations, this remuneration report includes the amount of the remuneration of, and any other benefits granted to, the Company's CEO, on a broken-down basis.
| Fixed Remuneration (€) | Variable Remuneration (€) |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name, Position |
Base compensation |
Administrator compensation |
Other benefits |
One-year variable |
Multi year variable |
Extra ordinar y items (€) |
Pension expense (€) |
Total remu neration (€) |
Fixed | Variable |
| Miguel Forte, CEO |
319,461 | / | 19,666 | / | / | / | / | 339,127 | 100% | 0% |
Other benefits include transportation repayments and phone bills repayments.
The one-year variable is a bonus based on key performance indicators stated above. The maximum variable remuneration is set at [50% * base salary] for the CEO. For the year 2021, the CEO performance was set at 75%. However, due to a challenging economic environment, no variable remuneration was granted for the year 2021.
In accordance with Article 3:6 of the Belgian Code of Companies and Associations, this remuneration report also includes the amount of the remuneration of, and any other benefits granted to, the Company's other Members of the Executive Committee, on a broken-down basis.
The Executive Committee (excluding the CEO) in place during 2021 was as follows:
Currently, all members of the Executive Committee (excluding Anne-Sophie Lebrun and Anthony Ting) are engaged on the basis of a service agreement. The contracts with all members of the Executive Committee can be terminated at any time, subject to certain pre-agreed notice periods not exceeding 12 months, which may, at the discretion of the Company, be replaced by a corresponding compensatory payment.
Please find the amount of remuneration on a broken-down basis for the other Members of the Executive Committee:
| Fixed Remuneration (€) | Variable Remuneration (€) |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name, Position |
Base compensation |
Administrator compensation |
Other benefits |
One-year variable |
Multi year variable |
Extra ordinar y items (€) |
Pension expense (€) |
Total remunera-tion (€) |
Fixed | Variable |
| Other Members of the Executive Committee |
1,303,471 | / | 56,208 | / | / | / | / | 1,359,679 | 100% | 0% |
Other benefits include transportation repayments and phone bills repayments.
The one-year variable is a bonus based on key performance indicators stated above. The maximum variable remuneration is set between [25% and 30% * base salary] depending on the positions. For the year 2021, the average performance of the Executive Committee (excluding the CEO) was set at 89%. However, due to a challenging economic environment, no variable remuneration was granted for the year 2021.
The table below provides an overview of the main conditions of the warrant plans as well as information related to the financial year 2021 regarding members of the Executive Committee:
| Main condition of the warrant plans | Information related to the financial year 2021 | |||||||
|---|---|---|---|---|---|---|---|---|
| Name Position |
Plan ID | Grant date |
Vesting Date | Retention period |
Exercise period |
A) Number of options vested; B) Value at exercise price (€) |
A) Number of options exercised; B) Date of exercise |
Number of options expired |
| Miguel Forte, CEO |
Plan 2020 |
29-05-20 | 29-05-20 | - | 30/05/2023 - 29/05/2027 |
A) 51,724 B) 2.74 |
- | - |
| Miguel Forte, CEO |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 58,000 B) 2.55 |
- | - |
| Jean-Luc Vandebroek, CFO |
Plan A | 28-02-19 | 1/3 at 28-02-2020 2/3 at 28-02-2021 3/3 at 28-02-2022 |
- | 28-02-2019 - 28/02/2029 |
A) 24,000 B) 4.11 |
- | - |
| Jean-Luc Vandebroek, CFO |
Plan 2020 |
29-05-20 | 29-05-21 | - | 30/05/2023 - 29/05/2027 |
A) 12,000 B) 2.74 |
- | - |
| Jean-Luc Vandebroek, CFO |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 7,500 B) 2.55 |
- | - |
| Olivier Godeaux, CMO |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 5,000 B) 2.55 |
- | - |
| Stefanos Theoharis, CBO |
Plan 2020 |
23-12-20 | 23-12-20 | - | 24/12/2023 - 23/12/2027 |
A) 5,000 B) 2.55 |
- | - |
The table below provides an overview of significant positions of shares held directly or indirectly on 31 December 2021 by the other Members of the Executive Committee. The overview must be read together with the notes referred to below.
| Shares | ||
|---|---|---|
| Executive Committee Member | Number | %* |
| Finsys Management SRL | 2,880 | 0.02% |
| * calculated as the percentage of all outstanding shares and warrants (22,508,074 which is 21,310,520 shares and 1,197,554 warrants) at the date of the Document |
• Miguel Forte
The management agreement between mC4Tx SRL and the Company is tacitly renewed on a yearly basis for a maximum of five years. Both the Company and mC4Tx SRL may terminate the management agreement by means of a six months' notice. Moreover, the Company may terminate the management agreement with immediate effect and without payment of any indemnity in the event mC4Tx SRL commits a serious breach of its obligations under the management agreement. mC4Tx SRL may terminate the management agreement with immediate effect in the event the Company commits a serious breach of its obligations under the management agreement, in which case he will receive an indemnity corresponding to six months' fees. No severance pay has been paid in 2021.
The management agreement also provides for a non-compete clause preventing mC4Tx SRL and Miguel Forte in person from engaging in any activities in the European Union or in the United States that are similar to those being pursued by the Company during the term of the management agreement or for a period of three years after termination of the management agreement.
• Jean-Luc Vandebroek
The management agreement between Finsys Management SRL and the Company is tacitly renewed on a yearly basis for a maximum of five years. Both the Company and Finsys Management SRL may terminate the management agreement by means of a six months' notice. Moreover, the Company may terminate the management agreement with immediate effect and without payment of any indemnity in the event Finsys Management SRL commits a serious breach of its obligations under the management agreement. Finsys Management SRL may terminate the management agreement with immediate effect in the event the Company commits a serious breach of its obligations under the management agreement, in which case he will receive an indemnity corresponding to six months' fees. In addition, in the event of a change of control of the Company, the Company must pay an indemnity corresponding to a year's fees to Finsys Management SRL if the management agreement is terminated within the year of the change of control, unless Finsys Management SRL commits a serious breach of its obligations under the management agreement. This change of control indemnity will also be due in the event the services to be procured by Finsys Management SRL under the management agreement are unilaterally and materially reduced within two years of the change of control and if Finsys Management SRL terminates the management agreement because of this reduction. No severance pay has been paid in 2021.
The management agreement also provides for a non-compete clause preventing Finsys Management SRL and Jean-Luc Vandebroek in person from engaging in any activities in the European Union or in the United States that are similar to those being pursued by the Company during the term of the management agreement or for a period of three years after termination of the management agreement. Finsys Management SRL, represented by Mr Jean-Luc Vandebroek, designated as Chief Financial Officer (CFO) of the Company, with effect as of 20 September 2021. Finsys Management SRL, represented by Mr Jean-Luc Vandebroek, will however remain on the board of directors of Bone Therapeutics as a non-executive director and will support a managed transition of the CFO function till December 31, 2021.
• Stefanos Theoharis
The management agreement between Venture Advances Therapies Limited and the Company is tacitly renewed on a yearly basis for a maximum of five years. Both the Company and Venture Advances Therapies Limited may terminate the management agreement by means of a three months' notice. Moreover, the Company may terminate the management agreement with immediate effect and without payment of any indemnity in the event Venture Advances Therapies Limited commits a serious breach of its obligations under the management agreement. Venture Advances Therapies Limited may terminate the management agreement with immediate effect in the event the Company commits a serious breach of its obligations under the management agreement, in which case she will receive an indemnity corresponding to six months' fees.
The management agreement also provides for a non-compete clause preventing Venture Advances Therapies Limited and Stefanos Theoharis in person from engaging in any activities in the European Union or in the United States that are similar to those being pursued by the Company during the term of the management agreement or for a period of three years after termination of the management agreement.
• Lieve Creten
The management agreement between Lieve Creten B.V and the Company has a fixed duration of 6 months, and can be renewed or converted to be permanent contract via expressed consent. Both the Company and Lieve Creten B.V may terminate the management agreement by means of a one month' notice. Moreover, the Company may terminate the management agreement with immediate effect and without payment of any indemnity in the event Lieve Creten B.V commits a serious breach of its obligations under the management agreement. Lieve Creten B.V may terminate the management agreement with immediate effect in the event the Company commits a serious breach of its obligations under the management agreement, in which case she will receive an indemnity corresponding to six months' fees.
• Anthony Ting
Anthony Ting has an employment contract with the affiliate in US. In the event of termination of the employment contract, the legal provisions of the American law apply.
• Anne Leselbaum
The management agreement between Clinical Drug Development S.L and the Company shall be extended for an indefinite period of time. Both the Company and Clinical Drug Development S.L may terminate the management agreement by means of a six months' notice. Moreover, the Company may terminate the management agreement with immediate effect and without payment of any indemnity in the event Clinical Drug Development S.L commits a serious breach of its obligations under the management agreement. Clinical Drug Development S.L may terminate the management agreement with immediate effect in the event the Company commits a serious breach of its obligations under the management agreement, in which case she will receive an indemnity corresponding to six months' fees.
The management agreement also provides for a non-compete clause preventing Clinical Drug Development S.L and Anne Leselbaum in person from engaging in any activities in the European Union or in the United States that are similar to those being pursued by the Company during the term of the management agreement or for a period of three years after termination of the management agreement.
Anne-Sophie Lebrun has an employment contract with the Company. In the event of termination of the employment contract, the legal provisions of Belgian law apply.
No severance pay has been paid throughout 2021 for any of the leadership team members.
The table below includes the evolution of the Remuneration of Non-Executive Directors, Remuneration of CEO, Remuneration of Core Leadership Team ("CLT"), Company performance and the average remuneration per FTE employee for last 5 years:
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Remuneration of Non-Executive Directors |
|||||
| Total annual remuneration (€) | 223,490 | 227,500 | 172,500 | 150,000 | 150,000 |
| Year-on-year difference | / | 2% | -24% | -13% | 0% |
| Number of Non-Executive Directors under review |
12 | 12 | 7 | 5 | 5 |
| Remuneration of CEO | |||||
| Total annual remuneration (€) | 281,000 | 355,000 | 328,000 | 432,000 | 339,127 |
| Year-on-year difference | / | 26% | -8% | 32% | -21% |
| Remuneration of CLT | |||||
| Total annual remuneration (€) | 1,047,000 | 963,000 | 1,056,000 | 1,060,000 | 1,359,679 |
| Year-on-year difference | / | -8% | 10% | 0,4% | 28% |
| Number of CLT Members under review | 7 | 6 | 7 | 6 | 8 |
| Company performance (thousands of euros) | |||||
| Net profit/(loss) for the period | (11,9) | (14,1) | (10,3) | (11,9) | (12,9) |
| Cash position at the end of year | 8,4 | 8,1 | 8,6 | 14,6 | 9,5 |
| Average remuneration per FTE employee | |||||
| Average employee cost per FTE | 68,990 | 72,151 | 75,493 | 84,879 | 98,491 |
| Year-on-year difference | / | 5% | 5% | 12% | 16% |
The Table below shows a comparison of the 2021 total remuneration of the CEO (in €), to the 2021 remuneration of the lowest paid full time Bone Therapeutics SA employee (in €). The remuneration includes fixed and variable remuneration as well as employee benefits, excluding employer social security charges.
| 2021 | |
|---|---|
| Ratio of Total Remuneration of CEO versus Lowest Remunerated Employee |
1:9 |
There are no provisions allowing the Company to reclaim any variable remuneration paid to the CEO or the other members of the Executive Committee.
Each member of the Executive Committee and each Director needs to focus to arrange his or her personal business to avoid direct and indirect conflicts of interest with the Company. The Company's corporate governance charter contains specific procedures when potential conflicts could appear.
There is a conflict of interest when the administrator has a direct or indirect financial interest adverse to that of the Company. In accordance with Article 7:96 of the Belgian Code on Companies and Associations, a director of a limited company which "has, directly or indirectly, an interest of an economic nature in a decision or an operation under the Board of Directors" is held to follow a particular procedure. If members of the Board, or of the Executive Committee or their permanent representatives are confronted with possible conflicting interests arising from a decision or transaction of the Company, they must inform the Chairman of the Board thereof as soon as possible. Conflicting interests include conflicting proprietary interests, functional or political interests or interests involving family members (up to the second degree).
If Article 7:96 of the Belgian Code on Companies and Associations is applicable, the Board member involved must abstain from participating in the deliberations and in the voting regarding the agenda items affected by such conflict of interest. Below is an overview of the meetings of the Board of Directors in which the conflictof-interest procedure has been applied.
In 2021, all directors of the Company each declared not to have any direct or indirect financial interests conflicting with the decisions to be made.
Currently, as far as the Company is aware, none of the other members of the Board of Directors have a conflict of interest within the meaning of Article 7:96 of the Belgian Companies and Associations Code that has not been disclosed to the Board of Directors. Other than potential conflicts arising in respect of compensationrelated matters, the Company does not foresee any other potential conflicts of interest in the near future.
The Company has granted SCTS personal, non-transferable royalty-free licenses to use, perform, research, develop and manufacture products in the name of the Company. A first license is granted by the Company to SCTS over the technology claimed by the ULB-028 patent family, in the framework of the PROFAB and EXCIP agreements entered into by the Company and SCTS (i.e. a research and development agreement between the Company, SCTS and the Region). A second license is granted by the Company to SCTS over the technology claimed by the BPBONE-001 and 002 patent families in the framework of the JTA PROD agreement (i.e. also a research and development agreement between the Company, SCTS and the Region). A third license is granted by the Company to SCTS over the technology claimed by the BONE-001 patent family; in the framework of the MO SELECT, CRYOFIN, PROSTERIL and ALLOPROD agreements (i.e. also a research and development agreement between the Company, SCTS and the Region).
As from 28 October 2020, all the recoverable cash advances conventions of SCTS have been transferred to Bone Therapeutics SA with the approval of the DGO6, the department in charge of grants & subsidies at the Walloon Region.
As the Company and SCTS operated together closely whereby both companies are occupying the same building (owned by SCTS) and staff employed by SCTS is operating under a consultancy arrangement on administrative and research projects for the account of Bone Therapeutics, agreements have been put in place to govern this relation and a VAT grouping was established between the two companies (effective as of 1 January 2016). All those agreements have been terminated at the signature of the sale of SCTS to Catalent Gosselies SA.
In course of 2022021, expenses related to all activities executed through Bone Therapeutics USA Inc. have been re-invoiced to the Company on 31 December 2021.
As a result of the relationship of the government (i.e. Walloon Region) with some shareholders of the Company and the extent of financing received, the Company judges that the government is a related party. However, the principal amounts recognized in the financial statements relate to government grants for a total of €35.54 million (2019: €33.15 million). Next to the government grants, government agencies granted loans to the Group for a total amount of € 3.97 million (€ 2.42 million in 2019).
There were no transactions with the Executive Committee in 2021.
For information on the Executive Committee remuneration, see Section 4.7.2.2 "Remuneration of the CEO and the other Executive Directors and the Executive Committee".
Article 7:97 of the Belgian Code on Companies and Associations provides for a special procedure which must be followed for transactions with Bone Therapeutics' affiliated companies or subsidiaries. Such a procedure does not apply to decisions or transactions that are entered into the ordinary course of business at usual market conditions or for decisions and transactions whose value does not exceed one percent of the Companies' consolidated net assets.
At the date of 31 December 2021, the Company's capital amounts to €4,923,998.63, represented by 21,310,520 ordinary shares without nominal value.
On 31 December 2021, 1,197,554 warrants were attributed and are still in circulation.
On 5 February 2015, the share capital was increased by a contribution in cash further to the completion of the initial public offering of the Company, in the amount of €6,077,750 with issuance of 2,012,500 shares. The new shares were issued at a price of €16 per share (of which 3.02 in share capital and 12.98 in issuance premium). The aggregate issuance premium amounted to €26,122,250.00. Following the capital increase, the share capital of the Company amounted to €16,544,052.63 and was represented by 5,470,740 shares.
