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Karessa Pharma
Holding AB (publ)
Company Description for listing
on Nasdaq Stockholm First North
February 2015
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Table of contents
Important information
Background and motives
Message from the CEO
Market overview
Karessa's unique technology
Description of operations
Financial overview
Share capital and ownership structure
Board of Directors and management
Legal matters and supplementary information
Risk factors
Taxation issues in Sweden
Articles of Association
Glossary
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Important information about First North
First North is an alternative market place operated by the stock
exchanges included in Nasdaq. It does not have the same legal
status as a regulated market. Companies listed on First North
are governed by First North's rules and not by the legal requirements for trading on a regulated market. An investment in a
company that is traded on First North therefore higher risk
than an investment in a company that is traded on a regulated
market. All companies whose shares are admitted to trading
on First North have a certified adviser to monitor compliance
with the rules. NASDAQ OMX Stockholm AB approves the
application for admission to trading on First North.
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Important information
Definitions
"Karessa", or "the Company" refers to the Group consisting of Karessa
Pharma Holding AB (publ) (CIN 556942-1596) and its subsidiaries.
"First North" refers to Nasdaq Stockholm First North. "Company
description" refers to this Company Description drawn up prior to
Karessa's listing on First North. "Euroclear Sweden" refers to Euroclear Sweden AB (CIN 556585-8074). "Remium" refers to Remium
Nordic AB (CIN 556101-9174). In the conversion of currencies, the
following exchange rates have been used: 1 USD = [x] SEK, GBP 1 =
[x] SEK and EUR 1 = [x] SEK.
FIRST DAY OF TRADING ON FIRST NORTH:
10 February 2015
SHARE INFORMATION FOR KARESSA
Short name: KARE
ISIN code: SE0005506193
DATES FOR FINANCIAL INFORMATION
Important information to investors
Each investor should carefully weigh up the information provided in
this company description, in particular, the factors mentioned in the
section on Risk factors, which describes some of the risks associated
with an investment in Karessa. The Company Description has been prepared in view of this listing of the Company's shares on First North. No
new shares will be issued in connection with the listing, and no prospectus will be registered with the Swedish Financial Supervisory Authority
(Finansinspektionen) by reason of this listing. The Company Description
does not constitute an offer to acquire, subscribe to or otherwise trade
in shares or other securities in Karessa.
Future-focused information
The Company Description contains future-oriented statements and
assumptions about future market conditions, operations and results.
These statements are found in multiple sections and include statements regarding the Company's current intentions, assessments and
expectations. Words such as "believes", "intends", "assesses", "expects",
"anticipates", "plans" or similar expressions indicate some of these statements. Other statements of this kind are identifiable based on their
contexts. Actual events and profit outcomes may differ significantly
from what is shown in such statements as a result of risks and other
factors that the Company's operations are affected by.
Third-party information
The Company Description contains historical and future-oriented
information. Where the information has been retrieved from a third
party, the Company is responsible for the information having been
correctly reported correctly. As far as the Company knows, no information has been omitted in a way that could make the information
incorrect or misleading in relation to the original sources. The Company has not, however, verified figures, market data or other information obtained from third parties, and consequently the Board of
Directors does not assume any responsibility for the completeness or
accuracy of such information as is presented in the Company
Description. Such information ought to be read with this in mind.
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Year-end report 2014
27 February 2015
Annual General Meeting
27 May 2015
Interim Report, first quarter 2015
29 May 2015
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Background and motives
Erectile Dysfunction (ED) is a large and growing global health problem. Its prevalence among men aged 40 years is estimated at around 40 per cent and it then
increases in pace with increasing age. Only about 10 percent of men who suffer
from ED receive adequate treatment. Karessa intends to supply this market with
new products that have faster and more reliable effects than today's leading
­treatments.
Since the first effective drugs were introduced in the late 1990s, the
market has grown significantly. By 2012, the global market was valued at SEK 35 billion.
Demand is expected to continue to rise. The main drivers include a
proportionally increasingly older population, increased awareness of
the possibility of effective treatment, less of a social stigma and the
increasing prevalence of underlying diseases and public health problems such as diabetes and obesity. There is much to indicate that, on
several large and established markets, drugs to treat erectile dysfunction will begin to be sold over the counter, which is likely to drive
demand even further.
Today, the market is dominated by three players: Pfizer Inc (Viagra), Eli Lilly & Co (Cialis) and Bayer AG (Levitra/Staxyn). The patents behind the respective drugs supplied by these market players are
now successively expiring, which opens the way for new players who,
through innovation and new product formats, can offer new concepts with major patient benefits.
facturing partners during 2015. As far as possible, registration as a
medicinal product will be carried out by the company, while sales to
end customers will be carried out either by means of project licensing
or product sales to selected partners or within our own organisation.
Listing on Nasdaq Stockholm First North
The listing of Karessa on Nasdaq Stockholm First North is a natural
part of the Company's aim to create a world-leading company in the
growing market for drugs for erectile dysfunction. The listing is also
anticipated to constitute a stamp of quality in relation to customers
and potential partners in cooperation and in the recruitment of staff,
as well as contribute to an increased interest in the Company among
new groups of investors, the media and other stakeholders.
Board assurance statement
The Board of Directors of Karessa is responsible for the information
in this Company Description, which has been drawn up in respect of
the Company's application for listing of the Company's shares on
First North. The Board hereby certifies that, as far as the Board is
aware, the data in this Company Description is correct and in accordance with actual circumstances, and that nothing has been omitted
that could affect its substance.
Unique patient benefits
Karessa's business concept is to develop and commercialise innovative
products with clear competitive advantages related to rapid and reliable effect in the therapeutic area of erectile dysfunction. Great benefit is generated for both patients and the company as a result of combining the company's patented drug delivery-film with clinically
tested and proven substances. For the individual patient, the goal is to
offer a drug with faster and more reliable effect than today's preparations. For Karessa as a company, this combination means a shorter
time to market, lower development costs and significantly reduced
risk with regard to clinical studies.
Karessa is currently working with two projects in the therapeutic
area of erectile dysfunction. Both projects, which are in the pre-clinical phase, concern the Company's drug delivery platform in combination with the active substances Sildenafil and Tadalafil, respectively.
The focus for 2014-2016 will be on product development and conducting the necessary studies prior to the forthcoming registration
with the competent authorities. The objective is for it to be possible
for a first production batch to be manufactured at contracted manu-
Stockholm, February 5, 2015
Karessa Pharma Holding AB (publ)
Board of Directors
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Message from the CEO
Our goal is to revolutionise the market for drugs that treat erectile dysfunction.
Through innovation and patented technology, we want to help men to regain their
sexual potency – without the need to plan far in advance.
products means that we can cut out several development stages. This
gives us a shorter time to market, lower development costs and significantly reduced risk with regard to clinical studies.
We are currently engaged in two different projects: one with the
film in combination with Sildenafil; and one with the film in combination with Tadalafil. The focus for the next two years will be on the
one hand on continued product development, and on the other hand
conducting the necessary studies for final registration with the relevant authorities.
There is no doubt but all that the market exists. Estimates suggest
that only about 10 per cent of all those affected get the help they
need. Undertreatment is therefore significant and there is much to
indicate that demand will continue to grow. The main drivers
included an increasingly ageing population, increased awareness of
the possibility of effective treatment, the increasing prevalence of
underlying diseases, and a diminishing social stigma. In many countries, there are also processes which aim to make it possible to sell the
drugs over-the-counter. In New Zealand in October 2014, a decision
was made to reclassify Sildenafil, which now makes it possible for
specially trained pharmacy staff to sell the drug without prescription.
If this were also to be the case in other markets, it would likely drive
demand further.
When Pfizer introduced Viagra at the end of the 1990s, they broke
completely new ground. They offered a medicinal product that
resulted in millions of men – and their partners – regaining the ability to have a functional sex life. Thus, they were responsible for
injecting new life, lust and vitality in relationships afflicted by erectile dysfunction.
The market for drugs for ED has since grown considerably. In
2012, net sales for the three leading drugs of today – Viagra, Cialis
and Levitra/Staxyn – amounted to around SEK 35 billion
Planning and time margin
Today's medicinal products for treating erectile dysfunction are fantastic in many ways. They are safe, effective and have helped millions of
men to regain their sexual self-confidence. What they lack is the possibility of spontaneity when desire well asserts itself. All of today's big
sellers take a relatively long time before they achieve their intended
effect. For them to function fully, planning and a time margin are
required – which is of course not always possible when it counts.
Our business concept is to develop and commercialise the next
generation of innovative products in the therapeutic area of erectile
dysfunction. We aim to do this by combining our patented drug
delivery-film with clinically tested and proven substances.
We already know that the film works as a delivery system for substances. We also know that the active substances produce the desired
effect. By combining them, we can create a medicinal product with
completely unique properties: a drug that makes it possible to eliminate
the need for planning and instead embracing desire and spontaneity.
A clear quality stamp
Our vision is to establish Karessa as a leading, innovative company in the area of erectile dysfunction. In
support of this, we have a clear objective, a strong concept, a well thought-out strategy and a competent
organisation. The listing of the company's share on Nasdaq Stockholm First North is an important step on this
journey. We hope and believe that it will constitute a
quality stamp in relation to customers and partners in cooperation, as well as contribute to a
general increase in interest in us and our
operations.
Benefits for the patient ...
For the individual patient, the combination means access to a drug
with faster and more reliable effect than today's preparations. Since
the drug is delivered directly into the bloodstream, and does not need
to pass the stomach, the time to effect can be shortened very tangibly, with a reduced need for planning as a result. This also means that
the time to effect cannot either be affected by the contemporaneous
intake of food and drink.
Stockholm, February 2015
... and for us as a company
For us as a company, the combination also entails major benefits: The
fact that the substances are proven and already approved as medicinal
Torbjörn Kemper
CEO
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Market Overview 1
The market for drugs for erectile dysfunction is on the brink of major changes. The
patents behind the medicinal products that dominate the market today (Viagra,
Cialis and Levitra) are now successively expiring. This opens the way for new players
who, through generics and innovation, can offer new concepts with improved
patient benefits. The market is also continuing to grow. Its main drivers include an
increasingly ageing population, the increased prevalence of underlying diseases
such as diabetes, and an increased awareness of effective treatment methods.
