Annual Report • Jan 27, 2023
Annual Report
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Infant Bacterial Therapeutics AB (publ) Annual Report 2021
We aim to satisfy unmet medical needs in the premature infant
Another primary endpoint, Sustained Feeding Tolerance (SFT), i.e. the period until good digestion, has been validated in IBT’s phase lll-study. Reduced time until good digestion, reduces risk for severe complications such as blood poisoning. This means that the study now has two rather than one validated primary endpoint, to prevent NEC and to reduce the time to SFT. Recruitment of patients in IBT’s phase lll-study has been strongly affected by the pandemic. A likely scenario, assuming that the current recruitment level can be maintained, is that the study can be concluded at the end of 2023. Should the pandemic situation once again get worse, recruitment may require additional time. However, the pandemic does not affect the quality in our data or the possibility to conclude the study. Costs are primarily related to the number of patients in the trial, which means that IBT’s liquidity is continuously deemed sufficient to conclude the study.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021
Infant Bacterial Therapeutics AB (publ) Annual Report
January 1 – December 31, 2021
The annual report is published on the company’s homepage, www.ibtherapeutics.com and is distributed in printed form when ordered. Orders may be placed via [email protected]. The annual report is also published in Swedish.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021
Infant Bacterial Therapeutics AB (publ) is a pharmaceutical company with a product in clinical development phase lll. The company’s vision is to develop drugs influencing the human infant microbiome, and thereby prevent or treat rare diseases affecting premature infants. IBT is currently developing its lead drug candidate IBP-9414. The ambition with IBP-9414 is become the world’s first approved probiotic pharmaceutical with the goal to prevent lethal infant diseases including NEC and sepsis and to induce sound gut and intestine development in premature infants. IBP-9414 contains the active compound Lactobacillus reuteri, which is a human bacterial strain naturally present in breast milk. IBT is further pursuing a second rare disease program IBP-1016 for the treatment of an unmet medical need in gastroschisis, a severe disease in infants. By developing these drugs, IBT has the potential to fulfill unmet needs for diseases where there are currently no prevention or treatment therapies available.
Premature infants are the most vulnerable beings on the planet and for them to survive, grow and thrive they need intensive and specialized care. Although advances in medical care and handling over the last 30 years have improved survival and well-being of these sensitive infants, both in the immediate post-natal period and in their subsequent lives, current drugs and therapies are mostly designed for adults and are not adapted to this specific and vulnerable patient population. Specific treatment and prophylactic therapy are thus underdeveloped and there is an urgent demand for drugs designed for the unique needs of the premature baby. IBT:s vision is to become an internationally recognized and leading company in the development of pharmaceuticals to meet the needs of the premature infants.
IBT develops, and intends to market and sell safe and efficacious therapies well adapted to its purpose that affects infants’ microbiome and thereby prevent or treat rare diseases that affects premature infants. IBT seeks to remain close to the needs expressed by healthcare providers and parents to provide satisfactory therapeutic solutions and continuously improve these solutions.
Clinical trials are conducted through collaborations with CRO’s or leading academic research groups chosen based on their experience and specialist knowledge in conducting clinical trials. Suitable sites are selected in cooperation with IBT to conduct clinical trials and to initiate the recruiting process for patients. IBT can monitor the clinical operations and pharmaceutical safety internally, or delegate these activities to the chosen CRO.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021
As I reflect on the year that passed, I’m pleased to note that our team significantly progressed several key deliverables for our drug candidate IBP-9414, including driving recruitment despite the pandemic challenge, expanding our IP protection across several important key markets, confirming Sustained Feeding Tolerance as a primary endpoint in addition to NEC, and extending strategic insights into our value proposition as we prepare IBT for launch.
IBP-9414 is now in its final Phase III development stage (“The Connection Study”). The purpose of our study is to produce the data needed to demonstrate how IBP-9414 improves the chances of premature infants' survival. Our active ingredient, Lactobacillus reuteri is a natural strain of bacteria present in human breast milk. With the data in hand, we will launch the world’s first pharmaceutical grade probiotic to prevent life threatening infant diseases including NEC and sepsis by promoting a healthy gastrointestinal development.
I would like to share a few words regarding the importance of premature infants’ ability to be fed sustainably. At birth, the umbilical cord is severed, and suddenly the baby needs nutrition from somewhere else. A baby doubles its weight every three to four weeks during the final trimester of pregnancy. A major challenge for medical staff caring for premature infants is to ensure they grow and develop in a similar way as if they had remained inside their mother. It’s also critical to avoid clinical complications such as sepsis. This requires the ability for the infant to sustainably tolerate a significant amount of nutrition. Infants receive nutrition in one of two ways; enteral or parenteral, i.e. orally or intravenously. A complicating factor is that the gastrointestinal system in the premature infant has not sufficiently developed to sustainably tolerate the necessary nutrition. It is furthermore well documented that extended use of parenteral nutrition can cause serious complications e.g. sepsis. There are also potential long-term implications associated with infant malnutrition including impaired cognitive function.
With that background the neonatal staff is highly focused on shortening the time to Sustained Feeding Tolerance to enable healthy gastrointestinal development. A blinded analysis of IBT’s clinical phase III study demonstrated in 2021 that shortening of time to SFT significantly reduces the risk of serious complications including sepsis. The validation of SFT as a clinical endpoint was accomplished using a methodology agreed in advance with the FDA. The validation conducted in 2021 of our development program importantly progressed in 2021 to document the effect of IBP-9414 regarding two unique goals instead of one: the prevention of NEC and to shorten the time to SFT, as the second now validated primary "endpoint".
The recruitment of patients for the Connection Study has grown to 800 patients (Feb 2022). The speed of recruitment has been favorably influenced by the increasing number of participating centers across the US, Europe and Israel, as well as planned expanded recruitment criteria covering infants between 500 gram to 1000 gram (from prior 750 gram to 1000 gram). On the other hand, the Covid pandemic has slowed us down. Several mitigating actions were quickly put in place to facilitate the processing of patients including e-consent. It's important to note that while the pandemic impacts the rate of recruitment, it does not impact the quality of data or our confidence in completing the study. Costs are primarily tied to the number of patients in the study, and we therefore remain sufficiently funded through the full study.
Our focus is to advance recruitment of The Connection Study towards conclusion. We are currently averaging 50 patients per month, and at the same time recognize recruitment speed and study conclusion is contingent on the pandemic. There are alternative scenarios. One likely scenario is that we conclude recruitment in 2023. On the other hand, if the pandemic situation worsens, patient recruitment may extend further.
While the study continues we will also make sure IBT stands ready to launch IBP-9414 under the most expedited scenario. This means we are identifying the necessary production requirements as well as the resources to prepare the product, the markets and the organization for commercialization across key markets.
During 2021 we secured several additional patent approvals. The IP protection of IBP-9414 is strong. We expect 12 years of exclusivity across critical markets such as Europe, the US, Japan and China thanks to three layers of protection including data exclusivity from being a biologics, patents as well as orphan drug status.
In conclusion, I would like to take this opportunity to thank all employees who, with great commitment, progress the important work with a product that can play a major role in improving the chances of survival for premature infants.
Stockholm March 30, 2022
Staffan Strömberg
CEO
IBP-9414 contains the active substance Lactobacillus reuteri, which is a co-evolved human bacterial strain naturally present in breast milk. Lactobacillus reuteri is a live bacteria known to be anti-inflammatory, anti-pathogenic and beneficial to gut motility. IBP-9414 is specifically formulated with the consideration of the extremely sensitive target population of premature infants.
IBT was granted Orphan Drug Designation by the FDA for Lactobacillus reuteri for the prevention of NEC in premature infants in 2013 and by the European Commission in 2015. IBT also received Rare Pediatric Disease Designation from the FDA for IBP-9414 in 2016, meaning that IBT may be awarded a priority review voucher following market approval.
In June 2016, IBT commenced a Safety and Tolerability study. At the end of 2017 the completed study results demonstrated a similar safety and tolerability profile both in the active group and placebo group.
IBT has, resulting from discussions with the FDA on November 20, 2018, chosen to modify its Phase III study in premature infants for the prevention of necrotizing enterocolitis (NEC). Following the guidance from the FDA, IBT amended the protocol to allow additional areas of treatment such as reduced time to good digestion, called “Sustained Feeding Tolerance” (SFT).
The pivotal Phase III study, The Connection study, commenced in 2019 and the first patient was recruited on July 4, 2019. A blinded evaluation presented in December 2021 showed that a reduction of time to SFT correlates with fewer complications such as blood poisoning and bronchopulmenary dysplasia, a chronic lung disease affecting premature infants.
NEC is a leading cause of death among premature infants in neonatal intensive care units (NICU). NEC annually kills approximately 3,700 and 1,500 infants in Europe and in the US, respectively. NEC has an unpredictable, spontaneous, and acute onset and major surgery is today the only available treatment. NEC is a serious inflammatory disease of the newborn bowel in which portions of the bowel undergo tissue death (necrosis).
NEC primarily affects premature infants and the risk to contrive NEC increases the lower the birth weight and lower gestational age. Gestational age is defined as the duration from the first day of the last menstruation cycle until birth. Occurrence of NEC by estimated gestational age is as set forth in Figure 1.
Figure 1. Occurrence of NEC by gestational age (Clark et al, 2012)
The disease has a higher rate of mortality in the younger and less mature infants. Mortality in infants who had a diagnosis of NEC by estimated gestational age is as set forth in Figure 2.
Figure 2. Mortality in infants who had a diagnosis of NEC by estimated gestational age (Clark et al, 2012).
The number listed outside parentheses in the table above is estimated gestational age in weeks. The number listed within parentheses represents the number of patients with NEC within each gestational age group.
The long-term clinical consequences for infants who survive NEC are variable and include short bowel syndrome, parenteral nutrition-associated cholestasis, abnormal growth, and adverse neurodevelopmental outcomes, including cerebral palsy, cognitive impairment, visual impairment, and hearing impairment.
The first weeks of nutrition have important implications for the development of preterm infants. The goal of achieving early and adequate enteral nutrition (tube feeding) in these infants is to facilitate recovery or catch up growth, to achieve normal body composition, whilst minimizing undesirable effects of nutritional imbalances (e.g. hyperglycemia, insulin resistance, etc.).
Evidence-based guidelines for nutrition of VLBW-infants (infants with a birthweight of under 1,500 grams) recommend starting parenteral nutrition (intravenous) within the first hours postnatally as the immature gastrointestinal tract is not ready to accept full enteral feedings in these infants directly after birth. However, prolonged parenteral nutrition is associated with complications (intrahepatic cholestasis, increased risk of bronchopulmonary dysplasia, worsening of pulmonary vascular resistance, IV line-mediated infections and sepsis.# Infant Bacterial Therapeutics AB (publ) Annual Report 2021
The enteral route of nutrition is the most physiological and natural way of administering nutrients to the neonate. The introduction of enteral feeding is therefore recommended as soon as possible, and ideally on day 1 with the goal of reaching full enteral nutrition as quickly as possible. This eliminates the need for parenteral nutrition and the associated risks of complications. Establishing sustained enteral feeding, associated with the discontinuation of parenteral nutrition is thus an important goal, especially in VLBW and ELBW-infants (extremely low birth weight <1000g). Reducing the number of days to reach complete enteral nutrition is considered to be clinically relevant and important in the treatment of the preterm infant. L. reuteri Lactobacillus reuteri is a co-evolved human bacterial strain naturally present in breast milk. L. reuteri is a live bacteria known to be anti-inflammatory, anti-pathogenic and beneficial to gut motility.