On the same day, the share capital was increased by a contribution in cash further to the conversion of the convertible bonds, in the amount of €3,252,657.78 with issuance of 1,077,039 shares. The new shares were issued at a price of €9.61 per share (of which 3.02 in share capital and 6.59 issuance premium). The aggregate issuance premium amounted to €7,097,342.22. Following the capital increase, the share capital of the Company amounted to €19,796,710.41 and was represented by 6,547,779 shares.
On 11 February 2015, the share capital was increased by contribution in cash further to the exercise of the over-allotment subscription right, in the amount of €911,662.50 with issuance of 301,875 shares. The new shares were issued at a price of €16 per share (of which 3.02 in share capital and 12.98 in issuance premium). The aggregate issuance premium amounted to €3,918,337.50. Following the capital increase, the share capital of the Company amounted to €20,708,372.90, represented by 6,849,654 shares.
On 30 October 2017, the share capital was decreased by an incorporation of losses of an amount of €6,045,571.41 without any reduction of shares.
On 7 March 2018, a total amount of €19.45 million in committed capital has been subscribed.
On 9 March 2018, as a result of the exercise of bond warrants and the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €1,210,754 with issuance of 565,773 shares. The aggregate share premium for this transaction amounts to €4,791,588.
From April 2018 to June 2018, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €464,215 with issuance of 216,923 shares. The aggregate share premium for this transaction amounts to €1,413,251.
On 9 July 2018, the share capital was decreased by an incorporation of losses of an amount of €4,830,335.13 without any reduction of shares.
From July 2018 to December 2018, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €1,024,076 with issuance of 678,196 shares. The aggregate share premium for this transaction amounts to €4,608,258.
From January 2019 to June 2019, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €968,552 with issuance of 641,425 shares. The aggregate share premium for this transaction amounts to € 1,313,907.
Via the Private Placement on 27 June 2019, the Company has raised EUR 5.0 million and placed 1,351,352 new shares with current and new institutional investors in Belgium. The share capital was increased by €2,040,542. The aggregate share premium for this transaction amounts to €2,959,458. Following the capital increase, the share capital of the Company amounted to €15,540,605 and was represented by 10,303,323 shares.
From July 2019 till 12 December 2019, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €479,218 with issuance of 317,363 shares and amounts to €16,019,823.16 and is represented by 10,620,686 shares. The aggregate share premium for this transaction amounts to €595,732.
On 12 December 2019, the Company decided to reduce its share capital by the incorporation of the losses. After the operation the share capital amounts to €5,427,597.19.
On 18 December 2019, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €26,116.08 with issuance of 51,208 shares. The aggregate share premium for this transaction amounts to €136,378.31.
On 29 January 2020, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €80,699.85 with issuance of 158,235 shares. The aggregate share premium for this transaction amounts to €451,774.60.
On 26 February 2020, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €61,311.18 with issuance of 120,218 shares. The aggregate share premium for this transaction amounts to €393,671.85.
On 25 March 2020, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by €79,592.64 with issuance of 156,064 shares. The aggregate share premium for this transaction amounts to €320,397.19.
On 30 April 2020, as a result of the immediate conversion of the convertible bonds placed via a private placement announced on 29 April 2020, the share capital was increased by € 203,302.32 with issuance of 398,632 shares. The aggregate share premium for this transaction amounts to € 796,697.15.
On 7 May 2020, as a result of the conversion of the convertible bonds placed via a private placement on 7 March 2018, the share capital was increased by € 80,629.47 with issuance of 158,097 shares. The aggregate share premium for this transaction amounts to € 306,864.56.
On 21 August 2020, as a result of the conversion of the convertible bonds placed via a private placement announced on 29 April 2020, the share capital was increased by € 100,332.81 with issuance of 196,731 shares. The aggregate share premium for this transaction amounts to € 312,154.16.
On 8 October 2020, as a result of the conversion of the convertible bonds placed via a private placement announced on 29 April 2020, the share capital was increased by € 106,802.16 with issuance of 209,416 shares. The aggregate share premium for this transaction amounts to € 280,691.85.
Via the Private Placement on 15 December 2020, the Company has raised EUR 9.92 million and placed 4,408,881 new shares with current and new institutional investors. The share capital was increased by €2,248,529. The aggregate share premium for this transaction amounts to €7,671,471. Following the capital increase, the share capital of the Company amounted to €8,414,913 and was represented by 16,478,168 shares.
On 26 February 2021, the share capital was decreased by an incorporation of losses totalling €4,602,355 without any reduction of shares.
Via the Private Placement on 3 December 2021, the Company has raised EUR 3.3 million and placed 4,832,352 new shares with current and new institutional investors. The share capital was increased by €1,111,441 The aggregate share premium for this transaction amounts to €2,174,558. Following the capital increase, the share capital of the Company amounted to € 4,923,998.63 and was represented by 21,310,520 shares.
| Date | Transaction | Number and class of shares issued |
Issue price per share (€) including issuance premium |
Capital increase/dec rease (€) |
Share capital after transaction (€) |
Aggregate number of shares after capital increase |
|---|---|---|---|---|---|---|
| 05/02/2015 | Capital increase | 2,012,500 | 16 | 6,077,750 | 16,544,052.63 | 5,470,740 |
| 05/02/2015 | Capital increase | 1,077,039 | 9.51 | 3,252,658 | 19,796,710.41 | 6,547,779 |
| 10/02/2015 | Capital increase | 301,875 | 16 | 911,663 | 20,708,372.90 | 6,849,654 |
| 30/10/2017 | Incorporation of losses |
None | Not applicable | -6,045,571 | 14,662,801.49 | 6,849,654 |
| 09/03/2018 | Capital increase/conver sion convertible bonds |
565,773 | 10.61 | 1,210,754 | 15,873,555.71 | 7,415,427 |
| 04/2018 – 06/2018 |
Capital increase/conver sion convertible bonds |
216,923 | 8.66 (average issue price) |
464,215 | 16,337,770.93 | 7,632,350 |
| 09/07/2018 | Incorporation of losses |
None | Not applicable | -4,830,335 | 11,507,435.80 | 7,632,350 |
| 07/2018— 12/2018 |
Capital increase/conver sion convertible bonds |
678,196 | 8.30 (average issue price) |
1,024,076 | 12,531,511.76 | 8,310,546 |
| 01/2019 – 06/2019 |
Capital increase/conver sion convertible bonds |
641,425 | 3.56 (average issue price) |
968,552 | 13,500,063.51 | 8,951,971 |
| 01/07/2019 | Capital increase | 1,351,352 | 3.70 | 2,040,542 | 15,540,605.03 | 10,303,323 |
| 10/07/2019 | Capital increase/conver sion convertible bonds |
49,522 | 3.79 (average issue price) |
74,778 | 15,615,383.25 | 10,352,845 |
| 21/08/2019 | Capital increase/conver sion convertible bonds |
93,952 | 3.51 (average issue price) |
141,868 | 15,757,250.77 | 10,446,797 |
| 11/09/2019 | Capital increase/conver sion convertible bonds |
33,200 | 3.54 (average issue price) |
50,132 | 15,807,382.77 | 10,479,997 |
| 14/11/2019 | Capital increase/conver sion convertible bonds |
140,689 | 3.13 (average issue price) |
212,440 | 16,019,823.16 | 10,620,686 |
| 12/12/2019 | Incorporation of losses |
None | Not applicable | -10,592,226 | 5,427,597.19 | 10,620,686 |
| 18/12/2019 | Capital increase/conver sion convertible bonds |
51,208 | 3.17 (average issue price) |
26,116 | 5,453,713,27 | 10,671,894 |
| 29/01/2020 | Capital increase/conver sion convertible bonds |
158,235 | 3.37 (average issue price) |
80,700 | 5,534,413.12 | 10,830,129 |
| 26/02/2020 | Capital increase/conver sion convertible bonds |
120,218 | 3.78 (average issue price) |
61,311 | 5,595,724.30 | 10,950,347 |
| 25/03/2020 | Capital increase/conver |
156,064 | 2.79 (average issue price) |
79,593 | 5,675,316.94 | 11,106,411 |
| sion convertible bonds |
||||||
|---|---|---|---|---|---|---|
| 30/04/2020 | Capital increase / conversion convertible bonds |
398.632 | 2.51 (average issue price) |
203,302.32 | 5,878,619.26 | 11.505.043 |
| 07/05/2020 | Capital increase / conversion convertible bonds |
158.097 | 2.45 (average issue price) |
80,629.47 | 5.959.248.73 | 11.663.140 |
| 21/08/2020 | Capital increase / conversion convertible bonds |
196,731 | 2.10 (average issue price) |
100,332.81 | 6,059,581.54 | 11,859,871 |
| 08/10/2020 | Capital increase / conversion convertible bonds |
209,416 | 1.85 (average issue price) |
106,802.16 | 6,166,383.70 | 12,069,287 |
| 15/12/2020 | Capital increase | 4,408,881 | 2.25 | 2,248,529 | 8,414,913.01 | 16,478,168 |
| 26/02/2021 | Incorporation of losses |
None | Not applicable | 4,602,355 | 3,812,557,67 | 16,478,168 |
| 02/12/2021 | Capital increase | 4,832,352 | 0.68 | 1,111,441 | 4,923,998.63 | 21,310,520 |
Pursuant to the decision of the extraordinary shareholders' meeting of the Company held on 9 July 2018 and in accordance with article 7 of the Company's articles of association, the Board has received certain powers within the framework of the authorised capital.
Indeed, on 9 July 2018, the shareholders' meeting decided, in accordance with Articles 604 and 607 paragraph 2, 2° of the old Belgian Companies Code (since then replaced by Articles 7:199 and 7:202 of the BCCA) to renew, for a period of five years, the authorisation of the Board to increase the Company's share capital by a maximum aggregate amount of €11,043,220.58 under the same conditions as those currently provided for in article 7 of the articles of association of the Company, including in the event that the Company receives a communication from the Financial Services and Markets Authority ("Autorité des services et marchés financiers" - FSMA) indicating that it has been informed of a takeover bid concerning the Company.
The Board is authorised to increase the share capital within the framework of the authorised capital, on one or more occasions in the following cases:
The Board may, in the interests of the Company and in compliance with and within the limits of the conditions provided for in the BCCA, limit or cancel the preferential subscription right, even in favour of one or more specified persons, other than the employees of the Company or its subsidiaries.
The capital increases decided pursuant to this authorisation may be carried out by contributions in cash or, within the limits of legal conditions, in kind, with or without the creation of new shares, preferential or not, with or without voting rights, with or without subscription rights. These capital increases may be carried out with or without share premium. The issue premiums, if any, will be allocated to the "Issue Premiums" account which, like the share capital, will constitute the guarantee of third parties and may only be disposed of in accordance with the legal provisions in force for the amendment of the articles of association, except in the case of the incorporation of these premiums into the capital account.
Since the renewal of the authorised capital by the extraordinary shareholders' meeting on 9 July 2018, the Board has made use of its powers as described above:
Consequently, the Board is therefore authorized to increase the share capital of the Company within the framework of the authorized capital for a maximum amount of € 5,007,579.78 (excluding any issue premiums).
At any given time, the shareholders' meeting can resolve to increase or decrease the share capital of the Company. Such resolution must satisfy the quorum and majority requirements that apply to an amendment of the articles of association.
Subject to the same quorum and majority requirements that apply to an amendment of the articles of association, the shareholders' meeting can authorize the Board of Directors, within certain limits, to increase the Company's share capital without any further approval of the shareholders. This authorization needs to be limited in time (i.e. it can only be granted for a renewable period of maximum five years) and in scope (i.e. the authorized share capital may not exceed the amount of the share capital at the time of the authorization).
On 9 July 2018, the extraordinary shareholders' meeting of the Company granted authorization to the Board of Directors to increase the Company's share capital, in one or several times, with a maximum amount of €11,043,220.58 (excluding issuance premiums, if any).
If the Company's share capital is increased within the limits of the authorized share capital, the Board of Directors is authorized to request payment of an issuance premium. This issuance premium will be booked on a non-available reserve account, which may only be decreased or disposed of by a resolution of the shareholders' meeting subject to the same quorum and majority requirements that apply to an amendment of the articles of association.
The Board of Directors can make use of the authorized share capital for capital increases subscribed for in cash or in kind, or effected by incorporation of reserves, issuance premiums or revaluation surpluses, with or without issue of new shares. The Board of Directors is authorized to issue convertible bonds, bonds cum warrants or warrants within the limits of the authorized share capital and with or without preferential subscription rights for the existing shareholders.
The Board of Directors is authorized, within the limits of the authorized share capital, to limit or cancel the preferential subscription rights granted by law to the existing shareholders in accordance with article 596 and following of the Belgian Companies Code. The Board of Directors is also authorized to limit or cancel the preferential subscription rights of the existing shareholders in favor of one or more specified persons, even if such persons are not members of the personnel of the Company or its subsidiaries.
This authorization was granted for a term of five years commencing from the date of the publication of the resolution in the Annexes to the Belgian Official Gazette (Moniteur belge ; 26 July 2018), and can be renewed.
The Company currently has 3 subscription rights plans outstanding:
On 24 February 2014, the extraordinary general shareholders' meeting of the Company created and approved a plan which consisted in the issue of 113,760 subscription rights for employees, consultants and Directors (plan A). At the date of the Document, 87,998 subscription rights have been granted and accepted. The Ordinary General Meeting of 10 June 2020 took note of the number of Plan A subscription rights still available for granting, i.e. 25,761 subscription rights and decided to cancel the said residual subscription rights.
On 28 May 2020, the Board of directors of the Company created and approved a plan which consisted in the issue of 69,978 subscription rights for employees, management members and Directors (plan 2020/05).
On 23 December 2020, the Board of directors of the Company created and approved a plan which consisted in the issue of 99,832 subscription rights for employees, management members and Directors (plan 2020/12).
On 31 December 2021, the following subscription rights are outstanding in accordance with the abovementioned plan:
| Plan | Total |
|---|---|
| CEO | 109,724 |
| CFO | 43,500 |
| CBO | 5,000 |
| Consultant | 5,000 |
| Board members | 29,330 |
| Former CTMO | 5,333 |
| Former CMO | 5,000 |
| Total | 197,554 |
The relevant terms and conditions of the Company's existing warrant plan A are set out below:
The relevant terms and conditions of the Company's existing warrant plan 2020 of May and December are set out below:
Exercise period: the Warrants shall not become exercisable before the first day of the fourth calendar year following the Offer and after the last day of the tenth year following the date of issuance (the "Exercise Period").
Exercise price: the exercise price will be determined by the Board of Directors of the Company, in accordance with the rules applicable to listed companies.
No new warrant plan has been issued in 2021.
On 31 December 2021, the share capital of the Company amounts to €4,923,998.63 and is fully paid up. It is represented by 21,310,520 shares, each representing a fractional value of €0.23 or one 21,310,520th of the share capital. The Company's shares do not have a nominal value.
o convention for a subordinated loan of 25 May 2012 between Novallia S.A. (the Lender) and Bone Therapeutics SA (the Borrower);
o convention for a subordinated loan of 2 May 2016 between Novallia S.A. (the Lender) and Bone Therapeutics SA (the Borrower);
No takeover bid has been instigated by third parties in respect of the Company's equity during the previous financial year and the current financial year.
The articles of the association of the Company do not impose any additional notification obligations other than the notification obligations required in accordance with Belgian law. The voting rights of the major shareholders of the Company differ in no way from the rights of other shareholders of the Company.
.
At 31 December 2021, there are 21,310,520 shares representing a total share capital of the Company of €4,923,999. There are only ordinary shares, and there are no special rights attached to any of the ordinary shares, nor special shareholder rights for any of the shareholders of the Company. The total number of attributed warrants is 232,887.
