Annual Report • Apr 8, 2019
Annual Report
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Transforming women's health through innovation
www.mithra.com
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| Report of the board of directors | 59 |
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| Responsibility statement | 89 |
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| Consolidated financial statements | 95 |
| Notes to the consolidated financial statements | 101 |
Mithra's mission is to help transform Women's Health by offering new choices through innovation with a particular focus on contraception and menopause. Our goal is to develop and produce new and improved products that meet women's needs for better safety and convenience, throughout their life span.
In an industry where innovation is rare, Mithra has set itself the goal of developing new products for women which combine security and convenience. Its portfolio of products based on the unique natural oestrogen Estetrol (E4) supports women throughout their hormonal life span: Estelle®, a fifth-generation oral contraceptive, PeriNesta™, the first complete oral treatment for perimenopause and Donesta®, a next-generation hormone therapy.
The company also develops and produces complex therapeutics in the areas of contraception, menopause, and hormone-dependent cancers. It offers partners a complete spectrum of research, development and production via its technology platform Mithra CDMO.
E4 is a natural estrogen produced by the human fetus, which passes into maternal blood during pregnancy. Thanks to its favorable pharmacodynamic and pharmacokinetic profile, E4 potentially represents a major breakthrough in various therapeutic fields like contraception and menopause.
Its safety margin and tolerability also present an opportunity to investigate its use in other areas of Women's Health such as oncology (hormonal cancers), emergency contraception and osteoporosis, as well as in indications that go beyond the sector of Women's Health such as neuroprotection and wound healing.
Today, Mithra is focused on the development of three late-stage E4-based potential blockbusters, Estelle®, a 5th generation oral contraceptive, PeriNesta™, the first complete oral treatment for perimenopause and Donesta®, a nextgeneration hormone therapy.
1- Kluft C et al., Contraception. 2016.; 2- Gerard C et al., Oncotarget. 2015;6(19):17621-36.; 3- Viss- er M et al., Horm Mol Biol Clin Invest. 2012;9:95-103.; 4- Visser M et al., Climactic. 2008;11 Suppl 1:64-8.; 5- Mawet M et al., Eur. J. Contracept. Reprod. Healthcare 2015:1-13.; 6- Apter D. et al., Eur. J. Contracept. Reprod. Healthcare 2017;22:4 ; 7- Apter D. et al., Contraception. 2016;94(4):366-73
| Project | Therapeutical area | Phase 1 | Phase 2 | Phase 3 | Market approval |
|---|---|---|---|---|---|
| Estelle® | Contraception | ||||
| PeriNestaTM | Perimenopause | ||||
| Donesta® | Menopause |
Mithra has extensive expertise in the development of complex and innovative products using medical polymer technology. The company is leveraging this expertise to target improved, long-lasting delivery of trusted, established approaches to contraception, menopause and hormonal cancers.
Polymer technology allows prolonged drug delivery based on the use of polymer matrices. These enable a drug's active pharmaceutical ingredient (API) to be distributed at a predetermined rate over a period of time, maintaining controlled drug delivery with minimal side effects.
This technology platform enables Mithra to optimize drug treatment regimens and provides a unique combination of predetermined, safer release rates and durations. It also opens the way for Mithra to develop highly specialized drug
| Project | Therapeutical area | Formulation | Clinical/BioEq. | Filing | Market approval |
|---|---|---|---|---|---|
| MyringTM | Contraception | ||||
| Tibelia® | Menopause | EU/RoW | |||
| North America | |||||
| Zoreline® | Oncology |
delivery approaches for new indications using the hormone formulation expertise as well as the development and manufacturing capabilities at its dedicated Mithra CDMO.
Mithra's Contract Development and Manufacturing Organization (CDMO) forms an integral part of Mithra's innovation and development strategy.
This 15 000 m2 technology facility allows Mithra to develop and produce its product portfolio in-house, including Complex Therapeutics based on polymer technology, such as Myring™ and Zoreline®, but also Estelle®, PeriNesta™ and Donesta® tablets. This state-of-the-art plateform enables Mithra to maintain a strong competitive position by reducing reliance on external providers, retaining intellectual property and expertise in-house.
The CDMO also provides its partners with a high quality service covering most aspects of research, development and manufacturing of polymeric forms, implants, sterile injectables and hormonal tablets.
A net increase in our turnover, a record level for cash reserves, and objectives successfully achieved for all of our innovative products: all the indicators are green as we head into 2019, a year which could be the most exciting ever. Mithra has moved up a gear and is on the home stretch of its research program aiming to deliver truly innovative solutions for women all around the world.
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Marc Coucke, Chairman of the Board
2018 has been a successful year from every point of view. Our flagship clinical programs have successfully reached and passed important milestones and are bringing our three blockbuster products closer to market. At the same time, our business development strategy has enabled us to conclude some firstrate marketing contracts, in particular with Gedeon Richter for Estelle® in Europe and in Russia. This strengthening of our presence on the world stage is evidence of Mithra's growing reputation and its status as a leading company for innovation in healthcare for women.
François Fornieri, Chief Executive Officer
Dear Shareholders, colleagues and partners,
2018 has been another record year for Mithra.
As a leading R&D-focused women's health company, our mission is to develop innovative products offering better efficacy, safety and quality of life, in order to meet women's needs throughout their lifespan. Our business model continues to be built on three pillars: our innovative E4 asset platform, which has produced three potential blockbusters in late-stage development; our complex therapeutics business that continues to generate revenues; and, our fully complementary CDMO facility.
It was a landmark year in terms of study readouts for Mithra's E4 portfolio. During the first half of the year we announced positive Phase II top-line results for Donesta® for the treatment of Vasomotor Symptoms in post-menopausal women. While in the second half of the year, the Estelle® Phase III study conducted in Europe and Russia successfully met its primary efficacy endpoint. Post-period we announced that the Phase III study conducted in the United States (U.S.) and Canada equally met its primary efficacy endpoint. This data further supports Estelle® as a novel, next-generation combined oral contraceptive for women, and brings us one step closer to commercialization.
In other post-period news, Mithra announced the addition of a new E4 candidate, PeriNesta™, also with blockbuster potential. PeriNesta™ is targeted at woman in their 40's that are still fertile, but are confronted with the first signs of menopause. This third blockbuster candidate has the potential to be the first product to offer perimenopausal woman an improved contraceptive solution, addressing the challenge of hot flushes and other perimenopausal symptoms, with a superior benefit/risk profile.
Mithra also continued to strengthen its intellectual property portfolio for E4 in contraception and menopause with additional formulation patents filed, bringing the total number of patent families to thirty.
2018 was a very active year in terms of commercial partnerships. Mithra signed ten additional Licensing and Supply Agreements (LSA's) for both our E4 asset portfolio, as well as our Complex Therapeutics, in addition to two Heads of Terms agreements for the commercialization of Estelle®.
In September we announced a LSA with Gedeon Richter, to commercialize Estelle® in Europe and in Russia. Worth up to EUR 55 million in upfront payments and milestone payments, this deal represented the largest in the history of Mithra.
With regards to Myring™, we obtained our first marketing authorization for the United Kingdom, followed by another seven marketing authorizations for various Eastern European countries. In the U.S., commercial launch has been delayed by one year; however, together with our partner Mayne Pharma, we are still confident to be amongst the first generic players to launch commercial production.
Post-period we also reported the expansion of Mithra CDMO's polymer technology expertise to include its first veterinary R&D project together with CEVA, world leader in animal health, further demonstrating our capability in polymer based drug development.
Financially we're stronger than ever, having achieved solid revenue growth with a record level of EBITDA .
Earlier in the year, Mithra successfully raised EUR 77.5 million via a private placement. The oversubscribed order book underlined the increasing interest of Tier 1 and specialist healthcare investors.
Reinforced by significant partnership deals, as well as the divestiture of our BeLux business that raised an additional EUR 20 million, Mithra is today in a comfortable cash position, and looking forward to moving our key assets towards commercialization.
2019 marks the 20th anniversary of Mithra – no small feat! The company has undergone a number of transformations over the years, evolving into the specialty women's health company we are today.
Following the momentum of 2018, the year ahead will have some significant news flow relating to our key assets. First and foremost, we expect to announce a commercial partner for Estelle® in the United States, our biggest market. Filing in both the U.S. and in Europe will take place towards the end of this year, facilitated by our international partners.
Donesta® will begin its Phase III study in the second half of 2019. At the same time, we plan to begin the Phase III study of PeriNesta™, requiring limited extra investment. Additional indications for Estetrol (E4) for neuroprotection and wound healing are also under development in the pre-clinical phase.
In 2019, we will continue to advance our business development efforts across our blockbuster E4 candidates, as well as our complex therapeutics, boosting revenues and underscoring the Group's financial strength in both the shortand medium term. Our Mithra CDMO, with its state-of-the-art equipment and proven expertise, will strengthen its R&D and commercial production activities, tripling capacity to deliver the next commercial batches of Myring™ in the second half of 2019.
Last but not least, we had the great honour to receive the prestigious essenscia Innovation Award 2019 during an official ceremony held in early April in presence of Her Royal Highness Princess Astrid. This award tops off the hard work, perseverance and passion of an entire team for nearly 20 years.
We eagerly await the exciting year ahead, and in the meantime, thank all of our stakeholders, patients, business partners and employees, for their continued trust in Mithra.
Marc Coucke, Chairman of the Board François Fornieri
Chief Executive Officer
EUR 65.5 million revenue +42%
Cash position : Record level of EUR
EUR -18.4 million in 2017
men
Creation of a Happy team to ensure the well-being of employees
Average age:
34 years
In 2018, Mithra has successfully completed crucial clinical milestones in its innovative programs based on Estetrol (E4). The positive top-line results of the Estelle® Phase III study ("E4 Freedom") in both Europe/Russia and the U.S./Canada confirmed the novel efficacy and safety profile and great potential of Estelle®, a true 5th generation oral contraceptive, which will offer women a unique innovative therapeutic solution. Mithra intends to file for approval with European and American regulatory agencies by the end of 2019.
For its novel hormonal treatment candidate Donesta®, Mithra has also achieved positive results in the Phase II ("E4 Relief") study for the treatment of vasomotor symptoms in postmenopausal women, confirming its unique potential with an improved benefit/risk profile. Following these positive results, we are accelerating Phase III study plans and intend to start in the second half of 2019, pending approvals.
Mithra has also entered a major new and untapped commercial market, perimenopause. Our third potential blockbuster, PeriNesta™, has the potential to become the first product on the market for perimenopausal women, offering an improved benefit/risk contraceptive solution while addressing the first menopausal symptoms. Pending approvals, Mithra is targeting a marketing authorization for both Donesta® and PeriNesta™ product candidates in 2023. With our three innovative products, Mithra has the potential to provide the right therapeutic option for women at each stage of their entire hormonal life span.
Mithra made significant progress with its contraceptive vaginal ring Myring™, which received its first European marketing authorization (United Kingdom), followed by other authorizations in seven other Eastern European countries (Hungary, Latvia, Croatia, Czech Republic, Poland, Slovakia and Slovenia). In the United States, the FDA has accepted the abbreviated new drug application filed by Mayne Pharma Mithra's commercial partner Myring™ in the U.S. Mayne Pharma, is still one of the best positioned players to launch the first generic version of NuvaRing® in the U.S. market, which accounts for more than 75% of its worldwide revenues.
8 European marketing authorizations
In addition to commercial progress in promising markets such as Russia, Mithra has also completed the pre-production phase of its vaginal contraceptive ring. In early 2019, the Mithra CDMO successfully produced the first commercial batches of Myring™ for the European market (Czech Republic).
In order to meet the expected international market demands, the Mithra CDMO will strengthen its activities in both the R&D and production. Thanks to its new state-of-the-art equipment and proven expertise, Mithra has tripled its production capacity to deliver the next commercial batches of the vaginal ring Myring™ in the second half of 2019.
In 2018, Mithra sold its activities in Belgium and Luxembourg to the Belgian company Ceres Pharma worth up to EUR 40 million. The agreement covers the sale of the women's health branded generics business in Belgium and Luxembourg as well as non-exclusive license and supply agreements for a number of Mithra's products.
For Mithra, the sale of the branded generics business realized the value of the divestment of a non-core asset, as the Company continues to become an innovative biopharma company fully-focused on its E4 based asset portfolio and its Complex Therapeutics development know-how. Following the successful private placement in May 2018, the cash inflow realized through the agreement with Ceres Pharma will further strengthen Mithra's financial position and investments in its potential blockbusters.
In 2018, Mithra strengthened its global deployment through key partnerships with women's health leaders, including Gedeon Richter for Estelle® in Europe and Russia.
Building on the progress made in 2018, Mithra is looking forward to continued progress in 2019, which will further strengthen its position as a leading innovative international Women's Health company.
Following the positive top-line Phase III results for Estelle® in Europe/Russia and U.S./Canada, Mithra is entering the final stages of clinical development for its oral combined contraceptive candidate and intends to file for market authorization in Europe and the U.S. by the end of 2019. Mithra will also continue its partnering discussions for the exclusive license and commercialization rights in the U.S., as well as in other key international markets.
Mithra will prepare for Phase III studies of Donesta® and PeriNesta™, its second and third potential blockbuster candidates, which could begin in H2 2019. With a strong cash position, a backlog of contracts with regulatory milestones to be collected in the near term, and a very promising out-licensing activity, Mithra is able to fund both clinical trials and complete the development of both the perimenopause and menopause programs itself. Depending on regulatory approvals, Mithra believes it could achieve marketing authorization for both candidates in 2023. Ongoing patent applications would protect Donesta® and PeriNesta™ intellectual property rights until 2039. Furthermore, Mithra remains focused on establishing the best commercial partnerships for these product candidates and to further accelerate commercial licensing agreements in menopause and in perimenopause in the U.S. and in the main European markets.
Strategically, Mithra also intends to explore further additional indications for E4, including pediatric neuroprotection where orphan drug designation has been obtained for the treatment of neonatal encephalopathy. Other indications, such as wound healing, are also being studied.
The Mithra CDMO will reinforce the Company's R&D and commercial production activities. With state-of-the-art equipment and know-how, the company has tripled its production capacity to deliver the next commercial batches of Mithra's vaginal ring Myring™ during H2 2019. Mithra also anticipates that its U.S. partner, Mayne Pharma, should receive FDA approval for the commercialization of Myring™ in the U.S. from 2020. In terms of R&D, Mithra will launch pivotal studies for Zoreline® in 2019 as well as undertake additional research projects.
In 2019 and beyond, we expect further significant revenue growth based on the potential for further E4 partnerships in the U.S. and other international markets.
The first Native Estrogen with Selective actions in Tissues (NEST™)
Even today, the unmet medical need for an estrogen with an improved benefit/risk profile remains strong. The promising results of Mithra's clinical programs indicate that Estetrol (E4) may offer new alternatives to meet women's needs at different stages of their hormonal cycle.
E4 is a revolution in healthcare. It has been carefully selected by Mother Nature over millions of years, and it has a very important role and greater therapeutic potential in comparison to many synthetic molecules that are developed by the industry.
Pr Jean-Michel Foidart, Perpetual Secretary of the Royal Academy of Medicine of Belgium
This native estrogen (E4) is produced by the human fetus, passing in the maternal blood at relatively high levels during pregnancy. Thanks to its favorable pharmacodynamic and pharmacokinetic profile, its tolerability and its safety margin, Estetrol potentially represents a major breakthrough in various therapeutic fields like contraception, perimenopause and menopause.
To support throughout the development of its E4 program, Mithra has set up scientific committees composed of European and North American experts in gynaecology. These committees are regularly consulted during the various stages of development of E4-based product candidates.
In 2018, Mithra strengthened its intellectual property portfolio with the addition of several patents and patent applications to its portfolio relating to E4. This now contains 30 patent families registered worldwide, ranging from the synthesis of Estetrol to its use in a wide range of conditions including cancer treatment, neuroprotection, dermatology and musculoskeletal pain.
In early 2018, Mithra achieved promising results following the Estelle® Phase II study on hemostasis. Minimal changes in markers of coagulation and fibrinolysis were observed, key parameters that will contribute to a more precise definition of the unique safety potential of Estelle®. In view of this favourable profile on hemostasis, Mithra filed a patent application relating to the use of E4 as a contraceptive and the unique safety profile of the E4/DRSP combination.
In February, the Intellectual Property Office of Hong Kong issued a patent covering the use of E4 as a morning-after pill. The patent specifically covers the use of E4 as a new emergency contraceptive solution. This new method differs from currently approved emergency contraceptives, which include progestogen-only pills and combined oestrogen-progestogen pills. The patent has already been granted in several parts of the world, namely Australia, Europe, Russia and the U.S.
Following the positive results of the Donesta® Phase II study on the optimal minimum oral dosage (15 mg of E4) for the effective treatment of VMS, Mithra has filed a patent application in order to consolidate and expand its existing E4 patent portfolio.
Mithra has also strengthened its intellectual property position in Canada, Chile, Japan and South Africa with the issuing of patents protecting the synthesis of E4 until 2032 in these different parts of the world.
Post-period end, the FDA granted E4 an Orphan Drug Designation (ODD) for the treatment of life-threatening hypoxic ischemic encephalopathy (HIE), based on the promising preclinical results obtained1,2. This syndrome affects about 30,000 newborns each year in the European Union and the U.S.3 , and is a consequence of the reduction in the supply of blood or oxygen to the baby's brain before, during or shortly after birth. As a results, one in four infants die prior to discharge from the neonatal intensive care unit. Mithra has already obtained this ODD from the European Medicines Agency (EMA) for E4 in neonatal encephalopathy in June 2017.
1 Tskitishvili et al. 2014. Exp Neurol, 261 : 298-307 2 Tskitishvili et al. (2016) Oncotarget, 7 : 33722-43. 3 Kurinczuk et al. Early Hum Dev 2010 ; 86: 329-338, 2010
The combined oral contraceptive Estelle®, composed of 15 mg Estetrol (E4) and 3 mg Drospirenone (DRSP), has successfully passed the milestone of Phase III studies and is entering its final stage before being launched worldwide. The results of the studies in Europe/Russia and USA/Canada including 3725 women, confirmed Estelle®'s outstanding safety and efficacy profile and its potential to become a 5th generation oral contraceptive.
The results of the Phase III studies demonstrate the outstanding profile of Estelle as a new generation combined oral contraceptive
In March 2018, Mithra announced positive results from its Phase II hemostasis study of Estelle® at the International Society of Gynecological Endocrinology Conference (ISGE) in Florence. The aim of the study was to determine the risk profile of Estelle® for deep venous thrombosis (DVT) and pulmonary embolism.
In addition to EE/LNG (levonogestrel - 2e generation COC), which is required by the regulatory agencies, Mithra elected to include Yaz® (EE/DRSP Combined Oral Contraceptives (COC), benchmark for Estelle®) as an additional comparative arm, given the well-documented elevated DVT risk for current DRSP-based COCs relative to LNG-based products. These results corroborate earlier findings, delineate the unique safety profile and contribute to the potential of Estelle® as a 'fifth generation pill', combining the quality of life offered by DRSP with a safer hemostatic profile compared to other DRSP COC's.
Based on these positive data, Mithra applied for an additional patent relating to the E4 synthesis process and E4 as a potential new emergency option to further strengthen and extend the existing Estelle® and E4 intellectual property estate.
In August, Mithra announced positive top-line results for the Phase III Estelle® study in Europe and Russia. The study successfully met its primary endpoint and achieved key secondary endpoints including outstanding bleeding profile, cycle control, quality of life and safety and tolerability. The primary endpoint was contraceptive efficacy measured by the number of pregnancies per 100 women per 12 months of exposure (Pearl Index; PI4 ). The resulting PI of 0.47, corresponding to a 99.5% efficacy rate over one year of use, has exceeded the efficacy goals of the study.
Post-period end, in January 2019, Mithra communicated positive topline results of Estelle® Phase III study in U.S./Canada aligned with the European arm. The primary efficacy endpoint indicates excellent contraceptive efficacy, with a PI of 2.415 per 100 women (98% efficacy rate). The PI of the North American arm is logically higher than the European PI due to calculation difference on both continents6 .
The results of Estelle® are similar to a recently FDA approved combined hormonal contraceptive (Annovera™7 ) and one of the best-selling Combined Oral Contraceptives (COC) in the U.S. (Lo-loestrin®8) with USD 527.7 million sales (15% yoy growth9 ).
4 Pearl Index (PI) is a standardised measurement of contraceptive methods calculated as the number of contraceptive failures per 100 women divided by the years of exposure
7 Registered trademark of Therapeutics MD
5 European definition 6 There are three main reasons that the PI's differ between the U.S. and EU: (1) Number of cycles used to calculate PI is different. In the U.S. you must report sexual activity, in addition to not using any other contraception vs. in the EU, where reporting of sexual activity is not a requirement. (2) On-treatment pregnancy calculation is different; in the U.S., pregnancies declared within 7 days of the last pill taken are counted vs EU: 2 days rule. (3) There are major compliance differences between EU and U.S. population due to socio-economic and sociologic differences in the U.S.
8 Registered trademark of Allergan Plc 9 Allergan plc 2018 full year earnings release
In April, Mithra has signed a binding Heads of Terms agreement with Searchlight Pharma, for an exclusive license to commercialize Estelle® in Canada. Under the terms of the agreement, Mithra is eligible to receive up to EUR 15 million in upfront payments and sales-related income. Mithra will also manufacture Estelle® for Searchlight at its CDMO facility and will receive guaranteed annual recurring revenues based on Minimum Annual Quantities (MAQ). Mithra forecasts the agreement could achieve sales-related revenues of at least EUR 50 million for Mithra over the period, based on market assumptions. The license and supply agreement was finalized with Searchlight Pharma in May 2018.
In June, Mithra signed a binding Heads of Terms agreement with Hyundai Pharm, for an exclusive license to commercialize Estelle® in South Korea. Under the terms of the agreement, finalized in September, Mithra is eligible to receive milestone payments, MAQ and further sales-related royalties. Mithra will also produce Estelle® for the South Korean market at its CDMO facility for the South Korean contraceptive market, which is worth approximately EUR 36 million a year, with Combined Oral Contraceptives (COCs)10 accounting for EUR 27 million.
In September, Mithra has concluded an historical exclusive license and supply agreement with Gedeon Richter to commercialize Estelle® in Europe/Russia, a key market that is valued at more than a fifth of the global contraception market (EUR 5.2 billion a year)11. Upon signature of the contract, Richter made an upfront payment of EUR 35 million. Additional milestone payments amounting to EUR 20 million will be made depending on the progress of the regulatory process of the product. Further sales-related milestones and royalties will be payable to Mithra subsequent to the launch of the product. Moreover, Mithra will receive guaranteed annual recurring revenues based on MAQ in addition to tiered royalties on net sales.
In October, an exclusive licence and supply agreement was signed with Adcock Ingram for the commercialization of Estelle® in South Africa. Mithra will receive a downpayment of EUR 1.5 million. Mithra will also be eligible to receive additional commercialization milestone payments, further sales-related royalties, guaranteed annual recurring revenues based on MAQ, single digit tiered royalties on net sales and additional high double digit royalties on sales exceeding forecasts. Moreover, Mithra will produce Estelle® for Southern Africa at its CDMO facility in Belgium.
Post-period end, Mithra signed a partnership agreement with ITROM for the commercialization of Estelle® in the Middle East. Under the terms of the agreement, ITROM will distribute Estelle® in MENA territories where the COC market is estimated at EUR 30 million a year12. This agreement represents a deal worth up to EUR 55 million over the period.
The contraceptive market is worth about USD 22 billion a year, with a compounded annual growth rate of about 6%13. The worldwide Combined Oral Contraceptive (COC) market represents approximately USD 6.5 billion11.
In this market, brands still account for 59% of the revenue14. Today, the best-selling pill is still the (non-reimbursed) Yaz family, with EUR 1.3 billion in sales15. For Estelle®, Yaz, based on ethinylestradiol (EE) and drospirenone (DRSP), is the benchmark, as Mithra's product candidate also contains the progestin DRSP. Unlike 1st and 2nd generation pills, drospirenone has the advantage of considerably increasing women's quality of life (absence of weight gain and even weight loss, improvement of acne, hirsutism,...). But the 4th generation COC has a well-documented elevated VTE risk16. Estelle®, the future 5th generation candidate pill, has a better haemostatic profile, and therefore a unique safety profile, while offering the advantages of DRSP in terms of a woman's quality of life.
Mithra intends to file for approval with regulatory agencies by the end of 2019 and will continue negotiations for commercial partners in the United States as well as in other leading markets.
| 1st & 2nd generation |
3rd & 4th generation (e.a. Yaz family) |
Estelle® (E4 + DRSP) |
|
|---|---|---|---|
| VTE safety profile |
✓ | ✗ | ✓ |
| Lipid profile |
✗ | ✓ | ✓ |
| Bleeding pattern |
✓ | ✓ | ✓ |
| Well Being/ QOL |
✗ | ✓ | ✓ |
| Breast profile |
✓ | ✗ | ✓ |
jvspfIBRZGGRKZ,NB%nb qdfk enperghpighzmfnz The results of the Phase II study of Donesta® for the treatment of vasomotor symptoms (VMS) in postmenopausal women confirmed the potential of Donesta® as a new generation hormonal therapy with a better benefit/risk profile. The Phase II study will be launched in the second half of 2019, pending approvals.
Initiated in 2016, the European Phase IIb Donesta® study ("E4 Relief") aimed to determine the minimum effective dose in the treatment of vasomotor symptoms (hot flushes) by menopausal women. In total, four E4 doses (2.5 - 5 - 10 - 15 mg) are tested in this blinded study, plus placebo.
In April 2018, Mithra announced the first positive results of this Phase II study. The results showed that 15 mg of E4 significantly reduces the frequency and severity of hot flushes, as well as secondary menopausal symptoms such as vulvo-vaginal atrophy (VVA), while confirming a promising safety profile.
Based on these positive results, Mithra applied for an additional patent to further strengthen and extend the existing Donesta® intellectual property estate.
In June, Mithra presented the Phase IIb study results for Donesta® at the 16th World Congress on Menopause in Vancouver, Canada. These results were also presented at the North American Menopause Society in October 2018. These data reinforced the previously announced positive Phase IIb study results and also demonstrated an encouraging cardiovascular safety profile and lower bone turnover versus placebo17. The promising safety profile at both haemostatic and metabolic levels is consistent with the findings obtained during Phase II of Estelle®.
17 As measured by a decrease in both the CTX-1 and osteocalcin markers with E4 use vs placebo. The effect is most pronounced for the 15 mg dose (near-significant for CTX-1 and significant at p < 0.05 for osteocalcin).
These promising results move Mithra's blockbuster potential to the next stage of clinical development: the Donesta® Phase III study, a worldwide randomized, multicenter, double-blind, partial, placebo-controlled, multicenter Phase III clinical trial. This study will evaluate the efficacy and safety of E4 for the treatment of moderate to severe vasomotor symptoms in postmenopausal women. The start of patient recruitment for this phase III with E4 monotherapy is planned for the second half of 2019 pending approvals, with a marketing authorization expected as early as 2023.
The study's primary objective is to measure the effect of treatment with different E4 dosis compared to placebo on the frequency and severity of moderate to severe VMS in post-menopausal women at 4 and 12 weeks. Secondary objectives include the evaluation of the effect of the treatment on a series of additional key efficacy and safety parameters.
With a strong cash position, Mithra is able to fund the trial and remains committed to collaborate with commercial partners for its menopause program worldwide. Mithra has appointed Rothschild & Co Global Advisory Services to organize a structured partner search process with a view to accelerate the commercial licensing in menopause and perimenopause for U.S. and major E.U. markets.
The global menopause market currently stands at USD 12.6 billion and is expected to grow to approximately USD 16 billion by 202518. While nearly 8 out of 10 women suffer from menopausal symptoms, less than 10% is currently treated. This is due to a concern about the safety of currently available hormone treatments and an important unmet need for novel hormone therapy (HT) approaches that offer an improved risk/benefit ratio while addressing women's needs in terms of quality of life.
In 2001, the Women's Health Initiative (WHI) has linked current HT to an increased risk of breast cancer, coronary artery disease, stroke, and VTE19. However, analyses present a more subtle picture, indicating that there is a 'window of opportunity' when treating menopausal symptoms at the beginning of menopause and that in that case, HT does not increase mortality due to cancer or cardiovascular (CV) events20. Also note that the WHI study has several limitations warranting caution, including the assessment of one dose, formulation, and route of administration in each trial21.
Currently, while non-hormonal product candidates may prove to be efficacious to suppress hot flushes, because of their mode of action, they do not attempt to address the host of symptoms associated with estrogen deficiency during menopause, including night sweats, sleep disorders, VVA (vulvo-vaginal atrophy), atherosclerosis, osteoporosis and bone density levels, and cardiovascular disease. Helping with the relief of these symptoms is essential to maintain a high level of quality of life for menopausal women.
Donesta®, given its unique mode of action as a natural estrogen, could address the unmet market need, offering a safer alternative to current VMS treatments, while offering the advantages of estrogens and HT on symptoms associated with menopause. If approved, Donesta could hence capture a substantial part of the growing menopause market.
18 Transparency Market Research 2017
19 Manson JE, Aragaki AK, Rossouw JE, et al. Menopausal Hormone Therapy and Long-term All-Cause and Cause-Specific Mortality : The Women's Health Initiative Randomized Trials. JAMA 2017 ; 318(10) : 927-38
20 Baber RJ, Panay N, Fenton ATIWG. 2016 IMS Recommendations on women's midlife health and menopause hormone therapy.
The first complete oral treatment for perimenopause
In 2018, Mithra has also entered a major new and untapped commercial market, perimenopause. This third potential blockbuster, PeriNesta™, could become the first product on the market for perimenopausal women, offering an improved benefit/risk contraceptive solution while addressing the first menopausal symptoms.
With its three innovative products, Mithra has the potential to provide the right therapeutic option for women at each stage of their entire hormonal span
The risk of venous thrombo embolism increases with age among users of combined oral contraceptives so the need for an effective contraceptive control that will show a safer profile while reducing the frequency and severity of hot flushes is an important medical need for clinicians and patients.
Perpetual Secretary of the Royal Academy of Medicine of Belgium
The PeriNesta™ product candidate will specifically target relief of hot flushes, or vasomotor symptoms (VMS), while providing effective contraception for women who are starting to exit reproductive stage and are transitioning into postmenopause. Part of reproductive aging, this intermediate phase between reproductive age and postmenopausal age is known as perimenopause22.
