Exhibit 1
AFFIMED N.V.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page | |
Unaudited condensed consolidated statement of comprehensive loss | 2 |
Condensed consolidated statement of financial position | 3 |
Unaudited condensed consolidated statement of cash flows | 4 |
Unaudited condensed consolidated statement of changes in equity | 5 |
Notes to the consolidated financial statements | 6 |
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Affimed N.V. | ||||||||
Unaudited condensed consolidated statement of comprehensive loss | ||||||||
(in € thousand) | ||||||||
For the three months ended March 31, | ||||||||
Note | 2014 | 2015 | ||||||
Revenue | 3 | 722 | 2,538 | |||||
Other income - net | 4 | 45 | 229 | |||||
Research and development expenses | 4 | (5,346 | ) | (2,921 | ) | |||
General and administrative expenses | (4,735 | ) | (1,848 | ) | ||||
Operating loss | (9,314 | ) | (2,002 | ) | ||||
Finance income / (costs) - net | 5 | (6,401 | ) | 518 | ||||
Loss before tax | (15,715 | ) | (1,484 | ) | ||||
Income taxes | 69 | 0 | ||||||
Loss for the period | (15,646 | ) | (1,484 | ) | ||||
Comprehensive loss | (15,646 | ) | (1,484 | ) | ||||
Loss per share in € per share | (1.06 | ) | (0.06 | ) | ||||
(undiluted = diluted) | ||||||||
The notes are anintegral part of these condensed consolidated financial statements.
2
Affimed N.V.
Condensed consolidated statement of financial position
(in € thousand)
Note | December 31, 2014 | March 31, 2015 | ||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Non-current assets | ||||||||
Intangible assets | 72 | 70 | ||||||
Leasehold improvements and equipment | 974 | 929 | ||||||
1,046 | 999 | |||||||
Current assets | ||||||||
Inventories | 199 | 201 | ||||||
Trade and other receivables | 939 | 1,057 | ||||||
Cash and cash equivalents | 39,725 | 37,033 | ||||||
40,863 | 38,291 | |||||||
TOTAL ASSETS | 41,909 | 39,290 | ||||||
EQUITY AND LIABILITIES | ||||||||
Equity | ||||||||
Issued capital | 240 | 240 | ||||||
Capital reserves | 131,544 | 131,886 | ||||||
Accumulated deficit | (99,989 | ) | (101,473 | ) | ||||
Total equity | 31,795 | 30,653 | ||||||
Non current liabilities | ||||||||
Borrowings | 7 | 3,895 | 4,508 | |||||
Total non-current liabilities | 3,895 | 4,508 | ||||||
Current liabilities | ||||||||
Trade and other payables | 3,759 | 3,113 | ||||||
Deferred revenue | 3 | 2,460 | 1,016 | |||||
Total current liabilities | 6,219 | 4,129 | ||||||
TOTAL EQUITY AND LIABILITIES | 41,909 | 39,290 | ||||||
The notes are anintegral part of these condensed consolidated financial statements.
3
Affimed N.V. | ||||||||
Unaudited condensed consolidated statement of cash flows | ||||||||
(in € thousand) | ||||||||
For the three months ended March 31, | ||||||||
Note | 2014 | 2015 | ||||||
Cash flow from operating activities | ||||||||
Loss for the period | (15,646 | ) | (1,484 | ) | ||||
Adjustments for the period: | ||||||||
- Income taxes | (69 | ) | 0 | |||||
- Depreciation and amortisation | 105 | 84 | ||||||
- Share based payments | 6 | 7,582 | 342 | |||||
- Finance income / costs - net | 5 | 6,401 | (518 | ) | ||||
(1,627 | ) | (1,576 | ) | |||||
Change in trade and other receivables | 334 | (118 | ) | |||||
Change in inventories | 2 | (2 | ) | |||||
Change in trade and other payables | 2,227 | (2,090 | ) | |||||
Cash generated from operating activities | 936 | (3,786 | ) | |||||
Interest received | 0 | 2 | ||||||
Paid interest | (17 | ) | (140 | ) | ||||
Net cash from (used in) operating activities | 919 | (3,924 | ) | |||||
Cash flow from investing activities | ||||||||
Purchase of intangible assets | (19 | ) | (5 | ) | ||||
Purchase of leasehold improvements and equipment | (7 | ) | (32 | ) | ||||
Net cash used for investing activities | (26 | ) | (37 | ) | ||||
Cash flow from financing activities | 0 | 0 | ||||||
Net changes to cash and cash equivalents | 893 | (3,961 | ) | |||||
Cash and cash equivalents at the beginning of the period | 4,151 | 39,725 | ||||||
Exchange-rate related changes of cash and cash equivalents | 0 | 1,269 | ||||||
Cash and cash equivalents at the end of the period | 5,044 | 37,033 | ||||||
The notes are anintegral part of these condensed consolidated financial statements.