The graph8 below provides an overview of the shareholders that have notified the Company of their ownership of securities of the Company. This overview is based on the most recent transparency declaration submitted to the Company.
8 Denominator for CPH Banque = 16,478,168, denominator for Nyenburgh Holding NV = 21,310,520, denominator for S.R.I.W. & Sofipole = 21,310,520 and denominator for SFPI = 6,549,779.
On 16 March 2022, Nyenburgh Holding NV declared that its shareholding in Bone Therapeutics' shares had crossed below the 5% threshold.
Dividends can only be distributed if, following the declaration and payment of the dividends, the amount of the Company's net assets on the date of the closing of the last financial year as follows from the statutory financial statements prepared in accordance with Belgian GAAP (i.e., the amount of the assets as shown in the balance sheet, decreased with provisions and liabilities), decreased with the non-amortized activated costs of incorporation and extension and the non-amortized activated costs for research and development, does not fall below the amount of the paid-up capital (or, if higher, the called capital), increased with the amount of non-distributable reserves. In addition, pursuant to the Belgian Company Code and the articles of association, the Company must allocate at least 5% of its annual net profits under its statutory non-consolidated accounts to a legal reserve until the reserve equals 10% of the Company's share capital.
In accordance with Belgian law, the right to collect dividends declared on ordinary shares expires five years after the date the Board of Directors has declared the dividend payable, whereupon the Company is no longer under an obligation to pay such dividends.
The Company has never declared or paid any dividends on its shares.
The Company's dividend policy will be determined by, and may change from time to time by determination of, the Company's Board of Directors. Any declaration of dividends will be based upon the Company's earnings, financial condition, capital requirements and other factors considered important by the Board of Directors. The calculation of amounts available to be distributed as dividends or otherwise distributed to shareholders must be made on the basis of the Belgian statutory financial statements, taking into account the limits set out in the Belgian Company Code.
Belgian law and the Company's articles of association do not require the Company to declare dividends. The Board of Directors expects to retain all earnings, if any, generated by the Company's operations for the development and growth of its business and does not anticipate paying any dividends to the shareholders in the near future.
The Board of Directors, represented by all its members, declares that, to the best of its knowledge, the consolidated financial statements for the twelve-month period ended 31 December 2021, which have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Company and the undertakings included in the consolidation as a whole, and that the management report includes a fair review of the important events that have occurred during the twelve months of the financial year and of the major transactions with the related parties, and their impact on the consolidated financial statements, together with a description of the principal risks and uncertainties that the Company can face.
On behalf of the Board of Directors,
mC4Tx SRL, Innoste S.A.,
28 April 2022 | 19:36 BST 28 avril 2022 | 20:09 BST
represented by Miguel Forte represented by Jean Stéphenne
7.2. Statutory Auditor's Report on the Consolidated Financial Statements for the Year ended 31 December 2021
| Consolidated Assets IFRS per: (in thousands of euros) |
Note | 31/12/21 | 31/12/20 |
|---|---|---|---|
| Non-current assets | 5,481 | 6,019 | |
| Intangible assets | 8.5.1 | 24 | 28 |
| Property, plant and equipment | 8.5.2 | 863 | 226 |
| Investments in associates | 8.5.3 | 12 | 12 |
| Other non-current assets | 8.5.6 | 96 | 1,296 |
| R&D Tax Credits | 8.5.4 | 4,486 | 4,456 |
| Current assets | 14,291 | 18,817 | |
| Trade and other receivables | 8.5.5 | 2,581 | 3,840 |
| Other current assets | 8.5.7 | 1,000 | 328 |
| Financial assets | 8.5.6 | 1,200 | 0 |
| Cash and cash equivalents | 8.5.8 | 9,510 | 14,648 |
| TOTAL ASSETS | 19,772 | 24,835 |
| Consolidated Equity & Liabilities IFRS per: (in thousands of euros) |
Note | 31/12/21 | 31/12/20 |
|---|---|---|---|
| Equity attributable to owners of the parent | (6,765) | 3,325 | |
| Share capital | 4,924 | 8,415 | |
| Share premium | 69,499 | 67,594 | |
| Accumulated losses | (81,488) | (73,080) | |
| Other reserves | 301 | 396 | |
| Total Equity | 8.5.8 | (6,765) | 3,325 |
| Non-current liabilities | 19,864 | 11,720 | |
| Interest bearing borrowings | 8.5.9 | 19,752 | 11,720 |
| Other non-current liabilities | 112 | 0 | |
| Current liabilities | 6,673 | 9,790 | |
| Interest bearing borrowings | 8.5.9 | 1,046 | 3,077 |
| Trade and other payables | 8.5.10 | 4,822 | 5,514 |
| Other current liabilities | 8.5.10 | 804 | 1,199 |
| Total liabilities | 26,537 | 21,510 | |
| TOTAL EQUITY AND LIABILITIES | 19,772 | 24,835 |
| (in thousands of euros) | For the year ended 31 December |
|
|---|---|---|
| 2021 | 2020 | |
| Revenue Other Operationg income |
1,000 1,745 |
1,000 2,666 |
| Total revenues and operating income | 2,745 | 3,666 |
| Research and development expenses General and administrative expenses |
(11,684) (3,087) |
(15,416) (3,267) |
| Operating profit/(loss) | (12,026) | (15,017) |
| Financial income | 333 | 0 |
| Interest income | 25 | 24 |
| Financial expenses Exchange gains/(losses) |
(1,147) (20) |
(747) (13) |
| Result Profit/(loss) before taxes | (12,836) | (15,754) |
| Income taxes | (89) | (78) |
| Net Income (Loss) from continuing operations | (12,925) | (15,832) |
| Net Income (Loss) from discontinued operations | 0 | 3,891 |
| TOTAL COMPREHENSIVE INCOME/(LOSS) OF THE PERIOD | (12,925) | (11,940) |
| Basic and diluted loss per share (in euros) - continuing operations | (0.77) | (1.35) |
| Basic and diluted loss per share (in euros) - discountinued operations | 0.00 | 0.33 |
| Profit/(loss) for the period attributable to the owners of the Company | (12,925) | (11,940) |
| Total comprehensive income/(loss) for the period attributable to the owners of the Company |
(12,925) | (11,940) |
| Consolidated Statements of Cash Flows | For the 12-months period ended 31 December |
|
|---|---|---|
| (in thousands of euros) | 2021 | 2020 |
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Operating profit/(loss) Adjustments non-cash |
(12,026) | (17,448) |
| Depreciation, Amortisation and Impairments | 186 | 601 |
| Share-based compensation Grants income related to recoverable cash advances |
(99) (590) |
266 (1,450) |
| Grants income related to patents | (69) | (52) |
| Grants income related to tax credit | (594) | (853) |
| Other | (65) | (88) |
| Movements in working capital: | ||
| Trade and other receivables (excluding government grants) | (624) | (1,014) |
| Trade and other Payables | (684) | 1,723 |
| Cash generated from operations | (14,565) | (18,315) |
| Cash received from grants related to recoverable cash advances | 468 | 1,745 |
| Cash received from non-refundable Subventions | 331 | 0 |
| Cash received from grants related to patents Cash received from grants related to other grants |
47 0 |
56 117 |
| Cash received from grants related to tax credit | 1,024 | 394 |
| Income taxes paid | (89) | (78) |
| Net cash used in operational activities | (12,784) | (16,082) |
| CASH FLOW FROM INVESTING ACTIVITIES Interests received |
3 | 2 |
| Purchases of property, plant and equipment | (193) | (78) |
| Purchases if intangbile assets | (14) | (15) |
| Proceed from the sale of SCTS | 0 | 12,000 |
| Net cash used in investing activities | (204) | 11,908 |
| CASH FLOW FROM FINANCING ACTIVITIES | ||
| Proceeds from government loans | 201 | 748 |
| Repayment of government loans | (372) | (122) |
| Proceeds from loans from related parties Reimbursements of related parties loans |
0 (675) |
1,550 (1,864) |
| Reimbursements of financial lease liabilities | (89) | (267) |
| Proceeds from bank | 8,000 | 4,000 |
| Reimbursements of other financial loans Interests paid |
(1,500) (724) |
(4,625) (679) |
| Guarantee facilities | 0 | (1,200) |
| Payments to acquire Non-controlling interests | 0 | (1,956) |
| Transaction costs | (277) | (1,180) |
| Proceeds from issue of equity instruments of the Company Proceeds received from convertible loan |
3,286 0 |
11,783 4,000 |
| Net cash generated from financing activities | 7,850 | 10,188 |
| NET INCREASE (DECREASE) IN CASH AND CASH | ||
| EQUIVALENTS | (5,138) | 6,015 |
| CASH AND CASH EQUIVALENTS at beginning of the period | 14,648 | 8,633 |
| CASH AND CASH EQUIVALENTS at end of the period | 9,510 | 14,648 |
| Attributable to owners of the parent | ||||||
|---|---|---|---|---|---|---|
| (in thousands of euros) | Share capital |
Share premium |
Accumulated Losses & Other reserves |
Total equity attributable to owners of the parent |
Non controlling interests |
TOTAL EQUITY |
| Balance at 1 January 2020 | 5,454 | 58,026 | (61,432) | 2,048 | 0 | 2,048 |
| Total comprehensive income of the period | 0 | 0 | (11,940) | (11,940) | 0 | (11,940) |
| Issue of share capital | 2,961 | 10,534 | 0 | 13,495 | 0 | 13,495 |
| Transaction costs for equity issue | 0 | (966) | 0 | (966) | 0 | (966) |
| Equity component for Convertible Bonds | 0 | 0 | 466 | 466 | 0 | 466 |
| Allocation to the legal reserve | 0 | 0 | 3 | 3 | 0 | 3 |
| Share-based payment | 0 | 0 | 266 | 266 | 0 | 266 |
| Other | 0 | 0 | (48) | (48) | 0 | (48) |
| Balance at 31 December 2020 | 8,415 | 67,594 | (72,684) | 3,325 | 0 | 3,325 |
| Balance at 1 January 2021 | 8,415 | 67,594 | (72,684) | 3,325 | 0 | 3,325 |
| Total comprehensive income of the period | 0 | 0 | (12,925) | (12,925) | 0 | (12,925) |
| Issue of share capital | 1,111 | 2,175 | 0 | 3,286 | 0 | 3,286 |
| Incorporation of losses | (4,602) | 0 | 4,602 | 0 | 0 | |
| Transaction costs for equity issue | 0 | (277) | 0 | (277) | 0 | (277) |
| Equity component for Convertible Bonds | 0 | 0 | (89) | (89) | 0 | (89) |
| Share-based payment | 0 | 0 | (99) | (99) | 0 | (99) |
| Other | 0 | 7 | 7 | 14 | 0 | 14 |
| Balance at 31 December 2021 | 4,924 | 69,499 | (81,188) | (6,765) | 0 | (6,765) |
The Group's equity decreased from € 3.33 million at the end of December 2020 to a negative amount of € 6.75, as a result of the incurred losses for the period (amounting to € 12,93 million) which have been partially offset by the Private Placement on 3 December 2021, during which the Company raised € 3.3 million. The related transaction costs for the Capital Raise amounted € 0.28 million. In February 21, the company incorporated losses into the share capital amounting to € 4,6 million.
The Equity component for Convertible bonds decreased by € 0.1 million compared to the prior year , following the conversion of the loan from Patronale into a Non-Convertible bond in September 2021.
The Share-based payments decreased by € 0.1 million compared to last year following the expiration of various SOP warrants for the former CEO and CTMO during the course of 2021.
Bone Therapeutics SA (the "Company") is a limited liability company governed by Belgian law. The address of its registered office is Rue Granbonpré 11 - Bâtiment H (bte 24), 1435 Mont-St-Guibert, Belgium. The shares of the Company are publicly listed on NYSE Euronext Brussels and Paris since 6 February 2015.
Bone Therapeutics USA Inc "BT US" together with the Company, it is referred as the "Group"). The Company is active in regenerative therapy specializing for addressing unmet medical needs in the field of bone diseases and orthopedics. The Company combines in-depth knowledge of bone diseases and stem cell science, a strong expertise in both cell manufacturing for human use and cell therapy clinical trials and regulatory affairs, which have allowed to establish a leadership position in the field of cell therapy for orthopedics and bone diseases.
The financial statements of Bone Therapeutics SA for the twelve months ended 31 December 2021 were authorized for issue by the Board of Directors on 28 April 2022. These statements have been audited by Deloitte Réviseurs d'Entreprises SRL, the statutory auditor of the Company and independent registered public accounting firm.
The principal accounting policies applied in the preparation of the consolidated financial statements are set out below.
The Group's consolidated financial statements for the year ended 31 December 2019 have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union ("IFRS").
In the current year, the Group has applied for a number of new and revised IFRSs issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2021.
The following IFRS standards, interpretations and amendments that have been published but that are not yet effective, have not been applied to the IFRS financial statements closed on 31 December 2021:
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts Cost of Fulfilling a Contract (applicable for annual periods beginning on or after 1 January 2022)
Amendments to IFRS 3 Business Combinations: Reference to the Conceptual Framework (applicable for annual periods beginning on or after 1 January 2022)
It is not expected that the initial application of the above-mentioned IFRS standards, interpretations and amendments will have a significant impact on the consolidated financial statements. There is no material impact of the application of new standards and interpretations that became effective for 2021.
The consolidated financial statements are presented in thousands of euros, unless otherwise stated. Euro is also the functional currency. The USD is the functional currency of Bone Therapeutics USA Inc. The functional currency is the currency of the economic environment in which an entity operates. The consolidated financial statements have been prepared on a historical basis, unless otherwise stated.
The consolidated financial statements incorporate the financial statements of the Company and entities directly or indirectly controlled by the Company.
Control is achieved when the Company:
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power, including:
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests.
All intragroup assets and liabilities, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint arrangement. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
In its consolidated financial statements, the Group uses the equity method of accounting for investments in associates and joint ventures. Under the equity method, the investment is initially recognized at cost in the consolidated statement of financial position and adjusted thereafter to recognize the Group's share of the profit or loss and other comprehensive income of the associate or joint venture.
An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate or joint venture. On acquisition of the investment, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included in the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.
The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture or when the investment is classified as held for sale.
Intangible assets are recognized if and only if it is probable that future economic benefits associated with the asset will flow to the Group and the cost of that asset can be measured reliably. Intangible assets with finite useful lives that are acquired separately are measured at cost less accumulated amortization and accumulated impairment losses. The cost of a separately acquired intangible asset comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates. Any directly attributable cost of preparing the asset for its intended use is also included in the cost of the intangible asset. Amortization is recognized on a straight-line basis over the estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. Recognition of costs in the carrying amount of an intangible asset ceases when the asset is in the condition necessary for it to be capable of operating in the manner intended by the Group.
Intangible assets acquired in a business combination are measured at fair value at the date of acquisition. Subsequent to initial recognition, intangible assets acquired in a business combination are subject to amortization and impairment test, on the same basis as intangible assets that are acquired separately.
| Intangible assets | Estimated useful life |
|---|---|
| Software | 3 years |
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.
Consistently with industry practices, management concluded that development costs incurred by the Group do not meet the recognition conditions given the fact that:
Property, plant and equipment are recognized as assets at acquisition or production cost if and only if it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The cost of an item of property, plant and equipment comprises its purchase or production price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, together with the initial estimation of the costs of dismantling and removing the asset and restoring the site on which it is located, if applicable.
