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2019-02-14 08:00 CET
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Karolinska Development: Q4 and 2018 Year-End Report - January-December

STOCKHOLM - 14 February 2019. Karolinska Development AB (Nasdaq Stockholm: KDEV) today publishes its Q4 and 2018 Year-End Report with a positive quarterly and full-year result. The full report is available on the Company's website.

"The fourth quarter provided the same level of news intensity as we have previously seen throughout most of the year, with important clinical development progress made and the announcement of new agreements that strengthen financing in the portfolio companies and offer clear commercialisation opportunities. The results announced by Aprea Therapeutics for its candidate drug, APR-246 continue to be promising and constitute a clinical success and the company has also secured financing for its further development. The results of the phase II study of Dilafor's candidate drug, tafoxiparin, by contrast, were not what we had expected. The otherwise positive events during the quarter did, however, outweigh the negative effect on the result of the Dilafor study, and we are, therefore, once again able to post a positive result for the quarter and, for the second year in succession, a positive full-year result. We expect 2019 to be as news-intensive as 2018, with some of our portfolio companies expected to present the results of a further three phase II studies over the next six months. The efforts of strengthening the financial situation of Karolinska Development, including identifying a solution for the convertible loan that matures in December, is of course also prioritized and will be intensified further in 2019. We will present a solution to our owners as soon as these efforts have given result", says Viktor Drvota, CEO, Karolinska Development 

Significant events during the fourth quarter

  • OssDsign announced that its latest product, Cranioplug, had received 510 (k) clearance by the U.S Food and Drug Administration (FDA), allowing marketing and sales of the product in the USA. The implant is the first product of its kind in the US market (October 2018).
  • Dilafor announced that the company's phase 2b study of its candidate drug, tafoxiparin, did not achieve its primary goals. The results of the study affected the value of Karolinska Development's holdings in Dilafor and negatively impacted the result for the fourth quarter of 2018 by approximately SEK 36 million (October 2018).  
  • Pharmanest entered into a licensing agreement with Nestlé Skin Health, giving Pharmanest the worldwide commercialisation and development rights for three products: Deflux®, Solesta® and BarrigelTM (October 2018).
  • Modus Therapeutics announced that the FDA has approved the company's Investigational New Drug (IND) application to initiate a phase I clinical trial of sevuparin for the treatment of sickle cell disease (November 2018).
  • An investment consortium headed by the American firm, Redmile Group, invested SEK 512 million in Aprea Therapeutics. The investment consortium also includes Rock Springs Capital, who, like Redmile Group, enters as a new owner. The new capital will be used to finance the further clinical development of APR-246. The investment entails an increase in the book value of Karolinska Development's holding in Aprea, resulting in a positive effect on earnings of approximately SEK 60 million for the fourth quarter of 2018 (November 2018).
  • Aprea Therapeutics presented additional positive results from its ongoing phase Ib/II study of APR-246 for the treatment of TP53 mutated Myelodysplastic Syndrome. Patients who were treated with APR-246 in combination with standard chemotherapy (azacitidine) achieved an Overall Response Rate (ORR) of 95% and a Complete Remission Rate (CRR) of 70%. The results strengthen APR-246's position as one of the world's most advanced TP53-targeted candidate drugs. The results were presented at the 2018 American Society of Hematology Annual Meeting in San Diego, USA (December 2018). 

Significant post-period events

  • Modus Therapeutics announced that patient enrolment for the phase II study of sevuparin in patients with sickle cell disease (SCD) has been completed. The results of the study are expected in mid-2019 (January 2019).  
  • Umecrine Cognition announced the analysed results of its phase IIa study of the GR3027 candidate drug in patients with idiopathic hypersomnia.  The primary study objectives were met in regard to safety and pharmacokinetics. The study also showed preliminary evidence of clinical efficacy in a subset of patients. Umecrine Cognition will analyze the data further before a decision to potentially move forward with the development of GR3027 in idiopathic hypersomnia or other sleep disorders. In parallel, Umecrine Cognition will continue the clinical development in hepatic encephalopathy (January 2019).
  • OssDsign announced the closing of a private placement of SEK 64 million. Swedish private investors and the French investment management company Alto Invest have taken part in the private placement. OssDsign will now begin the process towards a listing on Nasdaq First North in 2019 (February 2019).

