2020 ANNUAL REPORT

Introduction

2020 in brief
CEO´s message
Medivir in brief
Business concept, business model and strategy

Operations

What is cancer?
The pharmaceutical development process
Project portfolio
Proprietary projects
Interview Professor Jeff Evans
Projects for partnering
Outlicensed projects
Sustainable development
Employees
The Medivir share

Directors' Report

Directors' Report
Corporate Governance Report
The Board of Directors´ Internal Controls Report
The Board of Directors
Management

Financial Reports

Income Statements
Statement of Comprehensive Income
Balance Sheets
Changes in Equity
43 Statements of Cash Flow
Accounting principles
Notes
Attestation
Auditor´s Repport

Other

Key ratios
Six-year summary
72 Definitions
Glossary
Shareholder information
Annual General Meeting

In the event of any discrepancies between the Swedish and the English Annual Report,

2020 in brief and significant events

The project portfolio

In January, the phase II study with MIV-711 in patients with osteoarthritis was published in the esteemed journal Annals of Internal Medicine.
Medivir's patent applications for MIV-818, covering both substance requirements for MIV-818 and its use for liver cancer treatment, were approved by the patent authorities in both the EU and Japan.
In February, a licensing agreement was signed for Medivir's drug Xerclear® for labial herpes with the Chinese company Shijiazhuang Yuanmai Biotechnology Co Ltd.
Data from the phase Ia study with MIV-818 in liver cancer patients, supporting the liver-targeted effect of MIV-818, was presented at Medivir's R&D-day on March 2. Biomarker analysis showed a selective effect: while tumor tissue had clear DNA damage, healthy liver tissue showed only minimal or no DNA damage. Five of the nine patients were assessed to have stable liver disease after treatment.
Shortly thereafter in March, the first liver cancer patient was included in the MIV- 818 phase Ib study.
In March a licensing agreement was signed with US biotech company Tango Therapeutics for one of Medivir's preclinical research programs. Yet another agreement for a preclinical project was signed with an undisclosed American company.
In May, the U.S. Food and Drug Administration (FDA) granted orphan drug designation to MIV-818 for the treatment of patients with hepatocellular carcinoma.
In June, the European Commission granted orphan medicinal product designation in the EU to MIV-818 for the treatment of patients with hepatocellular carcinoma.
In July, a research collaboration was initiated with the Drug Discovery and Development Platform (DDD) at SciLifeLab on potential inhibitors of SARS CoV-2. Through the collaboration, DDD will get access to Medivir's unique proprietary proteasetargeted compound library.
Medivir renegotiated in December the agreement with TetraLogic Pharmaceuticals Corporation regarding compensation model and levels for an out-licensing of birinapant. The agreement was

dissolved and renegotiated so that the compensation Medivir is obliged to pay in a transaction now is based solely on the distribution of actual income to Medivir.

The company

Yilmaz Mahshid took over as CEO on September 14, 2020.
In October Dr. Tom Morris was appointed interim Chief Medical Officer.
In December, Medivir's Board of Directors decided to propose a rights issue of class B shares with preferential rights for existing shareholders of approximately SEK 170 million before transaction costs.

Significant events after the end of the year

In January 2021 an exclusive license agreement was signed with IGM Biosciences, Inc. for birinapant.
At the beginning of 2021, a rights issue was carried out together with a subsequent exercise of an over-allotment option, providing the company with approximately SEK 195 million before transaction costs.
An Extraordinary General Meeting on March 11, 2021, decided on a directed new share issue of approximately SEK 28 million to Linc AB.
In February a licensing agreement with Ubiquigent was signed for the preclinical research program USP7.
In March 2021, it was announced that Yilmaz Mahshid will leave his position as CEO of Medivir at the Annual General Meeting on May 5, for personal reasons. The recruitment process for a new CEO has begun.
A new board is proposed through the re-election of Uli Hacksell, Lennart Hansson, An van Es Johansson and Bengt Westermark as board members. The Nomination Committee proposes the election of Yilmaz Mahshid as new board member and that Uli Hacksell is elected Chairman of the Board. Bengt Julander and Helena Levander have declined re-election.

Key rarios1

MSEK	2020	2019	2018	2017	2016
Net turnover2	14	9	24	37	93
Operating profit 2	-43	-126	-351	-363	-312
Liquid assets	70	135	286	468	1,698
Equity/assets ratio, %	74	63	73	83	90
Number of employees	11	51	75	88	117

1) A voluntary redemption program offering Medivir's shareholders the opportunity to redeem one in every four shares at a price of SEK 129 was approved at an Extraordinary General Meeting held after the end of 2016. The redemption process entailed the transfer of SEK 857.5 million of the company's liquid assets to the shareholders.

2) 2016 have been recalculated to correspond to the continuing operations.

Promising clinical data, successful business development and secured financing

In the spring of 2020, Medivir was able to present promising data from the phase Ia study and shortly thereafter initiate the phase Ib study with MIV-818, our proprietary and wholly owned candidate drug for liver cancer. In December, we succeeded in renegotiating the old agreement with TetraLogic for birinapant, which enabled us to sign a license agreement for birinapant with IGM Biosciences in mid-January 2021. In addition, at the beginning of 2021, we were able to carry out a much-needed financing of the company with strong support from both existing investors and new specialist investors. It is particularly gratifying that the share issues provided Medivir an ownership base with strong institutions in the lead.

Medivir is one of the oldest listed companies in the Swedish pharmaceutical sector. It is a company in constant development that in recent years has been transformed into a specialist company in the field of oncology. Unlike many other cancer companies, Medivir does not have a number of projects in the early clinical phase, but focuses on one clinical project, MIV-818, with a clear therapeutic goal, where the unmet medical needs are large.

I took over as CEO of Medivir in September 2020 and when I was recruited, it was precisely this clear focus that attracted me the most. And the company also stands for much more that is interesting. Experience and competence, not only from clinical development but also from business development and the ability to take drugs to market approval. A robust portfolio of projects for outlicensing or partner agreements. A strong and experienced board of directors. And a very high scientific standard.

MIV-818 is proprietary developed and wholly owned by Medivir. It has received orphan drug designation both in the USA and in Europe, which entails a number of advantages in the development towards market registration. The value of MIV-818 is illustrated by its clear potential. It may become the first liver-directed, orally administered drug that can help patients with various cancers in the liver. Liver cancer is the third most common cause of cancer-related deaths in the world and hepatocellular carcinoma (HCC) is the most common form of cancer that occurs in the liver. Although existing treatments for HCC can prolong patients' lives, the treatment benefits are often limited and mortality remains at a high level.

The data from the phase Ia study presented last year showed that patients had been exposed to acceptable levels of the drug substance, outside of the liver, which provides support for the liverdirected effect of MIV-818. Based on an independent analysis of the growth of liver tumors, five of the nine patients were judged to have stable liver cancer disease after treatment.

The first part of the phase Ib study with MIV-818 in patients with advanced liver cancer who have undergone previous treatments is a classic dose escalation study with groups of three patients, that

aimed to further investigate the safety and tolerability profile and to determine the starting dose for part two of the phase Ib study.

Part two of the phase Ib study, where MIV-818 will be included as part of a combination treatment, is planned to begin in the second half of 2021. At time of writing, this looks feasible, despite the covid-19 pandemic.

We are also working on our business development, where we are looking to find possible partners for outlicensing our projects for partnerships, MIV-711 and remetinostat.

Birinapant is a project acquired in 2016 from TetraLogic Pharmaceuticals Corporation, subsequently developed by Medivir. At the end of 2020, we succeeded in renegotiating the birinapant agreement with TetraLogic so that the conditions for achieving an outlicensing were significantly improved. At the beginning of 2021, we could announce that we had signed an exclusive license agreement with US based IGM Biosciences for birinapant. The agreement gives IGM the global and exclusive rights to develop birinapant. IGM intends to initiate clinical trials with birinapant in 2021 in combination with its proprietary antibody IGM-8444, a combination which has shown enhanced antitumor activity preclinically.

The agreement with IGM provided Medivir with a payment of USD 1 million after signing, which is to be followed by an additional USD 1.5 million when IGM includes birinapant in phase I clinical trials. The terms of the agreement also entitle Medivir to milestone payments up to a total of approximately USD 350 million, given that birinapant is successfully developed and approved, as well as tiered royalties up to mid-teens on net sales. A portion of all revenue goes to Tetralogic, but the main part goes to Medivir.

Another licensing agreement was signed in February 2021, for Medivir's preclinical research program USP7. The agreement grants UK based Ubiquigent Limited an exclusive global license to develop and commercialize all of the program's related substances in all therapeutic indications in exchange for agreed revenue sharing with Medivir upon successful development or commercialization.

"The value of MIV-818 is illustrated by its clear potential. It may become the first liver-directed, orally administered drug that can help patients with various cancers in the liver."

In the financing we were able to carry out successfully at the beginning of 2021, the rights issue was oversubscribed to 93.5 percent. As a result, the over-allotment option was exercised, directed to the specialist investor HealthInvest, which thus becomes a new shareholder in Medivir. In addition, a directed new share issue of approximately SEK 28 million to Linc AB was carried out shortly thereafter. In total, Medivir received approximately SEK 223 million before transaction costs through the issues, a financing that is central for us to be able to develop our cutting-edge project MIV-818 into the next phase. That this financing received strong support from both existing owners such as Linc AB and Nordea as well as from new institutional specialist investors such as HealthInvest feels very gratifying. Medivir gained an ownership base with strong institutions in the lead. I would like to thank all, both old and new shareholders, for the clear trust you have shown in Medivir.

The results we have presented so far regarding MIV-818 have generated strong interest. 2021 will be an exciting year and the company will work forward with a clear focus and a strong commitment.

In the midst of this exciting phase, I have, for personal reasons not related to the company, made the decision to leave the operational work as CEO of Medivir. I am pleased to be proposed as a board member of Medivir and hope to continue to contribute to the company's development in that role.

My faith in Medivir has definitely been strengthened during my time at the company. I am convinced that Medivir has a very strong potential to create value for healthcare and patients as well as for our shareholders.

Yilmaz Mahshid President & CEO

Vision:

Improving life for cancer patients through transformative drugs

Medivir in brief

Medivir develops innovative drugs with a focus on cancer where the unmet medical needs are high. The company targets indication areas where available therapies are limited or missing and there are great opportunities to offer significant improvements to patients. Medivir is focusing on the development of MIV-818, a pro-drug designed to selectively treat liver cancer cells and to minimize side effects. The company was founded as early as 1988 and has been listed on Nasdaq Stockholm since 1996.

Collaborations and partnerships are important parts of Medivir's business model, and the drug development is conducted either by Medivir or in partnership. Birinapant, a SMAC mimetic, is outlicensed to IGM Biosciences to be developed in combination with IGM-antibodies for the treatment of solid tumors. The company has developed two pharmaceutical products, Xerclear and Olysio, which have reached the market.

Our focus and our projects

Our business focuses on in-house development of our wholly owned project platform for cancer indications where the medical needs are great. Medivir has chosen to develop MIV-818, which has been developed entirely within the company and which has great potential to offer patients with liver cancer a significantly improved treatment.

The clinical development program is conducted in a cost-efficient way and is well suited for a company of Medivir's size. MIV-818 is wholly owned by Medivir, i.e. we do not have to pay any future milestones or royalties to any third party.

We have two more drug projects, remetinostat, and MIV-711, in clinical development phase. Medivir does not conduct clinical development of these projects on its own, but instead seeks partners for the continued development.

Business concept, business model and strategy

Business concept

Medivir creates shareholder value by developing innovative cancer drugs for major unmet medical needs, on its own or in partnership with other companies.

Business model

Medivir strives to optimize the value of each separate project. For the commercialization of a specialist pharmaceutical, the company can choose to market on its own within certain territories, when the number of prescribing doctors is limited. In other indications that demand a large marketing organization Medivir intends to seek partners that can secure the fastest route to the market and commercial success. Medivir collaborates with expertise in academia, healthcare and the pharmaceutical industry to bring specialist knowledge, experience and specific competencies to its projects if and when needed.

Strategic priorities

1 To efficiently take candidate drugs through clinical development

Effectively and cross-functional drive the development of own candidate drugs all the way to approved pharmaceuticals with large therapeutic benefit and commercial potential.

2 To be a respected partner and generate revenue through partnerships

Develop and nurture meaningful and mutually beneficial partnerships in order to accelerate the clinical development and to reduce financial risk.

3 To continuously develop an inspiring corporate culture based on business experience, professionalism, collaborative skills and creativity

Cultivate a creative, inspiring and professional corporate culture that strengthens our ability to work more virtual.

What is cancer?

cells to die. As tumors grow, they can become more aggressive

What are the main objectives of drug treatment in cancer?

The pharmaceutical development process

The initial phases of pharmaceutical development can involve testing thousands of compounds, with the most promising selected as candidate drugs. Safety and efficacy are tested in the preclinical development phase, before the trials on humans begin in the clinical phase. Additional clinical trials are sometimes carried out after approval and launch in order to optimize use.

Research and preclinical phase

Before a candidate drug is selected for clinical development it has been through a rigorous chain of studies. The initial phases of pharmaceutical development can involve testing thousands of compounds. The molecules' properties are optimized with regard to safety, efficacy and pharmacokinetics, and their potential benefits in comparison with other similar pharmaceuticals are evaluated. In the preclinical phase, the candidate drug's safety and efficacy are thoroughly evaluated in animal models in order to establish whether its safety and efficacy profile is safe enough to enter trials on human beings.

Clinical phase

Clinical trials for a new pharmaceutical product means studies or trials conducted on human beings: healthy volunteers and patients. These trials are carefully regulated by the requirements of the regulatory agencies. Before a clinical trial can begin, both the regulatory agency and ethical review boards must approve the design of the clinical trial. The number of patients and or volunteers can vary depending on the indication, but in general, you must include enough patients to be able to show significant effect of the drug.

Phase I

Test subjects: Usually healthy volunteers but the studies may also include patients with the disease in question, particularly in the case of drugs aimed at the treatment of cancer.

Purpose: To establish safe doses and identify possible adverse events, and to understand how the pharmaceutical is absorbed, transported round the body, and excreted. Often also to measure early signs of efficacy, possibly through the use of so-called biomarkers.

Phase II

Test subjects: Patients with the disease/symptoms.

Purpose: To study the efficacy and adverse events profiles in order to determine an optimum dose or dosage range that can provide the desired clinical effect.

Phase III

Test subjects: Patients with the disease/symptoms.

Purpose: To study the efficacy and adverse events profiles in larger patient groups, including comparative studies with existing treatments or placebos, in order to evaluate the benefit/risk profile in a statistically reliable way and thereby provide the necessary evidence to secure marketing authorizations and support reimbursement.

Market

Registration

Before a pharmaceutical product is approved an application for a license to market the pharmaceutical has to be submitted. The regulatory agencies conduct a detailed review of the comprehensive documentation submitted by the company and then decide on whether to approve the pharmaceutical, and in which patient populations. This stage also involves price negotiations with relevant authorities and payers.

Launch and sale

Additional clinical trials may be conducted once a pharmaceutical has been approved by a medicines agency and launched on the market, in order to optimize the drug's usage. These so-called phase IV trials are conducted in parallel with sales, and they may also examine safety aspects.

Patent and market protection

Patent protection and regulatory protection, e.g. data exclusivity, orphan drug exclusivity, and pediatric extension, are key components of pharmaceutical development.

A focused project portfolio

Medivir focuses on the clinical development of the proprietary and wholly owned candidate drug MIV-818, for liver cancer. For two projects, remetinostat and MIV-711, active business development is conducted with the goal of outlicensing or finding a partnership for the projects. At the beginning of 2021, birinapant was outlicensed to IGM Biosciences. Xerclear is outlicensed to GlaxoSmithKline and Shijiazhuang Yuanmai Biotechnology.

PROPRIETARY PROJECTS

PROJECT/PRODUCT	DISEASE AREA	RESEARCH	PRECLINICAL	PHASE I	PHASE II	PHASE III	MARKET
MIV-818 NUCLEOTIDE DNA POLY MERASE INHIBITOR (ORAL)	Liver cancer (hepatocellular carcinoma)

PROJECTS FOR PARTNERING

Remetinostat HDAC INHIBITOR (TOPICAL)	Cutaneous T-cell lymphoma (MF) Basal cell carcinoma(BCC)1
MIV-711 CATHEPSIN K-INHIBITOR (ORAL)	Osteoarthritis

OUTLICENSED PROJECTS

PROJECT/PRODUCT	DISEASE AREA	RESEARCH	PRECLINICAL	PHASE I	PHASE II	PHASE III	MARKET
Birinapant SMAC MIMETIC (INTRAVENOUS)	Solid tumors Head / neck cancer (with radiotherapy)2	IGM Biosciences
Xerclear	Labial herpes	GlaxoSmithKline Shijiazhuang Yuanmai Biotechnology

1) Conducted by Stanford University, US

2) Conducted by National Cancer Institute, US

Completed Ongoing

MIV-818

for the treatment of liver cancers

Cancer originating from liver cells (hepatocellular carcinoma, HCC) is the third most common cause of cancer-related deaths in the world. Although existing treatments for HCC can extend patients' lives, treatment benefits are often marginal and mortality remains at a high level. MIV-818 has the potential to become the first liver-directed, orally administered drug that can help patients with various cancers of the liver.

DISEASE AREA	RESEARCH	PRECLINICAL	PHASE I	PHASE II	PHASE III	MARKET
Liver cancer (hepatocellular carcinoma)

MIV-818 is Medivir's proprietary prodrug with the liver as the target organ. Based on promising preclinical and clinical data, Medivir has chosen to focus on MIV-818 for clinical development on its own.

Although existing treatments for liver cell carcinoma (hepatocellular carcinoma, HCC) can prolong the lives of patients, the treatment benefits are often marginal and mortality remains at a high level. Molecularly directed substances have had limited success in HCC because these tumors have a wide range of mutations. The lack of overall benefit together with the generally poor prognosis for patients with HCC result in a great medical need. Through its mode of action MIV-818 has the potential to be effective independent of type of mutations.

Other forms of liver cancer that could be treated with MIV-818 are intrahepatic cholangiocarcinoma - bile duct cancer - accounting for about 3 to 5 percent of liver cancer cases. Bile duct cancer has a poor prognosis and lacks treatments that effectively increase survival rates

Liver-targeted antitumor effect

MIV-818 is a liver-directed orally administered prodrug of troxacitabine monophosphate. Intravenously administered troxacitabine has previously been shown to be effective against various forms of cancer, but the development was stopped due to e.g. systemic side effects.

MIV-818 is instead being developed as an orally administered drug with a high antitumor activity that targets the liver. The intention is to achieve maximum concentration of the active substance in the tumor, or the tumors, while minimizing the systemic toxicity in the rest of the body. The goal is to improve the antitumor effect while reducing the risk of side effects.

Phase I study in two parts

The first clinical study with MIV-818 was initiated at the end of 2018. The primary purpose of this phase Ia study was to study the safety and tolerability of MIV-818 in patients with advanced liver cancer. Signals of relevant effects on the tumors in the liver were also studied, using biomarkers on liver biopsies from patients and by measuring the size of the tumors.

In March 2020, data were presented from all nine patients in the phase Ia study. Pharmacokinetic analysis showed that patients were exposed only to low levels of MIV-818 and acceptable troxacitabine levels outside of the liver, providing experimental support for MIV-818's liver targeted effect. The adverse events were dosedependent and mainly mild, and the few serious side effects observed were reversible.

Biomarker analysis of liver biopsies from patients showed a selective effect of the treatment with MIV- 818: while tumor tissue had clear treatment-induced DNA damage, the surrounding normal liver tissue showed only minimal or no DNA damage. Based on an independent analysis of the growth of the liver tumors, five of the nine patients were assessed to have stable liver disease after treatment.

In March 2020 the first patient with advanced liver cancer in the phase Ib study was dosed with MIV-818. It is a classic 3+3 interpatient dose-escalation multi-center study with the primary purpose to determine the safety and tolerability profile for MIV-818. A secondary purpose is to further evaluate the efficacy of MIV-818.

Medical need and market potential

Liver cancer is the third most common cause of cancer-related death worldwide. Despite existing treatments for hepatocellular carcinoma (HCC), mortality remains at a high level. There are 42,000 patients diagnosed with liver cancer per year in the US and current five-year survival is 11 percent. The generally poor prognosis for patients with HCC results in a great medical need. Cholangiocarcinoma, or bile duct cancer, is the second most common liver tumor form. The average survival in bile duct cancer is 12 months. MIV-818 has the potential to become the first liver-targeted, orally administered drug that can help patients with HCC and other forms of liver cancer.

Next step

In March 2020 the first patient with advanced liver cancer in the phase Ib study was dosed with MIV-818. It is a classic 3+3 inter-patient dose-escalation multi-center study with groups of three patients aiming to further investigate the safety and tolerability profile and to determine the starting dose for part two of the phase Ib study.

In parallel, part two of the phase Ib study is being prepared, where MIV-818 will be included as part of a combination treatment. This part of the study is planned to be initiated in the second half of 2021. Simultaneously, the first part of the phase Ib study continues in an expansion cohort, with the same dose but with more patients. It cannot be ruled out that the ongoing covid-19 pandemic may affect Medivir's study schedules.

MIV-818 – A liver cancer-targeted nucleotide prodrug

By providing troxacitabine monophosphate (TRX-MP) with a "chemical tail", Medivir has created a prodrug (MIV-818) that is given orally and which is stable in the gastrointestinal tract but which quickly breaks down in the liver. When MIV-818 is absorbed from the gastrointestinal tract, it accumulates in the liver before it enters the bloodstream. MIV-818 is inactive in itself but is converted to TRX-MP and its active metabolite TRX-TP (see image below) when taken up by liver cells. TRX-TP is then incorporated into DNA in rapidly dividing cancer cells, thereby causing DNA damage and cancer cell death. Through the liver-targeted effect, minimal amounts of MIV-818 enter the bloodstream, thereby minimizing the risk of side effects.

Ongoing phase I study

MIV-818 is a prodrug that is developed for improved treatment efficacy, safety and tolerability in the treatment of liver cancer. MIV-818 is administered orally and should provide maximum concentration of the active substance in the tumor while keeping the levels of the active substance in the rest of the body to a minimum. The goal is to have a high anti-tumor effect and at the same time a low risk of side effects.

Selective signal of efficacy in liver cancer patients treated with MIV-818

In Medivir's phase Ia study with MIV-818 in patients with advanced liver cancer, biopsies were taken both on normal liver tissue and tissue from the liver tumor to study possible MIV-818-induced DNA damages. The results were clear. In tumor tissue, DNA damage was observed while normal liver tissue was not affected by the MIV-818 treatment. As in the previous mouse studies, we observed DNA damage in oxygen-poor cancer tissue from the patient biopsies. The doses administered did not lead to serious side effects and only low levels of MIV-818 in the blood were detected.

In summary, the data collected from the phase Ia study indicate that the intended effects were achieved, i.e. the study provided an early proof-of-concept. This provides strong support for the continued clinical development of MIV-818.

In March 2020 the first patient with advanced liver cancer in the phase Ib study was dosed with MIV-818. The phase Ib study is a classic 3+3 inter-patient dose-escalation multi-center study with groups of three patients aiming to further investigate the safety and tolerability profile and to determine the starting dose for part two of the phase Ib study.

more patients. Biopsies from liver cancer patients treated with MIV-818. Cells with damaged DNA are brown in color.

Have we made any progress in the fight against cancer?

In order to get a better understanding of recent developments in the fight against cancer, and in particular with regard to liver cancer, we have talked to Professor Jeff Evans, who is Professor of Translational Cancer Research and Director of the Institute of Cancer Sciences, University of Glasgow. He is also Honorary Consultant in Medical Oncology at the Beatson West of Scotland Cancer Centre, Glasgow, Group Leader (Translational Cancer Therapeutics Laboratory) at the CRUK Beatson Institute, Glasgow, and Lead of the Glasgow Experimental Cancer Medicine Centre (ECMC). Furthermore Professor Evans is an advisor to Medivir and an investigator in the MIV-818 clinical program.

From an overall viewpoint, even though many major challenges remain, professor Evans is optimistic about the recent development in the fight against cancer.

"One of the most promising approaches over the last decade or two in the management of malignant disease is our increasing understanding of the molecular and cellular basis of transport, development and progression, and how we might exploit that for therapeutic gain.

We have seen significant advances in patients with advanced disease, initially molecular targeted agents, by the small molecule inhibitors or antibody based inhibitors, and then more recently with immunotherapies starting initially with the immune checkpoint inhibitors and extending beyond that into cellular therapies.

One of the challenges that remains is how we best combine these various agents with existing treatments, such as cytotoxic chemotherapy, radiation therapy and surgery, and how we optimally select the patients based on a precision approach in order to maximize benefit and minimize toxicity. Ultimately we will then be able to translate these findings back to the earlier disease setting, where we could reach greater impact on overall survival as well."

