Targovax annual report 2021
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Activating the patient’s
immune system to
fight cancer
TARGOVAX ANNUAL REPORT 2021
Targovax annual report 2021
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Targovax is a clinical stage immuno-
oncology company developing immune
activators to target hard-to-treat solid
tumors
Targovax annual report 2021
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Contents
Contents ....................................................................... 3
About Targovax ............................................................ 5
CEO Statement ............................................................. 6
Directors Report ........................................................... 7
Management ............................................................. 21
Board of Directors ...................................................... 23
Corporate Governance Report ................................... 25
Accounts and notes Group ......................................... 34
Accounts and notes ASA............................................. 81
Auditors report ........................................................ 111
Targovax annual report 2021
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Immuno-oncology is one of the
fastest growing therapeutic
fields in medicine
Immunotherapy has revolutionized cancer
treatment over the past decade, introducing novel
drugs that enable the patient’s own immune system
to fight the cancer. Today, millions of patients
benefit from immunotherapy, and some are cured.
This breakthrough has been led by the immune
checkpoint inhibitors, which have rapidly grown into
a market worth USD 25bn globally.
Despite this early success, most patients still do not
respond to checkpoint inhibitor treatment, and the
new frontier in cancer therapy is to identify tailored
combination approaches that can unlock the
benefits of immunotherapy to more patients.
Targovax is a frontrunner in this space, as
demonstrated by several strong clinical data read-
outs in 2020-2021 confirming the potential of our
lead candidate, ONCOS-102, to trigger robust
immune activation that translates into better clinical
outcomes for patients.
Targovax annual report 2021
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About Targovax
Activating the patient’s immune system to fight cancer
Targovax (OSE:TRVX) is a clinical stage immuno-oncology company developing immune activators
to target hard-to-treat solid tumors. Targovax’s focus is to activate the patient’s immune system
to fight cancer, and thereby bring benefit to cancer patients with few available treatment
alternatives. Targovax is assessing its product candidates in different cancer indications, including
melanoma, mesothelioma, and colorectal cancer, and has demonstrated a favorable safety and
tolerability profile.
Targovax’s lead clinical candidate, ONCOS-102, is a genetically modified oncolytic adenovirus,
which has been engineered to selectively infect cancer cells and activate the immune system to
fight the cancer. On the back of very encouraging clinical data in several indications, both as
monotherapy and in immunotherapy and chemotherapy combinations, the next development
step for ONCOS-102 will be to further improve immune activation and clinical response in
melanoma patients resistant to PD1 checkpoint blockade.
Building on successful phase 1/2 studies demonstrating clinical benefit and providing deep
mechanistic insights, Targovax is expanding its ONCOS program into delivery of circular RNA and
targeting KRAS mutant cancers with the aim of establishing a platform for development of a rich
pipeline of innovative future immunotherapy product candidates.
To learn more about ONCOS-
102’s mechanism of action,
watch our latest video which is
available either by clicking on
the image below or via our
website.
TARGOVAX VISION
Targovax aims to activate the
patient’s immune system to fight
cancer, and thereby bring benefit to
cancer patients with few available
treatment alternatives.
CLASS-LEADING CLINICAL DATA
ONCOS-102 is leading immune
activator with clinical efficacy in
several solid tumors in
monotherapy and in combination
with anti-PD1 and chemotherapy
Targovax annual report 2021
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CEO Statement
During 2021, adenoviruses clearly pulled ahead as the most promising class for oncolytic
immunotherapy, as demonstrated by convincing clinical data from both Targovax (ONCOS-102)
and several of our peers. When it comes to the breadth, depth, and consistency of the
translational analyses from our phase 1/2 clinical program, the totality of the ONCOS-102 data
package is second to none. As such, Targovax can now soundly be considered one of the front-
runners in the oncolytic virotherapy space. We are planning to leverage this position by building
an innovative pipeline of NextGen ONCOS viruses, including a move into the emerging circular
RNA field.
Over the past year, we have delivered strong efficacy data for our lead product candidate ONCOS-
102 in both melanoma and mesothelioma, which allows us to forge ahead with our R&D program.
Broad translational analyses of patient tumor tissue confirm the promising efficacy outcomes and
provide deep understanding of the immune activating potential and underlying biological
mechanism of action of ONCOS-102.
The unique insights we have generated in the clinic set us up to do two things. First, we can
optimize our clinical development strategy with differentiated, scientifically hand-picked immune-
oncology (IO) combinations to complement and boost the efficacy of ONCOS-102 and further
separate us from the competition. Second, we can build on real-world, clinical evidence to design
smart and innovative next generation ONCOS delivery vectors to maximize the potential of our
platform. I am particularly enthusiastic about our new circular RNA (circRNA) program, where we
have a unique first-in-class opportunity to leverage our clinically validated ONCOS delivery system
to bridge into the rapidly evolving RNA therapeutics field.
As we look to 2022, the top three priorities for Targovax are to:
• Let the science guide us: We will make smart, scientifically based decisions building on data
and insights generated in the phase 1/2 program
• Advance ONCOS-102 in melanoma: We aim to boost response rates beyond 35% ORR through
carefully selected, differentiated IO combinations
• Establish ONCOS as a versatile delivery platform: We will engineer next generation ONCOS
viruses to deliver circRNA and highly targeted, immune stimulatory genetic payloads.
Ambitious plans cannot be delivered without a strong team and sufficient resources. Therefore,
we have made key recruitments in science, clinical development, and manufacturing, attracting
highly skilled, experienced individuals with a track record of innovation and execution. Through
our collaboration with Prof. Michael Uhlin at Karolinska Institutet, we have secured access to a
world-leading immunotherapy environment, providing the infrastructure we need to quickly put
our circRNA pipeline plans into action. In addition, we raised NOK 175m in gross proceeds in a
rights issue in December 2021, which gives us the necessary financial flexibility both to prepare for
the next ONCOS-102 trial in
melanoma and expand the
aspirations of our next generation
immunotherapy pipeline.
It is with great excitement that I
and the whole Targovax team take
on the challenge to deliver on our
ambitious plans, with a clear vision
to capture the full potential that
lies in the ONCOS delivery platform.
We aim to create and validate
potent, differentiated product
candidates that will bring benefit to
patients with advanced solid
tumors, and to build value for both
new and existing shareholders as
we do so.
Targovax annual report 2021
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Directors’ Report
During 2021, Targovax has achieved a strong data package for the lead asset ONCOS-102
demonstrating promising clinical efficacy and powerful immune activation in several forms of
cancer and treatment combinations. We believe that these data confirm the tremendous
potential of ONCOS as a versatile delivery vector for targeted anti-cancer payloads, and we wish
to pursue this opportunity by expanding our pipeline repertoire, including a move into the
emerging circRNA space. The Covid-19 pandemic has adversely impacted drug development
timelines across the industry, but it is the opinion of the Board of Directors that the Group has
been somewhat spared from major impacts of the pandemic. Its development processes have all
continued according to schedule.
The most important milestone for the company in 2021 was the data read-out from the ONCOS-
102 and chemotherapy combination in malignant pleural mesothelioma (MPM). At the 30-month
follow-up, the median overall survival (mOS) was 25.0 months for the subgroup of randomized,
first-line ONCOS-102-treated patients (n=8). This is a clear improvement over the mOS of 13.5
months observed in the first-line SoC-only control group (n=6). Previous phase 3 clinical trials in
MPM have reported mOS in the range of 12-16 months for patients receiving the same SoC
chemotherapy treatment in the first-line setting.
In addition, the immune activation data revealed powerful and consistent ONCOS-102-induced
remodeling of the tumor microenvironment with increased T-cell infiltration and a shift towards
pro-inflammatory immune cells, far beyond what was observed for the SoC-only control group.
This immune activation is associated with tumor responses and is most pronounced in patients
with better survival outcomes, indicating that the immune activating capacity of ONCOS-102 is
driving the clinical benefit for patients.
The ONCOS program provides a unique, clinically validated platform system to expand beyond
ONCOS-102 to build a pipeline of novel, cutting edge product candidates. In particular, Targovax is
exploring the potential for utilizing ONCOS as a delivery tool for novel RNA concepts, such as
circRNA – a space which has recently attracted significant interest from both industry and
investors.
We remain committed to the mutant KRAS opportunity and our mutant KRAS pipeline continues
to evolve. The two research grants awarded by the Research Council of Norway in December 2021
and Innovation Norway in January 2022 are strong endorsement of the underlying science and
broad potential of Targovax’s mutant KRAS program. These funds will enable continued clinical
development of the TG vaccine candidates, as well as support important immunological
characterization and product development.
Strategy and strategic focus areas
Targovax is committed to develop innovative targeted immunotherapies to extend and transform
the lives of cancer patients with hard-to-treat solid tumors. The Group is aiming to become a
leading immuno-oncology development company in multiple cancer types. The ONCOS R&D
strategy is to validate ONCOS as a versatile delivery tool and identify best combination
approaches.
The Group’s strategy is to:
o Execute one or more multi-cohort trials in PD1 refractory melanoma
o Progress preclinical drug candidates to a clinical development stage
o Selectively pursue partnerships and clinical trial collaborations, both for ONCOS-102 and
pipeline products
o Establish ONCOS as a versatile delivery platform by engineering next generation ONCOS
viruses to deliver circRNA and highly targeted, immune stimulatory genetic payloads.
o Build the mutant KRAS immunotherapy program through strategic partnerships
Targovax annual report 2021
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Business and technology platforms
The Group’s development pipeline is based on a novel proprietary platform: A virus-based
immunotherapy platform (ONCOS) that utilizes engineered oncolytic viruses armed with potent
immune-stimulating transgenes to target solid tumors. The aim is to (re)activate the patient’s
immune system to recognize and attack the patient’s own cancer cells thus acting as a form of
autologous or self-vaccination. The treatment approach harnesses the patient’s own immune
system to fight cancer.
Targovax’s virus-based oncolytic immunotherapeutic technology has a tumor-selective mechanism
of action, making tumors visible to the immune system and educating the immune system to
recognize and attack patient specific tumor cells.
The technology is based on adenoviruses engineered to kill tumor cells, primarily via activation of a
systemic, patient-specific, tumor-selective immune response. The lead pipeline candidate is
ONCOS-102.
Targovax’s ONCOS immunotherapy technologies are designed to stimulate the immune system in
several ways to recognize and fight cancer. When Targovax’s adenovirus is injected into a tumor
the presence of the adenovirus attracts cells of the innate immune system such as natural killer (NK)
cells and macrophages which are designed to attack the virus. This innate immune attack triggers a
subsequent and highly specific and targeted adaptive immune response.
Targovax is also exploring how novel RNA constructs can be engineered into ONCOS to further
enhance the delivery of genetic payloads directly into the tumor. This has the potential to expand
the ONCOS program into a versatile and unique platform system for enhanced transgene delivery,
as well as to build additional regulatory functionality into the backbone construct. CircRNA is an
example of such novel RNA technology being explored in the context of ONCOS, and Targovax is
actively building the team to drive these RNA efforts forward.
In addition, Targovax has developed a mutant KRAS program based on the Company’s neoantigen
vaccine targeting mutant KRAS cancers, covering up to eight different mutations. Oncogenic KRAS
mutations are the key genetic driver behind many cancers and therefore considered a central target
in oncology drug development.
Pipeline and newsflow
Targovax annual report 2021
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ONCOS-102 clinical development program
ONCOS-102 in PD1 refractory melanoma
The trial explored safety, immune activation, and clinical responses, of ONCOS-102 and Keytruda
(pembrolizumab), an anti-PD1 checkpoint inhibitor (CPI), in patients with advanced or
unresectable melanoma whose tumors have continued to grow following prior CPI therapy. The
trial was conducted at the Memorial Sloan Kettering Cancer Center in New York, Fox Chase Cancer
Center in Philadelphia, University of Maryland Comprehensive Cancer Center in Baltimore as well
as Oslo University Hospital.
Topline efficacy results were announced in late 2020 and showed class-leading objective response
rates (ORR) as well as effects on non-injected lesions:
o Tumor responses observed in 7 out of 20 evaluable patients, resulting in overall response
rate (ORR) of 35%
o Evidence of systemic activity was observed in multiple patients, including two cases
where a non-injected lesion completely disappeared
o Broad and strong immune activation was observed by several analytical methods, with a
clear association to patient outcome
o Confirmed the ability of ONCOS-102 to re-sensitize PD1 refractory tumors to respond
PD1-blockade
As the next step in PD1 refractory melanoma, Targovax intends to continue with a multi-cohort
phase 2 trial where ONCOS-102 will be tested in various combinations to further improve the ORR,
including anti-PD1, double checkpoint, and potentially also other novel immunotherapies.
Based on the encouraging findings to date, Targovax received Fast Track designation for PD-1-
refractory advanced melanoma from the US Federal Drug Administration (FDA) in June 2021,
which is an endorsement by the US FDA of the strength and relevance of the ONCOS-102 data
package. The FDA Fast Track designation is awarded to therapies with the potential to address
unmet medical needs in serious medical conditions and allows for more frequent interactions with
the FDA to expedite clinical development and the regulatory review processes. Fast Track
products have high likelihood of receiving Priority Review for a future Biologics License Application
(BLA) and may be allowed to submit parts of the application for rolling review to shorten the
approval timeline.
ONCOS-102 in malignant pleural mesothelioma (MPM)
The trial was an open label, randomized, exploratory phase 1/2 adding ONCOS-102 to standard of
care (SoC) chemotherapy (pemetrexed/cisplatin) in first and second (or later) line malignant
pleural mesothelioma (MPM) to assess safety, immune activation and clinical efficacy of the
combination treatment. In total, 31 patients were included.
At the 30-month follow-up, median overall survival (mOS) was 25.0 months for the subgroup of
randomized, first-line ONCOS-102-treated patients (n=8). This is a clear improvement over the
mOS of 13.5 months observed in the first-line SoC-only control group (n=6) as well as historical
control of 12-16 months for patients receiving the same SoC chemotherapy treatment in the first-
line setting. Importantly a combination of Opdivo/Yervoy double checkpoint inhibition was
recently approved as a first-line treatment option for MPM based on a phase 3 trial showing mOS
of only 18.1 months.
Immune activation was assessed in tumor biopsies pre- and post-ONCOS-102 treatment (Day 0
and Day 36). The tumor tissue analyses revealed powerful and consistent ONCOS-102-induced
remodeling of the tumor microenvironment with increased T-cell infiltration and a shift towards
pro-inflammatory immune cells, far beyond what was observed for the SoC-only control group.
This immune activation is associated with tumor responses and is most pronounced in patients
with better survival outcomes, indicating that the immune activating capacity of ONCOS-102 is
driving the clinical benefit for patients.
Based on the encouraging efficacy and the associated broad immune activation, the US FDA granted
ONCOS-102 Fast Track designation for malignant pleural mesothelioma in February 2021.
CPI – Checkpoint inhibitor
“Best-in class response rate with ORR of 35%”
Targovax annual report 2021
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ONCOS-102 in colorectal cancer with metastasis – collaboration trial
This is a single arm, open-label, multi-center phase 1/2 trial, where ONCOS-102 is administered
intraperitoneally in combination with systemically delivered Imfinzi (durvalumab, an anti-PD-L1
antibody), to patients who have metastatic colorectal cancer with peritoneal carcinomatosis and
have failed prior standard therapies. The trial will assess the safety, immune activation and anti-
tumor activity of the ONCOS-102 and Imfinzi combination and is financed by the Cancer Research
Institute and run by Ludwig Cancer Research. Targovax was selected to participate with ONCOS-
102 as the virus of choice for this trial. The trial completed recruitment in June 2021 with a total of
33 patients enrolled.
The safety reviews during the dose escalation part of the trial were completed with no dose
limiting toxicities, and the ONCOS-102 and Imfinzi combination showed good tolerability. Clinical
results from the trial are intended to be published by Targovax´s collaboration partners at a
scientific conference during 1H 2022.
Next generation ONCOS viruses and circRNA
The recent success of adenoviral technology in the Covid-19 vaccine space has strengthened the
rationale to fully exploit the capability of the ONCOS technology as a delivery system for targeted
genetic payloads. Emerging clinical data from Targovax and others indicate that adenovirus is a
superior oncolytic vector, particularly when compared to herpes and vaccinia-based approaches.
The ONCOS platform is based on a highly immunogenic, versatile double-stranded DNA
adenovirus serotype 5 backbone with two genetic modifications to enhance cancer selectivity:
1. A 24bp deletion in the E1A region to ensure selective replication in actively dividing cells,
such as cancer cells
2. Replacement of the serotype 5 to a serotype 3 fiber knob; making the virus primarily
infect via the DSG2 and CD46 receptors, which are typically upregulated on cancer cells
Targovax has a portfolio of novel ONCOS viruses in pre-clinical development, both in-house and
through collaboration with partners. In the second generation ONCOS viruses, the DNA payload
capacity of the backbone has been increased beyond ONCOS-102 to include two transgenes. The
first pre-clinical results from the ONCOS-200 series were presented at the American Association
for Cancer Research (AACR) Annual Meeting in June 2020, demonstrating clear anti-cancer activity
and mechanistic synergism between the two transgene payloads. These encouraging observations
are being further investigated to elucidate transgene functionality and mechanism of action in
vivo.
From the wholly owned ONCOS-200-series, ONCOS-211 has been selected as the lead candidate
for further development. This construct carries two transgenic payloads, ICOS-L and ADA. ICOS-L
provides a stimulatory signal driving T-cells into their cytotoxic effector state, and ADA removes
immune-suppressive adenosine thereby promoting a pro-inflammatory tumor micro-
environment. In combination, these two transgenes add targeted immune-stimulatory firepower
to the already strong immune-activating properties of ONCOS.
Targovax has also recently initiated a program to explore how circRNA can be engineered into
NextGen ONCOS vectors to further enhance the delivery of genetic payloads directly into the
cancer cells. circRNA has the advantage of being resistant to exonuclease degradation and is
therefore more chemically stable and has longer half-life than linear RNAs. With the circRNA
approach, Targovax has the potential to expand the ONCOS technology into a versatile and unique
platform system for enhanced transgene delivery, as well as to build additional regulatory
functionality into the viral backbone. In January 2022, Targovax appointed circRNA co-discoverer
and pioneer Dr. Thomas B Hansen to drive this program, in close collaboration with the research
team of Prof. Michael Uhlin at Karolinska Institutet in Stockholm.
In 2020, Targovax entered into a collaboration agreement with Valo Therapeutics to evaluate
coating of ONCOS-102 with TG mutant KRAS peptides using Valo´s PeptiCrad technology with the
“ONCOS-102 has shown 25.0 months median overall
survival in first-line mesothelioma, and these are the
best survival data reported in this population”
Targovax annual report 2021
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aim of creating an oncolytic mutant KRAS vaccine. Targovax also has a research collaboration with
Oblique Therapeutics to utilize ONCOS as a delivery vector for Oblique´s proprietary AbiProt
antibodies targeting mutant KRAS. Through these projects, Targovax is exploring the opportunity
for bridging its oncolytic virus and KRAS technologies and expertise, and if successful, to generate
first-in-class viral therapies engineered to directly target oncogenic KRAS driver mutations.
Under these collaborations, Targovax and the respective partners will jointly investigate the
technical feasibility, immune modulatory, and anti-cancer properties of encoding these novel
payloads in the ONCOS backbone both in vitro and in vivo. The resulting constructs and any novel
IP will be jointly owned, and additional functionality can be built in to stimulate multiple
complementary anti-tumor mechanisms. Targovax is actively pursuing additional, similar
collaborative partnerships to expand the pipeline and access novel complementary technologies
where a synergy can be expected with ONCOS.
In summary, Targovax has a broad pipeline of both in-house and partnered pre-clinical research
programs, which will be an important focus area in the short- to mid-term to expand and
demonstrate the broader potential of ONCOS as a flexible, immune stimulatory, clinically
validated delivery platform.
Mutant KRAS platform
The mutant KRAS program is based on the TG neoantigen vaccine, which covers up to eight
different KRAS driver mutations. Oncogenic KRAS mutations are the key genetic driver behind up
to 30% of all cancers, and therefore considered a highly attractive target in drug development. A
32-patient phase 1/2 clinical trial evaluating TG01 in resected pancreatic cancer in combination
with standard of care chemotherapy (gemcitabine) reported mOS of 33.3 months in May 2019.
The mOS compares favorably to the ESPAC4 historical control trial of gemcitabine monotherapy,
which reported mOS from surgery of 27.6 months. These data were corroborated by robust and
durable immune responses in vaccinated patients, and several examples of clearance of residual
mutant KRAS cancer cells after surgery were observed by ctDNA analysis. The company has
attained Orphan Drug Designation for TG01 in pancreatic cancer in both the US and Europe.
In December 2021, Targovax received a NOK 9.8 million research grant award by the Research
Council of Norway towards the TG mutant KRAS program, and in January 2022, Targovax was
awarded an additional NOK 8.2 million grant by Innovation Norway to accelerate product
development activities related to the company’s TG mutant KRAS vaccine program and planned
clinical trials. These grants will enable continued clinical development of Targovax’s TG vaccine
candidates, as well as support important immunological characterization and product
development.
Targovax is also actively working to create shareholder value from the TG technology through cost
effective partnerships. Consistent with this approach, Targovax has entered into several
collaboration agreements. In January 2020, Targovax and IOVaxis Therapeutics entered into an
option agreement for an exclusive license to develop and commercialize the TG01 and TG02
vaccines in Greater China and Singapore. The intention is that IOVaxis will exercise the option to
license TG upon the first regulatory IND approval to start a clinical trial in China. IOVaxis paid an
option fee of USD 250,000 to Targovax, and an additional USD 3 million upfront fee is due when
the exclusive license option is exercised. The total development and commercial milestones in the
deal are worth up to USD 100 million, in addition to tiered royalties on sales up to the mid-teens.
In 2022, Targovax expects to form one or more academic and/or commercial collaborations with
TG-01 that will involve innovative clinical combination trials.
Targovax annual report 2021
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Preclinical development of ONCOS-102
Targovax has conducted several in vivo studies of ONCOS-102 in mesothelioma and melanoma
mouse models to investigate the mode of action and assess the efficacy for the clinical combination
strategies in these indications. Data have been published at scientific conferences and in leading,
peer reviewed journals.
It has been shown that ONCOS-102 and PD-1 checkpoint inhibition (Keytruda) act synergistically in
a humanized melanoma mouse model, driving both tumor volume reduction and anti-tumor T-cell
immunity (Kuryk et al. Oncoimmunology 2018):
o Keytruda alone did not reduce tumor volume in the selected mouse model
o ONCOS-102 reduced tumor volume by 51%
o ONCOS-102 + Keytruda reduced tumor volume by up to 69%
o ONCOS-102+ Keytruda induced an abscopal effect, validating the proposed mode of action
that ONCOS-102 can generate systemic anti-tumor immune responses (Kuryk et al. JMV
2019)
Similarly, in a mesothelioma mouse model, it has been demonstrated that ONCOS-102 acts
synergistically with chemotherapy to reduce tumor volume and drive tumor-specific immune
responses (Kuryk et al, 2018, JMV):
o Chemotherapy alone did not reduce tumor volume in the selected mouse model
o ONCOS-102 alone reduced tumor volume by 56%
o ONCOS-102 + chemotherapy reduced tumor volume by 75% relative to chemotherapy
alone and by 33% relative to ONCOS-102 alone
o ONCOS-102 induced a mesothelin specific anti-tumor CD8+ T-cell response
IPR / Market exclusivity
Targovax owns a broad patent portfolio which is designed to protect its drug candidates and
includes different families of patents and patent applications covering drug compositions, and
relevant combination therapies. This patent portfolio also covers potential future product
candidates. The company continuously works to strengthen its patent portfolio.
Targovax has granted patents in Europe, China, and Japan for the use of ONCOS-102 in
combination with chemotherapy in malignant pleural mesothelioma:
o In October 2021, Targovax was granted the EU patent no 3402889 by the European Patent
Office (valid until 2037)
o In November 2021, Targovax was granted patents no CN108495934 and JP6974350 by the
Chinese and Japanese Patent Offices, respectively (valid until 2037)
In March 2021, Targovax was granted the US Patent no 10,940,203 by the US Patent Office. The
patent covers the use of ONCOS-102 in combination with checkpoint inhibitors until 2036.
These patents protect Targovax’s innovative oncolytic immunotherapy platform and strengthen
the company’s market position.
Targovax has attained Orphan Drug Designation in the EU and US for the use of ONCOS-102 in
mesothelioma, ovarian cancer, and soft tissue sarcoma, supporting a rapid path to
commercialization and ensuring up to ten years of market protection from the date of market
approval in any of these indications.
Targovax annual report 2021
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Important events in 2021
o In January, granted IOVaxis 3 months extension to the exclusive license option for TG
mutant RAS vaccines in Greater China and Singapore
o In February, entered into a enter research collaboration with Papyrus Therapeutics to
develop novel ONCOS viruses with receptor tyrosine kinase (RTK) inhibitor functionality
o In February, the US FDA granted ONCOS-102 Fast-Track designation for malignant pleural
mesothelioma.
o In March, received US patent for ONCOS-102 in combination with checkpoint inhibitors
o In March, Dr Sonia Quaratino’s was elected as a new member of the Board
o In June, reported class-leading median overall survival in Targovax’s ONCOS-102 trial in
mesothelioma at the 24-month follow-up
o In June, announced completed enrollment in the phase 1/2 trial with ONCOS-102 in
combination with durvalumab in patients with advanced colorectal cancer with
peritoneal metastases
o In June, received Fast-Track designation and scientific advice from the US FDA for
ONCOS-102 in PD-1-refractory advanced melanoma
o In July, appointed Dr. Lone Ottesen as Chief Development Officer
o In September, presented poster at European Society for Medical Oncology (ESMO)
o In September, received European Patent for ONCOS-102 in combination with
chemotherapy
o In October, appointed Dr. Erik Digman Wiklund as Chief Executive Officer, previously CBO
of Targovax and co-discoverer of circRNA
o In October, expanded the pipeline program into circRNA delivery
o In October, appointed Ola Melin as Head of Manufacturing
o In November, presented two posters at the Society for Immunotherapy of Cancer (SITC)
Annual Meeting
o In December, completed a rights issue raising gross proceeds of NOK 175m
o In December, received NOK 9.8m research grant award by the Research Council of
Norway towards the TG mutant KRAS vaccine program
o In December, reported 25.0 months median overall survival (mOS) for ONCOS-102
combined with chemotherapy in first line mesothelioma
Important events after balance sheet date
o In January 2022, appointed circRNA co-discoverer Dr. Thomas B Hansen as VP of
Research to lead the NextGen ONCOS circRNA pipeline program
o In February 2022, announced a research collaboration with Prof. Michael Uhlin at
Karolinska Institutet in Stockholm, Sweden, for development and characterization of
NextGen ONCOS viruses
o In January 2022, received NOK 8.2m grant award by Innovation Norway towards the TG
mutant KRAS vaccine program
o In January 2022, received patents for ONCOS-102 in combination with chemotherapy in
China and Japan
o In February 2022, appointed Dr. Lubor Gaal as Chief Financial Officer
o In March 2022, announced a collaboration with Agenus on mutant KRAS cancer vaccine
adjuvanted with QS-21 STIMULON™
Targovax annual report 2021
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Key figures in the consolidated accounts
Targovax raised gross proceeds of NOK 175 million in a rights issue in fourth quarter 2021 through
the allocation of 101,744,186 new shares at a subscription price of NOK 1.72 per share. The rights
issue was resolved by the Company’s Board of Directors based on the authorization granted at the
Company’s Annual General Meeting held 25 November 2021.
Income statement (2020 figures in brackets)
In 2021 Targovax had no core business revenue.
Total operating expenses for 2021 amounted to NOK 96 million (NOK 105 million), of which
payroll and related expenses amounts to NOK 48 million (NOK 43 million). The operating expenses
are reported net of governmental grants, which amounted to NOK 3 million in the period (NOK 2
million).
Operating loss amounted to NOK 96 million in 2021 (NOK 104 million). Financial income amounted
to NOK 0.2 million for the year (NOK 1 million). The group had financial expenses of NOK 3 million
(NOK 5 million). The net loss for the period amounted to NOK 98 million (NOK 108 million).
Cash flow
Net cash amounted to NOK 182 million at the end of the year, compared to NOK 122 million at the
end of 2020.
Net cash outflow from operating activities for the year 2021 was NOK 85 million (NOK 111
million).
Financial position
As at 31 December 2021, Targovax had total assets of NOK 565 million, compared to NOK 521
million by the end of 2020.
Total current assets amounted to NOK 191 million (NOK 127 million), of which cash and cash
equivalents amounted to NOK 182 million (NOK 122 million).
Total non-current assets were NOK 374 million (NOK 394 million), of which intangible assets
amounted to NOK 372 million (NOK 390 million).
Shareholders’ equity amounted to NOK 418 million, increased from NOK 373 million in 2020. The
equity ratio amounted to 73.90 percent compared to 71.55 percent in 2020.
Going concern
The financial statements for 2021 have been prepared under the going concern assumption, as
stipulated in Section 3.3a of the Norwegian Accounting Act. The right issue in the fourth quarter
2021 ensures that the Group has available financial resources sufficient for all planned activities,
in the next twelve months as of 31 December 2021. Targovax’s Directors therefore continues to
adopt the going concern basis in preparing the Groups consolidated financial statements.
Risk factors and risk management
Targovax is subject to several operational and financial risk factors and uncertainties which may
affect parts or all the activities in the group. The Group proactively manages such risks and
management and the Board of Directors regularly analyze operations and potential risk factors to
take measures to reduce risk exposure.
Operational risk
Targovax’s activity is development of pharmaceutical medications. Development of
pharmaceuticals normally goes through several stages before commercialization and risk of failure
is generally inherent throughout the process.
The group is in an early phase in clinical development. Although the end-results from two of the
trials are positive, the clinical data are limited, and the results of preclinical studies and early
clinical trials of the Group's product candidates may not be predictive of the results of later-stage
clinical trials. Changes in the standard of care from initiation to completion of a clinical trial is also
a risk factor.
Further, delays in the work with ongoing clinical trials, or in the preparations for new clinical
studies, are important risk factors. Chemistry, manufacturing and controls for Targovax’s drug
products are under development and unforeseen incidents and delays may have an impact on the
progress of ongoing and planned clinical studies.
As many studies depend on both funding and technology from external partners for completion,
uncertainties append to these partners’ ability and willingness to carry the studies through.
Development of pharmaceuticals is highly time consuming and costly and as Targovax depends on
third parties to conduct its clinical trials, delays or other unforeseen discrepancies outside
Targovax’s control may occur. Such delays in clinical trials might increase the cost of the trial and
additional capital requirements might arise.
Targovax also conduct clinical trials in combination with third party products. Limited access or
any other constraints in terms of use of such products may adversely impact the progress or
clinical development of Targovax’s trials and products.
To secure progress according to plans and budgets, Targovax has implemented and executes
routines and practices, including monitoring, evaluation and reporting, to secure planned and
approved project developments.
Targovax annual report 2021
Page 15
The clinical trials also include volunteer patients and Targovax put great emphasis on the safety of
these individuals as well as general regulatory framework of the development of pharmaceuticals.
Recruitment of patients may be delayed due to patients’ willingness to participate, competing
trials and doctors’ priorities.
The Group’s lead pipeline candidate, ONCOS-102 is currently in clinical phase I/II.
The success, competitive position and future revenues will depend in part on Targovax´s ability to
protect its intellectual property and know-how. To date, Targovax holds certain exclusive granted
patent rights and has filed several patent applications, however, uncertainties related to
predicting the degree and range of the protection from its patent estate will always exist as will
the risk and uncertainties that may be caused by third party patents. The biopharmaceutical
industry is characterized by intense competition and rapid innovation. The Group's competitors
may be able to develop other compounds or drugs that are able to achieve similar or better
results.
Financial risks
Being an early phase research and development group, Targovax is accumulating financial losses.
Operating losses are expected to persist during the development phases of the Groups’ products,
and potentially cash generating operations are not expected until one or more of the group’s
products are commercialized.