Perimenopause begins approximately three years prior to menopause and ends one year after the final menstrual period. This period is characterized by persistent irregular menstrual cycles, extreme fluctuations in hormonal levels, frequent anovulation and the appearance of VMS22. A significant number of women also experience sleep disorders, depressive symptoms, such as mood swings, irritability, and poor concentration23.
To date there is currently no approved product that provides both contraceptive efficacy and VMS relief. PeriNestaTM has the potential to be the first officially approved product brought to market that addresses this unmet need of women in perimenopause.
This new blockbuster potential represents a significant new business opportunity while requiring limited additional investment. This addressable and underserved market is estimated up to 35 million patients each year in the U.S. and three major European markets24. This represents a multi billion EUR market value with no existing approved product on the market addressing the dual need of contraception and hot flushes relief and other menopausal symptoms during perimenopause.
This third E4-based product candidate will be the subject of a limited safety study in women aged around 50 years with vasomotor symptoms. The cost of the study will be low thanks to the extensive clinical data available. Pending regulatory agency approval, Mithra should be in a position to target market authorization in 2023.
Mithra has filed an additional global patent application based on the existing data generated in previous clinical studies. If granted, the patent will strengthen and extend the existing E4 intellectual property estate in menopause and perimenopause until 2039.
22 Climacteric. avr.2012 ;15(2):105-14. doi : 10.3109/13697137.2011.650656. Epub 2012 fév. 2016 23 Bosworth et al., 2001 24 IQVIA 2019 market analysis (US, France, UK, Germany)
35
The hormonal contraceptive vaginal ring developed and produced at Mithra CDMO
jvspfIBRZGGRKZ,NB%nb qdfk enperghpighzmfnz In 2018, Mithra continued its business development strategy for Myring™ and entered into a series of licensing and supply agreements in promising markets such as Russia and Australia. The vaginal contraceptive ring has also obtained its first marketing authorizations in Europe. On the production side, the Mithra CDMO has launched the first phase of commercial batches for the European market, as well as test batches for the authorization procedure in the United States.
Myring™ is a flexible contraceptive vaginal ring product made of ethylene vinylacetate copolymers, and contains a combination of 11.7 mg etonogestrel and 2.7 mg ethinyl estradiol. When placed in the vagina, each ring releases on average 0.120 mg/day of etonogestrel and 0.015 mg/day of ethinyl estradiol over a three-week period of use, in line with the original vaginal ring, NuvaRing®.
The ring remains in place for three weeks, after which it is removed for a one-week break. Then, there usually is withdrawal bleeding, and a new ring is inserted one week after the last ring was removed. Myring™ has been shown to be bioequivalent to the NuvaRing® vaginal ring.
To date, Mithra has licensed Myring™ to industry leaders in eight international markets, including the United States, Austria, the Czech Republic, Russia, Denmark, Chile, MENA region, Australia and New Zealand. All contracts provide for the production of vaginal contraceptives at the Mithra CDMO facility in Belgium, which has tripled its production capacity to meet orders placed and the expected market increase.
In March 2018, Mithra has granted an exclusive license and supply agreement to Alvogen for the commercialization of Myring™ in Russia, a market worth approximately EUR 13 million a year25. At the same time, the FDA accepted the Abbreviated New Drug Application (ANDA) for Myring™ in the U.S. The ANDA was submitted by Mithra's partner for the U.S. commercialization of the vaginal ring, Mayne Pharma. For this contract, Mithra received a EUR 2.4 million downpayment and is eligible to receive further milestones of at least EUR 7.6 million from approval by the FDA through to commercial launch of the product. Following the FDA's request in December 2018, new test batches will be produced at the Mithra CDMO facility in Belgium during the first half of 2019. According to the latest commercial information, Mayne Pharma is still one of the best positioned players to launch the first generic version of Merck's NuvaRing® in the U.S. market, which represents over 75% of NuvaRing®'s annual global revenues26.
In June, Mithra announced an exclusive license and supply agreement with Orifarm for the commercialization of Myring™ in Denmark, a market worth approximately EUR 0.75 million a year27. One month later, Mithra received its first Marketing Authorization (MA) for Myring™ in the United Kingdom, following approval by the MHRA (Medicines and Healthcare Products Regulatory Agency). The UK market is worth approximately EUR 1.2 million a year28 with no generic competition on the market yet. Under the same decentralized procedure, MAs for seven other countries (Latvia, Hungary, Croatia, the Czech Republic, Poland, Slovakia and Slovenia) were also granted.
In September, an exclusive license and supply agreement for the commercialization of Myring™ in Chile was signed with Laboratorio Pasteur. The Chilean market for contraceptive rings accounts for EUR 5.8 million a year and is fast-growing, with an 18% increase between 2016 and 201729.
In November, Mithra signed an exclusive license and supply agreement with Neo Health for Myring™ in Australia and New Zealand. An important area where the contraceptive market represents about EUR 107 million with a growing demand for products such as the vaginal contraceptive ring30.
Post-period end, Mithra signed an exclusive license and supply agreement with ITROM for Myring™ in MENA region, where the hormonal contraceptive market is estimated at EUR 37.5 million a year31.
jvspfIBRZGGRKZ,NB%nb qdfk enperghpighzmfnz Tibelia® is a complex oral formulation composed of tibolone, a synthetic steroid for use in hormone therapy. In a global market estimated at EUR 115 million, the product developed by Mithra could capture a significant share, particularly via the North American continent.
Tibelia® targets two indications of the original product, Livial®:
To date, Mithra has granted about ten Tibelia® licenses, the generic version of Livial®, the world's best-selling product with a global market share of 52%, or nearly EUR 60 million32. Given the strong file, including the extended shelf-life, Mithra estimates that Tibelia® could take up a sizeable part of the global market in volume over the first ten years of commercialization. The introduction on the North American continent would play a crucial role because no tibolone-based hormone treatment product is currently marketed there. Mithra has already signed a contract for the commercialization of Tibelia® in Canada. If the Canadian authorities give the go-ahead, Tibelia® could be the first tibolone product on this North American market, a promising market that could serve as a launch platform for commercialization in the United States.
In July, Mithra signed an exclusive license and supply agreement with Mediner for the commercialization of Tibelia® in Hungary, a market worth approximately EUR 0.6 million a year33.
In September, Mithra and Pei Li Pharm entered into an exclusive licensing and supply agreement for the commercialization of Tibelia® in Taiwan, which has a menopause market worth approximately EUR 4.1 million a year34.
In December, Mithra signed a licensing agreement with UAE-based company ITROM for Tibelia® and the contraceptive pill Daphne Continu. Combined, the products will generate at least EUR 8 million of value for Mithra over the period of the ten-year agreement.
Post-period end, Mithra strengthens its presence in the fast-growing Chilean market with an agreement for commercialization of Tibelia® with Saval Pharmaceuticals. Under the terms of the seven-year agreement, Saval will distribute Tibelia® in Chile, which has a tibolone market worth approximately EUR 3.2 million per year35.
32 IMS, Q3 2017. TCCA (in volume ; 2013-2017) : +0,5 % 33 IQVIA 2017. CAGR in volume (2013-2017) : +5% 34 IQVIA 2017 35 IQVIA Q3 2017
jvspfIBRZGGRKZ,NB%nb qdfk enperghpighzmfnz Zoreline® is a subcutaneous implant developed by Mithra in two formulation (1 and 3 months). As a generic version of Zoladex®, this polymer technology-based device will start its final clinical studies in 2019.
Early 2018, Mithra received positive results of its one-month pilot pharmacokinetic (PK) and pharmacodynamic (PD) study for Zoreline®. The safety profile of the one-month implant (3.6 mg) is similar to the branded Zoladex® implant (AstraZeneca) and therefore meets regulatory requirements. At the end of the year, Mithra announced positive results for the three-month formulation of Zoreline®, enabling it to initiate the final clinical studies. The pivotal studies on three-month and one-month formulations are intended to take place in the first and second half of 2019, respectively.
Following the results of these studies, Mithra has launched its business development strategy to find worldwide partners for the authorization filling and the commercialization of the product.
Zoreline® represents a significant business opportunity in a market dominated by Zoladex® with worldwide revenue of USD 693 million36. No generic version of Zoladex® has been approved to date, except for a few Eastern European countries.
Busy new years for the Mithra CDMO, the R&D and manufacturing platform specialized in polymeric forms, sterile injectables and hormonal tablets. New equipment, tripled production capacity, strengthened environmental policy: The Mithra CDMO has largely confirmed its ambitions and developed its services to meet growing demand in an optimal way.
Mithra CDMO, Mithra's Research, Development and Manufacturing Platform, strengthened its environmental policy in 2018 with the creation of an internal committee aiming to implement various measures to reduce its environmental footprint. With the installation of 1800 solar panels, the Mithra CDMO is aiming to secure approximately 50% of its electricity consumption through a renewable energy source. This green source allows Mithra to reduce its carbon footprint and reduce a major cost driver.
Opened in 2016, Mithra's technological platform incorporates strict environmental considerations in terms of air treatment, containment measures, modern solutions for energy monitoring and choice of reusable consumables. Additional environmental measures undertaken by Mithra's CDMO include energy monitoring on all electricity, water, heat and chillers to optimize consumption, implementation of a day/ night mode for air flow management, and a water retention system for water recycling. The Environmental Committee will ensure the implementation of other green initiatives in 2019.
In 2018, Mithra has expanded the portfolio of its Injectables division with the development of a new product for Midas Pharma. Its expertise in this complex field had already been called upon by Generic Specialty Pharma at the end of 2017 for the development and production of four injectable products.
Post-period end, Mithra took its first steps into the veterinary market signing a contract with CEVA Animal Health, the leading global veterinary pharmaceutical group. Mithra will develop a hormonal device for the fertility market. This new polymer-based device would be a real innovation and bring an additional competitive edge to our partner while expanding Mithra's polymer based technology expertise. Feasibility studies will be carried out during the first half of 2019.
Mithra has made respect for the environment one of its priorities and intends to reduce its ecological footprint as much as possible.
End 2018, Mithra CDMO acquired new manufacturing equipment to triple its production capacity. The upgraded equipment will be used to sustain commercial demand thanks to commercial agreements and expected market increase.
Post-period end, Mithra started the commercial manufacturing process of the vaginal contraceptive ring Myring™ with a first batch for the European market (Czech Republic). The Mithra CDMO development and production center plans to start manufacturing further commercial batches for the European market (Austria, Denmark, Belgium, Luxembourg and the Netherlands) in the second half of 2019, as scheduled.
| Thousands of Euro (€) | 2018 | 2017 |
|---|---|---|
| Revenues | 65,465 | 46,252 |
| Cost of sales | (5,254) | (9,095) |
| Gross profit | 60,211 | 37,158 |
| Research and development expenses | (33,407) | (46,653) |
| General and administrative expenses | (7,562) | (6,373) |
| Selling expenses | (3,658) | (4,503) |
| Other operating income | 5,427 | 3,338 |
| Total operating expenses | (39,199) | (54,191) |
| REBITDA | 21,012 | (17,033) |
| Discontinued EBITDA | 21,269 | - |
| Share-based payments | (1,181) | (1,020) |
| Exceptional results | (373) | |
| EBITDA | 38,308 | (18,426) |
| Depreciation | (2,851) | (2,655) |
| Operating profit/(loss) | 35,457 | (21,081) |
| Financial income | 237 | 377 |
| Change in fair value37 | (46,550) | (25,455) |
| Cost of debt | (5,365) | (267) |
| Loss before taxes | (16,232) | (46,426) |
| Income taxes | 3,869 | 11,421 |
| Net loss for the period | (12,363) | (35,006) |
Strong revenue growth (+42%) with significantly improved EBITDA (record level of EUR 38.3 million versus EUR -18.4 million in 2017) and cash position (EUR 119 million versus EUR 36.2 million in 2017) thanks to increased business development activities.
37 Fair values are computed on the contingent considerations payables which are reported under Other financial loans 38 EBITDA is an alternative performance measure calculated by excluding the depreciations & amortizations from EBIT (operating loss) from the consolidated statement of income prepared in accordance with IFRS.
Free Float > 33,33%
Meusinvest SA > 14.37%
Bart Versluys41 > 4.51% Ogesip Invest SA > 3.13%
39 François Fornieri holds warrants entitling him to subscribe 1,023,000 additional shares of Mithra.
1 March 2019 : Annual Results 2018
8 April 2019 : Annual Report 2018
16 May 2019 : Annual General Shareholders' Meeting
19 September 2019 : Interim Report 2019
Stock exchange price evolution in 2018 from 1st January 2018 to 31 December 2018
Chief Executive Officer (CEO)
François Fornieri has more than 30 years of pharmaceutical experience with a strong focus on women's health. He obtained a degree in Chemistry and is the founder and CEO of the Company.
François previously worked for Bayer-Schering and was also co-founder of Uteron Pharma, which was sold to Watson/Actavis (NYSE: ACT) in early 2013.
François has been elected 2011 Manager of the year by the Belgian business magazine Trends/Tendances.
Prof. Jean-Michel Foidart co-founded Mithra Pharmaceuticals SA and Uteron Pharma SA. Through his membership of international research centers as well as his academic and industry career, he has extensive knowledge of reproductive medicine.
He trained in Gynecology at the University of Liège where he also obtained a PhD in cell biology and biochemistry. He is the former head of the Gynecology and Obstetrics department at the University of Liège, the general secretary of the European Society of Gynecology (ESG) and member of multiple editorial boards of international peer-reviewed journals.
Prof Foidart was awarded the Bologne-Lemaire Prize from Institut Destrée (Walloon of the year) in 2011.
Christophe Maréchal was Director, Group Treasury and Credit Risk Manager, at Hamon Group (Euronext Brussels: HAMO), an engineering and contracting company. He has more than 20 years of international financial experience in the industrial, telecommunications, manufacturing and banking industries, including M&A, operational and financial strategy, and tactical initiatives to drive long-term business growth.
Before joining Hamon Group in 2006, Christophe held a number of positions at France Telecom Group in Paris, London and Brussels, including Deputy Group Treasurer. He holds a Master in Business Administration from the University of Liège, Belgium, and studied econometrics at the Katholieke Universiteit Brabant, Tilburg, Netherlands.
Michaël Dillen has 12 years of experience in various legal positions, predominantly oriented towards the healthcare sector. Michaël initiated his career as a lawyer, where he developed a legal practice focused on corporate and commercial advisory towards private and institutional clients in the life sciences industry. Before joining Mithra in 2017 as Chief Legal Officer he worked for Terumo, a Japanese listed medical devices company. Here, he acted as senior counsel responsible for covering legal services in the EMEA region.
Michaël holds a master degree in law, LL.M. degrees in both health law and business law (University of Antwerp and Queen Mary and Westfield College, University of London), as well as a masters degree in business (Solvay Business School).
Valérie Gordenne has over 20 years of experience in the pharma industry with a strong focus on R&D, (non)clinical trials, regulatory affairs and manufacturing. She holds a Master Degree in Pharmaceutical Sciences (Industrial Pharmacist) from the University of Liège.
She started her career in Research and Development for a medium size pharmaceutical company called SMB Technology as Project Manager and later, she became Qualified Person for a manufacturing site dedicated to investigational medicinal products.
In 2004 she joined Mithra as Qualified Person where her responsibilities also included Regulatory Affairs for the pre- and post-marketing portfolio. Between 2008 and 2012 she acted as General Manager of Odyssea Pharma SA, the site dedicated to hormonal intra-uterine system Levosert©, which is now a subsidiary of Actavis. Following the acquisition of Uteron Pharma by Watson/ Actavis, she returned to Mithra as Chief Scientific Officer. Responsibilities at Mithra include R&D for the Company's portfolio.
Geoffroy Dieu has over 15 years of experience in the operational and strategic management of industrial sites, mainly in the food industry. Geoffroy obtained a Master in Management at the UCL (Belgium), and started his career in 1999 at PriceWaterhouseCoopers.
Before joining Mithra, Geoffroy was the General Manager of the Belgian subsidiary of the Firmenich Group. Previously, he was the subsidiary's Plant Manager, in charge of the European projects of Lean Manufacturing and Master Plan aimed at optimizing the Supply Chain. As Product Manager, he also gained significant commercial experience. His career positions him very well for a key role in the further operational and commercial development of the Mithra CDMO.
Jean-Manuel Fontaine has over 20 years of experience in the pharma industry in manufacturing, supply chain and commercial positions. He holds a Master in Pharmaceutical Sciences and MBA from Cornell University.
He started his career at Pfizer in supply chain and manufacturing where he ensured ERP implementation and integration of Pfizer's Belgium manufacturing site. In 2001 he joined Lundbeck where he held various positions in sales & marketing in Belgium and France, notably for Cipralex®. In 2010, Jean-Manuel joined UCB's global marketing team as associate director, developing a global campaign for the brand and driving business alignment across EU regions.
In 2013, Jean-Manuel joined Mithra to lead successively business development and public relations.
Alexandra has nearly 20 years combined international experience across a variety of functions and sectors, including pharmaceutical, automotive, banking, and insurance. She joins Mithra from UCB, where she held a number of roles, most recently as Director of Corporate Social Responsibility, where she was responsible for the implementation and management of several new patient initiatives in Africa. Prior to this she was Director of R&D Portfolio Management and Director of Investor Relations at UCB.
Born and raised in the United States, Alexandra holds an M.B.A. in International Management from Fordham University in New York and a Bachelor's degree in International Business from Loyola College in Maryland.
Benjamin Brands holds a bachelor's degree from the university of Liège ( Belgium) in Public Health with a major in Epidemiology and Health Economics and has over 10 years' experience in the pharmaceutical industry. His area of expertise covers Regulatory Affairs, Quality Assurance and Supply Chain.
Benjamin started his career at Astra Zeneca in a commercial role and joined Mithra in 2009 to take growing responsibilities in the Quality Assurance and Regulatory Affairs department. After developing the Quality Assurance activity at Mithra as QA Manager he progressively transitioned to Supply Chain Manager to develop the whole Supply activities and manage the growing logistic and supply streams. Since 2018, Benjamin is Chief Supply Chain Officer managing the further development of several key projects, including the Mithra CDMO platform.
Patrick Kellens has more than 25 years of IT experience in different sectors like health, telecommunications, consulting and manufacturing. He also has 5 years experience in the pharmaceutical industry as clinical data manager inside a clinical pharmacology unit at Eli Lilly.
Before joining Mithra in 2018, he held various positions ranging from consultant, project/program manager, operations manager to finally IT manager in a large local healthcare institution. He holds a Master degree in Biochemistry from the University of Liège and a complementary degree in IT.
| 1. | Report of the Board of Directors 59 | |
|---|---|---|
| 1.1. | Analysis of results / operations 59 | |
| 1.2. | Statement of financial position analysis60 | |
| 1.3. | Cash flow analysis61 | |
| 1.4. | Corporate governance statement61 | |
| 1.5. | Statements required by art. 34 of the royal decree of 14 November 200775 | |
| 1.6. | Transactions within the authorized capital 76 | |
| 1.7. | Acquisition of own Securities 76 | |
| 1.8. | Use of financial instruments by the Group as per art. 96 of the Belgian Companies' code76 | |
| 1.9. | Circumstances that could considerably affect the development of the Group 76 | |
| 1.10. | Research and development80 | |
| 1.11. | Conflicting interests of Directors (Art. 523 of the Belgian Companies Code)81 | |
| 1.12. | Independence and expertise of at least one member of the Audit committee 86 | |
| 1.13. | Going concern assessment87 | |
| 1.14. | Appropriation of results87 | |
| 1.15. | Important events after the reporting period 87 | |
| 1.16. | Grant of discharge to the directors and the statutory auditor88 | |
| 2. | Responsibility statement89 | |
| 3. | Auditor report90 | |
| 4. | Consolidated Statement of Income95 | |
| 5. | Consolidated statement of comprehensive income 97 | |
| 6. | Consolidated Statement of Financial Position98 | |
| 7. | Consolidated statement of changes in Equity 99 | |
| 8. | Consolidated Cash Flow statement 100 | |
| 9. | Notes to the consolidated financial statements 101 | |
| 9.1. | General Information 101 | |
| 9.2. | Summary of Significant Accounting Policies 101 | |
| 9.3. | Financial Risk Management 110 | |
| 9.4. | Critical Accounting Estimates and Judgements 112 | |
| 9.5. | Business combinations and asset deals114 | |
| 9.6. | Segment Information114 | |
| 9.7. | Other Intangible Assets 115 | |
| 9.8. | Property, plant and equipment116 | |
| 9.9. | Goodwill & IP R&D117 | |
| 9.10. | Investments in associates 118 | |
| 9.11. | Other non-current assets 119 | |
| 9.12. | Inventories119 | |
| 9.13. | Trade Receivables and other current assets119 | |
| 9.14. | Cash and cash equivalents 120 | |
| 9.15. | Share capital 120 |
| 9.16. | Financial liabilities121 | |
|---|---|---|
| 9.17. | Trade payables and other current liabilities 127 | |
| 9.18. | Financial instruments 127 | |
| 9.19. | Revenue and other operating income129 | |
| 9.20. | Expenses by nature 132 | |
| 9.21. | Employee benefit expenses133 | |
| 9.22. | Retirement benefit schemes 133 | |
| 9.23. | Financial income and expenses134 | |
| 9.24. | Income tax134 | |
| 9.25. | Result per share 136 | |
| 9.26. | Share-based payments137 | |
| 9.27. | Contingencies and arbitrations138 | |
| 9.28. | Commitments138 | |
| 9.29. | Related party transactions139 | |
| 9.30. | Events after the balance sheet141 | |
| 9.31. | Discontinued operations 142 | |
| 9.32. | Mithra Pharmaceuticals companies consolidation scope 143 | |
| 9.33. | Disclosure audit fees144 | |
| 9.34. | Condensed statutory financial statements of Mithra SA145 | |
| 9.35. | Alternative performance measure147 |
Mithra's revenues increased by 42% from EUR 46.3 million to EUR 65.5 million, mainly due to the out-licensing revenue recognized for partnership agreements with leaders in Women's Health. In total, and including additional smaller deals, Mithra recognized EUR 56.3 million in out-licensing agreements revenue in 2018, compared to EUR 29.4 million in 2017.
With regard to the Belux business, Mithra's revenues were EUR 7.6 million in 2018, compared to 14 million in 2017. These revenues have been recognized over 7 months. Since August 2018, Mithra is acting as an Agent for Ceres, so that revenue is reported net of the related COGS. Indeed, Mithra is still selling some products on behalf of Ceres during a transition period, until all market authorizations will be formally transferred.
Gross margin for 2018 increased by EUR 23 million from EUR 37.2 million in 2017 to EUR 60.2 million in 2018. The increase of 62% is due to the increase of license granting deals referred to above. The gross margin on the Belux business was EUR 3.9 million in 2018 (7 months as principal and 5 months as agent without gross margin), compared to EUR 7.7 million in 2017 (12 months as principal).
R&D expenses decreased by EUR 12.5 million from EUR 48.2 million in 2017 to EUR 35.7 million in 2018. This is mainly related to the end of Phase III of Estelle® (EUR 12.7 million in 2018 compared to EUR 23.7 million in 2017) and Phase II of Donesta® (EUR 2.8 million in 2018 compared to EUR 5.5 million in 2017). R&D expenses for Myring™, Zoreline® and Tibelia® amounted to EUR 1.7 million. The remainder of the R&D expenses relate to payroll and consultancy expenses, and more specifically to the CDMO facility in Belgium.
G&A expenses are well controlled and have slightly increased to EUR 9 million in 2018 from EUR 8.7 million in 2017, on a consolidated basis.
Selling expenses have decreased in 2018, mainly due to the disposal of the Belux operations to Ceres. As a result, selling expenses came to EUR 3.9 million at 31 December 2018, down from EUR 4.7 million, on a consolidated basis.
In the discontinued income statement at operating income level, a realized gain on the sale of the Belux business to Ceres of EUR 18.5 million is reported, since the Belux Business is no longer part of the operational business of Mithra.
EBITDA1 amounts EUR 38.3 million in 2018 compared to EUR -18.4 million in 2017 (refer to section Alternative performance measure).
The result of change in fair value for 2018 amounts to EUR -46.6 million and is driven by changes in the fair value of contingent liabilities (earn outs) which are non-cash elements. Regarding the contingent liabilities, this reflects management's higher estimate for future sales revenues, including the new estimate about the generic market development.
1 EBITDA is an alternative performance measure, it represents Earnings before financial income and expense, tax, amortization, depreciation and impairment, share-based payment expense and changes in fair value of contingent consideration payable.
The remaining part of the Financial income and expenses is related to the interests paid for EUR -3.2 million and by changes in amortized costs of refundable government advances for EUR -2.2 million (reported in the consolidated income statement under Financial expenses as non-cash elements).
With the fair value impact over 2018 of EUR 46.6 million, the Group ends with a loss before taxes for the period amounting to EUR 16.2 million, which thanks to the strong increase of EBITDA is a significant improvement of EUR 30.2 million compared to a loss before taxes of EUR 46.4 million in 2017, on a consolidated basis.
The Group recorded a tax credit of EUR 3.9 million for the year that results from an increase of the deferred tax asset from the prior year-end, which is to be offset against taxable income in the future. Taking this tax income into consideration, the net loss for 2018 was EUR 12.4 million (loss of EUR 35 million for 2017), on a consolidated basis.
The Company has no branches. Refer to detailed table about the group structure in note 9.32.
As of 31 December 2018, the Statement of financial position shows a total of EUR 202 million in non-current assets, the majority of which are Other intangible assets (EUR 81.9 million) and Property, plant and equipment (EUR 84.4 million).
These Other intangible assets are the result of acquired assets as part of former business combinations. Note that Donesta® qualified as an asset deal, for EUR 8 million. The book value mainly relates to Estelle® for an amount of EUR 30.6 million, to Zoreline® for an amount of EUR 24.4 million, and to Myring™ for an amount of EUR 11.4 million. Other intangible assets consist mainly of a portfolio of acquired product rights and market access rights. In 2018, EUR 1.5 million has been added to the Other intangible assets as a result of a capitalization of development costs incurred for the development of the API E4.
In the non-current assets, the Group recorded EUR 24.9 million additional net book value of tangible fixed assets (EUR 84.4 million at the end of 2018 vs. EUR 59.5 million in 2017). The increase relates mainly to the construction of the second phase of the new production facility for the manufacturing of pharmaceutical products (Mithra CDMO), where Mithra is preparing the production of Myring™. Over 2018, EUR 6.6 million have also been added to the Property, plant and equipment as a result of a capitalization of development costs related to intangible assets incurred for the development of the production zone of Myring™.
Current assets at the end of 2018 represent a value of EUR 153.7 million. The cash position accounts for EUR 119 million of cash and cash equivalents on 31 December 2018 and Trade & other receivables for EUR 23.7 million.
The Trade & other receivables balance takes into account unbilled revenue for EUR 15.3 million related to out-licensing revenue, among which EUR 5 million milestones related to Gedeon Richter, EUR 7.6 million related to Mayne Pharma and EUR 2.3 million milestones related to Fuji Pharma. Finally, Trade & other receivables consists of EUR 1.6 million of recoverable VAT that relates to the recognition of tangible fixed assets by Mithra CDMO.
Inventories have significantly increased from EUR 4.1 million in 2017 to EUR 10.9 million in 2018. It is mainly explained by the increase of API2 stock from EUR 1 million in 2017 to EUR 7.4 million in 2018 in order to be ready for the production of Myring™.
The cash & cash equivalents balance mainly increased thanks to EUR 77.5 million gross proceeds from the capital increase by means of private placement and to the many out-licensing contracts signed during 2018.
The equity position at the end of the year has increased to EUR 150.9 million in 2018 from EUR 86.9 million in 2017. The increase is the net result of EUR 77.5 million in gross proceeds by means of a private placement as well as the net result of the period.
Non-current liabilities increased to EUR 168.7 million at the end of 2018, compared to EUR 105.6 million in 2017, primarily due to the leases (EUR +14 million) and Subordinated financing (EUR + 3 million) for the CDMO facility, as well as due to an increase of the fair values of the contingent considerations payables (EUR + 42.4 million) which are reported under Other financial liabilities.
2 Active Pharmaceutical Ingredient
The current liabilities decreased to EUR 36 million at the end of 2018, compared to EUR 52.2 million in 2017. The decrease of the current liabilities is the net result of a decrease in the Trade payables and other current liabilities (EUR -9.5 million), in the Accrued charges & deferred income (EUR -10.9 million) and an increase of the short term financial debts which includes the contingent considerations expected to be payable within 12 months.
The decrease of the Trade payables is closely related to the reduction of R&D expenses.
The decrease in Deferred income is the result of the recognition of the revenues : from the Estelle® deal with Libbs for EUR 5 million and the Estelle® deal with FUJI for EUR 5.5 million. For more details about Deferred income, please refer to Note 9.19 Revenues and other operating income.
Full year cash flow of the group amounted to EUR +82.8 million including cash flows from discontinued operations for EUR +21.3 million, comprised of:
Operating cash flow: The cash provided by operating activities amounts to EUR +3.5 million for the full year 2018, including cash flows from discontinued operations (EUR + 2.8 million). The result from operations of EUR +35.5 million has been adjusted for the non-cash items such as Depreciation and amortization, Tax credit and Share based payments, amounting in net to EUR +3.3 million.
Proceeds from the disposal of Belux operations for EUR 18.5 million are reported as cash flows from investing activities.
Working capital is also impacting the cash used for operating activities as a result of a decrease in Trade & other receivables (EUR -10.1 million), in Trade & other Payables (EUR -9 million) and in Deferred revenue (EUR -10.2 million). The global decrease is partially offset by an increase of inventories (EUR +7.6 million).
The Corporate Governance of the Company is organized pursuant to the Belgian Companies Code (BCC), the Company's Articles of Association and the Company's Corporate Governance Charter (CGC).
The Company's CGC was adopted by the Extraordinary Shareholders Meeting of 8 June 2015 and has become effective upon completion of the offering and listing of the shares of the Company. It was drafted in accordance with the recommendations set out in the Belgian Corporate Governance Code, which was issued on 9 December 2004 by the Belgian Corporate Governance Committee and as amended on 12 March 2009, pursuant to Article 96, §2, section 1, 1 of the BCC and the Royal Decree of 6 June 2010 with regard to the appointment of the Corporate governance Code to be complied with by listed companies.
