Cessatech A/S - Annual Report 2020
CVR no. 41293055, Kanonbådsvej 2, 1437 Copenhagen, Denmark
CESSATECH - ANNUAL REPORT - 2020
1. COMPANY INFORMATION & MANAGEMENT REVIEW 2
2. CESSATECH 4
2.1 Executive summary 4
2.1 BUSINESS MODEL AND STRATEGY 5
3.0 LEAD ASSET CT001 6
3.1 Cessatech’s solution 7
3.2 Competitive landscape for CT001 8
4.0 COMMENT FROM THE CEO 10
4.1 Rethinking Child Treatments 11
4.2 Key milestones 11
4.0 HIGHLIGHTS FROM 2020 12
Q2-2020 12
Q3-2020 12
Q4-2020 12
5.0 HIGHLIGHTS AFTER THE PERIOD 2020 12
Early Q1-2021 12
6.0 BOARD OF DIRECTORS 13
7.0 EXECUTIVE MANAGEMENT 14
8.0 MISCELLANEOUS 15
8.1 The share 15
8.2 Warrants 15
8.3 Financial calendar 15
10. FINANCIAL HIGHLIGHTS AND RATIOS 16
11. FINANCIAL REVIEW 16
Operating income and operating results 16
Balance sheet and solidity 17
Cash flow 17
Capital resources 17
Subsequent events 17
12. MANAGEMENT STATEMENT ON THE ANNUAL REPORT 18
13. INDEPENDENT AUDITOR´S REPORT 19
Basis for Opinion 19
Statement on Management’s Review 19
1
Management’s Responsibilities for the Financial Statements 20
Auditor’s Responsibilities for the Audit of the Financial Statements 20
14. INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME 22
15. BALANCE SHEET 23
16. STATEMENT OF CHANGES IN EQUITY 24
17. CASH FLOW STATEMENT 25
18. NOTES 26
Accounting policies 26
Capital resources and liquidity 31
Staff expenses 33
Tax 34
Equity 36
Distribution of profit/loss for the year 37
Change in working capital 37
Financial risks and financial instruments 38
Related parties 40
Operating lease commitments and other commitments 40
Events occuring after the balance sheet date 40
2
1. COMPANY INFORMATION & MANAGEMENT REVIEW
In this document, the following definitions shall apply unless otherwise specified: “the Company”
or “Cessatech” refers to Cessatech A/S, with CVR number 41293055.
The Company
Cessatech A/S
Kanonbådsvej 2
DK-1437 Copenhagen K
CVR no.: 41293055
Board of Directors
Ulla Hald Buhl (Chairman)
Adam Steensberg
Flemming Jensen
Charlotte Videbæk
Peter Birk
Martin Olin
Executive Management
Jes Trygved (CEO)
Auditors
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR-no. DK 33 77 12 31
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2. CESSATECH
2.1 Executive summary
CT001 – clinical validation: The product is based on more than ten years of clinical experience
and has been proven effective and safe in a clinical Phase II trial in 50 children at Copenhagen
University Hospital (Rigshospitalet). Almost all (94 percent) stated that they would like to receive
this treatment again rather than existing alternatives (e.g., oral solutions or injections). In addition,
Cessatech has delivered promising results in a retrospective study based on 700 medical
procedures during a 10-year period in a collaborative study on 328 children between
Rigshospitalet (Denmark) and Astrid Lindgren Children’s Hospital (Sweden). CT001 is now
expected to enter late stage clinical development in 2021.
Phase III – a clear route to market approval and 10 years of market exclusivity in Europe:
According to EU regulations, a paediatric investigation plan (PIP) must be obtained to support the
authorisation of a new medicine for children. The founders of Cessatech started this process back
in 2016 and was recently granted an approved PIP-program by the EMA, providing a clear and
fast route to regulatory approval for its lead asset CT001.
Cessatech’s approved PIP consists of four (4) additional short clinical trials and two (2)
computer-based modelling-simulation studies, which will be conducted during 2021-2023. After
completing the approved PIP and filing for regulatory approval, Cessatech plan to be able to
provide sufficient data to demonstrate the efficiency and safety of its lead asset CT001, which will
be the basis of a paediatric-use marketing authorisation (PUMA) by the EMA and the reward of
ten years of market exclusivity in Europe. It is Cessatech’s ambition to have its nasal spray
(CT001) ready for launch on the market in 2024.
Risk-reduced approach: CT001 is based on a fixed combination of two well-known compounds,
ketamine and sufentanil. The compounds are already approved treatments for injection in adults
and are also used separately for pain-relief intravenously in children, which Cessatech believes
will significantly reduce the risk in upcoming clinical studies and subsequently in the regulatory
filing for CT001.
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Large market need: In Europe alone, it is estimated that approximately 25 million children are
exposed each year to acute procedural pain. The objective for Cessatech’s solution is a peak
volume market share of 30-40%, after 6-8 years on the market, corresponding to approx. six (6)
million annually treated children. By then, the Company estimates the total market to be
approximately DKK 1.5-2 billion.
Product portfolio: The Company has two follow-on concepts for children, a sedative nasal spray
(CT002) for medical and diagnostic procedures (e.g., MRI scanning) and a local anaesthetic gel
(CT003) that can be applied to open wounds (e.g., before stitching in the emergency room). With
the recent success of obtaining an approved PIP for the Company’s lead asset, it is the
Company’s ambition to apply for a similar development program as the one recently granted for
CT001.