In order for treatments to be more precise the development of diagnostic methods and tools plays a significant role, according to professor Evans. He also points out the need to more accurately monitor how the treatments work.

"Again, for cancer in general there is a continuing increase in the number of new cases. The incidence of most malignant diseases continues to rise internationally. Early diagnosis, and particularly early detection at the premalignant stage, remains a big challenge. We have some successes in screening for certain phenotypes but many of those, with diseases that often present with late stage disease or metastatic disease, may not have a risk group to identify

them in and not the right screening infrastructure or mechanisms to identify early disease.

But it's likely in the future that we will have a precision prevention agenda whereby we will be able to exploit our understanding of cancer better in terms of early detection, not only early detection of existing disease but detection of early premalignant disease to try and influence natural history or/and patient outcomes.

In terms of precision medicine it may very well be that rather than always treating patient based on the organ of origin you also take account of the molecular profiling in its broader sense of the malignancy. We know that there are some therapies that will only work in the presence of a specific marker or may not work in the presence of a specific marker, and that is how we can maximize the potential to better tailor our treatment approaches to the individual patient."

When discussing liver cancer and HCC, professor Evans points out that these malignancies are strongly connected to chronic liver disease. He sees that much progress has been made in recent times, but that there is still a major need for novel approaches. "Undoubtably primary liver cancer represents a big unmet need globally. The numbers are continuing to rise as a consequence of the increasing numbers in chronic liver disease, for a number of reasons, such as hepatitis, alcohol related or non-alcohol related fatty liver disease, often associated with obesity, type 2 diabetes, much of it a result of ominous life styles. This is an increasing problem globally, not just a problem with the Asia Pacific region, it is increasing worldwide.

One of the challenges is that these patients invariably have chronic liver disease and therefore they may have abnormal synthetic liver function which also may influence the management of the malignancy beyond the malignancy specific factors, such as the molecular profile or the anatomy of the disease spread.

So early detection again remains an issue because of the importance of identifying these patients when they are still accessible to surgery with or without transplantation, or even ablation therapies. And for those who are not suitable for this radical approach, duly based on the anatomy and on its synthetic liver function, we have transarterial chemoembolization -TACE - and systemic therapies. And regarding systemic therapies we have one systemic therapy license in the first line setting of more than ten years ago now and it was then only over a decade before the second first line therapy was licensed in 2018.

It is very encouraging that over the last couple of years a number of licensed agents have been developed for first and second line setting, but nevertheless overall survival still remains disappointing and even when we optimally identify the combinations of therapies or the sequence of therapies, we will still be left with an unmet need for novel approaches in more advanced HCC. Then we can take that back to an early disease setting, either given in combination with ablation or TACE, and at some point they will also be. If they're better agents, at what point do we do next phase, in other words for this very bulky disease do we continue to do TACE and pair it with systemic therapies or do we continue to repeat it? And I think that's going to be an interesting question when we have better therapies than we have had historically."

The therapies available today are all systemic therapies, and professor Evans points out that Medivir's MIV-818 is unique in the way it targets the liver and thus has the potential to become the first liver targeted therapy.

"Today we have systemic anti-cancer therapies beyond loco-regional approaches like surgery, ablation or TACE. We have tyrosine kinase inhibitors administered orally or we have intravenous immunotherapy combination therapies. These will target both intrahepatic and extrahepatic disease.

MIV-818, by having a little activity on extrahepatic disease, falls into the active therapeutic category specifically within the liver, and preferentially on liver tumors. This does raise the possibility that for those with extensive intrahepatic disease we could have another therapeutic option, either alone or in combination with systemic therapy, or in combination with TACE. If we can we improve the local disease in the liver, and with better agents that we could institute in the patients with liver only intrahepatic disease without major vessel involvement, there is a chance that we could increase the number of patients that are downstaged and then rendered eligible for a practical approach such as surgery or ablation. At present that remains anecdotal and speculative, but it is an interesting direction to explore in the future if we have very active agents against intrahepatic liver disease."

Professor Jeff Evans

Projects for partnering

Medivir focuses primarily on in-house development of MIV-818 and other business development. To enable further development and commercialization of our other clinical projects, Medivir is looking for industrial or academic partners or licensees.

Medivir has two clinical projects for licensing/ partnerships:

Remetinostat– for improved treatment of Mycosis fungoides, the most common type of cutaneous T-cell lymphoma
MIV-711 with the potential to be the first disease-modifying drug in osteoarthritis.

Currently Medivir does not conduct any clinical development for these projects, but instead evaluates the possibilities of concluding a license or collaboration agreement for the continued development of each project.

Remetinostat

Mycosis fungoides (MF) is the most common form of cutaneous T-cell lymphoma (CTCL). Oral HDAC inhibitors are effective against MF-CTCL, but they have significant side effects and are therefore only used in later stages of the disease.

Remetinostat, an HDAC inhibitor applied to the skin in the form of a gel, degrades as it reaches the blood stream, reducing the risk of side effects. Remetinostat is expected to address the central needs of patients suffering from cutaneous T-cell lymphoma, CTCL, in the long-term initial stage of the disease, thanks to its balance between effect on the disease with its symptoms and a tolerability that allows extended treatment.

A phase II study with remetinostat in patients with early-stage CTCL (IA-IIA MF), the most common form of CTCL, has been performed with positive results.

Medivir'sgoal istofindapartnerforphaseIII and commercialization of remetinostat.

Investigator-initiated phase II study with

remetinostat at Stanford University in the USA In a recently completed investigator-initiated study in collaboration with researchers at Stanford University, remetinostat was given to patients with basal cell cancer (BCC). The preliminary results indicate that remetinostat has potential as an effective and welltolerated treatment of local skin tumors in BCC patients1). A publication of final data is now being prepared.

Also at Stanford University, an investigatorinitiated phase II clinical trial was conducted in which remetinostat was given to patients with squamous cell carcinoma. Four patients were treated before recruitment was negatively impacted by the Covid-19 pandemic. The study has now been terminated due to a shortage of drug. The shelf life of remetinostat expired at the end of October and it could not be extended. We expect data from the four patients to be published in the future.

MIV-711

Medivir has conducted a phase II study showing positive effects in both bone and cartilage in joints in osteoarthritis patients after only six months of treatment with MIV-711. Treatment with MIV-711 for a total of 12 months provided continued treatment effect on bone and cartilage, and the patients also retained the response level of the positive signals for self- reported pain as well as other clinical symptoms ²).

Medivir's goal is to establish a license or collaboration agreement for the continued development of MIV-711 as the first disease-modifying drug for osteoarthritis.

Recent scientific work suggests that two processes, increased bone turnover and degradation of cartilage tissue, play important roles in the development of osteoarthritis.

1) Reference: Urman et al. An open-label phase 2 clinical trial of topical Remetinostat for basal cell carcinoma. Society for Investigative Dermatology (SID) May 11, 2019.

2) Reference: Ann Intern Med. 2020 Jan 21;172(2):86-95 and Editorial Ann Intern Med. 2020 Jan 21;172(2):147-148.

Outlicensed projects

For outlicensed projects, royalties and milestone payments are paid to Medivir. Medivir's outlicensed projects consist of birinapant, Xerclear and MIV-701.

Birinapant

Birinapant is a SMAC mimetic acquired in 2016 from TetraLogic Pharmaceuticals Corporation, subsequently developed by Medivir for the treatment of solid tumors.

Birinapant has the potential to, in combination with other drugs, improve a number of treatments of solid cancer tumors in order to increase treatment response and extend patient survival where available treatments do not provide the necessary survival or where the patient no longer has any treatment alternatives.

In January 2021, Medivir signed an exclusive licensing agreement with US-based IGM Biosciences for birinapant. Through the agreement, IGM is granted the global and exclusive rights to develop birinapant. IGM intends to initiate clinical trials in 2021 with birinapant in combination with its proprietary antibody, IGM-8444, a combination which has shown enhanced antitumor activity preclinically.

Xerclear®

In 2009, Xerclear® (Zoviduo®) was approved for the treatment of labial herpes. The marketing rights to Xerclear® in the USA, Canada and Mexico were divested in 2010. The rights in Europe and the rest of the world have been outlicensed to GlaxoSmithKline, with the exception of China, where Medivir has out-licensed the rights to Shijiazhuang Yuanmai Biotechnology Co Ltd. (SYB), and Israel and South America where Medivir has retained the rights.

Medivir receives royalties on Xerclear®/ (Zoviduo®) sales from GlaxoSmithKline. In addition, Medivir would receive milestones when Zoviduo® is approved as an over the counter product in new markets.

After marketing approval and production in China, Medivir will receive a fixed royalty from SYB for each unit sold and the agreement guarantees a minimum sale during the first three years on the market amounting to single-digit million SEK.

MIV-701

In the spring of 2019, a licensing agreement was signed for one of Medivir's candidate drugs, MIV-701, with the French company Vetbiolix, granting Vetbiolix the right to develop the product for veterinary use. MIV-701 is a cathepsin K inhibitor that is not suitable for human development due to its rapid degradation, but which has excellent properties for animals. Medivir is entitled to additional milestone payments as well as royalties during the continued development.

Preclinical projects

In the first quarter of 2020 Medivir entered into a licensing agreement with the US-based biotech company Tango Therapeutics for a preclinical research program. Through the agreement, Medivir is entitled to multiple development and commercial milestone payments as well as royalties on future sales.

Furthermore, Medivir has entered into an option agreement with another, nondisclosed biotech company for yet another preclinical research project.

In July 2020 a research collaboration was initiated with the Drug Discovery and Development Platform (DDD) at SciLifeLab on potential inhibitors of SARS CoV-2. Through the collaboration, DDD will get access to Medivir's unique proprietary protease-targeted compound library.

In february 2021 a licensing agreement with Ubiquigent was signed for the preclinical research program USP7. The agreement grants Ubiquigent an exclusive global license to develop and commercialize all of the program's related substances in all therapeutic indications in exchange for agreed revenue sharing with Medivir upon successful development or commercialization.

Sustainable development in a troubled world

Medivir's vision, to improve the life of cancer patients through transformative drugs, shows in itself that sustainability is central to the company. In 2020, sustainability work was furthermore to a large extent characterized by the Covid-19 pandemic with measures to ensure safety and reduce the risk of infection for employees, patients and partners.

Medivir's operations are conducted in compliance with regulatory guidelines and industry standards that in a natural way integrates many of the most important sustainability issues. We also work according to the ten principles of the UN Global Compact Program, which includes human rights, working conditions, the environment and corruption.

Medivir's biggest contribution to reducing its environmental footprint comes from the development of candidate drugs which have the desired beneficial effect but which also have a minimal environmental impact from a life-cycle perspective.

Medivir's sustainability work focuses on conducting clinical development in accordance with ethical rules and guidelines, taking into account the environmental impact of both Medivir's own operations and those of our suppliers. Medivir also strives to ensure that it provides a safe and developmental work environment, attractive to both today's and tomorrow's employees.

Official regulatory approvals are always required for clinical studies, which are then carried out within the framework of the regulatory and ethical regulations of the countries in question. The requisite permits from regulatory authorities and ethics committees are only issued when Medivir is able to demonstrate satisfactory risk and benefit assessments.

The ongoing Covid-19 pandemic has of course made great demands in healthcare in general in 2020. This has affected the conditions to recruit patients for, and to conduct, clinical pharmaceutical studies. Medivir has taken great care to ensure that the company's studies are implemented so that the risks for participating patients, healthcare staff, clinical partners and our own employees are minimized.

With consideration for the environment

Medivir strives to reduce its resource consumption by recycling materials wherever possible. The company has established strong routines for recycling paper, plastic consumables, glass packaging and cardboard. Environmental issues also form part of the assessment aspect of all procurement processes for goods and services.

For Medivir, the sustainability work is not limited to its own internal business. For the production of substances and products for clinical development, Medivir employs sub- contractors. The process for this ensures that the subcontractors that can be hired in the clinical development phase comply with all applicable environmental and other provisions before entering into an agreement. In the case of long-term contractual relation- ships, there are also regular follow-ups. Medivir is continuously working to reduce the use and management of hazardous substances and hazardous waste. Hazardous waste that cannot be recycled shall be stored, processed and disposed of in accordance with specified hazardous waste handling guidelines.

Medivir is a knowledge-intensive company that wants its employees to be able to attend international conferences and meetings in order to promote development and the exchange of ideas and experiences. As in other years, we have in 2020 encouraged the use of conference calls and online meetings, but this year the main reason has been to avoid the risks of infection which may be present at personal meetings. In general, the company strives to reduce the environmental impact through conscious choice of means of transport and to avoid unnecessary business trips.

Employees

Medivir's success is based on the ability to collaborate, both internally and externally.

Medivir's drug development is organized to combine cost-effectiveness, quality and flexibility. This is achieved through a small internal organization with cutting edge competence within drug development and business developmental leadership. Medivir also prioritizes cooperation with external academic partners, industrial partners and other service providers.

Medivir strives to create a working environment that promotes health and well-being. A good working climate lays the foundation for job satisfaction and good relationships, low sick leave rates and low staff turnover rates.

The Medivir share

Medivir's class B share has been listed on the Nasdaq Stockholm since 1996, with all trade taking place on the Small Cap list.

Share structure, earnings per share, and equity

There were a total of 24,287,818 (24,287,818) class B shares in Medivir AB at the year-end with a nominal value of SEK 8. The average number of shares during the year was 24,287,818 (24,287,818). All shares are equally entitled to participation in Medivir's assets and profits. The share capital at the year-end was SEK 188.5 million (188.5 m) and the equity totaled SEK 141.9 (184.5) million.

Shareholders

There were a total of 8,767 (8,436) shareholders at the year-end, 1,580 (1,510) of whom held more than 1,000 shares. The fifteen biggest shareholders accounted for 40 percent (43%) of the total number of shares and votes. Foreign owners accounted for 27 percent (27%) of the total equity.

Share price performance and turnover, 2020

Medivir's share price fell by 33.1 percent, from SEK 12.40 to SEK 8.30, in 2020. Nasdaq's Stockholm All Share Index (OMXSPI) increased by 12.9 percent during the same period. Medivir's market capitalization at the end of 2020 was SEK 0.20 billion (0.30 bn), based on the closing price paid at the yearend of SEK 8.30. A total of 17,787,731 Medivir shares were traded on the Nasdaq Stockholm exchange in 2020, corresponding to a turnover rate of 74 percent. The average daily trading volume during the year was 70,586 shares. The Medivir share is primarily traded on the Nasdaq Stockholm.

Share-related incentive plans

The intention of long-term incentive plans is to create the conditions for retaining and recruiting competent staff to the Group, as well as offering employees an attractive opportunity to become a partner in the company to promote and stimulate continued corporate loyalty by combining shareholders and employees' interests.

In 2017, the Board of Directors proposed a long-term incentive plan that was approved by the 2017 Annual General Meeting. The

right to subscribe was vested in all of the company's senior executives as well as other permanent employees of Medivir. The market value was determined using the Black & Scholes valuation model, based on term, strike price, weighted share price during the subscription period (VWAP), risk-free interest rate, and volatility. The subscription price for all outstanding warrants (strike price) per share shall correspond to 133 percent of the volume weighted average rate of the class B share. Medivir's employees purchased 48,515 warrants in the second quarter of 2017 as part of this incentive plan.

The warrants were issued at a market value of SEK 9.41 with a strike price of SEK 89.36 per share. Medivir's employees purchased a further 9,320 warrants in the fourth quarter of 2017. These warrants were issued at a market price of SEK 3.98 with a strike price of SEK 89.36 per share. The combined total of 57,835 warrants can be exercised to subscribe for new class B shares during the period from 16 December 2020 to 15 January 2021, inclusive. The valuation calculation for 2017 was based on the following figures: term, 3.66 years; strike price, SEK 89.36; VWAP, SEK 67.19; risk-free interest rate, –0.35 percent; volatility, 32 percent.

In May 2018, the Annual General Meeting approved a new long-term incentive plan

with the same structure. In the second quarter of 2018, Medivir's employees purchased 51,864 warrants with a market value of SEK 5.63 each and a strike price of SEK 52.75 per share. The warrants can be exercised to subscribe for new class B shares during the period from 16 December 2021 to 15 January 2022, inclusive.

In May 2020, the Board of Directors proposed and the AGM approved a new longterm incentive program with the same structure. During the second quarter 2020, Medivir employees bought 227 000 warrants at a market value of 1.30 each with an exercise price of SEK 31.40 per share. In the third quarter 2020, Medivir employees bought an additional 300 000 warrants. These warrants were issued at a market value of SEK 1.00 each with an exercise price of SEK 31.40 per share. The total 527 000 warrants may be exercised to subscribe for new class B shares during the period from 1 December 2023 up to and including 15 December 2023. The valuation calculation for 2020 was based on the following figures: term, 3.58 years; strike price, SEK 31.40; VWAP, SEK 15.70; risk-free interest rate, 0.0 percent; volatility, 41 percent.

For a more detailed description, see Note 4 on pages 51-52.

Medivir's 15 largest shareholders 30 December 20201

Name	Class B Shares	% of votes	% of capital
Avanza Pension	2,171,184	8.9	8.9
Nordea Investment Funds	1,999,459	8.2	8.2
Linc AB	1,008,283	4.2	4.2
Credit Suisse i Luxemburg S.A	623,675	2.6	2.6
Ålandsbanken	584,062	2.4	2.4
Nordnet pensionsförsäkring AB	466,372	1.9	1.9
SIX SIS AG	382,977	1.6	1.6
AM Karlsson i Kvicksund AB	360,492	1.5	1.5
Jan Stefan Nydahl	349,977	1.4	1.4
Bo Öberg	347,744	1.4	1.4
BNP Paribas Sec Serv Luxembourg	337,885	1.4	1.4
Futur Pension	337,326	1.4	1.4
SEB life international assurance	320,000	1.3	1.3
Banque Pictet & Cie SA	261,125	1.1	1.1
Nils Gunnar Johansson	235,424	1.0	1.0
Total, 15 largest shareholders	9,785,985	40.3	40.3
Total, other shareholders	14,501,833	59.7	59.7
TOTAL	24,287,818	100	100

Shareholder categories, % of capital

Analysts who cover Medivir

1) Source: Euroclear Sweden. Ownership data in the table may comprise composite data from multiple entries in Euroclear's statistics. These composite entries are designed to show an institution's or private person's total holdings in Medivir.

This composite entry approach has not been taken in other tables for the Medivir share.

Shareholder breakdown by size of holding 30 December 2020

No. of shares	No. of shareholders	No. class B shares	% of capital	% of votes
1 – 500	6,308	743,513	3.06	3.06
501 – 1,000	879	708,484	2.92	2.92
1,001 – 5,000	1,134	2,665,909	10.98	10.98
5,001 – 10,000	193	1,482,572	6.10	6.10
10,001 – 15,000	75	943,739	3.89	3.89
15,001 – 20,000	36	652,304	2.71	2.71
20,001 –	142	17,085,297	70.35	70.35
Total	8,767	24,287,818	100	100

Niklas Elmhammer, Redeye Ulrik Trattner, Carnegie Investment Bank Ingrid Gafanhao,

Kempen

Joe Pantginis, H.C. Wainwright & Co

Share Capital Performance

Year	Transaction	Nominal amount, SEK	Change in share capital, SEK	Total share amount, SEK	Total no. of class A shares	Total no. of class B shares	Total no. of shares
2010	New share issue	5	26,219,390	130,437,125	660,000	25,427,425	26,087,425
	Private placement	5	11,250,000	141,687,125	660,000	27,677,425	28,337,425
	Exercise of options 2005–2010	5	921,650	142,608,775	660,000	27,861,755	28,521,755
	Exercise of options 2007–2012	5	357,370	142,966,145	660,000	27,933,229	28,593,229
2011	Exercise of options 2007–2012	5	496,705	143,462,850	660,000	28,032,570	28,692,570
	Non-cash issue	5	12,806,285	156,269,135	660,000	30,593,827	31,253,827
2012	Exercise of options 2007–2012	5	31,000	156,300,135	660,000	30,600,027	31,260,027
2015	Redemption program and bonus issue	6	858,635	157,158,770	606,358	26,359,679	26,966,037
2017	Redemption program and bonus issue	8	533,818	157,692,558	474,769	19,844,208	20,318,977
2018	New share issue	8	30,801,590	188,494,179	474,769	23,813,049	24,287,818
2018	Conversion of class A shares to class B shares	8	–	188,494,179	–	24,287,818	24,287,818

Directors' Report	21
Corporate Governance Report	26
Board of Directors' Internal Controls Report	32
Board of Directors	34
Management	36
Income Statements	38
Statement of Comprehensive Income	39
Balance Sheets	40
Statement of Changes in Equity	42
Statements of Cash Flow	43
Accounting policies	44

Notes

01 Segment reporting	50
02 Intra-Group transactions	50
03 Audit costs and audit consulting	50
04 Average number of employees, salaries, other
remuneration, and social security contributions	51
05 Leases including property rent	52
06 Profit/loss from participations in Group companies	52
07 Financial risks	53
08 Interest income and similar profit/loss items	56
09 Interest expenses and similar profit/loss items	56
10 Tax	56
11 Earnings per share	56
12 Intangible fixed assets	57
13 Property, plant and equipment	58
14 Leases	59
15 Participations in Group companies	60
16 Financial assets held for sale	61
17 Prepaid expenses and accrued income	61
18 Other short-term investments and cash equivalents	61
19 Provisions	61
20 Accrued expenses and deferred income	61
21 Pledged assets	61
22 Undertakings and contingent liabilities	62
23 Statements of cash flows, supplemental disclosures	62
24 Reconciliation of net debt	62
25 Other operating income	64
26 Events after the end of the reporting period	64
27 Proposed treatment of non-restricted equity	64

Attestation	65
Auditor's Report	66
Key ratios	70
Six-year summary	71
Definitions	72
Glossary	73

Shareholder information 74 2021 Annual General Meeting 74

20				MEDIVIR ANNUAL REPORT 2020

Directors' Report

The Board of Directors and the President of Medivir AB (publ.), corporate ID no. 556238-4361, whose place of incorporation is Huddinge, Sweden, hereby submit the Annual Report for the operations of the Group and the Parent Company, Medivir AB, (publ.) for the 2020 fiscal year. All figures refer to the 2020 fiscal year of the Group, unless otherwise indicated. Comparisons, unless otherwise indicated, are made with the 2019 fiscal year.

The Medivir Group comprises the Parent Company, Medivir AB, and five subsidiary companies, three of which are registered in the UK. The subsidiary companies are currently dormant. The Parent Company's shares are listed on the NASDAQ Stockholm Stock Exchange list for small companies (Small Cap). For additional information, see www.medivir.se.

Medivir develops innovative drugs with a focus on cancer where the unmet medical needs are high. This strategy is aimed at indication areas where available therapies are limited or missing and there are great opportunities to offer significant improvements to patients.

For a detailed description of Medivir's project portfolio, please see pages 7-15.

Significant events in 2020

The project portfolio

In January, the phase II study with MIV-711 in patients with osteoarthritis was published in the esteemed journal Annals of Internal Medicine.
Medivir's patent applications for MIV-818, covering both substance requirements for MIV-818 and its use for liver cancer treatment, were approved by the patent authorities in both the EU and Japan.
In February, a licensing agreement was signed for Medivir's drug Xerclear® for labial herpes with the Chinese company Shijiazhuang Yuanmai Biotechnology Co Ltd.
Data from the phase Ia study with MIV-818 in liver cancer patients, supporting the liver-targeted effect of MIV-818, was presented at Medivir's R&D-day on March 2. Biomarker analysis showed a selective

effect: while tumor tissue had clear DNA damage, healthy liver tissue showed only minimal or no DNA damage. Five of the nine patients were assessed to have stable liver disease after treatment.

Shortly thereafter in March, the first liver cancer patient was included in the MIV-818 phase Ib study.
In March a licensing agreement was signed with US biotech company Tango Therapeutics for one of Medivir's preclinical research programs. Yet another agreement for a preclinical project was signed with an undisclosed American company.
In May, the U.S. Food and Drug Administration (FDA) granted orphan drug designation to MIV-818 for the treatment of patients with hepatocellular carcinoma.
In June, the European Commission granted orphan medicinal product designation in the EU to MIV-818 for the treatment of patients with hepatocellular carcinoma.
In July, a research collaboration was initiated with the Drug Discovery and Development Platform (DDD) at SciLifeLab on potential inhibitors of SARS CoV-2. Through the collaboration, DDD will get access to Medivir's unique proprietary protease-targeted compound library.
Medivir renegotiated in December the agreement with TetraLogic Pharmaceuticals Corporation regarding compensation model and levels for an out-licensing of birinapant. The agreement was dissolved and renegotiated so that the compensation Medivir is obliged to pay in a transaction now is based solely on the distribution of actual income to Medivir.

