Annual
Report
2022
Passionately creating
medicines that make
a difference
uniontherapeutics.com
Emma, aged 19, diagnosed
with atopic dermatitis, with
her mother.
Contents
Introduction
UNION at a glance 4
2022 achievements 5
Joint letter from the Chair and CEO 6
Consolidated key figures 8
Impact and corporate responsibility
ESG strategy and focus areas 24
Patient care 26
Our people 28
Environment and climate 31
Corporate governance 33
Executive Management 34
Board of Directors 35
Key risks 36
Financial review
Financial review 39
Management review Financial statements
Financial statements
Consolidated financial statements 42
Parent company financial statements 73
Other information
Statement by the Board of Directors
and the Executive Management 97
Independent Auditor’s Report 98
Forward looking statements 100
Sources 101
Company information 101
Page 6 Page 17Page 12 Page 20
Letter from
the Chair
and CEO
Living with
atopic
dermatitis
NiclosamideOrismilast
Our business
Business model and strategy 10
Pipeline overview 11
Orismilast 12
Psoriasis 14
Atopic dermatitis 16
Hidradenitis suppurativa 18
Niclosamide 20
COVID-19 and immuno compromised
patients 21
UNION therapeutics 2Annual Report 2022
contents
Scalable business model
Scalable and capital-efficient business model built on
identification and development of well-characterized mole-
cules with broadly applicable mechanisms of action. Ambition
to maintain a diversified clinical-stage pipeline with shorter
time to market while yielding multiple growth opportunities
through expansion of scope for existing molecules, through
the introduction of new molecules from existing platforms,
as well as through in-licensing of new molecules.
Experienced team
Approximately 40 employees led by an
experienced management team of biotech
entrepreneurs and seasoned pharma executives
with a track record of developing and launching
more than 15 drugs to the global markets.
Strong patent estate
UNION has a strong patent estate consisting of
250 granted patents across multiple compound
classes within immunology and infectious
diseases.
Diversified mid- to late-stage pipeline
UNION is developing orismilast, a high-potency PDE4 inhibitor,
as an efficacious but safe oral treatment across immunology,
initially targeting best-in-class or first-in-class positions in
psoriasis, atopic dermatitis and hidradenitis suppurativa.
UNION is also developing niclosamide, a host-targeting
antiviral, as a potential first-in-class treatment for prevention
of respiratory infections in immunocompromised patients.
UNION at a glance
UNION is a development-focused pharmaceutical company advancing novel treatment options
within immunology and infectious diseases, two large and fast-growing therapeutic areas.
The UNION Way
Passionately creating medicines
that make a difference
UNION therapeutics 4Annual Report 2022 UNION at a glance
union at a glance
Initiation of Phase 2b study with oral
orismilast in atopic dermatitis.
2022 achievements
Significant advancement
of the clinical pipeline
Multiple presentations
and publications
Regulatory support
for orismilast
Corporate
progress
Positive topline results from Phase 2b
study with oral orismilast in psoriasis*.
New data on orismilast published
and presented in the Journal of the
European Academy of Dermatology and
Venereology (JEADV) and at leading
scientic conferences.
Fast Track designation from the U.S.
Food and Drug Administration (FDA)
for oral orismilast in hidradenitis
suppurativa*, following Fast Track in
atopic dermatitis in 2021.
Strong progress of ESG initiatives, in-
cluding supplier engagement in estima-
tion of CO
2
emissions, development of a
purposeful company culture (The UNION
Way) and partnering with patient organi-
zations to raise disease awareness.
Conclusion of patient enrolment in
Phase 2/3 study with niclosamide nasal
spray in COVID-19.
Publication of large-scale analysis
on COVID-19-associated mortality
in dialysis and kidney transplant
patients in the peer-reviewed journal
Transplantation.
Treatment extension from the
Danish Medicines Agency and Ethics
Committee for Phase 2a study with oral
orismilast in hidradenitis suppurativa.
Continued investor support, including
DKK 62.0m in private placement (DKK
275.0m across 2021/2022), conversion
of DKK 45.0m convertible debt to equity,
extension of DKK 79.5m of venture debt
facility with the European Investment
Bank, and USD 4.0m in milestone pay-
ments from licensing agreements.
* Announced January 2023.
UNION therapeutics 5Annual Report 2022 2022 achievements
2021 achievements
Joint letter from the Chair and CEO
Important steps
taken to create
medicines that
make a difference
2022 has been a year of great progress for UNION
with several important achievements paving the way
for a very exciting 2023, including positive topline
results from the Phase 2b study with orismilast
in psoriasis, advancement of our mid- to late-
stage clinical programs with both orismilast and
niclosamide, as well as continued development of
a purposeful company culture, The UNION Way,
to support the future growth of the company.
Positive topline results for orismilast lay
the foundation for potential best-in-class or
first-in-class positions across immunology
Throughout the year, we have successfully ad-
vanced our two lead molecules, orismilast and
niclosamide.
Orismilast, a high-potency PDE4 inhibitor, is
initially being developed for the three immu-
nological diseases psoriasis, atopic dermatitis
(AD) and hidradenitis suppurativa (HS). During
2022, the Phase 2b study with oral orismilast
in psoriasis progressed rapidly and patient
enrollment was completed in August 2022.
In January 2023, we announced positive topline
results, supporting the target product profile of
a best-in-class PDE4 inhibitor and confirming
the well-established, favorable safety profile of
PDE4 inhibition.
In 2022, we also announced the initiation of a
Phase 2b study with oral orismilast in AD, the
most prevalent immunological skin disease.
FDA has previously granted Fast Track desig-
nation for oral orismilast in AD due to the
significant unmet medical need for a safe and
efficacious oral treatment.
At the beginning of 2023, FDA also granted
Fast Track designation for oral orismilast in
HS, a scarring skin disease with a significant
unmet medical need and few alternatives to
Stig Løkke Pedersen
Chair of the Board of Directors
Kim Domela Kjøller
Chief Executive Officer
UNION therapeutics 6Annual Report 2022 Joint letter from the Chair and CEO
letter from ceo
Stig Løkke Pedersen
Chair of the Board of Directors
Kim Domela Kjøller
Chief Executive Officer
Niclosamide - a broad-spectrum
antiviral with large potential
The event-driven Phase 2/3 platform trial
PROTECT-V, investigating niclosamide nasal
spray for the prevention of COVID-19 in immu-
nocompromised patients, was expanded at the
beginning of 2022 to include India in addition
to the UK. The targeted 230 events, being
confirmed, symptomatic COVID-19 cases, were
met in late 2022 and active recruitment thus
completed. We are very pleased with the clinical
development of niclosamide in 2022 and look
forward to seeing the results from PROTECT-V
in the first half of 2023.
Due to limited benefits of vaccines and
continued emergence of new variants of the
virus, immunocompromised patients remain
at significant risk of succumbing to COVID-19,
despite the availability of vaccines, monoclonal
antibodies and antiviral tablets. With the risk of
contracting other viruses alongside COVID-19,
including influenza and RSV, the need for a
broad-spectrum antiviral is even more pro-
nounced.
The UNION Way
Following the significant growth of the organ-
ization over the last few years, all employees
surgery. Amongst other benefits, the Fast Track
designations provide UNION with the oppor-
tunity for more frequent interactions with the
FDA, supporting the continued development of
orismilast.
The significant advancement of the clinical
pipeline and the positive Phase 2b results
are also a validation of UNION’s scalable and
capital-efficient business model focused on
in-licensing of molecules with well-estab-
lished mechanisms of action and execution of
well-designed clinical development programs to
rapidly demonstrate competitive drug product
characteristics.
During 2022, UNION has laid the foundation
for and continued to build a strong scientific
narrative for orismilast with publications and
presentations at leading scientific conferences.
We are very satisfied with the clinical develop-
ment of orismilast in 2022 and with the recogni-
tion from regulatory authorities, supporting
the continued development of orismilast in
immunological diseases with very significant
unmet medical needs.
have come together in 2022 to define a shared
language around our purpose and vision of
“passionately creating medicines that make
a difference”. The desired values and virtues
when engaging with colleagues as well as
external collaborators have been defined in The
UNION Way, our company culture.
Looking ahead to a very exciting 2023
2023 has started with positive topline results
from our Phase 2b study with oral orismilast
in psoriasis. This news and the data expected
to read out from several of our other clinical
studies throughout the year lay the foundation
for a very exciting 2023.
“ 2023 has already started with positive topline results from our
Phase 2b study with oral orismilast in psoriasis, supporting
the target product profile of a best-in-class PDE4 inhibitor and
confirming the well-established favorable safety profile of the
PDE4 mechanism.”
UNION remains committed to develop medi-
cines that are impactful for patients.
We are very grateful for the support we contin-
ue to receive from our stakeholders, including
patients, doctors, employees, investors, indus-
try partners and a broad range of other external
collaborators, all essential for reaching our goal
of creating medicines that make a difference.
UNION therapeutics 7Annual Report 2022 Joint letter from the Chair and CEO
DKK’000 2022 2021 2020 2019 2018*
Statement of comprehensive income
Revenue 34,393 118,912 0 11,649 0
Research and development costs -186,434 -155,305 -65,107 -19,402 -48,459
Administrative costs -31,564 -21,724 -8,270 -5,053 -5,491
Other operating income 0 6,178 9,049 344 3,683
Operating result -183,625 -51,939 -64,328 -12,462 -50,267
Financial income/(expense) -36,133 -9,562 -22,078 -4,543 -5,375
Result before tax -219,758 -61,501 -86,406 -17,005 -55,642
Tax income/(expense) 5,454 5,475 5,510 4,143 5,497
Result for the year -214,304 -56,026 -80,896 -12,862 -50,145
Statement of financial position
Non-current assets 17,908 17,978 16,856 576 169
Current assets excl. Cash and cash equivalents 8,762 13,545 15,603 5,251 6,678
Cash and cash equivalents 159,005 253,402 36,425 46,466 21,775
Total assets 185,675 284,925 68,884 52,293 28,622
Equity -27,688 49,380 -58,397 -38,308 -35,419
Non-current liabilities 136,793 170,675 94,963 81,220 52,362
Current liabilities 76,570 64,870 32,318 9,381 11,679
DKK’000 2022 2021 2020 2019 2018*
Cash flow statement
Cash flow from operating activities -158,074 -2,974 -51,546 -8,379 -43,973
Cash flow from investing activities -178 -140 -1,668 0 -35
- Investment in property plant and equipment -178 -140 0 0 -35
Cash flow from financing activities 61,448 216,496 43,524 32,783 52,023
Employees
Average full-time equivalents 36 25 9 9 8
Headcounts by year-end 40 36 16 10 8
* The comparatives figures for 2018 have not been restated following the adoption of IFRS 16 Leases on January 1, 2019 by use of the
modified retrospective approach.
Consolidated key figures
UNION therapeutics 8Annual Report 2022 Consolidated key figures
consolidated key gures
Identify Develop Commercialize
Business model and strategy
The core of UNION’s business model is
identification and development of molecules
with well-established and broadly
applicable mechanisms of action with
first-in-class or best-in-class potential.
1
2
A B
C
3
Optimization of drug potential
Maximizing the potential of drug product
candidates and ensuring access for as many
patients as possible. Depending on disease
area and/or geography, UNION will decide if it
will commercialize itself or partner with a larger
pharmaceutical company.
Identification of molecules
Identification of molecules that have well-
established and broadly applicable mechanisms of
action as well as favorable safety profiles. These
can be molecules already in the clinical pipeline or
molecules in-licensed from other companies or
academic institutions.
Pharmaceutical
innovation
Optimization of the formulation
of the drug and drug delivery
to enhance efficacy, safety
and ease-of-use of the drug to
support patient adherence to
treatment.
Understanding of unmet
medical needs
Using data and proprietary research
to combine the scientific rationale
with a deep understanding of the
unmet needs among patients,
physicians and payers, aiming to
develop solutions that meet the
needs of all stakeholders.
Clinical development
Design of clinical development programs
to rapidly demonstrate competitive and unique drug
product characteristics for patients, physicians and payers
in close collaboration with key opinion leaders, patient
organizations and contract research organizations.
UNION therapeutics 10Annual Report 2022 Business model and strategy
Pipeline overview
A diversified mid- to late-stage clinical pipeline
with drug candidates in large therapeutic areas.
Program Phase 1 Phase 2a Phase 2b Phase 3
Orismilast*
Immunology
Psoriasis
Oral orismilast
Atopic dermatitis
Oral orismilast
FDA Fast Track
Hidradenitis suppurativa
Oral orismilast
Investigator-sponsored study
FDA Fast Track
Atopic dermatitis
Topical orismilast
Niclosamide
Infectious
diseases
COVID-19 Prophylaxis
Niclosamide nasal spray
PROTECT-V platform study**
Other
Canine pyoderma***
Topical oxyclozanide
* Innovent Biologics has exclusive rights to oral orismilast and an option on topical orismilast for Greater China (Mainland China, Hong Kong, Taiwan and Macau). UNION retains remaining worldwide rights.
** Platform study led by Cambridge University Hospitals NHS Foundation Trust and the University of Cambridge, and funded by Kidney Research UK, LifeArc, Addenbrookes Charitable Trust, Kidney Research UK and UNION.
*** Topical oxyclozanide is fully out-licensed to Ceva Santé Animale.
Phase 2/3
Immunology
The purpose of the immune system is to defend the
body against outside invaders, such as bacteria, viruses,
and toxins. However, the immune system sometimes
malfunctions, which can lead to inammation, eczema,
allergies or other autoimmune reactions where the
immune system attacks the body’s own cells.
Infectious diseases
Infectious diseases are disorders caused by disease-
causing agents, such as bacteria or viruses. An
infection can occur anywhere in the body. COVID-19
and inuenza are examples of respiratory infections,
which are infections of parts of the body involved
in breathing, such as the throat, airways or lungs.
UNION therapeutics 11Annual Report 2022 Pipeline overview
pipeline
Orismilast
A high-potency PDE4 inhibitor currently in development
as an oral treatment of psoriasis, atopic dermatitis
(AD), and hidradenitis suppurativa (HS).
The recent Phase 2b study with oral orismilast
in psoriasis further supports the target product
profile of orismilast as potential best-in-class
treatment and confirms the well-established,
favorable safety profile of PDE4 inhibition.
Regulatory Fast Track and
strategic partnership
UNION has received Fast Track designation from
FDA for oral orismilast for the treatment of mod-
erate to severe AD as well as for the treatment of
moderate to severe HS. Fast track designation is
usually given to molecules that have demonstrat-
ed high potential for treatment of diseases with
significant unmet need.
In 2021, UNION entered a strategic partnership
with Innovent Biologics, granting exclusive
rights to orismilast in Greater China. In 2022,
Innovent dosed the first patient in a Phase 1 study
with oral orismilast in healthy volunteers, which
is required for further development in Chinese
patients.
.
Addressing significant unmet medical needs
UNION is currently developing orismilast, a
high-potency PDE4 inhibitor, as an efficacious
and safe oral treatment of initially three diseases
within immunology: psoriasis, AD and HS. De-
spite recent developments in the treatment land-
scape, there is an unmet medical need for effica-
cious, safe oral treatments with no monitoring in
all three diseases. Oral orismilast holds potential
as a best-in-class treatment for psoriasis and a
first-in-class treatment for AD and HS.
Documented clinical efficacy and
safety in Phase 2b study
Orismilast has been tested in clinical Phase 1
and 2a studies demonstrating superior effica-
cy to placebo for psoriasis and AD. The safety
and efficacy data from the Phase 2a study in
psoriasis as well as new preclinical data on the
pharmacological properties of orismilast were
recently published in Journal of the Europe-
an Academy of Dermatology and Venerology
(JEADV). The data support orismilast’s potential
in psoriasis, AD and HS.
Psoriasis
Need for orals with improved efcacy
Orismilast developed as potentially best-
in-class safe oral treatment with improved efcacy.
Hidradenitis suppurativa
Need for more and improved treatment options
Orismilast holds rst-in-class potential as a novel oral
treatment with broad anti-inammatory mode-of-action vs.
targeted, injectable biologics.
Page 18
Atopic dermatitis
Need for safe oral treatments with good efcacy
Orismilast holds rst-in-class potential as a safe
oral alternative to JAK inhibitors and injectable biologics.
Page 16
Page 14
UNION therapeutics 12Annual Report 2022 Orismilast
orismilast
PDE4 inhibitors and their broad potential within immunology
Phosphodiesterase-4 (PDE4) is a group of
enzymes that regulate inammation in the body.
PDE4 enzymes work inside the cells, regulating
the production of several signaling molecules
(cytokines) involved in inammatory diseases.
Since identication of PDE4 nearly 60 years
ago, its pharmacologic inhibition has been
shown to offer a vast potential to provide
treatment options for many different immune-
mediated diseases within dermatology (e.g.,
psoriasis and AD), pulmonology (e.g., asthma
and chronic obstructive pulmonary disease),
gastroenterology (e.g., ulcerative colitis and
Crohn’s disease), and rheumatology (e.g.,
psoriatic arthritis).
Currently, two systemic PDE4 inhibitors
are approved, one for the treatment of
dermatological and rheumatological diseases,
and one for pulmonary disease.
PDE4 inhibition is an established therapeutic
target with a well-documented safety prole.
The key challenge with systemic PDE4
inhibitors is the need for higher efcacy
while controlling adverse events related to
tolerability. Next-generation compounds like
orismilast aim to improve this balance by
strengthening and focusing on the potency of
PDE4 subtypes related to inammation.
Anne, Industrial Researcher.
UNION therapeutics 13Annual Report 2022 Orismilast
There are approximately 18 million patients
diagnosed with psoriasis in the seven major
markets (US, EU5* and Japan)
1
. The severity of
psoriasis varies greatly from person to person
and symptoms can range from mild disease
with a single patch to severe disease with dark
red, thick, cracking and bleeding plaques, cov-
ering a large part of the body and comorbidities
extending the impact of the disease. Many pa-
tients with psoriasis experience significant im-
pact on their quality of life due to their disease
and additional comorbidities, such as psoriatic
arthritis, cardiometabolic diseases, and mental
health disorders.
Need for oral treatments with
improved efficacy
There is no cure for psoriasis and depending
on the progression and severity of the disease,
patients are either treated with topicals, orals
and/or biological treatments (injectables).
Despite recent advancements in the treatment
landscape, there are limited effective oral
treatment options available today, where some
require extensive screening and monitoring.
Many physicians and patients express a need for
better oral treatments.
UNION is developing orismilast as a potential
best-in-class oral treatment with improved
ef ficacy.
Development of orismilast as a potential best-
in-class oral treatment for psoriasis
In January 2023, UNION announced positive topline data from the
IASOS study with oral orismilast in adult patients with psoriasis.
Data from the 202 patients randomized and dosed in the study
showed that all active arms of oral orismilast achieved the primary
endpoint of percentage change in Psoriasis Area Severity Index (PASI)
from baseline to week 16 measured against placebo, with statistical
signicance reached at the rst time point after 4 weeks of treatment.
Moreover, the results support the best-in-class potential driven by higher
potency indicated by secondary endpoints, including PASI-90 and PASI-100.
The data overall support the target product prole of orismilast and conrm the well-established
favorable safety prole of PDE4 inhibition.
Psoriasis is a chronic, systemic, inflammatory skin disease
that causes thick, red, and scaly plaques, most commonly
appearing on the scalp, knees, elbows, and limbs.
Psoriasis
* EU5: UK, Germany, France, Italy, and Spain.
1 Evaluate Pharma (2023).
Market forecast (USDbn)
1
Worldwide
“Psoriasis is a chronic inammatory skin
disease for which there is no cure. The
disease has a severe impact on patients, as
many patients also suffer from substantial
psychosocial consequences, such as social
stigmas and depression, as well as negative
physical impact on their quality of life due to
the many comorbidities associated with the
disease.”
2022 20252023 20262024 2027 2028
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28 28
29
30
31
32
Prof. Richard Warren
MD, Ph.D., Salford Royal (part of Northern
Care Alliance NHS Foundation Trust) and
University of Manchester,
Senior Investigator of the Phase 2b study
UNION therapeutics 14Annual Report 2022 Psoriasis
psoriasis
Living with psoriasis
Meet Anne, aged 45, who has lived with
psoriasis since she was eight years old.
“I know that for the rest of my life I will have to treat my psoriasis to
keep it under control. It is part of my life and I no longer remember
a life without psoriasis. At times I do envy people who do not have
psoriasis.”
Patient story
Anne experienced the first rash on her arm when
she was eight years old and, as it did not disappear
by itself, she was taken to see a doctor who gave
her the diagnosis “psoriasis”. To treat the psoria-
sis, the doctor gave her a prescription for a topical
steroid cream.
Anne has tried many different types of treatment
for her psoriasis, ranging from topicals, UVB-light
therapy and tablets to alternative medicines as
well as different types of baths, for example in the
Dead Sea and red baths (potassium permanganate
is added to the bath coloring the water red). Anne
decided to seek alternative treatments after sev-
eral years with steroid cream treatment due to the
side effects, including the skin becoming thinner
and feeling both tighter and excessively dry.
Many of the different treatment options that Anne
has tried worked initially but the psoriasis symp-
toms rapidly returned.
From when Anne first experienced the psoriasis
symptoms in the form of a rash on her arm until
today, where the psoriasis covers 70-80% of her
body, rashes have occurred more frequently. The
psoriasis has a very negative effect on Anne’s life,
especially during the winter when the itching and
stinging are very painful.
After 36 years of trying out different treatment
options and long periods with no effect, Anne was
finally offered biological treatment. The doctors had
for many years been hesitant to prescribe biological
treatment, mainly due to the high associated cost
associated with biological treatment. The treatment
has removed the majority of Anne’s psoriasis, but
large spots still remain on her legs. Anne finds it
challenging to inject herself every second week and
is worried about the side effects and that the treat
-
ment is not appropriate for long-term use.
It is Anne’s hope that more new treatment options,
such as oral treatments, will become available and
can help remove her psoriasis completely.
UNION therapeutics 15Annual Report 2022 Psoriasis
Atopic dermatitis (AD) is the most common form of eczema,
a chronic skin disease causing extremely itchy skin.
There are approximately 47 million patients di-
agnosed with AD across the US, EU5* and Japan
1
.
AD usually begins in childhood with 90% of AD
patients being diagnosed by the age of five
2
.
Multiple factors contribute to the development of
AD, including a decreased ability of the skin to
function as a barrier, decreased diversity of the
bacteria on the skin and an overactive immune
system. Itch, depression, sleep disturbance and
anxiety are the most common aspects that drive
the disease burden of patients living with AD.
Development of orismilast as a rst-in-
class safe oral treatment of AD
In July 2022, UNION initiated ADESOS, a Phase 2b study
with oral orismilast for the treatment of patients with
moderate to severe AD.
FDA has granted Fast Track designation to oral orismilast
for the treatment of AD due to the signicant unmet
medical need for a safe and efcacious oral treatment.
Atopic dermatitis
Market forecast (USDbn)
1
Worldwide
* EU5: UK, Germany, France, Italy, and Spain.
1 Evaluate Pharma (2023).
2 Silverberg (2017).
“AD is one of the most common and
burdensome chronic skin diseases
worldwide causing reduced quality of
life in both children and adults. Despite
recent advances in the management of
AD, there are still multiple unmet needs
for safe and effective oral therapies.
The well-established safety prole of the
PDE4 inhibitor class is favorable and oral
orismilast might become the rst oral
PDE4 inhibitor approved to treat AD.”
In addition, patients with AD often report higher
rates of other diseases such as asthma, rhinitis,
psychiatric and cardiovascular diseases.
Need for effective and safe oral treatments
There is no cure for AD. Depending on the pro-
gression and severity of the disease, patients are
e
ither treated with topicals, orals and/or biological
treatments (injectables). The vast majority of AD
patients are treated with topicals, while more se-
vere patients can get oral or biological treatments.
There are approximately twice as many diagnosed
patients with AD compared to psoriasis in the US,
EU5 and Japan. However, the treatment landscape
in AD is significantly less established than psori-
asis with fewer treatment options available. The
first oral therapies, JAK inhibitors, were approved
in 2022 and have been given a safety warning
and treatment limitation in their box warning due
to increased risk of heart-related events, cancer,
blood clots and death. Thus, a substantial unmet
medical need remains.
2022 20252023 20262024 2027 2028
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10
12
13
15
16
18
CAGR
+15%
Jonathan Silverberg
MD, Ph.D., MPH, Associate Professor of
Dermatology at The George Washington
University School of Medicine and Health
Sciences, and Signatory Investigator for
ADESOS
UNION therapeutics 16Annual Report 2022 Atopic dermatitis
atopic dermatitis
Living with
atopic dermatitis
Meet Emma, aged 19, who has lived with atopic
dermatitis (eczema) since she was five years old.
Patient story
Emma is a young woman who has suffered from
eczema since she was five years old. However, it
was not until she was 13 years old that she was
diagnosed with the disease.
Over the years, the location of eczema on
Emma’s body has changed. Initially, it was
mainly around her eyes, cheeks, and neck, but
when she became a teenager, it started to cover
almost her whole body. Today, only her feet and
stomach are eczema free.
There are days when Emma does not think
about her eczema. However, there are also
many days where the disease negatively im-
pacts her life. Some days and nights, the itching
is very severe.
Emma never knows how the eczema will look in
the morning and whether she will have to use
ointments so it is less itchy and visible during
the day.
Historically, she was only treated with two
different types of hormone creams. In the be-
ginning, the effect was good, but they became
less effective over time and today the creams
have almost no effect. For Emma, the hormone
creams also have side effects. Her skin at select-
ed vulnerable areas has become very thin and
tight, and when using the creams, her skin dries
out even more.
Many patients with AD receive topical treatment
despite their known limitations. This was also
the case for Emma. It was not until Emma’s
eczema had spread all over her body, including
large areas of inflammation, that Emma con-
sulted a specialist in AD and was introduced to
other treatment options.
“ In many situations, I feel that the eczema has limited my
possibilities of doing things, for example going out with my friends,
as the eczema can be very itchy, or doing sports, as sweat makes
the itching even worse.”
See video on UNION’s website.
UNION therapeutics 17Annual Report 2022 Atopic dermatitis
Development of orismilast as a potential rst-
in-class safe oral treatment of HS
Oral orismilast is currently in development for the treatment
of mild, moderate and severe HS in OSIRIS, an investigator-
sponsored Phase 2a study.
In September 2022, the Danish Medicines Agency and Ethics
Committee granted Treatment Extension for patients who have
completed the OSIRIS study to continue treatment with oral
orismilast for a period of up to 52 weeks.
In January 2023, The FDA has granted Fast Track designation to
oral orismilast for the treatment of moderate to severe HS.
Hidradenitis suppurativa (HS) is a chronic, progressive, inflammatory
skin disease that usually develops after puberty as a result of inflamed
hair follicles, most notably in the armpit and genital regions.
There are approximately 700,000 patients
diagnosed with HS across the US, EU5* and
Japan
1
. HS is a very painful disease, as patients
experience inflammatory nodules, boils or ab-
scesses that typically open and release odorous
fluids. As HS progresses, the scars form tunnels
or sinus tracts that connect.
HS patients suffer from pain and significant
discomfort as a result of the constant formation
of pus and often require the use of bandages.
Many patients are stigmatized by these symp-
toms, leading to a severely diminished quality
Hidradenitis
suppurativa
* EU5: UK, Germany, France, Italy, and Spain.
1 Evaluate Pharma (2023).
“HS is an inammatory systemic skin disease
that seriously affects the life of patients. It
causes wide-spread inammation, pain and
scarring resulting in serious detrimental
effects on the quality of life of patients. Despite
the recent advances in the treatment of HS,
there is still a high unmet need for safe and
efcacious oral treatments. It is encouraging
to see that FDA recognizes the potential of oral
orismilast in HS and has granted it Fast Track
designation.”
of life resulting in social isolation. HS is associ-
ated with various more general diseases, such
as arthritis and metabolic syndrome.
Need for better oral treatment options
There is no cure for HS and there is currently only
one drug approved for the treatment of moderate
to severe HS, which is a biologic administered
through injection. For mild HS, there are no treat-
ments approved.