1
Source unless otherwise specified: Transparency Market Research: ”Erectile Dysfunction Drugs Market”.
Geographical market
In terms of sales, North America constitutes the biggest separate geographical market, followed by Europe and Asia. Common to all these
markets is that since the introduction of Viagra, they have remained
in a state of strong growth, in terms of both sales and the number of
doses. Demand is expected to continue to rise in the future, with
Northern Europe continuing to be the biggest separate market. In
terms of growth rate, however, countries such as China, India, Brazil
and Russia are expected to be responsible for the bulk of the increase.
Erectile dysfunction refers to men's inability to obtain and sustain a
sufficient erection to be able to successfully complete intercourse.
The reasons may be physical, mental, or a combination of both. The
biggest underlying factors include age, other medications and lifestyle.
Its prevalence among men aged 40 years is estimated at around 40 per
cent, and it then increases in pace with increased age Feldman et al
1994, The Massachusetts Male Aging Study (MMAS). In spite of the
fact that the problem of ED has received a great deal of attention in
recent years, undertreatment is substantial. Only about 10 per cent of
all men with ED have received the right treatment. There is still a
large group of patients who need medication for erectile dysfunction,
but who, for various reasons, have not yet got help.
Players and the patent situation
The market for drugs for erectile dysfunction is well consolidated
and is dominated today by three players: Pfizer Inc, Eli Lilly & Co,
and Bayer AG, which together represent 99 per cent of revenues
from preparations sold. The distribution between these can be seen in
the figure on page 8.
The ED medicinal products that these three players market are
based on PDE5 inhibitors. By basing their preparations on different
types of substances distinctive properties are achieved – Sildenafil
and Vardenafil have a faster effect, but are relatively short-acting.
With Tadalafil, it takes a little longer before its full effect is achieved,
but on the other hand it is longer-acting.
In spite of the fact that the active substances differ, however, the
principle for all the preparations in this class are the same: they act by
making it easier for the arteries of penis to dilate during sexual
arousal. This increased blood flow in turn naturally aids erection.
These preparations have no effect without sexual arousal, that is, that
the individual himself feels sexual desire. The preparations are taken
orally in good time before intercourse. Consuming food and drink in
some cases can influence the time to effect. The side effects of these
preparations are generally mild and decline with time. The most common are headache, nasal congestion and muscular aches and pains. No
long-term adverse effects have been identified. On large established
markets, thus far a prescription by a doctor is required.
The size of the market
Since Viagra was introduced in 1998, the market for drugs for erectile dysfunction has grown substantially. By 2012, the global market
was valued at SEK 35 billion. As the patents behind today's most frequently used drugs successively expire in the coming years, the price
of today's treatments is expected to gradually decline as they become
exposed to price competition from generics. However, this development may come to be avoided through continued product development and the addition of value-adding factors. The actual demand
measured in number of doses, however, is expected to continue to
rise. The main drivers include a proportionally increasingly older population, increased awareness of the possibility of effective treatment,
less of a social stigma and the increasing prevalence of underlying diseases and public health problems such as diabetes and obesity. There
is much to indicate that, on several large and established markets,
drugs to treat erectile dysfunction will begin to be sold over the
counter, which is likely to increase volumes further.
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Market drivers
An ageing population
The single biggest factor underlying erectile dysfunction is age.
Its prevalence among men aged 40 years is estimated at around
40 per cent, and it then increases in pace with
increased age. Among men aged 70, it is estimated that 70 per cent are affected. In terms of
size, relative as well as actual, this group is
Increased prevalence of contributing diseases
increasing in size. Even if there are large geo-
The drivers behind erectile dysfunction also include an increased
graphical differences the trend is the same: in
incidence of diseases such as diabetes, high blood pressure
terms of the population as a whole, we are getting
and cardiovascular disease. Even if these diseases do
older. In 1950-1955, the average life expectancy in the world was
not usually per se affect the ability to achieve an
47 years. By 2005-2010 it had increased to 69 years. For the
erection, the medication for them does. These
period 2045-2050 it is estimated by the United Nations to reach
drugs may thus achieve their intended effect, but at
76 years. The background to this development is generally better
the same time cause a hormonal imbalance or affect
health care and improved social welfare in combination with the
the nerves and blood circulation in a way that results in
positive long-term effects of a reduction in tobacco smoking and
erectile dysfunction.
a generally healthier lifestyle. All in all, this means that the
potential risk group will most likely to continue to grow in size.
From prescription medication to over-the-counter medication
Prescribed medications for erectile dysfunction have now been
Increased awareness
used successfully for many years. Their side-effects and associated
The possibility of treating erectile dysfunction with drugs is still a
risks have proven to be fairly limited. In several markets,
relatively new phenomenon. Despite strong growth, the problem
there is debate on relaxing the requirement for pre-
is both underdiagnosed and greatly undertreated.
scription by a doctor. There is much to indicate that
As knowledge of effective treatments increases,
in the future these medicinal products will be sold
the demand for drugs is also anticipated to con-
without prescription in many markets. This would
tinue to rise. Estimates from Transparency Mar-
likely result in greatly increased volumes, since a visit
ket Research point to the fact that only 10 per
to the doctor for many constitutes a high barrier.
cent of men with erectile dysfunction are being
treated. Even if patient groups who, for various reasons, should
not take medicinal products based on PDE5-inhibitors are
Choice of lifestyle
excluded, undertreatment is therefore significant. Closely related
The significant risk factors also include obesity, alco-
to this is also a declining social stigma, a greater knowledge of
holism, smoking and a sedentary lifestyle – factors
how the drugs actually work, and the conditions under which they
that all contribute to a reduction in blood flow and
provide the best effect. All in all, this will contribute to a rise in
thereby increase the risk of erectile dysfunction.
demand.
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Pfizer
Pfizer's trademark Viagra broke new ground when it was launched
on the market in 1998. The drug, which was in fact developed to
treat cardiovascular disease and high blood pressure, achieved a very
rapid breakthrough and came to be one of the world's best-selling
drugs. The active substance is Sildenafil. This preparation is taken
orally approximately one hour before sexual intercourse. The effect
persists for 4-8 hours.
Viagra's patent protection differs between its geographical markets.
In the majority of countries within the EU and in Switzerland, the
patent expired in June 2013. That same year, the patented was
declared invalid also in Canada. In the USA, the biggest single market,
the patent expires in 2019.
Sales of Viagra in 2012 amounted to SEK 16,1 billion.
intercourse. Compared with both Viagra and Levitra/Staxyn, however, the effect lasts for a longer period of time – up to 36 hours.
This is probably one of the reasons why in recent years Cialis has
taken market share from Viagra in particular.
The expiry of Eli Lilly's patent for Cialis in 2017 is anticipated to
have a dramatic effect on sales, which in 2012 amounted to SEK 15
billion.
Expiry of patents
As the patents held by the leading players and on which their medicinal products are based successively run out, the market will open up
to new players and a trend towards generics. Usually this involves a
combination of a sharp fall in prices and increased sales volumes.
When downward pressure on prices has had its full impact, normally
the price of generics falls to approximately 10 per cent of the original
price of the patented medicinal product.
In the case of erectile dysfunction, however, Karessa's assesses that
the reduction in prices can be countered by new and existing preparations being further developed to provide a more rapid and stable
effect. It is the Company's belief that a substantial share of the market is prepared to pay a price premium for the benefits that the
Company's technology enable.
Karessa also assesses that the difference in pricing between different brands will increase in line with a higher degree of specialisation
and functionality.
Bayer
Bayer's drug for treating erectile dysfunction, Levitra/Staxyn, was
developed as a response to Pfizer's success with Viagra. In 2003, Levitra was launched in Europe and by 2010 Staxyn was approved for
sale in the USA. These preparations are based on the same active
ingredient, Vardenafil. This preparation is taken orally approximately
one hour before sexual intercourse. The effect persists for 4-8 hours.
Both of these drugs are patent-protected. In the USA, Canada, UK,
Germany, Spain, Italy, France and China the patent expires in 2018.
In Japan, it expires in 2020.
In 2012, sales of Levitra/Straxyn amounted to SEK 2,5 billion. Sales
have fallen in recent years, as a consequence of increased market
share for Viagra and Cialis.
Eli Lilly
Since 2003, the US pharmaceutical company Eli Lilly & Co offers the
drug Cialis for the treatment of erectile dysfunction. The active substance is Tadalafil. The preparation is taken orally in good time before
Bayer AG
Brand: Levitra/Staxyn
Market share: 7%
Active substance: Vardenalfil
Eli Lilly & Co
Brand: Cialis
Market share: 45%
Active substance: Tadalafil
Market share
2012
Others
Market share: 1%
Pfizer
Brand: Viagra
Market share: 47%
Active substance: Sildenafil
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Competition
As the patents expire, new players will begin the marketing and sales
of generics. In Europe, Canada, Asia and Latin America, a number of
new brands have been registered and launched. More are under development. It is worth noting, however, that these projects, existing or
under development, all focus on medicinal products in tablet form.
As far as the Company is aware, there is currently no project which
is based on any new form of delivery, similar to that of Karessa.
intercourse and they are affected to different degrees by the patient's
consumption of food and alcohol. The side effects of these preparations are generally mild and decline with time. These include headache, nasal congestion and muscular aches and pains. No long-term
adverse effects have been identified.
Local therapy
For patients who, for various reasons, cannot tolerate PDE5 inhibitors,
local therapy in the form of potency-raising injections of Caverject
(Alprostadil), which has significant vasodilating properties, can be an
option. The injections act in the form of a rapid erection regardless of
sexual arousal. The dose is set individually and varies depending on
the problems of each respective patient. Erection is achieved normally
after 10 or 15 minutes and is maintained for around 60 minutes. The
most common side effects are pain and small haemorrhages during
the erection. The Company believes that this therapy will continue to
be rather limited in use.
Treatment forms
Below is a brief description of the main treatment forms that are provided today. In addition to these, there are a number of treatments
that are considered irrelevant. These include, for example, herbal remedies, implants and vacuum pumps.