Since 2012, thirteen published clinical trials that have enrolled more than 4,000 infants have indicated proof-of-concept of the clinical potential of Lactobacillus reuteri in the prevention of NEC. Since 2012, nine published clinical studies that have enrolled more than 3,100 infants have indicated proof-of-concept of the clinical potential of Lactobacillus reuteri for the reduction in episodes of feeding intolerance or reduction in time to full enteral feeding. The table below shows a summary of studies using Lactobacillus reuteri showing clear clinical signal for the reduction in NEC incidence and clear clinical signal for reduction in episodes of feeding intolerance or reduction in time to full enteral feeding.
The development plan for IBP-9414 consists of two clinical trials: the completed safety and tolerability study followed by the ongoing pivotal Phase III study, The Connection Study. The safety and tolerability study, was been completed on time in Q4 2017. The Connection Study was initiated in the second half of 2019 and is ongoing. The first study was a randomized, double blind, parallel-group, dose escalation placebo- controlled multicenter study to investigate the safety and tolerability of IBP-9414 in premature infants (ClinicalTrials.gov identifier: NTC02472769). The study included 120 premature infants, defined as a gestational age ≤ 32 weeks and birth-weight ranging from 500 to 2,000 grams, recruited and randomized to receive either IBP-9414 or placebo. The first dose of study drug was administered within 48 hours of birth and continued daily for a period of 14 days. Follow-up assessments were occasionally made up to six months after the last dose of the study drug. The primary outcome in this trial was safety and tolerability. This Safety and Tolerability study has been completed on time in Q4 2017. The safety and tolerability study concluded that IBP-9414 was safe and well-tolerated in premature infants with birth weights between 500–2,000 grams, with high compliance to treatment with the study drug and that there was no evidence of cross- contamination with IBP-9414 in placebo treated infants.
The ongoing pivotal Phase III study is designed to demonstrate and document efficacy of IBP- 9414 over placebo in two primary “endpoints”, prevention of NEC and improvement of so called Infant Bacterial Therapeutics AB (publ) Annual Report 2021 12 “Sustained Feeding Tolerance” in premature infants with a birth weight ≤ 1,500 grams. This study will also include safety evaluation. Given the urgency to provide an effective preventative therapy to this unmet medical need, IBT plans to utilize the available FDA and EMA expedited programs to reach the market as soon as possible.
There has been little or no progress in recent years in improving outcomes for infants that are affected by NEC once the disease is underway. Nor is there definitive treatment that modifies the underlying risk factors for the disease. Approximately 20 to 40 percent of patients with NEC will require surgery. Thus, NEC prevention strategies are vital and urgently needed but to date none have been successful or generally adopted as the standard of care. Subsequently, a preventive treatment against NEC remains an unmet medical need. NEC patients require medical care and in many cases also surgical interventions that increase hospital expenditures and prolong length of stay. The economic burden of NEC has been evaluated to be almost 20 percent of the total cost of the initial care of all newborns in the US, and represents approximately USD 5 billion spent annually on NEC. Moreover, those infants who survive NEC may face serious lifelong sequelae, which eventually decrease their quality of life and generate further costs to the patient and society. In the light of this, a preventive therapy for NEC such as IBP-9414 would therefore be expected to both directly and indirectly reduce these healthcare expenses. IBT intends to demonstrate these benefits to support reimbursement for IBP-9414 in the prevention of NEC from caregivers, insurance companies and pharmaceutical authorities, in order to gain compensation and reimbursement for IBP-9414 for prevention of NEC and SFT.
In 2021 an independent consultant company, ClearView Healthcare Partners LLC (“ClearView”), were commissioned by IBT to evaluate the market need for the preventative drug IBP-9414 for NEC (the “ClearView Report”). ClearView completed 30 interviews with neonatologists and hospital Pharmacy and Therapeutics (“P&T”) committee members in the US. The Clearview report established that neonatologists perceive NEC to represent a key priority despite its low incidence. In addition, the need to improve digestion (SFT) in premature infants is of decisive importance. The neonatologists nearly unanimously stated a need for improved prevention of NEC and SFT to relieve both the clinical and economic burdens.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 13
Clearview also report increasing interest by neonatologists to prescribe food supplements to prevent NEC and SFT but that the majority of neonatologists do not recommend food supplements to any great extent due to their opinion that FDA-regulation is key to guarantee the required quality control. The ClearView Report estimated that the number of premature infants eligible to receive prophylaxis for NEC and SFT is over 56,000 infants per annum in the US. A target product profile (“TPP”) was presented to interviewees in the interviews conducted by Clearview. The TPP defined among other things the safety profile, method of administration, and expected efficacy in the prevention of NEC of 33% and a statistically significant reduction in time to SFT. The ClearView Report has shown that when presented with the TPP of IBP-9414, neonatologists reacted positively and expressed a strong willingness to use IBP-9414 in their clinical practice (90 percent of Physician Preference Share), and according to a hospital template a majority of P&T (Pharmacy and therapeutics) members expressed willingness to adopt the product. An adapted price range was tested in the ClearView report, depending on gestation age. At a price of USD 5,000 per week until the infant reaches 34 weeks PMA as base, ClearView estimate sales amounting to USD 630m per annum in the USA. The analysis considered number of addressable patients, physician preference scores, formulary inclusion and protocol access. With the results from the analysis for the USA with IBP-9414:s two primary endpoints, ClearView made an assessment of what the corresponding results would be for the European market and the rest of the world (ROW), illustrated as follows in the table below. This shows that the potential for Europe corresponds to what we see for the USA, and ROW is estimated at approximately half of the USA, resulting in a “megabrand” potential of USD 1.5bn.
Gastroschisis is a rare, life-threatening and debilitating birth abnormality in infants where the infant is born with externalized intestines.
* Clearview marknadsundersökning 2021. Rest Of World (ROW) uppskattat till 50% av EU → Tre former av IP skydd
1) Dataexklusivitet
2) Patent
3) Särlekemedel
→ >12 års exklusivitet på kritiska marknader som EU, USA, Japan och Kina
| USA | EUROPE | ROW | TOTAL | |
|---|---|---|---|---|
| Peak Sales USD M |
After the initial surgical repair, gastroschisis represents an area of significant unmet medical need with no definitive treatment available. Post-operative management of gastroschisis is largely aimed at overcoming the significant morbidity related to the reduction in gut motility and consequent feeding intolerance necessitating the prolonged requirement for parenteral nutrition. Infants suffering from gastroschisis have a greatly increased risk of sepsis and liver cholestasis. It is common for neonates born with gastroschisis to have typically an extended hospital stay of 1-5 months thereby causing significant burden to the healthcare system. The active bacteria used in IBP-1016 is known to enhance gut motility and function in infants with feeding intolerance.
IBP-9414 is protected by already approved patents on Lactobacillus reuteri, held by BioGaia. IBT has been granted from BioGaia an exclusive royalty-free license to use Lactobacillus reuteri in IBT’s areas of interest. The license is valid for the duration of the patent term. IBT has and intends to apply for patent protection for innovations for the purpose of securing a sufficient and efficient protection of IBT’s current and future commercial position and interests. Patent applications regularly cover the US, the EU, Japan and China, but also other markets where it is commercially justified.# Infant Bacterial Therapeutics AB (publ) Annual Report 2021
The Board of Directors and CEO of Infant Bacterial Therapeutics AB (publ) (”IBT”), reg. no. 556873-8586 hereby presents the Annual Report for the financial year January 1, 2020 to December 31, 2021. This financial report is prepared in accordance with RFR 2, Reporting for legal entities and “Årsredovisningslagen”.
IBT is a clinical stage pharmaceutical company with a vision to develop drugs influencing the infant microbiome, and thereby prevent or treat rare diseases affecting premature infants. IBT is currently developing its drug candidate IBP-9414 to prevent necrotizing enterocolitis (NEC), and improve so called “feeding tolerance” affecting premature infants. IBP-9414 contains the active ingredient Lactobacillus reuteri, which is a human strain of bacteria found in breast milk. The portfolio contains a second program, IBP-1016, for the treatment of gastroschisis, a rare and severe disease in infants. By developing these drugs, IBT has the potential to fulfill medical needs where there are currently no treatment therapies available. The FDA and the European Commission have granted IBT Orphan Drug Designation, and the FDA have granted “Rare Pediatric Disease” Designation for IBP-9414 for the prevention of NEC.
The patent protection granted in the US is valid until 2026 and in Europe, China and Japan until 2027. Thereafter patent term extensions are possible in certain areas of the world which could provide additional patent protection of the innovation via patent term extensions. IBT has filed for further patent protection for IBP-9414 which aims to protect patents until 2036. On February 9 we announced that the Japan Patent Office has issued a decision to grant a patent entitled: “A method of activating lactic acid bacteria”, which protects the formulation of Lactobacillus reuteri including IBP-9414. The Japanese patent is valid until 2036.
| 2021 Jan-Dec | 2020 Jan-Dec | |
|---|---|---|
| Net sales | 61 | - |
| Other income | 33 | 312 |
| Operating profit/loss | -44,578 | -71,918 |
| Result after tax | -44,991 | -72,007 |
| Total assets | 408,478 | 450,318 |
| Cash flow for the period | -55,532 | -56,625 |
| Cash flow per share for the period (SEK) | -4.95 | -5.04 |
| Cash | 386,752 | 423,438 |
| Earnings per share before and after dilution (SEK) | -1.44 | -6.41 |
| Equity per share (SEK) | 35.21 | 39.21 |
| Equity ratio (%) | 97 | 98 |
Amounts are reported in KSEK (SEK in thousands). Amounts in parenthesis refer to the same period in the previous year unless stated otherwise.
Operational result amounted to KSEK -44,578 (-71,980) and result after financial items amounted to KSEK -44,991 (-72,007). Result after tax amounted to KSEK -44,991 (-72,007). Result per share prior and after dilution amounted to SEK -4.01 (-6.41).
Costs for the ongoing IBP-9414 clinical trial are reported net of exchange rate effects on foreign currency deposits. Exchange rate effects during the reporting period amounted to KSEK 18,846 (-15,125), (Note 1, 2). Operational costs amounted to KSEK 63,518 (57,105) prior to exchange rate effects on foreign currency deposits, and after exchange rate gains to KSEK 44,672 (72,230). Costs for the ongoing IBP-9414 clinical trial amounted to KSEK 42,196 (32,910) prior to exchange rate gains. Personnel costs amounted to KSEK 15,695 (19,693). Other external costs amounted to KSEK 5,627 (4,502). Operational costs in total prior to exchange rate gains increased during the reporting period compared to the previous year. Costs for the ongoing clinical study increased regarding production of clinical trial material, trial insurance coverage, patient recruitment and dosing in the ongoing phase III study which was initiated in 2019.
Personnel costs are lower in the reporting period than during the equivalent period in the previous year due to reduced staff and payment of bonus during the third quarter 2020 in the amount of KSEK 2,849. On a rolling twelve-month period, the company had 8 (10) full time equivalent employees. The company had 8 (10) employees on the balance sheet date. Other external costs during the reporting period increased compared to the equivalent period during the previous year primarily as a result of consulting fees regarding market analysis.
Cash flow for the period amounted to KSEK -55,532 (-56,625). Cash flow per share amounted to SEK -4.95 (-5.04).
Prepaid expenses amounted to approximately MSEK 9.1 (12.7) and mainly refer to contractual milestone payments paid to the company’s CRO and CMC producers regarding yet unfulfilled contractual obligations which are reported as a receivable in the balance sheet. Accrued expenses amounted to approximately MSEK 7.6 (6.9) and mainly refer to research and development and personnel costs. The Company’s cash balance on December 31, 2021, amounted to KSEK 386,752 compared to KSEK 423,438 on December 31, 2020. The Company’s shareholder’s equity on December 31, 2021, amounted to KSEK 395,254 compared to KSEK 440,154 on December 31, 2020. Shareholder’s equity per share on December 31, 2021, amounted to SEK 35.21 compared to SEK 39.21 on December 31, 2020.# Infant Bacterial Therapeutics AB (publ) Annual Report 2021
The Company’s equity ratio on December 31, 2021, amounted to 97% compared to 98% on December 31, 2020. IBT has during November 2017 and 2018 generated approximately SEK 528m after transaction costs in new share issues. IBT’s liquidity and captal is deemed sufficient to conduct the ongoing Phase III clinical study, as well as to fund the company´s activities until application for market approval.