The general standard of care for HS patients,
although off-label, includes topical antiseptics
and oral antibiotic treatment which often provide
only temporary symptomatic relief. Antibiotics do
not target the underlying inflammation and their
usage is associated with resistance development.
Orismilast holds the potential to be a first-in-class
oral treatment with a broad anti-inflammatory
mode of action.
700,000
patients diagnosed with HS across
US, EU5* and Japan
1
.
Professor Gregor B. Jemec
PhD, MD, Founding Chairman of the
Department of Dermatology, Zealand
University Hospital Roskilde, Denmark,
Lead Investigator of the Phase2a study
UNION therapeutics 18Annual Report 2022 Hidradenitis suppurativa
hidradenitis suppurativa
Living with hidradenitis
suppurativa
Meet Ole, aged 39, suffering from hidradenitis suppurativa (HS) and
psoriasis, two skin diseases with significant impact on quality of life.
Ole was diagnosed with psoriasis when he was
a teenager and diagnosed with HS at the age of
33. For Ole, the first symptoms of HS started with
a small inflammatory abscess on his back. He
consulted a doctor specialized in HS who gave
him the diagnosis and prescribed a cream to treat
the abscess.
Ole was fortunate to be treated by a doctor who
was familiar with HS. On another occasion when
Ole was travelling, he started feeling pain and
found an abscess the size of a golf ball on his
thigh. The pain was so intense that he needed to
get immediate treatment and he had to go to a
local hospital. As he was travelling, he could not
consult his regular dermatologist who is special-
ized in HS. At the hospital, the doctor he saw was
not familiar with HS.
Ole received several different injections into
the abscess before the inflammation had been
reduced and was no longer causing pain. The
doctor’s lack of knowledge of HS resulted in a
lot of pain and very damaged skin due to all the
injections. Ole had to undergo laser surgery
when he came back from his travels to completely
remove the abscess and repair his skin. This was
a complicated process due to the anesthesia, and
after the surgery it took a long time for the wound
to heal.
For Ole, it was not possible to effectively treat his
HS with topical cream, and after a couple of years,
he was offered biologic treatment. With Ole’s fear
of needles, a family member must help with his
weekly injections, which is frustrating and stress-
ful for both Ole and his family.
As the injectable is the only approved treatment
for HS, Ole has no other option but to continue
with it, but his hope is that one day an oral treat-
ment option will be available.
Patient story
“ In my family we speak openly about having HS, as both my mother
and sister have the disease. I have grown up with HS around me and
know how negatively the disease influences the lives of people living
with HS and their surrounding family.”
UNION therapeutics 19Annual Report 2022 Hidradenitis suppurativa
living with hidradenitis
Niclosamide
First-in-class drug candidate for the prevention
of COVID-19 and other respiratory infections.
Small molecule with a big potential
Niclosamide is a host-targeting, broad-spec-
trum antiviral with demonstrated effect (in-vit-
ro) against a broad range of viruses, including
SARS-CoV-2, influenza and RSV. UNION is
currently developing niclosamide for the pre-
vention of COVID-19 in immunocompromised
patients.
In an in-vitro screening (cell studies) of ap-
proved molecules conducted by Institut Pasteur
in South Korea in early 2020 in response to the
emerging COVID-19 pandemic, niclosamide
was found to be the most potent inhibitor of
SARS-CoV-2, including being 40 times more
potent than remdesivir (the first approved drug
for the treatment of COVID-19).
Developing a new formulation of
niclosamide that allows delivery
directly at the site of infection
Niclosamide is poorly absorbed in its original
formulation as an oral tablet, which limits the
application for treatment and prevention of
respiratory infections. UNION has developed a
concentrated liquid formulation of niclosamide
that allows for delivery as a nasal spray to
the upper respiratory tract. For respiratory
infections, such as COVID-19, this enables local
delivery of niclosamide directly to the site of
infection.
Discovered by Bayer Healthcare
Niclosamide is a salicylanilide that was discovered by Bayer in the 1960s and introduced into clinics
as an oral treatment for tapeworm infections. Today, it is still marketed in several European countries
and developing countries. UNION has identified antimicrobial properties of niclosamide and secured
protection of the intellectual property rights, forming the basis for the company’s development of
niclosamide.
The mechanism of action
of niclosamide
Niclosamide has a novel, host-
targeting mechanism of action
that is broadly antiviral and works
in two key ways. First of all,
niclosamide neutralizes pH in the
cells’ endosomes, which prevents
virus particles entering the host cell.
Secondly, niclosamide increases
the degradation of virus in the cell
(autophagic flux) by inhibiting an
intracellular enzyme called SKP2.
UNION therapeutics 20Annual Report 2022 Niclosamide
niclosamide
COVID-19 and immuno-
compromised patients
Immunocompromised patients continue to be at high risk of
contracting COVID-19 and experience significantly higher mortality
rates than the general population.
Unmet medical needs persist
Despite the roll-out of vaccines and the avail-
ability of monoclonal antibodies and antiviral
tablet treatments to reduce the risk of hospital-
ization and death, significant unmet medical
needs persist in COVID-19. Two unmet medical
needs are low vaccine efficacy in immunocom-
promised patients and emerging variants of
SARS-CoV-2.
Weak protection of
immunocompromised patients
Immunocompromised patients, who are
estimated to represent ~3% of the total popula-
tion
1
, are at high risk of contracting COVID-19
because they have a weak immune system
due to medication or underlying disease, for
example kidney disease patients on dialysis,
organ transplant patients and cancer patients
on chemotherapy. Due to the immunocompro-
mised state of these patients, they do not mount
a proper antibody response to vaccination and
are thus often not sufficiently protected. The
monoclonal antibodies and antiviral tablet
treatments are challenged by either limited
efficacy against new variants of SARS-CoV-2, for
example Omicron and sub-variants of Omicron,
or not appropriate for long-term use.
There used to be one prophylactic treatment,
a monoclonal antibody, authorized for use in
immunocompromised patients but this authori-
zation was halted by FDA in January 2023 until
further notice due to failure to retain efficacy
against sub-variants of Omicron. In contrast
to this, in-vitro studies have demonstrated that
niclosamide conserves potency against variants
of concern, including Omicron BA.1 and BA.5
which have been the dominant strains of the
virus for the majority of 2022. No potential
competitors to UNION’s niclosamide nasal spray
have completed clinical trials in an immuno-
compromised patient population, similar to
PROTECT-V.
Development of niclosamide in COVID-19 – The PROTECT-V platform trial
UNION is developing niclosamide nasal spray as a prophylactic treatment of COVID-19
for immunocompromised patients. Niclosamide nasal spray was selected by Cambridge
University Hospital as the rst agent for the event-driven Phase 2/3 platform trial
PROTECT-V. The target of 230 events was met in 2022, having enrolled 1,660 patients.
The trial was initiated in UK in February 2021 and expanded to include India in March
2022. Results are expected in the rst half of 2023.
Higher mortality rates among
immunocompromised patients
Large-scale analysis of data from the UK Kidney
Association between December 2020 and March
2022 on 9,388 COVID-19 cases among dialysis
and kidney transplant patients in the UK, of
which 924 were fatal, clearly illustrates the need
for additional protection of kidney patients,
as one example of an immunocompromised
patient group
2
.
The analysis shows that excess
mortality rates and case fatality rates have been
substantially higher for kidney disease patients
compared to the general population. During the
Omicron wave from December 2021 to March
2022, 1 out of 20 kidney transplant patients
infected with COVID-19 have died, whereas
COVID-19 infection has only been fatal to 1 out
of 330 in the general population.
1 MacMillan (2022).
2 Weiss et al. (2022)
“The vaccines have been a huge step forward,
but patients with weak immune systems, such
as the patients enrolled in the PROTECT-V study,
do not mount a proper response to the vaccines
and are thus not sufciently protected. With
the virus rapidly evolving, and new emerging
variants, a huge unmet medical need exists for a
variant-agnostic drug that can provide additional
protection for immunocom promised patients.
Niclosamide might be that drug.”
Dr. Rona Smith
Senior Research Associate at the University
of Cambridge and Honorary Consultant
Nephrologist at Addenbrooke’s Hospital,
Lead Investigator for the PROTEC-V study
UNION therapeutics 21Annual Report 2022 COVID-19 and immuno compromised patients
COVID-19 and immunocompromised patients
Patient story
Getting a kidney trans-
plant during a pandemic
Meet Sanjay, aged 45, who lives with a new kidney and pancreas.
“COVID-19 had a big impact on my family and me. No one could
visit us at home due to my disease, and when I came back
from hospital after my kidney and pancreas transplant, I felt like
transferring from one prison to another. I did struggle mentally
with that.”
Sanjay was 39 years old when he was diag-
nosed with a chronic kidney disease. Within 12
months, his kidney function had been severely
reduced, and he had to start dialysis treatment
while being added to the kidney transplant
list. Doctors suggested he would also get a new
pancreas due to his type 2 diabetes.
During the summer of 2020, Sanjay was offered
a new kidney and pancreas. He was hospitalized
for six weeks after the transplantation, where
his only physical point of contact was with
doctors and nurses in surgical masks due to the
COVID-19 pandemic.
Sanjay was very concerned about COVID-19 as
he was aware it could be fatal to him. During
the pandemic, Sanjay and his family had to rad-
ically change their lives as they could no longer
have visitors at home, and he had to be sepa-
rated from his wife and kids if they were sick.
The family took all precautionary measures to
protect Sanjay, as they knew that COVID-19 or
another respiratory infection would have severe
consequences for him.
In January 2022, Sanjay and his wife were in-
fected with COVID-19. Sanjay was hospitalized
and was treated with monoclonal antibodies to
help fight the infection. His COVID-19 disease
path was severe and it took him more than five
weeks to fully recover compared to his wife who
was fully recovered after one week.
Sanjay recognizes the need to stay updated on
vaccinations for the flu, COVID-19 and other
diseases. This way he feels that he does what he
can to stay healthy. He is concerned that there
is no longer a focus on protection of immu-
nocompromised patients and their need for
new treatments to protect them from various
life-threatening respiratory infections.
UNION therapeutics 22Annual Report 2022 COVID-19 and immuno compromised patients
Impact and corporate
responsibility
ESG strategy and focus areas 24
Patient care 26
Our people 28
Environment and climate 31
Corporate governance 33
Executive Management 34
Board of Directors 35
Key risks 36
William, Associate Business Analyst.
This section constitutes UNION’s statutory reporting
on corporate responsibility and gender distribution in
management, pursuant to section §99a and §99b of
theDanish Financial Statements Act.
UNION therapeutics 23Annual Report 2022 Impact and corporate responsibility
ESG strategy
and focus areas
UNION’s Environment, Social and Governance (ESG) strategy
and focus areas take part in the company’s patient-centric vision
around passionately creating medicines that make a difference.
Sustainability and contributing positively to
society as a whole have always been embedded
in UNION’s business and way of working. From
its inception, UNION had a desire to address
the emerging issue associated with antimicro-
bial resistance. As the company has grown, it
has developed and improved its sustainability
efforts and expanded to cover its environmen-
tal footprint where the starting point has been
CO
2
-baselining. As part of this journey, UNION
started to communicate externally about ESG
priorities and progress in the 2021 Annual
Report.
During 2022, UNION has further refined the
company’s ESG strategy and focus areas. Differ-
ent ESG initiatives have been identified and are
progressing as planned. Environmental efforts
are centered around CO
2
emissions, including
estimation of CO
2
emission baseline, improving
data accuracy and initiating a dialogue with the
most important suppliers across the value chain
from a CO
2
-emission perspective.
Following the growth of the organization, the
employee-related social efforts have focused on
the development and implementation of a com-
mon company culture, The UNION Way, where-
as the patient-related social efforts have focused
on disease awareness and patient engagement.
With respect to governance, the objectives have
been to integrate environmental and social ef-
forts with the corporate governance framework.
Sustainability reporting frameworks
UNION adheres to legal requirements and fol-
lows selected standards and recommendations,
for example the Danish Financial Statements Act,
the sector-specific reporting metrics defined by
the Sustainability Accounting Standards Board
(SASB), now part of the IFRS Foundation and the
United Nations’ Sustainable Development Goals
(SDGs).
Drive execution
Be responsible for progress
and put humbleness and
hard work above good
intentions
Social
UNION’s ultimate goal is
to improve the health and
well-being of patients. The
company culture as well
as the ethical behavior
and well-being of UNION’s
employees are of significant
importance to this vision
The UNION Way and
employee meaningfulness
Disease awareness and
partnering with patient groups
Collaborate to win
Lift others up and empower
your surroundings to put
impact for patients first
Governance
UNION wants to build a
pharmaceutical company
with a corporate govern-
ance framework based on
efficiency, transparency and
accountability
Policies and
Code of Conduct
Reporting transparency
Fuel ambition
Inspire people to bring out
their best and reach for the
highest standard
Environment
UNION wants to take
climate action by under-
standing and minimizing
emissions across the value
chain
Supplier engagement
around CO
2
emissions
The UNION Way
Passionately creating
medicines that make a difference
ESG key focus
areas 2022
ESG ambition Company visionCompany culture
UNION therapeutics 24Annual Report 2022 ESG strategy and focus areas
corporate responsibility
UNION’s response to UN’s Sustainable Development Goals
Focused on immunology and infectious disease,
UNION is developing innovative drugs that hold
potential to address some of the currently most
important global health priorities.
UNION’s response
• Improving patient quality of life
• Aspiring to ensure better access and affordability
in low- and middle-income countries
• Help ghting antimicrobial resistance
• Preparing for future pandemic(s)
Despite being a development-focused biotechnology
company with limited direct impact on the environment,
UNION takes climate action by understanding and
minimizing emissions across the value chain.
UNION’s response
• Providing transparency of CO
2
emissions across
scope 1, 2 and 3
• Collaborating with key suppliers across the value
chain on CO
2
-emission data
UNION is addressing several of UN’s Sustainable Development Goals (SDGs) but three goals
are in particular focus and in line with the company’s vision and core business operations
UNION leverages the SASB standards for Biotechnology & Pharmaceuticals to focus on nancially
material sustainability topics. However, since UNION does not currently have any drug products on
the market, some SASB metrics are more relevant than others. SASB metrics, when relevant, are
referenced in footnotes throughout the present chapter.
Nina, Director of Regulatory Affairs and
Tanya, Project Director for Niclosamide.
UNION therapeutics 25Annual Report 2022 ESG strategy and focus areas
See chapter 2 “Our business” for patient insights on the burden of disease.
Patient care
Passionately creating medicines that make a difference requires insights
through close collaboration with patients and patient organizations.
Patient insights
UNION interacts with individual patients and
patient organizations to better understand the
unmet medical needs among patients and to get
insights that are important for the company’s
work with pharmaceutical innovation and clini-
cal development. This can be in relation to drug
delivery and ease-of-use of the drug supporting
patient adherence or with respect to endpoints
and the use of quality-of-life metrics in clinical
studies.
Raising awareness about
the burden of disease
UNION is committed to the development of safe
and effective medicines that can help improve
quality of life among patients suffering from
immunological and infectious diseases. These
include patients living with psoriasis, atopic
dermatitis (AD), and hidradenitis suppurativa
(HS), as well as immunocompromised patients
whose lives have been, and still are, impacted
by not only COVID-19 but also higher rates of
influenza and RSV. UNION acknowledges the
important role that patient organizations have
in speaking up about the burden of disease.
During the last year, UNION became a member
of Danish patient organizations for psoriasis,
AD and HS: Psoriasisforeningen Danmark,
Atopisk Eksem Forening and Patientforeningen
HS Danmark. UNION also made a joint state-
ment on the need for improved protection and
prevention for immunocompromised patients in
the context of the COVID-19 pandemic together
with the European Cancer Patient Coalition, the
European Kidney Health Alliance, the European
Kidney Patients’ Federation and the European
Society for Organ Transplantation.
In 2022, a large-scale analysis of data from
the UK Kidney Association from the period
December 2021 to March 2022 on COVID-19
cases among dialysis and kidney transplant
patients in the UK was undertaken by UNION.
It was published in the peer-reviewed journal
Transplantation, creating awareness about the
significantly increased risk of severe and fatal
outcomes from COVID-19 for immunocom-
promised patients, such as kidney patients,
compared to the general population.
UNION therapeutics 26Annual Report 2022 Patient care
In 2022, UNION innovated and further progressed the clinical
development of its pipeline candidates to the benefit for patients
Granted patents Enrolled patients in clinical trials
Clinical trial diversity
Dec 31, 2022Dec 31, 2021
Orismilast
Niclosamide
Other
Dec 31, 2022 Dec 31, 2021 Dec 31, 2022Dec 31, 2021
Innovation to the benefit for patients*
In 2022, UNION innovated and further pro-
gressed the clinical development of its product
candidates to the benefit of patients. UNION’s
product candidates are supported by a strong
patent estate consisting of 250 granted patents
as of December 31, 2022 (+42 vs. December 31,
2021).
The PROTECT-V Phase 2/3 platform study was
expanded to India in March 2022 and patient
enrollment, including 1,660 patients, was com-
pleted in late 2022. The investigator-initiated
Phase 2a study in HS, OSIRIS, was granted a
Treatment Extension by the Danish Medicines
Agency and Ethics Committee in September
2022, giving patients who have completed the
initial treatment period the opportunity to con-
tinue treatment with orismilast for a period of
up to 52 weeks. Patient enrollment in the Phase
2b study in psoriasis, IASOS, was completed
in August 2022, having enrolled 202 patients.
Moreover, the Phase 2b study in AD, ADESOS,
was initiated in August 2022.
As a result of the clinical development progress
with UNION’s product candidates, patient
enrollment in 2022 has been from an increas-
ingly diverse set of countries. However, UNION
acknowledges that some communities are often
underrepresented as participants in clinical
trials. Engaging with patient organizations,
UNION wants to help remove barriers to partici-
pating in trials.
Safety of clinical trial participants**
UNION applies the highest ethical standards
in the conduct of research, development, and
outsourced non-clinical and clinical develop-
ment and manufacturing activities, adhering
to the ICH Good Clinical Practice guidelines.
Patient safety has the highest priority at UNION.
In all activities related to the development and
supply of investigational medicinal products,
compliance with applicable laws and regula-
tions designed to ensure the safety and quality
of products, including reporting of safety infor-
mation, is essential.
UNION has established a quality management
system with formalized processes and proce-
dures to ensure compliance with relevant reg-
ulatory requirements. The main purpose of the
quality management system is to ensure that
investigational medicinal products and new
medicinal products are of the quality required
for their intended use. The majority of business
activities at UNION are outsourced to contract
development and manufacturing organizations,
contract research organizations and other sup-
pliers or service providers. Thus, UNION has
established the necessary vendor management
and oversight activities, including qualification
of vendors through evaluation of quality ques-
tionnaires and audit activities.
The frequency of audits conducted by UNION
is determined by use of a risk-based approach,
taking into consideration for example the crit-
icality of processes and previous major quality
events.
171
160
37
32
42
16
* SASB metric: HC-BP-000.A (Number of patients treated).
** SASB metric: HC-BP-210.a.1 (Discussion, by world region, of management process for ensuring quality and patient safety during clinical trials).
208
250
716
1,935
UNION therapeutics 27Annual Report 2022 Patient care
Our people
In 2022, the employees at
UNION have defined a common
company culture, The UNION
Way, characterizing the
company’s way of working and
desired virtues when engaging
with colleagues, industry
partners and other collaborators.
Based on workshops throughout the organiza-
tion, a company culture with core values (DNA)
being “Fuel ambition”, “Drive execution” and
“Collaborate to win” has been defined.
The different values and virtues are important
for UNION to deliver on the ultimate goal, or
vision, about passionately creating medicines
that make a difference.
Fuel
ambition
Inspire people to bring out
their best, be persistent and
reach for the extraordinary
Lift others up and empower your
surroundings to put impact for
patients first
Prioritize and make progress with a
humble approach, and willingness to
go the extra mile whenever needed
Drive
execution
C
ollaborate
to win
THE UNION WAY
Take ownershipIgnite passion React on feedback
Be entrepreneurialAim for the extraordinary Value expertise
Get things donePromote meritocracy Lift others up
UNION therapeutics 28Annual Report 2022 Our people
our people
50%
Male
50%
Female
Employees by gender diversity
(by year-end 2022)
32%
General and
administrative
68%
R&D
Employees by functional areas
(by year-end 2022)
20-29
30-39
40-49
50-59
>60
Age range of employees
(by year-end 2022)
10%
27%
18%
8%
37%
Growth in employee numbers
(by year-end)
2019 2020 2021 2022
16
10
36
40
Organizational development*
UNION has grown significantly over the last
few years, from 10 employees as of December
31, 2019 to 40 employees as of December 31,
2022. 27 employees, or 68%, work in Research
and Development and related functions, with 13
employees working in general and administrative
functions, for example Finance, Legal, HR and
IT. 20 employees are male and 20 employees are
female. The gender diversity and the diverse age
range among employees, as well as the multitude
of nationalities in addition to Danish, ensure that
different perspectives and knowledge come into
play when making decisions.
The Executive Management at UNION, portrayed
on page 34, consists of four members who are all
male. The extended management team, which
includes other positions at the same organization-
al level as Executive Management, consists of five
men and two women in addition to the Execu-
tive Management. Other managerial positions,
defined as positions with people responsibility
referring to members of the extended manage-
ment team, include two men and two women.
UNION’s Diversity Policy, which was adopted in
2022, aims to improve the gender balance in all
managerial functions by for example ensuring
that both genders are represented in the final
stage of the recruitment process when possible.
The Board of Directors at UNION consists of seven
members, including four Danish nationals and
three internationals. Five board members are in-
dependent, whereas the two founders are also part
of the management team. With five male board
members and two female board members, UNION
meets the Danish Business Authority’s guidelines
for board gender composition. In 2022, UNION had
a turnover rate (voluntary and involuntary) of 9.6%
(2021: 16.1%) with 3.4 FTEs leaving the company
compared to an average number of FTEs throughout
the year of 35.6.
Healthy and meaningful work**
UNION is committed to being an employer with
competitive terms of employment, excellent health
and safety standards, and a motivating and inspir-
ing work environment. The company considers com-
petitive compensation to be a relevant factor with
respect to the attraction and retention of top talent.
In addition to compensation, employee engagement
and flexible work arrangements are key efforts.
In 2022, UNION has established a Work Environ-
ment Committee, facilitating work environment
and office assessments, addressing health- and
safety-related matters. Initiatives promoting
employee welfare include improved maternity and
paternity leave benefits, enhancing gender diversity,
and remote working allowance for employees to
purchase relevant workstation equipment, enabling
the continued flexibility to work from home in an
ergonomically safe manner. Shaping a dynamic
company culture, and developing a shared lan-
guage around the purpose, values and virtues of
the company have been important steps. Living the
company culture will continue in 2023, as UNION
aims to attract and retain passionate employees who
come to work excited about creating medicines that
make a difference.
* SASB metric: HC-BP-33a.2 (Turnover rate).
** SASB metric: HC-BP-330a.1 (Discussion of talent recruitment and retention efforts for scientists and research and development personnel).
UNION therapeutics 29Annual Report 2022 Our people
Read more at UNION’s website Read more at UNION’s website
Employee
perspectives on
The UNION Way:
Meet Anne
and Peter
All employees have been involved in
defining the company culture and
developing a shared language around
purpose, values and virtues.
“ Working at UNION is never boring. The
size of UNION, a small, mid- to late-stage
biotech company, allows for a lot of
opportunities and responsibility, and gives
a huge diversity in my tasks. I have a lot
of great and very skilled colleagues and I
like how we support and assist each other
to achieve a common goal. I think all of
this makes my job very interesting and
meaningful.”
“ Driving Execution is intuitively close to the
way my team and I work, as we are often
responsible for activities that are not very
visible but can be hard stops for UNION if
not executed in time and at the required
quality. Personally, I like seeing how the
humble and hard work of my team pays
off by supporting the objectives of my
colleagues and UNION.”
Employee perspectives
Anne, Senior Clinical Program Manager Peter, Vice President, General Counsel
UNION therapeutics 30Annual Report 2022 Our people
Scope 1
Scope 2
Scope 3
2021
3,852
ton
3,952
ton
2022
15%
4%
14%
31%
46%
21% 15% 9% 7% 2% 11%
14% 2% 1% 8%
Environment and climate
At UNION, we have started improving the transparency
of our CO
2
footprint, thereby enabling a better foundation
for minimizing emissions across the value chain.
Science-based carbon accounting
In 2021, UNION partnered with a global leader
in science-based carbon accounting to esti-
mate and track the company’s CO
2
footprint
according to the Greenhouse Gas Protocol for
the first time. The Greenhouse Gas Protocol is
the world’s most recognized greenhouse gas
accounting standard and covers scope 1 (direct
emissions from owned assets, e.g. vehicles and
fuel use from production sites), scope 2 (indi-
rect emissions from purchased energy, such as
electricity and heating) and scope 3 (indirect
emissions not already included in scope 2, e.g.
emissions from purchased goods and services,
transport and business travel).
In 2022, UNION has estimated its CO
2
emissions
for purchased electricity and heating in scope
2 and for seven categories in scope 3, including
purchased goods and services, capital goods,
Total CO
2
emissions
(ton CO
2
-equivalent)
Breakdown of scope 3 emissions
UNION’s CO
2
footprint
Clinical studies
Manufacturing of drug
product
Manufacturing of drug
substance
Advisory
Toxicology studies/
Non-clinical
Packaging and labelling
Business travel
Other
fuel- and energy-related activities, upstream
transportation, waste, business travel and em-
ployee commuting. UNION does not have any
scope 1 emissions.
Small increase in CO
2
emissions
from 2021 to 2022
Due to the advancement of several clinical
studies in 2022, UNION’s general activity
level and the associated operating costs have
increased significantly from 2021 to 2022.
However, UNION’s total CO
2
emissions are
roughly unchanged, increasing 2.8% to 3,969
ton CO
2
-equivalent in 2022 (2021: 3,862 ton)*.
Scope 2 CO
2
emissions have increased to 17 ton
CO
2
-equivalent in 2022 (2021: 10 ton), under the
market-based approach**, driven by expansion
of the office space in mid-2021 to accommodate
the continued growth in employees.
2021 2022
3,952
1710
00
3,852
* Emissions in 2021 are slightly lower than the emissions presented in the 2021 Annual Report as a result of re-categorization of suppliers, improving accuracy and
enabling comparison across years.
** Location-based estimation of scope 2 is 6.6 ton CO
2
-equivalent, i.e. considering the avg. emission intensity in the geographic location where the energy
consumption occurs. On the contrary, the market-based approach, which is viewed as more accurate by the GHG protocol and has been used in the presentation of
UNION’s emissions, considers the emission intensity from the relevant energy provider(s).
3,9693,862
UNION therapeutics 31Annual Report 2022 Environment and climate
environment and climate
Louise, Financial Controller.
Scope 3 CO
2
emissions have increased 2.6% to
3,952 ton CO
2
-equivalent in 2022 (2021: 3,852
ton). This relatively small increase of 100 ton
CO
2
-equivalent in scope 3 CO
2
emissions from
2021 to 2022, despite the generally increasing
activity level, is explained by less CO
2
-intensive
activities in 2022 compared to 2021. Clinical
studies have increased 17%-points and manu-
facturing of active pharmaceutical ingredient,
or drug substance, and drug product, which is
more CO
2
-intensive, has decreased 36%-points
between 2021 and 2022. The increase in CO
2
emissions from clinical study execution, further
driven by toxicology/non-clinical and packag-
ing/labelling, is not sufficient to notably offset
the reduction in CO
2
emissions from manufac-
turing.
Spend-based vs. activity-based estimates
An important distinction in estimation of
CO
2
emissions is that between spend-based
estimates and activity-based estimates. Spend-
based estimates take the financial value of a
purchased good and service, for example the
spend associated with purchased flight tickets,
and multiply the financial value by an emis-
sion factor derived from an industry average
of emission levels, whereas activity-based esti-
mates consider the actual activities, for example
details on the destination travelled by flight
based on departure and destination.