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Affimed N.V. | ||||||||||||||||||||
Unaudited condensed consolidated statement of changes in equity | ||||||||||||||||||||
(in € thousand) | ||||||||||||||||||||
Note | Issued capital | Capital reserves | Own shares | Accumulated deficit | Total equity | |||||||||||||||
Balance as of January 1, 2014 | 63 | 469 | (25 | ) | (99,730 | ) | (99,223 | ) | ||||||||||||
Loss for the period | (15,646 | ) | (15,646 | ) | ||||||||||||||||
Balance as of March 31, 2014 | 63 | 469 | (25 | ) | (115,376 | ) | (114,869 | ) | ||||||||||||
Balance as of January 1, 2015 | 240 | 131,544 | 0 | (99,989 | ) | 31,795 | ||||||||||||||
Equity-settled share based payment awards | 6 | 342 | 342 | |||||||||||||||||
Loss for the period | (1,484 | ) | (1,484 | ) | ||||||||||||||||
Balance as of March 31, 2015 | 240 | 131,886 | 0 | (101,473 | ) | 30,653 |
The notes are anintegral part of these condensed consolidated financial statements.
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Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
1. | Reporting entity |
Affimed N.V. (in the following Affimed or Company) is a Dutch company with limited liability (naamloze vennootschap) and has its corporate seat in Amsterdam, the Netherlands. The Company was founded as Affimed Therapeutics B.V. on May 14, 2014 as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) for the purpose of a corporate reorganization of Affimed GmbH (formerly Affimed Therapeutics AG) and converted its legal form under Dutch law to a public company with limited liability for an initial public offering of its common shares.
The condensed consolidated financial statements of Affimed as of and for the period ended March 31, 2015 comprise the Company and its wholly owned and controlled subsidiaries, Affimed GmbH, Heidelberg, Germany, AbCheck s.r.o., Plzen, Czech Republic and Affimed Inc., Delaware, USA. Financial information presented in the consolidated financial statements for periods prior to the consummation of the corporate reorganization on September 17, 2014 is that of Affimed Therapeutics AG and its subsidiary AbCheck s.r.o. Affimed N.V. had not conducted any operations and had not held any assets or liabilities, including contingent liabilities, prior to the reorganization. Affimed Inc. was formed in February 2015 and provides internal services for the Group.
Affimed is a clinical-stage biopharmaceutical group focused on discovering and developing targeted cancer immunotherapies. The Company’s product candidates are developed in the field of immune-oncology, which represents an innovative approach to cancer research that seeks to harness the body’s own immune system to fight tumor cells. Affimed has own research and development programs and collaborations, where the Company is performing research services for third parties.
2. | Basis of preparation and changes to Group’s accounting policies |
Statement of compliance
The interim financial statements for the three months ended March 31, 2015 and 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Affimed N.V.’s annual consolidated financial statements as at 31 December 2014.
The interim financial statements were authorized for issuance by the management board on May 13, 2015.
Critical judgments and accounting estimates
The preparation of the interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
In preparing these interim financial statements, the critical judgments made by management in applying the Group's accounting policies were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2014.
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Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
Functional and presentation currency
These interim financial statements are presented in euro, which is the Company’s functional currency. All financial information presented in euro has been rounded to the nearest thousand (abbreviated €) or million (abbreviated € million).
Significant accounting policies
The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended December 31, 2014 with the exception of new amendments to standards and new or amended interpretations applied for the first time as described below.
New standards and interpretations applied for the first time
A number of amendments to standards and new or amended interpretations are effective for annual periods beginning on or before January 1, 2015, and have been applied in preparing these financial statements.
Standard/interpretation | Effective Date 1 |
Annual Improvements to IFRSs 2010-2012 Cycle | July 1, 2014 |
Annual Improvements to IFRSs 2011-2013 Cycle | July 1, 2014 |
1 Shall apply for periods beginning on or after shown in the effective date column.
None of these amendments to standards and new or amended interpretations had an effect on the interim consolidated financial statements of the Group.
New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations are effective for annual periods beginning after December 31, 2015, and have not been applied in preparing these consolidated financial statements.