The company

Yilmaz Mahshid took over as CEO on September 14, 2020.
In October Dr. Tom Morris was appointed interim Chief Medical Officer.
In December, Medivir's Board of Directors decided to propose a rights issue of class B shares with preferential rights for existing shareholders of approximately SEK 170 million before transaction costs.

Long-term incentive plans

In 2017, the Board of Directors proposed a long-term incentive plan that was approved by the 2017 Annual General Meeting. The right to subscribe was vested in all of the company's senior executives as well as other permanent employees of Medivir. The market value was determined using the Black & Scholes valuation model, based on term, strike price, weighted share price during the subscription period (VWAP), risk-free interest rate, and volatility. The subscription price (strike price) per share for all outstanding warrants shall correspond to 133 percent of the volume-weighted average rate of the class B share during the subscription period.

Medivir's employees purchased 48,515 warrants in the second quarter of 2017 as part of this incentive plan. The warrants were issued at a market value of SEK 9.41 with a strike price of SEK 89.36 per share. Medivir's employees purchased a further 9,320 warrants in the fourth quarter of 2017. These warrants were issued at a market value of SEK 3.98 with a strike price of SEK 89.36 per share.

The combined total of 57,835 warrants can be exercised to subscribe for new class B shares during the period from 16 December 2020 to 15 January 2021, inclusive. The warrants expired without being utilized for subscription. The valuation calculation for 2017 was based on the following figures: term, 3.66 years; strike price, SEK 89.36; VWAP, SEK 67.19; risk-free interest rate, –0.35 percent; volatility, 32 percent.

In May 2018, the Annual General Meeting approved a new long-term incentive plan with the same structure. In the second quarter of 2018, Medivir's employees purchased 51,864 warrants with a market value of SEK 5.63 each and a strike price of SEK 52.75 per share. The warrants can be exercised to subscribe for new class B shares during the period from 16 December 2021 to 15 January 2022, inclusive. The 2018 valuation calculation was based on the following figures: term, 3.66 years; strike price, SEK 52.75; VWAP, SEK 39.66; risk-free interest rate, –0.16 percent; volatility, 32 percent.

Significant events after the end of the fiscal year

In January the company signed an exclusive license agreement with IGM Biosciences, Inc. for birinapant. Medivir received a payment of USD 1 million after signing, which is to be followed by an additional USD 1.5 million when IGM includes birinapant in phase I clinical trials. In addition, the agreement entitles Medivir to milestone payments and royalties.
A rights issue of class B shares with preferential rights for existing shareholders was completed in early February. Through the rights issue, which was oversubscribed to 93.5 percent, Medivir received approximately SEK 170 million before transaction costs. An EGM resolved on the reduction of the share capital.
The Board of Directors decided to exercise the over-allotment option of SEK 25 million, directed to the specialist investor HealthInvest.
An Extraordinary General Meeting on March 11, 2021, decided on a directed new share issue of approximately SEK 28 million to Linc AB. Owner of Linc AB is Bengt Julander, Member of the Board of Medivir.
In February 2021 a licensing agreement with Ubiquigent was signed for the preclinical research program USP7.
In March 2021, it was announced that Yilmaz Mahshid will leave his position as CEO of Medivir at the Annual General Meeting on May 5, for personal reasons.
Medivir's Nomination Committee has announced that it will propose to the 2021 Annual General Meeting the re-election of board members Uli Hacksell, Lennart Hansson, An van Es Johansson and Bengt Westermark and the election of Yilmaz Mahshid as new board member. Bengt Julander and Helena Levander have declined re-election. As new Chairman of the Board, the Nomination Committee will propose Uli Hacksell.

The Group's results and financial position

Revenues, expenses, and results

Net turnover for the period from January – December was SEK 13.9 million (8.7 m) corresponding to an increase of SEK 5.2 million, the difference mainly attributable to revenue from the entered license agreements in the first quarter.

During the year, a lease agreement was renegotiated as well as repayment from previous clinical studies, which had a positive

effect on earnings and is reported as other income.

Other external costs totaled SEK -52.9 million (-91.1 m), corresponding to a decrease of SEK 38.1 million.

Personnel costs amounted to SEK -24.9 million (-35.0 m) a decrease of 10.1 million. The total expenses was SEK -77.9 million (-126.1 m) a decrease of 48.2 million. The reduction in costs is mainly explained by lower clinical costs, lower personnel costs and overhead expenses.

Depreciation, amortization and impairment for the period totaled SEK -4.4 million (-7.1).

Net financial items totaled SEK 0.3 million (2.6), corresponding to an increase of SEK 2.3 million. The decrease was due to a reduction in financial assets and comprises unrealized gains attributable to positive market valuations of short-term interestbearing investments.

The operating profit/loss totaled SEK -42.9 million (-126.0 m), SEK 83.1 million better than previous year. The improvement mainly relates to the positive effect of renegotiated leases, repayment from previous clinical studies, lower other external costs and lower personnel costs.

The tax for the period totaled SEK 0.0 million (-0.1). The Group's tax cost is based on a tax rate of 21.4 percent. The deficit in the Parent Company Medivir AB parent company is not capitalized, for which reason no deferred tax is credited to the profit/loss.

The net profit/loss for the period was SEK -42.6 million (-123.4).

Cash flow and financial position

Liquid assets, including short-term investments amounted to SEK 70.0 million (134.5 m) at the end of the period, corresponding to a decrease of SEK 64.5 million. The opening balance 2020 was SEK 134.5 million (286.3 m).

Medivir's financial assets are, in accordance with its financial policy, invested in low-risk, interest-bearing securities.

Breakdown of net sales

SEK million	2020	2019
Upfront and milestone payments	5,110	106
Royalty	8,838	8,612
Total	13,948	8,724

Cash flow from operating activities totaled SEK -58.1 million (-148.3 m), with changes in working capital accounting for SEK -2.3 million (-15.7 m) of this total.

Cash flow from financing activities totaled SEK -12.1 million (-6.7 m).

Investments, depreciation, amortization and impairment

The period's investments in tangible and intangible fixed assets totaled SEK 5.4 million (4.5 m).

Depreciation, amortization and impairment of property, plant and equipment and intangible fixed assets during the period were charged against earnings in the sum of SEK -4.4 million (-6.6) and SEK -0.0 million (-0.5), respectively.

Royalty undertakings

A part of Medivir's research and development projects work has been carried out exclusively in-house, for which reason Medivir is entitled to all revenues relating to these innovations. Medivir also conducts research and development work that originates from universities and pharmaceutical companies, and Medivir is consequently entitled to the revenues generated by these projects but obliged to pay royalties on the same.

Royalty costs during the period totaled SEK 1.7 million (1.5).

Patents

Patent protection and regulatory protection, such as data exclusivity, orphan drug exclusivity, and pediatric extension, are key components of pharmaceutical development, both for those projects that are developed in-house and those that are inlicensed. At the end of the year, Medivir's patent portfolio comprised 18 patent families, whereof 16 proprietary and 2 exclusively inlicensed from Harvard and Princeton Universities. In total, over 250 patents granted to protect the company's candidate drugs. In addition, there are also about 10 patent families in preclinical projects that Medivir has outlicensed and which are being developed by partners. Medivir is of the opinion that this protection is strong and therefore provides adequate and effective protection for Medivir's existing and future commercial position. Moreover, the company is not currently subject to any claims relating to liability etc. with regard to alleged infringements of third-party intellectual property rights. In addition to patent protection, the FDA has granted orphan drug designation in the US for the company's candidate drugs remetinostat for the treatment of Mycosis Fungoides cutaneous T-cell lymphoma, and MIV-818 for the treatment of hepatocellular carcinoma. The European Commission has also granted Orphan Medicinal Product Designation in the EU for MIV-818.

Risk factors

An effective risk assessment reconciles Medivir's business opportunities and results with the requirements of shareholders and other stakeholders for stable, long-term value growth and control. If competing products take market shares or competing research projects achieve better efficacy and reach the market more quickly, the future value of Medivir's product and project portfolio may be lower than originally expected. The process of research and pharmaceutical development, all the way up to approved registration, is both highly risky and capital-intensive. The majority of the projects begun never achieve market registration. Medivir's ability to conduct clinical studies, to enter into partnerships, and to successfully develop its candidate drugs to market launch and sales, are crucial in terms of the company's future.

Development

Drug development is associated with a high level of risk. Development projects are abandoned during the process when the substances being developed either prove unable to demonstrate the desired efficacy or display risks of unwanted side effects.

Safety and efficacy criteria in clinical trials

Before launching any of Medivir's candidate drugs, Medivir and/or its partner must demonstrate that the pharmaceutical compound complies with the stringent safety and efficacy norms set by the regulatory authorities in the countries in which Medivir plans to market the drug.

The process of obtaining regulatory authorization to market a new candidate drug usually demands extensive preclinical and clinical trials, which are extremely costly and take a very long time. The FDA, EMA and other regulatory authorities may delay, restrict or refuse authorization for a number of reasons, including the possibility that a candidate drug is unsafe or ineffective. If Medivir is unable to obtain authorization for its existing or future candidate drugs, it will be unable to market or sell them. Any deficiencies or delays in the implementation of preclinical or clinical trials will reduce or delay Medivir's ability to generate revenues from the commercialization of these candidate drugs and may have a significant negative effect on Medivir's ability to retain and complement its project portfolio.

Regulatory approval

Medivir is exposed to regulatory decisions such as the permits required to commercialize pharmaceuticals and regulatory changes with regard to pricing and discounting of pharmaceuticals, or altered conditions for prescribing a particular pharmaceutical product.

Production

Medivir has no proprietary production facilities and the company is consequently dependent on subcontractors for pharmaceutical production and for production for projects in preclinical and clinical development.

The relevant compound must be produced in a sufficient quantity and with sufficient quality. The risk exists that Medivir will not have the ability to satisfy its production

needs at a reasonable cost at the appropriate time. Moreover, production processes must take into account the environment, working conditions, and human rights.

Competition

Medivir is not the only company that carries out development projects, for which reason successful competing development projects may make completing a project less attractive for marketing reasons. Competitors may develop, market and sell pharmaceuticals that are more effective, safer and cheaper than Medivir's. Once a product has been approved, competitors may also have both greater manufacturing and distribution capacity than Medivir and superior sales and marketing prospects.

Commercial success and market acceptance

Even if Medivir's candidate drugs receive regulatory approval, there is no guarantee that the medication will achieve acceptance among physicians, patients or drug payors. The degree of market acceptance depends on a number of different factors, including the incidence and degree of any side effects, the availability of alternative therapies, price and cost effectiveness, and sales and marketing strategies.

Product liability and insurance coverage

Medivir's operations entail product liability – something that is unavoidable in conjunction with research and development, preclinical trials and clinical trials, and the production, marketing and sale of pharmaceuticals. Even if Medivir considers its existing insurance coverage to be sufficient, the extent and amount of indemnity provided by the insurance coverage is limited, for which reason there is no guarantee that Medivir will be fully recompensed for any damage incurred under its current insurance policy. Moreover, there is no guarantee that suitable insurance coverage can be obtained at an acceptable

cost, that such insurance cover can actually be arranged, or that product liability claims or other claims will not have a significantly negative effect on Medivir's operations and financial position.

Patent protection

Medivir's future success is largely dependent on the company's ability to secure and retain protection for the intellectual property rights attributable to Medivir's products. Assessing the potential for achieving patent protection for inventions within the pharmaceutical and biotechnology areas is generally difficult and entails addressing complex legal and scientific issues. There is no guarantee that Medivir will be able to secure or retain patents for either its products or its technologies. Even if patents are issued, they may be contested, invalidated or circumvented, which will limit Medivir's ability to prevent competitors from marketing similar products and reducing the time for which Medivir has patent protection for its products.

Collaboration risks

Entering into collaboration agreements with pharmaceutical and biotechnology companies for the development and sales of the company's potential products is a significant component of Medivir's strategy. The success of such partnerships may vary. Conflicts or differences of opinion may arise between Medivir's partners or counterparties with regard to the interpretation of clinical data, achieving milestone payments, and interpretation of financial remuneration for or title to patents and similar rights developed within the frameworks of these partnerships.

Reliance on key employees

Medivir is highly reliant on certain key employees. The ability to recruit and retain qualified employees is of the utmost importance in ensuring the requisite level of expertise within the company.

Financial risks

Developing new drugs is expensive and takes a long time. Medivir's future potential for revenues of its own depend on the ability, over time, to outlicense or commercialize research and development projects and thereby receive revenues in the form of milestone payments, ongoing royalty payments, or sales revenues. The company might also, from time to time, need to acquire new capital via new share issues. The future profit performance is uncertain. Current and future partnership agreements may have a significant impact on Medivir's future revenues and cash position. For a detailed presentation of financial risks, such as currency risk, interest rate risk, credit risk and liquidity risk, see Note 7 on pages 53-55.

Related party transactions

There are existing agreements between companies owned by senior executives and Medivir entered into in 2005, conferring entitlement to royalties on products that the company has developed based on patented inventions that the company has acquired from the parties in question. During the period, no transactions with related parties took place to a total value of SEK 0.0 million (0.002m). Furthermore, Medivir did not purchase any consulting services during the period to the value of SEK 0.0 million (0.2 m). The company did not purchase any other services from related parties during the period.

Information security

Medivir's IT systems are exposed to risks such as computer viruses, unauthorized intrusions, natural disasters and breakdowns in the telecommunications or electricity networks. Such events could disrupt the company's operations, delay development, delay submission of applications for authorization to regulatory authorities and increase the company's costs.

Covid-19 pandemic

The Covid-19 pandemic has marked the past year in many ways. It has caused severe pressure on healthcare and in many cases also caused delays and complicated recruitment to clinical trials. Medivir has implemented measures to protect its employees, take its social responsibility and at the same time has tried to minimize the negative impact the Covid-19 pandemic may have on Medivir's operations. To date, Medivir's clinical trials have not been significantly delayed due to the pandemic. Even though the vaccination programs in the spring of 2021 are in full swing, the pandemic is still ongoing and it is currently not possible to estimate the extent to which the activities may be affected in the future. Medivir will continuously monitor the situation very closely in order to be able to introduce further measures if necessary.

Employees

Medivir had 9 (14) employees (FTEs) at the period end, 56% (44%) of whom were women. Out of these employees, there are 0 (1) who have been given notice of termination of employment, but whose employment has not yet been terminated. The average number of employees during the fiscal year was 11 (51).

Salaries, remuneration, and social security contributions totaled SEK 24.290 thousand (34.198); for further information, see Note 4 on pages 51-52. For details of guidelines for remuneration to senior executives approved at the 2020 AGM, see the Corporate Governance Report on page 30-31. See Note 4 with regard to remuneration disbursed to senior executives in the 2020 fiscal year.

Legal issues

Medivir is not and has not been party to any legal proceedings or arbitration proceedings during the past 12 months that had or could have a material effect on Medivir's financial position or profitability.

Environmental work and occupational health and safety

Medivir creates sustainable value through its development of drugs that contribute to giving people better/longer lives. Medivir also strives to be a responsible business partner and employer and consequently conducts an active program of environmental and occupational health and safety work that ensures the company complies fully with all environmental and occupational health and safety-related legislation. In addition, Medivir's Occupational Health and Safety Policy, and our Environmental Policy, both emphasize the importance of maintaining a good working environment and of minimizing the environmental impact of our operations. Incident reporting is an important tool in ensuring a high standard of occupational health and safety, and all incidents and accidents are, therefore, followed up. The company is not involved in any environmental disputes and no workplace accidents were reported to the Swedish Work Environment Authority in 2020. For additional information on Medivir's environmental and occupational health & safety work, see page 16.

Parent Company in brief

Medivir AB (publ.), corporate ID no. 556238-4361, is the Parent Company of the Group. Its operations consist of pharmaceutical development, administrative and company management functions.

The Parent Company's total turnover amounted to SEK 13.9 million (8.7 m).

Combined operating expenses totaled SEK -82.8 million (-133.2 m).

The operating loss was SEK -45.8 million (-126.0 m), corresponding to an improved result of SEK 80.3 million.

Net financial items totaled SEK 0.8 million (3.8 m), corresponding to a decrease of SEK 2.9 million.

The tax for the period totaled SEK 0.0 million (0.0 m).

The net loss for the period was SEK -44.9 million (-122.3 m), corresponding to an improvement of SEK 77.3 million. The improvement mainly relates to lower costs for clinical studies, reimbursement from previous clinical studies, lower personnel costs and the effect on the result of renegotiated leases.

Liquid assets, including short-term investments with a maximum term of three months, amounted to SEK 62.3 million (125.7 m).

Summary of future development work

Medivir's future investments will mainly be in clinical pharmaceutical projects within oncology.

It is the view from Board of Directors and management that the current cash is sufficient to complete the ongoing clinical activities.

Proposed treatment of non-restricted equity

The following non-restricted equity is available for disposition by the Annual General Meeting.

	SEK
Share premium reserve	600,750,161
Accumulated loss	-609,990,341
Net profit for the year	-44,936,647
Total	-54,176,827

The Board of Directors proposes that the Annual General Meeting resolve that the above amount, SEK -54,176,827 be carried forward.

Dividend

The Board of Directors proposes that no dividend be paid for the 2020 fiscal year.

Corporate Governance Report

The Parent Company is the Swedish public limited company, Medivir AB, whose shares are listed on the NASDAQ Stockholm stock exchange. Good corporate governance is an essential component of Medivir's efforts to create value for its shareholders and we endeavor at all times to:

Generate optimum conditions for active and responsible corporate governance.
Achieve a well-balanced division of responsibility between owners, the Board of Directors, and the company management.
Maintain a high level of transparency in relationships with owners, the capital market, employees and society at large.

Compliance with the Swedish Code of Corporate Governance ("the Code")

Medivir has applied the Code since July 1, 2008 and has undertaken to follow best practice, wherever possible, with regard to corporate governance. The company has not deviated from any of the provisions of the Code in 2020.

Decision-making at shareholders' meetings

Medivir's shareholders exercise their right of decision at the Annual General Meeting and any Extraordinary General Meetings. See pages 18-19 for more information about Medivir's share and shareholders.

AGM

Shareholders exercise their control over the company at the AGM or at EGMs. Minutes from and information on Medivir's General Meetings can be found on the website.

2020 Annual General Meeting

The Annual General Meeting was held on Tuesday, May 5, 2020. In all, 13 (40) shareholders attended, either in person or through proxies, representing 11.96 percent (16.63) of the votes. Helena Levander, Chairperson of the Board, was elected to serve as Chairperson of the AGM.

Matters resolved by the AGM:

Reelection of Board Members Uli Hacksell, Lennart Hansson, Bengt Julander, Helena Levander, Bengt Westermark, and An van Es Johansson. Helena Levander was re-elected to serve as Chairperson of the Board.
The Auditors' fees for the period until the next AGM shall be payable upon approval of their invoice within the framework of the amount quoted.
Remuneration guidelines to senior executives.
Procedures for the appointment of the Nomination Committee and its work.
The Directors' fees for the period until the next AGM were set at a maximum of SEK 1,850,000, divided as follows: The Chair-

The model reflects the situation as of Dec. 31, 2020. * Tom Morris is hired on a consultancy basis.

man shall receive SEK 650,000, and the other Members who are not employed by the company shall each receive SEK 240,000.

Authorization of the Board on one or more occasions before the next AGM, with or without deviation from the shareholders' preferential rights, to approve the new issue of class B shares in a number that shall not collectively exceed 20 percent of the total number of shares outstanding in the company after exercise of this authorization. Issuance of new shares under the authorization shall be carried out on market terms.
Resolution on the issue of warrants under a new incentive program
Amendment to the articles of association in accordance with the Board's proposal.

Extraordinary General Meetings 2021

The extraordinary general meeting in January 2021 resolved to issue class B shares with preferential rights to existing shareholders to raise about SEK 170 million before transactions costs, as well as the exercise of the overallotment option of SEK 25 million. An additional extraordinary general meeting was held in March 2021 that resolved on a directed issue of shares of about SEK 28 million.

2021 Annual General Meeting

Medivir's 2021 AGM will be held on Wednesday, May 5. In order to mitigate the spread of Covid-19, the board of directors has decided that the AGM will be conducted by advance voting only, without physical presence of shareholders, proxies or third parties. More information is available on the Medivir website, www.medivir.com.

Nomination Committee

Under the Nomination Committee procedure adopted at the 2020 AGM, the Chairman of the Board shall contact the three largest shareholders in terms of the number of votes at the end of the third quarter and offer them the opportunity to each appoint a representative to the Nomination Committee. If any of these shareholders waive their right to appoint a representative, the right shall pass to the shareholder with the next largest shareholding after these shareholders. According to the procedure, the Chairman of the Board shall also be a member of the Nomination Committee. The Committee members shall jointly elect a Chairman to lead the work of the Committee.

Nomination Committee duties

The duties have changed over the years in order to comply with the requirements of the Code. The primary duty of the Committee continues, however, to be to propose candidates for election to the Board of Directors. In order to ensure its ability to evaluate the expertise and experience required of Board Members, the Committee must keep itself informed of the Group's strategy and the challenges it will face. The Committee must also take into consideration all applicable rules governing the independence of the Board Members. The Committee shall also draw up proposals for resolution by the AGM regarding the remuneration and fees payable to: Board Members elected by the AGM but who are not employed by the company, the auditor and Members of the Nomination Committee.

To date, the Committee has not proposed payment of any remuneration to its members. The Nomination Committee proposes candidates for the position of auditor in consultation with the Board of Directors. The Nomination Committee is also tasked with proposing a candidate for election as Chairman of the AGM.

The work of the Nomination Committee ahead of the 2021 AGM

The work begins with a review of a checklist detailing all of the duties of the Committee as prescribed by the Swedish Code of Corporate Governance and by the Nomination Committee's Rules of Procedure as adopted

by the AGM. A timetable is also set for the work. A good understanding of Medivir's operations is vital in enabling the members of the Committee to carry out their duties. The Chairman of the Board is responsible for the annual appraisal of the work of the Board, including the efforts of the individual Members of the Board. In 2020 the Board Members responded to a digital questionnaire and the results were compiled by an external supplier. A report based on the results was then jointly discussed at the December Board Meeting, which provided the Board and its Chairperson with a good picture of how the Board can improve its work. The Nomination Committee was also informed of the results of these appraisals, including the appraisal of the Chairman of the Board. The Committee interviewed all Board Members as part of the task of evaluating the Board of Directors. The Committee is thus able to assess the expertise and experience required for Board Members. The Nomination Committee also studied the Group's appraisals of the quality and efficiency of the Auditor's work, including recommendations for auditors and audit fees. The Nomination Committee had held four meetings by March 23, 2021. The Committee's full proposals for the 2021 AGM were published in conjunction with publication of the notice convening the AGM.

The composition of the 2020–2021 Nomination Committee was as follows:

Jan Särlvik, Chairman of the Nomination Committee, and representing Nordea Fonder
Karl Tobieson, representing Linc AB
Bo Öberg, representing the shareholders
Helena Levander, Chairperson of the Board Medivir AB

Members of the Nomination Committee

The Nomination Committee, ahead of the 2021 AGM (appointed by the biggest shareholders in terms of the number of votes held on Sept. 30, 2020)

Name	Representing	Proportion of votes, % Sept. 30, 2020
Jan Särlvik	Nordea Fonder	8.2
Karl Tobieson	Linc AB	4.2
Bo Öberg	Shareholders	1.4
Helena Levander	Medivir's Chairperson of the Board (convenor)	0.2
Total		14.0

Medivir's Nomination Committee has announced that it will propose to the 2021 Annual General Meeting the re-election of board members Uli Hacksell, Lennart Hansson, An van Es Johansson and Bengt Westermark and the election of Yilmaz Mahshid as new board member. Bengt Julander and Helena Levander have declined re-election. As new Chairman of the Board, the Nomination Committee will propose Uli Hacksell.

Duties and work of the Board of Directors

The primary duty of the Board is to manage the Group's operations on behalf of the owners in such a way that the interests of the owners, in terms of a long-term healthy return on capital invested, are optimally protected. The Board manages and decides on Group-wide issues such as:

Strategic orientation and significant objectives.
Significant issues in relation to the optimization of capital structure, investments, acquisitions, and divestments.
Monitoring and control of operations, financial position, information provision and organizational issues, including appraisals of the Group's executive management.
Appointment and, when required, dismissal of the CEO.
Overall responsibility for setting up efficient systems for internal control and risk management.
Significant policies.

Composition of the Board of Directors

The Members of the Board shall serve from the end of the AGM at which they were elected until the end of the next AGM. There is no limit on the number of consecutive periods during which a person may be a Board Member. The Board of Directors elected by the shareholders at the 2020 AGM until the end of the 2021 AGM comprised six Members of the Board and no Deputy Members, including the Chairperson of the Board. Women make up 33 percent of the Board. The CEO and CFO also attend Board Meetings. However, they are not present for matters that may involve a conflict of interest, or where it is otherwise inappropriate for them to attend, such as in conjunction

with the evaluation of the CEO's work. See pages 34-35 for a presentation of the Members of the Board.