The Warrant Program (TO 1): During the IPO in December 2020, Cessatech offered units, each
consisting of two (2) shares and three (3) warrants in the Company. The offer consisted of
1,680,000 shares of nominally DKK 0.20 each and 2,520,000 warrants, each granting the right to
subscribe for one (1) new share in the Company of nominally DKK 0.20 each. All shares belong to
the same share class and carry the same rights. With a subscription of the maximum number of
units in the offer, Cessatech’s share capital increased from nominally DKK 400,000 to DKK
736,000, the number of shares increased from 2,000,000 to 3,680,000, and a total of 2,520,000
warrants of series TO 1 was issued to the investors. If all the warrants are exercised, the
subscription amount from such exercise will be mDKK 25.2. The exercise period for the warrants
will take place during the period 25/11 - 16/12 2021.
2.1 BUSINESS MODEL AND STRATEGY
Cessatech’s business model offers scalable economic value creation by identifying and
developing drugs with a short time to market and a risk-reduced profile. The drugs that will be
developed by Cessatech should be proven effective in adults and represent a medical unmet
need in children where a focused development plan can be applied for documenting good effect
and safety in children. By following the EMA approved PIP program for its lead asset nasal spray,
Cessatech significantly shortens time to market and is provided ten (10) years of market
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exclusivity. Utilizing the PIP regulatory route is thus a cornerstone of Cessatech’s business model,
which will also be applied on future products when applicable. The existing business plan is
focused on Europe, but Cessatech will also investigate the regulatory route and development
requirements for the U.S.
Cessatech believe , there are several (principle) options going forward. Being a small drug
development company, the more traditional approach would be to out-license or sell the products
to pharmaceutical companies. With its clinical late stage lead asset CT001, Cessatech believes
that the Company will be an attractive candidate for partnership or an out-licensing agreement
with larger pharmaceutical companies. Another option for Cessatech would be to consider a
direct-to-market commercialization strategy by building on the Company’s core competences
within commercialization and distribution and develop its own platform. Cessatech will
continuously evaluate all options.
3.0 LEAD ASSET CT001
Cessatech is confident that intranasal treatment is a better alternative than intravenous medicine
as it is easier and quicker to administer, resulting in fast pain relief, and the child does not have to
experience the pain related to injection. Also, it is more feasible to administer compared to
non-compliant children than oral medications.
Despite the many pain-relieving products available for adult patients, few of these have been
developed for children. A study on unlicensed drug prescription revealed that up to 75 percent of
all medications currently prescribed in hospital settings are administered off-label, meaning that
the use deviates from the dose, is not tested, documented, or approved for children. A commonly
used treatment as Midazolam only has a sedative effect, thus leaving the pain untreated.
Morphine/opioids require intravenous access for fast pain relief, causing further pain for the child.
The treatment of acute pain in children is therefore characterized by a significant unmet medical
need, which has been recognized by both regulatory authorities and health care professionals.
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3.1 Cessatech’s solution
The Company’s first product and lead asset, CT001, is an analgesic non-invasive nasal spray for
children aged 1-17 years that experience acute pain or pain related to medical procedures.
Today’s analgesic solutions often require an intravenous access which is not always feasible or
easy and can be painful. In contrast, CT001 has a fast onset and is easy to use. Its composition
includes a fixed combination of the two well-known analgesics ketamine and sufentanil (an
opioid), which are already approved treatments for injection in adults. The two compounds are
also used separately for analgesia but only intravenously in children. The potential advantages of
the fixed combination of sufentanil and ketamine include improved analgesia with approx. 30
percent lower dose of sufentanil and consequently the avoidance of undesirable side effects such
as prolonged sedation and risk of respiratory depression.
With funding from the Novo Nordisk Foundation and the Capital Region of Denmark - in 2014 and
2016 - CT001 has been developed as a ready-to-use nasal spray. These grants, which were given
to Rigshospitalet for the founders’ research project before it was incorporated in Cessatech, have
further covered the process of obtaining the approved Paediatric Investigation Plan as well as a
clinical registry study (0203), which has just been finalized and communicated. Also, a Phase II
study was earlier conducted at Rigshospitalet in Denmark, where a total of 50 children were
treated for procedural pain. The nasal spray was confirmed effective, with a maximum pain score
during the painful procedure of 5 or less on a 0–10 scale (0 indicating no pain and 10 the worst
imaginable pain) in 78 percent of the children. Furthermore, no serious adverse events were
reported. Almost all (94 percent) of the children or parents (for preverbal children) stated that they
would like to receive this treatment again in a similar situation rather than analgesic suppositories,
tablets, oral solutions, or injections.
Cessatech has entered into an agreement with Rigshospitalet. The agreement regards the
assignment of the analgesic nasal spray CT001 to Cessatech, including data, patent rights and
other relevant documents as well as an exclusive license to, among other things, develop and sell
the product. For this, Cessatech will pay a royalty of 1% on all net sales to Rigshospitalet as well
as a royalty of ten (10) percent on all revenue received from sub-licensees irrespective of the
revenue originates from jurisdictions where there is a valid claim or not. The royalties shall be
reported and paid annually to Rigshospitalet. Cessatech is solely responsible for the
development, manufacture and sale of CT001 as well as the commercialization and the patent
rights and the Company or collaboration partners shall bear all costs related thereto.
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CT001 targets a large unmet need, as much of the medication currently used for acute pain relief
is not approved for use in children and is invasive. The treatment has already created peace and
security for many families since 2015, when the formulation used for the clinical Phase II trial also
became available at Rigshospitalet (manufactured by the hospital’s pharmacy). The founders have
experienced an increasing interest for the treatment, not only from other hospitals, but also from
the emergency rooms and the pre-hospital area. The current formulation is not a ready-to-use
nasal formulation and once a standardized (CT001) formulation is approved by the EMA, only
Cessatech’s CT001 formulation can be supplied in hospitals.