After initial recognition at historical cost, property, plant and equipment owned by the Group are depreciated using the straight-line method and are carried on the balance sheet at cost less accumulated depreciation and impairment. Depreciation begins when the asset is capable of operating in the manner intended by management and is charged to profit or loss, unless it is included in the carrying amount of another asset. The components of an item of property, plant and equipment with a significant cost and different useful lives are recognized separately. Lands are not depreciated. The residual value and the useful life of property, plant and equipment are reviewed at least at the end of each reporting period. The depreciation method is also reviewed annually.
| Property, plant and equipment | Estimated useful life |
|---|---|
| Buildings | 20 years |
| Leasehold Improvements | The shorter of the useful life and the lease term |
| Office furniture | 4 years |
| Lab equipment | 3 to 5 years |
| IT equipment | 3 years |
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Property, plant and equipment at the end of December 2021 amount to €0.86 million with an increase mainly due to the new building rental contract with Watson Creek following the recent headquarter move from Gosselies tothe new facilities in Mont-Saint-Guibert in line with IFRS 16.
The determination of classification of leases is made at the inception of the lease: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.
The Group leases laboratory equipment, facilities, car and IT equipment.
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
The lease term covers the non-cancellable period for which the Group has the right to use an underlying asset, together with both:
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
Payments associated with short-term leases and leases of low-value assets (determined by the Management) are directly recognized as an expense in the comprehensive income statement. Short-term leases are leases with a lease term of 12 months or less and low-value assets primarily comprise IT equipment.
The Group does not sublease any equipment to external parties. If the Group will sublease any equipment, the Group will assess whether the sublease is a finance or operating lease in the context of the right-of-use asset being leased. The sublease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying right-of-use asset. It is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of the underlying right-of use asset.
At the end of each reporting period, the Group assess whether there is any indications that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Recoverable amounts of intangible assets with an indefinite useful life and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. The value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
An impairment loss is recognized whenever recoverable amount is below carrying amount. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. An impairment loss on goodwill can never be reversed.
Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value (except for trade receivables that are measured at transaction amount). Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
The financial assets include receivables (including trade receivables and other receivables), derivative financial instruments, financial assets at fair value through profit or loss, cash and cash equivalents.
The acquisitions and sales of financial assets are recognised at the transaction date.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
Debt instruments that meet the following conditions are subsequently measured at amortized cost:
Debt instruments include:
Receivables related to government grants, including recoverable cash advances ("avances récupérables"), are recognised when there is reasonable assurance that the Group will comply with the conditions attaching to them and the grant will be received, which generally corresponds to the date at which the Group obtains a confirmation letter from the authorities (see "government grants" below).
In relation to the impairment of financial assets an expected credit loss model is applied. The expected credit loss model requires the Group to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets.
Specifically, the following assets are included in the scope for impairment assessment for the Group: 1) trade receivables; 2) non-current receivables 3) cash and cash equivalents.
IFRS 9 provides a simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit losses for trade receivables without a significant financing component (short-term trade receivables). The Group determines the expected credit losses on these items by using a provision matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the credit risk profile of these assets is presented based on their past due status in terms of the provision matrix.
IFRS 9 requires the Group to measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. On the other hand, if the credit risk on a financial instrument has not increased significantly since initial recognition, the Group is required to measure the loss allowance for that financial instrument at an amount equal to 12 month expected credit losses. For long-term receivables IFRS 9 provides a choice to measure expected credit losses applying lifetime or 12 month expected credit losses model. The Group selected the lifetime expected credit losses.
All bank balances are assessed for expected credit losses as well. They may have low credit risk at the reporting date if they are held with reputable international banking institutions.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition.
The amortized cost of a financial instrument is the amount at which the financial asset or liability is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance on the financial asset. On the other hand, the gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss allowance.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs. Repurchase of the Company's own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.
Convertible bonds which include warrants are considered as a single financial instrument measured at fair value through profit and loss (see note 8.3). A hybrid instrument consists of a host debt and an embedded derivative that is not an own equity component and is therefore measured at fair value through profit or loss, such as, e.g. a convertible bond for which the equity conversion feature does not meet the definition of an own equity instrument of the entity.
We refer to note 8.3 for more explanation.
Except for the convertible bonds including warrants (see note 8.3.2), which are measured at fair value through profit and loss, all financial liabilities of the Group are subsequently measured at amortized cost using the effective interest method.
Financial liabilities at amortized cost include:
The Group derecognizes financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.
Government grants are assistance by government, government agencies and similar bodies, whether local, national or international, in the form of transfers of resources to the Group in return for past or future compliance with certain conditions.
The Group recognizes a government grant only when there is a reasonable assurance that the Group will comply with the conditions attached to the grant and the grant will be received. As such, a receivable is recognized in the statement of financial position and measured in accordance with the accounting policy mentioned above (see financial assets).
With respect to Recoverable Cash Advances or RCA's ("Avances Récupérables") whereby in case of successful project completion and a positive decision by the Company to exploit the results of the project, 30% of the amount will be reimbursed through a fixed reimbursement schedule and up to 170% under the form of royalties, the amount recognized as a grant is the difference between the fair value of the expected reimbursement and the actual amount received by the Company as a RCA. The Group recognizes the portion of the RCA that is expected to be reimbursed as a liability. This liability is initially measured at fair value and subsequently at amortized cost, where the carrying amount of a liability is determined by using the effective interest rate. Furthermore, the discount rate is not adjusted every year.
On 10 May 2016, the IFRS Interpretation Committee ("IFRS IC") published the final agenda decision IAS 20— Accounting for repayable cash receipts. In this context, the IFRS IC clarified that an RCA gives rise to a financial liability in the scope of IFRS 9. This financial liability is initially measured at fair value and any difference with the cash to be received from the Walloon Region is treated as a government grant in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. Subsequent to the initial recognition, the financial liability is measured at amortized cost using the effective interest method on the basis of the estimated contractual cash flows with changes in value due to a change in estimated cash flows recognized in profit or loss.
In addition, the benefit of a government loan without interest or at a below market rate of interest is treated as a government grant and measured as the difference between the initial discounted value of the loan and the proceeds received or to be received.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs which the grants are intended to compensate. As a result, grants relating to costs that are recognized as intangible assets or property, plant and equipment (grants related to assets or investment grants) are deducted from the carrying amount of the related assets and recognized in the profit or loss statement consistently with the amortization or depreciation expense of the related assets. Grants that intend to compensate costs that are expensed as incurred are released as income when the subsidized costs are incurred, which is the case for grants relating to research and development costs as incurred.
Government grants that become receivable as compensation for expenses or losses already incurred are recognized in profit or loss of the period in which they become receivable.
The portion of grants not yet released as income is presented as deferred income in the statement of financial position. In the statement of comprehensive income, government grants are presented as other operating income or financial income depending on the nature of the costs that are compensated.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. There are currently no hedging instruments.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. Derivatives are not offset in the financial statements unless the Group has both legal right and intention to offset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
The tax currently payable is based on taxable profit for the year, which differs from profit as reported in the consolidated statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. Income tax for the current and prior periods is recognized as a liability to the extent that it has not yet been settled, and as an asset to the extent that the amounts already paid, exceeds the amount due. The Group's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred taxes are recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences and tax losses carried-forward to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and tax losses carriedforward can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates/laws that have been enacted or substantively enacted by the end of the reporting period. The measurement reflects the Group's expectations, at the end of the reporting period, as to the manner in which the carrying amount of its assets and liabilities will be recovered or settled.
The deferred tax asset on the tax credit has been treated as a government grant and presented as other operating income in the consolidated statement of comprehensive income.
The Group is currently not generating revenue from contracts with customers other than from licensing agreements. Most income recognized by the Group is resulting from government grants.
The Group enters into license and/or collaboration agreements with third-party biopharmaceutical partners. Revenue under these arrangements may include non-refundable upfront payments, product development milestone payments, commercial milestone payments and/or sales-based royalty payments.
• Upfront Payment
Licensing revenues representing non-refundable payments received at the time of signature of license agreements are recognized as revenue upon signature of the license agreements when the Group has no significant future performance obligations and collectability of the fees is assured.
Milestone payments represent amounts received from the Group's customers or collaborators. The receipt of which is dependent upon the achievement of certain scientific, regulatory, or commercial milestones. Under IFRS 15, milestone payments generally represent a form of variable consideration as the payments are likely to be contingent on the occurrence of future events. Milestone payments are estimated and included in the transaction price based on either the expected value (probability-weighted estimate) or most likely amount approach. The most likely amount is likely to be most predictive for milestone payments with a binary outcome (i.e., the Group receives all or none of the milestone payment). Variable consideration is only recognized as revenue when the related performance obligation is satisfied, and the Group determines that it is highly probable that there will not be a significant reversal of cumulative revenue recognized in future periods.
Royalty revenues arise from our contractual entitlement to receive a percentage of product sales achieved by co-contracting parties. As the Company has not yet obtained the approval for commercialization, the Company did not yet receive any royalty revenue at the date of the Annual Report. Royalty revenues, if earned, will be recognized on an accrual basis in accordance with the terms of the collaboration agreement when sales can be determined reliably and there is a reasonable assurance that the receivables from outstanding royalties will be collected.
A share-based payment is a transaction in which the Group receives goods or services either as consideration for its equity instruments or by incurring liabilities for amounts based on the price of the Group's shares or other equity instruments of the Group. The accounting for share-based payment transactions depends on how the transaction will be settled, that is, by the issuance of equity, cash, or both equity or cash.
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, if any, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equitysettled employee benefits reserve.
For cash-settled share-based payments, a liability is recognized for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is re-measured, with any changes in fair value recognized in profit or loss for the year.
The Company offers post-employment, death, disability and healthcare benefit schemes to certain categories of employees.
Disability, death and healthcare benefits granted to employees of the Company are covered by an external insurance company, where premiums are paid annually and expensed as they were incurred.
As a consequence of the law of 18 December 2015, the minimum guaranteed rates of return were modified as follows:
In view of the minimum returns guarantees, those plans qualify as Defined Benefit plans.
Due to the fact that the Belgian law prescribes that the employer would guarantee a minimum rate of return on the contributions, such plans are classified as defined benefit plans under IFRS.
The cost of providing benefits is determined using the projected unit credit (PUC) method, with actuarial valuations being carried out at the end of each annual reporting period.
Events after the reporting period which provide additional information about the Group's position at the closing date (adjusting events) are reflected in the financial statements. Events after the reporting period which are not adjusting events are disclosed in the notes if material.
In the application of the Group's accounting policies, which are described above, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The followings are areas where key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years:
On 7 May 2020, the Company announces that it has received €4.0 million as a result of issuing, to existing investors, subordinated bonds with the option to convert. This enables Bone Therapeutics' bond investors to be repaid in the company's shares, with a conversion price of €7.0 per share. This additional EUR 4.0 million financing has been achieved a week after the €11.0 million financing round.
The unsecured convertible bonds will be issued in registered form, redeemable at 100% of their principal amount with a maturity of 38 months and a coupon of 8% per annum. The coupon will be payable annually. The conversion price of €7.0 per share mitigates the dilution of existing shareholders in the event that the bonds would be redeemed in ordinary shares of Bone Therapeutics.
The Company issued 1,600 bonds at the nominal amount of €2,500 each of which the 800 bonds have been assigned to Integrale. The loan with Patronale has been converted into subordinated bonds and warrants in September 2021. (see note 8.3.3). The initial convertible loan with Integrale was not renegotiated and remains in line with prior year conditions. As an immediate result the initial 1,600 bonds at the nominal amount of €2,500 each in May 2020 have been reduced to 800 bonds at the initial nominal amount of €2,500 eachConvertible Bonds entitle bondholders to convert their bonds into a fixed number of shares of the issuing company usually at the time of their maturity. Convertible bonds are a type of compound financial instrument with characteristics of both liability and equity. IFRS propose that the issuing company must separately identify the liability and equity components of convertible bonds and treat them accordingly in the financial statements. For this reason, Management made estimation of the fair value of the liability component which is calculated by discounting the future cash flows of the bonds (interest and principal) at the rate of a similar debt instrument without the conversion option. The total valuation of the liability on 31 December 2021 amounts to € 1.96 million. The Management made judgments in relation of this operation and considered the following elements: a market-based interest of 10% and a a maturity date of 38 months after the issue date for the calculation of the fair value. The difference has been recognized into the equity.
The consolidated balance sheet on 31 December 2021 shows a negative equity in the amount of € 6.8 million and a cash position of €9.5 million. The company is still in a development phase conducting clinical trials to achieve regulatory approval and pre-clinical development which implies various risks and uncertainties. Based on the 2022 revised projected cash forecast considering an operating cash burn of €8 million to €10 million and a projected financing cash burn of around €1.6 million, the Company anticipates having sufficient cash to carry out its revised strategic focus, namely achieving an efficacy outcome milestone with ALLOB TF2 Phase IIb clinical study by early 2023 taking into account the following relevant assumptions:
The assumptions made above comprise various risks and uncertainties, mainly but not limited to the timing of collection of certain funds, the uncertainty about the ALLOB top line results, including but not limited to the uncertainty of the clinical trial development process for ALLOB and the uncertainty related to the equity. Based on cash flow forecasts for the next twelve months including significant expenses and cash outflows for the ongoing clinical trials and the issuance of the Convertible Bond in the amount of € 5 million, the cash runway of the company is expected into Q1 2023. Hence the Company will continue to require additional financing to continue its operations in the longer turn. The Company also continues to evaluate other options with a potential positive impact on the going concern which are however currently not included in the 2022 revised projected cash forecast.
• Completion of business deal with a Chinese partner:
Discussions are still ongoing with a Chinese partner for the global rights for ALLOB, Bone Therapeutics' allogeneic osteoblastic cell therapy product. If the licensing deal is concluded, the partner would be responsible for all future costs of development of ALLOB, including the ongoing ALLOB TF2 Phase IIb trial and costs related to development, process development (scale up) and manufacturing of the product. The negotiations for the global rights agreement are taking longer than expected. The envisaged completion of a final binding agreement has been delayed and is now foreseen to be potentially completed in the second quarter 2022 after approval by the Board of directors. Milestone payment from the licensees Link Health-Pregene of €0,930 million is a condition precedent to this new potential global rights deal.
• Interim analysis ALLOB clinical study
Management is currently assessing the possibility to anticipate the assessment of the efficacy of ALLOB through an interim analysis of the clinical results at about 66 patients with 3 months followup. Although no formal decision has been taken by the Board yet, this would give the opportunity to define at an early stage the value proposition of ALLOB and hence optimizing the ongoing study costs while at the same time providing an opportunity to initiate strategic discussions with potential partners based on positive clinical results.
• Potential M&A options
The Board is still investigating various M&A options to secure BT for the longer term. These options could increase the asset portfolio of Bone and would provide further potential for the repayment of outstanding debts of which first capital repayments are due in June 2023.
Based on the completion of the current CB financing operation as mentioned above and the announced sole focus on the completion of the ALLOB TF2 study with related downsizing of the company, the Board is of the opinion that it is appropriate to prepare the 2021 financial statements of the Company under the assumption of going concern, considering a projected operational cash burn of €8 to €10 million for 2022 and a cash runway till Q1 2023. The latter should allow the achievement of an efficacy outcome milestone in the ALLOB TF2 study. In the event that the Chinese deal is not concluded in the meantime, positive topline results should lead to strategic discussions with partners who already expressed their interest to top line results when available. The assumptions, risks and uncertainties mentioned above, however, indicate the existence of material uncertainties which may cast significant doubt about the Company's ability to continue as a going concern. The Board of Directors however, remain confident about the strategic focus taken and have decided, after due consideration, that the application of the valuation rules in the assumption of a "going concern" is justified. The latter is reinforced by the nature of the ongoing discussions potentially further strengthening the going concern beyond the results of the Phase IIb ALLOB clinical study as the Company's ability to continue operations also depends on its ability to raise additional capital and to refinance existing debt in order to fund operations and assure the solvency of the Company.
The Group does not make the distinction between different operating segments, neither on a business or geographical basis in accordance with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the Board of Directors of the Company.