The activity-based approach is more granular
and insightful but more data-intensive in terms
of collecting relevant input data, often because
close dialogue with suppliers is needed, com-
pared to the spend-based approach. Conse-
quently, a hybrid approach is often pursued by
many companies. In 2022, UNION has used
activity-based estimates for electricity and
heating, waste, business travel and employee
commuting.
Supplier engagement
Indirect emissions across the value chain
(scope 3) represent almost 100% of UNION’s
CO
2
footprint. Therefore, UNION has in 2022
conducted a supplier engagement pilot project
and initiated a dialogue with key suppliers,
representing 46% of estimated CO
2
emissions
in 2022 (spend-based approach), to get a better
understanding of emissions across the value
chain and eventually replace spend-based
estimates with activity-based estimates from
suppliers. This serves as not only more accurate
CO
2
estimation but also a good starting point
for continued dialogue with key suppliers about
identification of CO
2
-minimizing initiatives in
the future.
The activity-based estimates, which are derived
from either suppliers’ own scope 1 estimates
and scope 2 estimates, as well as revenue and
UNION’s costs associated with these suppliers,
or suppliers’ CO
2
emissions intensity level,
resulted in CO
2
emission estimates that were
slightly higher for ~60% of suppliers included in
the pilot and slightly lower for ~40% of suppli-
ers. In aggregate, activity-based CO
2
emission
estimates from the supplier engagement pilot
were 26% higher than the spend-based esti-
mates. Replacing spend-based estimates with
activity-based estimates would have resulted in
total CO
2
emissions of 4,441 ton CO
2
-equivalent
in 2022 compared to the 3,969 ton CO
2
-equiva-
lent. To enable comparison between 2022 and
2021, spend-based estimates for the suppliers
included in the supplier engagement pilot pro-
ject have been used in the formal presentation
of UNION’s CO
2
footprint.
Going forward, UNION will continue the dia-
logue with key suppliers to improve and stream-
line the activity-based CO
2
emission input as
well as start identifying initiatives that can help
minimize UNION’s indirect CO
2
emissions as
the company grows.
UNION therapeutics 32Annual Report 2022 Environment and climate
Corporate governance
Name
Nationality
Independence
Meeting attendance
in 2022*
Stig Løkke Pedersen, Chair Danish Independent
Arthur Higgins, Deputy Chair British/American Independent
Gitte Pugholm Aabo Danish Independent
Andrew J. Oakley Australian Independent
Dr. Jutta Heim German/Swiss Independent
Dr. Rasmus Toft-Kehler Danish Not independent
Dr. Morten Sommer Danish Not independent
Attended Absent
* Attendance for face-to-face and video meetings only; written resolutions not included.
Number of BoD meetings and
meeting attendance in 2022
For more information about the potential
impact of key risks identied and the
mitigating actions.
Go to pages 36-37
UNION therapeutics 33Annual Report 2022 Corporate governance
corporate governance
Executive Management
Dr. Kim D. Kjøller
Chief Executive Officer
Born 1967, Danish
Dr. Kim D. Kjøller has been CEO of UNION since January
2021. He brings more than 20 years of experience from
various senior executive positions in the pharmaceutical
industry, of which the last 10 years were in dermatology.
Before joining UNION, Kim was EVP and Head of R&D
at LEO Pharma. Kim also held senior positions in both
Strategic Marketing, Medical Affairs, Global Development
and as General Manager at Sanofi, Lundbeck, and Sanofi
Pasteur MSD.
Kim is an MD from Copenhagen University and has au-
thored and co-authored over 35 scientific publications and
given presentations at both scientific and pharmaceutical
marketing meetings globally.
Morten H. Boesen
Chief Financial Officer
Born 1982, Danish
Morten H. Boesen joined UNION in 2018 as Chief Financial
Officer. Prior to UNION, Morten worked at EQT, the largest
private equity fund in the Nordics, initially as an invest-
ment professional and subsequently as an executive
director in the EQT-owned global retailer Flying Tiger
Copenhagen, where he held responsibility for strategy,
business development as well as global commercial and
supply chain operations.
Earlier in his career, Morten worked as a management
consultant with McKinsey & Company, in the M&A adviso-
ry group of Nordea Bank and in the finance department of
Novozymes, the world leader in industrial biotech.
Morten holds an M.Sc. in Finance and Accounting from
Copenhagen Business School.
Dr. Rasmus Toft-Kehler
Co-founder, Chief Operating Officer and Board member
Born 1980, Danish
Rasmus Toft-Kehler is co-founder, board member and
Chief Operating Officer at UNION. Rasmus has extensive
leadership and strategic development experience from
founding and building companies in the life science indus-
try, and he is co-founder and board member of multiple
biotechnology and life science companies.
Before going into biotech, Rasmus worked in investment
banking and in management consulting, e.g. Goldman
Sachs and Booz Allen Hamilton, and acted as board mem-
ber of a family-owned company that was sold in 2005.
Rasmus holds a Ph.D. in Entrepreneurship from Copen-
hagen Business School and executive education from
Harvard Business School.
Dr. Morten Sommer
Co-founder, Chief Scientific Officer and Board member
Born 1981, Danish
Morten Sommer is the co-founder of several biotech-
nology companies specialized within the fields of drug
development, industrial biotech and microbiome research.
Morten is also a Professor and Scientific Director at the
Technical University of Denmark with a lab of more than
20 Ph.D.s and Post-Doctorial researchers, working pri-
marily at the intersection of antibiotic resistance and the
human microbiome.
Morten is Chair of the Board at Clinical-Microbiomics,
and member of the board in Novozymes, SNIPR biome,
Biosyntia and UTILITY therapeutics.
Morten holds an M.Sc. in Physics from University of
Copenhagen and a Ph.D. in Biophysics from Harvard Uni-
versity from the laboratory of Professor George Church.
UNION therapeutics 34Annual Report 2022 Executive Management
executive management
Board of Directors
Stig Løkke Pedersen
Chair of the Board
Arthur Higgins
Deputy Chair of the Board
Gitte Pugholm Aabo
Member of the Board
Andrew J. Oakley
Member of the Board
Jutta Heim
Member of the Board
Dr. Rasmus Toft-Kehler
Co-founder, Chief Operating
Officer, Member of the Board
Dr. Morten Sommer
Co-founder, Chief Scientific Officer,
Member of the Board
Born 1961, Danish Born 1956, British and American Born 1967, Danish Born 1962, Australian Born 1951, German and Swiss Born 1980, Danish Born 1981, Danish
Stig has more than 35 years
of strategic, commercial and
leadership expertise from the
life science industry, holding
senior positions at H. Lund-
beck and Ciba-Geigy.
Chair of the Board and Board
Member in several private
and publicly listed biotech-
nology companies, including
StemMedical, SSI Diagnostica
and moksha8 Pharmaceuti-
cals. In addition, Stig is Op-
erating Partner in the private
equity fund Catacap.
Arthur is a global executive
with extensive business
development, marketing and
leadership expertise from
large healthcare companies in
both the US and Europe, hold-
ing CEO positions at Bayer
HealthCare and Assertio Ther-
apeutics, and senior executive
roles at Abbott Laboratories.
Arthur is a Senior Operating
Advisor to Abu Dhabi Invest-
ment Authority, Director of
Ecolab and ZimmerBiomet.
Gitte brings extensive global
leadership experience from the
life science industry and a deep
understanding of dermatology,
marketing, and capital markets.
Gitte was previously President
& Chief Executive Officer of LEO
Pharma for more than 10 years.
Gitte is Chief Executive Officer
at GN Hearing, and a member
of the Committee of Directors
of Danmarks Nationalbank (the
Danish Central Bank), board
member of ALK-Abelló, and
member of the board and the
Executive Committee at Danish
Chamber of Commerce (Dansk
Erhverv).
Andrew is a global executive
with more than 20 years of
financial and capital markets
experience, holding positions
as Chief Financial Officer
of Actelion, Vectura PLC,
Sosei Group Corporation and
Autolus Therapeutics PLC.
Andrew currently serves as
Chief Financial Officer of
Theolytics Ltd. and is also a
board member of Novaremed
AG.
Jutta has more than 20 years
of research experience within
infectious disease, coagulation
disorders and oncology. She has
worked for more than 30 years
at Ciba-Geigy/Novartis in both
Switzerland and the US, as well
as in Basilea Pharmaceutica and
Evolva.
Chair of the Board of Directors
of Synendos Therapeutics and
advisor to Discoveric bio group
and to Aukera Therapeutics,
all companies located in
Switzerland.
She is also a member of the
scientific advisory board of the HZI,
the infectious diseases institute of
the Helmholtz association.
Rasmus has extensive
leadership and strategic
development experience
from founding and building
companies in the life science
industry. Before going
into biotech, he worked in
investment banking and in
management consulting.
Rasmus is the Chief Operating
Officer of UNION and co-
founder of several biotech
companies. He is also
board member at Clinical-
Microbiomics and UTILITY
Therapeutics.
Morten has extensive research
and development experience
working within the fields of
drug development, industrial
biotechnology and microbiome
research. He has published more
than 100 scientific publications
and is an inventor of several issued
patents.
Morten is the Chief Scientific
Officer of UNION and holds the
position as Professor and Scientific
Director at the Technical University
of Denmark. He is also Chair of
the Board at Clinical-Microbiomics
and board member at Novozymes,
SNIPR biome, Biosyntia and
UTILITY Therapeutics.
UNION therapeutics 35Annual Report 2022 Board of Directors
board of directors
Key risks
Description Potential impact (non-exhaustive) Mitigating actions
Clinical
develop-
ment risks
UNION’s product candidates will go through lengthy and
costly clinical trials to document efficacy and safety
before filing for approval with the relevant regulatory
authorities. Clinical trials are generally associated with
a high risk of failure. UNION could experience delays
in completing clinical trials, incur additional costs in
clinical trials and ultimately fail to progress orismilast
and niclosamide towards the market.
• Patients will not benefit from new
treatments.
• Potentially negative impact on sales,
profit and market position.
• UNION’s focus is molecules with well-established mechanisms of action and favorable
safety profiles, implying that the clinical development risk is lower relative to molecules with
mechanisms of action that have not been studied to the same extent before.
• UNION’s clinical project teams work closely with contract research organizations to design
and conduct the clinical trials and engage with regulatory authorities to get guidance on the
development path.
• UNION’s management team has quarterly program review meetings where Project Direc-
tors and the relevant functional leads in the project teams discuss the clinical development
progress and associated risks. Risk management and prioritizations within and across
programs are structured around a stage-gate model with defined milestones.
Product
supply,
quality and
safety risks
Shortage of the investigational medicinal product or
quality issues could mean that UNION is unable to con-
tinue the development of its product candidates.
• Product shortage and quality issues could
result in delays and ultimately discontinua-
tion of UNION’s product candidates.
• Potentially negative impact on sales,
profit and market position.
• UNION’s CMC and supply chain team works closely with contract development and manu-
facturing organizations on early identification of root causes when issues materialize.
People
risks
UNION’s ability to compete in the highly competitive
pharmaceutical industry depends on its ability to attract
and retain highly qualified managerial, scientific, medi-
cal, commercial and other personnel.
• UNION could be unable to continue the
development of its product candidates,
out-license or commercialize its product
candidates or otherwise implement the
business plan if key employees leave the
organization and it is not possible to find
suitable replacements in a timely manner.
• Potentially negative impact on sales,
profit and market position.
• UNION defined a company culture in 2022 with a shared language around a meaningful vi-
sion about creating medicines that make a difference, describing the virtues and behaviors
encouraged by employees.
• Different initiatives promoting employee welfare have been adopted in 2022, such as im-
proved maternity and paternity leave benefits, which, together with a strong and meaningful
company culture, are important aspects with respect to attraction and retention of qualified
personnel.
UNION is continuously monitoring they key risks it is exposed to. Failure to mitigate significant risks can potentially
impact the development of the company’s product candidates negatively, thus impacting future sales, profit and market
position. The risks are diverse and range from failure to document efficacy and safety of the product candidates to
not being able to attract and retain qualified employees, all with different likelihood and impact profiles.
UNION therapeutics 36Annual Report 2022 Key risks
key risks
Description Potential impact (non-exhaustive) Mitigating actions
Environ-
mental
risks
UNION is developing chemically derived pharmaceutical
drugs requiring relatively carbon-intensive operational
activities. Since activities such as manufacturing are
outsourced, UNION has a low direct impact on the
environment. However, the activities of our contractors,
operating on behalf of UNION, do have an environmen-
tal impact, including CO
2
footprint.
• The indirect carbon emissions of UNION,
representing the vast majority of the
company’s emissions, could have a neg-
ative impact on the environment.
• UNION has in 2022 improved the data transparency and granularity of CO
2
emission esti-
mates by engaging with suppliers, thereby enabling a stronger foundation for identification
of CO
2
-minimizing initiatives going forward.
Business
ethics risks
Partnerships and collaborations can bring significant
benefits but also involve risks. The key business ethics
risk includes violation by employees and business part-
ners or contractors of our anti-corruption commitment.
• Potentially legal and financial conse-
quences from business ethics violation
• Potentially negative impact on sales,
profit and market position.
• The Board of Directors has in 2022 approved several new policies governing the rules,
standards and ethical principles at UNION, for example anti-bribery and anti-corruption
policy, sustainability policy and code of conduct.
• All UNION employees are encouraged to speak up if potential illegal or unethical business
behaviors are detected or suspected.
Intellectual
property
risks
UNION could be unable to maintain or enforce intel-
lectual property rights that cover the current product
candidates. UNION could also face infringement claims
or challenges by third parties.
• UNION could lose its competitive advan-
tage if the company is unable to protect
its intellectual property, whereas patent
infringement claims could prevent devel-
opment of the product candidates.
• Potentially negative impact on sales,
profit and market position.
• UNION owns a patent portfolio consisting of key patent families that include issued patents
and pending patent applications worldwide, providing comprehensive protection of the
company’s product candidates.
• UNION works closely with external patent counsels to minimize the risk of patent infringe-
ment against UNION and to prepare for any potential patent infringement claims as well as
defense.
Financing
risks
UNION is a development-focused pharmaceutical com-
pany. As a consequence, lack of external funding could
impact UNION’s ability to advance the development of
medicines end even the company’s ability to continue
as a going concern.
• Potentially negative impact on ability to
continue development of medicine.
• Potentially negative impact on cash
position.
• Potential impact on UNION’s ability to
continue as a going concern.
• In 2022, investors have supported UNION with an additional DKK 62.0m private placement.
• The cooperation agreement with Innovent, resulted in milestone payments of DKK 29.1m in
2022.
• In 2022, the loan period was extended for the European Investment Bank loan facility.
• Management believes that sufficient liquidity resources can be obtained in due time during
2023 to enable the company to continue its activities as planned through December 2024.
This could be in the form of issuance of new shares, renegotiation of terms for current
outstanding debt instruments, entering license and research and development collaboration
agreements, expense management activities, or a combination of such.
IT risks
IT systems are key to UNION’s business operations. IT
risks, such as cyber-attacks and infrastructure failure,
could result in business disruption.
• IT risks could compromise patients’, em-
ployees’ and other individuals’ privacy.
• IT risks could limit UNION’s ability to
continue its business operations.
• Potentially negative impact on sales,
profit and market position.
• UNION has appropriate protection from viruses and malware, and sensitive data is encrypt-
ed and subject to restricted use. The IT environment is evolving rapidly, hence the company
works with external IT specialists to improve IT protection on a continuous basis.
• In 2022, a new information security policy has been adopted, standard operating procedures
and controls have been improved, and records of processing activities, i.e. mapping of data,
have been developed and anchored in a governance, risk and compliance tool.
UNION therapeutics 37Annual Report 2022 Key risks
Significant advancement of UNION’s pipeline, including
Phase 2b studies with oral orismilast in psoriasis and atopic
dermatitis, and continued strengthening of the organization
have driven the higher activity level in 2022.
The financial review is based on the consoli-
dated financial statements for the year ended
December 31, 2022, with comparative 2021 and
2020 figures in brackets. There is no significant
difference in the development of the Group and
the Parent Company.
Income statement
Revenue
Revenue in 2022 was DKK 34.4m (2021: DKK
118.9m; 2020: DKK 0m). The revenue all relates
to the strategic collaboration and regional
license agreement for orismilast in Greater
China (Mainland China, Hong Kong, Macau
and Taiwan) entered with Innovent Biologics
(the Innovent Agreement) in 2021. As part of
the Innovent Agreement, UNION is entitled to
receive milestone payments contingent on the
achievement of certain development and reg-
ulatory milestones across multiple therapeutic
indications and on the achievement of certain
sales-based milestones. In 2022, Innovent re-
ceived Chinese IND clearance for oral orismi-
last in psoriasis and atopic dermatitis resulting
in milestones totaling DKK 29.1m. Additionally,
DKK 5.3 m was recognized as License revenue
reflecting the progress of the Phase 2 studies.
Research and development costs
Research and development costs increased to
DKK 186.4m in 2022 (2021: DKK 155.3m; 2020
DKK 65.1m). Higher activity level in 2022, in
particular the Phase 2b studies in psoriasis and
atopic dermatitis, has driven the increase in
costs compared to 2021 and 2020. Additionally,
employee costs have increased as an effect of
the strengthening of the research and develop-
ment organization.
Administrative costs
Administrative costs increased to DKK 31.6m
in 2022 (2021: DKK 21.7m; 2020: DKK 8.3m)
The increased cost is primarily due to full year
effect of increase in employees in 2021 and
related employee costs. External costs are at
the same level as in 2021, reflecting continued
system, process and compliance optimization
efforts as well as preparations for future growth
supported by external service providers and
advisors.
Other operating income
Other operating income decreased to DKK 0m
in 2022 (2021: DKK 6.2m; 2020: DKK 9.0m). In
2021 and 2020, Other operating income consist-
ed of government grants (primarily Innovation
Fund Denmark).
Financial income/(expenses)
Financial income/(expenses) increased to
DKK -36.1m (2021: -9.6m; 2020: DKK -22.1m).
The 2022 costs are primarily due to fair value
adjustments of convertible debt and warrant
and put option as well as interest expenses
and modification costs related to the European
Investment Bank loan.
Tax income/(expense)
Tax income of DKK 5.5m in 2022 (2021: DKK
5.5m; 2020: DKK 5.5m) comprises receivable tax
credit for research and development expendi-
tures at the applicable tax rate under the Danish
Tax Assessment Act.
Result for the year
The Result for the year of DKK -214.3m (DKK:
-56.0m; 2020: DKK -80.9m) reflects higher
research and development costs, financial ex-
penses and revenue from the Innovent agree-
ment.
Cash flow
Cash flow from operating activities
Cash flow from operating activities totaled DKK
DKK -158.1m (2021: -3.0m; 2020: DKK -51.5m),
which reflects the Result for the year adjusted
for non-cash items.
Cash flow from financing activities
Cash flow from financing activities totaled
DKK 61.4m (2021: DKK 216.5m; 2020: DKK
43.5m) primarily due to proceeds from a capital
increase.
Liquidity and capital resources
As of December 31, 2022, UNION had cash and
cash equivalents of DKK 159.0m (2021: DKK
253.4m; 2020 DKK 36.4m). The decrease is
primarily due to cash flow from operating activ-
ities, partially offset by the capital increase.
Loss of subscribed share capital
As a result of the group’s accounting policy,
financing strategy and utilization of the credit
Financial review
UNION therapeutics 39Annual Report 2022 Financial review
nancial review
facility provided by the European Investment
Bank, at December 31, 2022 the company had
lost more than 50% of its subscribed share
capital. Management expects to re-establish
the subscribed share capital through additional
capital increase in 2023.
Material uncertainty related
to going concern
UNION monitors its liquidity position and fore-
casts rolling twelve-month cash requirements
monthly to identify liquidity risks and enable
the Board of Directors and Executive Manage-
ment to prepare for new financing transactions
and/or take relevant tactical or strategic actions
to allow the company to continue its research
and development activities as planned as a
going concern.
UNION, considering its net current assets and
forecasted cash requirements, has liquidity to
fund its operations as planned through Decem-
ber 2023, assuming relevant expense manage-
ment measures have been implemented in the
event that managements plans, as described
below, do not materialize. Further, repayment of
the first tranche of the loan from the European
Investment Bank of DKK 85.5m, which falls due
for payment in January 2024, is not funded yet.
UNION plans to obtain additional long-term
sources of funding following the announcement
in January 2023 of topline results from the
Phase 2b study with oral orismilast in psoriasis
and expected data read-outs through 2023. This
could be in the form of issuance of new shares,
entering license and research and development
collaboration agreements, expense manage-
ment activities, renegotiated terms for current
outstanding debt instruments or a combination
of such.
The Board of Directors and Executive Manage-
ment believe it is probable that sufficient liquid-
ity resources can be obtained in due time dur-
ing 2023 to enable the company to continue its
activities as planned through December 2024
and beyond. Based on these assumptions, the
Board of Directors and the Executive Manage-
ment have prepared the Financial Statements
based on a going concern assumption.
Since such new source of funding is not
obtained as of the date of these Financial
Statements, material uncertainty that may cast
significant doubt on the company’s ability to
continue as a going concern exists, and there-
fore the company may be unable to realize its
assets and discharge its liabilities in the normal
course of business.
Equity
Equity as of December 31, 2022 totaled DKK
-27.7m (2021: 49.4m; 2020: DKK -58.4m). The
development was driven primarily by net in-
come and the capital increase. The equity corre-
sponds to an equity ratio of -14.9% (2021: 17.3%;
2020: -84.8%).
In 2022 share capital has increased to DKK
710 thousand (2021: 660 thousand; 2020: 563
thousand).
UNION therapeutics 40Annual Report 2022 Financial review
Consolidated financial statements
Statement of comprehensive income or loss 43
Cash flow statement 43
Statement of financial position 44
Statement of changes in equity 45
Notes
1. Accounting policies 46
2. Going concern and critical accounting estimates
and judgements 49
3. Revenue 50
4. Research and development costs and
Administrative costs 53
5. Staff costs 54
6. Share-based compensation 55
7. Other operating income 58
8. Financial income and expenses 58
9. Income taxes 59
10. Earnings per share 60
11. Intangible assets 60
12. Property, plant and equipment 62
13. Other receivables 63
14. Capital management and share capital 63
15. Financial risks 64
16. European Investment Bank Loan 66
17. Convertible loans 68
18. Other payables 70
19. Related party disclosures 70
20. Changes in liabilities arising from
financing activities 71
21. Cash flow statement - adjustment for
non-cash items 72
22. Cash flow statement - changes in
net working capital 72
23. Contingent assets and liabilities,
contractual obligations and pledges 72
24. Events after the balance sheet date 72
UNION therapeutics 42Annual Report 2022 Consolidated financial statements
consolidated nancial statements
DKK’000 Notes 2022 2021 2020
Revenue 3 34,393 118,912 0
Research and development costs 4 -186,434 -155,305 -65,107
Administrative costs 4 -31,584 -21,724 -8,270
Operating result before other income -183,625 -58,117 -73,377
Other operating income 7 0 6,178 9,049
Operating result -183,625 -51,939 -64,328
Financial income 8 2,687 4,286 6
Financial expenses 8 -38,820 -13,848 -22,084
Result before tax -219,758 -61,501 -86,406
Tax income/(expense) 9 5,454 5,475 5,510
Result for the year -214,304 -56,026 -80,896
Other comprehensive income or loss
Items that may be reclassified to profit or loss in subsequent
periods, net of tax
Exchange differences on translation of foreign operations 6 13 -40
Other comprehensive result for the period, net of tax 6 13 -40
Total comprehensive result for the year -214,298 -56,013 -80,936
Basic net earnings/(loss) per share 10 -32 -9 -15
Diluted net earnings/(loss) per share 10 -32 -9 -15
Result for the year and total comprehensive result is attributable to the shareholders of UNION therapeutics A/S.
Statement of
comprehensive income or loss
DKK’000 Notes 2022 2021 2020
Result for the year -214,304 -56,026 -80,896
Adjustment for non-cash items 21 52,742 14,129 23,459
Changes in net working capital 22 -1,174 34,762 1,945
Changes in non-current financial assets -43 -130 -10
Interest received 401 0 7
Interest paid -1,150 -1,184 -221
Income taxes received/(paid) 5,454 5,475 4,170
Cash flow from operating activities -158,074 -2,974 -51,546
Investment in intangible assets 11 0 0 -1,668
Investment in property, plant and equipment 12 -178 -140 0
Cash flow from investing activities -178 -140 -1,668
Proceeds from capital increase 62,037 154,786 43,749
Proceeds from exercise of warrants 201 0 0
Costs associated with capital increase -100 -15 -70
Proceeds from issuance of convertible loans 17 0 62,037 0
Repayment of loans 20 -126 0 0
Lease instalments 20 -564 -312 -155
Cash flow from financing activities 61,448 216,496 43,524
Net cash flow for the year -96,804 213,382 -9,690
Cash at the beginning of the year 253,402 36,425 46,466
Exchange rate adjustments of cash 2,407 3,595 -351
Cash and cash equivalents at end of the year 159,005 253,402 36,425
Cash and cash equivalents as per statement of financial position 159,005 253,402 36,425
Non-cash investing activities
Non-cash capital increases included in equity 0 0 14,898
Cash flow statement
UNION therapeutics 43Annual Report 2022 Consolidated financial statements
con comprehensive cash ow
DKK’000 Notes
Dec. 31
2022
Dec. 31
2021
Dec. 31
2020
Assets
Non-current assets
Intangible assets 11 16,566 16,566 16,566
Property, plant and equipment 12 1,048 1,160 168
Other receivables 13 294 252 122
Total non-current assets 17,908 17,978 16,856
Current assets
Tax receivables 9 5,500 5,500 5,500
Other receivables 13 3,262 8,045 10,103
Cash and cash equivalents 159,005 253,402 36,425
Total current assets 167,767 266,947 52,028
Total assets 185,675 284,925 68,884
DKK’000 Notes
Dec. 31
2022
Dec. 31
2021
Dec. 31
2020
Equity and liabilities
Equity
Share capital 14 710 660 563
Other reserves -28,398 48,720 -58,960
Total equity -27,688 49,380 -58,397
Non-current liabilities
Long-term debt 15 107,224 99,286 88,894
Cash-settled warrant obligation 6 9,990 6,074 6,069
Deferred revenue 3 0 876 0
Convertible loans 17 19,358 63,778 0
Lease liabilities 15 221 661 0
Total non-current liabilities 136,793 170,675 94,963
Current liabilities
Lease liabilities 15 814 429 167
Trade payables 15 17,743 11,424 7,350
Warrant and put option 16 34,884 18,480 18,018
Deferred revenue 3 2,920 7,344 0
Other payables 18 20,209 27,193 6,783
Total current liabilities 76,570 64,870 32,318
Total liabilities 213,363 235,545 127,281
Total equity and liabilities 185,675 284,925 68,884
Statement of financial position
UNION therapeutics 44Annual Report 2022 Consolidated financial statements
con nancial position
Other reserves
DKK’000 Notes
Share
capital
Foreign
currency
translation
reserve
(Accumulated
deficit)/
Retained
earnings Total
Equity at January 1, 2021 563 -25 -58,935 -58,397
Result for the year 0 0 -56,026 -56,026
Other comprehensive income or loss 0 13 0 13
Total comprehensive result for the year 0 13 -56,026 -56,013
Transactions with owners:
Capital increases 14 97 0 154,689 154,786
Cost associated with capital increase 0 0 -15 -15
Share-based compensation 6 0 0 9,019 9,019
Equity at December 31, 2021 660 -12 48,732 49,380
Equity at January 1, 2020 515 15 -38,838 -38,308
Result for the year 0 0 -80,896 -80,896
Other comprehensive income or loss 0 -40 0 -40
Total comprehensive result for the year 0 -40 -80,896 -80,936
Transactions with owners:
Capital increases 14 48 0 58,600 58,648
Cost associated with capital increase 0 0 -70 -70
Share-based compensation 6 0 0 2,269 2,269
Equity at December 31, 2020 563 -25 -58,935 -58,397
Other reserves
DKK’000 Notes
Share
capital
Foreign
currency
translation
reserve
(Accumulated
deficit)/
Retained
earnings Total
Equity at January 1, 2022 660 -12 48,732 49,380
Result for the year 0 0 -214,304 -214,304
Other comprehensive income or loss 0 6 0 6
Total comprehensive result for the year 0 6 -214,304 -214,298
Transactions with owners:
Exercise of warrants 14 2 0 199 201
Conversion of convertible loans 17 23 0 57,518 57,541
Capital increase 14 25 0 62,012 62,037
Cost associated with capital increase 0 0 -100 -100
Share-based compensation 6 0 0 17,551 17,551
Equity at December 31, 2022 710 -6 -28,392 -27,688
Statement of changes in equity
UNION therapeutics 45Annual Report 2022 Consolidated financial statements
con equity
Notes
1. Accounting policies
Basis for preparation
The consolidated financial statements of UNION therapeu-
tics A/S (referred to as “UNION” or “the company” through-
out the annual report) have been prepared in accordance
with International Financial Reporting Standards (IFRS)
as adopted by the EU and additional requirements of the
Danish Financial Statements Act (class B and selected
disclosure requirements for class C).