General monitoring of risks related to the financial development is secured through control of
financial reporting. This is achieved through day-to-day follow-up by management, supervised by
the Board of Directors, through periodical reporting and evaluation. Non-conformances and
improvement opportunities are followed up and corrective measures implemented continuously.
Funding of ongoing operations is and will be for some time depending on external sources, mainly
equity contributions. Significant changes to financial market conditions, may affect the climate for
investor investments.
To maintain and expand the Group’s base of potential investors and securing access to risk capital
when needed, the Targovax management continuously promote and present the group through
investor road shows and participation in industry- and investor seminars.
Future interest rate fluctuations may affect the Group’s business, financial condition, results of
operations, cash flows, time to market and prospects. Currently, the Group has no long-term debt
other than lease liabilities and its debt to Business Finland. The debt to Business Finland carry an
annual interest equal to the European Central Bank’s steering rate less 3 percentage points, but in
no event less than 1 percent. The current interest is 1 percent per annum.
Fluctuations in exchange rates could affect the Group’s cash flow and financial condition. The
currency exposure includes both transaction risk and risk related to translation of operating
expenses.
Transaction risk arises when future commercial transactions or recognized assets or liabilities are
denominated in a currency that is not the entity’s functional currency. The Group undertakes
various transactions in foreign currencies and is consequently exposed to fluctuations in exchange
rates. The exposure arises largely from research expenses. The group is mainly exposed to
fluctuations in EUR, GBP, USD and CHF. Translation risk in the Group arises when amounts
denominated in foreign currencies are converted to NOK, the Group’s reporting and functional
currency. One of the Group’s subsidiaries has EUR as its reporting and functional currency.
Targovax has costs and payments in several currencies, EUR the most prominent but also USD and
other. Cash inflow takes place in NOK through capital increases. Targovax manages currency risk
by matching expected outflows with holdings in all major currencies.
Targovax has signed a liability insurance which covers the CEO, the Board of Directors,
management, and any other former or present employee with independent management
responsibility in Targovax ASA and its subsidiaries. The insurance covers NOK 50,000,000 per claim
and in total during the insurance period, world-wide including USA and Canada.
The Covid-19 pandemic
Following the outbreak of COVID-19, authorities on both sides of the Atlantic have taken strong
measures to reduce the spread of the virus. These measures, in combination with uncertainty and
hospitals potentially prioritizing acute patients, have increased the risk of clinical trials being
delayed, but it is the opinion of the Board of Directors that the Group has been somewhat spared
from major impacts of the pandemic. Its development processes have all continued according to
schedule. The company will update the market if there are relevant changes to operations.
Market developments
Overall pharmaceutical market
The IQVIA Institute predicts that the pharmaceutical market will reach USD 1.5 trillion by 2023, an
increase of USD 300 billion from the USD 1.2 trillion recorded in 2018. This growth is coming
mainly from market expansion in emerging countries and demographic trends in developed
countries due to an ageing population. Over the coming years the market is expected to grow by
4-5% CAGR, which is somewhat lower than the average 6.3% CAGR during 2014-2018.
The United States share of global spending will increase from ca. USD 500 billion in 2019 to USD
625-700 billion in 2023, while the European share of spending will grow from ca. USD 160 billion
to USD 175-225 billion. Double-digit annual growth brought the China pharmaceutical market to
Targovax annual report 2021
Page 16
ca. USD 150 billion in 2019, but this growth is expected to decrease and stabilize between 3-6%
CAGR% and reach ca. USD 170 billion in 2023.
The cancer market
General
The 2019 worldwide spending on cancer drugs was ca. USD 100 billion and expected to grow to
USD 175 billion by 2025 according to a 2019 report from Allied Marked Research. This represents
a growth rate of close to 8%, which is higher than the pharmaceutical market overall. The market
for cancer immunotherapy was estimated to close to USD 60 billion in 2019 and expected to grow
at a CAGR % of 10-15% to reach a total value of USD 100-130 billion by 2025. As such,
immunotherapy already accounts for over 50% of the cancer drug market and is projected to
increase this share over the coming years.
The Cancer Epidemiology
Cancer Research UK estimates that cancer accounted for close to 10 million deaths in 2018
globally, which makes it the world’s most deadly disease. There were 17 million new cases of
cancer worldwide in 2018. It is predicted there will be 27.5 million new cancer cases worldwide
each year by 2040, if recent trends in incidence of major cancers and population growth are seen
globally in the future. This is an increase of 62% from 2018 and is expected to be higher in males
(68% increase) than in females (55% increase).
Types of cancer treatment
The cancer therapy (oncology) market is highly diversified, and the optimal cancer treatment
should be individualized, depending on the type, stage and differentiation of the cancer, as well as
the patient’s overall physical condition and age. A patient’s treatment plan may consist of one or
many different treatment modalities, depending on the situation. For some cancer patient’s
treatment is of a curative intent, while for others, the intent is to relieve suffering and to increase
quality of life (palliative care). Traditionally, surgery, chemotherapy, radiation therapy and
hormone therapy are among the most common treatments. However, new and innovative
approaches like targeted therapies and immunotherapy are increasingly being utilized for the
treatment of cancer.
Immunotherapy
Clinicians and scientists agree that the immune system can be used to fight cancer and have in
recent years managed to design therapies which uses a patient’s own immune system to fight
cancer. Immunotherapy is a form of therapy designed to activate a patient’s immune system in
the fight against cancer. The immune system can be utilized in several ways, but the most
common is to increase or “boost” the immune system and to stimulate it to recognize the cancer
cells as foreign bodies that are to be removed. This is normally achieved by giving patients
antibodies, immune activators or non-specific cancer immunotherapies and adjuvants.
Immunotherapy is now an important form of treatment in the fight against many types of cancer.
Within immunotherapy there are several different variations and approaches, of which using
antibodies to target immune checkpoints, so-called “checkpoint inhibitors”, is the most advanced
concept and has by far the largest market share. Another popular approach is to use genetically
engineered viruses that selectively infect and kill cancer cells, which as a class are known as
“oncolytic viruses”. These oncolytic viruses are usually injected directly into solid tumors, where
they kill cancer cells through a process in which the cell membrane is broken down, referred to as
“lysis”. When the cancer cells are lysed unique tumor antigens (tumor associated antigens (TAAs)
and neoantigens) are released, which the immune system can detect and mount an immune
response against. As a result, the patient’s immune cells (e.g. T-cells) can learn to recognize and
destroy tumors and patrol the body to find and eradicate cancer cells.
Organization
The Group’s management team at year-end consisted of Erik Digman Wiklund, CEO, Øystein Soug,
Special Advisor and interim Chief Financial Officer, Magnus Jäderberg, Chief Medical Officer, Lone
Ottesen, Chief Development Officer, Victor Levitsky, Chief Scientific Officer, Ingunn Munch
Lindvig, VP Regulatory and Ola Melin, Head of Manufacturing.
The Board of Directors held 16 meetings in 2021. All members of the Board of Directors are
shareholder-elected. The members of the Board of Directors were at the end of 2021 Damian
Marron (Chairperson), Sonia Quaratino, Robert Burns, Per Samuelsson, Johan Christenson, Eva-
Lotta Allan, Diane Mellett and Bente-Lill B. Romøren.
Targovax has offices in Lysaker, Norway, and in Espoo, Finland.
Targovax annual report 2021
Page 17
Corporate social responsibility
Targovax is a clinical stage biotechnology company developing immune activators to target hard-
to-treat solid tumors in cancer patients. Targovax’s focus is to “activate the patient’s immune
system to fight cancer”, thus extending and transforming the lives of cancer patients with
targeted therapeutic cancer immunotherapies. The Group’s pipeline aims at different cancer
indications, including melanoma, mesothelioma and colorectal cancer. The products are designed
to harness the patient’s own immune system to fight the cancer, whilst also delivering a favorable
safety and tolerability profile. Further, the products are well positioned for combinations with
other treatment approaches, including other immunotherapies, surgery, radiation and
chemotherapy.
Targovax is currently working on an Environmental, social and governance (ESG) report for 2021, this
will be issued during spring 2022.
We believe that creating value for patients, customers and society strengthens our business and
provides value for shareholders, and that our commitment to corporate social responsibility will
enhance this by building strong relationships with our stakeholders.
Our commitment to corporate social responsibility is driven by our values: trust, quality,
teamwork and innovation and is reflected in Targovax’s focus to develop innovative
immunotherapies to fight cancer.
Targovax has a set of Corporate Social Responsibility principles agreed by the Board of Directors
on 22 December 2020. They consist of principles related to social commitment, business conduct,
anti-corruption, human rights, employment without discrimination, labor rights and work
conditions, whistleblowing and environmental responsibility.
The complete content of the principles is published on the Group’s website www.targovax.com.
Targovax conducts social commitment through its mission to extend and transform the lives of
cancer patients with highly targeted immunotherapy. This mission encompasses all activities from
developing products, gaining approval by relevant authorities, working with patient organizations
and hospitals and finally getting the products to the market.
Working environment
Targovax’s policy is to promote equal human rights and opportunities and prevent discrimination
because of gender, ethnicity, nationality, ancestry, color, or religion.
1
Including consultants
Targovax is working actively to promote the anti-discrimination act in our business. The activities
include recruitment, salary and working conditions, promotion, professional development, and
protection against harassment. Targovax aims to be a workplace where there is no discrimination
due to disability. Targovax works actively to design and facilitate the physical environment so that
the Group’s various functions can be used by as many as possible.
As of 31
st
December 2021, Targovax had a total of 23 employees, of which 22 were full-time
employees. The group has a policy to outsource non-core operations and highly specialized
services. The group has traditionally recruited from environments where the number of women
and men is relatively equally represented. In terms of gender equality, 50 percent of the Board
members are women, as are 33 percent of the senior management team.
Working time arrangements at the group are independent of gender. Targovax provides paid
parental leave for both genders and in 2021.
Workforce
Men
Women
Total
Total workforce
1
10
13
23
Total workforce full-time employees
9
13
22
Total workforce part-time employees
1
0
1
Number of non-permanent employees
1
0
1
Table: Targovax’s workforce by gender and employment
The working environment are measured at least once a year through employee surveys. For the
2021 survey, 61,11 percent of employees answer that they feel valued as a member of the
organization and 72,22 percent of employees answers that they feel motivated in their work. 52%
percent of Targovax’s workforce hold a master’s degree and 43 percent holds a PhD.
The Board of Directors considers the work environment within the group to be good. No accidents
or injuries resulting in absence were registered in 2021. Absence due to illness in the group was
1.96 percent in 2021.. Currently zero percent of the company’s workforce is operating under a
collective bargaining agreement. Due to Targovax currently being a small company in terms of
number of employees, the company is not obliged to have employee representatives or a health
and safety representative. Targovax has a health and safety management system and does not
currently provide any general HSE training for its employees. To ensure safe handling of the viral
Targovax annual report 2021
Page 18
product, Targovax Quality Management System includes a SOP regarding safe biological sample
handling. Employees in relevant roles are trained in using the SOP as part of their onboarding.
The Group’s policy prohibits unlawful discrimination against employees, shareholders, Board
members, customers, and suppliers on account of ethnic or national origin, age, sex or religion.
Respect for the individual is the cornerstone of the Group’s policy. All persons shall be treated
with dignity and respect, and they shall not be unreasonably interfered with in the conduct of
their duties and responsibilities. The Group shall provide the necessary conditions for a safe,
healthy and satisfactory working environment for all employees.
Employees shall not, under any circumstances, be subjected to harassment or other improper
conduct.
Targovax has not been subject to any legal proceedings regarding working environment or
worker’s rights in the reporting period.
External environment
Targovax strives to minimize its impact on the environment, and its activities are subject to strict
requirements in terms of quality, safety and impacts on personal health and the environment.
All production and distribution activities are outsourced, and when selecting suppliers, Targovax
evaluate each candidate’s ethical and responsible business conduct including environment, health
and safety policy.
Governance and ethics
Ensuring good governance practices involves all people in Targovax. This includes governance as
documented in the guidelines for corporate governance, ethical conduct and anti-corruption
based on the Targovax values and respect for human rights. Targovax supplier requirements in
terms of adherence to our practices, guidelines and values are an integral part of all stages of the
procurement process including selection and auditing.
Our corporate values set out our expectation for everyone to behave ethically in everything they
do. Our values are trust, quality, teamwork, and innovation.
Targovax considers solid corporate governance as a prerequisite to creating value for
shareholders and gaining the confidence of investors. Targovax will strive to comply with the
generally accepted principles of good corporate governance through its internal controls and
management structure. Targovax believes that its current guidelines for corporate governance are
in line with the latest version of the Norwegian Code of Practice for Corporate Governance, and a
description of this is given at the end of the Annual report. A complete description of the
recommendation is available at the Norwegian-Corporate Governance Board (NCGB) web page
(www.nues.no). For further details, please see the section entitled Corporate Governance in this
Annual Report and on the group’s homepage.
Shareholder information
During 2021 the Targovax share was traded in the NOK 1.89 – 7.11 range. During 2021, 177 million shares
were traded, with a total value of NOK 711 million. Closing price on 31 December 2021 was NOK 2.21 per
share, corresponding to a market-value of NOK 416 million.
As of 22 February 2022, there were 188,326,591 shares outstanding in Targovax, distributed amongst
6,429 shareholders. The 20 largest shareholders control 78.3 percent of total shares outstanding.
The estimated share ownership situation on 22 February 2022:
Estimated
Shareholder
Shares mill
Ownership
Avanza Bank AB (nom.)
15.7
8.4 %
HealthCap
12.4
6.6 %
FJARDE AP-FONDEN
8.7
4.6 %
ABN Amro Global (nom.)
5.5
2.9 %
Goldman Sachs & Co. LLC (nom.)
5.2
2.8 %
Nordea
4.5
2.4 %
RadForsk
4.4
2.4 %
Bækkelaget Holding
4.2
2.3 %
Danske Bank (nom.)
2.7
1.4 %
Thorendahl Invest
2.0
1.1 %
MP Pensjon
1.9
1.0 %
Jon-Arild Andreassen
1.8
0.9 %
Westerheim
1.4
0.7 %
Pettersen
1.3
0.7 %
Vaktmestergruppen AS
1.3
0.7 %
Olsen
1.2
0.6 %
Skipperud
1.2
0.6 %
Pettersen Gruppen AS
1.1
0.6 %
Jahatt AS
1.1
0.6 %
The Bank of New York Mellon (nom.)
0.9
0.5 %
20 largest shareholders
78.3
41.6 %
Other shareholders (6 409)
110.0
58.4 %
Total shareholders
188.3
100.0 %
Targovax annual report 2021
Page 19
As per 31 December 2021, key management and members of the Board holds a total of 947,077
shares in Targovax ASA, representing 0.5 percent of total shares outstanding.
Remuneration to management
The remuneration of the management is intended to ensure the Group’s continued ability to
attract and retain the most qualified management team members and to provide a solid basis for
succession planning.
The Compensation Committee submits recommendations on compensation policy and
adjustments in remuneration of the management team members for the approval of the Board of
Directors. The remuneration of the management team may consist of fixed salary and
supplements, incentive programs, and pension schemes. Subject to individual agreement,
members of the management team are also entitled to other fixed benefits.
The Remuneration Principles were adopted by the Annual General Meeting in March 2021.
Information about the work in the Compensation Committee and applied compensation principles
for the management team in 2020 and 2021 respectively are in the Compensation Report
submitted in note 10 to the Annual Accounts.
The Remuneration Report for 2021 will be subject for approval in the Annual General Meeting in
April 2022.
Financial results and allocation of profits in Targovax ASA
Targovax ASA is the holding company in the Targovax group. Targovax ASA reported a loss before
tax of NOK 51 million (NOK 40 million). Total cash amounted to NOK 170 million at the end of
2021 compared to NOK 106 million at the end of 2020. Equity at the end of 2021 amounted to
NOK 791 million compared to NOK 687 million at the end of 2020.
Targovax ASA´s annual result amounted to a loss of NOK 51 million. The Board of Directors
proposed that the loss is transferred to accumulated loss and that total share premium reserve of
NOK 1 185 million is allocated to retained earnings to cover the accumulated loss as per today and
for future periods.
Outlook
During 2021, the company delivered strong efficacy data for the lead-product candidate ONCOS-
102 in both melanoma and mesothelioma. Together with the broad immune activation data,
Targovax is in an excellent position to design the next phase of the ONCOS-102 clinical
development program. In parallel Targovax is expanding its pipeline efforts to establish ONCOS as
a versatile delivery vector for next generation immunotherapies, including circRNA. In 2022,
Targovax also expects to form one or more academic and/or commercial mutant KRAS
collaborations which will bring the TG cancer vaccine back to the clinic.
Lysaker, 9 March 2022
The Board of Directors of Targovax ASA
Damian Marron Bente-Lill Romøren Johan Christenson
Chairperson of the Board Board member Board member
Eva-Lotta Allan Diane Mellett Per Samuelsson
Board member Board member Board member
Sonia Quaratino Robert Burns Erik Digman Wiklund
Board member Board member Chief Executive Officer
Targovax annual report 2021
Page 20
Responsibility Statement from the Board of Directors
and the Managing Director
We confirm, to the best of our knowledge that the financial statements for the period 1 January to 31 December 2021 have been prepared in accordance with current applicable accounting standards and
give a true and fair view of the assets, liabilities, financial position, and profit or loss of the entity and the group taken as a whole. In addition, in our opinion the Annual Report for Targovax for 1 January to
31 December 2021 with the file name Targovax Annual Report 2021-12-31 en.zip in all material aspects is prepared in accordance with ESEF Regulation. We also confirm that the Board of Directors’ Report
includes a true and fair view of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncertainties facing the
entity and the group.
Lysaker, 9 March 2022
The Board of Directors of Targovax ASA
Damian Marron Bente-Lill Romøren Johan Christenson
Chairperson of the Board Board member Board member
Eva-Lotta Allan Diane Mellett Per Samuelsson
Board member Board member Board member
Sonia Quaratino Robert Burns Erik Digman Wiklund
Board member Board member Chief Executive Officer
Targovax annual report 2021
Page 21
Management
The Group’s management team consists of six individuals. Set out below
are brief biographies of the members of Management. Holdings of shares
and share options as of 9 March 2022 and includes close associates.
Erik Digman Wiklund was hired as the Company's CFO in
April 2017 and transitioned into the Chief Business Officer
(CBO) role in October 2018, before being appointed CEO in
2021. Dr. Wiklund previously worked for the Norwegian
cancer biotechnology company Algeta ASA and the
nutraceutical company Aker Biomarine Antarctic AS. He also
has management consulting experience from the Pharma &
Health Care practice of McKinsey & Company. Dr. Wiklund
has a background in cancer research and holds a PhD in
Molecular Biology from Aarhus University, Denmark, and the
Garvan Institute of Medical Research in Sydney, Australia. Dr.
Wiklund is a Swedish and Norwegian citizen, residing in
Norway.
Ingunn Munch Lindvig has worked more than 20 years in the
pharma and biotech industry. She has extensive experience
with regulatory strategy and delivery on regulatory plans
across a range of pharmaceutical products. Prior to joining
Targovax, Dr. Lindvig was Head of Regulatory Affairs at
Nordic Nanovector ASA for five years and she also led the
regulatory function at Photocure ASA for seven years. Dr.
Lindvig was part of the Regulatory team at Nycomed
Imaging/Nycomed Amersham/GE Healthcare. Dr. Lindvig
holds a PhD in physiology from University of Oslo, Norway.
She is a Norwegian citizen and resides in Norway.
Erik Digman Wiklund
Chief Executive Officer
Shares: 100 000
Share options: 1 200 000
Lone Ottesen
Chief Medical Officer
Shares: 47 000
Share options: 490 000
Ingunn Munch Lindvig
Vice President, Regulatory Affairs
Shares: 10 000
Share options: 392 000
Dr. Lone Ottesen is a highly experienced drug developer
with extensive experience across the global oncology and
immune-oncology drug development spectrum with nearly
20 years in the pharmaceutical industry in both early- and
late-phase development. Dr. Ottesen gained her MD and
PhD at Aarhus University in Denmark and has held roles of
increasing seniority in GSK, Eisai and latest AstraZeneca
where she was the Global Clinical Head for two assets in
pivotal clinical development as well as leading the
development of durvalumab in breast and gynecological
cancers. Lone will be spearheading the clinical
development program for the Targovax portfolio including
the planned registration-directed trial in anti-PD1
refractory melanoma for the lead asset ONCOS-102. She is
a Danish citizen and resides in the UK.
Ola Melin joins Targovax with over 25 years' experience in
Biologics development, manufacturing, and supply, most
recently as Director of Technical Operations at OxThera AB,
where he was responsible for clinical supply and for
establishing a commercially ready manufacturing process
and supply chain. Prior to that Mr. Melin spent 18 years at
Biovitrum and Sobi AB, where he held senior leadership
roles as Head of External Manufacturing and Head of
Product Supply, as well as other CMC positions. Mr. Melin
started his career with manufacturing process development
at Pharmacia. Mr. Melin has studied Biochemical
engineering at Mälardalen University. He is a Swedish
citizen and resides in Sweden.
Ola Melin
Head of Manufacturing
Shares: 50 000
Share options: 325 000
Targovax annual report 2021
Page 22
Dr. Lubor Gaal is a seasoned industry executive with 25 years
of experience working in large pharmaceutical and
biotechnology companies in Europe and the USA. Most
recently, he served as Managing Director and Head of Europe
at Locust Walk, a global life science boutique investment
bank. At Locust Walk, Dr. Gaal was responsible for
overseeing all European strategic transactions, including
financings, M&A and licensing. Before Locust Walk, he was
Head of External Innovation and Licensing and a member of
the R&D Management Committee at Almirall and Head of
Europe Search and Evaluation for oncology at Bristol-Myers
Squibb. Prior to that, Dr. Gaal held executive management
positions at Neuro3d and Vectron Therapeutics, and global
business development roles in Bayer. Dr. Gaal has a Ph.D. in
molecular and cell biology from the University of California at
Berkeley, USA. Dr. Lubor Gaal is a Belgian citizen and resides
in Spain.
Dr. Victor Levitsky is a seasoned internationally recognized
expert in immunology, oncology, T-cell immunotherapy and
immuno-oncology with in-depth knowledge of preclinical,
translational and early stage clinical drug development. He
brings extensive experience in pre-clinical drug
development of protein-based biologics and small
molecules. Dr. Levitsky is a medical doctor with a PhD in
Virology and post-doctoral training in tumor biology at
Karolinska Institute, Sweden. He spent the first 20 years of
his career as an academic research scientist, including
Associate Professor positions at the Karolinska Institute in
Sweden and the Johns Hopkins University School of
Medicine in the USA. Before joining Targovax Dr. Levitsky
served as Tumor Immunology Leader and Senior Principal
Scientist with Roche in Zurich, and his most recent position
has been VP, Head of Oncology Research at Molecular
Partners, Zurich, Switzerland. Dr. Levitsky is a Swedish and
Russian citizen and resides in Switzerland.
Lubor Gaal
Chief Financial Officer
Shares: 0
Share options: 300 000
Victor Levitsky
Chief Scientific Officer
Shares: 10 000
Share options: 545 000
Targovax annual report 2021
Page 23
Board of Directors
The Board of Directors consists of eight individuals. Set out below are brief
biographies of the members of Board. Holdings of shares, share options
and RSUs as of 9 March 2022 and includes close associates.
Damian Marron is an experienced non-executive director,
corporate advisor and life science executive with a successful
track record of value creation through public and venture
capital financing, portfolio planning, M&A, licensing
agreements as well as R&D collaborations, both as an
executive and in advisory roles. He has notably specialized in
immuno-oncology, cell therapy and orphan diseases. Mr.
Marron is currently Non-Executive Director at Bone
Therapeutics a clinical stage, regenerative medicine company
listed on Euronext, Cantargia, a clinical stage monoclonal
antibody company for oncology and autoimmune diseases
listed on Nasdaq Stockholm and Resolys Bio, a private, late
pre-clinical U.S. startup. He is also Chair of the Board of
Imophoron Ltd, of CytoSeek Ltd, private UK start-ups and
Head of Biopharma with Treehill Partners, a global pure-play
healthcare advisory firm. Mr. Marron has formerly been chair
of the board of directors of PepGen Ltd and the CEO at
Agalimmune Ltd, TxCell SA, Cytheris SA, and Trophos SA. Mr.
Marron is a British and Irish citizen and resides in France.
Diane Mellett is a consultant to a number of biotech and
medical device companies. She has qualified in both U.S. and
UK law and advises biotechnology companies in commercial
contract and intellectual property matters. She was formerly
General Counsel for Cambridge Antibody Technology (CAT)
(LSE: NASDAQ) and led the secondary NASDAQ listing of that
company as well as serving on the board of directors. During
her time at CAT, she led a successful defense of a contractual
dispute with Abbott Pharmaceuticals (now Abbvie) covering
the company's major collaboration partnership regarding
Humira®, the most successful revenue generating antibody
therapy in the pharmaceutical industry to date. Ms. Mellett is
a UK and Irish citizen and resides in France.
Damian Marron
Chairperson (b. 1963)
Shares: 0
Share options: 0
RSU: 43 988
Per Samuelsson
Board Member (b. 1961)
Shares: 0
Share options: 0
RSU: 0
Diane Mellett
Board Member (b. 1960)
Shares: 96 028
Share options: 0
RSU: 58 221
Per Samuelsson is a partner at Odlander
Fredrikson/HealthCap, the life sciences venture capital
firm, which he joined in 2000. Prior to this, he gained more
than 15 years of investment banking experience, mainly
with Aros Securities in Sweden. In his last position with
Aros Securities, as a Director in the firm's corporate finance
department, he specialized in the areas of merger
transactions, initial public offerings, and equity incentive
programs. Prior to this, Mr. Samuelsson was Head of
Research, also at Aros Securities. He currently holds several
board of directors positions at Nordic Nanovector ASA,
Oncopeptides AB and SwedenBIO. Mr. Samuelsson
received his MSc in Engineering from the Institute of
Technology in Linköping, Sweden. He is a Swedish citizen
and resides in Sweden.
Eva-Lotta Allan, an independent director, has over 30 years
of experience from the biotechnology industry of private and
public companies. She is the Non-Executive Chairman of C4X
Discovery and Draupnir Bio and serves as Non-Executive
Director of Almirall, Crescendo Biologics and Aleta
Biotherapeutics. During Ms. Allan's five years as
Immunocore's Chief Business Officer she raised USD 320
million in a Series A round, established significant strategic
partnerships with top pharmaceutical companies. Ms. Allan
was previously at Ablynx, where she served as Chief Business
Officer for seven years taking the company public and
structured several complex partnerships with pharmaceutical
companies. Ms. Allan was previously Senior Director of
Business Development and Site Operations (Europe) at
Vertex Pharmaceuticals, and she was previously a board
director of Isconova and UK's BIA. Ms. Allan has a degree in
microbiology from Stockholm University and started her
career at the Tumor biology department at the Karolinska
Institute in Stockholm. Ms. Allan is a Swedish citizen and
resides in the United Kingdom..
Eva-Lotta Allan
Board Member (b. 1959)
Shares: 71 368
Share options: 0
RSU: 40 811
Targovax annual report 2021
Page 24
Dr. Sonia Quaratino is an R&D executive with over 20 years'
experience in clinical development and immunology
research. Shewas Chief Medical Officer at Kymab, a clinical-
stage biopharmaceutical company now part of Sanofi. She is
also the Chair of the Scientific and Clinical Advisory Board for
STipe Therapeutics and Non-Executive Director at Ichnos
Sciences. Prior to Kymab, Dr. Quaratino held a position as
Global Clinical Program Leader – Translational Clinical
Oncology at Novartis, and Senior Medical Director and
Immunology Advisor at Merck Serono. Dr. Quaratino has an
extensive professional background which includes a Medical
Degree and a Doctorate in Hematology-Oncology from the
University of Palermo, Italy and a PhD in Immunology from
Imperial College London, UK. She was also Professor of
Immunology at the University of Southampton, a leading
institution for innovative research. Her research group
focused on the pathogenic mechanisms underlying chronic
inflammatory diseases and the interface between
autoimmunity and cancer. Dr. Quaratino is an Italian citizen
and resides in Germany.
Dr. Robert Burns is an advisor to companies developing
immune based therapies in cancer and autoimmune
indications. He has been involved for more than 30 years in
building biotechnology companies focused on immuno-
oncology. Dr. Burns is currently chairman of Affibody AB in
Sweden, a company developing novel therapies in
autoimmune and inflammation indications. He was a
member of the board of directors of Oncos Therapeutics OY
prior to the Company's acquisition of Targovax Oy. Dr. Burns
was previously chairman of the board of directors of
Haemostatix Limited before it was acquired by Ergomed plc.
He was also previously CEO at 4-Antibody AG, Affitech A/S
(NASDAQ/OMX) and Celldex Therapeutics Inc (NASDAQ),
each an immuno-oncology vaccine and antibody discovery
company. Prior to Celldex Therapeutics, Dr. Burns was
Director of Technology Licensing at the Ludwig Cancer
Research, an international independently financed not-for-
profit research group focused on cancer vaccines and
antibody-based cancer immunotherapies. He holds a PhD in
Chemistry and is a UK citizen, residing in Oxford, United
Kingdom.
Sonia Quaratino
Board Member (b. 1962)
Shares: 0
Share options: 0
RSU: 22 722
Johan Christenson
Board Member (b. 1958)
Shares: 0
Share options: 0
RSU: 0
Robert Burns
Board Member (b. 1947)
Shares: 275 454
Share options: 21 235
RSU: 34 083
Dr. Johan Christenson has been a Partner at HealthCap since
2001. He has been in the life science sector covering science,
medicine, drug development and venture investments since
1981. Prior to joining HealthCap, Dr. Christenson was with
SEB Företagsinvest (the venture capital arm of SEB) to
supervise the healthcare portfolio. He was Global Product
Director and member of the global therapy area
management team of Pain and Inflammation at AstraZeneca.
He has an MD degree and a PhD in basic neuroscience from
Karolinska Institute. He held a position as Assistant Dean at
the Karolinska Institute Graduate School for two years. Dr.
Christenson has four years of clinical specialist training in
pediatrics and pediatric neurology. He serves on several
private companies in the pharma and biotech sector
including Fusion Pharmaceuticals Inc. and InCarda Inc. Dr.
Christenson is a Swedish citizen and resides in Sweden.
Bente-Lill Bjerkelund Romøren is a consultant with 40
years' experience from national and international
management positions in the pharmaceutical industry. She
was formerly CEO of Novo Nordisk Scandinavia. Her
experience spans senior management, marketing, sales,
business development, licensing, market access, public
affairs, clinical trials and lifecycle management. Ms.
Bjerkelund Romøren has good knowledge of the healthcare
system as well as regulations and framework for the
pharmaceutical market. She has board member experience
from the private and public sector (healthcare). She holds a
MSc degree in chemistry from the Norwegian Institute of
Technology in Trondheim. Ms. Bjerkelund Romøren is a
Norwegian citizen and resides in Norway.
Bente-Lill Romøren
Board Member (b. 1949)
Shares: 35 577
Share options: 0
RSU: 11 361
Targovax annual report 2021
Page 25
Corporate Governance Report
Targovax ASA (the “Company” and together with its subsidiaries, the “Group”) considers good
corporate governance to be a prerequisite for value creation, trustworthiness and for access to
capital.
In order to secure strong and sustainable corporate governance, it is important that the Group
ensures good and healthy business practices, reliable financial reporting and an environment of
compliance with legislation and regulations.
The Norwegian Corporate Governance Board (NCGB or NUES) issues “The Norwegian Code of
Practice for Corporate Governance” (the “Code of Practice”), most recently revised 14 October
2021, for companies listed on Oslo Stock Exchange and Oslo Axess. The Code of Practice is
available at www.nues.no. The Code of Practice is based on a “comply or explain principle”
whereby listed companies must comply with the Code of Practice or explain why they have
chosen an alternative approach. How the Company has adapted to this Code of Practice is
described in the Company’s Corporate Governance Policy. Each chapter represents the 15 topics
in the Code of Practice. It starts with the recommendations, explains how the policy is followed up
by the Company, and finally concludes with any deviations from the Code of Practice.
1. Implementation and reporting on corporate governance
The Board of Directors must ensure that the company implements sound corporate governance.
