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Company announcement
No. 12/2023
DK-2200 Copenhagen N
CVR No.: 3226 6355
Interim Report First Half 2023
Copenhagen, Denmar k , September 12, 2023 – Orph azyme A/S (ORPHA.CO) (the
“Company”), today announces its Interim Report First Half 2023 for the period January 1 – June
30, 2023.
Business updates and Financial highlights First Half 2023:
Unless otherwise stated, comments in this announcement refer to H1 performance from
continuing operations. In 2022, the business operations and activities that were part of the Sale
of Assets agreement with Zevra Therapeutics Inc. (Previously KemPharm) were reclassified as
discontinued operations, but in 2023 all activities and financials are considered related to
continuing operations.
Operating expenses for the six months ended June 30, 2023 totaled DKK 12.8 million
compared to DKK 27.3 million for continuing operations for the same period in 2022.
The total comprehensive profit/loss for the first half 2023 was a net loss of DKK 12.8
million compared to a total comprehensive profit of DKK 62.5 million for the same period
in 2022.
As of June 30, 2023, Orphazyme held cash totaling DKK 30.3 million compared to DKK
42.5 million as of December 31, 2022.
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Update about the business:
In May 2023, Michael Hove was elected Chairman of the Board of Directors and Jakob
Have and Jakob Bendtsen were elected to the Board of Directors replacing the former
board.
In May 2023, it was announced that the board of directors and CEO/CFO Anders Fink
Vadsholt had entered into a severance agreement pursuant to which Mr. Vadsholt will
step down as CEO/CFO of the Company. Regardless, Mr. Vadsholt has remained
available for the Company until his replacement is found, but in no event longer than
until 30 September 2023.
In May 2023, Orphazyme agreed with the plaintiffs on the US Security class action case
to settle the case by Orphazyme paying a settlement amount. A written settlement
document has been filed by the parties to the Court awaiting its approval. When
approved there will be a general 100-day objection period, where the consortia behind
the class action can object to the settlement amount. We currently expect to receive
final approval by the Court in early 2024 and will update the market once the
preliminary approval order has been issued by the Court. Our issued guidance on
operating loss and cash position at the end of the year includes the expense and
payment of the final settlement amount.
The Group is in process to liquidate its subsidiaries in US and Switzerland and expect the
liquidation will be finalized in H1 2024. Following these liquidations, the Group will only
consist of the Danish parent company.
The management and the board are still in the process of handing over the final parts of
the remaining activities to Zevra and the process is expected to be finalized before end
of 2023.
The Company is still in the process to optimize the current cost/supplier setup in order to
prepare the Company for a new biotech activity/investment.
Initial conversations at high level regarding a new biotech activity is started, but further
steps will await the final outcome of the US Security class action case and the solvent
liquidation of the US and Swiss subsidiaries. The board will keep the market updated as
soon as there are relevant updates in the process.
The board is investigating its current capital structure to potentially strengthen the
equity and liquidity of the Company. A strengthened equity and liquidity may result in
engagement in activities and investments related to biopharmaceutical research and
development and/or participate in partnerships or co-operate with other businesses or
invest in an asset not related to biotech activity.
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Subsequent Events
Management is not aware of any events subsequent to 30 June 2023 which could be expected to
have a significant impact on the group’s financial position.
Outlook
The financial outlook for the year is unchanged.
For the full-year 2023 we still expect an operating loss in the range of DKK 30 – 35 million. We
still expect to end 2023 with DKK 6 - 10 million in cash. There are inherent risks and uncertainties
in our Outlook for 2023 including the limited nature of our business activities, the class action
lawsuit in the United States and our future prospects.
In our financial guidance of expected operating loss in the range of DKK 30 – 35 million, the
expected settlement amount for the US Security class action case is included in these guidance
numbers. Our guidance of expected cash position of DKK 6 – 10 million by the end of the year
does also include the expected settlement amount from the US Security class action case.
The settlement and finalization of the US Security Class action case is depending on a lot of factors
outside the control of the board, but having this in mind the board is working with a timeline that
all matters and processes described above are settled and finalized during H1 2024 so all efforts
in H2 2024 can be concentrated in searching for a new biotech activity.
Forward-looking statements, in particular relating to future activities, operating income and
expenses as well as other key financials, are subject to risks and uncertainties. Various factors,
many of which lie outside of the Company’s control, may cause the realized results to differ
materially from the expectations presented in this earnings release.
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Condensed Consolidated Key Figures
Following the Sale of Assets to Zevra Therapeutics Inc., key figures and ratios are presented for
continuing activities unless otherwise stated. Comparative periods have been restated accordingly
for the statement of profit or loss and other comprehensive income and the cash flow statements.