The consolidated financial statements have been prepared
under the historical cost basis, except for certain financial
assets and liabilities that are measured at fair value.
Applied materiality
UNIONs consolidated financial statement is based on
the concept of materiality focusing on information that is
considered material and relevant.
The consolidated financial statements are a result of pro-
cessing large numbers of transactions and aggregating
those into classes according to their nature or function.
The aggregated transactions are presented in classes of
similar items in the financial statements. Line items not
individually material are aggregated with other items of
similar nature in the consolidated financial statements or
in the notes.
The disclosure requirements are substantial in IFRS and
the Danish Financial Statement Act. Management pro-
vides specific disclosures required unless the information
is considered immaterial to the financial decision-making
of the users of these consolidated financial statements
and otherwise not warranted or not applicable.
Information on COVID-19
UNION’s business, operations and clinical studies were
impacted by the effects of COVID-19. Although the clinical
studies continued without interruption during 2022,
delays and increased costs resulting from implications of
COVID-19 were experienced. However, UNION has not rec-
ognized any write-offs, impairments of assets, or losses
due to onerous contracts. UNION continuously monitors
the COVID-19 pandemic and its potential impact on the
business and financials.
Information on the conflict in Ukraine
UNION does not have any activities in Ukraine or Russia
and is not directly impacted by the war in Ukraine.
Changes in the accounting policies and disclosures
Implementation of new and revised
standards and interpretations
UNION applied for the first time certain standards and
amendments, which are effective for annual periods
beginning on or after January 1, 2022.
Onerous Contracts – Costs of Fulfilling a
Contract – Amendments to IAS 37
An onerous contract is a contract under which the costs
that UNION cannot avoid because it has the contract
exceed the economic benefits expected to be received
under it.
The amendments specify that when assessing whether
a contract is onerous or loss-making, an entity needs to
include costs that relate directly to a contract to provide
goods or services including both incremental costs (e.g.,
the costs of direct labor and materials) and an allocation
of costs directly related to contract activities (e.g., depre-
ciation of equipment used to fulfil the contract and costs
of contract management and supervision). General and
administrative costs do not relate directly to a contract
and are excluded unless they are explicitly chargeable to
the counterparty under the contract.
UNION applied the amendments to the contracts for which
it had not fulfilled all of its obligations at the beginning of
the reporting period. UNION did not identify any onerous
contracts. Therefore, these amendments had no impact
on the consolidated financial statements.
Property, Plant and Equipment: Proceeds before
Intended Use – Amendments to IAS 16 Leases
The amendment prohibits entities from deducting from
the cost of an item of property, plant and equipment, any
proceeds of the sale of items produced while bringing
that asset to the location and condition necessary for
it to be capable of operating in the manner intended by
management. Instead, an entity recognizes the proceeds
from selling such items, and the costs of producing those
items, in profit or loss.
In accordance with the transitional provisions, UNION
applies the amendments retrospectively only to items
of property, plant and equipment made available for use
on or after the beginning of the earliest period presented
when the entity first applies the amendment (the date of
initial application).
These amendments had no impact on the consolidated
financial statements as there were no sales of such items
produced by property, plant and equipment made availa-
ble for use on or after the beginning of the earliest period
presented.
IFRS 9 Financial Instruments – Fees in the ’10 per
cent’ test for derecognition of financial liabilities
The amendment clarifies the fees that an entity includes
when assessing whether the terms of a new or modified
financial liability are substantially different from the terms
of the original financial liability. These fees include only
those paid or received between the borrower and the
lender, including fees paid or received by either the bor-
rower or lender on the other’s behalf. There is no similar
amendment proposed for IAS 39 Financial Instruments:
Recognition and Measurement.
In accordance with the transitional provisions, UNION
applies the amendment to financial liabilities that are
modified or exchanged on or after the beginning of the
annual reporting period in which the entity first applies the
amendment (the date of initial application), refer to note
16.
Standards and interpretations not yet in force
At the date of publication of the consolidated financial
statements, a number of new and amended standards and
interpretations have not yet entered into force or have not
yet been adopted by the EU.
UNION has elected to adapt amendments to IAS 1 Pres-
entation of Financial statements regarding applying mate-
riality judgements to accounting policy disclosure, early.
None of the new or amended standards and interpreta-
tions not adapted early are expected to have a material
impact on the consolidated financial statements.
UNION therapeutics 46Annual Report 2022 Consolidated financial statements
con note 1
Notes
IAS 1 Presentation of Financial Statements
- Disclosure of Accounting policies
The amendments to IAS 1 replace the requirement to dis-
close ”significant accounting policies” with a requirement
to disclose ”material accounting policy information”.
UNION has adapted the amended standard for the annual
report for the financial year January 1 - December 31. As
an effect UNION is only disclosing accounting policies if:
• A choice of accounting policy is permitted by the IFRS
accounting standard,
• It is needed to provide context for a change of account-
ing policy that had a material effect on the information in
the financial statements,
• It is needed to provide context to significant judgements
and estimates,
• The required accounting (recognition, measurement,
presentation, disclosure) is complex and users would
otherwise not understand the material transaction,
event, or condition, or
• There are other qualitative factors that make the ac-
counting policy information material.
Consolidated financial statements
The consolidated financial statements comprise the
parent company, UNION therapeutics A/S, and three whol-
ly-owned subsidiaries controlled by UNION therapeutics
A/S: UNION Research Services ApS, UNION therapeutics
Germany GmbH and UNION therapeutics North America
Inc.
The consolidated financial statements are prepared by
combining the parent company’s and the individual sub-
sidiaries’ financial statements and eliminating intercompa-
ny transactions such as intra-group income and expenses,
shareholdings, and intra-group balances, and realized and
unrealized gains on intra-group transactions.
Translation of foreign operations
Items included in the consolidated financial statements
of each of the group’s entities are measured using the
currency of the primary economic environment that best
reflects the economic substance in which the legal entities
operate (functional currency). The functional currency of
the parent company and the Danish subsidiary is DKK. The
functional currency of the U.S. subsidiary is USD and the
functional currency of the German subsidiary is EUR.
Transactions denominated in currencies other than the
functional currency are foreign currency transactions.
On initial recognition, foreign currency transactions are
translated to the functional currency at the exchange rates
at the transaction date. Foreign exchange differences
arising between the rate at the transaction date and the
rate at the date of payment are recognized in profit or loss
as financial income or financial expenses.
Receivables and payables and other monetary items
denominated in foreign currencies are translated into the
functional currency at the exchange rates at the date of
the statement of financial position.
The difference between the exchange rates at the end of
the reporting period and at the date at which the receiva-
ble or payable arose or was recognized in the latest annual
report is recognized in the statement of comprehensive
income as financial income or financial expenses.
Financial statements of foreign subsidiaries are translated
into DKK at the exchange rates prevailing at the reporting
date for assets and liabilities, and at average exchange
rates for income statement items. The following exchange
rate differences, arising from translation using the
exchange rate prevailing at the reporting date, are recog-
nized in Other comprehensive income:
• Translation of foreign subsidiaries’ net assets at the
beginning of the year
• Translation of foreign subsidiaries’ income statements
from average exchange rates.
Current versus Non-current classification
The company presents assets and liabilities in the state-
ment of financial position based on Current/Non-current
classification.
An asset is classified as Current when it is:
• expected to be realized or intended to be sold or con-
sumed in the normal operating cycle
• held primarily for the purpose of trading
• expected to be realized within twelve months after the
reporting period or
• cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period. All other assets are
classified as non-current.
A liability is classified as Current when:
• it is expected to be settled in the normal operating cycle
• it is held primarily for the purpose of trading
• it is due to be settled within twelve months after the
reporting period or
• there is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period.
All other liabilities are classified as Non-current. Deferred
tax assets and liabilities are classified as Non-current
assets and liabilities.
Equity
Foreign currency translation reserve
Exchange differences arising on translation of foreign
controlled entities into the presentation currency, DKK, are
recognized in other comprehensive income and accumu-
lated in a separate reserve within equity. The cumulative
amount is reclassified in the statement of comprehensive
income when the net investment is disposed of.
(Accumulated deficit)/Retained earnings
Accumulated deficit include the accumulated profit or
loss for the year. Further, accumulated deficit includes the
share premium comprising the amount received, attrib-
utable to shareholders’ equity, in excess of the nominal
amount of the shares issued at the company’s capital
increases, reduced by any expenses directly attributable
to the capital increases. Accumulated deficit also includes
the corresponding increase in equity relating to share-
based payment expense recognized in the profit or loss
arising from equity-settled share-based compensation
programs.
Cash flow statement
The cash flow statement shows the company’s net cash
flows, broken down by operating, investing and financing
activities, the year’s changes in cash and cash equivalents
and the company’s cash and cash equivalents at the
beginning and the end of the year.
Cash flows from operating activities are presented using
the indirect method and are made up as the result for the
year, adjusted for non-cash operating items, changes in
1. Accounting policies continued
UNION therapeutics 47Annual Report 2022 Consolidated financial statements
Notes
working capital, interest paid and received, and paid or
received income taxes.
Cash flows from investing activities comprise payments in
connection with purchase and sale of fixed assets, securi-
ties which are part of investment activities and payments
in connection with purchase and sale of businesses and
activities.
Cash flows from financing activities comprise dividends
paid to shareholders, capital increases and reductions,
borrowings and repayments of interest-bearing debt.
Cash is comprised of cash on hand and in bank deposit
accounts.
Segment information
Although UNION has established subsidiaries in Denmark,
Germany and USA, the company is managed and operated
as one business unit which is reflected in the internal
reporting. No separate lines of business or separate
business entities have been identified with respect to any
product candidate or geographical market and no seg-
ment information is currently disclosed in the company’s
internal reporting. All material non-current assets are
located in Denmark.
1. Accounting policies continued
UNION therapeutics 48Annual Report 2022 Consolidated financial statements
con note 2
Notes
Material uncertainty related to going concern
UNION monitors its liquidity position and forecasts rolling
twelve-month cash requirements monthly to identify
liquidity risks and enable the Board of Directors and
Executive Management to prepare for new financing
transactions and/or take relevant tactical or strategic
actions to allow the company to continue its research and
development activities as planned as a going concern.
UNION, considering its net current assets and forecasted
cash requirements, has liquidity to fund its operations
as planned through December 2023, assuming relevant
expense management measures have been implemented
in the event that managements plans, as described below,
do not materialize. Further, repayment of the first tranche
of the loan from the European Investment Bank of DKK
85.5m, which falls due for payment in January 2024, is not
funded yet.
UNION plans to obtain additional long-term sources of
funding following the announcement in January 2023
of topline results from the Phase 2b study with oral oris-
milast in psoriasis and expected data read-outs through
2023. This could be in the form of issuance of new shares,
entering license and research and development collabora-
tion agreements, expense management activities, renego-
tiated terms for current outstanding debt instruments or a
combination of such.
The Board of Directors and Executive Management believe
it is probable that sufficient liquidity resources can be
obtained in due time during 2023 to enable the company to
continue its activities as planned through December 2024
and beyond. Based on these assumptions, the Board of
Directors and the Executive Management have prepared the
Financial Statements based on a going concern assumption.
Since such new source of funding is not obtained as of the
date of these Financial Statements, material uncertainty
that may cast significant doubt on the company’s ability
to continue as a going concern exists, and therefore the
company may be unable to realize its assets and discharge
its liabilities in the normal course of business.
Critical Estimates and judgements
In preparing the consolidated financial statements,
management makes various accounting judgements as
well as estimates and define assumptions which form the
basis of recognition, measurement and presentation of the
company’s assets and liabilities.
The estimates and assumptions applied are based on his-
torical experience, the most recent information available
at the reporting date, and other factors that management
considers reasonable under the circumstances.
The basis for judgement and information can by nature
be inaccurate or incomplete, and UNION is subject to
uncertainties, which can result in an actual outcome that
deviates from the estimates and defined assumptions.
It may be necessary in the future to change previous
estimates and judgements as a result of supplementary
Note Critical accounting estimates and judgements Estimate/ Judgement
2 Going concern uncertainties Judgement relating to timing and extend of future
funding transactions.
Judgement
3 Revenue recognition Application of the five step model of IFRS 15. Judgement and estimate
4 Preclinical and Clinical cost
assessment
Estimating cost not invoiced (accruals). Estimate
6 Measuring of Share-based com-
pensation
Estimating inputs to the valuation model including the
share price, expected life of the share option, market
interest rate, and volatility and making assumptions
about them.
Estimate
9 Income taxes Determine whether to recognize deferred tax assets. Judgement
16 Measuring European Investment
Bank Warrant and Put Option
Estimating inputs to the valuation model including the
share price.
Estimate
17 Valuation of convertible debt
instrument
Estimates concerning variables such as discount
rates, probability of exit events taking place, and the
timing of such exit events.
Estimate
2. Going concern and critical accounting estimates and judgements
information, additional knowledge and experience of
subsequent events.
In applying the accounting policies described in the
individual notes, management has exercised the following
critical accounting judgements and estimates which
significantly influence the amounts recognized in the
consolidated financial statements:
UNION therapeutics 49Annual Report 2022 Consolidated financial statements
Notes
3. Revenue
Revenue from license and collaboration agreements may vary from period to period as revenue may comprise
license revenue, sales-based royalties, development milestones and regulatory milestone payments, research and
development services and option fees.
Innovent Agreement
On September 28, 2021, UNION entered into a strategic collaboration and license agreement for orismilast, a
next-generation PDE4 inhibitor currently in development for inflammatory dermatology conditions, with Innovent
Biologics, Inc (the Innovent Agreement). As part of the Innovent Agreement, UNION received a non-refundable,
non-creditable and not subject to set-off up-front payment of USD 20m (DKK 127m) and is eligible to receive future
milestones and option payments of up to USD 250m, of which up to USD 89m is contingent on the achievement
of certain development and regulatory milestones across multiple therapeutic indications and up to USD 158m is
contingent on the achievement of certain sales-based milestones. Lastly, UNION is entitled to receive a sales-based
royalty fee ranging from a high single digit to a low twenties percentage of all net sales of orismilast in Greater China
(including Mainland China, Hong Kong, Macao and Taiwan) by or on behalf of Innovent.
Within the Innovent Agreement, UNION identified three performance obligations: (1) delivery of license for orismilast
(at a point in time), (2) delivery of Phase 2 study data for orismilast (over time) (3) Option to enter into agreement
regarding topical formulation (at a point in time).
Out of the total contract value of DKK 1,715m (USD 270m) excluding royalties, the upfront payment of DKK 127m has
been recognized as the transaction price, as the future potential milestone and option amounts were not deemed to
be highly probable as they are contingent upon success in future clinical trials and regulatory approvals which are
not within UNION’s control and were uncertain at the inception of the agreement. Milestones will be recognized when
their achievement is deemed to be highly probable, and a significant revenue reversal would not occur. Upon com-
mercialization of products, if any, under this agreement, royalties and net sales-based milestones will be recognized
when the related sales occur.
The transaction price of DKK 127m was at the inception of the contract allocated to the performance obligations
based on the best estimate of relative stand-alone selling prices. As such, DKK 117m was allocated to the perfo-
mance obligation related to to the delivery of license of orismilast, DKK 10m was allocated to the performance
obligation related to the delivery of Phase 2 study data for orismilast. The transaction price of DKK 127m comprises
UNION’s unconditional rights to considerations under the Innovent agreement.
The performance obligations related to the delivery of licenses were completed at a point in time (September 2021)
and UNION recognized DKK 117.0m as revenue in September 2021. The performance obligation regarding Phase 2
study data will be completed as the studies progress. Revenue will be recognized over time based on incurred cost as
a percentage of total expected cost.
In 2022 DKK 5.3 m (2021: DKK 1.9m; 2020: DKK 0m) was recognized as License revenue from upfront payment recog-
nized over time reflecting the progress of the Phase 2 studies.
On July 25, 2022 Innovent received Chinese Investigational New Drug (IND) clearances for psoriasis and atopic
dermatitis. Two development milestones totaling USD 4.0m (DKK 29.1m) were contingent on the achievement of the
IND clearances. Accordingly, DKK 29.1m is recognized as License revenue from milestones recognized at a point in
time in 2022.
Other out-license agreements
In January 2019, UNION entered into an out-licensing agreement with an external party. Under the terms of the agree-
ment, UNION is eligible for upfront and milestone payments upon successful achievement of certain development
milestones and regulatory approval milestones, as well as royalties on sales.
100% of UNION’s revenue in 2022 and 2021 arise from the Innovent agreement. Payment terms are between 30 and
60 days.
Revenue
DKK’000 2022 2021 2020
License revenue from upfront payment recognized over time 5,300 1,886 0
License revenue from upfront payment recognized at a point in time 0 117,026 0
License revenue from milestones recognized at a point in time 29,093 0 0
34,393 118,912 0
Geographical split of revenue:
Denmark 0 0 0
Greater China 34,393 118,912 0
34,393 118,912 0
UNION therapeutics 50Annual Report 2022 Consolidated financial statements
con note 3
Notes
3. Revenue continued
Deferred revenue
Deferred revenue at December 31, 2022 of DKK 2.9m (December 31, 2021: DKK 8.2m; December 31, 2020: DKK 0m)
represents the aggregated amount of the transaction price allocated to the performance obligations (delivery of
Phase 2 study data for orismilast) that are unsatisfied at the end of the reporting period. Deferred revenue present-
ed as Current of DKK 2.9 m (December 31, 2021: DKK 7.3m; December 31, 2020: DKK 0m), relates to performance
obligations that UNION expects to satisfy during the coming twelve months, whereas the Non-current portion of DKK
0 m (December 31, 2021: DKK 0.9m; December 31, 2020: DKK 0m) represents performance obligations that UNION
expects to satisfy after the coming twelve months.
Deferred revenue
DKK’000 2022 2021 2020
At January 1 8,220 0 0
Portion of upfront payment recognized over time 0 10,106 0
Recognized as revenue -5,300 -1,886 0
At December 31 2,920 8,220 0
Of which is presented as:
Non-current 0 876 0
Current 2,920 7, 3 4 4 0
2,920 8,220 0
Joint arrangements
For the Innovent agreement UNION and Innovent Biologics have agreed an initial joint development plan in respect of
activities that support the development of orismilast. Costs under any such joint development plan will be shared be-
tween Innovent Biologics and UNION, with UNION covering 90% and Innovent Biologics covering 10% of such costs.
Accounting policies
Revenue
Revenue is recognized when the customer obtains control of promised goods or services, in an amount that reflects
the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue
recognition for arrangements within the scope of IFRS 15, the following five steps are performed: (i) identify the con-
tract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price;
(iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or
as) the entity satisfies a performance obligation. The five-step model to contracts is only applied when it is probable
that the consideration UNION is entitled to in exchange for the goods or services it transfers to the customer will be
collected. At contract inception, once the contract is determined to be within the scope of IFRS 15, UNION assesses
the goods or services promised within each contract and identifies, as a performance obligation, and assesses
whether each promised good or service is distinct. Revenue is recognized in the amount of the transaction price that
is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Royalties: Certain license and collaboration agreements include sales-based royalties including commercial mile-
stone payments based on the level of sales. The license has been deemed to be the predominant item to which the
royalties relate under license and collaboration agreements. As a result, revenue is recognized when the related sales
occur.
Upfront payments: Certain agreements include payments to UNION at signing. To the extend the customer obtains
control of goods or services related to the upfront payments at signing, revenue is recognized at signing. To the
extent the customer obtains control of goods and services related to the upfront payment at a later point in time,
upfront payments are initially recognized as deferred revenue and only recognized as revenue when the customer
obtains control of goods or services.
Milestone revenue: At the inception of each arrangement that includes milestone payments, it is evaluated whether
the achievement of milestones is considered highly probable and UNION estimates the amount to be included in the
transaction price. If it is highly probable that a significant revenue reversal would not occur, the associated milestone
value is included in the transaction price. Milestone payments that are not within the control of UNION or the license
and collaboration partner, such as regulatory approvals, are not considered probable of being achieved until those
approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-
alone selling price basis, for which revenue is recognized as or when the performance obligations under the contract
are satisfied. At the end of each subsequent reporting period, the probability of achievement of such development
milestones and any related constraint is re-evaluated, and if necessary, the estimate of the overall transaction price
is adjusted. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and
earnings in the period of adjustment.
UNION therapeutics 51Annual Report 2022 Consolidated financial statements
Notes
3. Revenue continued
Accounting policies continued
License revenue for intellectual property: If license to functional intellectual property is determined to be distinct
from the other performance obligations identified in the arrangement, revenue is recognized from non-refundable
upfront fees allocated to the license at the point in time the license is transferred to the licensee and the licensee is
able to use and benefit from the license. For licenses that are bundled with other promises, UNION utilizes judgement
to assess the nature of the combined performance obligation to determine whether the combined performance
obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress
for purposes of recognizing revenue from non-refundable, upfront fees.
Revenue is measured at the fair value of the agreed consideration exclusive of VAT and taxes charged on behalf of
third parties. Revenue is presented in the country in which the delivery takes place, which is the customer’s country of
domicile.
Joint arrangements
When UNION enters into an agreement, the agreement might include joint development arrangement plans in respect
of activities that support the development of the UNION Asset. Costs arising under any such joint development plan
will be shared between UNION and the development partner. These collaboration agreements are considered joint
operations as defined in IFRS 11 “Joint Arrangements”. As a consequence, such agreements are not considered
performance obligations.
Deferred revenue
Deferred revenue represents the aggregated amount of consideration to which UNION has obtained unconditional
right to but for which performance obligations are not yet satisfied at the end of the reporting period. The split be-
tween Current and Non-current deferred revenue is based on UNION’s underlying development plans under which the
performance obligations are expected to be satisfied.
Critical accounting estimates and judgements
Revenue comprises license payments, milestone payments and royalty income. License payments which provide the
buyer with the right to use the license as it exists at the date of transfer are recognized upon transfer of the associat-
ed licensing rights at the point at which the buyer obtains the right to use the license.
The evaluation of the criteria for revenue recognition requires management to apply significant judgment in the ap-
plication of the five step model of IFRS 15. Specifically, in relation to the Innovent Biologics license and collaboration
agreement management has performed significant judgements and estimates in its (i) identification of performance
obligations under the contract, including the determination of whether promised services under the contract are
capable of being distinct, (ii) allocation of the transaction price to various performance obligations, (iii) determin-
ing whether licenses granted under the contract provide the costumer with either a right to access the company’s
intellectual property as it exists throughout the license period or a right to use the company’s intellectual property as
it exists at a point in time at which the license is granted, and (iv) estimation of budget costs and cost to complete
the research and development projects, which are applied in measuring progress of performance obligation satisfied
over time.
UNION therapeutics 52Annual Report 2022 Consolidated financial statements
Notes
4. Research and development costs and Administrative costs
DKK’000 Notes 2022 2021 2020
Research and development costs
Employee benefit costs 5 32,016 21,289 7,4 5 3
Share-based compensation 6 13,080 6,750 5,542
External costs 141,338 127,266 52,112
186,434 155,305 65,107
Higher activity level in 2022 compared to 2021 and 2020, particularly in the Phase 2b studies in psoriasis and atopic
dermatitis, caused the increase in research and development costs. Additionally, employee costs have increased as
an effect of the strengthening of the research and development organization in 2021.
DKK’000 Notes 2022 2021 2020
Administrative costs
Employee benefit costs 5 10,858 7, 4 51 4,026
Share-based compensation 6 8,387 2,274 1,354
External costs 11,593 11,648 2,735
Depreciation 12 746 351 155
31,584 21,724 8,270
To support the increased activity level in research and development, the administrative functions were also strength-
ened 2021 resulting in higher employee costs in 2022. External costs in 2022 are at the same level as in 2021 reflect-
ing continued system, process and compliance optimization efforts together with preparations for future growth
supported by external service providers.
Accounting policies
Research and development costs
Research and development costs are primarily external and, to a lesser extent, internal costs incurred in the develop-
ment of the UNION’s product candidates, including personnel costs and external research and development costs.
Substantial portions of the company’s clinical studies are performed by third-party laboratories, medical centers or
contract research organizations.
UNION recognizes accruals for estimated research and development costs, comprising payments for work per-
formed by third-party contractors and others. Payments for these activities are based on the terms of the individual
agreements with the relevant counterparties, such as contract research organizations, which may differ from the
pattern of costs incurred, in which case, they are reflected in the financial statements as expense, prepaid expense or
accrued expense. For clinical studies, the company accrues expenses based upon the estimated percentage of work
completed.
To the extent payments are made by UNION in advance of the related activities performed by the CROs, they are
included in prepayments to clinical research organizations and expensed when the activities are performed by
the CROs. To the extent the payments are made by UNION following the performance of the related activities, the
expense is accrued for as a payable to clinical research organizations.
Administrative costs
Administrative costs consist primarily of personnel costs and costs related to corporate functions and business
development. In addition, administrative costs include depreciation and other expenses for UNION’s headquarters.
Critical accounting estimates and judgements
UNION’s cost estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the sta-
tus of each program and total program spending. The company evaluates the estimates to determine if adjustments
are necessary or appropriate based on information received.
UNION therapeutics 53Annual Report 2022 Consolidated financial statements
con note 4
Notes
5. Staff costs
DKK’000 Notes 2022 2021 2020
Wages and salaries 36,938 25,711 9,518
Defined contribution plans 1,557 1,005 300
Other social security costs 3,413 1,452 410
Share-based compensation 6 21,467 9,024 6,896
Other staff costs 966 572 1,250
64,341 37,764 18,374
Research and development costs 45,096 28,039 12,995
Administrative costs 19,245 9,725 5,379
64,341 37,764 18,374
Average number of full-time equivalents 36 25 9
Employee benefits are primarily made up of salaries and other social security expenses. The cost of these benefits is
recognized as an expense.
Accounting policies
Staff costs, including wages and salaries, defined contribution plan costs, share-based compensation, social
security costs and other staff expenses are recognized in the year in which the associated services are rendered by
employees of UNION.
Remuneration to Board of Directors and Executive Management
2022
DKK’000
Board of
Directors
Executive
Management Total
Wages and salaries 1,295 7,23 9 8,534
Share-based compensation 7,303 6,113 13,416
Social security 0 10 10
8,598 13,362 21,960
2021
DKK’000
Board of
Directors
Executive
Management Total
Wages and salaries 888 6,938 7,826
Share-based compensation 1,819 3,545 5,364
Social security 0 10 10
2,707 10,493 13,200
2020
DKK’000
Board of
Directors
Executive
Management Total
Wages and salaries 140 4,693 4,833
Share-based compensation 391 644 1,035
Social security 0 7 7
531 5,344 5,875
Executive Management members are the key management personnel of UNION.
