Karolinska Development AB (publ): Interim Report January - June 2019

STOCKHOLM - 30 August 2019. Karolinska Development AB (Nasdaq Stockholm: KDEV) today publishes its Interim Report for the period January - June 2019. The full report is available on the Company's website.

"Karolinska Development's portfolio continues to enjoy a good risk spread and to offer substantial potential. The negative results of Modus' clinical study of sevuparin were a significant setback, but we are, at the same time, seeing significant progress by other portfolio companies such as Aprea, Dilafor and OssDsign. We are currently concentrating on ensuring that the ongoing set-off issue can be carried out, as strengthening our finances is vital if we are to continue our engagement in the portfolio companies ahead of impending and potentially value-enhancing milestones. For example, we expect to be able to access the results of two Phase 2 studies of Aprea's drug candidate APR-246 already before the end of 2019. In 2020, the results of Apreas's Phase 3 study in the indication MDS as well as Phase 2 data for Umecrine Cognition's and Dilafor's respective drug candidates await. We are also looking forward, in conjunction with the set-off issue, to initiating a new partnership with Sino Biopharma that will open the Asian market up to Nordic innovations.", says Viktor Drvota, CEO, Karolinska Development.

Significant events during the second quarter

• Aprea Therapeutics presented promising results from studies with APR-246 in combination with immune checkpoint blockade. The results showed that APR-246 can improve the effects of immuno-oncology agents (April 2019).
• Aprea Therapeutics announced that APR-246 has received an Orphan Drug Designation and Fast Track Designation from the FDA for the treatment of MDS (April 2019).
• Dilafor announced the completion of a capital raising event and that it was planning to start a new Phase 2b study of its candidate drug, tafoxiparin, that will evaluate tafoxiparin's ability to soften the cervix prior to labor induction. The investment will entail an increase in the value of Karolinska Development's holding in Dilafor and have a positive effect on earnings of SEK 16.8 million in the second quarter of 2019 (April 2019).
• Karolinska Development's 2018 Annual Report contained an update by the Board of Directors on the Company's financial situation and the measures taken to strengthen the company's finances. The Annual Report also included an emphasis of matter paragraph from the Auditor regarding going concern assumptions (April 2019).
• OssDsign applied for listing on Nasdaq First North and published a prospectus in connection with a share issue of SEK 151.3 million (May 2019).
• OssDsign's share was listed on Nasdaq First North and the share issue in conjunction with the listing was oversubscribed. As of March 31, 2019, Karolinska Development's holdings in OssDsign amounted to 25% and, after the realised share issue, to approximately 18% after full dilution, including indirect holdings through KCIF Co-Investment Fund (May 2019).
• OssDsign made substantial progress in the process to have OSSDSIGN Cranial PSI covered by the French national reimbursement system (May 2019).
• The data from the Phase 2 study of sevuparin by the portfolio company, Modus Therapeutics, did not show any meaningful clinical benefit in the management of acute vaso-occlusive crisis (VOC) in patients with sickle cell disease. Modus is now considering its options for the further development of sevuparin (May 2019).
• Karolinska Development's Board of Directors resolved, subject to subsequent approval by the Annual General Meeting, to carry out a directed new issue of series B shares to the holders of the 2015 convertible loan. Sino Biopharmaceutical Limited ("Sino Biopharma") and other owners, who collectively hold 84% of the convertible loan, have committed, on certain terms and under certain conditions, to subscribe corresponding to their convertible loan holding, including accrued interest, with the provision that Sino Biopharma's share of the votes in the Company shall not exceed 49% after the directed new issue. Karolinska Development and Sino Biopharma simultaneously announced their intention to initiate a new cooperation in conjunction with the set-off issue, with the aim of opening the Asian market to Nordic innovations (May 2019).
• Karolinska Development and KCIF Investment Fund KB - a holding company jointly owned by the European Investment Fund and Karolinska Development - sold their entire holding in Pharmanest AB. The divestment yielded a total of approximately SEK 23 million for Karolinska Development (June 2019).
• Karolinska Development's Annual General Meeting resolved, amongst other things, to approve the Board of Directors' decision to carry out a directed new issue of series B shares to the holders of the 2015 convertible loan (June 2019).

Significant post-period events

• Karolinska Development's CFO Fredrik Järrsten is appointed as Deputy CEO (July 2019)
• Karolinska Development published a prospectus for the directed new share issue to the holders of the Company's convertible loan (July 2019).
• The subscription period in the directed new share issue to the holders of the Company's convertible loan was extended four times and now ends on 12 September 2019 (July and August 2019).
• Dilafor has enrolled the first subject in its Phase 2b study with tafoxiparin in pregnant women planned for labor induction (July 2019).
• Forendo Pharma announced that Sunstone Life Science Ventures joins the existing international investor syndicate and has made a EUR 5 million investment in Forendo Pharma. The new financing will enable Forendo Pharma to progress its lead endometriosis program, FOR-6219, an HSD17B1 enzyme inhibitor, into the next phase of clinical studies after the successful completion of its Phase 1a study earlier this year (July 2019).
• Aprea Therapeutics announced the appointment of Scott Coiante as Senior Vice President and Chief Financial Officer (August 2019).
• Forendo Pharma announced the start of the Phase 1b study of its lead endometriosis program, FOR-6219 (August 2019).
• Promimic announced that the company's first spinal device utilizing HA^nano Surface to improve osseointegration has now been 510(k) approved by the FDA.

Financial update

Second quarter

• The net profit/loss for the second quarter was SEK 7.5 million (SEK 31.3 million in the second quarter of 2018). Earnings per share totalled SEK 0.1 (SEK 0.5 in the second quarter of 2018).
• The result of the Change in fair value of shares in portfolio companies amounted to SEK 21.8 million (SEK 26.0 during the second quarter of 2018).
• The total fair value of the portfolio was SEK 995.3 million at the end of June 2019, corresponding to an increase of SEK 25.3 million from SEK 970.0 million at the end of the previous quarter. The net portfolio fair value at that time was SEK 652.0 million, corresponding to an increase of SEK 16.0 million from SEK 636.0 million at the end of the previous quarter.
• Net sales totalled SEK 1.0 million during the second quarter of 2019 (SEK 0.8 million during the second quarter of 2018).
• Karolinska Development invested a total of SEK 15.5 million in portfolio companies during the second quarter. Second quarter investments in portfolio companies by Karolinska Development and other specialised life sciences investors totalled SEK 194.5 million.
• Cash and cash equivalents decreased by SEK 25.7 million during the second quarter, totalling SEK 36.1 million on 30 June 2019.
• The Parent Company's equity on 30 June 2019 was SEK 284.9 million.

The Q2 2019 Interim Report for Karolinska Development AB for the period January-June 2019 is available as a PDF atwww.karolinskadevelopment.com.

For further information, please contact:

Viktor Drvota, CEO, Karolinska Development AB
Phone: [phone], e-mail: [e-mail]

Fredrik Järrsten, CFO and Deputy CEO, Karolinska Development AB
Phone: [phone], e-mail: [e-mail]

TO THE EDITORS

About Karolinska Development AB

Karolinska Development AB (Nasdaq Stockholm: KDEV) is a Nordic life sciences investment company. The company focuses on identifying breakthrough medical innovations in the Nordic region that are developed by entrepreneurs and leadership teams. The Company invests in the creation and growth of companies that advance these assets into commercial products that are designed to make a difference to patients' lives while providing an attractive return on investment to shareholders.

Karolinska Development has access to world-class medical innovations at the Karolinska Institutet and other leading universities and research institutes in the Nordic region. The Company aims to build companies around scientists who are leaders in their fields, supported by experienced management teams and advisers, and co-funded by specialist international investors, to provide the greatest chance of success.

Karolinska Development has established a portfolio of ten companies targeting opportunities in innovative treatment for life-threatening or serious debilitating diseases.

The Company is led by an entrepreneurial team of investment professionals with a proven track record as company builders and with access to a strong global network.

For more information, please visit www.karolinskadevelopment.com

Attachment

• KD Q2 2019 (ENG) Final (https://ml-eu.globenewswire.com/Resource/Download/5403e34c-9c48-4469-b929-fa419df82ada)