Targovax annual report 2021
Page 1
Annual Report 2022
13 April 2023
Annual Report 2022
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Targovax is a clinical stage
biotechnology
company
developing
RNA therapeutics and
cancer immunotherapy
Annual Report 2022
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Annual Report 2022
CEO Statement .............................................................. 6
Directors’ Report ........................................................... 7
Management ............................................................... 21
Board of Directors ....................................................... 23
Corporate Governance Report………………………………….31
Accounts and notes .................................................... 36
Accounts and notes .................................................... 78
Auditors report ......................................................... 105
Targovax annual report 2021
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RNA therapeutics and cancer
immunotherapy
are some of the
fastest growing fields in medicine
Immunotherapy has revolutionized cancer treatment over
the past decade, introducing novel drugs that enable the
patient’s own immune system to
eradicate cancer cells.
Today, millions of patients
achieve long-lasting benefit
from immunotherapy
. This breakthrough has been led by
the checkpoint inhibitors, which have grown into a market
worth
over USD 30bn in 2022.
Targovax
lead clinical-stage immunotherapy candidate
ONCOS
-102 has demonstrated excellent safety and
clinical efficacy in several cancer types. Ear
ly results in
melanoma are particularly promising, and ONCOS
-102 is
ready to enter phase 2 in PD
-
1 resistant melanoma, where
no approved treatment options exist today.
Annual Report 2022
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About Targovax
Targovax (OSE:TRVX) is an RNA therapeutics and clinical stage cancer immunotherapy company.
Building on deep experience from immunotherapy and viral engineering, Targovax is establishing a
cutting-edge circular RNA (circRNA) platform. Its unique and proprietary circVec vector-system for
circRNA expression and delivery has broad potential applications and is being explored in multiple
settings. The aim is to develop novel clinical candidates for in-house development, as well as to forge
early partnerships to broaden and accelerate the circRNA pipeline development.
Targovax´ clinical programs aim to activate the patient´s own immune system to fight cancer, and to
bring benefit to cancer patients with few available treatment alternatives. 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 against the tumor. ONCOS-102 has
demonstrated excellent safety, strong immune responses and clinical efficacy in several cancer
types, both as monotherapy and in combinations. Targovax is aiming to progress ONCOS-102 into a
randomized phase 2 trial in melanoma patients resistant to PD-1 checkpoint inhibitor treatment,
subject to additional financing and/or one or more partnerships.
Targovax´ second clinical stage program is a KRAS immunotherapy, with lead candidate TG01
currently being tested in studies in RAS-mutated pancreatic cancer and multiple myeloma. Building
on broad industry and academic networks, these collaborative trials are highly cost-efficient for
Targovax, and are supported by prestigious research grants from Innovation Norway and the
Norwegian Research Council.
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 has shown 35% response rate in PD-1
resistant melanoma, which is one of the best published
data sets in this immunotherapy-resistant cancer type
Annual Report 2022
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CEO Statement
During 2022 we reinvented Targovax at the same time as
delivering on all major milestones for our three technology
platforms. We have thus established a solid foundation to unlock
the full potential of our portfolio, and rapidly progress our circular
RNA platform to solve important unmet medical needs and deliver
value for our shareholders.
The new Targovax
Entering 2022, we set ourselves the goal of rebuilding Targovax to enable us to deliver the full
potential of our technology platforms. The actions taken over the year, have brought us a long way
from being a single-asset oncolytic virus player, to an emerging platform company with an innovative
pipeline. Today, we have two clinical stage programs supported by strong academic and industry
partners. In parallel, we have established completely new capabilities in circular RNA (circRNA),
leveraging the pioneering work of our leadership team to ensure Targovax is one of the key players in
this rapidly emerging field of next generation RNA therapeutics. To execute on our ambitious plans,
the organization has been retooled with several talented individuals joining, and we have built a new
and expert international management team with strong translational drug development experience.