UNION therapeutics 54Annual Report 2022 Consolidated financial statements
con note 5
Notes
6. Share-based compensation
The table below summarizes share-based compensation expenses included in the statement of comprehensive
income or loss:
DKK’000 2022 2021 2020
Research and development costs, from equity-settled warrants 9,164 6,745 916
Research and development costs, from cash-settled warrants 3,916 5 4,626
Administrative costs, from equity-settled warrants 8,387 2,274 1,354
Administrative costs, from cash-settled warrants 0 0 0
21,467 9,024 6,896
Warrant programs
UNION has established share-based incentive programs (equity-settled and cash-settled) for members of the Board
of Directors, members of the Executive Management and key personnel in the form of warrants. Warrants are granted
by the Board of Directors in accordance with authorizations given to it by the general meeting of shareholders and as
incorporated into the company’s articles of association.
Warrants granted in February 2017 (cash-settled)
In April 2017, the general meeting of shareholders granted warrants with rights to subscribe for up to 44,654 shares
of nominally DKK 0.1 with an exercise price of DKK 24 per warrant. At December 31, 2022, the Board of Directors have
granted in total 44,654 (December 31, 2021: 44,654; December 31, 2020: 44,654). These warrants vest and become
exercisable upon an “exit event”, defined as an event of IPO, merger, demerger, or solvent liquidation, which triggers an
immediate expense recognition upon grant. These warrants may be settled in equity instruments of the company or in
cash at the discretion of the warrant holder. Accordingly, these warrants are classified as cash-settled warrants. The
life of the warrants under the February 2017 program is eight years from the date of grant. Upon occurrence of an ‘exit
event’ the warrant holder has fourteen days to exercise the warrants or the warrants will lapse.
Warrants granted from November 2017 (equity-settled)
In November 2017, the Board of Directors were authorized to grant warrants for up to 250,000 shares of nominally
DKK 0.1 per warrant in the company in the period until March 31, 2024. In June 2020, the Board of Directors were au-
thorized to grant warrants for up to an additional 250,000 shares in the company in the period until June 25, 2025. At
December 31, 2022, the Board of Directors have granted in total 438,670 (December 31, 2021: 419,230; December 31,
2020: 235,930) warrants adjusted for expired and exercised warrants under this authorization. Warrants granted under
the November 2017 equity incentive plan are classified as equity settled and generally vest over four years’ service
periods in periodic installments that may or may not be equal, which triggers linear or graded vesting profiles. Certain
warrants under this program vest immediately upon grant. The life of the warrants under the November 2017 program
varies from 4-10 years from the date of grant.
The following schedule specifies the movements of number and weighted average exercise price of outstanding
warrants for 2022, 2021 and 2020:
Equity-settled warrants
Number of warrants
Board of
Directors
Executive
Manage-
ment
Employ-
ees Total
Weighted
average
exercise
price per
warrant
(DKK)
Weighted
average
grant
date fair
value per
warrant
(DKK)
Outstanding, December 31, 2019 71,080 80,000 73,100 224,180 65 34
Granted during the period 0 0 11,750 11,750 23 70
Outstanding, December 31, 2020 71,080 80,000 84,850 235,930 63 35
Granted during the period 37, 5 0 0 105,960 39,840 183,300 97 110
Outstanding, December 31, 2021 108,580 185,960 124,690 419,230 78 68
Granted during the period 25,000 18,920 32,000 75,920 64 179
Expired during the period -25,125 0 -10,400 -35,525 82 33
Exercised during the period -20,955 0 0 -20,955 10 4
Outstanding, December 31, 2022 87,500 204,880 146,290 438,670 78 93
Exercisable warrants at December 31, 2022 289,191 78
Exercisable warrants at December 31, 2021 183,421 75
Exercisable warrants at December 31, 2020 94,454 70
The average share-price at exercise was DKK 160 pr share of nominal DKK 0.1 each.
The weighted average remaining contractual life for outstanding equity-settled warrants was 3.5 years at December
31, 2022 (December 31, 2021: 3.8 years; December 2020: 3.3 years).
The range of the exercise price for outstanding equity-settled warrants was DKK 0.1-160 at December 31, 2022 (De-
cember 31, 2021: 0.1-124; December 31, 2020: 0.1-82).
UNION therapeutics 55Annual Report 2022 Consolidated financial statements
con note 6
Notes
6. Share-based compensation continued
Cash-settled warrants
Number of warrants
Former
employees Total
Weighted
average
exercise
price per
warrant
(DKK)
Weighted
average
grant
date fair
value per
warrant
(DKK)
Outstanding, December 31, 2019 44,654 44,654 24 10
Granted during the period 0 0 0 0
Outstanding, December 31, 2020 44,654 44,654 24 10
Granted during the period 0 0 0 0
Outstanding, December 31, 2021 44,654 44,654 24 10
Granted during the period 0 0 0 0
Outstanding, December 31, 2022 44,654 44,654 24 10
Exercisable warrants at December 31, 2022 0 n/a
Exercisable warrants at December 31, 2021 0 n/a
Exercisable warrants at December 31, 2020 0 n/a
The weighted average remaining contractual life for outstanding cash-settled warrants was 2.1 years at December
31, 2022 (December 31, 2021: 3.1 years; December 31, 2020: 4.1 years).
The exercise price for outstanding cash-settled warrants was DKK 24 at December 31, 2022 (December 31, 2021: 24;
December 31, 2020: 24).
Determination of fair value of warrants
UNION determines and calculates the fair value of each equity-settled warrant at grant date and for each cash-settled
warrant, at each balance sheet date, using the Black-Scholes pricing model. This pricing model requires the input of
subjective assumptions such as:
• Dividend yield: Is determined to be zero.
• The expected stock price volatility: As it is not possible to estimate the expected volatility of a non-publicly listed
entity’s share price, UNION has estimated the fair value of its warrants by using the volatility of an appropriate peer
group of listed international biotechnology companies.
• The risk-free interest rate, which is based on the Danish government bonds having a yield with a maturity equal to
the expected term of the option in effect at the time of grant.
• The expected life of warrants, which is based on vesting terms, expected rate of exercise and life terms in the
warrant program.
• Estimate of UNION therapeutics A/S’ market share price. As UNION therapeutics A/S is not listed on a stock
exchange, the estimated fair value of the warrants at each measuring date, using the Black-Scholes model, has
been established by assuming that the value of UNION therapeutics A/S’ shares is the price per share determined
at the latest financing round and considering additional subsequent valuation infliction points and relevant facts
and circumstances.
UNION therapeutics 56Annual Report 2022 Consolidated financial statements
Notes
6. Share-based compensation continued
Valuation assumptions for warrants in 2022, 2021 and 2020
The fair value at each measuring date in 2022, 2021 and 2020 is measured using the following significant assump-
tions:
Dec. 31 2022 Dec. 31 2021 Dec. 31 2020
Equity-settled warrants
Dividend yield - - -
Volatility (%) 69 54-76 61-77
Risk-free interest rate 1.2% -0.2% - -0.4% -0.4% - -0.6%
Market share price range applied DKK 160-248 DKK 160 DKK 53-160
Exercise price DKK 0.1-160 DKK 0.1-124 DKK 0.1-53
Expected life of equity-settled warrants granted 5 years 5 years 5 years
The grant date fair value per warrant DKK 86-217 DKK 83-160 DKK 53-93
Dec. 31 2022 Dec. 31 2021 Dec. 31 2020
Cash-settled warrants
Dividend yield - - -
Volatility (%) 71 76 67
Risk-free interest rate 1.4% -0.2% -0.6%
Market share price at year end DKK 248 DKK 160 DKK 160
Exercise price DKK 24 DKK 24 DKK 24
Expected life of cash-settled warrants at end period 2 .1 years 3.1 years 4.1 years
The end period fair value per warrant DKK 224 DKK 136 DKK 136
Reconciliation of fair value of cash-settled warrants:
DKK’000 Cash-settled warrants
At January 1 2020 1,443
Fair value adjustment through comprehensive income 4,626
At December 31, 2020 6,069
Fair value adjustment through comprehensive income 5
At December 31, 2021 6,074
Fair value adjustment through comprehensive income 3,916
At December 31, 2022 9,990
Accounting policies
Equity-settled awards
The cost of equity-settled awards is determined by the fair value at the date when the grant is made using an appro-
priate valuation model. The cost is recognized in the statement of comprehensive income together with a corre-
sponding increase in equity, over the period in which the service and, where applicable, the performance conditions
are fulfilled (the vesting period).
Service and non-market performance conditions are not taken into account when determining the grant date fair
value of awards, but the likelihood of the conditions being met is assessed as part of the company’s best estimate
of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the
grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to
an immediate expensing of an award unless there are also service and/or performance conditions.
Cash-settled awards
A liability is recognized for the fair value of cash-settled awards. The fair value is measured initially at the date of
grant and subsequently at each reporting date up to and including the settlement date, with changes in fair value
recognized in employee benefits expense.
UNION therapeutics 57Annual Report 2022 Consolidated financial statements
Notes
8. Financial income and expenses
Financial income
DKK’000 Notes 2022 2021 2020
Interest income 401 0 6
Foreign exchange gains, net 2,286 4,286 0
2,687 4,286 6
Financial expenses
DKK’000 Notes 2022 2021 2020
Interest expenses 1,178 1,184 380
Interest expenses, lease liabilities 53 32 11
Fair value adjustment, Convertible debt (unrealized) 17 1,881 1,741 0
Fair value adjustment, Convertible debt (realized) 17 11,24 0 0 0
Interest expenses, European Investment Bank loan (amortized cost) 16 11,240 10,891 9,409
Modification loss, European Investment Bank loan 16 3,116 0 0
Foreign exchange loss, net 0 0 272
Fair value adjustment, warrant and put option (unrealized) 16 10,112 0 12,012
38,820 13,848 22,084
Foreign exchange gains in 2022 are primarily related to USD cash positions.
The fair value adjustment of convertible debt in 2022 is due to conversion of nominal DKK 45.0m of total DKK 62.0m
of the convertible loan into share capital.
Fair value adjustments of warrant and put option is primarily due to increase in market share price.
Modification loss is a result of extending the tranche 1 European Investment Bank loan.
Accounting policies
For accounting policies regarding share-based compensation, European Investment Bank loan and Convertible loan,
please refer to note 6, 16 and 17, respectively.
6. Share-based compensation continued
Critical accounting estimates and judgements
Estimating fair value for share-based compensation transactions requires determination of the most appropriate
valuation model, which depends on the terms and conditions of the respective awards. This estimate also requires
determination of the most appropriate inputs to the valuation model including the share price, expected life of the
share option, market interest rate, and volatility and making assumptions about them. UNION determines the value of
the share price with reference to the share price applied in most recent capital increase transactions, and adjusted for
any value infliction points. UNION initially measures the cost of equity-settled and cash-settled share-based compen-
sation awards using the Black-Scholes model to determine the fair value of the respective awards.
For cash-settled share-based compensation transactions, the liability needs to be remeasured at the end of each re-
porting period up to the date of settlement, with any changes in fair value recognized in comprehensive income. This
requires a reassessment of the estimates used at the end of each reporting period. The assumptions and models
used for estimating fair value for share-based payment.
7. Other operating income
Other operating income consists of government grants and other items secondary to the company’s activities. In
2020 UNION received a governmental grant from Innovation Fund Denmark. The grant provides compensation for
a part of certain project-specific research and development expenses, including wages and salaries. In 2021 the
remaining conditions attached to the government grant were fulfilled and the remaining part of the grant was recog-
nized in the consolidated comprehensive income.
In 2022, UNION recognized DKK 0m (2021: DKK 6.2m; 2020: DKK 9.0m) as Other operating income, hereof income
from the government grant accounts for DKK 0m (2021: DKK 6.2m; 2020: DKK 8.7m).
UNION therapeutics 58Annual Report 2022 Consolidated financial statements
con note 8con note 7
Notes
The biotechnology and pharmaceutical industry is subject to considerable risks and uncertainties. UNION has so far
reported significant losses and, consequently, has unused tax losses. Management has concluded that deferred tax
assets should not be recognized at December 31, 2022. (none recognized at December 31, 2021 and December 31,
2020) due to uncertainty related to future utilization of loss carry-forward.
Income tax receivables are recognized in accordance with the Danish tax credit scheme (Skattekreditordningen).
Companies covered by the tax credit scheme may obtain payment of the tax base of losses originating from research
and development expenses of up to DKK 25.0m (tax value of DKK 5.5m). Under Danish tax legislation, UNION is
eligible to receive DKK 5.5m in 2022 (2021: DKK 5.5m; 2020: DKK 5.5m) in cash relating to the surrendered tax loss
based on qualifying research and development expenses. These tax receipts comprise the majority of the current tax
income in 2022, 2021 and 2020, respectively.
Accounting policies
Current income tax
Tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid
to the taxation authorities within one year of the date of the statement of financial position. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the
countries where the company operates.
Deferred tax
Deferred tax is provided using the liability method on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits
and any unused tax losses to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences and the carry forward of unused tax credits and unused tax losses, can be utilized.
Unused tax losses can be carried forward indefinitely.
Critical accounting estimates and judgements
If management assesses that tax assets can be offset against positive taxable income within the foreseeable future,
UNION recognizes deferred tax assets, including the tax base of tax loss carryforwards. Management has assessed
that UNION do not meet the recognition criteria for capitalization of deferred tax assets due to the uncertainty as to
the future utilization of tax loss carryforward. Judgments are made in respect of determination of research and devel-
opment costs applicable for super deduction, impacting amounts if non capitalized deferred tax assets.
9. Income taxes
The major components of income tax income for the years ended December 31, 2022, 2021 and 2020 are:
DKK’000 2022 2021 2020
Income taxes in the statement of profit or loss
Net result before tax -219,758 -61,501 -86,406
Corporate income tax rate in Denmark 22% 22% 22%
Computed corporate income tax (income) -48,347 -13,530 -19,009
Prior year adjustments -2 1,983 -15
Adjustment for non-deductible expenses 1,579 3,748 106
Adjustment for research and development super deduction -4,468 -7,5 32 -4,027
Adjustment for warrant expense (equity and cash settled) 4,723 1,560 1,517
Change in deferred tax asset not recognized 41,061 8,296 15,918
Tax expense/(income) for the period -5,454 -5,475 -5,510
Deferred tax in the statement of financial position
Tax deductible losses 33,188 15,952 22,262
Research and development expenses being capitalized for tax purpose 33,072 11,312 0
Other temporary differences 7,521 5,420 2,536
Deferred tax asset/(liability) at December 31 73,781 32,684 24,798
Deferred tax assets not recognized
Deferred tax assets not recognized -73,781 -32,684 -24,798
Deferred tax at December 31 0 0 0
UNION therapeutics 59Annual Report 2022 Consolidated financial statements
con note 9
Notes
10. Earnings per share
The result for the period and weighted average number of shares used in the calculation of basic and diluted result
per share are as follows:
DKK’000, except share amounts and per share amounts Notes 2022 2021 2020
Result for the year -214,304 -56,026 -80,896
Weighted average number of shares outstanding 6,753,204 6,492,633 5,4 47,310
Average dilutive effect of outstanding stock options and
warrants 0 0 0
Average number of diluted shares 6,753,204 6,492,633 5,4 47,310
Basic net earnings/(loss) per share -32 -9 -15
Diluted net earnings/(loss) per share -32 -9 -15
The following potential ordinary shares are anti-dilutive and are therefore not included in the weighted average num-
ber of shares for the purpose of diluted earnings per share:
Notes 2022 2021 2020
Outstanding warrants under employee incentive programs 6 483,324 463,880 280,580
Outstanding warrants relating to European Investment Bank
loan facility 16 141,003 115,572 112,680
Contingent issuable shares relating to convertible loans 17 120,737 681,609 0
Total outstanding warrants 745,064 1,261,061 393,260
Accounting policies
Basic net earnings per share are calculated as the result for the year compared to the weighted average of the issued
shares in the financial year.
The basis for the calculation of diluted net earnings per share is the weighted-average number of ordinary shares in
the financial year adjusted for the dilutive effects of warrants.
11. Intangible assets
Patents, trademarks
and other rights
DKK’000 2022 2021 2020
Cost
At January 1 16,566 16,566 0
Additions 0 0 16,566
At December 31 16,566 16,566 16,566
Amortization
At January 1 0 0 0
Additions 0 0 0
At December 31 0 0 0
Carrying amount
At December 31 16,566 16,566 16,566
Acquisition of PDE4-inhibitor program
The intangible assets consist of certain intangible rights in the form of patents and compound data relating to the
‘PDE4 inhibitor compounds’ acquired from Leo Pharma A/S in 2020.
Under the terms of the Agreement, UNION agreed to make future payments to LEO Pharma A/S that are contingent
upon the achievement of specified clinical, regulatory, and sales milestones. UNION applies the cost accumulation
method for the accounting for such contingent payments.
Under the agreement, UNION will, subject to meeting certain clinical, regulatory, and sales milestones, pay in cash to
the seller up to USD 202m equivalent to DKK 1,240m. Also, UNION will pay to the seller low single-digit percentage
royalty applied on net sales of covered products until the expiry of the royalty term which ends at the latest on the
twelfth anniversary of the first commercial sale of covered products.
UNION has no internally generated intangible assets from development, as the criteria for recognition of an asset are
not considered met.
UNION therapeutics 60Annual Report 2022 Consolidated financial statements
con note 11con note 10
Notes
11. Intangible assets continued
The intangible asset is not being amortized until approval of the underlying asset has been received from regulatory
authorities.
Management has in 2020, 2021 and 2022 not identified indicators of impairment concerning the acquired intangible
rights.
Impairment test has been carried out in 2022. Present value has been calculated based on 12 years of discontinued
cashflow using a WACC of 14%. The impairment test shows no signs of impairment.
Accounting policies
Separately acquired intangible assets
Separately acquired intangible assets are measured at historical costs. Such assets have a finite useful life and are
subsequent to initial measurement carried at costs less accumulated amortization and impairment.
For acquisition of intangible rights involving equity-settled share-based payment transactions, management meas-
ures the fair value of the rights received and the corresponding increase in equity by reference to the fair value of the
rights received unless that fair value cannot be estimated reliably. If management cannot estimate reliably the fair
value of the rights received, it measures the fair value and the corresponding increase in equity by reference to the fair
value of the equity instruments granted.
Variable or contingent consideration for the acquisition of intangible rights is accounted for under the cost accumula-
tion model, whereby all future considerations are added, when incurred, to the cost of the asset initially recorded.
Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumu-
lated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible
assets with finite lives are amortized using the straight-line method over the useful economic life and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and
the amortization method are reviewed at least once a year. Changes in the expected useful life or the expected pat-
tern of consumption of future economic benefits embodied in the asset are considered to modify the amortization
period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on
intangible assets with finite lives is recognized in the statement of comprehensive income in the expense category
that is consistent with the function of the intangible assets.
Internally generated intangible assets from development
Intangible assets arising from development projects are recognized in the balance sheet when:
• the development project is clearly defined and identifiable and the attributable costs can be measured reliably
during the development period;
• the technological feasibility, adequate resources to complete and a market for the product or an internal use of the
product can be documented; and
• management has the intent to produce and market the product or to use it internally
Such an intangible asset is recognized if it can be documented that the future income from the development project
will exceed the aggregate cost of production, development, and sale and administration of the product, with sufficient
certainty.
Costs not recognized in the balance sheet are recognized in the statement of comprehensive income as Research
and development costs when incurred.
Impairment test of intangible assets
During the year, the carrying amounts of intangible assets are reviewed in order to determine whether there is any
indication that they have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss.
Intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indica-
tion that the asset may be impaired.
The recoverable amount is the higher of fair value less costs of disposal and value in use. On assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
UNION therapeutics 61Annual Report 2022 Consolidated financial statements
Notes
DKK’000
Right-of-
use assets
Other
equipment Total
Cost
At January 1, 2020 650 95 745
Adjustments -206 0 -206
Additions 0 0 0
At December 31, 2020 444 95 539
Depreciation
At January 1, 2020 -217 -64 -281
Adjustments 65 0 65
Additions -136 -19 -155
At December 31, 2020 -288 -83 -371
Carrying amount
At December 31, 2020 156 12 168
Right-of-use assets
The company leases its office premises in Copenhagen. The property lease is non-cancellable in the period through
June 15, 2023. Hereafter, the option to terminate is six months. The contract does not provide a right, obligation, or
an option to buy the office premises. The contract contains both lease and non-lease components according to the
specific pricing of the services in the agreements.
Additionally, the company leases parking spaces in the area of the office premises. The contracts include options
to terminate in three months, but the leasing contracts are expected to continue at least until June 30, 2025. The
contracts does not contain any non-lease components.
In 2020, 2021 and 2022, the expense related to variable lease payments not included in the lease liabilities amounts
to DKK 0.1m per year and was recognized in administrative costs.
Accounting policies
Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets, as follows:
Other fixtures and fittings, tools and equipment: 2-5 years. Leasehold improvements: Extend of lease term, but no
longer than 5 years.
12. Property, plant and equipment
DKK’000
Right-of-
use assets
Other
equipment Total
Cost
At January 1, 2022 1,647 157 1,804
Additions 456 178 634
Disposals 0 -16 -16
At December 31, 2022 2,103 319 2,422
Depreciation
At January 1, 2022 -618 -26 -644
Additions -604 -142 -746
Disposals 0 16 16
At December 31, 2022 -1,222 -152 -1,374
Carrying amount
At December 31, 2022 881 167 1,048
Cost
At January 1, 2021 444 95 539
Additions 1,203 140 1,343
Disposals 0 -78 -78
At December 31, 2021 1,647 157 1,804
Depreciation
At January 1, 2021 -288 -83 -371
Additions -330 -21 -351
Disposals 0 78 78
At December 31, 2021 -618 -26 -644
Carrying amount
At December 31, 2021 1,029 131 1,160
UNION therapeutics 62Annual Report 2022 Consolidated financial statements
con note 12
Notes
For further information regarding the European Investment Bank loan and convertible loan, refer to note 16 and 17,
respectively. For further information regarding going concern, refer to note 2.
Loss of subscribed share capital
As a result of the group’s accounting policy, financing strategy and utilization of the credit facility provided by the Eu-
ropean Investment Bank, at December 31, 2022 the company had lost more than 50% of its subscribed share capital.
Management expects to re-establish the subscribed share capital through additional long-term sources of funding or
through retained earnings if entering into license or research and development colaboration agreements in 2023.
Share capital
On December 29, 2021, a 10-for-1 stock split of issued and outstanding ordinary shares was approved at an extraordi-
nary general meeting. The stock split also resulted in a reduction of the nominal value of the company’s ordinary
shares from DKK 1 to DKK 0.1.
The share split directly affects granted warrants, as warrants effectively split 10-for-1, while the exercise price of each
warrant is reduced to 1/10 of the pre-split value. The total value of granted warrants is unchanged, refer to note 6, 10,
16 and 17, respectively.
At December 31, 2022 the share capital comprises of 7,100,075 shares of nominal DKK 0.1, each of which have been
issued and paid in full. Only one class of shares exists, and no shares carry any special rights.
Number of
shares
Share capital
(DKK’000)
Share capital at January 1, 2020 515,448 515
Capital increase at May 7, 2020 35,367 36
Capital increase at June 23, 2020 12,044 12
Share capital at December 31, 2020 562,859 563
Share capital at January 1, 2021 562,859 563
Capital increase at February 9, 2021 96,741 97
Effect of 10-for-1 share split December 29, 2021 5,936,400 0
Share capital at December 31, 2021 6,596,000 660
Share capital at January 1, 2022 6,596,000 660
Capital increase at January 3, 2022 (exercise of warrants) 20,955 2
Capital increase at June 30, 2022 (conversion of loan) 232,477 23
Capital increase at December 2, 2022 250,643 25
Share capital at December 31, 2022 7,100,075 710
13. Other receivables
DKK’000
Dec. 31
2022
Dec. 31
2021
Dec. 31
2020
VAT receivables 2,786 4,224 972
Prepayments 341 2,170 119
Deposits 294 252 122
Other receivables 135 1,651 9,012
Other receivables 3,556 8,297 10,225
Classified as:
Non-curent assets 294 252 122
Current assets 3,262 8,045 10,103
Other receivables 3,556 8,297 10,225
In 2022 Other receivables primarily consist of VAT receivables. In 2021 and 2020, Other receivables primarily consist-
ed of VAT receivables and government grant from Innovation Fund Denmark not yet fully paid out.
14. Capital management and share capital
Capital Management
The Board of Directors monitors the share and capital structure to ensure that UNION’s capital resources support the
strategic goals. UNION’s goal is to maintain a strong capital base to maintain confidence from investors, creditors,
employees and collaboration partners, and a continuous advancement of the research and development pipeline and
business in general.
UNION is primarily financed through equity investments from shareholders, convertible loans, and a long-term loan
agreement with the European Investment Bank. UNION has also obtained financing through license agreements and
governmental- and private grants. The adequacy of UNION’s available funds will depend on various factors, including
the advancement of the research and development programs, the magnitude of investments in these programs, and
UNION’s ability to establish commercial collaboration and licensing agreements with partners.
As such, UNION will require additional funds and plans to obtain additional long-term sources of funding through
issuance of new shares, entering license and research and development collaboration agreements, expense manage-
ment activities, renegotiate terms for current outstanding debt instruments or a combination of such.
UNION therapeutics 63Annual Report 2022 Consolidated financial statements
con note 13-14
Notes
DKK’000
Carrying
amount
Falling due
within
1 year
Falling due
between
1-2 years
Falling due
after
2 years
Total con-
tractual
cash flows
2022
Long-term debt (amortized cost) 107, 2 24 0 123,613 0 123,613
Trade payables (amortized cost) 17,74 3 17,74 3 0 0 17,743
Cost accruals (amortized cost) 18,789 18,789 0 0 18,789
Lease liabilities (amortized cost) 1,035 848 229 0 1,077
Convertible loans (fair value) 19,358 0 21,590 0 21,590
Warrant and put option (fair value) 34,884 34,884 0 0 34,884
199,033 72,264 145,432 0 217,696
2021
Long-term debt (amortized cost) 99,286 0 80,038 38,098 118,136
Trade payables (amortized cost) 11,424 11,424 0 0 11,424
Cost accruals (amortized cost) 25,059 25,059 0 0 25,059
Lease liabilities (amortized cost) 1,090 471 681 0 1,152
Convertible loans (fair value) 63,778 0 0 78,786 78,786
Warrant and put option (fair value) 18,480 18,480 0 0 18,480
219,117 55,434 80,719 116,884 253,037
2020
Long-term debt (amortized cost) 88,894 0 0 118,136 118,136
Trade payables (amortized cost) 7,350 7,350 0 0 7,350
Cost accruals (amortized cost) 4,891 4,891 0 0 4,891
Lease liabilities (amortized cost) 167 167 0 0 167
Warrant and put option (fair value) 18,018 18,018 0 0 18,018
119,320 30,426 0 118,136 148,562
The amounts disclosed in the tables are the contractual undiscounted cash flows (including interest payments).
Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
15. Financial risks
The company’s financial risks are managed by the Executive Management. UNION follows a policy where manage-
ment continually monitors the following defined risks: liquidity risk, interest rate risk, currency risk and credit risk.
Liquidity risk
Liquidity risk is the risk that UNION will not be able to meet its financial obligations as they fall due. The Executive
Management monitors its risk of a shortage of funds using a liquidity planning tool.
The company’s objective and policy is to maintain a balance between continuity of funding and flexibility through the
use of equity investments from shareholders and external loans. For discusion of going concern refer to note 2.
UNION has no unused credit facilities at December 31, 2020, December 31, 2021 or December 31, 2022.
The following are the contractual undiscounted out flows associated with the company’s financial liabilities in the
current and prior year based on their contractual maturities.
UNION therapeutics 64Annual Report 2022 Consolidated financial statements
con note 15
Notes
15. Financial risks continued
The fair value of Convertible loan and Warrant and put option are based on level 3 in the fair value hierarchy. There
were no transfers between levels 1, 2 and 3 for recurring fair value measurement during the period ended December
31, 2022, 2021 or 2020.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
UNION has no significant interest-bearing debt with variable interest, and UNION’s interest rate risks primarily relate
to the position of cash in banks. As such, no separate analysis is provided.