The Board of Directors must provide a report on the company’s corporate governance in the
directors' report or in a document that is referred to in the directors' report. The report on the
company's corporate governance must cover every section of the Code of Practice.
If the company does not fully comply with the Code of Practice, the company must provide an
explanation of the reason for the deviation and what solution it has selected.
The Board has decided that the Company will comply with the Norwegian Code of Practice.
Compliance with the Code of Practice is described in the Board of Directors’ Report. Targovax
complies with the Code of Practice without any significant exceptions. One minor deviation has
been accounted for below under chapter 6: General Meetings.
Deviations from the recommendation: None
2. Business
The company’s articles of association should clearly describe the business that the company
shall operate.
The Board of Directors should define clear objectives, strategies and risk profiles for the
company’s business activities such that the company creates value for shareholders in a
sustainable manner. When carrying out this work, the Board of Directors should therefore take
into account financial, social, and environmental considerations.
The Board of Directors should evaluate these objectives, strategies, and risk profiles at least
yearly.
The Company’s Articles of Associations clearly describe the business of the Company and are
available at www.targovax.com. The Board of Directors leads the Company’s strategic planning
and makes decisions that form a basis for the Company’s executive management to prepare and
carry out investments and structural measures. The Company’s objectives, strategies and risk
profiles are being evaluated yearly, and together with the Company’s Articles of Association,
provides the information needed to help ensure that shareholders can anticipate the scope of the
Company’s activities.
The Company has guidelines for how it integrates considerations related to stakeholders into its
value creation. Corporate Social Responsibility principles were adopted by the Board of Directors
on 22 December 2020 to ensure sound corporate social responsibility. The implementation of
corporate social responsibility principles in the Group’s day-to-day operations, its business
strategies and towards various stakeholders is further described in the Board of Directors report
2020.
Deviations from the recommendation: None
Targovax annual report 2021
Page 26
3. Equity and dividends
The Board of Directors should ensure that the company has a capital structure that is
appropriate to the company’s objectives, strategy, and risk profile.
The Board of Directors should establish and disclose a clear and predictable dividend policy.
The background to any proposal for the Board of Directors to be given a mandate to approve
the distribution of dividends should be explained.
Mandates granted to the Board of Directors to increase the company’s share capital or to
purchase own shares should be intended for a defined purpose. Such mandates should be
limited in time to no later than the date of the next annual general meeting.
The Board of Directors ensure the Company has a capital structure that is appropriate to the
Company’s objectives, strategy, and risk profile. Targovax and its subsidiaries’ (the “Group’s”)
equity at 31 December 2021 was NOK 418 million, which corresponds to an equity ratio of 73.9
percent. The Board of Directors regards the present equity structure as appropriate and adapted to
the Company’s objectives, strategy, and risk profile. Moreover, for biotech companies at a relatively
early stage, like Targovax, access to debt is usually restricted and not available outside of
government support structures.
The Company’s long-term objectives include making distributions of net income in the form of
dividends, but Targovax has paid no dividend to date. The Group is focusing its resources on the
development of its immuno-oncology platforms and does not anticipate paying any cash dividend
in the foreseeable future.
Mandates granted to the Board of Directors to increase the Company’s share capital or to purchase
own shares should be intended for a defined purpose. Such mandates should be limited in time to
no later than the date of the next annual general meeting.
In connection with the Company’s share incentive arrangements and pursuant to the Section 10-14
of the Norwegian Limited Companies Act, the Board of Directors is granted an authorization to
increase the Company’s share capital by up to NOK 865 313 of the share capital of the Company.
This applies until the Annual General Meeting in 2022.
For the period between the Annual General Meetings in 2022 and 2023, the Board of Directors
proposes an authorization to increase the Company’s share capital by up to 40 percent of
outstanding shares and options and RSUs (i.e. fully diluted).
Deviations from the recommendation: None
4. Equal treatment of shareholders
Any decision to waive the pre-emption rights of existing shareholders to subscribe for shares in
the event of an increase in share capital should be justified. Where the Board of Directors
resolves to carry out an increase in share capital and waive the pre-emption rights of existing
shareholders on the basis of a mandate granted to the board, the justification should be publicly
disclosed in a stock exchange announcement issued in connection with the increase in share
capital.
Any transactions the company carries out in its own shares should be carried out either through
the stock exchange or at prevailing stock exchange prices if carried out in any other way. If there
is limited liquidity in the company’s shares, the company should consider other ways to ensure
equal treatment of all shareholders.
Share issues without pre-emption rights for existing shareholders
Any decision to waive the pre-emption rights of existing shareholders to subscribe for shares in the
event of an increase in the share capital shall be justified. Where the Board of Directors resolves to
carry out a share issue without pre-emption rights for existing shareholders, then the justification
shall be publicly disclosed in an announcement issued in connection with the share issue.
Transactions with own shares
Any transactions the Company carries out in its own shares shall be carried out either through the
Oslo Stock Exchange or at prevailing stock exchange prices if carried out in another way. If there is
limited liquidity in the Company’s shares, the Company shall consider other ways to ensure equal
treatment of all shareholders. The Company has not conducted trades in its own shares.
Deviations from the recommendation: None
5. Share and negotiability
The company should not limit any party’s ability to own, trade, or vote for shares in the company.
The company should provide an account of any restrictions on owning, trading, or voting for
shares in the company.
The Company's constituting documents do not limit any party’s ability to own, trade or vote for
share in the Company. The Company’s shares are freely transferable, subject to any restrictions that
may exist under applicable securities laws.
Deviations from the recommendation: None
Targovax annual report 2021
Page 27
6. General meetings
The Board of Directors should ensure that the company’s shareholders can participate in the
general meeting.
The Board of Directors should ensure that:
o the resolutions and supporting information distributed are sufficiently detailed,
comprehensive, and specific to allow shareholders to form a view on all matters to be
considered at the meeting
o any deadline for shareholders to give notice of their intention to attend the meeting is
set as close to the date of the meeting as possible
o the members of the Board of Directors and the chairman of the nomination committee
attend the general meeting
o the general meeting is able to elect an independent chairman for the general meeting
Shareholders should be able to vote on each individual matter, including on each individual
candidate nominated for election. Shareholders who cannot attend the meeting in person
should be given the opportunity to vote. The company should design the form for the
appointment of a proxy to make voting on each individual matter possible and should nominate
a person who can act as a proxy for shareholders.
Exercising rights
The Board of Directors ensures that the Company’s shareholders can participate in the general
meeting given normal circumstances. The Board of Directors ensures that:
o the resolutions and supporting documentation, if any, are sufficiently detailed,
comprehensive, and specific to allow shareholders to understand and form a view
on matters that are to be considered at the General Meeting
o the registration deadline, if any, for shareholders to participate at the General
Meeting is set as close as practically possible to the date of the General Meeting
o representatives of the Board and the chairperson of the Nomination Committee
attend general meetings
Shareholders are able to vote on each individual matter, including on each individual candidate
nominated for election.
Participation without being present
The Board of Directors will choose whether to hold a general meeting a physical or electronic
meeting. If a general meeting is being held as a physical meeting, shareholders who cannot be
present are given the opportunity to vote using proxies. The form of the proxy is designed to make
voting on each individual matter possible. The Company nominates a person who can act as a proxy
for shareholders.
Deviations from the recommendation: The Company does not have an arrangement in place to
ensure independent chairing of the General Meeting. However, the Board of Directors will on an ad
hoc basis evaluate independent chairing when necessary. Historically, it has not been deemed
necessary to have an independent chair.
Although Targovax encourages the members of the Board to attend the Annual General Meeting,
their attendance is not always possible.
7. Nomination Committee
The company should have a nomination committee, and the nomination committee should be
laid down in the company’s articles of association. The general meeting should stipulate
guidelines for the duties of the nomination committee, elect the chairperson and members of
the nomination committee, and determine the committee’s remuneration.
The nomination committee should have contact with shareholders, the Board of Directors, and
the company’s executive personnel as part of its work on proposing candidates for election to
the board.
The members of the nomination committee should be selected to take into account the interests
of shareholders in general. The majority of the committee should be independent of the Board
of Directors and the executive personnel. The nomination committee should not include any
executive personnel or any members of the company’s Board of Directors.
The nomination committee’s duties should be to propose candidates for election to the Board of
Directors and nomination committee (and corporate assembly where appropriate) and to
propose the fees to be paid to members of these bodies.
The nomination committee should justify why it is proposing each candidate separately.
The company should provide information on the membership of the committee and any
deadlines for proposing candidates.
The Company has a Nomination Committee, and the Nomination Committee is laid down in the
Company’s Articles of Association. The Company’s General Meeting stipulates guidelines for the
Targovax annual report 2021
Page 28
nomination committee, elects the members and the Chairperson of the Nomination Committee,
and determines their remuneration. The current Nomination Committee was elected at the General
Meeting 17 March 2021. The objectives, duties and functions of the Nomination Committee are
described in the Company’s “Charter for the Nomination Committee” which were adopted by the
General Meeting 14 September 2015 and updated in December 2020.
Two out of three of the members of the Nomination Committee are independent of the Company’s
Board of Directors and executive management. Two of the members are also not members of the
Board of Directors. Neither the CEO nor others of the executive management team are members of
the Nomination Committee.
The Nomination Committee shall contact the Company’s two largest shareholders, as registered in
the VPS on 1 November each year, and request such shareholders to each propose a candidate to
be appointed as a member of the Nomination Committee. If any candidates are proposed by such
shareholders, the Nomination Committee shall include those candidates among the three
candidates in the recommendation to the General Meeting for election of members to the
Nomination Committee.
The Nomination Committee shall give recommendations for the election of shareholder elected
members of the Board of Directors and the members of the Nomination Committee, and
remuneration to the members of the Board of Directors and the members of the Nomination
Committee.
The Nomination Committee shall justify why it is proposing each candidate separately.
Targovax's shareholders are entitled to nominate candidates to the Board of Directors of Targovax
ASA. Information on how to send input and proposals can be found on Targovax’s website in the
section “Committee’s composition” under “Investor Relations” and “Corporate governance”.
For information about the members of the Nomination Committee, please see “Committee
composition” under “Corporate Governance” in the Investor section at www.targovax.com.
Deviations from the recommendation: Johan Christenson is currently a member of both the Board
of Directors and the nomination committee and offered himself for re-election, and was re-elected,
as a Board Member and a member of the nomination committee at the annual General Meeting in
2021.
8. Board of directors; composition and independence
The composition of the Board of Directors should ensure that the board can attend to the
common interests of all shareholders and meets the company’s need for expertise, capacity, and
diversity. Attention should be paid to ensuring that the board can function effectively as a
collegiate body.
The composition of the Board of Directors should ensure that it can operate independently of
any special interests. The majority of the shareholder-elected members of the board should be
independent of the company’s executive personnel and material business contacts. At least two
of the members of the board elected by shareholders should be independent of the company’s
main shareholder(s).
The Board of Directors should not include executive personnel. If the board does include
executive personnel, the company should provide an explanation for this and implement
consequential adjustments to the organization of the work of the board, including the use of
board committees to help ensure more independent preparation of matters for discussion by the
board, cf. Section 9 of the code of Practice.
The general meeting (or the corporate assembly where appropriate) should elect the chairman
of the Board of Directors.
The term of office for members of the Board of Directors should not be longer than two years at
a time.
The annual report should provide information to illustrate the expertise of the members of the
Board of Directors, and information on their record of attendance at board meetings. In
addition, the annual report should identify which members are considered to be independent.
Members of the Board of Directors should be encouraged to own shares in the company.
The Board of Directors consists of eight members, and currently has the following composition:
Damian Marron (Chair), Sonia Quaratino, Per Samuelsson, Bente-Lill Romøren, Johan Christenson,
Robert Burns, Eva-Lotta Allan, and Diane Mellett. The current Board of Directors was elected at the
General Meeting 17 March 2021.
Targovax annual report 2021
Page 29
Participation on Board of Directors meetings and Board committee meetings during 2021:
Participation in
meetings
Board
Meetings
Audit Committee
Compensation
committee
Governance
Committee
Damian Marron
15
1
5
5
Sonia Quaratino
10
Bente-Lill Romøren
14
3
Johan Christenson
16
3
Robert Burns
15
5
Eva-Lotta Allan
12
3
Diane Mellett
16
5
3
Per Samuelsson
14
4
5
The composition of the Company’s Board of Directors is considered to ensure that the
shareholders’ interests are maintained, and that the Company’s need for a diversified and
experienced Board of Directors with sufficient capacity is in place. The members of the Board of
Directors represent a combination of expertise, capabilities and experience from the
pharmaceutical industry and finance business.
The composition of the Board of Directors ensures that it can act independently of any special
interests. All of the shareholder-elected members of the Board of Directors are independent of
the Company’s executive management and material business connections. In addition, five of the
members of the Board of Directors are considered to be independent of the Company’s major
shareholder(s). A major shareholder means in this connection a shareholder that owns or controls
10 percent or more of the Company’s shares or votes, and independence shall entail that there
are no circumstances or relations that may be expected to be able to influence independent
assessments of the person in question.
The Board of Directors does not include executive management. The Chairperson of the Board of
Directors is elected by the General Meeting.
The term of office for members of the Board of Directors are no longer than one year at the time.
Members of the Board of Directors may be re-elected.
For further information about the members of the Board of Directors, including number of shares
and who are considered independent, see Note 10 Related parties and Management in the
Company’s Annual Report, and the section “Board of Directors” in the Annual Report.
Deviations from the recommendation: None
9. The work of the Board of Directors
The Board of Directors should issue instructions for its own work as well as for the executive
management with particular emphasis on clear internal allocation of responsibilities and duties.
These instructions should state how the Board of Directors and executive management shall
handle agreements with related parties, including whether an independent valuation must be
obtained. The Board of Directors should also present any such agreements in their annual
directors’ report.
The Board of Directors should ensure that members of the Board of Directors and executive
personnel make the company aware of any material interests that they may have in items to be
considered by the Board of Directors.
In order to ensure a more independent consideration of matters of a material character in which
the chairman of the board is, or has been, personally involved, the board's consideration of such
matters should be chaired by some other member of the board.
The Public Companies Act stipulates that large companies must have an audit committee. The
entire Board of Directors should not act as the company’s audit committee. Smaller companies
should give consideration to establishing an audit committee. In addition to the legal requirements
on the composition of the audit committee etc., the majority of the members of the committee
should be independent of the company.
The Board of Directors should also consider appointing a remuneration committee in order to
help ensure thorough and independent preparation of matters relating to compensation paid to
the executive personnel. Membership of such a committee should be restricted to members of
the board who are independent of the company’s executive personnel.
The Board of Directors should provide details in the annual report of any board committees
appointed.
The Board of Directors should evaluate its performance and expertise annually.
General
The Board of Directors Handbook adopted by the Board of Directors on the 22 December 2020
includes a set of instructions and policies instructions/charters for its own work, as well as for the
executive management, with particular emphasis on clear allocations of internal responsibilities
and duties.
Targovax annual report 2021
Page 30
Agreements with related parties
The Board of Directors shall arrange for a valuation to be obtained from an independent third
party in the event of a transaction between the Company and its related parties, e.g.,
shareholders, a shareholder’s parent company, members of the Board of Directors, executive
management or closely-related parties of any such parties. An independent valuation shall also be
carried out in the event of transactions between companies within the same group where any of
the companies involved have minority shareholders.
The Board of Directors ensures that members of the Board of directors and executive
management make the Company aware of any material interests that they may have in items to
be considered by the Board of Directors. In order to ensure a more independent consideration of
matters of a material character in which the chairperson of the board is, or has been, personally
involved, the board's consideration of such matters will be chaired by some other member of the
board.
The Board of Directors, working with the Corporate Governance Committee, carries out an annual
evaluation of its own performance and expertise and presents the evaluation report to the
Nomination Committee.
The Board of Directors has established three permanent Board Committees, which is described in
further detail below. The current members of the committees were elected at the Board of
Directors meeting 14 May 2021. The members of the committee are appointed for one year.
These committees do not pass resolutions but supervise the work of the Company’s management
on behalf of the Board of Directors and prepare matters for Board of Directors consideration
within their specialized areas. In this preparatory process, the committees have the opportunity to
draw on company resources, and to seek advice and recommendations from sources outside the
Company. The Board of Directors also establishes ad-hoc sub-committees as needed, e.g.
research, development, finance, manufacturing and in connection with M&A activities.
Audit Committee
The members of the Audit Committee are Diane Mellett (chair), Damian Marron and Per
Samuelsson. The CFO acts as the committee’s secretary. The composition of the committee meets
the requirements of the Norwegian Code of Practice for Corporate Governance as regards
independence, and all the committee members are considered to be independent of Executive
Management. The mandate of the committee is set out in the Charter for the Audit Committee
and is in brief as follows:
o Prepare for the Board of Directors a report describing its supervision of the financial
reporting process, including review of implementation of accounting principles and
policies.
o Monitor the effectiveness of the Company’s internal control and risk management
systems, noting any deficiencies and monitor management in remedying any such
deficiencies.
o Have regular contact with the external auditor regarding the annual and consolidated
accounts.
o Review and monitor the independence of the statutory auditor, ref. the Norwegian
Auditors Act, chapter 4 and in particular whether services other than audits delivered by
the statutory auditor or the audit firm are a threat against the statutory auditor’s
independence. The committee supervises implementation of and compliance with the
Company’s Ethics Code of Conduct and supervises the Company’s compliance activities
relating to corruption as further described in the provisions herein.
5 meetings were held in 2021.
Compensation committee
The members of the Compensation Committee are Per Samuelsson (chair), Damian Marron and Robert
Burns. The composition of the committee meets the requirements of the Norwegian Code of Practice
for Corporate Governance as regards independence, and all the committee members are considered to
be independent of Executive Management. The mandate of the committee is set out in the Charter for
the Compensation Committee and is in brief as follows:
o The role of the committee shall be to oversee the Group’s compensation policy for its
CEO, Management, employees, and consultants, recommend changes to the Group’s
compensation policy to the Board of Directors as and when appropriate and prepare
matters for final decision by the Board of Directors. Recommendations and proposals
for compensation to members of the Board of Directors shall be the responsibility of the
Nomination Committee.
5 meetings were held in 2021.
Corporate Governance Committee
The members of the Corporate Governance Committee are Bente-Lill Romøren (chair), Johan
Christenson, Diane Mellett and Eva-Lotta Allan. The composition of the committee meets the
requirements of the Norwegian Code of Practice for Corporate Governance as regards
independence, and all the committee members are considered to be independent of Executive
Management. The mandate of the committee is set out in the Charter for the Governance
Committee and is as follows:
o Develop and review the Groups policies and practices for corporate governance, and
annually recommend changes to such policies and practices, if any, to the Board of
Directors
Targovax annual report 2021
Page 31
o Lead the Board of Directors in its annual review of the Board of Directors’ performance
and its competence
o Monitor the functioning of the Board committees and sub-groups and make
recommendations to the Board of Directors with regard to the composition of Board
committees and sub-groups
o Lead the Board of Directors in its annual review of the CEO’s performance
3 meetings were held in 2021.
Deviations from the recommendation: None
10. Risk management and internal control
The Board of Directors must ensure that the company has sound internal control and systems for
risk management that are appropriate in relation to the extent and nature of the company’s
activities.
The Board of Directors should carry out an annual review of the company’s most important
areas of exposure to risk and its internal control arrangements.
To manage the Company specific risks and risk inherent in the industry, and to comply with
international and national regulations, the Company have implemented a periodic review process
to identify, analyze and handle the main risk factors facing the Group. The Audit Committee will
periodically receive written reports, highlighting the main risks and proposed actions to address
these as well as any significant weaknesses in the internal control regime.
Our aim is to have an annual review by the Board of Directors, of the Company’s most important
areas of exposure to risk and its internal control arrangements.
Risk Management is further described under “Directors’ Report”, in the Risk section.
Deviations from the recommendation: None
11. Remuneration of the Board of Directors
The remuneration of the Board of Directors should reflect the board’s responsibility, expertise,
time commitment and the complexity of the company’s activities.
The remuneration of the Board of Directors should not be linked to the company’s performance.
The company should not grant share options to members of its board.
Members of the Board of Directors and/or companies with which they are associated should not
take on specific assignments for the company in addition to their appointment as a member of
the board. If they do nonetheless take on such assignments this should be disclosed to the full
board. The remuneration for such additional duties should be approved by the board.
Any remuneration in addition to normal directors’ fees should be specifically identified in the
annual report.
The compensation of the Board of Directors and its sub-committees is decided by the Annual
General Meeting, based on a recommendation from the Nomination Committee. Separate rates
are set for the Board of Directors’ chair and other members, respectively. Separate rates are also
adopted for the Board of Directors’ sub-committees, with similar differentiation between the
Chair and the other members of each committee.
The Annual General Meeting 17 March 2021 decided to remunerate the Board of Directors with a
combination of cash and Restricted Share Units (RSUs).
If the Board members choose to receive the Board remuneration in RSU’s they must elect to
either (i) receive 100% of the compensation in RSUs, (ii) receive 1/3 of the compensation in cash
and 2/3 in RSUs, or (iii) receive 2/3 of the compensation in cash and 1/3 in RSUs. The total
compensation, except for meeting compensation, to each member of the Board of Directors for
2020-2021 are described in Note 10 in the Annual Report.
The number of RSUs to be granted to a member of the Board of Directors is calculated as the non-
cash compensation in NOK, divided by the market price for the Targovax ASA share. The market
price is calculated as volume weighted average share price the 10 trading days prior to the grant
date.
The cash compensation is not linked to the Company’s performance or similar. None of the
members of the Board of Directors has a pension plan or agreement concerning pay after
termination of their office with the Company.
Robert Burns, member of the Board of Directors, was granted share options in Oncos Therapeutics
Oy when he was a member of the Board of Directors of that company. By virtue of the
combination with Oncos on 2 July 2015, these share options were converted into share options in
Targovax ASA. The details of his options are set out in Note 11 of the consolidated financial
statements. He is the only member of the Board of Directors with share options in the Company.
There are no plans to issue new options to the members of the Board of Directors going forward.
Information about all compensation paid to each member of the Board of Directors is presented
in Note 10 of the consolidated financial statements.
Deviations from the recommendation: None
Targovax annual report 2021
Page 32
12. Remuneration for executive personnel
The guidelines on the salary and other remuneration for executive personnel must be clear and
easily understandable, and they must contribute to the company’s commercial strategy, long-
term interests, and financial viability.
The company’s arrangements in respect of salary and other remuneration should help ensure
the executive personnel and shareholders have convergent interests, and should be simple.
Performance related remuneration should be subject to an absolute limit.
The Board of Directors has established guidelines for the remuneration of executive management,
and these guidelines shall be communicated to the Annual General Meeting. The guidelines were
approved by the Annual General Meeting 17 March 2021 and will be considered and approved by
the general meeting and in the event of any material changes and at least every fourth year. The
guidelines set out the main principles in determining the salary and other remuneration of
executive management.. The Board of Director’s guidelines on the remuneration of executive
management are outlined in an appendix to the agenda for the Annual General Meeting.
Performance-related remuneration of the executive management in the form of share option
grants, bonus programs or similar are linked to value creation for shareholders over time. Such
arrangements’ intention is to incentivize performance and be based on quantifiable factors over
which the employee in question can have influence. Performance-related remuneration is subject
to an absolute limit (while there is no upside limit on granted share options nor on granted share
units).
Information about all compensation paid to each member of the Executive Management is
presented in Note 10 of the consolidated financial statements.
Deviations from the recommendation: None
13. Information and communication
The Board of Directors should establish guidelines for the company’s reporting of financial and
other information based on openness and taking into account the requirement for equal
treatment of all participants in the securities market.
The Board of Directors should establish guidelines for the company’s contact with shareholders
other than through general meetings.
General information
The Company shall provide timely and precise information about the Company and its operations
to its shareholders, the stock exchange when applicable and the financial markets in general. Such
information will be given in the form of annual reports, quarterly reports, press releases, notices to
relevant marketplace exchange as well as investor presentations in accordance with what is
deemed most suitable. The Company shall seek to clarify its long-term potential, including
strategies, value drivers, and risk factors.
The Company’s quarterly presentations are webcast directly and may be found on Targovax’s
website, along with the quarterly and annual reports, under “Investor Relations”.
Information to shareholders
The Company has procedures for establishing discussions with shareholders to enable the
Company to develop a balanced understanding of the circumstances and focus of shareholders.
Such discussions will always be in compliance with the principle of equal treatment of the
Company’s shareholders.
Deviations from the recommendation: None
14. Take-overs
The Board of Directors should establish guiding principles for how it will act in the event of a
take-over bid. In a bid situation, the company’s Board of Directors and management have an
independent responsibility to help ensure that shareholders are treated equally, and that the
company’s business activities are not disrupted unnecessarily.
The Board has a particular responsibility to ensure that shareholders are given sufficient
information and time to form a view of the offer. The Board of Directors should not hinder or
obstruct take-over bids for the company’s activities or shares.
Any agreement with the bidder that acts to limit the company’s ability to arrange other bids for
the company’s shares should only be entered into where it is self-evident that such an
agreement is in the common interest of the company and its shareholders. This provision shall
also apply to any agreement on the payment of financial compensation to the bidder if the bid
does not proceed. Any financial compensation should be limited to the costs the bidder has
incurred in making the bid.
Agreements entered into between the company and the bidder that are material to the market's
evaluation of the bid should be publicly disclosed no later than at the same time as the
announcement that the bid will be made is published.
In the event of a take-over bid for the company’s shares, the company’s Board of Directors
should not exercise mandates or pass any resolutions with the intention of obstructing the take-
over bid unless this is approved by the general meeting following announcement of the bid. If an
offer is made for a company’s shares, the company’s Board of Directors should issue a statement
making a recommendation as to whether shareholders should or should not accept the offer.
Targovax annual report 2021
Page 33
The board’s statement on the offer should make it clear whether the views expressed are
unanimous, and if this is not the case it should explain the basis on which specific members of
the board have excluded themselves from the board’s statement. The board should arrange a
valuation from an independent expert. The valuation should include an explanation and should
be made public no later than at the time of the public disclosure of the board’s statement.
Any transaction that is in effect a disposal of the company’s activities should be decided by a
general meeting (or the corporate assembly where relevant).
In the event of a take-over process, the Board of Directors and the Company’s Executive
Management each have an individual responsibility to ensure that the Company’s shareholders
are treated equally and that the Company’s activities are not unnecessarily interrupted. The Board
of Directors has a particular responsibility in ensuring that the shareholders have sufficient
information and time to form a view on the offer.
The Board of Directors will not seek to hinder or obstruct any takeover bid for the Company’s
operations or shares. In the event of such a bid as discussed in section 14 of the Norwegian Code
of Practice for Corporate Governance, the Board of Directors will, in addition to complying with
relevant legislation and regulations, seek to comply with the recommendations in the Code of
Practice. This includes obtaining a valuation from an independent expert. On this basis, the Board
of Directors will make a recommendation as to whether or not the shareholders should accept the
bid. There are no other written guidelines for procedures to be followed in the event of a takeover
bid.
The Company has not found it appropriate to draw up any explicit basic principles for Targovax’s
conduct in the event of a takeover bid, other than the actions described above. The Board of
Directors otherwise concurs with what is stated in the Code of Practice regarding this issue.
Deviations from the recommendation: None
15. Auditor
The Board of Directors should ensure that the auditor submits the main features of the plan for
the audit of the company to the audit committee annually.
The Board of Directors should invite the auditor to meetings that deal with the annual accounts.
At these meetings the auditor should report on any material changes in the company’s
accounting principles and key aspects of the audit, comment on any material estimated
accounting figures and report all material matters on which there has been disagreement
between the auditor and the executive management of the company.
The Board of Directors should at least once a year review the company’s internal control
procedures with the auditor, including weaknesses identified by the auditor and proposals for
improvement.
The Board of Directors should establish guidelines in respect of the use of the auditor by the
company’s executive management for services other than the audit.
The Board of Directors ensures that the auditor submits the main features of the plan for the
audit of the Company to the Audit Committee annually.
The Board of Directors invites the auditor to meetings that deal with the annual accounts, so the
auditor can report on any changes in the company’s accounting principles and key aspects of the
audit, comment on any material estimated accounting figures and report all matters on which
there has been disagreement between the auditor and the executive management of the
company.
The Board of Directors once a year reviews the Company’s internal control procedures with the
auditor, including weaknesses identified by the auditor and proposals for improvement.
At least once a year, the Audit Committee will meet with the auditor to consider the auditor’s
views on the Group’s accounting principles, risk areas and internal control procedures.
The Audit Committee receives an annual summary from the external auditor of services other
than auditing that have been provided to the Company. The Company has established guidelines
for the management’s use of the external auditor for services other than auditing.
The auditor’s fees, presented in Note 10 of the consolidated financial statements, have stated for
the relevant categories of auditing and other services. The auditor’s fee is determined at the
Annual General Meeting. The Audit Committee receives an annual summary from the external
auditor of services other than auditing that have been provided to the Company. The Company
has established guidelines for the management’s use of the external auditor for services other
than auditing.
