Vivesto — Annual Report 2011

Aug 25, 2011

ANNUAL REPORT May 2010 - April 2011

Oasmia Pharmaceutical AB (publ)

The year in brief3
Quarterly data4
Five-year highlights5
The share6
Description of operations8
Oasmia Human Health11
Oasmia Animal Health 16
The company 19
Board of Directors21
Management22
Auditors23
Administration report24
Financial statements34
Notes to the financial statements40
Proposal for allocation of non-restricted equity56
Signing of the annual report 56
Audit report57
Annual General Meeting 2011 58
Contact information59
History 60
Glossary61

The year in brief

Operations

Over the past fiscal year, Oasmia took important steps closer to the market. Registration applications were submitted in the EU and the USA for the first product candidate, Paccal® Vet, for the treatment of mastocytoma in dogs. The applications were submitted in August 2010 and are currently under review by government agencies. No word on approval has been received as of yet.

During the fiscal year, there was extensive ramping up of the production facility in Uppsala. The facility is primarily intended for the manufacture of Oasmia drugs for clinical trials. It can also be used for the production of drugs intended for sale on the market, but only in a small scale. Production at this facility is part of the applications for Paccal® Vet.

To be able to supply the market with larger volumes of both Paccal® Vet and other products, Oasmia entered into a contract manufacturing agreement with Baxter Oncology in March 2011. Production of Paccal® Vet will later be transferred to Baxter Oncology. For Oasmia's second product candidate, Paclical®, production via Baxter Oncology will be included in the registration application. From a production standpoint, Paccal® Vet and Paclical® are the same product, which provides benefits in manufacturing.

The international Phase III study on ovarian cancer continued during the year. In the study, the company's pharmaceutical candidate Paclical® was compared with the well-known drug Taxol®. The study includes about 80 cancer clinics in 16 countries and is expected to include 650 patients. The first patients were included in the study in early 2009 and as of April 2011, the enrollment was nearly complete.

No new licensing and distribution agreements were entered into during the fiscal year but in May 2011 one agreement was signed for Paclical® in Israel and Turkey.

Listings on the stock exchange

During the fiscal year, the Oasmia share was taken up for listing on two stock exchanges; NASDAQ OMX Stockholm in June 2010 and the Frankfurt Stock Exchange in Frankfurt in January 2011.

Financing

At the end of 2010, the company carried out a fully underwritten share issue with preferential rights for current shareholders for MSEK 239. After the issue, all interest-bearing loans were paid off and the company retained its debt-free status as of the end of the fiscal year.

In July 2010, a Standby Equity Distribution Agreement (SEDA agreement) was entered into with YA Global Master SPV Ltd. With the agreement, YA Global undertakes to supply up to MSEK 75 through the purchase of newly issued Oasmia shares over a period of 36 months from the date of the agreement. No such issue occurred during the past fiscal year.

Board of Directors

At the Annual General Meeting of September 2010, Björn Björnsson was elected as new board member, expanding the Board to five members. In February 2011, Björn Björnsson was appointed as the new Chairman of the Board following Bo Cederstrands indication that he wanted to step down from that position. Bo Cederstrand remained a member of the Board. Peter Ström, who has been a member of the Board since 2006, was also appointed Deputy Chairman.

Quarterly data

The Group

		Q 1	Q 2	Q 3	Q 4	Full year
TSEK (if not otherwise stated)		May-July	Aug-Oct	Nov-Jan	Feb-Apr	May-Apr
Net sales	2010/11	42	0	64	0	106
	2009/10	24 657	253	326	5 505	30 741
Capitalized development cost	2010/11	20 017	18 896	26 846	20 291	86 049
	2009/10	24 438	20 331	14 864	21 010	80 643
Operating expenses	2010/11	-31 302	-34 801	-42 477	-42 200	-150 778
	2009/10	-38 471	-29 303	-26 870	-31 703	-126 345
Operating income	2010/11	-11 216	-15 832	-15 542	-21 764	-64 353
	2009/10	10 624	-8 719	-11 679	-5 187	-14 961
Income for the period	2010/11	-12 090	-16 729	-15 628	-21 513	-65 960
	2009/10	9 386	-9 365	-11 688	-5 387	-17 054
Earnings per share, SEK*	2010/11	-0,31	-0,44	-0,33	-0,41	-1,50
	2009/10	0,27	-0,26	-0,31	-0,14	-0,47
Weighted average number of shares, in
thousands*	2010/11	38 403	38 403	47 620	52 079	44 061
	2009/10	34 438	35 590	37 830	38 403	36 550
Equity per share, SEK*	2010/11	3,38	2,94	6,06	5,65	5,65
	2009/10	2,05	3,22	3,83	3,69	3,69
Equity/assets ratio, %	2010/11	67	52	93	92	92
	2009/10	53	82	87	79	79
Net liability	2010/11	41 428	74 209	-91 041	-51 895	-51 895
	2009/10	24 130	-3 737	-17 054	9 467	9 467
Debt/equity ratio, %	2010/11	32	66	-	-	-
	2009/10	34	-	-	7	7
Number of employees at the end of the
period	2010/11	69	70	72	68	68
	2009/10	56	60	58	64	64

*Recalculation of historical values has been made with respect to capitalization issue elements in the rights issue carried out in the second quarter of 2009/10 and the third quarter of 2010/11.

Five-year highlights

The Group

TSEK (if not otherwise stated)	2010/11	2009/10	2008/09	2007/08	2006/07
Net sales	106	30 741	79 357	71 158	22 387
Capitalized development cost	86 049	80 643	36 057	9 675	14 484
Operating expenses	-150 778	-126 345	-122 794	-85 754	-47 856
Operating income	-64 353	-14 961	-7 156	-4 855	-10 986
Income for the period	-65 960	-17 054	-7 105	-5 067	-11 752
Earnings per share, SEK*	-1,50	-0,47	-0,21	-0,15	-0,36
Weighted average number of shares, in
thousands*	44 061	36 550	34 376	33 526	32 304
Equity per share, SEK*	5,65	3,69	1,78	1,89	2,13
Equity/assets ratio,%	92	79	63	74	79
Net liability	-51 895	9 467	25 844	4 109	-11 263
Debt/equity ratio,%	-	7	42	6	-
Number of employees at the end of the
period	68	64	55	40	29

*Recalculation of historical values has been made with respect to capitalization issue elements in the rights issue carried out in the second quarter of 2009/10 and the third quarter of 2010/11.

The share

The Oasmia share has been listed on NASDAQ OMX Stockholm since June 2010 and on the Frankfurt Stock Exchange since January 2011.

Share price development (all figures regard the fiscal year May 1, 2010 - April 30, 2011) In Stockholm, the highest price paid during the year was SEK 26,76 (May 4, 2010) and the lowest price paid was SEK 11,60 (February 23, 2011). The company's year-end market value was MSEK 716.

Short name
NASDAQ OMX Stockholm	OASM
Frankfurt Stock Exchange	OMAX

Share capital

The number of shares is 52 079 341. Each share has a quota value of SEK 0,10 and share capital amounts to SEK 5 207 934.10. According to the Articles of Association, the share capital must amount to at least SEK 3 350 000 and at most SEK 13 400 000 distributed over at least 33 500 000 shares and at most 134 000 000 shares.

Share capital development

Year	Event	Quota value	Increase in the number of shares	Increase in share capital (SEK)	Total number of shares	Total share capital (SEK)
1988	Foundation	100,00	500	50 000,00	500	50 000,00
1999	New share issue1	100,00	500	50 000,00	1 000	100 000,00
1999	Split	0,10	999 000	-	1 000 000	100 000,00
1999	New share issue1	0,10	30 000 000	3 000 000,00	31 000 000	3 100 000,00
2006	New share issue1	0,10	851 310	85 131,00	31 851 310	3 185 131,00
2007	New share issue1	0,10	1 523 690	152 369,00	33 375 000	3 337 500,00
2008	New share issue1	0,10	125 000	12 500,00	33 500 000	3 350 000,00
2009	Preferential rights issue	0,10	2 392 858	239 285,80	35 892 858	3 589 285,80
2009	New share issue2	0,10	1 720 000	172 000,00	37 612 858	3 761 285,80
2010	Preferential rights issue	0,10	14 466 483	1 446 648,30	52 079 341	5 207 934,10

¹Private placement for Alceco International S.A. (formerly Oasmia S.A.)

²Private placement to a limited group of institutional actors and other large investors

Shareholders

The company had 2 988 shareholders as of April 30, 2011. The ten largest shareholders in Oasmia are listed in the table below.

Shareholder	Number of shares and votes (%)
Alceco International S.A.	55.71
Avanza Pension	4.32
Svenska Handelsbanken S.A.	2.49
Briban Invest AB	2.01
Nordnet Pensionsförsäkring AB	1.57
Banque Öhman S.A.	1.33
Banque Carnegie Luxembourg S.A.	1.24
Christer Ericson (private and company)	1.12
SEB S.A.	0.93
SIX SIS AG	0.86
Others	28.42

Principal owner

Alceco International S.A. (previously Oasmia S.A.) is a holding company based in Luxembourg, which is owned and controlled by Bo Cederstrand and Julian Aleksov. Alceco International S.A. conducts no business; it is only responsible for financial management.

About the Oasmia share and shareholder rights

company shares are c Euroclear manages the company share register. The shareholders do not receive any physical share certificates, and transactions with the shares are made electronically by registration in the Euroclear system by authorized banks and other securities companies. All shares are denominated in SEK. The shares are regulated by the sions of this law. One share entitles to one vote at the Annual General Meeting. Shareholders have the right to vote to assets and profits and can freely be transferred. In accordance with the Companies Act (2005:551), shareholders have preferential rights to share subscription in new share issues, subscription options, and convertibles, but these preferential rights can be bypassed after a resolution at a General Meeting. The shares in Oasmia are not subject to compulsory offers, redemption rights or purchase obligation. No public offers have been made with respect to the company shares in the current or previous fiscal year.

Dividend

The company has not paid any dividend to date. As Oasmia will be in a phase involving development of the company's product portfolio in upcoming years, any surplus capital will be invested in operations.

Description of operations

Business concept

Oasmia's business concept focuses on developing novel formulations of well-established cytostatics that have better properties, a milder side-effect profile and a broader area of use than existing alternatives.

Examples of existing cytostatics are pharmaceuticals based on paclitaxel, docetaxel, doxorubicin, gemcitabine or carboplatin. For some time the market for cytostatics has been dominated by a small number of large pharmaceutical companies. During their period of market exclusivity, the previously patented products enjoyed sales of several billion USD or EUR. The patents for a number of drugs have now expired and generic copies have claimed a large percentage of sales.

Oasmia assesses that there is considerable scope for novel formulations of existing cytostatics. Novel formulations have the potential for administration in higher doses with the same and/or improved side-effect profiles. The company believes that physicians who are presented with this type of therapy alternative will extensively choose this alternative.

Strategy

Oasmia operates in both the veterinary medicine and the human medicine fields, providing synergy effects in several areas. For example, it generates additional revenue opportunities and reduces financial risks.

The synergy effects within clinical development occur primarily at an early stage. One step in the development of human products is to conduct studies on animals in order to investigate the safety of the product candidate. Such animal studies can serve as the basis for approval in veterinary medicine, while data from the studies can be used as the basis for studies on humans. Furthermore, genetic similarities between humans and dogs can be used to predict the effect and safety of the new pharmaceutical.

Synergy effects also occur in production. Oasmia can ensure that the production process is the same for both areas (provided that the substance is the same). This means that the same production facility and equipment can be used, which provides scale benefits. In addition, the same production documentation can be used for applications in both veterinary and human medicine.

One effect of working with well-known substances is that the company may use the extensive documentation already available on these compounds. This documentation includes methods of analysis, description of the metabolism and breakdown products, environmental impact, regulations for handling and other regulatory documentation. For Oasmia, this means that the development time can be shortened.

Business model

Oasmia's business model is based on running projects under its own auspices up until the time of registration, and then licensing out sales and marketing rights to regional or multinational partners for sales-based royalties and milestone payments. Large-scale commercial production is handled by contract manufacturers.

This model entails that Oasmia does not intend to establish any marketing and sales organisation. Such functions are instead handled by company partners. Agreements with contract manufacturers entail that Oasmia has free access to high-quality facilities that have undergone many official inspections and fulfil all requirements. This enables Oasmia to focus on the core business, in other words pharmaceutical development.

The point in time when licensing and distribution agreements are concluded with business partners depends primarily on the development stage of the product candidate and the market situation.

When it comes to choice of partner, the following criteria are particularly important:

• Market knowledge
• Company size
• Willingness to invest

Oasmia's model for profitability is based on gross royalties from licensees, own control over product costs, and ensuring that the resulting net royalty is sufficiently high. The company seeks to achieve gross royalties of about 40% of the licensee's net sales, while product costs should not exceed 15%. This must generate a net royalty of at least 25%. All existing agreements are in line with these conditions.

Production

Oasmia has a permit from the EMA to manufacture Paclical® and Paccal® Vet for clinical trial. In March 2011, the company entered into an agreement with Baxter Oncology in Germany for contract manufacturing of Paclical® and Paccal® Vet. Oasmia will initially handle the commercial manufacture of Paccal® Vet itself, but will gradually transfer the technique and methods to Baxter. Commercial manufacturing of Paclical® will be handled by Baxter. Final labelling, packing and distribution to licensees will be carried out at the company's own premises. The agreement with Baxter can be expanded to include additional product candidates in Oasmia's product portfolio.

production facility in Uppsala.

During the fiscal year, the company's facility for handling the initial market supply of Paccal® Vet was completed. Systems for water for injection (WFI) and clean steam were installed, along with a reactor for chemical synthesis. New quality assurance systems were also implemented.

Platform XR-17

product portfolio within oncology is a group of unique, patented substances. These -17. The platform comprises a combination of semi-synthetic retinoids that have the capability to increase the solubility of highly insoluble substances. The combination between XR-17 and the active ingredient results in new drugs, with the difference that the active substances in these drugs are well documented and known.

XR-17 is a non-toxic platform that can create micelles of nano size in water solutions, for example Ringer solution, together with an active substance. XR-17 can act as a surfactant and make it possible for hydrophobic cytotoxic substances to pass through the cell membrane.

Toxic excipients that are currently used in pharmaceuticals, for example cytostatics, can be replaced with XR-17. The advantages for the patient include an improved side-effect profile and shorter care time after treatment.

All of Oasmia's pharmaceutical candidates are based on XR-17. The company's most critical patents are global and extend to 2023. Further patent applications have been submitted to protect Oasmia's technology and novel formulations. This means that patent protection can be extended to 2028.

Oasmia Human Health

Positive development in cancer care

Over the years, the chances of surviving cancer have improved significantly. Preventive measures to discover cancer at an early stage, together with improved diagnosis methods and more effective treatments are factors that have a positive impact on survival rates. For example, the relative survival rate for men has more than doubled in the last 35 years, from 30% to 67%, while the rate for women has increased from 42% to 67%.¹

Cancer the second most common cause of death

Millions of people around the world are affected by some form of cancer each year. The disease is the second most common cause of death in industrialized countries (second to cardiovascular disease) and the third most common cause of death in developing countries. Globally, cancer accounts for every one out of eight deaths and about 20 000 people die from cancer each day.²

On a global basis, the incidence of cancer was estimated at 12,4 million in 2008.³ Each year, more than 50 000 new cases of cancer are diagnosed in Sweden. In 2009, there were 54 611 new cases of cancer.