The development plan for IBP-9414 is comprised of a clinical program consisting of two clinical trials: the completed safety and tolerability study and the ongoing pivotal Phase III study, “The Connection Study”. The Safety and Tolerability Study was completed on schedule during the fourth quarter of 2017. The following pivotal study, ”The Connection Study”, commenced on July 4, 2019. The primary goal in the first trial was to evaluate safety and tolerability. This study was completed on time in Q4 2017 and concluded that IBP-9414 was safe and well-tolerated in premature infants with birth weights between 500–2,000 grams, with high compliance to treatment with the study drug and that there was no evidence of cross-contamination with IBP-9414 in placebo treated infants. The ongoing pivotal Phase III study is designed to demonstrate and document efficacy of IBP-9414 over placebo in the prevention of NEC and the reduced time to Sustained Feeding Infant Bacterial Therapeutics AB (publ) Annual Report 2021 19 Tolearance in premature infants with a birth weight ≤ 1,500 grams. This study will also include safety evaluation. A blinded analysis of IBT:s clinical phase lll-study in 2021 showed that reduced time to SFT significantly reduces the risk of serious complications such as blood poisoning. The validation of SFT as an endpoint was based on a procedure agreed with the FDA. The validation conducted in 2021 means that the effect of IBP-9414 is documented for two goals rather than one: to prevent NEC and also to reduce the time until SFT. Thus, the study has two validated endpoints. As a consequence of the COVID-19 pandemic the study is delayed and is as previously communicated currently expected to be concluded in 2023 or 2024 depending on the pandemic.
The Company’s Board of Directors work continually and systematically with risk assessment to identify risks and take the necessary actions to cope with them. The internal control environment as described in the Company code of conduct report comprises mainly the following components: control environment, risk assessment, control activities, information and communication, as well as monitoring. For every identified significant risk, risk mitigation actions are formulated.
The value of the Company is largely dependent on success in the Company’s development of IBP-9414 and the successful completion of clinical trials and the grant of a marketing authorization by the US Food and Drug Administration (“FDA”) and/or the European Medicines Agency (“EMA”). IBT’s clinical development is at development stage and there is a risk that IBP-9414 will not demonstrate the required effect. If the development on IBP-9414 is unsuccessful, IBT may try to focus on other projects but there is a risk that such projects will not be successful.
BioGaia has been granted IBT an exclusive license to the BioGaia patent for use Lactobacillus reuteri, DSM17938, in developing of a medicinal remedy for treatment of premature infants. The patents have been granted in the USA, China and Japan are valid until 2026 and in Europe until the end of 2027. Thereafter, the patents can be extended in certain parts of the world, which may provide additional patent protection. There are no royalties payable by IBT to BioGaia when commercializing IBT’s pharmaceutical candidates. The main patent protection for IBP-9414 is the product claim for the use of a specific strain of Lactobacillus reuteri. This is a claim-type which is often referred to as “unlimited product protection” similar to that used for new chemical entities in the relation to small-molecules based products in the pharmaceutical industry. Patents including a product claim for the strain are issued in most important markets. The patent protection granted in the USA, China and Japan are valid until 2026 and in Europe until 2027. After those years patent term extensions are possible in certain areas of the world which could provide additional patent protection of the innovation.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 20
IBT has also applied for further patent protection relating to IBP-9414 which is currently pending and aim to further protect IBP-9414 until 2036.
There is an inherent risk within the type of business that IBT conducts that the company’s licenses, patents, trademarks or other non-tangible assets do not provide sufficient protection for the company, or the company’s rights may not be upheld. Furthermore, patent infringement may occur which may involve costly litigation. Results from infringement cannot be guaranteed. Negative outcome from litigation regarding non-tangible assets may cause the losing party to lose protection, future use of said rights being prohibited, or the obligation to pay for damages. The company has filed patent applications for products under development, which have not yet been granted. There is no guarantee that such applications will be granted.
IBT develops medicinal products and is dependent on assessments and decisions by applicable authorities. Such assessments are preceded by decisions, among other, regarding permission to conduct clinical studies, permission to market and sell pharmaceuticals, prerequisites for prescribing pharmaceuticals, pricing of pharmaceuticals subject to reimbursement systems, and discounts on pharmaceuticals. It cannot be guaranteed that IBT will obtain the authoritative decisions necessary to conduct clinical studies and receive market approval. It cannot be excluded that national authorities may take a contrary view or act to stop the product being sold in the applicable country, which could lead to delays or withdrawal of market approval. To mitigate the regulatory risks IBT involves world-leading external expertise in relation to, for example, regulatory matters or the design of clinical studies.
IBT utilizes contract manufacturers for production of IBP-9414 which makes the Company dependent on external deliveries meeting agreed requirements for example for quality, quantity and time of delivery. There is no guarantee that IBT will not be impacted by delayed or failed deliveries, which could impact the progress of the clinical studies. To minimize this risk, IBT has evaluated a number of contract manufacturers that are able to produce IBP-9414.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 21
IBT conducts development of pharmaceutical products and conducts clinical studies which causes risks related to product liability. To mitigate such risk, IBT carries insurance coverage for products under development. There is however no guarantee that the insurance coverage provides sufficient protection against claims for damages for eventual damages caused by the company’s products or product candidates. The Company’s insurance policies include coverage for patients who participate in clinical trials and product liability insurance for products under development and in the market. The insurance coverage is subject to continuous review. The Company deems that the Company’s insurance coverage is appropriate for the current scope of the business.
IBT is, to a high degree, dependent on a few key persons, both employees as well as directors. The Company’s future earnings are affected by its ability to attract and retain qualified key persons. In cases where one or more key persons leave the Company and the Company is not successful in replacing such persons, this might have a negative effect on the Company’s business, financial position and earnings.
IBT’s operations are capital intensive. IBT has during November 2017 generated SEK 104.5m in a directed share issue to institutional investors and SEK 439.1m in a preferred share issue in January 2018. Capital generated amounted to approximately SEK 544m before share issue costs and approximately SEK 528m after share issue costs, and is deemed sufficient to conduct the planned Phase III study. A predominant share of IBT’s development costs are commitments in foreign currencies. Should the SEK depreciate versus the specific currency, it could have a significant impact on the Company’s financial position and results. The currency against which IBT has the greatest exposure is USD.# IBT’s balance sheet item “cash and cash equivalents” in the balance sheet represents cash deposits at Danske Bank and SEB. The Company’s assessment is that the counterpart risk at Danske Bank and SEB is very low. See note 18 for further information about financial risks. IBT has declared taxable losses which may be nullified should the company be subject to new ownership controlling in excess of 50% of the votes of the company, or new owners who each control in excess of 5 % of the votes and collectively control in excess of 50% of the votes of the company. Nullification of these taxable losses would result in economic loss for IBT which may have a negative impact on the company’s results and financial position. In response to the COVID-19 pandemic and the coronavirus, IBT is closely monitoring developments and is actively taking measures to minimize or limit affects thereof on the company’s operations. IBT adheres to directives issued by Folkhälsomyndigheten, the WHO and ECDC (European center for prevention and control of disease). The pandemic affects the recruitment level in IBT’s pivotal study, “The Connection study”. The bulk of the costs for conducting the study are generated in connection with recruitment of patients, and thus the assessment is that IBT has sufficient funds to conclude the study although at a later point in time. Infant Bacterial Therapeutics AB (publ) Annual Report 2021 22 Further information on risks and uncertainties is available in IBT’s Rights Issue Prospectus dated January 10, 2018 on the Company’s homepage www.ibtherapeutics.com.
The Company’s operations do not have any specific environmental risks and is not subject to notification obligations under the Swedish Environmental Code. The Board of Directors of the Company is of the opinion that the Company is in compliance with applicable rules and regulations and offers its employees a sound and safe working environment.
IBT should be perceived as an innovative and creative Company that represents quality, health and provides a function in society. It is important for IBT to work actively with sustainability issues. Respect for human rights, environment and anti-corruption shall reflect the company’s operations with regard to business strategies, financing, investments and purchasing processes. The Company is not legally required to publish a sustainability report.
IBT is not and has never been involved in any legal proceedings.
The company’s Corporate Governance Report for 2019 is published on the Company’s webpage www.ibtherapeutics.com
IBT strives to have good communication with the Company’s shareholders. The Company’s publication of information should be correct, pertinent, and timely. The Company’s communication will also be characterized by openness and the Company will publish periodic interim reports and annual reports in Swedish and English. Events which are determined to have potential impact on the share price will be distributed as press release.
| Event | Date |
|---|---|
| Interim report January – March 2022 | May 4, 2022 |
| Interim report January – June 2022 | August 25, 2022 |
| Interim report January – September 2022 | November 10, 2022 |
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 23
The Annual General Meeting for IBT will be held on May 4, 2022. Due to COVID-19 the AGM will be conducted by voting in advance in accordance with temporary laws. AGM with personal attendance or by proxy will therefore not take place this year.