Deviations from the recommendation: None
Targovax annual report 2021
Page 34
TARGOVAX GROUP 2021
Accounts
and notes
Targovax annual report 2021
Page 35
Contents
C
Consolidated statement of profit or loss ............................................................. 35
Consolidated Statement of comprehensive income ........................................... 36
Consolidated statement of financial position ..................................................... 37
Consolidated statement of changes in equity ..................................................... 38
Consolidated statement of cash flow .................................................................. 39
1. General information ........................................................................................ 40
2. Summary of significant accounting principles ................................................. 40
3. Important accounting estimates and discretionary assessments ................... 42
4. Segments ......................................................................................................... 43
5. Financial instruments and risk management objectives and policies ............. 43
6. Revenue recognition ........................................................................................ 47
7. Research and development expenses ............................................................. 47
8. Government grants .......................................................................................... 48
9. Payroll and related expenses ........................................................................... 49
10. Related parties and Management ................................................................. 50
11. Share-based compensation ........................................................................... 63
12. Other operating expenses ............................................................................. 67
13. Financial instruments .................................................................................... 67
14. Tax .................................................................................................................. 69
15. Intangible assets and impairment test ........................................................... 70
16. Property, plant and equipment ...................................................................... 72
17. Leases ............................................................................................................. 73
18. Receivables ..................................................................................................... 75
19. Cash and cash equivalents ............................................................................. 76
20. Share capital and shareholder information ................................................... 76
21. Interest-bearing debt ..................................................................................... 78
22. Current liabilities ............................................................................................ 79
23. Events after the reporting date ...................................................................... 80
Targovax annual report 2021
Page 36
Consolidated statement of profit or loss
Amounts in NOK thousands except per share data
Note
2021
2020
Other revenues
6
-
624
Total revenue
-
624
Research and development expenses
7,8
-37 440
-45 040
Payroll and related expenses
7,8,9,10,11
-48 386
-43 090
Other operating expenses
7,8,12
-8 466
-12 658
Depreciation, amortizations and write downs
15,16,17
-1 309
-3 735
Total operating expenses
-95 601
-104 524
Operating profit/loss (-)
-95 601
-103 901
Finance income
13
245
596
Finance expense
13,21
-2 667
-5 099
Net finance income (expense)
-2 422
-4 503
Loss before income tax
-98 023
-108 403
Income tax income/(expense)
14
52
277
Loss for the period
-97 971
-108 126
Earnings/loss (-) per share
Basic and dilutive earnings/loss (-) per share
20
-1.10
-1.40
Consolidated Statement of comprehensive
income
Amounts in NOK thousands except per share data
Note
2021
2020
Income/loss (-) for the period
-97 971
-108 126
Items that may be reclassified to profit or loss:
Exchange differences arising from the translation of
foreign operations
-12 927
16 069
Total comprehensive income/loss (-) for the period
-110 898
-92 057
Targovax annual report 2021
Page 37
Consolidated statement of financial position
Amounts in NOK thousands
Note
31.12.2021
31.12.2020
ASSETS
Intangible assets
15
371 727
389 646
Property, plant, and equipment
16
111
179
Right-of-use assets
17
2 544
3 734
Total non-current assets
374 382
393 559
Receivables
13,18
9 207
4 859
Cash and cash equivalents
19
181 682
122 321
Total current assets
190 889
127 180
TOTAL ASSETS
565 271
520 740
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
20
18 833
8 653
Share premium reserve
-
1 046 476
Other reserves
59 620
52 684
Retained earnings
309 289
-778 136
Translation differences
29 985
42 912
Total equity
417 726
372 588
Non-current liabilities
Interest-bearing liabilities
21
49 523
57 881
Deferred tax
14
59 314
62 047
Lease liabilities
17
1 375
2 568
Total non-current liabilities
110 212
122 495
Amounts in NOK thousands
Note
31.12.2021
31.12.2020
Current liabilities
Interest-bearing liabilities
21,22
7 543
3 185
Short-term lease liabilities
17
1 349
1 258
Trade payables
22
8 103
5 196
Accrued public charges
22
3 203
3 428
Other current liabilities
22
17 134
12 589
Total current liabilities
37 333
25 656
TOTAL EQUITY AND LIABILITIES
565 271
520 740
Lysaker, 9 March, 2022
The Board of Directors of Targovax ASA
Damian Marron Bente-Lill Romøren Johan Christenson
Chairperson of the Board Board member Board member
Eva-Lotta Allan Diane Mellett Per Samuelsson
Board member Board member Board member
Sonia Quaratino Robert Burns Erik Digman Wiklund
Board member Board member Chief Executive Officer
Targovax annual report 2021
Page 38
Consolidated statement of changes in equity
Amounts in NOK thousands
Note
Share
capital
Share
premium
Other
reserves
Translation
differences
Retained
earnings
(accumulated
losses)
Total
equity
Balance at 31 December 2019
6 338
886 899
46 885
26 843
-670 010
296 955
Loss for the period
-108 126
-108 126
Exchange differences arising from the translation of foreign operations
16 069
16 069
Other comprehensive income/loss, net of tax
Total comprehensive income for the period
16 069
-108 126
-92 057
Issue of ordinary shares - Capital increase - Private Placement and repair offering
20
2 297
173 724
176 021
Transaction costs - Private Placement
-14 164
-14 164
Share issuance, employee share options & RSU’s
20
18
82
-
99
Transaction costs – Share based payments
-65
-65
Recognition of share-based payments & RSU's
11
5 799
5 799
Balance at 31 December 2020
8 653
1 046 476
52 684
42 912
-778 136
372 588
Loss for the period
-97 971
-97 971
Exchange differences arising from the translation of foreign operations
-12 927
-12 927
Other comprehensive income/loss, net of tax
Total comprehensive income for the period
-12 927
-97 971
-110 898
Issue of ordinary shares - Capital increase – Rights Issue
20
10 174
164 826
175 000
Transaction costs – Rights Issue
-26 040
-26 040
Share issuance, employee share options & RSU’s
20
5
195
-
200
Transaction costs – Share based payments
-59
-59
Recognition of share-based payments & RSU's
11
6 935
6 935
Reclassification of Share premium
-1 185 396
1 185 396
-
Balance at 31 December 2021
18 833
-
59 620
29 985
309 289
417 726
Targovax annual report 2021
Page 39
Consolidated statement of cash flow
Amounts in NOK thousands
Note
2021
2020
Cash flow from operating activities
Loss before income tax
-98 023
-108 403
Adjustments for:
Finance income
13
-245
-596
Finance expense
13
2 667
5 099
Interest received
13
245
596
Other finance income/expense
13
46
-364
Share option and RSU expense
11
6 935
5 799
Depreciation, amortizations and write downs
16,17
1 309
3 735
Change in receivables
18
-4 348
10 569
Change in other current liabilities
22
6 012
-27 229
Net cash flow from /(used in) operating activities
-85 402
-110 793
Cash flow from investing activities
Purchases of property, plant, and equipment (PPE)
16
-
-70
Net cash received from/(paid in) investing activities
-
-70
Cash flow from financing activities
Proceeds from borrowings
21
-
5 555
Repayment of borrowings
21
-2 023
-
Repayment of lease liabilities
17
-1 468
-3 209
Interest paid
13
-710
-704
Proceeds from issuing shares -Rights issue, Private Placement and repair offering
20
175 000
176 021
Payment for share issue cost – Rights issue, Private Placement and repair offering
-25 329
-14 164
Proceeds from exercise of share options & RSUs
20
200
99
Payment for share issue cost – share options & RSUs
-59
-65
Net cash generated from financing activities
145 610
163 534
Net increase/(decrease) in cash and cash equivalents
60 208
52 671
Net exchange gain/loss on cash and cash equivalents
-848
-778
Cash and cash equivalents at beginning of period
122 321
70 429
Cash and cash equivalents at end of period
19
181 682
122 321
Targovax annual report 2021
Page 40
1. General information
Targovax ASA ("the Company") and its subsidiaries (together the Group) is a clinical stage
immuno-oncology company developing immune activators to target hard-to-treat solid tumors.
The Group’s development pipeline is based on a novel proprietary platform:
A virus-based immunotherapy platform (ONCOS) that utilizes engineered oncolytic viruses armed
with potent immune-stimulating transgenes to target solid tumors. The aim is to (re)activate the
patient’s immune system to recognize and attack the patient’s own cancer cells thus acting as a
form of autologous or self-vaccination. The treatment approach harnesses the patient’s own
immune system to fight cancer.
Targovax’s virus-based oncolytic immunotherapeutic technology has a tumor-selective mechanism
of action, making tumors visible to the immune system and educating the immune system to
recognize and attack patient specific tumor cells.
The technology is based on adenoviruses engineered to kill tumor cells, primarily via activation of a
systemic, patient-specific, tumor-selective immune response. The lead pipeline candidate is
ONCOS-102.
Targovax’s ONCOS immunotherapy technologies are designed to stimulate the immune system in
several ways to recognize and fight cancer. When Targovax’s adenovirus is injected into a tumor
the presence of the adenovirus attracts cells of the innate immune system such as natural killer (NK)
cells and macrophages which are designed to attack the virus.
Targovax is also exploring how novel RNA concepts can be engineered into ONCOS to further
enhance the delivery of genetic payloads directly into the tumor. This has the potential to expand
the ONCOS program into a versatile and unique platform system for enhanced transgene delivery,
as well as to build additional regulatory functionality into the backbone construct. CircRNA is an
example of such novel RNA technology being explored in the context of ONCOS, and Targovax is
actively building the team to drive these RNA efforts forward.
In addition, Targovax has developed a mutant KRAS program based on the Company’s neoantigen
vaccine targeting mutant KRAS cancers, covering up to eight different mutations. Oncogenic KRAS
mutations are the key genetic driver behind many cancers and therefore considered a central target
in oncology drug development
The Company is a Norwegian public limited liability company listed on the Oslo Stock Exchange in
Norway. The address of the registered office is Vollsveien 19, 1366 Lysaker, Norway.
These financial statements have been approved for issue by the Board of Directors on 9 March
2022 and are subject to approval by the Annual General Meeting in April 2022.
2. Summary of significant accounting principles
The principal accounting policies applied in the preparation of these consolidated financial
statements are described in the respective note, or if not, set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
Amounts are in thousand Norwegian kroner unless stated otherwise.
Functional currency
The functional currency is determined in each entity in the Group based on the currency within
the entity's primary economic environment. Transactions in foreign currency are translated to
functional currency using the exchange rate at the date of the transaction. At the end of each
reporting period foreign currency monetary items are translated using the closing rate, non-
monetary items that are measured in terms of historical cost are translated using the exchange
rate at the date of the transaction and non-monetary items that are measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value was
measured. Changes in the exchange rate are recognized continuously in the accounting period.
Presentation currency
The Group’s presentation currency is NOK. This is also the parent company’s functional currency.
The statement of financial position figures of entities with a different functional currency are
translated at the exchange rate prevailing at the end of the reporting period for balance sheet
items, including goodwill, and the exchange rate at the date of the transaction for profit or loss
items. The monthly average exchange rates are used as an approximation of the transaction
exchange rate where the rate at the date of transaction is not available. Exchange differences are
recognized in other comprehensive income (“OCI”).
When investments in foreign subsidiaries are sold, the accumulated translation differences
relating to the subsidiary attributable to the equity holders of the parent are recognized in the
statement of comprehensive income. When a loss of control, significant influence or joint control
is present the accumulated exchange differences related to investments allocated to controlled
interests is recognized in profit or loss.
When a partial disposal of a subsidiary (not loss of control) is present the proportionate share of
the accumulated exchange differences is allocated to non-controlling interests.
2.1 Basis for preparation of the annual accounts
The consolidated financial statements of Targovax ASA have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union, as well as
Norwegian disclose requirements listed in the Norwegian Accounting Act.
Targovax annual report 2021
Page 41
The consolidated financial statements are based on historical cost.
The consolidated financial statements have been prepared on the basis of uniform accounting
principles for similar transactions and events under otherwise similar circumstances.
2.2 Accounting principles
Foreign exchange
The Group record transactions at initial recognition based on the exchange rate at the date of the
transaction. If the exchange rate at the date of transaction is not available, average monthly
exchange rate in the month of transaction is used. The date of a transaction is the date on which
the transaction first qualifies for recognition in accordance with International Financial Reporting
Standards. However, if exchange rates fluctuate significantly, the use of the average rate for a
period may be inappropriate and an exchange rate closer to transaction date is used.
Any exchange differences are recognized in statement of profit or loss under financial items in the
period in which they arise.
2.3 Adoption of new and revised IFRS standards
Standards and interpretations affecting amounts reported in the current period
All relevant new and revised IFRSs and IFRIC interpretations that are mandatory for periods
commencing 1 January 2020 and earlier have been adopted for all periods presented in these
financial statements.
The Group has applied the following amendments for the first time for their annual reporting
period commencing 1 January 2021:
• Covid-19-Related Rent Concessions – amendments to IFRS 16, and
• Interest Rate Benchmark Reform – Phase 2 – amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16.
The Group also elected to adopt the following amendments early:
• Annual Improvements to IFRS Standards 2018–2020, and
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction – amendments to
IAS 12.
The amendments listed above did not have any impact on the amounts recognized in prior
periods and are not expected to significantly affect the current or future periods.
None of the other new standards, revised standards, amended standards or interpretations have a
material impact on the Group’s overall results and financial position.
Standards and interpretations in issue but not yet adopted
Certain new accounting standards and interpretations have been published that are not
mandatory for 31 December 2021 reporting periods and have not been early adopted by the
Group. These standards are not expected to have a material impact on the entity in the current or
future reporting periods and on foreseeable future transactions.
2.4 Basis of consolidation
The consolidated financial statements as at 31 December 2021 comprise the financial statements
of the Company and its 100% owned and controlled subsidiary Targovax OY, located at Espoo,
Finland. Targovax Solutions LLC, located at Massachusetts, USA, was liquidated during 2020.
Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over
the investee.
Specifically, the Group controls an investee if, and only if, the Group has:
o Power over the investee (i.e. existing rights that give it the current ability to direct the
relevant activities of the investee)
o Exposure, or rights, to variable returns from its involvement with the investee
o The ability to use its power over the investee to affect its returns
In general, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in assessing whether it has
power over an investee, including:
o The contractual arrangement(s) with the other vote holders of the investee
o Rights arising from other contractual arrangements
o The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control. Consolidation of a
Targovax annual report 2021
Page 42
subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group
loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or
disposed of during the year are included in the consolidated financial statements from the date
the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of OCI are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests
having a deficit balance. When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All
intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction.
If the Group loses control over a subsidiary, it ceases to recognize the related assets (including
goodwill), liabilities, non-controlling interest and other components of equity, while any resultant
gain or loss is recognized in statement of profit or loss. Any investment retained is recognized at
fair value.
2.5 Business combinations and intangible assets
Business combinations are accounted for using the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration transferred, which is measured at acquisition
date fair value, and the amount of any non-controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquiree
at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-
related costs are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as
a financial liability are subsequently remeasured to fair value with changes in fair value recognized
in profit or loss.
Intangible assets comprising the patented technology were recognized at fair value at the date of
acquisition of Targovax OY (previous Oncos Therapeutics OY) July 2015. Until the development of
the patented technology is finalized no amortization is recorded and the carrying amount will be
tested for impairment at least once a year, or more often if there are indicators of impairment.
When finalized, the patented technology will be amortized by the straight-line method over the
estimated useful life.
2.6 Going concern
The Group works continuously to ensure financial flexibility in the short and long-term to achieve
its strategic and operational objectives. To date, the Group has financed its operations through
private placements, grants, borrowings, repair offerings and the initial public offering in
connection with the listing of the company’s shares on Oslo Stock Exchange in 2016. In December
2021 the company raised NOK 175 million in gross proceeds through a rights issue, which will
ensure financial resources sufficient for all planned activities, in the next twelve months as of 31
December 2021. The Board of Directors has confirmed that the conditions for assuming that the
Group is a going concern are present, and that the financial statements have been prepared based
on this assumption.
3. Important accounting estimates and
discretionary assessments
Management makes estimates and assumptions that affect the reported amounts of assets and
liabilities within the next financial year. Estimates and judgments are continually evaluated and
are based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances.
Impairment of intangible assets
Where a finite useful life of the acquired intangible asset cannot be determined, the asset is not
subject to amortization, but is tested when indication, or at least annually for impairment.
Acquired intangible assets will not be subject to amortization until market authorization is
obtained with the regulatory authorities and the intangible assets are available for use. After
market authorization, the intangible assets will be amortized using the straight-line method to
allocate their cost to their residual values over their estimated useful lives.
Acquired intangible assets related to development of the ONCOS-102 platform are recognized in
the consolidated statement of financial position, amounting to 372 MNOK. The value is tested for
impairment 31 December 2021. Due to the nature of the intangible assets there are uncertainties
in estimating the value in the impairment test. This is further described in Note 15.
Estimated value of share-based payments
At each balance sheet date, the Group revises its estimates of the number of options that are
expected to vest. It recognizes the impact of the revision to original estimates, if any, in the
statement of profit or loss, with a corresponding adjustment to equity. The estimated turnover
Targovax annual report 2021
Page 43
rate for unvested share options is 0 percent for all share option plans. See Note 11 Share-based
compensation.
Deferred tax asset
A deferred tax asset shall be recognized for the carryforward of unused tax losses and unused tax
credits to the extent that it is probable that future taxable profit will be available against which
the unused tax losses and unused tax credits can be utilized.
The Group cannot prove probable future taxable income large enough to justify recognizing a
deferred tax asset in the balance sheet. However, this assumption must be continually assessed,
and changes could lead to a significant asset being recognized in the future. This assumption
requires significant management judgment. See Note 14 Taxes.
4. Segments
The Group's activities during 2021 have been to continue the development and implementation of
a strategy with the aim of developing highly targeted immunotherapy treatments for cancer
patients.
There was increased operational activity in Finland and Norway after the acquisition of Oncos
Therapeutics OY. The Group’s lead product has not yet obtained regulatory approval. For
management purposes, the Group is organized as one business unit and the internal reporting is
structured in accordance with this. The Group is thus currently organized in one operating
segment.
5. Financial instruments and risk management
objectives and policies
The Group's financial assets and liabilities comprise cash at bank and cash equivalents, receivables
and trade creditors that originate from its operations. All financial assets and liabilities are carried
at amortized cost. All financial assets and liabilities, other than the long-term leasing liabilities and
debt to Business Finland, are short-term and their carrying value approximates fair value.
The Group does currently not use financial derivatives to manage financial risk such as interest
rate risk and currency risk. The Group is subject to market risk, credit risk and liquidity risk.
Market risk
Interest rate fluctuations could in the future materially and adversely affect the Group’s business,
financial condition, results of operations, cash flows, time to market and prospects.
Currently, the Group has no long-term debt other than leasing liabilities and its debt to Business
Finland. The debt to Business Finland carries an annual interest equal to the European Central
Bank’s steering rate less 3 percentage points, but in no event less than 1%. The current interest is
1% per annum. For further information see Note 21 Interest-bearing debt.
The Group may in the future be exposed to interest rate risk primarily in relation to any future
interest-bearing debt issued at floating interest rates and to variations in interest rates of bank
deposits. Consequently, movements in interest rates could have a material and adverse effect on
the Group’s business, financial condition, results of operations, cash flows, time to market and
prospects.
The Group is not sensitive to a change in interest rates on interest-bearing borrowings, the debt to
Business Finland, unless the European Central Bank’s steering rate increases above 4 %. Hence the
Group’s profit or loss statement, statement of financial position and the Group’s cash flow is not
sensitive to 1% change in interest rates on interest-bearing borrowings.
The following table demonstrates the Group’s sensitivity to a 1 percent point change in interest
rates on cash and cash equivalents at 31 December 2021 and 2020:
2021
2020
Amounts in NOK thousands
1% point
increase
1% point
decrease
1% point
increase
1% point
decrease
Loss before income tax effect
1 817
-1 817
1 223
-1 223
Foreign currency risk
Fluctuations in exchange rates could affect the Group’s cash flow and financial condition.
The Group has currency exposure to both transaction risk and translation risk related to its
operating expenses. Transaction risk arises when future commercial transactions or recognized
assets or liabilities are denominated in a currency that is different from the Group’s presentation
currency. The Group undertakes various transactions in foreign currencies and is consequently
exposed to fluctuations in exchange rates. The exposure arises largely from research expenses.
The Group is mainly exposed to fluctuations in EUR, USD, GBP and CHF. Targovax hedges foreign
currency by aligning the cash positions with future expected currency outflows. The Group does
not have derivatives for hedge accounting at year-end.
Targovax annual report 2021
Page 44
The following tables demonstrate the Group’s currency rate sensitivity on monetary assets and
liabilities in the loss before income tax and other comprehensive income at 31 December 2021
and 2020.
Group’s sensitivity to a 10% increase/decrease in EUR against NOK:
2021
2020
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
534
-534
1 996
-1 996
Other comprehensive income
-5 096
5 096
-5 214
5 214
Group’s sensitivity to a 10% increase/decrease in USD against NOK:
2021
2020
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
194
-194
273
-273
Other comprehensive income
-
-
-
-
Group’s sensitivity to a 10% increase/decrease in GBP against NOK:
2021
2020
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
75
-75
377
-377
Other comprehensive income
-
-
-
-
Group’s sensitivity to a 10% increase/decrease in CHF against NOK:
2021
2020
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
147
-147
405
-405
Other comprehensive income
-
-
-
-
Credit risk
Credit risk is the risk of a counterparty defaulting. The Group has limited credit risk. Outstanding
receivables are limited and primarily government grants receivable from various government
agencies. No impairment has been recognized. The carrying value of the assets represents the
Group's maximum exposure to credit risk.
Cash and cash equivalents:
2021
2020
Rating
Amounts in NOK thousands
Amount
In %
Amount
In %
S&P
Cash at bank:
181 366
100%
73 275
60%
Nordea Bank AB
169 680
93%
56 693
46%
AA-
Danske Bank A/S
0
0%
15
0%
A
DNB Bank ASA
11 686
6%
16 567
14%
AA-
Money market funds:
316
0%
49 046
40%
Nordea Likviditet III
316
0%
49 046
40%
Total
181 682
100%
122 321
100%
Targovax annual report 2021
Page 45
Fair value of financial instruments
The carrying value of receivables, cash and cash equivalents, borrowings and other trade payables
are assessed to approximate fair value.
2021
2020
Amounts in NOK thousands
Carrying
amounts
Fair value
Carrying
amounts
Fair value
Receivables
9 207
9 207
4 859
4 859
Cash and cash equivalents
181 682
181 682
122 321
122 321
Total financial assets
190 889
190 889
127 180
127 180
Interest-bearing borrowings
57 066
57 066
61 066
61 066
Lease liabilities
2 725
2 725
3 826
3 826
Trade payables
8 103
8 103
5 196
5 196
Total financial liabilities
67 894
67 894
70 087
70 087
The table below analyses financial instruments carried at fair value, by valuation method. The
different levels have been defined as follows:
o Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
o Level 2: Inputs other than quoted prices including Level 1 that are observable for the
asset or liability, either directly (that is, as prices) or indirectly (that is, derived from
prices)
o Level 3: Inputs in asset or liability that are not based on observable market data (that is,
unobservable inputs)
As at 31 December 2021:
Amounts in NOK thousands
Level 1
Level 2
Level 3
Total
Interest-bearing borrowings
-
-
57 066
57 066
Total financial instruments at fair value
-
-
57 066
57 066
As at 31 December 2020:
Amounts in NOK thousands
Level 1
Level 2
Level 3
Total
Interest-bearing borrowings
-
-
61 066
61 066
Total financial instruments at fair value
-
-
61 066
61 066
Targovax annual report 2021
Page 46
Liquidity risk
The Group manages liquidity risk by estimating and monitoring cash and liquidity needs on an on-going basis and maintaining adequate reserves and banking facilities. The Group has, after the private
placement in the fourth quarter 2021, sufficient cash available to meet its obligations as at 31 December 2021 and related to planned activities in the next 12 months. Hence, the Group is funded into 2023,
and will need new funding for the next phases of the development program and subsequent clinical trials. All liabilities at year-end, other than the debt to Business Finland and long-term lease liabilities, are
short-term and fall due within one year of the reporting date.
The following tables analyses the Group’s current and non-current financial liabilities, at 31 December 2021 and 2020 respectively, into relevant maturity groupings based on the remaining period at the
balance sheet date to the contractual maturity date. The amounts disclosed in the tables are the financial undiscounted cash flows.
At 31 December 2021
(Amounts in NOK thousands)
On demand
Less than 3 months
3 to 12 months
1 to 5 years
>5 years
Total
Interest-bearing borrowings
1
-
228
7 981
47 051
13 910
69 170
Lease liabilities
-
378
1 133
1 511
-
3 022
Trade payables
-
8 103
-
-
-
8 103
Accrued public charges
-
3 203
-
-
-
3 203
Other current liabilities
-
17 134
-
-
-
17 134
Total
-
29 046
9 114
48 562
13 910
100 633
1 Interest-bearing borrowings comprise loans from Business Finland and includes future interest payments.
At 31 December 2020
(Amounts in NOK thousands)
On demand
Less than 3 months
3 to 12 months
1 to 5 years
>5 years
Total
Interest-bearing borrowings
1
-
239
3 665
49 873
17 222
70 988
Lease liabilities
-
364
1 093
2 827
-
4 284
Trade payables
-
5 196
-
-
-
5 196
Accrued public charges
-
3 428
-
-
-
3 428
Other current liabilities
-
12 589
-
-
-
12 589
Total
-
21 816
4 758
52 700
17 222
96 496
1 Interest-bearing borrowings comprise loans from Business Finland and includes future interest payments.
Targovax annual report 2021
Page 47
6. Revenue recognition
Revenue from providing services is recognized in the accounting period in which the services are
rendered. Revenue is presented net of value added tax.
Amounts in NOK thousands
2021
2020
Other revenue
-
624
Total operating revenue
-
624
The Group's products are still in the research and development phase, and it has no revenue from
sales of products yet.
At end of 2019, Targovax and IOVaxis Therapeutics entered into an option agreement for an
exclusive license to develop and commercialize the TG01 and TG02 vaccines in Greater China and
Singapore. The intention is that IOVaxis will exercise the option to license TG upon the first
regulatory IND approval to start a clinical trial in China. IOVaxis paid an option fee of USD 250,000
to Targovax in 2020, and an additional USD 3 million upfront fee is due when the exclusive license
option is exercised. The total development and commercial milestones in the deal are worth up to
USD 100 million, in addition to tiered royalties on sales up to the mid-teens. The Group has no
revenue from the option agreement in the year 2021 or 2020.
7. Research and development expenses
Expenditure on research and development activities is recognized as an expense in the period in
which it is incurred. Internal and external research and development costs related to the Group's
development of new products are recognized in the statement of profit or loss in the year
incurred unless it meets the asset recognition criteria of IAS 38 "lntangible Assets".
Uncertainties related to the regulatory approval process and results from ongoing clinical trials
generally indicate that the criteria for asset recognition is not met until the time when the
marketing authorization is obtained from regulatory authorities. This assessment requires
significant management discretion and estimations.
The following table gives an overview of the Group’s research and development expenditures
compared to the total operating expenses:
2021
2020
Amounts in NOK thousands
Total
Of which R&D
Total
Of which R&D
R&D expenses
37 440
37 440
45 040
45 040
Payroll and related expenses
48 386
22 898
43 090
22 101
Other operating expenses
8 466
40
12 658
26
Depreciation, amortizations
and write downs
1 309
-
3 735
-
Total
95 601
60 377
104 524
67 168
The following research and development expenditures have been expensed:
Amounts in NOK thousands
2021
2020
R&D related consultancy and other expenses
18 185
26 698
Cost of manufacturing for R&D
17 484
17 305
Patent expenses
4 659
2 980
Government grants
-2 888
-1 943
Total research and development expenses
37 440
45 040
Targovax annual report 2021
Page 48
8. Government grants
Government grants are recognized at the value of the contributions at the transaction date.
Grants are not recognized until it is probable that the conditions attached to the contribution will
be achieved. The grant is recognized in the statement of profit or loss in the same period as the
related costs and are presented net.
Government grants are normally related to either reimbursements of employee costs and
classified as a reduction of Payroll and related expenses or related to other operating activities
and thus classified as a reduction of Research and development expenses or Other operating
expenses.
Government grants have been recognized in statement of profit or loss as a reduction of the
related expense with the following amounts:
Amounts in NOK thousands
2021
2020
Research and development expenses
2 888
1 943
Payroll and related expenses
374
292
Other operating expenses
1
1
Total grants
3 263
2 236
For the full year 2021 the Group has, for SkatteFUNN projects, recognized NOK 3.3 million (NOK
0.9 million 2020) as cost reduction in Research and development expenses, Payroll and related
expenses and Other operating expenses.
Targovax has been awarded a NOK 9.8 million research grant from the Research Council of
Norway towards product and clinical development for the TG mutant KRAS cancer vaccine
program. This grant is for the period 2022-2025, hence no cost reduction has been recognized in
2021.
See note 23 Events after the reporting date for more information about grants.
The Group received an additional NOK 5 555 100 (EUR 552 400) to one of the existing loans from
Business Finland during the first quarter of 2020. No additions to the Business Finland loans were
granted during 2021. The loan’s interest rate is assessed to be 7% lower than comparable market
rates, hence NOK 1.4m was recognized as a government grant recorded as a reduction to
Research and development expenses in first quarter 2020.
See note 21 Interest-bearing debt for information about Business Finland loans.
Specification of grants receivables:
Amounts in NOK thousands
2021
2020
Grants from SkatteFUNN
3 263
866
Total grants receivable
3 263
866
Targovax annual report 2021
Page 49
9. Payroll and related expenses
Payroll and related expenses are recognized in the statement of profit or loss in the period in
which the related costs are incurred or services are provided.
Defined contribution plans
Targovax ASA has a defined contribution pension plan as required by the Norwegian Law and as
well an applicable contribution pension plan as required by Finnish Law for all employees
employed in Targovax OY. These pension plans apply to all employees of Targovax ASA and
Targovax OY respectively. Currently, members of the Management Team with residence outside
Norway and Finland are not part of the company’s respective national pension plans. The
company pays these executives an annual amount in addition to base salary in lieu of their
participation in a company scheme. For defined contribution pension plans, contributions are paid
to pension insurance plans and charged to the statement of profit or loss in the period to which
the contributions relate.
Bonus scheme
In 2018 Targovax implemented a bonus system covering all employees.
The Group recognizes a liability and an expense for bonuses based on a short-term incentive plan
for employees linked to achievement of corporate objectives as well as individual objectives
determined by the Board. See note 10 Related parties and Management.
Total payroll and related expenses for the Group are:
Amounts in NOK thousands
2021
2020
Salaries and bonus
33 885
31 123
Employer’s national insurance contributions
3 788
4 273
Share-based compensation
1)
6 935
5 799
Pension expenses – defined contribution plan
2 200
1 613
Restructuring costs
-150
Other
1 952
724
Governmental grants
-374
-292
Total payroll and related expenses
48 386
43 090
1) Share-based compensation has no cash effect.
Number of employees calculated on a full-time basis as at end of
period
21,8
19,6
Number of employees as at end of period
22
20
Targovax ASA has a defined contribution pension scheme that complies with requirements of
Norwegian occupational pension legislation (OTP). The contribution is expensed when it is
accrued. Targovax OY has a defined contribution pension scheme that complies with requirements
of Finnish law.
Targovax annual report 2021
Page 50
10. Related parties and Management
Targovax Compensation Report
This report describes the compensation programs for Targovax. It is intended to describe programs
for senior executives and to explain how they were compensated in 2020 and will be in 2021. See
Note 9 Payroll and related expenses and 11 Share-based compensation for accounting principles
for payroll and related expenses and equity-settled share-based payments.
Section 1: Introduction by the Compensation Committee
It is our pleasure to present the Targovax Remuneration Report for the year 2021. We encourage
our shareholders to read the entire Remuneration Report before attending the Annual General
meeting in April 2022.
During 2021, Targovax has achieved a strong data package for the lead asset ONCOS-102
demonstrating promising clinical efficacy and powerful immune activation in several cancer forms
and treatment combinations. We believe that these data confirm the tremendous potential of
ONCOS as a versatile delivery vector for targeted anti-cancer payloads, and we wish to pursue this
opportunity by expanding our pipeline repertoire, including a move into the emerging circRNA
space.
Targovax is a clinical stage company with a pipeline focusing on opportunities in immuno-
oncology and particularly oncolytic adenovirus technology. In order to implement our strategy
and build shareholder value Targovax needs to be able to attract and retain experienced and
qualified key individuals. The total compensation philosophy reflects this in that equity incentives
play an important role in compensating, motivating, and retaining the employees. Moreover, the
Remuneration Committee believes that it is essential that a substantial part of management’s
compensation is aligned with the interests of Targovax’s shareholders. The equity incentive is an
important motivator of Targovax’s organization, in particular key employees, to deliver the
milestones that will advance Targovax and underpin long-term value creation. In order to make
this journey successful, it is of crucial importance for Targovax to be able to attract and retain
senior and talented individuals that are willing to build lasting careers with the company.
During the year the Remuneration Committee has engaged closely with management in order to
ensure essential means and tactics necessary to fulfil the needs of the company. Long-term
incentives have been the most important topic to ensure a successful compensation policy. The
Remuneration Committee believes that the suggested compensation policy will support and fulfil
the essential needs of sustainable engagement and long-term value creation of the company.
The Remuneration Committee will continue to measure and monitor the effectiveness of the
compensation policies and return with further amendments when needed.
Per Samuelson, Robert Burns, and Damian Marron
Targovax Compensation Committee, 9 March 2022
Section 2 – Compensation Committee activity
The Compensation Committee
The Board of Directors, with the assistance of the Compensation Committee, presented to the
Annual General Meeting 2021 the compensation principles for Targovax. The Compensation
Committee is of the view that compensation practices must support the strategic aims of the
business and enable the recruitment, motivation, and retention of senior executives as well as other
key employees. Targovax’s practices must take into account the views of regulatory and governance
bodies and the expectations of shareholders and the wider employee population. The Board of
Directors approves the total compensation of the CEO, which is communicated to the shareholders
through the Annual General Meeting. The Board of Directors has final approval of the compensation
of the Management Team, upon recommendation of the CEO and the Compensation Committee.
Compensation Committee activity
The CEO attended selected meetings of the Compensation Committee, providing input and assisting
with specific queries. The CEO did not participate in conversations regarding his own level of
compensation.
The committee covered the following matters during the year:
o Review of the overall compensation strategy and policies
o Review of the compensation levels and structure for each member of the management
team
o Review of the market competitive positioning of the compensation for each member of
the management team
o Recommendation on the base salary increase of the CEO and a review of
recommendations made by the CEO for the organization
o Assessment of fulfilment of objectives for 2021 and on resulting cash bonuses
o Recommendation on the grant of employee share options
o Recommendation on corporate objectives for 2022
Targovax annual report 2021
Page 51
Section 3 – Overview of the compensation policy
The compensation policy
The compensation policy applied in 2020 and 2021 is as follows:
Principle
Summary
Market
competitive
compensation
Targovax offers market competitive reward opportunities on a level
adequate to enable the company to attract, retain, and motivate the talent
needed to achieve our vision and business objectives. We balance the
need to provide market competitive levels of reward against a desire to be
cost-effective when determining reasonable and responsible reward
outcomes.