In 2010, an estimated 1,5 million people were diagnosed with cancer in the USA. About 22 000 of these, about 3 percent of the women affected, were diagnosed with ovarian cancer.⁴ In 2002, 204 000 new cases of ovarian cancer were diagnosed globally.⁵

The most common cancers

The five most common diagnoses of cancer in the world are lung cancer, breast cancer, colorectal cancer, stomach cancer and prostate cancer.⁶

Swedish Cancer Society Report 2011, Swedish Cancer Society

Swedish Cancer Society Report 2011, Swedish Cancer Society

³ WHO, International Agency for Research on Cancer, World Cancer Report 2008

⁴ American Cancer Society, 2010

⁵ World Cancer Report 2008, International Agency Research on Cancer, WHO

⁶ Swedish Cancer Society Report 2011, Swedish Cancer Society

Continued growth in oncology

The market for oncologic treatment (all types of treatment given to fight a cancer disease) has grown by 16% per year between 2000 and 2008 and is expected to continue to grow by over 10% per year up to 2015, when the world market is expected to reach USD 100 billion.⁷

⁷ GBI Research: The future of oncology therapeutics Market forecasts to 2015

Market drivers⁸

There are a number of factors indicating that the cancer treatment market will continue to grow in coming years. At the same time, there are several factors indicating the opposite. A selection of some central factors that may affect development is presented below.

Treatment

Cancer can be treated with methods such as surgery, radiation therapy or cytostatics (chemotherapy). The most desirable is to be able to remove all tumor tissue with a surgical procedure. However, this may be difficult or even impossible if the disease spreads to other organs. Cancer treatments have developed and improved over time.

Taxanes

Taxanes is a pharmaceutical group of cytostatics (cytotoxins). The drugs used most contain the active substance paclitaxel (a natural substance obtained from yew trees) or docetaxel.

Paclitaxel and docetaxel are used to treat several forms of cancer, such as non-small cell lung cancer (NSCLC), breast cancer, prostate cancer and ovarian cancer. Both paclitaxel and docetaxel can be administered in combination with other cytotoxins and/or other drugs that reduce tumor aggressiveness. The current recommended treatment for ovarian cancer is paclitaxel in combination with platinum.

The patents for paclitaxel (Taxol®) and docetaxel (Taxotere®) have expired. As a result, generics are continually being launched and product development is underway, primarily in the form of improved excipients that produce a more favorable side effect profile.

The taxane market in the USA, EU-5 and Japan was valued at about USD 4,2 billion in 2009.⁹

⁸ GBI Research: The future of oncology therapeutics Market forecasts to 2015

⁹ Oasmias's calculation

Competition - taxanes

The taxane market consists of a small number of major players as well as companies producing paclitaxel and docetaxel based generics.

Taxol® (Bristol-Myers Squibb)

Introduced in the USA in 1992, in the EU in 1995 and in Japan in 1997. Active substance is paclitaxel. The patent has expired and generic versions are out on the market.

Abraxane® (Celgene)

Introduced in the USA in 2005. Active substance is paclitaxel. Patent protected until 2013.

Taxotere® (Sanofi-Aventis)

Introduced on the market throughout the world in 1996. Active substance is docetaxel. The patent has expired in the USA and the EU and generic versions are out on the market.

Anthracyclines

In addition to taxanes, there is another group of pharmaceuticals of great interest to Oasmia; anthracyclines. The most commony used anthracycline is doxorubicin. The substance is available in two different formulations; doxorubicin and liposomal doxorubicin. The substance is made by a fungus (Streptomyces), which has been used for decades for several indications.

Competition - anthracyclines

The anthracycline market consists of a small number of major pharmaceutical companies as well as companies manufacturing generics.

Adriamycin®

Well-known brand introduced in the 1970s. Active substance is doxorubicin. The patent has expired and market players are now generic companies, such as Teva.

Doxil®/Caelyx® (Johnson & Johnson)

Introduced in the 1990s. Active substance is doxorubicin in a liposomal formulation. The product is patent protected (applies from 1995 with extension 2000) and is marketed through two brands; Doxil® and Caelyx®.

Strategy

Oasmia will develop novel formulations of existing cytostatics for cancer treatment, with improved safety and/or efficacy, leading to an improved quality of life for the patient. Our strategy is to replace existing cytostatics by demonstrating improved safety and/or efficacy.

The introduction of Abraxane® was a breakthrough for nanoparticle-based products. The company predicts that Celgene and Oasmia will be the players which will replace a few of the cytostatics current available on the market. There may be an introductory advantage for Oasmia because of the fact that nanoparticle based product Abraxane® has been audited by the regulatory authorities in the EU and USA.

usage to other indications for which the cytotoxin in question is an approved treatment. For this purpose, the company is conducting a study aimed at showing similarities between Paclical® and other products based on paclitaxel.

Product candidates

Paclical®

The product candidate is a novel formulation with the well-known substance paclitaxel. Paclitaxel inhibits cell division by stabilizing microtubules (a part of the cell). This is an anticancer substance within human medicine and is found in e.g. Taxol®/generics. Paclitaxel is approved for several indications, including ovarian cancer, breast cancer and non-small cell lung cancer.

Paclitaxel is practically insoluble in water. Cremophor® EL (polyethoxylated castor oil) and ethanol are used as solvents for paclitaxel in, for example, Taxol® and this may cause hypersensitivity reactions. In Oasmia's formulation, paclitaxel has been made water soluble by the properties of the excipient XR-17. Paclitaxel and XR-17 forms nanoparticle-sized micelles in an aqueous solvent. Paclical® is Cremophor® EL-free and therefore the patients do not need to be premedicated to avoid hypersensitivity reactions. Other advantages of Paclical® are shorter infusion times and the ability to administrate in higher doses.

Paclical® is designated as an orphan drug by the EMA and FDA. Orphan drug designation can be obtained for medicinal products intended for rare, life-threatening or seriously health-impairing disease as regards treatment, prevention and diagnosis. This status gives Oasmia regulatory and financial advantages, such as protocol assistance and market exclusivity.

Abraxane® is the main competitor for Paclical®, but is also the Cremophor® EL free formulation that paved the way for Paclical®.

Approved standard treatment with paclitaxel, both as Taxol®/generics and as Abraxane®, is treatment every three weeks. However, there is ongoing research on methods to treat each week with lower doses. The reason for wanting to administer paclitaxel on a weekly basis is that a lower dose means fewer side effects and even better efficacy for certain indications.

Doxophos®

The product candidate is a novel formulation with doxorubicin, one of the most effective and most utilized substances for cancer treatment. The complete mechanism for doxorubicin's anticancer effect is not clear. However, it is likely that doxorubicin binds to DNA and thereby causes the cytotoxic effects that block the enzymatic system, which is vital to DNA replication and DNA transcription. Doxorubicin is currently used for the treatment of approximately 20 different cancer forms, such as breast cancer, glandular cancer, bladder cancer and acute leukemia.

Although the drug has high efficacy, it has a relatively narrow therapeutic window due to a number of serious side effects that limit its usage. The most serious side effect is chronic cardiac insufficiency. Oasmia's formulation with XR-17 is expected to have a good possibility of mitigating the side effect profile of doxorubicin. In Doxophos®, doxorubicin is formulated with XR-17 in nanoparticles at a size of 30-40 nanometers. These nanoparticles have been developed to optimize the therapeutic potential. Preclinical studies indicate that Doxophos® produces fewer cardiac effects.

Oasmia's first step in the development of Doxophos® is to determine the maximum tolerated dose when Doxophos® is given each week and every third week, respectively. The study is expected to start in the autumn. The pharmaceutical candidate will be developed in a human and/or a veterinary project if it can be verified that Doxophos® shows reduced cardiac effects compared to conventional doxorubicin, or if other advantages can be shown.

Docecal®

The product candidate is a novel formulation with the taxane docetaxel, which is structurally similar to paclitaxel and prevents mitosis in a similar manner. The patent on docetaxel (Taxotere®) recently expired. Docetaxel is approved for several indications, including breast cancer, lung cancer, prostate cancer and head and neck cancer. The substance is poorly soluble in water, but has been made water soluble with the help of XR-17. When Docecal® is dissolved in water, XR-17 forms micelles with docetaxel. The product is expected to have the same benefits as Paclical®.

Partners

Medison Pharma has acquired the licensing and distribution rights to Paclical® in Turkey and Israel. Medison Pharma specializes in niche drugs and has a number of strong partners.

Orion Corporation, Finland, owned marketing and distribution rights to Paclical® in the Nordic countries until August 2011, when the contract was terminated and all rights went back to Oasmia.

The year in review

Oasmia continues to recruit patients to the international clinical Phase III study in which women suffering from ovarian cancer are treated with Paclical® or the comparator Taxol®, both in combination with the pharmaceutical carboplatin. Paclical® is given at a dose of 250 mg/m² and Taxol at a dose of 175 mg/m² . The study is expected to include 650 patients. The recruitment is in the final stage and is expected to be completed soon. In August, Oasmia published an interim analysis of the study showing that Paclical® did not have less effect than Taxol®. The analysis included 400 patients. Standard treatment for ovarian cancer is currently Taxol® in combination with carboplatin.

During the year, a pharmacokinetic study was concluded. The study compared paclitaxel concentrations in the blood plasma when it is given as Paclical® and Taxol®, under identical conditions. The work on the study report is in progress and the results will be published in a scientific journal.

Oasmia Animal Health

There are currently approximately 140 million dogs in the USA, EU and Japan.¹⁰ The number of dogs is growing at the same pace as the number of inhabitants in these countries. An important reason behind the increase is of a social nature, since dogs are often considered an extra member of the family.

The world market for pharmaceuticals for pets amounts to about USD 7 billion. The largest percentage of this consists of human drugs used outside of the approved indication.¹¹ Pharmaceuticals for dogs represent almost one-third of this market.¹²

Many dogs are affected by cancer

Cancer is a common disease in dogs. The frequency of cancer in dogs increases with age, just like in humans. Approximately 45% of all dogs over ten years old die from cancer. Counting dogs of all ages, one out of four dogs dies from cancer. 13

Treatment

Common treatment methods are surgery, pharmaceuticals (including cytostatics) and radiation therapy. When it comes to cytostatic treatment, there are few registered cytostatics for the treatment of dogs. Thus, drugs intended for humans are used.

Market drivers¹⁴

The size and growth of the market for oncological treatment for pets is affected by several factors. Some of the most central factors are:

¹⁰ Tuft University E-news, Nick Dodman 2009

¹¹ Oncology Insight, February 2008, Vetnosis Ltd

¹²

¹³ Abbott Animal Health

¹⁴ Oncology Insight, February 2008, Vetnosis Ltd

Competition

The veterinary market is still at an early stage when it comes to cancer treatment and is thereby difficult to assess. Currently, there are two cancer drugs registered for the treatment of mastocytoma in dogs; Masivet® and -called protein kinase inhibitors. The use of these pharmaceuticals is limited due to the fact that tumors have to show a specific mutation in order for the treatment to be effective.

Masivet® (AB Science)

AB Science is a French pharmaceutical company whose only registered product at present is Masivet®. The product was registered with the EMA for the indication mastocytoma in November 2008.

Pfizer is one of the largest pharmaceutical companies in the world. Palladia was registered with the FDA for the indication mastocytoma in June 2009.

Strategy

Oasmia will develop cytostatics for treatment of cancer in dogs, which is the pet that pet owners give the highest priority for medical treatment. Mastocytoma and lymphoma are incontestably the most common diagnoses in dogs and together account for close to 50% of all cancers in dogs. Oasmia will develop cytostatics for these two cancer types.

In order to be competitive Oasmia must:

• Register products that represent a clinical advantage.
• Replace the use of cytostatics that are only approved for treatment of humans with approved veterinary products.
• Position products as complements to surgery and radiotherapy.

Product candidates

Paccal® Vet

Until now, it has been impossible to give paclitaxel to companion animals (especially dogs) due to the serious side effects caused by the excipient Cremophor® EL. In earlier studies of dogs with various tumor diseases, Taxol® (a formulation with Cremophor® EL) caused serious allergic reactions in 64% of the dogs treated.¹⁵ These reactions occurred despite use of an extremely slow infusion rate (up to six hours) and rigorous premedication with antihistamines and corticosteroids to prevent hypersensitivity reactions. Twelve percent of the dogs died due to the medication.

Paccal® Vet does not cause the hypersensitivity reactions associated with conventional paclitaxel formulations and Oasmia aims to register the first paclitaxel preparation for the veterinary market.

In Oasmia's formulation, paclitaxel has been made water soluble through the properties of the excipient XR-17. In a water solution, XR-17 forms nanoparticle sized micelles with paclitaxel. Paccal® Vet is Cremophor® EL-free and therefore the dogs do not need to be premedicated to avoid hypersensitivity reactions. With Paccal® Vet, it will be possible for the veterinarian to treat dogs with paclitaxel, which previously could not be used due to the side effect profile.

The initial Phase III study was performed on 29 dogs with mastocytoma of type II and III that were treated with Paccal® Vet. The results showed that the treatment was effective for over 70% of the dogs. Mastocytoma is one of the most common forms of cancer in dogs.

Doxophos® Vet

The product candidate is a novel formulation with doxorubicin, a very effective and well-used substance for the treatment of various cancer forms within veterinary medicine. The complete mechanism behind the cytotoxic

¹⁵ Poirier VJ, Hershey AE, Burgess KE, Phillips B, Turek MM, Forrest LJ, Beaver L, Vail DM. J

Vet Intern Med. 2004 Mar-Apr;18(2):219-22

effect is not known. However, it is generally accepted that doxorubicin binds to DNA and thereby hinders the enzymatic system, which is vital to DNA replication and DNA transcription.

Within veterinary medicine, doxorubicin is used for the treatment of lymphoma, malignant melanoma, leukemia, sarcoma and solid tumours, for example. Unfortunately, treatment with doxorubicin causes the incurable and fatal heart disease cardiomyopathy if too high a cumulative dose is given. In pre-clinical studies on rats, treatment with Doxophos® Vet has indicated that the dynamic alterations concerning cardiac side effects were less than conventional preparations of doxorubicin.

Partners

The rights to Paccal® Vet have been licensed to Orion Corporation in Europe, Abbott Laboratories in the USA/Canada and Nippon Zenyaku Kogyo in Japan.

The year in review

In autumn 2010, Oasmia concluded the analysis and processing phase of a clinical, randomized, multicenter, Phase III study on dogs suffering from mastocytoma (skin cancer). The study was conducted in five countries at 24 centers, of which five centers were located in Europe and 19 in the USA. The study included 249 dogs suffering from mastocytoma. All dogs had a measurable disease that could not be treated surgically. In the study, the efficacy of the test preparation Paccal® Vet was compared to the pharmaceutical lomustine, a humanregistered cytostatic that is currently used within veterinary healthcare. Lomustin has previously been reported as effective on mastocytoma in dogs.

The results of the study showed significantly better efficacy and similar frequency of side effects. Also, the negative impact on the liver function was significantly lower in dogs treated with Paccal® Vet than in dogs treated with lomustine.

The market approval application was submitted to the American and European pharmaceutical authorities in the autumn of 2010. The company is maintaining an open dialogue with the authorities and answers questions as they are received.

In 2010, a pilot study designed to establish the dose and investigate the pharmacokinetic profile of Doxophos® Vet in dogs was completed. The study showed that Doxophos® Vet could be administered in a somewhat higher dose compared to what is currently used.

The company

Employees

As of April 30, 2011, Oasmia had 68 employees, most of them in production, quality assurance and quality control. During the fiscal year, the company has strengthened the workforce within several departments.

Number of employees by department (as of April 30, 2010)

CEO	1
Research & development	8
Production	31
Clinical development	6
Regulatory affairs	5
PR & communications	3
Logistics & procurement	4
Finance & legal	5
Administration	5
Total	68

Experience and education

Most employees have an academic degree and experience in industrial pharmaceutical development. The company also has employees with extensive experience in regulatory affairs, which is crucial for obtaining necessary regulatory approvals.

