Annual Report
2021
ANNUAL REPORT . 2
Content
ANNUAL REPORT . 3
Entity details
Entity
Central Business Registration No (CVR): 3 7 85 24 0 6
Registered in: Copenhagen
Financial year: January 1 - December 31
Board of Directors
Kirsten Aarup Drejer (Chairman)
Sven Martin Jacobson
Thomas Feldthus
Henrik Stage
Jeppe Øvli Øvlesen
Executive Management
Lone Merete Veng (CEO)
Auditors
Godkendt Revisionspartnerselskab
CVR No 30 70 02 28
ANNUAL REPORT . 4
Management’s Statement
April 7, 2022
E
xecutive Management
Board of Directors
Lone Merete Veng
CEO
ANNUAL REPORT . 5
Our mission is to make novel treatments
for patients in need, enabling them to
live healthy and productive lives
ANNUAL REPORT . 6
Independent Auditor’s Report
Opinion
Basis for Opinion
Statement on the Management’s review
ANNUAL REPORT . 7
Management’s responsibilities for the financial statements
Auditor’s responsibilities for the audit of the financial
statements
ANNUAL REPORT . 8
CVR No 3 0 70 02 28
MNE33234
MNE35503
ANNUAL REPORT . 9
Our vision is to unlock the power of
Resolution Therapy – for the benefit of
patients with heart attack
ANNUAL REPORT . 10
Management’s Review
Primary activities
The activities of ResoTher Pharma ApS center around the
discovery and development of peptide-based drugs as resolution
therapy for diseases where inflammation plays a key pathological
role. Currently, the activities are focused on advancing our
molecules in clinical testing for cardiovascular and inflammatory
disorders with a large unmet medical need.
Development in activities and finances
In the year 2021, ResoTher Pharma commenced clinical
development of its lead asset, RTP-026, advanced a series of
backups for pre-clinical evaluation, and initiated a new discovery
project. All activities center around the central objective: to
discover and develop novel peptide-based therapies for
inflammatory and cardiovascular disorders.
As of 31 December 2021, the company had a cash balance of DKK
23.6 million compared to 1.3 million as of 31 December 2020. The
increase is the result of capital increases of DKK 53.1 million,
partly offset by the cash flow from operating activities during
2021 of DKK -8.5 million and repayment of convertible and non-
convertible loans of DKK 4.3 million in 2021.
As of 31 December 2021, the company’s equity amounted to DKK
38.6 million compared to DKK -0.6 million as of 31 December
2020. The increase reflects capital increases during the year of
DKK 53.1 million less the negative financial result for the year.
Capital transactions and repayment of borrowings
In 2021, ResoTher Pharma executed early repayment of a
convertible and a non-convertible loan. The non-convertible loan
notes were repurchased at a total price of DKK 1.802 thousand by
4 May 2021. Further, ResoTher Pharma repaid the non-
convertible loan by payment of DKK 2.000 thousand and DKK
567 thousand by 30 June 2021 and 30 October 2021, respectively.
As a result of the loan repayments, ResoTher Pharma recognized
a loss of DKK 522 thousand in 2021.
Going concern assumption
The Board of Directors and Management are constantly
monitoring the financial position and the liquidity and are
prepared to take appropriate actions to secure the ongoing
activities of the company.
Management considers the Company’s capital resources at 31
December 2021 sufficient to finance the Company’s planned
research and development activities at least through 31
December 2022.
On this basis, the Board of Directors and Management continues
to view the company as a going concern.
Subsequent events
Proceeds from capital increase in December 2021 of DKK 14.3
million was received on ResoTher Pharma’s bank account
January 31, 2022.
ANNUAL REPORT . 11
Financial Statements
Financial Statements
Page
Income statement and statement of
comprehensive income
12
Balance sheet
13
Cash flow statement
14
Statement of changes in equity
15
Notes to the financial statements
Section 1 - Basis of preparation
1.1
Corporate information
16
1.2
Accounting policies
16
1.3
Key accounting estimates and judgements
18
1.4
Financing and going concern assumptions
19
1.5
Subsequent events
19
Section 2 – Operating activities
2.1
Research and development expenses
20
2.2
General and administrative expenses
21
2.3
Employee benefit expenses
21
2.4
Share-based compensation
22
Section 3 - Operating assets and
liabilities
Page
3.1
Receivables
27
3.2
Other liabilities
27
3.3
Changes in net working capital
27
3.4
Adjustment for non-cash items
27
Section 4 - Capital structure and
financial matters
4.1
Capital management
28
4.2
Share capital
28
4.3
Borrowings and convertible debt
instruments
29
4.4
Financial risks
30
4.5
Financial income and expenses
31
4.6
Changes in liabilities arising from financing
activities
32
Section 5 - Corporate governance
5.1
Remuneration of Board of Directors and
Executive Management
33
5.2
Management's holdings of shares and share-
based instruments
33
5.3
Related party transactions
35
Section 6 - Other disclosures
6.1
Taxation
36
6.2
Earnings per share
37
ANNUAL REPORT . 12
Financial Statements
January 1 - December 31
INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
Note
DKK'000 2021 2020
2.1/2.3
Research and development expenses (8,697 ) (5,590 )
2.2/2.3
General and administrative expenses (4,020 ) (1,494 )
Operating loss
(12,717 )
(7,084 )
4.5
Financial income 1 26
4.5
Financial expenses (891 ) (523 )
Net loss before tax (13,606 ) (7,581 )
6.1
Tax on loss for the year 1,928 2,385
Net loss for the year
(11,678 )
(5,196 )
Other comprehensive income - -
Total comprehensive loss for the year (11,678 ) (5,196 )
Attributable to:
Shareholders of ResoTher Pharma ApS (11,678 ) (5,196 )
Earnings per share:
6.2
Basic and diluted loss per share for the period (DKK) (66.58 ) (46.35 )
ANNUAL REPORT . 13
Financial Statements
December 31
BALANCE SHEET
EQUITY AND LIABILITIES
4.2 Share capital
4.2
Share premium 64,245 9,518
Accumulated deficit
(25,844 )
(10,191 )
Total equity
(560 )
4.3
Borrowings - 3,615
3.2
Other non-current liabilities - 62
Total non-current liabilities
Trade payables 2,442 1,060
3.2
Other liabilities 332 358
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Note
DKK'000 Dec 31, 2021 Dec 31, 2020
ASSETS
3.1
Receivables 1,603 860
6.1
Tax receivables 1,928 2,385
3.1
Receivable proceeds from capital increase 14,264 -
Cash and cash equivalents 23,611 1,290
Total current assets
TOTAL ASSETS 41,406 4,535
ANNUAL REPORT . 14
Financial Statements
January 1 - December 31
CASH FLOW STATEMENT
* The total gross proceeds from issuance of shares in 2021 amounts of DKK 53,136 thousand, of which DKK 14,264
thousand at 31 December 2021, is deposited, by the investors, on the Company's lawyers client account. The
amount has been transferred to the Company in 2022.