All non-current assets are located in Belgium with the exception of some minor IT material purchased by BT US.
The intangible assets consist only of purchased software.
| (in thousands of euros) | 31/12/2021 | 31/12/2020 |
|---|---|---|
| Acquisition cost | 278 | 264 |
| Accumulated amortization and impairment | (255) | (236) |
| Intangible assets | 24 | 28 |
Table below shows the movements at acquisition in intangible assets at the end of 2021 compared to the year before:
| Cost (in thousands of euros) |
Software | Clinical developments | Total |
|---|---|---|---|
| Balance at 1 January 2020 | 248 | 0 | 248 |
| Additions | 16 | 16 | |
| Balance at 31 December 2020 | 264 | 0 | 264 |
| Additions | 14 | 14 | |
| Balance at 31 December 2021 | 278 | 0 | 278 |
Table below shows the movements in accumulated amortization in intangible assets at the end of 2021 compared to the year before:
| Accumulated amortization and impairment (in thousands of euros) |
Software | Clinical developments | Total |
|---|---|---|---|
| Balance at 1 January 2020 | (220) | 0 | (220) |
| Amortization expense | (16) | (16) | |
| Balance at 31 December 2020 | (236) | 0 | (236) |
| Amortization expense | (18) | (18) | |
| Balance at 31 December 2021 | (255) | 0 | (255) |
Property, plant and equipment consist mainly of buildings, laboratory equipment and a property under construction:
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Acquisition cost | 3,205 | 2,463 |
| Accumulated depreciation and impairment | (2,342) | (2,237) |
| Property, plant and equipment | 863 | 226 |
Property, plant and equipment (PPE) at the end of December 2021 amount to €0.86 million with an increase mainly due to the new Building Lease rental contract with Watson Creek following the recent Headquarter offices move from Gosselies in 2021 to the new facilities in Mont-Saint-Guibert in line with IFRS 16.
| Cost (in thousands of euros) |
Laboratory equipment |
IT material |
Office furniture |
Land | Building | Cars | Properties under construction |
Total |
|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2020 | 3,065 | 357 | 110 | 233 | 6,359 | 163 | 97 | 10,384 |
| Additions | 17 | 0 | 0 | 0 | 0 | 61 | 0 | 78 |
| Disposals | (352) | (87) | 0 | 0 | 0 | (93) | (97) | (629) |
| Linked to discontinued activities | (524) | (219) | (34) | (233) | (6,359) | 0 | 0 | (7,369) |
| Balance at 1 December 2021 | 2,206 | 51 | 75 | 0 | 0 | 131 | 0 | 2,463 |
| Additions | 47 | 8 | 20 | 0 | 680 | 0 | 0 | 756 |
| Disposals | 0 | 0 | (1) | 0 | 0 | (13) | 0 | (14) |
| Linked to discontinued activities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Balance at 31 December 2021 | 2,253 | 59 | 94 | 0 | 680 | 118 | 0 | 3,205 |
Total investment at acquisition cost at the end of 2021 amounts to €3.20 million, mainly composed of laboratory equipment and the new premises rental contract in Mont-Saint-Guibert signed in 2021.
The table below shows the changes in the accumulated depreciation and impairment of property, plant and equipment at the end of 2021.
| Accumulated depreciation and impairment (in thousands of euros) |
Laboratory equipment |
IT material |
Office furniture |
Land | Building | Cars | Properties under construction |
Total |
|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2020 | (2,633) | (237) | (104) | (16) | (1,207) | (88) | 0 | (4,283) |
| Depreciation expense | (83) | (4) | (0) | 0 | 0 | (57) | 0 | (144) |
| Disposals | 352 | 87 | 0 | 0 | 0 | 93 | 0 | 532 |
| Linked to discontinued activities | 300 | 105 | 29 | 16 | 1,207 | 0 | 0 | 1,657 |
| Balance at 1 December 2021 | (2,063) | (49) | (75) | 0 | 0 | (52) | 0 | (2,239) |
| Depreciation expense | (206) | (3) | (2) | 0 | 0 | (34) | 0 | (245) |
| Disposals | 137 | 0 | 1 | 0 | 0 | 4 | 0 | 141 |
| Linked to discontinued activities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Balance at 31 December 2021 | (2,133) | (52) | (76) | 0 | 0 | (81) | 0 | (2,342) |
| Carrying amount (in thousands of euros) |
Laboratory equipment |
IT material |
Office furniture |
Land | Building | Cars | Properties under construction |
Total |
|---|---|---|---|---|---|---|---|---|
| Net value assets | 120 | 8 | 18 | 0 | 680 | 37 | 0 | 863 |
| Balance at 31 December 2021 | 120 | 8 | 18 | 0 | 680 | 37 | 0 | 863 |
The investment in associates relates to the investment in "SA Invest Mons-Borinage-Centre" for an amount of € 0.01 million and is not changed compared to the prior year.
The following tables detail the amounts recognized in the consolidated statement of financial position with respect to deferred taxes.
| (in thousands of euros) | Assets | Liabilities | |||
|---|---|---|---|---|---|
| 31/12/21 | 31/12/20 | 31/12/21 | 31/12/20 | ||
| Property, plant and equipment | 0 | 0 | 149 | 20 | |
| Intangible assets | 408 | 466 | 0 | 0 | |
| Trade and other receivables | 0 | 0 | 38 | 144 | |
| Financial liabilities | 188 | 157 | 0 | 0 | |
| Other non-current liabilities | 0 | 0 | 0 | 0 | |
| Other current liabilities | 0 | 0 | 138 | 8 | |
| Total temporary differences | 597 | 623 | 326 | 171 |
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Tax credits | 4,486 | 4,915 |
| Tax credits related to notional interest deduction | 0 | 0 |
| Tax losses | 25,341 | 21,367 |
| Total | 29,827 | 26,282 |
| (in thousands of euros) | Assets | Liabilities | |||
|---|---|---|---|---|---|
| 31/12/21 | 31/12/20 | 31/12/21 | 31/12/20 | ||
| Deferred tax assets/(liabilities) | 30,424 | 26,929 | 326 | 171 | |
| Unrecognized deferred tax assets | (25,612) | (21,842) | 0 | 0 | |
| Offsetting | (326) | (171) | (326) | (171) | |
| Total recognized deferred taxes | 4,486 | 4,915 | 0 | 0 |
The following table presents an overview of the deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax asset has been recognized:
| (in thousands of euros) | 31/12/2021 | 31/12/20 |
|---|---|---|
| Tax credits related to notional interest deduction | 0 | 0 |
| Tax losses | 101,364 | 85,468 |
| Temporary differences | 1,084 | 1,805 |
| Total | 102,448 | 87,273 |
The unrecognized tax credits related to notional interest deduction were expired in 2020. There is no expiry date on the other sources of deferred tax assets.
Furthermore, the R&D tax credits have been treated as a government grant and presented as other operating income in the consolidated statement of comprehensive income (see note 8.6.2).
At closing2021, there are no unrecognized deferred tax liabilities related to temporary differences associated with investments in subsidiaries and associates. In the financial statements, only the tax credit has been recognized as deferred tax asset that will be obtained in cash by the Company after 5 years because the Group is substantially loss making and likely that will remain so for still some years to come.
The trade and other receivables can be detailed as follows:
| Trade and other receivables | Total | |
|---|---|---|
| (in thousands of euros) | 31/12/21 | 31/12/20 |
| Trade receivables | ||
| Trade receivables | 1,029 | 1,071 |
| Impairement on trade receivables | 0 | 0 |
| Total trade receivables | 1,029 | 1,071 |
| Other receivables | ||
| Receivable related to taxes | 278 | 276 |
| Receivable related to tax credit | 0 | 459 |
| Receivable related to recoverable cash advances | 671 | 1,831 |
| Receivable related to Non refundable subsides | 331 | 0 |
| Receivable related to patent grants | 271 | 204 |
| Total other receivables | 1,552 | 2,770 |
| Total trade and other receivables | 2,581 | 3,840 |
Trade and other receivables amount to €2.58 million showing a decrease of €1.26 million compared to the end of December 2020.
The decrease of the receivables is mainly driven by the reduction of the outstanding receivables by €0.83 million related to recoverable cash advances and non-refundable subsides from the Walloon Region (upfront amounts and amounts received following expense declarations in function of the progress of the works) and further reconciled under note 8.6.2 (decrease). The total combined outstanding receivables with the Walloon Region amount to 1.27 million at the end of December 2021 compared to 2.03 million at the end of December 2020 and is mainly driven by the reduction of new RCA conventions being signed due to the negative equity position of the company in 2021 which are only slightlyy offset by a higher receivable position for Patent conventions in 2021 increasing by €0.1 million compared to the same period last year.
In addition the tax credit related to 2020 has been paid early December 2021 driving another €0.46 million decrease at the end of December 2021, compared to the same period last year.
Trade receivables remain more or less in line with the year before and amount 1.03 million, mainly driven by the second milestone invoice to Pregene for a gross amount of € 1 million.
The non-current financial assets have decreased following the reclassification of the from € 1.20 million related to the two bank guarantees of each €0.60 million constituted as a result of the sale of the subsidiary in November 2020. The bank Guarantee has been issued for a term of 18 months as of the Closing Date of the deal. The bank guarantees will expire unconditionally and automatically on 13 May 2022, provided no demand for payment of a Claim is made by Catalent.
The remaining amount recorded as non-current financial assets represent the warranty in respect of social security commitments.
Other current assets amount € 1 million and are mainly deferred CRO costs relating to 2022 activities.
Cash and cash equivalents include following components:
| (in thousands of euros) | 31/12/2021 | 31/12/2020 |
|---|---|---|
| Cash at bank and in hand | 9,476 | 14,493 |
| Short-term bank deposits | 34 | 155 |
| Total | 9,510 | 14,648 |
The cash position at the end of December 2021 amounted to €9,51 million compared to €14.65 million at the end of December 2020. The cash and cash equivalents have been impacted by the fact that the Company has collected a proceed of €11.29 million from convertible bonds, subordinated loans and equity instruments (before €0.278 million transaction costs). In counterparts, the Company has used €16,15 million in operation, investing, and financing activities.
The short-term bank deposits have an original maturity date not exceeding 3 months.
There is no expected credit loss on 31 December 2021.
Equity decreased from €3.32 million at the end of December 2020 to a negative equity of €6.76 million at the end of December 2021. The variation is mainly explained by recognition of the capital raise for an amount €3.29 million in December 2021 (net of transaction costs) and offset by the result of the Company (a loss of €12.92 million).
| Consolidated Equity & Liabilities IFRS per: (in thousands of euros) |
31/12/21 | 31/12/20 |
|---|---|---|
| Share capital | 4,924 | 8,415 |
| Share premium | 69,499 | 67,594 |
| Retained Earnings | (83,345) | (75,030) |
| Total outside reserves | (8,922) | 979 |
| Specific reserve for convertible Bonds | 1,856 | 1,950 |
| Other Reserves | 301 | 396 |
| Non-controlling interests | 2,156 | 2,346 |
| Total Equity | (6,765) | 3,325 |
Equity decreased from €3.32 million at the end of December 2020 to a negative equity of €6.76 million at the end of December 2021, mainly driven by the incorporation of current year losses for a total amount of € 12,92 million. On 26 February 2021, the share capital was already decreased by an incorporation of losses of an amount of €4,602,355 without any reduction of shares.
The equity decrease resulting from the incorporation of losses is partially offset by the share capital and share premium's increase following the December 2021 Capital Raise (amounting €3.29 million) and the recognition of the transaction costs for the recent equity transactions for an amount of € 0.28 million. Via a Private Placement on 3 December 2021, the Company raised EUR 3.29 million and placed 4,832,352 new shares with current and new institutional investors in Belgium. The share capital increased by €1,111,441 The aggregate share premium for this transaction amounts to €2,174,558. Following the capital increase, the share capital of the Company amounted to € 4,923,998.63 and is represented by 21,310,520 shares.
The specific reserve for Convertible bonds has slightly decreased compared to the year before following the conversion of the Convertible loan of 2 million from Patronale into a non-Convertible loan in September 2021 under the same conditions as the non-Convertible loan concluded with the European Investment bank and impacting the equity component. The loan will be measured at amortised cost in accordance with IFRS 9. At initial recognition of the loan, the nominal amount of the loan has been decreased with the transaction costs related to the loan which also includes the amount of the warrants allocated to the tranche withdrawn. The interest rate to be applied will be computed based on the expected future contractual cash flows (i.e. reimbursement of capital + contractual interests). The interest rate computed as such is the effective interest rate. Following the above requirements, the initial recorded 0.2 million equity component for Convertible bonds, has been decreased accordingly, reducing the equity component by another €0.1 million.
Other reserves have been decreased following the expiration of the warrant plans for the former CEO and CTMO reporting a decrease of the total reserve of 0.1 million at the end of December 2021.
Please find also below the evolution of the shares:
| (in euros) | 2021 | 2020 |
|---|---|---|
| Total shares on 1 January | 16,478,168 | 10,671,894 |
| Increase of shares | 4,832,352 | 5,806,274 |
| Total | 21,310,520 | 16,478,168 |
The Company currently has 3 subscription rights plans outstanding:
On 18 December 2021, a total amount of 33,333 warrants from Plan A expired of which 28,000 warrants from the former CEO Thomas Liénard and 5,333 warrants from the former CTMO Benoit Champluvier. In addition, we corrected the total outstanding warrant for Plan 12/2020 on behalf of the Board Member Jean-Paul Prieels for an amount of 2,000 warrants as these have not been accepted.
| Plan | 31/12/2020 | Offered | Cancelled | Loss | 31/12/2021 |
|---|---|---|---|---|---|
| Plan A | 69,331 | 0 | 33,333 | 0 | 35,998 |
|---|---|---|---|---|---|
| Plan 2020/05 | 63,724 | 0 | 0 | 0 | 63,724 |
| Plan 2020/12 | 99,9832 | 0 | 2,000 | 0 | 99,832 |
| Total outstanding warrants | 232,887 | 0 | 35,333 | 0 | 197,554 |
The following plans were established during the year 2014 and 2020:
| Plan | Beneficiaries | Number of warrants issued |
Number of warrants granted |
Exercise price of warrants granted (€) |
Expiry | |
|---|---|---|---|---|---|---|
| Warrant Plan A | Employees, consultants or Directors |
113,760 | 87,998 | 4.11, 7.72 and 8.77 | February 2024 |
|
| Warrant 2020/05 |
Plan | CEO, CFO | 69,978 | 63,724 | 2.74 | May 2027 |
| Warrant 2020/12 |
Plan | Employees, consultants or Directors |
93,578 | 99,8329 | 2.55 | December 2027 |
| TOTAL | 277,316 | 251,554 |
For relevant terms and conditions of the Company's existing warrant plans, please refer to section 6.4.2.
The main terms and the fair value at grant date of warrants granted out of Plan A, Plan 2020/05 and 2020/12 are as follows:
| Options series | Number | Grant Date | Expiry date | Exercise price |
Fair Value at grant date |
|---|---|---|---|---|---|
| (4) Warrant Plan A | 35,998 | 28-02-19 | 23-02-24 | 4.11 | 1.9 |
| (5) Warrant Plan 2020/05 | 63,724 | 29-05-20 | 29-05-27 | 2.74 | 1.52 |
| (6) Warrant Plan 2020/12 | 97,832 | 23-12-20 | 23-12-27 | 2.55 | 1.56 |
The fair value of the warrants has been determined at grant date based on the Black-Scholes formula. The variables, used in this model, are:
| Plan A - 2019 |
Plan 2020/05 |
Plan 2020/12 | |
|---|---|---|---|
| Number of warrants granted | 35,998 | 63,724 | 97,832 |
9 6,254 warrants were granted in December 2020 but issued in May 2020
| Exercise price (in €) | 4.11 | 2.74 | 2.55 |
|---|---|---|---|
| Fair value of the share at grant date | 4.11 | 2.74 | 2.75 |
| Expected dividend yield | 0 | 0 | 0 |
| Expected volatility | 56.40% | 57.10% | 57.10% |
| Risk-free interest rate | 0.00% | 0.00% | 0.00% |
| Duration in years | 4.98 | 7.00 | 7.00 |
| Fair value (in €) | 1.95 | 1.52 | 1.55 |
There were no warrants exercised in 2021. The expenses relating to these plans are disclosed in point 8.8.3.
