Terje Kalland, Acting CEO, comments: “After a very eventful period for Karolinska Development, we are happy to announce the completion of the financing that enables the execution of the investment strategy that was presented in October. The financing took place in three steps, a private placement directed to CP Group, a rights issue of convertible bonds and a directed issue of convertible bonds to CP Group. In total, proceeds to Karolinska Development amounted to SEK 450 million before transaction costs. After the subscription period was extended in January to allow for allotment that nearly fully subscribed the rights issue of convertible bonds.
After the reporting period we announced that Karolinska Development’s CEO Bruno Lucidi had left the company after his contract was terminated. It is of course unfortunate having to appoint at new CEO after such a short time after the previous appointment, but as the Board of Directors and Bruno Lucidi had differing opinions on the implementation of the company’s investment strategy, the Board of Directors concluded that the company’s activities would be difficult to execute under these circumstances. As Acting CEO I will work together with the Board of Director, the company’s management and staff to continue on the path we set out at the presentation of the new strategy during the fall, while the recruitment process of a new CEO is ongoing.
In the portfolio, Forendo Pharma announced during the fourth quarter that the company had closed a financing round for the clinical development of Forendo’s candidate drug for the treatment of endometriosis. Karolinska Development invests in Forendo alongside a number of distinguished life science investors of which some have associations with large pharma companies. This is investment is a good example of Karolinska Developments strategy to syndicate ownership in the portfolio companies with other specialized investors in the sector. This broadens the access to capital and to key executives for the portfolio companies. Together with the license revenues from Forendo’s agreement regarding fispemifene and the US pharmaceutical company Apricus Biosciences, the company has now secures financing through to proof-of-concept in endometriosis.
We are now focusing on applying this policy of co-investment across the whole portfolio. In the strategic portfolio we aim to syndicate the upcoming investment with other specialized investors in order to reach the value inflection points in the portfolio companies’ projects that enables exits. In the opportunistic portfolio efforts are concentrated to agreements with industrial partners and to find external investors in these companies.
The clinical development in the portfolio is moving forward with an ongoing Phase I/II study in Aprea. The company announced during the first quarter 2015 that its candidate drug APR-246 has been granted orphan drug designation in Europe on the treatment of ovarian cancer. Dilaforette, after the end of 2014, and Clanotech, during the fourth quarter, were also granted European orphan drug designation for its product candidates for the treatment of sickle-cell disease and adjuvant treatment in connection with glaucoma surgery respectively. Dilaforette is now preparing to initiate a Phase II study with sevuparin in sickle-cell disease for the treatment of this life-long and periodically very painful disease.
OssDsign continues to expand its market launch in Europe of Craniomosaic – an implant for severe cranial injuries – that is now also marketed in Spain. During the 2014 fourth quarter we also announced that OssDsign’s follow-up product Cranioplug had received marketing approval in the US. Athera initiated a Phase I study of PC-mAb during the fourth quarter for the treatment of cardiovascular disease. Later, Boehringer Ingelheim announced that it will not exercise the option rights to license Athera’s candidate drug. Boehringer’s announcement does not affect the current clinical trial and the project is co-financed through the EU 7th Framework Program. At the same time Athera is in the process of finding a partner or investor for the further development of PC-mAb.”
Significant events during the fourth quarter
Karolinska Development
-
Karolinska Development completed a private placement amounting to
SEK 63 million to Sino Biopharmaceutical Limited, a member of the Thai Charoen Pokphand Group (CP Group) - A rights issue of convertible bonds not exceeding approximately SEK 228m and a directed issue of convertible bonds to CP Group not exceeding approximately SEK 173m was decided by the Board of Directors and approved at the Extraordinary General Meeting
- Karolinska Development presented a new strategy at the company’s Capital Markets Day
- The preliminary outcome of the rights issue of convertibles was announced
- Bruno Lucidi was appointed CEO of Karolinska Development
The Portfolio
- Forendo Pharma announced the US licensing of fispemifene to Apricus Biosciences and closed a EUR 12 million financing round for the company’s endometriosis program
-
Clanotech received orphan drug designation in the EU for its product candidate
CLT-28643 in glaucoma surgery - OssDsign’s Cranioplug received marketing approval in the US
- Athera initiated Phase I study with cardiovascular antibody PC-mAb and Boehringer Ingelheim decided not to exercise the option rights on the development of PC-mAb
Significant events after the fourth quarterKarolinska Development
- Following an extension of the subscription period for the rights issue of convertible bonds, Karolinska Development finalized the company’s financing through the issue of convertibles, which was subscribed by approximately 94 percent and in total the share issue and the convertible bond issue thereby generated proceeds of approximately SEK 450m.
- Deputy CEO Terje Kalland was appointed Acting CEO after Bruno Lucidi left his role in the company as his contract was terminated
Financial Summary
| SEKm |
2014 Oct-Dec |
2013 Oct-Dec (restated) |
2014 Full-year |
2013 Full-year (restated) |
|
| Condensed income statement | |||||
| Change in fair value in portfolio companies | -19.3 | -123.4 | -310.4 | -140.0 | |
| Net profit/loss | -39.8 | -99.2 | -375.8 | -157.3 | |
| Condensed balance sheet | |||||
| Cash, cash equivalents and short-term investments | 141.3 | 200.7 | |||
| Share information | |||||
| Earnings per share, weighted average, before and after dilution (SEK) | -0.80 | -2.05 | -7.73 | -3.25 | |
| Net asset value per share (SEK) | 31.2 | 40.7 | |||
| Equity per share (SEK) | 31.0 | 40.5 | |||
| Share price, last trading day in the reporting period (SEK) | 13.3 | 30.9 | |||
| Portfolio information | |||||
| Portfolio companies' net cash¹ | 55.0 | 111.6 | |||
| Investments in portfolio companies | 27.5 | 88.2 | 84.0 | 266.2 | |
| Of which investments not affecting cash flow | 0 | 64.3 | 6.7 | 68.1 | |
| Fair value of portfolio holdings | 1,502.2 | 1,729.5 | |||
1Portfolio companies' net cash is comprised of sum of cash, cash equivalents and short-term investments less
external loans in portfolio companies regardless of Karolinska Development's ownership interest
For further information, please contact:
Terje Kalland, Acting CEO, Karolinska Development AB
Phone: +46 (0) 76 891 73 01, e-mail: terje.kalland@karolinskadevelopment.com
Christian Tange, CFO, Karolinska Development AB
Phone: +46 (0) 73 712 14 30, e-mail: christian.tange@karolinskadevelopment.com
TO THE EDITORS
About Karolinska Development AB
Karolinska Development aims to create value for patients, researchers, investors and society by developing innovations from world class science into differentiated products that can be partnered. The business model is to: SELECT the most commercially attractive medical innovations that can potentially satisfy unmet medical needs; DEVELOP innovations to the stage where the greatest return on investment can be achieved; and COMMERCIALIZE the innovations through the sale of companies or out-licensing of products. An exclusive deal flow agreement with Karolinska Institutet Innovations AB, along with other cooperation agreements with leading universities, delivers a continuous flow of innovations. For more information, please visit www.karolinskadevelopment.com.
Karolinska Development is listed on NASDAQ OMX (KDEV). Karolinska Development may be required to disclose the information provided herein pursuant to the Securities Markets Act.