Pay for
performance and
commitment
An appropriate proportion of the reward package is performance-based
for top executives to ensure reward is linked to the achievement of key
financial and non-financial objectives with a balance of short and long-
term performance components - with priority being given to securing the
long-term commitment of key employees.
Transparency
Compensation programs are designed and communicated in a manner that
reinforces the linkage between business objectives, our vision, and culture.
Business
alignment and
consistency
Compensation decisions are made within an international framework to
ensure local practices are aligned and consistent with our principles and
policies. Compensation practices will remain flexible enough to evolve as
the business priorities of Targovax change.
Shareholder
alignment
Compensation programs will align the interests of all employees in driving
long-term value creation for our shareholders. Targovax will share the
success of the company wherever possible with its employees.
Element
Applied in 2021
Proposed for 2022
Base salary
✔
✔
Short term incentive for top
executives: Annual cash bonus
✔
✔
Short term incentive for all
employees: Annual cash bonus
✔
✔
Long term incentive for all
employees: Share options
✔
✔
Benefits
✔
✔
Pension
✔
✔
Equity as part of Board fee
✔
✔
Targovax annual report 2021
Page 52
Section 4 – Compensation policy for each element
The policy for each element of the compensation offered to our employees is described below
and is laid down in the Targovax’s Remuneration principles as approved by the Annual General
Meeting in 2021.
Base salary
Base salaries for individual members of the management team are reviewed annually by the
committee. The salaries are set by taking into consideration the scope of the role, the level of
experience of the individual, the geographical location of the role, internal relativity, and external
economic environment.
The overall performance rating, employee potential, and current compensation market
competitiveness will be combined to assess any proposed salary revision.
Short term incentives: annual bonus
The corporate objectives are set by the Board and determined for and agreed with the CEO. The
bonus of the CEO is determined by achievements of corporate objectives. Other
management/employee bonuses are based on the achievement of the corporate objectives as
well as individual objectives.
The level of performance achieved and the amount of bonus to be awarded individual members
of the Management Team is reviewed by the committee, in discussion with the CEO, and
approved by the Board.
The Corporate Objectives for 2021 and 2022 focus on short term execution of clinical plans and
longer-term business development.
Target bonus percentages
2021
(% of base
salary)
(% of base
salary)
2022
(% of base salary)
Erik Digman Wiklund (Chief Executive Officer)
50%
1
50%
Øystein Soug (Interim Chief Financial Officer)
35%
35%
Magnus
Jäderberg
(Chief Medical
Officer)
30%
30%
Lone Ottesen (Chief Development Officer)
30%
30%
Victor Levitsky (Chief Scientific Officer)
20%
F
20%
Ingunn Munch Lindvig (VP Regulatory Affairs)
Development)
20%
20%
Ola Melin (Head of Manufacturing)
20%
20%
1) As per 20 October 2021
The Committee may, at its discretion, review the operation of the annual bonus plan and make
recommendations to the Board for approval. Any review will take into account the overall impact
of the compensation package, the mix between fixed and variable pay, and the balance between
short and long-term performance measurement.
In 2018 Targovax implemented a bonus system covering all employees who are not part of the
management team. The criteria are the same as for the management team; based on the
achievement of the corporate objectives as well as individual objectives.
Long-term incentives
The Committee’s proposal for 2022 long-term incentives and the policy applied in 2021 are
described below.
Long term incentives proposal for 2022
Eligibility
New employees and consultants are eligible for option grants upon joining the company.
Employees and consultants will be eligible for an annual option award on a discretionary basis,
taking into account overall performance, work responsibility, importance of retention,
organization level, and position.
The Board of Directors will exercise discretion as to who will receive an equity award in any given
year, based on recommendations made by the Compensation Committee.
The Board of Directors intends to grant awards under the plan, alongside the existing option plan,
on an annual basis.
Board members are not eligible to participate.
Grant size and exercise price
The Compensation Committee shall recommend to the Board the size of the overall option grant.
The grant schedule will be determined, and reviewed, on the basis of market competitiveness of
the equity component of the compensation package and the overall size of the available share
pool approved by shareholders.
Share option grants will not be subject to any performance-based vesting conditions.
The exercise price is determined at grant and reflects the share price on the day of the grant.
Long-term incentives in 2021
In 2021, Targovax granted share options under the current share option plan in which all
employees are eligible to participate.
Targovax annual report 2021
Page 53
The share option grants are not subject to any performance-based vesting conditions. Under the
current plan, share options have been granted to employees upon joining the company.
Additional grants have been awarded to employees on a discretionary basis taking into account
the number of options held, overall performance, competitiveness of terms, work responsibility,
importance of retention, organization level, and position.
Employee vesting schedule
Granted share options vest over a four-year period as follows: 25 percent of the options vest on
the first anniversary of the grant date; and the remaining 75 percent of the options vest in equal
monthly tranches over the next 36 months. Most options expire seven years after the grant date.
In the case of termination of employment, the employee will not vest further share options
beyond notice of termination, unless the employee continues as a consultant to the company.
Unless special circumstances dictate otherwise, the terminated employee can, as a general rule,
exercise vested share options for a maximum period of six to twelve months after termination.
In the event of a Take-over or a Statutory Merger all unvested options shall vest if, within 24
months following the completion of such trade sale or merger, the option holder’s employment is
terminated by the Group.
Limits
The Board of Targovax seeks authorization from shareholders at the Annual General Meeting to
issue a maximum number of share options in total for all grants. This authorization is sought every
year and at the Annual General Meeting in March 2021, the Board was authorized to increase the
Group’s share capital in connection with share incentive arrangements to employees and
consultants by up to NOK 865 313 of the Company’s outstanding shares, options and RSUs. The
authorization to increase the share capital covers:
o Already granted options, vested as well as unvested; and
o Planned future grants of options
At the end of 2021, 7 743 106 share options were outstanding, of which 3 786 992 were vested
and exercisable at year-end 2021. Current Management Team members held 5 208 735 share
options, 2 023 149 options were held by other employees and the remaining 511 222 by board
members, previous employees, previous Oncos board members, consultants, and inventors.
At end of 2021, one Board member who had previously been granted options in legacy Oncos
before the merger in 2015, held 21 235 Targovax options converted from these legacy Oncos
options. Targovax has never and does not plan to grant options to Board members.
Pension
Targovax ASA has a defined contribution pension plan as required by the Norwegian Law and as
well an applicable contribution pension plan as required by Finnish Law for all employees
employed in Targovax OY. These pension plans apply to all employees of Targovax ASA and
Targovax OY respectively.
Currently, members of the Management Team with residence outside Norway and Finland are not
part of the company’s respective national pension plans. The company pays these executives an
annual amount in addition to base salary in lieu of their participation in a company scheme.
Other benefits
Benefits to the Management Team may comprise certain other items such as healthcare, accident
insurance, etc. on customary terms.
Severance payment
Erik Digman Wiklund (CEO), Øystein Soug (CFO) and Magnus Jäderberg (CMO) are entitled to
severance pay equal to 12 months' salary in the event of termination of employment. If Erik
Digman Wiklund (CEO) terminates the employment during the first 12 months following the
commencement of the employment, Erik Digman Wiklund (CEO) is entitled to severance pay
equals to 6 months’ Base Salary. Apart from this, no employee, including any member of
Management, has entered into employment agreements which provide for any special benefits
upon termination.
Targovax annual report 2021
Page 54
Statement for 2021
The Board of Directors complies with the decision made at Targovax ASA’s Ordinary General Meeting on 17 March 2021 to approve of the Board of Directors’ statement concerning principles for
Management compensation pursuant to Norwegian Public Limited Companies Act section 6–16a. The principles for 2021 were identical to the principles listed above.
Section 5 – Compensation tables for 2021 and 2020
Remunerations and other benefits in 2021:
Amounts in NOK thousands
Fixed annual fee as at
31 Dec 2021
Earned fees in
cash in 2021
Earned fees in RSU’s
in 2021
Earned committee
meetings fee per
31.12
Exercise of share
options/RSUs
Total remuneration
earned in 2021
Board of Directors of Targovax ASA:
Damian Marron, Chairperson of the Board
1
511
341
170
40
551
Bente-Lill Bjerkelund Romøren, Board member
298
223
75
40
338
Johan Christenson, Board member
298
298
20
318
Catherine Wheeler, Board member
45
45
Per Samuelsson, Board member
298
298
56
354
Robert Burns, Board member
298
298
20
318
Eva-Lotta Allan, Board member
298
198
99
20
318
Diane Mellett, Board member
298
123
174
52
350
Sonia Quaratino, Board member
225
75
150
Total Board of Directors
2
2 521
1 555
966
248
45
2 589
1) Catherine Wheeler was replaced by Sonia Quaratino at the AGM 2021.
2) The Board members may choose to receive their Board fee either in RSUs or in cash. Please see the table for holding of RSUs for further details on the Board related remuneration.
Targovax annual report 2021
Page 55
Amounts in NOK thousands
Fixed annual salary as
at 31 Dec 2021
Earned salaries in
2021
Bonus earned in
2021
Pension
expenses in
2021
Benefits in kind in
2021
Exercise of share
options/RSUs
Total remuneration
in 2021
Management team:
Erik Digman Wiklund, Chief Executive Officer
1
2 500
2 137
561
90
10
-
2 799
Øystein Soug, Interim Chief Financial Officer
2
2 814
2 927
739
90
8
-
3 763
Magnus Jäderberg, Chief Medical Officer
3
2 928
2 929
755
-
704
-
4 389
Lone Ottesen, Chief Development Officer
3,4
2 720
1 369
354
196
66
1 985
Victor Levitsky, Chief Scientific Officer
5
475
2 053
472
-
569
-
3 094
Ingunn Munch Lindvig, VP Regulatory Affairs
1 469
1 494
268
90
7
-
1 830
Ola Melin, Head of Manufacturing
6
1 549
352
65
97
42
-
556
Total Management Team
7, 8
14 455
13 261
3 184
563
1 407
-
18 415
1) Erik Digman Wiklund became CEO 20
th
October 2021. Prior to that he was the CBO of Targovax.
2) Øystein Soug became interim CFO 20
th
October 2021. Prior to that he was the CEO of Targovax.
3) Fixed annual salary is the annual salary in GBP multiplied by the average exchange rate throughout the year.
4) Lone Ottesen joined Targovax 1 July 2021.
5) Victor Levitsky is working 20% for Targovax as per 31.12.2021.
6) Ola Melin joined Targovax 1 October 2021. Fixed annual salary is the annual salary in SEK multiplied by the average exchange rate throughout the year.
7) Torbjørn Furuseth resigned from his position as CFO on 31 October 2021. During 2021 his remuneration consisted of TNOK 2 150 in salary, TNOK 364 in bonus, TNOK 74 in pension and TNOK 10 in benefits in kind.
8) Kirsi Hellström resigned from the Management Team during 2021, her remuneration in 2021 consisted of TNOK 826 in salary, TNOK 131 in bonus, TNOK 146 in pension and TNOK 2 in benefits in kind and TNOK 7 in exercise of share options.
All amounts in the tables exclude National Insurance Contribution.
In 2021, the annual general meeting of the Company resolved that all current board members shall receive NOK 300 000 and the Chairperson of the Board NOK 515 000 for the period from the annual
general meeting in 2021 and until the annual general meeting in 2022. If the current board members have served for a shorter period than since the annual general meeting in 2021, the remuneration shall
be pro rata adjusted down (based on the number of days served compared to the full period). The members of the board of directors may choose to receive their remuneration, or parts thereof, in the form
of restricted stock units (RSUs). The remuneration in cash shall be payable immediately after the annual general meeting in 2022. Members of board committees shall receive an additional remuneration of
NOK 4 000 per committee meeting, however not less than NOK 20 000 for the period and the chairpersons of such committees shall receive remuneration of NOK 8 000 per meeting, however not less than
NOK 40 000 for the period.
In 2021 NOK 0.2 million was recognized as expense for Board remunerations in RSUs for the period January-Mar 2021 and NOK 0.9 million for the period April 2021 to December 2021.
The Group has recognized as expense NOK 3.5 million, excluding National Insurance Contribution, in provision for bonuses to the Management Team as per 31 December 2021.
The Group has recognized as expense NOK 5.2 million in share-based compensation for the year 2021 to the Management Team as per 31 December 2021. There are no outstanding loans or guarantees
made to the Board of Directors or the Management Team at 31 December 2021.
Targovax annual report 2021
Page 56
Remunerations and other benefits in 2020:
Amounts in NOK thousands
Fixed annual fee as at
31 Dec 2020
Earned fees in cash
in 2020
Earned fees in RSU’s
in 2020
Earned committee
meetings fee per
31.12
Exercise of share
options/RSUs
Total
remuneration
earned in
2020
Board of Directors of Targovax ASA:
Damian Marron, Chairperson of the Board
1
375
250
125
32
407
Patrick Vink, former Chairperson of the Board
1
123
123
4
714
841
Bente-Lill Bjerkelund Romøren, Board member
290
266
24
20
86
396
Johan Christenson, Board member
290
290
20
310
Catherine Wheeler, Board member
290
266
24
290
Per Samuelsson, Board member
290
290
40
330
Robert Burns, Board member
290
290
20
310
Eva-Lotta Allan, Board member
290
145
145
20
310
Diane Mellett, Board member
290
193
97
28
111
429
Total Board of Directors
2
2 528
1 700
828
184
911
3 623
1) Patrick Vink, the former Chairperson of the Board, was replaced by Damian Marron as of 29.04.2020.
2) The Board members may choose to receive their Board fee either in RSUs or in cash. Please see the table for holding of RSUs for further details on the Board related remuneration.
Amounts in NOK thousands
Fixed annual salary as
at 31 Dec 2020
Earned salaries in
2020
Bonus earned in
2020
Pension expenses in
2020
Benefits in kind
in 2020
Exercise of share
options/RSUs
Total remuneration
in 2020
Management team:
Magnus Jäderberg, Chief Medical Officer
1
2 900
2 885
773
-
694
-
4 351
Øystein Soug, Chief Executive Officer
2 734
2 840
880
76
8
-
3 805
Victor Levitsky, Chief Scientific Officer
2 504
1 419
374
-
397
-
2 191
Ingunn Munch Lindvig, VP Regulatory Affairs
1 428
1 365
268
75
8
-
1 717
Anne-Sophie Møller, Head of Clinical Science
1 149
1 169
215
71
8
-
1 463
Kristiina Hyvärinen, Director CMC
2
799
683
122
143
2
10
959
Kirsi Hellström, Head of CMC
772
767
92
147
3
-
1 014
Torbjørn Furuseth, Chief Financial Officer
Quality Assurance
1 965
1 997
566
75
9
-
2 648
Erik Digman Wiklund, Chief Business Officer
1 900
1 953
547
76
9
-
2 585
Total Management Team
16 151
15 078
3 843
663
1 138
10
20 731
1) Fixed annual salary is the annual salary in GBP multiplied by the average exchange rate throughout the year.
2) Kristiina Hyvarinen resigned from her position as Head of CMC on 31 August 2020.
Targovax annual report 2021
Page 57
All amounts in the tables exclude National Insurance Contribution.
In 2020, the annual general meeting of the Company resolved that all current board members shall receive NOK 290 000 and the Chairperson of the Board NOK 500 000 for the period from the annual
general meeting in 2020 and until the annual general meeting in 2021. If the current board members have served for a shorter period than since the annual general meeting in 2020, the remuneration shall
be pro rata adjusted down (based on the number of days served compared to the full period). The members of the board of directors may choose to receive their remuneration, or parts thereof, in the form
of restricted stock units (RSUs). The remuneration in cash shall be payable immediately after the annual general meeting in 2021. Members of board committees shall receive an additional remuneration of
NOK 4 000 per committee meeting, however not less than NOK 20 000 for the period and the chairpersons of such committees shall receive remuneration of NOK 8 000 per meeting, however not less than
NOK 40 000 for the period.
In 2020 NOK 0.3 million was recognized as expense for Board remunerations in RSUs for the period May 2019-April 2020 and NOK 0.5 million for the period May 2020 to December 2020.
The Group has recognized as expense NOK 3.6 million in share-based compensation to the Management Team at 31 December 2020. There are no outstanding loans or guarantees made to the Board of
Directors or the Management Team at 31 December 2020.
Targovax annual report 2021
Page 58
Holding of shares, options for shares and RSUs, including those of close associates, as at 31 December 2021:
Holding
shares as at
31 Dec 2021
% ownership
31 Dec
2021
Expired
options
2021
Exercised
options
2021
Granted
options
2021
Holding of options
as at 31 Dec 2021
Exercised
RSU’s 2021
Granted
RSU’s
2021
4
Holding of
RSU’s as at 31
Dec 2021
4
Board of Directors of Targovax ASA:
Damian Marron, Chairperson of the Board
-
19 503
43 988
Bente-Lill Bjerkelund Romøren, Board member
35 577
0.02%
-
-15 250
11 361
11 361
Johan Christenson, Board member
1
-
-
Sonia Quaratino, Board member
22 722
22 722
Per Samuelsson, Board member
1
-
-
Robert Burns, Board member
187 103
0.10 %
21 235
34 083
122 434
Eva-Lotta Allan, Board member
71 368
0.04 %
-
11 361
40 811
Diane Mellett, Board member
96 029
0.05 %
-
22 722
58 221
Total Board of Directors
390 077
0.21 %
-
-
21 235
-15 250
121 752
299 537
Management team:
Erik Digman Wiklund, Chief Executive Officer
2
100 000
0.05 %
450 000
1 200 000
Magnus Jäderberg, Chief Medical Officer
20 000
0.01 %
- 133 265
946 735
Lone Ottesen, Chief Development Officer
47 000
0.02 %
490 000
490 000
Øystein Soug, Interim Chief Financial Officer
3
320 000
0.17 %
1 310 000
Victor Levitsky, Chief Scientific Officer
10 000
0.01 %
45 000
545 000
Ola Melin, Head of Manufacturing
50 000
0.03 %
325 000
325 000
Ingunn Munch Lindvig, VP Regulatory Affairs
10 000
0.01 %
125 000
392 000
Total Management
5
557 000
0.30 %
-133 265
-
1 435 000
5 208 735
-
-
-
Total
947 077
0.50 %
-133 265
-
1 435 000
5 229 970
-15 250
121 4752
299 537
1) Johan Christenson and Per Samuelsson, both Member of the Board, are partners at HealthCap, HealthCap owns 12 458 375 shares at 31.12.2021
2) The shares are held through Digman AS
3) The shares are held through Abakus Invest AS
4) Granted RSUs to the Board of Directors are a part of the yearly Board remuneration fee which the Board members can select either to receive in cash or in RSUs. Catherine Wheeler left the Board of Targovax March 2021. She exercised 6 049 RSUs during 2021 and holds no RSUs as per 31.12.21.
5) Torbjørn Furuseth resigned from his position as CFO on 31 October 2021. Per 31.12.21 he holds 248 738 options, but no shares. Kirsi Hellström left the management team 1.12.21. Per 31.12.21 she holds 4 350 shares and 264 000 options.
Targovax annual report 2021
Page 59
Holding of shares, options for shares and RSUs, including those of close associates, as at 31 December 2020:
Holding
shares as at
31 Dec 2020
% ownership
31 Dec
2020
Expired
options
2020
Exercised
options
2020
Granted
options
2020
Holding of options
as at 31 Dec 2020
Exercised
RSU’s 2020
Granted
RSU’s
2020
3
Holding of
RSU’s as at 31
Dec 2020
5
Board of Directors of Targovax ASA:
Damian Marron, Chairperson of the Board
-
24 485
24 485
Bente-Lill Bjerkelund Romøren, Board member
20 327
0.02%
-
14 863
15 250
Johan Christenson, Board member
1
-
-
Catherine Wheeler, Board member
6 049
Per Samuelsson, Board member
1
-
-
Robert Burns, Board member
86 020
0.10 %
21 235
42 604
88 351
Eva-Lotta Allan, Board member
51 368
0.06 %
-
14 201
29 450
Diane Mellett, Board member
44 149
0.05 %
-
26 445
14 201
35 499
Total Board of Directors
201 864
0.23 %
-
-
21 235
41 308
95 491
199 084
Management team:
Øystein Soug, Chief Executive Officer
2
200 000
0.23 %
300 000
300 000
1 310 000
Magnus Jäderberg, Chief Medical Officer
20 000
0.02 %
150 000
1080 000
Erik Digman Wiklund, Chief Business Officer
-
0.00 %
190 000
750 000
Torbjørn Furuseth, Chief Financial Officer Quality
Assurance
15 000
0.02 %
190 000
620 000
Victor Levitsky
-
0.00 %
500 000
500 000
Ingunn Munch Lindvig, VP Regulatory Affairs
10 000
0.01 %
150 000
267 000
Anne-Sophie Møller, Head of Clinical Science
-
0.00 %
80 000
250 500
Kirsi Hellström, Head of CMC
-
0.00 %
145 000
221 000
Kristiina Hyvärinen, Director CMC
4
-
0.00 %
126 878
6 664
-
41 958
Total Management
245 000
0.28 %
426 878
6 664
1 705 000
5 040 458
-
-
-
Total
446 864
0.52 %
426 878
6 664
1 705 000
5 061 693
41 308
95 491
199 084
1) Johan Christenson and Per Samuelsson, both Member of the Board, are partners at HealthCap, HealthCap owns 12 458 375 shares at 31.12.2020
2) The shares are held through Abakus Invest AS
3) Granted RSUs to the Board of Directors are a part of the yearly Board remuneration fee which the Board members can select either to receive in cash or in RSUs.
4) Kristiina Hyvärinen resigned from her position as Head of CMC on 31 August 2020.
5) Patrick Vink, the former Chairman of the Board exercised 123 159 RSUs in 2020, hence no outstanding balance at 31.12.2020.
Targovax annual report 2021
Page 60
Total outstanding options for shares by range of exercise price at 31 December 2021:
Exercise price in NOK
2.18
5.19-5.59
6.00-6.06
7.16-8.72
9.61
11.81
16.59
20.58
21.38
24.42
37.60
Total
Board of Directors of
Targovax ASA:
Robert Burns, Board member
21 235
21 235
Total Board of Directors
21 235
Management team:
Erik Digman Wiklund, CEO
200 000
380 000
130 000
190 000
150 000
150 000
1 200 000
Øystein Soug, Interim CFO
150 000
300 000
300 000
220 000
250 000
90 000
1 310 000
Magnus Jäderberg, CMO
90 000
80 000
150 000
120 000
100 000
150 000
256 735
946 735
Victor Levitsky
45 000
250 000
250 000
545 000
Lone Ottesen, CDO
140 000
350 000
490 000
Ingunn Munch Lindvig, VP
Regulatory Affairs
125 000
27 000
90 000
150 000
392 000
Ola Melin, Head of
Manufacturing
75 000
250 000
325 000
Total Management
1,2
585 000
27 000
960 000
1 110 000
1 040 000
120 000
470 000
150 000
400 000
346 735
-
5 208 735
Total
585 000
27 000
960 000
1 110 000
1 040 000
120 000
470 000
150 000
400 000
346 735
21 235
5 229 970
1) Torbjørn Furuseth resigned from his position as Chief Financial Officer on 31 October 2021. As of 31.12.2021 he holds 48 748 options for shares of exercise price 6,00, 62 494 at 7,16 and 137 496 at 9,68.
2) Kirsi Hellström left the management team 1.12.21. As of 31.12.2021 she holds 45 000 options for shares of exercise price 2.18, 10 000 of 5,19, 25 000 of 6,00, 25 000 of 6,52, 20 000 of 7,16, 120 000 of 9,61, 9 000 of 16,59 and 10 000 of 25,65.
Targovax annual report 2021
Page 61
Total outstanding options for shares by range of exercise price at 31 December 2020:
Exercise price in NOK
5.77-6.17
6.58-7.10
7.74-9.30
10.19
10.26
12.39
15.21
17.17
21.16
21.96
25-26.22
37.60
Total
Board of Directors of Targovax
ASA:
Robert Burns, Board member
21 235
21 235
Total Board of Directors
21 235
Management team:
Øystein Soug, CEO
150 000
300 000
300 000
220 000
250 000
90 000
1 310 000
Magnus Jäderberg, CMO
90 000
80 000
150 000
120 000
100 000
150 000
390 000
1 080 000
Erik Digman Wiklund, CBO
130 000
130 000
190 000
150 000
150 000
750 000
Torbjørn Furuseth, CFO
130 000
100 000
190 000
200 000
620 000
Victor Levitsky
250 000
250 000
500 000
Ingunn Munch Lindvig, VP
Regulatory Affairs
27 000
90 000
150 000
267 000
Anne-Sophie Møller, Head of CS
12 000
90 000
30 000
80 000
10 000
13 500
15 000
250 500
Kirsi Hellström
12 000
50 000
20 000
120 000
9 000
10 000
221 000
Kristiina Hyvärinen, Dir. CMC
1
12 809
10 000
7 590
11 559
41 958
Total Management
51 000
730 000
910 000
1 430 000
200 000
142 809
10 000
500 090
150 000
426 559
490 000
-
5 040 458
Total
51 000
730 000
910 000
1 430 000
200 000
142 809
10 000
500 090
150 000
426 559
490 000
21 235
5 061 693
1) Kristiina Hyvärinen resigned from her position as Head of CMC on 31 August 2020.
Targovax annual report 2021
Page 62
Related party transactions
The Company entered into a consulting agreement with Levitski V-Biopharm Consulting, a Zurich
based company, in April 2020. Levitski V-Biopharm Consulting is a related party of Victor Levitsky,
who is a member of Targovax Management Team, Chief Scientific Officer as from April 2020.
Levitski V-Biopharm Consulting is entitled to a consultancy fee of CHF 26,874 per month for a
100% position. Viktor Levitsky reduced his position from 100% to 20% as of 1 November 2021.
Related party transactions:
2021
2020
Amounts in NOK thousands
Revenue
(expense)
Receivable
(Payable) at
31 December
Revenue
(expense)
Receivable
(Payable) at
31 December
Levitski V-Biopharm Consulting
-2 969
-
-1 271
-258
Remuneration to the statutory auditor (excl. VAT)
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Statutory audit
489
385
Other attestation services
-
18
Tax services
-
50
Other services
48
27
Total
537
480
Targovax annual report 2021
Page 63
11. Share-based compensation
Equity-settled share-based payments are measured at the fair value of the equity instruments at
the grant date.
The fair value of the employee services received in exchange for the grant of the options is
recognized as an expense, based on the Company's estimate of equity instruments that will
eventually vest. The total amount to be expensed is determined by reference to the fair value of
the options granted excluding the impact of any non-market service and performance vesting
conditions. The grant date fair value of the options granted is recognized as an employee expense
with a corresponding increase in equity, over the period that the employees become
unconditionally entitled to the options (vesting period).
The fair value of the options granted is measured using the Black-Scholes model. Measurement
inputs include share price on measurement date, exercise price of the instrument, expected
volatility, weighted average expected life of the instruments, expected dividends, and the risk-free
interest rate.
Service and non-market performance conditions attached to the transactions are not taken into
account in determining fair value.
When the options are exercised, the Company issues new shares. The proceeds received net of
any directly attributable transaction costs are recognized as share capital (nominal value) and
share premium reserve.
At the end of each reporting period, the group revises its estimates of the number of options that
are expected to vest. It recognizes the impact of the revision to original estimates, if any, in
statement of profit or loss, with a corresponding adjustment to equity. Changes to the estimates
may significantly influence the expense recognized during a period.
Share options
The Group operates an equity-settled, share-based compensation plan, under which the entity
receives services from employees as consideration for equity instruments (options) in Targovax
ASA.
At the Annual General Meeting (AGM) in March 2021 the Board of Directors was authorized to
increase the Group’s share capital in connection with share incentive arrangements by up to the
lower of (a) NOK 1 250 000 and (b) 10% of the Company's outstanding shares, options and RSU's.
This authorization replaces the previous authorizations to increase the share capital by up to the
lower of NOK 1 000,000 and b) 10% of the Company’s outstanding shares, options and RSUs given
to the Board of Directors at the AGM held in April 2020.
The Company has granted share options under its long-term incentive program (the “LTI Option
Program”). The Option Program applies to the Management Team as well to employees in
general. Certain former employees and former board members have also been granted options
under the LTI Option Program.
Additionally, the Company has in the past granted options as payment for inventions (the “IPR
Option Program”).
Each share option converts into one ordinary share of the Company on exercise. Options may be
exercised at any time from the date of vesting until expiry. The options generally vest over a
period of four years: 25 percent of the options vest on the first anniversary of the grant date and
the remaining 75 percent of the options vest in equal monthly tranches over the next 36 months.
Options expire seven years after the grant date.
In general, the exercise price of the options is set at the fair value of the shares at grant date.
Certain former employees and former board members have also been granted options under the
LTI Option Program as replacement for historical option holdings.
There were granted 2 225 000 share options during 2021 and 2 335 000 share options during
2020.
As of 31 December 2021, there are in total 7 743 106 (7 310 067 at 31 December 2020)
outstanding options for all option programs, 7 652 698 (7 219 659 at 31 December 2020)) options
under the LTI Option Program and 90 408 (90 408 at 31 December 2020) options under the IPR
Option Program.
Fair value of the options has been calculated at grant date. The fair value of the options was
calculated using the Black-Scholes model. The expected volatility for options issued in 2021 and
2020 is estimated at average of 75,82% and 76,06 %%, based on the volatility of comparable listed
companies. The volume weighted average interest rate applied to the share options grants in
2021 and 2020 is 1,33% and 0,42%.
Targovax annual report 2021
Page 64
The following table shows the changes in outstanding options in 2021 and 2020:
2021
2020
No. of
options
Weighted avg.
exercise price
(in NOK)
No. of
options
Weighted avg.
exercise price
(in NOK)
Outstanding at 1
January
7 310 067
12.94
6 028 642
15.26
Granted during the
period
2 225 000
4.59
2 335 000
9.94
Exercised during the
period
-29 788
6.64
-10 726
7.74
Forfeited
-1 124 017
8.70
-243 230
7.37
Expired
-638 156
19.83
-799 619
23.41
Outstanding no. of
options at end of
period
7 743 106
10.13
7 310 067
12.94
1) See Note 10 Related parties and Management for further information on granted share options to Management
Team.
The average fair value of options granted in 2021 was 2.49 per share and 5.45 per share in 2020.
The weighted- average assumptions used to determine the Black Scholes fair value of options
granted in 2021 and 2020 were:
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Volatility (%)
75.82
76.06
Expected life (in years)
3.66
3.66
Risk-free interest rate (%)
1.33
0.42
Share price (NOK)
4.62
10.17
Exercise price (NOK)
4.59
9.94
The expensed share options, NOK 5.8 million in 2021 (Targovax ASA: NOK 5.2 million and Targovax
OY: NOK 0.6 million) and NOK 4.9 million in 2020 (Targovax ASA: NOK 4.4 million and Targovax OY:
NOK 0.5 million), includes management estimate for employee turnover. The estimated turnover
rate used for the year 2021 and 2020 was 10%.