Rules of Procedure and Board Meetings

The Board of Directors adopts written Rules of Procedure every year, clarifying the duties of the Board and regulating the division of labor of the Board, including the role of the Chairman, the decision-making process within the Board, the Board's schedule of meetings, notices convening Board Meetings, agendas and minutes.

The Rules of Procedure also regulate how the Board shall receive information and documentation in order to ensure its ability to take well-founded decisions. The Board adopts written instructions for the CEO each year, clarifying the CEO's responsibility for the ongoing administration, methods of reporting to the Board, the requirement for internal control instruments, and other matters requiring a decision by the Board or which must be reported to the Board. The Rules of Procedure require an inaugural Board Meeting to be held immediately after

the AGM. The Board normally also holds a minimum of six additional Meetings each year. Four of these Meetings are held in conjunction with the publication of the Group's annual and interim reports. Each meeting addresses the company's project portfolio and business development. In addition, at least one meeting addresses specific longterm strategy issues. The budget and economic outlook are addressed at the final Meeting of each calendar year. Additional meetings, incl. telephone conferences, are held as required.

Responsibilities of the Chairman of the Board

The Chairman is responsible for ensuring that the work of the Board is well-organized, conducted efficiently, and that the Board fulfills its obligations. The Chairman monitors company operations in dialogue with the CEO and is responsible for ensuring that other Board Members receive the information and documentation required to enable a high standard of discussion and decision-making, and for monitoring the implementation of the Board's decisions. The Chairman is responsible for conducting an annual appraisal of the Board's work and for ensuring that the Nomination Committee is provided with the results of the appraisals. The Board has evaluated its work during the year by means of an online questionnaire comprising ca. 50 questions in seven areas. The Board has completed the same questionnaire for four years, for which reason a good description of the trend was obtained. The Board evaluation for the year shows a consistently strong performance. Improvements over the previous year can be noted in areas such as the Board material, the Board's work and procedures, and the Chairman's work. One of the stronger areas is the Board's contribution to the company's overarching strategy.The results of the evaluation were presented to the Nomination Committee. The Chairman represents Medivir on ownership issues.

The Board of Directors' attendance and fees1

				ATTENDANCE (TOTAL NUMBER OF MEETINGS)	TOTAL REMUNERATION
Members elected by the AGM	Elected	Born	Independent	Board Meetings
Uli Hacksell	2018	1950	No2	19/20	140,000
Lennart Hansson	2018	1956	Yes	20/20	240,000
Bengt Julander	2017	1953	No3	20/20	240,000
Helena Levander (Chairperson)	2015	1957	Yes	20/20	650,000
An van Es Johansson	2019	1960	Yes	19/20	240,000
Bengt Westermark	2017	1945	Yes	20/20	240,000

1) The table refers to fees paid to the Board of Directors during the period from May 2020 – April 2021. The fee payable to Members of the Board elected by the Annual General Meeting is determined by the Annual General Meeting in line with a proposal by the Nomination Committee. Fees for 2020 have been paid in the amounts shown in the above table, which excludes travel expenses. Differences arise between the maximum fee approved by the Annual General Meeting and the actual amount disbursed, as the actual amount disbursed during the calendar year is a combination of the fees paid between the two most recent General Meetings. See Note 4 on pages 51-52 for the actual amounts disbursed.

2) Uli Hacksell was employed as CEO through September 30, 2020 and during that period was independent in relation to the company's major shareholders, but not independent in relation to the company and the company management.
3) Independent in relation to the company and the company management, but not independent in relation to the company's major shareholders.

The work of the Board of Directors in 2020

The Board has held 20 minuted Meetings in 2020 at which the Members had the opportunity to participate virtually. The attendance of the individual Members at these Meetings is shown in the table on page 29. All meetings followed an approved agenda which, together with the documentation for every item, was provided to the Members before the relevant meeting. An ordinary Board Meeting usually lasts for just over half a day in order to ensure sufficient time for presentations and discussions.

The CEO and CFO participate in the majority of Board Meetings. Reviews of the current business position, developments relating to ongoing projects, the Group's results and financial position, liquidity and the outlook for the rest of the year are conducted at every ordinary Board Meeting. A member of Group management usually reviews a relevant strategic issue. The work of the Board during the year largely focused on:

Development of the project portfolio.
Financial development and capital acquisition.
Interim Reports, the Year-end Report, and the Annual Report.
Collaborations and partnerships.
Overview of corporate management.
Reviews of proposals regarding salaries, variable and fixed remuneration.
Review of the results of, and proposals for, long-term incentive plans.
Reviews of the company's risk management, governance, and internal controls.
Reviews of reports from the company's Auditor elected by the AGM, including the Auditor's audit plan.

Board Committees

As a result of changes in the company and its focus, the need to have separate committees to carry out the work of the Board has decreased. Therefore the Board resolved at the 2019 AGM that the Remuneration Committee, the Audit Committee and the R&D Committee were no longer needed. Since then, these matters have been prepared and addressed by the entire Board as part of its regular duties.

Group management

The Board appoints the CEO and, where necessary, the Deputy CEO. The CEO leads the work of Group management and is responsible, together with Group management, for ensuring that the operating activities are conducted in accordance with the provisions of the Swedish Companies Act, other legislation and regulations, applicable regulations for listed companies, the Articles of Association, and the CEO's Instructions. Group management has a broad composition of individuals with in-depth and extensive experience of R&D, registration and approval of pharmaceuticals, and the requisite expertise in commercial development, accounting, finance and communication. For a presentation of Group management, see page 36. The role of Group management is to:

Set goals, allocate resources, and follow up on the performance of the company and the development of the projects.
Produce information and documentation that enables the Board to take wellfounded decisions.
Implement the strategy adopted by the Board throughout the organization on the basis of the annual strategic work.
Following up on established goals is a key tool in the management of our operational work.

Guidelines for remuneration to senior executives

Remuneration principles for senior executives at Medivir are determined by the AGM. The proposed guidelines for 2021 are essentially in line with the guidelines applied to date, but have been adapted as a result of certain changes in the Companies Act.

In this context, senior executives refers to the CEO and other members of Group management. The guidelines apply to employment contracts entered into after the adoption of the guidelines by the AGM or AGM-approved amendments to existing terms. Medivir shall offer a competitive total compensation package that promotes recruitment and retention of qualified senior executives. Remuneration payable to senior executives may comprise a fixed salary, performance-related pay, incentive plans approved by the AGM, pensions and other benefits. The fixed salary shall take into account the extent of the individual's responsibilities and their experience.

Remuneration to senior executives (SEK thousand)

Funktion		Year Fixed salary	Perfor mance related pay	Benefits	Total	Pension	Total
Former CEO, Uli Hacksell1	2020	1,710	0	0	1,710	0	1,710
	2019	2,280	371	0	2,651	0	2,651
CEO, Yilmaz Mahshid4	2020	569	669	18	1,256	200	1,456
	2019	0	0	0	0	0	0
Other senior executives3)4	2020	5,197	1,510	39	6,746	1,673	8,419
	2019	5,634	484	0	6,118	1,995	8,113
Total	2020	7,476	2,179	57	9,711	1,873	11,585
	2019	7,914	855	0	8,769	1,995	10,764

1) Uli Hacksell worked as CEO through September 30, 2020.

2) Yilmaz Mahshid began as CEO on 14 September 2020.

3) Linda Basse was employed as CMO through September 30, 2020. Tom Morris, assumed the position of interim CMO on a consultancy basis in October 2020. 4) For 2020, includes a subsidy in accordance with warrants program of series 2020:1 approved by the AGM in May 2020. In 2020 the CEO acquried 300,000 warrants and other senior executives acquired a total of 185,000 warrants.

Performance-based pay, as a cash bonus, may comprise a maximum of 50% of the annual fixed salary. Performance-related pay shall be linked to predetermined and quantifiable criteria formulated in order to promote the company's long-term value creation.

A remuneration report covering the types of remuneration regulated by guidelines adopted by the AGM has been prepared separately and will be presented at the AGM in May 2021.

Evaluation of principles for remuneration to senior executives

In 2020, Medivir has complied with the remuneration principles for senior executives approved by the AGM.

Long-term incentive plans

The purpose of long-term incentive plans is to generate the conditions for retaining and recruiting competent personnel and to offer employees an attractive opportunity to acquire a stake in the Group, so as to encourage continued company loyalty by combining the interests of the shareholders and the employees.

In 2017, the Board of Directors proposed a long-term incentive plan that was approved by the 2017 AGM. The right to subscribe was vested in all of the company's senior executives as well as other permanent employees of Medivir. The market value was determined using the Black & Scholes valuation model, based on term, strike price, weighted share price during the subscription period (VWAP), risk-free interest rate, and

volatility. The subscription price (strike price) per share for all outstanding warrants shall correspond to 133% of the volume-weighted average rate of the class B share during the subscription period. Medivir's employees purchased 48,515 warrants in the second quarter of 2017 as part of this incentive plan. The warrants were issued at a market value of SEK 9.41 with a strike price of SEK 89.36 per share. Medivir's employees purchased a further 9,320 warrants in the fourth quarter of 2017. These warrants were issued at a market value of SEK 3.98 with a strike price of SEK 89.36 per share. The combined total of 57,835 warrants can be exercised to subscribe for new class B shares during the period from December 16, 2020 through January 15, 2021. The valuation calculation for 2017 was based on the following figures: term, 3.66 years; strike price, SEK 89.36; VWAP, SEK 67.19; risk-free interest rate, -0.35%; volatility, 32%.

In May 2018, the Annual General Meeting approved a new long-term incentive plan with the same structure. In the second quarter of 2018, Medivir's employees purchased 51,864 warrants with a market value of SEK 5.63 each and a strike price of SEK 52.75 per share. The warrants can be exercised to subscribe for new class B shares during the period from December 16, 2021 through January 15, 2022. The 2018 valuation calculation was based on the following figures: term, 3.66 years; strike price, SEK 52.75; VWAP, SEK 39.66; risk-free interest rate, -0.16 percent; volatility, 32 percent.

In May 2020, the Board of Directors and the AGM approved a new long-term incentive plan with essentially the same structure. In the second quarter of 2020, Medivir's employees purchased 227,000 warrants with a market value of SEK 1.30 each and a strike price of SEK 31.40 per share. Medivir's employees purchased a further 300,000 warrants in the third quarter of 2020. These warrants were issued at a market value of SEK 1.00 with a strike price of SEK 31.40 per share. The total of 527,000 warrants can be exercised to subscribe for new class B shares during the period from December 1, 2023 through December 15, 2023. The 2020 valuation calculation was based on the following figures: term, 3.58 years; strike price, SEK 31.40; VWAP, SEK 15.70; risk-free interest rate, 0.0 percent; volatility, 41 percent.

Election of auditors

The duties of the Nomination Committee include proposing an auditor to the AGM.

Öhrlings PricewaterhouseCoopers AB (PwC) was appointed as the company's external auditors for a one-year period up to and including the 2021 AGM. Tobias Stråhle, Authorized Public Accountant, is the Auditor-in-Charge for Medivir.

The auditors work according to an audit plan and report their observations on a rolling basis to the Board, both during the course of the audit and in conjunction with the preparation of the annual accounts.
The auditors review one interim report and the annual financial statement in order to assess their accuracy, completeness and the correspondence of the accounts with generally accepted accounting practice and relevant accounting principles.
The Auditor-in-Charge attends the AGM at which he or she presents details of the audit work and observations made.

When additional services are requested from PwC, over and above the audit engagement, such services are provided, subject to the approval of the Chairman of the Board.

Auditors' fees

Fees for auditing Medivir's accounts are determined by the AGM in line with proposals by the Nomination Committee. Auditors' fees in 2020 and 2019 are shown in the table to the left.

Audit and audit consulting costs (SEK thousand)

	2020 444 121 52 – 350 967	GROUP
		2019
PwC
Audit engagement		459
Auditing activities other than audit engagement		150
Tax advice		18
Valuation services		–
Other services		–
Total, PwC		627
Other auditors
Audit engagement	–	–
Total	–	–
Total	967	627

The Board of Directors' Internal Controls Report

Internal control

The following presentation comprises the Board of Directors' report on Internal Controls. The purpose of internal controls is to shed light on Medivir's systems for monitoring and controlling operational risks in relation both to strategy and operational practice and to compliance with legislative and regulatory requirements. It shall also provide reasonable assurance of the reliability of the external financial reporting. The internal controls include, amongst other things, a control environment, risk assessment, control activities, information and communication, and monitoring.

The Board has evaluated the need to appoint a special function for internal audit, but has assessed that the company's size and the nature of the business do not justify this.

Control environment

Medivir's internal control structure is based on the division of labor between the Board of Directors, the CEO and other members of the management team. Medivir is also subject to the guidelines and regulations issued by the Swedish Medical Products Agency with regard to research and trials of potential new pharmaceutical products.

Medivir's control environment is based on:

Steering documents, such as the Board's Rules of Procedure and the CEO's Instructions, quality systems, policies and guidelines.
Medivir's core values and Code of Conduct.
The company's organization and the way in which it conducts its operations, with clearly defined roles and areas of responsibility, and delegation of authority.
The company's quality process and its guidelines, which ensure compliance with the permits issued by the Swedish Medical Products Agency.
Group-wide planning processes, such as the process for appraisal of the R&D portfolio, the budget process, and performance reviews.

In addition to external laws and regulations, the internal control environment comprises policies and guidelines. These internal steering documents are updated regularly in line with changes in both internal and external requirements.

The internal steering documents include:

• The Articles of Association

The Board of Directors' Rules of Procedure and the written instructions for the CEO
Guidelines for remuneration to senior executives
Quality Manual
Finance Policy
Information Policy
IT policy
Accounting and HR Manuals
Code of Conduct

Operational and financial reports are drawn up on a monthly and quarterly basis for the Group, the Parent company, the subsidiary companies, operating units and projects. The process includes specific controls that shall be carried out in order to ensure that the reports are of a high quality.

Risk assessment

An effective risk assessment reconciles Medivir's business opportunities and results with the requirements of shareholders and other stakeholders for stable, long-term value growth and control. Medivir continuously updates its risk analysis with regard to the assessment of operational risks. The risk work is reported annually to Group management and the Board of Directors.

Medivir is exposed to the following main risk categories:

Strategic risks and external risks such as regulatory approval, competition, price changes and patent protection.
Operating risks such as partnerships, uncertainty in the context of research projects, disruptions to production, data security and reliance on key persons and partnerships.
Financial risks such as liquidity, interest, currency and credit risks.

Medivir's risk assessment is designed to identify and evaluate the most significant risks and to ensure that there are sufficient control points in place during the processes to manage these risks. Policies and guidelines are important steering tools. For a more detailed presentation of risk exposure and the way in which Medivir handles it, see pages 53-55.

Control activities

Procedures and activities have been structured to handle and remedy significant risks. The activities include regular reviews of the research portfolio, internal audits of the quality manual and of compliance with documented procedures for handling clinical projects, review and control of significant

suppliers, and monitoring and following up of financial analyses and key ratios.

Risk management during the current Covid-19-pandemic

During the year, the Board's risk assessment paid special attention to how the consequences of the covid-19-pandemic affect the company and what possible risks the pandemic may pose to the company's future development and any risks that may affect financial reporting going forward.

Information and communication

Medivir has information and communication pathways that are designed to promote the completeness and accuracy of the external communication. The Board of Directors approves the consolidated annual accounts and the year-end financial statement, and tasks the CEO with presenting quarterly reports in accordance with the Board's Rules of Procedure. All financial reports are published in accordance with applicable regulations. External information is communicated through channels such as the Medivir website (www.medivir.com), where quarterly reports, year-end financial statements, annual reports, press releases and news are published. The Board of Directors and management receive ongoing reports on the Group's

position, profit performance, and operational development in terms of the status both of research projects and other businesscritical areas. The most important communication channels within the company include the intranet, where quality systems, policies, guidelines and information are published, and regular information meetings for all members of staff.

Monitoring

The Board of Directors regularly reviews the Group's development projects and business development strategy, as well as all financial reporting and liquidity.

The Board of Directors' follow up of internal control is mainly carried out by Medivir's auditors, who review operations in accordance with a set audit plan and follow up annually on selected aspects of the internal controls annually within the framework of the statutory audit. Once an audit is completed, observations are reported back to the Board on a rolling basis. The Auditor-in-Charge also attends at least one Board meeting per year and reports the observations made during the audit for the year and the operational routines. The practice on these occasions is to set time aside for specific discussions not attended by the CEO or other employees.

Board of Directors

Helena Levander

Born: 1957.

Title: Chairperson of the Board. Member of the Board since 2015.

Education: B.Sc. in Economics and Business Administration from the Stockholm School of Economics.

Background: Extensive experience of the financial and equity markets and of corporate governance issues. Helena was previously employed by companies such as Neonet, Odin Förvaltning, Nordea Asset Management and SEB Asset Management.

Other directorships: Founder and now Chairperson of the Board of Nordic Investor Services AB. Member of the Boards of Concordia Maritime AB, Lannebo Fonder, Recipharm AB, Rejlers and Stendörren Fastigheter. Chairperson of the Board of Ativo Finans.

Shares in Medivir: 150,000 class B shares (including related party).

Uli Hacksell

Born: 1950.

Title: Member of the Board since 2018.

Education: Pharmacist and PhD.

Background: Senior positions at major pharmaceutical and biotech companies for over 25 years and more than 10 years' experience as CEO of publicly held companies. As CEO of ACADIA Pharmaceuticals between 2000 and 2015, he led its development from a private start-up company to a public, multibillion-dollar company. In the 1990s, he held senior positions at Astra AB, prior to which he was a Professor of Organic Chemistry at Uppsala University.

Other directorships: Member of the Boards of Active Biotech, InDex Pharmaceuticals AB, Beactica AB and SynAct Pharma AB.

Shares in Medivir: 150,000 class B shares.

Lennart Hansson

Born: 1956.

Title: Member of the Board since 2018.

Education: Ph.D. in Genetics from Umeå University.

Background: Extensive experience in senior positions in the fields of pharmaceutical and commercial development in both biotech and pharmaceutical companies, such as KabiGen AB, Symbicom AB, AstraZeneca, and Biovitrum AB, and as CEO of Arexis AB. Responsible for Industrifonden's life sciences operations between 2008 and 2016. He has held seats on the Boards of over 30 companies and is also a co-founder of two pharmaceutical development companies.

Other directorships: Member of the Boards of InDex Pharmaceuticals AB and Calliditas Therapeutics AB. Chairman of the Boards of Cinclus Pharma Holding AB, Ignitus AB and Sixera Pharma AB.

Shares in Medivir: 20,000 class B shares.

An van Es-Johansson

Born: 1960.

Title: Member of the Board since 2019.

Education: Physician from Erasmus University, Rotterdam, the Netherlands.

Background: Extensive international experience in the life science sector and has held several leading positions in Clinical Development, Medical Affairs, Business Development and Commercial at Pharmacia and Swedish Orphan Biovitrum in Sweden, Eli Lilly in the Netherlands and Roche in the US and Switzerland. She has also worked in biotech and at startup companies. An is an entrepreneur and professional coach.

Other directorships: She is a Member of the Boards of Lumos Pharma, Savara Pharmaceuticals Inc, PLUS Therapeutics and Agendia BV.

Shares in Medivir: 0.

Bengt Julander

Born: 1953.

Title: Member of the Board since 2017.

Education: M. Sc. Pharmacy. Has worked in the pharmaceutical industry since 1978.

Background: CEO of Linc AB, which invests in life sciences. Since 1990, primarily active as an investor in and a Member of the Boards of pharmaceutical development companies. Experience of developing and commercializing products.

Other directorships: Member of the Boards of Linc AB, Livland Skog AB, Knil AB, Calliditas Therapeutics AB, Animal Probiotics AB, Rejson AB, Sedana Medical AB, Stille AB and Swevet AB, as well as a number of smaller companies.

Shares in Medivir: 5,840,172 class B shares (through company).

Bengt Westermark

Born: 1945.

Title: Member of the Board since 2017.

Education: Professor of Tumor Biology at Uppsala University, Faculty of Medicine, since 1986.

Background: Dean of the Faculty of Medicine at Uppsala University, 1996–2002, and Vice-Rector of Medicine and Pharmacy, 1999–2002. Chairman of the research board of the Swedish Cancer Society, 2003–2013. He has published over 300 papers in scientific journals, primarily on the mechanisms governing the uncontrolled growth of cancer cells. Member of the Royal Swedish Academy of Sciences, the European Molecular Biology Organisation, and the European Academy of Cancer Sciences. He has received a number of prizes and awards for his research and has been cited over 25,000 times by other researchers.

Other directorships: Member of the Board of Hamlet Pharma AB and various advisory groups for medical research funding.

Shares in Medivir: 16,000 class B shares.

Management

Yilmaz Mahshid

Born: 1979.

Title: Chief Executive Officer. Education: Ph.D. Medical Sciences, Karolinska Institutet.

Employed: 2020.

Background: Former CFO at PledPharma and among others responsible for the listing of the company at Nasdaq Stockholm Main Market. Prior to that Investment Manager & Controller at Industrifonden and healthcare analyst at Pareto Securities and Öhman Fondkommission. Started his career as a researcher at Karolinska Institutet and later at the pharmaceutical companies Biolipox and Orexo. Board assignments in Index Pharmaceuticals, Mahshid Advisors and Venaticus Capital.

Shares in Medivir: 25,000 class B shares. Warrants in Medivir: 300,000.

Magnus Christensen

Born: 1974. Title: Chief Financial Officer. Education: B.Sc. in Economics and Business Administration.

Employed: 2019.

Background: Twenty years of experience in business and finance. Previously CFO at O'Learys Trademark AB. Prior to that, Interim CFO at Rebtel and Head of Business Control at ICA Sverige AB. Prior senior positions at Scan AB and SkiStar AB. Experience of finance in listed, private equity and private companies.

Shares in Medivir: 15,000 class B shares. Warrants in Medivir: 75,000.

Tom Morris

Born: 1963.

Title: Interim Chief Medical Officer. Education: BSc in Physiology from the University of Wales, medical degrees from the University of Wales College of Medicine and Master of Laws degree from Cardiff Law School. Employed: 2020*.

Background: More than 20 years of experience within drug development, mostly in oncology. Previously at Medeval Ltd and more recently at AstraZeneca. He has overseen the clinical development of several global drug programs, interacting with regulatory agencies, external clinical experts and academic groups worldwide. Fellow and Board member of The Faculty of Pharmaceutical Medicine, a former chair of its Ethical Issues committee and a member of its Professional Standards Committee.

Shares in Medivir: 0 class B.

Warrants in Medivir: 0. *Consultant

Christina Herder

Born: 1961.

Title: EVP, Chief Operating Officer. Education: Ph.D. in Physical Chemistry from Royal Institute of Technology and Executive MBA from Stockholm University.

Employed: 2017.

Background: Former CEO of Modus Therapeutics. Prior to that, Director, Corporate Development at Sobi. Responsible for building and leading the Project & Portfolio Management function at Biovitrum. Also Member of the Boards of PCI Biotech and Idogen.

Shares in Medivir: 10,000 class B shares. Warrants in Medivir: 54,630.

Fredrik Öberg

Born: 1965.

Title: Chief Medical Officer. Education: PhD in Medical Science at Uppsala University.

Employed: 2011.

Background: More than 25 years of experience in cancer research. Over the past 10 years, focused on industrial drug discovery in oncology. Prior to that he managed an academic research group at Uppsala University as principal investigator, and has initiated several innovative scientific projects in cancer biology. He has published more than 50 scientific articles and holds several patents. Associate professor of Experimental Pathology at Uppsala University. Shares in Medivir: 69,172 class B shares.

Warrants in Medivir: 61,510.