The Board of directors propose that the following surplus:
| Item | Amount |
|---|---|
| Income carried forward | -231 837 922 |
| Surplus reserve | 669 021 577 |
| Result for the period | -44 990 998 |
| Total | 392 192 657 |
Be appropriated as follows:
| Item | Amount |
|---|---|
| Income carried forward | 392 192 657 |
| Total | 392 192 657 |
The board of directors recommend that no dividend be paid for fiscal year 2021. Regarding results and financial position in general please refer to the following income statements and balance sheets with accompanying notes.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 24
| Note | 2021 Jan-Dec | 2020 Jan-Dec |
|---|---|---|
| Net sales | - | - |
| Other income | 94 | 312 |
| Research and development costs | -44 672 | -72 230 |
| Operating loss | -44 578 | -71 918 |
| Result from financial items | ||
| Interest income and similar profit/loss items | - | 214 |
| Interest expense and similar profit/loss items | -413 | -303 |
| Result after financial items | -44 991 | -72 007 |
| Result for the period* | -44 991 | -72 007 |
| Result per share SEK | ||
| Result per share, before and after dilution* | -4.91 | -6.41 |
| Number of shares, weighted average* | 11 226 184 | 11 226 184 |
| Number of shares at end of period ** | 11 226 184 | 11 226 184 |
* No dilution effects exist
**On December 31, 2021, allocation of emitted shares amounted to 377,736 A-shares carrying 10 votes per share and 10,848,448 B-shares carrying 1 vote per share
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 25
| Note | 2021-12-31 | 2020-12-31 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Intangible non-current assets | ||
| Activated development costs | 11 334 | 12 150 |
| Shares in subsidiary | 50 | 50 |
| Total non-current assets | 11 384 | 12 200 |
| Current assets | ||
| Current receivables | ||
| Accounts receivable | - | 99 |
| Other receivables | 1 202 | 1 856 |
| Prepaid expenses and accrued income | 9 140 | 12 725 |
| Total current assets | 10 342 | 14 680 |
| Cash and cash equivalents | 386 752 | 423 438 |
| Total current assets | 397 094 | 438 118 |
| TOTAL ASSETS | 408 478 | 450 318 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Restricted equity | ||
| Share capital | 3 060 | 3 060 |
| Unrestricted equity | ||
| Share premium reserve | 669 022 | 668 931 |
| Accumulated losses | -231 837 | -159 830 |
| Net loss for the year | -44 991 | -72 007 |
| Total equity | 395 254 | 440 154 |
| Liabilities | ||
| Current liabilities | ||
| Accounts payable | 4 797 | 1 232 |
| Other current liabilities | 779 | 2 065 |
| Accrued expenses and prepaid income | 7 648 | 6 867 |
| Total current liabilities | 13 224 | 10 164 |
| TOTAL EQUITY AND LIABILITIES | 408 478 | 450 318 |
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 26
| Restricted equity | Unrestricted equity | Total equity | |||
|---|---|---|---|---|---|
| Share capital | Share premium reserve | Accumulated losses incl. loss for the period | |||
| Opening equity on Jan 1, 2020 | 3 060 | 667 167 | -159 830 | 510 397 | |
| Net loss for the year | -72 007 | -72 007 | |||
| Total comprehensive income | -72 007 | -72 007 | |||
| Shareholder transactions | |||||
| Warrants | 1 764 | 1 764 | |||
| Closing equity on Dec 31, 2020 | 3 060 | 668 931 | -231 837 | 440 154 | |
| Opening equity on Jan 1, 2021 | 3 060 | 668 931 | -231 837 | 440 154 | |
| Net income for the period | -44 991 | -44 991 | |||
| Total comprehensive income | -44 991 | -44 991 | |||
| Shareholder transactions | |||||
| Warrants | 91 | 91 | |||
| Closing equity on Dec 31, 2021 | 3 060 | 669 022 | -276 828 | 395 254 |
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 27
| 2021 Jan-Dec | 2020 Jan-Dec | |
|---|---|---|
| Operating activities | ||
| Operating profit/loss | -44 578 | -71 918 |
| Interest income received | - | 214 |
| Paid interest costs | -413 | -303 |
| Adjustment for non - cash flow affecting items: | ||
| Depreciation production process | 816 | 816 |
| Value variance currency accounts | -18 846 | 15 125 |
| Cash flow from operating activities before changes in working capital | -63 021 | -56 066 |
| Cash flow from changes in working capital | ||
| Increase (-)/Decrease (+) in operating receivables | 4 338 | -4 611 |
| Increase (+)/Decrease (-) in operating liabilities | 3 060 | 2 288 |
| Cash flow from operating activities | -55 623 | -58 389 |
| Financing activities | ||
| Warrants | 91 | 1 764 |
| Cash flow from financing activities | 91 | 1 764 |
| Cash flow for the period | -55 532 | -56 625 |
| Unrealized exchange rate difference in cash | 18 846 | -15 125 |
| Cash and cash equivalents at the beginning of the period | 423 438 | 495 188 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR | 386 752 | 423 438 |
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 28
This financial report is prepared in accordance with the Annual Accounts Act, “Årsredovisningslagen” and as stipulated by RFR 2 Reporting for legal entities. Adoption of RFR 2 means that IBT applies all IFRS and statements as adopted by the EU to the extent possible subject to the Annual Accounts Act, “Tryggandelagen” and considerations of the relation of reporting and taxation. Preparation of financial reports in agreement with RFR 2 requires application of some significant estimates regarding various evaluations and assessments of principles of items for accounting purposes. IBT has no transactions to report under total comprehensive income and a statement to that effect is provided under the income statement. The subsidiary, IBT Baby AB, was established in May 2017. During the second quarter of 2017 and third quarter of 2020 IBT Baby AB received warrants at no cost from the parent company, which during the second quarter have been sold to personnel employed by IBT at market price. Other transactions have not occurred. As the company was established with a share capital amounting to 50 KSEK and only incurred marginal establishment costs, consolidated income statement and balance sheet, in all material aspects, equal those of the parent company and therefore no consolidation has been made, supported by the Annual Accounts act, “Årsredovisningslagen 7 kap. 3a §”. IFRS 16 Leases. In January 2016, the IASB published a new leasing standard that will replace IAS 17 Leases and the related interpretations, IFRIC 4, SIC-15 and SIC-27. The standard requires that assets and liabilities attributable to all leases, with a few exceptions, be recognized in the balance sheet. This accounting treatment is based on the view that the lessee has a right to use an asset during a specific period of time as well as an obligation to pay for this right. For the lessor, the financial reporting will remain essentially unchanged. The standard is applicable for financial years beginning on January 1, 2019 or later. Early application is permitted.# Infant Bacterial Therapeutics AB (publ) Annual Report 2021
IBT presents financial reports for the corporate entity and has thus chosen not to adopt the leasing standards according to IFRS 16. IBT presents in accordance with items 2-12 in RFR 2 and leasing costs are reported as in the past, linear over the term of the lease.
IBT’s functional currency is SEK. The financial statements are presented in SEK rounded to the nearest thousand unless otherwise stated. Rounding to thousands may result in incorrect amounts when summarized.
Transactions in foreign currencies are converted into the functional currency at the exchange rates on the transaction date. Monetary assets and liabilities in foreign currencies are converted into the functional currency at the exchange rates on the balance sheet date. Exchange rate differences resulting from the conversion are reported in the financial items section in the income statement. Non-monetary assets and liabilities are normally reported at historical cost and converted to exchange rate at date of transaction.
Financial instruments are reported at cost. Financial assets are deleted from the balance sheet when the right to receive cash flows from the instrument has ceased or been transferred and the Company has transferred in principle all risks and benefits associated with possession. Financial liabilities are deleted from the balance sheet when the liability in the agreement has been fulfilled or otherwise revoked.
Financial assets are classifies based on the business model in which the asset is placed and the cash flow character of the asset. If the financial asset is held within the framework of a business model with the objective to collect contractual cash flows (hold to collect) and the contractual terms relating to the financial asset at predetermined periods generates cash flows solely comprised of capital and interest on the capital amount outstanding the asset will be reported at accumulated cost. If on the other hand the business model goal is met by both collecting contractual cash flows and selling financial assets (hold to collect and sell), and the contractual terms of the financial asset at determined periods generates cash flows solely comprised of payments of capital and interest on the capital amount outstanding the asset will be reported at fair value under other comprehensive income. All other business models (other) where the purpose is speculation, carry for sale or where the cash flow character eliminates other business models are consequently reported at fair value in the income statement.
Financial assets are comprised of cash and derivatives. Cash is comprised of immediately available cash held by Swedish banks. The company applies the business model hold to collect regarding cash. Derivatives are valued at fair value in the income statement.
Financial liabilities are valued at fair value in the income statement provided they have a determined price upon which IFRS 3 applies, carry for trade or if initially identified as liabilities at fair value in the income statement. Other financial liabilities are valued at accumulated cost.
The company reports loss reserves for expected credit losses on financial assets valued at accumulated cost. On each balance sheet date the company reports changes in expected credit losses since initial reporting in the result. The company values the credit losses for all financial assets amounting to 12 months expected losses. For financial assets with significant increase in risk since the initial reporting a reserve is reported based on credit losses over the entire duration of the asset (the general model). The company reports expected credit losses for the remaining duration of all financial instruments with significant increase in risk since the initial reporting, either estimated individually or collectively, considering all reasonable and verifiable information, including forward looking. The company evaluates expected credit losses from financial instruments in such manner that reflects objectively and by likelihood amounts ascertained by assessing an interval of possible outcomes, discounted value of money and reasonable and verifiable information regarding present conditions and forecasts regarding future economic conditions.
Cash is subject to the general model for write downs. The exemption for limited credit risk on the balance sheet date applies to cash. The company defines default as if it is deemed unlikely that the counterparty will meet its obligations due to indications of financial difficulty and passed due payments. Default is regardless deemed to be the case when payment is 90 days past due. The company will delete a receivable when no further possible cash flows are deemed to exist.
Accounts payable are commitments to pay for goods or services acquired in operations from suppliers. Amounts are unhedged and normally payable within 30 days. Accounts payable are classified as current liabilities when due within one year or sooner (or a normal cycle of operation if longer). If not, they are reported as long-term debt. Liabilities are initially disclosed at Fair value and thereafter at accrued cost applying the effective interest method.
Expected duration for other liabilities is short, and therefore the liability is disclosed at nominal amount without using the discounting method for accrued cost.
Accounts receivable are reported at nominal value. Other receivables are reported at nominal value. Fair value of accounts receivable and other receivables equals reported value as the discounting effect is not material.
IBT’s development of internally generated non-current fixed assets are separated in a research phase and a development phase. All costs related to the research phase are reported as costs as they are incurred. All costs related to development are reported as assets according to IAS 38 if all the following criteria are met:
Costs related to the project are charged to income in the development phase should the above criteria not be met. IBT’s assessment is that development of the production process for the pharmaceutical candidate IBP-9414 meets the above criteria. Costs generated by the project have been activated as of the point in time the criteria were met. The production process has been assessed as completed for accounting purposes. The intangible asset “production process” is therefore depreciated over its estimated time of use and has caused depreciation costs in 2016. Estimated useful life is 20 years. Depreciation is reported in the R&D function in the income statement. The currently ongoing development project, IBP-9414, is not deemed to meet the above criteria in IAS 38 to be activated as development in the balance sheet. The development costs are therefore charged to income as incurred.
Non-financial assets with uncertain periods of use or non-financial assets not ready for use, are not depreciated but tested annually, or upon indication of impairment, for possible impairment. Assets which are depreciated are evaluated regarding impairment any time events or changes in circumstances indicate that the reported value may not be recovered. Write downs are made by such amounts that reported value exceeds recoverable value. Recoverable value is the higher of the assets Fair value reduced by sales costs and its useful value. Estimated impairment requirements are grouped for assets at lowest possible levels where most significant independent cash flow exists (cash generating groups). For assets (other than goodwill) previously impaired a test is made at each balance sheet date if recovery should be made.
Liquid assets in the balance sheet are comprised of cash and bank deposits.
Employee compensation in the form of salaries, bonuses, paid vacation, paid sick leave, and pension benefits are reported as earned. No pension commitments exist in the Company in addition to pension premiums paid annually. All pension plans are fee based.
The cash flow is prepared according to the so called indirect method.
Income is reported at Fair value received or to be received. The company had no income as of the balance sheet date.
Leasing where a significant part of risk and benefits with ownership are retained by the seller are classified as operational leasing. Payments made during the term of lease are charged to income in the income statement on a linear basis over the term of lease.
Operational segments are reported in a method consistent with internal reporting provided to the highest executive decision maker. The Board of Directors are the Company’s highest executive decision maker. The Company’s operations are comprised of only one branch of operation – to develop pharmaceutical products. The Company’s report of total comprehensive income and financial position is solely one operating segment.# Taxes
The Company’s reported tax costs or tax income refers to current tax and changes in deferred taxes. Current tax is calculated based on taxable income for the period in accordance with prevailing tax laws. Current tax also includes adjustments from prior years. IBTs taxable losses amount to approximately 305 (260) MSEK. Deferred taxes are reported for all temporary differences generated between the taxable value of assets and liabilities and their reported values. Deferred tax receivables are reported to the extent that it is likely that future taxable profits will be available, against which temporary differences may be offset. Deferred tax receivables in the company’s financial statements will be activated only when it is certain that taxable income will occur. No deferred tax receivable is reported in the company’s financial statements.
Assessments and estimates are appraised continuously and are based on historical experience and other factors, including expectations of future events considered to be reasonable under current circumstances. The Company makes assessments and estimates regarding the future. The resulting estimates for accounting purposes will, by definition, seldom equal the actual results. Assessments are also made regarding the Company’s accounting principles. The currently ongoing development project, IBP-9414, is not deemed to meet the above criteria in IAS 38 to be activated as development in the balance sheet. The development costs are therefore charged to income as incurred. Amounts are reported in KSEK (SEK in thousands). Amounts in parenthesis refer to the same period in the previous year unless stated otherwise.
Fair value of other receivables, cash, accounts payable and other liabilities are estimated to equal book value (accumulated cost) due to the short duration. Financial assets and liabilities valued at fair value hierarchy 1 in the income statement. Profit and loss effects are reported in R&D function in the income statement. All derivatives are valued at hierarchy level 2.