PDE5 inhibitors
The absolute foremost treatment form comprises medicinal products
based on PDE5-inhibitors. Examples of active substances are Sildenafil
(Viagra), Tadalafil (Cialis), Vardenafil (Levitra/Staxyn), Avanafil
(Stendra/Spedra) and Udenfafil (Zydena). All the preparations in
this class work in a similar way: they act by making it easier for the
arteries of the penis to dilate during sexual arousal. The increased
blood flow leads naturally to erection. These preparations have no
effect without sexual arousal, that is, that the individual himself feels
sexual desire. The preparations are taken orally in good time before
Testosterone treatment
This treatment form addresses patients when abnormally low levels
of testosterone have been found. The preparations are generally in
the form of gel or patches and are often used in conjunction with
PDE5-inhibitors. The Company also believes that this therapy will be
a relatively small niche and that it will be possible to combine it with
the products that the Company develops.
A changed patent situation
Actual and forecast sales trends (USD million)
Medicinal
products
Brand
3,000
2,500
2,000
1,500
1,000
500
0
2010
2011
Viagra
2012
2013E 2014E 2015E 2016E 2017E 2018E 2019E
Staxyn/Levitra
Cialis
9
Patent expiry
2013
2014
Sildenafil
Viagra
EU
US
Tadalafil
Cialis
EU
US & Japan
Vardenafil
Levitra
EU
US
2015
2016
2017
2018
2019
2020
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
A drug delivery platform with
unique competitive advantages
Karessa's business concept is to develop and commercialise innovative products with
clear competitive advantages in the therapeutic area of erectile dysfunction. By combining the Company's patented drug delivery platform with clinically tested and
proven substances (such as Sildenafil and Tadalafil) the foundation is laid for a unique
concept with great competitive advantages. From the patient perspective, a medicinal product with significantly faster effect is enabled – and thus reduces the need for
planning. From the owner and investor perspectives, the concept entails a lower risk
and shorter time to market, as compared with what is usual for drug development.
Fast, stable and reliable
From a medical perspective, this provides the possibility of fast, stable
and reliable delivery. For the individual patient, the combination
means a faster and more stable effect than today's preparations. Since
the drug goes straight out into the blood, the time to effect is very
tangibly reduced, which reduces the need for planning and a time
margin. The effect is not either affect by the contemporaneous consumption of food and drink.
The foundation of Karessa's operations is a patented drug delivery
platform in the form of an alignate-based polymer film. The film,
which can be likened to a postage stamp, is applied discreetly to the
oral mucosa and through it the drug is then rapidly delivered out
into the bloodstream. The film then dissolves without leaving any
residues in the mouth.
The goal of Karessa's medicinal product
Faster and more reliable effect compared with oral tablets.
More effective. That the drug is delivered via the mucous mem-
Drugs and other substances that are delivered into the blood-
brane in the mouth also avoids contact with the metabolic
stream via the oral mucosa are taken up considerably faster (and
enzymes in the lower gastrointestinal tract and the liver, which
thus provide a faster effect) than is the case for delivery via tab-
otherwise reduce or completely eliminate the effect of a significant
lets or capsules that are swallowed. It also offers a more reliable
proportion of medicinal products that are delivered via oral tablets
and discreet form of delivery than tablets and other delivery sys-
or capsules.
tems such as nasal sprays and orally dissolving tablets.
No impact from food or drink. Since the drug is delivered straight
out into the bloodstream, and does not need to pass stomach, the
time to uptake is not either affected by the contemporaneous consumption of food and alcohol or other beverages – which otherwise
can make a large difference.
1
1
Combining Karessa's patented
drug delivery platform in the
form of a film with proven, safe
and known substances generates
significant benefits for the
patient.
10
2
2
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
For Karessa as a company, the combination means a shorter time to
market, lower development costs and reduced risk compared with
traditional drug development. Because the molecules and their effects
are well known to the world's medicinal products authorities, only
limited studies are required in order to show how much of the active
substance is delivered within a certain time interval. The film's technical characteristics also enable large-scale and cost-effective production. Karessa currently works with two pharmaceutical manufacturing facilities which are specialised in film manufacture: one in the
USA and one in Germany.
History and milestones of the drug delivery platform
2004
• Fredrik Hübinette, the inventor behind Karessa’s now patented drug delivery platform, begins tests of hundreds of
potential film-forming polymers
• Over 1200 empirical tests with potential polymers are carried out
Uniqueness
Today there are only a few orally dissolving drug delivery films on
the market and in addition, a handful of drug delivery films under
development that are known to the Company. Most of these films
dissolve much faster than Karessa's. When a film dissolves to rapidly,
absorption through the oral mucosa suffers. What is unique about
Karessa's technology lies in the combination of a film that attaches
well to the oral mucosa and, at the same time has a dissolving rate
that enables as rapid and complete transport as possible of the active
substance directly into the bloodstream.
2005
Exclusive license
The technology behind Karessa’s drug delivery film is patented. The
patent (Swedish patent no. 0502900-4) is owned by Uppsalagruppen
Medical AB, and is exclusive for the remainder of the period of validity of the patent, and is licensed without restrictions to the Company
with regard to critical molecules in the area of sexual dysfunction.
The Company will pay no royalties or any type of future milestone
payment for the license, but must pay the costs related to maintaining the patent.
The basic patent on the film along with the unique product profile constitute protection on major markets, which makes Karessa an
interesting partner in cooperation for a variety of established pharmaceutical companies.
Read more about the patent on page 26.
2009
• Verification of p
atentability
• Ensuring that all ingredients are of medicinal product standard
2006 – 2007
• Patent Application (PCT) - “the Film patent” (A total of 42
countries; the patent granted is different depending on the
country, and some are pending)
• Formulation and development of different variants of products
• Evaluation of potential pharmaceutical factories in the USA,
EU and Asia
• Started tech-transfer to two pharmaceutical facilities: one in
the USA and one in Germany
2010
• Preparation for clinical pharmaceutical studies for the two
variants
• Large-scale production of the basic film, without active substance, verified
2014
• Karessa is formed
• Access to the technology behind the drug delivery platform in
respect of critical molecules in the area of sexual dysfunction
licensed from Uppsalagruppen Medical AB
• Completion of a new share issue in the amount of SEK 80
million and the setting up of the new Group structure
11
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Description of operations
Vision
Karessa's vision is to establish itself as a
leading company in the therapeutic area
of erectile dysfunction.
The drugs to treat erectile dysfunction that dominate the market
today are safe, effective and have helped millions of men – and their
partners – to enjoy a functional sex life. The weaknesses and shortcomings of the tablets, however, include the need for a time margin
and planning; they generally take a relatively long time before they
achieve their intended effect and their time to effect in some cases
can be considerably affected by the contemporaneous consumption
of food and/or alcohol.
Karessa's operations are based on a desire to be able to take sexual
desire into account – directly when it is felt. Great benefit is generated for both patients and the company as a result of combining the
company's patented drug delivery-film with clinically tested and
proven substances (such as Sildenafil and Tadalafil). For the individual patient, the goal is to provide access to a new medicinal product
with a faster and more reliable effect than today's preparations. Since
the drug is delivered directly into the bloodstream, and does not need
to pass the stomach, the time to effect is shortened very tangibly,
with a reduced need for planning as a result. The time to effect is not
either affected by the contemporaneous consumption of food and
drink.
For Karessa as a company, this combination means a shorter time
to market, lower development costs and significantly reduced risk
with regard to clinical studies.
Business concept
Karessa's business concept is to develop
and commercialise innovative, fast-acting products in the therapeutic area of
erectile dysfunction.
A unique concept
Benefits for the patient:
• Faster and more reliable
effect
• Reduced the need for
planning
• No impact from food or
drink
12
Benefits for Karessa:
• Shorter time to market
• Lower development
costs
• Reduced risk
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Business model
Karessa develops products for a global market. This business model
Sales via licensed partners
will be adapted according to specific local market conditions. The
In markets with specific requirements for costly, locally adapted
overall objective is to optimise the value of the Company's product
studies for medicinal product approval, Karessa will sign license
and project portfolio, and to minimise risk in its operations.
agreements with local pharmaceutical companies covering clinical
As far as possible, the Company will be responsible for develop-
studies, registration, sales and – if necessary – also manufacture.
ment, registration and manufacturing, while sales to end custom-
The licensing income in this case will consist of compensation in
ers will be effected through project licensing, through product sales
connection with milestones being reached and royalties based on
to selected partners, or by the Company itself.
the licensee's actual sales.
The Company's revenue streams will therefore mainly consist of
license revenues from partners as well as product sales to selected
Product sales to distributors
distributors. In both cases, the Company is seeking fully integrated
In markets without special requirements for locally adapted stud-
business partners with the capacity to manage and support the
ies, Karessa intends to manage all stages right up to the delivery of
products in their local markets.
the finished product. Sales to end users will then take place
Decisions concerning the business model are based on revenue
through selected distributors. The price to partner companies will
potential, regulatory complexity and the costs for any local studies
be agreed taking into account the retail sale price, anticipated vol-
required.
umes, and exclusivity where applicable.
Sales via licensed partners
Product development
Clinical
studies
Registration
Sales
Licence agreement
Product sales to distributor
Product development
Clinical
studies
Registration
Sales
Distribution agreements
Patent protection "delivery film"
New formulation-specific patent applications
Objectives
Karessa's ambition is to become a profitable and growing pharmaceutical company in the therapeutic area of erectile dysfunction. Its operational objectives for the period 2015-2017 include:
• Submission in Europe for medicinal product approval for at least
one of the ongoing development projects
• Entering into local distribution and licensing agreements on the first
markets
• Ensuring a competitive organisation
• Establishing Karessa as a long-term and credible global partner
within the therapeutic area of erectile dysfunction
• Completing the work of formulating the films/products, as well as
beginning dosage studies for the ongoing development projects K-01
Sildenafil and K-02 Tadalafil.
• Assuring GMP manufacturing in the manufacturing facility prior to
pharmacokinetics studies (PK studies) and produce study materials
• Assuring GMP manufacturing for the future deliveries to market
• Starting pharmacokinetics studies prior to medicinal product registration for the development projects K-01 Sildenafil and K-02Tadalafil.
13
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Strategy
Product development with a focus on proven substances
Karessa's overall strategy is to combine the Company's unique and
patented drug delivery-film with proven substances, in order to thus
achieve faster and more reliable medicinal products within the therapeutic area of erectile dysfunction.
Compared with traditional drug development, this model means
both shorter time to market and lower development costs. Because
the active substances are already on the market, and are well-proven
in terms of both efficacy and safety, the number of studies that need
to be conducted, as well as the risks associated with these studies, are
limited. The studies that need to be done are dosage studies and PK
studies, which entail significantly lower risk and costs compared with
traditional drug development.
Full control over the manufacturing process
The medicinal products will be manufactured by contracted partners
in the USA and Germany. Where a licensee wants to set up their
own production due to local requirements, Karessa will assist in
ensuring that the production is quality-assured GMP production.
Repeatability of the work involved in registration and marketing
authorisation
Most of Karessa's relevant geographical markets, such as the USA and
Canada accept data from clinical testing on which registration as a
medicinal product in Europe is based. The Company will therefore
adapt the study as far as possible so that the results can be used for
registration in other countries all over the world. This means that special emphasis will be placed on the study design, the size and the
methods of analysis – in order to achieve maximum flexibility in
terms of how the study can be used.
Product sales and/or project licensing
The Company's go-to-market strategy will be adapted according to
the conditions on each respective geographical market. The overall
objective is to optimise the value of the Company's product and project portfolio. Karessa's business model therefore includes both product sales of the finished product to local distributors, and a licensing
arrangement where we enter into cooperation with partners already
in the clinical development phase. The licensing arrangement is
intended to apply primarily in markets where special requirements
concerning the locally adapted studies exist.
Karessa's organisation is characterised by flexibility, efficiency and
competence.
Karessa aim is to build a small cost-effective organisation with a high
level of internal competence and capacity. In order to create the maximum flexibility and efficiency, external resources within, among
other things, medicine and regulatory processes will be contracted on
a specific needs basis.
Medicinal product development based on new substances
Product development
Preclinical
development
Clinical phase 1.
Clinical phase 2.
Clinical phase 3.
Registration
Development time approx.12–13 years
Karessa's model
Product
development
Dose-finding
study
PK study
Registration
Development time approx. 3 years
14
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Product development and clinical testing
Karessa works with substances that have already been approved for
use as medicinal products in previous products. Since the development is based on a proven substance, previous documentation can be
used, which results in a significantly shorter time to market, lower
costs and reduced development risks.
The Company is currently working with two projects in the therapeutic area of erectile dysfunction. Both projects, which are in the
pre-clinical phase, concern the Company's drug delivery platform in
combination with the active substances Sildenafil and Tadalafil,
respectively.
The focus for 2015-2016 will be on product development and conducting the necessary studies for the forthcoming registration and
with the competent authorities.
The product development that is now in progress is anticipated to
be completed during Q2 2015. This product development is based on
the delivery film formulations which to date have been carried out
and which, in internally conducted pre-clinical testing, demonstrate a
better product profile than the existing tablet treatments offered on
the market. The data shows a much faster uptake in the blood than
today's tablet treatments.
The objective is for it to be possible for a first production batch to
be manufactured at the manufacturing facility in the USA or Germany during 2015.
Organisation
The big focus in 2015 will be on continuing to build up a skilled and
flexible internal organisation. The areas of competence/skills and
focus that the Company has identified in connection with building
up the organisation are:
• Product development and film formulation skills, which will assure
competence and capacity for the production of the finished product
based on Karessa's drug delivery film and the selected active molecules, Sildenafil and Tadalafil
• Assure high efficiency in the regulatory process
• Assure the production at and technology transfer to the contract
manufacturing partners
• Involve and engage distributors and partners at an early stage to
assure a commercial focus
The number of employees at Karessa at the beginning of January
2015 was four, including the CEO. At the Swedish headquarters, all
employees work with product development, finance, and assurance of
the regulatory strategy moving forward.
The company's employees have experience from several of relevant
areas for the business: the development of medicinal products, regulatory compliance, business development/commercialisation, financing
and management. The employees' experience comes from previous
involvement and leading positions in the pharmaceutical industries.
In addition, the inventor of the patented film, Fredrik Hübinette, will
act as Senior technical advisor in finalising the formulation of the
delivery film, as well as technology transfer to the manufacturing
facility.
In addition, consultants are hired for IT, legal matters and regulatory issues.
Planned studies
• Dose-finding study
It is estimated that the dose-finding study will commence in Q2 2015.
The purpose of this study is to determine the dose that gives the best
effect – actual, and in relation to any side effects. This study will
then form the basis for continued clinical studies.
• Clinical studies
Karessa will carry out its own PK studies to verify pre-clinical findings for the two planned substances Sildenafil and Tadalafil in combination with the delivery film. The studies will be used as the basis for
the submission of documentation for product approval by the local
authorities in all markets where this is possible. As a result of more
comprehensive regulatory frameworks in Asia, which include requirements for local studies, the work there will be conducted in conjunction with local partners.
Scientific advisers
Stefan Arver and Scott Boyer the members of the board and direct,
evaluate and assure the scientific strategy within the Company. Stefan Arver is an Associate Professor in Endocrinology and Director of
the Centre for Andrology and Sexual Medicine at Karolinska Institute in Stockholm.
Scott Boyer has a great deal of experience from various senior positions with Astra Zeneca and Pfizer within research and development
including Global Head, Molecular Toxicology and Chief Scientist.
15
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Manufacturing and purchasing
In terms of production, the focus in 2015 will continue to be on technology transfer prior to start-up of the manufacturing process, as well
as upscaling of the production prior to clinical studies. Production for
the studies, as well as the first commercial product series will be done
with contracted partners in the USA and Germany (GMP-rated).
These partner companies already have extensive experience of Karessa's drug delivery platform as a result of ongoing cooperation with
Nicoccino Holding AB, whose nicotine-based product is based on the
same patented drug-delivery platform as Karessa's.
All the ingredients are classed as medicinal products and purchased
from external suppliers. The manufacturing process, referred to as
coating, is a relatively standardised form of production.
During 2015, the means of GMP manufacture of the film formulations will be assured through technology transfer and upscaling of
the production. During 2015, Karessa will also assure the production
of prior to clinical study.
In a longer perspective, the choice of production arrangement will
be made based on legal requirements or what is considered to be the
most advantageous for the Company. However, as a result of the
complex manufacturing process and the large initial investments in
technology transfer and know-how Karessa will most likely continue
to be responsible for the production irrespective of the licensing or
distribution arrangements.
USA and Canada
In the USA and Canada too, Karessa intends to irresponsible for the
medicinal product registration of the planned products.
Asia-Pacific, Africa and emerging markets
In markets where a local study is required to obtain MA, local partners will be responsible for clinical studies, as well as the process
required for medicinal product registration. For example, local registration will be handled locally in the Asia-Pacific region, Africa and in
some emerging markets.
Sales and distribution
Karessa develops products for a global market. Where the Company
is able to, sales will be conducted under our own steam, but the focus
will be on building a global network of distributors and partners who
are responsible for marketing and sales in their respective markets.
The Company's unique patent situation means excellent conditions
for being an attractive partner for many pharmaceutical companies
all over the world.
OTC
Karessa operates in the therapeutic area of erectile dysfunction with a
focus on prescription products. Today, except in New Zealand, none
of the leading substances within erectile dysfunction are approved as
over-the-counter medications, but the authorities in several countries
are currently reviewing whether some substances can become
non-prescription drugs. Karessa is closely monitoring this development. If substances in this therapeutic area are approved for OTC
Karessa will have a product available in this area too. Such an
approval is expected to increase the number of users and doses considerably, since access to ED medicinal products will then no longer be
dependent on a prescription from a doctor.
Regulatory planning
In order to obtain marketing authorisation, an application for registration will be submitted to the relevant medicinal products authorities
such as the FDA (USA), EMA (EU), and the Swedish Medical Products Agency (Sweden). The application for registration will be less
extensive for proven substances because the available documentation
relating to the substances can be invoked.
Europe
In Europe, Karessa intends to submit its own application to the European regulatory authorities in accordance with the decentralised procedure (DCP) process. In somewhat simplified terms, an approved
application in a Member State in accordance with this principle automatically gives approval also in other Member States. From start to
end, this process usually takes about 1–1.5 years, including local
approvals for such things as translations and pricing.
16
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
and without restrictions, is licensed to the Company with regard to
critical molecules in the area of sexual dysfunction in which erectile
dysfunction is included. The Company will pay no royalties or any
type of future milestone payment for the license, but must pay the
costs related to maintaining the patent.
Patent and intellectual property rights
The basis for Karessa’s business model consists of the Company’s
rights to the Film patent (see more below) in respect of critical molecules in the area of sexual dysfunction. The Film patent’s validity
lasts until 2026 and has been approved on a number of major markets, setting the stage for global distribution. In addition to the patent
protection, there are also other major barriers to setting up production of similar products. These include the fact that today only a few
manufacturing facilities in the world have the capacity and knowhow to produce this type of film. Based on the delivery film patent,
the Company intends to develop new patents for each substance,
which will create additional and longer patent protection.
Application for the delivery film patent
The PCT application (PCT/SE2006/050626) was made in 2006. The
subsequent national phase comprises a total of 42 countries, including
the EU. The patent application has so far been approved in Sweden,
the USA (Notice of Allowance), China, Russia, Japan, Australia, New
Zealand, South Africa and Israel. The license for the invention applies
to the whole world. The scope of the protection for the invention is
governed by the patent application and patent approval in each country. In the countries in which the patent has been approved, protection until 2026 or in some cases longer is obtained.
The delivery film patent
This purpose of the Film patent (Swedish patent no. 0502900-4) is to
protect our capacity to produce an orally dissolving film that clings
to the oral mucosa and can effectively deliver an active substance.
The Film patent is owned by Uppsalagruppen Medical AB and is
exclusive for the remainder of the period of validity of the patent,
Potential new patent applications
Karessa will periodically submit additional patent applications concerning the delivery film in combination with different active substances.
Patent families (Uppsalagruppen Medical AB)
Country
Appl. No.
Appl. Date
Patent No.
Grant date
Status
Australia
2006327277
22/12/2006
2006327277
25/03/2013
Granted
Brazil
PI0620403-1
22/12/2006
EPC*
06844046.0
22/12/2006
Canada
2633878
22/12/2006
**
China
200680048866.3
22/12/2006
ZL200680048866.3
27/03/2013
Hong Kong
09101443.2
22/12/2006
Sweden
0502900-4
23/12/2005
0502900-4
18/03/2008
India
5142/DELNP/2008
22/12/2006
Israel
191994
22/12/2006
191994
31/12/2013
Granted
Japan
2008-547188
22/12/2006
5425471
06/12/2013
Granted
Mexico
MX/a/2008/007839
22/12/2006
Norway
20083226
22/12/2006
New Zealand
569261
22/12/2006
South Korea
10-2008-7018096
22/12/2006
Russian Federation
2008130391
South Africa
USA
Pending
Pending
Pending
Granted
Pending
Granted
Pending
Pending
Pending
569261
11/12/2012
Granted
22/12/2006
2445977
27/03/2012
Granted
2008/05287
22/12/2006
2008/05287
25/11/2009
Granted
12/158472
22/12/2006
US 8,759,282 B2
24-06-2014
Granted
Pending
* Countries included: AL, AT, BA, BE, BG, CH, CY, CZ, DE, DK, EE, ES, FI, FR, GB, GR, HR, HU, IE, IS, IT,
** Canadian Intellectual Property Office communicated ”Notice of allowance” 15-07-2014
17
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Financial overview
The Group’s parent company is Karessa Pharma Holding AB. The Group was formed
as a result of Uppsalagruppen Medical AB, which owns the Film patent (see page
17), spinning off a license for the right to critical molecules in the area of sexual dysfunction to a separate company, Karessa Pharma AB. In conjunction with this spinoff, Karessa Pharma Holding AB carried out a new share issue of SEK 80 million
(3,200,000 shares at the issue price of SEK 25) and then acquired Karessa AB’s parent company Pertubatio AB through a non-cash issue. The Group thus consists of
three companies: Karessa Pharma Holding AB (the parent company), Pertubatio AB
(subsidiary) and Karessa Pharma AB (subsidiary of the subsidiary). Pertubatio AB
and Karessa Pharma AB will be merged.
Financial resources
The Board’s opinion is that Karessa’s current working capital and
liquidity are sufficient for the Company’s activities for the next
twelve-month period from the time of drawing up this Company
Description. This opinion is based on the Company’s short-term
financial resources, which mainly consist of available cash and cash
equivalents and which, as per the day of signing of this Company
Description, amount to approximately SEK 70,7 million.
All companies in the Karessa Group are newly formed companies
and have not issued any annual reports. Below is a pro forma statement of accounts for the Group as at 31 December 2014. To date,
the Group’s activities have not generated any income. The costs have
mainly consisted of the acquisition of the license for the Film patent
for the area of sexual dysfunction from Uppsalagruppen Medical AB,
as well as research and development. The accounting principles used
are set out on page 26 below.
18
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Profit And Loss Account
Consolidated statements Karessa Pharma Holding AB
12 Aug–31 Dec 2014
Pro Forma
(tkr)
Net sales
0
Other operating income
0
Total earnings
0
Raw materials and consumables
0
Gross profit
0
Other external costs
–2,552
Personnel costs
–507
Depreciation
0
Total operating expenses
–3,059
Operating profit/loss
–3,059
Financial income
333
Financial expenses
0
Total net financial income/expenses
333
Profit/loss after financial items
–2,726
Tax
0
NET INCOME
–2,726
19
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Balance Sheet
Consolidated statements Karessa Pharma Holding AB
31-12-2014
Pro Forma
(tkr)
Goodwill/intellectual property rights
170,245
Long-term investments
40,300
Total fixed assets
210,545
Stock
74
Other short-term receivables
1,106
Prepaid expenses and accrued income
187
Total current assets
1,367
Cash in hand, bank
34,259
Total cash and cash equivalents
34,259
TOTAL ASSETS
246,171
Share capital
550
Share premium reserve
247,005
Other contributed capital
179
Net profit/loss for the year
–2,726
Total shareholders' equity
245,008
Accounts payable - trade
419
Other current liabilities
267
Accrued expenses
477
Total current liabilities
1,163
TOTAL SHAREHOLDERS' EQUITY and LIABILITIES
246,171
20
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Cash Flow Statement
Consolidated statements Karessa Pharma Holding AB
12 Aug–31 Dec 2014
Pro Forma
(tkr)
Operating activities
Operating profit/loss after financial items
–2,726
Depreciation
0
Cash flow from operating activities before changes in working capital
–2,726
Changes in working capital
–254
Cash flow from operating activities
–2,980
Investing activities
Net investments in intangible fixed assets
–2,800
Net investments in financial fixed assets
–40,300
Cash flow from investing activities
–43,100
Net cash flow before financial items
–46,080
Financing activities
Contributed capital
80,339
Cash flow from financing activities
80,339
CASH FLOW FOR THE PERIOD
34,259
Cash and cash equivalents at beginning of period
0
Cash and cash equivalents at end of period
34,259
21
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Share capital and ownership
­structure
Marketplace
Karessa has applied for and received approval for admission to trading of the Company’s shares on Nasdaq Stockholm First North. The
first day of trading on First North is 10 February 2015. The Company’s
share will have the ticker KARE.
Share capital
Karessa’s share capital amounts to SEK 550,000 divided among
11,000,000 shares outstanding. According to the articles of association, the share capital is to amount to no less than SEK 500,000 and
no more than SEK 2,000,000 and the number of shares is to amount
to no less than 10,000,000 and no more than 40,000,000. The share’s
implied book value is SEK 0.05 (five öre). The Company has only one
class of shares and all shares carry equal rights to dividends and profit
in the event of a liquidation, and entitlement to one vote per share.
The shares in Karessa are not, nor have ever been, subject to any
offer as a result of a mandatory bid or redemption rights or obligations. The shares have not been subject to any public takeover bid.
The shares have been issued in accordance with Swedish law and are
denominated in Swedish kronor (SEK). There are no restrictions on
the free transfer of shares.
Capital development
The share capital in Karessa has changed since the Company was
formed in 2014 in accordance with what is shown in the following
table.
Shareholders
The table below shows Karessa’s twelve biggest shareholders as at 31
December 2014. On 31 December 2014 Karessa had around 5,400
shareholders.
Incentive programme
Karessa has 450,000 outstanding share warrants. Each share warrant
gives the right to subscribe for one new share in Karessa for SEK 50
by no later than 1st December 2017. If all share warrants are exercised for the subscription of 450,000 shares, the new shares, based on
the current number of shares outstanding, would constitute 3.9 per
cent of the share capital of Karessa.
Authorisation
The Board of Karessa is authorised to, on one or more occasions during the period up to the next annual general meeting, decide on a
new share issue for cash payment and/or with provision for payment
in kind or set-off; and thereby is able to deviate from the shareholders’ preferential rights. The purpose of this authorisation and the reason for the deviation from the shareholders’ preferential rights is to
allow for raising capital for expansion and new business opportunities. If the new share issue is made for payment in cash and deviates
from the shareholders’ preferential rights, the share price shall be at a
market rate and the number of newly issued shares may not exceed
20 per cent of the total number of shares in the Company after completion of the new share issue.
Action
Formation (2013)
Split (2014)
Number of
shares
Shareholders
Participating interest
JP MORGAN BANK
3,478,879
31.6%
UBS AG CLIENTS ACCOUNT
1,493,418
13.6%
HüBINETTE, FREDRIK
1,164,295
10.6%
SVENSKA HANDELSBANKEN AB FOR PB
962,406
8.8%
BANK MORGAN STANLEY AG ZURICH
302,050
2.8%
FÖRVALTNINGS AB HUMMELBOSHOLM
224,000
2.0%
HJÄLMSTAD, LINDA-MARIE
200,000
1.8%
SKANDINAVISKA ENSKILDA
BANKENS.A., W8IMY
160,528
1.5%
LEXRON AB
160,000
1.4%
NORTH LAKE INVEST AB
100,449
0.9%
FREDRIK SJÖÖ
100,449
0.9%
PETER ÅSBERG
100,449
0.9%
2,553,077
23.2%
11,000,000
100%
OTHERS
Total:
Change
number of shares
Acc. number of
shares
Implied book
value
(SEK)
Change
Share capital (SEK)
Acc.
share capital (SEK)
+ 50,000
50,000
+ 50,000
50,000
1
-
50,000
+ 950,000
1,000,000
0.05
New share issue (2014)
+ 5,000
55,000
+ 100,000
1,100,000
0.05
New share issue (2014)
+ 160,000
215,000
+ 3,200,000
4,300,000
0.05
Non-cash issue (2014)
+ 335,000
550,000
+ 6,700,000
11,000,000
0.05
22
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Board of Directors
Karessa’s Board of Directors has five members. The work of the Board of Directors
is led by its chair. The Chair of the Board is paid an annual director’s fee of SEK
150,000 and the other three members who are not employees of the Company are
paid an annual director’s fee of SEK 100,000 per member.