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Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
Standard/interpretation | Effective Date 1 |
Annual Improvements to IFRSs 2012-2014 Cycle | January 1, 2016 |
Amendments to IAS 16, 38 Clarification of acceptable methods | |
of depreciation and amortization | January 1, 2016 |
Amendments to IAS 1 Disclosure Initiative | January 1, 2016 |
Amendments to IFRS 10, 12 and IAS 28 Investment Entities | January 1, 2016 |
Amendment to IFRS 11 Accounting for Acquisitions of Interests in | |
Joint Operations | January 1, 2016 |
IFRS 15 Revenue from Contracts with Customers | January 1, 2017 |
IFRS 9 Financial Instruments (2014) | January 1, 2018 |
1 Shall apply for periods beginning on or after shown in the effective date column.
The Company has not yet determined if any of these amendments to standards and new or amended interpretations have an effect on its financial statements.
3. | Revenue |
Collaboration agreement Amphivena
Affimed is party to a collaboration with Amphivena Therapeutics Inc., San Francisco, USA (in the following Amphivena) to develop a product candidate for hematologic malignancies. The collaboration consists of a series of linked transactions which in substance form a research and development collaboration. Amphivena is a structured entity with one project and uses the funding it receives from investors (which include Affimed) and Janssen Biotech Inc., Horsham, USA (in the following Janssen) to pay Affimed for its research and development services. Once approval of an investigational new drug application (IND) for the product candidate is obtained, Janssen has an option to acquire Amphivena on predetermined terms and the investors could receive further payments.
The relevant linked agreements consist of:
· | a license and development agreement between Affimed and Amphivena, |
· | a stock purchase agreement between Amphivena, its investors (which include Affimed) for purposes of financing Amphivena, and |
· | a warrant agreement between Amphivena and Janssen for purposes of financing Amphivena and providing Janssen the option to acquire the results of the research and development activities through an acquisition of Amphivena following IND approval. |
Pursuant to the license and development agreement between Affimed and Amphivena, Affimed grants a license to intellectual property and agreed to perform certain services for Amphivena related to the development of a product candidate for hematological malignancies. In consideration for the research and development work to be performed, Amphivena could be required to pay to Affimed service fees totaling approximately €16.0 million payable according to the achievement of milestones and phase progressions as described under the license and development agreement. Affimed recognized revenue of €4.4 million and €1.8 million in 2013 and 2014 upon achievement of the milestones consisting of the earned milestone payments of €4.6 million and €2.0 million less Affimed’s share in funding Amphivena of €0.2 million and €0.2 million, respectively. In the first quarter of 2015, the Group recognized revenue of €2.4 million for the achievement of the third milestone which had been received in cash in 2014 and deferred until the milestone was achieved.
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Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
After the achievement of the third milestone, the Group is eligible for advance payments for research and development services for a total of €7.5 million, payable in three instalments. The first instalment of €1.3 million was received in the first quarter of 2015 less Affimed’s share in funding Amphivena of €0.3 million. The payment was deferred as of March 31, 2015.
Collaboration agreement The Leukemia & Lymphoma Society (LLS)
Affimed is party to a collaboration with LLS to fund the development of a specific TandAb. Under the terms of the agreement, LLS has agreed to contribute up to $4.4 million contingent upon the achievement of certain milestones.
In the event that the research and development is successful, Affimed must proceed with commercialization of the licensed product. If Affimed decides for business reasons to not continue the commercialization, Affimed must at its option either repay the amount funded or grant a license to LLS to enable LLS to continue with the development program. In addition, LLS is entitled to receive royalties from Affimed based on the Group’s future revenue from any licensed product, with the amount of royalties not to exceed three times the amount funded (€13.2 million).
The Company achieved the milestones in January and April 2014 and received related payments of $ 1.5 million (€ 1.1 million); €0.6 million was recognized as revenue in the first quarter of 2014.
4. | Research and development expenses |
Government grants
The Company receives certain government grants that support its research effort in defined projects. These grants generally provide for reimbursement of approved costs incurred as defined in the respective grants.
Income in respect of grants also includes contributions towards the costs of research and development. Income is recognized when costs under each grant are incurred in accordance with the terms and conditions of the grant and the collectability of the receivable is reasonably assured.
Government grants relating to costs are deferred and recognized in the income statement over the period necessary to match them with the costs they are intended to compensate. When the cash in relation to recognized government grants is not yet received the amount is included as a receivable on the statement of financial position.
The Company recognizes income from government grants under ‘Other income’ in the consolidated statement of comprehensive loss. In the first quarter of 2015 an amount of €254 (first quarter of 2014 €31) was recognized.