Liabilities amounted to €26.54 million in 2021 compared to €21.51 million at the end of December 2020, representing an increase of €5.03 million The total Non-current Liabilities have increased from €11.7 million at the end of December 2020 to €19.86 million at the end of December 2021 or an increase of €8.14 million, mainly driven by the newly concluded non-convertible loan with the European Investment bank in June 2021 for a total gross amount of €8 million. The loan has been measured at amortized cost in accordance with IFRS 9. Financial liabilities are detailed as follows:
| Non-current | Current | Total | ||||
|---|---|---|---|---|---|---|
| (in thousands of euros) | 12/31/2021 | 12/31/2020 | 12/31/2021 | 12/31/2020 | 12/31/2021 | 12/31/2020 |
| Finance lease liabilities | 19 | 50 | 18 | 32 | 37 | 82 |
| Government loans | 4,250 | 4,637 | 864 | 870 | 5,114 | 5,507 |
| Loans from related parties | 25 | 106 | 81 | 675 | 106 | 781 |
| Finance Lease Liabilities | 490 | 0 | 83 | 0 | 573 | 0 |
| Bank debt | 0 | 0 | 0 | 1,500 | 0 | 1,500 |
| Convertible Bonds | 1,949 | 3,601 | 0 | 0 | 1,949 | 3,601 |
| Non-Convertible Bonds | 13,019 | 3,325 | 0 | 0 | 13,019 | 3,325 |
| Derivative Financial Liabilities |
112 | 0 | 0 | 0 | 112 | 0 |
| Total financial liabilities | 19,864 | 11,720 | 1,046 | 3,077 | 20,911 | 14,797 |
There are some outstanding covenants with respect to the financial liabilities, such as related to the Novallia loans in case the Company has difficulties regarding continuity. In case of of Public Take-over bid, we refer to section 6.5.
The initial convertible loan from Patronale of € 2 million, which was contracted in May 2020, has been transferred into a non-convertible loan with accompanying warrants under the same conditions as the recent EIB loan contracted in September 2021, following negotiations with the European Investment Bank. At initial recognition of the loans, the nominal amount of the loans has been decreased with the transaction costs related to the loan and the amount of the warrants allocated to the tranche withdrawn.
The 800,000 warrants for the loan with the EIB and the 200,000 warrants for the loan with Patronale (including the put option) are fully related to the loan agreement. As such, the accounting treatment (including measurement) of the loan is linked to the warrant plan (and put option). The put option is inseparably linked to the warrants. As such, the entire instruments have been accounted for as one instrument (so not separating the put option from the warrants). As one of the parties has settlement alternatives (i.e. settlement of the warrants in cash), the instrument should be considered as a financial derivative liability to be measured at fair value at each closing with changes in fair value recognised immediately in profit or loss. The measurement of the warrant (including the put option) at fair value has been based on a model taking into account following inputs: share price, strike price, volatility of the share, duration and the interest rate. The fair value of the accompanying warrants for both EIB and Patronale have been recognized under non-current financial liabilities for an amount of € 0.112 million per December 2021.
The other non-current liabilities are including an amount of € 0.49 million to recognize our long term rental obligations with Watson Creek for our new offices in Mont-Saint-Guibert (in accordance with IFRS16 requirements) and another 0.1 million has been recognized as current liabilities for the short term rental obligations due in 2022.
The non-current liabilities for convertible bonds have decreased from € 3.6 million at the end of December 2020 to € 1.95 million at the end of December 2021 following the modification of the initial Patronale loan into a non-convertible loan as explained above Considering the Issuer has no Cash Alternative Election (choice over how the share conversion option will be settled), the share conversion option for the Integrale loan is an own equity instrument (cfr IAS 32.26). As a result, the equity component has been calculated at fair value from the start and recorded accordingly. The total balance on December 2021 for the non-current liability of Integrale amounts € 1.95 million.
The current financial liabilities decreased by € 2.03 million mainly driven by the reimbursed loans from SambrInvest and Novallia for € 0.59 million and € 1.5 million loan reimbursement from BNP Fortis and ING. The remaining outstanding liability for Novallia amounts 0.1Mio at the end of December 2021.
Trade and other payables decreased by € 0.69 million, from € 5.51 million at the end of December 2020 compared to 4.8 million at the end of December 2021.
Our other current financial liabilities decreased from € 1.2 million at the end of December 2020 to € 0.8 million at the end of December 2021 mainly driven by the ongoing reimbursement of the outstanding recoverable cash advances towards the Walloon Region throughout the year 2021 and supported by the fact that no new RCAs conventions are being signed with the Walloon Region given the negative equity situation of the company.
Lease debts are gradually decreasing as no new vehicles have been contracted throughout 2021 and all lab equipment has been nearly fully depreciated. In addition both short term and long term lease liabilities for the new offices in Mont-Saint-Guibert have been added in accordance with IFRS 16.
The future minimum lease payments related to these finance leases can be reconciled as follows to the liabilities recognized in the consolidated statement of financial position:
| Future minimum lease payments (in thousands of euros) |
31/12/21 | 31/12/20 |
|---|---|---|
| Not later than 1 year | 102 | 29 |
| Later than 1 year and not later than 5 years | 458 | 52 |
| Later than 5 years | 51 | 0 |
| Less: future finance charges | (12) | |
| Present value of minimum lease payments | 610 | 70 |
| Present value of minimum lease payments (in thousands of euros) |
31/12/21 | 31/12/20 |
|---|---|---|
| Not later than 1 year | 102 | 27 |
| Later than 1 year and not later than 5 years | 458 | 42 |
| Later than 5 years | 51 | 0 |
| Present value of minimum lease payments | 610 | 70 |
The government loans relate to the repayable part of recoverable cash advances (not linked to turnover) and are detailed in note 8.2.14. Interest is charged to this repayable part at a rate based on Euribor 1 year + 100 basis point or IBOR 1 year + 100 basis point if higher.
The Company has been provided with a bridge loan of €0.75 million from Sambrinvest in April 2020. On 31 December 2020, the outstanding amount equals to €0.56 million and has been fully reimbursed in January 2021.
The Company has taken up three bridge loans in May 2020 BNP Paribas Fortis SA/NV (€1.50 million), ING Belgique SA/NV (€1.50 million) and Belfius Banque SA/NV (€1.00 million) to finance its activities until the new capital raise. On 31 December 2020, the Company has reimbursed €0.75 million to BNP Paribas Fortis and ING and €1.00 million to Belfius. All bank loans were reimbursed in 2020 and no new bank loans in 2021 have been contracted.
The non-current liabilities for convertible bonds have decreased from € 3.6 million at the end of December 2020 to € 1.95 million at the end of December 2021 following the conversion of the initial Patronale loan into a non-convertible loan as explained above. Considering the Issuer has no Cash Alternative Election (choice over how the share conversion option will be settled), the share conversion option for the Integrale loan is an own equity instrument (cfr IAS 32.26). As a result, the equity component has been calculated at fair value at inception and recorded accordingly. The total balance on December 2021 for the non-current liability of Integrale amounts to € 1.95 million.
We refer to note 8.3.2 where the valuation of the corresponding financial liability has been described.
On 1 July 2021, the Company announced that it has signed a loan agreement of up to €16 million with the European Investment Bank (EIB). The EIB financing would support and prepare Bone Therapeutics' lead asset, the enhanced viscosupplement JTA-004 for future regulatory approval and commercialization. JTA-004, was being evaluated in a registrational phase III clinical trial for the treatment of osteoarthritic pain in the knee. Due to the fact that the primary end-points and accompanying objectives of the Phase III results were not met as anticipated, further investments are currently put on hold.
The EIB financing will now primarily be used to accelerate the clinical development of ALLOB, Bone Therapeutics' scalable allogeneic cell therapy platform. ALLOB is currently being tested in a phase IIb study in patients with difficult-to-heal tibial fractures. Patient recruitment of this study is currently anticipated to be completed in H2 2022 and the planned top line results are expected at the latest in Q1 2023 with ALLOB now being the strategic focus.
The loan financing is further supplemented by an agreement to issue warrants to the EIB: 800,000 warrants will be issued with the disbursement of the first tranche and 500,000 warrants with the disbursement of the second tranche. Each warrant will give the holder the right to subscribe to one ordinary share of Bone Therapeutics at the subscription price of €0.01 and with an exercise price which will be equal to the minimum of the 30-day volume-weighted average price and the last closing price of Bone Therapeutics' shares at the date of the pricing.
The warrants have a maturity of 10 years and become exercisable from the repayment date of the relevant tranche, subject to certain customary exceptions. The warrant agreement further includes an anti-dilution provision which could apply in case of change in Bone Therapeutics' share capital, including capital increases if they exceed €15 million in aggregate starting from the disbursement of the first tranche.
The first tranche of €8 million was received on 6 September 2021 (upon approval of the issuance of associated warrants by Bone Therapeutics' General Meetings on 23 August 2021).
The second €8 million tranche will be released when specific clinical and commercial milestones have been achieved and might require further negotiations with the European Investment Bank following the disappointing results of JTA Phase III published in June 2021. The second €8 million tranche will likely not be released given the recent disappointing results of JTA Phase III published in September 2021. The second €8 million tranche has accordingly been excluded in the forward looking cash projections of Bone Therapeutics and new negotiations with the European Investment Bank will need to be scheduled first.
The loan facility will be in the form of a senior loan, repayable to the EIB in a single payment five years following the disbursement of each of the two tranches. The loan carries a fixed interest of 2% per year paid annually and a 3% capitalized interest.
On September 2021, the Convertible loan of €2 million with Patronale, (representing 800 bonds) contracted in May 2020 as explained above, has been modified into a Non-Convertible loan following the negotiations with the European Investment bank under the same conditions as the Non-Convertible loan with the European Investment bank. Hence Bone Therapeutics also renegotiated 800 convertible bonds issued on 7 May 2020 (for an amount of €2 million) to Patronale Life into a loan subject to the same repayment terms as the agreement with the EIB, with the issuance of 200,000 additional warrants approved by the Extraordinary General Meeting which was held on 5 August 2021.
The initial convertible loan from Patronale of € 2.0 million, which was contracted in May 2020, has been transferred into a non-convertible loan with accompanying warrants under the same conditions as the recent EIB loan contracted in September 2021, following negotiations with the European Investment Bank. At initial recognition of the loans, the nominal amount of the loans has been decreased with the transaction costs related to the loan and the amount of the warrants (€ 0.1 million) allocated to the tranche withdrawn.
The 800,000 warrants for the loan with the EIB and the 200,000 warrants for the loan with Patronale (including the put option) are fully related to the loan agreement. As such, the accounting treatment (including measurement) of the loan is linked to the warrant plan (and put option). The put option is inseparably linked to the warrants. As such, the entire instruments have been accounted for as one instrument (so not separating the put option from the warrants). As one of the parties has settlement alternatives (i.e. settlement of the warrants in cash), the instrument should be considered as a financial derivative liability to be measured at fair value at each closing with changes in fair value recognised immediately in profit or loss. The measurement of the warrant (including the put option) at fair value has been based on a valuation model considering the following inputs: share price, strike price, volatility of the share, duration and the interest rate. The fair value of the accompanying warrants for both EIB and Patronale have been recognized under non-current financial liabilities for an amount of € 0.1 million per December 2021.
Please find enclosed the table of the total overview of Financial liabilities in relation with IAS 7:
| Non-cash changes | ||||||
|---|---|---|---|---|---|---|
| (in thousands of euros) | 31/12/20 | Cash Flows |
New Contract Cashflows |
Change other |
Change in estimated cash flows |
31/12/21 |
| Finance lease liabilities | 82 | -45 | 0 | 0 | 0 | 37 |
| Government loans | 5,507 | -372 | 0 | 0 | -22 | 5,114 |
| Loans from related parties | 781 | -675 | 0 | 0 | 0 | 106 |
| Other (bail Rent Building) | 0 | 573 | 0 | 0 | 573 | |
| Bank debt | 1,500 | -1,500 | 0 | 0 | 0 | 0 |
| Convertible Bonds | 3,601 | -182 | 0 | -2,000 | 530 | 1,949 |
| Non-Convertible Bonds | 3,325 | 0 | 8,000 | 2,000 | -306 | 13,019 |
| Derivative Financial Liabilities | 0 | 0 | 112 | 0 | 0 | 112 |
| Total financial liabilities | 14,797 | -2,773 | 8,685 | 0 | 202 | 20,911 |
Trade and other payables are detailed as follows:
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Trade payables | 4,502 | 5,171 |
| Other payables | 320 | 343 |
| Total trade and other payables | 4,822 | 5,514 |
Trade payables (composed of supplier's invoices and accruals for supplier's invoices to receive at reporting date) are non-interest bearing and are in general settled 30 days from the date of invoice.
The decrease of €0.7 million is mainly related to trade payables which included important invoices at the end of 31 December 2021 related to the Contract Research Organizations ("CRO") for the ongoing clinical studies (JTA & ALLOB). Given the completion of the Phase III study for JTA in June 2021, the total outstanding trade payable invoices have decreased accordingly.
Other current liabilities consist of the deferred income related to the government grants as detailed in the following table:
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Deferred income on grants related to recoverable cash advances RW | 339 | 869 |
| Deferred income non-refundable grants RW | 398 | 315 |
| Deferred income on grants related to patents | 67 | 15 |
| Other | 0 | 0 |
| Total | 804 | 1,199 |
The deferred income related to the grants on the recoverable cash advances is detailed in note 8.6.2.
The total deferred income related to recoverable cash advances has been split out for the year 2021 between the actual refundable cash advances to be reimbursed an the non-refundable Goverments grants (subsides). The total deferred income related to recoverable cash advances and subsides with the Walloon Region decreased by €0.45 million compared to the year before, partially offset by an increase on deferred income coming from patents.
In 2021, the Company invoiced the second milestone to Link Health & Pregene following the submission by Pregene of the IND application to the Chinese National Medical Products Administration (NMPA) as per the underlying License Agreement executed on 5 October 2020. In 2020, the Company recognized an upfront payment for the license agreement signed with Link Health & Pregene, after the signature of the License agreement in October 2020 for an amount of €1.00 million which was paid February 2021.
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| License | 1,000 | 1,000 |
| Other | 0 | 0 |
| Total | 1,000 | 1,000 |
The Company has signed an exclusive license agreement for the manufacturing, clinical development and commercialization of Bone Therapeutics' allogeneic, off-the-shelf, bone cell therapy platform ALLOB in China (including Hong Kong and Macau), Taiwan, Singapore, South Korea, and Thailand. This agreement has been signed with Link Health Pharma Co., Ltd ("Link Health") and Shenzhen Pregene Biopharma Company, Ltd ("Pregene").
Currently Bone Therapeutics is discussing with Pregene and Link Health a potential licensing deal of ALLOB global rights to Pregene. If and when this agreement is signed it will replace the current agreement above described. Under that existing agreement, Bone Therapeutics, in addition to the above mentioned and already achieved milestones, was eligible to receive up to 55m euro in development, regulatory and commercial milestones payments including up to 10 million in upfront and milestone payments anticipated in the initial 24 months. Bone Therapeutics was also entitled to receive tiered double-digit royalties on annual net sales of ALLOB. Due the ongoing negotiations with Pregene and Link Health and the potential replacement of this agreement with the global rights agreement, these future milestone payments are at this stage no longer considered valid and have accordingly been taken out from the forward-looking revenue and cash planning (budget 2022-2023). Depending on which deal will prevail the financials will be updated upwards accordingly. If the global rights license deal is signed Pregene will have global rights for ALLOB.
