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

Not Applicable
(Title of Class)​

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

Not Applicable
(Title of Class)​

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

Ordinary shares: 96,487,597​

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⌧ Yeso◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ý⌧Yeso◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "accelerated“accelerated filer," "large" large accelerated filer," and "emerging growth company"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 whether the registrant has fi led a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. o

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

​

If "Other"“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).

o◻Yes ý☒ No

             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

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," "estimate," "will," "would,"“anticipate,” “believe,” “could,” “expect,” “may,” “should,” “plan,” “intend,” “estimate,” “will,” “would,” and "potential,"“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'smanagement’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. These risks and uncertainties include, but are not limited to, factors 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 the European Patent Office opposition proceeding with Biogen Inc. relating to EP2801355;



•

our ability to defend our tax filing position in any ongoing tax audits;



•

our ability to successfully protect, defend and enforce the intellectual property associated with the Company;



•

our ability to maintain our listing on The Nasdaq Capital Market;



•

the impact of the novel coronavirus 2019, or COVID-19, on our business and stock price and the timing of the opposition proceeding;



•

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 "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.

​

​

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, 2020, 2019 and 2018, and as of December 31, 2020 and 2019, 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, 2017 and 2016, and as of December 31, 2018, 2017 and 2016, 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.

Consolidated Statement of Profit or Loss Data

Table of ContentsA.          [Reserved]

Consolidated Statement of Financial Position Data

Exchange Rate Information

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

B.          Capitalization

Not applicable.

C.          Reason for the Offering

Not applicable.

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 "Cautionary“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.

TableRisk Factor Summary

Investing in our ADSs involves significant risks. You should carefully consider the risks described below before making a decision to invest in our ADSs. If we are unable to successfully address these risks and challenges, our business, financial condition, results of Contents

Risks Related to Our Businessoperations, or prospects could be materially adversely affected. In such case, the trading price of our ADSs would likely decline, and Industryyou may lose all or part of your investment. Below is a summary of some of the risks we face.

●

There can be no assurance that the EBA will decide to accept our petition for review in the opposition proceeding involving our EP2801355 patent and denial of the petition would end the opposition proceeding in favor of the opponents, which, for all practical purposes, would represent an unsuccessful outcome of the opposition proceeding, resulting in no royalties being due to the Company from Biogen based on Biogen’s net sales outside the United States.

●

Even if the EBA accepts the Petition (as defined below), there can be no assurance that we will ultimately prevail in the opposition proceeding involving our EP2801355 patent after any appeals or, if we do prevail, that the resulting claims of our EP2801355 patent will be royalty bearing under the Settlement and License Agreement with Biogen.

●

Failure to defend tax filing positions taken by Group companies could negatively impact our financial position, results of operations and cash holdings.

●

Negative results from the ongoing tax audit in Germany could result in additional taxes, interest and penalties becoming due that could negatively impact our financial position, results of operations and cash holdings.

Risks Related to Our Business and Operations

There can be no assurance that the EBA will decide to accept our petition for review in the opposition proceeding involving our EP2801355 patent and denial of the petition would end the opposition proceeding in favor of the opponents, which, for all practical purposes, would represent an unsuccessful outcome of the opposition proceeding, resulting in no royalties being due to the Company from Biogen based on Biogen’s net sales outside the United States.

We are involved in an opposition proceeding regarding EP2801355, or EP’355 patent, with several opponents including a subsidiary of Biogen Inc. (all subsidiaries of Biogen Inc., together with Biogen Inc., hereafter collectively referred to as “Biogen”), or the Opposition Proceeding. On January 27, 2022, we submitted a petition for review, or the Petition, to the Enlarged Board of Appeal, or the EBA, of the European Patent Office, or the EPO. The Petition requests that the EBA review the decision of the Technical Board of Appeal, or the TBA, of the EPO dated September 6, 2021, which dismissed the Company’s appeal of the previous Opposition Proceeding decision of the EPO Opposition Division to revoke the EP’355 patent, for reasons of procedural error made by the TBA.

We expect the EBA to decide whether to accept our Petition within about 6 to 12 months from the date of submission. We cannot assure you that the EBA will agree with our reasoning that the TBA made a procedural error and further procedural errors may affect the outcome of the proceedings. Based on the analysis of our legal advisors, we believe likelihood of the Petition being successful is low.

The denial of the Petition would end the Opposition Proceeding in favor of the opponents. For all practical purposes, such denial of the Petition would represent an unsuccessful outcome of the Opposition Proceeding, resulting in no royalties being due to the Company from our Settlement and License Agreement, dated as of January 17, 2017, or the License Agreement, with two subsidiaries of Biogen that became effective on February 1, 2017, based on Biogen’s net sales outside the United States, as defined in the License Agreement.

Even if the EBA accepts the Petition, there can be no assurance that we will ultimately prevail in the opposition proceeding involving our EP2801355 patent after any appeals or, if we do prevail, that the resulting claims of our EP2801355 patent will be royalty bearing under the Settlement and License Agreement with Biogen.

        We are involved in an opposition proceeding regarding EP2801355, or EP'355 patent, with several opponents including a subsidiary of Biogen Inc. (all subsidiaries of Biogen Inc., together with Biogen Inc., hereafter collectively referredIf the EBA accepts the Petition, the EBA will then need to as "Biogen"), orrule on the Opposition Proceeding. On January 29, 2018,matter. If 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. On May 7, 2018, the Company submitted its notice of appeal, and on August 1, 2018, the Company submitted the detailed grounds for the appeal. On July 8, 2019, we received notice from the EPO that the appeal was scheduled to be heard by the Technical Board of Appeal, or TBA,ruling of the EPO on June 18, 2020, or the 2020 Hearing. The 2020 Hearing has subsequently been postponed twice as the result of the ongoing COVID-19 pandemic. The 2020 Hearing was initially rescheduled to be heard on February 2, 2021 and on January 12, 2021, the EPO informed the Company that the appeal hearing would be postponed a second time to September 6, 2021, or the 2021 Hearing. The 2021 Hearing may be further delayed as a result of the COVID-19 pandemic. Management expects the TBA to issue a ruling on the same day as the hearing with a fully-argued decision to follow approximately two months after the 2021 Hearing.

        If we receive aEBA is favorable, ruling following the 2021 Hearing, it is expected that the TBA will have to decide again on our appeal. The TBA may either confirm its previous decision or change its decision, after which the TBA may remit the case to the Opposition Division, in order for the Opposition Division to resolve the remaining elements of the original opposition. Management estimates thatOpposition Proceeding. If this were to occur, we would incur significant attorneys’ fees in connection with these additional proceedings, which could have an adverse effect on our financial condition. In the Opposition Division would take approximately two to three years to resolvefavorable scenario, the remaining elementssteps from EBA acceptance of the original opposition in the eventPetition to completion of a remittal. However, delays can occur that would extend the time needed for the Opposition Divisionnew opposition proceeding is expected to reach a conclusion on the remaining elements of the original opposition. Wetake up to four years and possibly longer. Since we are not entitled to any royalty payments from our Settlement and License Agreement, dated as

until and unless all remaining elements of the original oppositionOpposition Proceeding are resolved in our favor. As such,favor, the earliest time we may expect to receive any revenues from the License Agreement, if at all, is 2024.2026.

        If we receive an unfavorable ruling in the 2021 Hearing, it would, for all practical purposes, represent an unsuccessful outcome of the Opposition Proceeding, resulting in no royalties being due to us from Biogen based on Biogen's future net sales outside the United States, as defined in the License Agreement. We may request a rehearing of the 2021 Hearing with the Enlarged Board of Appeal of the EPO in an effort to overturn the unfavorable outcome, but the likelihood of getting a rehearing is low. The denial of a request to rehear would end the Opposition Proceeding in favor of the opponents.

        There can be no assurance that we will be successful in the Opposition Proceeding after any appeals. Even if we receive a favorable ruling following the 2021 Hearing, the Opposition Division may not resolve the remaining elements of the original opposition in our favor. If we are not ultimately successful in the Opposition Proceeding, we would not be entitled to any future revenues resulting from the License Agreement.

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

Even if we prevail, after any appeals, in the 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 Opposition Proceeding, after any appeals, but fail as a result of that proceeding to obtain issuance of a patent with a claim that

Table of Contents

covers treatment for multiple sclerosis, or MS, by orally administering 480 mg per day of dimethyl fumarate, or DMF, in which case we would not be entitled to any royalties from Biogen with respect to sales outside of the United States. Moreover, even if we prevail, after any appeals, in the Opposition Proceeding, we will only be eligible to receive royalties outside of the United States 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'sBiogen’s sales outside the United States 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 receive or maintain Supplementary Protection Certificates, or SPCs, for any of our European patents.

If we are not ultimately successful in the ongoing Opposition Proceeding or a new opposition proceeding, we would not be entitled to any future revenues resulting from the License Agreement.

Failure to defend tax filing positions taken by Group companies could negatively impact our financial position, results of operations and cash holdings.

The Company’s Danish, German and United States tax returns are subject to periodic audit by the local tax authorities. Such audits could result in the tax authorities disagreeing with the tax filing positions taken by the Group. If the Group is unable to defend tax filing positions taken, additional taxes, interest and penalties would be assessed against the Group and such amounts could have a material adverse effect on our financial position, results of operations and cash holdings.

Periodically there are intercompany cross-border transactions between Group companies. There is a risk that the tax authorities could disagree with management as to whether intercompany cross-border transactions were conducted at arms’ length and in accordance with tax regulations. If such disagreement were to occur, it is likely the tax authorities would assert that a Group company understated taxable income or overstated deductible expenses. If the tax authorities are successful in increasing taxable income and/or disallowing deductible expenses in one or more jurisdictions, it would result in the Group experiencing a higher effective tax rate that could have a material adverse effect on our financial position, results of operations and cash holdings. As discussed in more detail elsewhere herein, there is an on ongoing tax audit being conducted in Germany where the Germany tax authorities have disagreed with the tax filing position taken by FP GmbH in connection with an intercompany cross-border transaction and have asserted that FP GmbH under reported taxable income in the amount of 265 million EUR ($300.4 million based on the December 31, 2021 exchange rate.)

The Company has taken a tax filing position that the Company’s United States subsidiary FP USA does not conduct a trade or business and therefore meets the definition as a disregarded entity under the United States and Danish tax regulations. As a disregarded entity, FP USA is not subject to United States federal or state income taxes. There is a risk that the United States or Danish tax authorities could disagree with this tax filing position and if the Company and/or FP USA are unable to defend this tax filing position, it could result in additional taxes, interest and penalties becoming due and such amounts could have a material adverse effect on our financial position, results of operations and cash holdings.

The Company made certain cash payments to equity award holders during the year ended December 31, 2017 that totaled 36.2 million EUR ($43.4 million based on the December 31, 2017 exchange rate). Management believes these payments are tax deductible expenses; however, the tax authorities could disagree. Management believes that appropriate tax filing provisions have been taken by the Company and its subsidiaries regarding these payments; however, if the Group is unable to defend the tax filing

positions taken, additional taxes, interest and penalties would be assessed against the Group and such amounts could have a material adverse effect on our financial position, results of operations and cash holdings.

Negative results from the ongoing tax audit in Germany could result in additional taxes, interest and penalties becoming due that could negatively impact our financial position, results of operations and cash holdings.

There is an ongoing tax audit being conducted by the German tax authorities of FP GmbH’s tax filings covering multiple years through the year ended December 31, 2017. The German tax authorities, in their preliminary assessment, have asserted that they believe one intercompany transaction, or Transaction, that occurred in 2017 between the Company and FP GmbH was not conducted in accordance with arm’s length principles applicable to cross-border intercompany transactions and that FP GmbH under reported its taxable income by 265 million EUR ($300.4 million based on the December 31, 2021 exchange rate.) A tax levy computed based on the preliminary assessment, after utilization of FP GmbH’s available tax loss carryforward, and before any applicable interest and/or penalty, would be approximate 80.7 million EUR ($91.6 million based on the December 31, 2021 exchange rate.)

Management believes the Transaction was conducted at arm’s length and the tax filing position taken by FP GmbH is correct. Management has determined, based on consultations with the Group’s tax advisors, that it is not probable (i.e., more likely than not) that FP GmbH will be required to pay additional taxes to the German tax authorities upon the ultimate resolution of the tax dispute in Germany. However, such determination is inherently subjective and, if it is incorrect, then the Group may be subject to significant additional tax levies. The ultimate resolution of the tax dispute in Germany may require that the Group incur a material outflow of cash that would negatively affect the Group’s financial position, results of operations and cash holdings.

An increase of FP GmbH’s 2017 taxable income in Germany as discussed above without a corresponding offset to the Group’s 2017 Danish tax filing, would result in double taxation. FP GmbH does not have the liquidity to pay a tax levy associated with an increase in FP GmbH’s taxable income of 265.0 million EUR, nor does the Group, without obtaining relief from double taxation from the Danish tax authorities. Relief from double taxation can be obtained through entering into a Mutual Agreement Procedure, or MAP, comprising a government-to-government dispute resolution mechanism, and/or a successful outcome from litigation against the German tax authorities. If relief is sought through a MAP, double taxation will be eliminated; however, there is no assurance that a MAP and/or litigation would eliminate a net increase in the Group’s total income tax expense. A net increase in the Group’s income tax expense could have a material negative effect on the Group’s consolidated financial position, results of operations and cash holdings.

If FP GmbH becomes insolvent upon receipt of a final tax assessment from the German tax authorities, the Group’s consolidated financial statements will be materially and adversely affected.

FP GmbH does not have sufficient liquidity or any other assets enabling it to pay a material tax levy when a final tax assessment is issued by the German tax authorities. Upon the receipt of a material final tax assessment, FP GmbH’s management will evaluate whether an over-indebtedness or illiquidity condition existed under German law and whether FP GmbH has become insolvent. If FP GmbH’s management concludes that FP GmbH has become either over-indebted or illiquid, insolvency proceedings will commence in a German court. FP GmbH will take all available steps to avoid insolvency, including, but not limited to, appealing the tax assessment and requesting suspension of execution of the tax assessment notice; however, depending on the facts and circumstances at the time the final tax assessment is issued by the German tax authorities, FP GmbH’s management may not be able to avoid the insolvency of FP GmbH. If FP GmbH is unsuccessful in avoiding insolvency, a court-appointed insolvency administrator, or Administrator, will commence overseeing the day-to-day operations of FP GmbH and the management of FP GmbH will no longer control FP GmbH.

In advance of receiving the final audit assessment from the German tax authorities, management currently plans to submit an application to the German courts to allow FP GmbH to enter debtor-in-possession, or DIP, proceedings. Entering DIP proceedings would allow FP GmbH’s management to remain in control of the day-to-day activities of FP GmbH while a court-appointed supervisor would monitor the activities of FP GmbH. There is no assurance the application will be accepted by the German court and if the court were to reject the application, insolvency proceedings would begin, management would lose control of the day-to-day activities of FP GmbH and the Administrator would begin managing the day-to-day activities of FP GmbH.

Under DIP proceedings, FP GmbH’s management is obligated, when overseeing the day-to-day operations of FP GmbH, to put the interest of creditors before the interest of shareholders. For financial reporting purposes, the prioritization of the interest of creditors in managing the affairs of FP GmbH, in substance, limits management’s decision-making ability, which would result in

management being deemed to have lost control of FP GmbH. Upon the loss of control of FP GmbH, FP GmbH would be deconsolidated from our consolidated financial statements resulting in the Group incurring a nonrecurring impairment loss. Such impairment loss will be recognized by the Group on the date control of FP GmbH is lost and will equal the net asset value of the Group’s investment in FP GmbH which, as of December 31, 2021, totals 19.4 million DKK ($3.0 million based on the December 31, 2021 exchange rate.) As of December 31, 2021, there is an uncollateralized intercompany loan, or Intercompany Loan, from FP GmbH to a subsidiary of the Group that totals 2.8 million EUR ($3.2 million based on the December 31, 2021 exchange rate.) The Intercompany Loan is due on demand and accrues interest at an annual rate of 2% with interest compounding quarterly. (The Intercompany Loan and the related interest are eliminated in consolidation and therefore not reflected in the consolidated financial statements included herein). Subsequent to the deconsolidation of FP GmbH, the Group’s consolidated statement of financial position will include a current liability equal to the Intercompany Loan and the Group’s consolidated statement of profit or loss will include interest expense recognized in accordance with the terms of the Intercompany Loan as stated above.

The loss of control of FP GmbH would have a material adverse impact on our financial position and operating results. Our cash holdings will also be adversely affected when we are required to repay the Intercompany Loan. In addition, the Company could be exposed to claims made by the Administrator in the event the Administrator believes the Company was unfairly benefited by the Transaction, or potentially other transactions and/or actions taken by the Company or another company within the Group, at the detriment of FP GmbH’s creditors. Any claims against the Company, or another company within the Group, that are ultimately successful, could have a material adverse effect on the Group’s financial position, operating results and cash holdings.

There is no assurance that the German tax audit will not result in double taxation.

Double taxation would result if the German tax authorities were successful in their claim that the Transaction was not conducted at arm’s length resulting in FP GmbH paying a German tax levy without an offset adjustment to the Group’s Danish tax filing. Double taxation would increase the Groups tax expense and would likely have a material negative effect on the Group’s financial position, operating results and cash holdings.

In the event double taxation occurs, the Group may choose to enter into a Mutual Agreement Procedure, or MAP, and/or commence litigation against the tax authorities in order to avoid or mitigate the negative effect of double taxation. A MAP is a government-to-government dispute resolution mechanism, which would enable the relevant authorities to resolve the tax dispute on a mutually agreeable basis. A MAP may also include an independent arbitration procedure to secure a successful resolution. If litigation were pursued, it would likely be time-consuming and costly and there remains a high uncertainty as to whether we would successfully avoid or mitigate double taxation. If a MAP were pursued, it would also be time-consuming and potentially costly and, while double taxation would be eliminated, there remains a high uncertainty whether we would get relief from an increase to the Group’s tax obligation, since the outcome of a MAP could be that a greater portion of the Group’s total 2017 taxable income is allocated to Germany where the tax rate is higher than Denmark. The time period to ultimately settle the tax dispute with the German tax authorities, including the completion of a MAP and/or litigation, is currently unknown; however, management does not believe the dispute will conclude within the next twelve months and could be three years or longer. The cost to pursue a MAP and/or litigation and any potential taxes, interest and penalties due at the conclusion of the MAP and/or litigation could each have a material adverse effect on the Group’s financial position, operating results and cash holdings.

At the conclusion of a MAP and/or litigation, if the German tax authorities are successful in increasing FP GmbH’s taxable income and if FP GmbH is unable to pay the related tax levy, the German tax authorities could commence litigation against the Company in Denmark to collect theoutstanding balance of the tax levy. If such were to occur, it would likely be time consuming to resolve, very costly to the Company to defend, and could have a material negative effect on the Group’s consolidated financial position, operating results and cash holdings.

There is uncertainty with respect to the Danish tax authority’s treatment of our American Depositary Shares.

In the fourth quarter of 2021, we submitted a request for a binding ruling from the Danish tax authorities regarding the Danish taxation of our American Depositary Shares, or ADSs. There is uncertainty as to how the Danish tax authorities will rule on our question and when such ruling will be made. Depending on the outcome of the ruling, it could have a significant negative effect on how holders of our ADSs are taxed including, but not limited to, the imposition of Danish withholding taxes on return of capital transactions we undertake with our ADSs holders. The imposition of additional taxes on holders of our ADSs could have an adverse impact on the price of our ADSs.

We review and explore strategic alternatives on an on-going basis, but there can be no assurance that we will be successful in identifying or completing any strategic alternative or that any such strategic alternative will yield additional value for our shareholders.

We regularly review strategic alternatives to ensure our current structure optimizes our ability to execute our strategic plan and to maximize shareholder value. The review of strategic alternatives could result in, among other things, a sale, merger, consolidation or business combination, asset divestiture, partnering, licensing or other collaboration agreements, or potential acquisitions or recapitalizations, in one or more transactions, or continuing to operate with our current business plan and strategy. There can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction.