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Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
5. | Finance income and finance costs |
Three months ended March 31, 2014 | Three months ended March 31, 2015 | ||
Changes in fair value of derivative conversion feature | (5,046) | 0 | |
Interest Preferred Shares | (1,162) | 0 | |
Interest Convertible Loan | (176) | 0 | |
Interest Perceptive Loan Agreement | 0 | (164) | |
Foreign exchange differences | (16) | 682 | |
Other finance income/finance costs | (1) | 0 | |
Finance income/costs - net | (6,401) | 518 | |
6. | Share-based payments |
In the corporate reorganization on September 17, 2014, an equity-settled share based payment program was established by Affimed N.V. (ESOP 2014). Based on this program, the Company has granted 715,000 options as of March 31, 2015 (December 31, 2014: 555,000 options) to certain members of the Management Board and the Supervisory Board, consultants and employees. The awards vest in installments over three years, with strike prices of $6.27 for 535,000 options granted on September 17, 2014, $6.20 for 20,000 options granted on November 19, 2014, $5.18 for 110,000 options granted on January 26, 2015 and $6.15 for 50,000 options granted on March 16, 2015. The final exercise date of the options is 10 years after the grant date of the instruments. As of March 31, 2015 and December 31, 2014, none of the ESOP 2014 awards outstanding had vested.
In the three months ended March 31, 2015, compensation expense of €342 was recognized affecting research and development expenses (€92) and general and administrative expenses (€250). In the three months ended March 31, 2014, compensation expense for share-based compensation awards under the then outstanding ESOP 2007 and carve-out plans of €7,582 was recognized, affecting research and development expenses (€3,582) and general and administrative expenses (€4,000).
7. | Borrowings |
Perceptive loan agreement
In July 2014, the Company entered into a credit facility agreement of $14 million and drew an amount of $5.5 million as of July 31, 2014. Repayment will start in April 2016 in monthly installments of $200, with the final balance due in August 2018. Finance costs comprise interest of an annual rate of LIBOR plus a margin of 9%, and an arrangement fee in the amount of 2% of the facility. In addition, the Company issued 106,250 warrants to the lender. The warrants are convertible into common shares of the Company with a strike price of $8.80. Upon initial recognition, the fair value of the warrant of €613 was recognized in equity, net of tax of €183. Fair value was determined using the Black-Scholes-Merton
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Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
formula, with an expected volatility of 65% and an expected time of six years to exercise of the warrant. The contractual maturity of the warrant is ten years.
The loan is collateralized by shares in AbCheck s.r.o., certain bank accounts, receivables and certain intellectual property rights with a total carrying amount of €11,094.
The loan is measured at amortized cost using the effective interest method. Interest costs of €164 and foreign exchange losses of €587 have been recognized in profit or loss of the three months ended March 31, 2015. The Company believes that the fair value of the liability does not differ significantly from its carrying amount of €4,508 as of March 31, 2015 due to the limited time passed after issuance.
8. | Related parties |
The supervisory directors of Affimed N.V. received compensation for their services on the supervisory board of €66 in the three months ended March 31, 2015, remuneration of managing directors amounted to €358. The Group recognized share-based payment expenses of €51 for supervisory directors and €265 for managing directors in the three months ended March 31, 2015.
In the three months ended March 31, 2014 selected managing directors and supervisory directors received payments related to consulting services. In connection with the IPO, the consulting agreements were terminated.
The following table provides the transaction amounts and outstanding balances for consulting fees and supervisory board remuneration related to key management personnel.
Transaction volume | Outstanding balances | |||||||
Three months | Three months | |||||||
ended March | ended March | December 31, | March 31, | |||||
31, 2014 | 31, 2015 | 2014 | 2015 | |||||
Dr. Adolf Hoess | 57 | 0 | 0 | 0 | ||||
MedVenture Partners GmbH (Dr. Florian Fischer) | 47 | 0 | 0 | 0 | ||||
Hecht Healthcare Consulting (Dr. Thomas Hecht) | 16 | 0 | 19 | 0 | ||||
Bio Pharma Consulting Services LLC (Dr. Richard Stead) | 8 | 0 | 6 | 0 | ||||
Dr. Thomas Hecht | 0 | 30 | 0 | 20 | ||||
Dr. Richard Stead | 0 | 9 | 0 | 6 | ||||
Berndt Modig | 0 | 12 | 7 | 8 | ||||
Ferdinand Verdonck | 0 | 15 | 7 | 11 | ||||
Eugene Zhukovsky | 0 | 0 | 16 | 0 |
9. | Subsequent events |
On May 12, 2015 we announced the closing of our previously announced public offering of 5,750,000 of our common shares at a public offering price of $7.15 per common share. The total amount includes 750,000 common shares issued pursuant to the underwriters’ option to purchase additional shares which was exercised on May 7, 2015. After deducting the underwriting discounts and other estimated offering expenses, the net proceeds of the public offering are expected to be approximately $37.1 million.
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