Foreign currency risk
UNION has foreign exchange exposure from vendors contracted and paid in other currencies than DKK, or EUR, to
which the DKK is pegged. UNION also has foreign exchange exposure through certain income elements, e.g. future
milestone payments as discussed in note 3 and 11.
UNION manages part of the cost-related foreign exchange exposure by buying and selling foreign currencies on a
quarterly basis in order to hold amounts of foreign currency that correspond to the contractually committed costs in
foreign currency on a 12-months rolling basis. This simple hedging approach is subject to hedging criteria related to
size of foreign exchange exposure from vendor contracts, historical currency fluctuation and transaction costs. As of
December 31, 2022, UNION holds positions in USD, GBP and PLN in addition to DKK.
The table shows the estimated exposure in USD, GBP and PLN and the net effect it would have had on equity and
profit for the year if the year-end exchange rates of USD, GBP and PLN had been 10% higher than the actual exchange
rates. A corresponding decrease in the actual exchange rates would have had an opposite (positive/negative) effect
on equity and profit for the year.
DKK’000
Cash and cash
equivalents
Trade
payables
Net
position
2022
USD 17,079 -463 16,616
GBP 13,314 -2,792 10,522
PLN 5,520 0 5,520
DKK’000
Cash and cash
equivalents
Trade
payables
Net
position
2021
USD 36,041 -645 35,396
GBP 17,721 -2,116 15,605
PLN 10,517 0 10,517
2020
USD 2,683 -226 2,457
GBP 0 -1,017 -1,017
DKK’000
Change
in equity
Change in profit
for the year
2022
Change if 10% higher USD-rate than actual rate 1,662 1,646
Change if 10% higher GBP-rate than actual rate 1,052 1,052
Change if 10% higher PLN-rate than actual rate 552 552
2021
Change if 10% higher USD-rate than actual rate 3,540 3,512
Change if 10% higher GBP-rate than actual rate 1,560 1,560
Change if 10% higher PLN-rate than actual rate 1,052 1,052
2020
Change if 10% higher USD-rate than actual rate 246 246
Change if 10% higher GBP-rate than actual rate -102 -102
Credit risk
The primary potential credit risks relate to Cash and cash equivalents. Cash and cash equivalents are not deemed to
be subject to any special credit risk as they are deposited with an accredited bank. At December 31, 2022 UNION has
no trade receivables (December 31, 2021: none; December 31, 2020: none).
UNION therapeutics 65Annual Report 2022 Consolidated financial statements
Notes
15. Financial risks continued
Accounting policies
Fair value
Fair value is the price that would be received from sale of an asset or paid to settle a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that
the transaction to sell the asset or settle the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.
UNION uses valuation techniques that are appropriate in the circumstances and for which sufficient data are availa-
ble to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable
inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
• Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
• Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For the purpose of fair value disclosures, UNION has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.
Critical accounting estimates and judgements
Management assessed that cash, trade receivables, trade payables, and other current liabilities (except for cash-set-
tled warrants and European Investment Bank warrant and put option) approximate their carrying amounts largely due
to the short-term maturities of these instruments. For information regarding going concern, refer to note 2.
16. European Investment Bank Loan
Finance contract with the European Investment Bank
In October 2017, UNION entered into a finance contract with the European Investment Bank ensuring a loan facility
of EUR 20.0m. Under the finance contract, the loan shall be disbursed in up to two tranches and the repayment date
is no later than the fifth anniversary of the relevant disbursement date. The loan agreement is subject to a number of
financial and non-financial terms.
In January 2018, UNION called the first of the two tranches under the finance contract. The first tranche totaled EUR
7.0m. The loan and accumulated interest originally fell due for payment in January 2023.
In December 2019, UNION called the second of the two tranches under the finance contract. The second tranche
totaled EUR 3.3m. The loan and accumulated interest fall due for payment in December 2024.
Modification of tranche 1 in 2022
In June 2022 the loan period was extended for the tranche 1 loan, meaning the loan and accumulated interest fall due
for payment on January 25, 2024.
It has been determined that the present value of cash flow arising from the modification does not exceed 10%.
Therefore, the extension of the loan is considered a modification of the existing loan and not a new loan. The modifi-
cation resulted in a modification loss of DKK 3.1m, that has been reported as Financial expenses in the consolidated
statement of comprehensive income.
As a result of the modification, UNION obliged to apply 5% of proceeds in excess of EUR 8.0m from any equity fund
raised (excluding an IPO and from any public offerings) occuring between June 2022 and January 2024 towards
repayment of the tranche 1 loan.
As a concequence of the capital increase in December 2022 (refer to note 14), UNION made a partial repayment of
the the tranche 1 loan of DKK 0.1m.
For further information refer to notes 15 and 20.
Consideration for the loan in the form of warrants
As consideration for the loan, UNION has granted 186,910 warrants to the European Investment Bank that vest
relative to the drawdown on the loan in two tranches. Upon drawdown of the first tranche in 2018, 87,220 warrants
vested. Upon drawdown of the second tranche in 2019, 25,460 warrants vested, and 74,230 warrants were lapsed
and became void.
In 2021, the European Investment Bank has been granted additional 2,892 warrants, as an anti-dilution measure as a
consequence of UNION granting additional equity settled warrants to the Board of Directors, members of the Execu-
tive Management and key personnel of the company.
UNION therapeutics 66Annual Report 2022 Consolidated financial statements
con note 16
Notes
In connection with the modification and extension of the loan period of the first tranche in June 2022, the European
Investment Bank has been granted an additional 25,431 warrants.
141,003 warrants were outstanding at December 31, 2022 (December 31, 2021: 115,572; December 31, 2020:
112,680). Each warrant entitles the European Investment Bank to subscribe for 1 share of nominal DKK 0.1 against
payment of exercise price of DKK 0.1. Vested warrants can be exercised in part of in full at any time at the discretion
of European Investment Bank. Warrants not exercised after 20 years shall lapse.
Put option related to repurchase of vested warrants held by the European Investment Bank
The loan agreement further includes an embedded derivative in form of a put option, pursuant to which the European
Investment Bank may require UNION to purchase all or part of the vested warrants held by the European Investment
Bank at an option price equivalent to the fair value of the warrants at the time of exercise.
Floating charge
As part of the loan agreement, UNION entered into a floating charge agreement pursuant to which a floating charge
of EUR 2.0m is pledged. Furthermore, UNION entered into a negative pledge preventing it from subsisting any securi-
ty over any of its assets. Refer to note 23.
The tables below summarize the assumptions, conditions and other information relating to the warrant and put
option:
Dec. 31
2022
Dec. 31
2021
Dec. 31
2020
Dividend yield - - -
Volatility (%) 69 76 67
Annual risk-free interest rate 1.2% -0.2% -0.6%
Market share price at year-end DKK 248 DKK 160 DKK 160
Exercise price DKK 0.1 DK K 0.1 DKK 0.1
Life of option 1-2 years 1-3 years 2-4 years
Sensitivity
At December 31, 2020, December 31, 2021 and December 31, 2022, other things being equal, a 1% increase in the
share price will result in a 1% increase in the fair value of the warrant put option. Similarly, a 1% decrease in the share
price will reduce the fair value of the warrant put option by 1%.
Reconciliation of fair value measurements under Level 3 hierarchy:
DKK ‘000 Warrant and put option
At December 31, 2019 6,006
Fair value adjustment through profit or loss (unrealized) 12,012
At December 31, 2020 18,018
Fair value adjustment through profit or loss (unrealized) 0
Warrants awarded 462
At December 31, 2021 18,480
Fair value adjustment through profit or loss (unrealized) 10,112
Warrants awarded 6,292
At December 31, 2022 34,884
Fair value adjustments through profit or loss are recognized in the statement of comprehensive income as financial
income or financial expenses, as applicable.
Accounting policies
A compound financial instrument which contains both a liability and an embedded put option component is separat-
ed at the issue date.
When establishing the accounting treatment of these non-derivative instruments UNION first establishes whether
the instrument is a compound instrument and classifies such instruments or components separately as financial
liabilities, or warrant put option instruments in accordance with IAS 32 Financial Instruments: Presentation.
UNION separately recognizes the components of a financial instrument that: (a) creates a financial liability for the
company; and (b) grants a put option to the lender to purchase all or part of the warrants held by the lender.
Classification of the liability and warrant put option components is not revised as a result of a change in the likelihood
that the warrant put option will be exercised, even when exercise of the option may appear to have become econom-
ically advantageous to the holders. When allocating the initial carrying amount of a compound financial instrument
to its liability and warrant put option components, the liability component is assigned the residual amount after
deducting from the entire fair value of the instrument, the amount separately determined for the warrant put option
component.
16. European Investment Bank Loan continued
UNION therapeutics 67Annual Report 2022 Consolidated financial statements
Notes
Accounting policies continued
Upon modification of loans UNION determine whether the present value of the cash flows under the new terms is at
least 10% different from the present value of the remaining cash flows of the original liability, applying the original
effective interest rate. If the difference is 10% or greater, the existing liability is de-recognized and a new financial
liability is recognized. If the difference is less than 10% a qualitative assessment for derecognition is performed.
If a qualitative analysis is applied, determining whether the terms are substantially different, from a qualitative
perspective, is judgmental and will depend on the specific facts and circumstances of each case. Qualitative factors
include, but are not limited to:
• A change in the currency in which the liability is denominated.
• A change in the interest basis (such as a change from fixed rate to floating rate, or vice versa).
• A change in any conversion features in the instrument.
• A substantial change in covenants.
If the terms are not determined to be substantially different it is considered a modification of the existing loan and
not a new loan. When modification of loans does not result in a derecognition any modification gain or loss are
recognized in the income statement. Modification gains or losses are determined by recalculating the gross carrying
amount of the financial liability by discounting the new contractual cash flows using the original effective interest
rate.
Critical accounting estimates and judgements
Estimating the fair value of the European Investment Bank warrant and put option requires determination of the
most appropriate measuring model and the determination of the most appropriate inputs to the measuring model.
UNION measures the fair value by the end of each reporting period by use of the Black-Scholes model. This valuation
method requires management to make certain estimates about the model inputs, such as the underlying share price
and volatility. The probabilities of the various estimates within the applied range can be reasonably assessed and are
used in Management’s estimate of fair value. For the European Investment Bank warrant and put option, estimated
share price is the most significant input. UNION determines the value of the share price with reference to the share
price applied in most recent capital increase transactions and adjusted for any value infliction points.
16. European Investment Bank Loan continued 17. Convertible loans
In July 2021, UNION issued a convertible debt instrument of DKK 62.0m, which was received from various parties,
including members of the Board of Directors and Executive Management. UNION has elected the fair value option
and accounts for both the debt and the embedded derivatives as a single instrument that is measured at fair value,
whereby the convertible debenture at initial recognition is designated at fair value and subsequently remeasured with
the change being presented on the statement of profit or loss for the reporting period.
On June 30, 2022, lenders holding nominal DKK 45.0m of total DKK 62.0m of the convertible loan agreed to convert
the convertible loans including incurred interests into share capital with a discount of 15%. The fair value of the por-
tion of the converted loan that was converted to equity is equal to DKK 57.5m.
The following table summarizes the changes in the convertible debt instrument in 2021 and 2022:
DKK ‘000
Carrying amount at January 1, 2021 0
Amount received July 2021 62,037
Fair value adjustment through profit or loss, included in finance expenses 1,741
Carrying amount at fair value at December31, 2021 63,778
Converted to equity -57,541
Fair value adjustment through profit or loss, included in finance expenses 13,121
Carrying amount at fair value at December31, 2022 19,358
The convertible loan is measured at fair value (level 3) taking into account:
• The convertible loan is a fixed rate loan carrying an interest rate of 9% with maturity on July 16 2024
• The convertible loan is denominated in DKK
• Conversion or repayment at maturity. On the maturity date, July 16, 2024, UNION has the discretion to 1) convert
the loan into new shares of the company at the share price at the latest capital increase with a discount of 15%.
If the loan is converted at maturity, the conversion price has a cap of DKK 160 per share less 15%; or 2) repay the
loan in cash to the extent that the loan amount and accrued interest has not been converted into shares and the
company’s existing loan to European Investment Bank has been repaid or consent has been provided by European
Investment Bank, though with bondhold discretion to elect conversion to equity.
UNION therapeutics 68Annual Report 2022 Consolidated financial statements
con note 17
Notes
• Mandatory conversion in the occurrence of an exit-event including 1) an admission to trading of the company’s
shares on a regulated market (IPO), 2) a trade sale of more than 90% of the company’s shares and 3) an equity
financing with issuance of new shares with proceeds of minimum DKK 120m.
• Conversion or repayment in connection with a De-SPAC transaction. In the event of a De-SPAC transaction the
lenders have the discretion to demand the outstanding loan amount repaid in cash or converted into shares with
a conversion price equal to the final offer price with a discount of 15%. In the event of a De-SPAC transaction the
lenders may elect to demand the loan repaid in cash against receiving additional 6% interest rate.
Since the convertible debt instrument includes conversion features resulting in settlement in a variable number of
shares, the convertible debt instrument does not comprise an equity component. The convertible debt instrument
includes the following elements:
• Fixed rate debt host contract
• Embedded prepayment option (exit event)
• Embedded prepayment option (De-SPAC)
• Cap on conversion price at maturity
Management has designated, due to the existence of non-closely related embedded derivatives, the entire debt
instrument to be carried at fair value through profit or loss using a probability weighted expected return method.
Changes arising from changes in the company’s own credit risk are recognized in other comprehensive income. The
inputs used in the valuation as at December 31, 2022 are detailed in the table below:
Assumptions applied
December
31, 2022
December
31, 2021
Discount rate 36.6% 36.6%
Probability of conversion at maturity 1% 1%
Probability of conversion due to exit event, including De-SPAC event 99% 99%
The sensitivity of the required return towards key assumptions regarding probabilities has been analyzed.
The below table, shows the market value of the convertible loan assuming a fixed discount rate of 36.6% if the prob-
ability associated with an exit event is changed (unchanged dates and 2/3 of the probability change is allocated to a
“De-SPAC” event and 1/3 is allocated to conversion at maturity):
17. Convertible loans continued
Illustrative proba-
bility of exit event
Calculated debt at
Dec. 31 (DKK‘000)
94% 19,171
96% 19,246
98% 19,321
99% 19,358
100% 19,396
Accounting policies
Convertible debt instrument determined to be a financial instrument is, as required by IAS 32 and IFRS 9, separated
into its components: debt, and embedded derivatives related to the conversion features; conversion or repayment at
maturity, mandatory conversion in the occurrence of an exit event, or conversion or repayment in connection with a
De-SPAC transaction.
UNION has elected the fair value option and accounts for both the debt and the embedded derivatives as a single
instrument that is measured at fair value, whereby the convertible debenture at initial recognition is designated at fair
value through profit or loss. At each reporting date the entire agreement is remeasured at fair value, whereby:
• changes in fair value related to changes in UNION’s own credit risk is presented in other comprehensive income; and
• all other changes in fair value to be presented in the income statement
Amounts recognized in other comprehensive income are not subsequently to be recycled to the income statement.
Upon the conversion, the fair value of the converted portion of the convertible loan is transferred to equity. The
increase in equity is distributed between share capital and accumulated deficit/retained earnings in the ratio between
the nominal value of the shares and the conversion price.
Critical accounting estimates and judgements
UNION has elected the fair value option for including embedded derivatives with their debt hosts and the combined
instruments are measured at fair value. In order to value these various instruments, UNION makes assumptions
and estimates concerning variables such as discount rates, probability of exit events taking place, and the timing of
such exit events. The assumptions of future outcomes, and other sources of estimating uncertainty concerning the
determination of key inputs to the valuation models, are based on management’s best assessment using the knowl-
edge available, management’s historical experiences as well as other factors that are considered to be relevant. The
estimates and assumptions are reviewed on an ongoing basis.
UNION therapeutics 69Annual Report 2022 Consolidated financial statements
Notes
19. Related party disclosures
Related parties exercising control or significant influence
As of December 31, 2022, 2021 and 2020, there are no related parties that individually or jointly exercise control over
UNION therapeutics A/S.
Related Parties with significant influence
As of December 31, Vendler ApS and Manjin ApS, which are controlled by the two founders and current members of
the Board of Directors and the Executive Management, Rasmus Vendler Toft-Kehler and Morten Sommer, respectively,
holds 26.15% each of the share capital and voting rights of UNION therapeutics A/S.
Related parties with significant influence comprise the board members and companies controlled by board members.
For remuneration of the board of directors refer to note 5 and note 6.
Key management personnel
Key management personnel comprise the Executive Management of UNION.
For disclosures of compensation to the Board of Directors and Key management personnel, including the Executive
Management, refer to note 5 and note 6.
DKK’000 2022 2021 2020
Transactions with related parties exercising control, Board of
Directors and Key management personnel:
Administrative costs* 2,160 4,109 2,312
Year end balances arising from transactions with related parties
exercising control, Board of Directors and Key management
personnel:
Convertible loan 0 3,227 0
Trade payables 0 61 49
* The company has received consultancy services from a company which is 50% owned by the Chairperson of the Board of Directors.
The expenses related to such services amounted to DKK 45 thousand in 2022 (2021: DKK 60 thousand; 2020: DKK 60 thousand).
* The Company renders contract research and management services from a company owned directly by a member of the Executive
Management and Board of Directors.
* The Company renders recruitment services from a company that is owned by Vendler ApS and Manjin ApS.
18. Other payables
DKK’000 2022 2021 2020
Salary related payables 1,242 1,711 1,889
Cost accruals 18,789 25,059 4,891
Other payables 178 423 3
20,209 27,193 6,783
Other liabilities primarily comprise of accruals for clinical research organizations costs. There were fewer outstand-
ing invoices at year-end 2022 compared to year-end 2021, resulting in lower cost accruals at year-end.
Accounting policies
For accounting policies regarding accrual for costs not yet invoiced, refer to note 4.
UNION therapeutics 70Annual Report 2022 Consolidated financial statements
con note 19con note 18
Notes
Subsidiaries
Balances and transactions between UNION therapeutics A/S and its subsidiaries, which are related parties of UNION
therapeutics A/S, have been eliminated during consolidation and are not disclosed in this note.
Other related parties
Other related parties include subsidiaries and associates of shareholders with significant influence and companies
controlled by and close family members of members of executive management or members of the board of directors.
DKK’000 2022 2021 2020
Transactions with other related parties:
Research and development costs* 367 488 488
Year end balances arising from transactions with other
related parties:
Convertible loan 0 167 0
* The company has received employee services from the spouse of one of the members of the Board of Directors
and Executive Management. The employee benefits amounted to DKK 367 thousand in 2022 (2021: DKK 480
thousand; 2020: DKK 480 thousand). The employment was terminated in September 2022.
In July 2021 UNION received a convertible debt instrument of DKK 62.0m from various parties, including Board of Di-
rectors and Executive Management. At December 31, 2021 the Board of Directors and Executive Management’s part
of the loan totaled DKK 3.4m. On June 30, 2022 the Board of Directors and Executive Management agreed to convert
the convertible loans into share capital.
20. Changes in liabilities arising from financing activities
2022 Non-cash changes
DKK’000 2021 Cash flows
Conversion
to equity
Addition
during the
period
Fair value
adjustment/
Interest
Foreign
exchange
adjustment 2022
Debt facility 99,286 -126 0 0 8,064 0 107, 2 24
Convertible loan 63,778 0 -57,541 0 13,121 0 19,358
Leasing liability 1,090 -564 0 456 53 0 1,035
Total 164,154 -690 -57,541 456 21,238 0 127,617
2021 Non-cash changes
DKK’000 2020 Cash flows
Conversion
to equity
Addition
during the
period
Fair value
adjustment/
Interest
Foreign
exchange
adjustment 2021
Debt facility 88,894 0 0 0 10,429 -37 99,286
Convertible loan 0 62,037 0 0 1,741 0 63,778
Leasing liability 167 -312 0 1,203 32 0 1,090
Total 89,061 61,725 0 1,203 12,202 -37 164,154
2019 Non-cash changes
DKK’000 2019 Cash flows
Adjustment
opening
Addition
during the
period Interest
Foreign
exchange
adjustment 2020
Debt facility 79,558 0 0 0 9,409 -73 88,894
Leasing 451 -155 -140 0 11 0 167
Total 80,009 -155 -140 0 9,420 -73 89,061
19. Related party disclosures continued
UNION therapeutics 71Annual Report 2022 Consolidated financial statements
con note 20
Notes
21. Cash flow statement - adjustment for non-cash items
DKK’000 2022 2021 2020
Income taxes -5,454 -5,475 -5,510
Depreciation and amortization 746 351 155
Financial costs/income 35,983 10,229 21,918
Share-based compensation 21,467 9,024 6,896
52,742 14,129 23,459
22. Cash flow statement - changes in net working capital
DKK’000 2022 2021 2020
Changes in other receivables 1,515 7, 362 -8,358
Changes in VAT receivables 1,438 -3,253 -624
Changes in prepayments 1,838 -2,051 -65
Changes in employee related liabilities -707 221 1,358
Changes in trade payables 6,319 4,074 6,147
Changes in other liabilities -11,577 28,409 3,487
-1,174 34,762 1,945
23. Contingent assets and liabilities, contractual obligations and pledges
Pledges
UNION has entered into a floating charge agreement with the European Investment Bank pursuant to which a floating
charge of EUR 2.0m (2021: EUR 2.0m; 2020: EUR 2.0m) is pledged. Furthermore, the group has entered into a neg-
ative pledge preventing it from placing any of its assets as security, excluding the aforementioned floating charge to
the European Investment Bank.
Bank accounts in UNION therapeutics Germany GmbH has been pledged as security for outstanding creditcard debt
in the entity.
Contingent payments under out-license agreements
UNION is entitled to potential milestone payments and royalties on successful commercialization of products devel-
oped under license agreements with Innovent Biologics Ind and another external party (reference is made to note 3).
Since the size and timing of such payments are uncertain until the milestones are reached or sales are generated, the
agreements may qualify as contingent assets. However, it is associated with a high degree of uncertainty to measure
the value of such contingent assets, and, accordingly, no such assets have been recognized.
Contingent payment of acquisition of intangible assets
As part of the acquisition of intangible rights, UNION may be required to make milestone and royalty payments to the
seller. Refer to note 11.
24. Events after the balance sheet date
January 9, 2023 UNION announced positive topline results from the IASOS Phase 2b study of oral orismilast in
patients with moderate to severe psoriasis.
January 10, 2023 UNION announced that the company has received FDA Fast Track designation for oral orismilast
for the treatment of moderate to severe hidradenitis suppurativa.
UNION therapeutics 72Annual Report 2022 Consolidated financial statements
con note 21-24
Parent company financial statements
Statement of comprehensive income or loss 74
Cash flow statement 74
Statement of financial position 75
Statement of changes in equity 76
Notes
1. Accounting policies 77
2. Going concern and critical accounting
estimates and judgements 77
3. Revenue 77
4. Research and development costs and
Administrative costs 79
5. Staff costs 79
6. Share-based comepnsation 80
7. Other operating income 83
8. Financial items 83
9. Income taxes 84
10. Intangible assets 84
11. Property, plant and equipment 85
12. Other receivables 86
13. Investments in subsidiaries 86
14. Capital management and share capital 87
15. Financial risks 88
16. European Investment Bank Loan 90
17. Convertible loans 91
18. Other payables 92
19. Related party disclosures 93
20. Changes in liabilities arising from
financing activities 94
21. Cash flow statement - adjustment for
non-cash items 94
22. Cash flow statement - changes in
net working capital 94
23. Contingent assets and liabilities,
contractual obligations and pledges 95
UNION therapeutics 73Annual Report 2022 Parent company financial statements
parent nancial statements
DKK’000 Notes 2022 2021 2020
Revenue 3 34,393 118,912 0
Research and development costs 4 -187,140 -155,528 -65,121
Administrative costs 4 -31,583 -21,724 -8,270
Operating result before other income -184,330 -58,340 -73,391
Other operating income 7 0 5,980 9,049
Operating result -184,330 -52,360 -64,342
Financial income 8 2,721 4,289 46
Financial expenses 8 -38,809 -13,823 -21,957
Result before tax -220,418 -61,894 -86,253
Tax income/(expense) 9 5,500 5,500 5,515
Result for the year -214,918 -56,394 -80,738
Other comprehensive income or loss
Items that may be reclassified to profit or loss in subsequent
periods, net of tax
Exchange differences on translation of foreign operations 0 0 0
Other comprehensive result for the year, net of tax 0 0 0
Total comprehensive result for the year -214,918 -56,394 -80,738
Result for the period and total comprehensive result is attributable to the shareholders of UNION therapeutics A/S.
Statement of
comprehensive income or loss
DKK’000 Notes 2022 2021 2020
Result for the year -214,918 -56,394 -80,738
Adjustment for non-cash items 21 52,872 12,827 23,447
Changes in net working capital 22 -1,122 34,725 2,027
Changes in non-current financial assets -43 -130 -10
Interest received 401 0 6
Interest paid -1,139 -1,158 -261
Income taxes received/(paid) 5,500 5,500 4,170
Cash flow from operating activities -158,449 -4,630 -51,359
Investment in intangible assets 10 0 0 -1,668
Investment in property, plant and equipment 11 -169 -140 0
Cash flow from investing activities -169 -140 -1,668
Proceeds from capital increase 62,037 154,786 43,749
Proceeds from exercise of warrants 201 0 0
Costs associated with capital increase -100 -15 -70
Proceeds from issuance of convertible loans 17 0 62,037 0
Repayment of loans 20 -126 0 0
Lease instalments 20 -564 -312 -155
Cash flow from financing activities 61,448 216,496 43,524
Net cash flow for the year -97,170 211,726 -9,503
Cash at the beginning of the year 251,335 36,027 45,827
Exchange rate adjustments of cash 2,407 3,582 -297
Cash and cash equivalents at end of the year 156,572 251,335 36,027
Cash and cash equivalents as per statement
of financial position 156,572 251,335 36,027
Non-cash investing activities
Non-cash capital increases included in equity 0 0 14,898
Cash flow statement
UNION therapeutics 74Annual Report 2022 Parent company financial statements
par comprehensive cash ow
DKK’000 Notes
Dec. 31
2022
Dec. 31
2021
Dec. 31
2020
Assets
Non-current assets
Intangible assets 10 16,566 16,566 16,566
Property, plant and equipment 11 1,040 1,160 168
Investments in subsidiaries 13 226 226 40
Other receivables 12 294 252 122
Total non-current assets 18,126 18,204 16,896
Current assets
Tax receivables 9 5,500 5,500 5,500
Receivables from group entities 19 1,290 1,120 1,353
Other receivables 12 3,269 7,908 10,102
Cash and cash equivalents 156,572 251,335 36,027
Total current assets 166,631 265,863 52,982
Total assets 184,757 284,067 69,878
DKK’000 Notes
Dec. 31
2022
Dec. 31
2021
Dec. 31
2020
Equity and liabilities
Equity
Share capital 14 710 660 563
Other reserves -29,696 48,042 -59,248
Total equity -28,986 48,702 -58,685
Non-current liabilities
Long-term debt 15 107, 2 24 99,286 88,894
Cash-settled warrant obligation 6 9,990 6,074 6,069
Deferred revenue 3 0 876 0
Convertible loans 17 19,358 63,778 0
Lease liabilities 15 221 661 0
Total non-current liabilities 136,793 170,675 94,963
Current liabilities
Lease liabilities 15 814 429 167
Trade payables 15 17,728 11,391 7,350
Warrant and put option 16 34,884 18,480 18,018
Deferred revenue 3 2,920 7, 3 4 4 0
Payables to group entities 19 735 430 1,268
Other payables 18 19,869 26,616 6,797
Total current liabilities 76,950 64,690 33,600
Total liabilities 213,743 235,365 128,563
Total equity and liabilities 184,757 284,067 69,878
Statement of financial position
UNION therapeutics 75Annual Report 2022 Parent company financial statements
par nancial position
Other
reserves
DKK’000 Notes
Share
capital
(Accumulated
deficit)/
Retained
earnings Total
Equity at January 1, 2021 563 -59,248 -58,685
Result for the period 0 -56,394 -56,394
Other comprehensive income or loss 0 0 0
Total comprehensive result for the year 0 -56,394 -56,394
Transactions with owners:
Capital increases 14 97 154,689 154,786
Costs associated with capital increase 0 -15 -15
Share-based compensation 6 0 9,010 9,010
Equity at December 31, 2021 660 48,042 48,702
Equity at January 1, 2020 515 -39,309 -38,794
Result for the period 0 -80,738 -80,738
Other comprehensive income or loss 0 0 0
Total comprehensive result for the year 0 -80,738 -80,738
Transactions with owners:
Capital increases 14 48 58,600 58,648
Costs associated with capital increase 0 -70 -70
Share-based compensation 6 0 2,269 2,269
Equity at December 31, 2020 563 -59,248 -58,685
Other
reserves
DKK’000 Notes
Share
capital
(Accumulated
deficit)/
Retained
earnings Total
Equity at January 1, 2022 660 48,042 48,702
Result for the period 0 -214,918 -214,918
Other comprehensive income or loss 0 0 0
Total comprehensive result for the year 0 -214,918 -214,918
Transactions with owners:
Exercise of warrants 14 2 199 201
Conversion of convertible loans 17 23 57,518 57,541
Capital increase 14 25 62,012 62,037
Costs associated with capital increase 0 -100 -100
Share-based compensation 6 0 17,551 17,551
Equity at December 31, 2022 710 -29,696 -28,986
Statement of changes in equity
UNION therapeutics 76Annual Report 2022 Parent company financial statements
par equity
Notes
1. Accounting policies
Basis of preparation
The parent company financial statements of UNION therapeutics A/S have been prepared in accordance with Inter-
national Financial Reporting Standards as adopted by the EU and additional Danish requirements. The accounting
policies are the same as for the consolidated financial statements with the supplementary accounting policies for
the parent described below. For detailed description of the accounting policies of the group, please refer to individual
notes in the consolidated financial statements.