Note
DKK'000 2021 2020
Net loss for the year (11,678 ) (5,196 )
3.4
Adjustments for non-cash items 588 (1,769 )
3.3
Changes in net working capital 552 486
Interest paid (217 ) (50 )
Income taxes received 2,385 503
Cash flows from operating activities
(8,370 )
(6,025 )
Cash flows from investing activities
4.2
Proceeds from issuance of shares * 38,872 2,999
Transaction costs of raising capital (3,894 ) (194 )
4.6
Repayment of borrowings (4,287 ) -
Cash flows financing activities
Changes in cash and cash equivalents
(3,220 )
Cash and cash equivalents, beginning of year 1,290 4,510
Cash and cash equivalents, year-end
ANNUAL REPORT . 15
Financial Statements
December 31
STATEMENT OF CHANGES IN EQUITY
Note
DKK'000 Share
capital
Share
premium
Accumulated
deficit
Total
Equity at January 1, 2020 103 8,237
(6,627 )
Net loss for the year
(5,196 )
(5,196 )
Other comprehensive income
Transactions with owners:
2.4
Share-bases compensation - -
4.2
Issuance of shares for cash 10 2,989
4.2
Transaction costs
(194 ) (194 )
Equity at December 31, 2020 113 11,226
(11,899 )
(560 )
Net loss for the year
(11,678 )
(11,678 )
Other comprehensive income
Transactions with owners:
2.4
Share-bases compensation - -
4.2
Issuance of shares for cash 117 53,019
4.2
Transaction costs - -
(3,894 ) (3,894 )
Equity at December 31, 2021 230 64,245
(25,844 )
ANNUAL REPORT . 16
Financial Statements
January 1 - December 31
Notes
1 Basis of preparation
This section summarizes ResoTher Pharma ApS’ (‘ResoTher
Pharma’ or the Company) accounting policies and key accounting
judgements and estimates. Additionally, this section provides
information about the overall basis of preparation that ResoTher
Pharma considers useful and relevant for understanding the
financial statements.
1.1 Corporate information
ResoTher Pharma is a privately-owned biotech company engaged
in discovering and developing new medicines for patients
suffering from cardiovascular disease, the leading cause of death
worldwide.
The Company is a limited liability company incorporated and
domiciled in Denmark with its registered office located at
Dronninggårds Alle 136, 2840 Holte.
The financial statements for the year ended December 31, 2021
with comparative figures for the year ended December 31, 2020
were authorized of issuance with a resolution of the Board of
Directors on March 28, 2022.
1.2 Accounting policies
ResoTher Pharma’s accounting policies are described in each of
the individual notes to the financial statements or in section 1.1
Notes including item specific accounting policies
Section 2 – Operating
activities
2.1 Research and
development expenses
2.2 General and
administrative expenses
2.3 Employee benefit
expenses
2.4 Share-based
compensation
Section 4 – Capital
structure
and financial matters
4.2 Share capital
4.3 Borrowings and
convertible debt
instruments
4.5 Financial income and
expenses
Section 3 – Operating
assets and liabilities
3.1 Receivables
3.2 Other liabilities
Section 6 – Other
disclosures
6.1 Taxation
6.2 Earnings per share
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the EU and additional requirements under the Danish Financial
Statements Act for reporting class B enterprises. All approved,
mandatory standards and bases for conclusion effective at 31
December 2021 have been applied in the financial year.
The financial statements have been prepared on a going concern
basis using a historical cost basis.
All financial assets and liabilities are measured at amortized cost
unless otherwise stated.
New accounting policies and disclosures effective in 2021
ResoTher Pharma has applied the following standards and
amendments for the first time for the reporting period
commencing 1 January 2021:
- Interest Rate Benchmark Reform – Phase 2: Amendments to
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
- Covid-19-Related Rent Concessions beyond 30 June 2021
Amendments to IFRS 16 On 28 May 2020, the IASB issued
Covid-19-Related Rent Concessions - amendment to IFRS 16
Leases
The implementation of the amendments listed above did not have
any impact on the amounts recognized in prior periods and are
not expected to significantly affect the current or future periods.