IBT carries no financial leasing agreements. Leasing costs related to operational leasing are charged at cost over the leasing period. No non-terminable leases exist after a duration of five years. Total future leasing costs regarding leasing agreements on the balance sheet date are as follows:
| 2021-12-31 | 2020-12-31 | |
|---|---|---|
| Due for payment within one year | 986 | 1 056 |
| Due for payment within one and five years | 1 763 | 2 462 |
| Total | 2 749 | 3 518 |
| 2021 | 2020 | |
|---|---|---|
| Rent | 816 | 899 |
| Parking | 62 | 91 |
| Automobiles | 237 | 146 |
| Total | 1 115 | 1 136 |
| 2021 | 2020 | |
|---|---|---|
| Actual on Dec. 31 | Actual on Dec. 31 | |
| Female | Male | |
| Sweden | 3 | 5 |
| Total | 3 | 5 |
| 2021 | 2020 | |
|---|---|---|
| Female | Male | |
| Board of Directors | 3 | 3 |
| Other management | 0 | 4 |
| Total | 3 | 7 |
| 000's | ||
|---|---|---|
| 2021 | 2020 | |
| Salaries and other compensation | 11 491 | 14 370 |
| Pensions | 1 720 | 1 983 |
| Social costs | 2 201 | 3 222 |
| Other costs | 283 | 118 |
| Total | 15 695 | 19 693 |
Variable compensation to management amounted to SEK 953 (1 955)k.
Fees are paid in accordance with the decision taken at the annual general meeting.
Base salary for the CEO, Mr. Staffan Strömberg, during 2021 amounted to SEK 2 739k plus SEK 878k in variable compensation. The CEO has fee based pension compensation and the company has therefore no other pension commitments other than stated here. Pension premiums in 2021 amounted to 30.0 % of base salary. The CEO and the company have a mutual notice period of six months. In addition, the company has a commitment of severance pay equal to nine months salary upon termination by the company.
Compensation to other management is comprised of base salary, performance compensation, other compensation and pension premiums. Other management in the company refers to four persons who along with the CEO comprise the management group (Note 7). The management group was in 2021 comprised of CEO Mr. Staffan Strömberg, COO Mr. Anders Kronström, CSO, CMO Mr. Jonas Rastad and CFO, Mr. Michael Owens.
| 000's | |||||
|---|---|---|---|---|---|
| Base salaries/ fees | Variable compensation | Other benefits | Pension costs | Total | |
| Peter Rothschild, Chairman of the Board | 670* | - | - | - | 670 |
| Margareta Hagman, Board member | 125 | - | - | - | 125 |
| Eva Idén, Board member | 125 | - | - | - | 125 |
| Anthon Jahreskog, Board member | 165 | - | - | - | 165 |
| Robert Molander, Board member | 125 | - | - | - | 125 |
| Kristina Sjöblom Nygren, Board member | 125 | - | - | - | 125 |
| Staffan Strömberg, CEO | 2 739 | 878 | 166 | 823 | 4 606 |
| Other management (4) | 3 415 | 75 | 35 | 672 | 4 197 |
| Total | 7 489 | 953 | 202 | 1 495 | 10 139 |
| *Of which 400k as working Chairman |
The management group was in 2020 comprised of CEO Mr. Staffan Strömberg, COO Mr. Anders Kronström, CSO Mr. Eamonn Connolly, CMO Mr. Jonas Rastad and CFO, Mr. Daniel Mackey.
| 000's | |||||
|---|---|---|---|---|---|
| Base salaries/fees | Performance compensation | Other benefits | Pension costs | Total | |
| Peter Rothschild, Chairman of the Board | 645* | - | - | - | 645 |
| Margareta Hagman, Board member | 113 | - | - | - | 113 |
| Anthon Jahreskog, Board member | 113 | - | - | - | 113 |
| Eva Idén, Board member | 113 | - | - | - | 113 |
| Robert Molander, Board member | 113 | - | - | - | 113 |
| Kristina Sjöblom Nygren, Board member | 113 | - | - | - | 113 |
| Staffan Strömberg, CEO | 2 355 | 336 | 159 | 765 | 3 616 |
| Other management (4) | 4 783 | 1 619 | 112 | 856 | 7 370 |
| Total | 8 358 | 1 955 | 272 | 1 621 | 12 206 |
| *Of which 400k as working Chairman |
| 000's | ||
|---|---|---|
| 2021 | 2020 | |
| Auditing | 353 | 230 |
| Totalt | 353 | 230 |
Auditing refers to compensation for review of the company’s internal controls, accounting, annual report and administration by the Board of Directors and CEO.
| 000's | ||
|---|---|---|
| 2021 | 2021 | |
| Opening accumulated costs | 16 225 | 16 225 |
| Activated costs | - | - |
| Total cost | 16 225 | 16 225 |
| Opening accumulated depreciation | -4 075 | -3 259 |
| Depreciation | -816 | -816 |
| Total accumulated depreciation | -4 891 | -4 075 |
| Carrying amount at end of the period | 11 334 | 12 150 |
Activated development costs refer to the production process of the pharmaceutical candidate IBP-9414. Period of use is based on the underlying useful life of the patent of 20 years. Depreciation is linear from 2016 and is reported in the R&D-function in the income statement
The criteria according to IAS 38 and IAS 36, respectively, require testing the immaterial fixed assets for impairment whenever events or changed circumstances indicate that the reported value may not be recovered. Activated costs referring to the production process have been assessed. The company has at the time of disclosure of this financial report utilized the pharmaceutical candidate produced by the production process in a clinical Phase II study in which 120 patients were dosed. Technology transfer possibility of the manufacturing method has been verified by third parties. The production process will be applied in the production of the drug upon potential market approval. Two independent companies, Apex Healthcare Consulting Ltd., and Clearview Healthcare Partners have evaluated the market potential in 2014 and 2016, respectively, for IBP-9414 in the USA. Their assessment of the market potential amounted to an interval of 200 MUSD to 360 MUSD per annum. The total assessment is that the criteria in IAS 38 are met.
| Name | Reg. No. | Domicile, country | No. Shares | Ownership | Book value 2021 | Book value 2020 |
|---|---|---|---|---|---|---|
| IBT Baby AB | 559110-7353 | Stockholm, Sweden | 50 000 | 100% | 50 000 | 50 000 |
| Total, SEK | 50 000 | 50 000 |
IBT Baby AB manages incentive programs for key personnel employed by IBT AB. IBT issues warrants which are sold by IBT Baby AB to employees of IBT AB eligible to participate in the parent company’s incentive program as follows:
On May 4, 2017, the Annual General Meeting decided on an incentive program by designated issue of warrants to a subsidiary established for this purpose. The maximum number of warrants to be issued are 280 000. The warrants were allotted in June 2017 at market terms at a price determined by calculating market price at the time of issue using the Black & Scholes method of valuation. The holder of warrants may during the period from April 3, 2022 through May 3, 2022, for each warrant subscribe for one point one (1.1) new share in the company at a subscription price per share amounting to SEK 272.41 recalculated due to share issues in November 2017 and January 2018. During 2017 a total of 200 000 warrants were issued and allotted. On January 1, 2020, 200 000 (200 000) warrants had been issued. The remaining 80 000 warrants were reserved for future employees. The warrants are subject to first right of refusal stipulating that the warrants shall be sold back to IBT Baby AB should the employee, from the date of signing, terminate employment within one year by 100%, within two years by 75%, within three years by 50%, and within 4 years by 25%. The warrants carry no dividend rights. The warrants are issued at market value and have thus have not resulted in any benefits which require accruals for social costs in the parent company. The subscription price per share exceeds the market price of IBT’s share on the balance sheet date which means that the warrants do not cause any dilution when calculating result per share. Total market value for the 200 000 issued warrants during the second quarter 2017 amounted to 884 KSEK.## WARRANTS 2017/2022
During the second quarter 2020 a total of 50 000 warrants allotted. Total market price for the allotted 50 000 warrants during the second quarter 2020 amounted to 17 KSEK.
During the fourth quarter 2020 a total of 10 000 warrants allotted. Total market price for the allotted 10 000 warrants during the fourth quarter 2020 amounted to 27 KSEK.
On the balance sheet date December 31, 2021, a total of 260 000 (260 000) warrants had been allotted. The remaining 20 000 warrants are reserved for future employees. Based on the existing number of shares the dilution resulting from the adopted incentive program, provided that all warrants are utilized for subscription of class B-shares, amounts to approximately 2.26 percent of shares, and 1.75 percent of votes.
| Number allotted 2021-12-31 | Number issued 2021-12-31 | Number allotted 2020-12-31 | Number issued 2020-12-31 | |
|---|---|---|---|---|
| Staffan Strömberg, CEO | 70 000 | 70 000 | 70 000 | 70 000 |
| Anders Kronström, COO | 50 000 | 50 000 | 50 000 | 50 000 |
| Other | 140 000 | 140 000 | 140 000 | 140 000 |
| Total | 260 000 | 260 000 | 260 000 | 260 000 |
On June 16, 2020, the Annual General Meeting decided on an incentive program by designated issue of warrants to the subsidiary IBT Baby AB. The maximum number of warrants to be issued are 375 000. In September 2020, 185 027 warrants were allotted at market terms at a price determined by calculating market price at the time of issue using the Black & Scholes method of valuation.
During the first quarter of 2021, 49 046 warrants were allotted. Total market price for the allotted 49 046 warrants during the first quarter of 2021 amounted to 88 KSEK.
During the third quarter of 2021, 10 000 warrants were allotted. Total market price for the allotted 10 000 warrants during the third quarter of 2021 amounted to 3 KSEK.
The holder of warrants may during the period from July 1, 2024 through September 20, 2024, for each warrant subscribe for one point one (1) new class B share in the company at a subscription price per share amounting to SEK 400.
On the balance sheet date December 31, 2021, a total of 244 073 (185 027) warrants had been allotted. The remaining 130 927 warrants are reserved for future employees. The warrants are subject to first right of refusal stipulating that the warrants shall be sold back to IBT Baby AB should the employee, from the date of signing, terminate employment within one year by 100%, within two years by 75%, within three years by 50%. The warrants carry no dividend rights. The warrants are issued at market value and have thus have not resulted in any benefits which require accruals for social costs in the parent company. The subscription price per share exceeds the market price of IBT’s share on the balance sheet date which means that the warrants do not cause any dilution when calculating result per share.