Financial reports

Income Statements

		GROUP		PARENT COMPANY
Summary of the Group's Income Statement, SEK k	NOTE	2020	2019	2020	2019

Net sales	1	13,948	8,724	13,948	8,724
Other operating income	25	27,307	2,659	24,909	2,659
Total income		41,255	11,383	38,857	11,383
Other external costs	3, 5	-52,932	-91,063	-56,191	-94,036
Personnel costs	4	-24,931	-35,033	-24,931	-35,033
Depreciation, amortization and impairment	12, 13, 14	-4,430	-7,085	-1,631	-4,179
Other operating expenses		-1,862	-4,181	-1,861	-4,181
Operating profit/loss		-42,900	-125,979	-45,757	-126,046
Profit/loss from participations in Group companies	6	–	–	–	800
Interest income and similar profit/loss items	8	827	4,449	827	3,474
Interest expenses and similar profit/loss items	9	-547	-1,805	-7	-510
Profit/loss after financial items		-42,620	-123,334	-44,937	-122,282
Tax	10	–	-106	–	–
Net profit/loss for the year		-42,620	-123,440	-44,937	-122,282
Net profit/loss for the year attributable to:
Parent Company shareholders		-42,620	-123,440	-44,937	-122,282
Earnings per share, calculated from the profit/loss attributable to: Parent Company shareholders during the year
Earnings per share (SEK per share)	11
Basic earnings per share, all operations		-1.75	-5.08	-1.85	-5.03
Diluted earnings per share, all operations		-1.75	-5.08	-1.85	-5.03
Average number of shares, '000		24,288	24,288	24,288	24,288
Average number of shares after dilution, '000		24,288	24,288	24,288	24,288
Number of shares at year-end, '000		24,288	24,288	24,288	24,288

Statement of Comprehensive Income

	GROUP		PARENT COMPANY
Consolidated Statement of Comprehensive Income, SEK k	2020	2019	2020	2019
Net profit/loss for the year	-42,620	-123,440	-44,937	-122,282
Other comprehensive income
Items that may be reclassified in the Income Statement
Translation differences	-527	290	–	–
Total other comprehensive income	-527	290	–	–
Total comprehensive income for the year	-43,147	-123,150	-44,937	-122,282

Balance Sheets

		GROUP		PARENT COMPANY
SEK k	NOTE	2020 Dec. 31	2019 Dec. 31	2020 Dec. 31	2019 Dec. 31
ASSETS
Fixed assets
Intangible fixed assets
Capitalized research and development expenditure		96,312	96,312	96,312	96,312
Other intangible assets		8	29	8	29
Total intangible fixed assets	12	96,320	96,341	96,320	96,341
Property, plant and equipment
Buildings and land	13	428	5,881	428	5,881
Equipment, tools, fixtures and fittings	13	92	1,596	92	1,596
Right-of-use assets	14	15,691	15,806	–	–
Total property, plant and equipment		16,211	23,283	520	7,477
Financial fixed assets
Participations in Group companies	15	–	–	100	100
Financial assets	7, 16	0	0	0	0
Financial receivable lease	14	–	21,027	–	–
Total financial fixed assets		–	21,027	100	100
Total fixed assets		112,531	140,651	96,940	103,918
Current assets
Current receivables
Accounts receivable	7	15	63	15	63
Receivables from Group companies		–	–	75	864
Tax receivables		778	1,577	778	1,577
Other receivables		3,199	3,554	3,135	3,089
Prepaid expenses and accrued income	17	4,932	6,745	4,823	4,704
Financial receivable lease	14	–	6,363	–	–
Total current receivables		8,924	18,302	8,826	10,297
Short-term investments
Other short-term investments	18	55,969	100,209	55,969	100,209
Cash and bank balances	18	14,038	34,300	6,380	25,488
Total short-term investments		70,007	134,509	62,349	125,697
Total current assets		78,931	152,811	71,175	135,994
TOTAL ASSETS		191,462	293,462	168,115	239,912

Balance Sheets

	GROUP		PARENT COMPANY
SEK k NOTE	2020 Dec. 31	2019 Dec. 31	2020 Dec. 31	2019 Dec. 31
EQUITY AND LIABILITIES
Equity, Group
Share capital	188,494	188,494	–	–
Other capital contributed	420,804	420,208	–	–
Exchange rate difference	-3,738	-3,211	–	–
Accumulated profit/loss	-463,655	-421,035	–	–
Total equity, Group	141,905	184,456	–	–
Equity, Parent Company
Restricted equity
Share capital	–	–	188,494	188,494
Total restricted equity		–	188,494	188,494
Non-restricted equity
Share premium reserve	–	–	600,750	600,750
Accumulated profit/loss	–	–	-609,990	-487,708
Net profit/loss for the year	–	–	-44,937	-122,282
Total non-restricted equity 26		–	-54,177	-9,240
Total equity, Parent Company	–	–	134,317	179,254
Provisions
Other provisions 19	–	–	–	19,782
Total provisions		–	–	19,782
Non-current liabilities
Other provisions 19	–	16,879	–	–
Lease debt 14	14,888	37,153	–	–
Total non-current liabilities	14,888	54,032	–	–
Current liabilities
Accounts payable 7	6,808	12,303	6,810	12,359
Liabilities to Group companies 2	–	–	714	69
Provisions 19	–	2,903	–	–
Lease debt, short-term 14	1,600	6,729	–	–
Other liabilities	848	3,023	857	2,117
Accrued expenses and deferred income 20	25,414	30,016	25,417	26,331
Total current liabilities	34,670	54,974	33,798	40,876
Total equity and liabilities	191,462	293,462	168,115	239,912

Pledged assets are reported in Note 21, and Undertakings and Contingent Liabilities in Note 22.

Changes in Equity

Group, SEK k	Share capital	Other capital contributed	Translation reserve	Accumulated profit/loss	Total equity	Number of shares
Opening balance, January 1, 2019	188,494	420,208	-3,501	-297,595	307,606	24,287,8181
Net profit/loss for the year	–	–	–	-123,440	-123,440	–
Exchange rate differences	–	–	290	–	290	–
Total comprehensive income for the period	–	–	290	-123,440	-123,150	–
New share issue	–	–	–	–	–	–
Warrants	–	–	–	–	–	–
Transaction costs	–	–	–	–	–	–
Closing balance, December 31, 2019	188,494	420,208	-3,211	-421,035	184,456	24,287,8182
Opening balance, January 1, 2020	188,494	420,208	-3,211	-421,035	184,456	24,287,8183
Net profit/loss for the year	–	–	–	-42,620	-42,620	–
Exchange rate differences	–	–	-527	-	-527	–
Total comprehensive income for the period	–	–	-527	-42,620	-43,147	–
New share issue	–	–	–	–	–	–
Warrants	–	595	–	–	595	–
Transaction costs	–	–	–	–	–	–
Closing balance, December 31, 2020	188,494	420,804	-3,738	-463,655	141,905	24,287,8184

1) Opening number of shares in 2019: 0 class A shares and 24,287,818 class B shares, nominal value: SEK 8 (of which 11,413 class B shares held by the company). 2) Closing number of shares in 2019: 0 class A shares and 24,287,818 class B shares, nominal value: SEK 8 (of which 11,413 class B shares held by the company). 3) Opening number of shares in 2020: 0 class A shares and 24,287,818 class B shares, nominal value: SEK 8 (of which 11,413 class B shares held by the company). 4) Closing number of shares in 2020: 0 class A shares and 24,287,818 class B shares, nominal value: SEK 8 (of which 11,413 class B shares held by the company).

Parent Company, SEK k	Share capital	Statutory reserve	Share premium reserve	Accumulated profit/loss	Net profit/ loss for the year	Total equity	Number of shares
Opening balance, January 1, 2019	188,494	–	600,750	-125,205	-362,503	301,536	24,287,8181
Appropriation of profits:
Profit/loss for the previous year brought forward	–	–	–	-362,503	362,503	–	–
Net profit/loss for the year	–	–	–	–	-122,282	-122,282	–
New share issue	–	–	–	–	–	–	–
Transaction costs	–	–	–	–	–	–	–
Closing balance, December 31, 2019	188,494	–	600,750	-487,708	-122,282	179,254	24,287,8182
Opening balance, January 1, 2020	188,494	–	600,750	-487,708	-122,282	179,254	24,287,8183
Appropriation of profits:
Profit/loss for the previous year brought forward	–	–	–	-122,282	122,282	–	–
Net profit/loss for the year	–	–	–	–	-44,937	-44,937	–
New share issue	–	–	–	–	–	–	–
Transaction costs	–	–	–	–	–	–	–
Closing balance, December 31, 2020	188,494	–	600,750	-609,990	-44,937	134,317	24,287,8184

The nominal value has been calculated as the share capital divided by the total number of shares. Proposed dividend for 2020: SEK 0 per share.

Statements of Cash Flow

			GROUP	PARENT COMPANY
Total operations, SEK k	NOTE	2020	2019	2020	2019
Operating activities
Profit/loss after financial items		-42,620	-123,334	-44,937	-122,282
Adjustment for non-cash items	23	-13,937	-11,207	-15,273	-14,145
		-56,557	-134,541	-60,210	-136,427
Tax paid		799	1,946	799	2,052
Cash flow from operating activities before changes in working capital		-55,758	-132,595	-59,411	-134,375
Cash flow from changes in working capital
Increase (–)/decrease (+) in current receivables		8,580	5,003	674	34,451
Increase (+)/decrease (–) in current liabilities		-10,875	-20,663	-7,079	-50,347
Cash flow from operating activities		-58,053	-148,255	-65,816	-150,271
Investing activities
Acquisition of property, plant and equipment		-2,684	-1,436	–	-1,377
Sale of property, plant and equipment		1,706	1,499	1,706	1,499
Divestment of/reduction in financial assets		6,346	4,427	–	–
Cash flow from investing activities	24	5,368	4,490	1,706	122
Financing activities
New share issue		595	–	–	–
Amortization of debt	24	-12,713	-6,659	–	–
Warrants issue		–	–	–	–
Transaction costs		–	–	–	–
Cash flow from financing activities		-12,118	-6,659	–	–
Cash flow for the year		-64,803	-150,424	-64,110	-150,149
Cash and cash equivalents at the beginning of the year		134,509	286,282	125,697	275,847
Exchange rate differences, cash and cash equivalents		301	-1,349	762	-1
Cash and cash equivalents at the end of the year	18	70,007	134,509	62,349	125,697

Accounting policies 2020

Group

Medivir prepares its Consolidated Accounts in accordance with IFRS, International Financial Reporting Standards, as endorsed by the EU. In addition to the stated IFRS, the Group also observes the Swedish Financial Reporting Board's recommendation, RFR 1 Supplementary Accounting Rules for Groups, and applicable pronouncements from the Swedish Financial Reporting Board. The Group utilizes the cost for Balance Sheet item valuation, unless otherwise indicated. IFRS are under constant development. A number of standards and interpretations were published during the preparation of the consolidated accounts as of December 31, 2020, only some of which have come into effect. An assessment of the impact that the introduction of these standards and statements has had, and may have, on Medivir's financial statements follows. Comments are restricted to those changes that have had, or could have, a significant effect on Medivir's accounting.

New and amended standards from January 1, 2020

A number of new standards and interpretations enter into force for financial years commencing after January 1, 2020 and have not been applied in the preparation of this financial report. These new standards and interpretations are not expected to have a material impact on the Group's financial reports on current or future periods, nor on future transactions.

Parent Company

Medivir AB continues, as in previous years, to apply those accounting principles relevant to legal entities that prepare Consolidated Accounts and which are listed on a stock exchange. Medivir AB complies with the Swedish Financial Reporting Board's recommendation, RFR 2 Accounting principles for legal entities. The Parent Company shall, in accordance with RFR 2, structure its reports in accordance with all applicable IFRS unless the recommendation permits an exemption from application. The Parent Company's principles are consequently consistent with those of the Group, unless otherwise indicated below. The Parent Company applies the exception set forth in RFR 2 in order not to report leasing in accordance with IFRS 16.

Consolidated accounts

The Consolidated Accounts have been prepared using acquisition accounting, whereby the subsidiary's equity at the time of acquisition is eliminated. The equity of the acquired subsidiary is measured on the acquisition date on the basis of the fair value of identifiable assets and liabilities assumed. Cost consists of the fair value of assets submitted as payment, issued equity instruments, and liabilities arising or assumed as of the transfer date. In cases where the cost of shares in the subsidiary exceeds the fair value of the assets and liabilities acquired, the difference is recognized as goodwill. Costs directly attributable to the acquisition are reported in the Group under other operating expenses in the Income Statement as they arise. In the

Parent Company, transaction costs are included in the acquisition value of equity in subsidiaries.

Subsidiaries comprise all companies over which the Group exercises a controlling influence. The Group controls a company when it is exposed to or entitled to a variable return from its holding in the company and has the ability to affect the return through the exercise of its influence over the company. Subsidiaries are consolidated from the day when controlling influence is transferred to the Group. They are deconsolidated from the date when the controlling influence ceases. For each acquisition, the Group determines whether potential non-controlling interests in the acquired company are recognized at fair value or at the holding's proportional share of the carrying amount of the acquired company's identifiable net assets. The preparation of Medivir's Consolidated Accounts includes the elimination of intra-group receivables and liabilities and of intragroup income and expenses between Group companies and the Consolidated Income Statement and the Consolidated Balance Sheet are consequently reported without intra-group transactions.

Translation of foreign currencies

Functional currency and reporting currency

Items included in the financial statements for the various entities within the Group are valued in the currency used in the economic environment in which the respective company is primarily active (functional currency). The Swedish krona (SEK), which is the Parent Company's functional currency and reporting currency, is the currency utilized in the Consolidated Accounts.

Transactions and Balance Sheet items

Transactions in foreign currencies are translated to the functional currency at exchange rates applicable on the transaction date or the date when the item is translated. Exchange rate profits and losses arising when paying for such transactions and when translating monetary assets and liabilities in foreign currencies at the closing day rate are reported in the Income Statement. Profits are reported under operating income and losses under operating expenses.

Group companies

The profit/loss and financial position of all Group companies whose functional currency differs from the reporting currency are translated to the Group's reporting currency (SEK) as follows:

Assets and liabilities for each Balance Sheet item are translated at the closing day rate.
Income and expenses for each Income Statement item are translated at the average exchange rate. If the average exchange rate is not a reasonable estimate of the total exchange rate effects for the year from each transaction date, income and expenses are translated at the closing day rate instead. All exchange rate differences arising are reported under other comprehensive income and accumulated as a separate portion of the equity.

The Income Statement

Medivir applies a classification by type of cost approach to the presentation of the Income Statement in accordance with the description in IAS 1, Presentation of Financial Statements.

Costs in the Income Statement are broken down into Other external costs, Personnel costs, Depreciation, amortization and impairment, and Other operating expenses:

Other external costs

Other external costs relate to services bought by Medivir. These mainly comprise clinical phase projects conducted through contracted research organizations.

Personnel costs

Personnel costs comprise costs for employed personnel.

Depreciation, amortization and impairment

Depreciation, amortization and impairment relate to scheduled depreciation for the year, but also non-recurrent depreciation, amortization and impairment, when relevant.

Financial instruments, reporting, disclosure and classification

For information on financial risks and investments, see Note 7, Financial Risks, on pages 53–55. Purchases and sales of financial instruments are reported on the transaction date – the date when Medivir undertakes to buy or sell the asset. Financial instruments are derecognized from the Balance Sheet when the right to receive cash flows from the instrument has expired or been transferred and the Group has transferred essentially all risks and benefits associated with title to the asset.

Financial instruments

Medivir divides its financial instruments into the following categories, in accordance with IFRS 9: amortized cost, and fair value through profit or loss. The classification for interest-bearing assets is based on the nature of the assets' cash flow and business model. Investments in equity instruments shall be valued at fair value under IFRS 9. Medivir has elected to report the change in value of such instruments via profit or loss.

Financial assets valued at fair value via profit or loss

Investments in fixed income funds are valued at fair value via profit or loss as the Group's business model entails managing the funds on the basis of increase in value and to realize profits or losses continuously through the divestment of parts of the investments. Equity instruments, which the Group has elected to report at fair value via profit or loss, are also included in this category. A profit or loss on a financial asset that is reported at fair value via profit or loss is reported net in the Income Statement for the period in which the profit or loss arises.

Financial assets valued at amortized cost

Interest-bearing assets (debt instruments) held in order to cash in contractual cash flows, and where these cash flows solely comprise capital sums and interest, are valued at amortized cost. The reported value of these assets is adjusted for any anticipated credit losses (see Impairment testing section below). Interest income from these financial assets is reported using the effective interest method and is

reported as financial income. The Group's financial assets valued at amortized cost comprise accounts receivable and cash and bank balances.

Financial liabilities valued at amortized cost

The Group's financial liabilities are classified as valued at amortized cost using the effective interest method. Financial liabilities valued at amortized cost comprise accounts payable and other liabilities. Liabilities are initially reported at fair value, net after transaction costs. Liabilities are subsequently reported at amortized cost and any difference between the amount received (net after transaction costs) and the repayment amount are reported in the Statement of Comprehensive Income over the loan period, using the effective interest method. Borrowing is classified as short-term in the Balance Sheet if the company does not have an unconditional right to postpone settlement of the debt for at least twelve months after the end of the reporting period. Dividends paid are reported as a liability after the approval by the AGM of the dividend payment. Accounts payable and other operating expenses have a short anticipated term and are valued without discounting at nominal amounts.

Impairment testing for financial assets

The Group assesses future anticipated credit losses in connection with assets reported at amortized cost, based on forward-looking information, in conjunction with the preparation of every financial report. The Group's financial assets for which anticipated credit losses are assessed comprise, in every significant respect, accounts receivable and other receivables. The Group applies the simplified approach for credit provision, i.e. the provision will correspond to the anticipated loss throughout the lifespan of the account receivable.

Intangible fixed assets

Trademarks and brands, product rights

Trademarks and brands, and product rights acquired separately are recognized at historical cost in the Group. Trademarks and brands, and product rights acquired through a business combination are recognized at fair value on the acquisition date. Trademarks and brands, and product rights have a defined useful life and are recognized at historical cost less accumulated impairment. Amortization is calculated on a straight-line basis over their estimated useful life of 10–15 years.

Research and Development costs – in-house development

Pharmaceutical development expenses are capitalized in accordance with IAS 38 Intangible assets, when the following criteria are fulfilled:

It is technically possible to complete the pharmaceutical.
The company's management intends to complete the pharmaceutical and the conditions for sale are in place.
The asset is expected to provide future economic benefits.
Medivir adjudges that the resources required to complete the development of the asset are available.
Developmental expenses can be reliably calculated.

Medivir's judgment of this principle with regard to ongoing development projects is presented on page 57 (Research & Development costs). Development costs for the product are reported, as of the

date when the above criteria are fulfilled, as intangible fixed assets at historical cost. Expenses arising before this date will continue to be reported as costs. Historical costs include direct costs for the completion of the pharmaceutical, including patents, registration application costs, and product tests including remuneration to employees. Amortization is calculated on a straight-line basis in order to spread the development costs over the estimated useful life. Amortization begins when the pharmaceutical is approved for sale. Useful life is based on the underlying patent term.

Medivir's other research and development costs are reported as they arise as costs for patent and technology rights, and other similar assets, developed in-house. Against the background of the contents of the "Research and development costs" section on page 57, other research work performed by Medivir is judged to be associated with such uncertainty that IAS 38's capitalization criteria cannot be considered satisfied, primarily because of the difficulties in judging whether it is technically possible to complete the pharmaceutical.

Development projects acquired

Amortization of intangible assets acquired, e.g. customer relationships or trademarks and brands, is calculated on a straight-line basis over the useful life. Amortization of other intangible assets acquired, such as development projects, is calculated on a straight-line basis over the useful life – linked to the term of patents obtained. Birinapant and remetinostat are not yet completed and amortization has not yet begun.

Other intangible fixed assets

Expenses incurred in connection with the development of Medivir's ERP systems such that the software's performance is improved or its useful life extended, are reported at historical cost. These expenses are amortized over the estimated useful life. The useful life is estimated at 5 years, whereupon the reported asset will be amortized on a straight-line basis in accordance with this estimate.

Property, plant and equipment

Property, plant and equipment are reported at historical cost less depreciation. Cost includes expenses directly attributable to the acquisition of the asset. Scheduled depreciation has been calculated on the basis of original cost with depreciation rates based on estimates of the economic useful lives of the assets. The Group applies the following depreciation periods: buildings, 20 years; equipment, tools, fixtures and fittings, 5-10 years; and IT hardware, 3 years.

Impairment

Property, plant and equipment and intangible fixed assets are subject to impairment testing and impairment losses are recognized whenever internal or external indications of potential impairment are identified, in accordance with IAS 36. An impairment is effected in the amount by which the asset's carrying value exceeds the recoverable amount. The recoverable amount is whichever is the higher of the asset's fair value, less selling expenses, and its value in use. The term, value in use, refers to the sum of the present value of expected future cash flows and the estimated residual value at the end of the useful life. When calculating the value in use, future cash flows are discounted at an interest rate that takes into account the market's assessment of risk-free interest and risk. In the Group, the calculation is based on results achieved, forecasts and business

plans. When conducting impairment testing, assets are grouped together at the lowest level at which there are separate, identifiable cash flows (cash-generating units). Intangible assets that are not in use are not amortized, but are subject to annual impairment testing. If the recoverable amount is less than the carrying amount, an impairment loss is recognized. The recoverable amount comprises whichever is the higher of the fair value and the value in use. The value in use is calculated on the basis of the estimated future cash flows, based on the competitive situation and estimated market shares. Investments in subsidiaries are valued in the Parent Company at historical cost and impairment testing is carried out at each yearend. The subsidiary's equity forms a key criterion for assessment in this context. Supplementary investments may be made in the form of new share issues or shareholders' contributions.

Shareholders' equity

Transaction costs directly attributable to the issuance of new shares or options are reported in equity as a deduction from issue proceeds under Accumulated profit/loss.

Net debt

Medivir has positive net debt, as reported in Note 24. The company's cash and cash equivalents comprise bank balances. The shortterm investments comprise the company's fund portfolio, which has a short maturity that can be converted to cash and cash equivalents without significant change in value. Calculation of net debt also includes interest-bearing receivables (leases). Liabilities include interest-bearing debt instruments (leases).

Revenue recognition principles

Out-licensing and collaboration agreements

Remuneration may, in the context of out-licensing and collaboration agreements, be payable in the form of upfront fees when the agreement is entered into, milestone payments, payments during the term of the agreement for a number of full-time equivalent research positions (FTEs), and/or royalties. Revenues from agreements with Medivir's partners in the research projects are recognized when Medivir's various discrete undertakings under the terms of the contract are fulfilled. When Medivir becomes a party to an agreement, it is analyzed in order to determine the number of discrete performance undertakings it contains. The remuneration received or which will be received under the terms of the agreement, the transaction price, are spread over each discrete undertaking on the basis of the respective undertaking's relative share of the estimated independent retail price of the undertakings. The allocated amount is subsequently recognized when the undertaking is fulfilled. See below for details of the way in which the various component elements are reported in Medivir's accounts.

Performance undertakings

The agreements often include remuneration for the use of Medivir's incorporeal rights that are licensed to the counterparty and remuneration for research work carried out by Medivir.

These undertakings are analyzed to determine whether they constitute discrete performance undertakings that shall be reported individually or whether they shall be regarded as a single undertaking. The license is deemed to comprise a separate undertaking in those cases where the license can be used without associated consultancy services from Medivir.

Reporting of discrete licenses

Licenses identified as separate performance undertakings are classified either as "right to access" or "right to use". A "right to access" license entails the right to access Medivir's rights as found during the licensing period, i.e. the IP right changes and Medivir conducts operations which have a material effect on the intangible asset to which the customer has a right. A "right to use" license entails the right to use Medivir's IP right as found at the time when the license is granted. Right to access licenses are reported over time, i.e. over the period of time during which the customer is entitled to use the license, while right to use licenses are reported at a given point in time, i.e. at the point in time when the customer gains control over the license. Discrete licenses are usually classified as "right to use" licenses because the research positions that could affect the value and benefit of the license are reported separately as a discrete performance undertaking.

In cases where Medivir receives an upfront payment when the agreement is entered into, it is allocated partly, as described above, to the licensing undertaking, and partly to the research positions. The part allocated to the license is recognized when the counterparty has obtained control over the license. Additional potential remunerations, i.e. variable payments that depend on certain milestones being achieved in the course of future performances in the context of pharmaceutical development, are not recognized until it is adjudged very probable that a significant reversal of accumulated revenues will not occur when uncertainty ceases to exist with regard to milestone achievement. This point in time is deemed to occur only when achievement of the milestone has been confirmed by the counterparty. A counterparty can also compensate Medivir for the use of an IP right by means of the payment of royalties on the future sales of a pharmaceutical based on the IP right. Revenues for salesbased royalties guaranteed in return for an IP license are only recognized when the subsequent sale is made.

Reporting of discrete research positions

The percentage of the agreement's transaction price allocated to the undertaking to provide research positions is recognized over time based on the degree of fulfillment of the undertaking. Variable remuneration for the positions that may also be payable, depending on milestones in a project being reached, are recognized in the manner described above. Variable income is recognized when uncertainty ceases to exist with regard to whether the milestone will be reached. This point in time is deemed to occur only when achievement of the milestone has been confirmed by the counterparty.

Reporting when Licensing and research positions comprise an undertaking

If the license is not distinct from the research positions which the customer shall receive in connection with the license, the license and consultancy positions are reported as a combined performance undertaking. An assessment is performed as to whether revenues for the combined performance undertaking shall be reported at a single point in time or over time, depending on when control over both the license and the consultancy services have been transferred to the customer. If the license that forms part of the combined performance undertaking is deemed to constitute the dominant element, relative to the research positions, the "right to access" and "right to use" criteria are applied – see above under discrete licenses – in order to determine when the customer obtains control over the combined undertaking and thereby to determine when the point in time for revenue recognition occurs. If the license is not deemed to

constitute the dominant element of the combined undertaking, the revenue is recognized over the period of time during which the research positions are provided. Additional potential remuneration based on milestone achievement is recognized using the principles described above. Royalties from the counterparty's use of the license in a finished pharmaceutical product are recognized in accordance with the principle described above.