Erik Nerpin
Chairman
Born: 1961
Education: LL.M, Uppsala
University. International
Banking Law, Boston University
Main occupation: Lawyer
Other current engagements
include:
Chairman of the Board of
Nicoccino Holding AB, Cassandra Oil AB, Kancera AB
and WYA Holding AB. Board
member of Diamyd Medical
AB, Effnetplattformen AB,
Aqeri Holding AB, AB Igrene,
Blasieholmen Investment
Group AB and Otirol Art AB
Previous directorships
include: Chairman of the
Board of Factum Electronics
AB (until 2013)
Shareholding: 20,000
Option holding: 0
Michel Bracké
Board member
Born: 1963
Education: Harvard Business School Alumni Master
Degree Applied Arts
Other current engagements:
CEO Nicoccino Holding AB
and MRM Advice AB
Previous directorships:
Board member of Dicota
Holding AB, Board member
of Urbanista and CEO of
OSM Holding AB
Shareholding: 10,000
Option holding: 0
Stefan Arver
Board member
Born: 1952
Education: MD, PhD (Karolinska Institute), Registered
medical practitioner, specialist in endocrinology
Other current engagements:
Director European Academy
of Andrology accredited
Educational Centre in
Andrology, Fellow and chief
physician, Section manager
Centre for Andrology and
Sexual Medicine at Karolinska University Hospital,
Stockholm. Research group
leader in Andrology and Sexual Medicine, Karolinska
Institute. Scientific adviser,
consultant in the area of
men's gender-specific diseases. Board member Vitamin Well AB, Alabio AB,
Acrosomen AB
Shareholding: 0
Option holding: 75,000
23
Scott Boyer
Board member
Born: 1962
Education: PhD, University
of Colorado, Boulder – Toxicology. NIH Fogarty International Centre Postdoctoral
Fellow – Karolinska Institute
Other current engagements:
Director – Computational
Toxicology, Karolinska Institute, CEO, Klaria Pharmaceuticals AB
Previous directorships: Shareholding: 10,000
Option holding: 0
Torbjörn Kemper
CEO, Board member
Born: 1969
Education: University of
Gothenburg, School of Business, Economics and Law
Other current engagements:
Board member of Nicoccino
Holding AB
Past experience: Sales
Director, HENKEL
Business Development
Director, MEDA OTC AB
Nordic Commercial Director,
NESTLÉ HEALTH SCIENCE
Commercial Director, Novartis Medical Nutrition
Sales Manager Glaxo Smith
Kline
Previous directorships:
Shareholding: 4,000
Option holding: 175,000
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Management and auditor
Auditor
Authorized public
accountant Hans Brorsson, born 1959
Shareholding: 0
Option holding: 0
Torbjörn Kemper
See Board of Directors
Erik Mascher
CTO
Born1956
Education: PhD in biochemistry, Uppsala University
Other current engagements:Previous directorships:Past experience: Senior Scientist, Section Manager
General Electric Healthcare,
Vice President Process
Development and Production Resistentia Pharmaceuticals AB, Consultant, MAKK
Consulting AB
Shareholding: 0
Option holding: 0
Hans Richter
CFO on a consultative basis
Born: 1949
Education: MBA, Uppsala
University, BA from Stockholm University
Other current engagements:
Chairman of the Board of
Magelhusen AB, Hela Sveriges Assistans AB, AntiSnore Sweden AB, board
member of Icehotel AB,
Gällöfsta Utbildning och
Konferens, Professionell
Ägarstyrning AB.
Previous directorships:
Chairman of IPQ IP Specialists AB, ID-Entity AB, Zuera
AB, board member of Vivaldi
AB, COOD Investments AB
Past experience: Professional board member and
CFO for hire
Shareholding: 0
Option holding: 0
Other information about the Board of Directors and senior management
concerning the circumstances since 1st January 2010
None of the members of the board or the Company’s senior executives
have been involved in a bankruptcy or liquidation (in the case of insolvency) in their capacity as board members or holders of senior executive
positions. No board member nor any of the Company’s senior executives
has been convicted in any fraud-related cases. Nor has any accusation
been made and/or sanction ordered by an authority or professional association against any of these individuals. No member of the board or senior
executive has been banned by a court from being a member of a compa-
Jan Berglund
Chief Operating Officer
Born: 1961
Education: Nursing Care/
Science of Care at Mid Sweden University in Sundsvall,
Bachelor of Science in Nursing, Anaesthetist Care from
Uppsala University
Other current engagements:
Previous directorships: Past experience: Country
manager, Cipla Europe NW,
Nordic Commercial Director
at Nestlé Health Care Science, Deputy Managing
Director Sweden, Director of
Contract Placement Solutions and Head of Marketing
and Sales at Trial Form Support, Area Manager General
Medicine at Novartis, various senior positions held at
GlaxoSmithKline
Shareholding: 5,000
Option holding: 55,000
ny’s administrative, management or supervisory bodies, or from having a
leading or controlling function in a company. None of the members of the
board or the senior executives are entitled to any benefits in connection
with the termination of their directorship or senior executive position
(beyond the fringe benefits pursuant to the provisions in their contracts of
employment during the period of notice). No member of the board or senior executive has any family ties with any other board member or senior
executive. The Company is not aware of any conflict of interest between
the obligations of the board members and senior executives to the Company and their respective private interests and/or other obligations.
24
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Legal matters and supplementary
information
Trading on First North
Karessa’s share will be traded on First North under the ticker KARE.
The share has the ISIN code SE0005506193. Karessa’s ICB classification is Subsector 4577.
Legal structure
Karessa is a Swedish public limited company with corporate identity
number 556942-1596. The Company was registered by the Swedish
Companies Registration Office on 11 September 2013 under its then
name Goldcup 9013 AB. The Company’s form of association is a limited company and is governed by the Swedish Companies Act (SFS
2005:551). The Board has its registered office in Stockholm.
Karessa is the parent company of a Group of a total of three companies. Karessa owns all the shares in Pertubatio AB (556966-7420)
which in turn owns all the shares in Karessa Pharma AB (5569592891).
CSD company
Karessa is a CSD company and its shares are registered in a CSD register in accordance with lagen (1998:1479) om kontoföring av finansiella
instrument (the Act (SFS 1998:1479) on accounting of financial instruments). Karessa and its shares are linked to the CSD system with
Euroclear as the central custodian of securities and the clearing house.
Euroclear also holds Karessa’s share register. Shareholders do not
receive any physical share certificate; instead transactions with shares
are effected electronically by registration in the CSD system by competent banks and other asset managers.
Shareholder Agreement
As far as Karessa’s board of directors know, no shareholder agreements exist between any of the Company’s major shareholders.
Lock-up agreements
Karessa’s founder Fredrik Hübinette has entered into a lock-up agreement with the Company which means that he has undertaken not to
transfer any shares in the Company or to enter into any agreement or
be involved in transactions that would have a similar effect to a transfer, during the period until 31st July 2015. As far as Karessa’s board
of directors know, no other lock-up agreements exist.
Dividend policy
The size of any future dividends to the shareholders in Karessa is
dependent on a number of factors, such as profit, financial position,
cash flow and need for working capital. Only after long-term profitability can be foreseen will dividends to shareholders be payable. In
the next few years, dividends are not anticipated to be applicable
since all available funds will be used for continued expansion. A decision on distribution of profits is made by the annual general meeting
and payment is effected by Euroclear. Those who are registered as a
shareholder in the share register maintained by Euroclear on the
record day for dividends decided by the annual general meeting are
entitled to dividends.
Dividends are normally paid as a cash amount per share, but may
also consist of payments in other than cash, such as distribution in
kind. If the shareholder cannot be reached to receive dividends, the
shareholder’s claim on the Company persists, and is limited only by
the general rules relating to limitation on claims. Should the limitation period expire, the full amount accrues to the Company. Karessa
does not apply any restrictions or special procedures with regard to
cash dividends to shareholders residing outside of Sweden. With the
exception of any limitations deriving from bank and clearing systems,
payment is effected in the same way as for shareholders resident in
Sweden. However, for shareholders who are not resident for tax purposes in Sweden, normal Swedish coupon tax is payable.
Certified Adviser on First North
First North is an alternative marketplace operated by the various
stock exchanges that are make up Nasdaq. It does not have the same
legal status as a regulated market. Companies listed on First North are
governed by First North’s rules and not by the legal requirements for
trading on a regulated market. An investment in a company that is
traded on First North therefore is generally higher risk than an investment in a company in a regulated market.
All of the companies whose shares are traded on First North have
a Certified Adviser to monitor that the Company complies with First
North’s rules for disclosure to the market and investors.
Remium, which is a member of and has an agreement with Nasdaq
OMX Stockholm AB, is the Certified Adviser for Karessa. A Certified Adviser audits companies whose shares are admitted for trading
on First North. Nasdaq OMX Stockholm AB approves the application
for admission to such trading. Nasdaq OMX Stockholm AB’s Surveillance function is responsible for checking that both companies and
their Certified Advisers comply with the rules of First North. Surveillance also monitors trading on First North. Remium does not own
any shares in Karessa.
25
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Patent
The technology behind Karessa’s drug delivery film is patented. The
patent (Swedish patent no. 0502900-4), designated in this Company
Description as “the Film patent”, is owned by Uppsalagruppen Medical AB and is exclusive for the remainder of the period of validity of
the patent, and is licensed without restrictions to the Company with
regard to critical molecules in the area of sexual dysfunction. The
Company will pay no royalties or any type of future milestone payment for the license, but must pay the costs related to maintaining
the patent.
The application for the Film patent, the PCT application (PCT/
SE2006/050626), was made in 2006. The subsequent national phase
comprises a total of 42 countries, including the EU. The patent application has so far been approved in Sweden, the USA (Notice of
Allowance), China, Russia, Japan, Australia, New Zealand, South
Africa and Israel. The license for the invention applies to the whole
world. The scope of the protection for the invention is governed by
the patent application and patent approval in each country. In the
countries in which the patent has been approved, protection until
2026 has been obtained.
proved IFRS interpretations as far as possible within the framework
of Sweden’s Annual Accounts Act and its law on safeguarding of
pension commitments (SFS 1967:531), and with regard to the connection between accounting and taxation. The recommendation specifies
the exemptions and additions to be applied in relation to IFRS.
The consolidated profit and loss account for Karessa will include
the annual report and the quarterly reports for Karessa and its subsidiaries.
The subsidiaries’ annual reports and quarterly reports will be
drawn up for the same accounting year as for the parent company
using the same accounting principles. All intra-group transactions, revenues and costs, profits and losses and balance sheet items derived
from intra-group transactions are eliminated in their entirety in the
consolidated profit and loss account.
A subsidiary is a company in which the parent company has a controlling influence; as a general rule as a consequence of a shareholding
that, directly or indirectly, gives the parent company control over
more than 50 per cent of the voting rights. A subsidiary is included
in the consolidated profit and loss account from the date of its acquisition, which is the day when the parent company acquired a controlling influence, and is included in the consolidated profit and loss
account up until the time when that controlling influence ceases.
Significant agreements
Karessa licenses the Film patent according to the agreement with
Uppsalagruppen Medical AB (see above under the heading “Patent” ).
Karessa currently has no other agreements that are deemed not possible to replace with another contractor under equivalent commercial
terms.
Acquisitions and goodwill
Acquisitions of subsidiaries are reported by applying the acquisition
method. The acquisition is considered to be a transaction by which
the Group indirectly acquires the assets of the subsidiary and takes
over its liabilities and other commitments. The cost of an acquisition
consists of the fair value of the assets provided as compensation,
equity instruments issued and liabilities incurred or taken over on the
day of transfer, plus costs that are directly attributable to the acquisition.