In addition, we may incur substantial expenses associated with identifying and evaluating potential strategic alternatives. The process of exploring strategic alternatives may be time consuming and if we are likelyunable to effectively manage the process, our business, results of operations and/or financial position could be adversely affected. We also cannot assure that any potential transaction or other strategic alternative, if identified, evaluated and consummated, will provide greater value to our shareholders than that reflected in our current ADS price. Any potential transaction would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends, the interest of third parties in our business and the availability of financing to potential buyers on reasonable terms.

If we ultimately prevail in the Opposition Proceeding, then we expect 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®Tecfidera^® as well as continued performance by Biogen of its obligations under the License Agreement.

        WeIf we ultimately prevail in the Opposition Proceeding and we receive royalty payments from Biogen under the License Agreement, we anticipate that such royalty payments from sales of Tecfidera^® outside of the United States would represent all or a significant portion of our future revenues, if any, may consist of royalties from Biogen from sales of Tecfidera® outside of the United States.any. We have no control over the sales efforts of Biogen, and its future marketing of Tecfidera®Tecfidera^® might not be successful. Reductions in the sales volume or average selling price of Tecfidera®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'sCompany’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 potential right to royalties from Biogen under the License Agreement.

We have faced and may continue to face business disruption and related risks resulting from the ongoing COVID-19 pandemic, which could have an adverse effect on our business.

Our business and its operations have been and may continue to be disrupted and adversely affected by the ongoing COVID-19 pandemic. As a result of measures imposed by the governments in affected regions, including throughout Europe, businesses and government agencies have been suspended due to quarantines intended to contain this outbreak. Such measures have negatively impacted and may in the future negatively impact certain of our business operations, including the expected timelines for the resolutions of our ongoing tax audits and the Opposition Proceeding, each described elsewhere in this Annual Report. Additionally, as a result of the COVID-19 pandemic, we have been required to limit our operations and implement limitations, including work-from-home policies.

Table of Contents

In addition, international stock markets have been volatile as a result of the uncertainty associated with the impact of the COVID-19 pandemic on the global economy. If such volatility continues, our stock price may be negatively affected as a result.

        The ultimateWe continue to monitor the impact of the ongoing COVID-19 pandemic, is highly uncertain and subject to rapid changes.including the impact of variants, on our business. We do not yet know the full extent of potential disruptions or impacts on our business or whether we will face additional disruptions or impacts on

our business, our ongoing tax audits, the Opposition Proceeding, or the global economy as a whole, and any such disruptions could have a material adverse effect on our operating results and financial condition.

Our future growth and ability to competeWe depend on retaining our key personnel and possibly recruiting additional qualified personnel.

Our success dependscontinued operations depend greatly upon the continued contributions of our management. These individuals currently include the members of our board of directors, consisting of our Chairman, Florian Schönharting, as well as Torsten Goesch, Grant Hellier Lawrence, Jakob Mosegaard Larsen, and Duncan Moore. Additionally, our Chief Executive Officer, Claus Bo Svendsen, and our Vice President, Finance and Controller, FP USA, Thomas Carbone.

The loss of directors or 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, ourif we need to recruit additional qualified personnel in the future, successwe may depend upon our abilitynot be able to attract, retain and motivate managerial employees and consultants. We face competition for personnel from other companies, universities, public and private research institutions and other organizations.do so successfully. 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.

Changes in privacy laws could have an adverse effect on our business.

The regulatory framework for privacy and 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, which imposes more stringent data protection requirements and will provide for greater penalties for noncompliance. Additionally, following the United Kingdom's withdrawal from the European Union and the European Economic Area, companies also have to comply with the United Kingdom's data protection laws (including the GDPR as incorporated into UK national law), the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover. We may be required to incur significant costs to comply with privacy and data security laws, rules and regulations, including the General Data Protection Regulation, or GDPR, and UK national law.law, each of which has significant penalties for noncompliance. Any inability to adequately address privacy and security concerns or comply with applicable privacy and data security laws, rules and regulations could have an adverse effect on our business prospects, results of operations and/or financial position.

Our business and operations may be materially adversely affected in the event of computer system failures or security breaches.

Despite the implementation of security measures, our internal computer systems, and those of any third-party vendor on which we rely from time to time, are vulnerable to damage from computer viruses, unauthorized access, cyber-attacks, natural disasters, fire, terrorism, war and telecommunication and electrical failures. If such an event were to occur and interrupt our operations, it could result in a material disruption to our operations. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, loss of trade secrets or inappropriate disclosure of confidential or proprietary information, including protected health information or personal data of employees or former employees, we could incur liability. We may also be vulnerable to cyber-attacks by hackers or other malfeasance. This type of breach of our cybersecurity may compromise our

Table of Contents

confidential information or our financial information and adversely affect our business or result in legal proceedings.

Risks Related to Our Financial Position and Capital Needs

With the exception of 2017, we have a history of operating losses and we may not achieve or sustain profitability.

Since the Company’s inception, with the exception of 2017 when we received a nonrecurring cash fee of $1.25 billion, or the Non-refundable Fee, from Biogen in connection with the License Agreement, we have incurred net losses and negative cash flows from operations. We expect to incur net losses and negative cash flows from operations for the foreseeable future, subject to the resolution of the Opposition Proceeding. There is no assurance that we will ever have operating revenues, net income or positive cash flows from operations in the future. The Group’s ability to generate future operating revenue is currently limited to royalties that are contingently due to the Company under the License Agreement only if we prevail, including all appeals, in the Opposition Proceeding. If we fail to prevail in the Opposition Proceeding, it is highly unlikely we will have operating revenues and our ability to continue as a going concern long-term would be uncertain.

Historically, we have financed our operations through our initial public offering completed in October 2014, private placements of equity securities, a government grant, and debt financing arrangements. We have never generated and do not anticipate generating any revenues from our own product sales. We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements beyond the next twelve months. Should the Company experience unforeseen expenses or other usages of cash, including but not limited to an unfavorable outcome in the tax audit in Germany, the effect would negatively impact management’s ability to fund operations and continue as a going concern.

If the Company were to need to raise capital to fund ongoing operations, there can be no assurances that such funding would be available on acceptable terms, if at all. The long-term success of the Company is contingent on the successful outcome of the Opposition Proceeding and the Company’s ability to successfully defend the intellectual property associated with the Company. There can be no assurance that the Company will be successful in the Opposition Proceeding or in defending the intellectual property associated with the Company. Accordingly, achieving and/or sustaining positive cash flows from operations or becoming profitable is uncertain.

Even if we do generate revenue, including from future royalties due the Company in accordance with the License Agreement, we may never achieve or sustain profitability on a consistent basis or at all. Our failure to sustain profitability could depress the market price of our ordinary shares and ADSs and could impair our ability to raise capital or continue our operations. A decline in the market price of our ordinary shares and ADSs also could cause you to lose all or a part of your investment.

We may be required to raise additional capital to fund our operations, and we may not be able to do so on terms acceptable to us, or at all.

We are required under the terms of the License Agreement to maintain sufficient capital to continue the Company as a going concern and a solvent entity, plus an additional $5.0 million until such time as the Company has complied with certain obligations under the License Agreement. While we currently believe we have sufficient resources to enable us to comply with our obligations under the License Agreement and continue as a going concern beyond the next twelve months, unforeseen events, including but not limited to an unfavorable outcome in the tax audit in Germany, could negatively affect our estimates and assumptions about how much capital will be required for us to meet our near and long-term obligations under the License Agreement and to continue as a going concern. If our current estimates and assumptions prove to be wrong and we need to raise additional capital to meet our obligations under the License Agreement and remain a going concern, we cannot assure you that we will be able to raise additional working capital as needed on terms acceptable to us, if at all. If we are unable to raise capital as needed, we may be required to reduce the scope of our operations, which could harm our financial condition and operating results, or cease our operations entirely. In addition, if we fail to prevail in the Opposition Proceeding, including all appeals, future revenues are unlikely and the Company’s ability to continue as a going concern long-term would be uncertain.

In the event we need to seek additional funds, we may raise additional capital through the sale of equity or convertible debt securities. In such an event, the ownership interests of our existing equity holders will be diluted, and the terms of any new securities may include liquidation or other preferences that adversely affect the rights of our existing equity holders. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our ADSs to decline. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as, but not limited to, incurring additional debt, making capital expenditures, declaring and paying dividends or making capital reductions.

Exchange rate fluctuations may materially affect our results of operations and financial condition.

Due to the international scope of our operations and the fact that a substantial amount of our cash is currently denominated in U.S. Dollars and Euros, fluctuations in exchange rates, particularly between the Danish Kroner, or the DKK, the Euro and the U.S. Dollar, may adversely affect us. Although we are based in Denmark, we have sourced many services from several countries outside Denmark where the transactions are settled in currencies that are not the DKK. Further, potential future revenue may be derived from abroad. As a result, our business is affected by fluctuations in foreign exchange rates between the DKK, the Euro, the U.S. Dollar or other currencies, and the effects could have a significant impact on our reported results of operations and cash flows from period to period. For example, in the year ended December 31, 2021 we recognized a foreign exchange gain of $2.2 million. This gain was primarily related to our U.S. Dollar cash holdings and the strengthening of the U.S. Dollar during the year compared to the DKK. While we benefited from changes in foreign exchange rates in 2021 and 2019, it is possible that the foreign exchange loss experienced in 2020 could reoccur. Any foreign exchange losses would negatively affect the Group and the effect could be material. Currently, we do not have any exchange rate hedging arrangements in place and do not currently have plans to implement any hedging arrangements. Losses incurred by the Company, including those caused by foreign exchange, could have a negative effect on the trading price of the ADSs.

Developments relating to Biogen, Tecfidera^®, our competitors or their products could materially and adversely affect our business, results of operations, business prospects and the market price of our ADSs.

In the event that our competitors or others in the pharmaceutical industry, including Biogen, experience developments relating to their business, products or product candidates, our business, results of operations, business prospects and the market price of our ADSs could suffer. In particular, if we are eligible to receive royalties on sales of Tecfidera^®, our future success will depend on the continued market acceptance of Tecfidera^® and adverse events, or the perception of adverse events, relating to Biogen or Tecfidera^® would have material adverse effects on us. As a result of entering into the License Agreement, the market price of our ADSs could become more significantly affected by announcements made by Biogen, over which we have no control. Additionally, cases of progressive multifocal leukoencephalopathy have been reported in patients being treated with Tecfidera^®, which could raise safety concerns and harm the market profile of DMF-containing treatments for MS, including Tecfidera^®. Similarly, developments relating to other competitors of Biogen and their products could have adverse effects on our business prospects and the market price of our ADSs. For example, competitors may offer their products at reduced prices or with discounts or rebates that increase pricing pressure with respect to therapies for the treatment of MS.

Related party transactions may be challenged by tax authorities.

The jurisdictions in which we conduct or will conduct business, and in particular Denmark, Germany and the United States, have detailed transfer pricing rules which require that all transactions with related parties be priced using arm’s-length pricing principles. The taxation authorities in these jurisdictions could challenge our arm’s-length related-party transfer pricing practices. International transfer pricing is an area of taxation that depends heavily on the underlying facts and circumstances and generally involves a significant degree of judgment. Accordingly, there is the risk that the tax authorities could disagree with a tax filing position taken by a Group company and impose additional taxable income or disallow the deductibility of expenses on intercompany cross-border transactions resulting in higher tax obligations in one or more tax jurisdictions. Management’s experience has been that the tax authorities can be aggressive in taking positions that would increase taxable income and/or disallow deductible expenses. If the tax authorities are successful in increasing taxable income and/or disallowing the deduction of expenses in one or more jurisdictions, it would result in the Group experiencing a higher effective tax rate that could be material. The imposition of additional taxes, interest and/or penalties resulting from a tax audit associated with related party transactions would negatively impact the Company’s financial position, operating results and cash flows and the impact could be material.

For example, the Danish and German tax authorities were conducting a joint tax audit of the Group’s Danish and German tax returns covering multiple years through the year ended December 31, 2017. The joint tax audit focused primarily on the Transaction and whether the Transaction was conducted at arm’s length and in accordance with tax regulations. The joint tax audit has concluded with the tax authorities unable to agree on whether the Transaction was conducted at arm’s-length in accordance with tax regulations. While the Danish tax authorities saw no reason to change the pricing of the Transaction, the German tax authorities assert that the Transaction was not conducted at arm’s-length resulting in FP GmbH understating its taxable income by 265 million EUR ($300.4 million based on the December 31, 2021 exchange rate.) for the year ended December 31, 2017. A tax levy associated with a 265 million EUR increase in FP GmbH’s taxable income, after unitization of FP GmbH’s available tax loss carryforward, and before any applicable interest and/or penalty, would be approximate 80.7 million EUR ($91.6 million based on the December 31, 2021 exchange rate.) Management believes the Transaction was conducted at arm’s length and the tax filing position taken by FP GmbH is correct. Management has determined, based on consultations with the Group’s tax advisors, that it is not probable (i.e., more likely than not) that the Group will be required to pay additional taxes to the German tax authorities upon the ultimate resolution of the tax dispute in Germany. However, such determination is inherently subjective and, if it is incorrect, then the Group may be subject to significant additional tax levies. The ultimate resolution of the tax dispute in Germany may require that the Group incur a material outflow of cash that would negatively affect the Group’s financial position, results of operations and cash holdings.

We may need to return the proceeds of a government grant if it is found that we did not fully comply with all terms and conditions.

As part of the project for the development of new or innovative products and procedures in the Free State of Saxony, Germany, the Sächsische Aufbaubank—Förderbank, or SAB, awarded FP GmbH a grant, or the Grant, of €3.8 million ($4.3 million based on the December 31, 2021 exchange rate) that subsidized certain product development costs incurred by FP GmbH, during the period from March 2007 to December 2008. While the SAB has conducted an audit of the use of proceeds and confirmed that FP GmbH had complied with all the terms and conditions of the Grant, the SAB maintains the right to revoke the Grant and demand repayment of the Grant, plus interest, in the event the SAB in the future determines that FP GmbH failed to fully comply with all the terms and conditions of the Grant. While we believe that FP GmbH is in full compliance with all the terms and conditions of the

Grant, there is always a risk that the SAB in the future could disagree and demand repayment of the Grant plus interest. If we were required to repay the Grant, it would have a material negative effect on our financial position and operating results.

Risks Related to Intellectual Property

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

Pursuant to the License Agreement, in 2017 we effected a corporate restructuring whereby we transferred our intellectual property to FWP IP ApS, or FWP IP, a Danish limited liability company. The capital stock of FWP IP was subsequently transferred to and is now held by FWP HoldCo ApS, or HoldCo, a Danish limited liability company, which is owned and controlled by FWP Fonden, or the Foundation, an independent Danish foundation. The boards of directors of the Foundation, HoldCo and FWP IP 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 the Foundation, HoldCo and FWP IP require the unanimous approval of their respective boards of directors. As a result, we no longer have full control over the licensed intellectual property associated with the Company. Even though we have agreed with Biogen and FWP IP that FWP IP will be required to take actions with respect to the transferred intellectual property, which now consists only of the non-U.S. intellectual property associated with the Company, 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, 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 at a price corresponding to its intrinsic value at the time of exercise. Finally, in the event the Foundation 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 material adverse effect on our business.

There can be no assurance that evenEven if we are successful in the opposition and appeal proceedings involving the patents associated with the Company currently pending before the EPO,Opposition Proceeding, there can be no assurance that we will not be subject to subsequent or parallel invalidity proceedings involving these same or other patents associated with the Company before a national court in any of the European Patent Convention member states where the patents were validated, which subsequent or parallel proceedings could result in the challenged patents being subject to continued uncertainty as to their validity until such proceedings have been fully concluded. We cannot at this time anticipate how long any such proceedings may last or when, if at all, the patents currently under challenge will finally be declared to be valid or not.

The possibility of parallel validity proceedings in national courts and in the EPO is inherent in the legal arrangements under the European Patent Convention under which the EPO was established. If a third party files an opposition to a European patent with the EPO and also, in parallel, initiates a revocation action (also called a "nullity action"“nullity action” or "validity proceeding"“validity proceeding”) against the same patent before a national court, certain national courts may exercise their discretion to either (i) stay the national proceedings, in order to await the outcome of the EPO opposition proceedings, or (ii) allow the revocation proceedings to go ahead, without awaiting the outcome of the EPO proceedings. The rules and practices differ from country to country within the member states of the European Patent Convention. For example, certain countries will stay the main proceeding until a final decision has been reached by the EPO whereas in other countries a stay is not automatic, and in such cases the courts may continue the proceedings notwithstanding the opposition. In Germany, for example, national nullity proceedings cannot be started before the German Federal Patent Court until the EPO opposition proceedings have been concluded or the opposition period has expired. As a result, it is possible that certain of the patents now subject to opposition proceedings before the EPOOpposition Proceeding will, even if

Table of Contents

we are ultimately successful before the EPO, again become subject to a revocation action in a country like Germany, which means the challenged patents could be subject to continued uncertainty in the EU as to their validity until such proceedings have been fully concluded. WeIf that were to occur, we cannot at this time anticipate how long any such proceedings may last or when, if at all, the patents currently under challenge will finally be declared to be valid or not. Furthermore, even if we are successful in the Opposition Proceeding, we will only be eligible to receive royalties outside of the United States if the patent(s) remain valid at relevant times on a country-by-country basis, provided that other conditions of the License Agreement are satisfied.

We rely on Biogen is responsible for the filing, prosecution and maintenance of certain of the non-U.S. licensed intellectual property and if Biogen fails to adequately protect such intellectual property, our rights to the intellectual property associated with the Company and our ability to receive future royalties from Biogen may be harmed.

Under the License Agreement, Biogen has assumed the filing, prosecution and maintenance of all of the non-U.S. licensed intellectual property associated with the Company, except for the EP'355EP’355 patent. While Biogen is obligated to take all reasonable

measures to diligently file, prosecute and maintain the non-U.S. licensed intellectual property for which it is responsible, there can be no assurances that Biogen will protect the intellectual property to the same degree as the Company. If Biogen fails to adequately protect the non-U.S. licensed intellectual property, the Company could lose such intellectual property rights. Additionally, if the non-U.S. licensed intellectual property is harmed and we ultimately prevail in the Opposition Proceeding, any future royalty payments from Biogen on the non-U.S. licensed intellectual property may be negatively impacted.

WeIf we prevail in the Opposition Proceeding, we may be required to pay significant fees to the EPO and our attorneys to file, prosecute, maintain and defend certain of the licensed intellectual property with no assurance of receiving future royalties from Biogen.

        In certain circumstances underIf we ultimately prevail in the Opposition Proceeding, the License Agreement provides that, in certain circumstances, the Company may assume the filing, prosecution and maintenance of certain of the Company'sCompany’s non-U.S. licensed intellectual property in order to protect its interests in such intellectual property, including participating in European opposition proceedings, unless and until Biogen either re-assumes the filing, prosecution and maintenance of such non-U.S. licensed intellectual property or exercises its option to purchase all of the Company'sCompany’s non-U.S. licensed intellectual property. To do so, the Company would have to incur significant fees, including attorneys'attorneys’ fees, to file, prosecute and maintain such non-U.S. licensed intellectual property and may not be entitled to receive any royalties from Biogen.

We may become involved in lawsuits to protect, defend and enforce the patents or other intellectual property associated with the Company, which could be expensive, time-consuming and, if unsuccessful, could result in issued patents covering our product candidate being found invalid or unenforceable.

Competitors may infringe the patents or other intellectual property associated with the Company. To counter such infringement, we may file claims or be required to join or assist claims filed by Biogen, and any related litigation and/or prosecution of such claims may be expensive and time-consuming. Any claims asserted against perceived infringers could provoke these parties to assert claims alleging that we infringe their intellectual property. In addition, in a patent infringement proceeding, or a parallel opposition, nullity or cancellation proceeding, it may be decided that a patent associated with the Company is invalid in whole or in part, unenforceable, or construes the patent'spatent’s claims narrowly allowing the other party to commercialize competing products on the grounds that the patents associated with the Company do not cover such products.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our personnel from their normal responsibilities. Such litigation or proceedings could substantially increase our operating expenses. We may not have sufficient financial or other resources to adequately conduct such litigation or

Table of Contents

proceedings. Some competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. The effects of patent litigation or other proceedings could, therefore, have a material adverse effect on our ability to compete in the marketplace.