3.2 Competitive landscape for CT001
There is a lack of medicines for treatment of procedural pain in children and some serious
shortcomings of existing treatment options (see table below). Only EMLA® crème and Fentanyl
solutions for injection are approved for treatment of short painful procedures. In clinical practice
EMLA® crème is used for prevention of pain related to needle insertion, while fentanyl injection is
only used in relation to surgery. Sedatives/analgesics are often used off-label for
treatment/prevention of pediatric procedural pain. Commonly used drug products are midazolam
for sedation (which has no analgesic effect), morphine (which requires injection for fast onset) and
nitrous oxide (only for children approx. above 4 years and further requires specially trained staff
and that the child can accept the mask). Commercially available fentanyl nasal spray is not
developed for use in children and dosing according to the child’s weight is not possible.
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An overview of the shortcomings of existing treatment options
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4.0 COMMENT FROM THE CEO
This is the first annual report of Cessatech and as a CEO - or as an employee - you never know
how long the journey will continue, but doing the first annual report is always special and I really
hope that I will be the CEO of the Company for many years. I want to introduce our Company in a
different way as we want to focus on new and innovative opportunities for treating children,
exactly how this will be done and how broad the scope will be, I hope to reveal in the next annual
report - about a year from now. We have many ideas and concepts we would like to explore, and I
will like to encourage the readers and especially the shareholders to suggest ideas or new
concepts for treating children, as I assume many of you may have been in contact with the
medical system and have experiences or been have had considerations - all ideas are welcome,
please share them on info@cessatech.com
The year 2020 began with preparation for Cessatech’s IPO, which was successfully conducted in
December 2020, and which provided capital to conduct the last stage clinical program for CT001
in 2021 and 2022 with the following warrant (TO 1). In addition, the main focus has been to
establish agreements with the clinical research organizations and the chemical manufacturing
units that will conduct the clinical trials and produce the final product. This has been prepared in
2020 and Cessatech is now ready to start the clinical trials.
The clinical program in 2021 includes a bioavailability study (0204)
investigating concentrations of active drugs in the blood after nasal
administration or injection of the approved intravenous solutions of the
drug. The study is planned to bridge to the already approved
intravenous solutions. In addition, a study (0205) looking at efficacy
and how pain relief correlates to the amount of the active drugs in the blood are investigated in an
acute pain model (removal of impacted wisdom teeth) in adults. A study in paediatric patients
(0206) investigating the amount of the active drugs in the blood of children of all age groups
supplementing the data from the initial Phase II study 0201, will also be needed to close
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knowledge gaps. These studies will all be initiated in 2021, and together with the two
computer-modelling studies and the final prehospital study (0202) in paediatric patients in 2022
will potentially serve as the basis for a PUMA approval.
It is important for a clinical company to constantly meet with potential partners and investors why
the business development activities going forward will be a coverstone in our activities and
especially for me as the CEO. This has been a large part of our 2020 focus and will continue in the
coming years as we continuously have to evaluate if the company has sufficient resources also to
at some point advance our pipeline.
4.1 Rethinking Child Treatments
Our purpose will be a core focus in all activities going forward - we are developing our first asset
CT001 - and our mindset, communication and external activities will always have children in mind.
We need to advance our pipeline, and we need to develop more solutions for children. Rethinking
Child Treatments will be an integrated part of the way we think and conduct our business
operations. That is also why we have entered a small sponsorship and voluntary collaboration
with Save the Children (Red Barnet), and it will be interesting to see what this will add.
4.2 Key milestones
- Established the company, the legal entity (APR)
- Building the initial organization of consultants and core team (MAY)
- Finalizing the agreement with Rigshospitalet for CT001 (JUN)
- Submitted CT001 fast-track application for US patent (SEP)
- Agreement with the Clinical Trial Organization, the CRO (OCT)
- Agreement with Contract Manufacturing Organization, the CMO (NOV)
- Trading in Cessatech’s shares and warrants commenced on the Spotlight Stock Market
- Finalizing the clinical protocols needed for the initial clinical trials (DEC)
Thank you
I would like to take this opportunity to thank our shareholders for their confidence in our business
and product vision. Together with an extraordinary team, I am looking forward to the year ahead
and to continuing Cessatech’s ambitious journey to bring new solutions to the millions of children
worldwide suffering from the lack of adequate solutions. We are eager to transform Cessatech
from a clinical organization into a late clinical-phase company with a pipeline of indications and
products which will be considered throughout 2021 – a very exciting time ahead for the Company
and its shareholders.
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4.0 HIGHLIGHTS FROM 2020
Q2-2020
- Established the company, the legal entity (6. APR)
- Building the initial organization of consultants and core team
- Finalizing the agreement with Rigshospitalet for CT001
Q3-2020
- The complete Board of Directors assembled and assigned
- The manufacturing process for CT001 was finalized
- Finalized selection of preferred Clinical Research Organization (CRO)
Q4-2020
- Approval for IPO listing and significantly oversubscribed by approx. 680%
- Finalized negotiations of preferred manufacturer for clinical and commercial batches
- Submitted Fast-track US patent application for CT001
- Initiated clinical preparations of first 3 clinical activities related to CT001
- Trading in Cessatech’s shares and warrants commenced on the Spotlight Stock Market
- Finalization of the Registry Study (0203) from Karolinska University Hospital
5.0 HIGHLIGHTS AFTER THE PERIOD 2020
Early Q1-2021
- Finalization of the clinical manufacturing setup and process with the new partner
- Top line results from Study 0203 (major milestone 1)
- Awarded Best Medical Treatment IPO Nordics in 2020 by independent editorial
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6.0 BOARD OF DIRECTORS
Ulla Hald Buhl
Chairman of the Board of Directors since 2020
Education: Bachelor of Nursing, Bispebjerg University Hospital, Denmark and Diploma in
Organization and Management, University of Southern Denmark, Odense, Denmark.
