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Forward Pharma A/S TABLE OF CONTENTS
Forward Pharma A/S Index to Consolidated Financial Statements

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Date of event requiring this shell company report……………report...............

Commission file number 001-36686

Securities registered or to be registered pursuant to Section 12(b) of the Act.

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Securities registered or to be registered pursuant to Section 12(g) of the Act.

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes    ý No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes    ý No

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

ý Yes    o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

oý Yes    o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, or an emerging growth company. See definition of "accelerated filer," "large accelerated filer," and large accelerated filer""emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o

†The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17    o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

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(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

o Yes    o No

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Forward Pharma A/S

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        Unless otherwise indicated or the context otherwise requires, all references in this Annual Report on Form 20-F (the "Annual Report") to "Forward Pharma A/S."S" or the "Company,"Parent" refer to Forward Pharma A/S and all references in this report to the "Group" refer to Forward Pharma A/S, together with its wholly owned subsidiaries. All references in this report to "Forward Pharma," the "Parent,"Company," "we," "our," "ours," "us" or similar terms refer to Forward Pharma A/S or Forward Pharma A/S together with its subsidiaries.wholly owned subsidiaries, as required by the context.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This Annual Report contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this Annual Report can be identified by the use of forward-looking words such as "anticipate," "believe," "could," "expect," "may," "should," "plan," "intend," "may,"estimate," "estimate""will," "would," and "potential," among others.

        Forward-looking statements appear in a number of places in this Annual Report and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including,factors. These risks and uncertainties include, but are not limited to, thosefactors relating to:

•

whether and when we will receive any additional payments under our Settlement and License Agreement with two subsidiaries of Biogen, Inc.;



•

the timing, outcome and impact of administrative, court and other proceedings, including any appeals, related to the patents and intellectual property associated with the Company, including our interference proceeding with Biogen, Inc. and the European Patent Office opposition proceeding with Biogen, Inc. relating to EP2801355;



•

our ability to successfully protect, defend and enforce our intellectual property;



•

our ability, in the event that the Settlement and License Agreement in the U.S. remains co-exclusive, to successfully assign our U.S. co-exclusive license to a third party and receive future payments;



•

the strength of the future market opportunity for products containing dimethyl fumarate for the treatment of multiple sclerosis;



•

our estimates regarding expenses, future revenues, capital requirements and the need for additional financing;



•

our ability to hire and retain qualified personnel;



•

our ability to continue as a going concern; and



•

other risk factors identified under the section "Item 3. Key Information—D. Risk factors" in this Annual Report.

"Risk Factors."

        Forward-looking statements speak only as of the date they are made, and except as required by law, we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

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PART I

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

        Not applicable.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

        Not applicable.

ITEM 3.    KEY INFORMATION

A.  Selected Financial Information

        The selected financial information set forth below for the years ended December 31, 2014, 2013,2017, 2016 and 20122015, and as of December 31, 20142017 and 2013 are2016, is derived from our audited consolidated financial statements included elsewhere in this Annual Report. The selected financial information set forth below for the years ended December 31, 2014 and 2013, and as of December 31, 20122015, 2014 and 2013, is derived from our audited consolidated financial statements not included in this Annual Report. We prepare our audited consolidated financial statements in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. This financial information should be read in conjunction with our "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited consolidated financial statements, including the notes thereto, included in this Annual Report.

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Consolidated statementStatement of profitProfit or loss dataLoss Data

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Consolidated statementStatement of financial position dataFinancial Position Data

EXCHANGE RATE INFORMATION
Exchange Rate Information

        Our business is primarily conducted in Denmark and Germany. The functional currency of Forward Pharma A/S is the Danish Kroner, or DKK, the functional currency of Forward Pharma FA ApS is the DKK, the functional currency of Forward Pharma Operations ApS is the DKK, the functional currency of FWP IP ApS is the DKK, the functional currency of Forward Pharma GmbH is the Euro and the functional currency of Forward Pharma USA, LLC is the United States, or U.S. dollar., Dollar. Forward Pharma A/S reports its consolidated financial statements in U.S. dollars.Dollars.

        The following table presents information on the exchange rates between the Danish Kroner and the U.S. dollar for the periods indicated, as published by the Danish Central Bank.

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        The following table presents information on the exchange rates between the EuroDKK and the U.S. dollarDollar for the periods indicated, as published by WM/Reuters.the Danish Central Bank. As of April 25, 2018, the exchange rate between the DKK and the U.S. Dollar was 6.113, as published by the Danish Central Bank.

        The following table presents information on the exchange rates between the Euro and the U.S. Dollar for the periods indicated, as published by the European Central Bank. As of April 25, 2018, the exchange rate between the Euro and the U.S. Dollar was 0.821, as published by the European Central Bank.

B.  Capitalization

Not applicableapplicable.

C.  Reason for the Offering

Not applicableapplicable.

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D.  Risk Factors

        Our business faces significant risks and uncertainties. You should carefully consider all of the information set forth in this Annual Report on Form 20-F and other documents we file with or furnish to the SEC, including the following risk factors, before deciding to invest or making any decision with respect to your investment in any of our securities. Our business, financial condition or results of operations could be materially and adversely affected if any of these risks occurs. This Annual Report also contains forward-looking statements that involve risks and uncertainties. See "Forward-Looking"Cautionary Note Regarding Forward-Looking Statements." Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors.

Risks Related to Our Business and Industry

We areThere can be no assurance that the interference proceeding between the U.S. Patent Application No. 11/576,871 and Biogen's U.S. Patent No. 8,399,514 will ultimately result in judgment against Biogen and the cancellation of its patent claims. In addition, there can be no assurance that any claims of the U.S. Patent Application No. 11/576,871 will ever issue in a clinical-stage companypatent or be royalty bearing under the Settlement and License Agreement with no approved products and no historical product revenues, which makes it difficult to assess our future prospects and financial results.Biogen.

        We        On April 13, 2015, an administrative patent judge at the U.S. Patent Trial and Appeal Board, or PTAB, declared Patent Interference No. 106,023, or the Interference Proceeding, between the U.S. Patent Application No. 11/567,871 associated with the Company, or the '871 application, and U.S. Patent No. 8,399,514, or the '514 patent, held by a subsidiary of Biogen, Inc. (all subsidiaries of Biogen, Inc., together with Biogen, Inc., hereafter collectively referred to as "Biogen"), both of which contain claims that cover a method of treating multiple sclerosis, or MS, using about a 480 mg daily dose of dimethyl fumarate, or DMF. If the Company is successful in the Interference Proceeding after any appeals (includingen banc review) to the U.S. Court of Appeals for the Federal Circuit, or Federal Circuit, it will be eligible to receive royalties starting as early as 2021 based on Biogen's net sales as defined in our Settlement and License Agreement, dated as of January 17, 2017, or License Agreement, with two subsidiaries of Biogen that became effective on February 1, 2017, provided that other conditions of the License Agreement are satisfied. However, as explained below, the outcome of the Interference Proceeding is uncertain, and even if we prevail in the Interference Proceeding after any appeals to the Federal Circuit, there is no assurance that we will receive further payments from Biogen under the License Agreement.

        An interference is an administrative proceeding at the United States Patent and Trademark Office, or USPTO, to determine which party is the first to invent an invention claimed by two parties. The party with the earliest effective filing date to the common invention is designated "senior party" and is entitled to the presumption that it is the first inventor. Biogen, as the junior party in the Interference Proceeding, has the burden of proof to show a biopharmaceutical company withdate of invention that predates our invention. During an interference, the parties can dispute the patentability of the other party's claims, challenge the senior party designation and present proof of prior invention. Interference proceedings typically involve both a limited operating history. Biopharmaceutical product development is"motions" phase and a highly speculative undertaking and involves a substantial degree"priority" phase. However, in this Interference Proceeding those two phases were combined.

        At the outset of uncertainty. Our operations tothe Interference Proceeding, the administrative patent judge accorded the Company the benefit of the filing date have been limited to developing our formulation technology and undertaking pre-clinical studies and clinical trials of our proposed drug candidate FP187. As an early stage company, we have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularlyDanish Application No. PA 2004 01546, filed on October 8, 2004. Biogen filed a motion in the biopharmaceutical area. Consequently,Interference Proceeding to vacate benefit to this priority date. Although we believe we are entitled to the ability to accurately assessbenefit of this priority date, and have opposed Biogen's motion, there is no assurance that the USPTO will agree with us. Biogen also filed a motion in the Interference Proceeding alleging that our future operating results or business prospects is more limited than ifclaims are unpatentable under 35 U.S.C. Section 112 for lack of written description and lack of enablement. The PTAB granted the motion for lack of written description on March 31, 2017. While we had a longer operating history or approved products on the market. Accordingly, the likelihood ofdo not believe Biogen has proven that our success must be evaluated in light of many potential challenges and variables associated with an early-stage drug development company, many of which areclaims fail

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outsideto satisfy Section 112 and have opposed Biogen's motion, there can be no assurance that we will be successful in appealing this decision. In addition, Biogen filed a motion for priority asserting February 19, 2004 as its date of conception of the invention claimed in its '514 patent, which is earlier than the October 8, 2004 priority date to which our control,'871 application has been accorded benefit. As the junior party in the Interference Proceeding, Biogen has the burden of proving an earlier date of conception and diligent reduction to practice of the occurrenceinvention from a date just before our earliest effective filing date through the date of Biogen's earliest alleged reduction to practice, which is currently Biogen's alleged first constructive reduction to practice on February 8, 2007, the date of Biogen's U.S. provisional application. Thus, Biogen must show diligence for a 28-month period from October 2004 through February 2007. While we do not believe Biogen has proven entitlement to priority and have opposed Biogen's priority motion, there can be no assurance that we will be successful in doing so.

        We filed four motions in the Interference Proceeding. Our first motion alleges that Biogen's '514 patent is unpatentable under 35 U.S.C. Sections 102 and/or 103 in view of the publication of our international application PCT/DK2005/000648. Our second motion alleges that Biogen's '514 patent claims are unpatentable under 35 U.S.C. Section 112 for lack of written description. Our third motion seeks benefit of the filing dates of our three additional Danish applications and our U.S. provisional application. Our fourth motion attacks Biogen's benefit claim to its February 8, 2007 U.S. provisional application. Biogen has opposed each of these motions and, while we believe our motions should be granted, there is no assurance we will be successful.

        The oral argument for the Interference Proceeding took place on November 30, 2016. On March 31, 2017, the PTAB issued a decision in the Interference Proceeding in favor of Biogen. The PTAB ruled that the claims of the '871 application are not patentable due to a lack of adequate written description. The Company has appealed the decision to the Federal Circuit. The oral argument for the appeal is scheduled for June 4, 2018. We expect a decision in the appeal in the second half of 2018. If the Company prevails in this appeal, we expect the Federal Circuit to remand the case to the PTAB, in order for the PTAB to resolve both parties' other outstanding motions, including Biogen's priority motion.

        If we ultimately prevail in the Interference Proceeding after all appeals to the Federal Circuit, we expect our '871 application to be in condition for allowance and Biogen's '514 patent to be cancelled. However, even if we prevail in the Interference Proceeding after any appeals to the Federal Circuit, there can be no assurance that we will obtain allowance of the '871 application or that, if we do obtain allowance of that application, that its claims will be royalty bearing under the License Agreement. Unless as a result of the Interference Proceeding after any appeals to the Federal Circuit we obtain issuance of a patent with a claim that covers treatment for MS by orally administering 480 mg per day of DMF, and all other conditions of the License Agreement are satisfied, we would not be entitled to any future royalties under the License Agreement with respect to sales in the U.S.

        If Biogen is successful after any appeals to the Federal Circuit in proving that our claims are unpatentable, we would not prevail in the Interference Proceeding. Even if we can defeat Biogen's argument that our claims are unpatentable, if Biogen is successful after any such appeals in proving an earlier date of conception and diligent reduction to practice, we would not prevail in the Interference Proceeding unless we can successfully prove that Biogen's claims are unpatentable. If we fail as a result of the Interference Proceeding after any appeals to the Federal Circuit to obtain issuance of a patent with a claim that covers treatment for MS by orally administering 480 mg per day of DMF, we would not be entitled to any future royalties from Biogen under the License Agreement with respect to sales in the U.S. Moreover, if Biogen prevails in the Interference Proceeding, after any appeals to the Federal Circuit, we may be prevented under our co-exclusive license from commercializing our lead product candidate, FP187^®, for MS in the U.S. at a 480 mg per day dose. Were this to occur, we would have the chance to review opportunities to develop other DMF-containing formulations and products,

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including generics, consistent with the terms of the License Agreement. If we are unable to commercialize FP187^® or any other product for sale in the U.S., we would be unable to generate any revenue from such a product.

Even if we prevail, after any appeals, in the Interference Proceeding, there can be no assurance that the license to Biogen in the U.S. will become exclusive.

        Under the License Agreement, Biogen was granted a perpetual, irrevocable, co-exclusive royalty-bearing license to the Company's intellectual property in the U.S. No later than 215 days after a final decision in the Interference Proceeding, after any appeals to the Federal Circuit, and if all other conditions of the License Agreement are met within the time period set forth in the License Agreement, which include the absence of legal restraints and termination or expiration of any setbacksrequired waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act, Biogen will obtain a perpetual, irrevocable, exclusive royalty-bearing license to the Company's U.S. intellectual property. Satisfying any conditions sought by regulators in connection with any HSR Act review could adversely affect our businessalter the terms of the License Agreement, which could have an adverse effect on the Company. If any regulatory conditions are not satisfied within the time period set forth in the License Agreement, and prospects.Biogen does not elect to obtain the exclusive license, then the U.S. license will remain an irrevocable co-exclusive license, under which the Company will maintain the ability to develop and commercialize medicines based on its co-exclusive license or to assign, on one occasion only, its co-exclusive license to a single third party, at the Company's discretion.

We depend entirely onThere can be no assurance that we will prevail in the successopposition proceedings involving our EP2801355 patent after any appeals or, if we do prevail, that the resulting claims of our only clinical candidate, FP187. We cannot give any assurance that this clinical candidateEP2801355 patent will successfully complete clinical trials or receive regulatory approval, which is necessary before it can be commercialized.royalty bearing under the License Agreement.

        We are involved in an opposition proceeding regarding EP2801355, or EP'355 patent, with several opponents including Biogen, or the Opposition Proceeding. On January 29, 2018, the European Patent Office, or EPO, revoked the EP'355 patent following the oral hearing in the Opposition Proceeding. On March 22, 2018, the Opposition Division issued its written decision with detailed reasons for the decision, and following review of these, the Company plans to appeal the Opposition Division's decision to the Technical Board of Appeal, with an expected duration of the appeal process of an additional two to three years. The Company has until June 2, 2018 to submit its notice of appeal, and the deadline for submitting the detailed grounds of appeal is August 2, 2018. There can be no assurance that we will be successful in the Opposition Proceeding after any appeals. If the Company is unsuccessful in the Opposition Proceeding, the Company would not be entitled to future royalties on Biogen's net sales outside the U.S. If the Company prevails in such appeal, we expect the Technical Board of Appeal to remand the case to the Opposition Division, in order for the Opposition Division to resolve the remaining elements of the original opposition.

Even if we prevail, after any appeals, in the Interference Proceeding and/or Opposition Proceeding, there can be no assurance that we will receive additional payments under the License Agreement.

        Even if we prevail, after any appeals, in the Interference Proceeding and/or Opposition Proceeding, there can be no assurance that any of the conditions for payment of a royalty under the License Agreement will be satisfied or that we will receive any additional payments. For example, we could prevail in the Interference Proceeding, after any appeals, but fail as a result of that proceeding to obtain an issued patent with a claim that covers treatment for MS by orally administering 480 mg per day of DMF, in which case we would not be eligible for any royalties from Biogen with respect to sales in the U.S. Moreover, even if we prevail, after any appeals, in the Interference Proceeding, we will only be eligible to receive royalties on sales in the U.S. if one or more of our patent(s) remains valid and would (but for the License Agreement) be infringed at relevant times by Biogen's sales in the U.S. of

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DMF-containing products indicated for treating MS, and other conditions of the License Agreement are satisfied.

        Similarly, we could prevail in the Opposition Proceeding, after any appeals, but fail as a result of that proceeding to obtain issuance of a patent with a claim that covers treatment for MS by orally administering 480 mg per day of DMF, in which case we would not be entitled to any royalties from Biogen with respect to sales outside of the U.S. Moreover, even if we prevail, after any appeals, in the Opposition Proceeding, we will only be eligible to receive royalties outside of the U.S. if one or more of our patent(s) remains valid and would (but for the License Agreement) be infringed, at relevant times and on a country-by-country basis, by Biogen's sales outside the U.S. of DMF-containing products indicated for treating MS, and other conditions of the License Agreement are satisfied.

        In addition, we may be required in any arbitration or suit brought in the County of New York in the State of New York according to the dispute resolution provisions of the License Agreement, to incur significant expense to prove, on a country-by-country basis, that any DMF-containing products indicated for treating MS sold by Biogen would (but for the License Agreement) infringe our patent(s) existing at that time. Additionally, among the conditions that need to be satisfied for any royalty to be payable by Biogen to the Company in a particular country is the absence of generic entry in that country having a particular impact as defined in the License Agreement. Even if our royalty-eligible patents were to remain valid, there can be no assurance that we would obtain royalties beyond 20 years from their effective filing date. In particular, there can be no assurance that we will obtain a patent term adjustment that will fully compensate us for all time lost during prosecution of our U.S. applications, and no assurance that we will receive or maintain Supplementary Protection Certificates, or SPCs, for each of our European patents.

We are likely to derive all or a significant portion of our future revenues, if any, from Biogen and our future success depends on continued market acceptance of Tecfidera^® as well as continued performance by Biogen of its obligations under the License Agreement.

        We anticipate that all or a significant portion of our future revenues, if any, may consist of royalties from Biogen from sales of Tecfidera^®. We have invested almostno control over the sales efforts of Biogen, and its future marketing of Tecfidera^® might not be successful. Reductions in the sales volume or average selling price of Tecfidera^® for any reason could have a material adverse effect on our business. We also depend on Biogen to perform all of its non-royalty payment obligations under the License Agreement.

Failure to materially comply with the terms and conditions of the License Agreement could result in a loss of future royalty revenues.

        Under the terms of the License Agreement we are required to perform certain obligations, including maintaining sufficient capital to continue the Company's operations as a going concern and solvent entity. Failure by the Company to materially comply with its obligations under the License Agreement could cause the Company to lose its right to royalties from Biogen under the License Agreement.

We no longer have full control over the licensed intellectual property associated with the Company.

        Pursuant to the License Agreement, we have effected a corporate restructuring whereby we have transferred our effortsintellectual property to FWP IP ApS, a Danish limited liability company. The capital stock of FWP IP ApS was subsequently transferred to and financial resources inis now held by FWP HoldCo ApS, a Danish limited liability company, which is owned and controlled by FWP Fonden, a newly formed independent Danish foundation. The boards of directors of FWP Fonden, FWP HoldCo ApS and FWP IP ApS are identical and each consist of three members, comprised of one independent member and one member appointed by each of Forward Pharma and Biogen. All actions of FWP Fonden, FWP HoldCo ApS and

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FWP IP ApS require the developmentunanimous approval of FP187.their respective boards of directors. As a result, our businesswe no longer have full control over the licensed intellectual property associated with the Company. Even though we have agreed with Biogen and future success is almost entirely dependentFWP IP ApS that FWP IP ApS will be required to take actions with respect to the transferred intellectual property in accordance with the provisions of the License Agreement, there can be no assurance that it will do so or that the prosecution of the intellectual property will be pursued in a manner that maximizes the value of the intellectual property over time. Further, in the event that FWP IP ApS, which holds the transferred intellectual property, would materially breach its obligations under the License Agreement, Biogen would have a right to purchase all of the issued and outstanding shares of FWP IP ApS at a price corresponding to its intrinsic value at the time of exercise. Finally, in the event FWP Fonden were to file for bankruptcy, a bankruptcy trustee would have substantial discretion to transfer or sell the assets of the foundation. In either such event, we could lose any right to control the transferred intellectual property, which could have a materially adverse effect on our abilitybusiness.

        Additionally, if Biogen obtains an exclusive U.S. license over the intellectual property subject to successfullythe License Agreement, we cannot be assured that Biogen will develop obtain regulatory approvalthe licensed intellectual property in such a way that maximizes the value of the licensed intellectual property.

If serious adverse, undesirable or unacceptable side effects occur with respect to Tecfidera^® or another DMF-containing or fumaric acid-containing product, future royalties or other payments to us may be adversely affected.

        It is documented in the Tecfidera^® label that the use of DMF may cause a decrease in lymphocytes, a group of white blood cells, in humans, thereby possibly increasing the potential for infection; this is also the case for other fumaric acid ester-containing products. A patient taking Tecfidera^® in an extension study, who suffered from severe lymphopenia for more than three years, developed progressive multifocal leukoencephalopathy, or PML, a rare brain infection, and then successfully commercialize FP187, which has completed Phase 1 testingdied of pneumonia. At least three other cases of PML have been reported in healthy volunteers for release characteristicspatients being treated with Tecfidera^®, again in the presence of persistent lymphopenia. As a result, Biogen revised the U.S. label of Tecfidera^® in December 2014 and tolerability, as well asFebruary 2016 to include a Phase 2 trial in moderatewarning about PML and to severe psoriasis patients, and is being prepared for Phase 3 trials for relapsing remitting multiple sclerosis, or RRMS, and psoriasis. FP187 will require additional pre-clinical and clinical development, managementincrease the frequency of clinical and manufacturing activities, and regulatory approval in multiple jurisdictions (if regulatory approval can be obtained at all). Further,monitoring of lymphocyte counts. To date, we will need to secure sources of commercial manufacturing supply, build or partner with a commercial organization, and incur substantial investment and significant marketing efforts before any revenues can be generated from product sales. We are not permitted to market or promote FP187 before we receive regulatory approval fromaware of instances in which this side effect has prevented the U.S. Food and Drug Administration, or FDA, orfrom approving DMF-containing products, although the FDA requires monitoring of the lymphocyte levels in individual patients under treatment with Tecfidera^®.

        In January 2017, Biogen updated the U.S. label of Tecfidera^® to include new text on the potential for liver injury under treatment with Tecfidera^®. This was based on the occurrence of clinically significant cases of liver injury having been reported in patients treated with Tecfidera^® in the post-marketing setting. The label update also introduced a requirement for monitoring of liver parameters before and regularly during treatment with Tecfidera^®. Similar additions were made to the European Commission,Summary of Product Characteristics in May 2017.

        We expect that the FDA and other regulatory agencies, as applicable, are likely to require similar language in the label of any other DMF-containing products of Biogen, the Company or EC,any assignee of our U.S. co-exclusive license. Any reduction in sales of Tecfidera^® or another DMF-containing product due to undesirable or unacceptable side effects including, but not limited to, the side effects mentioned above, could have a material adverse effect on any royalties or other foreign regulatory authorities, and we may never receive such regulatory approval for FP187. We cannot assure youpayments that any clinical trials for FP187 willmight otherwise be completed inpaid to us, which could have a timely manner, or at all, or that we will be able to obtain marketing approvals or labeling from the FDA, the EC or other foreign regulatory authorities necessary or desirable for the successful commercialization of FP187. If FP187 or any future product candidate is not approved and commercialized, we will not be able to generate any product revenues, which would materially and adversely affectmaterial adverse effect on our business, financial condition and resultprospects.

Table of operations. Moreover, any delay or setback in the development of any product candidate could adversely affect our business and prospects.Contents

Our future growth and ability to compete dependsdepend on retaining our key personnel and recruiting additional qualified personnel.