Third parties may claim rights including ownership rights in the intellectual property associated with the Company.

None of the named inventors on the patent and patent applications associated with the Company were our employees at the time of the filing of the Core Composition Patent family that we acquired from Aditech Pharma AB (together with its successor-in-interest, Swiss company Aditech Pharma AG, or Aditech). Two of the named inventors of the priority applications in the Core Composition Patent family were consultants of Aditech and, while obligated under their consulting agreements to assign their rights in the Core Composition Patent family to Aditech, were employed by other institutions at the time they were named as inventors. While such institutions have not made any claims to ownership, there can be no assurance they will not do so in the future.

Later-filed patent families were filed by us, but some of the named inventors were acting only in a consultant capacity to us. Some of these consultants, while obligated under their consulting agreements to assign their rights in such patent families to us, were employed by other institutions prior to or at the time they made their inventions. While such institutions have not made any ownership claims to the inventions disclosed in the later-filed patent families, there can be no assurance they will not do so in the future.

Named inventors on our patent applications, whether filed by us or acquired from Aditech, could also challenge whether their property rights were properly assigned. Further, other individuals (including persons not known to us or their employers) could make claims or assertions that they are inventors and/or owners of the intellectual property associated with the Company.

“Under mandatory Danish law, a salaried employee having made an invention which is either patentable or registrable as a patentable invention (and products that may be registered as utility models)model in Denmark through his or her service with an employer has the rights to such invention, provided, however, that the rights to the patentable invention upon the employer'semployer’s request must be transferred to the employer, to the extent not otherwise agreed, provided thatif the use of such patentable invention falls within the "working area"“working area” of the employer or it is a result of a specific assignment given by the employer to the employee. Following notification from the employee of the invention, the employer has four months to decide whether to acquire the rights to the invention. Such a transfer of the invention to the employer entitles the employee to a "reasonable compensation." The fee will be fixed considering the value of the inventionreceive and its consequences forobligates the employer to pay a “reasonable compensation” unless the employee's terms of employmentnature and the impact that the employee's service has had for the invention. In the event that the value of the invention does not exceed what the employee, taking histhe agreed working conditions as a whole into account, reasonably could be expected to achieve,achieve. The fee will be fixed factoring in the employee is not entitled to any fee.value of the invention and its importance for the employer’s business, the employee’s terms of employment and the impact that the employee’s service has had on the invention. The compensation payable by the employer is not subject to any maximum amount and may be paid either as a lump sum or as a continuing royalty payment based on, for example, the number of items produced based on the invention. An employee'semployee’s claim for compensation may become time-barred or forfeited due to the employee'semployee’s passive behavior. The general relative time-barring deadline under Danish law is five years with respect to claims based on employment matters, whereas the general absolute deadline for such claims is 10 years.”

Some of the named inventors on the newer applications associated with the Company (not the Core Composition Patent family) are or were employees of our German subsidiary, FP GmbH, and thus are subject to German employment law. German employment law governs the transfer/assignment of any intellectual property rights generated by such employees. In particular, any inventions eligible for patent protection made by such employees are subject to the provisions of the German Act on

Table of Contents

Employees' Employees’ Inventions (Gesetz über Arbeitnehmererfindungen), which regulates the ownership of, and compensation for, inventions made by employees. The law provides for a formal procedure for the transfer of an employee'semployee’s rights to patentable inventions which result from performance of the tasks the employee is charged with at the employer or which are based to a significant extent on the experiences or works of the employer, upon the employer'semployer’s request within a certain period of time after notification by the employee.

We believe that all inventive contributions made by employees of FP GmbH were made after the amended version of the German Act on Employees'Employees’ Inventions came into force on October 1, 2009, and thus the amended version of the law exclusively applies to such inventions. Prior to October 1, 2009, such formal procedure had been susceptible to faults. The amendments to the law facilitate the transfer of rights in employees'employees’ inventions to the employer by replacing the former opt-in approach with an opt-out approach.

Following the transfer of rights, an employee is entitled to a claim for "reasonable compensation"“reasonable compensation” to be calculated on an individual basis (e.g., revenue achieved through protection of the patent). In addition, the German Act on Employees'Employees’ Invention provides for certain obligations on the employer including the obligation to apply for patent protection in Germany, the obligation to release the invention for application in those countries where the employer does not want to apply for a patent and the obligation to offer to the employee granted patents or pending patent applications if the employer intends to abandon rights in any country.

We face the risk that disputes can occur between us and employees or ex-employees of FP GmbH pertaining to alleged non-adherence to the provisions of this act. Such disputes may be costly to defend and take up our management'smanagement’s time and efforts whether we prevail or fail in such dispute. If we are required to pay additional compensation or face other disputes under the German Act on Employees'Employees’ Inventions, in particular in case of a failed transfer of rights, our results of operations could be adversely affected.

Intellectual property rights have limitations and may not adequately protect our business.

The degree of future protection afforded by the intellectual property rights associated with the Company is uncertain because intellectual property rights have limitations and may not adequately protect our business. The following examples are illustrative:

•

Others may be able to commercialize DMF-containing products that are not covered by the claims of the patents or patent applications associated with the Company.



•

Others may independently develop similar or alternative technologies or otherwise circumvent any of our technologies without infringing the patents or patent applications that we own, license or will own or license.



•

We might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own, license or will own or license.



•

We might not have been the first to file patent applications on the inventions disclosed in those applications.

Table of Contents

•

Our competitors might conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets.



•

Ownership of the patents or patent applications associated with the Company may be challenged by third parties.



•

The patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business.

Risks Related to Our Financial Position and Capital Needs

With the exception of 2017, we have a history of operating losses and we may not achieve or sustain profitability.

        Since the Company's inception, with the exception of 2017 when we received a nonrecurring cash fee of $1.25 billion, or the Non-refundable Fee, from Biogen in connection with the License Agreement, we have incurred net losses and negative cash flows from operations. We expect to incur net losses and negative cash flows from operations for the foreseeable future, subject to the resolution of the Opposition Proceeding. There is no assurance that we will ever have operating revenues, net income or positive cash flows from operations in the future. The Group's ability to generate future operating revenue is currently limited to royalties that are contingently due to the Company under the License Agreement only if we prevail, including all appeals, in the Opposition Proceeding. If we fail to prevail in the Opposition Proceeding, it is highly unlikely we will have operating revenues and our ability to continue as a going concern long-term would be uncertain.

        Historically, we have financed our operations through our initial public offering completed in October 2014, private placements of equity securities, a government grant, and debt financing arrangements. We have never generated and do not anticipate generating any revenues from our own product sales. We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements beyond the next twelve months. Should the Company experience unforeseen expenses or other usages of cash, the effect would negatively impact management's ability to fund operations and continue as a going concern. In addition, the Danish and German tax authorities have commenced tax audits of the Group's Danish and German tax returns covering multiple years through the year ended December 31, 2017. Management has determined, based on consultations with the Group's tax advisors, that it is not probable (i.e., more likely than not) that the Group will be required to pay additional taxes to the German tax authorities upon the ultimate resolution of the joint tax audit. However, such determination is inherently subjective and, if it is incorrect, then the Group may be subject to significant additional tax levies. The imposition of additional taxes, interest and/or penalties by the taxing authorities could have a material adverse effect on the Group. If the Company were to need to raise capital to fund ongoing operations, there can be no assurances that such funding would be available on acceptable terms, if at all. The long-term success of the Company will be based on successfully defending the intellectual property associated with the Company in the Opposition Proceeding. There can be no assurance that the Company will successfully defend the intellectual property, achieve or sustain positive cash flows from operations or become profitable.

        Even if we do generate revenue, including from future royalties on sales, we may never achieve or sustain profitability on a consistent basis or at all. Our failure to sustain profitability could depress the market price of our ordinary shares and American Depositary Shares, or ADSs, and could impair our ability to raise capital or continue our operations. A decline in the market price of our ordinary shares and ADSs also could cause you to lose all or a part of your investment.

Table of Contents

Negative results from ongoing tax audits could result in additional taxes, interest and penalties becoming due that could negatively impact our financial position, results of operations and cash holdings.

        The Company's Danish, German and United States tax returns are subject to periodic audit by the local tax authorities and are subject to ongoing audits in Germany and Denmark. Such audits could result in the tax authorities disagreeing with the tax filing positions taken by the Group. If the Group is unable to defend the tax filing positions taken, additional taxes, interest and penalties would be assessed against the Group and such amounts could have a material adverse effect on our financial position, results of operations and cash holdings.

        Currently, the Danish and German tax authorities are conducting a joint tax audit of our Danish and German tax returns covering multiple years through the year ended December 31, 2017. To date, the joint tax audit has focused on whether cross-border intercompany transactions were conducted at arm's length and in accordance with tax regulations. Management believes that the intercompany transactions that are the focus of the joint tax audit were conducted at arm's length and are in accordance with tax regulations; however, the Danish and German tax authorities may decide to allocate a greater portion of the Group's total 2017 taxable income to Germany. The corporate income tax rate is higher in Germany than in Denmark and therefore any reallocation of the Group's 2017 taxable income from Denmark to Germany will have a negative effect on our financial position, results of operations and cash holdings that could be material.

        Management has determined, based on consultations with the Group's tax advisors, that it is not probable (i.e., more likely than not) that the Group will be required to pay additional taxes to the German tax authorities upon the ultimate resolution of the joint tax audit. However, such determination is inherently subjective and, if it is incorrect, then the Group may be subject to significant additional tax levies. The ultimate resolution of the joint tax audit may require that the Group incur a material outflow of cash that would negatively affect the Group's financial position, results of operations and cash holdings. The timing of the completion of the joint tax audit by the tax authorities is currently unknown.

        The Company made certain cash payments to equity award holders during the year ended December 31, 2017 that totaled 36.2 million EUR ($43.4 million based on the December 31, 2017 exchange rate). Management believes these payments are tax deductible expenses; however, the tax authorities could disagree. Management believes that appropriate tax filing provisions have been taken by the Company and its subsidiaries regarding these payments; however, if the Group is unable to defend the tax filing positions taken, additional taxes, interest and penalties would be assessed against the Group and such amounts could have a material adverse effect on our financial position, results of operations and cash holdings.

There is no assurance that the joint tax audit being conducted by the Danish and German tax authorities will not result in double taxation.

        The Danish and German tax authorities may conclude their joint tax audit of the Group's Danish and German tax returns without reaching an agreement as to whether intercompany transactions were conducted at arm's length and whether each tax jurisdiction was allocated an equitable portion of the Group's taxable income. In the event of such a conclusion, we believe that one, or possibly both, tax jurisdictions would assess additional taxes on the Company and/or FP GmbH, which would result in double taxation of the Group's taxable income. If double taxation were to occur, the Group would experience a higher effective tax rate, which could be material to and would negatively affect the Group's financial position, operating results and cash holdings.

        In the event that the joint tax audit results in double taxation, the Group may choose to enter into a Mutual Agreement Procedure, or MAP, and/or commence litigation against the tax authorities in order to avoid or mitigate the negative effect of double taxation. A MAP is a

Table of Contents

government-to-government dispute resolution mechanism, which would enable the relevant authorities to resolve the tax dispute on a mutually agreeable basis. A MAP may also follow an independent arbitration procedure to secure a successful resolution. If litigation were pursued, it would likely be time-consuming and costly and there remains a high uncertainty as to whether we would successfully avoid or mitigate the double taxation. If a MAP were pursued, it would also be time-consuming and potentially costly and, while double taxation would be eliminated, there remains a high uncertainty whether we would get relief from an increase to the Group's tax obligation, since the outcome of a MAP could be that a greater portion of the Group's total 2017 taxable income is allocated to Germany. We currently estimate that litigation could take up to five years and a MAP could take up to three years to conclude and could be further prolonged by other factors, including in respect of a MAP the addition of an arbitration procedure. The cost to pursue a MAP and/or litigation and any potential taxes, interest and penalties due at the conclusion of the MAP and/or litigation could each have a material adverse effect on the Group's financial position, operating results and cash holdings.

We may be required to raise additional capital to fund our operations, and we may not be able to do so on terms acceptable to us, or at all.

        We are required under the terms of the License Agreement to maintain sufficient capital to continue the Company as a going concern and a solvent entity, plus an additional $5.0 million until such time as the Company has complied with certain obligations under the License Agreement. While we currently believe we have sufficient resources to enable us to comply with our obligations under the License Agreement and continue as a going concern beyond the next twelve months, unforeseen events could negatively affect our estimates and assumptions about how much capital will be required for us to meet our near and long-term obligations under the License Agreement and to continue as a going concern. If our current estimates and assumptions prove to be wrong and we need to raise additional capital to meet our obligations under the License Agreement and remain a going concern, we cannot assure you that we will be able to raise additional working capital as needed on terms acceptable to us, if at all. If we are unable to raise capital as needed, we may be required to reduce the scope of our operations, which could harm our financial condition and operating results, or cease our operations entirely. In addition, if we fail to prevail in the Opposition Proceeding, including all appeals, future revenues are unlikely and the Company's ability to continue as a going concern long-term would be uncertain.

        In the event we need to seek additional funds, we may raise additional capital through the sale of equity or convertible debt securities. In such an event, the ownership interests of our existing equity holders will be diluted, and the terms of any new securities may include liquidation or other preferences that adversely affect the rights of our existing equity holders. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our ADSs to decline. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as, but not limited to, incurring additional debt, making capital expenditures, declaring and paying dividends or making capital reductions.

Exchange rate fluctuations or abandonment of the Euro currency may materially affect our results of operations and financial condition.

        Due to the international scope of our operations and the fact that a substantial amount of our cash is currently denominated in U.S. Dollars and Euros, fluctuations in exchange rates, particularly between the Danish Kroner, or the DKK, the Euro and the U.S. Dollar, may adversely affect us. Although we are based in Denmark, we have sourced many services from several countries outside Denmark where the transactions are settled in currencies that are not the DKK. Further, potential future revenue may be derived from abroad. As a result, our business is affected by fluctuations in foreign exchange rates between the DKK, the Euro, the U.S. Dollar or other currencies, and the effects

Table of Contents

could have a significant impact on our reported results of operations and cash flows from period to period. For example, in the year ended December 31, 2020 we recognized a foreign exchange loss of $3.0 million. This loss was primarily related to our U.S. Dollar cash holdings and the weakening of the U.S. Dollar during the year compared to the DKK. While we benefited from changes in foreign exchange rates in 2019 and 2018, it is possible that the foreign exchange loss experienced in 2020 could reoccur. Any foreign exchange losses would negatively affect the Group and the effect could be material. Currently, we do not have any exchange rate hedging arrangements in place and do not currently have plans to implement any hedging arrangements. Losses incurred by the Company, including those caused by foreign exchange, could have a negative effect on the trading price of the ADSs.

Developments relating to Biogen, Tecfidera®, our competitors or their products could materially and adversely affect our business, results of operations, business prospects and the market price of our ADSs.

        In the event that our competitors or others in the pharmaceutical industry, including Biogen, experience developments relating to their business, products or product candidates, our business, results of operations, business prospects and the market price of our ADSs could suffer. In particular, if we are eligible to receive royalties on sales of Tecfidera®, our future success will depend on the continued market acceptance of Tecfidera® and adverse events, or the perception of adverse events, relating to Biogen or Tecfidera® would have material adverse effects on us. As a result of entering into the License Agreement, we expect that the market price of our ADSs will become more significantly affected by announcements made by Biogen, over which we have no control. Additionally, cases of progressive multifocal leukoencephalopathy have been reported in patients being treated with Tecfidera®, which could raise safety concerns and harm the market profile of DMF-containing treatments for MS, including Tecfidera®. Similarly, developments relating to other competitors of Biogen and their products could have significant adverse effects on our business prospects and the market price of our ADSs. For example, competitors may offer their products at reduced prices or with discounts or rebates that increase pricing pressure with respect to therapies for the treatment of MS.

Related party transactions may be challenged by tax authorities.

        The jurisdictions in which we conduct or will conduct business, and in particular Denmark, Germany and the United States, have detailed transfer pricing rules which require that all transactions with related parties be priced using arm's-length pricing principles. The taxation authorities in these jurisdictions could challenge our arm's-length related-party transfer pricing practices. For example, prior to the consummation of the License Agreement with Biogen, FP GmbH and the Company terminated their internal license agreement and agreed that FP GmbH should be paid an arm's-length compensation for said termination. International transfer pricing is an area of taxation that depends heavily on the underlying facts and circumstances and generally involves a significant degree of judgment. The Danish and German tax authorities have commenced a joint tax audit of the Group's Danish and German tax returns covering multiple years through the year ended December 31, 2017 and, to date, the joint tax audit has focused on whether cross-border intercompany transactions were conducted at arm's length and in accordance with tax regulations. It is uncertain when, or if, a tax audit will commence in the United States. If such a tax audit were to occur, we expect that the U.S. tax authorities will also focus on the intercompany recognition of revenue and expense to ensure that such transactions were conducted at arm's length. There is no assurance that the Group will successfully defend that intercompany transactions were conducted in accordance with arm's length pricing principles and that any additional taxes, interest or penalties, which could be material, will not be incurred. There is also the risk that the tax authorities could impose additional taxable income or disallow the deductibility of expenses on intercompany cross-border transactions resulting in higher tax obligations in one or more tax jurisdictions. Management's experience has been that the tax authorities can be aggressive in taking positions that would increase taxable income and/or disallow deductible

Table of Contents

expenses reported. If the tax authorities are successful in increasing taxable income and/or disallowing the deduction of expenses in one or more jurisdictions, it would result in the Group experiencing a higher effective tax rate that could be material. The imposition of additional taxes, interest and/or penalties resulting from a tax audit would negatively impact the Company's financial position, operating results and cash flows and the impact could be material.

        Management has determined, based on consultations with the Group's tax advisors, that it is not probable (i.e., more likely than not) that the Group will be required to pay additional taxes to the German tax authorities upon the ultimate resolution of the joint tax audit. However, such determination is inherently subjective and, if it is incorrect, then the Group may be subject to significant tax levies. The ultimate resolution of the joint tax audit may require that the Group incur a material outflow of cash that would negatively affect the Group's financial position, results of operations and cash holdings.

We may need to return the proceeds of a government grant if it is found that we did not fully comply with all terms and conditions.

        As part of the project for the development of new or innovative products and procedures in the Free State of Saxony, Germany, the Sächsische Aufbaubank—Förderbank, or SAB, awarded FP GmbH a grant, or the Grant, of €3.8 million ($4.7 million based on the December 31, 2020 exchange rate) that subsidized certain product development costs incurred by FP GmbH, during the period from March 2007 to December 2008. While the SAB has conducted an audit of the use of proceeds and confirmed that FP GmbH had complied with all the terms and conditions of the Grant, the SAB maintains the right to revoke the Grant and demand repayment of the Grant, plus interest, in the event the SAB in the future determines that FP GmbH failed to fully comply with all the terms and conditions of the Grant. While we believe that FP GmbH is in full compliance with all the terms and conditions of the Grant, there is always a risk that the SAB in the future could disagree and demand repayment of the Grant plus interest. If we were required to repay the Grant, it would have a material negative effect on our financial position and operating results.

Risks Related to Our Ordinary Shares and ADSs

If we fail to maintain the listing of our ADSs with a U.S. national securities exchange, the liquidity of our ADSs could be adversely affected.

Our ADSs are currently listed for trading on The Nasdaq Capital Market. In order to maintain our listing on The Nasdaq Capital Market, we must comply with certain Nasdaq listing rules. In June 2019, we received written notices from Nasdaq indicatingrules, including maintaining a minimum bid price of $1.00 per ADS and maintaining our status as an operating company. We cannot assure that we were notwill stay in compliance with two of the requirements forNasdaq’s continued listing on The Nasdaq Global Select Market, which was our listing venue at the time. In order to regain compliance and maintain our listing, we subsequently transferred our listing venue from The Nasdaq Global Select Market to The Nasdaq Capital Market and changed the ADS ratio from one ADS per two ordinary shares to one ADS per fourteen ordinary shares through a reduction of the number of outstanding ADSs.