About: Ulla Hald Buhl has 25 years of experience in biotech and is a serial entrepreneur
having founded and co-founded several listed and non-listed companies.
Charlotte Videbæk
Member of the Board of Directors since 2020
Education: MD, Doctor of Medical Science, Specialist in Neurology, Copenhagen.
About: Charlotte Videbæk has more than ten years of clinical experience, followed by
more than 20 years of experience within international pharma- and biotech and project
management.
Peter Birk
Member of the Board of Directors since 2020
Education: Ph.D. in Protein Engineering, INSA Toulouse, France and Master of
Molecular Biology, University of Southern Denmark, Denmark.
About: Peter Birk has a proven biotech track record where he has held several Board
positions and both strategic and operational managerial positions.
Adam Steensberg
Member of the Board of Directors since 2020
Education: MD, Doctor of Medical Science, Copenhagen, MBA IMD Switzerland.
About: Adam Steenberg has 15 years of experience in biotech- and pharmaceutical
industry. He has a broad experience from R&D strategy, medical, science from all
stages of development, including regulatory submissions.
Martin Olin
Member of the Board of Directors since 2020
Education: M.Sc, Business & Auditing, Copenhagen Business School.
About: Martin Olin has more than 20 years of life science experience, CEO and CFO
leadership experience in international organizations.
Other ongoing assignments: Managing Director at Nordic Eye Venture Capital (Nordic
Eye Management ApS and Nordic Eye Invest Aps)
Flemming Steen Jensen
Member of the Board of Directors since 2020
Education: M.Sc. in Pharmacy, University of Copenhagen, Denmark.
About: Flemming Jensen has more than 30 years of experience in the pharmaceutical
Industry, where he held positions within development, manufacturing, supply chain,
QA, engineering and senior management.
Other ongoing assignments: Senior Vice President at Ascendis Pharma A/S, member
of the Board of Directors of Genau & More A/S and Allero Therapeutics B.V.
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7.0 EXECUTIVE MANAGEMENT
Jes Trygved
Chief Executive Officer, CEO
Education: MSc. International Marketing, Copenhagen Business School, Denmark
Jes Trygved has 20 years of experience within the biotech- and pharmaceutical
industry, incl. 15 years with H. Lundbeck A/S in various commercial roles where he
managed teams of up to +100 people.
In addition, Jes Trygved is also an MBA Advisor at Copenhagen Business School and
Senior Healthcare Adviser at Valtech A/S.
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8.0 MISCELLANEOUS
8.1 The share
The shares in Cessatech were listed at Spotlight Stock Market on 16. December 2020. The ticker
is CESSA and the ISIN code is DK0061411964. The total number of shares as of 31 December
2020 amounted to 3.680.000. Every share equals the same rights to the Company’s assets and
results.
8.2 Warrants
The warrants of series TO 1 in Cessatech were listed at Spotlight Stock Market on 16 December
2020. The ticker is CESSA TO1 and the ISIN code is DK0061416849. In total, there are 2,520,000
outstanding warrants. Each warrant entitles the holder the right to subscribe for two (2) new
shares in Cessatech at a subscription price of DKK 10.00 per share during the exercise period
period 25/11 - 16/12 2021. The warrants, if fully exercised, can provide the Company with a total
of mDKK 25,2 (before issuing costs)
The Board and the CEO have proposed that no dividend is paid out for the fiscal year, 6 April
2020 - 31 December 2020.
8.3 Financial calendar
Annual General Meeting: 26 March 2021
Q1 Report: 19. April 2021
Q2 and half-year Report: 19 August 2021
Q3 Report: 19 November 2021
Q4 and year-end report 2021: February 2022
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10. FINANCIAL HIGHLIGHTS AND RATIOS
11. FINANCIAL REVIEW
Operating income and operating results
The operating income and result for 2020 were as expected. Net revenue amounted to DKK 0
and the operating result was KDKK -901 in 2020. The operating result was as expected as the
Company is currently conducting development activities.
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Key figures
2020
Amounts in DKK ´000´
Income Statement
Operating Loss
-901
Total financial items
-8
Loss for the period
-849
Balance sheet
Total assets
13,808
Equity
13,611
Cash flows
Cash flows from:
- Operating activities
-732
- Investing activities
-76
- Financial activities
14,314
The Period´s cash flow
13,506
Dividend
0
Ratios
Solvency ratio
99%
Earnings per share (DKK)
-0.55
Balance sheet and solidity
The total equity at 31 December 2020 was KDKK 13.611. The solvency ratio as per 31 December
2020 was 99%
Cash flow
The total cash flow for the year 2020 was KDKK 13.506, caused primarily by the IPO in
December.
Capital resources
As a development stage start-up life-science company, and like other similar development stage
companies, the Company expects negative cash flow in 2021 from operating activities. Therefore,
the Company is dependent on being recapitalized or selling rights to its products against cash
until reaching the point where the size of the revenue exceeds the costs resulting in a positive
cash flow. The activities of the Company in the future will depend on proceeds obtained from
capital increases or sales of rights. Please refer to note 2 to the Financial Statements.