The parent company financial statements are presented in DKK.
Supplementary accounting policies for the Parent Company
Investments in subsidiaries
Investments in subsidiaries are measured in the parent company financial statements at the lower of cost and recov-
erable amount. Distributed dividends are recognized in the income statement of the parent company.
2. Going concern and critical accounting estimates and judgements
In respect of the financial reporting for the parent company, no accounting estimates or judgements , in addition to
the critical accounting estimates and judgements described in note 2 to the consolidated financial statements, are
made when applying the parent company’s accounting policies, which are significant to the financial reporting apart
from those disclosed in individual notes in the consolidated financial statements.
3. Revenue
Innovent agreement
Revenue from license and collaboration agreements may vary from period to period as revenue may comprise license
revenue, sales-based royalties, development milestones and regulatory milestone payments, research and develop-
ment services and option fees.
On September 28, 2021, UNION therapeutics A/S entered into a strategic collaboration and license agreement for oris-
milast, a next-generation PDE4 inhibitor currently in development for inflammatory dermatology conditions, with In-
novent Biologics, Inc (the Innovent Agreement). As part of the Innovent Agreement, UNION therapeutics A/S received
a non-refundable, non-creditable and not subject to off-set up-front payment of USD 20m (DKK 127m) and is eligible
to receive future milestones and option payments of up to USD 250m, of which up to USD 89m is contingent on the
achievement of certain development and regulatory milestones across multiple therapeutic indications and up to USD
158m is contingent on the achievement of certain sales-based milestones. Lastly, the company is entitled to receive
a sales-based royalty fee ranging from a high single digit to a low twenties percentage of all net sales of orismilast in
Greater China (Mainland China, Hong Kong, Macau and Taiwan) by or on behalf of Innovent.
Within the Innovent Agreement, UNION therapeutics A/S identified three performance obligations: (1) delivery of
license for orismilast (at a point in time), (2) delivery of Phase 2 study data for orismilast (over time) (3) Option to enter
into agreement regarding topical formulation (at a point in time).
Out of the total contract value of DKK 1,175m (USD 270m) excluding royalties, the upfront payment of DKK 127m has
been recognized as the transaction price, as the future potential milestone and option amounts were not deemed to
be highly probable as they are contingent upon success in future clinical trials and regulatory approvals which are
not within UNION therapeutics A/S’ control and were uncertain at the inception of the agreement. Milestones will be
recognized when their achievement are deemed to be highly probable, and a significant revenue reversal would not
occur. Upon commercialization of products, if any, under this agreement, royalties and net sales-based milestones will
be recognized when the related sales occur.
The transaction price of DKK 127m was at the inception of the contract allocated to the performance obligations
based on the best estimate of relative stand-alone selling prices. As such, DKK 117m was allocated to the perfomance
obligation related to the delivery of license of orismilast, DKK 10m was allocated to the performance obligation related
to the delivery of Phase 2 study data for orismilast. The transaction price of DKK 127m comprises UNION therapeutics
A/S’ unconditional rights to considerations under the Innovent agreement.
The performance obligations related to the delivery of licenses were completed at a point in time (September 2021)
and UNION therapeutics A/S recognized DKK 117.0m as revenue in September 2021. The performance obligation
UNION therapeutics 77Annual Report 2022 Parent company financial statements
par note 1-3
Notes
3. Revenue continued
2.9 m presented as Current (December 31, 2021: DKK 7.3m; December 31, 2020: DKK 0m), relates to performance
obligations that UNION therapeutics A/S expects to satisfy during the coming twelve months, whereas the Non-cur-
rent portion of DKK 0 m (December 31, 2021: DKK 0.9m; December 31, 2020: DKK 0m) represents performance
obligations that UNION therapeutics A/S expects to satisfy after the coming twelve months.
Deferred revenue
DKK’000 2022 2021 2020
At January 1 8,220 0 0
Portion of upfront payment recognized over time 0 10,106 0
Recognized as revenue -5,300 -1,886 0
At December 31 2,920 8,220 0
Of which is presented as:
Non-current 0 876 0
Current 2,920 7, 3 4 4 0
2,920 8,220 0
Joint arrangements
For the Innovent agreement UNION therapeutics and Innovent Biologics have agreed an initial joint development plan
in respect of activities that support the development of orismilast. Costs under any such joint development plan will
be shared between Innovent Biologics and UNION therapeutics A/S, with UNION therapeutics A/S covering 90% and
Innovent Biologics covering 10% of such costs.
regarding Phase 2 study data will be completed as the studies progress. Revenue will be recognized over time based
on incurred cost as a percentage of total expected cost.
In 2022 DKK 5.3m (2021: DKK 1.9m) was recognized as License revenue from upfront payment recognized over time
reflecting the progress of the Phase 2 studies.
On July 25, 2022 Innovent received Chinese Investigational New Drug (IND) clearances for psoriasis and atopic der-
matitis. Two development milestones totaling USD 4.0m (DKK 29.1m) were contingent on the achievement of the IND
clearances. Accordingly, DKK 29.1m is recognized as License revenue from milestones recognized at a point in time in
2022.
Other out-license agreements
In January 2019, UNION therapeutics A/S entered into an out-licensing agreement with an external party. Under the
terms of the agreement, UNION therapeutics A/S is eligible for upfront and milestone payments upon successful
achievement of certain development milestones and regulatory approval milestones, as well as royalties on sales.
100% of UNION therapeutics A/S’ revenue in 2022 and 2021 arise from the Innovent agreement. Payment terms are
between 30 and 60 days.
Revenue
DKK’000 2022 2021 2020
License revenue from upfront payment recognized over time 5,300 1,886 0
License revenue from upfront payment recognized at a point in time 0 117,026 0
License revenue from milestones recognized at a point in time 29,093 0 0
34,393 118,912 0
Geographical split of revenue:
Denmark 0 0 0
Greater China 34,393 118,912 0
34,393 118,912 0
Deferred revenue
Deferred revenue at December 31, 2022 of DKK 2.9 m (December 31, 2021: DKK 8.2m; December 31, 2020: DKK
0m) represents the aggregated amount of the transaction price allocated to the performance obligations (delivery
of Phase 2 study data for orismilast) that are unsatisfied at the end of the reporting period. Deferred revenue of DKK
UNION therapeutics 78Annual Report 2022 Parent company financial statements
Notes
4. Research and development costs and Administrative costs
DKK’000 Notes 2022 2021 2020
Research and development costs
Employee benefit costs 5 27,827 19,250 7,45 4
Share-based compensation 6 13,080 6,740 5,541
External costs 146,233 129,538 52,126
187,140 155,528 65,121
Higher activity level in 2022 compared to 2021 and 2020, particularly in the Phase 2b studies in psoriasis and atopic
dermatitis, caused the increase in research and development costs. Additionally, employee costs have increased as
an effect of the strengthening of the research and development organization in 2021.
DKK’000 Notes 2022 2021 2020
Administrative costs
Employee benefit costs 5 10,858 7, 4 51 4,025
Share-based compensation 6 8,387 2,275 1,354
External costs 11,593 11,647 2,736
Depreciation 11 745 351 155
31,583 21,724 8,270
To support the increased activity level in research and development, the administrative functions were also strength-
ened 2021 resulting in higher employee costs in 2022. External costs in 2022 are at the same level as in 2021 reflect-
ing continued system, process and compliance optimization efforts together with preparations for future growth
supported by external service providers.
5. Staff costs
DKK’000 Notes 2022 2021 2020
Wages and salaries 32,982 23,673 9,518
Defined contribution plans 1,557 1,005 300
Other social security costs 3,180 1,452 410
Share-based compensation 6 21,467 9,015 6,896
Other staff costs 966 571 1,250
60,152 35,716 18,374
Research and development costs 40,907 25,990 12,995
Administrative costs 19,245 9,726 5,379
60,152 35,716 18,374
Average number of full-time equivalents 33 22 9
Employee benefits are primarily made up of salaries and other social security expenses. The cost of these benefits is
recognized as an expense.
UNION therapeutics 79Annual Report 2022 Parent company financial statements
par note 4 par note 5
Notes
Remuneration to Board of Directors and Executive Management
2022
DKK’000
Board of
Directors
Executive
Management Total
Wages and salaries 1,295 7,23 9 8,534
Share-based compensation 7,303 6,113 13,416
Social security 0 10 10
8,598 13,362 21,960
2021
DKK’000
Board of
Directors
Executive
Management Total
Wages and salaries 888 6,938 7,826
Share-based compensation 1,819 3,545 5,364
Social security 0 10 10
2,707 10,493 13,200
2020
DKK’000
Board of
Directors
Executive
Management Total
Wages and salaries 140 4,693 4,833
Share-based compensation 391 644 1,035
Social security 0 7 7
531 5,344 5,875
Executive Management members are the key management personnel of UNION therapeutics A/S.
5. Staff costs continued 6. Share-based compensation
The table below summarizes share-based compensation expenses included in the statement of comprehensive
income or loss:
DKK’000 2022 2021 2020
Research and development costs, from equity-settled warrants 9,164 6,735 915
Research and development costs, from cash-settled warrants 3,916 5 4,626
Administrative costs, from equity-settled warrants 8,387 2,275 1,354
Administrative costs, from cash-settled warrants 0 0 0
21,467 9,015 6,895
Warrant programs
UNION therapeutics A/S has established share-based incentive programs (equity-settled and cash-settled) for mem-
bers of the Board of Directors, members of the Executive Management and key personnel in the form of warrants.
Warrants are granted by the Board of Directors in accordance with authorizations given to it by the general meeting of
shareholders and as incorporated into the company’s articles of association.
Warrants granted in February 2017 (Cash-settled)
In April 2017, the general meeting of shareholders granted warrants with rights to subscribe for up to 44,654 shares
of nominally DKK 0.1 with an exercise price of DKK 24 per warrant. At December 31, 2022, the Board of Directors
have granted in total 44,654 (December 31, 2021: 44,654; December 31, 2020: 44,654) warrants under this program.
These warrants vest and become exercisable upon an “exit event”, defined as an event of IPO, merger, demerger, or
solvent liquidation, which triggers an immediate expense recognition upon grant. These warrants may be settled in
equity instruments of the company or in cash at the discretion of the warrant holder. Accordingly, these warrants are
classified as cash-settled warrants. The life of the warrants under the February 2017 program is eight years from the
date of grant. Upon occurrence of an ‘exit event’ the warrant holder has fourteen days to exercise the warrants or the
warrants will lapse.
Warrants granted from November 2017 (Equity-settled)
In November 2017, the Board of Directors were authorized to grant warrants for up to 250,000 shares of nominally
DKK 0.1 in the period until March 31, 2024. In June 2020, the Board of Directors were authorized to grant warrants for
up to an additional 250,000 shares of nominally 0.1 in the period until June 25, 2025. At December 31, 2021, the Board
of Directors have granted in total 438,670 (December 31, 2021: 419,230; December 31, 2020: 235,930) warrants
adjusted for expired and exercised warrants under this authorization. Warrants granted under the November 2017
equity incentive plan are classified as equity settled and generally vest over four years’ service periods in periodic
installments that may or may not be equal, which triggers linear or graded vesting profiles. Certain warrants under
this program vest immediately upon grant. The life of the warrants under the November 2017 program varies from
4-10 years from the date of grant.
UNION therapeutics 80Annual Report 2022 Parent company financial statements
par note 6
Notes
The following schedule specifies the movements of number and weighted average exercise price of outstanding
warrants for 2022, 2021 and 2020:
Equity-settled warrants
Number of warrants
Board of
Directors
Executive
Manage-
ment
Employ-
ees Total
Weighted
average
exercise
price per
warrant
(DKK)
Weighted
average
grant
date fair
value per
warrant
(DKK)
Outstanding, December 31, 2019 71,080 80,000 73,100 224,180 65 34
Granted during the period 0 0 11,750 11,750 23 70
Outstanding, December 31, 2020 71,080 80,000 84,850 235,930 63 354
Granted during the period 37, 5 0 0 105,960 39,840 183,300 97 110
Outstanding, December 31, 2021 108,580 185,960 124,690 419,230 78 68
Granted during the period 25,000 18,920 32,000 75,920 64 179
Expired during the period -25,125 0 -10,400 -35,525 82 33
Exercised during the period -20,955 0 0 -20,935 10 4
Outstanding, December 31, 2022 87,500 204,880 146,290 438,670 78 93
Exercisable warrants at December 31, 2022 289,191 78
Exercisable warrants at December 31, 2021 183,421 75
Exercisable warrants at December 31, 2020 94,454 70
The average share-price at exercise was DKK 160 pr share of nominal DKK 0.1 each.
The weighted average remaining contractual life for outstanding equity-settled warrants was 3.5 years at December
31, 2022 (December 31, 2021: 3.8 years; December 31, 2020: 3.3 years).
The range of the exercise price for outstanding equity-settled warrants was DKK 0.1-160 at December 31, 2022 (De-
cember 31, 2021: 0.1-124; December 31, 2020: 0.1-82).
6. Share-based compensation continued
Cash-settled warrants
Number of warrants
Former
employees Total
Weighted
average
exercise
price per
warrant
(DKK)
Weighted
average
grant
date fair
value per
warrant
(DKK)
Outstanding, December 31, 2019 44,654 44,654 24 10
Granted during the period 0 0 0 0
Outstanding, December 31, 2020 44,654 44,654 24 10
Granted during the period 0 0 0 0
Outstanding, December 31, 2021 44,654 44,654 24 10
Granted during the period 0 0 0 0
Outstanding, December 31, 2022 44,654 44,654 24 10
Exercisable warrants at December 31, 2022 0 n/a
Exercisable warrants at December 31, 2021 0 n/a
Exercisable warrants at December 31, 2020 0 n/a
The weighted average remaining contractual life for outstanding cash-settled warrants was 2.1 years at December
31, 2022 (December 31, 2021: 3.1 years; December 31, 2020: 4.1 years).
The exercise price for outstanding cash-settled warrants was DKK 24 at December 31, 2022 (December 31, 2021: 24;
December 31, 2020: 24).
UNION therapeutics 81Annual Report 2022 Parent company financial statements
Notes
Determination of fair value of warrants
UNION therapeutics A/S determines and calculates the fair value of each equity-settled warrant at grant date and for
each cash-settled warrant, at each balance sheet date, using the Black-Scholes pricing model. This pricing model
requires the input of subjective assumptions such as:
• Dividend yield: Is determined to be zero.
• The expected stock price volatility: As it is not possible to estimate the expected volatility of a non-publicly listed
entity’s share price, UNION therapeutics A/S has estimated the fair value of its warrants by using the volatility of an
appropriate peer group of listed international biotechnology companies.
• The risk-free interest rate, which is based on the Danish government bonds having a yield with a maturity equal to
the expected term of the option in effect at the time of grant.
• The expected life of warrants, which is based on vesting terms, expected rate of exercise and life terms in the
warrant program.
• Estimate of UNION therapeutics A/S’ market share price. As UNION therapeutics A/S is not listed on a stock
exchange, the estimated fair value of the warrants at each measuring date, using the Black-Scholes model, has
been established by assuming that the value of UNION therapeutics A/S’ shares is the price per share determined
at the latest financing round and considering additional subsequent valuation infliction points and relevant facts
and circumstances.
Valuation assumptions for warrants in 2022, 2021 and 2020
The fair value at each measuring date in 2022, 2021 and 2020 is measured using the following significant assump-
tions:
Dec. 31 2022 Dec. 31 2021 Dec. 31 2020
Equity-settled warrants
Dividend yield - - -
Volatility (%) 69 54-76 61-77
Risk-free interest rate 1.2% -0.2% - -0.4% -0.4% - -0.6%
Market share price range applied DKK 160-248 DKK 160 DKK 53-160
Exercise price DKK 0.1-160 DKK 0.1-124 DKK 0.1-5 3
Expected life of equity-settled warrants granted 5 years 5 years 5 years
The grant date fair value per warrant DKK 86-217 DKK 83-160 DKK 53-93
Dec. 31 2022 Dec. 31 2021 Dec. 31 2020
Cash-settled warrants
Dividend yield - - -
Volatility (%) 71 76 67
Risk-free interest rate 1.4% -0.2% -0.6%
Market share price at year end DKK 248 DKK 160 DKK 160
Exercise price DKK 24 DKK 24 DKK 24
Expected life of cash-settled warrants at end period 2 .1 years 3.1 years 4.1 years
The end period fair value per warrant DKK 224 DKK 136 DKK 136
Reconciliation of fair value of cash-settled warrants:
DKK’000
Cash-settled
warrants
At January 1, 2020 1,443
Fair value adjustment through comprehensive income 4,626
At December 31, 2020 6,069
Fair value adjustment through comprehensive income 5
At December 31, 2021 6,074
Fair value adjustment through comprehensive income 3,916
At December 31, 2022 9,990
6. Share-based compensation continued
UNION therapeutics 82Annual Report 2022 Parent company financial statements
Notes
7. Other operating income
Other operating income consists of government grants and other items secondary to the company’s activities. In
2020 UNION therapeutics A/S received a grant from Innovation Fund Denmark. The grant provides compensation
for a part of certain project-specific research and development expenses, including wages and salaries. In 2021 the
remaining conditions attached to the government grant were fulfilled and the remaining part of the grant was recog-
nized in the consolidated comprehensive income.
In 2022, the company recognized DKK 0m (2021: DKK 6.0m; 2020: DKK 9.0m) as Other operating income, hereof
income from the government grant accounts for DKK 0m (2021: DKK 6.0m; 2020: DKK 8.7m).
8. Financial items
Financial income
DKK’000 Notes 2022 2021 2020
Interest income 401 0 6
Interest income, Group entities 33 3 40
Foreign exchange gains, net 2,287 4,286 0
2,721 4,289 46
Financial expenses
DKK’000 Notes 2022 2021 2020
Interest expenses 1,167 1,159 380
Interest expenses, lease liabilities 53 32 11
Fair value adjustment, Convertible debt (unrealized) 17 1,881 1,741 0
Fair value adjustment, Convertible debt (realized) 17 11,24 0 0 0
Interest expenses, European Investment Bank loan 16 11,240 10,891 9,408
Modification loss, European Investment Bank loan 16 3,116 0 0
Foreign exchange loss,net 0 0 146
Fair value adjustment, warrant and put option (unrealized) 16 10,112 0 12,012
38,809 13,823 21,957
Foreign exchange gains in 2022 are primarily related to USD cash positions.
The fair value adjustment of convertible debt in 2022 is due to conversion of nominal DKK 45.0m of total DKK 62.0m
of the convertible loan into share capital.
Fair value adjustments of warrant and put option is primarily due to increase in market share price.
Modification loss is a result of extending the tranche 1 European Investment Bank loan.
UNION therapeutics 83Annual Report 2022 Parent company financial statements
par note 7 par note 8-9
Notes
9. Income taxes continued
The biotechnology and pharmaceutical industry is subject to considerable risks and uncertainties. UNION therapeu-
tics has so far reported significant losses and, consequently, has unused tax losses. Management has concluded
that deferred tax assets should not be recognized at December 31, 2022. (none recognized at December 31, 2021
and December 31, 2020) due to the uncertainty related to future utilization of tax loss carry-formard.
Income tax receivables are recognized in accordance with the Danish tax credit scheme (Skattekreditordningen).
Companies covered by the tax credit scheme may obtain payment of the tax base of losses originating from research
and development expenses of up to DKK 25m (tax value of DKK 5.5m). Under Danish tax legislation, UNION thera-
peutics is eligible to receive DKK 5.5m in 2022 (2021: DKK 5.5m; 2020: DKK 5.5m) in cash relating to the surrendered
tax loss based on qualifying research and development expenses. These tax receipts comprise the majority of the
current tax income in 2022, 2021 and 2020, respectively.
10. Intangible assets
Patents, trademarks
and other rights
DKK’000 2022 2021 2020
Cost
At January 1 16,566 16,566 0
Additions 0 0 16,566
At December 31 16,566 16,566 16,566
Amortization
At January 1 0 0 0
Additions 0 0 0
At December 31 0 0 0
Carrying amount
At December 31 16,566 16,566 16,566
9. Income taxes
The major components of income tax income for the years ended December 31, 2022, 2021 and 2020 are:
DKK’000 2022 2021 2020
Income taxes in the statement of profit or loss
Net result before tax -220,418 -61,894 -86,253
Corporate income tax rate in Denmark 22% 22% 22%
Computed corporate income tax (income) -48,492 -13,617 -18,976
Prior year adjustments -2 1,983 -15
Adjustment for non-deductible expenses 1,579 3,748 79
Adjustment for research and development super deduction -4,468 -7,5 32 -4,027
Adjustment for warrant expense (equity and cash settled) 4,723 1,560 1,517
Change in deferred tax asset not recognized 41,160 8,358 15,907
Tax expense/(income) for the period -5,500 -5,500 -5,515
Deferred tax in the statement of financial position
Tax deductible losses 33,188 15,952 22,251
Research and Development expenses being capitalized for tax pupose 33,072 11,312 0
Other temporary differences 7,521 5,420 2,547
Deferred tax assets/(liabilities) at December 31 73,781 32,684 24,798
Deferred tax assets not recognized
Deferred tax assets not recognized -73,781 -32,684 -24,798
Deferred tax at December 31 0 0 0
UNION therapeutics 84Annual Report 2022 Parent company financial statements
par note 10par note 9
Notes
11. Property, plant and equipment
DKK’000
Right-of-
use assets
Other
equipment Total
Cost
At January 1, 2022 1,647 157 1,804
Additions 456 169 625
Disposals 0 -16 -16
At December 31, 2022 2,103 310 2,413
Depreciation
At January 1, 2022 -618 -26 -644
Additions -604 -141 -745
Disposals 0 16 16
At December 31, 2022 -1,222 -151 -1,373
Carrying amount
At December 31, 2022 881 159 1,040
Cost
At January 1, 2021 444 95 539
Additions 1,203 140 1,343
Disposals 0 -78 -78
At December 31, 2021 1,647 157 1,804
Depreciation
At January 1, 2021 -288 -83 -371
Additions -330 -21 -351
Disposals 0 78 78
At December 31, 2021 -618 -26 -644
Carrying amount
At December 31, 2021 1,029 131 1,160
Acquisition of PDE4-inhibitor program
The intangible assets consist of certain intangible rights in the form of patents and compound data relating to the
‘PDE4 inhibitor compounds acquired from Leo Pharma A/S in 2020.
Under the terms of the Agreement, UNION agreed to make future payments to LEO Pharma A/S that are contingent
upon the achievement of specified clinical, regulatory, and sales milestones. UNION applies the cost accumulation
method for the accounting for such contingent payments.
Under the terms of the Agreement, UNION therapeutics A/S agreed to make future payments to LEO Pharma A/S that
were contingent upon the achievement of specified clinical, regulatory, and sales milestones. UNION therapeutics
A/S applies the cost accumulation method for the accounting for such contingent payments.
Under the agreement, UNION therapeutics A/S will, subject to meeting certain clinical, regulatory, and sales mile-
stones, pay in cash to the seller up to USD 202m equivalent to DKK 1,240m. Also, UNION therapeutics A/S will pay to
the seller low single-digit percentage royalty applied on net sales of covered products until the expiry of the royalty
term which ends at the latest on the twelfth anniversary of the first commercial sale of covered products.
UNION has no internally generated intangible assets from development, as the criteria for recognition of an asset are
not considered met.
The acquired intangible asset is not being amortized until approval of the underlying asset has been received from
regulatory authorities. Management has in 2020, 2021 and 2022 not identified indicators of impairment, concerning
the acquired intangible rights.
Impairment test has been carried out in 2022. Present value has been calculated based on 12 years of discontinued
cashflow using a WACC of 14%. The impairment test shows no signs of impairment.
10. Intangible assets continued
UNION therapeutics 85Annual Report 2022 Parent company financial statements
par note 11
Notes
DKK’000
Right-of-
use assets
Other
equipment Total
Cost
At January 1, 2020 650 95 745
Adjustments -206 0 -206
Additions 0 0 0
At December 31, 2020 444 95 539
Depreciation
At January 1, 2020 -217 -64 -281
Adjustments 65 0 65
Additions -136 -19 -155
At December 31, 2020 -288 -83 -371
Carrying amount
At December 31, 2020 156 12 168
Right-of-use assets
The company leases its office premises in Copenhagen. The property lease is non-cancellable in the period through
June 15, 2023. Hereafter, the option to terminate is six months. The contract does not provide a right, obligation, or
an option to buy the office premises. The contract contains both lease and non-lease components according to the
specific pricing of the services in the agreements.
Additionally, the company leases parking spaces in the area of the office premises. The contracts include options
to terminate in three months, but the leasing contracts are expected to continue at least until June 30, 2025. The
contracts does not contain any non-lease components.
In 2020, 2021 and 2022, the expense related to variable lease payments not included in the lease liabilities amounts
to DKK 0.1m per year and was recognized in administrative costs.
12. Other receivables
DKK’000
Dec. 31
2022
Dec. 31
2021
Dec. 31
2020
VAT receivables 2,792 4,224 972
Prepayments 341 2,170 119
Deposits 294 252 122
Other receivables 136 1,514 9,011
Other receivables 3,563 8,160 10,224
Classified as:
Non-current assets 294 252 122
Current assets 3,269 7,908 10,102
Other receivables 3,563 8,160 10,224
In 2022 Other receivables primarily consist of VAT receivables. In 2021 and 2020, Other receivables primarily consist-
ed of VAT receivables and government grant from Innovation Fund Denmark not yet fully paid out.
13. Investments in subsidiaries
DKK’000 2022 2021 2020
Cost at January 1 226 40 40
Additions 0 186 0
Cost at December 31 226 226 40
Carrying amount at December 31 226 226 40
Name and registered office
Voting rights
and ownership
UNION therapeutics North America Inc.,
Collateral MMA, 33 Bedford Street, Suite 9, Lexington MA 02420 100%
UNION therapeutics Research Services ApS, Tuborg Havnevej 18, 2900 Hellerup 100%
UNION therapeutics Germany GmbH, Alter Kirchenweg 83, 24983 Handewitt 100%
11. Property, plant and equipment continued
UNION therapeutics 86Annual Report 2022 Parent company financial statements
par note 12 par note 13
Notes
Share capital
On December 29, 2021, a 10-for-1 stock split of issued and outstanding ordinary shares was approved at an extraordi-
nary general meeting. The stock split also resulted in a reduction of the nominal value of the company’s ordinary
shares from DKK 1 to DKK 0.1.
The share split directly affects granted warrants, as warrants effectively split 10-for-1, while the exercise price of each
warrant is reduced to 1/10 of the pre-split value. The total value of granted warrants is unchanged, refer to note 6, 16
and 17, respectively.
At December 31, 2022, the share capital comprises of 7,100,075 shares of nominal DKK 0.1, each of which have been
issued and paid in full. Only one class of shares exists, and no shares carry any special rights.
Number of
shares
Share capital
(DKK’000)
Share capital at January 1, 2020 515,448 515
Capital increase at May 7, 2020 35,367 36
Capital increase at June 23, 2020 12,044 12
Share capital at December 31, 2020 562,859 563
Share capital at January 1, 2021 562,859 563
Capital increase at February 9, 2021 96,741 97
Effect of 10-for-1 share split 5,936,400 0
Share capital at December 31, 2021 6,596,000 660
Share capital at January 1, 2022 6,596,000 660
Capital increase at January 3, 2022 (exercise of warrants) 20,955 2
Capital increase at June 30, 2022 (conversion of loan) 232,477 23
Capital increase at December 2, 2022 250,643 25
Share capital at December 31, 2022 7,100,075 710
14. Capital management and share capital
Capital Management
The Board of Directors monitors the share and capital structure to ensure that UNION therapeutics A/S’ capital
resources support the strategic goals. UNION therapeutics A/S’ goal is to maintain a strong capital base so as to
maintain confidence from investors, creditors, employees and collaboration partners, and a continuous advance-
ment of the research and development pipeline and business in general.
UNION therapeutics A/S is primarily financed through equity investments from shareholders, convertible loans, and a
long-term loan agreement with the European Investment Bank. UNION therapeutics A/S has also obtained financing
through license agreements and governmental- and private grants.
The adequacy of UNION therapeutics A/S’ available funds will depend on various factors, including the advancement
of the research and development programs, the magnitude of investments in these programs, and UNION therapeu-
tics A/S’ ability to establish commercial collaboration and licensing agreements with partners.
As such, UNION therapeutics A/S will require additional funds and plans to obtain additional long-term sources of
funding through issuance of new shares, entering license and research and development collaboration agreements,
expense management activities, renegotiate terms for current outstanding debt instruments or a combination of
such.
For further information regarding the European Investment Bank loan and the convertible loan, refer to note 16 and
17, respectively. For further information regarding going concern, refer to note 2 in the consolidated financial state-
ments.
Loss of subscribed share capital
As a result of the group’s accounting policy, financing strategy and utilization of the credit facility provided by the Eu-
ropean Investment Bank, at December 31, 2022 the company had lost more than 50% of its subscribed share capital.
Management expects to re-establish the subscribed share capital through additional long-term sources of funding or
through retained earnings if entering into license or research and development collaboration agreements in 2023.
UNION therapeutics 87Annual Report 2022 Parent company financial statements
par note 14
Notes
DKK’000
Carrying
amount
Falling due
within
1 year
Falling due
between
1-2 years
Falling due
after
2 years
Total con-
tractual
cash flows
2022
Long-term debt (amortized cost) 107, 2 24 0 123,613 0 123,613
Trade payables (amortized cost) 17,728 17,728 0 0 17,728
Cost accruals (amortized cost) 18,789 18,789 0 0 18,789
Lease liabilities (amortized cost) 1,035 848 229 0 1,077
Convertible loans (fair value) 19,358 0 21,590 0 21,590
Warrant and put option (fair value) 34,884 34,884 0 0 34,884
199,018 72,249 145,432 0 217,681
2021
Long-term debt (amortized cost) 99,286 0 80,038 38,098 118,136
Trade payables (amortized cost) 11,391 11,391 0 0 11,391
Cost accruals (amortized cost) 25,054 25,054 0 0 25,054
Lease liabilities (amortized cost) 1,090 471 681 0 1,152
Convertible loans (fair value) 63,778 0 0 78,786 78,786
Warrant and put option (fair value) 18,480 18,480 0 0 18,480
219,079 55,396 80,719 116,884 252,999
2020
Long-term debt (amortized cost) 88,894 0 0 118,136 118,136
Trade payables (amortized cost) 7,350 7,350 0 0 7,350
Cost accruals (amortized cost) 4,904 4,904 0 0 4,904
Lease liabilities (amortized cost) 167 167 0 0 167
Warrant and put option (fair value) 18,018 18,018 0 0 18,018
119,333 30,439 0 118,136 148,575
The amounts disclosed in the tables are the contractual undiscounted cash flows (including interest payments).
Balances due within 12 months equal their carrying balances as the impact of discounting is not significant, with the
exception of convertible loans.
The fair value of Convertible loan and Warrant and put option are based on level 3 in the fair value hierarchy. There
were no transfers between levels 1, 2 and 3 for recurring fair value measurement during the period ended December
31, 2022, 2021 or 2020.
15. Financial risks
The company’s financial risks are managed by the Executive Management. UNION therapeutics A/S follows a policy
where management continually monitors the following defined risks: liquidity risk, interest rate risk, currency risk and
credit risk.
Liquidity risk
Liquidity risk is the risk that UNION therapeutics A/S will not be able to meet its financial obligations as they fall due.
The Executive Management monitors its risk of a shortage of funds using a liquidity planning tool.
The group’s objective and policy is to maintain a balance between continuity of funding and flexibility through the use
of equity investments from shareholders and external loans. For discussion of going concern refer to note 2 in the
consolidated financial statements.
UNION therapeutics A/S has no unused credit facilities at December 31, 2020, at December 31, 2021 or at December
31, 2022.
The following are the contractual undiscounted out flows associated with the company’s financial liabilities in the
current and prior year based on their contractual maturities.
UNION therapeutics 88Annual Report 2022 Parent company financial statements
par note 15
Notes
15. Financial risks continued
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
UNION therapeutics A/S has no significant interest-bearing debt with variable interest, and UNION therapeutics A/S’
interest rate risks primarily relate to the position of cash in banks. As such, no separate analysis is provided.
Foreign currency risk
UNION therapeutics A/S has foreign exchange exposure from vendors contracted and paid in other currencies than
DKK, or EUR, to which the DKK is pegged. UNION therapeutics A/S also has foreign exchange exposure through
certain income elements, e.g. future milestone payments as discussed in note 3 and 10.
UNION therapeutics A/S manages part of the cost-related foreign exchange exposure by buying and selling foreign
currencies on a quarterly basis in order to hold amounts of foreign currency that correspond to the contractually
committed costs in foreign currency on a 12-months rolling basis. This simple hedging approach is subject to
hedging criteria related to size of foreign exchange exposure from vendor contracts, historical currency fluctuation
and transaction costs. As of December 31, 2022, UNION therapeutics A/S holds positions in USD, GBP and PLN in
addition to DKK.
The table shows the expected exposure in USD, GBP and PLN and the net effect it would have had on equity and
profit for the year if the year-end exchange rates of USD, GBP and PLN had been 10% higher than the actual exchange
rates. A corresponding decrease in the actual exchange rates would have had an opposite (positive/negative) effect
on equity profit for the year.
DKK’000
Cash and cash
equivalents
Trade receiva-
bles/
(payables)
Net
position
2022
USD 16,921 -654 16,267
GBP 13,314 -2,792 10,522
PLN 5,120 0 5,120
DKK’000
Cash and cash
equivalents
Trade receiva-
bles/
(payables)
Net
position
2021
USD 35,765 -645 35,120
GBP 17,721 -2,116 15,605
PLN 10,517 0 10,517
2020
USD 2,683 173 2,856
GBP 0 -1,017 -1,017
DKK’000
Change
in equity
Change in profit
for the year
2022
Change if 10% higher USD-rate than actual rate 1,627 1,627
Change if 10% higher GBP-rate than actual rate 1,052 1,052
Change if 10% higher PLN-rate than actual rate 552 552
2021
Change if 10% higher USD-rate than actual rate 3,512 3,512
Change if 10% higher GBP-rate than actual rate 1,560 1,560
Change if 10% higher PLN-rate than actual rate 1,052 1,052
2020
Change if 10% higher USD-rate than actual rate 286 286
Change if 10% higher GBP-rate than actual rate -102 -102
Credit risk
The primary potential credit risks relate to Cash and cash equivalents. Cash and cash equivalents are not deemed to
be subject to any special credit risk as they are deposited with accredited bank. At December 31, 2022 UNION thera-
peutics A/S has no trade receivables (December 31, 2021: none; December 31, 2020: none).
UNION therapeutics 89Annual Report 2022 Parent company financial statements
Notes
In 2021, the European Investment Bank has been granted additional 2,892 warrants, as an anti dilution measure as
a consequence of UNION therapeutics A/S granting an additional equity settled warrants to the Board of Directors,
members of the Executive Management and key personnel of the company.
In connection with the modification and extension of the loan period of the first tranche in June 2022, the European
Investment Bank has been granted additional 25,431 warrants.
141,003 warrants were outstanding at December 31, 2022 (December 31, 2021: 115,572; December 31, 2020:
112,680). Each warrant entitles the European Investment Bank to subscribe for 1 share of nominal DKK 0.1 against
payment of exercise price of DKK 0.1. Vested warrants can be exercised in part or in full at any time at the discretion
of the European Investment Bank. Warrants not exercised after 20 years shall lapse.
Put option relation to repurchase of vested warrants held by the European Investment Bank
The loan agreement further includes an embedded derivative in form of a put option, pursuant to which the European
Investment Bank may require UNION therapeutics A/S to purchase all or part of the vested warrants held by the Euro-
pean Investment Bank at an option price equivalent to the fair value of the warrants at the time of exercise.
Floating charge
The tables below summarize the assumptions, conditions and other information relating to the warant and put
option:
Dec. 31
2022
Dec. 31
2021
Dec. 31
2020
Dividend yield - - -
Volatility (%) 69 76 67
Annual risk-free interest rate 1.2% -0.2% -0.6%
Market share price at year-end DKK 248 DKK 160 DKK 160
Exercise price DKK 0.1 DKK 0.1 DKK 0.1
Life of option 1-2 years 1-3 years 2-4 years
16. European Investment Bank Loan
Finance contract with the European Investment Bank
In October 2017, UNION therapeutics A/S entered into a finance contract with the European Investment Bank ensur-
ing a loan facility of EUR 20.0m. Under the finance contract, the loan shall be disbursed in up to two tranches and the
repayment date is no later than the fifth anniversary of the relevant disbursement date. The loan agreement is subject
to a number of financial and non-financial terms.
In January 2018, UNION therapeutics A/S called the first of the two tranches under the finance contract. The first
tranche totaled EUR 7.0m. The loan and accumulated interest originally fell due for payment in January 2023.
In December 2019, UNION therapeutics A/S called the second of the two tranches under the finance contract. The
second tranche totaled EUR 3.3m. The loan and accumulated interest fall due for payment in December 2024.
Modification of tranche 1 in 2022
In June 2022 the loan period was extended for the tranche 1 loan, meaning the loan and accumulated interest fall due
for payment on January 25, 2024.
It has been determined that the present value of cash flow arising from the modification does not exceed 10%.
Therefore, the extension of the loan is considered a modification of the existing loan and not a new loan. The modifi-
cation resulted in a modification loss of DKK 3.1m, that has been reported as Financial expenses in the consolidated
statement of comprehensive income.
As a result of the modification, UNION obliged to apply 5% of proceeds in excess of EUR 8.0m from any equity fund
raised (excluding an IPO and from any public offerings) occuring between June 2022 and January 2024 towards
repayment of the tranche 1 loan.
As a consequence of the capital increase in December 2022 (refer to note 14), UNION therapeutics A/S made a
partial repayment of the the tranche 1 loan of DKK 0.1m.
For further information refer to notes 15 and 20.
Consideration for the loan in the form of warrants
As consideration for the loan, UNION therapeutics A/S has granted 186,910 warrants to the European Investment
Bank that vest relative to the drawdown on the loan in two tranches.
Upon drawdown of the first tranche in 2018, 87,220 warrants vested. Upon drawdown of the second tranche in 2019,
25,460 warrants vested, and 74,230 warrants were lapsed and became void.
UNION therapeutics 90Annual Report 2022 Parent company financial statements
par note 16
Notes
As part of the loan agreement, UNION therapeutics A/S entered into a floating charge agreement pursuant to which
a floating charge of EUR 2.0m is pledged. Furthermore, UNION therapeutics A/S entered into a negative pledge
preventing it from subsisting any security over any of its assets. Refer to note 23.
Sensitivity
At December 31, 2022, December 31, 2021 and December 31, 2020, other things being equal, a 1% increase in the
share price will result in a 1% increase in the fair value of the warrant put option. Similarly, a 1% decrease in the share
price will reduce the fair value of the warrant put option by 1%.
Reconciliation of fair value measurements under Level 3 hierarchy:
DKK ‘000 Warrant and put option
At December 31, 2019 6,006
Fair value adjustment through profit or loss (unrealized) 12,012
At December 31, 2020 18,018
Fair value adjustment through profit or loss (unrealized) 0
Warrants awarded 462
At December 31, 2021 18,480
Fair value adjustment through profit or loss (unrealized) 10,112
Warrants awarded 6,292
At December 31, 2022 34,884
Fair value adjustments through profit or loss are recognized in the statement of taxable income as comprehensive
income or financial expenses, as applicable.
16. European Investment Bank Loan continued
17. Convertible loans
In July 2021, UNION therapeutics A/S issued a convertible debt instrument of DKK 62.0m, which was received from
various parties, including members of the Board of Directors and Executive Management. UNION therapeutics A/S
elected the fair value option and accounts for both the debt and the embedded derivatives as a single instrument
that is measured at fair value, whereby the convertible debenture at initial recognition is designated at fair value and
subsequently remeasured with the change being presented on the statement of profit or loss for the reporting period.
On June 30, 2022, lenders holding nominal DKK 45.0m of total DKK 62.0m of the convertible loan agreed to convert
the convertible loans including incurred interests into share capital with a discount of 15%. The fair value of the por-
tion of the converted loan that was converted to equity is equal to DKK 57.5m.
The following table summarizes the changes in the convertible debt instrument in 2021 and 2022:
DKK ‘000
Carrying amount at January 1, 2021 0
Amount received July 2021 62,037
Fair value adjustment through profit or loss, included in finance expenses 1,741
Carrying amount at fair value at December31, 2021 63,778
Converted to equity -57,541
Fair value adjustment through profit or loss, included in finance expenses 13,121
Carrying amount at fair value at December31, 2022 19,358
The convertible loan is measured at fair value (level 3) taking into account:
• The convertible loan is a fixed rate loan carrying an interest rate of 9% with maturity on July 16, 2024
• The convertible loan is denominated in DKK
• Conversion or repayment at maturity. On the maturity date, July 16, 2024, UNION therapeutics A/S has the discre-
tion to 1) convert the loan into new shares of the company at the share price at the latest capital increase with a
discount of 15%. If the loan is converted at maturity, the conversion price has a cap of DKK 160 per share less 15%;
or 2) repay the loan in cash to the extent that the loan amount and accrued interest has not been converted into
shares and the company’s existing loan to European Investment Bank has been repaid or consent has been provid-
ed by European Investment Bank, though with bondholder’s discretion to elect conversion to equity.
UNION therapeutics 91Annual Report 2022 Parent company financial statements
par note 17
Notes
• Mandatory conversion in the occurrence of an exit-event including 1) an admission to trading of the company’s
shares on a regulated market (IPO), 2) a trade sale of more than 90% of the company’s shares and 3) an equity
financing with issuance of new shares with proceeds of minimum DKK 120m.
• Conversion or repayment in connection with a De-SPAC transaction. In the event of a De-SPAC transaction the
lenders have the discretion to demand the outstanding loan amount repaid in cash or converted into shares with
a conversion price equal to the final offer price with a deduction of 15%. In the event of a De-SPAC transaction the
lenders may elect to demand the loan repaid in cash against receiving additional 6% interest rate.
Since the convertible debt instrument includes conversion features resulting in settlement in a variable number of
shares, the convertible debt instrument does not comprise an equity component. The convertible debt instrument
includes the following elements:
• Fixed rate debt host contract
• Embedded prepayment option (exit event)
• Embedded prepayment option (De-SPAC)
• Cap on conversion price at maturity
Management has designated, due to the existence of non-closely related embedded derivatives, the entire debt
instrument to be carried at fair value through profit or loss using a probability weighted expected return method.
Changes arising from changes in the company’s own credit risk are recognized in other comprehensive income. The
inputs used in the valuation as at December 31, 2022 are detailed in the table below:
Assumptions applied
December
31, 2022
December
31, 2021
Discount rate 36.6% 36.6%
Probability of conversion at maturity 1% 1%
Probability of conversion due to exit event, including De-SPAC 99% 99%
17. Convertible loans continued
The sensitivity of the required return towards key assumptions regarding probabilities has been analyzed.
The below table, shows the market value of the convertible loan assuming a fixed discount rate of 36.6% if the prob-
ability associated with an exit event is changed (unchanged dates and 2/3 of the probability change is allocated to a
“De-SPAC” event and 1/3 is allocated to conversion at maturity):
Illustrative
probability of
exit event
Calculated
debt at Dec. 31
(DKK‘000)
94% 19,171
96% 19,246
98% 19,321
99% 19,358
100% 19,396
18. Other payables
DKK’000 2022 2021 2020
Salary related payables 1,102 1,552 1,889
Cost accruals 18,759 25,054 4,904
Other payables 8 10 4
19,869 26,616 6,797
Other liabilities primarily comprise of accruals for clinical research organizations costs. There were fewer outstand-
ing invoices at year-end 2022 compared to year-end 2021, resulting in lower cost accruals at year-end.
UNION therapeutics 92Annual Report 2022 Parent company financial statements
par note 18
Notes
19. Related party disclosures
Related parties exercising control or significant influence
As of December 31, 2022, 2021 and 2020, there are no related parties that individually or jointly exercise control over
UNION therapeutics A/S.
Related Parties with significant influence
As of December 31, Vendler ApS and Manjin ApS, which are controlled by the two founders and current members of
Board of Directors and the Executive Management, Rasmus Vendler Toft-Kehler and Morten Sommer, respectively,
holds 26.15% each of the hare capital and voting rights of UNION therapeutics A/S.
Related parties with significant influence comprise the board members and companies controlled by board members.
For remuneration of the board of directors refer to note 5 and note 6.
Key management personnel
Key management personnel comprise the Executive Management of UNION.
For disclosures of compensation to the Board of Directors and Key management personnel, including the Executive
Management, refer to note 5 and note 6.
DKK’000 2022 2021 2020
Transactions with related parties exercising control, Board of
Directors and Key management personnel:
Administrative costs* 2,160 4,109 2,312
Year end balances arising from transactions with related parties
exercising control, Board of Directors and Key management
personnel:
Convertible loan 0 3,227 0
Trade payables 0 61 49
* The company has received consultancy services from a company which is 50% owned by the Chairperson of the Board of Directors.
The expenses related to such services amounted to DKK 45 thousand in 2022 (2021: DKK 60 thousand; 2020: DKK 60 thousand).
* The Company renders contract research and management services from a company owned directly by a member of the Executive
Management and Board of Directors.
* The Company renders recruitment services from a company that is owned by Vendler ApS and Manjin Aps.
Subsidiaries
Balances and transactions between UNION therapeutics A/S and its three subsidiaries controlled by UNION thera-
peutics A/S: UNION Research Services ApS, UNION therapeutics Germany GmbH and UNION therapeutics North
America Inc.
Other related parties
Other related parties include subsidiaries and associates of shareholders with significant influence and companies
controlled by and close family members of members of executive management or members of the board of directors.
DKK’000 2022 2021 2020
Transactions with subsidiaries:
Research and development costs 5,472 2,625 1,623
Year end balances arising from transactions with subsidiaries:
Trade receivables 1,290 1,120 1,353
Trade payables 735 430 1,268
Transactions with other related parties:
Research and development costs* 367 488 488
Year end balances arising from transactions with other
related parties:
Convertible loan 0 167 0
* The company has received employee services from the spouse of one of the members of the Board of Directors and Executive
Management. The employee benefits amounted to DKK 367 thousand in 2022 (2021: DKK 480 thousand; 2020: DKK 480 thousand).
The employment was terminated in September 2022.
In July 2021 UNION received a convertible debt instrument of DKK 62.0m from various parties, including Board of Di-
rectors and Executive Management. At December 31 2021 the Board of Directors and Executive Management’s part
of the loan totaled DKK 3.4m. On June 30, 2022 the Board of Directors and Executive Management agreed to convert
the convertible loans into share capital.
UNION therapeutics 93Annual Report 2022 Parent company financial statements
par note 19
Notes
20. Changes in liabilities arising from financing activities
2022 Non-cash changes
DKK’000 2021 Cash flows
Conversion
to equity
Addition
during the
period
Fair value
adjustment/
Interest
Foreign
exchange
adjustment 2022
Debt facility 99,286 -126 0 0 8,064 0 107, 2 24
Convertible loan 63,778 0 - 5 7, 4 51 0 13,121 0 19,358
Leasing liability 1,090 -564 0 456 53 0 1,035
Total 164,154 -690 -57,541 456 21,238 0 127,617
2021 Non-cash changes
DKK’000 2020 Cash flows
Conversion
to equity
Addition
during the
period
Fair value
adjustment/
Interest
Foreign
exchange
adjustment 2021
Debt facility 88,894 0 0 0 10,429 -37 99,286
Convertible loan 0 62,037 0 0 1,741 0 63,778
Leasing liability 167 -312 0 1,203 32 0 1,090
Total 89,061 61,725 0 1,203 12,202 -37 164,154
2019 Non-cash changes
DKK’000 2019 Cash flows
Adjustment
opening
Addition
during the
period Interest
Foreign
exchange
adjustment 2020
Debt facility 79,558 0 0 0 9,409 -73 88,894
Leasing 451 -155 -140 0 11 0 167
Total 80,009 -155 -140 0 9,420 -73 89,061
21. Cash flow statement - adjustment for non-cash items
DKK’000 2022 2021 2020
Income taxes -5,500 -5,500 -5,515
Depreciation and amortization 745 351 155
Financial costs/income 36,160 8,961 21,911
Share-based compensation 21,467 9,015 6,896
52,872 12,827 23,447
22. Cash flow statement - changes in net working capital
DKK’000 2022 2021 2020
Changes in other receivables 1,358 7,519 -8,358
Changes in VAT receivables 1,452 -3,272 -624
Changes in prepayments 1,829 -2,051 -65
Changes in employee related liabilities -451 -336 1,358
Changes in intercompany payables -25 -838 1,434
Changes in intercompany receivables -170 233 -1,313
Changes in trade payables 6,482 5,278 6,148
Changes in investments in subsidiaries 0 -186 -40
Changes in other liabilities -11,597 28,378 3,487
-1,122 34,725 2,027
UNION therapeutics 94Annual Report 2022 Parent company financial statements
par note 20
par note 21-22
Notes
23. Contingent assets and liabilities, contractual obligations and pledges
Pledges
UNION therapeutics A/S has entered into a floating charge agreement with the European Investment Bank pursuant
to which a floating charge of EUR 2.0m (2021: EUR 2.0m; 2021: EUR 2.0m) is pledged. Furthermore, the group has
entered into a negative pledge preventing it from placing any of its assets as security, excluding the aforementioned
floating charge to the European Investment Bank.
Contingent payment under out-license agreements
UNION therapeutics A/S is entitled to potential milestone payments and royalties on successful commercialization
of products developed under license agreements with Innovent Biologics Inc and another external party (reference is
made to note 3). Since the size and timing of such payments are uncertain until the milestones are reached or sales
are generated, the agreements may qualify as contingent assets. However, it is associated with a very high degree of
uncertainty to measure the value of such contingent assets, and, accordingly, no such assets have been recognized.
Contingent payment of acquisition of intangible assets
As part of the acquisition of intangible rights, UNION therapeutics A/S may be required to make milestone and royalty
payments to the seller. Refer to note 10.
UNION therapeutics 95Annual Report 2022 Parent company financial statements
par note 23
UNION is passionate about creating
medicines that offer signicant benets
to patients, physicians and payers – in
a sustainable way with care for key
stakeholders, including employees, the
environment and collaborators.
Other information
Statement by the Board of Directors
and the Executive Management 97
Independent Auditor’s Report 98
Forward looking statements 100
Sources 101
Company information 101
UNION therapeutics 96Annual Report 2022 Other information
other information
Executive Management
Board of Directors
UNION therapeutics 97Annual Report 2022 Statement by the Board of Directors and the Executive Management
statement by BoD and EB
Independent Auditor’s Report
UNION therapeutics 98Annual Report 2022 Independent Auditor’s Report
independent auditor
UNION therapeutics 99Annual Report 2022 Independent Auditor’s Report
This annual report contains forward-looking
statements. All statements other than state-
ments of historical facts contained in this
report, such as statements regarding future
results of operations and financial position,
business strategy, prospective products,
availability of funding, clinical trial results,
product approvals and regulatory pathways,
collaborations, timing and likelihood of suc-
cess, plans and objectives of management for
future operations, and future results of current
and anticipated products, are forward-looking
statements.
These forward-looking statements are based
on current expectations and beliefs, as well as
assumptions concerning future events. These
statements involve known and unknown risks,
uncertainties and other factors that could
cause actual results to differ materially from
the results discussed in the forward-looking
statements.
Any forward-looking statement made in this
report speaks only as of the date of this report
and represents estimates and assumptions only
Forward looking
statements
as of the date of this report. Nothing contained
in this report should be construed as a profit
forecast or profit estimate.
To the extent this report includes market and
industry data obtained by the company from in-
dustry publications and surveys, the company
may not have access to the facts and assump-
tions underlying the numerical data, market
data and other information extracted from pub-
lic sources and as a result neither the company
nor any of the company’s advisors or represent-
atives are able to verify such information and
assume no responsibility for the accuracy or
completeness of any such information. Any in-
formation contained or views expressed in this
report do not purport to be comprehensive and
are based on financial, economic, market and
other conditions prevailing as of the date of this
report and are subject to change without notice.
Except as required by law, UNION assumes no
obligation to update these statements publicly,
whether as a result of new information, future
events or otherwise after the date of this report.
UNION therapeutics 100Annual Report 2022 Forward looking statements
forward looking statements
Page 14
Psoriasis
1 Evaluate Pharma (January 2023, Evaluate Ltd.)
Page 16
Atopic dermatitis
1 Evaluate Pharma (January 2023, Evaluate Ltd.)
2 Silverberg JI. (2017) Public Health Burden and Epidemiology of Atopic Dermatitis. Dermatol Clin. 2017;35(3):283-289.
Page 18
Hidradenitis suppurativa
1 Evaluate Pharma (January 2023, Evaluate Ltd.).
Page 20
Niclosamide
1 MacMillan (2022). What Does It Mean To Be ‘Immunocompromised’? Yale Medicine. Published: February 14, 2022.
Link: https://www.yalemedicine.org/news/what-does-immunocompromised-mean
2 Weiss et al. (2022): Kidney Transplant and Dialysis Patients Remain at Increased Risk for Succumbing to COVID-19, Transplantation.
Sources Company information
Denmark
E-mail: info@uniontherapeutics.com
Phone: +45 61777435
CVR-nr.: 3396 3750
Auditors
EY Godkendt Revisionspartnerselskab
Dirch Passers Allé 36
2000 Frederiksberg
Denmark
Established
October 10, 2011
UNION therapeutics 101Annual Report 2022 Sources
UNION therapeutics A/S
Tuborg Havnevej 18
DK-2900 Hellerup
Denmark
E-mail: info@uniontherapeutics.com
Phone: +45 61777435
CVR-nr.: 33963750
Production and layout: NOTED
Passionately creating medicines
that make a difference.