Karolinska Development AB: Interim Report For January-June 2016

Jim Van heusden, CEO, comments: “In the first half of 2016 Karolinska Development achieved three key developments within our portfolio companies: we secured additional financing; ensured continued progress of the development pipeline; and strengthened board and management teams.

“A key highlight so far in 2016 has been Aprea’s SEK 437 million financing in March, the largest ever completed by a Karolinska Development portfolio company and more broadly by any private life science company in Sweden in more than a decade. Dilaforette and Promimic also secured non-dilutive financing through new partnerships. As a consequence of these activities, the majority of our portfolio is now funded to deliver key value-generating milestones over the coming years.

“We are also encouraged by the progress made by our portfolio companies in advancing their development pipelines, and presenting and publishing their latest results.

“In addition, we attracted entrepreneurial leaders to the boards and senior management team of our companies: Simon Cartmell joined the board of OssDsign, Christian Schade was appointed CEO of Aprea and Bruce Scharschmidt joined the board of Umecrine Cognition,; their quality and experience is crucial to ensuring the success of our portfolio.

“Karolinska Development’s investment strategy is designed to deliver value from the most promising life science opportunities across the Nordic region. I look forward to providing further updates as we execute on our strategy.”

Significant events during the second quarter 2016

• Karolinska Development saw good progress during the second quarter through its portfolio companies making important announcements in relation to their product pipelines, and the strengthening of their board and management teams. Most of the companies in the portfolio are now funded to deliver key value-generating milestones over the coming years.
• Lipidor AB announced an agreement on a Phase III clinical study and the joint commercialization of a topical psoriasis product with Cadila Pharmaceuticals (June 2016).
• Aprea AB presented promising efficacy and safety data from the Phase Ib part of its PiSARRO trial of APR-246 in ovarian cancer patients at the American Society of Clinical Oncology (ASCO) meeting (June 2016).
• Dilaforette AB presented a poster highlighting the mechanism of action of sevuparin in treating sickle-cell disease at the European Hematology Association Congress (June 2016).
• Promimic AB published positive results from an in vivo proof-of-concept study, in the International Journal of Nanomedicine (April 2016), demonstrating the improved bone-healing properties of medical implants coated with HAnano Surface compared with uncoated implants.
• Aprea AB named Christian S. Schade as its President and Chief Executive Officer (June 2016).
• OssDsign AB appointed Simon Cartmell as Chairman of the Board (April 2016).

Significant events after the second quarter

• KDev Investments divested its entire shareholding in ClanoTech AB to Rosetta Capital (July 2016). Karolinska Development retains an economic interest in ClanoTech through an earn-out agreement, the proceeds of which will be retained entirely by Karolinska Development.
• Umecrine Cognition AB announced the appointment of Dr. Bruce Scharschmidt as a new member of its board of directors and Senior Development Adviser (July 2016).

Financial summary

• Karolinska Development’s portfolio Total Fair Value decreased by SEK 75.8 million as it wrote down the entire value of its holding in ClanoTech AB ahead of KDev Investments disposal of all of its shares in the company to Rosetta Capital (July). With this reduction, the Total Fair Value of Karolinska Development’s portfolio at the end of June was SEK 401.2 million. Net Fair Value of the portfolio at the end of June 2016 was SEK 143.7 million, a decrease of SEK 49.4 million compared to the end of March 2016.
• Entire shareholding of Akinion Pharmaceuticals AB (via KDev Investments) divested to Accelerated Innovation Europe AB in April. Following this transaction, neither Karolinska Development nor KDev Investments has any economic interest nor exposure in Akinion.
• Net sales amounted to SEK 0.6 million in the second quarter (SEK 1.1 million in the second quarter 2015). Net loss amounted to SEK -75.8 million (SEK -654.6 million). Earnings per share amounted to SEK -1.4 (SEK -12.3).
• Karolinska Development’s investments in portfolio companies during the second quarter amounted to SEK 9.5 million. Total investments in portfolio companies by other specialized life science investors during second quarter amounted to SEK 6.8 million.
• Cash, cash equivalents and short term liquidity investments decreased by SEK 19.2 million during the second quarter and amounted to SEK 268.4 million as of June 30, 2016.
• Operational costs in the second quarter amounted to SEK 6.6 million, a reduction of 46% compared to SEK 12.2 million in second quarter 2015 as a consequence of the organizational restructuring undertaken during 2015.

Conference Call and Webcast

Please dial in at one of the following numbers a few minutes before the start of the conference call:

• From Sweden: +46 (0) 8 505 564 74
• From the US: +1 855 753 22 30
• From the UK: +44 (0) 20 336 453 74

The presentation will also be webcast and can be accessed from the following web address:

http://edge.media-server.com/m/p/84ypx7fr

Host: Jim Van heusden, CEO.
For further information, please contact:

Jim Van heusden, CEO, Karolinska Development AB
Phone: +46 72 858 32 09, e-mail: jim.van.heusden@karolinskadevelopment.com

Christian Tange, CFO, Karolinska Development AB
Phone: +46 73 712 14 30, e-mail: christian.tange@karolinskadevelopment.com

David Dible/Mark Swallow/Pip Batty, Citigate Dewe Rogerson
Phone: +44 20 7638 9571; e-mail: KDev@citigatedr.co.uk

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