Subsequent events
To date, the Company has not yet been negatively impacted by the effects of COVID-19, it is
however likely that some activities will be delayed compared to original objectives, but this is
most likely a few months if it will have an impact.
Subsequent to the balance sheet date, no events that could significantly affect the financial
statements for 2020 have occurred.
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12. MANAGEMENT STATEMENT ON THE ANNUAL REPORT
Copenhagen, 11 March 2021
Executive Management
Jes Trygved
CEO
Board of Directors
Ulla Buhl Charlotte Videbæk Martin Olin
Chairman
Adam Steensberg Flemming Steen Jensen Peter Birk
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13. INDEPENDENT AUDITOR´S REPORT
Opinion
Basis for Opinion
Statement on Management’s Review
19
Management’s Responsibilities for the Financial Statements
Auditor’s Responsibilities for the Audit of the Financial Statements
20
Hellerup, 11 March 2021
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR No 33 77 12 31
Torben Jensen Lars Fermann
State Authorised Public Accountant State Authorised Public Accountant
mne18651 mne45879
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14. INCOME STATEMENT AND STATEMENT OF
COMPREHENSIVE INCOME
22
INCOME STATEMENT
6 April -
31 December
2020
Note
DKK ´000´
Other operating income
Other external expenses
-612
3
Staff expenses
-289
Operating loss before net financials
-901
Financial expenses
-8
Loss before tax
-909
4
Tax on loss for the year
Net loss for the year
-849
Other comprehensive income for the year, net of tax
Total comprehensive income
-849
15. BALANCE SHEET
23
ASSETS
31 December
2020
Note
DKK ´000´
Intangible Assets
Total non-current assets
Other receivables
4
Receivable corporate tax
Prepayments
Cash
Total current assets
EQUITY AND LIABILITIES
31 December
2020
Note
DKK ´000´
Share capital
Retained earnings
7
Total equity
Trade payables
Other payables
Current liabilities
Total liabilities
Total equity and liabilities
16. STATEMENT OF CHANGES IN EQUITY
24
STATEMENT OF CHANGE IN EQUITY
Share
Share
Retained
Total
Amounts in DKK `000`
capital
Premium
earnings
equity
Total comprehensive income 2020
-849
-849
Formation of Company at 6. April 2020
Share capital increase
Conversion to A/S
-40
Capital increase, IPO
Transfer
-15,456
Incentive Warrant Scheme
Expenses in connection with capital increase
-1,918
-1,918
Equity as at 31 December 2020
17. CASH FLOW STATEMENT
25
CASH FLOW STATEMENT
6 April -
31 December
2020
Note
DKK ´000´
Loses before tax
-909
Financial expenses, reversed
Other non-cash items
7
Change in working capital
Cash flows from operating activities before net financials
-724
Financial expenses paid
-8
Cash flows from operating activities
-732
Purchase of intangible assets
-76
Cash flow from investing activities
-76
Capital per ApS - A/S formation
Cash capital increase, IPO
Transaction cost, cash capital increase, IPO
-1,918
Cash flows from financing activities
Total cash flow for the year
Cash, beginning of year
Cash, end of the year
18. NOTES
1. Accounting policies
2. Capital resources and liquidity
3. Staff expenses
4. Tax
5. Equity
6. Distribution of profit/loss for the year
7. Change in working capital
8. Financial risks
9. Related parties
10. Operating lease commitments and other commitments
11. Events occuring after the balance sheet date
1. Accounting policies
Cessatech A/S is a limited liability company domiciled in Denmark. The Financial Statements have
been prepared in accordance with international Financial Reporting Standards as adopted by the
EU and further requirements in the Danish Financial Statements Act.
Danish kroner (DKK) is the Company's presentation currency and functional currency. The
financial statements are presented in Danish kroner (DKK ´000´)
First financial statements
The financial statements of Cessatech A/S for 2020 are the Company's first financial statement
and are prepared in accordance with International Financial Reporting Standards as adopted by
EU and further requirements in the Danish Financial Statements Act for annual reports of class B
companies with elements from class C.
Due to the fact that financial statements have not previously been prepared, this is the first IFRS
financial statement, and not a transition from previous GAAP to IFRS. Hence, the financial
statements do not include reconciliations from previous GAAP to IFRS.
The IFRS opening balance sheet as at 6 April 2020 have been prepared in accordance with IFRS,
including the provisions of IFRS 1 “First-time adoption of IFRS”. The accounting policies are
based on the accounting standards and interpretations in effect as at 31 December 2020. The
IFRS opening balance sheet as at 6 April 2020 has been prepared as if IFRS had always been
applied.
Recognition and measurement
Revenues are recognised in the income statement as earned. Furthermore, value adjustments of
financial assets and liabilities measured at fair value or amortised cost are recognised. Moreover,
all expenses incurred to achieve the earnings for the year are recognised in the income statement,
including depreciation, amortisation, impairment losses and provisions as well as reversals due to
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changed accounting estimates of amounts that have previously been recognised in the income
statement.
Assets are recognised in the balance sheet when it is probable that future economic benefits
attributable to the asset will flow to the Company, and the value of the asset can be measured
reliably.
Liabilities are recognised in the balance sheet when it is probable that future economic benefits
will flow out of the Company, and the value of the liability can be measured reliably.
Assets and liabilities are initially measured at cost. Subsequently, assets and liabilities are
measured as described for each item below.