Based on the existing number of shares the dilution resulting from the adopted incentive program, provided that all warrants are utilized for subscription of class B-shares, amounts to approximately 2.13 percent of shares, and 1.69 percent of votes.
| Number allotted 2021-12-31 | Number issued 2021-12-31 | Number allotted 2020-12-31 | Number issued 2020-12-31 | |
|---|---|---|---|---|
| Staffan Strömberg, CEO | 50 000 | 50 000 | 50 000 | 50 000 |
| Anders Kronström, COO | 40 000 | 40 000 | 40 000 | 40 000 |
| Other | 154 073 | 154 073 | 95 027 | 95 027 |
| Total | 244 073 | 244 073 | 185 027 | 185 027 |
| Allotted warrants, year | Issued warrants | Strike price* | Value per allotted warrant | Volatility, %** | Risk-free interest, % | Value per share | Expiry, year | |
|---|---|---|---|---|---|---|---|---|
| 2017 (2017/2022) | 200 000 | 272* | 4.42 | 40 | -0,2 | 85 | 2022 | |
| 2020 (2017/2022) | 50 000 | 272* | 0.35 | 40 | -0,3 | 75 | 2022 | |
| 2020 (2017/2022) | 10 000 | 272* | 2.66 | 40 | -0,3 | 127 | 2022 | |
| 2020 (2020/2024) | 87 543 | 400 | 14.24 | 40 | -0,3 | 170 | 2024 | |
| 2020 (2020/2024) | 97 484 | 400 | 4.86 | 40 | -0,3 | 125 | 2024 | |
| 2021 (2020/2024) | 49 096 | 400 | 1.78 | 40 | -0,3 | 105 | 2024 | |
| 2021 (2020/2024) | 10 000 | 400 | 0.29 | 40 | -0,3 | 81 | 2024 | |
| Total | 504 073 |
*Recomputed from SEK 300 after directed share issue in November 2017. Upon expiry without subscription by May 3, 2022, warrants 2020-2024 will have an average strike price of SEK 400 when due on September 30, 2024
**Expected future volatility is ascertained by comparison of historical average and median values for comparable listed companies in the same sector as IBT based on analysis in S&P Capital IQ.
| 000's | ||
|---|---|---|
| 2021 | 2020 | |
| Taxes | 831 | 1 464 |
| Other receivables | 371 | 392 |
| Total cost | 1 202 | 1 856 |
| 000's | ||
|---|---|---|
| 2021 | 2020 | |
| Prepaid rent | 165 | 54 |
| Prepaid insurance clinical trial | 294 | 250 |
| Prepaid CRO costs* | 8 599 | 12 211 |
| Other prepaid expenses | 82 | 210 |
| Total cost | 9 140 | 12 725 |
*Contractual milestone payments paid to the company’s CRO regarding unfulfilled commitments. The maximum credit risk exposure on the balance sheet date equals reported value.
| 000's | ||
|---|---|---|
| 2021 | 2020 | |
| Bank deposits at Danske Bank and SEB | 386 752 | 423 438 |
| Total cost | 386 752 | 423 438 |
The Company’s liquidity consists solely of cash deposits held at Danske Bank and SEB. Total liquidity on the balance sheet date December 31, 2021, amounted to SEK 386.8 (423.4m) of which USD amounted to SEK 200.4m (82.0m) and EUR amounted to SEK 45.2m (54.2m). Liquidity in SEK is charged with Deposit Fees.
| 000's | ||
|---|---|---|
| 2021 | 2020 | |
| R&D costs | 4 700 | 2 966 |
| Social costs and special salary taxes | 1 153 | 937 |
| Vacation pay | 1 427 | 1 297 |
| Salaries | 81 | 70 |
| Board fees | 78 | 78 |
| Other accrued expenses | 209 | 240 |
| Total | 7 648 | 6 867 |
All accrued expenses are due for payment within twelve months.
| SEK | ||
|---|---|---|
| 2021 | ||
| Recommendation of appropriation of profits or loss | ||
| Income carried forward | -231 837 922 | |
| Surplus reserve | 669 021 577 | |
| Result for the period | -44 990 998 | |
| Total | 392 192 657 | |
| Be appropriated as follows: | ||
| Income carried forward | 392 192 657 | |
| Total | 392 192 657 |
The board of directors recommend that no dividend be paid for fiscal year 2021.
Compensation to the Board of directors are paid in accordance with the annual general meeting. The Chairman of the Board, Mr. Peter Rothschild, receives Board fees amounting to KSEK 250 per annum, and KSEK 400 annually as operational Chairman. Bonuses were paid during the second quarter to Staffan Strömberg amounting to KSEK 100 and to Anders Kronström KSEK 75 related to the achieved milestone of 300 dosed patients. Bonus was paid during the fourth quarter to Staffan Strömberg amounting to KSEK 779 as variable bonus as a percentage of gross salary. Board member Mr. Robert Molander invoiced consulting fees amounting to KSEK 955. Consulting fees refer mainly to commercialization of IBP-9414. No other significant related party transactions have occurred.
| 2021 | 2020 | |
|---|---|---|
| Pledged assets and contingent liabilities | None | None |
Calculations are in accordance with IAS 33 Earnings per share. Earnings per share are calculated by dividing result for the period with the weighted average number of shares during the period.
| Result per share, SEK | ||
|---|---|---|
| 2021 | 2020 | |
| Result for the period, 000's | -44 991 | -72 007 |
| Weighted average number of shares before and after dilution* | 11 226 184 | 11 226 184 |
| Result per share before and after dilution | -4.0 | -6.41 |
| Period | Transaction | Change | Series A shares | Series B shares | Share capital | Quota value | Subscription price | Total Invested |
|---|---|---|---|---|---|---|---|---|
| 2011-11-22 | Founding | 50 000 | 50 000 | 1,00 | 1,00 | 50 000 | ||
| 2015-09-15 | Share issue | 40 000 | 90 000 | 1,00 | 1 320,00 | 52 800 000 | ||
| 2015-09-15 | Bonus issue | 90 000 | 500 000 | 5,56 | - | 52 850 000 | ||
| 2016-02-12 | Split/reclass | -90 000 | 74 066 | 500 000 | 0,27 | - | 52 850 000 | |
| 2016-05-30 | Share issue | - | 148 132 | 1 500 000 | 0,27 | 27,30 | 153 016 212 | |
| 2017-11-30 | Share issue | - | - | 1 100 000 | 0,27 | 95,00 | 257 516 212 | |
| 2018-02-05 | Share issue | - | 155 538 | 3 051 120 | 0,27 | 95 693 680 | 307 2018-02-13 | Share issue |
| Total | 377 736 | 10 848 448 | 3 059 663 | 0,27 | - | 696 658 082 |
The financial risks related to the Company’s operations are mainly liquidity, currency, and counterparty risks.
Liquidity risks are such risks as not having access to liquidity to meets the Company’s operational requirements. The Company has no financial liabilities with agreed duration. Other liabilities are commitments to pay for goods or services obtained during operations from suppliers. The amounts are unhedged and normally payable within 30 days. Capital needs are monitored by budget review.# Infant Bacterial Therapeutics AB (publ) Annual Report 2021 43
The Company’s capital requirements have previously been met by capital injections from its former parent company, BioGaia and share issue in connection with listing the Company on Nasdaq First North in March 2016. To date, IBT has received 82 MSEK from BioGaia and 100 MSEK from other shareholders in connection with the May 2016 share issue. IBT has during November 2017 generated SEK 104.5m in a directed share issue to institutional investors and in January 2018, a preferred share issue generated SEK 439.1m. Capital generated amounting to approximately SEK 543.6m prior to transaction costs and approximately SEK 528m post transaction costs is deemed sufficient to conduct the planned pivotal Phase III clinical study. As the Company’s pharmaceutical candidate IBP-9414 reaches important milestones in its pharmaceutical development, additional financing possibilities are available. As a listed company in Sweden the Company can issue new shares with preemptive rights for its shareholders. Other possible financing methods are licensing specific rights to the pharmaceutical to pharmaceutical company partners and a share issue to new investors, conditional upon being possible on terms acceptable to current shareholders. Obtaining loans for financing is not deemed suitable other than as a temporary solution before the Company reaches profitability and has positive cash flow. The company has only financial liabilities with short duration which are due for payment within 12 months. Access to capital may be limited at times when needed by the Company.
The Company allows only investments in interest bearing instruments which carry low risk and high liquidity. The Company cooperates with established and credit worthy counterparties and evaluates receivables on an ongoing basis in order to achieve low exposure to bad debts. To mitigate this risk, IBT deposits its surplus liquidity in liquid accounts at Danske Bank and SEB. The Company had no short-term deposits on the balance sheet date.
Currency risk is the risk of fluctuating values in assets or liabilities resulting from variations in exchange rates. The majority of IBTs development costs are commitments in foreign currencies. Should the SEK be reduced in value versus foreign currencies, it may have considerable impact on the Company’s financial position and results. As of the balance sheet date, the Company has no currency hedges. The currencies against which IBT has the greatest exposure are USD and EUR. A variance in the SEK versus USD and EUR of 5 percent, based on total research-and development costs, all else being equal, would have affected 2021 results by approximately SEK 2.1m.
| 2021 Jan-Dec | 2020 Jan-Dec | |
|---|---|---|
| Cash flow per share | ||
| Cash flow for the period, 000's | -55 532 | -56 625 |
| Average number of shares | 11 226 184 | 11 226 184 |
| Cash flow per share (SEK) | -4.95 | -5.04 |
| Equity per share | ||
| Equity, 000's | 395 254 | 440 154 |
| Number of shares at end of period | 11 226 184 | 11 226 184 |
| Equity per share (SEK) | 35.21 | 39.21 |
| Equity ratio | ||
| Equity, 000's | 395 254 | 440 154 |
| Total equity and liabilities, 000's | 408 478 | 450 318 |
| Equity ratio % | 97% | 98% |
| Key ratios | Definition | Motive |
|---|---|---|
| Average number of shares | Average number of shares during the year | Relevant in calculating income and cash flow per share |
| Net sales | Sales for the year | |
| Reporting period | January 1 - December 31, 2021 | Defines time period comprised by this financial report |
| Result per share | Result for the year divided by average number of shares | Result allocated per share |
| Cash flow per share* | Cash flow for the year divided by average number of shares | Measure to describe cash flow allocated to one share during the year |
| Number of shares* | Number of shares at the end of the year | Relevant for calculating shareholders’ equity allocated to one share |
| Total assets | Total assets at the end of the year | Relevant for calculating shareholder’s equity |
| Shareholders equity/share* | Total shareholders’ equity divided by the number of shares at the end of the year | Measure to describe shareholder’s equity per share |
| Equity ratio* | Total shareholders’ equity as a percentage of total assets | Measure to evaluate the company’s ability to meet its financial obligations |
*The Company presents certain financial measures in the Year-end report not defined by IFRS. The Company deems that these measures provide valuable additional information for investors and management of the Company as they enable evaluation and benchmarking of the Company’s performance. As all companies do not calculate financial measures the same way, these measures are not always comparable to those used by other companies. These financial measures shall therefore not be viewed as replacements for those defined by IFRS. The financial definitions are not defined by IFRS unless otherwise stated.
The Board of Directors and CEO hereby certify that this report gives a true and fair presentation of the Company’s operations, financial position and result of operations, and describes material risks and uncertainties facing the Company. The Annual Report was approved for issuance by the Board of Directors on March 30, 2022 and will be subject to approval at the annual general meeting on May 4, 2022.
Stockholm, March 30, 2022
Peter Rothschild Chairman
Eva Idén Director
Margareta Hagman Director
Kristina Sjöblom Nygren Director
Anthon Jahreskog Director
Robert Molander Director
Staffan Strömberg CEO
Nb: This is a translation of the Swedish annual report. If any discrepancies exist, the Swedish version shall prevail.
Our Auditor’s Report was submitted on March 30, 2022
Deloitte AB
Birgitta Lööf Authorized public accountant
To the general meeting of the shareholders of Infant Bacterial Therapeutics AB (publ) corporate identity number 556873-8586
We have audited the annual accounts and consolidated accounts of Infant Bacterial Therapeutics AB (publ) for the financial year 2021-01-01 - 2021-12-31. The annual accounts and consolidated accounts of the company are included on pages 16-47 in this document.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2021 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act.
The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2021 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act.
The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.
Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's audit committee in accordance with the Audit Regulation (537/2014) Article 11.
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current Infant Bacterial Therapeutics AB (publ) Annual Report 2021 48 period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.
The company’s costs for research and development as of December 31, 2020 amount to TSEK 44 672 after exchange rate gains on foreign currency forward contracts and currency deposits and is a significant amount in the income statement. It is management’s assessment that the entire amount should be expensed instead of being capitalized as intangible assets since the criteria in IAS 38 regarding capitalization are not deemed to be fulfilled. The company describes its positions in the accounting principles on page 29.# Report on Other Legal and Regulatory Requirements
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Infant Bacterial Therapeutics AB (publ) for the financial year 2021-01-01 - 2021-12-31 and the proposed appropriations of the company’s profit or loss. We recommend to the general meeting of shareholders that the profit to be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.
We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 50
The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group’s type of operations, size and risks place on the size of the parent company's and the group’s equity, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company’s organization and the administration of the company’s affairs. This includes among other things continuous assessment of the company’s and the group’s financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company’s financial affairs otherwise are controlled in a reassuring manner.