        While the trading price of our ADSs has been above $1.00, as required by the Nasdaq listing rules, since the ADS ratio change was effected, there is no assurance that the trading price will stay above $1.00.standards. We actively monitor the price of our ADSs and will consider available options, including, but not limited to, changing the ADS ratio, to maintain compliance with the continued listing standards of Nasdaq. We cannot assure that we will stay in compliance with Nasdaq's continued listing standards. If we fail to comply with the continued listing standards of Nasdaq, we will not be able to remain listed on that stock exchange, which could have a material adverse effect on the price of our ADSs. In addition, if we do not prevail in the Opposition Proceeding, weour ADSs may choose to delist our ADSsbe delisted from The Nasdaq Capital Market.

Table of ContentsMarket, either by Nasdaq or voluntarily by the Company.

If our ADSs are delisted, either by Nasdaq or voluntarily by the Company, our ADSs may be eligible to trade on the OTC Bulletin Board or another over-the-counter market, however, such delisting could have an adverse impact on the price of our ADSs. Any such alternative would likely result in it being more difficult for us to raise additional capital through the public or private sale of equity securities and for investors to dispose of, or obtain accurate quotations as to the market value of, our ADSs. In addition, there can be no assurance that our ADSs would be eligible for trading on any such alternative exchange or markets.

The market price of our ADSs has fluctuated in the past, and is likely to continue to be volatile, which could subject us to litigation.

The market price of our ADSs has fluctuated and is likely to be subject to further wide fluctuations in response to numerous factors, many of which are beyond our control, such as those in this “Risk Factors” section and others including:

In addition, if the stock market experiences uneven investor confidence, the market price of our ADSs could decline for reasons unrelated to our business, operating results, or financial condition. The market price of our ADSs might also decline in reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation. If we are the subject of such litigation, it could result in substantial costs and a diversion of our management’s attention and resources.

Holders of our ADSs have different rights than holders of our ordinary shares.

We have issued to our security holders ADSs and ordinary shares, each of which afford their holders different rights. Currently, only our ADSs are publicly traded (on The Nasdaq Capital Market). An ADS holder will not be treated as one of our shareholders and will not have shareholder rights. Danish law governs shareholder rights. Our depositary, Bank of New York Mellon, is the holder of the ordinary shares underlying outstanding ADSs. Holders of ADSs only have ADS holder rights. The deposit agreement among us, the depositary, and ADS holders sets out ADS holder rights as well as the rights and obligations of the depositary.

The market price of the ADSs may be volatile and may fluctuate due to factors beyond our control.

The price of equity securities of publicly traded emerging biopharmaceutical and drug discovery and development companies has been highly volatile and is likely to remain highly volatile in the future. The market price of the ADSs may fluctuate significantly due to a variety of factors, including:

•

developments in the Opposition Proceeding;



•

developments regarding our ongoing tax audits;



•

economic conditions related to the ongoing COVID-19 pandemic;



•

developments concerning proprietary rights, including patents and litigation matters;



•

technological innovations or commercial product introductions by our competitors;



•

changes in government regulations;



•

public concern relating to the commercial value or safety of Tecfidera®;



•

financing or other corporate transactions;



•

publication of research reports or comments by securities or industry analysts;



•

general market conditions in the pharmaceutical industry or in the economy as a whole; or



•

other events and factors beyond our control.

In addition, the stock market in general has recently experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of individual companies. Broad market and industry factors may materially affect the market price of companies'companies’ equity securities, including ours, regardless of actual operating performance.

There may be a lack of liquidity and market for our ordinary shares and ADSs.

A lack of liquidity in the markets for our ADSs could negatively affect the ability of the holders to sell our ADSs or the price at which holders of our ADSs will be able to sell them. As a result of the ADS ratio change that we effected in December 2019, there are fewer ADSs outstanding, which could have a negative impact on liquidity for such ADSs. Future trading prices of our ADSs will depend on

Table of Contents

many factors including, among other things, prevailing interest rates, our operating results and the market for similar securities.

Our ordinary shares underlying the ADSs are not listed on any public securities exchange. Future sales by our existing shareholders could limit the ability of an ADS holder to sell the ADSs at the price and time such holder desires. Any such limited trading market may also increase the price volatility of the ADSs or the ordinary shares underlying the ADSs.

Our ordinary shares are controlled by insiders, who could have significant influence over the outcome of corporate actions requiring board and shareholder approval.

Our Chairman, Florian Schönharting, and director, Torsten Goesch, indirectly beneficially own approximately 72%70% of our ordinary shares (represented as ADSs), of which approximately 54%52% is beneficially owned by Mr. Schönharting. With such concentrated control, Messrs. Schönharting and Goesch, acting individually or in concert, have significant influence over the outcome of corporate actions requiring board and shareholder approval, including the election of directors, certain decisions relating to our capital structure, amendments to our Articles of Association, and the approval of mergers and other significant corporate actions or transactions. The interests of these insiders may not always coincide with our interests or the interests of our other shareholders or holders of the ADSs and those other shareholders and holders of the ADSs may have no effective voice in the management of the Company.

Certain of our principal shareholders as well as NB FP Investment II K/S have entered into a shareholders'shareholders’ agreement under which they have agreed to take certain actions that may be adverse to the interests of other shareholders and holders of ADSs.

Certain of our principal shareholders as well as NB FP Investment II K/S have entered into a shareholders'shareholders’ agreement, under which they have agreed to take certain actions, including with respect to the ability of certain principal shareholders to nominate directors to the board of directors and the obligation to increase share capital in certain circumstances. The shareholders that are party to the shareholders'shareholders’ agreement control a majority of the voting power of our ordinary shares, and the actions taken under or pursuant to the shareholders'shareholders’ agreement may conflict with the interests of other shareholders and holders of ADSs.

ADS holders may not be able to exercise their right to vote the ordinary shares underlying the ADSs.

Holders of ADSs may exercise voting rights with respect to the ordinary shares represented by the ADSs only in accordance with the provisions of the deposit agreement and not as direct shareholders in the Company. The deposit agreement provides that, upon receipt of notice of any meeting of holders of our ordinary shares, the depositary will fix a record date for the determination of ADS holders who shall be entitled to give instructions for the exercise of voting rights. Upon timely receipt of notice from us, if we so request, the depositary shall distribute to the holders as of the record date (1) the notice of the meeting or solicitation of consent or proxy sent by us and (2) a statement as to the manner in which instructions may be given by the holders. However, we may not request the depositary to distribute this information, which could effectively limit the ability of ADS holders to direct the voting of the ordinary shares underlying their ADSs.

ADS holders may instruct the depositary of their ADSs to vote the ordinary shares underlying their ADSs. Otherwise, ADS holders will not be able to exercise their right to vote, unless they withdraw the ordinary shares underlying the ADSs. However, ADS holders may not know about the meeting far enough in advance to withdraw those ordinary shares. If we ask for ADS holders'holders’ instructions, the depositary, upon timely notice from us, will notify ADS holders of the upcoming vote and arrange to deliver our voting materials to ADS holders. We cannot guarantee ADS holders that they will receive the voting materials in time to ensure that they can instruct the depositary to vote the

Table of Contents

ordinary shares underlying the ADSs held by them or to withdraw the ordinary shares underlying the ADSs so that the ADS holder can vote them. If the depositary does not receive timely voting instructions from the ADS holder, it may give a proxy to a person designated by us to vote the ordinary shares underlying the ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that ADS holders may not be able to exercise any right to vote, and there may be nothing ADS holders can do if the ordinary shares underlying their ADSs are not voted as requested.

ADS holders'holders’ rights to participate in any future preferential subscription rights or to elect to receive dividends in shares may be limited, which may cause dilution to their holdings.

According to Danish law, if we issue additional securities for cash, current shareholders will have preferential subscription rights for these securities on a pro rata basis unless (i) they waive those rights at a meeting of our shareholders (if issued at market value, by at least two-thirds of the votes cast and the share capital represented at such meeting), (ii) such rights are waived individually by each shareholder, or (iii) the additional securities are issued pursuant to an authorization granted to our board of directors including a waiver of preemptive rights. However, our ADS holders in the United States will not be entitled to exercise or sell such rights related to the ordinary shares which they represent unless we register the rights and the securities to which the rights relate under the Securities Act of 1933, as amended, or the Securities Act, or an exemption from the registration requirements is available. In addition, the deposit agreement provides that the depositary will not make rights available to our ADS holders unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act or exempted from registration under the Securities Act. Further, if we offer holders of our ordinary shares the option to receive dividends in either cash or shares, under the deposit agreement the depositary may require satisfactory assurances from us that extending the offer to holders of ADSs does not require registration of any securities under the Securities Act before making the option available to holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders may be unable to participate in our rights offerings or to elect to receive dividends in shares and may experience dilution in their holdings. In addition, if the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case our ADS holders will receive no value for these rights.

ADS holders may be subject to limitations on the transfer of their ADSs and the withdrawal of the underlying ordinary shares.

ADSs, which may be evidenced by American Depositary Receipts, or ADRs, are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason subject to each ADS holder'sholder’s right to cancel such holder'sholder’s ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders'shareholders’ meeting or we are paying a dividend on our ordinary shares. In addition, ADS holders may not be able to cancel their ADSs and withdraw the underlying ordinary shares when they owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order

Table of Contents

to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities.

Future sales, or the perception of future sales, of a substantial number of our ordinary shares or ADSs could adversely affect the price of the ADSs, and actual sales of our equity will dilute shareholders and ADS holders.

Future sales of a substantial number of our ordinary shares or ADSs, or the perception that such sales will occur, could cause a decline in the market price of the ADSs. If shareholders sell substantial amounts of shares or ADSs in the public market, or the market perceives that such sales may occur, the market price of the ADSs and our ability to raise capital through an issue of equity securities in the future could be adversely affected. We have entered into a registration rights agreement pursuant to which we have agreed under certain circumstances to filefiled a registration statement to register the resale of the shares held by certain of our existing shareholders as well as to cooperate in certain public offerings of such shares.December 2021. In addition, we have registered ordinary shares and ADSs that we may issue under our 2014 Omnibus Equity Incentive Plan and may register shares under other equity compensation plans. As a result, these ordinary shares can be freely sold in the public market or otherwise upon issuance, subject to volume limitations applicable to affiliates and lock-up agreements.

We do not expect to pay dividends or other shareholder distributions in the foreseeable future.

While we distributed the proceeds from a capital reduction of EUR 917.7 million, or $1.1 billion, to our ADS holders and shareholders in September 2017, we do not expect to pay dividends or other shareholder distributions in the foreseeable future. Even if future operations lead to significant levels of distributable profits, any earnings may be reinvested in our business and dividends or other shareholder distributions, if any, may not be paid until we have an established revenue stream to support such continuing dividends or other shareholder distributions. Payment of future dividends or other shareholder distributions, if at all, will effectively be

at the discretion of our board of directors, after taking into account various factors including our business prospects, cash requirements and financial performance. In addition, payment of future dividends may be made only if our shareholders'shareholders’ equity exceeds the sum of share capital plus the reserves required to be maintained by the License Agreement, Danish law or by our Articles of Association. Accordingly, investors cannot rely on income from dividends or other shareholder distributions and any returns on an investment in the ADSs may depend entirely upon any future appreciation in the price of the ADSs.

We are a foreign private issuer and, as a result, we willare not be subject to U.S. proxy rules and will beare subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

We will report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are non-accelerated filers are required to file their annual report on Form 10-K within 90 days after the end of each fiscal year. Foreign private issuers are

Table of Contents

also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, our shareholders and ADS holders may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

The determination of foreign private issuer status is made annually on the last business day of an issuer'sissuer’s most recently completed second fiscal quarter. Accordingly, we will next make a determination with respect to our foreign private issuer status on June 30, 2021.2022. There is a risk that we will lose our foreign private issuer status in the future.

We would lose our foreign private issuer status if, for example, more than 50% of our assets are located in the United States and we continue to fail to meet additional requirements necessary to maintain our foreign private issuer status. As of December 31, 2020,2021, approximately $168,000$138,000 of our assets were located in the United States, although this may change if we expand our operations in the United States. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly greater than the costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial statements in accordance with U.S. GAAP and modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers. Such conversion and modifications would involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers, which could also increase our costs.

If we fail to establish and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of the ADSs.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to detect and/or prevent errors and fraud. Any failure to maintain current controls or implement on a timely basis, new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act of 2002 or work performed by our independent registered accounting firm as part of their audit of our financial statements may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of the ADSs.

We are required to disclose changes made in our internal control over financial reporting and procedures and our management is required to assess the effectiveness of these controls annually. An independent assessment of the effectiveness of our internal control over financial reporting could detect problems that our management'smanagement’s assessment might not. Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation and could adversely affect the price of our ADSs.

Table of Contents

Failure to maintain effective internal control over financial reporting could result in material misstatements in our financial statements which could negatively impact the price of our ADSs.

        In connection withWe have in the preparation of our consolidated financial statements for the year ended December 31, 2020, we carried out an evaluation of the effectiveness ofpast concluded that our internal controls over financial reporting were not effective and concluded that our previously identifiedreported a material weakness still exists, as described in "Item“Item 15. Controls and Procedures"Procedures” included elsewhere herein. We cannot assure you that our internal control over financial reporting will be effective inWhile the future or that additionalpreviously reported material weakness will not be discovered.

        As a consequence of this material weakness, managementhas been remediated and we have concluded that our internal controlcontrols over financial reporting and, consequently, our disclosure controls and procedures, were not effective as of December 31, 2020. Our management believes that2021, there is no assurance we will be able to maintain adequate disclosure controls and procedures and internal controls of financial reporting in the consolidated financial statements included in this annual report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.future.

        We have taken actions, or Actions, to remediate the causes of the material weakness; However, since the material weakness was associated with specific transactions that did not occur subsequent to implementing the Actions, there has been no opportunities for us to monitor and test that the Actions taken were sufficient to mitigate the material weakness. The lack of objective evidence to support that the material weakness has been remediated, necessitates that we continue to report that the material weakness has not been remediated. Failure to effectively remediate the causes of this material weakness or establishmaintain adequate disclosure controls and maintainprocedures and effective internal control over financial reporting could result in material misstatements in our financial statements or a failure to meet our reporting obligations. This, in turn, could negatively impact the Company'sCompany’s financial position, operating results and cash flows, the market price of our ADSs and our ability to remain listed on The Nasdaq Capital Market.

Failure to comply with Section 404 of the Sarbanes-Oxley Act could negatively affect our business including the price of our ADSs.

Under the Sarbanes-Oxley Act, we are required to maintain effective disclosure controls and procedures and internal control over financial reporting and to make a formal assessment of the effectiveness of our internal control over financial reporting.reporting annually. We concluded that our disclosure controls and procedures and internal controls over financial reporting were not effective as of December 31, 2020, and there is no assurance that we will be able to remediate2021: however, in the past our formal assessment of the effectiveness of our internal control over financial reporting identified a material weakness that has been remediated as described in “Item 15. Controls and maintain adequate disclosure controls and procedures and internal controls in the future.Procedures” included elsewhere herein. We may experience situations in the future where our evaluation and testing processes required by Section 404 of the Sarbanes-Oxley Act, or work performed by independent registered accountants, may identify one or more material weaknesses in our internal controls over financial reporting that will result in our inability to assert that our internal control over financial reporting is effective.

If we cannot maintain adequate internal controls over financial reporting that provide reasonable assurance of the reliability of the financial reporting and preparation of our financial statements for external use, we could suffer harm to our reputation, fail to meet our public reporting requirements by providing timely and accurate financial statements, be required to restate our prior period financial statements, or we may be unable to comply with applicable stock exchange listing requirements, any of which could adversely affect the price of our ADSs.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research about our business, the price of the ADSs and our trading volume could decline.

        The trading market for the ADSs depends in part on the research and reports that securities or industry analysts publish about us or our business. Presently, the Company is not covered by any analysts. If we are covered by securities or industry analysts in the future and such analysts downgrade

Table of Contents

our ADSs or publish inaccurate or unfavorable research about our business, the price of our ADSs would likely decline. If one or more such analysts ceased coverage of our company or failed to publish reports on us regularly, demand for the ADSs could decrease, which might cause the price of our ADSs and trading volume to decline.

We believe that we were classified as a passive foreign investment company, or a PFIC, fromsince 2014 to 2020 and may be classified as a PFIC in future years. If we are a PFIC for any taxable year, this could result in adverse U.S. federal income tax consequences to U.S. Holders of our ADSs.

Under the U.S. Internal Revenue Code of 1986, as amended, or the Code, we will be a PFIC for any taxable year in which, after the application of certain "look-through"“look-through” rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of "passive“passive income,"” or (ii) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production of, "passive“passive income."” Passive income generally includes interest, dividends, rents, certain non-active royalties and capital gains. We believe that we were a PFIC for each ofsince the seven years preceding December 31, 2020,Company’s initial public offering in 2014 and may be classified as a PFIC in future years. Whether we will be a PFIC in any year depends on the composition of our income and assets, and the relative fair market value of our assets from time to time, which we expect may vary substantially over time. Because (i) we currently own a substantial amount of passive assets, including cash, and (ii) the value of our assets, including our intangible assets, that generate non-passive income for PFIC purposes, is uncertain and may vary substantially over time, it is uncertain whether we will be or will not be a PFIC in future years.

If we are a PFIC for any taxable year during which a U.S. Holder, as defined below, holds ADSs, a U.S. Holder may be subject to adverse tax consequences, including (i) if a mark-to-market election or a qualified electing fund, or QEF, election has not

been made with respect to its ADSs, a U.S. Holder may incur significant additional U.S. federal income taxes on income resulting from distributions on, or any gain from the disposition of, such ADSs, as such income generally would be allocated over the U.S. Holder'sHolder’s holding period for its ADSs and would be subject to tax at the highest rates of U.S. federal income taxation in effect for such years, with an interest charge then imposed on the resulting taxes in respect of such income, and (ii) dividends paid by us would not be eligible for preferential individual rates of U.S. federal income tax. In addition, U.S. Holders that own an interest in a PFIC are required to comply with certain reporting requirements.

A U.S. Holder may in certain circumstances mitigate adverse tax consequences of the PFIC rules by filing an election to treat the PFIC as a QEF, or, if shares of the PFIC are "marketable stock"“marketable stock” for purposes of the PFIC rules, by making a mark-to-market election with respect to the shares of the PFIC. However, we are not obligated to comply with the reporting requirements necessary to permit U.S. Holders to elect to treat us as a QEF and accordingly U.S. Holders may not be able to make QEF elections to avoid the adverse tax consequences of the PFIC rules. While we have complied with the reporting requirements to permit U.S. Holders to elect to treat us as a QEF in the past, we reserve the right to discontinue such reporting in the future for any reason at any time. Furthermore, if a U.S. Holder were able to make a mark-to-market election with respect to its ADSs, the U.S. Holder would be required to include annually in its U.S. federal taxable income an amount reflecting any year-end increase in the value of its ADSs (which may not be matched by cash distributions). Mark-to-market elections will not be available for any of our subsidiaries that are also PFICs. For further discussion of the adverse U.S. federal income tax consequences of our classification as a PFIC, see "Item“Item 10. Additional Information—Taxation—U.S. Federal Income Tax Considerations for U.S. Holders."

Table of Contents”

Risks Related to Danish Law and Our Operations in Denmark

Preemptive rights may not be available to non-Danish shareholders, and any inability of non-Danish shareholders to exercise preemptive rights in respect of shares issued in any offering by us will cause their proportionate interests to be diluted.

Under Danish law, existing shareholders will have preemptive rights to participate on the basis of their existing share ownership in the issuance of any new shares for cash consideration, unless those rights are waived by a resolution of the shareholders or the shares are issued pursuant to an authorization granted to the board of directors including a waiver of preemptive rights. The preemptive rights of the shareholders may be waived by two-thirds of the votes cast and of the share capital represented at the general meeting if the share capital increase is made at market price, or, if the share capital increase is made at below market price, by nine-tenths of the votes cast and of the share capital represented at the general meeting. Certain non-Danish shareholders may not be able to exercise preemptive rights for their shares due to restrictions included in securities laws of certain countries, including those applicable in the United States. To the extent that shareholders are not able to exercise their preemptive rights in respect of the shares in any offering by us, such shareholders'shareholders’ proportional interests will be diluted.