Translation policies
Translation in foreign currencies are translated at the exchange rates at the dates of transaction.
Exchange differences arising due to differences between the transaction date rates and the rates
at the dates of payment are recognised in the financial income and expenses in the income
statement. Where foreign exchange transactions are considered hedging of future cash flows, the
value adjustments are recognised directly in equity.
Receivables, payables and other monetary items in foreign currencies that have not been settled
at the balance sheet date are translated at the exchange rate at the balance sheet date. Any
differences between the exchange rates at the balance sheet date and the rates at the time when
the receivable or the debt arose are recognised in the financial income and expenses in the
income statement.
Fixed assets acquired in foreign currencies are measured at the transaction date rates.
New Standards not yet effective
There are no IFRS or IFRIC interpretations that are not yet effective that are expected to have a
material impact on the company.
Foreign currency translation
On initial recognition, transactions in currencies other than the functional currency of the
Company are recognized at the exchange rate applicable at the transaction date. Receivables,
payables and other monetary items denominated in foreign currency not settled at the balance
sheet date are translated using the exchange rate applicable at the balance sheet date. Exchange
rate differences between the exchange rate applicable at the transaction date and the exchange
rate at the date of payment and the balance sheet date, respectively, are recognized in the
income statement as net financials.
27
Tax
Tax for the year, consisting of current tax and change in deferred tax, is recognized in the income
statement with the portion attributable to tax on the profit or loss for the year, and directly in
equity or in other comprehensive income with the portion attributable to amounts recognized
directly in equity or in other comprehensive income, respectively.
Current tax payables and receivables are recognized in the balance sheet as tax computed on the
basis of the taxable income for the year results in taxes to be paid or refunded.
Current tax for the year is computed based on the tax rules and tax rates applicable at the
balance sheet date.
Deferred tax is recognized using the balance sheet liability method on the basis of alle temporary
differences between the carrying amounts and tax bases of assets and liabilities, except for
deferred tax on temporary differences due to either initial recognition of goodwill or initial
recognition of transaction that is not a business combination, and where the temporary difference
ascertained at the time of initial recognition does not affect either the tax results or the taxable
income. The deferred tax is calculated based on the planned use of the individual asset or
settlement of the individual liability.
Deferred tax is measured by applying the tax rules and tax rates expected to be applicable when
the deferred tax is expected to crystallize as current tax. Any change in deferred tax as a result of
changes in tax rules or rates is recognized in the income statement, unless the deferred tax is
attributable to transactions that have previously been recognized directly in equity or in other
comprehensive income. In the latter case, the change is recognized directly in equity or in other
comprehensive income, respectively.
Deferred tax assets, including the tax value of tax losses allowed for carryforward, are recognized
in the balance sheet at the expected realizable value, either through offsetting against deferred
tax liabilities or as a net tax asset for offsetting against future positive taxable income. An
assessment is made on each balance sheet date of whether it is probable that sufficient taxable
income will be generated in future to enable utilization of the deferred tax asset.
STATEMENT OF COMPREHENSIVE INCOME
Other external expenses
Other external expenses comprise expenses relating to administrative expenses.
Staff expenses
Staff expenses comprise wages and salaries as well as social security expenses, pensions for
group staff, other staff-related expenses and share-based payment compensation.
28
Employee benefits
Share-based warrants compensation benefits are provided to the Board of Directors,
Management and other key employees via Cessatech’s Incentive Warrant Scheme which was
adopted in December 2020.
Incentive Warrant Scheme
The fair value of warrants granted under the Cessatech’s Incentive Warrant Scheme is recognised
as an employee benefits expense, with a corresponding increase in equity. The total amount to be
expensed is determined by reference to the fair value of the warrants granted: - including any
market performance conditions (e.g. the entity’s share price) - excluding the impact of any service
and non-market performance vesting conditions (eg profitability, sales growth targets and
remaining an employee of the entity over a specified time period), and - including the impact of
any non-vesting conditions (eg the requirement for employees to save or hold shares for a
specific period of time). The total expense is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be satisfied. At the end of each
period, the entity revises its estimates of the number of options that are expected to vest based
on the non-market vesting and service conditions. It recognises the impact of the revision to
original estimates, if any, in profit or loss, with a corresponding adjustment to equity
Net financials
Net financials comprise interest income and expenses, realized and unrealised gains and losses
on transactions in foreign currency and realized and unrealized gains and losses on other financial
assets.
Amortization of capital losses and borrowings costs relating to financial liabilities is recognized on
an ongoing basis as part of the interest expenses.
BALANCE SHEET
Receivables
Receivables comprise trade receivables and other receivables. Receivables are included in the
category loans and receivables, which are financial assets with fixed or determinable payments
that are not listed in an active market and are not derivative financial instruments.
On initial recognition, receivables are measured at the amount of consideration that is
unconditional unless they contain significant financing components, when they are recognized at
fair value and subsequently at amortized cost, which usually corresponds to the nominal value,
less write-downs for bad debts.
The Company applies IFRS 9 simplified approach to measuring expected credit losses which
uses a lifetime expected loss allowance for all receivables.
Cash
Cash includes deposits in bank accounts
29
Equity
Direct and incremental costs associated with capital increases are accounted for as a reduction in
the proceeds from the capital increase and recognized in shareholders´ equity.
Liabilities
Other financial liabilities comprise trade payables, other payables to public authorities and other
liabilities. On initial recognition, other financial liabilities are measured at fair value less any
transaction costs. Subsequently, the liabilities are measured at amortized cost according to the
effective interest method, so that the difference between the proceeds and the nominal value is
recognized in the income statement as a financial expense over the period of the loan.