The 2009 Belgian Corporate Governance Code (BCGC) is available on the internet site of the Belgian Corporate Governance Committee (www.corporategovernancecommittee.be).
The CGC is anticipated to be updated in the near future and in any case, if changes are made to the Company's corporate governance policy. No update took place during the last financial year.
The Company's CGC, together with the articles of association of the Company, are available on the Company's website (www.mithra.com), mentioning the date of the most recent update, in a clearly recognizable part of the Company's website under the heading "Investors", separate from the commercial information.
The Company, which is listed since 30 June 2015, was required to implement the principles of the Code and the BCGC, and the revised organization of the Company was gradually implemented over 2015. The Company has not amended its CGC since then. The Company's Board of Directors complies with the BCGC, and believes that certain deviations from its provisions were justified as follows:
The Company's shares are admitted to trading on the regulated market of Euronext Brussels, under the ticker "MITRA". The total number of voting rights as at 31 December 2018 was 37,639,495.
Since the publication of last year's report, an increase of capital through authorized capital by means of private placement took place on the 4th of June 2018 by which an amount of EUR 1,956,474.29 was contributed to the share capital of Mithra in cash. An additional amount of EUR 75,543,531.71 was contributed on the share premium account of Mithra. This share capital increase led to the issuance of 2,672,414 new shares ("MITRA").
On 31 December 2018, the share capital of Mithra amounted to EUR 27,555,760.70 as per Belgian GAAP and consisted of 37,639,495 ordinary shares. All shares are equal and common (each having the same rights), and are fully paid up. The shares do not have a nominal value, but reflect the same fraction of the Company's share capital, which is denominated in euro. Each share entitles its holder to one vote.
Post period (30 January 2019), an increase of capital took place following the exercise of 15 warrants representing EUR 84.690 pursuant to the 2015 warrant plan. Indeed, in accordance with the warrant plan issued in 2015 ("Warrant Plan 2015), 1 January 2019 was the start of the exercise period. An amount of EUR 18,119.48 was contributed to the share capital of Mithra in cash, and the remaining amount of EUR 66,570,52 was contributed on the share premium account of the Company. This exercise of 15 warrants led to the issuance of 24,750 shares (1 warrant equaling to 1,650 shares) who have been admitted to trading on the regulated market of Euronext Brussels.
As a result, the share capital of Mithra amounts to EUR 27,573,880.18 corresponding to 37,664,245 existing shares on the date of the present report,.
Furthermore, on 5 November 2018, Mithra's extraordinary general meeting approved the issuance of a maximum of 1,881,974 warrants under a new warrant plan (the "Warrant Plan 2018"), for the benefit of key employees, members of the management team and certain directors. The warrants expire five years after the date of issuance (maximum holding period). They are generally not transferable and may not, in principle be exercised prior to the date of the second anniversary following its offering (i.e. principally not before the 6 November 2020 subject to exercise conditions in the Warrant Plan). All of the offered warrants are subject to a service condition of two years. Furthermore, a portion of 30% of these offered warrants were subject to additional market and non-market vesting conditions. The market condition, upon which the vesting is dependent from the share market price, was included in the grant date fair value calculation (see the discount applied in the table below). This condition was met post yearend. Each warrant gives the right to subscribe to one new Mithra share. Should the warrants be exercised, Mithra will apply for the listing of the resulting new shares on Euronext Brussels.The warrants as such will not be listed on any stock exchange market.
Out of the maximum of 1,881,974 warrants which have been issued, a number of 1,336,034 have been accepted by the beneficiaries (a number of 1,238,339 warrants as from 31/12/2018 and a number of 97,695 warrants postperiod).
Therefore, in accordance with the Warrant Plan 2015, a remaining amount of 635 warrants, representing 1,047,750 new shares, can be exercised as from 1 January 2019. Additionally, a number of 1,336,034 of new warrants (representing 1,336,034 new shares) shall be exercisable as from 6 November 2020 pursuant to the 2018 Warrant Plan.
The Company's shares are admitted to trading on the regulated market of Euronext Brussels, under the ticker "MITRA'.
Based on the transparency declarations the Company has received and the aforementioned capital increases which took place, the significant shareholders of the Company (i.e. above 3% of the outstanding voting rights) as at 31 December 2018 are:
| Shareholder | Address | Number of voting rights | % of voting rights |
|---|---|---|---|
| Mr François Fornieri1 | 10,618,757 | 28.22% | |
| Mr Marc Coucke2 | 6,201,573 | 16.48% | |
| Meusinvest SA | Rue Lambert-Lombard, 3, B-4000 Liège, Belgium | 5,410,551 | 14.37% |
| Ogesip Invest SA | Boulevard du Roi Albert II, 37, B-1030 Bruxelles, Belgium | 1,181,700 | 3.14% |
| Mr Bart Versluys3 | 1,699,496 | 4.52% | |
| Free float | 12,527,418 | 33.27% |
François Fornieri holds through himself and through Yima SPRL warrants entitling him to subscribe 1,775,7900 additional shares of Mithra.
Marc Coucke holds his shareholding partially through Alychlo NV and Mylecke Management Art & Invest NV, which he both controls.
Bart Versluys holds his shareholding through Scorpiaux BVBA and Versluys Bouwgroep BVBA, both controlled by him. All percentages are calculated on the basis of the current total number of voting rights.
Post-period, the Company proceeded to a capital increase due to the exercise of 15 warrants of the Warrant Plan 2015 which led to the following shareholding's spread:
| Shareholder | Address | Number of voting rights | % of voting rights |
|---|---|---|---|
| Mr François Fornieri1 | 10,618,757 | 28.19.% | |
| Mr Marc Coucke2 | 6,201,573 | 16.47% | |
| Meusinvest SA | Rue Lambert-Lombard, 3, B-4000 Liège, Belgium | 5,410,551 | 14.37% |
| Ogesip Invest SA | Boulevard du Roi Albert II, 37, B-1030 Bruxelles, Belgium | 1,181,700 | 3.13% |
| Mr Bart Versluys3 | 1,699,496 | 4.51% | |
| Free float | 12,552,168 | 33.33% |
François Fornieri holds warrants, through himself and through Yima SPRL, entitling him to subscribe 1,775,790 additional shares of Mithra.
Marc Coucke holds his shareholding partially through Alychlo NV which he controls.
Bart Versluys holds his shareholding through himself and Scorpiaux BVBA, controlled by him. All percentages are calculated on the basis of the current total number of voting rights.
The most recent transparency declarations are available on the company's website www.mithra.com.
To the Board's best knowledge, no shareholders' agreement exists among shareholders of the Company with respect to the Company.
The Board of Directors currently consists of 12 members (with a minimum of three (3) set out in the Articles of Association), of which three (3) are Executive Directors (as members of the Executive Management Team) and nine (9) of which are non-executive Directors, including four (4) Independent Directors. The Board of Directors also appointed Selva Luxembourg SA (Mr Christian Moretti) as an observer to the Board with effect as from September 2018 due to its long experience in the molecule synthesis industry.
The roles and responsibilities of the Board, its composition, structure and organization are described in detail in Mithra's Corporate Governance Charter (available on Mithra's website). This Corporate Governance Charter specifies the criteria that directors must satisfy in order to qualify as Independent Directors.
The Board is composed of ten (10) men and of two (2 )women. Although the Company did not have an explicit diversity policy during the 2018 financial year, it will endeavor to implement one as soon as possible (and in accordance with the time-line set by provision 518bis of the BCC), in order to obtain gender diversity amongst its Board members.
Directors are appointed for a maximum term of four years, which is renewable.
| The composition of Mithra's Board of Directors is currently asfollows: | |||
|---|---|---|---|
| -- | -- | -- | ------------------------------------------------------------------------ |
| Name | Position | Term 1 | Nature of Mandate |
Board of Directors Committee Membership |
Attendance² to 2018 Board meetings |
|---|---|---|---|---|---|
| YIMA SPRL (permanent representative: Mr. François Fornieri) |
Managing director |
2019 | Executive | - | 11/11 |
| Mr François Fornieri | Director | 2019 | Executive | - | 11/11 |
| Mr. Marc Beyens | Director | 2019 | Non-executive | - | 10/11 |
| CG CUBE S.A. (permanent representative: Mr. Guy Debruyne) |
Director | 2019 | Non-executive | - | 10/11 |
| Meusinvest SA (permanent representative: Mr. Gaëtan Servais) |
Director | 2019 | Non-executive | Audit Committee and Nomination and Remuneration Committee |
11/11 |
| EVA CONSULTING SPRL (permanent representative Mr. Jean-Michel Foidart) |
Director | 20193 | Executive | - | 9/11 |
| P4MANAGEMENT SPRL (permanent representative: Ms. Christiane Malcorps) |
Director | 20193 | Independent | Nomination and Remuneration Committee |
11/11 |
| Alychlo NV (permanent representative: Mr. Marc Coucke) |
Director | 2019 | President Non-executive |
9/11 | |
| Aubisque BVBA (permanent representative Ms. Freya Loncin) |
Director | 20191 | Non-executive | - | 9/11 |
| Ahok BVBA (permanent representative Mr. Koen Hoffman) |
Director | 20193 | Independent | Audit Committee (Chair) | 11/11 |
| P.SUINEN SPRL-S (permanent representative: Mr. Philippe Suinen) |
Director | 2019 | Independent | Audit Committee | 10/11 |
| Castor Development SA (permanent representative Mr. Jacques Platieau) |
Director | 2019 | Independent | Nomination and Remuneration Committee (Chair) |
11/11 |
The term of the mandate of the Director will expire immediately after the Annual Shareholders Meeting held in the year set forth next to the Director's name. Current directors were appointed at the Extraordinary Shareholders Meeting held on 8 June 2015, unless specified otherwise above.
The number of meetings that could be attended by each Director is due to the nomination of new Directors during the financial year.
Mr Jacques Platieau fulfilled a mandate of Director from 8 June 2015 until 30 June 2018, date as from which he has been replaced by his management company Castor Development SA. He thus attended 6 Board meetings as a physicial person and 5 as permanent representative of Castor Developemnt SA.
Mr. Fornieri acts both as Director and as permanent representative of YIMA SPRL and thereby effectively controls two votes the Board of Directors meetings.
More detailed information on the Board's responsibilities, duties, composition and operation can be found on Mithra's website in the Corporate GovernanceCharter.
In 2018, eleven Board meetings have been held (in case two distinct meetings take place successively, the two meetings have been taken into account hereinabove).The Board meetings were mainly related to the financial results and financial reporting, including the half-year and annual accounts and budget, the Company's strategy, and R&D progress, important agreements or (expected) acquisitions and divestments, and continuous evaluation of the structure of the Company.
Moreover, one specific Board meeting was dedicated to discussions related to a potential increase of capital through authorized capital which ultimately took place on the 4th of June 2018. Another Board took place on the 5 July 2018 to formally propose to the Extraordinary General Meeting to approve a new warrant plan for the benefit of key employees and members of the executive management as well as for certains directors. On the 5th of July 2018, the Board also discussed and approved (i) the divestment of its in-licensed branded generic portfolio on the Belgian and Luxembourg territory and (ii) license grant for a number of complex therapeutics developed products in-house.
Led by the Chair and assisted by the Nomination and Remuneration Committee (and by external experts, as required) the Board conducts, every 3 years, a self-evaluation with respect to its size, composition, performance (including of its committees), and interaction with Executive Management. The evaluation has the following objectives:
There is a periodic evaluation of the contribution of each Director aimed at adapting the composition of the Board. At the time of their re-election, the Directors' commitments and contributions are evaluated within the Board, and the Board ensures that any appointment or re-election allows an appropriate balance of skills, knowledge and experience to be maintained. The same applies at the time of appointment or re-election of the Chairs (of the Board and of the Board Committees).
The Board acts on the results of the performance evaluation by recognizing its strengths and addressing its weaknesses. Where appropriate, this will involve proposing new members for appointment, proposing not to re-elect existing members or taking any measure deemed appropriate for the effective operation of the Board.
The Board of Directors has set up an Audit Committee, in line with the BCGC.
More detailed information on the Audit Committee's responsibilities can be found in the CGC, which can be found on Mithra's website.
The Chair of the Audit Committee reports to the Board subsequent to each Committee meeting on its activities, conclusions, recommendations and resolutions. The Chair of the Audit Committee, reports to the Board on an annual basis, on the Audit Committee'sperformance.
The Audit Committee is composed ofthree (3) members, which are exclusively non-executive Directors. The majority of its members are Independent Directors.
At least one of its members has the necessary expertise with regard to accounting and auditing and, if possible, a majority of its members are independent Directors. The Board of Directors ensures that the Audit Committee has the necessary and sufficient expertise with regards to accounting, audit and finance, in order to fulfill its role in an adequate manner. The Chair of the Audit Committee is not the Chair of the Board of Directors. The CEO and CFO can attend the meetings of the Audit Committee in an advisory and non-voting capacity. At least twice a year, the Audit Committee meets the Statutory Auditor in order to discuss questions regarding its mandate, the audit procedure and, in particular, the potential weaknesses identified in the control.
The following Directors are members of the Audit Committee: AHOK BVBA (permanent representative: Mr Koen Hoffman) (Chair), P.SUINEN SPRL-S (permanent representative: Mr Philippe Suinen) and MEUSINVEST SA (permanent representative: Mr. Gaëtan Servais). AHOK BVBA (permanent representative: Mr. Koen Hoffman) and P. SUINEN SPRL-S (permanent representative: Mr. Philippe Suinen) are both independentDirectors.
A diversity policy has not yet been introduced within this Committee due to the fact that the Company has only been listed for a short period of time. However, the Company shall endeavor to implement a diversity policy as soon as possible (and in line with the time-line st by provision 518bis of the BCC), to obtain gender diversity amongst its Committee members.
The Audit Committee met six times in 2018. The statutory auditor was present at two of these six meetings.
The main topics discussed were the interim half-year and annual financial information and figures, the budget, the statutory auditor's external audit, internal control, risk management and compliance. The Audit Committee also debriefed the capital increase which occurred with respect to the cash perspectives and their advice has been requested on transactions where there was a conflict of interest.
Attendance was as follows: AHOK BVBA (permanent representative: Mr. Koen Hoffman): 6/6, P.SUINEN SPRL-S (permanent representative Mr. Philippe Suinen): 4/6, MEUSINVEST SA (permanent representative: Mr. Gaëtan Servais): 6/6.
The Board of Directors has set up a Remuneration Committee, in line with the BCGC. As the Remuneration Committee also performs the task of a Nomination Committee, it is called the Nomination and Remuneration Committee.
The role of the Nomination and Remuneration Committee is to make recommendations to the Board of Directors with regard to the (re-)election of Directors and the appointment of the CEO and the Executive Managers, and to make proposals to the Board on the remuneration policy for Directors, the CEO and the Executive Managers.
The Committee has also specific tasks. These are further described in the Company's CGC and Article 526 quater of the Companies Code. In principle, the Committee will meet at least two (2) times per year.
The Nomination and Remuneration Committee is composed of three members, which are exclusively non-executive Directors. The majority of its members are IndependentDirectors.
The Nomination and Remuneration Committee has the necessary expertise in terms of the remuneration policy, which is evidenced by the experience and previous roles of its members.
Until 17 May 2018, the following Directors were members of the Nomination and Remuneration Committee: ALYCHLO NV (permanent representative: Mr Marc Coucke) (Chair), Mr Jacques Platieau, and P4Management SPRL (permanent representative: Mrs Christiane Malcorps). P4Management (permanent representative: Mrs Christiane Malcorps) and Mr Jacques Platieau are independent Directors.
Although the Company is not bound by gender diversity regulations at the moment (cfr. article 518bis of the BCC), it is worth noting that by seating on the Nomination and Remuneration Committee, Mrs Christiane Malcorps sets a gender diversity of one third of the Committee's composition.
Starting from May 2018, ALYCHLO NV (permanent representative Mr Marc Coucke) formally resigned from its position of member and chair of the Nomination and Remuneration Committee. As a replacement, Mr Jacques Platieau was candidate to assume the chairman mandate of the Committee, and Meusinvest SA (permanent representative: Mr Gaëtan Servais) was appointed to take up the vacant seat.
The CEO is invited to attend the meetings of the Nomination and Remuneration Committee in an advisory and nonvoting capacity. He does not attend discussions concerning his own remuneration.
The Chair of the Nomination & Remuneration Committee reports to the Board subsequent to each Committee meeting on its activities, conclusions, recommendations and resolutions. The Chair of the Nomination & Remuneration Committee shall, on an annual basis, report to the Board on the Nomination & Remuneration Committee's performance. Every three (3 )years, the Nomination & Remuneration Committee reviews its terms of reference and its own effectiveness and recommends any necessary changes to the Board.
The Nomination & Remuneration Committee met four times in2018.
The main topics discussed were the preparation of the remuneration report, performance of the CEO and other members of the Executive Management Team, their appointment, resignation, and remuneration (including the grant of a new warrant plan), the composition of the Executive Management Team, and the assessment of the contractual conditions giving right to bonuses to the CEO.
Attendance was as follows: ALYCHLO NV (permanent representative: Mr. Marc Coucke):1/4 ,Mr. Jacques Platieau personnally, and on behalf of its management company CASTOR DEVELOPMENT SA (permanent representative: Mr Jacques Platieau) 4/4, P4MANAGEMENT SPRL (permanent representative: Mrs Christiane Malcorps) 4/4 and Meusinvest SA (permanent representative Mr Gaëtan Servais), 3/4.
The Board of Directors of Mithra has set up an Executive Management Team. The Executive Management Team is an advisory committee to the Board of Directors, which does not constitute a management committee ("comité de direction") under Article 524bis of the BCC.
The Executive Management Team's mission is to discuss and consult with the Board and advise the Board on the day-to-day management of the Company in accordance with the Company's values, strategy, general policy and budget, as determined by the Board.
The Executive Management Team shall, prepare a report to the Board on the day-to-day management of the Company, to be presented by the CEO to the Board. Such report shall contain a summary of all material resolutions discussed by the Executive Management Team over the relevant period.
More detailed information on the Executive Management Team's responsibilities can be found in the CGC, which can be found on Mithra's website.
At least all executive Directors are member of the Executive Management Team. The Executive Management Team is currently composed of eleven members: the Chief Executive Officer (CEO), Chief Business Development Officer (CBDO), Chief Financial Officer (CFO), Chief Legal Officer (CLO), Public Relations Officer (PRO), Chief Production Officer (CPO), Chief Scientific Officer (CSO), the Investor Relations Officer (IRO), the Chief Supply Chain Officer (CSCO), the Chief Information Officer (CIO), and the President of the Scientific Advisory Board. The Executive Management Team is chaired by the CEO of the Company. Furthermore, the Chair may invite additional personnel to attend a meeting of the Executive Management Team.
The members of the Executive Committee as of 31 December 2018 are listed in the table below.
| Name | Function |
|---|---|
| YIMA SPRL (permanent representative: Mr. François Fornieri) | Chief Executive Officer, Chief Business Development Officer (Chair) |
| EVA CONSULTING SPRL (permanent representative: Mr. Jean-Michel Foidart) | Chair of the Scientific Advisory Board3 |
| CMM&C SPRL (Mr. Christophe Maréchal) | Chief Financial Officer (CFO) |
| MIDICO BVBA (Mr. Michaël Dillen) | Chief Legal Officer (CLO) |
| BGL Consulting SPRL (Mr. Benjamin Brands) | Chief Supply Chain Officer (CSO) |
| Novafontis SPRL (Mr. Jean-Manuel Fontaine) | Public Relations Officer (PRO) |
| RLD CONSULT SPRL (Mr. Geoffroy Dieu) | Chief Production Officer (CPO) |
| Alius Modi SPRL (Mrs. Valérie Gordenne) | Chief Scientific Officer (CSO) |
| Mr Patrick Kellens | Chief Information Officer (CIO) |
| Ms Sofie Van Gijsel | Investor Relations Officer (IRO) |
Post period, the Investor Relations Officer position has been taken up by Viribus Valorem SPRL (Ms Alexandra Deschner) in replacement of Ms Sofie Van Gijsel.
The Executive Management Team met regularly and at least once every month. The CEO reported and advised the Board on this day-to-day management at every meeting.
The Nomination and Remuneration Committee recommends the level of remuneration for Directors, including the Chairman of the Board, which is subject to approval by the Board and, subsequently, by the Annual Shareholders Meeting.
The Nomination and Remuneration Committee benchmarks the Directors' compensation against peer companies. The level of remuneration should be sufficient to attract, retain and motivate Directors who match the profile determined by the Board.
Apart from their remuneration, all Directors will be entitled to a reimbursement of out-of-pocket expenses actually incurred as a result of their participation in meetings of the Board of Directors.
The level of remuneration of the Directors was determined at the occasion of the Company's Initial Public Offering on 8 June 2015 and explained in the Prospectus issued by the Company in that context. It has not been modified since then. The remuneration of the Directors will be disclosed to the Company's shareholders in accordance with the applicable laws and regulations.
The Directors' mandate may be terminated ad nutum (at any time) without any form of compensation. There are no employment or service agreements that provide for notice periods or indemnities between the Company and the members of the Board of Directors, who are not a member of the Executive Management Team.
Without prejudice to the powers granted by law to the Shareholders Meeting, the Board will set and revise at regular intervals the rules and the level of compensation for Directors executing a special mandate or having a seat in one of the committees, as well as the rules for reimbursement of the Directors' business-related out-of-pocket expenses.
3 The scientific structure having been modified in an important manner, the Board replaced on 22/11/2016 the Scientific Committee by a Scientific Advisory Board not governed by the CGC.
Only non-executive Directors shall receive a fixed remuneration in consideration of their membership of the Board and the Committees of which they are members. Regarding the members of the Board of Directors that are members of the Executive Management Team, please consult the section "Executive Management Team" on the Company's website.
Independent directors will not receive, in principle, any performance-related remuneration.
The Board may upon recommendation of the Nomination and Remuneration Committee propose to the Shareholders Meeting a deviation from the latter principle and grant warrants in order to attract and retain highly qualified independent Directors.
Executive Management Team members receive no additional compensation when invited to the Board.
The remuneration package for the non-executive Directors (whether or not independent) approved by the Shareholders Meeting of 8 June 2015 is made up of a fixed annual fee of EUR 20,000. The fee is supplemented with a fixed annual fee of EUR 5,000 for membership of each committee of the Board of Directors, and an additional fixed annual fee of EUR 20,000 for the Chairman of the Board. Changes to these fees will be submitted to the Shareholders Meeting for approval.
There is no performance-related remuneration for non-executive Directors.
Apart from the above remuneration for non-executive Directors (whether or not independent), all Directors will be entitled to a reimbursement of out-of-pocket expenses incurred as a result of participation in meetings of the Board of Directors.
The total amount of the remuneration and the benefits paid in 2018 to the non-executive Directors (in such capacity) was EUR 230,831.61 (gross, excluding VAT), split as follows:
| Name | Nature | Remunerations | As member of a committee | As chairman of the board |
|---|---|---|---|---|
| Marc Beyens | Non-exec | 20,000 | ||
| CG Cube | Non-exec | 20,000 | ||
| Meusinvest | Non-exec | 20,000 | 8,750 | |
| Alychlo | Non-exec - Chair | 20,000 | 1,250 | 20,000 |
| P. Suinen | Independent | 20,000 | 5,000 | |
| Jacques Platieau | Independent | 20,000 | 5,000 | |
| Ahok | Independent | 20,000 | 5,000 | |
| Aubisque | Non-exec | 20,000 | ||
| P4Management | Independent | 20,000 | 5,000 |
The table below provides an overview of the shares and warrants held by the current members of the Board on the 31st of December 2018.
| Share- Warrantholder | Shares | % | Warrants* | % | Shares and Warrants |
% |
|---|---|---|---|---|---|---|
| YIMA SPRL (permanent representative: Mr François Fornieri)(CEO) |
0 | 0.00% | 752,790 | 33% | 752,790 | 1.89% |
| Mr François Fornieri (permanent representative of YIMA SPRL) (together with YIMA SPRL) |
10,618,757 | 28.22% | 1,023,000 | 44.68% | 11,641,757 | 29,16% |
| Marc Beyens | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| CG CUBE S.A. (permanent representative: Guy Debruyne) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Guy Debruyne (permanent representative of CG Cube S.A.) (together with CG Cube S.A.) |
80,800 | 0.21% | 0 | 0.00% | 80,800 | 0.20% |
| AHOK BVBA (permanent representative : Mr Koen Hoffman) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Koen Hoffman (permanent representative of Ahok BVBA) (together with Ahok BVBA) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Meusinvest SA (permanentrepresentative: Gaëtan Servais) |
5,410,551 | 14.37% | 0 | 0.00% | 5,410,551 | 13.56% |
| Gaëtan Servais (permanent representative of Meusinvest SA) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Aubisque BVBA (permanent representative : Ms Freya Loncin) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Freya Loncin (permanent representative of Aubisque BVBA) (together with Aubisque BVBA) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Marc Coucke (permanent representative of Alychlo NV) (Marc Coucke together with Alychlo NV) |
6,201,573 | 16.48% | 0 | 0.00% | 6,201,573 | 15.53% |
| Eva Consulting SPRL (permanent representative : Jean-Michel Foidart) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Mr Jean-Michel Foidart (permanent representative of Eva Consulting SPRL) (together with Eva Consulting SPRL)** |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| P4MANAGEMENT SPRL (permanent representative of Christiane Malcorps) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Christiane Malcorps (permanent representative of P4MANAGEMENT SPRL)(together with P4Management) |
0 | 0.00% | 0.00% | 0 | 0.00% |
| P.SUINEN SPRL-S (permanentrepresentative: Mr Philippe Suinen) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
|---|---|---|---|---|---|---|
| Philippe Suinen (permanentrepresentative of P.SUINEN SPRL-S) (together with P.SUINEN SPRL-S) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Castor Development SA (permanentrepresentative of Jacques Platieau) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Jacques Platieau (permanent representative of Castor Development SA)(together with Castor Development SA) |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Subtotal | 22,311,681 | 59,28% | 1,775,790 | 77.68% | 24,006,671 | 60.14% |
* corresponds to the amount of shares following warrant conversion.
**Post Period, an amount of 52,695 warrants were granted and accepted by Eva Consutling SPRL.
The remuneration of the members of the Executive Management Team is determined by the Board of Directors upon recommendation of the Nomination and Remuneration Committee and subsequent to the CEO's recommendation to this Committee (except for his own remuneration). Mithra Pharmaceuticals strives to be competitive in the European market.
The level and structure of the remuneration of the members of the Executive Management Team is such that qualified and expert professionals can be recruited, retained and motivated taking into account the nature and scope of their individual responsibilities.
The remuneration of the members of the Executive Management Team currently consists of the following elements:
In addition to the 2015 Warrant Plan, in order to include new members of the Executive Management team, a short and long term performance based remuneration and incentive scheme has been elaborated within the Nomination and Remuneration Committee, validated by the Board and formally approved by the Extraordinary General Meeting of shareholders on 5 November 2018. Such scheme is based on objectives which are, in accordance with Article 520bis of the BCC, pre-determined by an explicit decision of the Board of Directors and were chosen so as to link rewards to corporate and individual performance, thereby aligning on an annual basis the interests of all members of the Executive Management Team with the interests of the Company and its shareholders and benchmarked with the practices in the sector.
The amount of remunerations and benefits paid in 2018 to the CEO and the other members of the Executive Management Team, (gross, excluding VAT and share-related payments) is shown in the table below:
| Thousands of Euro (€) | Total | Of which CEO |
|---|---|---|
| Basic Remuneration | 2,321 | 1.012 |
| Variable Remuneration (*) | 0 | 0 |
| Group Insurance (pension, invalidity, life) | 1 | 0 |
| Other insurance (car, cell phone, hospitalization) | 31 | 0 |
| Total | 2.353 | 1.225 |
The table below provides an overview of the shares and warrants held by the members of the Executive Management Team, including the Executive Director on 31 December 2018 (i.e. the CEO).
| Share- / Warrantholder | Shares | % | Warrants | % | Shares and Warrants |
% |
|---|---|---|---|---|---|---|
| YIMA SPRL (permanentrepresentative: Mr. François Fornieri) (CEO) (together with François Fornieri) |
0 | 0.00% | 752,790 | 33.00% | 752,790 | 1.89% |
| Mr. François Fornieri (permanent representative of YIMA SPRL) (together with YIMA SPRL) |
10,618,757 | 28,22% | 1,023,000 | 44.68% | 11,641,757 | 29.16% |
| Mr. Christophe Maréchal (representative of and together with CMM&C SPRLBVBA) |
0 | 0.00% | 135,502 | 5.93% | 135,502 | 0.34% |
| Mr. Jean-Michel Foidart (representative of and together with Eva Consulting SPRL) * |
0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Mr. Benjamin Brands (representative of and together with BGL Consulting SPRL) |
0 | 0.00% | 52,695 | 2.31% | 52,695 | 0.13% |
| Mr. Jean-Manuel Fontaine (representative of and together with Novafontis SA)** |
0 | 0.00% | 77,445 | 3.39% | 77,445 | 0.19% |
| Mr. Geoffroy Dieu (representative of and together with RLD Consult SPRL) |
0 | 0.00% | 0 | 0.00% | 0,00 | 0.00% |
| Ms Valérie Gordenne (representative of and together with Alius Modi SPRL) |
54,000 | 0.14% | 0 | 0.00% | 54,000 | 0.14% |
| Mr. Patrick Kellens | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| Mr. Michaël Dillen (representative of and together with Midico BVBA) |
0 | 0.00% | 120,446 | 5.21% | 120,446 | 0.30% |
| Ms. Sofie Van Gijsel*** | 0 | 0,00% | 0 | 0,00% | 0 | 0,00% |
| Subtotal | 10,672,757 | 28,36% | 2.161.878 | 94,52% | 12,834,635 | 32,16% |
| Total | 37,639,495 | 100.00% | 2,310,839 | 100.00% | 39,950,334 | 100.00% |
*Post period, 52,695 warrants were offered to Eva Consulting and accepted by him.
**Post period (30 January 2019) a capital increase took place by means of which Jean-Manuel Fontaine converted 15 warrants into 24,750 new shares.
***Sofie Van Gijsel left the Company on 31 August 2018.
The Executive Management Team was strengthen post period with the arrival of (i) Viribus Valorem SPRL (represented by Mrs. Alexandra Deschner) as Investor Relation Officer.