We are a Danish company with limited liability. The rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions.

We are a Danish company with limited liability. Our corporate affairs are governed by our Articles of Association and by the laws governing companies incorporated in Denmark. The rights of shareholders and the responsibilities of members of our board of directors may be different from the rights and obligations of shareholders and boards of directors in companies governed by the laws of U.S. jurisdictions. In the performance of its duties, our board is required by Danish law to consider the interests of our Company, its shareholders, its employees and other stakeholders, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, the interests of our shareholders.

We are, as a foreign private issuer, not obligated to and do not comply with all the corporate governance requirements of Nasdaq. This may affect the rights of our shareholders.

We are a foreign private issuer for purposes of U.S. federal securities laws. As a result, in accordance with the listing requirements of Nasdaq, we rely on home country governance requirements and certain exemptions thereunder rather than relying on the corporate governance requirements of Nasdaq. In accordance with Danish law and generally accepted business practices, our Articles of Association do not provide quorum requirements generally applicable to general meetings of shareholders. To this extent, our practice varies from the requirement of Nasdaq Listing Rule 5620(c), which requires an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the outstanding voting shares. Although we must provide shareholders with an agenda and other relevant documents in advance of a general meeting of shareholders, Danish law does not have an applicable regulatory regime for the solicitation of proxies, and thus our practice will vary from the requirement of Nasdaq

Listing Rule 5620(b). Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to these Nasdaq requirements.

As a Danish company we must comply with the Danish Companies Act, or DCA. The DCA contains binding provisions for the board of directors, shareholders and general meetings of shareholders; and financial reporting, auditor, disclosure, compliance and enforcement standards. Certain provisions apply to our board of directors (e.g., in relation to role, composition, conflicts of interest requirements and remuneration), shareholders and the general meeting of shareholders

Table of Contents

(e.g. (e.g., regarding our obligations to provide information to our shareholders). Further, certain sections of the DCA only apply to Danish companies listed on a regulated market within the European Economic Area, or EEA, and accordingly do not apply to us. This may affect the rights of our shareholders.

We have historically filed our Danish tax returns on a standalone basis; however, due to certain changes to our ownership structure made at the start of 2013, as of January 2013, we began to file our Danish tax returns asare part of a joint taxation schemes.

        During the period January 19, 2013 to December 31, 2015,group in Denmark and therefore we were subject to a Danish joint taxation schemeare jointly and severally liable with Tech Growth Invest ApS and entities under Tech Growth Invest ApS's control, collectively referred to hereafter as Tech Growth. From the establishment of FA on December 3, 2015, FA was part of the joint taxation scheme with Tech Growth. A subsidiary of Tech Growth Invest ApS experienced a change in ownership on December 31, 2015. The effect of the change in ownership resulted in the year ended December 31, 2015 being the final year that the Company and FA were partother members of the joint taxation group with Tech Growth. On January 1, 2016,for the Company and FA became membersjoint tax group’s Danish tax liabilities.

We are part of a new Danish joint taxation groupGroup, or Tax Group, with NB FP Investment General Partner ApS. As a member of the Tax Group, we are jointly and severally liable with NB FP Investment General Partner ApS (collectively the "2016 Tax Group"). Upon their inception during 2017, Operations and FWP IP (through the date of the sale of FWP IP (November 22, 2017) to HoldCo, which is owned and controlled by the Foundation) became members of the 2016 Tax Group. The Company remains liable with other entities in the joint taxation group with Tech Growth Invest ApS for Tech Growth's Danish tax liabilities that can be allocated to the period January 19, 2013 to December 31, 2015 and the Company is liable with other entities in the 2016 Tax Group for Danish tax liabilities that can be allocated to the five-year period ended December 31, 2020.

        All members of a Danish tax group are jointly and severally liable for the group'sTax Group’s Danish tax liabilities. However, Danish law requires the taxing authorities to look primarily to the NB FP Investment General Partner ApS, as the administration company, and its wholly-owned entities to satisfy Danish tax liabilities and to look to partially owned entitiesother members of the Tax Group (such as us) only on a secondary basis. While we do not believe Tech Growth, NB FP Investment General Partner ApS or any other member of the joint taxation scheme has any material Danish tax liabilities, there can be no assurance that it does not have any such material liabilities, that it will not incur such material liabilities in the future, or that it will fulfill any such obligations. If Tech Growth Invest ApS, NB FP Investment General Partner ApS or any other entity that is a member of any of the joint taxation groups has any material Danish tax liabilities that are not satisfied by them or if they, while being membersa member of the respective joint taxation group,Tax Group, incur any such liabilities in the future, we may be responsible for the payment of such taxes, which could have an adverse effect on our financial position, results of operations.operations and cash holdings.

U.S. federal and/or state income tax may apply to us in the future.

We have taken the position that we are not currently subject to U.S. federal or state income tax. Our Vice President, Finance and Controller, Thomas Carbone, is employed by FP USA. Pursuant to the U.S. tax laws and the income tax treaty between Denmark and the United States, we will not be subject to U.S. tax in connection with any of such employees'employees’ activities unless there is a U.S. trade or business being conducted in connection with a permanent establishment. While we have taken the position that the functions such employees fulfill do not give rise to U.S. tax liability for us, there can be no assurance that the U.S. tax authorities will agree with such position. If the U.S. Internal Revenue Service disagrees with our position, and/or if the functions of such employees are expanded in the future, and/or we engage additional personnel located in the United States whose functions are sufficiently broad, we may be or may become subject to U.S. federal and/or state income tax, which might have a material adverse effect on us and our results of operations.

Table of Contents

Claims of U.S. civil liabilities may not be enforceable against us.

Forward Pharma A/S is incorporated under the laws of Denmark, and three of its subsidiaries, Operations, FP GmbH and FA, are incorporated under the laws of Denmark, Germany and Denmark, respectively. Substantially all of our assets are located outside the United States. On a combined basis, the majority of our directors and officers reside outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce judgments against them or us in U.S. courts, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States.

The United States does not have a treaty with Denmark or Germany providing for reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Accordingly, a final judgment for the payment of money rendered by a U.S. court based on civil liability will not be directly enforceable in Denmark or Germany. However, if the party in whose favor such final judgment is rendered brings a new lawsuit in a competent court in Denmark, that party may submit to the Danish court the final judgment that has been rendered in the United States. A judgment by a federal or state court in the United States will neither be recognized nor enforced by a Danish court, but such judgment may serve as evidence in a similar action in such court. In addition, the final judgment of a U.S. court may be recognized and enforced in Germany in compliance with certain requirements including petitioning a German court to recognize and declare such judgment enforceable. Also, general reciprocity in respect of the mutual recognition of judgments between Germany and the U.S. court that rendered the concerned judgment must be guaranteed, and the judgment must not violate German (international) public policy.

​

​

ITEM 4. INFORMATION ON THE COMPANY

A.          History and Development of the Company

Forward Pharma A/S is a Danish biopharmaceutical company whose operations previously consisted of developing FP187^®, a proprietary formulation of DMF, for the treatment of MS and other inflammatory and neurological indications. DMF is an immunomodulator that can be used as a therapeutic to improve the health of patients with MS and immune disorders.

On February 1, 2017, our License Agreement with Biogen became effective. Pursuant to the License Agreement, Biogen paid us a non-refundable cash fee of $1.25 billion. The License Agreement provided Biogen with a co-exclusive license in the United States and an exclusive license outside the United States, to the Company'sCompany’s intellectual property.

Under the terms of the License Agreement, we effected a corporate restructuring in 2017. For more, see "—“—B. Business Overview—Our Company—Restructuring."”

On March 25, 2019, we received notice from Biogen of their exercise of the option to purchase the intellectual property in the United States associated with the Company pursuant to the License Agreement. The Foundation and Biogen consummated the assignment of the U.S. intellectual property to Biogen upon the execution of assignment agreements and the payment of a nominal amount by Biogen to FWP IP, and Biogen has assumed ownership and responsibility for the assigned U.S. intellectual property. In addition, we are no longer able to develop or commercialize any therapy for the treatment of any human disease or condition using DMF, including FP187®FP187^®. For more, see "—“—B. Business Overview—Our Company—License Agreement with Biogen."” As discussed throughout this Annual Report, we have permanently discontinued our development of DMF formulations, including FP187®FP187^®.

We are a Danish public limited liability company founded in 2005. Our principal executive offices are located at Østergade 24A, 1st Floor, 1100 Copenhagen K, Denmark. Our telephone number at this address is +45 33 44 42 42. We are currently composed of Forward Pharma A/S, its two wholly-owned subsidiaries, FP USA, incorporated in the state of Delaware, and Operations, incorporated in Denmark, and two wholly-owned subsidiaries of Operations, FP GmbH, incorporated in Germany, and FA, incorporated in Denmark.

Table of Contents

In 2004, Aditech, controlled by Nordic Biotech General Partner ApS (an affiliate of one of our largest shareholders), assessed the potential for DMF to become a significant global product. Aditech specifically focused on the development of an improved DMF formulation, with the goal of simplifying the product compared to then-existing DMF-containing treatments and limiting the side effects typically associated with such treatments.

We were founded for the purpose of developing such an improved DMF formulation while protecting, defending and enforcing a patent family Aditech filed relating to, among other things, formulations and dosing regimens of DMF. In 2010, we acquired this patent family from Aditech. Under our agreement with Aditech, we obtained, among other things, Aditech'sAditech’s patents and associated know-how related to formulations and dosing regimens of DMF. For more, see "—“—Material Agreements—Aditech Agreements."”

We have not made any significant capital expenditures or divestures during the last three financial years, and do not have any significant capital expenditures or divestitures currently in progress.

B.          Business Overview

Our Company

We have focused on DMF'sDMF’s potential as an immunomodulating drug to improve the health of patients with immune disorders for over 10 years, during which time we assembled a significant intellectual property portfolio. As a result of entering into the License Agreement, combined with the unsuccessful outcome in the Interference Proceeding and Biogen'sBiogen’s purchase of the intellectual property in the United States associated with the Company, we have permanently discontinued our development of a DMF formulation, except for maintaining our files and records for previously completed research and development work. We completed an organizational realignment in 2017 to focus on the deliverables under the License Agreement and reduce operating expenses.

License Agreement with Biogen

On February 1, 2017, our License Agreement with Biogen and certain additional parties became effective. The License Agreement provided Biogen with a co-exclusive license in the United States, and an exclusive license outside the United States, to the Company'sCompany’s intellectual property, effective as of February 9, 2017.

In accordance with the License Agreement, Biogen paid the Company the Non-refundable Fee of $1.25 billion and could be obligated to pay the Company royalties in the future subject to the outcome of certain matters discussed below.

The License Agreement did not resolve the Interference Proceeding or the Opposition Proceeding. The Company and Biogen entered into the License Agreement with the intention to permit the PTAB and the Federal Circuit, as applicable, and the EPO, the TBA and the Enlarged Board of Appeal, as applicable, to make final determinations in the proceedings before them.

Because the Company was unsuccessful in the Interference Proceeding after all appeals, pursuant to the License Agreement, Biogen had the option to elect to obtain an exclusive license to the intellectual property in the United States associated with the Company or to purchase the intellectual property in the United States associated with the Company for a nominal price.

On March 25, 2019, we received notice from Biogen of their exercise of the option to purchase the intellectual property in the United States associated with the Company pursuant to the License Agreement. The Foundation and Biogen consummated the assignment of the U.S. intellectual property to Biogen upon the execution of assignment agreements and the payment of a nominal amount by Biogen to FWP IP, and Biogen has assumed ownership and responsibility for the assigned U.S.

Table of Contents

intellectual property. In addition, we are no longer able to develop or commercialize any therapy for the treatment of any human disease or condition using DMF, including FP187®FP187^®. Because we were unsuccessful in the Interference Proceeding after all appeals, the Company will not be entitled to future royalties on Biogen'sBiogen’s net sales in the United States. Therefore, sources of revenue derived from customers in the United States, including product sales of any DMF formulation, are not expected.

If the Company is successful in the Opposition Proceeding (i.e., the Company obtains, as a result of the Opposition Proceeding, and any appeals therefrom, a patent with a claim covering oral treatment of MS with 480 mg per day of DMF), it willwould be eligible to collect a 10% royalty from January 1, 2021 to December 31, 2028 and a 20% royalty from January 1, 2029 until the earlier of the expiration or invalidation of the patents defined in the License Agreement, on a country-by-country basis on Biogen'sBiogen’s net sales outside the United States of DMF-containing products indicated for treating MS that, but for the rightslicense granted under the License Agreement, would infringe a Company patent, provided that other conditions of the License Agreement are satisfied within the time period set forth in the License Agreement.satisfied. Among the conditions that need to be satisfied for any royalty to be payable by Biogen to the Company is the absence of generic entry in a particular countrygeography having a particular impact as defined in the License Agreement. Given

As discussed further below, the expected timeline forrecent decision of the resolutionTBA to confirm the revocation of the EP2801355 patent makes a successful outcome of the Opposition Proceeding including any appeals,doubtful. Accordingly, management believes it is unlikely future royalties will be due the earliest time we may expect to receive any royalty income fromGroup in accordance with the License Agreement, if atAgreement. See the risk factors entitled “There can be no assurance that the EBA will decide to accept our petition for review in the opposition proceeding involving our EP2801355 patent and denial of the petition would end the opposition proceeding in favor of the opponents, which, for all is 2024. Ifpractical purposes, would represent an unsuccessful outcome of the opposition proceeding, resulting in no royalties being due to the Company is unsuccessful in the Opposition Proceeding, the Company would not be entitled to future royaltiesfrom Biogen based on Biogen'sBiogen’s net sales outside the United States. SeeStates” and “Even if the risk factor entitled "ThereEBA accepts the Petition, there can be no assurance that we will ultimately prevail in the opposition proceeding involving our EP2801355 patent after any appeals or, if we do prevail, that the resulting claims of our EP2801355 patent will be royalty bearing under the Settlement and License Agreement with Biogen."Biogen” for additional information.

Restructuring

Under the terms of the License Agreement, the Company restructured its operations on June 30, 2017 whereby the Company transferred to Operations (a wholly-owned Danish limited liability company of the Company created in 2017) certain assets and liabilities, including the legal and beneficial rights, title and interest to defined intellectual property, and Operations transferred the intellectual property to FWP IP (a wholly-owned Danish limited liability company of Operations created in 2017). The final step in the restructuring was completed on November 22, 2017 when the capital stock of FWP IP was sold to HoldCo, a Danish limited liability company that is owned and controlled by the Foundation, an independent Danish foundation. HoldCo paid Operations ApS 336,000 DKK ($54,000 based on the December 31, 2017 exchange rate) as consideration for the capital stock of FWP IP. The Foundation'sFoundation’s three-member board includes one independent director and one director appointed from each of the Company and

Biogen. Accordingly, the Company does not control the Foundation. During the year ended December 31, 2017, the Company contributed 5 million DKK ($805,000 based on the December 31, 2017 exchange rate) as the initial capitalization of the Foundation and is obligated to pay 100,000 DKK ($17,00015,000 based on the December 31, 20202021 exchange rate) annually to FWP IP in exchange for FWP IP agreeing to hold, prosecute and maintain the transferred intellectual property, which now consists only of the non-U.S. intellectual property associated with the Company, in accordance with certain agreements. In the future, the Company is only obligated to remit the annual funding of 100,000 DKK to FWP IP through the last to expire, or invalidation of, the licensed patents underlying the transferred intellectual property; however, the Company'sCompany’s obligation to remit the annual funding would be discontinued earlier if certain events, as defined in the License Agreement, occur. In addition to its annual funding obligations, the License Agreement requires the Company to fund the cost to file, prosecute and maintain European patent EP 2801355 (until the date on which the Opposition Proceeding has reached a final, unappealable conclusion) and to participate in an intellectual property advisory committee. The Company was required to fund the cost to file, prosecute

Table of Contents

and maintain the U.S. patents associated with the Company prior to Biogen purchasing such intellectual property.

Key Intellectual Property Involved in Opposition Proceeding

European patent EP2801355, or the EP'355EP’355 patent, covers, among other things, the treatment of MS with 480 mg per day of DMF using pH-controlled compositions that have an enteric coating. The EPO completed their review of this application and issued this patent on May 20, 2015. This patent was opposed by several parties in an opposition proceeding, which is a special proceeding heard by the EPO where one or more third parties request that the patent, or a part thereof, be revoked. On January 29, 2018, the EPO revoked the EP'355EP’355 patent on one of the alleged grounds of invalidity 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. On May 7, 2018, the Company submitted its notice of appeal, and on August 1, 2018, the Company submitted detailed grounds for the appeal. On July 8, 2019, the Company received notice from the EPO that the appeal would be heard by the TBA of the EPO on June 18, 2020, or the 2020 Hearing. The 2020 Hearing has subsequently beenwas postponed twice as the result of the ongoing COVID-19 pandemic. The 2020 Hearingpandemic and was initially rescheduled to befinally heard on February 2, 2021 and on January 12, 2021,by the EPO informed the Company that the appeal hearing would be postponed a second time toTBA on September 6, 2021 or(the “September 2021 Hearing”). At the 2021 Hearing. Theconclusion of the September 2021 Hearing, may be further delayed as a resultthe TBA announced that it had dismissed the Company’s appeal of the COVID-19 pandemic. Managementprevious decision of the Opposition Division to revoke patent EP2801355 and that the detailed reasons for the dismissal would be published at a later date. The TBA made its decision after considering the Company’s appeal against the decision of the Opposition Division and third-party submissions from several opponents.

The TBA published the detailed reasons for its decision on November 18, 2021. Following the review and evaluation of the TBA’s published reasoning for its decision, the Company submitted a petition (“Petition”) to the Enlarged Board of Appeal (“EBA”) of the EPO asking the EBA to review the TBA’s decision in an effort to overturn the unfavorable outcome. The Petition asserts that a procedural error was made by the TBA that resulted in the erroneous decision to dismiss the Company’s appeal. While management believes there are compelling factors supporting why the TBA failed to comply with the required procedural aspects when reaching its decision in the September 2021 Hearing, the likelihood of the Petition being successful is low.

The Petition to the EBA was submitted on January 27, 2022 and management estimates that it will take between six and twelve months to receive a response whether the EBA will admit the Petition.

If the EBA rejects the Petition and declines to review the TBA’s decision, it would end the Opposition Proceeding in favor of the opponents. The rejection of the Petition would also represent an unsuccessful outcome of the Opposition Proceeding, resulting in no royalties being due to the Group from Biogen based on Biogen’s net sales outside the United States, as defined in the License Agreement.

If the EBA admits the Petition and elects to review the TBA’s decision, management expects the EBA to take up to two years to reach a conclusion as to whether the TBA complied with the required procedural aspects while conducting the September 2021 Hearing.

If after the EBA completes its review, it does not agree with management that the TBA failed to comply with certain procedural aspects while conducting the September 2021 Hearing, it would represent an unsuccessful outcome of the Opposition Proceeding, resulting in no royalties being due to the Group from Biogen based on Biogen’s net sales outside the United States, as defined in the License Agreement.

If after the EBA completes its review, it agrees with management that the TBA failed to comply with certain procedural aspects while conducting the September 2021 Hearing, the EBA may ask the TBA to hear the parties again and reach a new decision. If the TBA reverses its decision and now rules in favor of the Company, management expects the TBA to issue a ruling on the same day as the hearing with a fully-argued decision to follow approximately two months after the 2021 Hearing. If the Company receives a favorable ruling following the 2020 Hearing, it is expected that the TBA will remitremand the case to the Opposition Division, in order for the Opposition Division to resolve the remaining elements of the original opposition. Management estimates thatIf the TBA remands the case to the Opposition Division, it is uncertain when the Opposition Division would take approximately two to three years to resolve the remaining elements of the original opposition in the event ofand there is a remittal. However, delays can occurreal risk that would extend the time needed for the Opposition Division to reach a conclusion onrules against the Company after considering the remaining elements of the original opposition and thereby the conclusion of the ongoing appeal process. We areopposition. The Group is not entitled to any royalty payments from the License Agreement until and unless all remaining elements of the original opposition are resolved in ourits favor. As such,If the earliest time we may expect to receive any revenues from the License Agreement, if at all, is 2024.