CASH FLOW STATEMENT
The cash flow statement shows cash flows from operating, investing and financing activities as
well as cash at the beginning and end of the year. Cash flows from operating activities are
presented in accordance with the indirect method and are determined as the operating profit or
loss adjusted for non-cash operating items, changes in working capital and paid financial income,
financial expenses and income tax.
Cash flows from investing activities comprise payments in connection with the acquisition and
sale of companies and financial assets as well as the purchase, development, improvement and
sale of property, plant and equipment and intangible assets.
Cash flows from financial activities comprise changes in the Company's share capital and
associated costs as well as the raising and repayment of loans, the repayment of interestbearing
debt, the purchase and sale of treasury shares and the payment of dividends.
Cash flows in currencies other than the functional currency are recognized in the cash flow
statement using average exchange rates, unless they deviate significantly from the actual
exchange rates at the transaction dates.
Cash and cash equivalents comprise cash less overdraft facilities that are an integrated part of
the cash management.
FINANCIAL HIGHLIGHTS
Explanation of financial ratios:
Equity at year end x 100 a
Solvency ratio : Total assets at year end
Net loss for the year a
Earnings per share : Average numbers of outstanding shares
30
SIGNIFICANT ACCOUNTING ESTIMATES AND ASSESSMENTS
In connection with the preparation of the financial statements, the management performs
accounting estimates and assessments that affect the recognized value of assets, liabilities,
income, expenses and cash flows as well as their presentation.
Accounting estimates reflect the management´s best estimates in terms of amounts where the
measurement is subject to uncertainty, typically because the estimate is based on assumptions
concerning future events. The accounting estimates are based on historical experience and other
assumptions deemed relevant, but the actual results may, naturally, deviate from the estimates
made. The estimates are regularly reassessed and the effect of changes is recognized in the
consolidated financial statements.
Accounting judgements reflect decisions made by the management as to how the accounting
policies are applied in specific situations where the accounting treatment depends on qualitative
assessments. Examples could be when the risk passes or how a certain transaction or item is
best presented to provide reliable and relevant information.
Development projects (judgement)
Cost incurred in relation to individual development projects are capitalized only where the future
economic benefit of the project is probable and the following main conditions are met: (i) the
development costs can be measured reliably, (ii) the technical feasibility of the product has been
ascertained and (iii) Management has the intention and ability to complete the intangible asset
and use or sell it.
Currently no other significant accounting estimates and judgements have been applied in the
preparation of the financial statements for 2020.
2. Capital resources and liquidity
As a development stage start-up life-science company, and like other development stage
companies, the Company has had a negative cash flow in 2020, why the Company is dependent
on being recapitalized or selling rights to its products against cash until reaching the point where
a positive cash flow can be realised. The activities of the company in the future will depend on
proceeds obtained from capital increases.
The Board of Directors and Executive Management are constantly monitoring the Company's
financial position to be prepared to take adequate measures to secure the company. In this
connection the Covid-19 pandemic is also taken into consideration.
The Company became listed on Spotlight Stock market Copenhagen in December 2020 and
raised DKK 15,8 million. Furthermore, warrants issued in connection with the IPO are expected to
be exercised at a subscription price of DKK 10 per share. The warrants can provide the Company
with total proceeds of DKK 25.2 million (before issuing costs), if all warrants are exercised.
31
Based on this the Board of Directors and Executive Management have concluded that the
Company has the necessary capital resources to finance the planned activities for 2021. In case
warrants will not be subscribed the activities will be adjusted.
The Board of Directors and Executive Management have based on the above concluded that the
company is a going concern for 2021.
32
3. Staff expenses
The average number of employees during 2020 is 2
In December 2020, the Board of Directors and the CEO received warrants as part of Ceesatech’s
Incentive Warrant Scheme.
The total fair value of warrants granted will have a value of TDKK 2,522. The assessed fair value at
expected grant date of options granted is DKK 7.53. The fair value at grant date is independently
determined using the Black-Scholes model which includes exercise price, the term of the warrant,
the impact of dilution (where material), the share price at grant date and expected price volatility
of the underlying share, the expected dividend yield, the risk-free interest rate for the term of the
warrant, and the correlations and volatilities of the peer group companies.
The model inputs for the granted warrants was effective as of 14 December 2020 and included:
● Vested warrants are expected to be exercisable for a period of one years after vesting
● Exercise price: DKK 10.00
● Grant date: 14 December 2020
● Expiry date: 31 December 2026
● Expected price volatility of the company’s shares: 100%
● Expected dividend yield: 0%
Risk-free interest rate: -0.46% The expected price volatility is based on the historic volatility
(based on the remaining life of the options), adjusted for any expected changes to future volatility
due to publicly available information.
33
6 April -
31 December
2020
Notes
DKK ´000´
Key management comprises Executive Management and the Board of
Directors
Compensation for key management personnel:
Wages and salaries
143
Incentive Warrant Scheme
146
Other Social security costs etc.
0
Total
289
4. Tax
The Company has a loss for the year and tax on the loss for the year is KDKK 60. The
unrecognized deferred tax assets from tax losses carried forward of KDKK 118 can be carried
forward indefinitely. Deferred tax has been provided at 22% corresponding to the current tax rate.