New accounting policies and disclosures effective in 2022 or
Later
The IASB has issued, and the EU has endorsed, a number of new
standards, and updated some existing standards, the majority of
which are effective for accounting periods beginning on January 1,
2022 or later. Therefore, they are not incorporated in the financial
statements. ResoTher Pharma expects to adopt these standards,
updates and interpretations when they become mandatory. There
are no standards that are not yet effective and that would be
expected to have a material impact on ResoTher Pharma in the
current or future reporting periods and on foreseeable future
transactions.
Applying materiality
The financial statements are based on the concept of materiality
and ResoTher Pharma focuses on information that is considered
material and relevant to the users of the financial statements.
The financial statements are a result of processing 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 financial statements or in the notes.
The disclosure requirements are substantial in IFRS and the
Danish Financial Statement Act. Management provides specific
disclosures required unless the information is considered
immaterial to the financial decision-making of the users of these
financial statements and otherwise not warranted or not
applicable
Operating segments
ResoTher Pharma is managed and operated as one business unit,
which is reflected in the organizational structure. No separate lines
of business or separate business entities have been identified with
respect to any of the product candidates or geographical markets
and therefore no segment information is currently disclosed in the
internal reporting.
Leases
The company applies the short-term lease recognition exemption
to its short-term sublease of office space (i.e., those that have a
lease term of 12 months or less from the commencement date and
do not contain a purchase option). It also applies the lease of low-
value assets recognition exemption to leases of office equipment
that are considered to be low value. Lease payments on short-
term leases and leases of low-value assets are recognized as
expense on a straight-line basis over the lease term.
ANNUAL REPORT . 18
Foreign currency
Translation of foreign currency
Items included in the financial statements of the Company are
measured using the currency of the primary economic
environment, in which the Company operates (functional
currency). The functional currency of the Company is Danish
Kroner (DKK).
Transactions denominated in foreign currencies are translated
into the functional currency at the exchange rates at the
transaction date. Monetary items, such as receivables and
payables, denominated in foreign currencies are translated into
the functional currency at the exchange rate at the balance sheet
date
All foreign currency gains and losses are recognized in the
statement of profit or loss under financial income and financial
expenses.
Non-monetary items in foreign currency which are measured at
cost at the balance sheet date are translated using the rates of
exchanges at the date of the transaction.
Presentation currency
The financial statements are presented in Danish Kroner (“DKK”).
Cash flow statement
The cash flow statement is presented in accordance with the
indirect method, with a starting basis of net loss for the year. Cash
flows for the year are presented as cash flows from operating,
investing and financing activities and include the changes in net
cash flows for the year along with cash and cash equivalents at the
beginning and end of the reporting period.
Cash flows from operating activities
Cash flows from operating activities comprise the profit or loss for
the year, adjusted for non-cash items such as share-based
payment expenses, depreciations, provisions and changes in the
working capital and leasehold deposits, financial expenses paid
and financial interest received, and amounts paid and received
regarding income taxes.
Cash flows from investing activities
Cash flows from investing activities comprise payments in
connection with purchase and sale of intangible and tangible
assets.
Cash flows from financing activities
Cash flows from financing activities comprise cash flows from
proceeds from issuance of new shares and related costs, proceeds
from issuance of convertible instruments and repayment of
convertible loans.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and bank
deposit accounts. Cash equivalents are instruments with original
maturities of 90 days or less. The company did not have any cash
equivalents at December 31, 2021 and 2020.
ANNUAL REPORT . 19
1.3 Key accounting estimates and judgements
The use of reasonable estimates and judgements is an essential
part of the preparation of the financial statements. Given the
uncertainties inherent in the Company’s funding activities,
Management must make certain key accounting estimates
regarding valuation and judgements on the reported amounts.
The key accounting estimates and judgements identified are
those that have a significant risk of resulting in a material
adjustment to the measurement of assets and liabilities in the
following reporting period. Management bases its estimates on
historical experience and various other assumptions that are held
to be reasonable under the circumstances. The estimates and
underlying assumptions are reviewed on an ongoing basis. If
necessary, changes are recognized in the period in which the
estimate is revised. Management considers the key accounting
estimates to be reasonable and appropriate based on currently
available information.
Management regards the accounting estimates listed below as
the key accounting estimates and judgements used in the
preparation of the financial statements.
Notes including management’s estimates and judgements
Estimates
Judgements
Section 2 – Operating activities
2.4 Share-based compensation
X
-
1.4 Financing and going concern assumptions
Management considers the Company’s capital resources at 31
December 2021 sufficient to finance the Company’s planned
research and development activities at least through 31 December
2022.
On this basis, Management has prepared the financial statements
on a going concern assumption.
1.5 Subsequent events
Proceeds from capital increase in December 2021 of DKK 14.3
million was received on ResoTher Pharma’s bank account January
31, 2022.
Accounting policies
If after the balance sheet date, but prior to the date of the Board of
Director’s approval of the financial statements, the Company
obtains information about conditions that existed at the balance
sheet date, the Company assesses if the information affects the
amounts recognized in the financial statements.
The Company will adjust the amounts recognized in its financial
statements to reflect any adjusting events obtained after the
balance sheet date and update the disclosures that relate to those
conditions considering the new information.
For non-adjusting events after the balance sheet date, the
Company will not change the amounts recognized in its financial
statements but will disclose the nature of the non-adjusting event
and an estimate of its financial effect, or a statement that such an
estimate cannot be made, if applicable.