Targovax annual report 2021
Page 65
At 31 December 2021, the range of exercise prices and weighted average remaining contractual life of the options were as follows:
Outstanding options
Vested outstanding
Exercise price
Outstanding options per
12/31/2021
Weighted average
remaining contractual life
Weighted average remaining
years until vesting
Weighted average
exercise price
Vested outstanding per
12/31/2021
Weighted average
exercise price
Weighted average
remaining life vested
0.00-0.51
64 872
0.50
0.38
0.51
14 833
0.51
0.50
0.51-7.50
3 287 982
5.47
1.23
4.83
1 023 671
6.48
3.38
7.50-9.30
785 000
5.23
1.03
8.30
253 330
8.66
3.27
9.30-12.39
1 827 496
4.94
0.90
9.90
739 996
10.34
3.41
12.39-21.50
1 285 309
2.48
0.00
19.11
1 262 715
19.16
2.47
21.50-21.96
-
0.00
0.00
0.00
-
0.00
0.00
21.96-25.00
381 433
0.50
0.00
24.42
381 433
24.42
0.50
25.00-37.60
111 014
0.67
0.00
36.52
111 014
36.52
0.67
Total
7 743 106
4.47
0.84
10.13
3 786 992
14.27
2.69
At 31 December 2020, the range of exercise prices and weighted average remaining contractual life of the options were as follows:
Outstanding options
Vested outstanding
Exercise price
Outstanding options per
12/31/2020
Weighted average
remaining contractual life
Weighted average remaining
years until vesting
Weighted average
exercise price
Vested outstanding per
12/31/2020
Weighted average
exercise price
Weighted average
remaining life vested
0.00-0.51
64 872
1.50
1.16
0.51
14 833
0.51
1.50
0.51-7.50
1 234 000
5.93
1.10
6.47
319 242
6.42
5.90
7.50-9.30
1 216 000
5.09
0.75
8.25
502 519
8.22
4.21
9.30-12.39
2 490 298
6.14
1.70
10.50
457 480
11.85
2.85
12.39-21.50
950 128
3.30
0.11
18.22
756 305
18.43
3.11
21.50-21.96
681 755
2.70
0.01
21.96
635 487
21.96
2.66
21.96-25.00
562 000
1.07
0.00
25.00
562 000
25.00
1.07
25.00-37.60
111 014
1.44
0.00
36.58
109 969
36.67
1.42
Total
7 310 067
4.74
0.91
12.94
3 357 835
17.15
3.01
From 1 January 2022 to 9 March 2022, 300 000 share options were granted to members of management, and 115 000 additional share options were granted to other employees of the Group, see note 23
Events after the reporting date.
Targovax annual report 2021
Page 66
Restricted Stock Units
The Board of directors may choose to receive their remuneration, or parts thereof, in the form
of restricted stock units (RSUs). If the Board members choose to receive the Board remuneration
in RSUs they must choose to either (i) receive 100% of the compensation in RSUs, (ii) receive 1/3
of the compensation in cash and 2/3 in RSUs, or (iii) receive 2/3 of the compensation in cash and
1/3 in RSUs.
The number of RSUs to be granted to the members of the Board of Directors is calculated as the
NOK amount of the RSU opted portion of total compensation to the Board member, divided by
the market price of the Targovax ASA share. The market price is calculated as the volume
weighted average share price the 10 trading days prior to the grant date. The RSUs will be non-
transferrable and each RSU will give the right and obligation to acquire shares in Targovax ASA
(at nominal value) subject to satisfaction of the applicable vesting conditions. When the RSUs
have vested, the participant must during the following three-year period select when to take
delivery of the shares.
The total compensation to each member of the Board of Directors for the period between the
AGM 2021-2022 have been set out in the minutes from the Annual General Meeting 17 March
2021. The Annual General Meeting 17 March 2021 decided to remunerate the Board of
Directors for the period between the AGM 2021 to the AGM 2022 with a combination of cash
and Restricted Stock Units (RSUs), hence at the 17 March 2021, additional 121 752 RSUs were
granted to the Board of Directors.
The average fair value of RSUs granted in 2021 was 8.67 per share and 8.22 per share in 2020.
The weighted- average assumptions used to determine the Black Scholes fair value of RSUs
granted in 2021 and 2020 were:
Amounts in NOK thousands
2021
2020
Volatility (%)
65.00
77.93
Expected life (in years)
1
1
Risk-free interest rate (%)
0.23
0.29
Share price (NOK)
8.77
8.32
Exercise price (NOK)
0.1
0.1
The expensed RSUs in 2021 and 2020 was NOK 1.1 million and NOK 0.9 million. A total of
299 537 RSUs was outstanding at 31 December 2021.
The following table shows the changes in outstanding RSUs in 2021 and 2020:
2021
2020
No. of
RSU’s
Weighted avg.
exercise price
(in NOK)
No. of
RSU’s
Weighted avg.
exercise price
(in NOK)
Outstanding at 1 January
199 084
0.10
268 060
0.10
Granted during the period
121 752
0.10
95 491
0.10
Exercised during the period
-21 299
0.10
-164 467
0.10
Forfeited
-
-
-
-
Expired
-
-
-
-
Outstanding no. of
Restricted Stock Units at end
of period
299 537
0.10
199 084
0.10
From 1 January 2022 to 9 March 2022 no RSUs have been granted to Board of Directors.
Targovax annual report 2021
Page 67
12. Other operating expenses
Expenditure on Other operating expenses is recognized in the statement of profit or loss as an
expense in the period in which it is incurred.
Amounts in NOK thousands
2021
2020
Consultancy, advisors' expenses and IR
4 144
7 746
Travel expenses
379
326
Facilities expenses
540
754
IT services and IT-related accessories
1 695
1 846
Conferences and training
312
325
Other
1 397
1 663
Government Grants
-1
-1
Total operating expenses
8 466
12 658
13. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
Financial assets
The Group´s financial assets are: trade receivables, governmental grant receivables and cash and
cash equivalents.
The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing them. With
the exception of trade receivables that do not contain a significant financing component, the
Group initially measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
The Group measures financial assets at amortised cost if both of the following conditions are
met:
• The financial asset is held within a business model with the objective to hold financial
assets in order to collect contractual cash flows and,
• The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR)
method and are subject to impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
The Groups financial assets at amortised cost includes trade receivables, governmental grant
receivables and other short-term deposit. Trade receivables that do not contain a significant
financing component are measured at the transaction price determined under IFRS 15 Revenue
from contracts with customers.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated
statement of financial position) when:
- The rights to receive cash flows from the asset have expired, or
- The Group has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full without material delay to
a third party under a ‘pass-through’ arrangement; and either
Targovax annual report 2021
Page 68
o the Group has transferred substantially all the risks and rewards of the asset,
or
o the Group has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset
Financial assets at amortized cost
Currently, all the Group's financial assets are categorized as receivables. As at 31 December 2021
and 2020 the Group have TNOK 0 in trade receivables, TNOK 3 263 and TNOK 866 in government
grant receivables and the Group have TNOK 1 199 and TNOK 1 217 in short-term deposits. The
Group has currently not recognized any non-current financial assets.
Financial liabilities
Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as
derivatives designated as hedging instruments in an effective hedge, as appropriate. Derivatives
are recognized initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
Derivatives are financial liabilities when the fair value is negative, accounted for similarly as
derivatives as assets.
Loans, borrowings and payables
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the
liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs
in the statement of profit or loss.
Payables are measured at their nominal amount when the effect of discounting is not material.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts
is recognized in the statement of profit or loss.
Liabilities at amortized cost (Loans and borrowings)
This is the category most relevant to the Group. After initial recognition, interest-bearing loans
and borrowings are subsequently measured at amortized cost using the EIR method. See note 21
Interest-bearing debt and 22 Current liabilities for information about Business Finland loans.
Finance income and expense
All finance income and finance expense, except for foreign exchange income/expense, are
related to financial assets and financial liabilities carried at amortized cost. Finance income
consists of interest income and foreign exchange gain. Finance expense mainly consist of
interest expense and exchange loss.
Finance income is:
Amounts in NOK thousands
2021
(% of base
salary)
2020
(% of base salary)
Interest income on bank deposit
-26
98
Interest income on Money Market fund, Nordea Likviditet
III
269
471
Interest income on tax repaid
1
27
Net currency gain - bank and other operating items
-
-
Other finance income
-
-
Total finance income
245
596
Finance expense is:
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Interest expense – Business Finland Loan
1 539
4 023
Interest expense on lease liabilities
310
249
Other interest expense
161
81
Net currency gain - bank and other operating items
658
702
Other finance expense
-
43
Total finance expense
2 667
5 099
Targovax annual report 2021
Page 69
14. Tax
Income tax expense comprise current income tax (tax payable) and deferred tax. Deferred taxes
are recognized based on temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit. Deferred tax assets arising from deductible temporary differences are recognized
to the extent that it is probable that taxable profits will be available so temporary differences
can be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realized, based on tax rates that have been
enacted or substantively enacted by the end of the reporting period.
The tax losses can be carried forward indefinitely in Norway and in Finland it can be carried
forward and offset against taxable income in ten years for tax purposes. The Group considers
that a deferred tax asset related to accumulated tax losses cannot be recognized in the
statement of financial position until the product under development has been approved for
marketing by the relevant authorities. This assumption is continually assessed, and changes
could lead to significant deferred tax asset being recognized in the future. This assumption
requires significant management judgment.
The Group is in the research phase of its product development and has incurred significant tax
losses related to its operations. Targovax ASA has a total tax loss carried forward of NOK 526
million at 31 December 2021 (31 December 2020: NOK 451 million). The research and
development expenses in Targovax Oy is fiscally capitalized for tax purposes resulting in a
temporary difference of NOK 328 million at 31 December 2021 and NOK 304 million at 31
December 2020.
Accumulated tax losses from Targovax OY’s operations amounts to EUR 23.2 million as of 31
December 2021 and EUR 23.6 million as of 31 December 2020. With a current tax rate in Finland
of 20%, the corresponding deferred tax asset is EUR 4.6 million as at 31 December 2021 and EUR
4.7 million as at 31 December 2020. Targovax OY has not recognized any deferred taxes under
FGAAP. Tax losses in Finland can be carried forward and offset against taxable income in ten
years for tax purposes. Targovax OY has not generated taxable income in prior years and is not
expected to generate taxable income in the nearest future. Due to the uncertainty for future
taxable profit within the ten years limitation of use, the company has assessed that it cannot be
considered as probable that future taxable profit can be used against the tax losses carried
forward.
However, the Group has recognized a deferred tax liability on temporary differences on the
acquired intangible assets, per 31 December 2021 of NOK 59,3 million and per 31 December
2020 of NOK 62.0 million.
The tax effects of temporary differences and tax losses carried forward at
31 December are as follows:
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Intangible and fixed assets
294 044
307 369
Capitalized R&D for tax purposes
-328 104
-303 720
Leasing
-173
-92
Borrowings
9 522
10 855
Share options and RSUs
-82
-671
Financial instruments
30
118
Tax loss carried forward
-757 881
-697 877
Temporary differences and tax losses carried
forward at 31.12
-782 645
-684 019
Temporary differences and tax losses carried
forward at 31.12 not recognized
1 079 215
994 252
Deferred tax asset (22%/20%) not recognized
237 437
218 736
Deferred tax asset 31.12
-
-
Recognized temporary differences at 31.12
296 570
310 234
Deferred tax liability 31.12
59 314
62 047
The tax on the Group’s profit before tax differs from the theoretical amount that would arise
using the domestic tax rate applicable to profits of the consolidated entities as follows:
Amounts in NOK thousands
2021
(% of base salary)
2020
Loss before income tax
-98 023
-108 403
Tax calculated at domestic rate (22%) / (22%)
-21 565
-23 849
Tax effect permanent differences
-5 342
-1 994
Tax effect of change in tax rates
-
-
Change in deferred tax asset not recognized
25 899
24 199
Effect on different tax rates in countries in which
the Group operates
957
1 367
Other
-
-
Tax income / expense (-)
52
277
Targovax annual report 2021
Page 70
15. Intangible assets and impairment test
Intangible assets
Intangible assets that relate to intellectual property rights acquired through licensing or
assigning patents and know-how are carried at historical cost less accumulated amortization,
where the useful life is finite and the asset is likely to generate economic benefits exceeding
costs. Where a finite useful life of the acquired intangible asset cannot be determined, the asset
is not subject to amortization, but is when indication, or at least tested annually for impairment.
Acquired intangible assets will not be subject to amortization until market authorization is
obtained with the regulatory authorities and the intangible assets are available for use.
Amortization on items of Intangible assets will be amortized using the straight-line method to
allocate their cost to their residual values over their estimated useful lives.
Research costs are recognized in the statement of profit or loss as incurred. Internal
development costs related to the Group’s development of products are recognized in the
statement of profit or loss in the year in which they are incurred unless they meet the
recognition criteria of IAS 38, “Intangible assets.” Uncertainties related to the regulatory
approval process and other factors generally means that the criteria are not met until the time
when the marketing authorization is obtained with the regulatory authorities.
Impairment of non-financial assets
Assets that are subject to amortization are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating units). Non-
financial assets other than goodwill that suffered impairment are reviewed for possible reversal
of the impairment at each reporting date.
Intangible assets consist of:
o Patents and license fees with estimated useful live of 10 years
o Capitalized value related to the acquisition of Oncos Therapeutics OY, not subject to
amortization before market authorization is obtained
Amounts in NOK thousands
Patents and
licence fees
(% of base salary)
Oncos Therapeutics
OY acqusition
Total
Cost:
2020
Opening balance
282
367 076
367 358
Additions
-
-
-
Exchange differences
1
22 571
22 571
At 31 December 2020
283
389 646
389 929
2021
Opening balance
283
389 646
389 929
Additions
-
-
-
Exchange differences
-
-17 919
-17 919
At 31 December 2021
283
371 727
372 010
Accumulated depreciation and
impairment:
2020
Opening balance
275
-
275
Depreciation and impairment
charge
8
-
8
At 31 December 2020
283
-
283
2021
Opening balance
283
-
283
Depreciation and impairment
charge
-
-
-
At 31 December 2021
283
-
283
Carrying amount:
At 31 December 2020
-
389 646
389 646
At 31 December 2021
-
371 727
371 727
Targovax annual report 2021
Page 71
As of 31 December 2021, the recognized intangible assets in the Group amounts to NOK 372
million. This is an decrease from NOK 390 million as of 31 December 2020, mainly due to
NOK/EUR foreign exchange fluctuations. The main part of the intangible assets is derived from
the acquisition of Oncos Therapeutics OY which was completed in July 2015 and related to the
development of ONCOS-102, which is a virus-based immunotherapy platform.
Intangible assets are tested for impairment at least annually, or when there are indications of
impairment.
The value of the intangible assets is estimated using a model of discounted cash flows. As the
valuation is sensitive to the outcome of a set of assumptions, the result from the valuation is
limited to only ensure sufficient certainty for the recognized amount in the financial statement
and is not be considered as a complete valuation of the full potential of ONCOS-102.
ONCOS-102 has been tested for impairment in those cancer indications with the most mature
path-to-market outlook and strategy, of which checkpoint inhibitor refractory melanoma is
considered the indication with the shortest path-to-market, on the back of very encouraging
data during 2020 and 2021. A melanoma platform trial exploring multiple combinations is
planned started during 2022.
A discounted cash flow model is in its nature uncertain, especially for an early-stage compound
like ONCOS-102. Key model assumptions are based on parameters observed in the market
today, as well as management’s own predictions and financial forecasts.
Results and sensitive analysis
The impairment test indicated that the value of the intangible assets exceeds the book value.
The table below shows how the value of intangible assets will be affected by changes in various
assumptions, given that the remainders of the assumptions are constant.
Assumptions
Sensitivity
(% of base salary)
Changes in recoverable amount
Discount rate
+/- 1% point
-122 MNOK / +138 MNOK
Sales price
+/- 1%
+15 MNOK / -15 MNOK
Likelihood of approval
+/- 1% point
+147 MNOK / -147 MNOK
These sensitivities do not change the conclusion that the value of the intangible assets exceeds
the book value. The impairment test is sensitive to ONCOS-102 likelihood of approval. If the
product does not receive approval the valuation will be 0. If the product is approved the value
will increase significantly other assumptions unchanged. Assumed likelihood of approval is based
on the product’s current phase in its development and statistics for drug development during
the last ten years.
Targovax annual report 2021
Page 72
16. Property, plant and equipment
Property, Plant and equipment (non-current assets) are carried at cost less accumulated
depreciation and accumulated impairment losses. Acquisition cost includes expenditures that
are directly attributable to the acquisition of the individual item. Other non-current assets are
depreciated on a straight-line basis over the expected useful life of the asset. lf significant
individual parts of the assets have different useful lives, they are recognized and depreciated
separately. Depreciation commences when the assets are ready for their intended use.
At the end of each reporting period, the Group reviews the carrying amounts of its assets to
determine whether there is any indication that those assets have suffered an impairment loss.
Property, plant and equipment consist of:
o Office equipment with estimated useful live of 5 years. No impairment losses have been
recognized.
Amounts in NOK thousands
Furniture, fittings
and equipment
Total
Cost
2020
Opening balance
1 943
1 943
Additions
70
70
Exchange differences
71
71
At 31 December 2020
2 084
2 084
2021
Opening balance
2 084
2 084
Additions
-
-
Exchange differences
-7
-7
At 31 December 2021
2 077
2 077
Accumulated depreciation and impairment:
2020
Opening balance
1 217
1 217
Depreciation and impairment charge
688
688
At 31 December 2020
1 905
1 905
2021
Opening balance
1 905
1 905
Depreciation and impairment charge
61
61
At 31 December 2021
1 966
1 966
Carrying amount:
At 31 December 2020
179
179
At 31 December 2021
111
111
Targovax annual report 2021
Page 73
17. Leases
Accounting policies
Identifying a lease
At the inception of a contract, The Group assesses whether the contract is, or contains, a lease.
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. To determine whether a
contract conveys the right to control the use of an identified asset, the Group assesses whether:
• The agreement creates enforceable rights of payment and obligations
• The identified asset is physically distinct
• It has the right to obtain substantially all of the economic benefits from use of the
asset
• It has the right to direct he use of the asset
• The supplier does not have a substantive right to substitute the asset throughout the
period of use
Separating components in the lease contract
For contracts that constitutes, or contains a lease, the Group separates lease components if it
benefits from the use of each underlying asset either on its own or together with other
resources that are readily available, and the underlying asset is neither highly dependent on, nor
highly interrelated with, the other underlying assets in the contract. The Group then accounts
for each lease component within the contract as a lease separately from non-lease components
of the contract. The Group allocates the consideration in the contract to each lease component
on the basis of the relative stand-alone price of the lease component and the aggregate stand-
alone price of the non-lease components. If an observable stand-alone price is not readily
available, the Group estimates this price by maximising the use of observable information.
Recognition of leases and exemptions
At the lease commencement date, the Group recognizes a lease liability and corresponding
right-of-use asset for all lease agreements in which it is the lessee, except for the following
exemptions applied:
• Short-term leases (defined as 12 months or less)
• Low value assets
For these leases, the Group recognizes the lease payments as Other operating expenses in the
statement of profit or loss when they incur.
Measuring the lease liability
The lease liability is initially measured at the present value of the lease payments for the right to
use the underlying asset during the lease term that are not paid at the commencement date.
The lease term represents the non-cancellable period of the lease, together with periods
covered by an option to extend the lease when the Group is reasonably certain to exercise this
option, and periods covered by an option to terminate the lease if the Group is reasonably
certain not to exercise that option.
The lease payments included in the measurement comprise of:
• Fixed lease payments (including in-substance fixed payments), less any lease incentives
receivable
• Variable lease payments that depend on an index or a rate, initially measured using
the index or rate as at the commencement date
• Amount expected to be payable by the Group under residual value guarantees
• The exercise price of a purchase option, if the Group is reasonably certain to exercise
that option
• Payments of penalties for terminating the lease, if the lease term reflects the Group
exercising an option to terminate the lease.
The Group do not include variable lease payments in the lease liability arising from contracted
index regulations subject to future events, such as inflation. Instead, the Group recognizes these
costs in profit or loss in the period in which the event or condition that triggers those payments
occurs.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest
on the lease liability, reducing the carrying amount to reflect the lease payments made and
remeasuring the carrying amount to reflect any reassessment or lease modifications, or to
reflect adjustments in lease payments due to an adjustment in an index or rate.
Group presents its lease liabilities as separate line items in the statement of financial position.
Measuring the right-of-use asset
The right-of-use asset is initially measured at cost. The cost of the right-of-use asset comprise:
Targovax annual report 2021
Page 74
• The amount of the initial measurement of the lease liability
• Any lease payments made at or before the commencement date, less any lease
incentives received
• Any initial direct costs incurred by the Group
• An estimate of costs to be incurred by the Group in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions of the lease, unless those
costs are incurred to produce inventories.
The right-of-use asset is subsequently measured at cost less accumulated depreciation and
impairment losses. The Group applies the depreciation requirements in IAS 16 Property, Plant
and Equipment in depreciating the right-of-use asset, except that the right-of-use asset is
depreciated from the commencement date to the earlier of the lease term and the remaining
useful life of the right-of-use asset. The Group has elected to not apply the revaluation model for
its right of use asset for leased buildings.
The Group applies IAS 36 Impairment of Assets to determine whether the right-of-use asset is
impaired and to account for any impairment loss identified.
Group presents it's right-of-use assets as separate line items in the consolidated statement of
financial position.
Right-of-use assets
The Group leases offices and other facilities, machinery and equipment. The Group's right-of-use
assets are categorized and presented in the table below:
Right-of use assets
Buildings
Total
Amounts in NOK thousands
Acquisition cost 1 January 2020
7 005
7 005
Addition of right-of use assets
4 588
4 588
Disposals
-7 005
-7 005
Acquisition cost 31 December 2020
4 588
4 588
Accumulated depreciation and impairment 1 January 2020
3 764
3 764
Depreciation
3 040
3 040
Disposals
-5 856
-5 856
Currency exchange differences
-94
-94
Accumulated depreciation and impairment 31 December 2020
854
854
Carrying amount of right-of-use assets 31 December 2020
3 734
3 734
Acquisition cost 1 January 2021
4 588
4 588
Addition of right-of use assets
90
90
Disposals
Acquisition cost 31 December 2021
4 678
4 678
Accumulated depreciation and impairment 1 January 2021
854
854
Depreciation
1 248
1 248
Disposals
-
-
Currency exchange differences
32
32
Accumulated depreciation and impairment 31 December 2021
2 134
2 134
Carrying amount of right-of-use assets 31 December 2021
2 544
2 544
Remaining lease term
2 year
Targovax annual report 2021
Page 75
0BLease liabilities
Summary of the lease liabilities
Total
Amounts in NOK thousands
Total lease liabilities at 01.01.2020
3 241
New lease liabilities recognized in the year
4 588
Disposal of lease liabilities
-1 150
Cash payments for the principal portion of the lease liability
-3 209
Cash payments for the interest portion of the lease liability
-
Interest expense on lease liabilities
249
Currency exchange differences
106
Total lease liabilities at 31 December 2020
3 826
Total lease liabilities at 01.01.2021
3 826
New lease liabilities recognized in the year
90
Disposal of lease liabilities
-
Cash payments for the principal portion of the lease liability
-1 468
Cash payments for the interest portion of the lease liability
-
Interest expense on lease liabilities
310
Currency exchange differences
-37
Total lease liabilities at 31 December 2021
2 725
Summary of other lease expenses recognized in profit or loss
Amounts in NOK thousands
2021
(% of base
salary)
2020
(% of
base
salary)
Variable lease payments expensed in the period
-
-
Operating expenses in the period related to short-term leases
(including short-term low value assets)
60
65
Operating expenses in the period related to low value assets
(excluding short-term leases included above)
-
-
Total lease expenses included in other operating expenses
60
65
Please see note 22. Current liabilities for current lease liabilities and Statement of cash flow for
cash outflow for leases.
The leases do not contain any restrictions on the Group’s dividend policy or financing. The Group
does not have significant residual value guarantees related to its leases to disclose. The Group
has not been granted any rent concessions due to the COVID-19 pandemic in 2021 or 2020.
18. Receivables
A receivable represents the Group’s right to an amount of consideration that is unconditional.
Loans and receivables carried at amortized cost are recognized at the transaction price plus
direct transaction expenses. The Group’s Financial asset receivables mainly comprise short-term
deposits for office leases and receivable from government grants in the Statement of financial
position, see Note 8 Government grants for further information of the recognition of grants in
the statement of profit or loss. Other receivables comprise VAT receivables and prepaid
expenses.
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Trade receivables
-
-
Receivable government grants
3 263
866
Short-term deposits
1 199
1 217
Financial asset receivables
4 462
2 082
Other receivables
4 746
2 777
Total receivables
9 207
4 859
Targovax annual report 2021
Page 76
19. Cash and cash equivalents
Cash and short-term deposits in the Statement of financial position comprise cash at bank and
other short-term highly liquid investments with original maturities of three months or less.
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Bank deposits
181 366
73 275
Money Market fund, Nordea Likviditet III
316
49 046
Total cash and cash equivalents
181 682
122 321
Restricted cash specification:
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Income tax withholding from employee
compensation
2 299
2 038
Rent deposits
1
944
949
Other
1
255
268
Total restricted cash
3 498
3 255
1 Classified as Receivables.
20. Share capital and shareholder information
Targovax raised gross proceeds of NOK 175 million in a rights issue in fourth quarter 2021 through
the allocation of 101,744,186 new shares at a subscription price of NOK 1.72 per share. The rights
issue was resolved by the Company’s Board of Directors based on the authorization granted at the
Company’s Annual General Meeting held 25 November 2021.
Targovax raised gross proceeds of NOK 101 million in a private placement in first quarter 2020
through the allocation of 12,627,684 new shares at a subscription price of NOK 8.0 per share. In
October 2020, Targovax successfully completed a private placement, raising gross proceeds of
approximately NOK 75 million, through the allocation of 10,344,828 new shares at a subscription
price of NOK 7.25 per share. The private placements and the issuance of the new shares was
resolved by the Company’s board of directors based on the authorization granted at the Company’s
annual general meeting held on 30 April 2019 and 29 April 2020.
Share capital as at 31 December 2021 is 18 832 659.10 (31 December 2020: 8 653 131.80)
comprising 188 326 591 ordinary shares at nominal value NOK 0.10 (31 December 2020: 86 531
318 at NOK 0.10). All shares carry equal voting rights.
The movement in the number of shares during the period was as follows:
2021
(% of base
salary)
2020
(% of base
salary)
Ordinary shares at beginning of period
86 531 318
63 383 613
Share issuance – Rights Issue, private placement and
repair offering
101 744 186
22 972 512
Share issuance, employee share options and RSUs
51 087
175 193
Ordinary shares at end of period
188 326 591
86 531 318
Targovax annual report 2021
Page 77
The 20 largest shareholders are as follows at 31 December 2021:
Shareholder
# shares
%
Avanza Bank AB
19 814 638
10.5 %
HealthCap
12 405 584
6.6 %
Fjärde AP-fonden
8 700 456
4.6 %
Nordnet Bank AB
6 297 113
3.3 %
ABN AMRO Global Custody Services N
5 323 904
2.8 %
Goldman Sachs & Co. LLC
5 186 162
2.8 %
Radiumhospitalets Forskningsstiftelse
4 427 255
2.4 %
Nordnet Livsforsikring AS
4 244 392
2.3 %
Danske Bank AS
2 819 768
1.5 %
MP Pensjon PK
2 517 055
1.3 %
Nordnet Livsforsikring AS
2 382 495
1.3 %
Thorendahl Invest AS
2 000 000
1.1 %
VPF Nordea Kapital
1 748 448
0.9 %
Sivilingenør Jon-Arild Andreassen AS
1 700 000
0.9 %
VPF Nordea Avkastning
1 649 274
0.9 %
Tor Westerheim
1 300 057
0.7 %
J.P. Morgan Bank Luxembourg S.A.
1 252 575
0.7 %
Egil Pettersen
1 243 057
0.7 %
Arild Staxwold Skipperud
1 186 375
0.6 %
Verdipapirfondet Nordea Norge Plus
1 076 603
0.6 %
20 largest shareholders
87 275 211
46.3 %
Other shareholders (6 346)
101 051 380
53.7 %
Total shareholders
188 326 591
100.0 %
The 20 largest shareholders are as follows at 31 December 2020:
Shareholder
# shares
%
HealthCap
12 405 584
14.3 %
Radiumhospitalets Forskningsstiftelse
4 427 255
5.1 %
Fjärde AP-fonden
4 000 000
4.6 %
Thorendahl Invest AS
1 750 000
2.0 %
VPF Nordea Kapital
1 748 448
2.0 %
VPF Nordea Avkastning
1 649 274
1.9 %
Bækkelaget Holding AS
1 603 287
1.9 %
Nordnet Bank AB
1 529 969
1.8 %
Danske Bank AS
1 446 001
1.7 %
Nordnet Livsforsikring AS
1 429 953
1.7 %
Morgan Stanley & Co. International
1 343 716
1.6 %
The Bank of New York Mellon SA/NV
1 290 959
1.5 %
Verdipapirfondet Nordea Norge Plus
1 076 603
1.2 %
MP Pensjon PK
1 061 925
1.2 %
State Street Bank and Trust Comp
1 038 000
1.2 %
Goldman Sachs & Co. LLC
993 850
1.1 %
Egil Pettersen
917 951
1.1 %
J.P. Morgan Bank Luxembourg S.A.
820 000
0.9 %
Barclays Capital Securities Ltd
770 717
0.9 %
Prieta AS
720 000
0.8 %
20 largest shareholders
42 023 492
48.5 %
Other shareholders (5 844)
44 507 826
51.5 %
Total shareholders
86 531 318
100.0 %
Targovax annual report 2021
Page 78
Earnings per share
Earnings per share are calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares outstanding
during the period.
Diluted earnings per share is calculated as profit or loss attributable to ordinary shareholders of
the Company, adjusted for the effects of all dilutive potential options.
Amounts in NOK thousands
2021
(% of base salary)
2020
Loss for the period
-97 971
-108 126
Average number of outstanding shares during the period
89 076
77 106
Earnings/ loss per share - basic and diluted
-1.10
-1.40
Share options and RSUs issued have a potential dilutive effect on earnings per share.
Share options and RSUs shall be treated as dilutive only if their conversion to ordinary shares
would decrease earnings per share or increase loss per share from continuing operations. As the
Group is currently loss-making, an increase in the average number of shares would have anti-
dilutive effects. Hence, no dilutive effect has yet been recognized.
21. Interest-bearing debt
Interest-bearing liabilities have been granted by governmental institution with special terms
such as a low interest rate (1% currently), hence the loans shall be divided to financial liability
and government grant components.
The financial liability shall initially be recognized at fair value and subsequently at amortized cost
using effective interest method. The grant component shall be recognized as income on a
systematic basis over the periods in which the entity recognizes as expenses the related costs for
which the grants are intended to compensate. The interest rate used to discount the cash flows
of the loans should reflect the market rate of interest for the Company at the time when the
tranches have been withdrawn. However, Targovax could only raise funds from the owners
or/and from venture capitalists at 8% rate or from the Government at 1% rate. Targovax has
access only to these two ‘loan markets. These funding limits also set restrictions to the
estimation of the fair market rate that shall be used to discount the cash flows. Further, there is
no proper peer group for life science companies, hence there is no comparable yield curve
available in Europe. Any other interest rate than in the bridge loan interest will be highly
judgmental due to the very tight credit status of the company (cannot provide any collateral).
Therefore, the 8% bridge loan interest represents managements best and only estimate of a
market rate interest and is used in separating the government grant component from the
Business Finland loans. The additional interest expense resulting from recognizing the loan by
using the effective interest method, is booked as addition to interest expenses in the statement
of profit or loss. The separated government grant is booked as a reduction of operating
expenses in the statement of profit or loss in the period when it has been received.
Business Finland is a publicly financed funding agency that finances research and development
activities for young innovative companies in Finland. The Finnish trade promotion organization
and the Finnish Funding Agency for Technology and Innovation (TEKES) united as Business
Finland in 2018.
The Group has received three R&D loans from Business Finland, for the commercialization of
ONCOS-102, under loan agreements dated September 2010, February 2012 and December 2013,
respectively, in the total outstanding amount of EUR 6.7 million as of 31 December 2021 (EUR
6.9 million as of 31 December 2020). An additional loan approval of EUR 0.5 million was granted
to one of the existing Business Finland loans during 1st quarter 2020. No additions to the
Business Finland loans were granted during 2021. EUR 0.8 million of the total debt EUR 6.7
million was short-term as per 31 December 2021 and EUR 0.3 million of the total debt EUR 6.9
million was short-term as per 31 December 2020. The Group will apply for an extension of the
repayment-free period on the loan agreement dated December 2013.
Pursuant to IFRS, these loans have a grant element due to the low interest rate they carry. The
loan periods of the R&D loans are usually 10 years, of which the first five years are free of
repayment. One of the loans are repaid in equal annual installments during the latter nine years,
(2021-2029), one loan during the latter five years (2022-2026) and one during the latter six years
(2023-2028). Annual interest is paid yearly throughout the entire loan period. The applicable
interest rate under the R&D loans is the European Central Bank’s steering rate less 3 percentage
points per annum, although not less than 1%. Due to the extension of the repayment-free period
of the loans in 2021, NOK 1.9 million was recognized as finance income in 2021.
For the IFRS adjustment of the Business Finland loans described above the Company applied the
transitional exemptions for first time adopters under IFRS 1. Consequently, Business Finland
loans granted prior to 1 January 2013 were not adjusted to fair value. In the purchase price
allocation from the 2015 acquisition of Oncos, these loans have been adjusted to fair value by
discounting future cash flows using the 8 % interest rate, resulting in a fair value adjustment of
NOK 9.3 million and a carrying amount of NOK 33.6 million in the statement of financial position
at the acquisition date. Based on the effective interest rate method, an increase in interest
expense of NOK 2.8 million has been recorded in the statement of profit or loss and other
comprehensive income as at 31 December 2021, and NOK 4.3 million as at 31 December 2020.
Targovax annual report 2021
Page 79
Should the project fail, it is possible to get a remission on part of the debt in accordance with the
EU competition legislation. The final amount of the non-recovered part of the principal depends
on factors such as the time and the materialized interest rate trend. The final sum will be
determined when an eventual decision on non-recovery is made. Targovax Group has issued an
on-demand guarantee in favor of Business Finland for the repayment obligation of Targovax OY
under the R&D loans. The loan agreements include no financial covenants.
The table below shows a reconciliation of the opening balances for the liabilities arising from
financing activities:
Changes in liabilities arising from financing activities
(Amounts in NOK thousands)
Interest-bearing liabilities
Business Finland loans
Interest-bearing liabilities 31 December 2019
50 441
Cash flow from financing activities
-
Exchange differences
2 745
Additions financial liabilities
5 555
Change to loan repayment schedules
-
Other transactions without cash settlement
2 325
Interest-bearing liabilities 31 December 2020
61 066
Cash flow from financing activities
-2 057
Exchange differences
-2 801
Additions financial liabilities
-
Change to loan repayment schedules
-1 903
Other transactions without cash settlement
2 760
Interest-bearing liabilities 31 December 2021
57 066
22. Current liabilities
The Group’s current liabilities consists of financial liabilities as the short-term part of the EUR
6 666 222 loan from Business Finland (see note 21 Interest-bearing debt), short-term lease
liabilities and trade payables, and other current liabilities as withholding taxes and accrued
expenses, and are classified as "current liabilities". Trade payable are obligations to pay for
goods or services that have been acquired in the ordinary course of business from suppliers.
Trade payables are classified as current liabilities if payment is due within one year or less (or in
the normal operating cycle of the business if longer). If not, they are presented as non-current
liabilities. Trade payables and other financial liabilities are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest method.
Current liabilities consist of:
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Interest-bearing liabilities
7 543
3 185
Short-term lease liabilities
1 349
1 258
Trade payables
8 103
5 196
Financial liabilities
16 996
9 638
Other current liabilities
20 337
16 017
Total current liabilities
37 333
25 656
Targovax annual report 2021
Page 80
23. Events after the reporting date
Post-period highlights
o In January 2022, appointed circ RNA co-discoverer Dr. Thomas B Hansen as VP of
Research to lead the NextGen ONCOS circRNA pipeline program
o In February 2022, announced a research collaboration with Prof. Michael Uhlin at
Karolinska Institutet in Stockholm, Sweden, for development and characterization of
NextGen ONCOS viruses
o In January 2022, received NOK 8.2m grant award by Innovation Norway towards the TG
mutant KRAS vaccine program
o In January 2022, received patents for ONCOS-102 in combination with chemotherapy in
China and Japan
o In February 2022, appointed Dr. Lubor Gaal as Chief Financial Officer
o In March 2022, announced a collaboration with Agenus on mutant KRAS cancer vaccine
adjuvanted with QS-21 STIMULON™
Share options
From 1 January 2022 to 9 March 2022, 300 000 options for shares have been granted Key
Management of the Group and 115 000 new options for shares have been granted to other
employees.
RSUs
From 1 January 2022 to 9 March 2022, 88 351 RSUs have been exercised by Board member and
primary insider Robert Burns.
Please see Important events after balance sheet date in the Director’s report for further details.
Targovax annual report 2021
Page 81
TARGOVAX ASA 2021
Accounts
and notes
Targovax annual report 2021
Page 82
Contents
Statement of profit or loss Targovax ASA ......................................................... 83
Statement of comprehensive income Targovax ASA ....................................... 83
Statement of financial position Targovax ASA ................................................. 84
Statement of changes in equity – Targovax ASA ............................................... 85
Statement of cashflow – Targovax ASA ............................................................. 86
1. General information ...................................................................................... 87
2. Summary of significant accounting principles ............................................... 87
3. Important accounting estimates and discretionary assessments ................. 89
4. Segments ....................................................................................................... 89
5. Financial instruments and risk management objectives and policies ........... 89
6. Revenue recognition ...................................................................................... 93
7. Research and development expenses ........................................................... 93
8. Government grants ........................................................................................ 94
9. Payroll and related expenses ......................................................................... 95
10. Related parties and Management ............................................................... 95
11. Share-based compensation ......................................................................... 96
12. Other operating expenses ......................................................................... 100
13. Financial instruments ................................................................................ 100
14. Tax .............................................................................................................. 102
15. Investments in subsidiaries ........................................................................ 103
16. Property, plant and equipment .................................................................. 103
17. Leases ........................................................................................................ 104
18. Receivables ................................................................................................ 107
19. Cash and cash equivalents ......................................................................... 107
20. Share capital and shareholder information ............................................... 108
21. Current liabilities ........................................................................................ 110
22. Events after the reporting date .................................................................. 110
Targovax annual report 2021
Page 83
Statement of profit or loss
Targovax ASA
Amounts in NOK thousands expect per share
data
Note
2021
2020
Other revenues
6,10
16 041
15 506
Total revenue
16 041
15 506
Research and development expenses
7,8
-15 494
-5 386
Payroll and related expenses
7,8,9,10,11
-42 847
-38 069
Other operating expenses
7,8,12
-7 135
-10 800
Depreciation, amortizations and write downs
15,16,17
-947
-1 136
Total operating expenses
-66 424
-55 391
Operating profit/loss (-)
-50 383
-39 885
Finance income
13
269
596
Finance expense
13
-1 333
-626
Net finance income (expense)
-1 063
-31
Loss before income tax
-51 447
-39 915
Income tax expense
14
Loss for the period
-51 447
-39 915
Earnings/loss (-) per share
Basic and dilutive earnings/loss (-) per share
20
-0.58
-0.52
Statement of comprehensive income
Targovax ASA
Amounts in NOK thousands expect per share data
2021
2020
Income/loss (-) for the period
-51 447
-39 915
Items that may be reclassified to profit or loss:
Exchange differences arising from the translation of foreign
operations
Total comprehensive income/loss (-) for the period
-51 447
-39 915
Targovax annual report 2021
Page 84
Statement of financial position
Targovax ASA
Amounts in NOK thousands
Note
31.12.2021
31.12.2020
ASSETS
Investments in subsidiaries
15
636 077
586 466
Property, plant, and equipment
16
-
3
Right-of use assets
17
2 013
2 885
Total non-current assets
638 090
589 354
Receivables
8,10,13,18
5 897
6 856
Cash and cash equivalents
19
169 996
105 743
Total current assets
175 892
112 599
TOTAL ASSETS
813 983
701 953
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
20
18 833
8 653
Share premium reserve
-
1 046 476
Other reserves
53 279
46 960
Retained earnings
718 772
-415 177
Total equity
790 884
686 912
Non-current liabilities
Lease liabilities
17
1 126
2 057
Total non-current liabilities
1 126
2 057
Current liabilities
Short-term lease liabilities
17
1 040
912
Trade payables
21
3 380
524
Accrued public charges
21
2 817
3 099
Other current liabilities
21
14 735
8 450
Total current liabilities
21 972
12 985
TOTAL EQUITY AND LIABILITIES
813 983
701 953
Lysaker, 9 March 2022
The Board of Directors of Targovax ASA
Damian Marron Bente-Lill Romøren Johan Christenson
Chairperson of the Board Board member Board member
Eva-Lotta Allan Diane Mellett Per Samuelsson
Board member Board member Board member
Sonia Quaratino Robert Burns Erik Digman Wiklund
Board member Board member Chief Executive Officer
Targovax annual report 2021
Page 85
Statement of changes in equity – Targovax ASA
Amounts in NOK thousands
Note
Share
capital
Share
premium
Other
reserves
Retained earnings
(accumulated losses)
Total
equity
Balance at 31 December 2019
6 338
886 899
41 673
-375 262
559 648
Loss for the period
-39 915
-39 915
Other comprehensive income/loss, net of tax
-
Total comprehensive income for the period
-39 915
-39 915
Issue of ordinary shares - Capital increase - Private Placement & Subsequent offering
20
2 297
173 724
176 021
Transaction costs - Private Placement
Transaction costs - Private Placement & Subsequent offering
-14 164
-14 164
Share issuance, employee share options & RSUs
20
18
82
99
Transaction costs – employee share options & RSUs
-65
-65
Recognition of share-based payments & RSU's
11
5 287
5 287
Balance at 31 December 2020
8 653
1 046 476
46 960
-415 177
686 912
Loss for the period
-51 447
-51 447
Other comprehensive income/loss, net of tax
-
Total comprehensive income for the period
-51 447
-51 447
Issue of ordinary shares - Capital increase – Rights Issue
20
10 174
164 826
175 000
Transaction costs – Rights Issue
Transaction costs - Private Placement & Subsequent offering
-26 040
-26 040
Share issuance, employee share options & RSUs
20
-59
-59
Transaction costs – employee share options & RSUs
5
195
200
Recognition of share-based payments & RSU's
11
6 319
6 319
Reclassification of Share premium
-1 185 396
1 185 396
-
Balance at 31 December 2021
18 833
-
53 279
718 772
790 884
Targovax annual report 2021
Page 86
Statement of cashflow – Targovax ASA
Amounts in NOK thousands
Note
2021
2020
Cash flow from operating activities
Loss before income tax
-51 447
-39 915
Adjustments for:
Finance income
13
-269
-596
Finance expense
13
1 333
626
Interest received
13
244
596
Other finance expense
13
-53
-177
Share option expense
11
6 319
5 287
Depreciation
16,17
947
1 136
Change in receivables
18
-19 058
-9 025
Change in other current liabilities
21
8 149
-3 946
Net cash flow from /(used in) operating activities
-53 836
-46 013
Cash flow from investing activities
Investment in subsidiary
15
-29 593
-62 650
Net cash received from/(paid in) investing activities
-29 593
-62 650
Cash flow from financing activities
Repayment of lease liabilities
17
-1 128
-1 229
Proceeds from issuing shares -Rights issue, Private Placement and repair offering
20
175 000
176 021
Payment for share issue cost – Rights issue, Private Placement and repair offering
-25 329
-14 164
Proceeds from exercise of options & RSUs
20
200
99
Payment for share issue cost – share options and RSUs
-59
-65
Net cash generated from financing activities
148 683
160 663
Net increase/(decrease) in cash and cash equivalents
65 254
52 000
Net exchange gain/loss on cash and cash equivalents
-1 001
-241
Cash and cash equivalents at beginning of period
105 743
53 984
Cash and cash equivalents at end of period
19
169 996
105 743
Targovax annual report 2021
Page 87
1. General information
The Company, Targovax ASA, is a Norwegian public limited liability company and the address of
the registered office is Vollsveien 19, 1366 Lysaker, Norway.
Targovax (OSE:TRVX) is a clinical stage immuno-oncology company developing oncolytic viruses to
target hard-to-treat solid tumors.
The Group’s development pipeline is based on a novel proprietary platform:
A virus-based immunotherapy platform (ONCOS) that utilizes engineered oncolytic viruses armed
with potent immune-stimulating transgenes to target solid tumors. The aim is to (re)activate the
patient’s immune system to recognize and attack the patient’s own cancer cells thus acting as a
form of autologous or self-vaccination. The treatment approach harnesses the patient’s own
immune system to fight cancer.
Targovax’s virus-based oncolytic immunotherapeutic technology has a tumor-selective
mechanism of action, making tumors visible to the immune system and educating the immune
system to recognize and attack patient specific tumor cells.
The technology is based on adenoviruses engineered to kill tumor cells, primarily via activation of
a systemic, patient-specific, tumor-selective immune response. The lead pipeline candidate is
ONCOS-102.
Targovax’s ONCOS immunotherapy technologies are designed to stimulate the immune system in
several ways to recognize and fight cancer. When Targovax’s adenovirus is injected into a tumor
the presence of the adenovirus attracts cells of the innate immune system such as natural killer
(NK) cells and macrophages which are designed to attack the virus.
Targovax is also exploring how novel RNA concepts can be engineered into ONCOS to further
enhance the delivery of genetic payloads directly into the tumor. This has the potential to expand
the ONCOS program into a versatile and unique platform system for enhanced transgene delivery,
as well as to build additional regulatory functionality into the backbone construct. CircRNA is an
example of such novel RNA technology being explored in the context of ONCOS, and Targovax is
actively building the team to drive these RNA efforts forward.
In addition, Targovax has developed a mutant KRAS program based on the Company’s neoantigen
vaccine targeting mutant KRAS cancers, covering up to eight different mutations. Oncogenic KRAS
mutations are the key genetic driver behind many cancers and therefore considered a central
target in oncology drug development.
These financial statements have been approved for issue by the Board of Directors on 9 March
2022 and are subject to approval by the Annual General Meeting in April 2022.
2. Summary of significant accounting principles
The principal accounting policies applied in the preparation of these financial statements are
described in the respective note, or if not, set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Amounts are in thousand Norwegian kroner unless stated otherwise.
Functional currency
The functional currency of the Company is NOK. Transactions in foreign currency are translated to
functional currency using the exchange rate at the date of the transaction. At the end of each
reporting period foreign currency monetary items are translated using the closing rate, non-
monetary items that are measured in terms of historical cost are translated using the exchange
rate at the date of the transaction and non-monetary items that are measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value was
measured. Changes in the exchange rate are recognized continuously in the accounting period.
Presentation currency
The Company’s presentation currency is NOK.
2.1 Basis for preparation of the annual accounts
The financial statements of Targovax ASA have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union, as well as Norwegian
disclose requirements listed in the Norwegian Accounting Act.
The financial statements are based on historical cost.
The financial statements have been prepared on the basis of uniform accounting principles for
similar transactions and events under otherwise similar circumstances.
2.2 Accounting principles
Foreign exchange
The Company record transactions at initial recognition based on the exchange rate at the date of
the transaction. The date of a transaction is the date on which the transaction first qualifies for
recognition in accordance with International Financial Reporting Standards. Any exchange
Targovax annual report 2021
Page 88
differences are recognized in statement of profit or loss under financial items in the period in
which they arise.
2.3 Adoption of new and revised IFRS standards
Standards and interpretations affecting amounts reported in the current period
The Company has applied the following amendments for the first time for their annual reporting
period commencing 1 January 2021:
• Covid-19-Related Rent Concessions – amendments to IFRS 16, and
• Interest Rate Benchmark Reform – Phase 2 – amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16.
The Company also elected to adopt the following amendments early:
• Annual Improvements to IFRS Standards 2018–2020, and
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction – amendments to
IAS 12.
The amendments listed above did not have any impact on the amounts recognized in prior
periods and are not expected to significantly affect the current or future periods.
None of the other new standards, revised standards, amended standards or interpretations have a
material impact on the Company’s overall results and financial position.
Standards and interpretations in issue but not yet adopted
Certain new accounting standards and interpretations have been published that are not
mandatory for 31 December 2021 reporting periods and have not been early adopted by the
Company. These standards are not expected to have a material impact on the entity in the current
or future reporting periods and on foreseeable future transactions.
2.4 Going concern
The Company works continuously to ensure financial flexibility in the short and long-term to
achieve its strategic and operational objectives. To date, the Company has financed its operations
through private placements, grants, repair offerings and the initial public offering in connection
with the listing of the company’s shares on Oslo Stock Exchange in 2016. In December 2021 the
company raised NOK 175 million in gross proceeds through a rights issue, which will ensure
financial resources sufficient for all planned activities, in the next twelve months as of 31
December 2021. The Board of Directors has confirmed that the conditions for assuming that the
Company is a going concern are present, and that the financial statements have been prepared
based on this assumption.
Targovax annual report 2021
Page 89
3. Important accounting estimates and
discretionary assessments
Management makes estimates and assumptions that affect the reported amounts of assets and
liabilities within the next financial year. Estimates and judgments are continually evaluated and
are based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances.
Estimated value of share-based payments
At each balance sheet date, the Company revises its estimates of the number of options that are
expected to vest. It recognizes the impact of the revision to original estimates, if any, in the
statement of profit or loss, with a corresponding adjustment to equity. The estimated turnover
rate for unvested share options is 0 percent for all share option plans. See Note 11 Share-based
compensation.
Estimated value of subsidiaries
Shares and investments intended for long-term ownership are reported in the Company’s
statement of financial position as non-current assets and valued at cost. The Company determines
at each reporting date whether there is any objective indication that the investment in the
subsidiary is impaired. If this is the case, the amount of impairment is calculated as the difference
between the recoverable amount of the subsidiary and its carrying value and recognizes the
amount in the statement of profit or loss. Any realized and unrealized losses and any write downs
relating to these investments will be included in the Company’s statement of comprehensive
income as financial items. See Note 15 Investments in subsidiaries.
Deferred tax asset
A deferred tax asset shall be recognized for the carryforward of unused tax losses and unused tax
credits to the extent that it is probable that future taxable profit will be available against which
the unused tax losses and unused tax credits can be utilized.
The Company cannot prove probable future taxable income large enough to justify recognizing a
deferred tax asset in the balance sheet. However, this assumption must be continually assessed,
and changes could lead to a significant asset being recognized in the future. This assumption
requires significant management judgment. See Note 14 Taxes.
4. Segments
The Company's activities during 2021 have been to continue the development and
implementation of a strategy with the aim of developing highly targeted immunotherapy
treatments for cancer patients.
The Company’s lead product has not yet obtained regulatory approval. For management
purposes, the Company is organized as one business unit and the internal reporting is structured
in accordance with this. The Company is thus currently organized in one operating segment.
5. Financial instruments and risk management
objectives and policies
The Company's financial assets and liabilities comprise cash at bank and cash equivalents,
receivables, borrowings and trade creditors that originate from its operations. All financial assets
and liabilities are carried at amortized cost. All financial assets and liabilities are short-term and
their carrying value approximates fair value.
The Company does currently not use financial derivatives to manage financial risk such as interest
rate risk and currency risk . The Company is subject to market risk, credit risk and liquidity risk.
Market risk
Interest rate fluctuations could in the future materially and adversely affect the Company’s
business, financial condition, results of operations, cash flows, time to market and prospects.
Currently, the Company has no long-term debt other than its leasing liabilities. The Company may
in the future be exposed to interest rate risk primarily in relation to any future interest-bearing
debt issued at floating interest rates and to variations in interest rates of bank deposits.
Consequently, movements in interest rates could have a material and adverse effect on the
Company’s business, financial condition, results of operations, cash flows, time to market and
prospects.
Targovax annual report 2021
Page 90
The following table demonstrates the Company’s sensitivity to a 1 percent point change in
interest rates on cash and cash equivalents at 31 December 2021 and 2020:
2021
2020
Amounts in NOK thousands
1% point
increase
1% point
decrease
1% point
increase
1% point
decrease
Loss before income tax effect
1 700
-1 700
1 057
-1 057
Foreign currency risk
Fluctuations in exchange rates could affect the Company’s cash flow and financial condition
The Company has currency exposure to both transaction risk and translation risk related to its
operating expenses. Transaction risk arises when future commercial transactions or recognized
assets or liabilities are denominated in a currency that is not the entity’s functional currency. The
Company undertakes various transactions in foreign currencies and is consequently exposed to
fluctuations in exchange rates. The exposure arises largely from research expenses. The Company
is mainly exposed to fluctuations in EUR, USD, GBP and CHF. The Company hedges foreign
currency by aligning the cash positions with future expected currency outflows. The Company
does not have derivatives for hedge accounting at year-end.
Translation risk arises due to the conversion of amounts denominated in foreign currencies to
NOK, the Company’s functional currency.
The following tables demonstrate the Company’s currency rate sensitivity on financial assets and
liabilities at 31 December 2021 and 2020.
The Company’s sensitivity to a 10% increase/decrease in EUR against NOK:
2021
2020
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
534
- 534
1 996
- 1 996
The Company’s sensitivity to a 10% increase/decrease in USD against NOK:
2021
2020
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
3
-3
134
-134
The Company’s sensitivity to a 10% increase/decrease in GBP against NOK:
2021
2020
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
125
-125
421
-421
The Company’s sensitivity to a 10% increase/decrease in CHF against NOK:
2021
2020
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
147
-147
405
-405
Credit risk
Credit risk is the risk of a counterparty defaulting. The Company has limited credit risk.
Outstanding receivables are limited and primarily government grants receivable from various
government agencies. No impairment has been recognized. The carrying value of the assets
represents the Company's maximum exposure to credit risk.
The credit quality of financial assets can be assessed by reference to credit ratings.
Targovax annual report 2021
Page 91
Cash at bank:
2021
2020
Rating
S&P
Amounts in NOK thousands
Amount
In %
Amount
In %
Cash at bank:
169 680
100%
56 697
54%
Nordea Bank AB
169 680
100%
56 693
54%
AA-
DNB Bank ASA
-
0%
3
0%
AA-
Money market funds:
316
0%
49 046
46%
Nordea Likviditet III
316
0%
49 046
46%
Total
169 996
100%
105 743
100%
Fair value of financial instruments
The carrying value of receivables, cash and cash equivalents, borrowings, and trade payables are
assessed to approximate fair value.
2021
2020
Amounts in NOK thousands
Carrying
amounts
Fair value
Carrying
amounts
Fair value
Receivables
5 897
5 897
6 856
6 856
Cash and cash equivalents
169 996
169 996
105 743
105 743
Total financial assets
175 892
175 892
112 599
112 599
Lease liabilities
2 166
2 166
2 969
2 969
Trade payables
3 380
3 380
524
524
Total financial liabilities
5 546
5 546
3 493
3 493
Targovax annual report 2021
Page 92
Liquidity risk
The Company manages liquidity risk by estimating and monitoring cash and liquidity needs on an on-going basis and maintaining adequate reserves and banking facilities. The Company has, after the Rights
Issue in the fourth quarter 2021, sufficient cash available to meet its obligations as at 31 December 2021 and related to planned activities in the next 12 months. Hence, the Company is funded into 2023, and
will need new funding for the next phases of the development program and subsequent clinical trials. All liabilities at year-end, other than long-term lease liabilities, are short-term and fall due within one
year of the reporting date.
The following tables analyses the Company’s current and non-current financial liabilities, at 31 December 2021 and 2020 respectively, into relevant maturity groupings based on the remaining period at the
balance sheet date to the contractual maturity date. The amounts disclosed in the tables are the financial undiscounted cash flows.
At 31 December 2021
(Amounts in NOK thousands)
On demand
Less than 3 months
3 to 12 months
1 to 5 years
>5 years
Total
Lease liabilities
292
876
1 168
-
2 336
Trade payables
-
3 380
-
-
-
3 380
Accrued public charges
-
2 817
-
-
-
2 817
Other current liabilities
-
14 735
-
-
-
14 735
Total
-
21 225
876
1 168
-
23 268
At 31 December 2020
(Amounts in NOK thousands)
On demand
Less than 3 months
3 to 12 months
1 to 5 years
>5 years
Total
Lease liabilities
277
832
2 218
3 327
Trade payables
-
524
-
-
-
524
Accrued public charges
-
3 099
-
-
-
3 099
Other current liabilities
-
8 450
-
-
-
8 450
Total
-
12 350
832
2 218
-
15 400
Targovax annual report 2021
Page 93
6. Revenue recognition
Revenue comprises the fair value of consideration received or due consideration for the sale of
services in regular business activities. Revenue from providing services is recognized in the
accounting period in which the services are rendered. Revenue is presented net of value added
tax.
Amounts in NOK thousands
2021
2020
Revenue from subsidiary
16 041
15 498
Other revenue
-
9
Total operating revenue
16 041
15 506
The Company’s products are still in the research and development phase, and it has no revenue
from sales of products yet.
At end of 2019, Targovax and IOVaxis Therapeutics entered into an option agreement for an
exclusive license to develop and commercialize the TG01 and TG02 vaccines in Greater China and
Singapore. The intention is that IOVaxis will exercise the option to license TG upon the first
regulatory IND approval to start a clinical trial in China. IOVaxis paid an option fee of USD 250,000
to Targovax in 2020, and an additional USD 3 million upfront fee is due when the exclusive license
option is exercised. The total development and commercial milestones in the deal are worth up to
USD 100 million, in addition to tiered royalties on sales up to the mid-teens. The Company has no
revenue from the option agreement in the year 2021 or 2020.
7. Research and development expenses
Expenditure on research and development activities is recognized as an expense in the period in
which it is incurred. Internal and external research and development costs related to the
Company's development of new products are recognized in the statement of profit or loss in the
year incurred unless it meets the asset recognition criteria of IAS 38 "lntangible Assets".
Uncertainties related to the regulatory approval process and results from ongoing clinical trials
generally indicate that the criteria for asset recognition is not met until the time when the
marketing authorization is obtained from regulatory authorities. This assessment requires
significant management discretion and estimations.
The following table gives an overview of the Company’s research and development expenditures
compared to the total operating expenses:
2021
2020
Amounts in NOK thousands
Total
Of which R&D
Total
Of which R&D
R&D expenses
15 494
15 494
5 386
5 386
Payroll and related expenses
42 847
18 463
38 069
17 982
Other operating expenses
7 135
23
10 800
24
Depreciation, amortizations and
write downs
947
-
1 136
-
Total
66 424
33 980
55 391
23 392
Targovax annual report 2021
Page 94
The following research and development expenditures have been expensed:
Amounts in NOK thousands
2021
2020
R&D related consultancy and other expenses
4 325
2 186
Cost of manufacturing for R&D
11 686
1 417
Patent expenses
2 370
2 356
Government grants
-2 888
-573
Total research and development expenses
15 494
5 386
8. Government grants
Government grants are recognized at the value of the contributions at the transaction date.
Grants are not recognized until it is probable that the conditions attached to the contribution will
be achieved. The grant is recognized in the statement of profit or loss in the same period as the
related costs and are presented net.
Government grants are normally related to either reimbursements of employee costs and
classified as a reduction of Payroll and related expenses or related to other operating activities
and thus classified as a reduction of Research and development expenses or Other operating
expenses.
Government grants have been recognized in statement of profit or loss as a reduction of the
related expense with the following amounts:
Amounts in NOK thousands
2021
2020
Research and development expenses
2 888
573
Payroll and related expenses
374
292
Other operating expenses
1
1
Total grants
3 263
866
For the full year 2021 the Company has, for SkatteFUNN projects, recognized NOK 3.3 million
(NOK 0.9 million in 2020) as cost reduction in Research and development expenses, Payroll and
related expenses and Other operating expenses.
Targovax has been awarded a NOK 9.8 million research grant from the Research Council of
Norway towards product and clinical development for the TG mutant KRAS cancer vaccine
program. This grant is for the period 2022-2025, hence no cost reduction has been recognized in
2021.
See note 22 Events after the reporting date for more information about grants.
Specification of grants receivables:
Amounts in NOK thousands
2021
2020
Grants from SkatteFUNN
3 263
866
Total grants receivable
3 263
866
Targovax annual report 2021
Page 95
9. Payroll and related expenses
Payroll and related expenses are recognized in the statement of profit or loss in the period in
which the related costs are incurred or services are provided.
Defined contribution plans
Targovax ASA has a defined contribution pension plan as required by the Norwegian Law. This
pension plan applies to all employees of Targovax ASA. Currently, members of the Management
Team with residence outside Norway are not part of the company’s respective national pension
plans. The company pays these executives an annual amount in addition to base salary in lieu of
their participation in a company scheme. For defined contribution pension plans, contributions
are paid to pension insurance plans and charged to the statement of profit or loss in the period to
which the contributions relate.
Bonus scheme
In 2018 Targovax implemented a bonus system covering all employees.
The Company recognizes a liability and an expense for bonuses based on a short-term incentive
plan for employees linked to achievement of corporate objectives as well as individual objectives
determined by the Board. See note 10 Related parties and Management.
Total payroll and related expenses for the Company are:
Amounts in NOK thousands
2021
2020
Salaries and bonus
28 394
26 526
Employer’s national insurance contributions
3 657
4 179
Share-based compensation
1)
6 319
5 287
Pension expenses – defined contribution plan
1 323
883
Restructuring costs
-150
Other
3 529
1 636
Governmental grants
-374
-292
Total payroll and related expenses
42 847
38 069
1) Share-based compensation has no cash effect.
Number of employees calculated on a full-time basis as at end of period
15.0
13.6
Number of employees as at end of period
15
14
Targovax ASA has a defined contribution pension scheme that complies with requirements of
Norwegian occupational pension legislation (OTP). The contribution is expensed when it is
accrued.
10. Related parties and Management
As the only difference between the Group and the Company concerning Management Team
remunerations is that Kirsi Hellström and Kristiina Hyvarinen, CMC Managers Helsinki, is employed
by Targovax ASA’s subsidiary Targovax Oy, please see Note 10 Related parties and Management in
the Group’s consolidated financial statements. See Note 10 Related parties and Management and
Note 11 Share-based compensation for accounting principle for payroll and related expenses and
equity-settled share-based payments in the Company’s financial statements.
Targovax annual report 2021
Page 96
Related party transactions:
2021
2020
Amounts in NOK thousands
Revenue
(expense)
Receivable
(Payable) at
31 December
Revenue
(expense)
Receivable
(Payable) at
31 December
Subsidiaries:
expense related to subsidiaries
-1 743
-1 324
receivables related to subsidiaries
-
4 424
revenue related to subsidiaries
16 041
15 498
Levitski V-Biopharm Consulting
-1 644
-
-1 301
-129
The Company entered into a consulting agreement with Levitski V-Biopharm Consulting, a Zurich
based company, in April 2020. Levitski V-Biopharm Consulting is a related party of Victor Levitsky,
who is a member of Targovax Management Team, Chief Scientific Officer as from April 2020.
Levitski V-Biopharm Consulting is entitled to a consultancy fee of CHF 13,437 per month for a
100% position. Viktor Levitsky reduced his position from 100% to 20% as of 1 November 2021.
Remuneration to the statutory auditor (excl. VAT):
Amounts in NOK thousands
2021
2020
Statutory audit
400
285
Other attestation services
-
18
Tax services
-
50
Other services
45
-
Total
445
353
11. Share-based compensation
Equity-settled share-based payments are measured at the fair value of the equity instruments at
the grant date.
The fair value of the employee services received in exchange for the grant of the options is
recognized as an expense, based on the Company's estimate of equity instruments that will
eventually vest. The total amount to be expensed is determined by reference to the fair value of
the options granted excluding the impact of any non-market service and performance vesting
conditions. The grant date fair value of the options granted is recognized as an employee expense
with a corresponding increase in equity, over the period that the employees become
unconditionally entitled to the options (vesting period).
The fair value of the options granted is measured using the Black-Scholes model. Measurement
inputs include share price on measurement date, exercise price of the instrument, expected
volatility, weighted average expected life of the instruments, expected dividends, and the risk-free
interest rate.
Service and non-market performance conditions attached to the transactions are not taken into
account in determining fair value.
When the options are exercised, the Company issues new shares. The proceeds received net of
any directly attributable transaction costs are recognized as share capital (nominal value) and
share premium reserve.
At the end of each reporting period, the Company revises its estimates of the number of options
that are expected to vest. It recognizes the impact of the revision to original estimates, if any, in
statement of profit or loss, with a corresponding adjustment to equity. Changes to the estimates
may significantly influence the expense recognized during a period.
Share options
The Company operates an equity-settled, share-based compensation plan, under which the entity
receives services from employees as consideration for equity instruments (options) in Targovax
ASA.
At the Annual General Meeting (AGM) in March 2021 the Board of Directors was authorized to
increase the Group’s share capital in connection with share incentive arrangements by up to the
lower of (a) NOK 1 250 000 and (b) 10% of the Company's outstanding shares, options and RSU's.
This authorization replaces the previous authorizations to increase the share capital by up to the
lower of NOK 1 000,000 and b) 10% of the Company’s outstanding shares, options and RSUs given
to the Board of Directors at the AGM held in April 2020.
Targovax annual report 2021
Page 97
The Company has granted share options under its long-term incentive program (the “LTI Option
Program”). The Option Program applies to the Management Team as well to employees in
general. Certain former employees and former board members have also been granted options
under the LTI Option Program.
Additionally, the Company has in the past granted options as payment for inventions (the “IPR
Option Program”).
Each share option converts into one ordinary share of the Company on exercise. Options may be
exercised at any time from the date of vesting until expiry. The options generally vest over a
period of four years: 25 percent of the options vest on the first anniversary of the grant date and
the remaining 75 percent of the options vest in equal monthly tranches over the next 36 months.
Options expire seven years after the grant date.
In general, the exercise price of the options is set at the fair value of the shares at grant date.
Certain former employees and former board members have also been granted options under the
LTI Option Program as replacement for historical option holdings.
There were granted 2 225 000 share options during 2021 and 2 335 000 share options during
2020.
As of 31 December 2021, there are in total 7 743 106 (7 310 067 at 31 December 2020)
outstanding options for all option programs, 7 652 698 (7 219 659 at 31 December 2020)) options
under the LTI Option Program and 90 408 (90 408 at 31 December 2020) options under the IPR
Option Program.
Fair value of the options has been calculated at grant date. The fair value of the options was
calculated using the Black-Scholes model. The expected volatility for options issued in 2021 and
2020 is estimated at average of 75,82% and 76,06 %%, based on the volatility of comparable listed
companies. The volume weighted average interest rate applied to the share options grants in
2021 and 2020 is 1,33% and 0,42%.
The following table shows the changes in outstanding options in 2021 and 2020:
2021
2020
No. of
options
Weighted avg.
exercise price
(in NOK)
No. of
options
Weighted avg.
exercise price
(in NOK)
Outstanding at 1
January
7 310 067
12.94
6 028 642
15.26
Granted during the
period
2 225 000
4.59
2 335 000
9.94
Exercised during the
period
-29 788
6.64
-10 726
7.74
Forfeited
-1 124 017
8.70
-243 230
7.37
Expired
-638 156
19.83
-799 619
23.41
Outstanding no. of
options at end of
period
7 743 106
10.13
7 310 067
12.94
1) See Note 10 Related parties and Management for further information on granted share options to Management Team.
The average fair value of options granted in 2021 was 2.49 per share and 5.45 per share in 2020.
The weighted- average assumptions used to determine the Black Scholes fair value of options
granted in 2021 and 2020 were:
Amounts in NOK thousands
2021
(% of base salary)
2020
(% of base salary)
Volatility (%)
75.82
76.06
Expected life (in years)
3.66
3.66
Risk-free interest rate (%)
1.33
0.42
Share price (NOK)
4.62
10.17
Exercise price (NOK)
4.59
9.94
The expensed share options, NOK 5.8 million in 2021 (Targovax ASA: NOK 5.2 million and Targovax
OY: NOK 0.6 million) and NOK 4.9 million in 2020 (Targovax ASA: NOK 4.4 million and Targovax OY:
NOK 0.5 million), includes management estimate for employee turnover. The estimated turnover
rate used for the year 2021 and 2020 was 10%.
Targovax annual report 2021
Page 98
At 31 December 2021, the range of exercise prices and weighted average remaining contractual life of the options were as follows:
Outstanding options
Vested outstanding
Exercise price
Outstanding options per
12/31/2021
Weighted average
remaining contractual life
Weighted average remaining
years until vesting
Weighted average
exercise price
Vested outstanding per
12/31/2021
Weighted average
exercise price
Weighted average
remaining life vested
0.00-0.51
64 872
0.50
0.38
0.51
14 833
0.51
0.50
0.51-7.50
3 287 982
5.47
1.23
4.83
1 023 671
6.48
3.38
7.50-9.30
785 000
5.23
1.03
8.30
253 330
8.66
3.27
9.30-12.39
1 827 496
4.94
0.90
9.90
739 996
10.34
3.41
12.39-21.50
1 285 309
2.48
0.00
19.11
1 262 715
19.16
2.47
21.50-21.96
-
0.00
0.00
0.00
-
0.00
0.00
21.96-25.00
381 433
0.50
0.00
24.42
381 433
24.42
0.50
25.00-37.60
111 014
0.67
0.00
36.52
111 014
36.52
0.67
Total
7 743 106
4.47
0.84
10.13
3 786 992
14.27
2.69
At 31 December 2020, the range of exercise prices and weighted average remaining contractual life of the options were as follows:
Outstanding options
Vested outstanding
Exercise price
Outstanding options per
12/31/2020
Weighted average
remaining contractual life
Weighted average remaining
years until vesting
Weighted average
exercise price
Vested outstanding per
12/31/2020
Weighted average
exercise price
Weighted average
remaining life vested
0.00-0.51
64 872
1.50
1.16
0.51
14 833
0.51
1.50
0.51-7.50
1 234 000
5.93
1.10
6.47
319 242
6.42
5.90
7.50-9.30
1 216 000
5.09
0.75
8.25
502 519
8.22
4.21
9.30-12.39
2 490 298
6.14
1.70
10.50
457 480
11.85
2.85
12.39-21.50
950 128
3.30
0.11
18.22
756 305
18.43
3.11
21.50-21.96
681 755
2.70
0.01
21.96
635 487
21.96
2.66
21.96-25.00
562 000
1.07
0.00
25.00
562 000
25.00
1.07
25.00-37.60
111 014
1.44
0.00
36.58
109 969
36.67
1.42
Total
7 310 067
4.74
0.91
12.94
3 357 835
17.15
3.01
From 1 January 2022 to 9 March 2022, 300 000 share options were granted to members of management, and 115 000 additional share options were granted to other employees, see note 22 Events after the
reporting date.
Targovax annual report 2021
Page 99
Restricted Stock Units
The Board of Directors may choose to receive their remuneration, or parts thereof, in the form
of restricted stock units (RSUs). If the Board members choose to receive the Board remuneration
in RSUs they must choose to either (i) receive 100% of the compensation in RSUs, (ii) receive 1/3
of the compensation in cash and 2/3 in RSUs, or (iii) receive 2/3 of the compensation in cash and
1/3 in RSUs.
The number of RSUs to be granted to the members of the Board of Directors is calculated as the
NOK amount of the RSU opted portion of total compensation to the Board member, divided by
the market price of the Targovax ASA share. The market price is calculated as the volume
weighted average share price the 10 trading days prior to the grant date. The RSUs will be non-
transferrable and each RSU will give the right and obligation to acquire shares in Targovax ASA
(at nominal value) subject to satisfaction of the applicable vesting conditions. When the RSUs
have vested, the participant must during the following three-year period select when to take
delivery of the shares.
The total compensation to each member of the Board of Directors for the period between the
AGM 2021-2022 have been set out in the minutes from the Annual General Meeting 17 March
2021. The Annual General Meeting 17 March 2021 decided to remunerate the Board of
Directors for the period between the AGM 2021 to the AGM 2022 with a combination of cash
and Restricted Stock Units (RSUs), hence at the 17 March 2021, additional 121 752 RSUs were
granted to the Board of Directors.
The average fair value of RSUs granted in 2021 was 8.67 per share and 8.22 per share in 2020.
The weighted- average assumptions used to determine the Black Scholes fair value of RSUs
granted in 2021 and 2020 were:
Amounts in NOK thousands
2021
(% of base salary)
2020
Volatility (%)
65.00
77.93
Expected life (in years)
1
1
Risk-free interest rate (%)
0.23
0.29
Share price (NOK)
8.77
8.32
Exercise price (NOK)
0.1
0.1
The expensed RSUs in 2021 and 2020 was NOK 1.1 million and NOK 0.9 million. A total of 299
537 RSUs was outstanding at 31 December 2021.
The following table shows the changes in outstanding RSUs in 2021 and 2020:
2021
2020
No. of
RSU’s
Weighted avg.
exercise price
(in NOK)
No. of
RSU’s
Weighted avg.
exercise price
(in NOK)
Outstanding at 1 January
199 084
0.10
268 060
0.10
Granted during the period
121 752
0.10
95 491
0.10
Exercised during the period
-21 299
0.10
-164 467
0.10
Forfeited
-
-
-
-
Expired
-
-
-
-
Outstanding no. of
Restricted Stock Units at end
of period
299 537
0.10
199 084
0.10
From 1 January 2022 to 9 March 2022 no RSUs have been granted to Board of Directors.
Targovax annual report 2021
Page 100
12. Other operating expenses
Expenditure on Other operating expenses is recognized in the statement of profit or loss as an
expense in the period in which it is incurred.
Amounts in NOK thousands
2021
2020
Consultancy, advisors' expenses and IR
3 611
6 915
Travel expenses
344
266
Facilities expenses
358
564
IT services and IT-related accessories
1 349
1 450
Conferences and training
248
271
Other
1 226
1 474
Impaired debt – Targovax Solutions LLC
-
-139
Government Grants
-1
-1
Total operating expenses
7 135
10 800
13. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
Financial assets
The Company´s financial assets are: governmental grant receivables and cash and cash
equivalents.
The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Company’s business model for managing them.
With the exception of trade receivables that do not contain a significant financing component,
the Company initially measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs.
The Company measures financial assets at amortized cost if both of the following conditions are
met:
o The financial asset is held within a business model with the objective to hold financial
assets in order to collect contractual cash flows and,
o The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding
Financial assets at amortized cost are subsequently measured using the effective interest (EIR)
method and are subject to impairment. Gains and losses are recognized in profit or loss when
the asset is derecognized, modified or impaired.
The Company’s financial assets at amortized cost includes trade receivables, receivables from
subsidiaries, governmental grant receivables and other short-term deposit. Trade receivables
that do not contain a significant financing component are measured at the transaction price
determined under IFRS 15 Revenue from contracts with customers.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized (i.e., removed from the Company’s consolidated
statement of financial position) when:
o The rights to receive cash flows from the asset have expired, or
o The Company has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full without material delay to a
third party under a ‘pass-through’ arrangement; and either
Targovax annual report 2021
Page 101
a) the Company has transferred substantially all the risks and rewards of the asset, or
b) the Company has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset
Financial assets at amortized cost
Currently, all the Company’s financial assets are categorized as receivables. As at 31 December
2021 and 2020 the Company has TNOK 0 in trade receivables, TNOK 3 263 and TNOK 866 in
government grant receivables and the Company has TNOK 801 and TNOK 800 in short-term
deposits. The Company has currently not recognized any non-current financial assets.
Financial liabilities
Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as
derivatives designated as hedging instruments in an effective hedge, as appropriate. Derivatives
are recognized initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
Derivatives are financial liabilities when the fair value is negative, accounted for similarly as
derivatives as assets.
Loans, borrowings and payables
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the
liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs
in the statement of profit or loss.
Payables are measured at their nominal amount when the effect of discounting is not material.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts
is recognized in the statement of profit or loss.
Liabilities at amortized cost (Loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortized cost using the EIR method.
Finance income and expense
All finance income and finance expense, except for foreign exchange income/expense, are
related to financial assets and financial liabilities carried at amortized cost. Finance income
consists of interest income and foreign exchange gain. Finance expense mainly consists of
interest expense and exchange loss.
Finance income is:
Amounts in NOK thousands
2021
2020
Interest income on bank deposit
-
98
Interest income on Money Market fund, Nordea Likviditet III
269
471
Interest income on tax repaid
-
26
Net currency gain - bank and other operating items
-
-
Total finance income
269
596
Finance expense is:
Amounts in NOK thousands
2021
2020
Interest expense on lease liabilities
253
208
Other interest expense
169
102
Net currency loss - bank and other operating items
911
314
31515
Other finance expense
-
3
Total finance expense
1 333
626
Targovax annual report 2021
Page 102
14. Tax
Income tax expense comprise current income tax (tax payable) and deferred tax.
Deferred taxes are recognized based on temporary differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax assets arising from deductible temporary differences
are recognized to the extent that it is probable that taxable profits will be available so temporary
differences can be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realized, based on tax rates that have been
enacted or substantively enacted by the end of the reporting period.
The tax losses can be carried forward indefinitely. The Company considers that a deferred tax
asset related to accumulated tax losses cannot be recognized in the statement of financial
position until the product under development has been approved for marketing by the relevant
authorities. This assumption is continually assessed, and changes could lead to significant
deferred tax asset being recognized in the future. This assumption requires significant
management judgment.
The Company is in the research phase of its product development and has incurred significant
tax losses related to its operations. Targovax ASA has a total tax loss carried forward of NOK 526
million at 31 December 2021 (31 December 2020: NOK 451 million).
No current or deferred tax charge or liability has been recognized for 2021 or 2020.
The tax effects of temporary differences and tax losses carried forward at 31 December are as
follows:
Amounts in NOK thousands
2021
2020
Fixed assets
-56
-67
Leasing
-153
-84
Share options and RSUs
-82
-671
Financial instruments
30
118
Tax loss carried forward
-526 090
-451 168
Temporary differences and tax losses carried forward at 31.12
-526 351
-451 873
Deferred tax asset (22% (2020;22%)) not recognized
115 797
99 412
Deferred tax asset
-
-
Amounts in NOK thousands
2021
2020
Loss before income tax
-51 447
-39 915
Tax calculated at (22%) / (22%)
-11 318
-8 781
Tax effect permanent differences
-5 067
-2 187
Change in deferred tax not recognized
16 385
10 968
Tax expense
-
-
Targovax annual report 2021
Page 103
15. Investments in subsidiaries
Shares and investments intended for long-term ownership are reported in the Company’s
statement of financial position as non-current assets and valued at cost. The Company
determines at each reporting date whether there is any objective indication that the investment
in the subsidiary is impaired. If this is the case, the amount of impairment is calculated as the
difference between the recoverable amount of the subsidiary and it’s carrying value and
recognizes the amount in the statement of profit or loss. Any realized and unrealized losses and
any write downs relating to these investments will be included in the Company’s statement of
comprehensive income as financial items.
Location
Year incorp.
Share capital
Ownership
Subsidiary:
Targovax OY (prev. Oncos
Therapeutics OY)
Helsinki, Finland
2015
EUR 4 035
100 %
Please see Note 15 Intangible assets and impairment test in the 2021 Annual report for the
Targovax Group for further details on the excess value of the intangible assets related to the
investment in Targovax OY. The performed sensitivity analysis of the intangible assets where the
input assumptions are worsened to stress test the discounted cash flow model indicate that
there is no current need to write down the value of the investment in the subsidiary.
16. Property, plant and equipment
Property, Plant and equipment (non-current assets) are carried at cost less accumulated
depreciation and accumulated impairment losses. Acquisition cost includes expenditures that
are directly attributable to the acquisition of the individual item. Other non-current assets are
depreciated on a straight-line basis over the expected useful life of the asset. lf significant
individual parts of the assets have different useful lives, they are recognized and depreciated
separately. Depreciation commences when the assets are ready for their intended use.
At the end of each reporting period, the Company reviews the carrying amounts of its assets to
determine whether there is any indication that those assets have suffered an impairment loss.
The Company has no property, plant and equipment at 31 December 2021, the property, plant
and equipment of NOK 2 985 at 31 December 2020 consist mainly of office equipment. No
impairment losses have been recognized. No development costs have been recognized as assets
as per 31 December 2021.
Amounts in NOK thousands
Furniture, fittings & equipment
Total
Cost:
2020
Opening balance
356
356
Additions
-
-
At 31 December 2020
356
356
2021
Opening balance
356
356
Additions
-
-
At 31 December 2021
356
356
Accumulated depreciation and impairment:
2020
Opening balance
321
321
Depreciation and impairment charge
32
32
At 31 December 2020
353
353
2020
Opening balance
353
353
Depreciation and impairment charge
3
3
At 31 December 2021
356
356
Carrying amount:
At 31 December 2020
3
3
At 31 December 2021
0
0
Targovax annual report 2021
Page 104
17. Leases
Accounting policies
Identifying a lease
At the inception of a contract, The Company assesses whether the contract is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. To determine whether a
contract conveys the right to control the use of an identified asset, the Company assesses
whether:
• The agreement creates enforceable rights of payment and obligations
• The identified asset is physically distinct
• It has the right to obtain substantially all of the economic benefits from use of the
asset
• It has the right to direct he use of the asset
• The supplier does not have a substantive right to substitute the asset throughout the
period of use
Separating components in the lease contract
For contracts that constitutes, or contains a lease, the Company separates lease components if it
benefits from the use of each underlying asset either on its own or together with other
resources that are readily available, and the underlying asset is neither highly dependent on, nor
highly interrelated with, the other underlying assets in the contract. The Company then accounts
for each lease component within the contract as a lease separately from non-lease components
of the contract. The Company allocates the consideration in the contract to each lease
component on the basis of the relative stand-alone price of the lease component and the
aggregate stand-alone price of the non-lease components. If an observable stand-alone price is
not readily available, the Company estimates this price by maximising the use of observable
information.
Recognition of leases and exemptions
At the lease commencement date, the Company recognizes a lease liability and corresponding
right-of-use asset for all lease agreements in which it is the lessee, except for the following
exemptions applied:
• Short-term leases (defined as 12 months or less)
• Low value assets
For these leases, the Company recognizes the lease payments as Other operating expenses in
the statement of profit or loss when they incur.
Measuring the lease liability
The lease liability is initially measured at the present value of the lease payments for the right to
use the underlying asset during the lease term that are not paid at the commencement date.
The lease term represents the non-cancellable period of the lease, together with periods
covered by an option to extend the lease when the Company is reasonably certain to exercise
this option, and periods covered by an option to terminate the lease if the Company is
reasonably certain not to exercise that option.
The lease payments included in the measurement comprise of:
• Fixed lease payments (including in-substance fixed payments), less any lease incentives
receivable
• Variable lease payments that depend on an index or a rate, initially measured using
the index or rate as at the commencement date
• Amount expected to be payable by the Company under residual value guarantees
• The exercise price of a purchase option, if the Company is reasonably certain to
exercise that option
• Payments of penalties for terminating the lease, if the lease term reflects the Company
exercising an option to terminate the lease.
The Company do not include variable lease payments in the lease liability arising from
contracted index regulations subject to future events, such as inflation. Instead, the Company
recognizes these costs in profit or loss in the period in which the event or condition that triggers
those payments occurs.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest
on the lease liability, reducing the carrying amount to reflect the lease payments made and
Targovax annual report 2021
Page 105
remeasuring the carrying amount to reflect any reassessment or lease modifications, or to
reflect adjustments in lease payments due to an adjustment in an index or rate.
Company presents its lease liabilities as separate line items in the statement of financial
position.
Measuring the right-of-use asset
The right-of-use asset is initially measured at cost. The cost of the right-of-use asset comprise:
• The amount of the initial measurement of the lease liability
• Any lease payments made at or before the commencement date, less any lease
incentives received
• Any initial direct costs incurred by the Company
• An estimate of costs to be incurred by the Company in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions of the lease, unless those
costs are incurred to produce inventories.
The right-of-use asset is subsequently measured at cost less accumulated depreciation and
impairment losses. The Company applies the depreciation requirements in IAS 16 Property, Plant
and Equipment in depreciating the right-of-use asset, except that the right-of-use asset is
depreciated from the commencement date to the earlier of the lease term and the remaining
useful life of the right-of-use asset. The Company has elected to not apply the revaluation model
for its right of use asset for leased buildings.
The Company applies IAS 36 Impairment of Assets to determine whether the right-of-use asset is
impaired and to account for any impairment loss identified.
Company presents it's right-of-use assets as separate line items in the consolidated statement of
financial position.
Right-of-use assets
The Group leases offices and other facilities, machinery and equipment. The Group's right-of-use
assets are categorized and presented in the table below:
Right-of use assets
Buildings
Total
Amounts in NOK thousands
Acquisition cost 1 January 2020
3 271
3271
Addition of right-of-use assets
3 607
3 607
Disposals
-3 271
-3 271
Acquisition cost 31 December 2020
3 607
3 607
Accumulated depreciation and impairment 1 January 2020
1 738
1 738
Depreciation 2020
1 105
1 105
Disposals
-2 122
-2 122
Accumulated depreciation and impairment 31 December 2020
721
721
Carrying amount of right-of-use assets 31 December 2020
2 885
2 885
Acquisition cost 1 January 2021
3 607
3 607
Addition of right-of-use assets
72
72
Acquisition cost 31 December 2021
3 679
3 679
Accumulated depreciation and impairment 1 January 2021
721
721
Depreciation 2021
944
944
Disposals
Accumulated depreciation and impairment 31 December 2021
1 666
1 666
Carrying amount of right-of-use assets 31 December 2021
2 013
2 013
Remaining lease term at 31 December 2021
2 year
Targovax annual report 2021
Page 106
1BLease liabilities
Summary of the lease liabilities
Buildings
Total
Amounts in NOK thousands
Total lease liabilities at 01.01.2020
1 533
1 533
New lease liabilities recognized in the year
3 607
3 607
Disposal of lease liabilities
-1 150
-1 150
Cash payments for the principal portion of the lease liability
- 1 229
-1 229
Cash payments for the interest portion of the lease liability
-
-
Interest expense on lease liabilities
208
208
Currency exchange differences
-
-
Total lease liabilities at 31 December 2020
2 969
2 969
Summary of other lease expenses recognized in profit or loss
Variable lease payments expensed in the period
-
-
Operating expenses in the period related to short-term leases (including
short-term low value assets)
49
49
Operating expenses in the period related to low value assets (excluding
short-term leases included above)
-
-
Total lease expenses included in other operating expenses
49
70
49
Please see note 21. Current liabilities for current lease liabilities and Statement of cash flow for
cash outflow for leases.
Summary of the lease liabilities
Buildings
Total
Amounts in NOK thousands
Total lease liabilities at 01.01.2021
2 969
2 969
New lease liabilities recognized in the year
72
72
Cash payments for the principal portion of the lease liability
- 1 128
-1 128
Cash payments for the interest portion of the lease liability
-
-
Interest expense on lease liabilities
253
253
Currency exchange differences
-
-
Total lease liabilities at 31 December 2021
2 166
2 166
Summary of other lease expenses recognized in profit or loss
Variable lease payments expensed in the period
-
-
Operating expenses in the period related to short-term leases (including
short-term low value assets)
56
49
Operating expenses in the period related to low value assets (excluding
short-term leases included above)
-
-
Total lease expenses included in other operating expenses
56
70
49
Please see note 21. Current liabilities for current lease liabilities and Statement of cash flow for
cash outflow for leases.
The leases do not contain any restrictions on the Company’s dividend policy or financing. The
Company does not have significant residual value guarantees related to its leases to disclose.
The Company has not been granted any rent concessions due to the COVID-19 pandemic in 2021
or 2020.
Targovax annual report 2021
Page 107
18. Receivables
A receivable represents the Company’s right to an amount of consideration that is
unconditional. Loans and receivables carried at amortized cost are recognized at the transaction
price plus direct transaction expenses. The Company’s Financial asset receivables mainly
comprise short-term deposits for office leases, receivable from subsidiaries and government
grants in the Statement of financial position, see Note 8 Government grants for further
information of the recognition of grants in the statement of profit or loss. Other receivables
comprise VAT receivables and prepaid expenses.
Amounts in NOK thousands
2021
2020
Trade receivables
-
-
Receivable from subsidiaries
-
4 424
Receivable government grants
3 263
866
Short-term deposits
801
800
Financial asset receivables
4 064
6 090
Other receivables
1 832
766
Total receivables
5 897
6 856
19. Cash and cash equivalents
Cash and short-term deposits in the Statement of financial position comprise cash at bank and
other short-term highly liquid investments with original maturities of three months or less.
Amounts in NOK thousands
2021
2020
Bank deposits
169 680
56 697
Money Market fund, Nordea Likviditet III
316
49 046
Total cash and cash equivalents
169 996
105 743
Restricted cash specification:
Amounts in NOK thousands
2021
2020
Income tax withholding from employee compensation
2 299
2 038
Rent deposits
1
801
800
Total restricted cash
3 100
2 838
1 Classified as Receivables.
Targovax annual report 2021
Page 108
20. Share capital and shareholder information
The Company raised gross proceeds of NOK 175 million in a rights issue in fourth quarter 2021
through the allocation of 101,744,186 new shares at a subscription price of NOK 1.72 per share. The
rights issue was resolved by the Company’s Board of Directors based on the authorization granted at
the Company’s Annual General Meeting held 25 November 2021.
The Company raised gross proceeds of NOK 101 million in a private placement in first quarter 2020
through the allocation of 12,627,684 new shares at a subscription price of NOK 8.0 per share. In
October 2020, the Company successfully completed a private placement, raising gross proceeds of
approximately NOK 75 million, through the allocation of 10,344,828 new shares at a subscription
price of NOK 7.25 per share. The private placements and the issuance of the new shares was
resolved by the Company’s board of directors based on the authorization granted at the Company’s
annual general meeting held on 30 April 2019 and 29 April 2020.
Share capital as at 31 December 2021 is 18 832 659.10 (31 December 2020: 8 653 131.80)
comprising 188 326 591 ordinary shares at nominal value NOK 0.10 (31 December 2020: 86 531
318 at NOK 0.10). All shares carry equal voting rights.
The movement in the number of shares during the period was as follows:
2021
(% of base
salary)
2020
Ordinary shares at beginning of period
86 531 318
63 383 613
Share issuance – Rights Issue, private placement and
repair offering
101 744 186
22 972 512
Share issuance, employee share options and RSUs
51 087
175 193
Ordinary shares at end of period
188 326 591
86 531 318
The 20 largest shareholders are as follows at 31 December 2021:
Shareholder
# shares
%
Avanza Bank AB
19 814 638
10.5 %
HealthCap
12 405 584
6.6 %
Fjärde AP-fonden
8 700 456
4.6 %
Nordnet Bank AB
6 297 113
3.3 %
ABN AMRO Global Custody Services N
5 323 904
2.8 %
Goldman Sachs & Co. LLC
5 186 162
2.8 %
Radiumhospitalets Forskningsstiftelse
4 427 255
2.4 %
Nordnet Livsforsikring AS
4 244 392
2.3 %
Danske Bank AS
2 819 768
1.5 %
MP Pensjon PK
2 517 055
1.3 %
Nordnet Livsforsikring AS
2 382 495
1.3 %
Thorendahl Invest AS
2 000 000
1.1 %
VPF Nordea Kapital
1 748 448
0.9 %
Sivilingenør Jon-Arild Andreassen AS
1 700 000
0.9 %
VPF Nordea Avkastning
1 649 274
0.9 %
Tor Westerheim
1 300 057
0.7 %
J.P. Morgan Bank Luxembourg S.A.
1 252 575
0.7 %
Egil Pettersen
1 243 057
0.7 %
Arild Staxwold Skipperud
1 186 375
0.6 %
Verdipapirfondet Nordea Norge Plus
1 076 603
0.6 %
20 largest shareholders
87 275 211
46.3 %
Other shareholders (6 346)
101 051 380
53.7 %
Total shareholders
188 326 591
100.0 %
Targovax annual report 2021
Page 109
The 20 largest shareholders are as follows at 31 December 2020:
Shareholder
# shares
%
HealthCap
12 405 584
14.3 %
Radiumhospitalets Forskningsstiftelse
4 427 255
5.1 %
Fjärde AP-fonden
4 000 000
4.6 %
Thorendahl Invest AS
1 750 000
2.0 %
VPF Nordea Kapital
1 748 448
2.0 %
VPF Nordea Avkastning
1 649 274
1.9 %
Bækkelaget Holding AS
1 603 287
1.9 %
Nordnet Bank AB
1 529 969
1.8 %
Danske Bank AS
1 446 001
1.7 %
Nordnet Livsforsikring AS
1 429 953
1.7 %
Morgan Stanley & Co. International
1 343 716
1.6 %
The Bank of New York Mellon SA/NV
1 290 959
1.5 %
Verdipapirfondet Nordea Norge Plus
1 076 603
1.2 %
MP Pensjon PK
1 061 925
1.2 %
State Street Bank and Trust Comp
1 038 000
1.2 %
Goldman Sachs & Co. LLC
993 850
1.1 %
Egil Pettersen
917 951
1.1 %
J.P. Morgan Bank Luxembourg S.A.
820 000
0.9 %
Barclays Capital Securities Ltd
770 717
0.9 %
Prieta AS
720 000
0.8 %
20 largest shareholders
42 023 492
48.5 %
Other shareholders (5 844)
44 507 826
51.5 %
Total shareholders
86 531 318
100.0 %
Earnings per share
Earnings per share are calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares outstanding
during the period.
Diluted earnings per share is calculated as profit or loss attributable to ordinary shareholders of
the Company, adjusted for the effects of all dilutive potential options.
Amounts in NOK thousands
2021
2020
Loss for the period
-51 447
-39 915
Average number of outstanding shares during the period
89 076
77 106
Earnings/ loss per share - basic and diluted
-0.58
-0.52
Share options and RSUs issued have a potential dilutive effect on earnings per share.
Share options and RSUs shall be treated as dilutive only if their conversion to ordinary shares
would decrease earnings per share or increase loss per share from continuing operations. As the
Company is currently loss-making, an increase in the average number of shares would have anti-
dilutive effects. Hence, no dilutive effect has yet been recognized.
Targovax annual report 2021
Page 110
21. Current liabilities
The Company’s current liabilities consist of financial liabilities as short-term lease liabilities and
current trade payables, and other current liabilities as withholding taxes and accrued expenses,
and are classified as "current liabilities". Short-term lease liabilities are classified as current
liabilities if payment is due within one year or less. Trade payables are obligations to pay for
goods or services that have been acquired in the ordinary course of business from suppliers.
Trade payables are classified as current liabilities if payment is due within one year or less (or in
the normal operating cycle of the business if longer). If not, they are presented as non-current
liabilities. Trade payable and other financial liabilities are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest method.
Current liabilities consist of:
Amounts in NOK thousands
2021
2020
Short-term lease liabilities
1 040
912
Trade payables
3 380
524
Financial liabilities
4 420
1 436
Other current liabilities
17 552
11 549
Total current liabilities
21 972
12 985
22. Events after the reporting date
Post-period highlights
o In January 2022, appointed circRNA discoverer Dr. Thomas B Hansen as VP of Science to
manage the NextGen ONCOS circRNA pipeline program
o In February 2022, announced a research collaboration with Prof. Michael Uhlin at
Karolinska Institutet in Stockholm, Sweden, for development and characterization of
NextGen ONCOS viruses
o In January 2022, received NOK 8.2m grant award by Innovation Norway towards the TG
mutant KRAS vaccine program
o In January 2022, received patents for ONCOS-102 in combination with chemotherapy in
China and Japan
o In February 2022, appointed Dr. Lubor Gaal as Chief Financial Officer
o In March 2022, announced a collaboration with Agenus on mutant KRAS cancer vaccine
adjuvanted with QS-21 STIMULON™
Share options
From 1 January 2022 to 9 March 2022, 300 000 options for shares have been granted Key
Management of the Group and 115 000 new options for shares have been granted to other
employees.
RSUs
From 1 January 2022 to 9 March 2022, 88 351 RSUs have been exercised by Board member and
primary insider Robert Burns.
Please see Important events after balance sheet date in the Director’s report for further details.
Targovax annual report 2021
Page 111
Auditors report
– to be added
once all board
members and
CEO have
signed the
report
Targovax annual report 2021
Page 112
Targovax annual report 2021
Page 113
Targovax annual report 2021
Page 114
Targovax ASA
Norwegian office:
Vollsveien 19,
N-1366 Lysaker
Phone: +47 21 39 88 10
Finnish office:
Stella Business Park,
Lars Sonckin kaari 14
FI- 02600 Espoo
Phone: +358 10 279 4000
www.targovax.com
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