Organization

Board of Directors

Björn Björnsson (born 1946)

Member since 2010. Chairman since 2011. Also Chairman of the Board in, for instance, Bure Equity AB and Skrindan AB. Member of the Board in, for instance, Carnegie Investment Bank and Max Matthiessen AB. Has during the last five years worked as Chairman of the Board in Försäkringsaktiebolaget Skandia and Skanditek Industriförvaltning AB, as well as member of the Board, CEO and liquidator in Trustor AB. Share holdings: -

Peter Ström (born 1952) Member since 2006. Vice Chairman since 2011. Also member of the Board in Comtax AB, Lidds AB and Stockholm Corporate Finance AB. Share holdings: 218 886

Claes Piehl (born 1950)

Member since 2005. Also member of the Board in Alfaros Aktiebolag. Has during the last five years worked as a management consultant for PA Management Consulting and Indevo, for instance. Share holdings: 124 940

Bo Cederstrand (born 1939)

Chairman 2000-2011. Member since 2011. One of the founders of Oasmia. About 40 experience as CEO and partner in a number of small and mid-sized companies, mainly within trade. Has extensive experience in international business and production. Has been very active in the trade association context. Has during the last five years worked as member of the Board in the Arken-stores (ended) as well as deputy board member in Fruges AB (ongoing).

Share holdings: Private 126 000 Through company 29 028 685

Julian Aleksov (born 1965)

Member since 1999. CEO of Oasmia and one of the founders of the company. Has extensive experience in coordinating research projects and strategic development of global intellectual property. Also Chairman of the Board in Qdoxx Pharma AB and GlucoGene Pharma AB.

Share holdings: Private 148 650 Through company 29 028 685

Management

Julian Aleksov CEO Born: 1965 One of the founders of Oasmia Share holdings: Private 148 650 Through company 29 028 685

Hans Sundin Executive Vice President Born: 1945 Employed since 2008 Share holdings: 3 500

Weine Nejdemo Chief Financial Officer Born: 1948 Employed since 2009 Share holdings: Private 10 000 Through company 14 834

Annette Ljungmark Head of Accounting and Human Resources Born: 1950 Employed since 2005 Share holdings. -

Auditors

Ernst & Young AB Portalgatan 2 B Box 23036, 750 23 Uppsala, Sweden Tel +46 18 19 42 00 Fax +46 18 19 42 50

Principal auditor: Björn Ohlsson Born 1960 Authorized Public accountant and member of FAR SRS

Administration report

GENERAL INFORMATION

The Group comprises the Parent Company Oasmia Pharmaceutical AB and the subsidiaries Qdoxx Pharma AB and GlucoGene Pharma AB. The Parent Company is developing a new generation of pharmaceuticals within human and veterinary oncology. Both subsidiaries are mainly inactive.

At the commencement of the financial year the Oasmia share was listed on NGM Equity in Stockholm, but during the fiscal year instead became listed on NASDAQ OMX Stockholm and the Frankfurt Stock Exchange in Frankfurt, Germany.

BUSINESS ACTIVITIES DURING THE YEAR

Oasmia human health

Paclical®

The international Phase III study on ovarian cancer that began in February 2009 continued during the year. In the study, the company's pharmaceutical candidate Paclical® is compared with the well-known drug Taxol®. The study currently involves 87 clinics in 16 countries in Europe and the number of patients will be 650. It was expected that patient recruitment would be completed before the end of the financial year. It is now in the final stage.

Doxophos®

Doxophos® is a new patented formulation of doxorubicin, one of the most effective and most utilized active substances for cancer treatment. Doxorubicin is currently used for the treatment of 20 different types of cancer.

Docecal®

Docecal® is a new patented formulation of docetaxel (Taxotere®) with improved chemical characteristics compared to Taxotere®. Oasmia intends to focus on the same indications as Taxotere®, which are prostate cancer and breast cancer.

Licensing and distribution agreements

No new licensing and distribution agreements were entered into during the year for Human Health, but an agreement was concluded after the close of the financial year.

Oasmia animal health

Paccal® Vet

In August 2010, Oasmia submitted registration applications in the EU and the USA for Paccal® Vet for the treatment of mastocytoma in dogs. The registration documentation states that the product will be produced in the company year none of these approvals had been acquired.

Doxophos® Vet

Doxophos® Vet is intended for the treatment of lymphoma in dogs. Osamia has received approval from the pharmaceutical authorities in Germany and Austria for the commencement of a Phase I study.

Licensing and distribution agreements

Oasmia has already concluded licensing and distribution agreements for the key world markets. No further agreements were concluded during the year.

THE COMPANY

Agreement with Baxter Oncology for future commercial production

In March 2011, Oasmia entered into an agreement with Baxter Oncology to ensure the future large-scale commercial production of the company production of the product candidates Paccal® Vet and Paclical® for the global market. Paccal® Vet will initially be Halle, Westphalia, Germany. The cooperation with Baxter is a very important step The cooperation may important step in launching these products.

Stock-exchange listings

During the financial year the Oasmia share was listed on two stock exchanges and the company thus holds s in June 2010 on NASDAQ OMX Stockholm and the second was in January 2011 on the Frankfurt Stock Exchange, General products are intended for the world market and that listing in Frankfurt can attract international investors to the company. The co-sponsor in Frankfurt was Silvia Quandt & Cie. AG, together with biw Bank für Investments und Wertpapiere AG. Oasmia is the first Swedish company to be listed on the Frankfurt ordinary exchange (General Standard).

Issue authorization

At the Annual General Meeting 2010 it was decided to authorize the Board on one or more occasions during the to make a decision regarding a new share issue against cash payment and/or with a provision regarding in kind or offset or otherwise with terms in accordance with Chap. 13, Sect. 7 of the Companies Act, plus an issue of convertibles against cash payment and/or with a provision regarding in kind or offset or otherwise with terms in accordance with Chap. 15, Sect. 5 of the Companies Act. In the event of a deviation from the preferential right, the new shares and convertibles shall be issued at an amount that concurs with the share price at the time of implementing the new share issue, minus any market-related discount that the Board deems to be required.

The reason for the authorization is to facilitate the procurement of operating capital. The reason for deviating that it shall be possible to issue with the support of the authorization must not exceed 15 000 000. The total number of convertibles that it shall be possible to issue with the support of the authorization must not exceed more convertibles than entitle conversion to 15 000 000 shares. It is also proposed that the Board or the party the Board appoints for the task shall have the right to make the minor changes that may be brought about by the registration thereof with the Swedish Companies Registration Office or Euroclear Sweden AB.

Issue

At the end of 2010, Oasmia carried out a fully underwritten rights issue for approximately MSEK 239. The issue was for approximately 14.5 million shares and the subscription price was SEK 16.50 per share. Prior to the issue, there were 37,612,858 shares, and after the issue 52,079,341 shares.

Credit facilities

In February 2010, the principal owner, Alceco International S.A. (formerly Oasmia S.A.) made a further credit facility of MSEK 40 available to Oasmia Pharmaceutical AB. A previous credit facility from the principal owner for MSEK 60 was terminated in December 2010 and expired in March 2011.

SEDA agreement

In July 2010, the company entered into a Standby Equity Distribution Agreement (SEDA agreement) with YA Global Master SPV Ltd (YA Global), which is controlled by USA-based Yorkville Advisors LLC. The agreement entails that YA Global undertakes to supply up to MSEK 75 through the purchase of newly-issued Oasmia shares over a period of 36 months from the date of the agreement. No such issue took place during the past financial year.

FINANCIAL INFORMATION

Net sales

Net sales for the financial year amounted to TSEK 106 (30,741) and solely comprised the licensed prescription of pharmaceuticals. Unlike the previous year the Group had no license revenue.

Capitalized development cost

Capitalized development cost consists of the company TSEK 86,049 (80,643) for the year. Capitalized development costs per product candidate are disclosed in Note 6.

Operating expenses

The total operating expenses affecting cash flow amounted to TSEK 145,970 (122,667). Of these, 59% (66) were capitalized as Capitalized development cost. The ratio of capitalized development costs has decreased successively since Paccal® Vet was submitted for registration in August 2010.

The number of employees increased from 64 to 68 during the year and personnel expenses rose to TSEK 37,370 (29,413).

Research and development costs, including such personnel expenses, which are not capitalized, increased during the year to TSEK 35,105 (18,073).

The increase in operating expenses was generally attributable to the wider scope of preclinical studies, increased intensity of the Paclical® study, production development and increased personnel.

Income for the period

The income for the period for the financial year was TSEK -65,960 (-17,054). The decrease in income was due to the fact that no license revenue was received during the year (TSEK 28,421 for the previous year), the expansion that resulted in higher operating expenses, and a lower level of capitalized development costs.

The activities of the Group were not affected by seasonal variation or cyclical effects.

Cash flow and capital expenditure

The cash flow from operating activities amounted to TSEK -57,598 (-11,235) for the year. The change from the previous year consisted mainly of license revenues in the previous year and increased expenditure in operations.

Capital expenditure amounted to TSEK 98,663 (85,315) for the year, of which investments in intangible assets amounted to TSEK 88,342 (81,773), and investments in property, plant and equipment amounted to TSEK 10,321 (3,541). Investments in intangible assets consisted of capitalized development costs of TSEK 86,049 and patents of TSEK 2,292. Investments in property, plant and equipment concerned the production facility in Uppsala. During the financial year an extensive upscaling of the production facility was achieved.

Financing

Financing during the financial year was by an increase in loans up to the end of 2010 when a rights issue was undertaken. The cash element of the issue amounted to TSEK 148,328 after issue expenses. The remainder of the share issue, TSEK 70,000, was paid by the company Alceco International S.A., by offset of a claim on the company for a corresponding amount. After the share issue the company settled all interest-bearing loans.

Financial position

At the close of the financial year equity amounted to TSEK 294,171 (141,803). At the same time the equity/assets ratio was 92% (79) and the debt/equity ratio was 0% (7).

The consolidated liquid assets amounted to TSEK 51,895 (5,372) at the end of the financial year. At the same time existing credit facilities were TSEK 45,000 (65,000), of which the utilized element was TSEK 0 (14,839).

The Board of Directors assesses that liquid funds, unutilized credit facilities and the existing SEDA agreement are an adequate financing basis for the upcoming year.

The Parent Company

taxes was TSEK -65 998 (-18 401). The Parent TSEK 51,884 (5,320) at the end of the year. For information on employees, salaries and remuneration, see Note 11.

Key ratios and other information

For definitions see Note 33

	2010-05-01	2009-05-01
	-2011-04-30	-2010-04-30
Number of shares at the close of the period (in thousands) before and after dilution* Weighted average number of shares (in thousands) before and after	52 079	38 403
dilution*	44 061	36 550
Earnings per share, before and after dilution, SEK*	-1,50	-0,47
Equity per share, SEK*	5,65	3,69
Equity/assets ratio,%	92	79
Net liability, TSEK	-51 895	9 467
Debt/equity ratio, %	-	7
Return on total assets, %	neg	neg
Return on equity, %	neg	neg
Number of employees at the end of the period	68	64

*Recalculation of historical values has been made with respect to capitalization issue elements in the rights issue carried out in the second quarter of 2009/10 and the third quarter of 2010/11.

OTHER INFORMATION

The Oasmia share

At the close of the financial year SEK 5,207,934, distributed on 52,079,341 shares with a par value of SEK 0.10 per share. Each share carries one vote and all shares entail equal rights to a share of the company entitlement to attend the Annual General Meeting. The company is not part of any agreement that becomes effective, is modified or terminated if control of the company changes as a consequence of a public takeover bid. Oasmia has no knowledge of agreements between shareholders that could limit the right to transfer the shares. There are furthermore no provisions in the Articles of Association concerning the appointment and dismissal of members of the Board of Directors, or agreements between the company and members of the Board of Directors or employees that require them to receive compensation if they resign from their positions, are given notice of termination without reasonable grounds, or their employment is terminated as a consequence of a public takeover bid for the shares in the company.

As of April 30, 2011 the number of shareholders was approximately 3,000, which was a significant increase from approximately 1,800 shareholders one year before. The principal owner in voting terms was Alceco International S.A. with 55.7% of the votes and shares, followed by Avanza Pension with 4.3%. The ten largest owners together held 71.6% of the total number of votes and shares.

Legal issues

Oasmia is not, and has not during the past financial year, been involved in any legal disputes of significance to the company proceedings, or which could affect the company

Environmental activities

large quantities of chemicals are handled. The activities are subject to registration in accordance with regulation (1998:899) on environmentally hazardous activities and protection of health. The Environmental Office of Uppsala Municipality has made the assessment that there are no objections to the activities, subject to the condition that the activities are conducted in accordance with the information disclosed in the registration.

The impact of the company activities do not seep into the surroundings from ventilation systems or via sewage. The ventilation in the building laboratories is not connected to the general ventilation plant. The processes are closed to a high degree and residual chemicals and solvents are managed by Kemstationen, Uppsala Vatten & Avfall AB for final destruction and recycling.

The company fulfills the environmental requirements made and seeks to conduct its activities in a way which benefits sustainable development within the environmental area. In addition to complying with the norms, guidelines and regulations which govern the work, the company does its utmost to continuously improve the business by, for example, offering internal training within quality and the environment.

Employees

The average number of employees in the financial year was 66 (56). Of these, 37 (30) were women, and 29 (26) men. The number of employees at the end of the year was 68 (64). Salaries and remuneration amounted to TSEK 28,936 (22,788). For further information see Note 11.

Guidelines for remuneration to senior executives

Guidelines for the establishment of salaries and other remuneration for senior executives were adopted at the Annual General Meeting in 2010. They are disclosed below.

Salaries and other benefits

The remuneration of the CEO and other senior executives shall comprise a fixed salary. In addition to the fixed salary, no other remuneration or benefits shall be paid and no pension provisions shall be made.

Term of notice and severance pay

If notice is given by the company, the term of notice for the CEO will be at most 24 months. If notice is given by the CEO, the term of notice shall be at most six months. For other senior executives, the term of notice shall normally be six months if notice is given by the company and three months if notice is given by the executive. No separate severance pay shall be given.

Incentive programme

Decisions on possible share and share-price related incentive programmes aimed at senior executives shall be made by the General Meeting.

Remuneration committee

The Board of Directors has not established a remuneration committee. The Board considers that it can fulfil the duties which normally would be performed by a remuneration committee. The detailed principles for salaries concerning the CEO and other senior executives shall be stated in a policy established by the Board.

Deviation in specific cases

The Board of Directors has the right to deviate from these guidelines if there are special circumstances in a specific case. If such a deviation is made, information about the case, and the reason for the deviation, must be presented at the next Annual General Meeting.

Other information concerning the Board of Directors and Management

A resolution was adopted at the 2010 Annual General Meeting that a member of the Board of Directors not employed by the company shall receive remuneration of SEK 25,000 per meeting attended by the member. By -owned by ased by an amount equivalent to social security expenses and VAT.

For more information about the remuneration of the Board of Directors and management, see note 11.

PROPOSALS FOR THE ANNUAL GENERAL MEETING 2011

The complete proposals from the Board of Directors for the 2011 Annual General Meeting are presented in connection with the notice convening the Annual General Meeting.

Dividend

The Board of Directors does not intend to propose dividends for the fiscal year 2010/2011.

Guidelines for remuneration to senior executives

The Board of Directors proposes that the 2011 Annual General Meeting approves that the current principles for remuneration and other terms of employment for the CEO and other senior executives shall apply until the 2012 Annual General Meeting. The principles shall be applied to employment agreements signed after the 2011 Annual General Meeting, and also to revisions of current employment agreements concluded up to the 2012 Annual General Meeting. The remuneration of the management is determined by the Board of Directors.