The Company has put into place two stock option plans since its incorporation.
First, the Extraordinary Shareholders Meeting of the Company of 2 March 2015 approved, upon proposal of the Board of Directors, the issuance of warrants giving right to 1,796,850 Shares, which, on a fully-diluted basis, represented 5.56% additional Shares at the time
These warrants (1089) have been granted free of charge. All warrants have been accepted by the relevant beneficiaries. Each warrant entitles its holder to subscribe for 1,650 Shares of the Company at a subscription price of EUR 5,646.00 per 1,650 Shares (a part corresponding to the par value of the existing Shares on the day the warrants are exercised will be allocated to the share capital). The balance will be booked as an issue premium.
These warrants can be exercised as from 1 January 2019, and have a term of 8 years as from the date of grant. Upon expiration of the term, they become null and void. On 31 December 2018, 650 warrants of the initial 1089 remained outstanding.
Post period (30 January 2019), an increase of capital took place following the exercise of 15 warrants representing EUR 84.690 pursuant to the Warrant Plan 2015. An amount of EUR 18,119.48 was contributed to the share capital of Mithra in cash, and the remaining amount of EUR 66,570,52 was contributed to the share premium account of the Company. This exercise of 15 warrants led to the issuance of 24,750 shares ( 1 warrants equals 1,650 shares) who have been admitted to trading on the regulated market of Euronext Brussels on the "MITRA" ticker.
Secondly, on 5 November 2018, Mithra's Extraordinary General Meeting approved the issuance of a maximum of 1,881,974 warrants under the Warrant Plan 2018, for the benefit of key employees, members of the management team and certain directors. The warrants are expiring five years (maximum holding period) after the date of issuance. They are generally not transferable and in principle, cannot be exercised prior to the date of the grant's second anniversary (i.e. as from 6 November 2020 subject to exercise conditions). All of the offered warrants are subject to a service condition of two years. Furthermore, a portion of 30% of these offered warrants were subject to additional market and non-market vesting conditions. The market condition, upon which the vesting is dependent from the share market price, was included in the grant date fair value calculation (see the discount applied in the table below). This condition was met post year-end. Each warrant gives the right to subscribe to one new Mithra share. Should the warrants be exercised, Mithra will apply for the listing of the resulting new shares on Euronext Brussels.The warrants as such will not be listed on any stock exchange market.
Out of the maximum of 1,881,974 warrants which have been issued, a number of 1,336,034 have been offered and accepted by beneficiaries. Post period, the Board of Directors decided to grant certain of such not yet offered warrants to certain new members of the Executive Management Team as a means of incentive scheme. As such, a number of 52,695 warrants have been granted to Eva Consulting SPRL (represented by Prof. Jean-Michel Foidart), and 30,000 warrants to Viribus Valorem SPRL (represented by Mrs. Alexandra Deschner).
Therefore, in sum accordance with the Warrant Plan 2015, a remaining number of 635 warrants representing 1,047,750 new shares can be exercised since 1 January 2019. Additionally, a number of 1,336.034 of new warrants (representing 1,336.034 new shares) shall in principle be exercisable, as from 6 November 2020 subject to exercice conditions pursuant to the Warrant Plan 2018.
In 2018, nine members of the Executive Management Team were engaged based on a service agreement, whereas two members of the Executive Management Team have been engaged based on an employment agreement. Both sorts of contracts can be terminated at any time, subject to certain pre-agreed notice periods, which may, at the discretion of the Company, be replaced by a corresponding compensatory payment. Post period, Viribus Valorem SPRL (represented by Mrs. Alexandra Deschner) joined Mithra based on a service agreement.
The service agreement with the CEO, YIMA SPRL, sets out a notice period (or notice indemnity in lieu of notice period) of 12 months.
There are no provisions allowing the Company to reclaim any variable remuneration paid to Executive Management based on incorrect financial information.
In general, the company has no intention to compensate in a subjective or discretionary manner.
The Executive Management Team should lead the Company within the framework of prudent and effective control, which enables it to assess and manage risks. The Executive Management Team should develop and maintain adequate internal control systems so as to offer a reasonable assurance concerning the realization of goals, the reliability of the financial information, the observance of applicable laws and regulations and to enable the execution of internal control procedures.
The Executive Management Team is an advisory committee to the Board and the CEO on the day-to-day management of the Company. Each of the members of the Executive Management Team has individually been made responsible for certain aspects of the day-to-day management of the Company and its business (in case of the CEO, by way of a delegation from the Board; in case of the other Exective Management Team members, by way of a delegation from the CEO). In the case that any decision to be taken by a member of the Executive Management Team could be material to the Company, it shall be presented and discussed at a meeting of the the Executive Management Team. The Executive Management Team meets several times per month.
During those Executive Management Meetings, there is a follow-up of the progress of various Group projects, clinical studies, business development deals, and other material matters.
The process of gathering financial information is organized on quarterly, half-year and annual basis, and report of such information is made to the CEO and to the Audit Committee. A central team produces the accounting figures under the supervision of the CFO and Group controller and the books are kept by an ERP (Dynamics AX). The cash and working capital are monitored on a continuous basis.
The quality of the internal controls is assessed during the course of the financial year and on an ad hoc basis with internal audits (supply chain, IT, PO validation workflows, working capital management, etc.) carried out on the basis of potential risks identified. The conclusions are shared and validated with the Audit Committee. During the financial year, the Audit Committee undertakes reviews of the half-year closures and specific accounting treatments. It reviews the disputes and puts all the questions it deems relevant to the Auditor and to the CFO or to the Executive Management of the Company.
The Audit Committee assists the Board of Directors in the execution of its task to control the Executive Management Team.
The Executive Management Team has organized the internal control environment, which is monitored by the Audit Committee. The Audit Committee decided not to create an internal audit role, since the scope of the business does not justify a full-time role.
The role of the Audit Committee shall be to assist the Board of Directors in fulfilling its monitoring responsibilities, as stipulated in the Company's CGC. These responsibilities include the financial reporting process, the system of internal control and risk management (including the Company's process for monitoring compliance with laws and regulations) and the external audit process.
BDO Réviseurs d'Entreprises SCRL, with registered office at Rue de Waucomont, Battice 51, 4651 Herve, Belgium, member of the Institut des Réviseurs d'Entreprises/Instituut der Bedrijfsrevisoren, represented by Cédric Antonelli, auditor, has been renewed as Statutory Auditor of the Company on 17 May 2018 for a term of three years ending immediately after the Shareholders Meeting to be held in 2021 which will deliberate and resolve on the financial statements for the financial year ended on 31 December 2020. BDO Réviseurs d'Entreprises SCRL is a member of the Belgian Institute of Certified Auditors ("Institut des Réviseurs d'Entreprises") (membership number B00023).
According to Article 34 of the Belgian Royal Decree of 14 November 2007, Mithra hereby discloses the following items:
Pursuant to the BCC, to attend or be represented at the general meeting and exercise her/his voting right, a shareholder must have carried out the accounting registration of his/her shares no later than the fourteenth day before the general meeting at 24:00h Belgian time (the "Registration Date"), either by registering them in the Company's register of nominative shares, or by registering them in the accounts of a licensed account holder or a settlement institution, the number of shares held on the day of the meeting being disregarded.
The shareholder must also inform the Company of her/his desire to attend the general meeting no later than the sixth day before the generalmeeting.
The Articles of Association provide that the number of Directors of the Company, who may be natural persons or legal entities and who need not be shareholders, shall be at least 3.
At least one half of the Board shall comprise non-executive Directors and at least 3 of them shall be Independent Directors.
When dealing with a new appointment, the Chair of the Board shall ensure that, before considering the candidate, the Board has received sufficient information such as the candidate's curriculum vitae, the assessment of the candidate based on the candidate's initial interview, a list of the positions the candidate currently holds, and, if applicable, the necessary information for assessing the candidate's independence.
The Chair of the Board is in charge of the nomination procedure. The Board is responsible for proposing members for nomination to the General Shareholders Meeting, in each case based upon the recommendation of the Nomination & Remuneration Committee.
Should any of the offices of Director become vacant, whatever the reason may be, the remaining Directors shall have the right to temporarily fill such vacancy until the next General Shareholders Meeting, which shall make a final appointment.
Whenever a legal entity is appointed as a Director, it must appoint an individual as its permanent representative, chosen from among its shareholders, managers, Directors or employees, and who will carry out the office of Director in the name and for the account of such legal entity.
Any proposal for the appointment of a Director by the General Shareholders Meeting shall be accompanied by a recommendation from the Board, based on the advice of the Nomination & Remuneration Committee. This provision also applies to proposals for appointment originating from shareholders. The proposal shall specify the proposed term of the mandate, which shall not exceed 4 years. It shall be accompanied by relevant information on the candidate's professional qualifications together with a list of the positions the candidate already holds. The Board will indicate whether the candidate satisfies the independence criteria.
In principle, there is no quorum requirement for a Shareholders Meeting and decisions are generally passed with a simple majority of the votes of the Shares present and represented. Nevertheless, capital increases (unless decided by the Board of Directors within the framework of the authorised capital), decisions with respect to the Company's dissolution, mergers, de-mergers and certain other reorganisations of the Company, amendments to the articles of association (other than an amendment of the corporate purpose) and certain other matters referred to in the BCC not only require the presence or representation of at least 50% of the share capital of the Company and at least 50% of the profit certificates, if any, of the Company but also the approval of at least 75% of the votes cast. An amendment of the Company's corporate purpose or, subject to certain exceptions, the purchase and sale of own Shares, requires the approval of at least 80% of the votes cast at a Shareholders Meeting, which in principle can only validly pass such resolution if at least 50% of the share capital of the Company and at least 50% of the profit certificates, if any, are present or represented. In the event that the required quorum is not present or represented at the first meeting, a second meeting will be convened, that will be able to validly deliberate and resolve regardless of the number of Shares and profit certificates, are present or represented.
Significant agreements to which the issuer is a party and which take effect, alter or terminate upon a change of control of the issuer following a takeover bid, and the effects thereof, except where their nature is such that their disclosure would be seriously prejudicial to the issuer; this exception shall not apply where the issuer is specifically obliged to disclose such information on the basis of other legal requirements
As noted above, the Company has issued a maximum number of 1.883.063 warrants on 2 March 2015 and 5 November 2018, respectively, for the benefit of the members of its Executive Management Team,consultants and employees. Pursuant to the terms and conditions of the warrant plans, in the event of a Liquidity event resulting from a public bid or otherwise, that modifies the (direct or indirect) control (as defined under Belgian law) exercised over the Company, the warrant holders shall have the right to exercise their warrants, irrespective of exercise periods/limitations provided by the plan. The warrants entitle their holders to subscribe to a maximum number of 2,929,724 securities carrying voting rights (all ordinary shares).
Each warrant of the Warrant Plan 2015 entitles its holder to subscribe to 1,650 Shares of the Company at a subscription price of EUR 5,646.00 per 1,650 Shares whereas each warrant of the Warrant Plan 2018 entitles its holder to subscribe 1 Share of the Company at a subscription price of either EUR 24,05 (members of personnel) or EUR 24,09 (not members of the personnel) (a part corresponding to the par value of the existing Shares on the day the warrants are exercised will be allocated to the share capital, while the balance will be booked as an issue premium).
On the 31th of May 2018, the Board gave mandate to a placement committee composed of (i) YIMA SPRL (Mr François Fornieri) and (ii) CMM&C BVBA (Mr. Christophe Maréchal) to determine the terms of an increase of capital by means of a private placement through authorized capital.
As a result thereof, the Company offered 2,672,414 new shares to certain qualified and/or institutional investors including Tier 1 investors. As, the offered new shares represented less than 20% of the Company's total shares currently admitted to trading on Euronext Brussels (pre-transaction) and brought the total number of shares (posttransaction) to 37,639,495, there was no legal obligation for the Company to issue a Prospectus. This increase of capital has been done by suppressing the preferential rights of the existing shareholders in accordance with provision 596 of the BCC and took place on the 4th June 2018.
Neither Mithra Pharmaceuticals SA nor any direct affiliate or any nominee acting in his own name but on behalf of the Company or of any direct affiliate, have acquired any of the Company's shares. Mithra Pharmaceuticals SA has not issued profit-sharing certificates or any other certificates.
The Group did not use any financial derivative instruments.
No special events have occurred that could considerably impact the development of theGroup.
The Group's exposure to price risk, credit risk, liquidity risk and cash flow risk are detailed in note 9.3 (Financial Risk Management). The Group has a business structure; built on: (i) a development portfolio which includes the development of Estetrol-based product candidates in the oral contraception and menopause indications and of Complex Therapeutics;(ii) the CDMO development and manufacturing facility, which will manufacture an important part of its innovative products, including its Estetrol-based products (the growing importance of this business for Mithra has been confirmed by the interest shown by first rank international market actors in its innovative products portfolio and the achievements in this respect in terms of international business development), and (iii) a commercialized portfolio of branded generics and OTC products in several regions. Therefore, the risk factors related
to each of these pillars are presented separately (as each has a different set of risks associated with it). As Mithra further evolved towards a biopharma company in 2017, most focus is on the development portfolio.
(i) No Estetrol-based product candidates have been approved nor commercialised and the lead product candidate is currently in Phase III. The successful development of the Group's Estetrol-based product candidates is highly uncertain. Estetrol-based product candidates must undergo pre-clinical and clinical testing supporting the clinical development thereof, the results of which, are uncertain and could substantially delay, which in turn could substantially increase costs, or prevent the Estetrolbased product candidates from reaching the market.
The Group's current lead Estetrol-based product candidates have not been approved nor commercialised. Estelle® for use in contraception is currently in Phase III studies, which will have to reconfirm its contraceptive efficacy, and in parallel with which a number of studies need to be conducted which are not expected to have a significant impact on any (potential) marketing authorisation approval, although these will play a role in determining the labelling and leaflet restrictions the product candidate would have upon approval (if any). Donesta® for use in hormone therapy in menopause is currently in Phase II (the pre-clinical and Phase I clinical trial support package is shared with Estelle® ; the data would seem to suggest (but did not possess the statistical power to demonstrate) that Estetrol decreases hot flushes in a dose-dependent manner, but larger populations and longer treatment periods as recommended by regulatory guidance (12 weeks) will be necessary to optimally see a difference in the results between the different Estetrol doses tested). All Estetrol-based product candidates will be subject to extensive (pre-)clinical trials supporting the clinical development thereof to demonstrate safety and efficacy in humans (which will take several years) before they can apply for the necessary regulatory approval to enter the market and potentially obtain marketing authorisation with the relevant regulatory authorities. The Group does not know whether future clinical trials will begin on time, will need to be redesigned will be completed on schedule (Phase III for Estelle® currently expected to give top line results between Q3 2018 and Q1 2019 and top line results for Phase II for Donesta® currently expected to be available Q2 2018), if at all, and therefore cannot currently provide any timing estimates for the development and registration (if any) of Estelle® or Donesta® beyond the Phases of clinical development these product candidates are currently in.
At any stage of development, based on review of available pre-clinical and clinical data, the estimated costs of continued development, the triggering of certain contingent payments and low-single digit "royalty payments", (payable to the former shareholders of Uteron Pharma as part of the acquisition of Estetra by the Group), and up to EUR 12 million, for Donesta® (as described in the note on business combinations and asset deals), market considerations and other factors, the development of Estetrolbased product candidates may bediscontinued.
Any further delays in completing clinical trials or negative results will delay the Group's ability to generate revenues from product sales of Estetrol-based product candidates, if any. This could have a material adverse effect on the Group's business, prospects, financial condition and results of operation.
The Group's pipeline currently comprises two product candidates which would, upon their marketing authorisation, be completely new original products. The Group will be dedicating the majority of its available cash resources to the development of these innovative Estetrol-based product candidates. If the Group would be unsuccessful in developing, commercialising and/or partnering these innovative original products, this would materially impact the revenue and profitability potential of the Group, as in that case, the nature of the Group's pipeline would be limited to the development (either directly or indirectly) of Complex Therapeutics and the further development of its commercial business, both of which present market opportunities of a level which is significantly lower than the opportunity offered by the development of innovative original products. Both of these activities have a profile which is more limited in terms of funding need and growth potential compared to the development of innovative product candidates.
(iii) In orderto successfully develop,register and commercialise its Estetrol-based product candidates, theGroup will need to successfully manage the transition from a focus on the commercialisation and development of generic products to a company that is in addition, to a significant extent, involved in development and commercialisation of innovative original product candidates.
The Group has, to date, never fully developed, registered and commercialised an innovative product candidate. Such development, registration and commercialisation present significant new challenges.
In preparation, the Group has expanded and continues to expand its organisation and has attracted and continues to attract a number of experienced collaborators in this new field of development. However the Group may not be able to successfully integrate their experience and know-how, and to continue to further successfully expand its organisation and successfully conclude every development step. A failure to successfully do so could cause delays in the clinical development and/or the regulatory approval process, which could ultimately delay or even prevent the commercialisation of the Group's innovative product candidates. This could have a material adverse effect on the Group's business, prospects, financial condition and result ofoperation.
(iv) None of the complex therapeutics (including amongst others Zoreline® and Myring™) currently under development by the Group have received regulatory approvement. Complex Therapeutics must undergo bioequivalence or pharmacodynamics or any other studies, which could be subject to delays, which in turn could substantially increase costs, or prevent these generic products from reaching the market on time.
All complex therapeutics will be subject to bioequivalence or pharmacodynamics or other studies (as deemed fit by the relevant regulatory agencies), to demonstrate that the generic product is bioequivalent to the previously approved drug, before they can receive the necessary regulatory approval to enter the market. In 2016, Myring™ was the first complex therapeutic solution produced by Mithra to demonstrate bioequivalence; for the other products (including Zoreline® ), this is not yet the case. Any delays in completing studies, will delay the Group's ability to generate revenues from product sales of complex therapeutical solutions products if any. In case the Group would come late in the market, dependent on the market as of the point when three to five generics have been approved, it will suffer from significantly reduced market share, revenues and cashflows for the relevant genericproduct.
Upon completion of the relevant studies, the Group's products must obtain marketing approval from the European Medicines Agency (EMA),the US Food and Drug Administration (FDA) or competentregulatory authorities in other jurisdictions before the products can be commercialised in a given market, and each such approval will need to be periodically renewed. Each regulatory agency may impose its own requirements and may refuse to grant or may require additional data before granting marketing approval even if marketing approval has been granted by other agencies.Changes inregulatoryapproval policies or enactment of additionalregulatory approvalrequirements may delay or prevent the products from obtaining or renewing marketing approval. Also, post-approval manufacturing and marketing of the Group's products may show different safety and efficacy profiles to those demonstrated in the data on which approval to test or market said products was based. Such circumstances could lead to the withdrawal or suspension of approval. All of this could have a material adverse effect on the Group's business, prospects, financial condition and results of operation.
The Group's product candidates are being developed with the intention of a commercial launch throughout the world. The Company currently has only a commercial, marketing and sales organisation in place in the Benelux to launch its product candidates in these markets. As in 2016, the Group decided to put its affiliates on hold, it does not plan to build out a commercial organization in these territories.
The Company divested its French subsidiary, Mithra France, in December 2017. The sale consisted in two agreements. A first contract was closed with Laboratoire CCD, a French-based Women's Health player and concerns the transfer of the marketing authorizations (Mas) for four products including Tibelia® . Secondly, Mithra concluded a share purchase agreement for Mithra France with Theramex, whereby Theramex has taken over the subsidiary, including its pharmaceutical license.
Until now the Group has never marketed a product outside of the Benelux and has therefore limited experience in the fields of sales, marketing and distribution in other markets. The Group does currently not intend to deploy itself a sales and distribution organisation elsewhere in the world, but will rely for the commercial launch and distribution of its products on license and supply deals with partners. The partners identified at 31 December 2017 are GSP for Zoreline® , Fuji Pharma for Donesta® and Estelle® (for Japan and ASEAN), Libbs for Estelle® (Brazil), Mayne Pharma for Myring™ in the US, Gynial for Myring™ in Austria. Post period, the Company entered into an agreement with Adamed for Myring™ in Czech Republic and Alvogen for Myring™ in Russia. Other partners have currently not yet been identified and there can be no assurance that the Group will ever identify such partners or find an agreement with such partners. Therefore its products might not be commercialised in all the markets the Group currently intends to commercialise its products. The Group's dependence on partners for the commercialisation of its products in certain regions results in a number of risks (including, but not limited to, less control over the partner's use of resources, timing, success, marketing of competing products by the partner, impact of future businesscombinations).
The Company has entered into some partnerships regarding sourcing of raw materials. Therefore the possibility for the Company to meet its production's commitments towards their counterparts depend on its sourcing arrangements.
The market for pharmaceutical products is highly competitive. The Group's competitors in the Women's Health market include many established pharmaceutical, biotechnology and chemical companies, such as Bayer, MSD, Pfizer and Allergan, many of which have substantially larger financial, research and development, marketing and personnel resources than the Group and could, therefore, more quickly adapt to changes in the marketplace and regulatory environment. Competitors may currently be developing, or may in the future develop technologies and products that are more effective, safe or economically viable than any current or future technology or product of the Group. Competing products may gain faster or broader market acceptance than the Group's products (if and when marketed) and medical advances or rapid technological development by competitors may result in the Group's product candidates becoming non-competitive or obsolete before the Group is able to recover its research and development and commercialisation expenses. This could have a material adverse effect on the Group's business, prospects, financial condition and results ofoperation.
The success of the Group depends in part on its ability to obtain, maintain and enforce its patents and other intellectual property rights for technologies and products in Europe, the United States and elsewhere. The Group holds various families of patent covering in particular several routes of synthesis of Estetrol and a number of therapeutic indications of Estetrol. One of the main patents covering the synthesis of Estetrol will expire in 2032. The indications for contraception and menopause are directly covered by 3 patent families , offering protection until 2022 in Europe and Canada and until 2025 in US. New patent applications have been filed in 2018 to protect the use of E4 to relieve the vasomotor symptoms of menopause. The scope of these patents will vary and will depend on what will ultimately be accepted country by country. If these additional patents are issued, they will offer potential protection until 2039. The Group will seek to protect the market opportunity for these product candidates after market authorisation approval (if any) by applying for market/data exclusivity (between maximum five to ten years depending on the territory) and/or patent extension (maximum five years) systems when foreseen by the national law of the country and to the extent that conditions of application are fulfilled.
The Group has experienced operating losses since 2012. It experienced consolidated net losses of EUR 9.8 million in 2015, EUR 35 million in 2016, EUR 35 million in 2017 and EUR 12.4 million in 2018. These losses have resulted principally from costs incurred in research & development and from general and administrative costs associated with the operations. In the future, the Group intends to continue the clinical trial program for its candidate products, conduct pre-clinical trials in support of clinical development and regulatory compliance activities that, together with anticipated general and administrative expenses, and the construction and start-up of its CDMO, will result in the Group incurring further significant losses for the next several years and the Group's cash burn is expected to increase as a result of these activities in the next fewyears.
There can be no assurance that the Group will ever earn significant revenues or achieve profitability resulting from its research and development activities.
The Group is also subject to the following risks, in addition to the risks mentionedabove:
We are committed to fully exploiting the potential of E4 (Estetrol) as well as our technologic platform in Complex Therapeutics to develop a diverse and broad portfolio of therapeutic treatments focused on Women's Health.
With regard to E4, most focus is on Mithra's late-stage product candidates, Estelle® for contraception (Phase III) and Donesta® for menopause (Phase II). Furthermore, Mithra is exploring additional indications in Women's Health (e.g. dysmenorrhea, endometriosis), as well as indications beyond Women's Health, such as wound healing and neuroprotection. Since 2017, Mithra capitalized some development costs related to E4 synthesis for EUR 3,105 k.
For the Complex Therapeutics, Mithra is preparing for the launch of Myring™ in Europe in 2019 with the production of the first commercial batches in Q1 2019, followed by the US launch in 2020. At the same time, we continue to advance the preclinical work on Zoreline, having obtained supportive 1and 3-monthd PK results in 2018.
Furthermore, Mithra will pursue the budgeted investments to further advance the technological CDMO facility in terms of performance, applicability and scale; in order to offer third-parties (such as GSP) the opportunity to develop sterile injectables; and to prepare the polymeric forms and hormonal tablets zones for the production of its proprietary products.
In addition, Mithra intends to initiate new discovery programs which might lead to the development and commercialization of drug candidates; and is committed to seek, maintain and expand the know-how, technologies and intellectual property position.
The Directors report that during the financial year under review three decisions have been taken that fall within the provisions of Art. 523 BCC. As required by Art. 523 BCC, the full minutes of the relevant meeting of the Board of Directors relating to such conflicts of interest are reproduced hereunder.
During the financial year 2018, no transaction or other agreement between the Company (or its affiliates) and a Director other than the decisions reproduced hereunder, which could be considered as a conflict of interests within the meaning of Art. 523 BCC was declared.
Furthermore, during the same financial year, there has been no transaction or other contractual relationship between the Group, and a Director or Executive Manager other than those that fall within the provisions of Art. 523 Art. BCC or that have been disclosed under "related party transactions" set out below.
Prior to the deliberations of the agenda and as required by Art. 523 BCC, Mr. François Fornieri, acting for himself and as permanent representative of SPRL YIMA reported his own conflict of interest regarding the following point on the agenda: "Composition and remuneration of the management team FY 2018". He confirms having informed the statutory auditor of the Company of the said conflict of interest.
As required by the aforementioned article, the full minutes must be reproduced here for the relevant meeting of the Board of Directors that discussed the conflict of interest.
Minutes of the above Board meeting:
The Chairman underlines and reads out the Art. 523 BCC. In such situation, the nature of the decision or operation in question, a justification of the taken decision, as well as the financial consequences for the Company must be noted in the minutes by the Board.
Mr. François Fornieri acting for himself and as permanent representative of SPRL Yima reported his own conflict of interests regarding the following point on the agenda, prior to any deliberations, and confirms having informed the statutory auditor of the Company of said conflict of interests:
Mr. François Fornieri acting for himself and as permanent representative of SPRL Yima, informs the other Directors of his own conflict of interests of financial nature regarding the decision referred to in point 2.2 on the agenda. Indeed, François Fornieri and Yima SPRL are, on one side, members of the management team, the remuneration of which will be discussed today and, on the other side, members of the Board which must rule on the said remuneration.
The Chairman thanks the Directors for their statements mentioned in the present minutes, which will be annexed to the management report for the financial year 2018 and transmitted to the statutory auditor of the Company, as required by Art. 523 BCC.
Indeed, the Board agrees that the aforementioned directors are subject to a conflict of interest and that, as required by Art. 523 BCC and by the Annex H of the Corporate Governance Code, the concerned directors shall neither deliberate nor vote, considering that it is directly linked to their conflicting interests.
In order to be compliant with the legal requirements and with the Annex H of the Corporate Governance Code, the Board records that the concerned directors shall temporarily leave the conference call when the items on the agenda linked to their conflicting interests will be discussed.
Afterwards, the different items on the agenda can be validly deliberated by the Board.
The Board reviews the report of the Nomination and Remuneration Committee on the subject and deliberates over it (Annex 1).
The Board notes that the Committee recommends to remove this function from the management team, since has become obsolete in light of the Company developments.
ii) Removal of the Chief Communication Officer position
The Board notes that the Committee recommends to look for a new person for this function, and to appoint him/her as a member of the management team or not.
iii) Replacement of the IRO
The Board notes that the Committee and the management work together to find a new IRO.
iv) Creation of a position of Chief Supply Chain Officer
The Board notes that it was advised by the Committee to approve the creation of a Chief Supply Chain Officer position, considering the development of the CDMO and of several projects.
b) The management remuneration
The Board takes a close look at the internal note of the nomination and remuneration Committee concerning the review of the management remuneration (Annex 1).
The members of the Board have a discussion about this review, its justification as well as the financial consequences for the Company.
Concerning the increase in the Chief Executive Officer's monthly remuneration, the Chairman of the Nomination and Remuneration Committee gives an explanation about the companies' standards to set the remuneration of the Chief Executive Officer. This CEO's higher remuneration is situated at the upper line of the available Belgian benchmarks, but is completely in line with the European benchmarks (Annex 2).
Furthermore, the new major challenges the Company already had to deal with, the new ones to come in 2018, as well as the CEO's very specific career path and capacities justifies that the Chief Executive Officer was offered a fix salary increase of approximately 15,000 euros per month.
As concluded by the Nomination and Remuneration Committee, the management team's total remuneration is slightly lower than during the fiscal year 2017 (2,529,000 EUR /Y), also including the budget for the IRO. The position has been filled post-period.
Having discussed all the items on the agenda, the meeting is closed at 11.50 am."
Prior to the deliberations of the agenda and as required by Art. 523 BCC, Mrs. Freya Loncin acting as permanent representative of Aubisque BVBA and Mr. Marc Coucke acting as permanent representative of Alychlo NV, reported their own conflict of interests regarding the following point on the agenda: "discussion and deliberation on the Heads of Agreement ("HoA") Ceres Pharma NV".
As required by the aforementioned article, the full minutes must be reproduced here for the relevant meeting of the Board of Directors that discussed the conflict of interest.
The Chairman underlines and reads out the Art. 523 of the Belgian Company Code. In such a situation, the nature of the decision or operation in question, a justification of the taken decision, as well as the financial consequences for the Company must be noted in the minutes by the Board.
Prior to any deliberations, the followings directors previously reported their own conflict of interests regarding point 2 on the agenda and confirmed having informed the statutory auditor of the Company of the said conflict of interests: (i) Aubisque BVBA (Freya Loncin) and (ii) Alychlo NV (Marc Coucke).
Indeed, Aubisque BVBA and Alychlo NV both informed the other directors that they are potentially concerned by a conflict of interest with financial consequences regarding point 2 on the agenda:
Furthermore, as required by Annex H of the Company Corporate Governance Code, Aubisque BVBA and Alychlo NV report that they may not be able to take a totally impartial decision concerning the point 2 on the agenda.
The Chairman thanks the Directors for their statements mentioned in the present minutes, which will be annexed to the management report for the financial year 2018 and transmitted to the statutory auditor of the Company, as required by Art. 523 BCC.
Indeed, the Board agrees that the aforementioned directors are subject to a conflict of interests and that, as required by Art. 523 BCC and by the Annex H of the Corporate Governance Code, the concerned directors shall neither deliberate nor vote, considering that it is directly linked to their conflicting interests.