Operating segments

IFRS 8 requires segment information to be presented from the management's perspective, which means that it is presented in the way used in internal reporting. The basis for identifying reportable segments is internal reporting as it is reported to and followed up on by the chief operating decision maker. The company has, in this context, identified the Group President/CEO as the chief operating decision maker, who assesses the operating segment's results on the basis of the operating profit/loss metric presented in the Income Statement. Medivir has only one segment, namely pharmaceuticals. This segment comprises the Group's project portfolio and the in-house developed pharmaceutical products, simeprevir and Xerclear.

Leases

The Group leases various buildings, machinery and cars. Leases are normally signed for fixed periods of three to ten years, but there may be an extension option, which is described below. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The leases do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The rightof-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

fixed payments less any lease incentives receivable
variable lease payments that are based on an index or a rate
amounts expected to be payable by the Group under residual value guarantees
the exercise price of a purchase option if the Group is reasonably certain to exercise that option
payments of penalties for terminating the lease, if the lease term reflects the Group's exercising that option to end the lease agreement.

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the group's incremental borrowing rate. Right-of-use assets are measured at cost comprising the following:

the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs,
restoration costs

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Shortterm leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.

Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor.

Interest expense is included in finance cost.
Expense relating to short-term leases is included in other external costs.
Expense relating to leases of lowvalue assets that are not shortterm leases are included in other external costs.
Expense relating to variable lease payments not included in lease liabilities are included in other external costs.

Pension liabilities and pension costs

Medivir's ITP (supplementary pensions for salaried employees) scheme is insured with Alecta and should be regarded as a defined benefit pension scheme in accordance with the UFR 10 statement from the Swedish Financial Reporting Board. In accordance with UFR 10, the company shall report its proportional share of the defined benefit undertakings and the plan assets and costs associated with the scheme. Alecta is unable to provide sufficient information and the scheme is consequently reported, until further notice, as if it were a defined contribution plan. Alecta's surplus can be distributed among the policyholders and/or the beneficiaries.

At the end of 2020, Alecta's surplus in the form of the collective consolidation ratio was preliminarily calculated by Alecta at 148% (148). The Group is of the opinion that the current premiums should cover existing undertakings. Other pension schemes within the Group are defined contribution schemes. The premiums paid are reported as personnel costs when they fall due for payment. The anticipated pension costs for 2021 are estimated at SEK 3,000 thousand.

Severance pay

Severance pay is booked as an expense when the obligation to pay the remuneration arises.

Short-term compensation to employees

Liabilities for salaries, bonuses and other compensation, including non-monetary benefits and paid absences, which are expected to be settled within 12 months after the end of the financial year, are reported as current liabilities at the undiscounted amount that is expected to be paid when the debts are settled. The cost is reported in the statement of comprehensive income as the services are performed by the employees. The debt is reported as liabilities to employees in the consolidated balance sheet.

Rights agreements

The Medivir Group has entered into various forms of agreement, both with parties external to the Group and with related parties, with regard to various rights linked to pharmaceutical development and finished pharmaceutical products (see above under the Intangible fixed assets section for the various kinds of rights acquired). Medivir may, depending on the nature and content of the agreement, have an existing or potential future undertaking to transfer resources to a party as remuneration for the rights and the use thereof. Medivir may consequently have rights in the Balance Sheet that may generate future revenues in the form of pharmaceutical sales or partnership agreements (see above under Revenues) but which may also result in another party receiving payments based on this return. This may result in Medivir reporting liabilities and provisions in the Balance Sheet with related costs in the Income Statement and/or disclosing contingent liabilities in the Notes. Different types of remuneration circumstances are presented below.

Royalty costs and provisions from in-licensed rights

Some of the pharmaceuticals that generate revenues for Medivir are based on inventions and rights that originally belonged to external parties and to which Medivir has obtained contractual right of disposal. Medivir's right of disposal over these incorporeal rights entail payments in the form of royalties. The payments in these agreements are based on the revenues that Medivir receives from any milestone payments or sales of finished pharmaceutical products. Royalty provisions are recognized when it is probable that payments will be made to the counterparty from whom the right was acquired and when the amount can be reliably estimated. These two preconditions for recognition as provisions are often not fulfilled until Medivir receives feedback and confirmation from the other parties that sales of the pharmaceutical product have occurred or on the successful completion of a pharmaceutical trial as part of a partnership agreement that generates a milestone payment to Medivir. The payments made to the rights holders may be made either to parties external to the Group or to related parties. Payments made to related parties are also reported as a supplementary disclosure (Note).

Contingent liabilities

Payments may have to be disbursed in future for a number of in-licensed rights on the basis of future events, such as a successful clinical phase pharmaceutical trial or future product sales. When the criteria for provision recognition (probable and reliable estimation of amounts) have not been met, but the possibility exists that future payments may have to be disbursed by Medivir for the usufruct, this fact is recognized as a Contingent liability in the Notes, together with estimations of the possible outcome.

Contingent assets

Other parties have acquired the usufruct for a number of the rights at Medivir's disposal (often as a result of Medivir having entered into so-called Out-licensing and collaboration agreements − see above under Revenues), and which may generate revenues for the Group in the future. These revenues are, however, contingent upon uncertain future events that are, to some extent, beyond the company's control. Such contingent assets are not reported as disclosures in the Notes until they become probable. When the uncertainty with regard to the outcome has ceased and Medivir is entitled to receive remuneration from a counterparty, the principles described above in the section entitled "Revenues" are applied.

Income tax

The tax expense for the period consists of current tax and deferred tax. Tax is recognized in the Income Statement apart from when tax relates to items recognized in other comprehensive income or directly in equity. In such cases, tax is also recognized in other comprehensive income and equity, respectively. Current tax is tax to be paid or received for the current year and restatements of current tax relating to previous years. Deferred tax is recognized in accordance with the balance sheet method on all temporary differences that arise between the taxable values of assets and liabilities and their carrying amounts in the consolidated accounts. Deferred tax receivables are recognized to the extent it is likely that future taxable profits will be available. Note 10 lists, amongst other things, the estimated deductible deficits accumulated in the Group. The Group's taxable deficits have no expiry date. The treatment of deferred tax on temporary differences is reported and explained in Note 10 on page 56 The various components of consolidated total tax are also explained in this Note.

Statements of Cash Flows

The Statement of Cash Flows has been reported by applying the indirect method. Reported cash flow only includes transactions involving payments made or received. Cash and bank balances, and short-term investments such as commercial papers and fixed income and bond funds with a maximum term of three months, are reported as cash and cash equivalents in the Statement of Cash Flows.

Significant estimates and judgments

The company management and the Board of Directors must, in order to be able to prepare the accounts in accordance with generally accepted accounting practices and in compliance with IFRS, make estimates and assumptions regarding the future. These estimates and assumptions affect both recognized revenue and cost items and asset and liability items, as well as other disclosures. Estimates and judgments are evaluated continuously and are based on historical experience and other factors, including expectations of future events regarded as reasonable under the prevailing circumstances. Segments that include such estimates and assumptions that may have a material impact on the Group's operating results and financial position are presented below.

Revenues

Medivir does not apply successive revenue recognition for impending potential milestone payments within the research projects due to the constant uncertainty regarding the extent of the progress made by the project and the likelihood that the next goal/milestone will be achieved. The income side consequently only shows confirmed and non-refundable income that can be considered to have accrued. Allocation to particular periods could show how Medivir successively receives revenues from the counterparty's utilization of incorporeal rights, but if successive revenue recognition were to be applied, there is a risk that income would be reported that is uncertain in terms of whether Medivir would ever receive any payment. An announcement by the counterparty that the project was to be discontinued, for example, could, under such circumstances, mean that Medivir had reported its profit or loss inaccurately.

Research and development costs

Research costs, including registration costs, are reported on an ongoing basis as costs as long as it remains uncertain what the future economic benefits arising from these costs will be. Pharmaceutical development is generally a complex and risky activity and the majority of research projects will never result in a pharmaceutical on the market. Product development costs shall be capitalized when it is likely that the project will succeed. Every research project is unique and must be judged individually on the basis of its own preconditions. The earliest date for capitalization to occur is adjudged to be upon completion of the phase III trials, but a number of uncertainty factors may still remain, even after completion of phase III trials, such that the criteria for capitalization cannot be considered to be satisfied. Where this is the case, capitalization does not occur until the pharmaceutical is approved by the relevant regulatory authority. Premature capitalization entails a risk of a project failing and of it being impossible to justify offset costs which must, instead, be carried directly as an expense. This would, in turn, mean that the previous year's results, and those for the year in question, would be misleading due to overly optimistic probability assessments.

Intangible fixed assets

The Group conducts impairment testing every year with regard to intangible assets with an unidentified useful life, and as yet uncompleted development projects. Other intangible assets are subject to impairment testing when events or changes indicate that the carrying amounts are not recoverable. When calculating the value in use, future cash flows are discounted at an interest rate that takes into account the market's assessment of risk-free interest and risk (WACC). In the Group, the calculation is based on results achieved, forecasts and business plans. The underlying assumptions about forecasted revenues, costs and margins are based on both internal and external sources of information. When conducting impairment testing, assets are grouped together at the lowest level at which there are separate, identifiable cash flows (cash-generating units). The estimations and assumptions made by the management in conjunction with impairment testing can have a significant impact on the Group's reported profit or loss. Impairment is effected if the estimated value in use is less than the carrying amount and is charged to the profit or loss for the year. See also Note 12, on page 57, for significant assumptions and a description of the effect of reasonable possible changes in the assumptions that form the basis for the calculations.

Tax

Deferred tax is calculated on the basis of the management's and Board of Directors' judgment of possible future utilization of the accumulated deficits within the Group. A revised judgment of the way in which the deductible loss carry forward can be recovered through future taxable surpluses may affect reported tax in the results of the operations and the balance in forthcoming periods. See also Note 10, on page 56.

Other information

The financial reports are presented in thousands of kronor (SEK k) unless otherwise indicated. Rounding off may mean that certain tables in the Notes do not add up.

Notes

01 Segment reporting

Medivir has only one segment, namely pharmaceuticals. This segment comprises the Group's project portfolio and the in-house developed pharmaceutical products, simeprevir and Xerclear.

The company monitors the operations through the operating profit/loss, which is presented in the Income Statement.

	GROUP			PARENT COMPANY
SEK k	2020	2019	2020	2019
Breakdown of net sales
Out-licensing and collaboration agreements
Non-recurrent payments	5,110	106	5,110	106
Research collaborations	–	–	–	–
Pharmaceutical sales	–	–	–	–
Royalty	8,838	8,618	8,838	8,618
Other services	–	–	–	–
Total	13,948	8,724	13,948	8,724
Geographic breakdown of net sales
Sweden	44	477	44	477
Nordic region, other	541	439	541	439
Europe, other	8,253	7,721	8,253	7,721
USA	5,110	–	5,110	–
Rest of the world	–	87	–	87
Total	13,948	8,724	13,948	8,724
External customers who account for more than 10% of net sales (SEK k)
Customer #1	8,839	8,145	8,839	8,145
Customer #2	3,599	–	3,599	–
Customer #3	1,510	–	1,510	–

The Parent Company's sales to Group companies totaled SEK 0 thousand (0). Intra-Group purchases amounted to SEK 0 thousand (56).

02 Intra-Group transactions

Parent Company

Intra-Group sales totaled SEK 0 thousand (0). Intra-Group purchases amounted to SEK 0 thousand (56).

Remuneration paid to the statutory audit firm and its network by the Medivir Group in 2020 totaled SEK 967 thousand (627 k), of which SEK 967 thousand (627 k) was paid to the statutory audit firm, Öhrlings PricewaterhouseCoopers AB, which sum can be broken down into the following categories:

Group

The cost of audit engagements for Medivir by the audit firm and its network totaled SEK 444 thousand (459 k) in 2020, of which SEK 444 thousand (459 k) was paid to the audit firm.

Other statutory engagements on behalf of Medivir by the audit firm and its network in 2020 cost a total of SEK 121 thousand (150 k), SEK 121 thousand (150 k) of which was paid to the audit firm.

Tax advice provided for Medivir by the audit firm and its network in 2020 cost SEK 52 thousand (18 k), SEK 52 thousand (18 k) of which was paid to the audit firm.

Other services provided for Medivir by the audit firm and its network in 2020 cost SEK 350 thousand (0 k), SEK 350 thousand (0 k) of which was paid to the audit firm.

Parent Company

The cost of audit engagements for Medivir by the audit firm and its network totaled SEK 444 thousand (459 k) in 2020, SEK 444 thousand (459 k) of which was paid to the audit firm.

Other statutory engagements on behalf of Medivir by the audit firm and its network in 2020 cost a total of SEK 121 thousand (150 k), SEK 121 thousand (150 k) of which was paid to the audit firm.

Tax advice provided for Medivir by the audit firm and its network in 2020 cost SEK 52 thousand (18 k), SEK 52 thousand (18 k) of which was paid to the audit firm.

Other services provided for Medivir by the audit firm and its network in 2020 cost SEK 350 thousand (0 k), SEK 350 thousand (0 k) of which was paid to the audit firm.

04 Average number of employees, salaries, other remuneration, and social security contributions

	GROUP
	2020 2019
Average number of employees	Women	Men	Women	Men
Sweden	6	5	26	25
UK	–	–	–	–
Total	6	5	26	25

	GROUP
Salaries, remuneration, social security contributions and pension costs, SEK thousand 1–4	2020	2019
Salaries and remuneration
Yilmaz Mahshid (CEO from 14 Sep 2020)	1,256	–
Uli Hacksell (CEO from 15 Oct 2018 to 30 Sep 2020)	1,710	2,651
Uli Hacksell (Member of the Board from 1 Okt 2020 and)	60	–
Anna Malm Bernsten (Chairperson of the Board from 3 May 20162)	–	700
Lennart Hansson (Member of the Board from 3 May 2018)	240	317
Anders R Hallberg (Member of the Board from 9 May 2019)	–	155
Helena Levander (Member of the Board from 9 May 2019)	650	618
An van Es Johansson (Member of the Board from 9 May 2019)	240	160
Bengt Julander (Member of the Board from 3 May 2017)	240	280
Bengt Westermark (Member of the Board from 3 May 2017)	240	330
Total, Board of Directors and CEO	4,636	5,211
Other senior executives3	6,746	6,118
Other employees3	5,186	11,879
Salaries and remuneration, total	16,568	23,208
Statutory and contractual social security contributions	4,454	7,284
Pension costs
of which for the CEO: SEK 0 thousand (414)	3,268	3,706
Total salaries, remuneration, social security contributions, and pension costs	24,290	34,198
Other personnel related costs	641	835
Total personnel costs	24,931	35,033

1) The number of employees for the Parent Company, and their salaries, remuneration, social security contributions, and pension costs correspond to those of the Group and this Note consequently only shows the figures for the Group.

2) Director's fees of SEK 0 (508) thousand and consultancy work carried out on behalf of Medivir SEK 0 (192) thousand.

3) In 2020 remuneration totaling SEK 0 thousand (21,149) that was carried as an expense prior year to former employees.

4) For the year 2020, it includes a subsidy in accordance with the program Warrants 2020: 1 that was approved at the Annual General Meeting in May 2020.

Board of Directors

SEK 1,670 thousand (2,560 was paid in Directors' fees to the Board of Directors of Medivir during the financial year, SEK 650 thousand (1,318) of which was paid to the Chairperson of the Board. Members of the Board are also reimbursed for travel expenses in conjunction with Board Meetings, etc. There is no pension plan for the Board of Directors. In addition and in accordance with pre-existing contracts, royalties have been disbursed to Uppsala Hallbechem AB (Anders Hallberg) in the sum of SEK 0 thousand (2).

Guidelines for remuneration to senior executives

Medivir shall offer a competitive total compensation package that promotes recruitment and retention of qualified senior executives. Remuneration payable to senior executives may comprise a fixed salary, performance-related pay, incentive plans approved by the AGM, pensions and other benefits. The fixed salary shall take into account the extent of the individual's responsibilities and their experience. Performance-related pay paid in cash shall total a maximum of 50 percent of the annual fixed salary. Performance-related pay shall be linked to predetermined and quantifiable criteria formulated in order to promote the company's long-term value creation. The guidelines in their entirety are presented on Medivir's web site.

Pensions

Pensions shall be premium-based for the CEO and other senior executives, and the premium may comprise up to 25 percent of the fixed salary. The Board of Directors shall be entitled, the above provisions notwithstanding, to offer other alternative solutions which, from a costs point of view, are equivalent to the above.

Severance pay, etc.

A maximum mutual notice period of six months shall apply. No severance pay or similar remuneration shall, as a basic principle, be payable but may – up to a one-off amount corresponding to a maximum of 100 percent of the annual remuneration – be agreed with reference to any change of control. An additional entitlement to severance pay corresponding to a maximum of 100 percent of the annual remuneration may also apply for the CEO in the event of the company terminating the employment of the CEO or of the CEO resigning due to a significant breach of contract on the part of the company.

Remuneration for the Chief Executive Officer

Salaries and other remuneration paid to the CEO during the year totaled SEK 2,279 thousand (2,280), while bonuses totaled SEK 669 thousand (371), and other benefits SEK 18 thousand (0). Pension provisions during the year totaled SEK 200 thousand (0).

A mutual notice period of six months applies for the CEO. The CEO is entitled to severance pay corresponding to twelve times the value of the fixed monthly salary at the time when notice of termination was given if the notice is given by the company or if the CEO gives notice due to significant breach of contract on the part of the company. Any bonuses are maximized to a value of 50 percent of the annual fixed salary.

Other senior executives

The term, other senior executives, refers, in addition to the CEO, to the people who, together with the CEO, have comprised Group management during the year. Group management, excluding the CEO, comprises four people (one woman and three men). Salaries totaling SEK 5,196 thousand (5,634) have been paid to other senior executives, together with SEK 1,510 thousand (484) in performance-related pay, SEK 0 thousand (0) in severance pay, and SEK 39 thousand (0) in benefits, comprising a total of SEK 6,746 thousand (6,118) in remuneration paid. Pension provisions have been made in the sum of SEK 1,673 thousand (1,995).

Fixed salaries and performance-related pay

The CEO and Group management, as well as other employees receive performance-related pay in addition to their fixed salaries. The performance-related pay follows a system adopted by the Board of Directors, based on company-wide goals.

The level of the performance-related pay per individual is maximized to between 10 and 50 percent of the basic salary received and is disbursed every year in cash for the previous year.

Long-term incentive plans

04 cont.

gram introduced by the company in 2017 is provided below. Medivir's share-related incentive plan is reported in accordance with "IFRS 2 – Share-based Payment".

Stock option program 2017 (LTI-2017)

The 2017 Annual General Meeting approved the Board's proposal to introduce a stock option program on condition that the company does not thereby incur any costs. The right to subscribe is vested in all of the company's senior executives and other permanent employees of Medivir. The company issued a total of 102,500 warrants to subscribe, free of charge, to the subsidiary company, Medivir Personal AB, without preferential rights for existing shareholders. The warrants may be exercised to subscribe for new class B shares during the period from 16 December 2020 up to and including 15 January 2021, and the subscription price (strike price) per share shall correspond to 133 percent of the volume-weighted average rate of the class B share according to the official NASDAQ Stockholm price list during the period from 4−17 May 2017, namely SEK 89.36/share. The Board of the company may, by means of a Board resolution and with the consent of the Board of Directors of the Subsidiary, cancel the Subsidiary's warrants that are not transferred or which have been repurchased from participants. Cancellation shall be registered with the Swedish Companies Registration Office. In the event of full exercise of the warrants, the company's share capital will increase by a maximum of SEK 795,487. The warrants are not associated with any vesting conditions for the employees.

Medivir AB employees were allocated and subscribed for a combined total of 57,835 warrants sold by Medivir Personal AB on two occasions in 2017. The employees paid the market value of the warrants when subscribing. The market value was determined using the Black & Scholes valuationmodel, based on term, strike price, weighted share price during the subscription period (VWAP), risk-free interest rate, and volatility. The volatility was determined by means of a comparative study of the historic volatility of Medivir and similar companies, taking into account the relative size and risk of Medivir. A total of 48,515 warrants were allocated during the second quarter at a market value of SEK 9.41 per warrant and with a strike price of SEK 89.36 per share. The valuation calculation was based on the following figures: term, 3.66 years; strike price, SEK 89.36; VWAP, SEK 67.19; risk-free interest rate, –0.35 percent; volatility, 32 percent. A total of 9,320 warrants were allocated during the fourth quarter at a market value of SEK 3.98 per warrant and with a strike price of SEK 89.36 per share. The market value was determined in accordance with the Black & Scholes valuation method using the following figures: term, 3.09 years; strike price, SEK 89.36; VWAP, SEK 49.58, risk-free interest rate, –0.61 percent; volatility, 37 percent. As of December 31, 57,835 (57,835) warrants were outstanding under the program. The subscription period ended on January 15, 2021 and no shares were subscribed under the program.

Stock option program 2018 (LTI-2018)

In the second quarter of 2018, Medivir's employees purchased 51,864 warrants with a market value of SEK 5.63 each and a strike price of SEK 52.75 per share. The warrants can be exercised to subscribe for new class B shares during the period from December 16, 2021 through January 15, 2022. The 2018 valuation calculation was based on the following figures: term, 3.66 years; strike price, SEK 52.75; VWAP, SEK 39.66; risk-free interest rate, -0.16 percent; volatility, 32 percent. As of December 31, 51,864 (51,864) warrants were outstanding under the program.

Stock option program 2020 (LTI-2020)

At the Annual General Meeting on May 5, 2020, the shareholders decided to issue 600,000 warrants for the benefit of the comany´s employees. Every options were subscribed for free of charge by the wholly owned subsidiary Medivir Personal AB. The total of 600,000 warrants can be exercised for subscription of new B shares during the period 1 December 2023 until December 15, 2023. In the second quarter of 2020, Medivir's employees purchased 227,000 warrants with a market value of SEK 1.30 each and a strike price of SEK 31.40 per share. Of these 227,000 warrants, senior executives bought 185,000 warrants. During the third quarter of 2020, Medivir´s CEO purchased 300,000 warrants. These warrants were issued at a market value of SEK 1.00 with a strike price of SEK 31.40 per share. The total of 527,000 warrants can be exercised to subscribe for new class B shares during the period from December 1, 2023 through December 15, 2023. The 2020 valuation calculation was based on the following figures: term, 3.58 years; strike price, SEK 31.40; VWAP, SEK 15.70; risk-free interest rate, 0.0 percent; volatility, 41 percent.

On December 31, there were a total of 636,699 (106,699) outstanding warrants within the framework of LTI 2017, 2018 and 2020.

05 Leasing agreements including property rent

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Costs for the year1	–	–	4,689	5,041
Nominal value of future minimum lease payments for irrevocable leasing agreements including property rent:
Within one year	–	–	3,084	5,650
Between two and five years	–	–	10,598	22,600
Over five years	–	–	7,800	16,950
Total	–	–	21,482	45,200

1) Costs for the year refer primarily to the rental of premises by Medivir AB.

06 Profit/loss from participations in Group companies

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Dividends from subsidiaries	–	–	–	800
Impairment of capital contributions in subsidiaries	–	–	–	–
Total	–	–	–	800

07 Financial risks

The Group is, by virtue of its operations, exposed to different types of risks. The operations are affected by a number of factors that can impact the company's profit or loss and its financial position. The strategy entails the ongoing identification and management of risks, as far as possible. The risks can be divided into operational risks and financial risks and the section below describes the financial risk factors that are adjudged to be of the greatest significance in terms of Medivir's development, together with the way in which Medivir manages them in order to minimize the risk level. The main financial risks that arise as a result of the management of financial instruments comprise market risks (interest risk, currency risk and share price risk), credit risk, and liquidity and cash flow risk. Operational risks are described in a separate section of the Directors' Report.

Financial policy

Medivir has established a Group policy for its financial operations. The policy defines the financial risks and describes the way in which the company shall manage these risks. The policy states that the company must, at all times, maintain a liquidity that corresponds to at least twelve months' known future net cash disbursements.

Medivir has an agreement with SHB regarding the management of the company's funds. The investment regulations linked to the agreement specify how the funds may be invested. In the current capital

market, investments of liquid assets shall be made in such a way that the capital invested, first and foremost, is protected, and, if possible, provides a reliable and secure return. Investments are made in interest-bearing instruments, fixed income funds, and cash or cash equivalent instruments. Underlying instruments shall have a low risk level and a risk spread shall be sought when investing cash and cash equivalents. Investments may only be made in specified securities, which are low risk securities (such as Swedish bondsand papers issued by the Swedish State and A1-rated commercial papers).

Capital risk

An effective risk assessment reconciles Medivir's business opportunities and results with the requirements of shareholders and other stakeholders for sustainable profitability, stable long-term value growth, and control. The process of research and pharmaceutical development, all the way up to approved registration, is both highly risky and capital-intensive.