Amendment of the Articles of Association

The Board of Directors proposes that the Annual General Meeting adopts a resolution to amend Article 8 of the Articles of Association, in accordance with new rules in the Swedish Companies Act concerning the convening of general meetings in listed companies.

EVENTS AFTER THE CLOSE OF THE FINANCIAL YEAR

Licensing agreement signed

Oasmia has signed a licensing agreement with Medison Pharma Ltd for Paclical® in Israel and Turkey. The agreement entails milestone payments of EUR 200,000 on the conclusion of the agreement, and EUR 200,000 on market approval of Paclical® within the EU. Oasmia's net royalty from the sales of the licensees is intially 25%, with a possible increase to maximum 30% with increasing sales. Registration of Paclical® in Israel and Turkey can be based on the same documentation as within the EU.

Concentration of the development programme

In order to realize trials by the end of the current financial year at the latest. In order to achieve this, the management has decided to concentrate the development programme.

Within Human Health the development is now driven by three product candidates: Paclical®, Doxophos® and Docecal®. Carbomexx® is no longer a prioritized product candidate. The reason is that Carbomexx® is based on a new active substance and entails a considerably more extensive development programme.

Product development within Animal Health is now concentrated on two product candidates, directed at cancer in dogs. They are Paccal® Vet, for the treatment of mastocytoma, and Doxophos® Vet, for the treatment of lymphoma. These two types of cancer account for around half of the cancer incidence in dogs, and Oasmia estimates that this investment is sufficient for the veterinary market. Carbomexx® Vet and Docecal® Vet are no longer prioritized product candidates.

Interim analysis of Phase III study

Oasmia has conducted an interim analysis of the ongoing Phase III study on ovarian cancer. The analysis was based on a total of 400 patients. The results meet the clinical demands that Paclical® is at least as effective as Taxol®. In the study, patients are treated with either Paclical® or Taxol®. The selection process is random. Patients treated with Taxol® require heavy premedication to avoid hypersensitivity reactions due to the solvent Cremophor® EL. This premedication is not required during treatment with Paclical® since Paclical® does not contain Cremophor® EL. Paclical® is given at a dose of 250 mg/m² and Taxol at a dose of 175 mg/m² . The infusion time for Paclical® is one hour and three hours for Taxol®.

Termination of contract

The licensing and distribution agreement with Orion Corporation, Finland, for the rights to Paclical® in the Nordic countries has been terminated and all rights have reverted to Oasmia.

FINANCIAL PROSPECTS

the company develops. handling of the case. The company cannot expedite the process in any other way than to submit answers to the

The company aims to launch its first product for the veterinary market, Paccal® Vet, in 2011. Licensing and distribution agreements are in place for the main world markets.

The company aims to launch its first product for the human market, Paclical®, in 2012. The Board of Directors assesses the conditions for licensing in the human market to be very favorable.

The Board of Directors has set the goal that the debt/equity ratio must not exceed 50%. At the end of the financial year (April 30), the debt/equity ratio was 0%.

The business is financed with equity, credits and licensing. The management is continuously working with these instruments.

RISKS

the company only partly, or not at all. T risks, and how they are handled, are described in more detail in Note 3. The key operational risks are described below. The outcome of these risks can influence the timing of the company and its rate of expansion, income, result and financial position.

Product development

Oasmia develops pharmaceuticals, which is associated with high risk. A large number of conditions and regulations entail that there is a significant risk of failure. For product development that is nevertheless successful there is always the risk that complexity entails delays and additional costs. Below, stages of product development are presented where such risk is significant.

The development of a pharmaceutical requires preclinical and clinical studies. The result of a study may be less favorable and lead to the discontinuation, or reconsideration and supplementing, of the study. Patients must be recruited for clinical studies via clinics and hospitals and various pharmaceutical companies compete for access to these patients. It is common for recruited patients to withdraw, requiring them to be replaced with other patients. Both of these factors can entail that a study takes longer and is more expensive than anticipated.

Oasmia enters into agreements with suppliers of patient recruitment services, and it cannot be excluded that such agreements are terminated and are difficult to replace. This can lead to delays.

products, may experience serious side effects. The consequence can be that further clinical studies must be performed, which could prolong product development. Another consequence which cannot be ruled out is that Oasmia could be sued by patients who have experienced side-effect or by their relatives.

In order for a pharmaceutical to be marketed and sold, a market approval from the pharmaceutical authority concerned is required in the respective territory. An application for market approval includes extensive documentation. The pharmaceutical authorities have a lot of freedom concerning processing times. They may ask for supplementary information or present questions for the company to answer. This processing entails that the dates by which approval may be achieved are subject to considerable uncertainty. It cannot be excluded that an application must be supplemented with further information, with the related additional time and costs. It cannot be ruled out either that approval is not obtained at all.

Intellectual property rights

Oasmia estimates that its patents have adequate protection on essential markets. It cannot be guaranteed, however, that continued product development will lead to patentable products, that current or future patent applications will lead to patents, or tha

It cannot be excluded that patents exist itation of the relevant substances or procedures which are patented, or the object of a patent submission by other party, the holder of these rights may seek legal action against Oasmia.

never be said with full certainty that a patent is valid, it is hard to predict the outcome of judicial processes concerning patents. The costs for such processes are often considerable.

Relations with authorities

cannot be obtained without extensive investigations or costly adjustments of the business. In the event that critical permits are recalled, Oasmia may be forced to discontinue its activities.

Competitors and prices

There are a large number of players in the markets targeted by Oasmia, and there are probably more on their way in. As a new player Oasmia will face competitors that command the advantages of established products and marketing tes can become established after market approval has been acquired. There is also uncertainty concerning an adequate entails a risk of erroneous investment estimations.

Untested veterinary market

The market for cancer drugs for dogs is new and untested. It is thus difficult to estimate the extent and speed at which cancer drugs can be accepted by veterinarians.

Remuneration from third party

Many pharmaceuticals entail the right for the end customer to obtain reimbursement from the paying third party such as the public sector or private insurance companies. Changes in such third party policies and the ability to affect the prices and demand for pharmaceuticals may affect Oasmia either negatively or positively.

Cooperation

commercialization thereby highly dependent on the collaborations cannot be established, or are terminated or do not function satisfactorily, this can have a negative impac

Onerous contract provision

The licensing and distribution agreements concluded by Oasmia contain certain onerous provisions. They mainly concern repayment of the entire or parts of the milestone payments received if Oasmia does not successfully apply for and obtain market approval within the time agreed with licensees.

Non-sustainable revenue sources

business model includes licensing and distribution agreements which entail milestone payments. They comprise the dominant revenue source until the point where Oasmia has gained market approval, and for a few years thereafter. They fall unevenly over time and therefore result in significant fluctuations in net sales and results. Milestone payments are unsustainable revenues, so that in the longer term Oasmia is dependent on the successful commercialization and market introduction of its pharmaceutical candidates.

Production

finished product. Full-scale manufacture is carried out by contract manufacturers. Technology transfer entails a technology proves to be more difficult to scale up than estimated, this may delay full-scale production and affect the launch dates. In connection with upscaling, validation of the full-scale production must be performed and documentation submitted to the relevant authorities. These authorities must approve the products at the manufacturer chosen by Oasmia. If the documentation is not complete, there is a risk that product launch is delayed. Oasmia has not yet started production at contract manufacturer . There is therefore a degree of

Dependence on few products

d commercialization of Paccal® Vet and Paclical®. This dependence entails the risk of a negative impact if the development and commercialization of these two product candidates does not proceed as planned.

Key personnel and recruitment

Oasmia is to a high degree dependent on key employees. If Oasmia were to lose any of its key personnel, this might delay or interrupt a research programme or development, or the licensing or commercialization of product candidates. Oasmia is dependent on qualified staff and expects to continue to expand in coming years. There is a need for recruitment within the departments of production and regulatory affairs, and there is a risk that Oasmia will not able to recruit the new qualified employees that are needed.

Employment agreements and intellectual property rights

The appointment of new key employees during the past two financial years is subject to the provision that any inventions made by employees, and/or other intellectual property rights that employees may acquire, shall belong to the company. Such provision was not made in previous employment agreements. No employment agreements contain competition or non-recruitment clauses for key employees after the end of their employment. These circumstances entail a risk for negative impact on the company if any of its key employees leave Oasmia and choose to engage in a competing business.

CORPORATE GOVERNANCE REPORT

This Administration Report does not contain a corporate governance report. Oasmia has instead, supported by Section 8, Chapter 6 of the Annual Accounts Act, chosen to establish a corporate governance report on a separate basis from the annual report. The corporate governance report is reviewed by the company and is available at the Oasmia website, www.oasmia.com.

Financial statements

Consolidated Income Statement

		2010-05-01	2009-05-01
TSEK	Note	-2011-04-30	-2010-04-30
Net sales	5	106	30 741
Capitalized development cost	6	86 049	80 643
Other operating income	7	269	-
Raw materials, consumables and goods for resale	8	-16 120	-18 842
Other external expenses	9,10	-92 479	-74 412
Employee benefit expenses	11	-37 370	-29 413
Depreciation/amortization and impairment	12,13	-4 674	-3 612
Other operating expenses	13	-133	-68
Operating income	14,15	-64 353	-14 961
Financial income		484	411
Financial expenses		-2 097	-2 505
Financial items, net	14,16	-1 613	-2 094
Income before taxes		-65 967	-17 055
Taxes	17	7	0
Income for the period		-65 960	-17 054
Income for the period attributable to:
Equity holders of the Parent Company		-65 960	-17 016
Non-controlling interest		-	-38
Earnings per share, before and after dilution, SEK	18	-1,50	-0,47

Consolidated Statement of Comprehensive Income

	2010-05-01	2009-05-01
TSEK Note	-2011-04-30	-2010-04-30
Income for the period	-65 960	-17 054
Comprehensive income for the period	-65 960	-17 054
Comprehensive income for the period attributable to:
Equity holders of the Parent Company	-65 960	-17 016
Non-controlling interest	-	-38
Comprehensive earnings per share, before and after dilution, SEK 18	-1,50	-0,47

Consolidated Statement of Financial Position

TSEK	Note	2011-04-30	2010-04-30
ASSETS
Non-current assets
Property, plant and equipment	12	27 243	20 665
Capitalized development cost	6	226 909	140 860
Other intangible assets	13	9 276	8 047
Financial assets		2	2
Total non-current assets		263 430	169 574
Current assets
Inventories	8	-	94
Trade receivables Other current receivables	20 21	- 2 141	60 2 090
Prepaid expenses and accrued income	20	2 853	2 460
Liquid assets	22	51 895	5 372
Total current assets		56 889	10 076
TOTAL ASSETS		320 319	179 650
EQUITY
Equity attributable to equity holders in the Parent Company
Share capital	23	5 208	3 761
Other capital provided		413 375	196 493
Retained earnings		-124 411	-58 509
Total		294 171	141 746
Non-controlling interest		-	57
Total equity		294 171	141 803
LIABILITIES
Non-current liabilities
Other non-current liabilities	24	15 373	15 397
Deferred tax liabilities	25	-	7
Total non-current liabilities		15 373	15 404
Current liabilities
Liabilities to credit institutions Short-term borrowings	26 27	- -	4 289 10 550
Trade payables		3 831	2 076
Other current liabilities	28	1 399	1 197
Accrued expenses and prepaid income	29	5 545	4 332
Total current liabilities		10 775	22 443
Total liabilities		26 148	37 847
TOTAL EQUITY AND LIABILITIES		320 319	179 650

Contingent liabilities	30
Pledged assets	30

Consolidated Statement of Changes in Equity

		Company	Attributable to equity holders in the Parent
TSEK	Note	Share capital	Other paid-up capital	Retained earnings	Non controlling interest	Total equity
Opening balance as of May 1, 2009		3 350	99 254	-41 493	95	61 207
Comprehensive income for the year		-	-	-17 016	-38	-17 054
New share issues	23,31	411	102 410	-	-	102 821
Issue expenses		-	-5 171	-	-	-5 171
Closing balance as of April 30, 2010		3 761	196 493	-58 509	57	141 803
Opening balance as of May 1, 2010		3 761	196 493	-58 509	57	141 803
Comprehensive income for the year		-	-	-65 960	-	-65 960
Non-controlling interest	32	-	-	57	-57	0
New share issue	23,31	1 447	237 250	-	-	238 697
Issue expenses		-	-20 369	-	-	-20 369
Closing balance as of April 30, 2011		5 208	413 375	-124 411	0	294 171

Consolidated Cash Flow Statement

		2010-05-01	2009-05-01
TSEK	Note	-2011-04-30	-2010-04-30
Operating activities
Operating income before financial items		-64 353	-14 961
Depreciation and amortization	12,13	4 650	3 612
Impairment of inventory	8	94	300
Disposals of intangible assets	13	133	68
Interest received	16	484	411
Interest paid	16	-1 392	-2 178
Cash flow from operating activities before
working capital changes		-60 385	-12 748
Change in working capital
Change in inventories	8	-	2 383
Change in trade receivables	20	60	2 277
Change in other current receivables	20,21	-445	-1 722
Change in trade payables		1 756	-950
Change in other current liabilities	28,29	1 415	-475
Cash flow from operating activities		-57 598	-11 235
Investing activities
Investments in intangible assets	6,13	-88 342	-81 773
Investments in property, plant and equipment	12	-10 321	-3 541
Cash flow from investing activities		-98 663	-85 315
Financing activities
Decrease in liabilities to credit institutions	26	-4 289	-3 067
Increase in long-term liabilities	24	-	15 373
New share issues	23,31	168 697	74 083
Issue expenses	23,31	-20 369	-5 171
New loans	27	58 745	25 007
Amortization of loans	27	-	-5 290
Cash flow from financing activities		202 784	100 934
Cash flow for the period		46 523	4 384
Cash and cash equivalents at the beginning of the
period		5 372	988
Cash and cash equivalents at the end of the
period	22	51 895	5 372

Parent Company Income Statement

		2010-05-01	2009-05-01
TSEK	Note	-2011-04-30	-2010-04-30
Net sales	5	106	28 817
Capitalized development cost	6	86 049	80 643
Other operating income	7	245	125
Raw materials and consumables		-16 080	-15 869
Other external expenses	9,10	-92 271	-74 051
Employee benefit expenses	11	-37 370	-29 413
Depreciation/amortization and impairment of
property, plant, equipment
and intangible assets	12,13	-4 486	-3 385
Operating income		-63 806	-13 133
Result from participations in Group companies	32	-578	-3 570
Other interest revenues and similar revenues	14,16	483	411
Interest costs and similar costs	14,16	-2 097	-2 109
Financial items, net		-2 192	-5 268
Income before taxes		-65 998	-18 401
Taxes	17	-	-
Income for the period		-65 998	-18 401

Parent Company Statement of Comprehensive Income

	2010-05-01	2009-05-01
TSEK Note	-2011-04-30	-2010-04-30
Income for the period	-65 998	-18 401
Comprehensive income for the period	-65 998	-18 401