Afterwards, the different items on the agenda can be validly deliberated by the Board.
The CEO reports to the Board that Ceres Pharma NV made a proposition to acquire the range of generic products of the Company (including licenses on complex generics of the Company such as Myring (MyLoop in Benelux), Heria or Daphne) (Women Health Division) as well as a non-exclusive license for the commercialization of Estelle on the Belux territory, through a HoA (Annex 1).
The Management prepared an internal note in order to analyze this offer and to make suggestions for the negotiations (Annex 2).
a) Debate and deliberation on the HoA (Ceres Pharma)
The said internal note was previously submitted to the Audit Committee on July, 5th 2018. The Audit Committee is unanimous that this transaction is positive for the Company, considering that it:
As such, the Company has been encouraged by the Audit Committee to pursue the discussions with Ceres Pharma, within the limits of the received HoA and of the internal Management note.
b) Approval of the sale of Mithra's Women Health Division and of the non-exclusive license for the commercialization of Estelle in BeLux.
The Board took note of the internal note, of the Audit Committee's advices, and of Ceres Pharma's offer. The sale of Mithra's Woman's Health Division as well as the granting of a non-exclusive license for Estelle in BeLux have both advantages and disadvantages, which have been analyzed by the Board, in light of the Company's current strategy, and in comparison with the other offers. The Board also notes that the non-exclusive nature of the license is an important aspect of the transaction.
Consequently, the Board approves the Audit Committee's conclusions about the nature and justification of this project, as well as its financial consequences for the Company.
Decision : following consideration of the aforementioned elements, the Board sees Ceres Pharma as the best potential partner for the Company and decides to approve the pursuit of the negotiations and the signature of the transaction. However, the Boards asks the Management to do its best to renegotiate the elements underlined by the Board and the Audit Committee, as discussed here above. Should the HoA between Ceres Pharma and the Company be signed, the Board will
In order to facilitate the signature of the transaction, the Board thinks that some powers should be delegated to the Chief Executive Officer and to the management. Nonetheless, the Board specifies that it would ratify the transaction at the next Board of Directors, should this transaction be concluded.
Having discussed all the items on the agenda, the meeting is closed at 12.55 AM.
Prior to the deliberations of the agenda and as required by Art. 523 BCC, Mr. François Fornieri acting as permanent representative of SPRL YIMA, Mr. Marc Coucke acting as permanent representative of Alychlo NV and Mr. Jean-Michel Foidart acting as permanent representative of Eva Consulting SPRL reported their own conflict of interests regarding the following point on the agenda: "Warrant plan 2018". They confirm having informed the statutory auditor of the Company of said conflict of interests.
As required by the aforementioned article, the full minutes must be reproduced here for the relevant meeting of the Board of Directors that discussed the conflict of interests.
The Chairman underlines and reads out the Art. 523 of the Belgian Company Code. In such a situation, the nature of the decision or operation in question, a justification of the taken decision, as well as the financial consequences for the Company must be noted in the minutes by the Board.
Yima SPRL (François Fornieri), Alychlo NV (Marc Coucke), and Eva Consulting SPRL (Jean-Michel Foidart) reported their own conflict of interests regarding the following point on the agenda, prior to any deliberations, and confirms having informed the statutory auditor of the Company of said conflict of interests:
Indeed, considering that the Board must give its opinion concerning the granting of a warrant plan to some staff members of the Company as well as to some members of the management team, and considering that the aforementioned directors will all potentially benefit from this possible warrant plan, they are concerned by a financial conflict.
The Chairman thanks the Directors for their statements mentioned in the present minutes, which will be annexed to the management report for the financial year 2018 and transmitted to the statutory auditor of the Company, as required by Art. 523 BCC, if a positive decision could be reached by the Board on these matters.
The Board agrees that the aforementioned directors are subject to a conflict of interests and that, as required by Art. 523 BCC and by the Annex H of the Corporate Governance Code, the directors in question shall neither deliberate nor vote, considering that the points discussed are directly linked to their conflicting interests.
In order to be compliant with the legal requirements and with Annex H of the Corporate Governance Code, the Board records that the directors in question shall temporarily leave the conference call when the items on the agenda linked to their conflicting interests will be discussed.
Thereafter, the different items on the agenda can be validly deliberated by the Board
Having taken notice of the nomination and remuneration Committee's opinion (Annex 1), the Board takes a close look at the warrant plan as set out.
a) Warrant Plan 2018 discussion and approval
The Board has a discussion about the possibility to issue a new warrant plan. The Board is fully convinced that both the management team and key employees should in one way or another be encouraged to meet the objectives set by the Board. With this in mind, the Board agrees that a bonus plan should be considerated, and thinks that a warrant plan would adequately motivate the management and the employees.
The board takes note that the Nomination and Remuneration Committee, after deliberation, approved the warrant plan, as described in Annex 2. The Board notes that this annex gives a clear idea of the impact, the conditions and the beneficiaries of the plan.
The Chief Legal Officer (CLO) explains that the Management asked a specialized lawyer's office to provide some extra legal and technical pieces of information about some structural characteristics of the warrant plan. Hence, the CLO explains that the warrant plan project as described in Annex 2 should be slightly modified.
Decision: Following deliberations on that matter, the Board hereby decides to give an express proxy to two of its directors (hereafter called "Representative"), each acting with substitution and delegation powers, to do the following in the name of and on behalf of the Company and of the Board: (a) based on the aforementioned law office's comments and on the Board's special report project, as required by Art. 583, 596 and 598 of the Companies Code related to the proposed issuance of warrants, to finalize and sign, the new warrant plan; (b) to determine and finalize the agenda and to summon the extraordinary general meeting, which will be called in, for the purpose of the proposed warrant plan; and (c) to develop, negotiate, precise, finalize, initial, sign, implement and deliver any other conventions, acts, certificates, instruments, notices, requests, mandates, notes and any other documents. And, generally speaking, to accomplish any other action in accordance with or linked to the finalization of the aforementioned Board's special report, the convening of the aforementioned extraordinary general meeting , and/ or the issuance of warrants, depending on what the Representative involved deems necessary or appropriate and on what they can accept (and a simple signature of the Representatives on this document or simply perform such an action is sufficient evidence); in each case from (a) to (c) in accordance with the determined warrants and with the potential comments of the FSMA.
b) Proposition with regard to the Selected Participants
Thanks to the proxy here above, the Board is advised by the Nomination and Remuneration Committee to already approve this plan for all the involved beneficiaries, including the Chairman of the Board, in light of his specific knowledges and of his added value to the Company.
The Board notes that, as required by Annex 3, the warrants to be issued will be distributed between the selected beneficiaries as follows:
Decision: the Board decides that, regardless of the effective implementation of the warrant plan, the list of beneficiaries of the incentives is now definitive. The Board mandates the CEO to distribute the remaining 1% of warrants to the beneficiary (-ies) of his choice, subject to the ratification carried out by Authorized Representatives, as mentioned in point 2.1.
Having discussed all the items on the agenda, the meeting is closed at 1.30 PM".
As previously disclosed, the Audit Committte is composed of the following three members: : (i) two of which satisfy to the independence criterias as set forth by provision 526ter of the BCC, and (ii) all of them meet the expertise requirement of that very article:
AHOK BVBA (standing representative: Mr Koen Hoffman) – Mr Hoffman obtained a Master of Applied Economics at the University of Ghent in 1990, followed by an MBA at Vlerick Business School in Ghent in 1991. He started his career in the Corporate Finance Bank at KBC Bank, in 1992. From October 2012 to July 2016, he was Chief Executive Officer of KBC Securities SA. He was a member of the Supervisory Board of KBC IFIMA SA (formerly KBC Internationale Financieringsmaatschappij N.V.) and of Patria Securities, as well as a member of the Board of Directors of Omnia Travel Belgium. Mr Hoffman is the Chief Executive Officer of Value Square and has been an Independent Director of Fagron SA since August 2016. He is also an independent chairman of the board of directors in the listed companies Greenyard, MDxHealth and Snowworld.
AHOK BVBA also satisfies the independence criteria as prescribed by provision 526ter of the BCC.
P.SUINEN SPRL-S (permanent representative: Mr Philippe Suinen) – Mr Suinen holds a degree in law from the University of Liège and a graduate diploma in European law from the University of Nancy. He entered public service in 1974 via the Government Recruitment Service and started his career at the Belgian Ministry of Foreign Affairs. From 1998 to 2014, he was CEO of A.W.E.X, General Administrator of WBI (Wallonia Brussels International) and APEFE (Association for the Promotion of Education and Training Abroad) and Senior Lecturer at the ULB (The Free University of Brussels). In 2014, he was elected President of the Chamber of Commerce and Industry of Wallonia (CCIW). During his career, he also served in several ministerial cabinets (Institutional Reforms, Education, Presidency of the Walloon Government and, as Chief of Cabinet, Foreign Trade and European Affairs, Vice-Presidency of the Belgian Federal Government, including transport, public enterprises, economy and telecommunications). He was also Vice-Chairman of the Board of SABENA and "Walloon of the Year" in 1999.
P. SUINEN SPRL-S also satisfies to the independence criterias as prescribed by provision 526 ter of the BCC.
MEUSINVEST SA (standing representative: Mr Gaëtan Servais) - Mr Servais is a graduate in economics from the University of Liège, where he began his career as a research assistant. In 1995, Mr Servais joined the Federal Plan Budget as an expert and, following this, the Economic and Social Council of the Walloon Region. From 2001, he was private secretary to a number of Ministers in the Walloon Government. Since 2007, has been CEO of Meusinvest, a financial company whose business is structured into a number of subsidiaries in order to best meet the financing needs for small to medium enterprises (SME) located in the Province of Liège.
End of 2018, Mithra has a total of EUR 97.6 million accumulated losses on its balance sheet and realized a consolidated net loss of EUR 12.4 million for the year ended 31 December 2018. The Board of Directors has analyzed the financial statements and accounting policies and based on conservative assumptions, the current cash position of EUR 119 million at 31 December 2018 will allow the Group to keep up with operating expenses and capital expenditure requirements at least until the end of 2019. Based on their assessment, the Management and Board of Directors consider it appropriate to prepare the financial statements on a going concern basis. The assessment is based on expected R&D clinical results and further business deals as well as on the monitoring of our funding activities. We are also considering potential capital increase and additional credit facilities to secure liquidity and to support the continuing development of our products.
Mithra Pharmaceuticals SA, the parent Company, ended the financial year 2018 with a net loss of EUR 14,384,208.12.
The Board of Directors proposed to appropriate the loss of the year of EUR 14,384,208.12 to accumulated loss. This brings the total amount of retained losses to EUR 64,653,016.10.
Post-period, in January 2019, Mithra published positive topline results of Estelle® Phase III study in U.S./Canada. Primary efficacy endpoint indicates excellent contraceptive efficacy, with a Pearl Index (PI) of 2.41 per 100 women (98% efficacy rate), in line with expectations. Key secondary endpoints (same as the one for the EU/RU study) were also achieved. Filing with U.S. and EU regulatory agencies is anticipated by year end.
Mithra announced the further expansion of its Estetrol (E4)-based programs. With a potential blockbuster named PeriNesta™, Mithra decided to target the underserved perimenopausal market, which affects women between reproductive age and post-menopausal age. The Company believes this additional product represents a major new market opportunity that requires only limited additional investment. The addressable market is estimated up to 35 million patients annually in the US and key EU markets (France, UK, Germany).
The Company also communicated the acceleration of preparations for its proposed Phase III E4 monotherapy study of Donesta® in menopause. This study will evaluate the efficacy and safety of E4 for the treatment of moderate to severe vasomotor symptoms in postmenopausal women. The start of patient recruitment for this phase III with E4 monotherapy is planned for the second half of 2019 pending approvals, with a marketing authorization expected as early as 2023.
In February 2019, Mithra CDMO started the commercial manufacturing process of the vaginal contraceptive ring Myring™ with a first batch for the European market (Czech Republic). The Mithra CDMO development and production center plans to start manufacturing further commercial batches for the European market (Austria, Denmark, Belgium, Luxembourg and the Netherlands) in the second half of 2019, as scheduled.
Mithra announced it signed a contract with CEVA Animal Health, leading global veterinary pharmaceutical group. With this first veterinarian project in development, Mithra will develop a hormonal device for the fertility market. This new polymer-based device would be a real innovation and bring an additional competitive edge to our partner while expanding Mithra's polymer based technology expertise
Post-period end, Mithra signed a partnership agreement with ITROM for commercialization of Estelle® in the Middle East. Under the terms of the agreement, ITROM will distribute Estelle® in MENA territories where the COC market is estimated at EUR 30 million a year. This agreement represents a deal worth up to EUR 55 million over the period. Mithra also signed an exclusive license and supply agreement with ITROM for Myring™ in MENA region, where the hormonal contraceptive market is estimated at EUR 37.5 million.
You are requested, for Mithra Pharmaceuticals SA, in accordance with the law and the Articles of Association, to grant discharge to the Directors and the Statutory Auditor for the duties carried out by them during the financial year ending 31 December 2018.
This report will be deposited according to the legal requirements and can be consulted at the Company's address.
Liege, 4 April 2019
For the Board of Directors,
Alychlo NV, represented by Yima SPRL, represented by Marc Coucke, Chairman François Fornieri, Managing Director
We hereby certify that, to the best of our knowledge, the consolidated financial statements as of 31 December 2018, prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, and the legal requirements applicable in Belgium, give a true and fair view of the assets, liabilities, financial position and loss of the Group and the undertakings included in the consolidation taken as a whole, and that the management report includes a fair review of the development and the performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
On behalf of the Board of Directors
ALYCHLO NV, represented by Yima SPRL, represented by Marc Coucke, Chairman François Fornieri, ManagingDirector
CMM&C SPRL, represented by Christophe Maréchal, CFO
In the context of the statutory audit of the consolidated financial statements of Mithra Pharmaceuticals S.A. (the Company) and its subsidiaries (together referred to as 'the Group'), we hereby present our statutory auditor's report. It includes our report on the audit of the consolidated financial statements as well as our report on the other legal and regulatory requirements. These reports form part of an integrated whole and are indivisible.
We have been appointed as statutory auditor by the general meeting of May 17, 2018, following the proposal formulated by the board of directors issued upon recommendation of the audit committee. Our statutory auditor's mandate expires on the date of the general meeting deliberating on the annual accounts closed on December 31, 2020. We have performed the statutory audit of the consolidated financial statements of Mithra Pharmaceuticals S.A. for fourteen consecutive years.
We have performed the statutory audit of the Group's consolidated financial statements, which comprise the consolidated statement of financial position as at December 31, 2018, and the consolidated income statement and other comprehensive income , the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterised by a consolidated statement of financial position total of 355,684 (000) EUR and for which consolidated income statement and other comprehensive income shows a loss for the year of 12,363 (000) EUR.
In our opinion, the consolidated financial statements give a true and fair view of the Group's net equity and financial position as at December 31, 2018, as well as of its consolidated financial performance and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Belgium. Our responsibilities under those standards are further described in the 'Statutory auditor's responsibilities for the audit of the consolidated financial statements' section in this report. We have complied with all the ethical requirements that are relevant to the audit of consolidated financial statements in Belgium, including those concerning independence.
We have obtained from the board of directors and company officials the explanations and information necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
As a result of the acquisitions of Estetra SPRL and Novalon SA in 2015, the consolidated financial statements include a contingent consideration towards the previous owners. As disclosed in Note 9.16.3 of the consolidated financial statements, this contingent liability is reported at fair value in the statement of financial position.
We consider this area a key audit matter requiring high auditor's attention because of the fact that the valuation of the contingent consideration is complex, contains key judgmental areas and is strongly affected by assumptions with regards to expected future cash flows and market conditions.
Our audit procedures included, among others, the following:
As explained in Notes 9.2.19 and 9.19 to the consolidated financial statements, the company has early adopted, in the consolidated financial statements for the year ended December 31, 2017, the new revenue standard, being the IFRS 15. The company has two main revenue streams, which are, on the one hand, sales of product, and, on the other hand, license agreements.
We consider this area a key audit matter requiring high auditor's attention due to the fact that (i) the accounting standard (IFRS 15) requires specific technical competences and a high degree of judgments in order to record and disclose revenue properly and (ii) the Company signed significant new contracts.
Our audit procedures included, among others, the following:
As described in Note 9.24 to the consolidated financial statements, the Group accounts for deferred tax assets on its tax losses carried forward and on the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the IFRS financial statements to the extent that it is probable that future taxable profits will be realized for which unused tax losses and tax credits can be used.
We consider this area a key audit matter requiring high auditor's attention because of its significance to the financial statements and the critical judgment made to assess the recoverability of the deferred tax assets.
Our audit procedures included, among others, the following:
The board of directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory provisions applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.
In preparing the consolidated financial statements, the board of directors is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board of directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a statutory auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with ISAs 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 consolidated financial statement.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit as well as significant audit findings, including any significant deficiencies in internal control identified during the audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year, and are therefore the key audit matters. We describe these matters in our statutory auditor's report unless law or regulation precludes public disclosure about the matter.
The board of directors is responsible for the preparation and the contents of the management report on the consolidated financial statements and for the other information included in the annual report on the consolidated financial statements.
In the context of our mandate and in accordance with the Belgian standard (revised in 2018) that is supplementary to the International Standards on Auditing (ISA) as applicable in Belgium, it is our responsibility to verify, in all material aspects, the management report on the consolidated financial statements and the other information included in the annual report on the consolidated financial statements, as well as to report on these elements.
In our opinion, after having performed specific procedures in relation to the management report, the management report is consistent with the consolidated financial statements for the same financial year, and it is prepared in accordance with article 119 of the Company Code.
In the context of our audit of the consolidated financial statements, we are also responsible for considering, in particular based on the knowledge we have obtained during the audit, whether the management report on the consolidated financial statements, and the other information included in the annual report on the consolidated financial statements (Chapter 1 Report of the Board of Directors) contain any material misstatements, i.e. any information which is inadequately disclosed or otherwise misleading. Based on the procedures we have performed, there are no material misstatements we have to report to you.
We do not express any form of assurance whatsoever on the management report on the consolidated financial statements.
This report is in compliance with the contents of our additional report to the audit committee as referred to in article 11 of Regulation (EU) No 537/2014.
Battice, April 6, 2019
BDO Réviseurs d'Entreprises SCRL Statutory auditor Represented by Cédric ANTONELLI
| Year ended 31 December | |||
|---|---|---|---|
| Thousands of Euro (€) | Notes | 2018 | 2017 |
| Revenues | 9.6, 9.19 | 57,876 | 32,042 |
| Cost of sales | 9.20 | (1,571) | (2,595) |
| Gross profit | 56,306 | 29,447 | |
| Research and development expenses | 9.20, 9.21 | (35,713) | (48,185) |
| General and administrative expenses | 9.20, 9.21 | (8,979) | (8,697) |
| Selling expenses | 9.20, 9.21 | (1,977) | (1,734) |
| Other operating income | 9.19 | 4,552 | 3,007 |
| Total operating expenses | (42,118) | (55,609) | |
| Profit / (Loss) from operations | 14,188 | (26,162) | |
| Change in fair value of contingent consideration payable 4 | 9.16, 9.18 | (46,550) | (25,455) |
| Financial income | 9.23 | 237 | 377 |
| Financial expenses | 9.23 | (5,365) | (267) |
| Loss before taxes | (37,491) | (51,507) | |
| Income taxes | 9.24 | 9,885 | 13,148 |
| Net loss from the continuing operations | (27,606) | (38,360) | |
| Weighted average number of share for the purpose of basic loss per share |
36,564,683 | 32,660,197 | |
| Basic loss per share (in Euro) | (0.75) | (1.17) | |
| Diluted loss per share (in Euro) | (0.75) | (1.17) |
| Year ended 31 December | |||
|---|---|---|---|
| Thousands of Euro | Notes | 2018 | 2017 |
| Revenues | 9.31, 9.6, 9.19 | 7,589 | 14,211 |
| Cost of sales | 9.31 | (3,684) | (6,499) |
| Gross profit | 3,905 | 7,711 | |
| Selling expenses | 9.31, 9.20, 9.21 | (1,989) | (2,961) |
| Other operating income | 9.31, 9.19 | 876 | 330 |
| Gain on sale of disposal group | 9.31, 9.19 | 18,477 | - |
| Total operating expenses | 17,363 | (2,630) | |
| Profit / (Loss) from operations | 21,269 | 5,081 | |
| Financial expenses | 9.31, 9.23 | (10) | - |
| Profit / (Loss) before taxes | 21,258 | 5,081 | |
| Income taxes | 9.31, 9.24 | (6,015) | (1,727) |
| Net Profit from discontinued operations | 15,243 | 3,354 |
4 Fair values is computed on the contingent considerations payables which are reported under Other financial loans
5 Please refer to note 9.31 Discontinued operations
| Year ended 31 December | |||
|---|---|---|---|
| Thousands of Euro | Notes | 2018 | 2017 |
| Revenues | 9.6, 9.19 | 65,465 | 46,252 |
| Gross Profit | 60,211 | 37,158 | |
| Profit / (Loss) from operations | 35,457 | (21,081) | |
| Change in fair value of contingent consideration payable6 |
9.16, 9.18 | (46,550) | (25,455) |
| Financial income | 9.23 | 237 | 377 |
| Financial expenses | 9.23 | (5,375) | (267) |
| Profit / (Loss) before taxes | (16,232) | (46,426) | |
| Income taxes | 9.24 | 3,869 | 11,421 |
| Net Profit / (Loss) for the year | (12,363) | (35,006) | |
| Attributable to | |||
| Owners of the parent | (12,363) | (35,006) |
Non-controlling interest - -
6 Fair values is computed on the contingent considerations payables which are reported under Other financial loans
| Year ended 31 December | |||
|---|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 | |
| Net loss for the year | (12,363) | (35,006) | |
| Other comprehensive income | (3) | (15) | |
| Currency translation differences | (3) | (15) | |
| Total comprehensive income/loss for the year | (12,366) | (35,021) | |
| Attributable to | |||
| Owners of the parent | (12,366) | (35,021) | |
| Non-controlling interest | |||
| TOTAL COMPREHENSIVE LOSS FOR THE YEAR | (12,366) | (35,021) |
| As at 31 December | ||||
|---|---|---|---|---|
| Thousands of Euro (€) | Notes | 2018 | 2017 | |
| ASSETS | ||||
| Property, plant and equipment | 9.8 | 84,396 | 59,519 | |
| Goodwill | 9.9 | 5,233 | 5,233 | |
| Other Intangible assets | 9.7 | 81,907 | 80,385 | |
| Deferred income tax assets | 9.24 | 27,045 | 22,718 | |
| Other non-current assets | 9.11 | 3,435 | 2,644 | |
| Non-current assets | 202,017 | 170,500 | ||
| Inventories | 9.12 | 10,945 | 4,141 | |
| Trade & other receivables | 9.13 | 23,773 | 33,881 | |
| Cash & cash equivalents | 9.14 | 118,949 | 36,190 | |
| Current assets | 153,667 | 74,212 | ||
| TOTAL ASSETS | 355,684 | 244,712 |
| As at 31 December | |||
|---|---|---|---|
| Thousands of Euro (€) | Notes | 2018 | 2017 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 7, 9.15 | 26,925 | 25,036 |
| Additional paid-in-capital | 7, 9.15 | 221,587 | 148,279 |
| Accumulated deficit | 7 | (97,557) | (86,374) |
| Translation differences | 7 | (62) | (59) |
| Equity attributable to equity holders | 150,893 | 86,882 | |
| Subordinated loans | 9.16 | 14,222 | 11,158 |
| Other loans | 9.16 | 53,148 | 38,073 |
| Refundable government advances | 9.16.2 | 10,252 | 7,785 |
| Other financial liabilities | 9.16.3, 9.18 | 88,620 | 46,232 |
| Provisions | 266 | 266 | |
| Deferred tax liabilities | 9.24 | 2,202 | 2,099 |
| Non-current liabilities | 168,710 | 105,612 | |
| Current portion of Subordinated loan | 9.16 | 173 | 104 |
| Current portion of Other loans | 9.16 | 12,405 | 9,206 |
| Current portion of Refundable government advances | 9.16 | 668 | 493 |
| Current portion of Other financial liabilities | 9.16 | 7,007 | 6,434 |
| Trade payables and other current liabilities | 9.17 | 14,624 | 24,174 |
| Corporate tax payable | 334 | (4) | |
| Accrued charges & Deferred income | 9.17 | 868 | 11,811 |
| Current liabilities | 36,081 | 52,217 | |
| TOTAL EQUITY AND LIABILITIES | 355,684 | 244,712 |
| Balance as at 31 December 2018 | 26,925 | 221,587 | (101,107) | (62) | 3,551 | 150,893 |
|---|---|---|---|---|---|---|
| Share-based payment expense | 1,181 | 1,181 | ||||
| Transaction costs for equity issue | (68) | (2,236) | (2,304) | |||
| Capital increase of 30 May 2018 | 1,956 | 75,544 | 77,500 | |||
| Currency translation differences | (3) | (3) | ||||
| Result for the year | (12,363) | (12,363) | ||||
| Balance as at 31 December 2017 | 25,036 | 148,279 | (88,744) | (59) | 2,370 | 86,882 |
| Share-based payment expense | 1,021 | 1,021 | ||||
| Transaction costs for equity issue | (65) | (676) | (5) | (746) | ||
| Capital increase warrants NOV 2017 | 530 | 1,948 | 2,479 | |||
| Capital increase of 21 June 2017 | 1,957 | 24,177 | 26,134 | |||
| Currency translation differences | (15) | (15) | ||||
| Result for the year | (35,006) | (35,006) | ||||
| Balance as at 1January 2017 | 22,613 | 122,830 | (53,733) | (44) | 1,349 | 93,015 |
| Notes | 9.15 | 9.15 | 9.26 | |||
| Thousands of Euro (€) | Share Capital |
Share Premium |
Accumulat ed deficit |
CTA | Share- based payment reserve |
Total Equity |
| Year ended 31 December | |||
|---|---|---|---|
| Thousands of Euro (€) | Notes | 2018 | 2017 |
| Cash Flow from operating activities | |||
| Result from operations | 35,457 | (21,081) | |
| Depreciation and amortisation | 9.20 | 2,851 | 2,156 |
| Gain on sale of disposal group | 9.31 | (18,477) | - |
| Tax credit | 9.19 | (739) | (2,406) |
| Share based payments | 9.26 | 1,181 | 1,021 |
| Taxes paid | - | (85) | |
| Subtotal | 20,273 | (20,395) | |
| Changes in working capital | |||
| Increase/(decrease) in Trade payables and other current liabilities |
9.17 | (9,050) | 8,493 |
| (Increase)/decrease in Trade receivables and other receivables | 9.13 | 10,108 | (25,925) |
| (Increase)/ decrease in Inventories | 9.12 | (7,604) | 29 |
| Increase/(decrease) in deferred revenue and others | 9.19 | (10,185) | 6,739 |
| Net cash provided by/-(used in) operating activities | 3,542 | (31,061) | |
| Cash Flow from investing activities | |||
| Payment for acquisition of tangible fixed assets | 9.8 | (10,009) | (14,803) |
| Payment for acquisition of intangible fixed assets | 9.7 | (90) | (1,255) |
| Disposal of assets | 9.31 | 19,353 | 312 |
| Contingent liabilities payments | 9.18 | (3,690) | - |
| Net cash provided by/- (used in) investing activities | 5,564 | (15,746) | |
| Cash Flow from financing activities | |||
| Repayments of financial loans & government advances | 9.16 | (1,365) | (574) |
| Proceeds from financial loans & government advances | 9.16 | 3,282 | 11,204 |
| Interest paid | 9.23 | (3,460) | (1,271) |
| Proceeds from issuance of shares (net of issue costs) | 9.15 | 75,196 | 27,887 |
| Net cash provided by/- (used in) financing activities | 73,653 | 37,246 | |
| Net increase/(decrease) in cash and cash equivalents | 82,760 | (9,561) | |
| Cash & cash equivalents at beginning of the year | 36,190 | 45,750 | |
| Cash & cash equivalents at end of the year | 118,949 | 36,190 |
| Year ended 31 December | ||||
|---|---|---|---|---|
| Thousands of Euro | Notes | 2018 | 2017 | |
| Cash flow from operating activities | 9.31 | 2,791 | 5,081 | |
| Cash flow from investing activities | 9.31 | 18,477 | - | |
| Cash flow from financing activities | - | - | ||
| Cash flow from discontinued operations | 21,269 | 5,081 |
Mithra Pharmaceuticals SA (Euronext MITRA) is dedicated to providing innovation and choice in Women's Health, with a particular focus on contraception and menopause. Mithra's goal is to develop new and improved products that meet women's needs for better safety and convenience. Its three lead development candidates – a fifth generation oral contraceptive Estelle®, the first complete oral treatment for perimenopause PeriNesta™ and next-generation hormone therapy Donesta® - are built on Mithra's unique native estrogen platform, E4 (Estetrol). Mithra also develops, manufactures and markets complex therapeutics and offers partners a complete spectrum of research, development and specialist manufacturing at its CDMO.
The consolidated financial statements are presented in thousands of euro (unless stated otherwise). The consolidated financial statements for the financial year ended 31 December 2018 have been authorized for issue on 6 April 2019 as decided by the Board of Directors of 04 April 2019. The financial statements have been prepared on historical cost basis. Any exceptions to the historical cost price method are disclosed in the accounting policies described hereafter.
The consolidated financial statements were prepared in accordance with IFRS as adopted by the European Union ("EU").
The financial statements have been prepared on a going concern basis and in accordance with the main accounting principles set out in this section. The Group is expecting losses in the coming years, which is inherent to the current stage of the Group's business life cycle as a biotech company. In this respect, the following underlying assumptions have been used:
During the current financial period, the Group has adopted all the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB as adopted by the European Union and effective for the accounting year starting on January 1, 2018. The Group has not applied any new IFRS requirements that are not yet effective as per December 31, 2018.
The following new Standards, Interpretations and Amendments issued by the IASB and the IFRIC as adopted by the European Union are effective for the financial period.
IAS 28 Investments in Associates and Joint Ventures Amendments resulting from Annual Improvements 2014-2016 Cycle (December 2016)
IAS 39 Financial Instruments: Recognition and Measurement Amendments for continuation of hedge accounting (fair value hedge of interest rate exposure) when IFRS 9 is applied (November 2013)
The adoption of these new standards and amendments has not led to major changes in the Group's accounting policies.