At the moment of publication of the Annual reports for 2021, Bone Therapeutics retains development and commercialization rights to ALLOB in all other geographies outside of those covered by this agreement. As a result, Bone Therapeutics will continue to concentrate on its development and commercialization plans for ALLOB in the US and Europe and novel innovative cell-based products globally.
The agreement grants Link Health and Pregene exclusive rights to clinically develop and commercialize ALLOB for the treatment of human bone disorders in Greater China, Taiwan, Singapore, South Korea, and Thailand. All rights for China will be transferred to Pregene and Link Health will gain rights for the remaining countries. Bone Therapeutics will share its patented proprietary manufacturing expertise for the expansion and differentiation of bone-forming cells and has the option to sell clinical supplies to Link Health and Pregene in preparation for their clinical development of ALLOB.
In October 2020, the Group entered into a patent and know-how license agreement with Link Health & Pregene in which an upfront non-refundable payment of € 1.00 million was received (in February 2021). In addition, this contract incorporates multiple development milestone payments, sales-based milestone payments and royalty payments.
Under IFRS 15, two distinct performance obligations could be identified (step 2 of the model), the provision of a license on some of the Company's IP and the provision of technical assistance. The license is considered as a right to use under IFRS 15. Revenue in respect of a distinct license that is a right to use shall be recognised at a point in time under IFRS 15 when the license is granted to Link Health & Pregene (this is made possible by the fact that the license is mature and by the fact that the Company has not planned to carry out additional work). The IND application to the Chinese NMPA has been submitted by Pregene in 2021, therefore, that portion of the transaction price that is allocated to the license (step 4 of the model) has been recognized in 2021. The impact recognized into the income statement equity statement amounted to € 1.00 million.
In determining the transaction price, the transaction price is initially limited to the upfront non-refundable payment. The development milestones under the contract that qualify as variable consideration are initially not considered because of the related constraint principles under IFRS 15.
The other operating income relate to the different grants received by the Group:
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Grants income related to recoverable cash advances | 500 | 1,198 |
| Grants income related to non-refundable Grants RW | 90 | 133 |
| Grants income related to patents | 69 | 52 |
| Grants income related to exemption on withholding taxes | 321 | 331 |
| Grants income related to tax credit | 604 | 856 |
| Other income | 161 | 96 |
| Total | 1,745 | 2,666 |
The recoverable cash advances ("Avances récupérables") are granted to support specific research and development programs. After the approval of these loans by the government (i.e., Walloon Region), a receivable is recognized for the loan to be received and presented as other receivables (see note 8.5.5). These loans become refundable under certain conditions, including the fact that the Group decides to exploit the R&D results of the project. In such case, part of the loan (30%) becomes refundable based upon an agreed repayment schedule, whereas the remaining part (70% and up to 170%) only becomes refundable to the extent revenue is generated within 10 or 25 years after the date at which exploitation has been decided. Accordingly, if no revenue is generated within that period of 10 or 25 years, any non-refunded part of the loan will ultimately not be repaid.
RCAs are partially recognized as a financial liability at the time of signing the agreement as explained in section 8.2.14 above and corresponding to the present value of the expected reimbursements discounted at a rate ranging between 1.08% and 17.1%. The difference between the actual amount received and the amount recognized as financial liability is considered as a government grant and is presented under the caption "deferred income". The deferred income is released as "other operating income" as the R&D costs compensated by the grant are incurred. The part of the grant representing the discount effect on the minimum refundable amount is released as interest income over the period of the interest free loan.
The receivable related to the recoverable cash advances is reconciled as follows:
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Opening balance | 1,831 | 1,964 |
| New grants | 0 | 1,589 |
| New loans | 125 | 780 |
| Canceled grants | (9) | (10) |
| Cash received | (947) | (2,493) |
|---|---|---|
| Closing balance | 1,000 | 1,831 |
The movements related to the debt of the government loans are detailed in the following table:
| (in thousands of euros) | 31/12/21 | 31/12/20 | |
|---|---|---|---|
| Opening balance | 5,507 | 5,056 | |
| New loans | 0 | 477 | |
| Repayment | (426) | (122) | |
| Impact of interests | 8 | 63 | |
| Unwind of discount | 25 | 31 | |
| Closing balance | 5,114 | 5,507 |
The deferred income related to the recoverable cash advances recognized in the consolidated statement of financial position can be reconciled as follows:
| (in thousands of euros) | 31/12/21 | 31/12/20 | |
|---|---|---|---|
| Opening balance | 1,184 | 801 | |
| Released as operating income | (585) | (1,450) | |
| Unwind of discount | (25) | (31) | |
| Cancelled grants | 0 | (12) | |
| Impact of interests | (15) | (15) | |
| Increase on new grants | 179 | 1,893 | |
| Closing balance | 737 | 1,184 |
For more detail on this section, see note 8.2.16.
Companies that employ scientific researchers and qualify as "R&D center" benefit from a partial exemption from payment of withholding tax on the salaries of scientific staff. They must transfer to the tax authorities only 20% of the withholding tax due on the salary of these researchers while the remaining amount is considered to be a government grant. These grants are recognized in the consolidated statement of comprehensive income at the same moment the related personnel expenses are incurred.
The Group receives government grants related to patents. On average, the grants received cover 70% of the fees incurred in the process of obtaining patents.
Considering that patent costs are expensed as incurred, related patent grants are immediately recognized as other operating income when the patent fees are incurred.
In 2020 the Group received a subsidy from the INAMI for the development of R&D activities (which was considered Other Grants income). In 2021, we the Group did not receive a subsidy from INAMI. The total of 0.2 million is entirely linked to IT Services re-invoiced to SCTS in line with the existing agreement.
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Lab fees and other operating expenses | 8,347 | 11,587 |
| Employee benefits expenses | 2,766 | 3,368 |
| Depreciations, amortization and impairment losses | 103 | 148 |
| Building Amortization | 40 | 0 |
| Patents costs | 428 | 313 |
| Total | 11,684 | 15,416 |
Research and development expenses in 2021 were at €11.68 million compared to €15.42 million in 2020. The decrease is mainly related to lower incurred costs from clinical operations with the "CRO" for completed Clinical trial for JTA in Phase III and reduced costs for ALLOB in Phase IIB for the difficult fractures in combination with lower staffing costs which reduced from €3.37 million in 2020 to only €2.77 million in 2021 following the reorientation of the company to primarily focus on ALLOB Phase IIB completion. Patent costs increased from 0.31 million in 2020 to 0.43 million in 2021.
Finally, some additional costs have been incurred throughout the year 2021 following the move of the HQ of Bone Therapeutics from Gosselies to Mont-Saint-Guibert.
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Employee benefits expenses | 1,277 | 1,428 |
| Depreciation and amortization expense | 31 | 25 |
| Building Amortization | 11 | 0 |
| Other expenses | 1,768 | 1,814 |
| Total | 3,087 | 3,267 |
General and administrative expenses for the full year 2021 amounted to €3,09 million compared to €3.27 million over the same period last year or a decrease of €0.2 million. The decrease is mainly resulting from the reduced staffing within the various G&A departments.
In addition, the total non-staff related costs for G&A reduced by another € 0.24 million due to the absence of non-recurrent fees related to the deals happening throughout the year 2020 partially offset by a final settlement with the Belgian Financial Services and Markets Authority (FSMA) regarding clinical studies communication issues in 2016 and 2017 for a settlement amount of € 0.5 million for which a total amount of €0.31 million has been recovered via the insurance company AIG EUROPE S.A..
Finally, some additional costs have been incurred throughout the year 2021 with regards to the new office rental costs following the move of the HQ of Bone Therapeutics from Gosselies to Mont-Saint-Guibert.
Employee benefits expenses can be detailed as follows:
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Short term benefits | 3,552 | 3,865 |
| Social security cost | 398 | 442 |
| Post-employment benefits and other benefits | 169 | 223 |
|---|---|---|
| Share-based compensation | (99) | 266 |
| Total | 4,019 | 4,796 |
The Group has a group insurance plan based on defined contributions for some employees, for which the insurance company guarantees an interest rate until retirement (type 'branche 21/tak21'). The contributions are a flat percentage of the salary depending on the category of personnel, entirely paid by the employer. By law, the employer has to guarantee a minimum rate of return on the contributions.
Based on an analysis of the plans and the limited difference between the legally guaranteed minimum returns and the interest guaranteed by the insurance company, the Group has concluded that the application of the PUC method would not have a material impact. The accumulated reserve (individualized reserves accumulated with the insurer) amounts to €0.4 million and the accumulated contribution paid amounts to €0.09 million.
| Number of employees | 31/12/2021 | 31/12/2020 |
|---|---|---|
| Research and development | 15 | 25 |
| General and administrative | 5 | 5 |
| Total | 20 | 30 |
| Financial result | 31/12/21 | 31/12/20 |
|---|---|---|
| Financial Income – value gain warrants | (333) | 0 |
| Interest income on government loans | (25) | (23) |
| Total financial income | (358) | (24) |
| Interest on borrowings | 790 | 655 |
| Interest on government loans | 25 | 23 |
| Interest on obligations under finance leases | 30 | 0 |
| Transaction costs on convertible bonds | 185 | 14 |
| Recognition of the discount on CBs | 119 | 55 |
| Other | (2) | 0 |
| Total financial expenses | 1.147 | 747 |
| Exchange (gains)/losses | 20 | 13 |
| Total financial result | 809 | 736 |
Financial income includes the valuation of 0.3 million in 2021 for the warrants related to the non-convertible loan with the European Investment bank and the modified loan with Patronale concluded in September 2021.
Financial expenses amount to €1.1 million in 2021 compared to €0.75 million in 2020 and are mainly impacted by the depreciation of the transaction costs for the capital bonds (€0.18 million), the recognition of the discount on convertible loan from Integrale and the non-convertible loans with EIB and Patronale (€0.12 million) and the higher interests on borrowings
10 Excluding Skeletal Cell Therapy Support SA
The Company recorded an amount of €0.08 million due to the withholding tax related to the milestone from Link Health & Pregene.
| Current tax | 31/12/21 | 31/12/20 |
|---|---|---|
| In respect of the current year | 89 | 78 |
| In respect of prior years | 0 | 0 |
| Total income taxes | 89 | 78 |
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
| (in thousands of euros) | 31/12/21 | 31/12/20 |
|---|---|---|
| Profit/loss for the period attributable to the owners of the Company |
(12,925) | (11,940) |
| Weighted average number of ordinary shares for basic loss per share (in number of shares) |
16,862,108 | 11,723,182 |
| Basic/diluted loss per share (in euros) | (0.77) | (1.02) |
On 16 November 2020, the Company confirmed the completion of the acquisition of Bone Therapeutics' manufacturing subsidiary, Skeletal Cell Therapy Support SA (SCTS) by Catalent Gosselies SA. SCTS was the manufacturing subsidiary for Bone Therapeutics SA. Following completion of the transaction, SCTS' manufacturing infrastructure and production operating teams have now become part of Catalent's Cell & Gene Therapy division.
(in thousands of euros)
For the year ended 31 December 2020 2019
| Revenues | 0 | 0 |
|---|---|---|
| Other operating income | 500 | 829 |
| Total revenues and operating income | 500 | 829 |
| Research and development expenses | (2,632) | (3,683) |
| General and administrative expenses | (299) | (374) |
| Operating profit/(loss) | (2,431) | (3,228) |
| Financial income | 0 | 0 |
| Interest income Financial expenses Exchange gains/(losses) Share of profit/(loss) of associates |
10 (98) 0 0 |
583 (136) 0 6 |
| Result Profit/(loss) before taxes | (2,519) | (2,776) |
| Income taxes | (21) | (38) |
| Net Income (Loss) from discontinued operations | (2,540) | (2,813) |
| Net income(loss) from discontinued operations attributable to: owners of the parent - - non-controlling interest |
(2,540) 0 |
(1,403) (1,410) |
| Capital gain on SCTS sale | 6,390 | 0 |
| Net result | 3,891 | (2,813) |
| (in thousands of euros) | For the year ended 31 December |
||
|---|---|---|---|
| 2020 | 2019 | ||
| Cash flow from operating activities | (2,240) | (2,574) | |
| Cash flow from investing activities | 0 | (63) | |
| Cash flow from financing activities | 9,236 | (109) | |
| Cash flow from discontinued operations (net increase/decrease) | 6,996 | (2,746) |
Please find below the detail of the carrying amount of all assets and liabilities that were disposed as a result of the sale of SCTS:
| (in thousands of euros) | At the signature of the sale of SCTS |
|---|---|
| Building | 4,922 |
| Other PPE | 141 |
| Investment in Associates | 280 |
| Receivables | 378 |
| Cash & Cash equivalents | 585 |
| Total assets | 6,306 |
The following table provides the category in which financial assets and financial liabilities are classified in accordance with IFRS9 – Financial Instruments.
| (in thousands of euros) | IFRS9 Category | 31/12/21 | 31/12/20 |
|---|---|---|---|
| Other non-current financial assets | |||
| Non-current receivables | financial assets at amortized cost | 1,296 | 1,296 |
| Trade and other receivables | financial assets at amortized cost | 1,274 | 2,035 |
| Cash and cash equivalents | financial assets at amortized cost | 9,510 | 14,648 |
| Total financial assets | 12,079 | 17,979 | |
| Non-current financial liabilities | |||
| Finance lease liabilities | At amortised cost | 509 | 50 |
| Government loans (RCA) | At amortised cost | 4,250 | 4,637 |
| Loans from related parties | At amortised cost | 25 | 106 |
| Non-Convertible Bonds | At amortised cost | 13,019 | 3,325 |
| Convertible Bonds | At amortised cost | 1,949 | 3,601 |
| Other non-current financial liabilities | At fair value through profit and loss | 112 | 0 |
| Current financial liabilities | |||
| Finance lease liabilities | At amortised cost | 101 | 32 |
| Government loans (RCA) | At amortised cost | 864 | 870 |
| Loans from related parties | At amortised cost | 81 | 675 |
| Bank debt | At amortised cost | 0 | 1,500 |
| Trade and other payables | |||
| Trade payables | At amortised cost | 4,502 | 5,171 |
| Total financial liabilities | 25,412 | 19,968 |
The fair value of financial instruments can be classified into three levels (1 to 3) based on the degree to which the inputs to the fair value measurements are observable:
The following table presents the financial assets and liabilities for which the fair value differs from the carrying amount. The other non current financial liabilities include warrants which are measured at fair value in the consolidated statement of the financial position. The carrying amount of the remaining financial assets and liabilities approximate their fair value.
| (in thousands of euros) | 31/12/21 | ||
|---|---|---|---|
| Carrying amount | Fair value | Fair value level | |
| Non-current financial liabilities | |||
| Government loans (RCA) | 4,250 | 5,380 | Level 3 |
| Non-Convertible Bonds | 13,019 | 15,732 | Level 2 |
| Other non-current financial liabilities | 112 | 112 | Level 3 |
| 31/12/20 | |||
|---|---|---|---|
| (in thousands of euros) | Carrying amount | Fair value | Fair value level |
| Non-current financial liabilities | |||
| Government loans (RCA) | 4,637 | 6,842 | Level 3 |
| Non Convertible Bonds | 3,325 | 4,564 | Level 2 |
The government loans related to the recoverable cash advances are measured at amortized costs (fair value is disclosed above and is also a Level 3 measurement).
The fair value has been measured based on a discounted cash-flow methodology, using a market interest rate reflecting the current market conditions and the risk profile of the company.