Parent Company Balance Sheet

TSEK	Note	2011-04-30	2010-04-30
ASSETS
Non-current assets
Intangible assets
Capitalized development cost	6	226 909	140 860
Concessions, patents, licenses, trademarks and
similar rights	13	9 180	7 630
Property, plant and equipment
Equipment, tools, fixtures and fittings	12	27 243	20 665
Financial assets
Participations in Group companies	32	110	298
Receivables from Group companies		5	4
Other securities held as non-current assets		1	1
Total non-current assets		263 448	169 458
Current assets
Inventories
Raw materials and consumables	8	-	94
		0	94
Current receivables
Trade receivables	20	-	60
Receivables from Group companies	31	89	370
Other current receivables	21	2 140	2 019
Prepaid expenses and accrued income	20	2 748	2 332
		4 977	4 782
Cash and bank balances	22	51 884	5 320
Total current assets		56 861	10 196
TOTAL ASSETS		320 309	179 653
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital	23	5 208	3 761
Statutory reserve		4 620	4 620
		9 828	8 381
Non-restricted equity
Share premium reserve		413 375	196 493
Retained earnings		-63 030	-44 628
Income for the period		-65 998	-18 401
		284 347	133 464
Total equity		294 175	141 845
Non-current liabilities Other non-current liabilities	24	15 373	15 373
Total non-current liabilities		15 373	15 373
Current liabilities
Short-term borrowings	27	-	10 550
Trade payables		3 818	2 068
Liabilities to credit institutions	26	-	4 289
Other current liabilities	28	1 399	1 197
Accrued expenses and prepaid income	29	5 545	4 332
Total current liabilities		10 761	22 435
TOTAL EQUITY AND LIABILITIES		320 309	179 653
Contingent liabilities and pledged assets
Contingent liabilities	30	-	-
Pledged assets	30	8 000	5 000

Parent Company changes in equity

		Restricted equity
TSEK	Note	Share capital	Statutory reserve	Non-restricted equity	Total equity
Opening balance as of May 1, 2009		3 350	4 620	54 626	62 596
New share issues	23,31	411	-	102 410	102 821
Issue expenses		-	-	-5 171	-5 171
Income for the period		-	-	-18 401	-18 401
Closing balance as of April 30, 2010		3 761	4 620	133 464	141 845
Opening balance as of May 1, 2010		3 761	4 620	133 464	141 845
New share issue	23,31	1 447	-	237 250	238 697
Issue expenses		-	-	-20 369	-20 369
Income for the period		-	-	-65 998	-65 998
Closing balance as of April 30, 2011		5 208	4 620	284 347	294 175

Parent Company Cash Flow Statement

		2010-05-01	2009-05-01
TSEK	Note	-2011-04-30	-2010-04-30
Operating activities
Operating income before financial items		-63 806	-13 133
Depreciation/amortization	12,13	4 486	3 385
Impairment of inventory	8	94	-
Interest received	16	483	411
Interest paid	16	-1 392	-2 013
Cash flow from operating activities before
working capital changes		-60 135	-11 350
Change in working capital
Change in inventories	8	-	-9
Change in trade receivables	20	60	41
Change in other current receivables	20,21,31	-645	-3 883
Change in trade payables		1 750	371
Change in other current liabilities	28,29	1 415	-3 797
Cash flow from operating activities		-57 555	-18 628
Investing activities
Investments in intangible assets	6,13	-88 342	-81 773
Investments in property, plant and equipment	12	-10 321	-3 541
Investments in financial assets		-1	-4
Cash flow from investing activities		-98 664	-85 319
Financing activities
Increase in liabilities to credit institutions	26	-	4 289
Decrease in liabilities to credit institutions	26	-4 289	-
Increase in long-term liabilities	24	-	15 373
New share issues	23,31	168 697	74 083
Issue expenses	23,31	-20 369	-5 171
New loans	27	58 745	25 007
Amortization of loans	27	-	-5 290
Cash flow from financing activities		202 784	108 290
Cash flow for the period		46 565	4 344
Cash and cash equivalents at the beginning of the
period		5 320	975
Cash and cash equivalents at the end of the
period	22	51 884	5 320

Notes to the financial statements

Note 1 General information

Oasmia Pharmaceutical AB (the Parent Company in the Oasmia Group) is a limited liability company seated and registered in Stockholm, Sweden. The c ted in the Administration Report on pages 24-33. The Annual Report for Oasmia Pharmaceutical AB for the fiscal year, ending on April 30, 2011, was approved for publication by the Board of Directors on August 25, 2011. The Income statements and Balance Sheets of the Group and the Parent Company will be presented for adoption by the Annual General Meeting on September 30, 2011.

Note 2 Accounting policies

The Group

The most important accounting policies applied when these consolidated accounts were established are described below.

Basis for the presentation of the reports

The Consolidated Accounts are presented in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretation statements from the International Financial Reporting Interpretations Committee (IFRIC) such as they have been adopted by the EU. Furthermore, the recommendation RFR 1, Supplementary accounting regulations for Groups, issued by the Swedish Financial Reporting Board, has been applied.

The Parent Company applies the lt of limitations to the opportunities to apply IFRS in the Parent Company with respect to the Annual Reports Act and Safeguard legislation and in some cases tax reasons.

The presentation of reports in accordance with IFRS requires the utilization of a number of important estimations for accounting purposes. Furthermore, it is required that the management makes certain assessments on the application of the Group accounting policies. Areas which require several estimations, are complex or for which assumptions and estimations are of significant importance for the Consolidated Accounts, are disclosed in note 4.

Revised accounting policies

New policies 2010/11

IFRS 3 (Revision), Business combinations and consequential amendments in IAS 27, Consolidated and separate financial statements

The standard has been applied as from the financial year that commenced on May 1, 2010. The amendment applies to acquisitions as from recognized, for instance recognitions of transaction costs, any conditional considerations and successive acquisitions. The amendments have affected the recognition of the successive acquisitions made when Oasmia on April 30, 2011 acquired the remaining interests in the subsidiary GlucoGene Pharma AB. In accordance with the revised IFRS 3 and re-drafted IAS 27 the acquisition of further interests in a subsidiary after a controlling influence is gained is recognized as a transaction with the owners affecting own capital.

The re- -

New IFRS and interpretations applicable to the financial year 2010/11 or later

Improvements to IFRS (May 2010)

Annual review of minor changes and clarifications, which in this instance concerned seven standards and interpretations with certain consequential amendments. Oasmia applies these as from the financial year commencing on May 1, 2011, but they are not expected to have any signifi

IFRS 7 (amendment) Financial instruments

The amendment has not yet been adopted by the EU. Applied to the financial year beginning on July 1, 2011 or later. Earlier application is permitted.

Further quantitative and qualitative information must be provided on the derecognition of financial assets from the balance sheet. If a transfer of assets does not result in full derecognition this must be disclosed. If the company retains an exposure in the derecognized asset the company must disclose this.

IFRS 9 Financial instruments

The standard has not yet been adopted by the EU. IFRS 9 is intended to replace IAS 39 Financial instruments as from 2013 at the latest. The elements of IFRS 9 published so far concern t ermitted. Oasmia has not yet taken a decision on early application.

IAS 24 (amendment) Related party disclosures

Applies to the financial year beginning on January 1, 2011 or later. Earlier application is permitted.

The re-drafted standard simplifies the disclosure requirement for publicly owned companies and amends and clarifies the definition of related party. Oasmia will apply the re-drafted IAS 24 as from the financial year beginning on May 1, 2011, but it is not assessed to entail any change

IFRIC 19 Extinguishing financial liabilities with equity instruments

Applies to the financial year beginning on July 1, 2010 or later. The interpretation clarifies the recognition of the renegotiation of loan terms so that all or part of the loan is repaid from issued shares. The shares must be assessed at fair value and the difference between fair value and the book value of the loan must be recognized in the income statement. If the fair value of the shares cannot be reliably calculated it must instead be calculated to reflect the fair value of the loan. Oasmia is not currently affected by IFRIC 19.

Consolidated accounts

Subsidiaries

Subsidiaries are companies where the Group has the right to design financial and operative strategies in a way which is customary for a shareholding equivalent to more than half of the votes. Subsidiaries are included in the Consolidated Accounts as from the day on which the controlling interest is transferred to the Group. They are excluded from the Consolidated Accounts as from the day on which the controlling interest ended.

iaries. Acquisitions made before 2010/11 are recognized in accordance with the previous acquisition method. As from the 2010/11 financial year the Group applies the revised IFRS Business combinations, as one of the amendments is that acquisition-related costs are carried as costs instead of being included in acquisition value.

Identifiable acquired assets and liabilities in an operational acquisition are initially assessed at fair value on the date of acquisition. For each acquisition the Group determines how far a non-controlling interest in the acquired company is recognized proportional share of the net assets of the acquired company. The excess, as the difference between the acquisition value and the fair value of the recognized as goodwill. If the acquisition value is less than the fair value of the acquired subsidiary's assets, liabilities and contingent liabilities, the difference is recognized directly in the income statement.

Eliminations are made for intra-Group transactions and balance-sheet items, and for unrealized gains on intra-Group transactions.

Non-controlling interest

For the 2010/11 financial year transactions with minority shareholders are treated as transactions with third parties. As from the 2010/11 financial year the Group treats transactions with holders of non-controlling interests as transactions with the Group acquisition of non-controlling interests, the difference between the acquisition cost and the actual acquired share of the recognized value of the subsidiary's net assets is carried to equity.

Segment reporting

An operating segment is a part of a company that conducts business activities from which revenues can be generated and costs can be incurred, and for which independent financial information is available. Furthermore, the operating results of the segment are reviewed on a reg nd the evaluation of its result. The Group currently has only one segment and therefore does not include segment information in the accounts.

Translation of foreign currency

The Group companies use SEK as their functional currency and reporting currency. Transactions in foreign currency are translated to the functional currency according to the exchange rates on the transaction date. Translation profits or losses arising from payments for such transactions and from translation of monetary assets and liabilities in foreign currency at the exchange rates on the closing date are recognized to operations. Currency gains and losses arising from the translation of bank accounts in foreign currencies are recognized under Net financial items.

Property, plant and equipment

Property, plant and equipment is recognized at acquisition cost, with deductions for depreciation. The acquisition cost includes expenses directly attributable to the acquisition of the asset.

Additional expenses are added to the carrying amount of the asset or are recognized as a separate asset, depending on what is most suitable, only when it is probable that the future economic benefits connected with the asset will prove beneficial to the Group and the acquisition cost of the asset can be measured in a reliable way. The carrying amount of the replaced part will be removed from the Balance Sheet. All other types of repairs and maintenance are recognized as expenses in the Income Statement in the period in which they arise.

Property, plant and equipment which is acquired by conditional sale is recognized at acquisition cost, i.e. the total discounted amount of all future payments. A liability is recognized at the same time concerning the purchase sum not yet paid. The liability is initially valued at its fair value and thereafter at amortised cost with application of the effective interest method. The liability is divided into a non-current part and a current part and recognized in the item Borrowings.

The Group applies component depreciation, which means that every part of an asset related to property, plant and equipment with a significant acquisition cost in relation to the total acquisition cost of the asset, is depreciated separately. Component depreciation is mostly

Assets are depreciated on a straight-line basis in order to distribute their acquisition cost on the calculated residual value over the calculated utilization period, as follows:

	Production equipment	12-15 years
	Inventories	5 years
	Vehicles	3 years

Impr 20 years

The residual values and utilization period of the assets are reviewed at every balance-sheet date and are adjusted as required. A carrying amount of an asset is immediately depreciated to its recoverable amount if the carrying amount exceeds its estimated recoverable amount.

Profits and losses from disposals are established by a comparison between the sales revenue and the carrying amount and are recognized in Other operating income or Other operating expenses.

Intangible assets

Capitalized development cost

Expenditures for research are written off immediately. Development costs which are attributable to production and tests of novel or improved products, are capitalized to the extent that they are expected to generate future economic benefits. Depreciation is made on a straight-line basis over the period that the expected benefits are expected to generate earnings for the company, which is from the date that commercial sale to final customers is commenced. The utilization period for such capitalized development costs is estimated to be at most 10 years.

Pharmaceuticals in development pass through two stages, the preclinical stage and the clinical stage. In the preclinical stage, pharmaceutical candidates are selected from possible future pharmaceuticals. The priorities which govern the selection are demand and profitability. Furthermore, the production process for the novel pharmaceutical to a test version and studies of the pharmaceutical for specificity, efficacy and safety are included. The work in this phase is concluded with submission of an IND (Investigative New Drug) application to the authorities in order to obtain permission to test the pharmaceutical on humans. When an application has been approved, the process continues in the clinical stage. This stage can be divided into four phases: in Phase I, the pharmaceutical is tested on healthy volunteers; in Phase II, the pharmaceutical is tested on a group of people with the disease the pharmaceutical is intended to treat; and in Phase III, the pharmaceutical is tested on a larger group of patients whereby both efficacy and safety and studied. Corresponding methods are used for pharmaceuticals for veterinary use. After market launch of the final product, rare side-effects are studied in Phase IV.

The company has adopted the principle of capitalizing development costs in Phase III for two pharmaceutical candidates for which all conditions for capitalization have been fulfilled. Other development costs are written off as they arise. Development costs previously written off, are not carried forward as assets in later periods.

Other intangible assets

The Group capitalizes fees to authorities for patents and sales rights to the extent they are expected to generate future economic benefits. They are recognized at acquisition cost, reduced by the accumulated amortizations. Amortization is performed on a straight-line basis in order to distribute the cost over the estimated utilization period. The amortization periods applied are as follows:

• Patents 20 years
• Sales rights 5 years

The capitalized patent expenses comprise registration costs such as initial expenses for e.g. authorities and legal fees. Sales rights comprise fees to authorities for the right to sell parallel-imported pharmaceuticals.

Inventories

The inventory is recognized at the lowest of acquisition cost and net realisable value. The acquisition cost is established by using the first in, first out method (FIFO). The acquisition cost consists of purchase costs and costs of own work. The net realisable value is the estimated sales price in the operating activities, with deductions for applicable variable sales expenses.

Impairment of non-financial assets

The capitalized development costs which are not yet current are not depreciated, but are instead evaluated annually for any impairment needs. The Group performs an estimation of the expected utilization period of the assets at every financial statement. If there are indications t is the highest net realisable value of the asset, with deductions for sales costs and its value in use. The asset is depreciated by the amount by which the carrying amount of the asset exceeds the recoverable amount. In order to establish the impairment need, the assets are grouped into cash generating units, which is the smallest group of assets that enables positive cash flows that are essentially independent of the cash flow from other assets or groups of assets. The Group presently has no assets with indeterminable utilization periods.

Financial instruments

ued income, liquid assets, borrowing, liabilities to credit institutions, trade payables, other current liabilities and certain accrued expenses. With the exception of recognized at acquisition cost with the addition of transaction costs. The classification of the items in the balance sheet is disclosed in note 19.

Trade receivables

Trade receivables are initially recognized at fair value and thereafter at amortised cost with application of the effective interest method, reduced by any impairment provision. A provision for impairment of trade receivables is made when there is objective evidence that the Group will not be able to receive all amounts which are due according to the initial terms of the claims. Significant financial difficulties of the debtor, a risk that the debtor will become bankrupt or undergo a financial reconstruction, and cancelled or delayed payments (more than 30 days overdue) are considered to be indicators that there is need to write down a trade receivable. The size of the provision is determined by the difference between the carrying amount of the asset and the present value of future estimated cash flow, discounted at the original effective interest rate. The recognized value of the asset is reduced by the utilization of a depreciation account and the loss is recognized in the income statement in the item Other external expenses. When a trade receivable cannot be collected, it is written off against the depreciation account for trade receivables. Recycling of amounts previously written off is credited to Other operating income in the income statement.

Derivative instruments

The derivative instruments in the Group consist of forward contracts for purchase of USD. Derivative instruments are recognized on first recognition at their fair value at the time of contract signing. Thereafter continuous revaluation to fair value is made. Changes in the fair value of derivatives are recognized as financial items in the income statement.

Liquid assets

Liquid assets include cash and bank balances. Utilized credit facilities are recognized as Liabilities to credit institutions in the balance sheet.