DKK (000)
As of and for
the six-
months ended
Jun 30, 2023
As of and for
the six-months
ended Jun 30,
2022
As of and for the
year
ended Dec
31, 2022
Statement of profit or loss
General and administrative expenses (12,834) (27,296) (41,241)
Operating loss (12,834)
(27,296) (41,241)
Net financial items 50 56 193
Loss before tax (12,784)
(27,239) (41,048)
Income tax benefit - 2,793 2,736
Loss from continuing operations (12,784)
(24,446) (38,312)
Net result from operations held for sale - 87,429 64,382
Net result for the period (12,784)
62,983 26,070
Total comprehensive income (loss) (12,784)
62,531 25,165
Profit / (loss) per share, basic and diluted (DKK) (0.36) 1.79 0.74
Statement of financial position
Other non-current assets - 5,500 -
Cash 30,340 49,532 42,464
Other current assets 5,841 38,557 15,658
Total assets 36,181 93,589 58,122
Share capital 35,312 35,312 35,312
Total equity 28,883 78,205 41,667
Current liabilities 7,298 15,384 16,455
Cash flow statement
Net cash from operating activities (12,124) (116,472) (117,945)
Net cash from investing activities - - 90,347
Net cash from financing activities - 5,310 (35,078)
Net cash flow from discontinued operations - 63,577 32,862
Other
Share price (DKK) 1.67 1.81 0.88
Total outstanding shares 35,312,241 35,312,241 34,952,241
Market capitalization (DKK million) 59.0 64.3 31.1
Equity ratio 80% 84% 72%
Equity per share (DKK) 0.81 2.21 1.18
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Management’s Review
The first half of 2023 was focusing on handing over the activities to Zevra Therapeutics Inc.
executing on the agreement from May 2022 where the Company sold substantially all of our
assets and business activities.
At the Annual General Meeting in May 2023, the Board of Directors withdraw their positions and
was replaced by Michael Hove (Chairman), Jakob Have and Jakob Bendtsen as board members.
The new board will continue to execute on the current strategy handing over the remaining
activity to Zevra, finalizing the US court case and optimizing the Company’s cost/supplier
structure enabling the Company to be engaged in activities and investments related to
biopharmaceutical research and development or attract a new activity within the biotech area.
Furthermore, the Company may, within its line of business, participate in partnerships or co-
operate with other businesses.
We entered H2 2023 with limited ongoing operations and DKK 30,3 million in cash as June 30,
2023.
Risk management
The following significant risks and uncertainties were identified as of June 30, 2023, which could
have a significant impact on our outlook and financial prospects:
Securities litigation:
On July 9, 2021, a putative class action lawsuit, captioned Busic v. Orphazyme A/S, et al., No.
21- cv-03640 (N.D. Ill.), was filed against the Company and certain of its current and former
directors and officers in the U.S. District Court for the Northern District of Illinois. On September
13, 2021, the Court appointed a lead plaintiff for the putative class. On November 19, 2021, the
lead plaintiff filed an amended complaint asserting claims under the U.S. Securities Act of 1933
and the U.S. Securities Exchange Act of 1934 for alleged misrepresentations and/or omissions in
the Company’s registration statement for its IPO of ADSs in the United States and in subsequent
public statements.
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The amended complaint seeks an unspecified amount of damages on behalf of a putative class
comprised of all persons and entities other than the defendants that purchased or otherwise
acquired the ADSs in connection with the IPO in September 2020 and/or between September 29,
2020 and November 4, 2021. On August 11, 2022, the Court granted in part and denied in part
defendants’ motion to dismiss the amended complaint. The Court dismissed all claims under the
Securities Act of 1933 relating to the Company’s registration statement for its IPO of ADSs and
dismissed as inactionable a number of challenged statements for the lead plaintiff’s claims under
the Securities Exchange Act of 1934, including all of the challenged statements prior to June
2021. On August 26, 2022, the Court amended its August 11, 2022 order to also dismiss certain
claims against certain individual defendants. The Court’s dismissal of claims in its August 11 and
26, 2022 orders was without prejudice to the filing of a further amended complaint. On September
8, 2022, the lead plaintiff filed a second amended complaint with new allegations regarding an
April 2021 statement by the Company’s CEO at the time.
In May 2023, Orphazyme agreed with the plaintiffs on the US Security class action case to settle
the case by Orphazyme paying a settlement amount. A written settlement document has been
filed by the parties to the Court awaiting its approval. When approved there will be a general 100-
day objection period, where the consortia behind the class action can object to the settlement
amount. We currently expect to receive final approval by the Court in first half of 2024 and will
update the market once the preliminary approval order has been issued by the Court. Our issued
guidance on operating loss and cash position at the end of the year includes the expense and
payment of the final settlement amount.
In our financial guidance of expected operating loss in the range of DKK 30 – 35 million, the
expected settlement amount for the US Security class action case is included in these guidance
numbers. Our guidance of expected cash position of DKK 6 – 10 million by the end of the year
does also include the expected settlement amount from the US Security class action case.