The Group elected not to early adopt the following new Standards, Interpretations and Amendments, which have been issued by the IASB and the IFRIC but are not yet effective as per December 31, 2018 and/or not yet adopted by the European Union as per December 31, 2018 and for which the impact might be relevant:
IFRS 9 introduces mainly (i) a new approach for the classification of financial assets, (ii) a new expected credit loss (ECL) model that will require more timely recognition of impairment credit losses and (iii) introduces a new model for hedge accounting, with enhanced disclosures. Regarding the classification and measurement of financial assets, the impact is limited since the Group does not hold significant equity or debt investments. Likewise, the impact in the Group of the new guidance on impairment of financial assets is very limited considering the nature of financial assets held and specifically the high quality profile of our limited number of customers included in our trade receivables. The Group does not currently apply hedge accounting. Considering all of the above, the Group has concluded that the application of IFRS 9 does not have a significant impact on its financial statements
* Not yet endorsed by the EU as of December 31, 2018.
Except for the impact of the IFRS 16 implementation which we are currently investigating, none of the other new standards, interpretations and amendments, which are effective for periods beginning after January 1, 2018 which have been issued by the IASB and the IFRIC but are not yet effective as per December 31, 2018 and/or not yet adopted by the European Union as per December 31, 2018, are expected to have a material effect on the Group's future financial statements.
The consolidated financial statements include all the subsidiaries over which the Group has control.
Control is achieved when the investor
If facts and circumstances indicate that there are changes to one or more of the three elements of control listed above, the investor shall reassess whether it controls theinvestee.
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the group (refer to note 9.2.3)
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
Anynon-controllinginterestsintheresultsandequityofsubsidiariesareshownseparatelyintheconsolidatedstatement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.
An associate is an entity over which theGroup has significantinfluence. Significantinfluence is the powerto participate in the financial and operating policy decisions of the investee but is not control or joint control over thosepolicies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net asset of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in an associate or joint venture is initially recognised at cost and adjusted for the Group's share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group's share of losses of an associate or joint venture exceeds its interest in that associate or joint venture, the Group discontinues recognising its share of furtherlosses.
An investment in an associate or joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment. The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 (Impairment of Assets), by comparing its recoverable amount with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequentlyincreases.
The Group applies the acquisition accounting method to account for business combinations. Identifiable assets acquired, and liabilities and contingent liabilities assumed, are, with limited exceptions, measured initially at their fair values at the acquisition date. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interest issued by the Group. This includes the fair value of any contingent consideration. Where the consideration transferred, together with the non-controlling interest, exceeds the fair value of the net assets, liabilities and contingent liabilities acquired, the excess is recorded as goodwill. The costs of acquisition are charged to the income statement in the period in which they are incurred.
Where not all of the equity of a subsidiary is acquired, the non-controlling interest is recognised either at fair value or at the non-controlling interest's share of the net assets of the subsidiary, on a case-by-case basis. Changes in the Group's ownership percentage of subsidiaries are accounted for withinequity.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit orloss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquire is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit orloss.
An operational segment is a component of anentity:
The Group's consolidated financial statements are presented in Euros, which is also the parent company's functional currency.
Foreign currency transactions are translated into the functional currency of each entity using the exchange rates prevailing at the dates of the transactions. At the end of each reporting period the entity shall (a) translate the foreign currency monetary items at closing rate, (b) translate non-monetary items measured at historical cost in a foreign currency, using the exchange rate of the transaction date, (c) translate non-monetary items measured at fair value in a foreign currency using the exchange rates at the date the fair value was determined. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement within 'financial income or cost'.
On consolidation, assets and liabilities including related goodwill of components of theGroup, are translated into Euros at rates of exchange ruling at the balance sheet date. Exchange adjustments arising when translating the financial statements of foreign subsidiaries, and those arising on loans to or from a foreign operation for which settlement is neither planned nor likely to occur and which therefore form part of the net investment in the foreign operation, are recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment.
Expenditure on research activities is recognized as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development is recognized to the extent that all conditions for capitalization have been satisfied as specified in IAS38:
This recognition is conventional when a regulatory filing has been made in a major market and the approval from the regulators is considered as highly probable. Some of its products which are capitalized as from current year do not require any regulatory approval.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Separately acquired intangible assets are shown at historical cost. Contingent payments based on future performance are an attribute of a fair value measurement throughout the life of the asset. The contingent payments will be disclosed as a contingent liability. When the contingent liability becomes a liability the re-measurement at the end of each reporting period shall be accounted for as an adjustment to the cost of intangible assets to the extent that it relates to future benefits and reporting periods. Intellectual property rights, patents, licenses, know-how and software with a finite useful life are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of these intangibles over their estimated useful lives of 7 to 10 years and starts at the moment the assets are available for use.
In the event an asset has an indefinite life, this fact is disclosed along with the reasons for being deemed to have an indefinite life.
Intangible assets acquired in a business combination, including in-process research and development, are initially measured as explained in paragraph 9.2.3
Property, plant and equipment is carried at historical cost, less subsequent depreciation. Historical costs are capitalized and include expenditure that is directly attributable to the acquisition of the assets, expenditure for bringing the asset to the location and condition necessary for it to be capable of operating in the intended manner, including the in-house development costs.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, here the CDMO plateform, form part of the cost of that asset. Other borrowing costs are recognised as an expense. Borrowing costs are interest and other costs that Mithra CDMO incurs in connection with the borrowing of funds.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance expenses are charged to the income statement during the financial period in which they areincurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Specific machines are depreciated using unit of production depreciation method.
The acquisition value of the assets have been analyzed by component and specific useful lives and residual values were applied to each of them. The residual value of the building is estimated to correspond to the cost of the structure of the building. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverableamount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within 'Other operating income or expenses' in the income statement.
Assets with an indefinite useful life are tested for impairment annually and at each interim reporting date, and whenever there is an indication that the asset might be impaired. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount is the higher of fair value less costs to sell and value in use. To determine fair value less cost to sell, the forecasted future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to theasset.
If the recoverable amount of an asset or cash generating unit is estimated to be less than the carrying amount, the carrying amount of the asset is reduced to its recoverable amount. A cash generating unit is the smallest identifiable Group of assets that generates cash inflows that are largely independent of the cash flows from other assets or Group of assets. An impairment loss is immediately recognised as an expense. Intangible and tangible assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income. An impairment loss recognised for goodwill shall not be reversed in a subsequent period.
To qualify as discontinued operations, a component of Mithra group must have been classified as held for sale and represent a separate major line of business or is a part of a single coordinated plan to dispose of a separate major line of business. BeLux Business within Product sales area is classified as discontinued operation and reported as held for sale. Non-current assets or disposal groups that are classified as held for sale are measured at the lower of carrying amount and fair value less cost to sell. Assets held for sale booked at 30 June 2018 have been sold at 31 December 2018.
The inventories mainly consist of trade goods.
Trade goods are valued atthe lower of cost and netrealisable value.Cost is determined using the first-in, first out (FIF0) method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling anddistribution.
Write-offs are done based on the shelf life of the products.
Tradereceivablesare amounts due from customers for merchandise sold or services performed in the ordinary course of business and are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment.
Term deposits with an initial term of more than three months are held to maturity and measured at amortized cost.
Cash and cash equivalents are carried in the balance sheet at nominal value. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and deposits held on call with banks. In the balance sheet, bank overdrafts, if any, are included in borrowings in current liabilities.
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Equity instruments issued by the Company are recorded in the amount of the proceeds received, net of direct issue costs.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.Trade payables are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the term of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
The tax expense or credit for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only to the extentthatitis probable thatfuture taxable profit will be available against which the temporary differences can be utilised.
Leases are classified as finance leases whenever the terms of the lease transfers substantially all the risk and rewards of ownership of the asset to the lessee. All other leases are classified as operatingleases.
Assets held under finance leases are at the start of the lease term recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. The financial costs need to be accounted to each term of the lease period so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges areexpensed.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straightline basis over the lease term.
While IFRS 15 is normally applicable after 1 January 2018, management has early adopted the Standard for the preparation of the 2017 financial statements, applying the standard retrospectively to each prior reporting period.
Net sales encompass revenue recognized resulting from transferring control over products sold to customers.
royalties received in connection with the license of IP are not included in the transaction price until the customer's subsequent sales occur.
Government grants are recognised as revenue on a systematic basis over the periods in which the entity recognises the related costs as expenses for which the grants are intended to compensate.
Refundable advances are accounted for as interest free loans for which the benefit of the below-market rate of interest is treated as agovernmentgrant.The benefitofthe below-marketrate ofinterestismeasured as the difference between the initial fair value of the loan and the proceeds received. Accordingly, when estimating the liability, the Company (i) determines its best-estimate of the period during which it will benefit from the advance and (ii) determines the amount of the liability as the difference between the nominal amount of the loan and its discounted and risk-adjusted value using a market rate for a liability with similar risk profile to the Company. The liability is subsequently measured at amortised cost using the cumulative catch-up approach under which the carrying amount of the liability is adjusted to the present value of the future estimated cash flows, discounted at the liability's original effective interest rate. The resulting adjustment is recognized within profit or loss. When there is reasonable assurance that the Company will comply with the conditions attaching to the grant, and that the grant will be received, the benefit is accounted for in deduction of the related research and development expenses that it is intended to compensate.
Repayment of refundable advances may be forgiven in certain circumstances. The liability component of refundable advances is treated as a government grant and taken to income only when there is reasonable assurance thatthe entity will meet the terms for forgiveness of the advance.
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share- based payment transactions are set out in note 9.26.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equitysettled share-based payment reserve.
If the entity cancels or settles a grant of equity instruments during the vesting period (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied), the entity accounts for the cancellation or settlement as an acceleration of vesting, and shall recognise immediately the amount that otherwise would have been recognised for services received over the remainder of the vesting period.
The Group currently does not have cash-settled share-based payment arrangements.
Companies that invest in research and development of new environmentally friendly products and advanced technologies can enjoy increased investment incentives or a tax credit following Belgian tax law, according to each company's choice. The tax credit may be calculated either as a one-off credit or spread over the depreciation period. Excess tax credit is carried forward, and the remaining balance after five years is refunded, which may result in a cash benefit. The tax credit applies to tangible and intangible fixed assets used for R&D of new products and technologies that do not have a negative impact on the environement (green investments), including R&D expenses capitalized under Belgian GAAP.
The tax credit should be claimed in the year in which the investment takes place.
Regarding the accounting treatment, the Group follows IAS 20 after assessing its situation carefully because the tax credit can be directly settled in cash and some conditions not related to taxes for receiving the tax credit exist. Tax credit is presented as other operating income in the Consolidated Statement of Income.
The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.
The Group's interest rate risk arises from long-term and short-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk, but the current interest rate environment in Europe is rather stable and even with negative interest rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain the majority of its long term borrowings in fixed rate instruments. All borrowings are euro denominated.
Based on the simulations performed, the impact on post tax profit and equity of a 0.1% shift would not besignificant.
The Group is currently not materially exposed to foreign exchange risks. Any future exchange rate risks that might materially expose the Group will be monitored closely. If appropriate, adequate mitigating actions will be taken.
The Group is currently not materially exposed to price risks.
Credit risk relates to the risk that a counterparty will fail to fulfil their contractual obligations with the result that the Group would suffer a loss. The Group's policy focuses on only working with creditworthy counterparties and, where necessary, requiring adequate securities. Information about the creditworthiness of counterparties is provided by independent rating agencies and, if this is not available, the Group uses information that is publicly available as well as its own internal records. Credit risk is managed by the financial department of the parent company by means of individual follow-up of credit per counterparty.
An aging analysis of the debtor is also evaluated on a regular basis for potential doubtful debts. An analysis of trade receivables for the financial year 2018 is shown below.
| Thousands of Euro (€) | Past due but not impaired | |||||
|---|---|---|---|---|---|---|
| Year | Carrying amount |
Neither impaired nor past due |
0-60 days |
61-90 days |
91-120 days |
>120 days |
| 2018 | 19,544 | 17,932 | 48 | 930 | 435 | 199 |
| 2017 | 25,428 | 19,175 | 5,551 | 249 | 63 | 390 |
IFRS 9 requires the Group to recognise a loss allowance for expected credit losses on trade receivables and contract assets. In particular, the Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. The group allows an average debtor's payment period of 30 days after invoice date. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. In assessing the credit risk characteristics, the group takes into account any indicators of impairment up until the reporting date, and it apply a definition of default that is consistent with the definition used for internal credit risk management purposes and consider qualitative factors where appropriate. Given the current nature of trade receivables, the loss allowance provision as at year-end is zero.
It is management's opinion that at the above reporting dates no further provision for doubtful debts was required.
The overall collectability risk for the remaining debt can be considered as immaterial as per management's computation following IFRS 9.
The credit risk on cash investments or cash available on banks accounts is limited given that the counterparties are banks with high credit scores attributed by international rating agencies. The financial institutions have credit ratings varying from A toAA- (upper-medium grade) and are thus considered as low credit risk.
Thanks to the successful IPO, and subsequent capital increases, the Group maintains sufficient cash to conduct its clinical trials. Management reviews cash flow forecasts on a regular basis to determine whether the Group has sufficient cash reserves to meet future working capital requirements and to take advantage of businessopportunities.
The liquidity risk mainly relates to non-current borrowings. The non-current debts primarily relate to contingent and deferred consideration payable in relation to historical acquisitions. We refer to section 9.5. on business combinations from the Annual Report 2017 which describes the timing and conditions linked to these liabilities.
The maturity analysis of the bank borrowings and subordinated debts, as well as the trade and other payables, the contingent considerations for Myring™ and Zoreline® and refundable government advances are shown below.
| Thousands of Euro (€) |
Less than 3 months |
Between 3 months and 1 year |
Between 1 and 2 years |
Between 2 and 5 years |
Over 5 years |
Total |
|---|---|---|---|---|---|---|
| At 31 December 2018 | 15,890 | 21,101 | 13,610 | 53,872 | 97,617 | 202,090 |
| Subordinated Loans & Bank loans | 180 | 10,582 | 1,816 | 6,051 | 13,460 | 32,089 |
| Finance lease liabilities | 586 | 4,490 | 7,451 | 21,866 | 37,465 | 71,857 |
| Contingent considerations Myring and Zoreline & Refundable government advances |
500 | 6,029 | 4,344 | 25,955 | 46,692 | 83,519 |
| Trade and other payables and other current liabilities |
14,624 | - | - | - | - | 14,624 |
| At 31 December 2017 | 29,043 | 17,032 | 6,746 | 33,446 | 101,262 | 187,529 |
| Subordinated Loans & Bank loans | 182 | 9,202 | 1,473 | 4,300 | 9,851 | 25,008 |
| Finance lease liabilities | 241 | 1,357 | 3,375 | 12,653 | 29,270 | 46,896 |
| Contingent considerations Myring™ and Zoreline® & Refundable government advances |
4,446 | 6,474 | 1,897 | 16,493 | 62,141 | 91,450 |
| Trade and other payables and other current liabilities |
24,174 | - | - | - | - | 24,174 |
The EUR 9,754k CDMO Straight Loan (refer to Note 9.16 Borrowings) is reported as current on the balance sheet, but the liquidity risk is not relevant as repayments are conditioned to be the granting of "subsidies" by Société Publique Wallonne (SPW) so that the cash out will be compensated. For the subordinated loans, an agreement on a reimbursement schedule has been found with the SRIW, end of 2018.
Moreover, we computed the variable part of the refundable government advances and contingent consideration payable for Myring™ and Zoreline® based on the existing business plan at 31 December 2018. The fixed part of the refundable government advances is of course independent of these assumptions.
The contingent consideration for Estetra has been excluded from the table above, as it depends on the market share that Estelle® can obtain. Based on updated management estimates of the potential market share, the contingent consideration represents between circa 3 and 4% of the potential partner's realized revenues.
The following table shows the potential maximum amount of the Estetra contingent consideration over a period up to and including 2040:
| Assumed partner (COC) market share: | Total contingent consideration Millions of Euro (€) |
|---|---|
| 5 % | 300-400 |
| 7,5 % | 500-650 |
| 10 % | 650-850 |
| 15 % | 950-1300 |
The difference between the above table and the amounts detailed in sections 9.16. Borrowings and 9.18. Financial instruments are due to the fact that the amounts above are undiscounted meaning that no discount rate neither probabilities of success of research and commercialization have been applied to them.
The contingent considerations relating to the asset deal Donesta are not reported in the table above, for more details please refer to 9.5.2. Donesta Bioscience BV from the Annual Report 2017.
For more details on borrowings and other financial liabilities, refer to notes 9.16. (Borrowings) and 9.18. (Financial instruments).
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to be in a position to provide returns for shareholders in the future and benefits for other stakeholders and to obtain over time an optimal capital structure to reduce the cost of capital.
The Group makes the necessary adjustments in the light of changes in the economic circumstances, risks associated to the different assets and the projected cash needs of the current and projected research activities. The current cash situation and the anticipated cash burn / generation are the most important parameters in assessing the capital structure. The Company objective is to maintain the capital structure at a level to be able to finance its activities for at least twelve months. Cash income from new partnerships is taken into account and, if needed and possible, the Company can issue new shares or enter into financing agreements.
Thepreparationoffinancial statementsinconformitywithIFRSrequirestheuseofcertaincriticalaccountingestimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies.The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosedbelow.
The financial statements have been prepared on a going concern basis and in accordance with the main accounting principles set out above.
End of 2018, Mithra has a total of EUR 97.6 million accumulated losses on its balance sheet and realized a consolidated net loss of EUR 12.4 million for the year ended 31 December 2018. The Group has analyzed the financial statements and accounting policies and based on conservative assumptions, the current cash position of EUR 119 million at 31 December 2018 will allow the Group to keep up with operating expenses and capital expenditure requirements at least until the end of 2019. Based on its assessment, the Management consider it appropriate to prepare the financial statements on a going concern basis. The assessment is based on expected R&D clinical results and further business deals as well as on the monitoring of our funding activities. We are also considering potential capital increase and additional credit facilities to secure liquidity and to support the continuing development of our products
Revenue from license granting contracts should be accounted for based on the substance of the agreements between the entity and its business partners. The new revenue standard (IFRS 15) requires management to exercise its judgment, notably in the following key areas:
Management makes its judgments taking into account all information available about the clinical status of the underlying projects at the reporting date and the legal analysis of the contracts performed by its legal counsel.
Sales related to Belux Business have been disclosed in a separate note, refer to 9.31 Discontinued operations. Since August 2018, Mithra is acting as an Agent for Ceres, so that revenue is reported net of the related COGS. Indeed, Mithra is still selling some products on behalf of Ceres during a transition period, until all market authorizations will be formally transferred.
R&D capitalization involves a great deal of judgment linked to evaluating whether all conditions to capitalized development costs have been met. The judgment relates mainly to criteria such as technical feasibility and economic benefits that results from it This analysis is done on a project basis and with the involvement of internal project managers.
The Group tests annually whether goodwill and indefinite useful life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 9.2.8. This involves the identification of potential impairment indicators and the use of significant assumptions including future cash flows, discount rate and probabilities of success. These estimates are performed taking into account all information available about the clinical status of the underlying project, some external benchmarks and the relevant market economic conditions at reporting date. Please refer to note 9.7. Other Intangible Assets and 9.9 Goodwill & IP R&D for the impairment testing performed on those assets.
Significant judgment is required in determining the consolidated provision for income taxes. The Group is subject to income taxes in different jurisdictions and there are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Measurement of the deferred tax asset related to the tax loss carry-forward involves significant judgement, notably related to the foreseable future taxable profits. We refer to section 9.24 Income tax expense.
Significant judgement is required in the estimation of present obligations that arise from past events including legal claims and other items. These judgments are based on the Group's prior experiences and are the best estimate of the Group's liability for these issues.
An estimation of the residual values and useful life of tangible assets and intangible assets is required to be made at least annually. Judgement is required in estimating the useful life of fixed asset categories. The residual value is the best estimate of the amount that would be obtained from the disposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life. Both residual value and useful life are determined based upon discussions with local engineers.
Valuation methods, usually discounted cash flow analysis, are used to determine the fair value of some of the Company's liabilities that are not traded in an active market. These valuation methods require judgement; the main assumptions and variables used are future cash flows per projects, likelihood of approval (LOA), discount rate and long term growth rate. These assumptions are based on external benchmarks, management's estimates based on experience of the entity and on internal analysis.
The remeasurement of refundable cash advances using the cumulative catch up method requires periodic reestimation of the contractual cash flows required to repay the liability towards the Walloon Region. Management revise periodically the business plan of each products concerned and the probability of success of related clinical trials.
During 2017 and 2018, Mithra had no business combinations or asset deals to account for in its year-end financial statements. Last business combinations occurred in 2015. For more details please refer to 9.5. Business combinations and asset deals from the Annual Report 2017.
Due to the increasing volume of new license granting deals, operating activities are since 2017 being reviewed at two levels: Benelux business for product sales and out-licensing business for partnership deals within Mithra. Hence, a distinction is being made in the information provided regularly to the chief operating decision maker, François Fornieri.
| Thousands of Euro (€) | 2018 | 2017 |
|---|---|---|
| Discontinued operations | 7,589 | 14,007 |
| Product sales | 7,589 | 14,007 |
| Out-licensing | - | - |
| Continuing operations | 57,876 | 32,245 |
| Product Sales | 1,539 | 2,845 |
| Out-licensing | 56,337 | 29,400 |
| Total Revenues | 65,465 | 46,252 |
For more details on the Product sales and out-licensing fees and geographical sales, please refer to section 9.19. Revenue and other operating income.
In 2018, two major customers representing 61% (Gedeon Richter) and 10% respectively of total revenue were identified in the "out-licensing" segment. No other customer represented more than 10% of total revenue.
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Continuing operations | ||
| Belgium | 193,997 | 161,528 |
| Brazil | 6 | 478 |
| Luxembourg | 6 | 9 |
| The Netherlands | 7,998 | 7,998 |
| Germany | 8 | 10 |
| Total Continuing operations Non-Current assets | 202,016 | 170,022 |
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Discontinued operations | ||
| Belgium (Assets held for sale) | - | 477 |
| Total Discontinued operations Non-Current assets | - | 477 |
The main non-current assets are located in Belgium, except for the intellectual property rights (relating to Estetrol, excluding the rights related to Estelle® ) acquired in the Netherlands and some minor assets in Brazil, Luxemburg and Germany.
| Thousands of Euro (€) | Operating license |
Intellectual property rights |
Software licences |
R&D Expenses |
Total |
|---|---|---|---|---|---|
| Cost | |||||
| At 31 December 2016 | 466 | 81,984 | 425 | - | 82,875 |
| Additions | 281 | - | 219 | 1,575 | 2,075 |
| Acquisitions through business combination |
110 | - | (310) | - | (200) |
| At 31 December 2017 | 857 | 81,984 | 334 | 1,575 | 84,750 |
| Additions | 652 | - | - | 1,530 | 2,182 |
| Disposals | - | (1,431) | - | - | (1,431) |
| At 31 December 2018 | 1,509 | 80,553 | 334 | 3,105 | 85,501 |
| Accumulated amortisation | |||||
| At 31 December 2016 | - | 3,665 | 81 | - | 3,745 |
| Amortisation expense | 506 | - | 114 | - | 620 |
| At 31 December 2017 | 506 | 3,665 | 195 | - | 4,365 |
| Amortisation expense | 142 | (913) | - | - | (772) |
| At 31 December 2018 | 648 | 2,752 | 195 | - | 3,594 |
| Net Book Value | |||||
| At 31 December 2016 | 466 | 78.320 | 345 | - | 79.130 |
| Cost | 857 | 81,984 | 334 | 1,575 | 84,750 |
| Accumulated amortisation and impairment |
506 | 3,665 | 195 | - | 4,365 |
| At 31 December 2017 | 351 | 78,320 | 139 | 1,575 | 80,385 |
| Cost | 1,509 | 80,553 | 334 | 3,105 | 85,501 |
| Accumulated amortisation and impairment |
648 | 2,752 | 195 | - | 3,594 |
| At 31 December 2018 | 861 | 77,802 | 139 | 3,105 | 81,907 |
The intangible assets consist mainly of a portfolio of acquired product exploitation rights, market access rights and an operating license for the Brazilian market. The rights were acquired from 1999 until present from different pharmaceutical companies. The intangibles also include intellectual property rights for a new formulation of tibolone.
The milestone payments for both Donesta® (conditional payments with a maximum of EUR 12,000k) and the Colvir, Vaginate and Alyssa assets are considered as contingent considerations payments based on future performance and will be accounted for as an adjustment to the cost of the intangible if and when the contingent considerations becomes a liability.
Most of IP rights are not yet amortised because they are not yet available for use. No impairment indicators were identified as at December 31, 2018.
Intellectual property rights
| Thousands of Euro (€) | 2018 | 2017 | Clinical Status |
|---|---|---|---|
| Intangible Estelle | 30,686 | 30,686 | End of Phase III |
| Donesta asset deal | 8,000 | 8,000 | End of Phase II |
| Intangible Zoreline | 24,382 | 24,382 | PK study |
| Intangible MyRing | 11,425 | 11,425 | UE : finalised and US : bioequivalence ongoing |
| Products purchased GSP | 2,450 | 2,450 | In progress |
| Intangible Brazil Acquisition | 463 | 463 | N/A |
| Other | 396 | 914 | Used and depreciated |
| Total | 77,802 | 78,320 | - |
No impairments indicators have been indentified on Intangible assets.
The increase in intangible assets during 2018 is primarily explained by the development costs capitalization in Estetra related to the project "E4 synthesis" (for EUR 1,530k), which entered into the development phase since 2017. The R&D expenses are not yet amortised because the project is still in development Phase. No impairment indicators were identified as at December 31, 2018.
| Thousands of Euro (€) | Land and buildings |
Fixtures and equipment |
Motor Vehicles |
Total |
|---|---|---|---|---|
| Cost | ||||
| At 31 December 2016 | 13,902 | 4,507 | 156 | 18,565 |
| Additions | 38,444 | 5,846 | 34 | 44,285 |
| Disposals | - | (69) | (36) | (105) |
| At 31 December 2017 | 52,347 | 10,284 | 154 | 62,785 |
| Additions | 19,271 | 7,708 | 249 | 27,228 |
| Disposals | - | - | - | - |
| At 31 December 2018 | 71,618 | 17,992 | 403 | 90,013 |
| Accumulated amortisation | ||||
| At 31 December 2016 | 456 | 1,071 | 77 | 1,604 |
| Disposals | - | - | - | - |
| Amortisation expense | 1,295 | 377 | (11) | 1,661 |
| At 31 December 2017 | 1,751 | 1,448 | 66 | 3,265 |
| Amortisation expense | 1,663 | 451 | 238 | 2,352 |
| At 31 December 2018 | 3,414 | 1,899 | 304 | 5,617 |
| Net Book Value | ||||
|---|---|---|---|---|
| At 31 December 2016 | 51,891 | 3,436 | 79 | 6,961 |
| Cost | 52,347 | 10,284 | 154 | 62,785 |
| Accumulated amortisation and impairment |
1,751 | 1,448 | 66 | 3,265 |
| At 31 December 2017 | 50,596 | 8,836 | 88 | 59,519 |
| Cost | 71,618 | 17,992 | 403 | 90,013 |
| Accumulated amortisation and impairment |
3,414 | 1,899 | 304 | 5,617 |
| At 31 December 2018 | 68,204 | 16,093 | 99 | 84,396 |
In November 2014, Mithra laid the first stone of its future integrated R&D and manufacturing technology platform called Mithra CDMO (Contract Development and Manufacturing Organization).
During the 2018, the Group recorded EUR 27,228k of additions to the tangible fixed assets which were mainly related to prepayments for its new production facility for the manufacturing of pharmaceutical products. The Group entered into various finance leases (see financial note 9.28) for the CDMO and related equipment,
The acquisition value of the building has been analyzed by component and specific useful lives and residual values were applied to each of them. Depreciation by component is provided for lifespans ranging between 5 and 30 years and CDMO building components from Phase 1 have been depreciated as from April 2017.
The second and final phase of the CDMO construction (Phase 2) has been completed in H2 2018 within the allocated budget (EUR 25.8 million). This second phase is dedicated to tablet manufacturing. Both Phases are supported by the Walloon Region by a nonrefundable investment grant.
The machines acquired within the CDMO investment are not depreciated in 2018 because these assets are not yet ready for their intended use but they will be ready as production starts in 2019 as communicated on our website.
Goodwill results entirely from the acquisition of Estetra (EUR 3,814k) and Novalon (EUR 1,420k).
Goodwill is tested for impairment at least annually. In the year of acquisition of Estetra and Novalon, management confirmed the validity of the expected cash flow approach used when acquiring the businesses, breaking down the risks and using all expectations about possible cash flows and discounting the expected value at a rate of 12.48% ignoring risks for which the estimates of future cash flows have already been adjusted.
Considering the fact that the recoverable value of Estelle® was initially estimated using a Phase 2 discount rate which is no longer applicable, that the WACC is slightly higher, and also taking into account that the Company was able to negotiate deals outside of the European and US markets which were the basis for the underlying business plan, no impairment loss was identified. The same applies for Donesta® and the Novalon products.
More specifically, the assets related to Estetra and Novalon products are tested for impairment in groups of assets described as three different cash-generating units (CGUs), being Estelle® , Myring™ and Zoreline® .