ANNUAL REPORT . 20
2 Operating activities
2.1 Research and development expenses
Note
DKK'000
2021
2020
External expenses
(7,541)
(11,602)
Income from government grants
847
7,203
2.3
Employee benefit expenses, including
share-based compensation
(2,003)
(1,191)
Total research and development
expenses
(8,697)
(5,590)
Government grants
The Company received government grants from the Innovation
Fund Denmark and Horizon 2020 from the European Union. These
grants provide compensation for a part of certain project specific
research and development expenses, including wages and
salaries. Government grants are recognized where there is
reasonable assurance that the grant will be received, and all
associated conditions have been complied with.
Accounting policies
Research and development expenses
Research and development expenses include wages and salaries,
share-based compensation, external research and development
expenses, expenses relating to obtaining and maintaining patents
and premises, other expenses, including IT, relating to research
and development and maintenance of the company’s technology
platforms.
The research activities are comprised of activities performed
before filing an investigational new drug (IND) or equivalent and
necessary pre-clinical activities for such product candidates. All
research expenses are recognized in the period in which they are
incurred.
The development activities are comprised of the activities
performed following the filing of an IND or equivalent clinical-
enabling activities for such product candidates, including but not
limited to, research and clinical research activities. In line with
industry practice, internal and subcontracted development costs
are expensed as they are incurred. Due to significant regulatory
uncertainties and other uncertainties inherent in the development
of new products, development expenses do not qualify for
capitalization as intangible assets until marketing approval by a
regulatory authority is obtained or considered highly probable.
Substantial portions of ResoTher Pharma’s clinical studies are
performed by third-party laboratories, medical centers, contract
research organizations and other vendors, or collectively "CROs".
For the currently ongoing clinical studies, the Company accrued
expenses based upon estimated percentage of work completed
and the contract.
Government grants included in external expenses
Government grants are recognized periodically when the work
supported by the grant has been reported and presented as
deductions to external expenses as the grants are considered to
be cost refunds. Government grants are recognized when a final
and firm right to the grant has been obtained.
ANNUAL REPORT . 21
2.2 General and administrative expenses
Note
DKK'000
2021
2020
External expenses
(2,483)
(983)
2.3
Employee benefit expenses, including
share-based compensation
(1,537)
(511)
Total general and administrative
expenses
(4,020)
(1,494)
The Company’s general and administrative expenses consist
mainly of employee benefits and external expenses related to
legal advisors, financial consultants, auditors and other
administrative services
Accounting policies
General and administrative expenses include wages and salaries,
share-based compensation and other expenses, including IT,
relating to the management, corporate and business
development, and administration of the Company. ResoTher
Pharma recognizes general and administration expenses in the
income statement in the period in which such expenses occur.
2.3 Employee benefit expenses
Note
DKK'000
2021
2020
Wages and salaries
(1,848)
(1,510)
2.4
Share-based compensation expenses
(1,627)
(119)
Other social security expenses
(65)
(73)
Total
(3,540)
(1,702)
2.1
Research and development expenses
(2,003)
(1,191)
2.2
General and administrative expenses
(1,537)
(511)
Total
(3,540)
(1,702)
Employees
Average number of employees
Number of year-end employees
3
2
Refer to note 5.1 for remuneration of the Board of Directors and
Executive Management.
Accounting policies
Employee benefit expenses
Wages, salaries, social security contributions, annual leave
and sick leave, bonuses and non-monetary benefits are
recognized in the year in which the associated services are
rendered by employees of ResoTher Pharma.
Share-based compensation expenses
Reference is made to note 2.4 Share-based compensation.
ANNUAL REPORT . 22
2.4 Share-based compensation
The Company has established a share-based incentive program
for members of the Board of Directors, Executive Management,
employees and consultants in the form of warrants. Warrants are
awarded 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 associations.
In 2018, the Board of Directors were authorized to issue warrants
for up to 5,181 shares of nominal DKK 1 in the Company, at an
exercise price of DKK 204 per share. At 31 December 2021, the
Board of Directors have issued in total 5,181 warrants under this
authorization.
In 2020, the Board of Directors were authorized to issue warrants
for up to an additional 7,200 shares of nominal DKK 1 in the
Company, at an exercise price of DKK 305.95 per share. At 31
December 2021, the Board of Directors have issued in total 4,565
warrants under this authorization.
In 2021, the Board of Directors were authorized to issue warrants
for up to an additional 7,300 shares of nominal DKK 1 in the
Company, at an exercise price of DKK 440.00 per share. At 31
December 2021, the Board of Directors have issued in total 5,800
warrants under this authorization.
Warrants granted under the share-based program are classified as
equity settled and generally vest over 1-3 years’ service periods and
with linear or graded vesting profiles. Certain warrants under this
program vest immediately upon grant.
Accounting policies
The Company has granted equity settled warrants to members of
the Board of Directors, Executive Management, employees and
consultants, who provide services similar to employees of the
Company as share-based incentive programs. The fair value of the
warrants at grant date is recognized as an employee benefit
expense in the statement of profit or loss over the vesting period.
A corresponding amount is recognized in shareholders’ equity.
The total amount to be expensed is determined by reference to
the fair value at grant date of the warrants granted. The fair value
is not adjusted for future changes in the fair value of the equity
awards that may occur over the service period. The grant date is
defined as the date at which the parties agree to the contractual
terms.
The total expense is recognized over the vesting period, which is
the period over which all of the specified vesting conditions are to
be satisfied.
Significant accounting estimates
The calculated fair value and the recognition of share-based
compensation expenses for the Company’s share-based
compensation programs are subject to significant assumptions
and estimates. The same assumptions and estimates were used
when valuing conversion options within convertible loans in 2019.