        There can be no assurance that we will be successful inTBA does not reverse its decision, it would represent an unsuccessful outcome of the Opposition Proceeding, after any appeals. Ifresulting in no royalties being due to the Company is unsuccessful in the Opposition Proceeding, the Company would not be entitled to future royaltiesGroup from Biogen based on Biogen'sBiogen’s net sales outside the United States. WhileStates, as defined in the appeal and any remitted issues toLicense Agreement.

As the Opposition Division have not been resolved, the decisionresult of the Opposition Division to revoke the EP'355 patent is "frozen." Assuming that the patent is ultimately maintained following the final conclusioncomplexity of the Opposition Proceeding including any appeals,combined with numerous factors that can affect the EP'355 patent currently hasoutcome, many of which are outside the control of the Company, it is difficult to estimate when the Opposition Proceeding will conclude; however, achieving a maximum duration until October 2025 (subjectfavorable outcome in the Opposition Proceeding could take up to possible SPC extension—see below).four years and possibly longer. Potential royalties due to the Group in accordance with the License Agreement are contingent on a successful outcome of the Opposition Proceeding, which is doubtful, and subject to other conditions, as defined in the License Agreement, being met. Even if there is a favorable outcome in the Opposition Proceeding, if the other conditions, as defined in the License Agreement, are not met, future royalties will not be due to the Group. Therefore, after considering the uncertainty of a successful outcome in the Opposition Proceeding combined with the uncertainty of meeting the other conditions, as defined in the License agreement, management believes it is unlikely that future royalties will be due the Company in accordance with the License Agreement.

Our Product Development Strategy

Historically, the Company'sCompany’s product development efforts were focused on advancing unique formulations and dosing regimens of DMF, an immunomodulator, as a therapeutic to improve the health of patients with immune disorders, including psoriasis and MS. Prior to entering into the License Agreement, we were actively developing FP187®, a proprietary formulation of DMF, for the treatment of MS patients. On March 1, 2017, we announced plans to complete the research and development work that was in process prior to the effective date of the License Agreement and pursue an organizational realignment to reduce personnel and operating expenses, including the suspension of further development of FP187®FP187®. This organizational realignment was substantially completed by September 30, 2017. We do not currently have any commercialized products on the market nor under development. As a result of entering into the License Agreement, combined with the unsuccessful

Table of Contents

outcome in the Interference Proceeding and Biogen'sBiogen’s purchase of the intellectual property in the United States associated with the Company, our research and development efforts involving DMF products, including FP187®FP187®, have been permanently discontinued.

Our Intellectual Property Strategy

We believe the patents and patent applications associated with the Company are valuable assets. To the extent required or permitted by the License Agreement, we intend to protect, defend and/or enforce the intellectual property associated with the Company. The intellectual property associated with the Company includes patents and patent applications in Europe and certain countries in Asia.

The Core Composition Patent family, based on international application PCT/DK2005/000648, filed on October 7, 2005, with priority to October 8, 2004, discloses, among other things, formulations and dosing regimens of DMF, including the use of a dose of 480 mg of DMF per day to treat MS. As described under "Risk Factors"“Risk Factors” and elsewhere in this Annual Report, whether the Core Composition Patent family discloses the use of a dose of 480 mg of DMF per day to treat MS has been challenged in some European Opposition Proceedings.

        The following table highlights key aspects of the current status of certain applications and patents within the Core Composition Patent family:

Table of Contents

Core Composition Patent Family

European Patent EP2801355. The EP'355EP’355 patent covers, among other things, the treatment of MS with 480 mg per day of DMF using pH-controlled compositions that have an enteric coating. The EPO completed its review of this application and issued this patent on May 20, 2015. This patent was opposed by several parties in opposition proceedings, which are special proceedings heard by the EPO where one or more third parties request that the patent, or a part thereof, be revoked. On January 29, 2018, the Opposition Division of the EPO revoked the EP'355EP’355 patent on one of the alleged grounds of invalidity 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,

on May 7, 2018, the Company submitted its notice of appeal, and on August 1, 2018, the Company submitted the detailed grounds for the appeal. On July 8, 2019, the Company received notice from the EPO that the 2020 Hearing would occur on June 18, 2020. The 2020 Hearing has subsequently beenwas postponed twice as the result of the ongoing COVID-19 pandemic. The 2020 Hearingpandemic and was initially rescheduled to befinally heard on February 2, 2021 and on January 12, 2021,by the EPO informed the Company that the appeal hearing would be postponed a second time toTBA on September 6, 2021, or2021. At the 2021 Hearing. Theconclusion of the September 2021 Hearing, may be further delayed as a resultthe TBA announced that it had dismissed the Company’s appeal of the COVID-19 pandemic. Management expects the TBA to issue a ruling on the same day as the hearing with a fully-arguedprevious decision to follow approximately two months after the 2021 Hearing. If the Company receives a favorable ruling following the 2021 Hearing, it is expected that the TBA will remit the case to the Opposition Division, in order forof the Opposition Division to resolverevoke patent EP2801355 and that the remaining elementsdetailed reasons for the dismissal would be published at a later date. The TBA made its decision after considering the Company’s appeal against the decision of the original opposition. Management estimates that the Opposition Division would take approximately two to three years to resolveand third-party submissions from several opponents.

The TBA published the remaining elementsdetailed reasons for its decision on November 18, 2021. Following the review and evaluation of the original oppositionTBA’s published reasoning for its decision, the Company submitted a petition to the Enlarged Board of Appeal of the EPO asking the EBA to review the TBA’s decision in an effort to overturn the unfavorable outcome. The Petition asserts that a procedural error was made by the TBA that resulted in the event of a remittal. However, delays can occur that would extenderroneous decision to dismiss the time needed forCompany’s appeal. While management believes there are compelling factors supporting why the Opposition DivisionTBA failed to reach a conclusion oncomply with the remaining elementsrequired procedural aspects when reaching its decision in the September 2021 Hearing, the likelihood of the original opposition. We are not entitledPetition being successful is low.

The Petition to any royalty payments from our Settlementthe EBA was submitted on January 27, 2022 and License Agreement, dated as of January 17, 2017, or the License Agreement, with two subsidiaries of Biogenmanagement estimates that became effective on February 1, 2017, untilit will take between six and unless all remaining elements of the original opposition are resolved in our favor. As such, the earliest time we may expecttwelve months to receive any revenues froma response whether the License Agreement, if at all, is 2024. There can be no assurance that weEBA will be successful inadmit 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 United States. Petition.

While the appeal and any remitted issues to the Opposition Division have not been resolved, the decision of the Opposition Division to revoke the EP'355EP’355 patent is "frozen."“frozen.” Assuming that the patent is ultimately maintained following the final conclusion of the Opposition Proceeding, including any appeals, the EP'355EP’355 patent currently has a maximum duration until October 2025 (subject to possible SPC extension—see below). This is the first issued patent associated with the Company covering the use of 480 mg per day of DMF to treat MS. Although Biogen may not challenge the validity of the EP'355EP’355 patent in national proceedings, the validity of the national parts of the EP'355EP’355 patent could be challenged by other third parties in the respective national courts, and in some countries these validity challenges can run in parallel with EPO opposition and appeal proceedings. See "Risk“Risk Factors—Risks Related to Intellectual Property—There can be no assurance that even if we are successful in the opposition and appeal proceedings involving the patents associated with the Company currently pending before the EPO, we will not be subject to subsequent or parallel invalidity proceedings involving these same or other patents associated with the Company before a national court in any of the European Patent Convention member states where the patents were validated, which subsequent or parallel proceedings could result in the challenged patents being subject to continued uncertainty as to their validity until such proceedings have been fully concluded. We cannot at this time anticipate how long any such proceedings may last or when, if at all, the patents currently under challenge will finally be declared to be valid or not."”

SPC Applications. In a number of countries in the EU, we have applied for national SPCs in reliance on the EP'355EP’355 patent and the EU marketing authorization for Biogen'sBiogen’s product Tecfidera®. If

Table of Contents

these applications are successful, the resultant SPCs will effectively extend the duration of the EP'355EP’355 patent, insofar as it covers Tecfidera®, from October 2025 until January 2029. So far, the SPC applications have been granted in Austria, Cyprus, France, Greece, Hungary, Ireland, Italy, Latvia, Luxembourg, Slovenia, Spain, and Sweden. This is possible because the case law of the Court of Justice for the European Union currently allows patent holders to obtain SPCs in reliance on marketing authorizations held by third parties. If the case law were to change such that this is no longer a possibility, we would expect any such SPCs granted in our favor to be revoked. Further, if an EU national court were to hold (subject to any appeal) that the claims of the EP'355EP’355 patent do not cover Tecfidera®, we would expect the national court to revoke any SPC granted in our favor in that country.

European Patent EP1799196. The European patent EP1799196 associated with the Company, or the EP'196EP’196 patent, covers, among other things, controlled release compositions that release DMF according to a specific in vitro release profile. The patent was granted on June 22, 2016. Oppositions to this patent have been filed by third parties with the EPO. On September 18, 2018, the EPO revoked the EP'196EP’196 Patent following an oral hearing in the opposition proceedings. The written decision was received on February 15, 2019 and a notice of appeal was filed against that decision on April 13, 2019. The Company expects theoral appeal proceedings are scheduled to be heard by the TBA within one to two years.take place on July 26, 2022.

European Patent Application EP2965751.    Another A key patent application in the EU is EP2965751, formerly EP15166243.4, or the EP'751EP’751 application. The EP'751EP’751 application covers, among other things, compositions containing DMF where the daily dosage is 480 to 600 mg and the DMF is released depending on pH. The EPO has completed its initial review of this application and issued a negative search report on January 13, 2016. We responded to the search report on July 13, 2016. A third-party observation was filed on September 20, 2016. We responded to the third-party observation on November 16, 2016. A negative office action was issued on

February 10, 2017, which we understood to have been the result of a clerical error. We responded on August 10, 2017 to correct the error. The EPO issued a notice of intention to grant this patent on June 26, 2018, April 9, 2019, and June 8, 2020. A request for further processing was granted on January 27, 2021. A further notice of intention to grant was issued on May 18, 2021. In June 2021, third party observations were filed, to which a response was sent to the Examining Division on February 23, 2022. Additional third party observations were filed in March 2022.

European Patent EP2801354.    A Another key patent in the EU is EP2801354, or the EP'354EP’354 patent. The EP'354EP’354 patent covers, among other things, controlled-release compositions that release DMF according to a specific in vitro release profile. The patent was granted on February 8, 2017. Oppositions to this patent have been filed by third parties with the EPO. On May 7, 2019, the EPO revoked the EP'354EP’354 patent following an oral hearing in the Opposition Proceedings. The written decision was received on September 9, 2019 and a notice of appeal was filed against that decision on November 8, 2019. The Company expects the appeal to be heard by the TBA within one to two years.

European Patent Application EP2792349. Another key patent application in the EU is EP2792349, formerly EP14172396.5, or the EP'349EP’349 application. The EP'349EP’349 application covers, among other things, controlled-release compositions containing DMF where the daily dosage is 480mg for use in treatment of a number of diseases. The EPO has issued notices of intention to grant this patent on September 13, 2017, May 30, 2018, February 27, 2019, November 19, 2019, and October 12, 2020.2020, June 8, 2021, and March 9, 2022.

European Patent EP2316430. The European patent EP2316430 associated with the Company covered DMF formulations with certain in vitro dissolution profiles. By a decision issued in July 2015, the Opposition Division of the EPO revoked EP2316430, in particular, for the reason that the claims allegedly contain subject matter not directly and unambiguously derivable from the original application as filed. The Opposition Division of the EPO did not adjudicate on the issues of novelty or inventive step. This patent was revoked by the TBA on May 3, 2018. No further appeal is possible.

European Patent Application EP3093012. Another key patent application in the EU is EP3093012, formerly EP16001391.8, or the EP'012EP’012 application. The EP'012EP’012 application covers, among other things, controlled-release pharmaceutical compositions comprising DMF in an amount of 50—50 - 90% by weight

Table of Contents

of the composition. The EPO has issued notices of intention to grant this patent on May 8, 2017, February 15, 2018, November 21, 2018, August 12, 2019, April 23, 2020, and March 11, 2021. The examination is ongoing, with the most recent third party observations being filed in March 2022, and oral proceedings have been summoned for June 24, 2022.

Clinical Development Summary

Since inception, the focus of our clinical development was on a DMF formulation for the treatment of MS. As a result of entering into the License Agreement, combined with the unsuccessful outcome in the Interference Proceeding and Biogen'sBiogen’s purchase of the intellectual property in the United States associated with the Company, we have permanently discontinued our development of a DMF formulation, except for maintaining our files and records for previously completed research and development work.

Material Agreements

Biogen License Agreement

As discussed above, on February 1, 2017, our License Agreement with Biogen and certain additional parties became effective. The License Agreement provided Biogen with a co-exclusive license in the United States, and an exclusive license outside the United States, to the Company'sCompany’s intellectual property, effective as of February 9, 2017.

In accordance with the License Agreement, Biogen paid the Company a non-refundable cash fee of $1.25 billion and could be obligated to pay the Company royalties provided that other conditions of the License Agreement are satisfied. See "—“—Our Company—License Agreement with Biogen."”

On March 25, 2019, we received notice from Biogen of their exercise of the option to purchase the intellectual property in the United States associated with the Company pursuant to the License Agreement. The Foundation and Biogen consummated the assignment of the U.S. intellectual property to Biogen upon the execution of assignment agreements and the payment of a nominal amount by Biogen to FWP IP, and Biogen has assumed ownership and responsibility for the assigned U.S. intellectual property. In

addition, we are no longer able to develop or commercialize any therapy for the treatment of any human disease or condition using DMF, including FP187®.

Aditech Agreements

In 2004, Aditech, controlled by Nordic Biotech General Partner ApS (an affiliate of one of our largest shareholders), began developing and filing patents for, among other things, formulations and dosing regimens of DMF. In 2005, we entered into a patent license agreement with Aditech to license this patent family from Aditech. In 2010, we acquired this patent family from Aditech pursuant to a patent transfer agreement, or the Transfer Agreement, that replaced the patent license agreement. Under our agreement with Aditech, we obtained, among other things, Aditech'sAditech’s patents and associated know-how related to formulations and dosing regimens of DMF.

In connection with our execution of the License Agreement, we entered into an addendum to the Transfer Agreement with Aditech, or the Addendum, which clarifies the royalties payable to Aditech in connection with any proceeds received by the Company from Biogen under the License Agreement. The Addendum specifies that Aditech is entitled to 2% of the Non-refundable Fee (or $25.0 million). This was paid to Aditech in 2017. The Addendum further specifies that Aditech is entitled to additional compensation should the Company receive royalties from Biogen under the License Agreement. If royalties are paid to the Company in accordance with the License Agreement, Aditech will be entitled to receive a cash payment equal to 2% of the same base amount with respect to which the Company'sCompany’s royalty percentage is calculated, accruing from the same period of time as any royalty payment payable by Biogen to the Company (prior to taking into account taxes, duties and VAT, if any).

Table of Contents

Competition

We are engaged in segments of the pharmaceutical and biotechnological industries that are highly competitive and rapidly changing. Large pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, governmental agencies and other public and private research organizations are commercializing or pursuing the development of products that target MS. Our future success may depend on the continued market acceptance of Tecfidera®Tecfidera^®. We expect approved MS treatments, such as Tecfidera®Tecfidera^®, will continue to face intense and increasing competition as new and improved products enter the MS markets and advanced technologies become available. Competition from any newly-approved products (whether branded, generics or biosimilars) may reduce Tecfidera®Tecfidera^® sales, which in turn may reduce possible royalties payable by Biogen to us. Several companies are developing additional treatments for multiple sclerosis, and late-stage clinical candidates include, but are not limited to, generic versions of existing medications, including generic versions of Tecfidera®Tecfidera^®. Competition among products approved for sale is based, among other things, on safety and effectiveness, the timing and scope of regulatory approvals, the availability and cost of supply, marketing and sales capabilities, reimbursement coverage, price, patent position and other factors.

Environmental, Health and Safety

Our operations are subject to a number of environmental acts and regulations. We believe that we are materially in compliance with all applicable environmental laws and regulations. Currently, there are no pending environmental issues that we believe could reasonably be expected to have a material adverse effect on our business, financial position, results of operations or future growth prospects.

We consider it important to maintain a good working environment and comply with the regulatory requirements regarding working environment. This consists of the physical and psychological working environment, including heating, ventilation, air conditioning and air circulation and exhaust systems, as well as office furniture and equipment design and functionality, and other general health and safety systems, including control of the facility. We are from time to time subject to inspections by the Danish Working Environment Authority for compliance with the Danish Working Environment Act.

Facilities

Our corporate headquarters are located at Østergade 24A, 1st floor, 1100 Copenhagen K, Denmark where we lease approximately 2,400 square feet of office space from Nordic Biotech Advisors ApS, an affiliate of certain of our principal shareholders, for administrative activities. In 2020,2021, we paid 633,000630,000 DKK ($97,000100,000 based on the average exchange rate for the year), including value added tax, or VAT, for such premises. FA and Operations, our Danish subsidiaries, are also located at Østergade 24A, 1st floor, 1100 Copenhagen K, Denmark. For more information, see "—“—Related Party Transactions—Leased Premises."”

FP USA, our U.S. subsidiary, is located in Suffern, New York and has office space of approximately 140 square feet. In 2020,2021, we paid $15,000 for such premises.

The Company'sCompany’s office lease commitments are currently all short-term.

Table of ContentsEmployees

Employees

As of March 31, 2021,2022, we had four employees. At each date shown, we had the following employees, broken out by department and geography:

​

One of our employees is represented by a labor union. We have never experienced any work stoppages.

All other operational tasks are or have been outsourced to consultant experts or consulting service companies, such as patent and legal experts. We engage approximately 15 individuals and firms as consultants and experts.

In the United States, our activities and personnel are focused on U.S. public company accounting, reporting and compliance, and related administrative functions to support Forward Pharma A/S.

Insurance

We maintain all insurance coverage required under applicable law, including in relation to our previous research and pre-clinical and clinical development.

We believe that we currently maintain appropriate insurance coverage, and that our current insurance coverage is in line with insurance coverage for comparable companies.

Legal Proceedings

We may, from time to time, become involved in legal proceedings in the ordinary course of business. Except for the Opposition Proceeding, we are not currently a party to, and have not been in the recent past subject to any material legal proceeding (including proceedings pending or threatened) that we believe could have an adverse effect on our business, operating results or financial condition. See "Item“Item 5. Operating and Financial Review and Prospects—Operating Results Overview—Intellectual Property Proceedings and the License Agreement—Interference Proceeding"Proceeding” for more information on the Interference Proceeding.

Opposition proceedings and appeals therefrom against two of the key European patents associated with the Company are currently ongoing and in addition we are involved in the Opposition Proceeding concerning EP'355,EP’355, including any appeals. There can be no assurance that these patent proceedings or other future legal proceedings will not have an adverse effect on our business, operating results or financial condition. See "Item“Item 5. Operating and Financial Review and Prospects—Operating Results Overview—Intellectual Property Proceedings and the License Agreement—Opposition Proceeding"Proceeding” for more information on the Opposition Proceeding.

C.          Organizational Structure

The registrant corporation, Forward Pharma A/S, has two wholly-owned subsidiaries, FP USA, incorporated in the state of Delaware, and Operations, incorporated in Denmark. Operations has two wholly-owned subsidiaries, FA, incorporated in Denmark, and FP GmbH, incorporated in Germany. A liquidation of our German subsidiary, FP GmbH, was initiated on January 29, 2020 and is still ongoing. All of our operations are conducted within Forward Pharma A/S or one of our directly or indirectly owned subsidiaries.

D.          Property, Plant and Equipment

See "—“—Business Overview—Facilities"Facilities” for a description of our leased premises. We have no material office equipment or manufacturing equipment. None of our equipment is leased and there are no liens or encumbrances on our equipment.