        Our success depends upon the continued contributions of our management, and scientific and technical personnel, many of whom have substantial experience with or been instrumental for us and our development of FP187.management. These individuals currently include the members of our board of directors, consisting of our Chairman, Florian Schönharting, as well as J. Kevin Buchi, Torsten Goesch, Grant Hellier Lawrence, Jakob Mosegaard Larsen and Jan G. J. van de Winkel, andDuncan Moore. Additionally, our Chief Executive Officer, Claus Bo Svendsen, and Chief Operating Officer, Peder Møller Andersen, our Chief Financial Officer, Joel Sendek, and Vice President, Finance and Controller, Forward Pharma USA, LLC, Thomas Carbone. Our senior scientific advisors include Dr. Kristian Reich, Dr. Ulrich Mrowietz, Dr. Fred D. Lublin, Dr. Per Soelberg Sørensen, Dr. Giancarlo Comi and Dr. Jerry S. Wolinsky.

        The loss of directors managers and senior scientific advisors could materially delay our research and development activities andor key executives could have a material adverse effect on our business. In addition, the competition for qualified personnel in the biopharmaceutical field is intense, and our future success may depend upon our ability to attract, retain and motivate highly-skilled scientific, technical and managerial employees and consultants. We face competition for personnel from other companies, universities, public and private research institutions and other organizations. If our recruitment and retention efforts are unsuccessful, it may be difficult for us to implement our business strategy, which could have a material adverse effect on our business.

The Company or any assignee of our U.S. co-exclusive license seeking to advance FP187^® or another DMF-containing formulation will be subject to extensive regulation, compliance with which is costly and time consuming, and which may delay or prevent receipt of the required approvals to commercialize the product candidate, which may delay or prevent our receipt of any royalties or other payments.

        The Company or any assignee of our U.S. co-exclusive license seeking to advance FP187^® or another DMF-containing formulation, which we collectively refer to as a DMF Formulation, will not be permitted to market its product candidate until it receives approval from the FDA. The process of obtaining FDA approval is expensive, often takes many years, and can vary substantially based upon the type, complexity, and novelty of the products involved, as well as the target indications. Approval policies or regulations may change and regulatory authorities have substantial discretion in the drug approval process, including the ability to delay, limit, or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed and may never be obtained.

        The FDA can delay, limit, or deny approval of a product candidate for many reasons, including:

•

disagreement with the number, design, size, duration, conduct or implementation of clinical trials or the adequacy of pre-clinical studies;



•

inability to demonstrate to the satisfaction of the FDA that a product candidate is safe and effective for any indication;



•

requirement to conduct additional clinical trials or pre-clinical studies;



•

refusal to accept clinical data from trials that are conducted at clinical facilities in countries where the standard of care is potentially different from that of the U.S.;



•

disagreement on the interpretation of clinical data;



•

inability to demonstrate that a product candidate's clinical and other benefits outweigh its safety risks;



•

refusal to approve the formulation, labeling or specifications of the product candidate; and



•

identification of deficiencies in the manufacturing processes or facilities of third-party manufacturers.

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        In addition, competitors could attempt to use the regulatory process to delay or prevent approval of the product candidate. Should any of the events described above occur, this could have a material adverse effect on our business, financial condition and results of operations.

Pre-clinical and clinical drug development involves a lengthy and expensive process with uncertain timelines and uncertain outcomes. If pre-clinical or clinical trials of a DMF Formulation are prolonged and/or delayed, we or any assignee of our U.S. co-exclusive license may be unable to obtain required regulatory approvals, and therefore may be unable to commercialize the product on a timely basis or at all, which would adversely affect any future revenues.

        To obtain the requisite regulatory approvals to market a DMF Formulation, we or any assignee of our U.S. co-exclusive license must demonstrate that it is safe and effective in humans for its intended use. This may involve extensive pre-clinical and clinical trials. The process for obtaining governmental approval to market a DMF Formulation is rigorous, time consuming and costly. It is impossible to predict the extent to which this process may be affected by legislative and regulatory developments. Due to these and other factors, a DMF Formulation could take significantly longer to gain regulatory approval than expected or may never gain regulatory approval. This could delay or eliminate our ability to generate revenue, including any royalties or other payments to us from any such assignee, by delaying or terminating the potential commercialization of any DMF Formulation.

        Pre-clinical trials must be conducted in accordance with FDA and other applicable regulatory authorities' legal requirements, regulations or guidelines, including good laboratory practice, or GLP, an international standard meant to harmonize the conduct and quality of nonclinical studies and the reporting of findings. Pre-clinical studies including long-term toxicity studies and carcinogenicity studies in experimental animals may result in findings which may require further evaluation, which could affect the risk-benefit evaluation of clinical development, or which may even lead the regulatory agencies to delay, prohibit the initiation of or halt clinical trials or delay or deny marketing authorization applications. Failure to adhere to the applicable GLP standards or misconduct during the course of the study may invalidate the study and therefore require us, or our assignee, if any, to repeat the study.