34
6 April -
31 December
2020
DKK ´000´
Tax on profit/loss for the year:
Current tax (tax under the tax credit scheme)
60
Total
60
Recognition of effective tax:
Tax computed on loss
200
Non-deductible expenses
-140
Effective tax rate (-7%)
60
Reconciliation of effective tax:
Tax computed on loss
200
Other permanent differences
18
Non-deductible expenses
-40
Non-recognized deferred tax asset
-118
Effective tax rate (-7%)
60
Deferred tax:
Tax loss carried forward
118
Write down to assessed value
-118
Total
0
Under the Danish tax credit scheme the 22% tax value of negative taxable income related to
costs from development activities up to DKK 25 million can be received in cash. Tax value of cost
related to development activities amounts to KDKK 60, and is anticipated to be paid out from
SKAT in Q4, 2021 to the Company.
35
5. Equity
Share capital
The share capital consists of 3.680.000 shares of DKK 0,2 each. The shares are fully paid in. The
shares are not divided into classes, and no shares enjoy special rights.
Capital management
The Company aims to ensure structural and financial flexibility as well as competitive strength.
For that purpose, the Company regularly assesses what the appropriate capital structure for the
Company is.
Incentive Warrant Scheme
The Board of Directors is authorized during the period until 1 January 2025 on one or more
occasions to issue warrants up to ten (10) percent of the Company’s share capital from time to
time, however in no event more than 368,000 warrants each conferring the right to subscribe one
share of nominal DKK 0.20 against cash contribution and to effect the corresponding increase(s)
of the share capital with up to nominal DKK 73,600 shares. Warrants have been issued to board
members and CEO in December 2020. Each warrant confers the right to subscribe one share of
nominal DKK 0.20 against payment of DKK 10.00 with the addition of CIBOR 3M + 4 % points
p.a. as from 1 January 2021. Interest shall be compounded as per the expiry of each calendar
year, the first time on 31 December 2021. The granting of warrants shall not be subject to any
payment by the warrant holders. Warrants can be exercised during the period 1 January 2024 –
31 December 2026 or in connection with an exit. Warrants vested can become eligible for
exercise with 1/36 per month as from the date of grant.
Warrants
In connection with the IPO, units were issued. One unit contained 2 shares and 3 warrants. The
warrants were also listed at Spotlight Stock Market on 16 December 2020. In total, there are
2,520,000 outstanding warrants equivalent to 68 percent of the total shares in the Company after
the listing on Spotlight Stock Market. Each warrant entitles the holder the right to subscribe for
one (1) new share in Cessatech at a subscription price of DKK 10 per share during the exercise
period 25 November - 16 December 2021. The warrants can provide the Company with a total of
DKK 25,2 million (before issuing costs) if all warrants are exercised.
36
2020
Formation of company, share issued, 6 April 2020
200,000
Share capital increase, conversion to A/S
1,800,000
Shares issued, IPO, 16 December 2020
1,680,000
Shares issued, 31 December
3,680,000
Alls shares have a nominal value of DKK 0,2
6. Distribution of profit/loss for the year
7. Change in working capital
37
6 April -
31 December
2020
DKK ´000´
Proposed dividends for the year
0
Retained earnings
-849
Total
-849
6 April -
31 December
2020
DKK ´000´
Other receivables and prepayments
-166
Change in trade payables
108
Change in other payables
89
Total
31
8. Financial risks and financial instruments
Risk management policy
The Company's financial risks are managed by the Executive management. The Company has not
prepared policies for the identification and handling of risks. The management of the Company's
risks is included in the Executive management´s day-to-day monitoring of the Company.
Interest rate risk
The Company is not subject to material interest rate risks.
Currency risk
The Company is not subject to material currency risks.
Credit risk
The Company is not subject to material credit risks
Liquidity risk
The Company's liquidity risk covers the risk that the Company is not able to meet its liabilities as
they fall due.
As a development stage start-up life-science company, and like other similar development stage
companies, the Company has a negative cash flow in 2020, why the company is dependent on
being recapitalized or selling rights to its products against cash until reaching the point where
revenue exceeds costs resulting in a positive cash flow.
The Board of Directors and Executive Management are constantly monitoring the Company's
financial position to be prepared to take adequate measures to secure the company. Several
options are possible such as partnering deals, service agreements, reduce investment in fixed
assets and increase capital in the Company.
The Board of Directors and Management have confidence in the company as a going concern.
The maturities of financial liabilities are presented in the table below. All amounts are contractual
cash flows, i.e. inclusive of interest.
38
There were no assets or liabilities measured at fair value as at 31 December 2020.
39
Within
Over
Amounts in DKK ´000´
1 year
1-2
year(s)
2-5 years
5 years
Total
As at 31 December 2020
Trade payables
108
Other payables
89
Total
197
9. Related parties
Transactions with key management personnel
For remuneration to key management personnel in 2020 please refer to note 3.
The following table provides the total amount of transactions that have been entered into with
related parties for the relevant financial year, including shares and warrants
10. Operating lease commitments and other commitments
The company has not entered any lease commitments
11. Events occuring after the balance sheet date
No events after the balance sheet has had a significant impact on the balance sheet.
40
Amounts in DKK ´000´
shares
warrants
Other related parties:
Contribution and increase
- Jes Trygved (CEO)
350
108
Contribution and increase
- Buhl Krone Holding Aps (Ulla Buhl)
350
11
Contribution and increase
- Martin Olin
250
5
Contribution and increase
- C-ApS (Charlotte Videbæk)
250
5
Contribution and increase
- Adam Steensberg
50
5
Contribution and increase
- Peter Birk
50
5
Contribution and increase
- Flemming Steen Jensen
0
5
Total
1,300
146