We currently do not have any material commitments to acquire fixed assets nor are there plans to acquire fixed assets in the future; however, we may, from time to time, need to replace office equipment such as computers. The estimated cost to replace office equipment, if needed, is not expected to be significant. We currently do not have any long-term supply agreements with our vendors.

​

ITEM 4A.  UNRESOLVED STAFF COMMENTS

None.

​

Table of Contents

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the information under "Selected Financial Information" and our audited consolidated financial statements, including the notes thereto, included in this Annual Report. The following discussion is based on our consolidated financial information prepared in accordance with IFRS as issued by the IASB, which might differ in material respects from generally accepted accounting principles in other jurisdictions. The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described under "Risk Factors"“Risk Factors” and elsewhere in this Annual Report.

Refer to Part I, Item 5 in our Annual Report on Form 20-F for the fiscal year ended December 31, 20192020 (filed with the SEC on April 24, 2020)14, 2021) for additional discussion of our financial condition and results of operations for the year ended December 31, 2018,2019, as well as our financial condition and results of operations for the year ended December 31, 20192020 compared to the year ended December 31, 2018.2019.

A.          Operating Results Overview

Overview

Forward Pharma A/S is a Danish biopharmaceutical company that was founded in 2005 to advance unique formulations and dosing regimens of DMF, an immunomodulator, as a therapeutic to improve the health of patients with immune disorders, including MS. We are a company with a limited number of employees and outsource the majority of our activities to external service providers. We are currently composed of a Danish incorporated parent company, Forward Pharma A/S, its two wholly-owned subsidiaries, FP USA, incorporated in the state of Delaware, and Operations, incorporated in Denmark, and two wholly-owned subsidiaries of Operations, FP GmbH, incorporated in Germany, and FA, incorporated in Denmark. During 2017, as part of the restructuring that is discussed below, FWP IP was established on June 30, 2017 as a wholly-owned subsidiary of Operations and sold on November 22, 2017.

As discussed in more detail elsewhere herein, the Company entered into the License Agreement with Biogen that became effective on February 1, 2017. The License Agreement provided Biogen with a co-exclusive license in the United States, and an exclusive license outside the United States, to defined intellectual property. In accordance with the License Agreement, Biogen paid the Company a non-refundable fee of $1.25 billion, or the Non-refundable Fee, in February 2017. Prior to entering into the License Agreement, the Company was actively developing FP187^®, a proprietary formulation of DMF, for the treatment of MS. On March 1, 2017, the Company announced plans to complete the remaining research and development efforts of FP187^® and pursue an organizational realignment to reduce personnel and operating expenses by mid-year 2017. The organizational realignment was

substantially completed by September 30, 2017. As a result of entering into the License Agreement, combined with the unsuccessful outcome in the Interference Proceeding and Biogen'sBiogen’s purchase of the intellectual property in the United States associated with the Company, or the U.S. IP, we have permanently discontinued our development of DMF formulations, including FP187®FP187^®. Therefore, sources of revenue derived from customers in the United States, including product sales of a DMF formulation, are not expected.

The Group'sGroup’s current business activities are limited to maximizing the benefit of the License Agreement, which requires the Company to prevail in the Opposition Proceeding. If the Company does not prevail in the Opposition Proceeding, including all appeals, future revenues are unlikely, the

Table of Contents

Company's Company’s ability to continue as a going concern long term would be uncertain and management would consider, amongst other things, an orderly wind-down of operations. A successful outcome of the Opposition Proceeding is highly uncertain and even if there is a successful outcome in the Opposition Proceeding, future revenues from the License Agreement would only be realized if other conditions defined bein the License Agreement are met. For more information, see "Item“Item 3. D. Risk Factors," "Item” “Item 4. Information on the Company"Company” and the Group'sGroup’s consolidated financial statements.

At December 31, 2020,2021, the Group had cash and cash equivalents of $70.8 million and working capital amounting to $79.1 million and $78.6 million, respectively.of $70.8 million. The Group has no material long-term obligations. Management currently believes there is adequate liquidity to fund the Group'sGroup’s operations beyond the next twelve months; however, unforeseen events could negatively affect management'shave a material adverse effect on management’s estimate. In addition, as discussed in more detail below, the Danish and German tax authorities have commencedconducted a joint tax auditsaudit of the Group'sGroup’s Danish and German income tax returns covering multiple years through the year ended December 31, 2017. ThereThe joint tax audit focused primarily on the Transaction to ensure the Transaction was conducted at fair value as determined in accordance with generally accepted arm’s length principles applicable to taxing cross-border transactions. The Danish and German tax authorities were unable to reach agreement as to whether the Transaction was conducted at fair value and terminated the joint income tax audit in the second quarter of 2021. The tax audit in Denmark concluded with no changes proposed to the Group’s Danish tax filings. The tax audit in Germany is ongoing and the German tax authorities have indicated that they disagree with FP GmbH’s determination of the fair value of the Transaction and have proposed a material increase in FP GmbH’s 2017 taxable income. While management believes the tax filing position taken in connection with the Transaction is correct and it is not probable (i.e., more likely than not) additional taxes will be due in Germany, there is a risk that atupon the conclusionresolution of the tax audits, the Danish and/or German tax authorities could assessthis matter additional taxes, interest and/or penalties oncould be due the Group.German tax authorities. The imposition of additional taxes, interest and/or penalties by the taxingGerman tax authorities could have a material adverse effect on the Group. For more information, see the risk factor entitled "There is no assurance that“Negative results from the jointongoing tax audit being conducted by the Danish and German tax authorities will notin Germany could result in double taxation"additional taxes, interest and penalty becoming due that could negatively impact our financial position, results of operations and cash holdings” and the Group'sGroup’s consolidated financial statements.

Restructuring

        In June 2017, under the terms of the License Agreement, the Company restructured its operations, or the Restructuring, whereby the Company transferred to Operations (a wholly owned Danish limited liability company of the Company created in 2017) certain assets and liabilities, including the legal and beneficial rights, title and interest to defined intellectual property, or the IP, and Operations transferred the IP to FWP IP (a wholly owned Danish limited liability company of Operations created in 2017). The final step in the Restructuring was completed on November 22, 2017 when the capital stock of FWP IP was sold to a Danish limited liability company (FWP HoldCo ApS, referred to as "HoldCo") owned and controlled by an independent Danish foundation (FWP Fonden, referred to as the "Foundation"). In consideration for the capital stock of FWP IP, HoldCo paid Operations 336,000 DKK ($54,000 based on the December 31, 2017 exchange rate). The Foundation's three-member board includes one independent director and one director appointed by each of the Company and Biogen. Accordingly, the Company does not control, nor does it have exposure or rights to variable returns from the Foundation, HoldCo or FWP IP. In November 2017, the Group contributed 5 million DKK ($805,000 based on the December 31, 2017 exchange rate) as the initial capitalization of the Foundation and is obligated to pay 100,000 DKK ($17,000 based on the December 31, 2020 exchange rate) annually, or the Annual Funding, to FWP IP in exchange for FWP IP agreeing to hold, prosecute and maintain the IP in accordance with certain agreements. The Group is only obligated to remit the Annual Funding through the last to expire, or invalidation of, the licensed patents underlying the IP; however, the Company's obligation to remit the Annual Funding would be discontinued earlier if certain events, as defined in the License Agreement, occur.

Shareholder Distribution

        On August 2, 2017, the Company's shareholders approved a capital reduction of EUR 917.7 million, or $1.1 billion, which was effected in September 2017.

        Currently, there are no plans for future distributions of funds to our shareholders.

Table of Contents

Trend Information

        We do not have any commercialized products on the market. As a result of entering into the License Agreement, combined with the unsuccessful outcome in the Interference Proceeding and Biogen's purchase of the U.S. IP, we have permanently discontinued our development of DMF formulations, including FP187®. At this time, the Company's only potential source of future revenue is contingent on a favorable outcome of the Opposition Proceeding. A successful outcome in the Opposition Proceeding is highly uncertain, but if it were to occur, and provided other conditions set forth in the License Agreement are met, the Company would be entitled to royalties based on Biogen's net sales of Tecfidera® outside the United States, as defined by the License Agreement. Accordingly, should we be entitled to royalties based on Biogen's net sales of Tecfidera® outside the United States, we expect trends in the biopharmaceutical market to have an impact on our business, particularly, trends that effect the market for, or price of, Tecfidera® sales outside the United States.

Financial Operations Overview

Revenue

The Company'sCompany’s only operating revenue earned to date has been the Non-refundable Fee received in 2017 in accordance with the License Agreement. We will likely not generate operating revenue in the future unless we prevail in the Opposition Proceeding. The Company'sCompany’s ability to generate operating revenues in the future is highly uncertain and it is possible that we may never recognize operating revenue in the future.

        Management concluded that the Non-refundable Fee should be recognized as revenue in full in 2017. In reaching this conclusion, various judgments were made, including the identification of the Company's performance obligations within the License Agreement and whether these performance obligations are distinct. Management concluded that the performance obligations in the License Agreement were related to the right granted to Biogen to use the licensed intellectual property both in the United States as well as in the rest of the world and concluded that these performance obligations were met at the time the License Agreement was consummated, as Biogen was granted full use of the licensed intellectual property whether under a co-exclusive license or an exclusive license. At the time the License Agreement became effective, the Company was required to (i) to fund the cost to file, prosecute and maintain the United States patents and European patent EP 2801355 associated with the Company, (ii) to participate in an intellectual property advisory committee and (iii) to provide the Annual Funding of 100,000 DKK (collectively referred to as "Defense Costs"). The period If the Company is obligatedsuccessful in the Opposition Proceeding (i.e., the Company obtains, as a result of the Opposition Proceeding, and any appeals therefrom, a patent with a claim covering oral treatment of MS with 480 mg/day of DMF), we will be eligible to fundcollect a 10% royalty from January 1, 2021 to December 31, 2028 and a 20% royalty from January 1, 2029 until the Defense Costs isearlier of the expiration or invalidation of the patents defined in the License Agreement, and could includeon a country-by-country basis on Biogen’s net sales outside the period fromUnited States of DMF-containing products indicated for treating MS that, but for the effective datelicense granted under the License Agreement, would infringe a Company patent, provided that other conditions of the License Agreement throughare satisfied. Among the lastconditions that need to expire, or invalidationbe satisfied for any royalty to be payable by Biogen to the Company is the absence of the licensed patents; however, the Company's obligation to fund Defense Costs would be discontinued earlier if certain events,generic entry in a particular geography having a particular impact as defined in the License Agreement, occur. Management concluded that the Company's obligation to defend the intellectual property does not represent a separate performance obligation as such activities are deemed to be costs to protect the value of the license granted to Biogen. Since Biogen received full unrestricted use of the Company's intellectual property at the time the License Agreement was consummated and since the Company currently has no plans to nor is it obligated to further develop the underlying licensed intellectual property, the License Agreement is deemed to provide Biogen with a right to use the Company's intellectual property upon the consummation of the License Agreement and accordingly, the Non-refundable Fee was recognized as revenue in 2017.Agreement.

        Effective upon Biogen purchasing the U.S. IP, the Company is no longer incurring Defense Costs associated with the U.S. IP.

The License Agreement does not obligate Biogen to remit additional amounts to the Company unless the Company prevails in the Opposition Proceeding, including any appeals, and certain other

Table of Contents

conditions of the License Agreement are satisfied. It is highly uncertain whether the Company will prevail in the Opposition Proceeding and therefore it is possible thatrealize additional revenues may not be realized from the License Agreement or any other source. In the event the Company does prevail in the Opposition Proceeding, Biogen would be obligated to remit future royalties to the Company as defined in the License Agreement, provided that other conditions of the License Agreement are satisfied. If the Company fails to prevail in the Opposition Proceeding, future revenues are unlikely and the long-term ability of the Company to continue as a going concern is uncertain. See Notes 1.2 and 1.5 in the accompanying consolidated financial statements for additional information.

Research and development costs

As a result of entering into the License Agreement, combined with the unsuccessful outcome in the Interference Proceeding and Biogen'sBiogen’s purchase of the U.S. IP, we permanently discontinued our research and development efforts involving DMF products, including FP187®FP187®.

Currently, our research and development costs primarily comprise salary and related expenses, including share based paymentshare-based compensation expense, license, patent and other intellectual property related costs incurred in connection with patent claims and other intellectual property rights conducted at the patent registry offices (the EPO and certain country-specific patent registry offices). Accordingly, our research and development costs are primarily associated with defending and protecting our non-U.S. IP; however, we may incur minor costs to meet remaining regulatory requirements associated with the wind-down of our research and development efforts of FP187®.

General and administrative costs

Our general and administrative costs consist primarily of:

•

salaries and expenses for employees as well as expenses related to share-based compensation awards granted to certain employees;



•

professional fees for auditors, tax advisors, legal counsel and other consultants;



•

information technology related expenses;



•

cost of facilities, communication and office expenses;



•

investor relations and other costs associated with our public listing of our ADSs on Nasdaq; and



•

expenses associated with intellectual property-related activities carried out in the courts to protect, defend and enforce patent rights granted against third parties (not residing within the USPTO, EPO or other country-specific patent registry offices).

We incur significant costs as the result of our public listing including the cost to maintain and enhance our infrastructure in order to comply with regulatory requirements including disclosure controls and procedures. Such costs include maintaining an organization of internal and external professionals who have the necessary experience and skills to address the complex rules and regulations we are required to comply with. The professionals we engage include legal and accounting advisors, auditors and investor relations firms amongst others. There are many other costs we incur to maintain our public listing such as liability insurance and depositary and stock exchange fees.

Non-operating income and (expenses)

Components of non-operating income and (expenses) consisted primarily of:

•

gains/losses from changes in foreign exchange rates related primarily to our cash holdings;



•

interest income earned on USD cash holdings; and

Results of Operations

Comparison of the years ended December 31, 20202021 and 20192020

​

Research and development costs for the years ended December 31, 20202021 and 20192020

Research and development costs for the years ended December 31, 2021 and 2020 were $226,000 and 2019 were $327,000, and $1.0 million, respectively. The decrease of $101,000 in research and development costs for the year ended December 31, 2020 of $722,0002021 is primarily the result of lowera decrease in costs incurred in connection with the Opposition ProceedingsProceeding and lower share-based compensation. Fees to patent advisors and other patent-related costs incurred in connection with the Opposition Proceeding decreased from $322,000 in the year ended December 31, 2019 to $203,000 in the year ended December 31, 2020.2020 to $171,000 in the year ended December 31, 2021. The decrease is the result of reduced activities leading up to the Opposition Proceeding hearing that is now scheduled foroccurred on September 6, 2021 after two postponements caused by the ongoing COVID-19 pandemic.2021. Share-based compensation decreased from $625,000 in the year ended December 31, 2019 to $63,000 in the year ended December 31, 2020. The decrease2020 to zero in share-based compensation resulted from equity awards that were issued prior to December 31, 2017 that included graded vesting provisions resulting in expense recognition that decreases in the latter years of vesting combined with an increased number of equity awards where the underlying expense was fully recognized prior to the year ended December 31, 20202021. Share-based compensation decreased as performance and/or service conditions were fulfilleda result of the underlying expense of fully vested equity awards being fully recognized prior to December 31, 2019. The balance2020.

As discussed in more detail elsewhere in this Annual Report, the likelihood of the decreasePetition being successful is low. In the favorable scenario, the steps from EBA acceptance of the Petition to completion of a new opposition proceeding is expected to take up to four years and possibly longer. The denial of the Petition would end the Opposition Proceeding in research and development cost duringfavor of the year ended December 31, 2020 isopponents. For all practical purposes, such denial of the Petition would represent an unsuccessful outcome of the Opposition Proceeding, resulting in no royalties being due to the Company from Biogen based on Biogen’s future net sales outside the United States, as defined in the License Agreement. As the result of completingthese uncertainties and variables, we are unable to currently estimate the wind downnature, timing or amount of FP187® development activities in 2019 and not incurring costs in connection therewith in 2020.

        We currently expect that ourthe research and development costs we will remain at current levelsincur in the future; however, considering the high level of uncertainty associated with estimating the nature and timing of costs to be incurred to continue the Opposition Proceeding, including any appeals, it is possible that unforeseen events could occur that could have a material effect on our estimated expenditures. Prospectively, research and development activities will primarily relate to Patent Fees. We may experience significant fluctuations in our expenses, period-to-period, as the result of the varying nature of the services expected to be provided by our patent advisor in connection with the Opposition Proceeding.

Table of Contentsfuture.

General and administrative costs for the years ended December 31, 20202021 and 20192020

General and administrative costs for the years ended December 31, 2021 and 2020 and 2019 were $3.1$3.6 million and $4.2$3.1 million, respectively. The decreaseincrease of $500,000 in general and administrative costs in the year ended December 31, 2020 of $1.1 million2021 resulted from a decreaseincreases in professional fees and insurance costs offset by reductions in share-based compensation. Share-based compensation decreasedand various other smaller items. Professional fees increased from $1.5$1.0 million in the year ended December 31, 20192020 to $1.7 million in the year ended December 31, 2021. The increase in professional fees is associated with increased consultations with our tax and legal advisors in connection with the tax audit in Germany and the potential insolvency of FP GmbH, as well as legal and auditor support that was needed in connection with the registration statements we filed with the Securities and Exchange Commission during the year ended December 31, 2021. Our insurance costs increased from $454,000 in the year ended December 31, 2020 to $590,000 in the year ended December 31, 2021. The increase in our insurance costs is attributed to market conditions and is primarily related to increased premiums for our directors and officers liability insurance. The increases in professional fees and insurance costs were offset by a decrease in share-based compensation from $271,000 in the year ended December 31, 2020. The decrease2020 to $1,000 in share-based compensation resulted from equity awards that were issued prior to December 31, 2017 that included graded vesting provisions resulting in expense recognition that decreases in the latter years of vesting combined with an increased number of equity awards where the underlying expense was fully recognized prior to the year ended December 31, 20202021. Share-based compensation decreased as performance and/or service conditions were fulfilleda result of the underlying expense of fully vested equity awards being fully recognized prior to December 31, 2019.2020.

We currently expect that our general and administrative costs will remain at current levels; however, unforeseen events could occur that could have a material effect on our estimated expenditures.

Non-operating income (expense) income for the years ended December 31, 20202021 and 20192020

During the year ended December 31, 2021, the Group recognized a foreign exchange gain of $2.2 million. The $2.2 million foreign exchange gain resulted primarily from the favorable effect of the strengthening of the USD compared to the DKK during the period that is reflected as a non-cash foreign exchange gain when the USD cash holdings were converted to the functional currency of the Company and Operations (the DKK) at December 31, 2021. During the year ended December 31, 2020, the Group recognized a foreign exchange loss of $3.0 million. The $3.0 million foreign exchange loss resulted primarily from the unfavorable effect of the weakening of the USD compared to the DKK during the period that is reflected as a non-cash foreign exchange loss when the USD cash holdings were converted to the functional currency of the Company and Operations (the DKK)DKK at December 31, 2020. During the year ended December 31, 2019, the Company recognized a foreign exchange gain of $759,000. The $759,000 foreign exchange gain resulted primarily from the favorable effect of the strengthening of the USD to the DKK during the period that is reflected as a non-cash foreign exchange gain when theSince our USD cash holdings were converted toare significant, future changes in the exchange rate between the DKK at December 31, 2019.and the USD will cause favorable or unfavorable volatility in our operating results and the impact could be material.

Other finance (expense) incomecosts primarily includesinclude bank fees, or negative interest, on EUR and DKK cash holdings net of interest income on USD cash holdings.holdings and interest received during the year ended December 31, 2021 in connection with a tax refund from the Danish tax authorities.

Income tax for the years ended December 31, 20202021 and 20192020

For the years ended December 31, 20202021 and 2019,2020, the Group incurred losses for tax purposes. The tax losses combined with the Group not meeting the requirements to recognize deferred tax assets, resulted in no income tax benefit being recognized.

Since there is significant uncertainty as to whether the Group will have taxable income in the future, deferred tax assets that are available at December 31, 20202021 do not meet the criteria for financial statement recognition and accordingly have not been recognized in the accompanying consolidated financial statements.