        Clinical trials must be conducted in accordance with FDA and other applicable regulatory authorities' legal requirements, regulations or guidelines, including good clinical practice, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors. Clinical trials are further subject to oversight by these governmental agencies and Institutional Review Boards, or IRBs, at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with supplies of a DMF Formulation produced under current good manufacturing practices and other requirements. Clinical trials may be conducted at multiple sites, including some sites in countries outside the U.S., which may subject us or any assignee of our U.S. co-exclusive license to further delays and expenses as a result of increased shipment costs, additional regulatory requirements and the potential engagement of non-U.S. and non-European Union clinical research organizations, as well as expose us to risks associated with clinical investigators who are unknown to the FDA, and with different standards of diagnosis, screening and medical care.

        Positive or timely results from pre-clinical studies and early-stage clinical trials do not ensure positive or timely results in late-stage clinical trials or product approval by the FDA.

        Products that show positive pre-clinical or early clinical results may not show sufficient safety or efficacy to obtain regulatory approvals and therefore fail in later-stage clinical trials. The FDA has substantial discretion in the approval process, and in determining when or whether regulatory approval will be obtained for any DMF Formulation. Even if the data collected from clinical trials of any DMF Formulation is believed to be promising, such data may not be sufficient to support approval by the FDA.

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        Delays could be encountered if a clinical trial is suspended or terminated by the Company, our assignee, if any, by the IRBs of the institutions in which such trials are being conducted, by the Data Monitoring Committee for such trial, or by the FDA or other regulatory authorities. The Company, our assignee, if any, or such authorities may impose a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, safety issues or adverse side effects, failure to demonstrate a benefit from using the drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If we or our assignee, if any, experience delays in the completion of, or termination of, any clinical trial of any DMF Formulation, the commercial prospects of the DMF Formulation may be harmed, and our ability to generate revenue, including royalties or other payments from any assignee of our U.S. co-exclusive license, may be delayed.

        In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials also may ultimately lead to the denial of regulatory approval of any DMF Formulation. Significant clinical trial delays could also allow competitors to bring products to market before we or our assignee do, which could impair our ability to generate revenue, including revenue from our assignee.

Even if we or any assignee of our U.S. co-exclusive license seeking to advance a DMF Formulation obtain regulatory approval for such a formulation, it will be subject to continual regulatory review. The outcome of, or failure to comply with, such review could impair our ability or the ability of any assignee of ours to sell such a formulation and therefore our ability to generate revenue.

        Even if marketing authorization is obtained for a DMF Formulation, it will remain subject to continual review and therefore authorization could be subsequently withdrawn or restricted. We or any assignee of our U.S. co-exclusive license will be subject to ongoing obligations and oversight by regulatory authorities, including adverse event reporting requirements, marketing restrictions and, potentially, other post-marketing obligations, the failure to comply with which could result in regulators issuing warning and/or untitled letters to us or our assignee, if any, imposing fines on us or such an assignee, imposing restrictions on any DMF Formulation developed by us or our assignee, if any, or its manufacture, or requiring the recall or removal of a product from the market, among other things. If any of these events occurs, our ability or the ability of our assignee, if any, to sell such product may be impaired or delayed, which could impair or delay our ability to generate revenue, including revenue from such an assignee.

We may be unable to assign our co-exclusive license to a third party on terms that are acceptable to us, or at all.

        If Biogen maintains a co-exclusive license, our success will depend in part on our ability or the ability of any assignee of our co-exclusive license to develop and commercialize a DMF Formulation. If we are unable to assign our co-exclusive license to a third party on terms that are acceptable to us, we may be required to develop and commercialize a DMF Formulation ourselves, which will be costly and time consuming, or otherwise rely for our revenue on royalties, if any, payable by Biogen, which would be limited to a royalty of 1% of Biogen's net sales in the U.S. of DMF-containing products indicated for treating MS that would (but for the License Agreement) infringe the Company's U.S. patents provided that other conditions of the License Agreement are satisfied. Such royalty would be payable from January 1, 2023. Failure to successfully develop and commercialize a DMF Formulation, or the incurrence of unexpected costs and expenses in doing so, would materially adversely affect our business.

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Our industry is highly competitive and rapidly changing, which may result in others discovering, developing or commercializing competing products before or more successfully than Biogen, the Company or any assignee of our U.S. co-exclusive license.

        The biopharmaceutical industry is highly competitive and subject to significant and rapid technological change. Our success is highly dependent on the ability of Biogen, the Company and/or any assignee of our U.S. co-exclusive license to market and sell a DMF-containing product, such as, in Biogen's case, Tecfidera^®. We face and will continue to face intense competition from a variety of businesses, including large, fully integrated pharmaceutical companies, specialty pharmaceutical companies and biopharmaceutical companies, academic institutions, government agencies and other private and public research institutions in the U.S., the European Union, or EU, and other jurisdictions. These organizations may have significantly greater resources than those of Biogen, the Company or any assignee of our U.S. co-exclusive license and may conduct similar research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and marketing of products that compete with Tecfidera^®, FP187^®, or another DMF Formulation we or any assignee of our U.S. co-exclusive license may develop.