The variables and the pricing model are described below.
The fair value of each warrant granted during the year is
calculated using the Black-Scholes pricing model. This pricing
model requires the input of subjective assumptions. The key
assumptions used for determining the fair value of these are:
Expected volatility: Based on peer group data and reflects
the assumption that the historical volatility over a period
similar to the life of the warrants is indicative of future trends,
which may not necessarily be the actual outcome. The peer
group consists of companies, which Management believes are
similar to the Company in respect of similarity of product
candidates, geography and maturity.
Market share-price at the time of grant: Determined as the
implied fair value, which can be derived from the subscription
price in the most recent capital increase round prior to the
granting of warrants. Where no capital increase has been
carried out, at grant date, a fair value was estimated by
considering a number of factors such as inflection points,
valuations between independent parties etc.
ANNUAL REPORT . 23
Expected future dividend yield per share: The Company
does not expect to pay dividend in the foreseeable future.
Expected life of warrants: Based on vesting terms, expected
rate of exercise and life terms in the warrant programs.
Annual risk-free interest rate: Based on a Danish
government bond with the same maturity as the expected life
of the warrants.
The fair values of the warrants have been derived based on the
following assumptions:
Feb
2020
grant
Jun
2021
grant
Jun
2021
grant
Sep
2021
grant
Dec
2021
grant
Share price
306
440
440
440
500
Exercise price
306
306
440
440
440
Expected time to
maturity
5
5
5
5
0
Risk free interest rate
0.6%
0.0%
0.0%
0.0%
0.0%
Volatility
85.2%
90%
90%
90%
90%
Expected dividend
-
-
-
-
-
Value of warrant (DKK)
200.90
315.93
290.51
290.51
43.24
ANNUAL REPORT . 24
The following schedule provides detailed information on warrants
outstanding on December 31, 2021:
* Of which 8,922 warrants may be exercised on December 31, 2021.
DKK Grant date fair value
(DKK)
Number of outstanding
warrants
Exercise price (DKK) Remaining term to
maturity on December
31, 2021
GRANT DATE
March 2018 107.39 3,382 240 1.5
October 2018 109.90 1,799 240 1.5
February 2020 200.90 565 306 3.5
June 2021 290.51 4,000 440 3.5
June 2021 315.93 2,000 440 3.5
September 2021 290.51 600 440 3.5
September 2021 315.93 2,000 306 3.5
December 2021 43.24 600 440 3.5
- 14,946 * - -
ANNUAL REPORT . 25
The following schedule provides detailed information on warrants
outstanding on December 31, 2020:
* Of which 5,746 warrants may be exercised on December 31, 2020.
DKK Grant date fair value
(DKK)
Number of outstanding
warrants
Exercise price (DKK) Remaining term to
maturity on December
31, 2020
GRANT DATE
March 2018 107.39 3,382 240 1.5
October 2018 109.90 1,799 240 1.5
February 2020 200.90 565 306 3.5
- 5,746 * - -
ANNUAL REPORT . 26
The following schedule specifies the movements in outstanding
warrants
The warrants are exercisable at any time after vesting. The warrants expire between June 30, 2023 until June 30, 2025.
The share-based compensation expenses included in profit and loss amounts to DKK 1,627 thousand in 2021 and DKK 119 thousand in 2020
and are recognized as operating expenses.
DKK Number of
warrants held by
BoD
Number of
warrants held by
Executive Mgmt.
Number of
warrants held by
employees
Number of
warrants held by
others
Total
outstanding
warrants
Weighted
average exercise
price
Outstanding January 1, 2020 5,181 - - - 5,181 240
Granted 565 - - - 565 305
Outstanding December 31, 2020 5,746 - - - 5,746 246
Granted 6,000 2,000 600 600 9,200 381
Outstanding December 31, 2021 11,746 2,000 600 600 14,946 329
ANNUAL REPORT . 27
3 Operating assets and liabilities
3.1 Receivables
DKK'000
Dec 31,
2021
Dec 31,
2020
Prepayments
171
11
Other receivables
1,432
849
Receivable proceeds from capital increase
14,264
-
Total current receivables at December 31
15,867
860
Accounting policies
Other receivables comprise VAT receivables and government
grants and are non-interest bearing. All receivables are measured
at amortized cost
3.2 Other liabilities
DKK’000
Dec 31,
2021
Dec 31,
2020
Employee cost liabilities
-
62
Total other non-current other liabilities at
December 31
- 62
Employee cost liabilities
243
240
Other liabilities
89
118
Total other current other liabilities at
December 31
332
358
Accounting policies
Employee cost liabilities are comprised of provision for holiday
allowance, provision for salaries and other employee related
provisions. Other liabilities consist of commitments and liabilities
related to government grants received in advance. Other liabilities
are measured at amortized cost which generally corresponds to
nominal value.
3.3 Changes in net working capital
Note
DKK'000
2021
2020
3.1
Change in receivables
(743)
(435)
Change in trade payables
1,383
690
3.2
Change in other liabilities
(88)
232
Change in net working capital
552
486
Working capital is defined as current assets less current liabilities
and measures the net liquid assets the Company has available for
the business.
3.4 Adjustments for non-cash items
Note
DKK'000
2021
2020
Reversals of non-cash items in the
statement of profit or loss
6.1
Income tax benefit
(1,928)
(2,385)
4.5
Interest expenses
891
384
4.5
Interest income
(1)
(26)
4.5
Change in fair value of conversion option,
net
-
139
2.4
Share-based compensation expenses
1,627
119
Total adjustments for non-cash items
588
(1,769)
For the purpose of presenting the cash flow statement, non-cash
items with effect on the statement of profit or loss or balance
sheet must be reversed to identify the actual cash flow effect from
the operating activities. The adjustments are specified in the table
above.