Borrowings

Borrowings are initially recognized at fair value, net after transaction costs. Borrowings are thereafter recognized at accrued acquisition value and any difference between the amount received (net after transaction costs) and the repaid amount is recognized in the income statement, distributed over the term of the loan, by applying the effective interest rate method. Borrowings are classified as current liabilities unless the Group has an unconditional right to postpone payment of the liability for at least 12 months after the balance-sheet date. The Group has a credit line from the principal owner S.A. The utilized part of this is recognized as a current liability.

Trade payables

Trade payables are initially recognized at fair value and thereafter at accrued acquisition value by applying the effective interest rate method.

Impairment of financial assets

The value of financial assets is reviewed as of every reporting date. If there are indications that an asset has depreciated in value, the recoverable amount is tested. are recognized at the amortised acquisition costs, is calculated as the present value of future cash flow, discounted at the effective interest rate which applied with the asset was recognized for the first time. Assets with a short term to maturity are not discounted. An impairment write-down will affect the income statement.

Share capital

Common stock is classified as equity. Transaction costs which can be attributed directly to new share issues or options are recognized, net after tax, in equity as a deduction of the issue payment.

Deferred income tax

Deferred taxes are recognized according to the balance sheet method, on temporary differences which arise between the taxation value of assets and liabilities and their carrying amounts in the consolidated accounts. The deferred tax is not recognized if it arises as a result of a transaction which comprises the first recognition of an asset or liability which is not an business combination and which, at the time of the transaction, does not affect the recognized or fiscal result. Deferred income tax is calculated by applying tax rates (and tax laws) which have been decided or announced as of the balance-sheet date and which are expected to apply when the deferred tax asset concerned is realized or the deferred tax liability is paid.

Deferred tax assets are recognized to the extent that there are convincing reasons that a future fiscal surplus will be available, against which the temporary differences can be used.

Remuneration to employees

Current remuneration Current remuneration to employees is calculated without discounting and is recognized as an expense when the services concerned services are obtained.

Pension obligations

The Group companies have no pension obligations.

Severance pay

Severance pay is awarded when notice is given to an employee by the Group before normal pension date, or when an employee accepts voluntary resignation in exchange for such payments. The Group recognizes severance pay when it is obliged either to give notice to the employee according to a detailed formal plan without the possibility of recall, or to pay remuneration when notice is given as a result of an offer made to encourage voluntary resignation. Benefits which are due more than 12 months after the balance-sheet date are discounted to the present value.

Revenue recognition

Revenues comprise the fair value of what is received or will be received for sold goods and services in the activities of the Group. Revenue is recognized without value added tax, and after elimination of inter-Group sales. The Group recognizes revenue when the amount can be measured in a reliable way, it is likely that future economic benefits will accrue to the company and certain criteria have been fulfilled for each of the business activities of the Group described below.

a) Sales of self-developed pharmaceuticals

The Parent Company Oasmia Pharmaceutical AB conducts sales of pharmaceuticals before they are registered. It is called compassionate use, but consists of delivery and invoicing of products according to a price list. Delivery and invoicing is performed at the same time and the revenue is recognized at this time. Sales of pharmaceuticals before they are registered can occur in the following two cases. In the first case, the buyer is a hospital pharmacy or veterinary clinic where our clinical trials are conducted. In the second case the buyer is a clinic which has decided to test a pharmaceutical (in cancer treatment) which is not yet approved, because the registered pharmaceuticals have not performed well.

(b) License revenue

The Parent Company signs licensing and distribution agreement with other companies for the rights to market and sell Oasmia's pharmaceutical candidates in different world regions. Licensing and distribution agreements contain milestone payments and royalties from sales. As a rule, milestone payments are recognized as revenue when licensing has been agreed and other criteria according to agreements have been fulfilled by Oasmia. However, each item will be assessed individually with regard to any factor of uncertainty that can entail a risk of repayment in full or in part, if a current license agreement may include such a clause. When such factors of uncertainty have been eliminated the amount is recognized as intact. Royalties are hereafter recognized as revenue in step with recognized sales.

c) Sales of parallel imported pharmaceuticals

The subsidiary Qdoxx Pharma AB previously parallel-imported pharmaceuticals from EU member states for sale in Sweden. The basis for such activities is price differences within the EU, but due to exchange-rate fluctuations these activities were discontinued, and the existing inventory was sold during the fiscal year.

Leasing

Leasing whereby a significant part of the risks and benefits of ownership is retained by the lessor is classified as operational leasing. Payments made during the lease term (after deduction of any incentives from the lessor) are carried as an expense in the income statement on a straight-line basis over the term of the lease. The company has no financial leasing.

Dividends

recognized financial statements in the period when the

Cash flow Cash flow statements are established in accordance with the indirect method.

Parent Company accounting policies

accounts are presented in accordance with the Annual Accounts Act (1995:1554) and the recommendation RFR 2 Accounting for legal entities, issued by the Swedish Financial Reporting Board. RFR 2 states that in the annual report for the legal entity the Parent Company shall apply all IFRS and announcements adopted by the EU as far as possible within the framework of the Annual Accounts Act, and with regard to the connection between accounting and taxation. The recommendation lists which exceptions and additions are to be made from IFRS. The differences between the accounting policies of the Group and the Parent Company are described below. In accordance with p. 3 of RFR 2 concerning IAS 39, the company has chosen not to apply the Annual Accounts Act chapter 14, sections a-e, which allows for an estimation of certain financial instruments at fair values.

The accounting policies stated below for the Parent Company have been applied consistently to all periods presented in the Pa financial statements.

Classification and presentation forms

The Parent Company uses the terms Balance Sheet, Changes in Equity and Cash Flow Analysis for the reports that in the Consolidated Accounts are named the Report on Financial Position, Report on Changes in Equity, and Report on Cash Flows.

The form of pres Accounts Act, which entails differences compared to the Consolidated Report, as the presentations based on IAS 1, Presentation of Financial Statements, are mainly applicable to the classification of equity and the naming of certain items.

Revenues

Dividends

Dividend revenue is recognized when the right to receive payment is judged to be safe.

Derivative instruments

Forward contracts are not recognized until they are due.

Participation in group companies and shareholder contribution for legal entities

The company recognizes group contributions and shareholder contributions in accordance with the announcement from the Swedish Financial Reporting Board. capitalized in shares and in

Participation in group companies is recognized according to economic significance. This means that participation in group companies made to minimise the total tax for the Group is recognized directly against retained earnings after deductions for the current tax effect.

Participation in group companies comparable to dividends is recognized as dividends. This means that a Group contribution received and its current tax effect is recognized to the income statement. Group contribution paid and its current tax effect is recognized directly against retained earnings.

Group contributions which are comparable to shareholder contributions are recognized, with consideration of the current tax effect, directly The supplier accounts for the Group contribution and its current tax effect as an investment in participation in Group companies.

Note 3 Financial risk management

The Group is exposed to various financial risks. In the Group´s finance policy, continuous identification and management of these risks are included. The Group is also exposed to operational risks, which is more closely described in the Administration Report, pages 24 33.

The key financial risks are:

• Financing and liquidity risks
• Capital risk
• Currency risk
• Price risk
• Interest rate risk
• Credit and counterparty risks

Below the extent

Financing and liquidity risk

utilized credit facilities become difficult, impossible or more expensive Liquidity risks concern situations where liquid assets may not be sufficient for the operations that the company has planned. The Group is exposed to these risks because the current business activities have a very fluctuating cash flow, from operations and from investments. The Group manages these risks via a continuous high activity level within the areas of financing via equity, agreements on credit lines and licensing. Short term liquidity is secured by a liquidity reserve, the unutilized part of confirmed credit lines, and the unutilized part of standby equity distribution agreements (SEDA)

The table below depicts the utilized credit amounts with the Bank as of the balance-sheet date (TSEK)

	2011-04-30			2010-04-30
Counter
party	Credit	Utilized	Liquidity	Credit	Utilized	Liquidity
Bank	limit	amount	reserve	limit	amount	Reserve
	5 000	0	5 000	5 000	4 289	711

The table below depicts the financial liabilities of the Group, divided after the time remaining from the balance-sheet date to the agreed due date (TSEK).

	Less than	Between	Between	More than
		1 and 2	2 and 5
As of April 30, 2011	1 year	years	years	5 years
Trade payables and other borrowings1	10 775	-	-	-
	Less than	Between 1 and 2	Between 2 and 5	More than
As of April 30, 2011	1 years	years	years	5 years
Liabilities to credit institutions	4 289	-	-	-
Trade payables and other borrowings1	7 628	-	-	-
Borrowings	10 550	-	-	-

1 Trade payables and other liabilities consist of Trade payables, Other current liabilities and Accrued expenses and prepaid income.

2 Borrowings last year consisted of utilized

The Group recognizes Other non-current liabilities of TSEK 15,373, which consists of prepaid income attributable to a licensing and distribution agreement that may be subject to a repayment obligation if the company does not achieve market registration of Paccal® Vet before May 1, 2014 (Note 24).

Capital risk

Capital risk is connected to situations where the capital structure is different to what is optimal. With an optimal structure, the cost of capital is kept at low level and a return can be generated to shareholders. The Group is exposed to such risk because of a very fluctuating cash flow. The capital structure can be judged from the debt/equity ratio. The objective for this ratio not to exceed 50% (50). The debt/equity ratio as of April 30, 2011 was 0% (7).

The table below depicts the net liabilities and debt/equity ratio of the Group (TSEK) (definitions, Note 33) as of the balance-sheet date.

	2011-04-30	2010-04-30
Total borrowing1	0	14 839
Deducted liquid assets	-51 895	-5 372
Net liability	-51 895	9 467
Total equity	294 171	141 803
Debt/equity ratio	0%	7%

1 Containing the balance sheet items short-term and long-term borrowing and liabilities to credit institutions.

Currency risk

Currency risks arise when future business transactions or recognized assets or liabilities are expressed in a currency which is not the functional currency of the company, which is SEK. The Group makes current payments in EUR, USD and CZK, but only very few payments have been received in these currencies during the last two financial years. Currency risks are handled by limiting the number of trading currencies and seeking to minimise the net exposure in each currency as far as possible. Both of these situations can be affected by Oasmia's choice of contract currency with business partners. There is no regular forward hedging as the currency exposure is dominated by the purchased product development services, which are very irregular and difficult to plan.

Price risk

Price risks consist of changes in purchase prices from suppliers for the raw materials used to produce pharmaceuticals. By far the majority of these raw materials are purchased in the currencies EUR, USD and CZK, so that the underlying prices can vary. Oasmia usually has several alternative suppliers of these raw materials to choose between and uses the opportunities to exert price pressure that are available in the current competitive situation.

Interest rate risk

Interest rate risk is connected to changes in market rates that have an influence on the Group´s net financials. The Group has an interest rate risk on utilising credit facilities where the utilized amount is exposed to floating interest rates. The Group does not continuously utilize such credit facilities, and does so only for relatively small amounts. If the floating interest rates had been 1.0% higher/lower, with all other variables constant, net income after tax as of April 30, 2011 would have been TSEK 0 (43) lower/higher, as a result of recalculated utilized bank credits. The credit facility available to Oasmia from Alceco International S.A carries a fixed interest rate of 6% on utilization, and therefore does not entail any interest rate risk. The Group does not have any significant interest-bearing assets so that there is no such interest rate risk.

Credit and counterparty risks

Credit and counterparty risks are connected to the risk of loss if a counterparty does not fulfil its obligations. Group revenues are received from only a few customer and partners, where sales are mainly to Apoteket in Sweden and license revenues are received from a few corporations selected by Oasmia. These counterparties have good credit ratings, so that the credit and counterparty risks are assessed to be very low.

Note 4 Important estimates and assessments for accounting purposes

Estimates and assessments are continuously reviewed and based on historical experience and other factors, including expectations of future events which are considered reasonable in the current circumstances.

Important estimates and assessments for accounting purposes

The Group makes estimates and assessments about the future. The resulting estimates for accounting purposes will be definition seldom correspond to the actual result. The estimates and assessments that entail a considerable risk of significant adjustments in the carrying amounts for assets and liabilities in the next financial year are listed below.

(a) Impairment test for intangible assets

The capitalized development costs for the financial year amounted to TSEK 86,049 (TSEK 80,643). The company annually performs an assessment of whether there is a need for impairment of the capitalized development cost. Oasmia has made the judgment that there is no need for impairment since registration of the two pharmaceutical candidates that are capitalized lies within the foreseeable future, and the expected future profits motivate the value of the assets. If these products are not approved, or the probability of approval is diminished, the capitalized expenditures would be carried as expenses. As of April 30, 2011, the capitalized expenditures amounted to 77% (99) of the equity at the same time.

The Group annually evaluates whether a need for impairment exists for all intangible assets, in accordance with the accounting policies described in note 2.

(b) License revenues

The Parent Company enters into licensing and distribution agreements with other companies. Such agreements include certain milestone payments with a risk of repayment, depending on success in product development and registration. The Parent Company continuously evaluates whether such conditions have changed, been eliminated or been realized, in accordance with the accounting principles described in note 2.

(c) Taxes

The group is liable to pay tax in Sweden. The Group companies have so far shown negative fiscal results as significant fiscal deficits exist in the Group. There are presently no convincing reasons that fiscal surpluses will exist in the future to defend a capitalization of the deficits. Accumulated fiscal deficits in the group are described in note 25.

Important judgments when applying the company accounting policies

The Group capitalizes expenditures for patents and sales rights because they are expected to generate future economic benefits. If the Group should make the judgment that they will no longer generate future economic benefits, these asse profit. As of April 30, 2011 the carrying amount for patents and sales rights in the Group amounted to TSEK 9,276 (8,047).

The Group capitalizes development costs for two pharmaceutical candidates for which the Group assesses that all criteria for capitalization are fulfilled. If the Group should make the judgment that all capitalization criteria are no longer fulfilled, these assets would be written off against the Group profit.

Note 5 Net sales per revenue category

	The Group		The Parent Company
	2010-05-01	2009-05-01	2010-05-01	2009-05-01
TSEK	-2011-04-30	-2010-04-30	-2011-04-30	-2010-04-30
License revenues	-	28 421	-	28 421
Net sales of pharmaceuticals	106	396	106	396
Parallel import sales	-	1 924	-	-
Total	106	30 741	106	28 817

Note 6 Capitalized development costs

Total for the Group and Parent Company

	2010-05-01 - 2011-04-30
TSEK	Paclical	Paccal Vet	Total
Opening balance acquisition value	76 227	64 633	140 860
Capitalized expenditures for the year	69 631	16 418	86 049
Closing balance accumulated acquisition value	145 858	81 051	226 909
Opening balance accumulated depreciation	-	-	0
Depreciation for the year	-	-	0
Closing balance accumulated depreciation	0	0	0
Closing balance carrying amounts	145 858	81 051	226 909

Research and development costs which are not capitalized, increased during the year to TSEK 35,105 (18,073).

	2009-05-01 - 2010-04-30
TSEK	Paclical	Paccal Vet	Total
Opening balance acquisition value	20 755	39 462	60 216
Capitalized expenditures for the year	55 472	25 171	80 643
Closing balance accumulated acquisition value	76 227	64 633	140 860
Opening balance accumulated depreciation	-	-	0
Depreciation for the year	-	-	0
Closing balance accumulated depreciation	0	0	0
Closing balance carrying amounts	76 227	64 633	140 860

Note 7 Other operating income

	The Group		The Parent Company
	2010-05-01	2009-05-01	2010-05-01	2009-05-01
	-2011-04-	-2010-04-	-2011-04-	-2010-04-
TSEK	30	30	30	30
Net sales to Group companies	-	-	-	125
State support (new start jobs)	245	-	245	-
Deleted prescribed debt	24	-	-	-
Total	269	0	245	125

Note 8 Inventories

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Acquisition value
Raw materials	-	94	-	94
Total	0	94	0	94

The inventories expenses that are recognized as costs are included in Raw materials, consumables and goods for resale, and in Other external expenses, and amounted to TSEK 0 (2,996). Write-down of inventories amounted to TSEK 94 (300) in the financial year, which is carried to the Income Statement item Raw materials, consumables and goods for resale.