The Managing Director shall manage the ongoing administration according to the Board of Directors’ guidelines and instructions and among other matters take measures that are necessary to fulfill the company’s accounting in accordance with law and handle the management of assets in a reassuring manner.
Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:
Our objective concerning the audit of the proposed appropriations of the company’s profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company’s profit or loss are not in accordance with the Companies Act.
A further description of our responsibilities for the audit of the management’s administration is located at the Swedish Inspectorate of Auditors website: www.revisorsinspektionen.se/rn/showdocument/documents/rev_dok/revisors_ansvar.pdf. This description forms part of the auditor´s report.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 51
Deloitte AB, was appointed auditor of Infant Bacterial Therapeutics AB by the general meeting of the shareholders on the 2021-05-04 and has been the company’s auditor since 2015-03-29.
Stockholm March 30, 2022
Deloitte AB
Birgitta Lööf
Authorized public accountant
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 52
IBT is a Swedish limited company whose B shares are listed on Nasdaq Stockholm. The company is governed by the AGM, the Board of Directors, the President and the executive management in accordance with the Companies Act, the Articles of Association, rules of procedure for the Board and the CEO's instructions and the Swedish Code of Corporate Governance.
The Board is responsible for evaluating established goals and continuously evaluating IBT's financial position and earnings and evaluating the operational management.
The share capital consists of 377,736 Class A shares with 10 voting rights per share and 10,848,448 Class B shares with one voting right per share.
The purpose of the Code is to strengthen confidence in Swedish listed companies by promoting a positive development of the company's corporate governance. The code is based on the principle of "comply or explain" which means that a company can make deviations from the code but these must then be explained. IBT has not deviated from any of the rules specified in the Code.
IBT's operations do not pose any specific environmental risks and do not require any specific environmental permits or decisions from authorities. The Board of Directors believes that the company conducts its operations in accordance with applicable health and safety rules and offers its employees a safe and healthy working environment.# Diversity and gender equality
IBT should be a workplace where diversity and gender equality are natural parts of the business. A workplace characterized by diversity and gender equality is necessary for IBT to be an attractive workplace and to achieve set goals. Recruitment shall be based on competence requirements, diversity and gender equality.
IBT is to be perceived as an innovative and creative company, which stands for quality and health and plays a role in society. It is important for IBT to work with sustainability. Respect for human rights, the environment and anti-corruption must characterize our everyday lives through business strategies, financing processes, investments and purchases.
According to the Swedish Annual Accounts Act (Årsredovisningslagen), there is no requirement that the Company prepare a Sustainability Report.
In accordance with IBT's articles of association, the Company will develop, manufacture, market and sell pharmaceuticals directly or through subsidiaries or other forms of part-ownership or Infant Bacterial Therapeutics AB (publ) Annual Report 2021 53 partnerships and conduct related operations. The seat of the Board is Stockholm. The Articles of Association can be found on IBT's website under the heading Investors / Corporate Governance.
In accordance with the Swedish Companies Act, the Annual General Meeting is IBT's highest decision-making body and at the Annual General Meeting the shareholders exercise their voting rights on key issues, for example establishing a report on comprehensive income and financial position, disposition of IBT's results, granting discharge from the Board of Directors and the Board of Directors, election of the Board of Directors and the CEO. and remuneration to the Board of Directors and auditors. In addition to the AGM, an Extraordinary General Meeting can be called. In accordance with the Articles of Association, notice of the Annual General Meeting and Extraordinary General Meeting are published in Post- och Inrikes Tidningar and on IBT's website. Annwall & Rothschild Investment AB, owns 7.02 percent of the capital and 28.63 percent of the votes in the company.
At IBT's Annual General Meeting on May 4, 2021, shareholders represented 60.1 percent of the total number of votes in the company. Due to the Corona pandemic, the AGM was held by mail voting, with no physical presence by shareholders or others present. The Annual General Meeting resolved, inter alia, the following:
The 2022 Annual General Meeting will be held on May 4, 2022. Due to the Corona pandemic, the AGM will be held by mail voting, with no physical presence by shareholders or others present.
Notice of Annual General Meeting shall be made through advertising in Post- och Inrikes Tidningar and on the company's website. That notice should be announced in Svenska Dagbladet and on the company's website.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 54
The Annual General Meeting 2021 resolved that a Nomination Committee should be appointed as follows: “The Chairman of the Board shall convene the three largest shareholders in the company, who each nominate a representative to be a member of the Nomination Committee together with the Chairman of the Board. At the composition of the nomination committee, the ownership conditions as of June 30, 2021 will determine which are the largest shareholders in terms of the number of votes. The representative of the largest shareholder in the nomination committee at this time shall be the chairman of the nomination committee. If one of the three largest shareholders waives their right to appoint a member to the nomination committee, the next shareholder in size shall be given the opportunity to appoint a member to the nomination committee. The names of the three members shall be published when appointed, however, latest six months prior to the 2022 AGM. The period of mandate of the nomination committee lasts until such time a new nomination committee has been appointed.”
The Nomination Committee has been formed in accordance with the decision of the Annual General Meeting and consists of, in addition to the Chairman of the Board of Directors, Peter Rothschild, Per-Erik Andersson, representative of the company's largest shareholder Annwall & Rothschild Investments AB, Sebastian Jahreskog, who via Six Sis AG’s ownership is the company's second largest shareholder, and Jannis Kitsakis, representative of the company's third largest shareholder, Fjärde AP-Fonden. All members of the nomination committee, except Peter Rothschild, are independent in relation to the company and company management. Per- Erik Andersson is chairman of the nomination committee.
The Nomination Committee shall prepare proposals on the following issues to be submitted to the Annual General Meeting 2022 for resolution:
a) proposal for election of the Chairman of the Meeting
b) proposals of Board members
c) proposal for election of the Chairman of the Board
f) proposal for Board fees
e) proposals for election of the auditor
g) proposal for audit fees
h) proposals regarding nomination committee for the 2023 Annual General Meeting.
All shareholders have had the opportunity to contact the Nomination Committee with proposals for members to the Board for further evaluation within the framework of its work. No comments or suggestions have been received by the Nomination Committee to date. The Nomination Committee submits a written motivation to the Board to the Annual General Meeting. In its justification, the Nomination Committee takes into account the diversity and breadth of the Board and strives for an even gender distribution.
The 2021 AGM decided on a mandate for the Board to, at one or more instances during the period until the next AGM, decide to issue class B-shares. The Board may decide to issue shares deviating from shareholders pre-emptive rights. Shares may be issued with or without stipulation of contribution in kind, offset, or other conditions in accordance with 13 chapter 5 § first section 6 of aktiebolagslagen.
Regarding share issue deviating from shareholders pre-emptive rights (directed share issues), the Board may not make any decisions increasing the share capital in excess of twenty percent of the share capital at the point in time the mandate first is exercised for a directed share issue.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 55
Share issue in accordance with the mandate shall be at market price. The Board may decide on other terms for share issues based on the mandate including who shall have the right to subscribe for the shares. The objective of the mandate is to provide flexibility for the Board in order to ensure adequate financing of the company to finance the company’s continued clinical operations as well as to broaden the company’s ownership base.
According to IBT's Articles of Association, the Board shall consist of a minimum of three and a maximum of ten members and no deputies. The Board is elected annually at the AGM for the period until the end of the next AGM. The Board of Directors has since the Annual General Meeting 2021 consisted of six members elected by the AGM without deputies. Peter Rothschild is indirect shareholder in IBT through Annwall & Rothschild Investment AB. Other members are independent in relation to the company and company management. The CEO is not a member of the Board but is adjunct to all Board meetings. Other officers in the company participate in Board meetings as rapporteur. The Board of Directors has adopted a rules of procedure, including the division of work between the Board and the CEO and the structure of the Board's work during the year. In addition to the responsibilities of the Swedish Companies Act and the Articles of Association is regulated following the Board's rules:
The Board of Directors is responsible for monitoring the Company's financial position, for monitoring the efficiency of the Company's internal control, internal audit and risk management, being informed of the audit of the 2021 financial statements and for reviewing and monitoring the auditor's impartiality and independence. In addition, the Board of Directors has adopted the CEO's instruction, certificate instruction including instructions regarding liquidity management and currency management policy. The work order, CEO instruction and attestation instruction are tested at least once a year.
Board meeting agenda is as follows where appropriate:
The Board continuously evaluates its work through open discussions and annually performs a written evaluation of its work. The Nomination Committee is informed of the results of the evaluation.
The 2021 Annual General Meeting resolved on Board fees of SEK 250,000 to the Chairman and SEK 125,000 to other members. In addition, a decision was made on an additional fee of SEK 400,000 to the chairman in his assignment to be working chairman of the board.
The Chairman of the Board is responsible for leading the work of the Board and for the Board to fulfill its obligations in accordance with the Companies Act and the Board's rules of procedure. Through continuous contacts with the CEO, the Chairman of the Board shall monitor the company's development and ensure that the Board receives the information required for the Board to fulfill its commitment. In addition, the Chairman, as a working Chairman of the Board, actively participates in financing issues, licensing issues and presentations to the market and assists company management in business development. Peter Rothschild has been Chairman of the Board since 2011.
The CEO is responsible for the company's business development and manages and coordinates day-to-day operations. The CEO has an instruction decided by the Board of Directors, which regulates, among other things, his work with management and development of the company as well as continuous reporting and decision-making to the Board. The Managing Director prepares the necessary information and decision-making documentation such as reports regarding, among other things, the company's finances, order situation, significant business and strategic issues before Board meetings, and is a rapporteur and submits motivated proposals for decisions. In addition, the President keeps the Chairman of the Board regularly informed about the company's operations. The Managing Director is solely responsible for external communication. The Board annually evaluates the CEO's work. In this evaluation, no one from the company management is present.
The management of IBT consists of four people. The management team is led by the CEO and is responsible for planning, directing and monitoring the day-to-day operations. Minuted meetings are held every week. The powers and responsibilities of the CEO, in addition to being regulated by the Companies Act, are defined in the CEO instructions adopted by the Board. The powers and responsibilities of company management are defined in job descriptions and attestation instructions.
The Board has appointed a Remuneration Committee consisting of Chairman of the Board Peter Rothschild and Board member Anthon Jahreskog. Anthon Jahreskog is Chairman of the Remuneration Committee. The Remuneration Committee shall prepare questions regarding remuneration and other terms of employment for the CEO and other senior executives who together form the company management. The Remuneration Committee has held four meetings. Peter Rothschild and Anthon Jahreskog were present at all four meetings. Principles for remuneration to senior executives are set at the Annual General Meeting. The remuneration committee's task is to prepare proposals for senior executives in accordance with these principles.
IBT's auditors are normally elected for a period of one year at the AGM. At the 2021 Annual General Meeting, re-election of Deloitte AB was resolved for the period up to the end of the Annual General Meeting that will be held in 2022. The Auditing Company has appointed Birgitta Lööf as the designated Auditor. Remuneration to the auditors is paid, in accordance with the decision of the Meeting, on an ongoing basis.
The auditors review the Board of Directors and the CEO's management of the company and the quality of the company's financial reporting. The auditors also carry out, on behalf of the Board, an audit of the financial statements, an audit of the annual report, and a review of a quarterly report. The auditor’s report their audit to the shareholders through the audit report, which is presented at the AGM. In addition, written and oral reports are submitted to the company management and the board. At the board meeting in connection with the review of the third quarter, the auditor participates in the reporting of comments from the ongoing review during the financial year regarding the company's internal control and preparation for the annual accounts. The auditors also submit an audit opinion on the corporate governance report and a report on the review of remuneration to senior executives. For information on remuneration to the auditors, see note 5 in the annual report.
The Board of Directors has decided that independent members of the Board possess accounting expertise as well as the Board's ongoing review of the financial reporting and with regard to the company's limited size and scope of transactions, to appoint no Audit Committee. Furthermore, the entire Board meets with the auditor at least once a year without the presence of the company's CEO or another of the company management.