ANNUAL REPORT . 28
4 Capital structure and financial matters
4.1 Capital management
Since its inception, ResoTher Pharma ApS has financed its
operations through capital increases and convertible debt facilities
as well as funding for research from government grants.
As of December 31, 2021 the Company had cash and cash
equivalents of DKK 37.9 million as compared to DKK 1.3 million as
of December 31, 2020.
As of December 31, 2021 the Company had repaid all borrowings
and convertible debt instruments that were issued to investors to
fund ongoing operations of the Company. See note 4.3 for
additional information regarding the convertible debt facilities.
Management is continually seeking to obtain additional funding,
cf. note 1.3. The funding is anticipated to be a mix of equity
financing with both existing and new investors as well as
government and scientific grants.
4.2 Share capital
On December 31, 2021, the share capital of the Company
comprised 229,868 shares (112,923 in 2020) with a nominal value of
DKK 1 per share.
Each share entitles the holder to cast one vote at general
meetings in the Company.
Accounting policies
Share capital
The share capital comprises the nominal amount of the
Company's ordinary shares.
Share premium
Share premium comprises amounts received, attributable to
shareholders' equity, in excess of the nominal amount of the
shares issued at the Company's capital increases.
Accumulated deficit
Accumulated deficit includes the accumulated loss for the year.
Accumulated deficit also includes reduction from any expenses
directly attributable to capital increases and 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.
Number
of shares
Share
capital
(DKK)
Share capital at January 1, 2020
103,120
103,120
Capital increase at May 11, 2020
9,803
9,803
Share capital at December 31, 2020
112,923
112,923
Capital increase at April 15, 2021
79,545
79,545
Capital increase at April 29, 2021
8,800
8,800
Capital increase at December 15, 2021
28,600
28,600
Share capital at December 31, 2021
229,868
229,868
ANNUAL REPORT . 29
4.3 Borrowings and convertible debt instruments
Borrowings at December 31, 2021:
Modification of convertible and non-convertible loans to induce
early repayment or early conversion and subsequent
repayment of loans
On April 29, 2021, ResoTher Pharma and the holders of the
convertible and non-convertible notes, SIU and Capnova A/S,
entered agreement to modify the terms of the convertible and
non-convertible loan agreements to induce a right of early
repayment to ResoTher Pharma or alternatively a right of early
conversion to holders of the convertible loan. Under the modified
terms of the convertible loan agreement, ResoTher Pharma was
granted a right to early repurchase the convertible note at a total
price of DKK 1.802 thousand by 4 May 2021, or, if not repurchased
by that date, the holders of the convertible note were granted
right to execute early conversation.
Under the modified terms of the non-convertible loan agreement,
ResoTher Pharma was allowed to early repurchase the non-
convertible loan by payment of DKK 2.000 thousand and DKK 567
thousand by 30 June 2021 and 30 October 2021, respectively. In
2021, ResoTher Pharma executed early repayment of the
convertible and the non-convertible loans and repurchased the
notes in accordance with the modified terms. As a result of the
loan modification and derecognition, ResoTher Pharma
recognized a loss of DKK 522 thousand in 2021.
Accounting policies
Non-convertible loans
Financial liabilities, including non-convertible loans, are initially
recognized at fair value (e.g., the amount of the proceeds
received), net of transaction costs incurred. During subsequent
periods, liabilities are measured at amortized cost. Any difference
between the cost (proceeds) and the redemption value is
recognized in the income statement over the period of the loans
and borrowings using the effective interest method.
A financial liability is derecognized when the obligation under the
liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is
DKK’000
Convertible loans
Loans
Total
Liabilities as of January 1,
2020
931
2,236
3,167
Interests during the year
268
180
448
Liabilities as of December
31, 2020
1,199 2,416 3,615
Liabilities as of January 1, 2021
1,199
2,416
3,615
Interests during the year
81
69
150
Loss on modification of
convertible loan
522
-
522
Repayments during the year
(1,802)
(2,485)
(4,287)
Liabilities as at
December 31, 2021
- - -
ANNUAL REPORT . 30
treated as the derecognition of the original liability and the
recognition of a new liability. The difference in the respective
carrying amounts is recognized in the income statement.
Convertible loans
Convertible loans are separated into liability and equity
components based on the terms of the contract. On issuance of
the convertible loan, the fair value of the liability component and
the conversion option is determined using the Black Scholes
valuation model. The liability component is classified as a financial
liability measured at amortized cost until it is extinguished on
conversion or redemption. The portion of the loan proceeds that is
allocated to the conversion option is recognized and included in
equity. The carrying amount of the conversion option, classified as
equity, is not remeasured in subsequent periods.
Upon derecognition of convertible loan after modification of loan
terms to induce early repayment or conversion, the difference, in
the respective carrying amounts, at the date the terms are
amended, between (i) the fair value of the consideration the
holder receives on repayment or conversion of the instrument
under the revised terms; and (ii) the fair value of the consideration
the holder would have received under the original terms, is
recognized in the income statement.
4.4 Financial risk
The Company is exposed to multiple financial risks due to its operations. The financial risks primarily include foreign currency and liquidity risks.
A risk with a potential financial implication of less than DKK 0.5 million is considered to have low potential impact.