Financial position and business prospects:
As of June 30, 2023, we had cash of DKK 30 million compared to DKK 42 million end of 2022. We
have limited operating activities and prudently manage our expenses. We plan to explore ways
to realize value from the Company’s remaining assets and may engage in activities and
investments related to biopharmaceutical research and development, participate in partnerships
or co-operate with other businesses.
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For more information on risks and uncertainties relating to Orphazyme’s business please refer to
our Statutory Annual Report 2022. The risks and uncertainties discussed above are those that the
Company currently views as material and specific to the Company, but there can be no assurance
that these are the only risks and uncertainties that the Company might face.
Additional risks and uncertainties, including risks that are not known to the Company at present
or that its management currently deems immaterial or non-specific to the Company, may also
arise or become material or specific to the Company in the future, which could, if such risks were
to materialize, have a material and adverse effect on the Company’s business, financial condition,
and/or results of operations.
With the uncertainties listed above, there can be no assurance that the Company will achieve or
sustain profitability or positive cash flows from operations. These interim condensed consolidated
financial statements do not include any adjustments that might result from the outcome of these
uncertainties. Based on the mitigating actions described above, Management is of the view that
a going concern assumption is appropriate as of June 30, 2023.
Financial Review
Income statement
The operating result for H1 2023 was a loss of DKK 12.8 million compared to a loss of DKK 27.3
million for the same period last year.
The net result for H1 2023 was a loss of DKK 12.8 million compared to a net profit of DKK 62.5
million for the same period in 2022. The difference primarily relates to the net effect of income
received from the Sale of Assets to Zevra in 2022.
Statement of financial position
As of June 30, 2023, we had cash of DKK 30 million compared to DKK 42 million end of 2022. As
of June 30, 2023, total equity amounted to DKK 29 million compared to DKK 42 million as of
December 31, 2022.
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Consolidated Statements of Profit or Loss and Other Comprehensive Income
Six months
ended
Jun 30, 2023
DKK (000)
Six months
ended
Jun 30, 2022
DKK (000)
Twelve
months
ended
Dec 31, 2022
DKK (000)
General and administrative expenses
(12,834 )
(27,296 )
(41,241 )
Operating expenses
(12,834 )
(27,296 )
(41,241 )
Financial income
Loss before tax
(12,784 )
(27,239 )
(41,048 )
Income tax benefit
Loss from continuing operations
(12,784 )
(24,446 )
(38,312 )
Net result from
discontinued operations (Note 3)
Net result for the period
(12,784 )
Exchange diff
.
from translation of foreign operations
(452 )
(905 )
Total comprehensive income (loss)
(12,784 )
Profit/(loss) per share, basic and diluted
(0.36
Continuing operations
(0.36
(0.69
(1.08
Discontinued operations
Consolidated Statements of Financial position
Jun 30, 2023
DKK (000)
Jun 30, 2022
DKK (000)
Dec 31, 2022
DKK (000)
ASSETS
Current assets
Corporation tax receivable
Trade receivables
Prepayments and other receivables
Cash
Total current assets
TOTAL ASSETS
EQUITY & LIABILITIES
Equity
Share capital
Share premium
Other reserves
(493 )
(493 )
Accumulated deficit
(2,093,372 )
(2,046,990 )
(2,080,588 )
Total equity
Current liabilities
Trade payable and accruals
Corporation tax payable
Other liabilities
Total current liabilities
TOTAL EQUITY AND LIABILITIES
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Consolidated Statements of Changes in Shareholders’ Equity
DKK (000)
Share
capital
Share
premium
Foreign
currency
translation
Other
Accumulated
deficit
Total
Balance as of December 31, 2021
(2,110,998 )
Net loss for the period - - - - 62,983 62,983
Other comprehensive loss for the period - - (452 ) - - (452 )
Total other comprehensive loss - - (452 ) - 62,983 62,531
Transactions with owners
Capital increase 360 4,950 - - - 5,310
Share-based payment costs - - - - 1,025 1,025
Total transactions with owners 360 4,950 - - 1,025 6,335
Balance as of June 30, 2022 35,312 2,087,436 (40 ) 2,487 (2,046,990 ) 78,205
Balance as of December 31, 2022
(493 )
(2,080,588 )
Net loss for the period - - - - (12,784 ) (12,784 )
Balance as of June 30, 2022 35,312 2,087,436 (493 ) - (2,093,372 ) 28,883
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Consolidated Statements of Cash Flow
Six
months
ended
Jun 30, 202
3
DKK (000)
Six
months
ended
Jun 30, 2022
DKK (000)
Operating
activities
Operating
loss
Change
in
trade
receivables,
prepayments,
deposits
and
other receivables
Change
in
provisions,
trade
payables,
accruals
and
other
liabilities
(12,834 )
(108,288 )
Interest
received
/
(paid),
net
Tax refund
(143 )
Net cash (used in) provided by operating activities
(12,124 )
(116,472 )
Financing activities
Proceeds
from
issuance
of
shares
Net cash provided by (used in) financing activities
Changes in cash and cash equivalents from
continuing operations
(12,124 )
(111,162 )
Net cash flow from operations held for sale (Note 2) -
Net change in cash (12,124 )
(47,585 )
Cash
balance
at
beginning
of
period
Effect
of
changes
in
exchange
rates
(
Cash
balance
at
end
of
period
(8,972 )
(27,296 )
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Notes to the Interim Consolidated Financial Statement
NOTE 1 – CORPORATE INFORMATION
Orphazyme is headquartered in Copenhagen, Denmark and is publicly traded on Nasdaq
Copenhagen.