Identifiable assets acquired and liabilities taken over and contingent liabilities in a business combination are initially valued at fair
value on the acquisition date. Any surplus arising as the difference
between the acquisition value and the fair value of the Group’s share
of the identifiable acquired assets, liabilities and contingent liabilities
is recognised as goodwill. Goodwill is recognised as an asset in the
consolidated balance sheet. If the difference is negative, it is taken up
directly in the consolidated profit and loss account. Equity in the subsidiary is eliminated entirely on acquisition. The Group’s equity
includes the parent company’s equity and that part of the subsidiaries’ equity earned after the acquisition.
Accounting principles
The Karessa Group is newly formed and has not drawn up any
annual report or interim report. Starting with the annual report for
2014 and the interim report for the first quarter of 2015, the Group
will begin reporting in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU and in accordance
with Sweden’s Annual Accounts Act and RFR 1 Supplementary
accounting rules for groups.
In all other respects, Karessa’s accounting principles will be based
on Sweden’s Annual Accounts Act (SFS 1995:1554) and Sweden’s
Financial Reporting Council’s recommendation RFR 2, Accounting
for legal entities. RFR 2 means that Karessa is to apply all EU-ap-
26
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Agreements with related parties
The current Group structure was formed as result of FFT Medical
AB spinning off Karessa Pharma AB to its shareholders through the
newly-formed company Pertubatio AB, whereupon Karessa acquired
Pertubatio AB through a non-cash issue. There are therefore no ownership connections between FFT Medical AB and Karessa. Moreover,
no transactions with related parties exist and Karessa is not party to
any agreement that has not been entered into on commercial terms.
Conversion from foreign currency
Functional currency and presentation currency
Items that will be included in the financial statements of the various
companies in the Group will be valued in the currency that is used
in the financial environment in which each respective company
mainly
operates (functional currency). Karessa’s functional currency is SEK
which will also be the presentation currency for the parent company
and the Group. This means that the financial statements will be presented in SEK rounded to the nearest thousand unless otherwise
specified.
Disputes and legal procedures
Karessa is not a party to any dispute, trial, or any arbitration process
that could affect the Company’s operations to a material degree.
Transactions and balance sheet items
Transactions in foreign currencies will be converted to the functional
currency SEK according to the exchange rate available on the date of
the transaction. Monetary assets and liabilities in foreign currencies
will be converted to the functional currency at the exchange rate
available on the balance sheet date. The exchange rate differences
that arise in the conversions will be reported in net financial items in
the profit and loss account. Non-monetary assets and liabilities will be
reported at their historical cost and will be converted at the exchange
rate available on the date of the transaction.
Insurance
The Board is of the opinion that Karessa currently has sufficient
insurance coverage for its current operations. The Board will continue
to monitor insurance coverage in pace with the Company’s operations expanding.
Permits for activities
The Company does not need any special permits to carry out its
activities.
Translation of foreign subsidiaries
Assets and liabilities in foreign entities, including goodwill and any
other over- or undervalues will be converted at the exchange rate
available on the balance sheet date. Income and expenses in a foreign
entity will be converted to SEK at a monthly average rate that applies
at the time of a transaction. Translation differences arising from the
translation of foreign entities will be reported directly against equity
in the consolidated profit and loss account as a translation difference.
27
Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Risk factors
All business activities and all ownership of shares is associated with risks. Below is
an account of a number of risk factors that may affect the Company's future development. These are not ranked and do not either claim to be comprehensive. Risk
factors that have not yet been identified, or have not been assessed as significant,
may still come to have an impact on the Company's future development. Any
potential investor should make his/her own overall assessment of all the information in this Company Description as well a general assessment of the business environment.
Risks related to the business and the industry
Karessa's business concept is to combine the company's patented drug
delivery technology with proven substances in the therapeutic area of
erectile dysfunction. The Company's products require continued
research and development, as well as regulatory approvals, before they
can generate revenue. The level of risk is therefore high, and there is
no guarantee that the Company's product development will be successful, that potential products will be safe and effective, that it will
be possible to obtain the necessary authorisations, or that the medicinal products to be launched on the market will be well received.
In order to obtain a marketing authorisation, the Company must
show that these product candidates are safe and effective by means
of adequate and well-controlled clinical studies. The Company cannot
predict with certainty when these studies will be completed or even
conducted. This type of development is time-consuming and is
affected by a variety of factors, including those which are outside the
control of the Company.
During the development process, it may become apparent that the
Company's product candidates do not have the anticipated effect, or
that they turn out to have unforeseen and undesirable side effects or
other characteristics which may delay or stop the product development and restrict or prevent the commercial use of the product candidates. Unanticipated study results can lead to the need to review
the concept and development programmes, which means that further
studies may be required at significant cost, or that development programmes are shut down. This can result in delayed product launches
or non-registration of the Company's product candidates which, in
such a case, would have a negative impact on the Company's earnings
and financial position.
Regulatory risks
The development, marketing and sale of medicinal products are subject to extensive regulation and legislation. The Company cannot predict with certainty whether, where, when and how these rules will be
changed, and if such changes might affect the Company negatively.
For the Company to be able to sell medicinal products in the long
term, marketing authorisation must be obtained for each geographical
market. The Company cannot predict with certainty what additional
clinical studies must be carried out for different markets, that the
manufacturing process will be approved, the time it takes to obtain
marketing authorisation, or that marketing authorisation will be
obtained for the markets that the Company wants to sell to. In this
respect, Karessa, like other companies in the pharmaceutical industries, is dependent on the assessments and decisions of the relevant
authorities, such as the Medical Products Agency of Sweden, the
Food and Drug Administration (FDA) in the USA, or the European
Medicines Agency (EMA) in the EU. Such assessments include
authorisation to carry out clinical trials and authorisation to market
and sell the medicinal products.
An application for marketing authorisation of the Company's
products as medicinal products require extensive documentation of
clinical results, quality assurance and that the production complies
with the applicable national and international requirements among
other things. Even if the Company prepares large parts of this documentation in parallel with the clinical studies, it cannot be ruled out
that unforeseen circumstances will lead to delays, which could result
in the applications for marketing authorisation being submitted later
than anticipated. The authorities may request supplementary information or have other comments on the Company's applications,
which means that the time for a possible market authorisation is subject to uncertainty. It cannot be ruled out that the Company may
need to supplement its applications, which can be time-consuming
and entail unforeseen costs.
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Patents, trademarks and know-how
In the type of activity in which Karessa is engaged, there is always a
risk that the Company's patents, licensed patent rights or other intellectual property rights do not provide sufficient protection for the
Company, or that the Company's rights cannot be upheld. Furthermore, patent infringements may occur, which can lead to costly litigation. The outcome of such disputes cannot be guaranteed in advance.
Negative outcomes of disputes concerning intellectual property
rights, can lead to loss of protection for the losing party, as well as a
ban on continuing utilise the current right or an obligation to pay
damages.
The Company has licensed a patent owned by Uppsalagruppen
Medical AB (the delivery film patent, see page 26). This patent has
not yet been approved in all countries where an application has been
made, and it cannot be guaranteed that this will be the case. Even if
the Company uses non-disclosure agreements, and strives to keep its
know-how within the Company and to maintain control over the
most sensitive components involved in the production of the Company's products, there are no guarantees that uncontrolled proliferation
and copying of the Company's production methods will not occur.
Such uncontrolled proliferation and copying could damage the Company if it is used for the production of competing products, or if it
otherwise exploited commercially without financial compensation to
Karessa.
Karessa is highly dependent on the Company's senior executives
and other key people. If the Company were to lose any of its key
employees it could come to have a negative impact on the Company's
expansion and growth.
Side effects
The Company's main area of activity lies in the development and sale
of medicinal products, which entails risks to persons who either consume or participate in clinical studies with the Company's products
or otherwise come into contact with the Company's products being
affected by side effects. The consequences of such potential side
effects in the various markets may delay or stop the process of
obtaining marketing authorisation or mean the suspension of sales
and thus impact the Company's sales, earnings and financial position.
It cannot be ruled out that the Company may be sued by people
who are affected by side effects, which may lead to the Company
being obliged to pay damages.
Competition
The Company operates in an industry that is characterised by intense
competition and it cannot be guaranteed that the Company's products will be preferred over competing companies' existing or future
products on the market. It cannot either be ruled out that competing
companies may develop equivalent or better products. Future products under development by other companies can result in increased
competition and poorer prospects for the Company's products with
respect to market share and price. The said uncertainties entail risks
that can have a negative impact on the Company's anticipated sales,
earnings and financial position.
Partners in cooperation and distribution channels
The Company's growth is expected to be largely dependent on the
establishment of partnerships with distributors, retailers and other
distribution channels. The Company cannot guarantee that contracts
can be concluded with favourable terms, or that contracts entered
into are not breached by the other parties. If key partnerships cannot
be entered into, are terminated or do not function satisfactorily, this
can adversely affect the Company's continued development, growth
and financial position. The Company might also be adversely affected
by stoppages or failures of business-critical systems.
Growth and recruitment needs
The Company intends to expand its operations in the coming years
and there will be a need for recruitment within all of the Company's
functions. This expansion will also make demands on the Company's
existing management, control, accounting and information systems. If
the Company is unable to control or provide for growth in an effective way, this could come to have a negative impact on the Company's operations, earnings and financial position.
Product liability and insurance
The Company's business operations carry risks of product liability.
The Company will obtain and maintain product liability insurance
for products where this is judged to be important. However, any
claims for damages against the Company in the event of damage
caused by the Company's products or product candidates may come
to exceed the amount paid out by the Company's insurance policies.
Furthermore, it is not possible to rule out that the Company's product liability insurance will not cover a claim for damages. If the Company is liable for damages in excess of what is covered by the Company's insurance policies, this can adversely affect the Company's
earnings and financial position.
Legal risks
In the long term, Karessa will operate in several countries and thus be
affected by the legislation in each individual country in which its
activities are carried on. It cannot be ruled out that legislation related
to taxation, customs duties and authorisations will change, potentially
with retroactive effect, in a way that may have a negative impact on
the Company's operations, earnings and financial position.