The financial risk exposures are described in further detail below:
Risk exposure
Impact
What can go wrong
Mitigating actions taken by the Company
Foreign currency risk
Low
The exposure to foreign currency fluctuations is considered
minor, as the majority of the Company’s expenses are incurred in
the functional currency (DKK) or currencies closely correlated to
DKK.
The most significant cash flows for the Company on a quantitative
basis are, in descending order, DKK and EUR.
The policy for managing foreign currency risks is to convert
cash received from issuance of shares to currencies that
match the denomination of budgeted costs.
Liquidity risk
Low
The exposure to liquidity risk primarily relates to the risk of failure
to meet the Company’s obligations when they become due,
which could happen if current assets are not enough to cover the
amount of short-term liabilities.
The policy in the Company for managing liquidity risks is to
have cash sufficient to act appropriately in case of
unforeseen fluctuations in liquidity. The Company’s cash
requirements for the forthcoming 12-month period are
estimated monthly.
Reference is made to note 1.3 regarding going concern
considerations.
ANNUAL REPORT . 31
Maturity analysis
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:
DKK’000
Less
than
1 year
1-5
years
>5 years
Total
contrac-
tual cash
flows
Carrying
amount
2021
Financial
liabilities:
Borrowings
-
-
-
-
-
Trade payables
4,075
-
-
4,075
4,075
Other payables
332
-
-
332
332
Total financial
liabilities
4,407 - - 4,407 4,407
2020
Financial
liabilities:
Borrowings
-
4,149
-
4,149
3,677
Trade payables
1,060
-
-
1,060
1,060
Other payables
358
62
-
420
420
Total financial
liabilities
1,418 4,211 - 5,629 5,157
The financial liabilities include estimated or contractual interest
rate payments.
4.5 Financial income and expenses
Note
DKK'000
2021
2020
Financial income
Foreign currency adjustments
1
26
Total financial income
1
26
Financial expenses
Interest expenses, bank (177) (25)
4.6 Interest expenses, loan
(150) (311)
Interest expenses, other
(11) -
4.3 Amortization, convertible loan
- (139)
4.3 Effect of modification, convertible loan
(522) -
Foreign exchange losses
(31) (48)
Total financial expenses
(891)
(523)
Accounting policies
Financial income and expenses are recognized in the Income
statement at the amounts that concern the financial year. Net
financials include interest income and expenses as well as
amortization of debt, effect of modification of convertible loans,
gains and losses due to changes in foreign exchange rates, etc.
ANNUAL REPORT . 32
4.6 Changes in liabilities arising from financing
activities
Non-cash changes
January 1,
2021
Cash flows
Accumulated
interest
Modification
December
31, 2021
Borrowings 3,615 (4,287) 150 522 -
Total liabilities
from financing
activities
3,615 (4,287) 150 522 -
Non-cash changes
January 1,
2020
Cash flows
Accumulated
interest
Modification
December
31, 2020
Borrowings 3,167 - 448 - 3,615
Total liabilities
from financing
activities
3,167 - 448 - 3,615
Convertible debt
For detailed information about the convertible debt instruments,
refer to note 4.3 Convertible debt instruments.
ANNUAL REPORT . 33
5 Corporate governance
5.1 Remuneration to the Board of Directors and
Executive Management
DKK’000
2021
2020
Remuneration to the Executive Management
Wages and salaries
1,242
912
Share-based compensation expenses
632
-
Total
1,874
912
Remuneration to the Board of Directors
Wages and salaries
165
100
Share-based compensation expenses
905
15
Total
1,070
115
Remuneration to the Board of Directors and
Executive Management
Research and development expenses
1,312
638
General and administrative expenses
1,632
389
Total
2,944
1,027
The Executive Management comprised one member. All members
of the Board of Directors and Executive Management are
registered with the Danish Business Authority.
Share-based compensation
In 2021, the total net share-based compensation expenses
regarding remuneration to the Executive Management and Board
of Directors amounted to DKK 905 thousand compared with DKK
15 thousand in 2020. For further comments on the development in
share-based compensation expense, refer to note 2.4 Share-based
compensation.
5.2 Management’s holding of shares and share-based
instruments
At December 31, the Board of Directors and Executive
Management held the following shareholdings in the Company:
Number of ordinary shares owned
2021
2020
Lone Merete Veng, CEO
8,500
8,500
Executive Management in total
8,500
8,500
Number of ordinary shares owned
2021
2020
Jeppe Øvli Øvlesen
22,301
21,233
Thomas Feldthus
1,173
-
Henrik Stage
2,832
2,632
Board of Directors in total
26,306
23,865
ANNUAL REPORT . 34
As of December 31, the Board of Directors and Executive Management held the following warrants in the Company:
Number of warrants held
December 31, 2021
Granted
December 31, 2020
Granted
January 1, 2020
Kirsten Drejer
5,181
-
5,181
-
5,181
Sven Jacobson
2,565
2,000
565
565
-
Henrik Stage
2,000
2,000
-
-
-
Thomas Feldthus
2,000
2,000
-
-
-
Board of Directors in total 11,746 6,000 5,726 565 5,181
Lone Veng (CEO)
2,000
2,000
-
-
-
Executive Management in
total
2,000 2,000 - - -
5.3 Related party transactions
The Company’s transactions with other related parties
DKK’000
2021
2020
Transactions with related parties (expenses)
Sublease of office, SynAct Pharma ApS
48
162
Interests on convertible loan, Capnova and SIU
81
129
Interests on loan, Capnova and SIU
69
180
Balances with related parties at year-end
(liabilities)
Convertible loan, Capnova and SIU
-
1,199
Loan, Capnova and SIU (principal and interest)
-
2,416
SynAct Pharma ApS is a fully owned subsidiary of SynAct Pharma
AB, a company listed on the Swedish Spotlight Stock Market
(multilateral trading facility). Jeppe Øvlesen, Thomas Jonassen and
Henrik Stage (all Management and Board members of ResoTher
Pharma ApS), together have significant interests in SynAct
Pharma AB. The sublease agreement is entered into on market
terms.