        There are ongoing tax audits being conducted by the Danish and German tax authorities of the Group's Danish and German tax returns. While management believes the tax filing positions taken were correct, there is always the risk that the tax authorities could disagree resulting in additional taxes, interest and penalty being assessed and the amount could be material. See below as well as Note 3.4 to the consolidated financial statements for additional information.

Government, Economic, Fiscal, Monetary or Political Initiatives That May Materially Affect Our Operations

        We have not identified any current government, economic, fiscal, monetary or political initiatives that would be expected to materially affect our operations.

Table of Contents

Critical Accounting Policies

        Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with IFRS as issued by the IASB. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the revenues and expenses reported during each period. Actual results may differ from these estimates under different assumptions or conditions.

        While our significant accounting policies are more fully described in the notes to our audited consolidated financial statements appearing elsewhere in this Annual Report, we believe that the following accounting policies are the most critical to aid you in understanding and evaluating our financial condition and results of operations.

Share-based compensation

        The fair value of equity awards (the share-based compensation arrangements we have historically used have included deferred shares, share options and warrants) issued to our employees, board members, consultants and non-employee consultants in connection with their services provided to the Group are recognized as compensation expense over the applicable service period which is also the vesting period.

        The Company determines the initial fair value and subsequent accounting for equity awards granted to the Company's employees, consultants, directors and non-employee consultants using an option pricing model (Black-Scholes) that requires management to use many subjective assumptions. The subjective nature of the assumptions requires management to use significant judgment, and small changes in any individual assumption or in combination with other assumptions may yield significantly different results. The most significant assumptions used to fair value equity awards included the expected period an equity award will be outstanding and the volatility of the Company's ADSs. As a public listed company there is objective evidence of the fair value of an ordinary share on the date an equity award is granted.

Income taxes

        Management uses subjective judgments, estimates, and assumptions to determine current and deferred tax provisions as well as current and deferred tax assets and liabilities. The judgments, estimates, and assumptions used by management can change over time as the result of new information becoming available or as facts and circumstance change. Any change will affect our reported assets, liabilities and operating results and the effect could be material. There are transactions and calculations for which the ultimate tax determination is uncertain. Where the final tax outcome of these matters could differ from the amounts initially estimated, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made, and the effect could be material.

        When we recognize deferred tax assets, including the tax base of tax loss carryforwards, management assesses that these taxes can be offset against positive taxable income within a foreseeable future. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based upon the likely timing and level of future taxable profits together with future tax planning strategies. Such a judgment will be made on an ongoing basis and is based on historical results of operations, budgets, and business plans. This judgment is made periodically after considering current facts and circumstances, as well as the risks and uncertainty associated with the operations of the Group. As facts and circumstances change, adjustments to previously made estimates will be made that could result in volatility in reported operating results and the occurrence of

Table of Contents

unforeseen events could have a material favorable or unfavorable effect on the consolidated financial statements of the Group. Taxable profits are not assured in the future; therefore, temporary differences that will be available to offset taxable profits after December 31, 2020 do not meet the criteria for financial statement recognition and therefore the related deferred tax assets have not been recognized.

Tax uncertainties

        The Group's Danish, German and United States tax returns are subject to periodic audit by the local tax authorities and are subject to ongoing audits in Germany and Denmark. Such audits could result in the tax authorities disagreeing with the tax filing positions taken by the Group, which would expose the Group to additional taxes being assessed, including interest and penalties that could be material. The Group exercises significant judgment when determining tax filing positions. The tax rules and regulations are very complex and there can be no assurance that management's interpretation and application of these rules and regulations to determine tax filing positions will be accepted by the tax authorities. If the tax authorities reject a tax filing position taken by a Group company and the tax authorities ultimately prevail in disallowing the tax filing position, after a Group company exhausts all options to defend such tax filing position, it would likely have a material adverse effect on the Group's financial position and operating results.

        There is a risk that the tax authorities could impose additional taxable income or disallow the deductibility of expenses on intercompany cross-border transactions resulting in higher tax obligations in one or more tax jurisdictions. Management's experience has been that the tax authorities can be aggressive in taking positions that would increase taxable income and/or disallow deductible expenses. If the tax authorities are successful in increasing taxable income and/or disallowing deductible expenses in one or more jurisdictions, it would result in the Group experiencing a higher effective tax rate that could be material. Management consulted with professional tax advisors when establishing intercompany cross-border tax filing positions for Group companies and believes that the intercompany cross-border tax filing positions taken are in accordance with tax regulations; however, there is always a risk that the tax authorities could disagree with the intercompany cross-border tax filing positions taken by the Group. If the tax authorities disagree with an intercompany cross-border tax filing position taken by the Group, and the tax authorities ultimately prevail in disallowing an intercompany cross-border tax filing position, after the Group exhausts all options to defend such tax filing position, it would result in additional taxes, interest and possibly penalty becoming due and such amount could be material. See also "Tax audits in Denmark and Germany" below.Germany

Tax audits in Denmark and Germany

        Currently, theThe Danish and German tax authorities are conductingconducted a joint tax audit of the Group'sGroup’s Danish and German income tax returns covering multiple years through the year ended December 31, 2017. Conducting aThe joint tax audit is expected to reducefocused primarily on one intercompany transaction that occurred in 2017 between the burdenCompany and cost to the Group of undergoing two audits that address similar transactions and to accelerate the resolution of disagreements.

        To date, the joint tax audit has focused on the intercompany recognition of revenue and expensesFP GmbH to ensure that such transactions werethe Transaction was conducted at arm's length. It is possible that the ongoing joint tax audit could resultfair value as determined in theaccordance with generally accepted arm’s length principles applicable to taxing cross-border transactions. The Danish and German tax authorities mutually agreeingwere unable to allocate a greater portionreach agreement as to whether the Transaction was conducted at fair value and terminated the joint income tax audit in the second quarter of 2021.

As discussed in more detail below, the tax audit in Denmark concluded with no changes proposed to the Group’s Danish tax filings. The tax audit in Germany is ongoing and the German tax authorities have indicated that they disagree with FP GmbH’s determination of the Group's totalfair value of the Transaction and have proposed a material increase in FP GmbH’s 2017 taxable income.

Tax audit in Germany

On May 21, 2021, the German tax authorities issued a preliminary audit assessment (the “Preliminary Assessment”) that proposed an increase to FP GmbH’s 2017 taxable income of 265.0 million EUR to 312.1 million EUR ($300.4 million and $353.7 million, respectively, based on the December 31, 2021 exchange rate). The Preliminary Assessment alleged that the Transaction was not conducted at fair value. The Company and FP GmbH disagree with the positions taken by the German tax authorities and intend to vigorously defend that the Transaction was conducted at fair value, as determined in accordance with generally accepted arms’ length principles, and no additional taxes are due in Germany. FP GmbH, with assistance from the Group’s tax advisors, submitted a formal response to the Preliminary Assessment arguing that the Transaction was conducted at fair value and why the Preliminary Assessment is incorrect. Management expects the German tax authorities will issue a final assessment, with few or no changes to the Preliminary Assessment, and levy a tax assessment against FP GmbH that is expected to be material to FP GmbH (referred to asand the "Reallocation of Taxable Income"). If such Reallocation of Taxable Income were to occur, it could trigger a net increase inGroup. It is uncertain when FP GmbH will receive the Group's total incomefinal tax expense caused by the higher statutory tax rate in Germany of 31.9% versus Denmark's statutory tax rate of 22.0%. Effectively, the Reallocation of Taxable Income would shiftassessment. Assuming FP GmbH’s taxable income to Germany that would be taxed at 31.9% while reducing taxable income in Denmark that was taxed at 22.0%.is increased by 265.0 million EUR and offset by FP GmbH hasGmbH’s available net tax loss carryforwards of 11.9approximately 12 million EUR ($14.613.4 million based on the December 31, 20202021 exchange rate) that could be used to mitigate an increase in income, using the German effective tax expense resulting from a Reallocationrate of Taxable Income. Any Reallocation of

Table of Contents

Taxable Income that is not covered by FP GmbH's tax loss carryforwards31.9%, and not subject to minimum taxation rules in Germanybefore any applicable interest and/or penalties, this would result in an increase in incomea tax expense at a ratelevy of approximately 10 percentage points of such amount compared to what has been recognized inapproximate 80.7 million EUR ($91.6 million based on the financial statements at December 31, 2020.2021 exchange rate).

        The Danish and German tax authorities may currently be discussingAn increase of FP GmbH’s 2017 taxable income in Germany without a Reallocation of Taxable Income; however, Management has determined, based on consultations with the Group's tax advisors, that it is not probable (i.e., more likely than not) that the Group will be required to pay additional taxescorresponding offset to the GermanGroup’s 2017 Danish tax authorities upon the ultimate resolution of the joint tax audit. However, such determination is inherently subjective and, if it is incorrect, then the Group may be subject to significant additional tax levies. The ultimate resolution of the joint tax audit may require that the Group incur a material outflow of cash thatfiling, would negatively affect the Group's financial position, results of operations and cash holdings. If the Danish and German tax authorities mutually agree to a Reallocation of Taxable Income, the Group's only option to mitigate the increaseresult in income tax expense would be to seek relief through litigation in Germany. If litigation in Germany were pursued, it would be time-consuming and costly and there is no assurance that the outcome of such litigation would be successful.

        If the Danish and German tax authorities do not mutually agree to a Reallocation of Taxable Income, the German tax authorities could unilaterally increase the taxable income of FP GmbH, which could lead todouble taxation. Relief from double taxation and an increase in the Group's total income tax expense. In such case, the Group's only option to mitigate the increase in income tax expense wouldcan be to seek reliefobtained through entering into a MAP comprisingand/or a government-to-government dispute resolution mechanism and/or commencesuccessful

outcome from litigation against the German tax authorities. If relief is sought through a MAP, double taxation will be eliminated; however, there is no assurance that a MAP and/or litigation in Germany would eliminate a net increase in the Group'sGroup’s total income tax expense caused byexpense. A net increase in the Group’s income tax could have a Reallocationmaterial negative effect on the Group’s consolidated financial position, results of Taxable Income, whichoperations and cash holdings.

At the conclusion of a MAP and/or litigation, if the German tax authorities are successful in increasing FP GmbH’s taxable income and if FP GmbH is unable to pay the related tax levy, the German tax authorities could commence litigation against the Company in Denmark to collect some or all of the outstanding balance of the tax levy. If this were to occur, it would likely be materialtime consuming to resolve, costly to the Company to defend, and could result inhave a material outflownegative effect on the Group’s consolidated financial position, operating results and cash holdings.

Based on consultations with the Group’s Danish and German tax advisors and after considering the facts and circumstances underlying the Transaction, the Group’s supporting documentation for the Transaction, the arguments set forth in FP GmbH’s response to the Preliminary Assessment, and the fact that the income tax audit in Denmark concluded with no changes proposed, management continues to believe that it is probable (i.e., more likely than not) that FP GmbH will not be required to pay additional income taxes to the German tax authorities upon the conclusion of casha MAP and/or litigation against the German tax authorities. Accordingly, the Group has not recognized a provision related to the ongoing income tax audit in Germany at December 31, 2021. Management notes that would negatively impactsuch determination is inherently subjective and, if it is incorrect, then FP GmbH may need to pay a tax levy that could have a material negative effect on FP GmbH and the Group'sCompany’s consolidated financial position, operating results and cash holdings.

In the event of a negative outcome in the tax audit in Germany and subject to the Group’s ability to get relief from double taxation, an increase in FP GmbH’s taxable income would be taxed at the German effective tax rate of 31.9% while reducing the taxable income in Denmark that was taxed at 22.0%. FP GmbH has available tax loss carryforwards that could be used to partially mitigate an increase in FP GmbH’s taxable income from a transfer pricing adjustment. Therefore, an increase in FP GmbH’s taxable income, that is not covered by FP GmbH’s tax loss carryforwards and not subject to minimum taxation rules in Germany, would result in a net increase in the Group’s income tax expense at a rate of approximately 10 percentage points. Assuming FP GmbH’s taxable income is increased by 265.0 million EUR, as set out in the Preliminary Assessment, and offset by FP GmbH’s available tax loss carryforwards of approximately 12 million EUR, subject to the Group’s ability to obtain relief from double taxation in Denmark of 58.3 million EUR ($66.1 million based on the December 31, 2021 exchange rate), it is estimated that the net increase in the Group’s income tax expense, will be approximately 22.4 million EUR ($25.5 million based on the December 31, 2021 exchange rate) before applicable interest and/or penalties.

FP GmbH does not have the liquidity to pay a tax levy associated with an increase in FP GmbH’s taxable income of 265.0 million EUR, nor does the Group, without obtaining relief from double taxation from the Danish tax authorities (see below section “Application for Debtor-in-Possession Proceedings” for additional information regarding the potential insolvency of FP GmbH). The Group’s total cash and cash equivalents amount to $70.8 million at December 31, 2021.

The cost to pursue litigation in Germany and/or a MAP individually, or in combination with any potential taxes, interest, and penalties due at the conclusionultimate resolution of the litigation and/or MAP, could have a material adverse effect on the Group'sGroup’s financial position, operating results, and cash holdings.

The timing oftime period to ultimately settle the tax dispute with the German tax authorities, including the completion of a MAP and/or litigation against the joint tax audit by theGerman tax authorities, is currently unknown.unknown; however, management does not believe the dispute will conclude within the next twelve months and the time period could be three years or longer.

        For more, see "Risk Factors—Risks RelatedTax Audit in Denmark

On June 2, 2021, the Company received notice from the Danish tax authorities that they had accepted the Group’s 2017 Danish income tax filing and that the Danish income tax audit had concluded; however, the Danish tax authorities reserve the right to Our Financial Positionaudit the Danish tax affairs of the Group at a future date. The Danish tax authorities determined that the Transaction could be considered to be at arm’s length terms and Capital Needs" and Note 3.4 Income tax,found no reason to change the pricing of the Transaction as reported in the accompanyingGroup’s Danish income tax filing.

Application for Debtor-in-Possession Proceedings

In anticipation of the receipt from the German tax authorities of a material final tax assessment, with few or no changes to the Preliminary Assessment, management is considering taking the actions discussed below in order to put the Company and FP GmbH in the best position to defend the tax filing position associated with the Transaction and to protect the interests of the Company and FP GmbH through the resolution of a MAP and/or litigation.

FP GmbH does not have sufficient liquidity or any other assets enabling it to pay a material tax levy if a final tax assessment, as discussed above, is issued by the German tax authorities. Upon the receipt of such a final tax assessment, FP GmbH’s management will need to evaluate whether an over-indebtedness or illiquidity condition exists under German law and whether FP GmbH has become insolvent. If FP GmbH’s management concludes that FP GmbH has become either over-indebted or illiquid, management expects that insolvency proceedings will commence in a German court (“Court”). Upon FP GmbH becoming insolvent, a Court-appointed insolvency administrator will oversee the day-to-day operations of FP GmbH and the management of FP GmbH will lose control of FP GmbH. FP GmbH intends to take all available steps to avoid insolvency, including, but not limited to, appealing the tax assessment and requesting suspension of enforcement of the tax assessment notice. Depending on the facts and circumstances at the time a final tax assessment is received from the German tax authorities, FP GmbH’s management may not be able to avoid the insolvency of FP GmbH.

In advance of the receipt of the final tax assessment, FP GmbH’s management currently plans to submit an application to the Court asking the Court to allow FP GmbH to enter into debtor-in-possession (“DIP”) proceedings. Entering into DIP proceedings would allow FP GmbH’s management to continue to oversee the day-to-day operations of FP GmbH, supervised by a Court-appointed expert, thereby avoiding the appointment of an insolvency administrator, who would have taken control of FP GmbH. While the application is pending, FP GmbH will be in preliminary DIP proceedings. While in preliminary DIP proceedings, FP GmbH’s management will continue to oversee the day-to-day operations of FP GmbH while a Court-appointed expert reviews the facts and circumstances underlying the application as part of the determination as to whether DIP proceedings are appropriate for FP GmbH. After evaluating the application and receipt of the expert’s opinion as to whether DIP proceedings are appropriate, the Court will rule on the application and decide whether FP GmbH can enter into DIP proceedings. Until the Court rules on the application, FP GmbH will remain in preliminary DIP proceedings. If the Court ultimately approves the application, FP GmbH would enter into DIP proceedings. While in DIP proceedings, FP GmbH’s management will continue to oversee the day-to-day operations of FP GmbH while a Court-appointed supervisor monitors the activities of FP GmbH, including but not limited to the status of the tax audit. The supervisor reports to the Court and advises FP GmbH’s management. Acts taken by FP GmbH’s management without the consent or against the objection of the supervisor may lead to ramifications for the further proceedings, while not limiting the powers and control of the management. Management is currently unable to estimate when the application to enter DIP proceedings will be submitted to the Court; however, it could occur in the near-term. After submitting the DIP proceeding application, it is unknown how long it will take the Court to rule on the application.

Under preliminary DIP proceedings and DIP proceedings, FP GmbH’s management is obligated, when overseeing the day-to-day operations of FP GmbH, to put the interest of creditors before the interest of shareholders. For financial reporting purposes, the prioritization of the interest of creditors in managing the affairs of FP GmbH, in substance, limits management’s decision-making ability resulting in management being deemed to have lost control of FP GmbH. Upon the loss of control of FP GmbH, FP GmbH will be deconsolidated from the Group’s consolidated financial statements for additional information.

Recent Accounting Pronouncements

        For discussion regarding newresulting in the Group incurring a nonrecurring impairment loss. Such impairment loss will be recognized by the Group on the date when control of FP GmbH is lost and amendmentswill equal the net asset value of Operations’ investment in FP GmbH (19.4 million DKK as of December 31, 2021 ($3.0 million based on the December 31, 2021 exchange rate)). As of December 31, 2021, there is an uncollateralized intercompany loan (“Intercompany Loan”) from FP GmbH to accounting standardsOperations that totals 2.8 million EUR ($3.2 million based on the December 31, 2021 exchange rate.) The Intercompany Loan is due on demand and accrues interest at an annual rate of 2% with interest compounding quarterly. The Intercompany Loan and the expected impact onrelated interest are eliminated in consolidation and therefore not reflected in the Group's consolidated financial statements see Note 2.3 New and amendments to accounting standards,included herein. Subsequent to the accompanyingdeconsolidation of FP GmbH and the recognition of the impairment loss, the Group’s consolidated statement of financial position will include a current liability equal to the Intercompany Loan and the Group’s consolidated statement of profit or loss will include interest expense recognized in accordance with the terms of the Intercompany Loan as stated above.

FP GmbH can apply for relief from paying a tax levy associated with the final tax assessment by requesting the German tax authorities to suspend enforcement. It is uncertain whether FP GmbH will be successful in obtaining a suspension of enforcement. If suspension of enforcement is obtained, FP GmbH would withdraw the DIP application, insolvency procedures would end, and control of FP GmbH would revert back to FP GmbH’s management. Upon FP GmbH’s management regaining control of FP GmbH, FP

GmbH’s financial statements would again be consolidated within the Group’s consolidated financial statements.statements and the impairment loss and subsequent accounting for the Intercompany Loan, discussed above, would be reversed.

Critical Accounting Estimates

        For discussion regarding critical accounting estimates, see Note 2.2 Significant accounting judgements, estimates and assumptions, toThe loss of control of FP GmbH will have a material adverse effect on the accompanyingCompany’s consolidated financial statements.position and operating results. The cash holdings of the Group would also be adversely affected when Operations is required to repay the Intercompany Loan. In addition, the Company could be exposed to claims made by the administrator in the event the administrator believes the Company has unfairly benefited from the Transaction, or potentially other transactions and/or actions taken by the Company or another company within the Group, at the detriment of FP GmbH’s creditors. Any claims against the Company, or another company within the Group, that are ultimately successful, could have a material adverse effect on the Group’s financial position, operating results and cash holdings.

Table of Contents

B. Liquidity and Capital Resources

Comparison of the Years ended December 31, 20202021 and 20192020

​

The table below summarizes our consolidated statement of cash flows for each of the years ended December 31, 20202021 and 2019:2020: