Exhibit 99.1
AFFIMED N.V.
Index to Condensed Consolidated Financial Statements
Unaudited condensed consolidated statement of comprehensive loss | 2 |
Condensed consolidated statement of financial position | 3 |
Unaudited condensed consolidated statement of cash flows | 4 |
Unaudited condensed consolidated statement of changes in equity | 5 |
Notes to the consolidated financial statements | 6 |
Affimed N.V.
Unaudited condensed consolidated statement of comprehensive loss (in € thousand)
(in € thousand)
For the three months ended June 30 | For the six months ended June 30 | |||||||||||||||||||
Note | 2016 | 2017 | 2016 | 2017 | ||||||||||||||||
Revenue | 3 | 2,069 | 508 | 4,005 | 907 | |||||||||||||||
Other income – net | 38 | 93 | 124 | 84 | ||||||||||||||||
Research and development expenses | 8 | (8,628 | ) | (5,431 | ) | (15,696 | ) | (10,873 | ) | |||||||||||
General and administrative expenses | 8 | (1,965 | ) | (1,969 | ) | (4,058 | ) | (4,215 | ) | |||||||||||
Operating loss | (8,486 | ) | (6,799 | ) | (15,625 | ) | (14,097 | ) | ||||||||||||
Finance income / (costs) – net | 4 | 450 | (1,169 | ) | (872 | ) | (1,625 | ) | ||||||||||||
Loss before tax | (8,036 | ) | (7,968 | ) | (16,497 | ) | (15,722 | ) | ||||||||||||
Income taxes | (1 | ) | 21 | (2 | ) | 20 | ||||||||||||||
Loss for the period | (8,037 | ) | (7,947 | ) | (16,499 | ) | (15,702 | ) | ||||||||||||
Total comprehensive loss | (8,037 | ) | (7,947 | ) | (16,499 | ) | (15,702 | ) | ||||||||||||
Loss per share in € per share | (0.24 | ) | (0.18 | ) | (0.50 | ) | (0.37 | ) | ||||||||||||
(undiluted = diluted) |
The Notes are an integral part of these consolidated financial statements.
Affimed N.V.
Condensed consolidated statement of financial position
(in € thousand)
Note | December 31, 2016 | June 30, 2017 | ||||||||||
(unaudited) | ||||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Intangible assets | 55 | 61 | ||||||||||
Leasehold improvements and equipment | 822 | 1,004 | ||||||||||
877 | 1,065 | |||||||||||
Current assets | ||||||||||||
Inventories | 197 | 250 | ||||||||||
Trade and other receivables | 2,255 | 2,524 | ||||||||||
Other assets | 516 | 513 | ||||||||||
Financial assets | 5 | 9,487 | 4,381 | |||||||||
Cash and cash equivalents | 35,407 | 44,486 | ||||||||||
47,862 | 52,154 | |||||||||||
TOTAL ASSETS | 48,739 | 53,219 | ||||||||||
EQUITY AND LIABILITIES | ||||||||||||
Equity | ||||||||||||
Issued capital | 333 | 439 | ||||||||||
Capital reserves | 190,862 | 207,841 | ||||||||||
Accumulated deficit | (152,444 | ) | (168,146 | ) | ||||||||
Total equity | 6 | 38,751 | 40,134 | |||||||||
Non current liabilities | ||||||||||||
Borrowings | 7 | 3,617 | 5,284 | |||||||||
Total non-current liabilities | 3,617 | 5,284 | ||||||||||
Current liabilities | ||||||||||||
Trade and other payables | 5,323 | 5,793 | ||||||||||
Borrowings | 7 | 973 | 1,750 | |||||||||
Deferred revenue | 75 | 258 | ||||||||||
Total current liabilities | 6,371 | 7,801 | ||||||||||
TOTAL EQUITY AND LIABILITIES | 48,739 | 53,219 |
The Notes are an integral part of these consolidated financial statements.
Affimed N.V.
Unaudited condensed consolidated statement of cash flows
(in € thousand) | For the six months ended June 30 | |||||||||||
Note | 2016 | 2017 | ||||||||||
Cash flow from operating activities | ||||||||||||
Loss for the period | (16,499 | ) | (15,702 | ) | ||||||||
Adjustments for the period: | ||||||||||||
- Income taxes | 2 | (20 | ) | |||||||||
- Depreciation and amortisation | 193 | 169 | ||||||||||
- Gain from disposal of leasehold improvements and equipment | 0 | (20 | ) | |||||||||
- Share based payments | 8 | 1,785 | 1,018 | |||||||||
- Finance income / costs – net | 4 | 872 | 1,625 | |||||||||
(13,647 | ) | (12,930 | ) | |||||||||
Change in trade and other receivables | (183 | ) | (250 | ) | ||||||||
Change in inventories | (5 | ) | (53 | ) | ||||||||
Change in other assets | (230 | ) | (404 | ) | ||||||||
Change in trade, other payables and deferred revenue | (2,667 | ) | 657 | |||||||||
Cash used in operating activities | (16,732 | ) | (12,980 | ) | ||||||||
Interest received | 0 | 25 | ||||||||||
Paid interest | (246 | ) | (128 | ) | ||||||||
Net cash used in operating activities | (16,978 | ) | (13,083 | ) | ||||||||
Cash flow from investing activities | ||||||||||||
Purchase of intangible assets | (11 | ) | (23 | ) | ||||||||
Purchase of leasehold improvements and equipment | (157 | ) | (349 | ) | ||||||||
Cash received from the sale of leasehold improvements and equipment | 0 | 18 | ||||||||||
Cash paid for investments in financial assets | 5 | (18,128 | ) | (4,655 | ) | |||||||
Cash received from maturity of financial assets | 5 | 0 | 9,209 | |||||||||
Net cash used for investing activities | (18,296 | ) | 4,200 | |||||||||
Cash flow from financing activities | ||||||||||||
Proceeds from issue of common shares | 6 | 0 | 17,901 | |||||||||
Transaction costs related to issue of common shares | 6 | 0 | (1,481 | ) | ||||||||
Proceeds from borrowings | 7 | 0 | 2,500 | |||||||||
Transaction costs related to borrowings | 7 | 0 | (11 | ) | ||||||||
Repayment of borrowings | (357 | ) | 0 | |||||||||
Cash flow from financing activities | (357 | ) | 18,909 | |||||||||
Net changes to cash and cash equivalents | (35,631 | ) | 10,026 | |||||||||
Cash and cash equivalents at the beginning of the period | 76,740 | 35,407 | ||||||||||
Exchange-rate related changes of cash and cash equivalents | (506 | ) | (947 | ) | ||||||||
Cash and cash equivalents at the end of the period | 40,603 | 44,486 |
The Notes are an integral part of these consolidated financial statements.
Affimed N.V.
Unaudited condensed consolidated statement of changes in equity
(in € thousand)
Note | Issued capital | Capital reserves | Accumulated deficit | Total equity | ||||||||||||||
Balance as of January 1, 2016 | 333 | 187,169 | (120,228 | ) | 67,274 | |||||||||||||
Equity-settled share based payment awards | 8 | 1,785 | 1,785 | |||||||||||||||
Loss for the period | (16,499 | ) | (16,499) | |||||||||||||||
Balance as of June 30, 2016 | 333 | 188,954 | (136,727 | ) | 52,560 | |||||||||||||
Balance as of January 1, 2017 | 333 | 190,862 | (152,444 | ) | 38,751 |
Issue of common shares | 6 | 106 | 15,910 | 16,016 | ||||||||||||||
Equity-settled share based payment awards | 8 | 1,018 | 1,018 | |||||||||||||||
Issue of warrant note (loan Silicon Valley Bank) | 51 | 51 | ||||||||||||||||
Loss for the period | (15,702 | ) | (15,702) | |||||||||||||||
Balance as of June 30, 2017 | 439 | 207,841 | (168,146 | ) | 40,134 |
The Notes are an integral part of these consolidated financial statements.
Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
1. | Reporting entity |
Affimed N.V. (in the following Affimed or Company) is a Dutch company with limited liability (naamloze vennootschap) and has its corporate seat in Amsterdam, the Netherlands. The Company was founded as Affimed Therapeutics B.V. on May 14, 2014 as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) for purposes of a corporate reorganization of Affimed Therapeutics AG and converted its legal form under Dutch law to a public company with limited liability for an initial public offering of its common shares.
The condensed consolidated financial statements of Affimed comprise the Company and its wholly owned and controlled subsidiaries Affimed GmbH, Heidelberg, Germany, AbCheck s.r.o., Plzen, Czech Republic and Affimed Inc., Delaware, USA.
Affimed is a clinical-stage biopharmaceutical group focused on discovering and developing targeted cancer immunotherapies. The Company’s product candidates are developed in the field of immuno-oncology, which represents an innovative approach to cancer research that seeks to harness the body’s own immune system to fight tumor cells. Affimed has its own research and development programs and collaborations, where the Company is performing research services for third parties.
2. | Basis of preparation and changes to Group’s accounting policies |
Statement of compliance
The interim financial statements for the three and six months ended June 30, 2017 and 2016 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with Affimed N.V.’s annual consolidated financial statements as at December 31, 2016.
The interim financial statements were authorized for issuance by the management board on July 31, 2017.
Critical judgments and accounting estimates
The preparation of the interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
In preparing these interim financial statements, the critical judgments made by management in applying the Group's accounting policies were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2016.
Functional and presentation currency
Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
These interim financial statements are presented in euro, which is the Company’s functional currency. All financial information presented in euro are reported in thousand (abbreviated €) or million (abbreviated € million).
Significant accounting policies
The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended December 31, 2016.
New standards and interpretations applied for the first time
The following amendments to standards and new or amended interpretations are effective for annual periods beginning on or before January 1, 2017, and will be applied in preparing the annual financial statements for the year 2017:
Standard/interpretation | Effective Date1 |
Amendments to IAS 7 Disclosure Initiative | January 1, 2017 |
1 Shall apply for periods beginning on or after the date shown in the effective date column.
New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations are effective for annual periods beginning after December 31, 2017, and have not been applied in preparing these consolidated financial statements.
Standard/interpretation | Effective Date1 |
IFRS 9 Financial Instruments (2014) | January 1, 2018 |
IFRS 15 Revenue from Contracts with Customers | January 1, 2018 |
IFRS 16 Leases | January 1, 2019 |
Clarifications to IFRS 15 Revenue from Contracts with Customers | January 1, 2018 |
Amendments to IFRS 2: Classification and Measurement of Share- | |
based Payment Transactions | January 1, 2018 |
Annual Improvements to IFRS Standards 2014-2016 Cycle | January 1, 2018 |
1 Shall apply for periods beginning on or after the date shown in the effective date column.
The Group is assessing the potential impact that IFRS 9, 15 or 16 could have on its consolidated financial statements. The other new or amended standards and interpretations are not expected to have a significant effect on the consolidated financial statements of the Group.
IFRS 9 - Classification contains a new classification and measurement approach for financial instruments that reflects the business model in which assets are managed and their cash flow
Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
characteristics. Based on its preliminary assessment, the Group does not believe that the new classification requirements, if applied at 31 December 2016, would have had an impact on its accounting of trade receivables, financial assets and borrowings.
IFRS 9 - Hedge Accounting will not have an impact on the consolidated financial statements as the Group does not have contracts or transactions which qualify for hedge accounting.
IFRS 9 - Impairment replaces the ‘incurred loss’ model in IAS 39 with a forward looking ‘expected credit loss’ (“ECL”) model. This will require considerable judgement as to how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis. Under IFRS 9, loss allowances will be measured on either of the following bases:
- | 12-month ECLs. These are ECLs that result from possible default events within the 12 months after the reporting date; and |
- | lifetime ECLs. These are ECLs that result from all possible default events over the expected life of a financial instrument. |
The Group has not yet finalized the impairment methodologies that it will apply under IFRS 9.
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. Affimed believes that IFRS 15 will have no impact on revenue from current collaboration agreements which is recognized according to the stage of completion. However, the Group has not yet finalized the assessment of all contracts with customers.
IFRS 16 – Leases specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Affimed will be required to recognize “right-of-use” assets related to its premises rented and certain equipment leased. During the next year, the Group will gather and update information related to leases, assess extension and termination options as well as possible exemptions, and identify the appropriate discount rate.
3. | Revenue |
Collaboration agreement Amphivena
Until July 2016, Affimed was party to a collaboration with Amphivena Therapeutics Inc., San Francisco, USA (in the following Amphivena). The purpose of the collaboration was the development of a product candidate for hematological malignancies. The collaboration included a License and Development Agreement between Amphivena and Affimed, which expired when Amphivena obtained the approval of an investigational new drug application (IND) from the FDA in July 2016.
Pursuant to the license and development agreement between Affimed and Amphivena, Affimed granted a license to intellectual property and agreed to perform certain services for Amphivena related to the development of a product candidate for hematological malignancies. In consideration for the research and development work that was performed, Amphivena was required to pay to Affimed service fees
Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
totaling approximately €16 million payable according to the achievement of milestones and phase progressions as described under the license and development agreement. Since the expiration of the agreement, the parties have been closing out the collaboration by exchanging documentation and transferring materials and third party contracts.
During each of the three and six month periods ended June 30, 2017, the Company’s revenue for the performance of research and development services amounted to €0.2 million (for the three and six months ended June 30, 2016:€1.4 and€2.8million), netof Affimed’s share in funding Amphivena of €0.6 million.
Amphivena has obtained funding by issuing preferred stock to investors. Investors provide financing in exchange for preferred stock issued by Amphivena under the terms of certain stock purchase agreements. Through June 30, 2017, Affimed participated in the financing of Amphivena with cash investments of €2.3 million.
Collaboration agreement The Leukemia & Lymphoma Society (LLS)
Affimed is party to a collaboration with LLS to fund the development of a specific TandAb. Under the terms of the agreement, LLS has agreed to contribute up to $4.4 million contingent upon the achievement of certain milestones.
In the event that the research and development is successful, Affimed must proceed with commercialization of the licensed product. If Affimed decides for business reasons not to continue the commercialization, Affimed must at its option either repay the amount funded or grant a license to LLS to enable LLS to continue with the development program. In addition, LLS is entitled to receive royalties from Affimed based on the Group’s future revenue from any licensed product, with the amount of royalties not to exceed three times the amount funded.
The Company recognized revenue for related payments of €0.2 million for the six month period ended June 30, 2017 (for the three and six months ended June 30, 2016: € 0.4 million) for research and development services.
Research service agreements
AbCheck has entered into certain research service agreements. These research service agreements provide for non-refundable, upfront technology access or research funding feesor capacity reservation feesand milestone payments. The Group recognized €0.3 and €0.5 million as revenue in the three and six months ended June 30, 2017 (2016: €0.3 and €0.8 million).
4. | Finance income and finance costs |
Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
Three months ended June 30, 2016 | Three months ended June 30, 2017 | Six months ended June 30, 2016 | Six months ended June 30, 2017 | |||||||||||||
Interest expense | -205 | -4 | -401 | -168 | ||||||||||||
Foreign exchange differences | 617 | -1,175 | -518 | -1,499 | ||||||||||||
Other finance income/finance costs | 38 | 10 | 47 | 42 | ||||||||||||
Finance income/costs - net | 450 | -1,169 | -872 | -1,625 | ||||||||||||
5. | Financial assets |
Financial assets include short-term deposits with banks of $5 million.
6. | Equity |
At June 30, 2017 the share capital of €439 (December 31, 2016: €333) is divided into 43,938,377 (December 31, 2016: 33,262,745) common shares with a par value of €0.01 per share.
In January and February 2017, the Company issued 10,675,632 common shares, including 10,646,762 common shares in a public offering at a price of $1.80 per common share for net proceeds of €16.4 million and 28,870 common shares in connection with its at-the-market sales agreement for proceeds of €58.
At June 20, 2017 the authorized share capital was increased from €1,100 to €2,196, divided into 109,800,000 common shares and 109,800,000 cumulative preference shares, each with a par value of €0.01 per share.