The Group's objective with regard to its capital structure is to secure the Group's ability to continue its operations such that it can continue to generate a return for its shareholders and benefits for other stakeholders, and to maintain an optimal capital structure in order to keep capital costs down.

To maintain, progress and expand its research portfolio, and thereby generate future value through both milestone payments and royalties, Medivir must have a strong capital base.

The consolidated equity totals SEK 141,905 thousand (184,456). The cash and cash equivalent position and short-term investments total SEK 70,007 thousand (134,509), and the equity/assets ratio is therefore 74.1 percent (62.8%).

The connection between categories and Medivir's Balance Sheet items

The Group, 31 Dec. 2020, SEK thousand	Financial assets recognized at fair value in the Income Statement	Financial assets valued at amortized cost	Financial liabilities valued at amortized cost	Total
Financial leasing receivables	–	–	–	–
Accounts receivable	–	15	–	15
Other short-term investments	55,969	–	–	55,969
Cash and bank balances	–	14,038	–	14,038
Accounts payable	–	–	-6,808	-6,808
Financial leasing liabilities	–	–	-1,600	-1,600
Total	55,969	14,053	-8,408	61,614

The Group, 31 Dec. 2019, SEK thousand	Financial assets recognized at fair value in the Income Statement	Financial assets valued at amortized cost	Financial liabilities valued at amortized cost	Total
Financial leasing receivables	–	27,390	–	27,390
Accounts receivable	–	63	–	63
Other short-term investments	100,209	–	–	100,209
Cash and bank balances	–	34,300	_	34,300
Accounts payable	–	–	-12,303	-12,303
Financial leasing liabilities	–	–	-43,882	-43,882
Total	100,209	61,753	-56,185	105,777

Parent Company, 31 Dec. 2020, SEK thousand	Financial assets recognized at fair value in the Income Statement	Financial assets valued at amortized cost	Financial liabilities valued at amortized cost	Total
Accounts receivable	–	15	–	15
Other short-term investments	55,969	–	–	55,969
Cash and bank balances	–	6,379	–	6,379
Accounts payable	–	–	-4,407	-4,407
Financial leasing liabilities	–	–	–	–
Total	55,696	6,394	-4,407	57,956

07 cont.

Parent Company, 31 Dec. 2019, SEK thousand	Financial assets recognized at fair value in the Income Statement	Financial assets valued at amortized cost	Financial liabilities valued at amortized cost	Total
Accounts receivable	–	63	–	63
Other short-term investments	100,209	–	–	100,209
Cash and bank balances	–	25,488	–	25,488
Accounts payable	–	–	-12,359	-12,359
Financial leasing liabilities	–	–	–	–
Total	100,209	25,551	-12,359	113,401

Financial assets and liabilities recognized at fair value

The table below shows financial instruments valued at fair value, based on the way in which they have been classified in the value hierarchy. The different levels are defined as follows:

Level 1 fair value is determined on the basis of listed prices on an active market for identical financial assets and liabilities.

Level 2 fair value is determined on the basis of observable information other than listed prices included in level 1.

Level 3 fair value is determined on the basis of valuation models where material input data is based on non-observable data. The Group has level 1 short-term investments. The short-term investments in the form of fixed income funds are managed as a single group of financial assets and are recognized at fair value in the Income Statement.

Carrying amount	Recognition at fair value at the end of the period, based on:
	Level 1 Level 2 Level 3

55,969	55,969 – –
55,969	55,969 – –

	Carrying amount	Recognition at fair value at the end of the period, based on:
The Group, 31 Dec. 2019, SEK thousand			Level 1 Level 2 Level 3
Financial assets recognized at fair value in the Income Statement:
Short-term investments	100,209	100,209	–	–
Total assets	100,209	100,209	–	–

Other financial assets and liabilities

The fair value of financial instruments such as accounts receivable, loan receivables, accounts payable and other non-interest-bearing financial assets and liabilities which are recognized at amortized cost less any amortization is deemed to correspond to the reported value due to the short anticipated term.

Market risks

Interest risk

Interest risk is the risk of a negative impact on cash flow or financial assets and liabilities resulting from changes in market rates of interest. Interest risk arises in two ways; the Group's investments in interest-bearing assets whose value changes when interest rates change and the cost of the Group's borrowings when interest rates change.

Medivir's cash and cash equivalents are invested in instruments such as bank and corporate commercial papers, fixed income and bond funds, fixed bank investments and special deposits. Changes in market rates of interest consequently affect Medivir's profit/loss by reducing or increasing returns on financial assets.

The Group's cash and cash equivalents, including short-term investments with a maximum term of three months, totaled SEK 70,007 thousand (134,509) on 31 December 2020. SEK 55,969 thousand (100,209) of this sum was invested in fixed income funds with discretionary management. An average return on cash and cash equivalents of 1.12 percent (0.47%) was achieved in 2020. The return has fluctuated during the year between -1.16 percent and 1.12 percent (0.08% and 0.72%). Assuming an average of existing short-term investments during the year, if the average return had been 1 percentage point higher or lower, the annualized positive or negative effect on the profit/loss would have been approximately SEK 700 thousand on a full-year basis. Falling interest rates result in a reduction in the return on the Group's cash or cash equivalents.

Currency risk

Currency risk is the risk that the fair value or future cash flows associated with financial instruments vary due to changes in foreign exchange rates.

The profit/loss is affected when costs and revenues in foreign currencies are translated into Swedish kronor (transaction risk).
The Balance Sheet is affected when assets and liabilities in foreign currencies are translated into Swedish kronor (translation risk).

In accordance with Medivir's financial policy, the Group has not made use of currency hedging in 2020. Income and expenses have consequently been affected by fluctuations in foreign currency exchange rates. The company's operating profit/loss was affected during the financial year by a net of SEK -241 thousand (-1,974) in exchange rate profits/losses and the exchange rate items component of net financial items totals SEK 0 thousand (1,638).

All trading in foreign currency was conducted at the best rate of exchange attainable at the point of exchange. Many of Medivir's contracts involve payments in GBP, EUR and USD, and accounts payable and accounts receivable consequently have currency exposure.

The Group's transactions in foreign currency consist of revenues from partners, pharmaceutical sales, purchases of services and goods and other operating costs.

The Group's transactions in its most common currencies and the theoretical effect on profit or loss arising if the average rates of exchange for each currency change by 5 percent are shown below.

07 cont.

2020	Net sales	Costs	Operating profit/loss	Change +/– 5%
EUR	8,838	355	9,193	+/– 460
USD	5,110	-14,770	-9,660	+/–483
GBP	–	-13,126	-13,126	+/– 656
DKK	–	-2,204	-2,204	+/– 110
SEK	–	-19,589	-19,589	+/– 0
Other currencies	–	-3,598	-3,598	+/– 180
Total	13,948	-52,932	-38,984	+/– 970

2019	Net sales	Costs	Operating profit/loss	Change +/– 5%
EUR	8,724	-5,404	3,320	+/– 166
USD	–	-37,505	-37,505	+/– 1,875
GBP	–	-9,027	-9,027	+/– 451
DKK	–	-3,020	-3,020	+/– 151
SEK	2,659	-78,302	-75,643	+/– 0
Other currencies	–	-4,104	-4,104	+/– 205
Total	11,383	-137,362	-125,979	+/– 2,517

The table shows the currency exposed operating income and operating expenses as net amounts per currency in SEK thousand for continuing operations.

A sensitivity analysis shows that a strengthening of the Swedish krona by 5 percent against the above currencies' annualized average exchange rates would have entailed an improvement in the Group's net profit/loss of SEK 970 thousand (2,517). A corresponding weakening of the Swedish krona would have yielded a deterioration in the net profit/loss of SEK 970 thousand (2,517).

Share price risk of unlisted shares

In 2007, Medivir received shares in conjunction with the new share issue conducted by Epiphany Biosciences, Medivir's licensing partner for the MIV-606 (EPB-348) shingles project and shares in conjunction with the new share issue conducted by Presidio Pharmaceuticals, Inc., Medivir's licensing partner for the MIV-410 (PTI-801) compound. The value of the shares held, which totaled SEK 18,793 thousand, is now impaired to SEK 0. Medivir has classified the shares as financial assets held for sale in accordance with IFRS 9.

Credit risk (counterparty risk)

Credit risk is the risk that a counterparty is unable to fulfill its contracted obligations to Medivir, thus causing a financial loss for the company.

Medivir invests its cash and cash equivalents with Swedish asset managers with high credit ratings, P-1 from Moody's. During the year, these investments did not experience any value changes resulting from changes to asset

managers' credit risk. The credit risks in relation to the above investments are deemed to be minor.

Medivir may also be exposed to credit risk in accounts receivable. Medivir's partnership agreements are with established pharmaceutical companies and historically, Medivir has never needed to impair accounts receivable. Medivir had SEK 15 thousand (63) in outstanding accounts receivable on the reporting date. The accounts receivable are reported at amortized cost, taking into account expected credit loss provisions. Accounts receivable in foreign currencies are converted at the closing day rate. Accounts receivable are exposed to credit risk and, in principle, to exchange rate risk. On 31 December 2020, however, all accounts receivable were denominated in Swedish kronor and hence no exchange rate risk exists. When assessing the impairment requirement for accounts receivable, the company primarily takes into account such factors as the time passed since the due date, evaluations of the customer's solvency, indications of insolvency, and individual agreements with the customer in question. In 2020, a bad debt loss of SEK 23 thousand (0) was reported.

	GROUP		PARENT COMPANY
Age analysis, accounts receivable, SEK thousand	2020	2019	2020	2019
Not due	15	–	15	–
Due, 1−90 days	–	39	–	39
91+ days	–	24	–	24
Total	15	63	15	63

Other receivables total SEK 3,199 thousand (3,554), of which SEK 0 thousand (0) was due on the reporting date.

Liquidity and cash flow risk

Liquidity risk is the risk of Medivir experiencing difficulties, in future, in fulfilling their obligations associated with financial liabilities. A financial liability is each liability in the form of a contracted obligation to pay cash or other financial assets to another company, or to exchange a financial asset or financial liability with another company subject to terms that may be disadvantageous for the company.

Medivir's management and Board of Directors have continuous access to information on the company's equity and cash and cash equivalents. Liquidity and cash flow forecasts are prepared continuously on the basis of anticipated cash flows in order to monitor liquidity capacity.

Medivir had a negative debt/equity ratio at the period end, i.e. the available cash and bank balances and short-term investments, as well as interestbearing receivables, exceed the Group's interest-bearing liabilities (leases). Current liabilities and ongoing operating expenses for 2021 are covered by Medivir's cash position and after completed directed and rights issues during the first quarter of 2021, which contributed approximately SEK 223 million before transactions costs. The company's management is of the opinion that Medivir is a going concern.

The following table shows the contractual undiscounted cash flows from the Group's financial liabilities, broken down by the time which, on the closing day, remains until the contractual due date.

	GROUP			PARENT COMPANY
31 Dec. 2020	Less than 1 year	2–3 years	More than 3 years	Less than 1 year	2–3 years	More than 3 years
Accounts payable	6,808	–	–	6,810	–	–
Leasing agreements	3,084	5,398	13,000	3,084	5,398	13,000

	GROUP			PARENT COMPANY
31 Dec. 2019	Less than 1 year	2–3 years	More than 3 years	Less than 1 year	2–3 years	More than 3 years
Accounts payable	12,303	–	–	12,359	–	–
Leasing agreements	14,309	28,618	27,526	14,309	28,618	27,526

The amounts maturing within 12 months are consistent with the reported amounts, because the discount effect is insignificant.

similar profit/loss items

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Interest income, Group companies	–	–	–	340
Interest income, other	1	48	1	48
Interest income, lease	–	1,313	–	–
Dividends from fixed income fund	64	–	64	–
Exchange rate differences	–	1,948	–	1,946
Change in fair value of fixed income fund, unrealized	762	1,140	762	1,140
Total	827	4,449	827	3,474

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Interest expenses, Group companies	–	–	–	–
Interest expenses, other	-7	-26	-7	-20
Interest expenses, lease	-540	-1,289	–	–
Exchange rate differences	–	-490	–	-490
Change in fair value of fixed income fund, unrealized	–	–	–	–
Total	-547	-1,805	-7	-510

10 Tax

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Tax on profit/loss for the year
Current tax	–	-106	–	–
Change in deferred tax	–	–	–	–
Tax on profit/loss for the year	–	-106	–	–
Applicable tax rate for the Parent Company	21.4%	21.4%	21.4%	21.4%
Difference between the Group's tax reported in the Income Statement and tax based on applicable tax rate
Profit/loss before tax	-42,620	-123,334	-44,937	-122,282
Tax at the applicable rate for the Parent Company	9,121	26,393	9,616	26,168
Tax effect of non-deductible costs	-48	-74	-48	-72
Tax effect of non-taxable income	131	171	–	171
Effect of foreign tax rates	–	–	–	–
Adjustment of tax in respect of previous years	–	–	–	–
Tax effect of loss carry-forwards not previously capitalized	-9,204	-26,597	-9,568	-26,268
Reported tax	0	-106	0	0

At the year-end, the total accumulated taxable loss of the Group was SEK 1,159 million (1,114) of which SEK 0 million (0) has been capitalized. The remaining loss comprises primarily losses within the Parent Company. There is no time restriction on the utilization of capitalized loss.

11 Earnings per share

	GROUP
	2020	2019
Total operations
Basic earnings per share, SEK1	-1.75	-5.08
Diluted earnings per share, SEK2	-1.75	-5.08
Net profit/loss for the year, SEK thousand	-42,620 -123,440
Average number of shares, '0003	24,288	24,288

1) Basic earnings per share – the profit/loss after financial items less the tax expense for the period divided by the average number of shares.

2)Diluted earnings per share – the profit/loss after financial items less the tax expense for the period divided by the average number of shares and outstanding share warrants, adjusted for any dilution effect.

3) The average number of shares is a calculated average over 12 months in 2020.

Earnings per share have been calculated as the net profit/loss for the year divided by the average number of shares during the year.

12 Intangible fixed assets

	GROUP		PARENT COMPANY
2020, SEK thousand	Capital ized R&D expend - iture	Other	Capital ized R&D expend - iture	Other
Cost at beginning of the year	119,084	4,323	119,084	4,323
Additions	–	–	–	–
Sales and disposals	–	–	–	–
Closing accumulated cost	119,084	4,323	119,084	4,323
Depreciation at beginning of the year	-3,895	-2,894	-3,895	-2,894
Depreciation for the year	–	-21	–	-21
Sales and disposals	–	–	–	–
Accumulated depreciation at year-end	-3,895	-2,915	-3,895	-2,915
Depreciation at beginning of the year	-18,877	-1,400	-18,877	-1,400
Depreciation for the year	–	–	–	–
Sales and disposals	–	–	–	–
Closing accumulated depreciation	-18,877	-1,400	-18,877	-1,400
Book value at year-end	96,312	8	96,312	8

Capitalized research and development expenditure

Capitalized expenditure for research and development work relates to capitalized development expenditure for the birinapant and remetinostat research programs acquired. The useful life of completed projects is based on the lifetime of the underlying patents and totals 10 years. Amortization is calculated on a straight-line basis in order to spread the development costs over the estimated useful life. Amortization of other intangible assets acquired, such as development projects, is effected linearly over the useful life and is linked to the lifetime of the patents obtained. Birinapant and Remetinostat are not yet completed and amortization has not yet begun.

Other

Other intangible assets relates to capitalized development expenditure on ERP systems. The useful life is estimated at 5 years.

	GROUP		PARENT COMPANY
2019, SEK thousand	Capital ized R&D expend - iture	Other	Capital ized R&D expend - iture	Other
Cost at beginning of the year	119,545	4,680	119,545	4,680
Additions	–	–	–	–
Sales and disposals	-461	-357	-461	-357
Closing accumulated cost	119,084	4,323	119,084	4,323
Depreciation at beginning of the year	-3,895	-2,351	-3,895	-2,351
Depreciation for the year	–	-543	–	-543
Sales and disposals	–	–	–	–
Accumulated depreciation at year-end	-3,895	-2,894	-3,895	-2,894
Depreciation at beginning of the year	-18,877	-2,218	-18,877	-2,218
Depreciation for the year	–	–	–	–
Sales and disposals	–	818	–	818
Closing accumulated depreciation	-18,877	-1,400	-18,877	-1,400
Book value at year-end	96,312	29	96,312	29

Impairment testing

Intangible assets with an indefinite useful life are subject to impairment testing at least once every year. Assets depreciated or amortized according to plan are subject to impairment testing whenever events or changes in circumstances indicate that their carrying amount is not recoverable.

Research projects that have been acquired but which are not yet completed for sale are subject to annual impairment testing. The value is also monitored and reviewed if there are indications to suggest that the carrying amount is not recoverable. This might, for example, happen in conjunction with failed research results or in the absence of the resources required to render the asset ready for sale. An impairment test has been performed at the end of 2020 and the analysis shows that there is no indication of impairment.

13 Property, plant and equipment

SEK thousand	GROUP		PARENT COMPANY
Buildings and land1	2020	2019	2020	2019
Cost at beginning of the year	9,614	4,245	9,614	4,245
Reclassification	–	3,992	–	3,992
Sales and disposals	–5,587	–	–5,587	–
Capital expenditure	–	1,377	–	1,377
Closing accumulated cost	4,027	9,614	4,027	9,614
Depreciation at beginning of the year	-3,733	-3,905	-3,733	-3,905
Sales and disposals	248	984	248	984
Depreciation for the year	-114	-812	-114	-812
Accumulated depreciation at year-end	-3,599	-3,733	-3,599	-3,733
Book value at year-end	428	5,881	428	5,881

Equipment, tools, fixtures and fittings	2020	2019	2020	2019
Cost at beginning of the year	12,996	102,253	12,996	102,253
Reclassification	–	-3,992	–	-3,992
Capital expenditure	–	–	–	–
Sales and disposals	-4,056	-85,265	-4,056	-85,265
Closing accumulated cost	8,940	12,996	8,940	12,996
Depreciation at beginning of the year	-11,400	-91,765	-11,400	-91,765
Depreciation for the year	-1,495	-2,823	-1,495	-2,823
Sales and disposals for the year	4,047	83,188	4,047	83,188
Accumulated depreciation at year-end	-8,848	-11,400	-8,848	-11,400
Book value at year-end	92	1,596	92	1,596

GROUP PARENT COMPANY

1) The value of the Group's buildings corresponds to the incurred cost of improvements to rental properties.

The balance sheet shows the following amounts related to leasing agreements:

SEK thousand	GROUP
Right-of-use assets	2020	Acquisition	2019
Properties	20,295	2,346	17,949
Equipment	586	–	586
Cars	516	338	178
Closing accumulated cost	21,397	2,684	18,713

The statement of profit or loss shows the following amounts related to leasing agreements:

SEK thousand GROUP

Depreciation charge of right-of-use assets	2020	Depreciation for the year	2019
Properties	-4,993	-2,428	-2,565
Equipment	-565	-311	-254
Cars	-148	-60	-88
Accumulated depreciation at year-end	-5,706	-2,799	-2,907
Accumulated depreciation at year-end	15,691		15,806

The total cash outflow for leases in 2020 was SEK 6,367 thousand (2,232).

The Group as lessor

The Group rented out a building in the UK until December 2020 and that letting covers largely the same terms and leasing period as the main lease A financial lease receivable is therefore recognized in the statement of

financial position, allocated into a non-current and current component. Interest income is distributed over the lease period. This is offset againstthe gross investment in the lease and reduces these capital amounts. The amounts are shown in Note 8.

The following table shows the contractual undiscounted cash flows fromthe Group's financial lease receivables, broken down by the time which, on the closing day, remains until the contractual due date.

	KONCERNEN
31 Dec. 2020	< 1 år	2–3 år	> 3 år
Financial receivable lease	0	0	0

		KONCERNEN
31 Dec. 2019	< 1 år	2–3 år	> 3 år
Financial receivable lease	7,814	15,628	7,544

The difference between the undiscounted cash flows amounting to SEK 30,986 thousand and the reported finance lease receivable amounting to SEK 27,390 thousand relates to unearned interest income of SEK 3,596 thousand.

15 Participations in Group companies

	PARENT COMPANY
SEK thousand	2020	2019
Opening cost	150,267	150,267
Divestments	–	–
Shareholders' contributions made	–	–
Closing accumulated cost	150,267	150,267
Depreciation at beginning of the year	-150,167 -150,167
Depreciation for the year	–	–
Closing accumulated depreciation	-150,167 -150,167

Book value at year-end	100	100

Subsidiary:	Corporate ID no.	Registered office	Number of shares	Share of capital	Book value, 2020	Book value, 2019
Glycovisc BioTech AB	556535-0005	Huddinge	5,000	100%	0	0
Medivir UK Ltd1	3496162	Essex (UK)	2,000,007	100%	0	0
Medivir Personal AB	556598-2823	Huddinge	1,000	100%	100	100
Tetralogic Birinapant UK Ltd1	9497530	Birmingham (UK)	2	100%	0	0
Tetralogic Shape UK Ltd1	9497577	Birmingham (UK)	2	100%	0	0
Total					100	100

1) The company is exempted from statutory audit requirements, pursuant to section 476 of The Companies Act, 2006.

16 Financial assets held for sale

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Epiphany Biosciences
Opening book value	14,165	14,165	14,165	14,165
Accumulated impairment loss	-14,165	-14,165	14,165	-14,165
Closing book value	0	0	0	0
Presidio Pharmaceuticals Inc.
Opening book value	4,628	4,628	4,628	4,628
Accumulated impairment loss	-4,628	-4,628	-4,628	-4,628
Closing book value	0	0	0	0
Total	0	0	0	0

In 2012, valuations carried out by independent parties showed that the market value was significantly lower than the carrying amount. The value impairment was adjudged to be significant and lasting and the holdings in Epiphany and Presidio were accordingly impaired to SEK 0. Testing of fair value did not give rise to any changes in value in 2020. As of 2014, gross values in respect of the opening book value and accumulated impairment losses are reported as totals per share holding.

17 Prepaid expenses and accrued income

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Prepaid rent	–	–	650	1,722
Licensing fees	822	1,467	822	1,467
Accrued royalty income	1,200	1,365	1,200	1,365
Repairs and Maintenance	22	30	22	30
Trade literature and publications	–	44	–	44
Insurance	260	76	151	76
Other items	2,628	3,763	1,978	–
Total	4,932	6,745	4,823	4,704

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Fixed income and bond funds	55,969	100,209	55,969	100,209
Cash and bank balances	14,038	34,300	6,380	25,488
Total	70,007	134,509	62,349	125,697

The Group's net available cash on the balance sheet date amounted to SEK 70,007 thousand.

19 Provisions

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Opening provisions	19,782	37,669	19,782	37,669
Outgoing provisions	-19,782	-18,293	-19,782	-18,293
Additional provisions	–	406	–	406
Total	–	19,782	–	19,782

Refers to provision for restructuring of personnel and premises in 2018.

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Accrued personnel costs	5,619	5,813	5,619	5,813
Accrued research costs	4,846	5,034	4,846	5,034
Deferred royalty payments	10,369	13,734	10,369	13,734
Other items	4,580	5,435	4,583	1,750
Total	25,414	30,016	25,417	26,331

There are no pledged assets.

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Parent Company guarantees for subsidiary companies	–	–	5,000	5,000
Total	–	–	5,000	5,000

Research and development undertakings linked to milestones

Medivir has several ongoing research and development partnerships, including in-licensed projects or similar kinds of arrangement, with a variety of parties. These partnerships may oblige Medivir to make payments in conjunction with the achievement of research, launch or net sales targets. The company is, however, generally entitled to terminate such partnership agreements

without incurring any costs thereby. Medivir does not classify research and development milestones as intangible assets until a payment obligation of this kind arises, which is generally when the company reaches pre-determined points in the development cycle. The table below shows Medivir's contingent liabilities in the form of potential development and net sales payments that Medivir may be obliged to make during the course of these partnerships.

SEK thousand	Total	Within 12 months	12–24 months	25–48 months	48 months +
Future contingent liabilities linked to the development cycle	572,218	–	109,270	275,628	187,320
Future contingent liabilities linked to net sales targets	273,844	–	–	–	273,844
Total	846,062	–	109,270	275,628	461,164

The table includes all potential payments for milestones achieved during ongoing research and development agreements. Net sales-related milestone payments refer to the maximum possible disbursement based on specified net sales levels when a product has reached the market in accordance with the agreements entered into. The amounts do, however, exclude variable payments based on sales volumes (known as royalty payments), which are carried as expenses in conjunction with the recognition of the sale. The table also excludes those payments booked as assets in the Balance Sheet on 31 December 2020.