The recoverable amounts are based on the fair value less cost to sell methodology which use some risk-adjusted discounted cash flow models for a period of 10 years. If any terminal value is included, further cash flows are extrapolated using a negative long term growth rate. Probabilities of success are also different by CGU and are updated based on latest information about clinical results. The discount rate applied was updated at 14.39% and is the same for all three models. Management's assessment is that the recoverable amounts exceeds their carrying value and that no impairment is required.
| Long term growth | ||||
|---|---|---|---|---|
| Intangible assets tested | rate | Phase 2 | Phase 3 | WACC |
| Estelle® | -1% | 100% | 38% | 14.39% |
| Long term growth | R&D | Commercial | ||
| rate | ||||
| Zoreline® | -3% | 80% | 55% | 14.39% |
| Myring™ | 0% | 90% | 75% | 14.39% |
| Intangible assets tested |
Probability of sucess in 2017
| Intangible assets tested | Long term growth rate |
Phase 2 | Phase 3 | WACC |
|---|---|---|---|---|
| Estelle® | BP up to10 years | 100% | 38% | 13.23% |
| Long term growth rate |
R&D | Commercial | ||
| Zoreline® | -3% | 30% | 55% | 13.23% |
| Myring™ | 0% | 90% | 75% | 13.23% |
Actually, a sensitivity analysis of impairment test has been done in case of adverse changes in assumptions. Mithra tested reasonable sensitivity to changes in the discount rate and a simulated increase of up to 1 percentage point in the discount rate used would not change the findings of the Group's analysis.
| Thousands of Euro (€) | Targetome | Total |
|---|---|---|
| At 31 December 2016 | 165 | 165 |
| Loss of the period - equity accounting | 0 | 0 |
| Derecognition of investment in associate | (165) | (165) |
| At 31 December 2017 | 0 | 0 |
| Loss of the period - equity accounting | 0 | 0 |
| At 31 December 2018 | 0 | 0 |
End of 2017, the Board of Directors of Targetome decided to terminate its activities. Further decisions regarding the future of the company are expected so that its value was derecognized for the current financial year.
| As at 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| R&D tax credit | 2,402 | 2,417 |
| Advance payments | 800 | - |
| Other long term receivables | 233 | 227 |
| Total other non-current assets | 3,435 | 2,644 |
In 2018, we can notice an increase of Other non-current assets mainly explained by the advance payments regarding API for EUR 800k.
| As at 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Raw materials & consumables | 8,338 | 2,180 |
| Finished goods | 2,971 | 2,350 |
| Total at cost | 11,309 | 4,530 |
| Cumulated amounts written off at the beginning of the period |
(389) | (125) |
| Reversal of write-down of inventories credited to expense in the period |
22 | (264) |
| Cumulated amounts written off at the end of the period |
(367) | (389) |
| Total net carrying amount | 10,945 | 4,141 |
The inventory change is booked within the cost of sales area and the write-down charges are booked within the operating expenses area of the income statement.
The increase of inventories related to API is mainly explained by the Myring™ production in 2019.
Regarding the inventory related to Belux Business, the Group still owns some inventories in the transition period agreed with Ceres until all the adequate procedures are performed. Indeed, the stock is transferred with the license of the products so that in the meanwhile, Mithra acts as an agent on behalf of Ceres.
| As at 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Trade receivables | 19,544 | 25,428 |
| Recoverable VAT | 2,720 | 6,270 |
| Prepayments | 1 | 558 |
| Other | 1,508 | 1,624 |
| Total Trade receivables | 23,773 | 33,881 |
The decrease in Trade receivables is mainly explained by the payment received regarding the invoices issued for the license upfront fees. The major part of the recoverable VAT stated at December 2018 closing has been collected at the end of Q1 2019. The decrease of VAT balance is explained by higher volume of investments on the CDMO Plateform in 2017.
For more details about unbilled revenue (contract assets) please refer to the Note 9.19 Revenue and other operating income.
| Total cash and cash equivalents | 118,949 | 36,190 |
|---|---|---|
| Cash at bank and in hand | 118,949 | 36,190 |
| Thousands of Euro (€) | 2018 | 2017 |
| As at 31 December |
These shares are fully paid and have no nominal value.
At 31 December 2018 and 31 December 2017, the Company's share capital was represented by the following number of shares (units).
| As at 31 December | ||
|---|---|---|
| 2018 | 2017 | |
| Number of shares (issued and fully paid) | 37,639,495 | 34,967,081 |
These shares are fully paid up and have no nominalvalue. There are no share categories within the company; i.e. all shares entitle their owner to the same rights. There were no treasury shares as at end of December 2018.
There were some shares reserved for issuance under options,which are warrants to be exercised respectively as from 1 st January 2019, as from 6th November 2020 and as from 29th January 2021. Refer to notes 1.4 and 9.26.
The change in the number of shares during each of the periods ending on 31 December 2018 and 31 December 2017 is as follows:
| Thousands of Euro (€) | Number of Shares |
Issued Capital |
Share premium |
Total |
|---|---|---|---|---|
| Balance at 31 December 2015 | 31,129,756 | 22,613 | 122,830 | 145,443 |
| Balance at 31 December 2016 | 31,129,756 | 22,613 | 122,830 | 145,443 |
| - Incorporation in capital of retained earnings |
3,112,975 | 1,957 | 24,177 | 26,134 |
| - Capital increase by subscription rights |
724,350 | 530 | 1,948 | 2,479 |
| - Transaction costs for equity issue | (65) | (676) | (741) | |
| Balance at 31 December 2017 | 34,967,081 | 25,036 | 148,279 | 173,315 |
| - Incorporation in capital of private placement |
2,672,414 | 1,956 | 75,544 | 77,500 |
| - Transaction costs for equity issue | (67) | (2,236) | (2,304) | |
| Balance at 31 December 2018 | 37,639,495 | 26,924 | 221,587 | 248,511 |
The following capital transactions took place between 1 January 2017 and 31 December 2017:
The following capital transactions took place between 1 January 2018 and 31 December 2018:
An overview of the borrowings is shown below.
| As at 31 December | ||||||
|---|---|---|---|---|---|---|
| 2018 | 2017 | |||||
| Thousands of Euro (€) | Total | Current | Non-Current | Total | Current | Non-current |
| Subordinated loans | 14,395 | 173 | 14,222 | 11,262 | 104 | 11,158 |
| Other loans | 65,553 | 12,405 | 53,148 | 47,278 | 9,205 | 38,073 |
| Bank loans | 14,966 | 10,270 | 4,697 | 12,724 | 9,205 | 3,519 |
| Financial Lease | 50,141 | 2,135 | 48,006 | 34,059 | - | 34,059 |
| Capital grants | 446 | - | 446 | 495 | - | 495 |
| Refundable government advances | 10,921 | 668 | 10,252 | 8,278 | 493 | 7,785 |
| Other financial liabilties | 95,627 | 7,007 | 88,620 | 52,665 | 6,434 | 46,232 |
| Total Borrowings | 186,496 | 20,253 | 166,242 | 119,483 | 16,236 | 103,247 |
Reconciliation of liabilities arising from financing activities:
| Thousands of Euro (€) |
2017 | Cash flows | Non-cash changes |
2018 | ||
|---|---|---|---|---|---|---|
| Inflow | Outflow | Additions | Amortized costs adjustments |
|||
| Unsecured subordinated loans | 395 | (102) | 293 | |||
| Secured subordinated loans | 10,866 | 3,236 | 14,102 | |||
| Straight loan | 8,660 | 1,094 | 9,754 | |||
| Innodem | 3,005 | (387) | 2,618 | |||
| Other bank loans | 1,061 | 1,700 | (166) | 2,595 | ||
| Financial lease | 34,059 | 16,082 | 50,141 | |||
| Capital grants | 495 | 446 | ||||
| Refundable government advances |
8,278 | 1,582 | (719) | 1,779 | 10,921 | |
| Total | 66,819 | 3,282 | (1,374) | 20,412 | 1,779 | 90,869 |
The difference between the total of both above table is explained by the Other financial liabilities (EUR 95,627 k) which classified as arising from investing activities because payment are made out of a liability recognized on acquisition.
Below we present the characteristics of the (9.16.1) other loans and subordinated loans, (9.16.2) refundable government advances, and (9.16.3) other financial liabilities.
The detailed breakdown and the characteristics of the other loans and subordinated loans as follows:
Detail of non-current bank borrowings and subordinated loans:
| Thousands of Euro (€) | Interest rate % |
Fixed / Variable |
Maturity | 2018 | 2017 |
|---|---|---|---|---|---|
| NON-CURRENT | |||||
| Subordinated loans (non-current) | 14,222 | 11,261 | |||
| Unsecured subordinated loans | 210 | 395 | |||
| Development Brazilian/Dutch subsidiary | 4.95% | Fixed | 2022 | 210 | 291 |
| Secured subordinated loans | 14,012 | 10,866 | |||
| CDMO Phase 1 property – prefin. | 6.50% | Fixed | 2018 | 9,922 | 7,997 |
| CDMO Phase 2 property – prefin. | 5.75% | Fixed | 2018 | 2,397 | 1,264 |
| CDMO Phase 2 Furnishing – prefin. | 5.75% | Fixed | 2018 | 1,693 | 1,606 |
| Other loans (non-current) | 52,703 | 37,578 | |||
| Bank loans | 4,697 | 3,519 | |||
| Long term bank loans | 2,423 | 895 | |||
| Investment loans | 2.00% | Fixed | 2023 | 437 | 541 |
| Working capital funding | 5.24% | Fixed | 2023 | 286 | 354 |
| Belfius | 1.89% | Fixed | 2027 | 1,700 | - |
| Other bank loan | 2,274 | 2,625 | |||
| Innodem | 2.57% | Fixed | 2026 | 2,274 | 2,625 |
| Financial Lease | 48,006 | 34,059 | |||
|---|---|---|---|---|---|
| Leasing "Intégrale" (Immo Phase I) | 5.40% | Fixed | 2032 | 24,331 | 25,164 |
| Leasing « Intégrale » (Immo Phase II) | 5.75% | Fixed | 2034 | 8,829 | - |
| Leasing ING Lease (solar panels) | 3.00% | Fixed | 2026 | 355 | - |
| Leasing CBC Lease | 2.00% | Fixed | 2021 | 733 | - |
| Leasing Phase 1 immo | 3.14% | Fixed | 2026 | - | 829 |
| Leasing ING Lease (Phase 2) | 3.00% | Fixed | 2026 | 6,165 | - |
| Leasing ING Lease (Phase I) | 3.14% | Fixed | 2026 | 7,593 | 8,066 |
| Total non-current | 66,924 | 48,736 |
| Thousands of Euro (€) | Interest rate % |
Fixed / Variable |
Maturity | 2018 | 2017 |
|---|---|---|---|---|---|
| CURRENT | |||||
| Subordinated loans (current) | 173 | 104 | |||
| Unsecured subordinated loans | 83 | 104 | |||
| Development Brazilian/Dutch subsidiary | 4.95% | Fixed | 2022 | 83 | 104 |
| Secured subordinated loans | 90 | - | |||
| CDMO Phase 1 Propery | 3.14% | Fixed | 2026 | 90 | - |
| Other loans (current) | 12,405 | 9,205 | |||
| Bank loans | 10,270 | 9,205 | |||
| Straight Loans ING - CDMO | Variable | 2018 | 9,754 | 8,660 | |
| Working capital funding | 5.24% | Fixed | 2023 | 67 | 67 |
| Investment loans | 2.00% | Fixed | 2023 | 99 | 99 |
| Innodem | 2,57% | Fixed | 2026 | 344 | 379 |
| Financial lease | 2,135 | - | |||
| Leasing "Intégrale" (Immo Phase I) | 5.40% | Fixed | 2032 | 833 | - |
| Leasing « Intégrale » (Immo Phase II) | 5.75% | Fixed | 2034 | 268 | - |
| Leasing ING Lease (solar panels) | 3.00% | Fixed | 2026 | 45 | - |
| Leasing ING Lease (Phase 2) | 3.14% | Fixed | 2026 | 516 | - |
| Leasing ING Lease (Phase I) | 3.14% | Fixed | 2026 | 473 | - |
| Total current | 12,578 | 9,310 |
The EUR 9,754k CDMO Straight Loan is referred as a current borrowing because of the short term nature of the straight loans, but part of the repayments will be done at the granting of "subsidies" by Société Publique Wallonne (SPW), so that the cash out will be compensated.
Securities given by the Company primarily consist of Receivable pledges (EUR 7,200k) and pledges on future receivables related to subsidies from the Walloon Region given as securities for the loans referred in the above table as Straight Loans ING – CDMO; plus receivable pledge mandates (EUR 6,000k) and mortgage mandates in respect of the office building owned by the Company (EUR 1,450k) which were both given as securities for mixed credit facilities (straight loans, bank guarantees and documentary credits) under which there was no straight loan drawdowns at year-end.
On 17 November 2014, the company has entered into finance leases for the construction and use of a production facility for the manufacturing of pharmaceutical products. The leases were supposed to commence at the earliest of the operational qualification of the construction or 31 October 2016. These leases were amended in 2016. The amendment consisted of a change for the entering into force of the leases until 30 April 2017, together with a grace period on the principal repayments until April 2019. The total investment for Phase I was supposed to amount to EUR 49,400k. Mithra committed to participate up to 32.87% in the financing of the construction through transferring the proceeds of a subordinated loan and grants that will be pre-financed by straight loans. The remainder is financed through two lease agreements: a lease contract of land and building with a term of 15 years for a total amount of EUR 24,900k and an equipment lease for a total amount of EUR 8,000k with a term of 7 years. The leasing of EUR 24,900k was amended during the course of 2016 and is now for EUR 25,164k.
Additionally on 20 May 2016, the company entered into new finance leases for the Phase 2 construction of the production facilities for the manufacturing of pharmaceutical products for which the total investment was estimated at ca. EUR 25,835k. The leases were supposed to commence at the earliest of the operational qualification of the construction or 30 April 2019. Finally, the leases had started on November 14, 2018 and construction was received as operational. The contract has a grace period until April 2019. Similar to the Phase I financing, Mithra committed to participate up to 35.04% in the financing of the construction through transferring the proceeds of a subordinated loan and of grants that will be pre-financed by straight loans. The remainder is financed through two lease agreements: a lease contract of land and building with a term of 15 years for a total amount of EUR 9,097k and an equipment lease for a total amount of EUR 7,685k with a term of 7 years.
The Group has also been awarded refundable advances support from the Walloon Region. Payment of awarded amounts that have not yet been received is subject to the achievement of certain milestones. Grants are subject to certain obligations. In case such obligations are not complied with, the grants could be suspended, reviewed or reclaimed. The Group has the obligation to continue the development of the relevant project. In case such project is stopped, the Group should return rights to the results and the data generated in the project to the Société Publique Wallonne (SPW), in which case the repayment obligation also lapses. The Company's ongoing grant programs are mainly refundable advances and capital grants.
The refundable advances have a fixed repayment part and variable repayment scheme. The variable part isdependent on the success of the project (i.e. based on a percentage of turnover). It should be noted that, while the variable parts of these advances are only due upon commercialization, the fixed parts are due in any event. The fixed and variable part can never exceed the double of the initial received amount. The final variable part to be repaid will depend on the performance of the product candidate.
| Total refundable government advances | 10,920 | 8,278 |
|---|---|---|
| Other refundable government advances | 4,913 | 2,390 |
| Refundable government advances Estetra | 6,007 | 5,887 |
| Thousands of Euro (€) | 2018 | 2017 |
| Year ended 31 December |
The below table gives the details of refundable governments advances granted to the group and repayments done in 2018:
| In Euro (€) | Amount of grant |
Decision year on fixed repayments part |
% of fixed repay-ment part |
% applied on turnover for variable repayment part |
Maximum repayment amount |
Amount reimbursed 2018 |
|---|---|---|---|---|---|---|
| AR 7410 - Zoreline 2 | 5,265,000 | 01-12-2015 | 30% | 3,57% | 200% | - |
| AR 7585 - Development EVA | 1,188,000 | 01-11-2016 | 30% | 0,21% | 200% | - |
| AR 6137 - Zoreline | 1,825,884 | 01-12-2009 | 30% | 3,30% | 200% | 256,384 |
| AR 6138 - Drosperinone Novalon | 625,800 | 01-12-2009 | 30% | 0,50% | 200% | 21,468 |
| AR 7492 - Donesta | 2,898,000 | 01-12-2015 | 30% | 0,10% | 200% | - |
| AR 7551 - Bio Synthesis | 747,000 | 01-12-2015 | 30% | 0,26% | 200% | - |
| AR 6139 - Estelle | 2,820,000 | 01-12-2012 | 30% | 0,50% | 200% | 21,760 |
| AR 6926 - Estelle | 2,009,000 | 01-12-2012 | 30% | 0,20% | 200% | 62,622 |
| AR 6875 - Estelle | 5,400,000 | 01-12-2012 | 30% | 0,60% | 200% | 339,450 |
| AR 7411 - Co-extrusion CDMO | 441,000 | 01-12-2015 | 30% | 0,40% | 200% | 16,839 |
| AR 1510597 - Septime | 206,466 | 01-07-2016 | 30% | 0,01% | 200% | - |
| AR 1710127 Estepig | 207,584 | 01-12-2017 | 30% | 0.0145% | 200% | - |
The amounts of refundable government advances have increased since we updated the future sales expectations on the related projects. The determination of the amount to be paid to the Walloon Region (the charge has been reported in the R&D expenses line of the Consolidated Statement of Income) under the signed agreement is subject to a high degree of uncertainty as it depends on the amount of the future sales that Mithra will generate in the future.
Total 23,633,734 718,524
| Product/projects related to the refundable advances |
Phase 2 | Phase 3 | WACC | Discount rate used for the fix part |
|---|---|---|---|---|
| Estelle® | 100% | 38% | 13.88% | 2.27% |
| Donesta® | 100% | 38% | 13.88% | 2.27% |
| Discount rate used | ||||
| R&D | Commercial | WACC | for the fix part | |
| Zoreline® | 80% | 55% | 13.88% | 2.27% |
| Others | 90% | 75% | 13.88% /12.48% |
2.27% |
| Total refundable government advances |
A sensitivity analysis of the carrying amount of refundable advances has been done in case of adverse changes in assumptions. Mithra tested reasonable sensitivity to changes in the business plan and a simulated increase of up to 3 percentage point in the discount rate used would not change the findings of the Group's analysis. A sensitivity to changes in the business plan and a simulated increase of up to 12 percentage point in the probability of success of Phase III would not change the findings of the Group's analysis neither.
Sensitivity analysis for Estelle in thousands of Euro (€):
| Increase of BP in % | Probability of success of PHASE III 38% |
50% | 65% | 78% | 100% |
|---|---|---|---|---|---|
| -5% | 5,802 | 7,031 | 8,566 | 9,897 | 12,149 |
| -3% | 5,905 | 7,165 | 8,741 | 10,107 | 12,419 |
| 0% | 6,007 | 7,300 | 8,917 | 10,317 | 12,688 |
| 3% | 6,109 | 7,435 | 9,092 | 10,528 | 12,958 |
| 5% | 6,212 | 7,570 | 9,267 | 10,738 | 13,227 |
Other non-current financial liabilities primarily include the fair value of the contingent consideration for Estetra (EUR 80,468k) as well as the fair value of contingent payments relating to certain contractual obligations with respect to the acquired Zoreline® and Myring™ products (EUR 15,159k). We refer to note 9.5 from Annual Report 2017 for a description of the characteristics of these debts. The strong increase of fair value for the contingent consideration for Estetra (EUR 84,542k in 2018 compared to EUR 42,432k in 2017) is the result of higher expected future revenue, including the new estimate about the generic market development. The discount rate update had no significant impact.
| Year ended 31 December | ||||||
|---|---|---|---|---|---|---|
| Thousands of Euro (€) | Total | Current | Non-Current | Total | Current | Non-current |
| Fair value Earn-out Estetra | 84,541 | 4,074 | 80,468 | 42,432 | 621 | 41,811 |
| Fair value Earn-out Myring™ | 3,093 | 500 | 2,593 | 2,458 | 500 | 1,958 |
| Fair value Earn-out Zoreline | 7,992 | 2,433 | 5,559 | 7,776 | 5,313 | 2,463 |
| Total Other financial liabilities | 95,627 | 7,007 | 88,620 | 52,666 | 6,434 | 46,232 |
The contingent payments regarding the asset deal of the Belux Business are not disclosed in the table because of the cost accumulation approach on the asset side. Indeed, they will be booked once they will be no longer contingent but when they will become an actual liability.
A sensitivity analysis has been performed on the fair value of the contingent considerations, see note 9.18 Financial instruments.
| As at 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Trade accounts payable | 13,071 | 16,141 |
| Invoices to receive | 1,071 | 7,241 |
| VAT payable | 36 | (7) |
| Salaries and social security payable | 446 | 794 |
| Deferred income & accrued charges | 868 | 11,811 |
| Other debts | 0 | 5 |
| Trade payables and other current liabilities | 15,493 | 35,986 |
The decrease in trade accounts payable is explained by the end of the Phase III clinical study for Estelle and the Phase II clinical study for Donesta and thus related to the reduction of R&D expenses.
The deferred income meets the definition of "contract liabilities" and is disclosed as required by IFRS 15.116 (a) for a total amount of EUR 350 k (see note 9.19). The decrease in deferred income is mainly the result of the recognition of the following revenues in 2018 : Estelle® deals with Libbs for EUR 5 million and with FUJI for EUR 4.5 million.
Financial instruments such as contingent liabilities are carried at fair value. Given the current nature of the other financial assets and liabilities involved, the Company considers that the carrying amounts of the related financial instruments approximate in their fair values.
IFRS 7 requires disclosure of financial instruments that are measured at fair value at the balance sheet date level of the following fair value measurement hierarchy:
Trade & other receivables and Cash & cash equivalents will typically be considered as Level 2. Refer to notes 9.13, 9.14 for the fair values of these financial assets which do not differ from the carrying values. The fact that their carrying value approximates their fair value is due to the short term nature of these assets.
Following the asset deal of Belux Business, contingent receivables for a total of 20 MEUR remains to be potentially received. An exercice of measurement at fair value of the contingent receivables has been done, based on scenarios of Ceres' fulfilment of the conditions. Since the amount is not signficiant, the contingent receivables have not been booked under financial assets.
For a significant part of the loans, the fair values are not materially different to their carrying amounts, since the interest payable on those loans are either close to current market rates because that are recent or the loans are of a short-term nature. If we consider the financial leases as the interest rates were determined by Euribor +fixed bank margin and recent they are not that different of their fair value.
The following table presents the group's liabilities that are measured at fair value on 31 December 2018 and 2017:
| As at 31 December | |||
|---|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 | |
| Non Current Other financial liabilities | 88,620 | 46,232 | Level 3 |
| Current Other financial liabilities | 7,007 | 6,434 | Level 3 |
The fair values of Other financial liabilities are based on discounted cash flows using a WACC. They are classified as level 3 in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
The following table shows the roll forward of the level 3 financial liability instruments:
| Thousands of Euro (€) | Other financial Liabilities |
|---|---|
| Balance at 1January 2018 | 52,665 |
| Business combination and acquisition of assets | - |
| Charged/(credited) to change in fair value of contingent consideration payable |
46,651 |
| Settlements | (3,690) |
| Balance at 31 December 2018 | 95,627 |
The fair value of the contingent payments has been determined using a probability weighting approach based on the discounted cash flows as described above. A risk-adjusted discounted cash flow model was used, where all future cash flows are probabilized using statistical data gathered from the biotech sector and then discounted using the updated WACC applicable to Mithra.
The increase has already been explained in the note 9.16.3. Other financial liabilities.
A 3 % increase in the sales forecasts used would lead to a increase of the fair value of the contingent liabilities payments of EUR 1,087k while a 12% increase in the probability used would lead to an increase of EUR10,358k.
| Increase of BP in % | Probability of success of PHASE III 38% |
50% | 65% | 78% | 100% | |
|---|---|---|---|---|---|---|
| -5% | 80,605 | 90,445 | 133,742 | 159,327 | 202,624 | |
| -3% | 82,573 | 92,672 | 137,109 | 163,366 | 207,803 | |
| 0% | 84,541 | 94,899 | 140,475 | 167,406 | 212,982 | |
| 3% | 85,328 | 95,790 | 141,822 | 169,022 | 215,054 | |
| 5% | 88,477 | 99,353 | 147,208 | 175,485 | 223,340 |
| Probability of sucess in 2018 | ||||
|---|---|---|---|---|
| Contingent considerations relating to intangible assets |
Amount fair valued in 2018 |
Phase 2 | Phase 3 | WACC |
| Estelle® | 84,541 | 100% | 38% | 14.39% |
| Amount fair valued |
R&D | Commercial | ||
| Zoreline® | ||||
| 7,992 | 80% | 55% | 14.39% | |
| Others | 3,093 | 90% | 75% | 14.39% |
| Probability of sucess in 2017 | ||||
|---|---|---|---|---|
| Contingent considerations relating to intangible assets |
Amount fair valued in 2017 |
Phase 2 | Phase 3 | WACC |
| Estelle® | 42,432 | 100% | 38% | 13.23% |
| Amount fair valued |
R&D | Commercial | ||
| Zoreline® | 7,776 | 30% | 55% | 13.23% |
| Others | 2,458 | 90% | 75% | 13.23% |
The increase of fair value for the contingent consideration for Estetra (EUR 84,541k in December 2018 compared to EUR 42,432k in 2017) is the result of higher expected future revenue, notably due to an update of the out-licensing fees forecasts, the change in estimate regarding the update of the business plan in order to capture the management's estimates related to the generic market development as from year 2028 and the discount rate update (less significant).
The Group's revenue consists of product sales and license revenues as follows:
| Thousands of Euro (€) | 2018 | 2017 |
|---|---|---|
| Discontinued operations | 7,589 | 14,007 |
| Product sales | 7,589 | 14,007 |
| Out-licensing | - | - |
| Continuing operations | 57,876 | 32,245 |
| Product Sales | 1,539 | 2,845 |
| Out-licensing | 56,337 | 29,400 |
| Total Revenues | 65,465 | 46,252 |
For more details about the discontinued operations, please refer to Note 9.31 Discontinued operations.
Mithra's revenues increased 42% from EUR 46.3 million to EUR 65.5 million, mainly due to out-licensing revenues recognized for partnership agreements with leaders in Women's Health such as Gedeon Richter for EUR 40 million.
The Group has disaggregated revenue into various categories in the following table which is intended to:
| Year ended 31 December 2018 | ||
|---|---|---|
| Thousands of Euro (€) | Product sales | Out-licensing |
| Primary Geographic Markets | ||
| Europe | 926 | 42,379 |
| Outside Europe | 612 | 13,958 |
| Total | 1,539 | 56,337 |
| Product type | ||
| Product sales | 1,539 | - |
| License grant | - | 55,577 |
| Manufacture and supply | - | - |
| R&D services | - | 760 |
| Total | 1,539 | 56,337 |
| Timing of transfer of goods and services | ||
| Point in time | 1,539 | 55,577 |
| Over time | - | 760 |
| Total | 1,539 | 56,337 |
Disaggregation of continuing revenue 2017 from continuing operations:
| Year ended 31 December 2017 | ||
|---|---|---|
| Thousands of Euro (€) | Product sales | Out-licensing |
| Primary Geographic Markets | ||
| Europe | 1,300 | 400 |
| Outside Europe | 1,545 | 29,000 |
| Total | 2,845 | 29,400 |
| Product type | ||
| Product sales | 2,845 | - |
| License grant | - | 29,400 |
| Manufacture and supply | - | - |
| R&D services | - | - |
| Total | 2,845 | 29,400 |
| Timing of transfer of goods and services | ||
| Point in time | 2,845 | 29,400 |
| Over time | - | - |
| Total | 2,845 | 29,400 |
The main reasons for the increase in out-licensing revenue were the Estelle® deals with Gedeon Richter for EUR 40 million, Ceres Pharma for EUR 1.4 million (for the out-licensing part of the deal), Adcock Ingram for EUR 0.7 million, and Searchlight Pharma for EUR 1 million. Additional milestones related to license granting agreements already signed during previous years for which recognition was deferred at the prior year-end have been also recognized, including EUR 6.75 million from Fuji Pharma and EUR 5 million from Libbs. In total, and including additional smaller deals and product sales revenue, Mithra recognized EUR 56.3 million revenue from license granting agreements in 2018, compared to EUR 29.4 million in 2017. Additional payments were received related to license granting agreements for which revenue recognition was deferred to future periods (refer to Statement of financial position section below).
Amounts received or milestones to be received in the near future have been recognized as revenue to the extent that it is highly probable that no reversal of revenue will be done in the future.
Most of the out-licensing contracts have a single performance obligation which is the grant of the license. Some contracts contain also other performances such as manufacture and supply obligations, which are distinct of the license.
An analysis has been conducted in order to determine wether the single performance obligation was satisfied as at 31 December 2018.
| Year ended 31 December 2018 | Revenue recognised | Balance in Deferred Income |
|---|---|---|
| Non refundable downpayments | 37,784 | 350 |
| Milestones payments | 18,553 | 3,667 |
| Sales | - | - |
| Total | 56,337 | 3,967 |
The deferred income is the result of some amounts already invoiced to partners but not recognized in revenue as the related performance obligations were not yet completed as at 31 December 2018. The details are as follows:
As at 31 December 2018, no significant financing component was identified on any of the existing customer contracts.
Trade receivables include significant amounts of unbilled revenue as at both reporting dates.
As at 31 December 2018, the balance takes into account unbilled revenue for EUR 15.3 million, among which EUR 5 million milestones related to Gedeon Richter, EUR 7.6 million related to Mayne Pharma and EUR 2.3 million milestones related to Fuji Pharma, compared to EUR 10.1 million in 2017.
| Other operating income | 4,552 | 3,338 |
|---|---|---|
| Other revenues | 3,812 | 932 |
| R&D Tax credit | 739 | 2,406 |
| Thousands of Euro (€) | 2018 | 2017 |
| Year ended 31 December |
In 2018, the "Other revenues" mainly refers to refundable government advances recognition mechanism (+ EUR 3.463 k) and to exemption from the withholding tax on professional income (+ EUR 246k).
For explanation on the item "R&D tax credit", refer to note 9.2.21 as we applied for an investment deduction mechanism for energy efficient investments and R&D investments which have no impact or reduce the impact on the environment. The decrease is mainly explained by the reduction of R&D expenses in 2018.
Item "Other revenues" from discontinued operations mainly refers to the gain on asset disposal related to the sale of Belux distribution business for EUR 20 million to Ceres.
A breakdown of the expenses by nature of the costs of goods sold, Research and development costs, G&A and selling costs is summarized below. A breakdown of the employee benefit expenses is given in note 9.21.