Note 9 Remuneration to auditors

	The Group		The Parent Company
	2010-05-01	2009-05-01	2010-05-01	2009-05-01
TSEK	-2011-04-30	-2010-04-30	-2011-04-30	-2010-04-30
Ernst & Young AB
Audit	370	225	370	225
Audit activities in addition to auditing	158	727	158	727
Tax consulting	-	48	-	48
Total	528	1 000	528	1 000

Audit concerns reviews of the Annual Report, accounting records, and the management by the Board of Directors and CEO, and other tasks

Audit activities in addition to auditing include review of interim reports and quality assurance services in connection with share issues and stock-exchange prospectus.

Note 10 Leasing

The Group has no financial leasing agreements, but has operational leasing agreements that primarily consist of leases for facilities. There are no variable fees. The future minimum lease payments for operational leases are as follows (TSEK).

	Operational
Fiscal year	leasing
2011/2012	4 229
2012/2013	4 229
2013/2014	4 229
2014/2015	4 229
2015/2016	4 229
Total	21 144

Leasing costs (minimum lease payments) were TSEK 3,887 (TSEK 3,801) for the financial year.

Note 11 Employees and remuneration

	The Group		The Parent Company
	2010-05-01	2009-05-01	2010-05-01	2009-05-01
	-2011-04-30	-2010-04-30	-2011-04-30	-2010-04-30
Average number of employees
per gender:
Women	37	30	37	30
Men	29	26	29	26
Total	66	56	66	56
Salaries and remuneration amounted to (TSEK):
Board of Directors,	220	75	220	75
CEO and other senior executives	2 967	2 397	2 967	2 397
Other employees	25 749	20 315	25 749	20 315
Total salaries and remuneration	28 936	22 788	28 936	22 788
Social security contributions by law and agreement	8 467	6 625	8 467	6 625
Total salaries, remuneration and social security	37 403	29 413	37 403	29 413

SALARIES AND REMUNERATION TO THE BOARD OF DIRECTORS AND OTHER SENIOR EXECUTIVES

	2010-05-01	2009-05-01
	-2011-04-30	-2010-04-30
CEO Julian Aleksov	837	669
Chairman of the Board Björn Björnsson	25	-
Chairman of the Board/Board member Bo
Cederstrand	63	25
Board member Peter Ström	63	25
Board member Claes Piehl	63	25
Other senior executives (3 persons)	2 131	1 728
Total	3 180	2 472

Board of Directors and Board Committees

Remuneration of the Chairman of the Board of Directors and Board members is adopted by the Annual General Meeting. There is no remuneration for participation in the nomination committee. Remuneration to Björn Björnsson is invoiced through a by Björn Björnsson wholly-owned company, in accordance with a decision from the Annual General Meeting and after a special agreement with Oasmia Pharmaceutical AB. Except what is described in Transactions with senior management in note 31, no other remuneration such as salary, pension premium or other benefits have been paid.

CEO

Remuneration of the CEO consists of a fixed salary and statutory pension and insurance benefits. The remuneration of the CEO is revised annually as of April 1 utilized. If notice is given by the employer, a 24 month term of notice applies. If notice is given by the CEO, the term of notice is 3 months.

Terms of employment for other senior executives

Remuneration to other senior executives consists of a fixed salary and statutory pension and insurance benefits. The salaries are revised annually as of April 1.

Gender profile of the corporate management

	2011-04-30 Number on the balance-sheet date	Of whom men	2010-04-30 Number on the balance sheet date	Of whom men
The Group
Members of the Board of Directors CEO and other	5	5	4	4
senior executives	4	3	4	3
The Parent Company
Members of the Board of Directors CEO and other	5	5	4	4
senior executives	4	3	4	3

Healthcare and medical care

The Group has an agreement with a corporate healthcare provider for regular health assessment of all staff. There are no other health benefits for the employees in addition to this.

Absence due to illness	The Parent Company
	2010-05-01	2009-05-01
	-2011-04-30	-2010-04-30
Total absence due to illness	1,9%	1,2%
- Long-term absence due to illness	0,0%	0,0%
- Absence due to illness of men	1,2%	1,3%
- Absence due to illness of women	2,5%	1,1%
- employees aged -29	1,0%	1,8%
- employees aged 30-49	2,0%	1,4%
- employees aged 50-	2,1%	0,3%

* Long-term illness is absence due to illness for a continuous period of 60 days or more.

Note 12 Property, plant and equipment

Property, plant and equipment consists of vehicles, equipment, production equipment and leasehold improvements.

	The Group 2010-05-01 - 2011-04-30
			Production	Leasehold
TSEK	Vehicles	Equipment	plant	improvements	Total
Opening balance acquisition value	148	11 019	16 613	4 466	32 246
Capital expenditures for the year	-	6 676	-	3 645	10 321
Closing balance accumulated acquisition value	148	17 695	16 613	8 112	42 567
Opening balance accumulated depreciation	-148	-5 659	-4 801	-973	-11 582
Depreciation for the year	-	-2 468	-984	-292	-3 743
Closing balance accumulated depreciation	-148	-8 127	-5 785	-1 265	-15 325
Closing balance carrying amounts	0	9 568	10 828	6 847	27 243

	The Group 2009-05-01 - 2010-04-30
			Production	Leasehold
TSEK	Vehicles	Equipment	plant	improvements	Total
Opening balance acquisition value	148	8 361	16 613	3 583	28 705
Capital expenditures for the year	-	2 658	-	883	3 541
Closing balance accumulated acquisition value	148	11 019	16 613	4 466	32 246
Opening balance accumulated depreciation	-140	-4 093	-3 808	-806	-8 847
Depreciation for the year	-8	-1 567	-993	-167	-2 735
Closing balance accumulated depreciation	-148	-5 659	-4 801	-973	-11 582
Closing balance carrying amounts	0	5 360	11 812	3 493	20 665

	The Parent Company 2010-05-01 - 2011-04-30
			Production	Leasehold
TSEK	Vehicles	Equipment	plant	improvements	Total
Opening balance acquisition value	148	11 019	16 613	4 466	32 246
Capital expenditures for the year	-	6 676	-	3 645	10 321
Closing balance accumulated acquisition value	148	17 695	16 613	8 112	42 567
Opening balance accumulated depreciation	-148	-5 659	-4 801	-973	-11 582
Depreciation for the year	-	-2 468	-984	-292	-3 743
Closing balance accumulated depreciation	-148	-8 127	-5 785	-1 265	-15 325
Closing balance carrying amounts	0	9 568	10 828	6 847	27 243

	The Parent Company 2009-05-01 - 2010-04-30
			Production	Leasehold
TSEK	Vehicles	Equipment	plant	improvements	Total
Opening balance acquisition value	148	8 361	16 613	3 583	28 705
Capital expenditures for the year	-	2 658	-	883	3 541
Closing balance accumulated acquisition value	148	11 019	16 613	4 466	32 246
Opening balance accumulated depreciation	-140	-4 093	-3 808	-806	-8 847
Depreciation for the year	-8	-1 567	-993	-167	-2 735
Closing balance accumulated depreciation	-148	-5 659	-4 801	-973	-11 582
Closing balance carrying amounts	0	5 360	11 812	3 493	20 665

Note 13 Other intangible assets

Other intangible assets consist of expenditures for patents and sales rights.

		The Parent Company
			2009-05-01
			-2010-04-30
			12 638
			1 130
			-
			13 768
			-5 487
			-651
85	83	-	-
			-6 137
9 276	8 047	9 180	7 630
	2010-05-01 -2011-04-30 14 974 2 292 -218 17 048 -6 926 -931 -7 772	The Group 2009-05-01 -2010-04-30 13 994 1 130 -150 14 974 -6 132 -877 -6 926	2010-05-01 -2011-04-30 13 768 2 292 - 16 060 -6 137 -743 -6 880

Note 14 Currency differences - net

Currency differences are recognized in the income statement as follows:

	The Group		The Parent Company
	2010-05-01	2009-05-01	2010-05-01	2009-05-01
TSEK	-2011-04-30	-2010-04-30	-2011-04-30	-2010-04-30
Other operating income	-	-		-
Raw materials, consumables and goods for resale	129	717	130	694
Financial items, net	14	-1 052	15	-1 051
Total	144	-335	144	-358

Note 15 Operating income

Operating income for the fiscal year 2010-05-01 2011-04-30 was TSEK -64,353 (-14,961). recognized expenses, TSEK 150,778 (126,345), TSEK 86,049 (80,643) was recognized as capitalized development costs.

Note 16 Financial revenues and expenses

	The Group		The Parent Company
	2010-05-01	2009-05-01	2010-05-01	2009-05-01
TSEK	-2011-04-30	-2010-04-30	-2011-04-30	-2010-04-30
Financial revenues:
Interest revenues in bank accounts	464	23	463	23
Currency differences in bank accounts	20	388	20	388
Total	484	411	483	411
Financial expenses
Interest expenses on utilized credits and other interest
expenses	-2 091	-767	-2 091	-604
Interest expenses on instalment purchases	-	-67	-	-67
Currency differences for bank accounts	-6	-1 440	-6	-1 439
Fair value losses on derivative instruments	-	-231	-	-
Total	-2 097	-2 505	-2 097	-2 109

Note 17 Taxes

All Group companies have their fiscal domicile in Sweden, where the tax rate for the 2010/11 fiscal year is 26.3% (26.3%). The income tax on Group earnings before tax is shown in the table below.

	The Group		The Parent Company
	2010-05-01	2009-05-01	2010-05-01	2009-05-01
TSEK	-2011-04-30	-2010-04-30	-2011-04-30	-2010-04-30
Income before taxes	-65 967	-17 055	-65 998	-18 401
Income tax according to current tax rates in Sweden	17 349	4 485	17 357	4 839
Non-taxable revenues	1	-	-	-
Non-deductible expenses	-134	-93	-134	-91
Write-down of participation in Group companies			-578	-3 570
Taxable deficits for which no deferred tax is recognized	-17 216	-4 392	-16 645	-1 178
Tax costs	0	0	0	0

Note 18 Earnings per share

Earnings per share are calculated by dividing the profit attributable to equity holders in the Parent Company by a weighted number of ordinary shares outstanding during the period. Earnings per share are calculated before and after dilution, since there are no potential ordinary shares outstanding that would lead to a dilution effect

	The Group
	2010-05-01	2009-05-01
	-2011-04-30	-2010-04-30
Earnings contributable to equity holders in the Parent Company
(TSEK)	-65 960	-17 016
Weighted average number of ordinary shares outstanding
(thousands)*	44 061	36 550
Earnings per share (SEK per share)*	-1,50	-0,47

*Recalculation of historical values has been made with respect to capitalization issue elements in the rights issues carried out in the second quarter of 2009/10 and the third quarter of 2010/11.

Note 19 Financial instruments by category

The accounting policies for financial instruments have been applied to the items below:

The Group April 30, 2011

TSEK	Loans and trade receivables	Other financial liabilities	Total
Financial assets
Trade receivables	-	-	0
Other current receivables	2 141	-	2 141
Accrued income	131	-	131
Liquid assets	51 895	-	51 895
Total financial assets	54 168	0	54 168
Financial liabilities Borrowing Liabilities to credit institutions Trade payables	- - -	- - 3 831	0 0 3 831
Other current liabilities	-	1 399	1 399
Accrued expenses and prepaid income	-	5 545	5 545
Total financial liabilities	0	10 775	10 775

The Group April 30, 2010

	Loans and trade	Other financial
TSEK	receivables	liabilities	Total
Financial assets
Trade receivables	60	-	60
Other current receivables	2 090	-	2 090
Liquid assets	5 372	-	5 372
Total financial assets	7 523	0	7 523
Financial liabilities
Borrowing	-	10 550	10 550
Liabilities to credit institutions	-	4 289	4 289
Trade payables	-	2 076	2 076
Other current liabilities	-	1 197	1 197
Accrued expenses and prepaid income	-	4 220	4 220
Total financial liabilities	0	22 332	22 332

Note 20 Trade receivables and Prepaid expenses and accrued income

The book value of trade receivables represents the fair value, since no reservations have been necessary for uncertain trade receivables.

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Trade receivables	-	60	-	60
Prepaid expenses and accrued income	2 853	2 460	2 748	2 332
Total	2 853	2 520	2 748	2 393

on the balance-sheet date of April 30, 2011. Trade receivables due for the Group amounted to TSEK 0 (TSEK 0) on the balance-sheet date of April 30, 2011.

Prepaid expenses and accrued income consist of the following:

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Prepaid rent	670	582	670	582
Prepaid leasing fees	73	13	73	13
Prepaid insurance premiums	100	282	100	282
Other prepaid expenses	1 879	1 584	1 774	1 456
Accrued interest income	131	-	131	-
Total	2 853	2 460	2 748	2 332

Note 21 Other current receivables

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Tax account	26	26	26	-
VAT receivable	2 102	2 040	2 101	2 019
Receivable on supplier	6	24	6	-
Receivable on employee	7	-	7	-
Total	2 141	2 090	2 140	2 019

Note 22 Liquid assets

Liquid assets consist of bank balances.

Note 23 Share capital

Specifications of changes in equity are presented in this report for the Group and the Parent Company, after their respective statements of financial position. The total number of shares as of 2011-04-30 was 52,079,341 of type A (37,612,858 as of 2010-04-30) with a quota value of SEK 0.10 per share. All shares issued are fully paid for. The development in the number of shares since 2009-05-01 is presented below.

	Number of shares	Share capital (SEK)
Opening balance 2009-05-01	33 500 000	3 350 000
2009 Rights issue	2 392 858	239 286
2009 Directed new issue1	1 720 000	172 000
Opening balance 2010-04-30	37 612 858	3 761 286
2010 Rights issue	14 466 483	1 446 648
Opening balance 2011-04-30	52 079 341	5 207 934

1 Restricted to a small number of institutional players and other major investors.

Note 24 Other non-current liabilities

The Group and the Parent Company recognize Other non-current liabilities of TSEK 15,373 (15,373), which is a prepaid revenue derived from the licensing and distribution agreement that was signed with Abbott Laboratories in July 2009. According to this agreement, MUSD 2 of the MUSD 5 received as a first milestone payment may be subject to repayment if Oasmia has not achieved market approval for Paccal® Vet before May 1, 2014.

Note 25 Deferred taxes

The Group has accumulated losses for tax purposes amounting to TSEK 162,806 (96,979) as of April 30, 2011. These are subject to no limitations in time and are deductible against future gains. Of the total losses carried forward for the Group, TSEK 17,881 (17,881) are prohibited to be utilized via Group contributions. This prohibition will lapse as from the 2014 tax return. There are currently no arguments convincing enough that there will be future profits for tax purposes to justify the capitalization of tax losses carried forward as an asset. Accumulated losses for tax purposes carried forward in the Parent Company amounted to TSEK 153,607 (88,321) as of April 30, 2011.

Note 26 Liabilities to credit institutions

Approved credit facilities amount to TSEK 5,000 (5,000) in the Group and the Parent Company. Utilized credits are described in the table below.