The future contingent liabilities reported represent contractual payments and are not discounted or risk adjusted. As stated in the company's risk factors on pages 23-25, pharmaceutical development is a complicated and risky process that can fail at any stage of the development process due to a wide variety of factors (such as failure to obtain regulatory approval, unfavorable data from ongoing trials, adverse events, or other safety aspects). The date of any disbursement and entering as a liability in the company's Balance Sheet is based on the company's assumptions regarding the likelihood of reaching relevant milestones. No contingent liabilities were booked in 2020 since the company assessed that the likelihood of reaching the milestones is not yet high enough.

23 Cash flow analysis, supplemental disclosures

	GROUP		PARENT COMPANY
SEK thousand	2020	2019	2020	2019
Adjustments for non-cash items
Depreciation, amortization and impairment of assets	4,430	7,086	1,631	4,179
Unrealized exchange rate differences	–	–		–
Capital gain/loss on sale/disposal of fixed assets	–	–		–
Capital gain/loss on the sale of operations/subsidiaries	–	–		–
Change in restructuring provisions	-16,968	-18,293	-19,782	-18,293
Share savings plan: value of employees' service	–	–	–	–
Other	-1,399	–	2,878	–
Total	-13,937	-11,207	-15,273	-14,145

Reconciliation of net debt

The net debt and changes in the net debt in 2020 are analyzed below.

	GROUP		PARENT COMPANY
	2020	2019	2020	2019
Cash and cash equivalents	14,038	34,300	6,380	25,488
Short-term investments	55,969	100,209	55,969	100,209
Current loan receivables	–	6,363	–	–
Non-current loan receivables	–	21,027	–	–
Non-current financial liabilities	-14,888	-37,153	–	–
Current financial liabilities	-1,600	-6,729	–	–
Net debt	53,519	118,017	62,349	125,697

24 Cont.

Group	Other assets		Other liabilities
	Cash and cash equivalents/ bank overdraft facility	Short-term investments	Loan receivables maturing within 1 year	Loan receivables maturing after 1 year	Loan liabilities maturing within 1 year	Loan liabilities maturing after 1 year	Total
Net debt on 1 January 2020	34,300	100,209	6,363	21,027	-6,729	-37,153	118,017
Additional items IFRS 16	–	–	–	–	–	-2,347	-2,347
Cash flow	-20,262	-44,240	–	–	–	–	-64,502
Amortization	–	–	-6,346	–	6,729	5,984	6,367
Reclassification short-term component	–	–	–	–	-1,600	1,600	–
Exchange rate differences	–	–	–	–	–	–	–
Other non-cash items	–	–	-17	-21,027	–	17,028	-4,016
Net debt on 31 December 2020	14,038	55,969	–	–	-1,600	-14,888	53,519

Group		Other assets		Other liabilities
	Cash and cash equivalents/ bank overdraft facility	Short-term investments	Loan receivables maturing within 1 year	Loan receivables maturing after 1 year	Loan liabilities maturing within 1 year	Loan liabilities maturing after 1 year	Total
Net debt on 1 January 2019	47,175	239,106	–	–	–	–	286,282
Additional items IFRS 16	–	–	6,363	25,454	-8,893	-41,578	-18,654
Cash flow	-11,527	-138,897	–	–	–	–	-150,424
Amortization	–	–	-4,427	–	6,659	–	2,232
Reclassification short-term component	–	–	4,427	-4,427	-4,425	4,425	–
Exchange rate differences	-1,349	–	–	–	–	–	-1,349
Other non-cash items	–	–	–	–	-70	–	-70
Net debt on 31 December 2019	34,299	100,209	6,363	21,027	-6,729	-37,153	118,017

Parent Company	Other assets		Other liabilities
	Cash and cash equivalents/ bank overdraft facility	Short-term investments	Loan receivables maturing within 1 year	Loan receivables maturing after 1 year	Loan liabilities maturing within 1 year	Loan liabilities maturing after 1 year	Total
Net debt on 1 January 2020	25,488	100,209	–	–	–	–	125,697
Cash flow	-19,108	-44,240	–	–	–	–	-63,348
Redemption program	–	–	–	–	–	–	–
Exchange rate differences	–	–	–	–	–	–	–
Other non-cash items	–	–	–	–	–	–	–
Net debt on 31 December 2020	6,380	55,969	–	–	–	–	62,349

Parent Company	Other assets	Other liabilities
	Cash and cash equivalents/ bank overdraft facility	Short-term investments	Loan receivables maturing within 1 year	Loan receivables maturing after 1 year	Loan liabilities maturing within 1 year	Loan liabilities maturing after 1 year	Total
Net debt on 1 January 2019	36,740	239,106	–	–	–	–	275,847
Cash flow	-11,253	-138,897	–	–	–	–	-150,150
Redemption program	–	–	–	–	–	–	–
Exchange rate differences	–	–	–	–	–	–	–
Other non-cash items	–	–	–	–	–	–	–
Net debt on 31 December 2019	25,488	100,209	–	–	–	–	125,697

	KONCERNEN		MODERBOLAGET
	2020	2019	2020	2019
Income effect of renegotiated and divested leases	10,139	–	8,466	–
Reversed liabilities for royalty commitments	5,126	–	5,126	–
Capital gain sale of tangible fixed assets	1,358	–	1,358	–
Reimbursement for previous clinical trials	6,482	–	6,482	–
Exchange rate differences	1,287	2,615	1,287	2,615
Other	2,915	44	2,190	44
Total	27,307	2,659	24,909	2,659

License agreement with IGM Biosciences for birinapant

In January the company signed an exclusive license agreement with IGM Biosciences, Inc. for birinapant. Medivir received a payment of USD 1 million after signing, which is to be followed by an additional USD 1.5 million when IGM includes birinapant in phase I clinical trials. In addition, the agreement entitles Medivir to milestone payments and royalties.

Rights issue of class B shares

A rights issue of class B shares with preferential rights for existing shareholders was completed in early February. Through the rights issue, which was oversubscribed to 93.5 percent, Medivir received approximately SEK 170 million before transaction costs. An EGM resolved on a reduction of the share capital.

Over-allotment option

The Board of Directors decided to exercise the over-allotment option of SEK 25 million, directed to the specialist investor HealthInvest.

Directed new share issue

An Extraordinary General Meeting on March 11, 2021, decided on a directed new share issue of approximately SEK 28 million to Linc AB. Owner of Linc AB is Bengt Julander, Member of the Board of Medivir.

Agreement with Ubiquigent for USP7

In February 2021 a licensing agreement with Ubiquigent was signed for the preclinical research program USP7.

CEO to leave his position at the AGM on May 5, 2021

In March 2021, it was announced that Yilmaz Mahshid will leave his position as CEO of Medivir at the Annual General Meeting on May 5, for personal reasons.

Nomination Committee proposal for a new Board of Directors ahead of 2021 AGM

The Board of Directors proposes that the accumulated loss of SEK -54,176,827 be carried forward.

Attestation

The Board of Directors and the Chief Executive Officer hereby attest that the Consolidated Accounts have been prepared in accordance with the IFRS international financial reporting standards, as adopted by the EU, and that they present a true and fair view of the Group's financial position and results of operations. The Annual Accounts have been prepared in accordance with generally accepted accounting principles and provide a true and fair view of the Parent Company's financial position and results of operations.

The Directors' Report for the Group and the Parent Company provides a true and fair view of the development of the Group's and the Parent Company's operations, financial positions and results of operations and describes significant risks and uncertainty factors facing the companies included in the Consolidated Accounts.

Stockholm, 25 March 2021

Helena Levander Uli Hacksell Lennart Hansson Chairperson of the Board Member of the Board Member of the Board

Bengt Julander An van Es-Johansson Bengt Westermark Member of the Board Member of the Board Member of the Board

Yilmaz Mahshid CEO and President

Our Audit Report was submitted on 25 March 2021 Öhrlings PricewaterhouseCoopers AB

Tobias Stråhle Authorized public accountant

Auditor's Report

To the general meeting of the shareholders of Medivir AB (publ), corporate identity number 556238-4361

Report on the annual accounts and consolidated accounts Opinions

We have audited the annual accounts and consolidated accounts of Medivir AB (publ) for the year 2020 except for the corporate governance statement on pages 26-31. The annual accounts and consolidated accounts of the company are included on pages 20-65 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 parent company and the group as of 31 December 2020 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 2020 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. Our opinions do not cover the corporate governance statement on pages 26-31. 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 Board of Directors in accordance with the Audit Regulation (537/2014) Article 11.

Basis for Opinions

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.

Our audit approach Audit scope

We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the group operates.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Key audit matters

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 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.

Valuation of intangible fixed assets

Medivir develops the research projects Remetinostat and Birinapant. The research projects have not yet been completed and depreciation has not begun.

As described in the directors report under the section "risk factors" on page 23-25 development of pharmaceuticals is a risk filled and time-consuming process. Furthermore, the section entitled "Important estimates and assessments" on page 49 shows that intangible assets are associated with assessments and estimates of the future. How the assessment was made is disclosed in note 12 on page 57. Since the 2019 Annual General Meeting, activities related to research and development are monitored by the Board and the company's management team.

According to IFRS, it is required that assets with indefinite lifespan are tested for impairment at least annually. The trial means that management needs to apply assessments and estimates of the future to ensure the book value does not exceed fair value.

For the above reasons, valuation of intangible fixed assets is considered to be a Key audit matter.

Provisions and contingent liabilities

One question for company management to assess is how obligations linked to payments that fall due when specifically research goals are met are to be handled in the accounts.

Medivir's commitments are reported as contingent liabilities in note 22 on page 62. When the probability of payment is estimated to exceed 50%, the amount corresponding to the obligation must be reported as a liability. At year end 31 December 2020, the company has made the assessment that the probability criterion has not been met and that no part of the agreed obligations should be reported as a liability.

The examination means that management needs to apply assessments and estimates about the future to determine at what time a debt should be recognized in the company's balance sheet and how large a part of the obligation should be reported.

For the above reasons, contingent liabilities and provisions is considered to be a Key audit matter.

Key audit matter How our audit addressed the Key audit matter

Our review has included, but is not limited to, the following measures

¤ We have evaluated the company's process for establishing an impairment test
¤ With the support of PwC's valuation specialists, we have checked the mathematical correctness of the model and evaluated whether it is based on accepted valuation methods.
¤ With the support of PwC's valuation specialists, we have evaluated the reasonableness of the input data in the model by checking information from external data sources and reports.
¤ We have obtained the company management's comments on the development of the research projects and the results communicated through the company's press releases.

Our review has included, but is not limited to, the following measures

¤ Obtained and reviewed board minutes, other board material and the strategic work within the board.
¤ Obtained and evaluated information from the company's management team.
¤ Reconciled the amounts against underlying agreements.
¤ Obtained and evaluated the management's assessment of ongoing studies and business negotiations to evaluate the probability that payment of obligations may take place.

Other Information than the annual accounts and consolidated accounts

This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1–19 and 70–74 The Board of Directors and the Managing Director are responsible for this other information.

Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.

In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.

If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company's and the group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intend to liquidate the company, to cease operations, or has no realistic alternative but to do so.

Auditor's responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.

A further description of our responsibility for the audit of the annual accounts and consolidated accounts is available on Revisorsinspektionen's website: www.revisorsinspektionen.se/revisornsansvar. This description is part of the auditor´s report.

Report on other legal and regulatory requirements Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Director's and the Managing Director of Medivir AB (publ) for the year 2020 and the proposed appropriations of the company's profit or loss.

We recommend to the general meeting of shareholders that the loss dealt with in accordance with the proposal in the statutory administration report and that the members of the Board of Director's and the Managing Director be discharged from liability for the financial year.

Basis for Opinions

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.

Responsibilities of the Board of Directors and the Managing Director

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' 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.

Auditor's responsibility

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:

¤ has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
¤ in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

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 responsibility for the audit of the administration is available on Revisorsinspektionen's website: www. revisorsinspektionen.se/revisornsansvar. This description is part of the auditor's report.

The auditor's examination of the corporate governance statement

The Board of Directors is responsible for that the corporate governance statement on pages 26-31 has been prepared in accordance with the Annual Accounts Act.

Our examination of the corporate governance statement is conducted in accordance with FAR's auditing standard RevR 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.

Öhrlings PricewaterhouseCoopers AB, Torsgatan 21 Stockholm, was appointed auditor of Medivir AB (Publ) by the general meeting of the shareholders on the May 5, 2020 and has been the company's auditor since the February 29, 1996. Tobias Stråhle has been the auditor in charge since May 3, 2016.

Täby 25 March 2021

Öhrlings PricewaterhouseCoopers AB

Tobias Stråhle Authorized public accountant

Key ratios

Group	2020	2019	2018	2017	2016	2015
EBITDA, SEK thousand	-38,470	-118,894	-326,498	-342,580	-278,919	95,662
EBIT, SEK thousand	-42,900	-125,979	-351,030	-362,835	-312,380	55,428
Operating margin, %	-307.6	-1,444.0	-1,471.0	-990.3	-335.7	11.7
Profit margin, %	-305.6	-1,413.7	-1,468.7	-981.8	-329.7	9.7
Debt/equity ratio, multiple	0.3	0.6	0.4	0.2	0.1	0.1
Return on:
shareholders' equity, %	-30.0	-50.2	-85.3	-32.1	-18.5	1.8
capital employed, %	-26.6	-41.0	-85.3	-32.0	-19.3	2.7
total capital, %	-22.0	-34.6	-67.7	-28.3	-17.3	2.5
Equity/assets ratio, %	74.1	62.8	73.4	83.4	90.2	89.7
Average number of shares, '000	24,288	24,288	23,956	21,963	26,941	29,048
Number of shares at year-end, '000	24,288	24,288	24,288	20,319	26,966	26,966
Earnings per share, SEK
Basic earnings per share, all operations	-1.75	-5.08	-14.62	-16.40	10.50	2.59
Diluted earnings per share, all operations	-1.75	-5.08	-14.62	-16.40	10.47	2.56
Equity per share, before and after dilution, SEK1	5.84	7.59	12.67	25.31	64.38	54.04
Net worth per share, before and after dilution, SEK1	5.84	7.59	12.67	25.31	64.38	54.04
Cash flow per share from operating activities, SEK	-2.39	-6.10	-13.30	-16.32	-6.68	11.95
Cash flow per share after investments, SEK	-2.43	-5.92	-13.59	-16.94	23.05	11.44
Cash flow per share after financing activities, SEK	-2.67	-6.19	-7.58	-56.03	23.03	-10.99
Dividend per share, SEK	–	–	–	–	–	–
Number of outstanding share warrants	636,699	109,699	109,699	57,835	62,842	238,254
Capital employed	158,393	228,338	307,606	514,057	1,733,922	1,450,109

1) IAS 33 states that potential ordinary shares do not give rise to any dilution effect when their conversion to ordinary shares entails an improvement in earnings per share,

which would be the case in conjunction with a conversion of the outstanding share warrants in Medivir.

Six-year summary

Group, SEK thousand	2020	2019	2018	2017	2016	2015
Income Statements
Net sales	13,948	8,724	23,863	36,639	93,043	474,274
Total expenses	-56,848	-134,703	-374,893	-399,474	-405,423	-418,846
Operating profit/loss	-42,900	-125,979	-351,030	-362,835	-312,380	55,428
Net financial items	280	2,645	555	3,106	5,655	-9,225
Profit/loss after financial items	-42,620	-123,334	-350,475	-359,729	-306,725	46,203
Tax	–	-106	161	-490	11,870	-14,495
Profit/loss after tax	-42,620	-123,440	-350,314	-360,218	-294,855	31,708

31 Dec. 2020 31 Dec. 2019 31 Dec. 2018 31 Dec. 2017 31 Dec. 2016 31 Dec. 2015

Balance Sheets
Intangible fixed assets	96,320	96,341	96,885	112,742	111,854	398,022
Property, plant and equipment	16,211	23,283	10,828	14,436	21,956	26,283
Financial fixed assets	–	21,027	–	–	–	–
Deferred tax receivables	–	–	–	–	1,002	–
Inventories and current receivables	8,924	18,302	25,358	21,213	88,209	114,008
Liquid assets and short-term investments	70,007	134,509	286,282	467,780	1,698,481	1,077,942
Shareholders' equity	141,905	184,456	307,606	514,057	1,732,912	1,450,109
Deferred tax liability/provisions	–	–	–	–	–	351
Long-term interest-bearing liabilities	14,888	37,153	–	–	–	–
Long-term non-interest-bearing liabilities	–	16,879	14,763	–	–	–
Current liabilities	34,670	54,974	96,983	102,113	188,591	165,795
Balance Sheet total	191,462	293,462	419,352	616,171	1,921,503	1,616,255

Definitions

Average number of shares

The unweighted average number of shares during the year.

Basic earnings per share

Profit/loss after financial items less full tax divided by the average number of shares.

Capital employed

Balance Sheet total less non-interestbearing liabilities including deferred tax liabilities.

Cash flow per share

Cash flow divided by the average number of shares.

Debt/equity ratio

Interest-bearing liabilities divided by shareholders' equity.

Diluted earnings per share

Earnings per share after financial items less full tax divided by the average number of shares and outstanding share warrants adjusted for any dilution effect.

EBIT

Profit/loss before financial items and tax.

EBITDA

Operating profit/loss before depreciation and amortization, financial items and tax.

Equity/assets ratio

Shareholders' equity in relation to the Balance Sheet total.

Net worth per share

Shareholders' equity plus hidden assets in listed shares divided by the number of shares at the period-end.

Operating margin

Operating profit/loss as a percentage of net sales.

Profit margin

Profit/loss after financial items as a percentage of net sales.

Return on capital employed

Profit/loss after financial items plus financial expenses as a percentage of average capital employed.

Return on equity

Profit/loss after financial items as a percentage of average equity.

Return on total capital

Profit/loss after financial items plus financial expenses as a percentage of the average Balance Sheet total.

Shareholders' equity

The sum of non-restricted and restricted equity at the year-end. Average shareholders' equity has been calculated as the sum of the opening and closing shareholders' equity balances, divided by two.

Shareholders' equity per share

Shareholders' equity divided by the number of shares at the period-end.

Tax cost for the year

The sum of current and deferred tax, taking into account changes in temporary differences and loss carry- forwards.

Glossary

Biomarker

A biological or chemical marker which can be used as an indicator that a pharmaceutical substance may have an effect on a disease.

Candidate drug (CD)

Substance selected for further development in clinical trials.

Clinical trials

Trials of pharmaceutical substances on human subjects.

EMA

The European Medicines Agency.

Enzyme

A protein molecule that catalyzes chemical reactions in cells without the actual enzyme being consumed. Polymerases and proteases are examples of enzymes.

FDA

The United States Food and Drug Administration.

Hepatitis C/HCV

Jaundice caused by the human hepatitis C virus (HCV).

Histone deacetylases (HDACs)

A class of enzymes that remove acetyl groups from histones.

Histones

A group of proteins which, together with DNA, form nucleoproteins that make up the body's chromosomes.

Metastasis (secondary growth)

A tumor that has spread to organs other than the one in which the primary growth or tumor is located.

Nucleoside analogue

Chemical variants of the nucleosides that build up genetic material (DNA).

Nucleotide

A nucleoside with one or more phosphate groups.

Orphan drugs

Pharmaceutical agents for the treatment of extremely rare diseases.

Orphan Drug Designation

Orphan Drug Designation (ODD) is granted by the FDA and EMA and can imply certain financial easing for the development of a drug. This may include lower fees to the authorities and increased market protection, including market exclusivity for the approved use (10 years in Europe and 7 years in the United States).

Polymerase

A type of enzyme that copies the genetic material (genes) in, for example, a virus.

Prodrug

An inactive drug substance that is converted to its active form when entering the body.

Protease

An enzyme that can cleave proteins into smaller units.

SMAC mimetic

SMAC (second mitochondrial activator of caspases) is a protein found naturally in cells. Smac mimetics drugs block survival signals that cancer cells are dependent on to avoid cell death.

Systemic effect

The pharmaceutical drug enters the bloodstream and effects other places in the body than where it was applied. Tablets do usually have systemic effect. The opposite of systemic effect is local or topical effect.

Topical administration

Application of a drug directly at the place where it should have its effect. Topical administration is used, for example, for medicines applied to skin, eyes and ears.

Troxacitabine

A nucleoside analogue with anticancer activity.

Financial glossary

IAS (International Accounting Standards) See IFRS.

IFRS (International Financial Reporting Standards)

New accounting rules adopted by the EU. The rules are designed to facilitate comparability between annual accounts in Europe. Listed companies have been obliged, since 1 January 2005, to comply with these rules.

Milestone payments

Payments as contractual goals are achieved.

Option

Right to buy shares in the future.

Royalty

Remuneration, often a percentage, for sales of a product (pharmaceutical).

SEK k

Swedish kronor in multiples of 1,000.

SEK m

Swedish kronor in multiples of 1,000,000.

Share issue

Issuance of new shares in order to obtain new capital.

Shareholder information

Financial calendar, 2021

¤ Q1 Interim Report January–March, publishing date April 28.
¤ Q2 Interim Report January–June, publishing date August 19.
¤ Q3 Interim Report January–September, publishing date November 3.

The reports will be available on Medivir's website; www.Medivir.se, under the heading, Investor Relations, as of these dates.

For additional information on Medivir, please contact Magnus Christensen, CFO. Tel: +46 (0)8 5468 3100 [email protected]

2021 Annual General Meeting

The Annual General Meeting will be held on May 5, 2021

In order to mitigate the spread of Covid-19, the board of directors has decided that the extraordinary general meeting will be conducted by advance voting only, without physical presence of shareholders, proxies and third parties.

Shareholders wishing to attend the Annual General Meeting shall:

¤ be entered in the register of shareholders maintained by Euroclear Sweden AB no later than April 27, 2021,
¤ notify the company of their intention to attend, stating their name, address and telephone number, either by letters in the post to: Medivir AB, c/o Euroclear Sweden, PO Box 191, SE-101 23 Stockholm, Sweden or by telephone: +46 (0)8 402 92 37 no later than May 4, 2021.

PLEASE NOTE:

Important information regarding nominee-registered shares

Shareholders whose shares are nominee-registered must, in order to be entitled to attend the Annual General Meeting, temporarily re-register their shares in their own names with Euroclear Sweden AB. Shareholders wishing to effect such re-registration must inform their nominee thereof in good time before April 29, 2021.

For full details of the 2021 Annual General Meeting, please see the convening notice on the website, www.medivir.com.

Production: Medivir in cooperation with Cord Communication. Photography: Joakim Folke and Getty Images.

Medivir AB 141 22 Huddinge Besöksadress: Lunastigen 7 Tel: 08-5468 31 00 E-post: [email protected] Medivir AB PO Box 1086 SE-141 22 Huddinge Visiting Address: Lunastigen 5 Tel: +46 (0)8-5468 31 00 E-mail: [email protected]

AI assistant

Medivir — Annual Report 2020

3177_10-k_2021-04-06_c15ea290-c7a1-4241-9e68-c282fc2dba39.pdf

2020 ANNUAL REPORT

Introduction

Operations

Directors' Report

Financial Reports

Other

2020 in brief and significant events

The project portfolio

The company

Significant events after the end of the year

Key rarios1

Promising clinical data, successful business development and secured financing

Vision:

Improving life for cancer patients through transformative drugs

Medivir in brief

Our focus and our projects

Business concept, business model and strategy

Business concept

Business model

Strategic priorities

What is cancer?

What are the main objectives of drug treatment in cancer?

The pharmaceutical development process

Research and preclinical phase

Clinical phase

Phase I

Phase II

Phase III

Market

Registration

Launch and sale

Patent and market protection

A focused project portfolio

PROPRIETARY PROJECTS

PROJECTS FOR PARTNERING

OUTLICENSED PROJECTS

MIV-818

for the treatment of liver cancers

Liver-targeted antitumor effect

Phase I study in two parts

Medical need and market potential

Next step

MIV-818 – A liver cancer-targeted nucleotide prodrug

Ongoing phase I study

Selective signal of efficacy in liver cancer patients treated with MIV-818

Have we made any progress in the fight against cancer?

From an overall viewpoint, even though many major challenges remain, professor Evans is optimistic about the recent development in the fight against cancer.

In order for treatments to be more precise the development of diagnostic methods and tools plays a significant role, according to professor Evans. He also points out the need to more accurately monitor how the treatments work.

Projects for partnering

Medivir has two clinical projects for licensing/ partnerships:

Remetinostat

Investigator-initiated phase II study with

MIV-711

Outlicensed projects

Birinapant

Xerclear®

MIV-701

Preclinical projects

Sustainable development in a troubled world

With consideration for the environment

Employees

The Medivir share

Share structure, earnings per share, and equity

Shareholders

Share price performance and turnover, 2020

Share-related incentive plans

Medivir's 15 largest shareholders 30 December 20201

Analysts who cover Medivir

Shareholder breakdown by size of holding 30 December 2020

Share Capital Performance

Contents

Notes

Directors' Report

Significant events in 2020

The project portfolio

The company

Long-term incentive plans

Medivir Annual Report 2020