Financial update

Karolinska Development posted a positive full-year result for the second year in succession. The total fair value of the portfolio increased during the year by 33% to SEK 952 million.

Fourth quarter

  • The net profit/loss for the fourth quarter was SEK 14.9 million (SEK 32.0 million in the fourth quarter of 2017). Earnings per share totalled SEK 0.2 (SEK 0.5 in the fourth quarter of 2017). 
  • The result of the Change in fair value of shares in portfolio companies amounted to SEK 36.4 million.
  • The total fair value of the portfolio was SEK 952.3 million at the end of December 2018, corresponding to an increase of SEK 103.6 million from SEK 848.7 million at the end of the previous quarter. The net portfolio fair value at that time was SEK 606.9 million, corresponding to an increase of SEK 79.8 million from SEK 539.1 million at the end of the previous quarter.
  • Net sales totalled SEK 0.9 million during the fourth quarter of 2018 (SEK 0.8 million during the fourth quarter of 2017).
  • Karolinska Development invested a total of SEK 43.4 million in portfolio companies during the fourth quarter. Fourth quarter investments in portfolio companies by Karolinska Development and other specialised life sciences investors totalled SEK 553.4 million.
  • Cash and cash equivalents decreased by SEK 2.2 million during the fourth quarter, totalling SEK 85.8 million on 31 December 2018.

Full year

  • The full-year net profit was SEK 30.5 million (SEK 179.6 million in 2017). Earnings per share totalled SEK 0.48 (SEK 2.93 in 2017). 
  • The full-year result for the change in the fair value of the portfolio amounted to SEK 58.5 million (SEK 252.1 million during 2017).
  • The total fair value of the portfolio was SEK 952.3 million at the end of December 2018, an increase from SEK 714.0 million at the corresponding date in 2017. The net portfolio fair value was SEK 618.9 million, an increase from SEK 447.8 million at the corresponding date in 2017.
  • Revenue totalled SEK 3.1 million for the full year of 2018 (SEK 2.5 million in 2017).
  • Karolinska Development invested a total of SEK 124.6 million in its portfolio companies during the full year. Full-year investments in the portfolio companies by Karolinska Development and other specialised life sciences investors totalled SEK 790.6 million.
  • Cash and cash equivalents decreased by SEK 83.8 million during the full year, totalling SEK 85.8 million on 31 December 2018.
  • The Parent Company's equity on 31 December 2018 was SEK 296.0 million.
  • The Board will not propose any dividend for the financial year 2018.

The Q4 and 2018 Year-End Report for Karolinska Development AB for the period January-December 2018 is available as a PDF at www.karolinskadevelopment.com.

For further information, please contact:

Viktor Drvota, CEO, Karolinska Development AB
Phone: +46 73 982 52 02, e-mail: viktor.drvota@karolinskadevelopment.com

Fredrik Järrsten, CFO, Karolinska Development AB       
Phone: +46 70 496 46 28, e-mail: fredrik.jarrsten@karolinskadevelopment.com

TO THE EDITORS

About Karolinska Development AB

Karolinska Development AB (Nasdaq Stockholm: KDEV) is a Nordic life sciences investment company. The company focuses on identifying breakthrough medical innovations in the Nordic region that are developed by entrepreneurs and leadership teams. The Company invests in the creation and growth of companies that advance these assets into commercial products that are designed to make a difference to patients' lives while providing an attractive return on investment to shareholders.

Karolinska Development has access to world-class medical innovations at the Karolinska Institutet and other leading universities and research institutes in the Nordic region. The Company aims to build companies around scientists who are leaders in their fields, supported by experienced management teams and advisers, and co-funded by specialist international investors, to provide the greatest chance of success.

Karolinska Development has established a portfolio of ten companies targeting opportunities in innovative treatment for life-threatening or serious debilitating diseases.

The Company is led by an entrepreneurial team of investment professionals with a proven track record as company builders and with access to a strong global network.

For more information, please visit www.karolinskadevelopment.com

This information is information that Karolinska Development AB (publ) (Nasdaq Stockholm: KDEV) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of Viktor Drvota, at 08:00 am CET on 14 February 2019.

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