We refer to note 8.5.10 where the valuation of the corresponding financial liability has been described.
| Reconciliation | 31/12/21 | 31/12/20 |
|---|---|---|
| (in thousands of euros) | ||
| Opening balance | 3,601 | 0 |
| Cash received | 0 | 4,000 |
| Cash paid | -182 | |
| Conversion into Non-Convertible loan Patronale | -2,000 | |
| Change in fair value | 390 | -199 |
| Transaction costs (movement) | 140 | -200 |
| Closing balance | 1,949 | 3,601 |
The fair value has been calculated as the weighted average of a best case, base case and worst-case scenario for each project. The weight given to each scenario is as follows:
Based on those scenarios, the fair value, after discounting fixed commitments at rates between 1.08% and 2.91% and the turnover dependent reimbursements at a rate of 17.10% (average rate used by the analysts following the Company) amounts to €6.24 million.
When applying a sensitivity analysis on the above varying the ponderations between the best and base case scenario (decreasing/increasing the PoS of the projects) and varying the discount rate used for discounting the turnover dependent reimbursements (using a discount rate for a more mature biotech company) we obtain the following results:
| Impact of PoS* | |||||
|---|---|---|---|---|---|
| (in thousands of euros) | -40% | -20% | 0 | +20% | +40% |
| DCF with discount rate of 17.10% used for turnover dependent reimbursement |
5,664 | 5,954 | 6,244 | 6,535 | 6,825 |
| DCF with discount rate used for turnover dependent reimbursement reduced to 12.5%** |
6,059 | 6,473 | 6,887 | 7,301 | 7,716 |
* Decrease/increase of best case versus increase/decrease of base case with the worst-case scenario remaining at the same level.
** DCF used for turnover dependent reimbursements.
The table below present only the impacts for JTA:
| Impact of PoS* | |||||
|---|---|---|---|---|---|
| (in thousands of euros) | -40% | -20% | 0 | +20% | +40% |
| DCF with discount rate of 17.10% used for turnover dependent reimbursement |
1,132 | 1,138 | 1,143 | 1,149 | 1,154 |
| DCF with discount rate used for turnover dependent reimbursement reduced to 12.5%** |
1,136 | 1,142 | 1,148 | 1,155 | 1,162 |
* Decrease/increase of best case versus increase/decrease of base case with the worst-case scenario remaining at the same level.
** DCF used for turnover dependent reimbursements.
| Im.pact of PoS* | |||||
|---|---|---|---|---|---|
| (in thousands of euros) | -40% | -20% | 0 | +20% | +40% |
| DCF with discount rate of 17.10% used for turnover dependent reimbursement |
4,532 | 4,816 | 5,101 | 5,386 | 5,671 |
| DCF with discount rate used for turnover dependent reimbursement reduced to 12.5%** |
4,923 | 5,331 | 5,739 | 6,146 | 6,554 |
* Decrease/increase of best case versus increase/decrease of base case with the worst-case scenario remaining at the same level.
** DCF used for turnover dependent reimbursements.
The Company believes that its credit risk, relating to receivables, is limited because currently almost all of its receivables are with public institutions. Cash and cash equivalent and short-term deposits are invested with highly reputable banks and financial institutions.
The maximum credit risk, to which the Group is theoretically exposed as at the balance sheet date, is the carrying amount of financial assets. At the end of the reporting period no financial assets were past due, consequently no financial assets were subject to impairment.
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The Company's main sources of cash inflows are obtained through capital increases, subsidies, government loans and where appropriate loans from commercial banks to finance long-term requirements (investment in infrastructure). A key objective of the Board together with the Executive Directors is to ensure that the Company remains adequately financed to meet its immediate and medium-term needs.
If necessary and appropriate, the Company assures itself of short-term borrowing facilities to cover short-term requirements. In this context, Bone Therapeutics signed a binding term sheet for a EUR 5 million convertible bonds (CBs) facility arranged by ABO Securities in April 2022.
The following table details the Group's remaining contractual maturity of its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Group may be required to pay.
| 31/12/2021 (in thousands of euros) |
Financial lease liabilities |
Government loans |
Loans from related parties |
Convertible Bonds |
Subordinated Loans |
Other Bail Rental |
Total |
|---|---|---|---|---|---|---|---|
| Within one year | 18 | 864 | 81 | 0 | 0 | 83 | 1,047 |
| >1 and <5 years | 19 | 1,309 | 25 | 1,949 | 1,764 | 439 | 5,504 |
| >5 and <10 years | 0 | 1,006 | 0 | 0 | 11,255 | 51 | 12,312 |
| >10 and <15 years | 0 | 608 | 0 | 0 | 0 | 0 | 608 |
| >15 years | 0 | 1,327 | 0 | 0 | 0 | 0 | 1,327 |
| 31/12/2020 (in thousands of euros) |
Financial lease liabilities |
Government loans |
Loans from related parties |
Convertible Bonds |
Subordinated Loans |
Bank debt | Total |
| Within one year | 29 | 929 | 688 | 320 | 280 | 1,500 | 3,746 |
| >1 and <5 years | 50 | 1,608 | 107 | 4,640 | 4,060 | 0 | 10,466 |
| >5 and <10 years | 0 | 1,425 | 0 | 0 | 0 | 0 | 1,425 |
| >10 and <15 years | 0 | 908 | 0 | 0 | 0 | 0 | 908 |
The Company has limited interest rate risk on long-term investments loans granted by regional investment bodies, on subordinated loans and also on turnover independent reimbursements (30%) related to RCA's (related to government loans) concluded as of 2009 which are carrying fixed interest rates. The Group at current does not undertake any hedging.
The Company is currently not exposed to any significant foreign currency risk.
However, should the Company enter into long-term collaboration agreements with third parties for which revenues would be expressed in a foreign currency, the Company might in such case consider entering into a hedging arrangement to cover such currency exposure (in case the related expenditure is planned in local currency). The Company will also monitor exposure in this respect following the establishment of its US subsidiary.
The structure of the group has been described in Chapter 3. For more detail about the related-party transactions, please refer to Chapter 5.
Balances and transactions between the Company and its subsidiary, which is a related party of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
As a result of the relationship of the government (i.e. Walloon Region) with some shareholders of the Company and the extent of financing received, the Company judges that the government is a related party. However, the principal amounts recognized in the financial statements relate to government grants. The total accumulated grants received from the Walloon Region since the start-up of BT amount up to
a total of €35.70 million (2020: €35.54 million). Next to the government grants, government agencies granted loans to the Group for a total amount of €3.97 million.
The remuneration of key management personnel has been described as follow:
| Period ended 31 December | ||
|---|---|---|
| (in thousands of euros) | 2021 | 2020 |
| Number of management members | 6 | 5 |
| Short-term benefits | 1,699 | 1,350 |
| Share-based payments | (95) | 228 |
| Total | 1,604 | 1,578 |
| Cumulative number of warrants granted (in units) | 158,224 | 163,224 |
| Shares owned (in units) | 2,880 | 2,880 |
Transactions with the non-executive directors can be summarized as follows:
| (in thousands of euros) | Period ended 31 December | |
|---|---|---|
| 2021 | 2020 | |
| Share-based payments | 0 | 38 |
| Management fees | 150 | 148 |
| Total | 186 | 186 |
| Number of warrants granted (in units) | 29,330 | 31,330 |
| Shares owned (in units) | 47,038 | 47,038 |
The Company has no major commitments for 2022 and beyond.
| Detail of audit and non-audit fees paid during 2021 in € | Amount |
|---|---|
| Statutory and IFRS audit fees Bone Therapeutics | 30,000 |
| Total audit fees Deloitte for FY21 | 30,000 |
| Report for Capital raise in December 2021 | 6,500 |
| Report on SOP Plan | 4,500 |
| Report for INAMI subsidies | 8,000 |
| Total non-audit fees Deloitte and related parties | 19,000 |
| TOTAL | 49,000 |
The annual consolidated financial statements on 31 December 2021 were authorized for issue by the Board of Directors of the Company on 27 April 2022. Accordingly, events after the reporting period are those events that occurred between 1 January 2022 and 27 April 2022.
In Q1 2022, Bone Therapeutics has officially relocated its corporate offices to the Louvain-la-Neuve Science Park in Mont-Saint-Guibert (Louvain-la-Neuve), Belgium. Louvain-la-Neuve is home to the Catholic University of Louvain (UCLouvain), one of Belgium's premier academic research institutes. Bone Therapeutics will be part of a vibrant biotech ecosystem with a high concentration of cell therapeutic companies.
In March 2022, Bone Therapeutics announced it was redefining its strategic priorities to concentrate specifically on the development of its most advanced clinical asset, ALLOB. Based on the positive results of the previous clinical studies of ALLOB and the extensive preclinical data set, Bone Therapeutics firmly believes that ALLOB has the highest potential of near-term value creation. In order to deliver the results from the Phase IIb clinical study, Bone Therapeutics has implemented a number of actions to reduce its cost base to enable completion of its Phase IIb study. As a result, Bone Therapeutics will focus its R&D activities to support the clinical development of ALLOB and all activities related to the development of the pre-clinical iMSCg platform as well as all other non ALLOB related activities, will be stopped. In this context, some members of Bone Therapeutics' management team will transition to depart Bone Therapeutics in the following months in alignment with the focus in activity.
In April 2022, Bone Therapeutics signed a binding term sheet for a EUR 5 million convertible bonds (CBs) facility arranged by ABO Securities. The proceeds of the financing will be used to advance the clinical development of Bone Therapeutics' lead asset, the allogeneic bone cell therapy, ALLOB. ABO Securities, on behalf of the CB investor, commits to subscribe to up to EUR 5 million in CBs. The CBs will be issued and subscribed in seven tranches. A first tranche with an aggregate principal amount of EUR 1.5 million will be issued on the Closing Date, followed by a tranche of up to EUR 1 million after 40 trading days from Closing. The issue and subscription of the remaining five tranches with a principal amount of EUR 500,000 each can be requested at Bone Therapeutics' sole discretion over an eighteen-month period, subject to customary conditions to be met. Subject to the fulfilment of conditions precedents, Bone Therapeutics and ABO Securities aim to agree on and execute the final subscription agreement for the CBs and to issue the first tranche of CBs by the beginning of May 2022.
In accordance with Art. 3:17 of the Belgian Companies and Associations' Code, it has been decided to present an abbreviated version of the statutory financial statements of Bone Therapeutics SA. These condensed statements have been drawn up using the same accounting principles for preparing the full set of statutory financial statements of Bone Therapeutics SA for the financial year ending 31 December 2021 These financial statements were as such prepared in accordance with the applicable accounting framework in Belgium and with the legal and regulatory requirements applicable to the financial statements in Belgium.
The management report, the statutory financial statements of Bone Therapeutics SA and the report of the statutory auditor will be filed with the appropriate authorities and are available at the Company's registered offices. The statutory auditor has issued an unqualified report on the statutory financial statements of Bone Therapeutics SA. The full set of the statutory financial statements is also available on the Company's website www.bonetherapeutics.com.
| 9.1.1. | Balance Sheet | |
|---|---|---|
| ASSETS (in thousands of euros) |
31/12/21 | 31/12/20 |
|---|---|---|
| Non-current assets | 3,259 | 3,377 |
| Formation expenses | 1,634 | 1,863 |
| Intangible assets | 24 | 28 |
| Property plant and equipment | 263 | 147 |
| Financial fixed assets | 1,339 | 1,339 |
| Current assets | 17,487 | 22,716 |
| Amounts receivable for more than one year | 4,428 | 4,431 |
| Trade and other receivables | 2,570 | 3,363 |
| Investments | 34 | 155 |
| Cash and cash equivalents | 9,407 | 14,385 |
| Deferred charges and accrued income | 1,047 | 383 |
| TOTAL ASSETS | 20,746 | 26,094 |
| EQUITY AND LIABILITIES (in thousands of euros) |
31/12/21 | 31/12/20 |
|---|---|---|
| Equity | (5,439 | 4,789 |
| Share capital | 4,924 | 8,415 |
| Share premium | 2,175 | 10,898 |
| Accumulated profits (losses) | (12,537) | (14,524) |
| Non-current liabilities | 19,213 | 11,484 |
| Current liabilities | 6,972 | 9,821 |
| Current portion of amounts payable after one year | 945 | 3,057 |
| Trade debts | 4,400 | 5,239 |
| Taxes remuneration and social security | 269 | 346 |
| Other amounts payable | 457 | 691 |
| Accrued charges and deferred income | 901 | 489 |
| Total liabilities | 26,185 | 21,305 |
| TOTAL EQUITY AND LIABILITIES | 20,746 | 26,094 |
| (in thousands of euros) | For the 12-months period ended |
||
|---|---|---|---|
| 31/12/21 | 31/12/20 | ||
| Operating income | 14,297 | 26,938 | |
| Turnover | 1,000 | 1,000 | |
| Own construction capitalized | 11,147 | 16,694 | |
| Other operating income | 2,150 | 2,854 | |
| Non-recurring operating income | 0 | 6,390 | |
| Operating charges | (15,733) | (39,420) | |
| Services and other goods | (12,169) | (18,489) | |
| Remuneration, social security, pensions | (2,275) | (2,521) | |
| Depreciation and amounts written off fixed assets | (603) | (17,232) | |
| Other operating charge | (685) | (1,178) | |
| Operating profit/(loss) | (1,436) | (12,482) | |
| Financial income | 5 | 1 | |
| Financial expenses | (847) | (691) | |
| Result Profit/(loss) before taxes | (2,277) | (13,172) | |
| Income taxes | (89) | (78) | |
| TOTAL COMPREHENSIVE INCOME OF THE PERIOD | (2,366) | (13,250) |
The Company ended the year with a loss of €13.51 million. Carried forward losses at the end of 2020 amounted to €14.52 million. The Board of Directors proposes to appropriate the loss for 2021 to losses carried forward. Losses carried forward after appropriation therefore amounts to €28,03 million.
| (in thousands of euros) | 31/12/2021 |
|---|---|
| Loss carried forward for the year at 31.12.2020 | (14,524) |
| Loss for the period | (13.514)) |
| Incorporation to share capital and share premium | 15.500 |
| Total loss carried forward | (12,538) |
The valuation rules have been prepared by the Board of Directors in accordance with the requirements of the Royal Decree of 30 January 2001.
Formation expenses are recorded as intangible fixed assets at their nominal value and depreciated over a period of 5 years. The debt issuance costs are directly recognized into the profit and loss.
R&D costs excluding administrative and financial costs are recognized as assets in an intangible asset account and amortized pro-rata basis over the year for the R&D costs capitalized as from 1 January 2016. For R&D costs capitalized before this change in accounting rules, amortization continues to be applied over a threeyear period.
Receivables are valued at their face value. Non-interest bearing long-term Receivables will be actualized using an appropriate discount rate.
Upon signing agreements with the Walloon Region, advance cash payment will be recorded (when received) and will be debited in line with the part of the expenses reported and claimed which, granting body considers as being paid through the advances.
Revenue recognition of Recoverable cash advances is linked to R&D expenses which according to the new valuation principle applicable as of 1 January 2016, are amortized at 100% in the year of capitalization. For RCA's linked to R&D expenses, which were capitalized before the fiscal year 2016, and which are amortized over a three-year period, revenue recognition of RCA's will be kept in line with the amortizing over this threeyear period.
When the decision is made to exploit the results of the work financed through the recoverable cash advances, the recoverable advances are recognized in debt in full during the year the decision was taken. At the same time, the recoverable cash advance is recognized at 100% in other operating charges. The amount of the debt corresponds to plan set out in an agreement with the Walloon Region.
In case the project is abandoned, the remaining part of the capitalized R&D will be depreciated in an accelerated way and the revenues that are related will also be recognized in an accelerated way.
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