7. | Borrowings |
On May 31, 2017, the second tranche of €2.5 million was drawn under the terms of the existing credit facility agreement with Silicon Valley Bank (“SVB”) and the agreement was amended to allow the remaining amount of €2.5 million to be drawn until September 30, 2017, contingent on the satisfaction of certain conditions and the issuance of additional warrants exercisable for the Company’s shares.
Pursuant to the loan agreement, the Group granted another 53,395 warrants to SVB to purchase Affimed’s common shares with a per-share exercise price of $2.30 for this second tranche. The Group recognized the fair value of the warrants in equity, net of transaction costs of €8. Fair value was determined using the Black-Scholes-Merton formula, with an expected volatility of 75% and an expected time of six years to exercise of the warrants. The contractual maturity of the warrants is ten years.
The Company adjusted the carrying amount of its financial liability and recorded a gain of €0.2 million upon the drawing of the second tranche due to a change in timing of the cash flows under the original terms of the existing credit facility.
Affimed N.V.
Notes to the consolidated financial statements
(in € thousand)
8. | Share-based payments |
In the corporate reorganization on September 17, 2014, an equity-settled share based payment program was established by Affimed N.V. (ESOP 2014). Based on this program, the Company granted 662,750 and 1,118,575 options in the three and six months ended June 30, 2017 to members of the Management Board, the Supervisory Board and to employees. The awards vest in installments over three years, and the final exercise date of the options is 10 years after the grant date of the instruments.
As of June 30, 2017, 3,846,504 ESOP 2014 awards were outstanding (December 31, 2016: 3,044,345), 1,394,749 awards (December 31, 2016: 952,458) were vested. In the three and six months ended June 30, 2017 17,333 and 316,416 and ESOP 2014 awards forfeited due to termination of employment, and no options were exercised. The options outstanding at June 30, 2017 had exercise prices ranging from $1.80 to $13.47 (December 31, 2016: $2.51 to $13.47).
In the three and six months ended June 30, 2017, compensation expense of €453 and €1,018 was recognized affecting research and development expenses (€128 and €214) and general and administrative expenses (€325 and €804). In the three and six months ended June 30, 2016, compensation expense of €838 and €1,785 was recognized affecting research and development expenses (€321 and €695) and general and administrative expenses (€517 and €1,090).
As of June 30, 2017, 534,142 (December 31, 2016: 534,142) ESOP 2007 options were outstanding.
9. | Related parties |
The supervisory directors of Affimed received compensation for their services on the supervisory board of €96 and €206 (€88 and €169) in the three and six months ended June 30, 2017 (2016). Remuneration of managing directors amounted to €432 and €883 (€534 and €1,087) in the three and six months ended June 30, 2017 (2016). The Group recognized share-based payment expenses of €30 and €80 (€71 and €159) for supervisory directors and €350 and €677 (€540 and €1,133) for managing directors in the three and six months ended June 30, 2017 (2016).
The following table provides the transaction amounts and outstanding balances for consulting fees and supervisory board remuneration.
Transaction volume | Outstanding balances | |||||||||||||||||||||||
Three months ended June 30, 2016 | Six months ended June 30, 2016 | Three months ended June 30, 2017 | Six months ended June 30, 2017 | December 31, 2016 | June 30, 2017 | |||||||||||||||||||
Dr. Ulrich Grau | 12 | 22 | 17 | 32 | 17 | 20 | ||||||||||||||||||
Dr. Ulrich Grau (i-novion) | 0 | 23 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Dr. Thomas Hecht | 30 | 57 | 30 | 63 | 23 | 23 | ||||||||||||||||||
Dr. Richard Stead | 10 | 17 | 11 | 24 | 14 | 8 | ||||||||||||||||||
Berndt Modig | 12 | 24 | 13 | 29 | 8 | 9 | ||||||||||||||||||
Ferdinand Verdonck | 14 | 29 | 15 | 33 | 10 | 10 | ||||||||||||||||||
Dr. Bernhard Ehmer | 10 | 20 | 10 | 25 | 11 | 12 | ||||||||||||||||||
Jens-Peter Marschner (until 2016) | 2 | |||||||||||||||||||||||