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Credit facilities	-	4 289	-	4 289
Total	0	4 289	0	4 289

Note 27 Borrowing

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Short term
Utilized credit	-	10 550	-	10 550
Total	0	10 550	0	10 550

As of the balance-sheet date the Group and the Parent Company had no borrowing. Utilized credit in the previous year consisted of the utilized part of the approved credit line from Alceco International S.A. Luxemburg (note 31).

Note 28 Other current liabilities

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Employee withholding taxes and social
security	1 399	1 197	1 399	1 197
Total	1 399	1 197	1 399	1 197

Note 29 Accrued expenses and prepaid income

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Accrued vacation salaries	3 878	3 097	3 878	3 097
Accrued social security contributions	1 219	1 073	1 219	1 073
Accrued interest expenses	-	50	-	50
Other items	448	111	448	111
Total	5 545	4 332	5 545	4 332

Note 30 Contingent liabilities and pledged assets

Contingent liabilities

The Group and the Parent Company had no contingent liabilities during the period.

Pledged assets

The Parent Company is subject to a mortgage charge of TSEK 8,000 (5,000) to a bank as security for an overdraft facility of TSEK 5,000 (5,000), and as the limit for a foreign currency derivative of TSEK 3,000.

	The Group		The Parent Company
TSEK	2011-04-30	2010-04-30	2011-04-30	2010-04-30
Mortgage charge	8 000	5 000	8 000	5 000
Total	8 000	5 000	8 000	5 000

Note 31 Transactions with related parties

Group companies

The Group consists of the Parent Company Oasmia Pharmaceutical AB and the subsidiaries QDoxx Pharma AB and GlucoGene Pharma AB. The subsidiaries are controlled by the Parent Company and are therefore considered to be related parties. other shares in subsidiaries are disclosed in note 32.

Intercompany sales

During the 2010/11 financial year there were no sales between the Parent Company and the subsidiaries. During the 2009/10 financial year ses and management provided by Oasmia to the subsidiary.

Transactions with senior management

Concerning salaries and remuneration to the Board of Directors and senior executives, see note 11. In addition to what is disclosed in that note, remuneration to Björn Björnsson Konsult AB amounted to TSEK 99 concerning advice on capital procurement issues.

Financial loan transacti0ons with related parties

The principal owner Alceco International S.A. has made a credit facility of MSEK 40 available to Oasmia. The credit facility runs until August 2011 and is renewed automatically for 12 months, unless terminated by one party at the latest 3 months before expiry. The contract interest rate is 6%. During the period March October 2010 the company drew on some elements of the credit facilities, which at that time amounted to MSEK 100. In the rights issue in November 2010 Alceco International S.A. used outstanding loans and interest for a total of TSEK 70,000 as payment for the subscribed shares. As of April 30, 2011 the company had no debt to Alceco International S.A. (as of April 30, 2010 the company had utilized TSEK 10,550 of the credit granted by Alceco International S.A.).

During the financial year, Oasmia has contributed working capital and group contribution to the subsidiary Qdoxx Pharma AB. receivable from the subsidiary QDoxx amounted to TSEK 89 (370) as of the balance-sheet date.

Group contribution from Oasmia to Qdoxx

During the 2010/11 financial year, Group contributions were made totalling TSEK 390 (1,750). See also note 32.

Other transactions with related parties

Ardenia Investment LTD is the owner and proprietor of the patents which form the basis for the activities of the Parent Company. By an agreement between Ardenia and Oasmia, closed in 2001, the rights to these patents have been transferred to Oasmia. Oasmia has no commitments towards Ardenia.

Note 32 Participations in Group companies

			Owner-	Votes	Book value	Book value
The Parent Company	Swed. org. no.	Domicile	ship%	%	2011-04-30	2010-04-30
Qdoxx Pharma AB	556609-0154	Uppsala	100	100	100	100
GlucoGene Pharma AB	556519-8818	Uppsala	100	100	10	198
Total					110	298

	The Parent Company
TSEK	2011-04-30	2010-04-30
Opening balance acquisition value	298	2 118
Acquisition of participation	0	-
Capital contribution	-	-
Group contribution	390	1 750
Closing balance accumulated acquisition value	688	3 868
Amortization	-578	-3 570
Closing balance carrying amounts	110	298

On April 30, 2011 Oasmia acquired the remaining 49% of the shares in the subsidiary GlucoGene Pharma AB. The purchase price was SEK 1. The recognized value of the net assets of GlucoGene Pharma AB was TSEK -3 and the recognized value of the acquired additional holding was TSEK

-2. The difference of TSEK -2 between the purchase price paid and the recognized value of the acquired holding was recognized in retained earnings. After the acquisition Oasmia owns 100% of the shares and votes in the subsidiary GlucoGene Pharma AB.

The write-down of shares in the subsidiary GlucoGene Pharma AB as of the balance-sheet date totals TSEK 188 (-).

Write-down of shares in the wholly-owned subsidiary Qdoxx Pharma AB in the period corresponded to the Group contribution made of TSEK 390 (3,570) as the purpose of the Group contribution was to cover losses in the subsidiary.

The write-downs are recognized companies.

Note 33 Definitions of key ratios

Earnings per share

Income for the period attributable to the equity holders of the Parent Company divided by the weighted average number of shares, before and after dilution, in the period.

Equity per share Equity as a ratio of the number of shares at the end of the period.

Equity/assets ratio Equity as a ratio of total assets.

Net liability Total borrowing (comprising the balance sheet items Short-term and Long-term borrowings and Liabilities to credit institutions) with deduction of liquid funds.

Debt/Equity ratio Net liability as a ratio of equity.

Return on total equity Income before interest expenses pertaining to the average balance sheet total. Return on equity Income before tax as a ratio of average equity.

Proposal for allocation of non-restricted equity

The following non-restricted equity is available for distribution by the Annual General Meeting: Share premium reserve SEK 413,374,526 Retained earnings SEK 63,029,528 Income for the period SEK 65,998,058 Total SEK 284,346,940

The Board of Directors proposes that the 2011 Annual General Meeting adopts a resolution to dispose of the above amounts as follows:

Carry forward of SEK 284,346,940

Signing of the annual report

The Board of Directors and Chief Executive Officer ensure that the Consolidated Accounts have been presented in accordance with international financial reporting standards, IFRS, as they have been adopted by the EU, and give a true and fair view of the financial position and result of the Group. The Annual Report is presented in accordance with generally accepted accounting principles and gives a true and fair view of the financial position and result of the Parent Company. The Administration Report for the Group and Parent Company gives a true significant risks and uncertainty factors to which the Parent Company and the companies that are part of the Group are subject.

Income Statements and Balance Sheets will be presented for adoption by the Annual General Meeting on September 30, 2011.

Uppsala, August 25, 2011

Björn Björnsson, Chairman

Claes Piehl, Board member Peter Ström, Board member

Bo Cederstrand, Board member Julian Aleksov, Board member and CEO

Our audit report was submitted on August 25, 2011 Ernst & Young AB

Björn Ohlsson Authorized Public Accountant

Audit report

To the Annual General Meeting of Oasmia Pharmaceutical AB (publ)

Swed. org. no. 556332-6676

We have audited the Annual Accounts, Consolidated Accounts and accounting records, and the management by the Board of Directors and CEO of Oasmia Pharmaceutical AB (publ) for the financial year 2010-05-01 2011- 04-30. The c document on pages 24-55. The Board of Directors and the CEO are responsible for the preparation and presentation of the accounts and for ensuring that the Annual Accounts Act is applied to the preparation of the Annual Accounts, and that the international financial and reporting standards, IFRS, as adopted by the EU, and the Annual Accounts Act, are applied to the presentation of the Consolidated Accounts. Our responsibility is to express an opinion on the Annual Accounts, Consolidated Accounts and administration on the basis of our audit.

Our audit was performed in accordance with approved accounting practice in Sweden. This entailed that we planned and performed our audit in order to obtain reasonable, but not absolute, assurance that the Annual Accounts and Consolidated Accounts are free of material misstatement. An audit involves performing procedures to obtain audit evidence for the amounts and other disclosures in the accounts. An audit also includes evaluating the appropriateness of the accounting policies applied and the application thereof by the Board of Directors and CEO, as well as assessing the significant estimates made by the Board of Directors and CEO on their preparation of the Annual Accounts and Consolidated Accounts, and evaluating the overall presentation of the Annual Accounts and Consolidated Accounts. As the basis for our opinion concerning discharge we have reviewed significant decisions, activities and circumstances in the company in order to assess whether any Board member or the CEO holds any compensation liability to the company. We have also examined whether any Board member or the CEO have otherwise acted in conflict with the Companies Act, the Annual Accounts Act, or the Articles of the Association. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

The Annual Accounts are presented in accordance with the Annual Accounts Act and give a true and fair view of the financial position and result of the company, in accordance with approved accounting practice in Sweden. The Consolidated Accounts are presented in accordance with international financial reporting standards, IFRS, as they have been adopted by the EU, and the Annual Accounts Act, and give a true and fair view of the financial position and result of the Group. The Administration Report is in accordance with the Annual Accounts and the other elements of the Consolidated Accounts.

We recommend adoption by the Annual General Meeting of the Income Statement and Balance Sheet of the Parent Company, and the Income Statement, Statement of Comprehensive Income and Statement of Financial Position of the Group, the allocation of profit of the Parent Company in accordance with the proposal in the Administration Report, and the granting of discharge for the financial year to the members of the Board of Directors and CEO.

Uppsala, August 25, 2011

Ernst & Young AB

Björn Ohlsson Authorized Public Accountant

Annual General Meeting 2011

The Annual General Meeting of Oasmia Pharmaceutical AB will be held on Friday September 30, 2011 at 2 pm in Oasmia's offices at office building Skeppet, Vallongatan 1, Uppsala.

Registration

Shareholders wishing to participate in the Annual General Meeting must:

• be entered in the share register administrated by Euroclear Sweden AB as of Saturday September 24, 2011.
• notify the company of attendance no later than Monday September 26, 2011, specifying the number of assistants.

Notification of attendance

Notification can be made:

• via e-mail to info@oasmia.com
• via post to Oasmia Pharmaceutical AB, Vallongatan 1, 752 28 Uppsala
• via fax at +46 18-51 08 73
• via the company website: www.oasmia.com

When providing notification of attendance, the shareholder must specify name, social security or company registration number, address, phone number and number of shares. The data received will be processed and used only for the Annual General Meeting 2011.

Participants who use a proxy should send the proxy to the above address before the meeting. Proxy forms are available from Oasmia.

Shares held in trust

In order to be entitled to participate in the Annual General Meeting, shareholders who have their shares held in trust must request that their own name be temporarily entered into the share register. The registration must be implemented by Saturday September 24, 2011.

Dividend

The Board of Directors does not intend to propose a dividend for the fiscal year 2010/2011.

Contact information

Oasmia Pharmaceutical AB Vallongatan 1 SE-752 28 Uppsala Sweden Tel +46 18 50 54 40 Fax +46 18 51 08 73 info@oasmia.com www.oasmia.com

This report has been prepared in both Swedish and English. In the event of any discrepancy in the content of the two versions, the Swedish version shall take precedence.

History

1990

• Private research project about the ageing of the cell is initiated

1999

• Oasmia Pharmaceutical AB is founded

2004

• Clinical trials with Paclical® begin

2005

• Clinical trials with Paccal® Vet begin
• The company is listed on NGM Nordic

2006

• Parallel import in Qdoxx Pharma is initiated
• Oasmia obtains SME status from EMEA
• EMEA grants Paclical® Orphan Drug designation for treatment of ovarian cancer in the EU

2007

• Oasmia changes stock list from NGM Nordic to NGM Equity
• A license and distribution agreement is signed with Orion Corporation, Finland, concerning Paclical® in the Nordic countries

2008

• Clinical Phase III trials with Paccal® Vet and Paclical® commence
• Oasmia expands the cooperation with Orion Corporation concerning Paccal® Vet to include all of Europe

2009

• A distribution agreement is signed with Abbott Laboratories, U.S., concerning Paccal® Vet in the U.S. and Canada
• FDA grants Paclical® Orphan Drug designation for treatment of ovarian cancer in the U.S.

2010

• A license agreement is signed with Nippon Zenyaku Kogyo Co. Ltd for Paccal® Vet in Japan
• Oasmia changes stock list from NGM Equity to Nasdaq OMX Stockholm
• A SEDA-agreement of MSEK 75 is signed with YA Global Master SPV Ltd., U.S.
• A clinical study shows good tolerance for Doxophos® Vet

• Oasmia submits the registration dossier for Paccal® Vet to EMA (for the EU) and FDA (for the U.S.)

• Oasmia is listed on the Frankfurt Stock Exchange

• An agreement is signed with Baxter Oncology GmbH for large scale manufacturing
• Results from the interim analysis shows that Paclical® meets the clinical requirement of equal efficacy as Taxol®

Glossary

Alkylating substance	Chemical which reacts with DNA by attaching hydrocarbon chains, alkyl chains, to the DNA molecule. This causes cell death.
Alkylating agent	See alkylating substance
Anthracyclines	A type of antibiotics derived from certain fungi. Several anthracyclines are used as cytostatics in cancer treatment.
Carboplatin	Chemotherapeutic substance containing the precious metal platinum. Acts as alkylating agent.
Chemotherapy	Treatment of cancer using cytostatics (cytotoxins).
Clinical phase	Tests of a drug candidate in humans (in a veterinary context, in animals).
Clinical phase I	During clinical development of a drug the drug is tested in humans for the first time in phase I. The efficacy and safety of the drug is studied in a limited group ( 25-100 people) of healthy volunteers. The compounds for treatment of cancer that Oasmia is working on constitute an important exception. These candidates are also tested on volunteers but on a patient group that has the disease concerned.
Clinical phase II	A developed study in patients (50-300 people) with the disease against which the intended drug will be used. Study of efficacy and safety.
Clinical phase III	The final phase comprises a larger patient group (300-3.000 people) and the aim is to verify the efficacy and safety and identify any previously observed side effects.
Clinical phase IV	After the market launch the finished drug is monitored with respect mainly to rare side effect symptoms.
Cytostatics	Cytotoxins, drugs against tumour disease.
Cytotoxic	Toxic to cells.
Cytotoxins	See cytostatics.
EMA	European Medicines Agency.
EU-5	France, Germany, Italy, Spain and the United Kingdom.
Excipient	Platform, carrier molecule.
FDA	Food and Drug Administration. The US drug regulator.
Incidence	The number of diagnosed cases of disease in one year.
Infusion	A route of administering a drug in liquid form. Infusion is often intravenous, i.e. the drug is administered into a vein.
Malignant melanoma	A serious and metastasizing form of skin cancer.
Mastocytoma	A form of skin cancer.
Micelle	Spherical structures with the ability to form aggregates.
Microtubules	Tubular structures in the cytoplasm, are part of the cell skeleton and give it its shape.
Nanometre	One billionth of a metre. Similar in size to molecules and molecular structures.
Nanoparticle	A particle whose size is measured in nanometres, 10-9 m.
NSCLC	Non-small cell lung carcinoma.
Oncology	The branch of science dealing with tumour diseases.
Paclitaxel	The first taxane to be isolated from a yew tree. One of the most common cytostatics used today.
Pharmacokinetics	The study of the distribution and metabolism over time of a drug or other substance in the body.
Preclinical phase	Selection of drug candidates. The selected candidate is tested with respect to specificity, efficacy and safety.
Premedication	Prophylactic treatment with certain drugs before and/or during the main treatment against a disease. This is done because the side effect of the main treatment would otherwise be too drastic.
Retinoid	An acid similar to vitamin A.
SME	Small and Medium Enterprises.
Taxane	A group of chemicals originally derived from a yew tree. The group is one of the most commonly used compounds against tumour diseases today.
Toxic	Poisonous.
WHO	World Health Organization, the UN agency for global health.