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Financial risks
Working capital
It cannot be ruled out that the Company will need to seek financing,
including loans or equity, to cover future unforeseen capital requirements. There are no guarantees either that such other financing can
be obtained from one time to another, or that the conditions for such
other financing will be acceptable to the Company and its shareholders. For example, a new issue of shares in the Company could lead to
a dilution for the existing shareholders.
Risks related to the Company's shares
Stock market risk
A potential investor should be aware that an investment in the Company's shares are associated with a high degree of risk. Along with the
Company's earnings, the share price is dependent on a number of factors that the Company cannot influence. Such factors include, for
example, the economic climate, market interest rates, capital flows,
political uncertainty and market and behavioural psychology. Even if
the Company's operations develop in a positive direction, the possibility that an investor makes a loss on the disposal of his/her shares in
the Company cannot be ruled out.
Currency risk
Currency risk is the risk of exchange rate fluctuations negatively
affecting the Company's earnings, financial position and/or cash
flow. Foreign-exchange risks can exist in the form of both transaction
risks and translation exposure. The Company currently has a relatively limited currency exposure but since future sales will be mainly
in foreign currencies, the Company's currency exposure will gradually increase.
Share liquidity
No trade in the Company's shares has occurred before its listing on
Nasdaq Stockholm First North. It is not possible to predict the extent
to which active and liquid trading in the shares will develop. If an
active and liquid trading does not develop, or is not sustained, it
would mean difficulties for shareholders to sell their shares without
affecting the market price negatively, or to sell them at all.
Future dividends
Since in the coming years Karessa will be in an expansive phase of
development, the Board does not intend to commit itself to a fixed
dividend payout ratio. If cash flows from operating activities exceed
the Company's capital requirements, the Board intends to recommend that the Annual General Meeting (AGM) decides on dividends.
No guarantees can be provided, however, as to whether future cash
flows will exceed the Company's capital requirements or that the
AGM will decide to pay out dividends in the future.
Shareholders with significant influence
At the time of listing on Nasdaq Stockholm First North, share ownership in Karessa is spread in such a way that no single shareholder controls the Company. However, it cannot be ruled out that in the
future there will be shareholders or groups of shareholders that
acquire a controlling influence at the AGM, for example in the case
of election of the Board of Directors.
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Taxation issues in Sweden
The following summary outlines certain tax rules which may become topical in connection with the holding and trading in shares in Karessa. This summary refers in
the first instance to shareholders with unlimited tax liability in Sweden. This summary is not intended to be exhaustive , nor does it cover situations where the
shares are held by partnerships or as stock in trade. In addition, it does not deal
with the special rules that apply when shareholders hold shares deemed held for
business purposes, or the special rules which apply to natural persons' holdings of
what are termed restricted shares held in a close company.
Special tax consequences may also arise for other categories of shareholders, such as investment companies, investment funds and persons
whose tax liability in Sweden is limited. Holders of shares in Karessa
are recommended to seek advice from tax advisers regarding the tax
consequences that may arise in each individual case, including their
applicability and the effects of foreign tax and tax agreements.
the remainder. The deficit cannot be saved for a later tax year.
Legal persons
Legal persons, except deceased estates, are normally taxed on all
income, including taxable capital gains and dividends, under income
from business activities. The tax rate is currently 22 per cent. If the
shares are shares deemed to be held for business purposes, special
rules apply. Calculation of the capital gain or loss occurs in the same
way as for natural persons as indicated above. Deductions for capital
losses are normally only allowed against capital gains on shares or
other partnership rights. Provided certain conditions are met, a loss
can also be offset against capital gains in companies within the same
group, on the condition that the right to group contributions exists
between the companies. Capital losses that have not been able to be
used for a given year may be saved and deducted against capital gains
on shares and other partnership rights in subsequent tax years without limitation in time, termed the aktiefållan (pen for shares).
Natural persons
For natural persons and deceased estates, any returns, such as dividends and capital gains, are taxed as income from capital when the
shares are sold. The tax rate is 30 per cent. Preliminary tax in respect
of dividends is withheld by Euroclear or, for nominee holdings, by
the nominee. The company paying the dividend is not responsible for
withholding any tax at source. Capital gains and capital losses are normally calculated as the difference between the sale payment, after
deductions for selling costs, and the cost amount.
The cost amount for all shares of the same class and type is calculated jointly, applying the average method. Alternatively, for listed
shares, the cost amount may be determined according to a standard
method at 20 per cent of the sale payment after deductions for selling costs. Capital losses on the disposal of listed shares are fully
deductible against taxable capital gains on other listed shares and
partnership rights the same year, except for shares in investment
funds that contain only Swedish rights to make claims (fixed income
funds). Capital losses that cannot be offset in this way may be 70 per
cent deducted against other income from capital. If a deficit arises in
income from capital, a tax credit is allowed against municipal and
state income taxes, as well as against state property tax and municipal
property charges. A tax credit is allowed of 30 per cent of the part of
the deficit that does not exceed SEK 100,000 and of 21 per cent for
Shareholders with limited tax liability in Sweden
For shareholders, natural as well as legal persons, with limited tax liability in Sweden, normal Swedish dividend tax is payable at the rate
of 30 per cent on dividends from the Swedish limited company.
However, this rate is generally reduced by double taxation relief
agreements between Sweden and other countries. Special rules apply
for dividends on share which are deemed held for business purposes.
Exemption from dividends tax also applies for shareholders within
the EU who are legal persons and who meet the criteria in the EU
directive 2011/96/EU if the shareholding amounts to at least 10 per
cent of the share capital in the company issuing the dividends. Dividends tax is withheld at the time of paying the dividends by Euro-
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
clear or, for nominee holdings, by the nominee. If dividends tax is
withheld at too high an amount, repayment can be requested from
Skatteverket (the Swedish Tax Agency) before the end of the fifth calendar year after the dividend payout. Shareholders with limited tax
liability in Sweden and who do not carry out activities from a permanent establishment in Sweden are not normally taxed in Sweden for
capital gains on the sale of shares and other partnership rights. Shareholders may, however, become the subject of such taxation in their
fiscal domicile. Natural persons with limited tax liability in Sweden
can be the subject of Swedish taxation on the disposal of securities if
at any time during the calendar year in which the sale takes place, or
at any time during the ten preceding calendar years, they have been
resident in Sweden or have had their habitual abode here. However,
the applicability of this rule in most cases is limited by double taxation relief agreements between Sweden and other countries.
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Articles of Association
Karessa Pharma Holding AB
CIN 556942-1596
notice of the annual general meeting. This date may not be a public
holiday, a Saturday, Midsummer Eve, Christmas Eve or New Year’s
Eve and it may not fall earlier than the fifth workday before the
meeting.
Shareholders may bring one or two assistants, however, only if the
shareholder has notified this in accordance with the preceding paragraph.
ARTICLES OF ASSOCIATION
Adopted at the extraordinary general meeting on 4 July 2014
Section 1
The Company is Karessa Pharma Holding AB (publ).
Section 9
The annual general meeting shall be held within six months after the
end of the financial year.
At the annual general meeting, the following matters shall be treated:
1) Election of the chair of the meeting.
2) Drawing up and approval of the voting list.
3) Election of one or two scrutinizers of the minutes.
4) Determination of whether the meeting has been duly convened.
5) Approval of the agenda.
6) Presentation of the annual report and the auditor’s report and,
where appropriate, the consolidated profit and loss account and
the auditors’ report for the Group.
7) Decisions on:
(a) Adoption of the profit and loss account and the balance
sheet as well as, where applicable, the consolidated profit
and loss account and the consolidated balance sheet.
(b) Allocation of the profit or loss according to the adopted
balance sheet, as well as
(c) Discharge from liability of the members of the Board of
Directors and the CEO
8) Determination of the fees to be paid to the members of the
Board and the auditors.
9) Election of the members of the Board and, where appropriate, of
the auditors
10) Any other matters arising from the annual general meeting in accordance with the Swedish Companies Act
(2005:551) or the Articles of Association.
Section 2
The Board shall have its registered office in the municipality of
Stockholm.
Section 3
The Company shall carry out research and development in the medical field, market and sell medicinal products and services and engage
in other activities related thereto.
Section 4
Share capital shall be no less than SEK 500,000 and no more than
SEK 2,000,000.
Section 5
The number of shares shall be no less than 10,000000 and no more
than 40,000,000. All shares are of the same class.
Section 6
The Board shall consist of no less than 3 and no more than 8 members with no substitutes.
Section 7
The Company shall have one to two auditors with or without substitutes or a registered public accounting firm.
Section 8
Notice of the annual general meeting shall be announced in Post- och
Inrikes Tidningar (the Swedish government gazette) and on the Company’s website, as well as by advertising in Svenska Dagbladet that
the notice has been issued.
Notice of the annual general meeting and any extraordinary general meetings at which amendments of the articles of association are
to be treated shall be published no earlier than six weeks and no later
than four weeks before such a meeting. Notice of other extraordinary
general meetings shall be published no earlier than six weeks and no
later than two weeks before the meeting.
In order to be entitled to participate in the annual general meeting,
shareholders must be listed in the printout of the share register with
respect to circumstances five weekdays prior to the meeting, and in
addition must register for the meeting, along with the number of
assistants to the Company, no later than the date specified in the
Section 10
The financial year for the Company shall be January 1 - December 31
(calendar year).
Section 11
The Company’s shares shall be registered in a CSD register in accordance with lagen (1998:1479) om kontoföring av finansiella instrument
(the Act (SFS 1998:1479) on accounting of financial instruments).
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Karessa Pharma Holding AB (publ) Company Description for listing on Nasdaq Stockholm First North
Glossary
GMP (Good Manufacturing Practice) is a regulatory framework governing the manufacture, including packaging, of medicines, foods and
health foods.
PK studies refers to studies of the mechanisms of the absorption and
distribution of medicinal products. In addition, time to effect, how
long the effect lasts, the chemical changes in substance in the body
and the drug's metabolism are studied.
Dose-finding study is a clinical study with the aim to determining the
dose of the future medicinal product that gives the best effect in
relation to any potential side effects.
34
Karessa Pharma Holding AB
Lahällsvägen 48
SE-183 30 Täby
SWEDEN
www.karessa.se
[email protected]