According to the Swedish Companies Act, the Swedish Annual Accounts Act and the Swedish Code of Corporate Governance, the Board is responsible for the internal control. This description has been prepared in accordance with these provisions and thus limited to internal control over the financial reporting.
The Board of Directors is responsible for ensuring that the company's organization is designed so that the accounting, asset management and the company's financial conditions are otherwise controlled in a satisfactory manner. The Board of Directors adopts annually rules of procedure for the work of the Board and instructions for the division of work between the Board and the CEO. The rules of procedure specify which matters require the approval or confirmation of the board. At the board meetings, the CEO prefers matters that require the board's treatment. The Managing Director shall ensure that the Board receives a factual, detailed and relevant information base for the Board to be able to make well-informed decisions and that the Board is kept regularly informed of the development of the company's operations and financial position.
Within IBT, internal control of financial reporting is focused, for example, on ensuring efficient and reliable management and accounting of purchases and sales, other income accounting and accounting of the company's financing. The internal control environment mainly comprises the following five components: control environment, risk assessment, control activities, information and communication and follow-up.
In addition to the rules of procedure between the Board and the CEO, IBT's control structure is based on the company's organization and ways of conducting operations where the roles and responsibilities are defined and communicated in the organization.
| Name | Position | Member since | Company and senior management | Major shareholders | Attendance |
|---|---|---|---|---|---|
| Peter Rothschild | Chairman of the Board | 2011 | No | No | 7/7 |
| Margareta Hagman | Board member | 2015 | Yes | Yes | 7/7 |
| Eva Idén | Board member | 2017 | Yes | Yes | 7/7 |
| Anthon Jahreskog | Board member | 2017 | Yes | Yes | 7/7 |
| Robert Molander | Board member | 2020 | Yes | Yes | 7/7 |
| Kristina Sjöblom Nygren | Board member | 2018 | Yes | Yes | 7/7 |
The Remuneration Committee has, besides ongoing contact, had two meetings during 2020 with full attendance. If a member has not been able to attend a board meeting, this member has had the opportunity to present his / her views to the chairman before the meeting.
Approve budget and corresponding long-term plans including investment budget - Process matters relating to investments and the like in the amount of five hundred thousand (500,000 SEK) or other commitments for the company, which entails a cost to the company exceeding five hundred thousand (500,000 SEK) - Decide on the purchase and sale of real estate, shares or acquisitions of another company's operations in excess of five hundred thousand (500,000 SEK) - Determine the annual report, the directors' report and the interim reports - Borrowing - Enter into an agreement with a term of more than three years - Initial processes of large scope and settlement of disputes of significant importance - Other issues of significant economic or other importance.# INTERNAL CONTROL
Employee awareness of maintaining good control over financial reporting is satisfactory and analysis and follow-up of financial progress is done monthly. Financial reports and compilations are made by IBT's finance department and reported to the Board on a quarterly basis and to company management on a monthly basis.
The company works continuously with risk assessment and risk management to ensure that the risks to which the company is exposed are managed within the framework that is ultimately determined by the Board of Directors. The company management annually analyzes the business processes of the business with regard to efficiency and risks. This work includes identifying significant risks of errors in financial reporting and ensuring that there are appropriate processes and controls within the business to manage these risks. Processes that are considered to be of particular importance to IBT are research and development. A more detailed description of the risk exposure can be found in the annual report.
The risks identified in financial reporting are managed through a number of control measures in the business processes. Processes, policies and controls are reviewed and updated annually. The purpose is to detect, prevent and correct errors and deviations. The control structure also includes, among other things, established powers (eg attestation), division of work, IT risks and the management's monthly review of financial information. The company controls the subcontractor's fulfillment of current services in accordance with agreements, including quality aspects.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 60
IBT has information and communication pathways aimed at promoting completeness and accuracy in financial reporting. Certificate arrangements and communication policies are distributed to all employees and kept available on the company's intranet. The entire company's staff meet approx. once a month to increase knowledge of processes and objectives and to exchange information and experience.
The company management annually evaluates internal control. The company's elected auditors, Deloitte AB, also annually review a selection of IBT's routines and internal controls. The Board then evaluates the information and ensures that measures are taken regarding the deficiencies and proposals that have emerged. The company has no special internal audit function (internal audit). The Board has made the assessment that, given the company's size and scope of transactions, as well as the expertise in the area that the Board possesses and the Board's meeting with the auditor, there is no reason to establish a formal internal audit department.
The Board of Directors is responsible for that the corporate governance statement on pages xx has been prepared in accordance with the Annual Accounts Act. Our examination of the corporate governance statement is conducted in accordance with FAR´s standard Rev 16 The auditor´s examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions. A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act.
Stockholm March 30, 2022
Deloitte AB
Birgitta Lööf
Authorized public accountant
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 61
On January 1, 2021 and December 31, 2021, respectively, the total number of shares amounted to 11 226 184 of which 377 736 class A-shares carrying ten votes and 10 848 448 class B-shares carrying one vote. IBT’s class B share was listed on Nasdaq Stockholm, Mid Cap, on September 10, 2018. The number of shareholders amounted to 5 790 on December 31, 2021 according to Euroclear Sweden compared to 5 898 on December 31, 2020.
IBTs share price decreased from 112 SEK to 66.80 SEK during 2021. Market value as of December 31, 2021 amounted to 725 MSEK.
Analysts covering IBT: SEB: Christopher W. Uhde, PhD, Carl Mellerby, Mattias Vadsten
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 62
December 31, 2021
| Name | Class A-shares | Class B-shares | Share capital % | Votes % |
|---|---|---|---|---|
| ANNWALL & ROTHSCHILD INVESTMENT AB | 377,736 | 410,478 | 7.02 | 28.63 |
| SIX SIS AG, W8IMY | - | 1,172,087 | 8.01 | 8.01 |
| FJÄRDE AP-FONDEN | - | 1,120,000 | 9.98 | 7.66 |
| SWEDBANK ROBUR NY TEKNIK BTI | - | 579,172 | 5.16 | 3.96 |
| AMF FÖRSÄKRING OCH FONDER | - | 501,585 | 4.47 | 3.43 |
| TREDJE AP-FONDEN | - | 501,579 | 4.47 | 3.43 |
| CBNY-NORGES BANK | - | 396,620 | 2.94 | 2.25 |
| UNIONEN | - | 322,196 | 2.87 | 2.20 |
| DANGOOR, DAVID | - | 306,421 | 2.73 | 2.10 |
| ÅLANDSBANKEN ABP (FINLAND) SWEDISH BRANCH | - | 305,495 | 2.72 | 2.09 |
| Total 10 largest shareholders | 377,736 | 5,548,633 | 50.36 | 63.76 |
| Other shareholders | - | 5,299,815 | 49.64 | 36.24 |
| Total | 377,736 | 10,848,448 | 100.00 | 100.00 |
Source: Euroclear Sweden
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 63
CEO since 2013. Born 1967. M.Sc. in chemical engineering and Ph.D. in organic chemistry from the Royal Institute of Technology in Stockholm. Staffan Strömberg has more than 20 years of experience in the pharmaceutical industry. Besides his roles at Billerud Tenova Bioplastics and at the Swedish Medical Products Agency, he has also been Vice President of NIcOx France, had various project management positions in AstraZeneca and been Head of R&D of Swedish Orphan. Member of the Board of Directors of Eteboxagu AB and BioGaia Pharma AB. Former CEO of Billerud Tenova Bioplastics AB and Head of Medical Devices at the Swedish Medical Products Agency.
Shareholding in the Company: 43 228 series B shares and 45,864 series B shares through the wholly owned company Eteboxagu AB and 70,000 warrants 2017/2022 och 50 000 warrants 2020/2024.
COO since 2018. Born 1967. M.Sc., M.B.A. Anders Kronström has over 20 years of experience working in the pharmaceutical industry. His experience spans across all stages of drug development in different disease segments. During his career at AstraZeneca he has had senior leadership positions within Project Management and Business Development. More recently, he was a CEO of Biosergen AS, a Norwegian biotechnology company.
Shareholding in the Company: 8 170 shares of series B and 50 000 warrants 2017/2022 and 40 000 warrants 2020/2024.
CFO since 2021. Born 1956. Bachelor of Science and Business Administration. Michael has background as Authorized Public Accountant and CFO in management positions from several companies in pharmaceutical development.
Shareholding in the company: 10 000 warrants 2017/2024.
Chief Medical Officer since 2019. Born 1950. Jonas has in excess of 20 years of experience as academic surgeon and has published 250 articles in peer review-magazines. He has held several leading positions at AstraZeneca in Sweden, Japan, The UK and USA. In addition, he has 13 years of experience of public leadership positions, among other head of the Kalmar regional hospital, Västerbottens county council and CEO of Region Skåne.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 64
Shareholding in the Company: None
IBT’s Board of Directors consists of six (five) ordinary members, including the chairman of the board, with no deputy board members, all of whom are elected for the period up until the end of the annual shareholders’ meeting 2021.
Chairman of the Board since 2011. Born 1950. Master of Business Administration from Stockholm School of Economics. Founder and Chairman of the Board of Directors of BioGaia AB, BioGaia Pharma AB and MetaboGen AB, and Annwall & Rothschild Investments AB. Board member of Allbright. Previously CEO of BioGaia (publ) and member of the Board of Directors of Moberg Pharma AB (publ).
Shareholding in the Company: 377,736 series A shares and 410,478 series B shares through Annwall & Rothschild Investments AB, a company co-owned with Jan Annwall.
Board member since 2015. Born 1966. Master of Business Administration, Örebro University. Advisor and consultant in business, accounting and finance. Member of the Board of Tagmaster AB. Previous positions: Deputy CEO and CFO of BioGaia AB (publ).
Shareholding in the Company: 3,570 series B shares.
Board member since 2017. Born 1966. Civil engineer in chemistry, Chalmers tekniska högskola. Chairman of the board of Better & Beyond AB. Previously held management positions at AstraZeneca AB.
Shareholding in the company: 51 series B shares.
Board member since 2017. Born 1980. Candidate degree in Management and systems, City University, London. Bachelor of business administration, Master of science in financial management at University of Cape Town. Board member of BioGaia AB (publ) and Fast Track Holdings Ltd. Until July, 2015 Chief Operating Officer, Fund Linked Products, Credit Suisse Investment bank, London. Anthon is a business strategy consultant in several industries.
Infant Bacterial Therapeutics AB (publ) Annual Report 2021 65
Shareholding in the company: 2 200 series B shares.
Board member since 2018. Born 1961. Kristina has received a Doctor of Medical Sciences from Karolinska Institutet and is a licensed physician. She is Chief Medical Officer, Head of Clinical Development, since May 2021 at Egetis Therapeutics AB (publ) in Stockholm.# Kristina Sjöblom Nygren
Kristina Sjöblom Nygren has extensive experience from the pharmaceutical industry, where she has held among other positions Chief Medical Officer, Head Development at Santhera Pharmaceuticals in Basel and Head of Clinical Development at SOBI in Stockholm.
Shareholding in the company: 100 series B shares
Board member since 2020. Born 1965. Robert Molander has an MBA from Washington University in Marketing and Finance and two Bachelors degrees from Miami University in Economics and International Studies. Robert is active as an advisor and consultant in commercial strategy, launch preparation, marketing and sales in the pharmaceutical industry. Previously sales and marking Director at Trialbee AB. Robert has 25 years of experience in marketing and sales in the USA from pharmaceutical companies, among other Novartis, Pfizer and Pharmacia.
Shareholding in the company: 10 000 series B shares
Infant Bacterial Therapeutics AB (Reg. no. 556873-8586)
Bryggargatan 10
111 21 Stockholm, Sweden
Email: [email protected]
www.ibtherapeutics.com
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