In April 2018, a wholly owned subsidiary of Orphazyme, Orphazyme U.S., Inc., was
incorporated in Delaware, USA and in March 2020, another wholly owned subsidiary,
Orphazyme Schweiz GmbH, was incorporated in Zug, Switzerland (together with Orphazyme
A/S, “Orphazyme” or “the Group” as applicable). The Company is in the process of winding
down these subsidiaries.
These interim consolidated financial statements were approved and authorized for issuance by
the Board of Directors on September 12, 2023.
There were no material related party transactions during the first half of 2023 other than
remuneration to the Executive Management and the Board of Directors.
As of the date of publication of this interim report, the Company has limited ongoing operational
business activities and only one employee.
Basis of preparation
The interim condensed consolidated financial statements for the six months ended June 30,
2023 have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by
the International Accounting Standards Board (IASB) and as adopted by the EU, and additional
Danish disclosure requirements for interim reports of companies listed on the Nasdaq
Copenhagen.
The interim condensed consolidated financial statements do not include all the information and
disclosures required in annual financial statements and should be read in conjunction with the
Company’s latest consolidated annual financial statements as of December 31, 2022. These
interim condensed consolidated financial statements have been prepared in accordance with the
going concern assumption.
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As of June 30, 2023 and as of the date of publication of the interim report, there is no material
impact directly related to COVID-19 on the Group’s consolidated financial statements, including
the judgements and estimates applied.
Updates to the Group's accounting policies
The accounting policies used in the preparation of the interim condensed consolidated financial
statements are consistent with those used in the preparation of Orphazyme’s annual
consolidated financial statements for the year ended December 31, 2022.
The interim financial report has not been reviewed or audited by the Company’s independent
auditors.
Significant accounting estimates and judgements
The significant accounting estimates and judgements disclosed in note 1.4 of the consolidated
financial statements for the year ended December 31, 2022 are still applicable.
NOTE 2 – GOING CONCERN
The expected net result for the year and the limited ongoing operational business activities
makes us comfortable with preparing the interim consolidated financial statements on a going
concern basis.
NOTE 3 – DISCONTINUED OPERATIONS AND DISPOSAL GROUP HELD FOR SALE
In May 2022, Orphazyme announced that it had signed an agreement to sell substantially all of
the Company’s assets and business activities, including those relating to the development and
approval of arimoclomol and the full claw back liability related to the French early access program,
to Zevra Therapeutics Inc.
In 2022, the business operations and activities that were part of the Sale of Assets agreement
have been reclassified as discontinued operations. The net result related to the above-mentioned
operations held for sale are therefore presented separately in the income statement and the
statement of cash flows.
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In 2023 there are no discontinuing activities. Net result and net cash flow from operations held
for sale and assets and liabilities in disposal group held for sale are specified below:
Six months ended
Jun 30, 2022
DKK (000)
Net revenue
22,324
Research and development expenses
(29,988)
General and administrative expenses
(39,833)
Operating expenses
(69,822)
Financial income
-
Financial expenses
(10,893)
Loss before tax
(58,391)
Income tax benefit
-
Net
result for the period
(58,391)
Gain from disposal of assets and liabilities held for sale
145,820
Net result from discontinued operations
87,429
Cash flow from operating activities
102,505
Cash flow from investing activities
1,460
Cash flow from
financing activities
(40,388)
Net cash flow from operations held for sale
63,577
NOTE 4 – DEFERRED TAX ASSETS
The Company’s tax losses can be carried forward infinitely subject to the general rules on limited
deductibility due to ownership changes. In Denmark, the Company’s ability to use tax loss carry
forwards in any one year is limited to 100% of the first DKK 9.1 million of taxable income plus
60% of taxable income above DKK 9.1 million.
For the period ended June 30, 2023, the Company has unrecognized net tax loss carry-forwards
in the Danish entity in the amount of DKK 2,198 million which is equal to a deferred tax asset of
DKK 484 million as of June 30, 2023.
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Board of Directors
Executive Management