        The highly competitive nature of and rapid technological changes in the biopharmaceutical industry could render obsolete or non-competitive Tecfidera^®, FP187^® or another DMF-containing product brought to market by Biogen, the Company or any assignee of our U.S. co-exclusive license. Competitors may, among other things:

•

develop and commercialize products that are safer, more effective, less expensive, or more convenient or easier to administer;



•

obtain quicker regulatory approval;



•

establish superior intellectual property positions;



•

have access to more manufacturing capacity;



•

implement more effective approaches to sales and marketing; or



•

form more advantageous strategic alliances.

        Should any of these factors occur, our business, financial condition and results of operations could be materially adversely affected.

The successful commercialization of Tecfidera^® or any other DMF-containing product brought to market by Biogen, the Company or any assignee of our U.S. co-exclusive license will depend, in part, on the extent to which governmental authorities, health insurers and other third-party payors establish or maintain adequate reimbursement levels and pricing policies.

        The successful commercialization of Tecfidera^® or any other DMF-containing product brought to market by Biogen, the Company, or any assignee of our U.S. co-exclusive license will depend, in part, on the extent to which third-party coverage and reimbursement for these products is or will be available from government and health administration authorities, private health insurers and other third-party payors.

        These bodies may deny or revoke the reimbursement status of a given drug product or establish prices for new or existing marketed products at levels that are too low to enable realization of an appropriate return on our investment in product development. Obtaining and maintaining reimbursement status is time consuming and costly. Significant uncertainty exists as to the reimbursement status of newly approved medical products. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases on short notice, and we believe that additional changes in these rules and regulations are likely. In addition, many governments and health

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insurers are increasingly attempting to manage healthcare costs by limiting both coverage and the level of reimbursement of new products. As a result, they may not cover or provide adequate payment for future products.

        These concerns are particularly present for drugs that use an active pharmaceutical ingredient, or API, such as DMF that is already available in other, approved drugs. Public and private payors may be willing to only provide coverage for any DMF-containing product brought to market by the Company or any assignee of our U.S. co-exclusive license if it can demonstrate a significant clinical advantage, or offer the drug at a price resulting in a treatment cost lower than other available drugs. Public and private payors may not be willing to grant reimbursement prices in line with our expectations.

        The unavailability or inadequacy of third-party coverage and reimbursement could have a material adverse effect on the market acceptance of any DMF Formulation brought to market by the Company or any assignee of our U.S. co-exclusive license and any future revenue we may expect to expandreceive from its sales. In addition, we are unable to predict what additional legislation or regulation relating to the healthcare industry or third-party coverage and reimbursement may be enacted in the future, or what effect such legislation or regulation would have on our drug development, regulatorybusiness.

If Biogen maintains a co-exclusive license, the Company or any assignee of our U.S. co-exclusive license may be restricted in its ability to commercialize and business development capabilities, and assell products under the License Agreement in a result,timely fashion, which would limit any revenue, including royalties or other payments, that we may encounter difficulties in managing our growth, which could disrupt our operations.might otherwise be entitled to receive.

        We expect to experience significant growth in theBiogen has several issued patents and is also prosecuting a number of our employees and consultants andadditional patent applications that could adversely impact the scopecommercial efforts of the Company or any assignee of our operations, particularly inU.S. co-exclusive license. These patents and applications, and those of third parties, could adversely impact the areascommercial efforts of drug development, regulatory affairs and business development. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experienceCompany or any assignee of our management teamU.S. co-exclusive license if, once approved by the FDA for the treatment of MS, the licensed product was found to infringe any valid patent claim issuing from any one of these applications. Further, the Company or such assignee could be required to pay substantial damages. Biogen and/or other competitors may initiate legal proceedings against the Company or our assignee, if any, alleging infringement of their intellectual property rights. The outcome of such potential proceedings would be unpredictable and we could be prevented from generating revenue, including receiving royalties or milestone or other revenues from any assignee of ours. Moreover, in managing a company withany such anticipated growth, we may not be able to effectively manageproceedings brought by Biogen, the expansionLicense Agreement prohibits the Company from challenging the validity or enforceability of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growthany Biogen patent.

Changes in privacy laws could delay the execution of our business plans or disrupt our operations, and have a materiallyan adverse effect on our business.

Our information technology systems could face serious disruptions that could adversely affect our business.

        Our information technologyThe regulatory framework for privacy and other internal infrastructure systems,cybersecurity issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. In May 2016, the European Union adopted the General Data Protection Regulation, or GDPR, that will impose more stringent data protection requirements and will provide for greater penalties for noncompliance beginning in May 2018. We may be required to incur significant costs to comply with privacy and data security laws, rules and regulations, including corporate firewalls, servers, leased linesthe GDPR. Any inability to adequately address privacy and connection to the Internet, face the risksecurity concerns or comply with applicable privacy and data security laws, rules and regulations could have an adverse effect on our business prospects, results of systemic failure that could disrupt our operations. A significant disruption in the availabilityoperations and/or financial position.