Karolinska Development publishes its Annual Report for 2018 with an update on the financial situation

STOCKHOLM, SWEDEN - 30 April 2019. Karolinska Development AB (Nasdaq Stockholm: KDEV) has today published its Annual Report for 2018. The Annual Report contains an update from The Board of Directors on the company's financial situation and an emphasis of matter paragraph from the Auditor regarding going concern.

In the Annual Report for 2018, The Board of Directors give an update on actions taken to strengthen the company's financials. The Board of Directors' information in the Directors' report on page 30 and 34 and note 1 reads:

"As of December 31, 2018, Karolinska Deve­lopment had an outstanding convertible loan of nominally SEK 329 million with an annual nominal interest rate of 8 percent. The conver­tible loan matures on December 31, 2019 with a repayment amount of approximately SEK 484 million (the interest rate is cumulative) if it is not converted to shares before then. The company also has an outstanding credit facility of SEK 50 million, which matures in November 2019. The company is in need of additional financing before the end of the last quarter of 2019 in order to finance the repayment of the convertible loan, the outstanding credit facility and secure the continued operation. The Board of Directors has taken steps to ensure the bu­siness's need for financing and is in discussions with the company's major convertible holder, Sino Biopharmaceutical Limited, also a major shareholder in the company, holding converti­bles in the company with a nominal value of app­roximately SEK 273 million, regarding a set-off of Sino Biopharmaceutical Limited's conver­tibles, together with accrued interest, against shares in the company. In the discussions, Sino Biopharmaceutical Limited has stated in writing:

"We, Sino Biopharmaceutical Limited and Chia Tai Resource Limited (a wholly-owned subsidiary of Sino Biopharmaceutical Limited) (collectively referred to as "Sino Biopharmaceutical"), hereby express that Sino Biopharmaceutical, holding convertible loan in Karolinska Development of nominal value of SEK 272,858,294 in total, have received the proposal from Karolinska Develop­ment for a full conversion of Sino Biopharmaceu­tical's holding of the convertible loan in Karolinska Development and are now sincerely considering the proposal and working out the implementation details with Karolinska Development. The propo­sal and our final decision regarding settlement of the convertible loan shall be subject to approval by the board of directors of Sino Biopharmaceutical."

Karolinska Development is also planning for a rights issue of shares to the company's shareholders, which is intended to be effectu­ated during the second half of 2019 and has appointed DNB Markets to assist with such rights issue. The company also works with other alternative solutions together with financial institutions. Should the Board of Directors not succeed with its plans to secure financing, there is a risk that conditions for going concern would not apply. However, the Board of Directors works actively with solutions to solve the financing situation and sees good opportunities for success in the near future and therefore judges that the company continues to have the possibility to implement the company's communicated business plan. The company's financial reports have been pre­pared based on a going concern assumption."

The information from The Board of Directors has led to the following emphasis of matter paragraph in the Auditor's report:

"We want to draw attention to the board's information in the directors' report on page 30 and 34 and note 1 in the financial statement, which states that the cash equivalents as per December 31, 2018 is not sufficient to repay the outstanding credit facility and convertible loan which matures in November 2019 and December 2019. In the directors' report it is presented that the company is in need of additional financing in the next 12 months in order to finance the repay­ment of the convertible loan, the outstanding credit facility and secure the continued opera­tion. Should sufficient financing not be obtained, there is a risk that the requirement for adopting going concern is not met. The Board of Directors has taken steps to ensure the business's need for financing and is in negotiations with the company's major convertible holder, including a proposal from the company for a conversion of the converti­ble loan.

These conditions indicate that there is sig­nificant uncertainty that can lead to conside­rable doubt regarding the company's ability to continue its operations. We have not modified our opinion because of this."

The Annual Report is now available to download at www.karolinskadevelopment.com.

For more information, please contact:

Viktor Drvota, CEO, Karolinska Development AB

Phone: +46 73 982 52 02, e-mail: viktor.drvota@karolinskadevelopment.com

Fredrik Järrsten, CFO, Karolinska Development AB
Phone: +46 70 496 46 28, e-mail: fredrik.jarrsten@karolinskadevelopment.com


About Karolinska Development AB

Karolinska Development AB (Nasdaq Stockholm: KDEV) is a Nordic life sciences investment company. The company focuses on identifying breakthrough medical innovations that are developed by entrepreneurs and leadership teams. The Company invests in the creation and growth of companies that advance these assets into commercial products that are designed to make a difference to patients' lives while providing an attractive return on investment to shareholders.

Karolinska Development has access to world-class medical innovations at the Karolinska Institutet and other leading universities and research institutes in the Nordic region. The Company aims to build companies around scientists who are leaders in their fields, supported by experienced management teams and advisers, and co-funded by specialist international investors, to provide the greatest chance of success.

Karolinska Development has established a portfolio of ten companies targeting opportunities in innovative treatment for life-threatening or serious debilitating diseases.

The Company is led by an entrepreneurial team of investment professionals with a proven track record as company builders and with access to a strong global network.

For more information: www.karolinskadevelopment.com.

This information is information that Karolinska Development AB (publ) (Nasdaq Stockholm: KDEV) is obliged to make public pursuant to the EU Market Abuse Regulation and to the Securities Markets Act. The information was submitted for publication, through the agency of Viktor Drvota, at 15:00 CET on 30 April 2019.

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