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Costs by nature | ||
| Trade goods, raw materials and consumables | 5,254 | 9,095 |
| Employee benefit expenses | 12,324 | 10,657 |
| External service providers | 29,119 | 42,144 |
| Other expenses | 2,593 | 4,415 |
| Corporate branding expenses | 1,096 | 1,142 |
| Depreciation, amortization and impairment charges | 2,851 | 2,655 |
| Commissions | 285 | 242 |
| Operating lease payments | 391 | 321 |
| Total costs by nature | 53,913 | 70,671 |
| Costs by type | ||
| Cost of sales | 5,254 | 9,095 |
| Research and development expenses | 35,713 | 48,185 |
| General and administrative expenses | 8,979 | 8,697 |
| Selling expenses | 3,967 | 4,695 |
| Total costs by type | 53,913 | 70,671 |
Investments in Mithra's innovative product portfolio, end of Phase III studies for Estelle® and Phase II for Donesta® , together with Myring™ and Zoreline® development, has driven the decrease in R&D expenses to EUR 35,713k in 2018.
The costs related to personnel and mandated contractors can be summarized as follows:
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Wages, salaries, fees & bonuses | 10,819 | 9,204 |
| Pension costs: defined contribution plan | 196 | 156 |
| Pension costs: defined benefit plan | 0 | 0 |
| Share based payments | 1,181 | 1,021 |
| Other | 130 | 277 |
| Total | 12,324 | 10,657 |
In 2018, the Group employed 129 FTE's at year-end (104 FTE's in 2017) which can be allocated to the following departments:
| As at 31 December | ||
|---|---|---|
| Number of employees | 2018 | 2017 |
| R&D Staff | 41 | 44 |
| G&A Staff | 88 | 44 |
| Sales staff | - | 16 |
| Total | 129 | 104 |
The Group offers several post-employment, death, disability and healthcare benefit schemes. All employees have access to these schemes. The death, disability and healthcare benefits granted to employees of the Group are covered by external insurance companies, where premiums are paid annually and charged to the income statement as they become payable. The post-employment pension plans granted to employees of the Group are defined contribution plans. A defined contribution plan is a pension plan under which the Group pays a fixed contribution into a separate entity.The contributionobligations tothe definedcontributionplans are expensedby theGroupintheincome statement as they were incurred. Although defined contribution plans in Belgium are legally subject to a minimum guaranteed return of 1,75% on employer contributions and employee contributions, the postemployment pension plans are accounted for as defined contribution plans, since the legally required return is basically guaranteed by the external insurance company. Any liability that may currently result isimmaterial.
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Interest income | - | 8 |
| Other financial income | 237 | 370 |
| Total financial income | 237 | 377 |
The decrease in the Other financial income is explained by the fact that 2017 included the gain realised on the sale of Mithra France shares for EUR 112k.
| Total financial expense | (5,375) | (267) |
|---|---|---|
| Other financial expenses | (1,915) | 1,443 |
| Interest payments | (3,460) | (1,710) |
| Financial expenses | (5,375) | (267) |
| Thousands of Euro (€) | 2018 | 2017 |
| Year ended 31 December |
Financial expenses primarily include interest accruing on the bank borrowings (see note 9.16) for the CDMO plateform (EUR 3,460k in 2018 and 1,710k in 2017) and the other financial expenses which includes the remeasurment of refundable government advances for EUR 1,779 k.
The tax expenses consist of:
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Current tax income / (expense) | (352) | 1,046 |
| Deferred tax income/(expense) related to temporary differences and tax losses |
4,224 | 10,525 |
| Withholding tax income / (expense) | (3) | (150) |
| Total | 3,869 | 11,421 |
The income taxes in 2017 and 2018 are still the result of temporary differences and tax losses carried forward, and is thus a non cash item.
Withholding taxes of EUR 150 k of 2017 relates to the Fuji Pharma downpayments.
The Group recorded a total deferred tax asset of EUR 4,224 k for the year. This deferred tax is to be offset against future taxable income.
The tax result for the year can be reconciled as follows:
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Income / Loss (-) before tax | (16.232) | (46,426) |
| Country's statutory tax rate | 29.58% | 33.99% |
| Tax expenses / income (-) (theoretical) | (4.801) | (15,780) |
| Tax expenses / income (-) in income statement (effective) | (3.869) | (11,421) |
| Difference in tax expenses / income (-) to explain | 932 | 4,360 |
| - Tax credit for R&D investments | (218) | (818) |
| - Temporary differences with different tax rates | 4,284 | (1,724) |
| - Tax losses for which no deferred tax income was recognised | (2,955) | 246 |
| - Belgian tax law reform impact on losses carried forward | - | 1,803 |
| - Permanent difference for which no deferred tax was recognized | (297) | 95 |
| - Withholding taxes | - | 150 |
| - Other | 119 | 604 |
| - Tax losses recognized with different tax rates | - | 4,004 |
| Total | 932 | 4,360 |
A detailed overview of the deferred tax asset is shown below:
| As at 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Deferred tax asset to be recovered after more than 12 months |
27,045 | 22,718 |
| Deferred tax asset to be recovered within 12 months | - | - |
| Deferred tax assets | 27,045 | 22,718 |
The increase of EUR 4,326 k is mainly explained by the temporary difference arising from the recognition of a deferred tax asset on the fair values of the Estetra earn-out for EUR 3,412 k in 2018. We compute DTA on the amount of the fair value of the Estetra earn out less the non taxable part (defined milestones payments) and over a maximum period of 10 years. The increase of tax assets is also explained by the increase of tax losses in 2018.
Regarding the Estetra acquisition done in 2015, no deferred tax effects were recorded in consideration of temporary differences arising from the difference between the fair values of assets acquired and liabilities assumed at the acquisition date and their tax bases because the probability criterion for recognizing a net deferred tax asset was not met at the previous reporting date.
Since the second semester 2017, the estimation of the management changed mainly because of a significant outlicensing deal that has been signed at the end of the last semester. As a consequence, management increased the probability of success of our clinical trials and its higher estimate for future sales revenues was a trigger to recognize a deferred tax impact as from 2017.
The deferred tax asset relates also to fiscal losses carried forward at the level of Mithra, Estetra and Novalon and to the temproray difference arising from the differences in accounting principles at the level of Mithra, Estetra and Novalon. Management is convinced that such companies will generate sufficient profits in the future in order to be
able to recover the fiscal losses carried forward and justify the recognition of the deferred tax asset particularily for Estetra thanks to ongoing contract negociations related to Estelle that will generate much profits in the coming years.
The movement in the deferred tax asset is as follows:
| Temporary Differences | |||||
|---|---|---|---|---|---|
| Thousands of Euro (€) | Contingent consideration |
Expensed R&D costs |
Other | Tax Losses |
Total |
| At 1 January 2017 | - | 323 | (799) | 12,669 | 12,193 |
| (Charged) / credited to income statement | 8,527 | - | 11 | 1,988 | 10,525 |
| At 31 December 2017 | 8,527 | 323 | (788) | 14,657 | 22,718 |
| (Charged) / credited to income statement | 8,379 | - | (3,433) | (619) | 4,327 |
| At 31 December 2018 | 16,906 | 323 | (4,221) | 14,038 | 27,045 |
The deferred tax liabilities (EUR 2,202k in 2018 and EUR 2,099k in 2017) result from temporary differences arising from the difference between the fair values of assets acquired at the acquisition date and their tax bases. DTA and DTL are offset by legal entity.
Basic loss per share is calculated by dividing the netresult attributable toshareholders by theweighted average number of shares outstanding during the year.
Diluted loss per share is calculated including all the outstanding warrants that are in the money at the closing date.
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Result for the purpose of basic loss per share, being net loss |
(27,606) | (38,360) |
| Weighted average number of shares for the purpose of basic loss per share |
36,564,683 | 32,660,197 |
| Basic loss per share (in Euro) | (0.75) | (1.17) |
| Diluted loss per share (in Euro) | (0.75) | (1.17) |
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Result for the purpose of basic loss per share, being net loss |
15,242 | 3,354 |
| Weighted average number of shares for the purpose of basic loss per share |
37,639,495 | 32,660,197 |
| Basic profit per share (in Euro) | 0.42 | 0.10 |
| Diluted profit per share (in Euro) | 0.42 | 0.10 |
By a decision of the extraordinary shareholders' meeting of 2 March 2015 the Company issued 1089 warrants primarily to key management with an exercise price of EUR 5,646 per warrant. Warrants are conditional on the person completing 4 years of service (vesting period). These warrants are exercisable as of 2019. The fair value of the 1.089 warrants at grant date is estimated at EUR 2,789k.The fair value of each option is estimated using the Black & Scholes model based on the following assumptions:
In 2017, there has been an exercise of 439 subscription rights (warrants) end of November. These warrants were settled during the vesting period which was accounted for as an acceleration of vesting by immediately recognizing the amount that otherwise would have been recognized for services received over the remainder of the vesting period.
Post period (30 January 2019), an increase of capital took place following the exercise of 15 warrants representing pursuant to the 2015 warrant plan.
635 warrants of the 2015 Warrant Plan are still outstanding as of the date of this report.
On 5 November 2018, Mithra's extraordinary general meeting approved the issuance of a maximum of 1,881,974 warrants under the "Warrant Plan 2018", for the benefit of key employees, members of the management team and certain directors with an exercice price of EUR 24.05 or EUR 24.09 depending on the status (employee or not) of the beneficiary. The warrants have a longevity period of five years as of the date of issuance. They are generally not transferable and, in principle, can not be exercised prior to the date of the grant's second anniversary (i.e. 6 November 2020 subject to exercice conditions). All of the offered warrants are subject to a service condition of two years. Furthermore, a portion of 30% of these offered warrants were subject to additional market and nonmarket vesting conditions. The market condition, upon which the vesting is dependent from the share market price, was included in the grant date fair value calculation (see the discount applied in the table below). This condition was met post year-end. Out of the maximum of 1,881,974 warants, a total of 1,336,034 warrants have been offered and accepted (a number of 1,238,339 warrants as from 31/12/2018 and a number of 97,695 warrants postperiod). As the exercise price is different for management companies and for employees, we've determined two different fair value amounts. The fair value of the warrants at grant date is estimated at EUR 9,624k. The fair value of each option is estimated using the Black & Scholes model based on the following assumptions: (i) first we valued separately the warrants granted to the management co's and those granted to the employees, (ii) secondly, we also valued separately the warrants that are subject to vesting conditions from those who were already definitely acquired by the beneficiaries upon grant.The fair value of the 1,238,339 warrants at grant date is estimated at EUR 6,705k for the warrants definitely acquired and EUR 2,918k for the remaining 30% subject to vesting conditions.
The fair value of each option is estimated using the Black & Scholes model based on the following assumptions:
| Plan 2015 | Plan 2018 (70%) | Plan 2018 (30%) | |
|---|---|---|---|
| Number of warrants granted | 1,089 *(1,650 shares) | 866,837 | 371,502 |
| Exercise price per warrant | EUR 5.646 | EUR 24.05-24.09 | EUR 24.05-24.09 |
| Expected dividend yield | - | - | - |
| Expected stock price volatility | 45.30% | 37.50% | 37.50% |
| Risk-free interest rate | 0.53% | 0.36% | 0.36% |
| Expected duration | 8 years | 5 years | 5 years |
| Fair value | EUR 2,789k | EUR 6,705k | EUR 2,918k |
| Discount related to market condition | - | - | 14.37% |
During the period, a charge of EUR 1 181k has been recognized at the consolidated statement of income.
Since 2008, Mithra is involved in a legal proceeding against Organon NV (now Merck Sharp and Dohme BV). The proceeding concerns the alleged patent infringement caused by the commercialization by Mithra and its partner DocPharma BVBA (now Mylan) of a generic drug named Heria. Currently, Organon claimed provisional damages of EUR 2,770k including actual loss on profit, cost for establishing the infringement, attorney's fees and expert's expenses. A first instance judgement, was rendered on 11 December 2015 that concluded in a partial infringement of Organon's patent. An expert was appointed by Commercial Court to advise on the damages suffered by Organon and Merck because of the partial infringement. A provisional expert damage report evaluates damages of EUR 647K. Despite Mithra and DocPharma have lodged an appeal for overturning the judgement and based on the provisional execution of first instance judgement, the judicial expert pursues his mission. Therefore, the procedure is now pending before the Court of Appeal. No hearing date has been set yet. Note that a provision in relation to this claim has been recognized in these consolidated financial statements based on management's best assessment.
For more details on contingent consideration payments, reference is made to section 9.18.3.
The contingent considerations relating to the asset deal Donesta are not accounted for based on accounting policy 9.2.6 (b).
As the acquisition of Donesta qualified for an asset deal – because the definition of a business as defined in IFRS 3 is not met – the transaction was measured initially at cost. Subsequently the intangible assets will be measured at their cost less any accumulated amortisation and any accumulated impairment losses. The transaction price further contains several instalments which, since the date of acquisition, are considered as a contingent price based on future performance, hence this measurement is more an attribute of fair value measurement throughout the life of the asset than being representative of the cost model upon initial recognition of the asset. Hence, the contingent payments are disclosed as a contingent liability with any liability being re-measured at the end of each reporting period as an adjustment to the cost of intangible assets to the extent that it relates to future reportingperiods.
We are required to adopt IFRS 16 as of 1 January 2019. We will apply IFRS 16 using the modified retrospective approach. Consequently, the cumulative effect of adopting IFRS 16 will be recognized as an adjustment to the opening balance of retained earnings as at 1 January 2019, with no restatement of comparative figures. We have assessed the estimated impact that the initial application of IFRS 16 will have on our consolidated financial statements, as further described below.
We identified the following leases on which there will be an impact of IFRS 16 for Mithra;
IFRS 16 introduces a single lessee accounting model for lessees and requires the lessee to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. This applies for all leases with a term of more than 12 months, unless the underlying asset is of low value.
We will recognize new assets and liabilities for our car leases and property lease arrangements. A lessee measures right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities.As a consequence, the nature of the expenses related to those leases will change as we will recognize a depreciation of the right-of-use assets and an interest expense on the lease liabilities. The depreciation would usually be on a straight-line basis. Previously we recognized operating lease expenses on a straight-line basis over the term of the lease.
We will apply IFRS 16 to all contracts entered into before 1 January 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.
Assets and liabilities arising from a lease are initially measured on a present value basis, being the present value of the remaining financial components of the lease payments (for leases of cars)and discounted using lessee's incremental borrowing rate.The costs for the services combined with the lease (the service components of the lease) are not to be accounted for as an asset and only impact profit and loss statement on a monthly basis.
Based on the information currently available, we estimate that we will recognize right-of-use assets and corresponding lease liabilities of EUR 677k as of 1 January 2019.
In the statement of profit and loss for accounting year 2019, we expect a shift from lease expenses to depreciation charges and interest cost of about EUR 334k.
ICON Plc has been contracted to manage the Phase III E4 monotherapy program of Donesta® in menopause (hysterectomized and non-hysterectomized women) for a total budget of around EUR 100 million. Additional partnerships have been signed with companies like Continuum in order to optimize the recruitement rate in this clinical program.
For its Estelle program, Mithra has contracted with Pharmalex to support the team for compilation and preparation of the registration file for Europe and US. The total budget is EUR 740k.
For fiscal year 2018, the related parties with which other transactions have occurred are as follows:
Transactions between the Company and its subsidiaries, which are related parties, are eliminated in the consolidated accounts and no further information is provided here in this Section. However, the associate Targetome has been included as a related party.
In 2018, Mithra did not acquire assets from related parties.
Refer to the table below for the compensations paid to key management:
| Thousands of Euro (€) | Dec 2018 | Dec 2017 |
|---|---|---|
| Base Salary | 2,321 | 2,478 |
| Variable Remuneration | - | - |
| Group Insurance (pension, invalidity, life) | 1 | 8 |
| Other (car, cell phone, hospitalization) insurance | 31 | 36 |
| Share based compensations (*) | 1,126 | 1,021 |
| Total | 3,534 | 3,542 |
* We also refer to section 9.26 on share based payments in which the Company indicated that François Fornieri exercised an amount of 114 warrants corresponding to the issuance of 188,100 new shares.
| Thousands of Euro | Type of services | 2018 | 2017 |
|---|---|---|---|
| Total services rendered to entities controlled by or with significant influence from key management / directors |
0 | 0 | |
| Ceres | Reinvoicing diverse expense | 447 | 0 |
| Total services purchased from entities controlled by or with significant influence from key management / directors |
130 | 156 | |
| Yima sprl | Rental services builiding Foulons | 157 | 122 |
| Bocholtz | Event organisation - rent meeting rooms | 6 | 8 |
| Thousands of Euro (€) | 2018 | 2017 |
|---|---|---|
| Receivables from entities controlled by or with significant influence from key management / directors |
0 | 10 |
| Payables to entities controlled by or with significant influence from key management / directors |
167 | 180 |
| Payables to other related parties | 0 | 0 |
| Thousands of Euro (€) | 2018 | 2018 |
|---|---|---|
| Loan from / to entities controlled by key management / directors | 0 | 0 |
The total amount of the remunerations and the benefits paid in 2018 to the non-executive Directors (in such capacity) was EUR 230,000 (gross, excluding VAT), split as follows:
| Name | Nature | Remuneration as Director |
as Member of a committee |
As Chair of the Board |
|---|---|---|---|---|
| Marc Beyens | Non-exec | 20,000 | ||
| CG Cube | Non-exec | 20,000 | ||
| Meusinvest | Non-exec | 20,000 | 8,750 | |
| Alychlo | Non-exec - Chair | 20,000 | 1,250 | 20,000 |
| P. Suinen | Independent | 20,000 | 5,000 | |
| Jacques Platieau | Independent | 20,000 | 5,000 | |
| Ahok | Independent | 20,000 | 5,000 | |
| Aubisque | Non-exec | 20,000 | ||
| P4Management | Non-exec | 20,000 | 5,000 |
Post-period, in January 2019, Mithra published positive topline results of Estelle® Phase III study in U.S./Canada. Primary efficacy endpoint indicates excellent contraceptive efficacy, with a Pearl Index (PI) of 2.41 per 100 women (98% efficacy rate), in line with expectations. Key secondary endpoints (same as the one for the EU/RU study) were also achieved. Filing with U.S. and EU regulatory agencies is anticipated by year end.
Mithra announced the further expansion of its Estetrol (E4)-based programs. With a potential blockbuster named PeriNesta™, Mithra decided to target the underserved perimenopausal market, which affects women between reproductive age and post-menopausal age. The Company believes this additional product represents a major new market opportunity that requires only limited additional investment. The addressable market is estimated up to 35 million patients annually in the US and key EU markets (France, UK, Germany).
The Company also communicated the acceleration of preparations for its proposed Phase III E4 monotherapy study of Donesta® in menopause. This study will evaluate the efficacy and safety of E4 for the treatment of moderate to severe vasomotor symptoms in postmenopausal women. The start of patient recruitment for this phase III with E4 monotherapy is planned for the second half of 2019 pending approvals, with a marketing authorization expected as early as 2023.
In February 2019, Mithra CDMO started the commercial manufacturing process of the vaginal contraceptive ring Myring™ with a first batch for the European market (Czech Republic). The Mithra CDMO development and production center plans to start manufacturing further commercial batches for the European market (Austria, Denmark, Belgium, Luxembourg and the Netherlands) in the second half of 2019, as scheduled.
Mithra announced it signed a contract with CEVA Animal Health, leading global veterinary pharmaceutical group. With this first veterinarian project in development, Mithra will develop a hormonal device for the fertility market. This new polymer-based device would be a real innovation and bring an additional competitive edge to our partner while expanding Mithra's polymer based technology expertise
Post-period end, Mithra signed a partnership agreement with ITROM for commercialization of Estelle® in the Middle East. Under the terms of the agreement, ITROM will distribute Estelle® in MENA territories where the COC market is estimated at EUR 30 million a year. This agreement represents a deal worth up to EUR 55 million over the period. Mithra also signed an exclusive license and supply agreement with ITROM for Myring™ in MENA region, where the hormonal contraceptive market is estimated at EUR 37.5 million.
On 30 July 2018, Mithra announced the signature of the deal with Ceres in order to sell the Belux activities. The divestment of the Belux portfolio is in line with Mithra's strategy to realize the value of its non-core assets and fully focus on its key value-driving pipeline.
The agreement covers the sale of Mithra's portfolio of in-licensed branded generics in Women's Health. Also included are License and Supply Agreements (LSAs) for a number of Mithra's products and product candidates developed inhouse, such as licenses for the commercialization in the Belux territories of Tibelia®, Myring™ and Estelle® .
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro | 2018 | 2017 |
| Revenues | 7,589 | 14,211 |
| Cost of sales | (3,684) | (6,499) |
| Gross profit | 3,905 | 7,711 |
| Selling expenses | (1,989) | (2,961) |
| Other operating income | 876 | 330 |
| Gain on sale of disposal | 18,477 | - |
| Total operating expenses | 17,363 | (2,630) |
| Operating Profit / (Loss) | 21,269 | 5,081 |
| Financial result | (10) | - |
| Profit / (Loss) before taxes | 21,258 | 5,081 |
| Income taxes | (6,016) | (1,727) |
| Net Profit / (Loss) | 15,242 | 3,354 |
| Attributable to | ||
| Owners of the parent | (15,242) | (3,354) |
| Non-controlling interest | - | - |
With regard to the Belux business, which was sold to Ceres in July 2018, Mithra's revenues were EUR 7.6 million for the 7-month period ended 31 July 2018, compared to 14 million for the full 2017. Since August 2018, Mithra is acting as an agent of Ceres, so that revenue is reported net of the related COGS. Indeed, Mithra is still selling some products on behalf of Ceres during a transition period, until all market authorizations will be formally transferred.
Other operating income includes a gain on the divestment of operations related to Belux Business for an amount of EUR 18.5 million to Ceres.
| Cash flow from discontinued operations (net increase/decrease) | 21,269 | 5,081 |
|---|---|---|
| Cash flow from financing activities | - | - |
| Cash flow from investing activities | 18,477 | - |
| Cash flow from operating activities | 2,791 | 5,081 |
| Thousands of Euro | 2018 | 2017 |
| Year ended 31 December |
The Group's financial statements consolidate those of the followingundertakings7 :
| The Company has the following subsidiaries |
2018 Ownership % |
2017 Ownership % |
|
|---|---|---|---|
| Mithra Recherche et Développement SA |
100% | 100% | |
| Registered office | Rue Saint-Georges 5 4000 Liège |
||
| Incorporation Date | 13/06/2013 | ||
| Company registration n° | 534.909.666 | ||
| Fund SA | 100% | 100% | |
| Registered office | Rue Saint-Georges 5 4000 Liège |
||
| Incorporation Date | 1/07/2013 | ||
| Company registration n° | 0535.840.470 | ||
| Mithra Lëtzebuerg SA | 100% | 100% | |
| Registered office | Boulevarddela Petrusse 124, 2330 Luxembourg |
||
| Incorporation Date | 27/12/2012 | ||
| Company registration n° | LU25909011 | ||
| Mithra Pharmaceuticals CDMO SA | 100% | 100% | |
| Registered office | Rue Saint-Georges 5 4000 Liège |
||
| Incorporation Date | 13/06/2013 | ||
| Company registration n° | 534.912.933 | ||
| Mithra Pharmaceuticals GmbH | 100% | 100% | |
| Registered office | Promenade 3-9 Raumm 22 DE - 52076 Aachen Germany |
||
| Incorporation Date | 27/12/2013 | ||
| Company registration n° | DE 295257855 | ||
| Mithra Farmacêutica do Brasil Ltda | 100% | 100% | |
| Registered office | Rua Ibituruna N° 764 Saúde, São Paulo Brésil |
||
| Incorporation Date | 28/02/2014 | ||
| Company registration n° | NIRE N°35.220.476.861 | ||
| WeCare Pharmaceuticals BV | 100% | 100% | |
| Registered office | Lagedijk 1-3, NL -1541 KA Koog aan de Zaan |
||
| Incorporation Date | 23/09/2013 |
7 Please note that the shareholding percentage is considered at a consolidated level. Therefore, the 100% are held by the Company or one of its subsidiaries.
| The Company has the following subsidiaries |
2018 Ownership % |
2017 Ownership % |
|
|---|---|---|---|
| Company registration n° | NL08165405B01 | ||
| Novalon SA | 100% | 100% | |
| Registered office | Rue Saint-Georges 5 4000 Liège |
||
| Incorporation Date | 17/11/2005 | ||
| Company registration n° | 877.126.557 | ||
| Estetra SPRL | 100% | 100% | |
| Registered office | Rue Saint Georges, 5 4000 Liège |
||
| Incorporation Date | 01/09/2009 | ||
| Company registration n° | 818.257.356 | ||
| Donesta Bioscience BV | 100% | 100% | |
| Registered office | Boslaan 11 3701 CH Zeist The Netherlands |
||
| Incorporation Date | 23/12/2011 | ||
| Company registration n° | Commercial Register No. 54167116 |
The following associates are accounted for using the equity method in the Group's financial statements:
| The Company has the following associates | 2018 Ownership % |
2017 Ownership % |
|
|---|---|---|---|
| Targetome SA Registered office |
Avenue Pré-Aily 4, 4031 Angleur |
25.13% | 25.13% |
| Incorporation Date Company registration n° |
15/07/2010 827,564,705 |
As indicated, on 27th June 2017, the Ordinary General Meeting of Targetome decided to terminate the companies' activities and to initiate the legal proceedings related to the liquidation of the company so that its value was derecognized for the current financial year.
| In Euro (€) | |
|---|---|
| Auditor's fees | 107,265 |
| Fees for exceptional services or special missions (audit related) | 57,900 |
| Tax consultancy (audit related) | - |
| Fees for exceptional services or special missions (external to audit) | - |
| Tax consultancy (external to audit) | - |
| Total | 165,165 |
In accordance with Art. 105 of the Belgian Companies' Code, the condensed statutory standalone financial statements of Mithra Pharmaceuticals SA are presented. These condensed statements have been drawn up using the same accounting principles for preparing the complete set of statutory financial statements of Mithra Pharmaceuticals SAat and for the year ending 31 December 2018 in Belgian GAAP.
The statutory auditor, BDO Réviseurs d'entreprises, has issued a clean audit opinion on the statutory financial statements as at 6 April 2019.
The management report, the statutory financial statements of Mithra Pharmaceuticals SA and the report of the statutory auditor will be filed with the appropriate authorities and are available at the Company's registered offices.
| Thousands of Euro (€) | ||
|---|---|---|
| Assets as at (in K EUR) | 2018 | 2017 |
| Fixed assets | 90,319 | 88,817 |
| Intangible fixed assets | 2,322 | 3,309 |
| Tangible fixed assets | 1,547 | 1,558 |
| Financial fixed assets | 86,450 | 83,950 |
| Current assets | 169,719 | 88,623 |
| Receivables | 973 | - |
| Amounts receivable | 40,356 | 57,066 |
| Inventory | 11,067 | 4,207 |
| Current investments | - | - |
| Cash at bank and in had | 117,202 | 27,038 |
| Deferred charges and accrued income | 121 | 312 |
| Total assets | 260,039 | 177,440 |
| Thousands of Euro (€) | ||
| Liabilities as at (in K EUR) | 2018 | 2017 |
| Equity | 190,423 | 127,307 |
| Capital | 27,556 | 25,599 |
| Share premium account | 226,922 | 151,379 |
| Reserves | 598 | 598 |
| Accumulated profits (losses) | (64,653) | (50,269) |
| Grants | - | - |
| Provisions | 266 | 266 |
| Amounts payable after more than one year | 4.905 | 3,811 |
| Current liabilities | 64,445 | 46,057 |
| Short term debts | - | - |
| Short term portion of LT debts | 600 | 650 |
| Amounts payable within one year | 63,825 | 45,407 |
| Deferred charges and accrued income | 20 | - |
| Total Liabilities | 260,039 | 177,440 |
| Thousands of Euro (€) | ||
|---|---|---|
| Summary income statement (in K EUR) | 2018 | 2017 |
| Operating income | 72,124 | 51,740 |
| Turnover | 49,793 | 49,630 |
| Capitalised production | 2,294 | - |
| Other operating income | 20,038 | 2,109 |
| Operating charges | 87,135 | 69,435 |
| Cost of goods sold | 8,229 | 8,711 |
| Services and other goods | 71,069 | 53,193 |
| Remuneration, social security costs and pensios | 3,838 | 3,859 |
| Depreciations of and amounts written off formation expenses, intangible and tangible fixed assets |
3,924 | 3,464 |
| Other operating charges | 88 | 208 |
| Operating profit | (15,011) | (17,696) |
| Financial result | 455 | 654 |
| Financial income | 748 | 1,263 |
| Financial charges | 293 | 609 |
| (Profit) loss for the year before taxes | (14,556) | (17,041) |
| Taxes | 171 | 216 |
| Profit (loss) for the period available for appropriation | (14,384) | (17,257) |
| Thousands of Euro (€) | ||
| Capital statement (in K EUR) | 2018 | 2017 |
| A. Capital | ||
| 1. Issued capital | ||
| - At the end of the previous year | 25,599 | 22,790 |
| - Changes during het year | 1,956 | 2,809 |
| - At the end of this year | 27,556 | 25,599 |
| 2. Capital representation | ||
| D. Autorised capital not issued | ||
|---|---|---|
| C. Commitmentes to issue shares | ||
| B. Own shares held by | N/A | N/A |
| - Bearer and dematerialised | 37,639,495 | 34,967,0 81 |
| 2.1 Shares without par value | ||
| 2. Capital representation |
Mithra decided to use some alternative performance measures (APMs) that are not defined in IFRS but that provide helpful additional information to better assess how the business has performed over the period. Mithra decided to use REBITDA and EBITDA in order to provide information on recurring items, but those measures should not be viewed in isolation or as an alternative to the measures presented in accordance with IFRS.
EBITDA is an alternative performance measure which represents Earnings before financial income and expense, tax, amortisation, depreciation and impairment, share-based payment expense and changes in fair value of contingent consideration payable.
REBITDA is an alternative performance measure which represents EBITDA adjusted for non-recurring expenses and EBITDA from discontinued operations.
Refer to note on Financial Highlights and table below for the reconciliation to operating loss:
| Year ended 31 December | ||
|---|---|---|
| Thousands of Euro (€) | 2018 | 2017 |
| Operational profit (from continuing activities) | 14,188 | (26,534) |
| Depreciation | 2,851 | 2,655 |
| Exceptional results | - | 372 |
| Share-based payments | 1,181 | 1,020 |
| REBITDA | 18,221 | (22,487) |
| Discontinued EBITDA | 21,269 | 5,081 |
| Share-based payments | (1,181) | (1,020) |
| EBITDA | 38,308 | (18,426) |
Rue Saint-Georges 5 4000 Liège Belgium +32 4 349 28 22 [email protected]
www.mithra.com
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