Capnova and SIU (Danish Agency for Institutions and Educational
Grants) are shareholders in ResoTher Pharma ApS and have
granted the company both a non-convertible loan in 2017 (paid
out in 2018) and a convertible loan in 2018 (paid out in 2019). The
two shareholders combined own more than 10% of the company,
but do not have a controlling interest. All loans were repaid during
2021, refer to note 4.3.
The Company’s related parties comprise the significant
shareholders of the Company, the Executive Management group,
the Board of Directors and the close members of the family of
these persons.
The Company has not granted any loans, guarantees, or other
commitments to or on behalf of any of the members in the Board
of Directors or Executive Management. Other than the
remuneration and other transactions relating to the Board of
Directors and Executive Management described in note 5.1 and 5.2
and capital increases on the same terms as other investors, no
other significant transactions have taken place with the Board of
Directors or the Executive Management during 2021 and 2020.
6 Other disclosures
6.1 Taxation
DKK’000
2021
2020
Income tax benefit from tax credit on research
and development activities
1,928
2,385
Total income tax benefit for the period
1,928
2,385
Reconciliation of effective tax rate to Danish
statutory tax rate
Net loss before tax
(13,606)
(7,581)
Statutory corporate income tax rate in Denmark
22%
22%
Computed income tax benefit for the period
2,993
1,668
Tax effect of:
Extra deduction for research and development
costs
578
742
Other non-deductible costs, incl. share-based
compensation
(358)
(25)
Deferred tax asset not recognized
(1,286)
-
Total income tax benefit recognized in profit or
loss
1,928
2,385
Deferred tax in the balance sheet
Deferred tax assets
1,616
331
Deferred tax assets not recognized
(1,616)
(331)
Deferred tax asset recognized in the balance
sheet
-
-
On December 31, 2021, the Company had unrecognized tax loss
carry-forwards in Denmark of DKK 7.3 million (December 31, 2020:
DKK 2.0 million) for income tax purposes, all of which can be
carried forward infinitely according to Danish Corporate Income
Tax Act. The tax loss carry-forwards are included in the above
deferred tax assets.
Income tax benefit for the year includes a tax credit for research
and development expenditures at the applicable tax rate under
the Danish Corporate Income Tax Act.
Accounting policies
Income tax
The income tax for the period comprises current and deferred tax,
including prior-year adjustments and changes in provisions for
uncertain tax positions. Tax is recognized in the statement of profit
or loss, except to the extent that it relates to items recognized in
equity or in other comprehensive income.
Current tax payables and receivables are recognized in the
balance sheet as a receivable in the event of prepayments and
amounts due.
Deferred taxes
Deferred tax is measured according to the liability method on all
temporary differences between the carrying amount and the tax
base of assets and liabilities. Where the tax value can be
determined according to alternative tax rules, deferred tax is
measured on the basis of the planned use of the asset or the
settlement of the obligation.
Deferred tax assets are measured at the value at which they are
expected to be utilized, either through elimination against tax on
future earnings or through a set-off against deferred tax liabilities.
Deferred tax assets are set of within the same legal tax entity and
jurisdiction.
ANNUAL REPORT . 37
Tax receivables
Current tax assets for the current and prior periods shall be
measured at the amount expected to be recovered from the
taxation authorities, using the tax rates and tax laws that have
been enacted or substantively enacted by the end of the reporting
period.
Management’s judgements
The Company is subject to corporate taxes in Denmark and is
required to accrue for income taxes, deferred income tax assets
and liabilities, and provisions for uncertain tax positions.
Uncertainties exist with respect to the interpretation of complex
tax regulations and the amount and timing of future taxable
income. Given the complexity of existing contractual agreements,
differences arising between the actual results and the
assumptions made, or future changes to such assumptions, could
necessitate future adjustments to tax income and expenses
already recorded. As at December 31, 2021 and 2020, the Company
has not recognized any provisions for uncertain tax positions.
The Company recognizes deferred income tax assets if it is
probable that sufficient taxable income will be available in the
future against which the temporary differences and unused tax
losses can be utilized. Management has considered future taxable
income in assessing whether deferred income tax assets should
be recognized and has concluded that the deferred income tax
assets do not meet the criteria for being recognized as assets in
the balance sheet.
6.2 Earnings per share
2021
2020
Loss for the year (DKK’000)
(11,678)
(5,196)
Weighted average number of shares
175,403
112,090
Basic and diluted loss per share (DKK)
(66.58)
(46.35)
The following potential ordinary shares are anti-dilutive and are
therefore excluded from the weighted average number of ordinary
shares for the purpose of diluted earnings/loss per share:
Number of potential ordinary shares
that are antidilutive
2021
2020
Outstanding warrants
15,546
5,746
Convertible loan
-
7,353
Accounting policies
Basic EPS is calculated by dividing the profit/loss for the year
attributable to ordinary equity holders of the company by the
weighted average number of ordinary shares outstanding during
the year. Diluted earnings per share is calculated as net profit or
loss divided by the sum of average number of shares outstanding,
including the dilutive effect of the outstanding share pool related
to warrants and convertible debt instruments unless antidilutive.