Well positioned in the fast-emerging field of circRNA
Recent significant financing and partnering transactions, including by Merck (MSD) and oRNA
Therapeutics, have demonstrated the rapidly emerging industry interest in circRNA, which offers
important benefits over current mRNA approaches. During 2022, we initiated our own circRNA
program at the Karolinska Institute in Stockholm, and under the leadership of circRNA discoverer Dr
Thomas Hansen and CSO Dr Victor Levitsky we have already established technical proof-of-concept
for our circVec system demonstrating enhanced and prolonged protein expression. A robust IP
strategy has been devised to protect our platform, and a core patent application protecting critical
aspects of our proprietary vector approach has been filed. We are now taking steps to validate our
findings
in vivo
in multiple settings to demonstrate the versatility of the circVec platform, with the
first data expected in the middle of 2023.
Important clinical milestones delivered
During 2022 we saw continued strong R&D progress and delivered on all major milestones for our
three R&D pillars. On the clinical side, the two investigator-sponsored trials with our enhanced mutant
RAS vaccine TG01 received regulatory approvals to proceed in the USA and Norway and are now
open for recruitment. The ground-work has been completed for a USA-based phase 2 study in PD-1
resistant melanoma, where our lead clinical candidate ONCOS-102 is planned to be tested in
combination with new and differentiated checkpoint inhibitors from our partner Agenus. We are
currently seeking further financing and/or partnerships to support this truly innovative study based on
a strong scientific rationale.
Financing announced to help drive near-term progress and deliver long-term success
Despite a challenging financing climate for the global life sciences sector, in early 2023 we were able
to secure a substantial NOK 300 million credit facility from the experienced specialist London-based
investor Atlas Capital Markets. This funding will enable us to drive our portfolio of innovative R&D
programs, in particular the circVec circRNA platform, forward over the next 3 years. The deal
structure provides Targovax with secured access to capital, whilst retaining full flexibility to decide
when and how much funds are required, thereby allowing us to plan strategically and build value for
our shareholders. In Atlas, we have found a partner which shares our confidence in our R&D portfolio
and leading position in circRNA.
Looking ahead
We are now well positioned to execute in 2023.
For circRNA, we are running
in vivo
proof-of-
concept studies in several settings to firmly
establish Targovax as the leader in vector-
delivered circRNA therapeutics – aiming to be
first into the clinic with a circRNA product for
cancer treatment already in 2025. To further
strengthen our financial position, we are building
on the momentum in the RNA field to actively
pursue additional opportunities to help unlock the
substantial potential value of our circRNA
platform. During the year, we expect TG01 to
progress rapidly in clinical studies at major
cancer centers in the USA and Europe, teeing up
important read-outs in 2024. We remain confident in the significant potential of ONCOS-102 and are
actively seeking additional financing partnership opportunities to support our planned phase 2 study
in PD-1 resistant melanoma.
Dr. Erik Digman Wiklund
CEO Targovax Group
Annual Report 2022
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Directors’ Report
During 2022 Targovax made important progress on all three of our three technology platforms, and
we believe we are in a strong position to build shareholder value. The Covid-19 pandemic and the
conflict in Ukraine 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 highly
challenging biotech funding environment has merited very close attention on the part of the Board of
Directors as regards the future plans and strategic direction of the company (see below).
The last 1.5 years have seen an explosion in the interest for circular RNA (circRNA). When we first
announced our circRNA program in late 2021, few were aware of this emerging therapeutic class.
Today, circRNA has grown into one of the most promising concepts in the industry, with substantial
recent deals and financings. Targovax is one of the early innovators in this exciting space, employing
some of the initial circRNA pioneers, and this is now starting to get noticed. Technical proof-of-
concept has been established for our circVec concept, which has broad potential and represents a
technologically differentiated platform opportunity. The system is applicable in a variety of
therapeutic areas, and offers a unique delivery route to solid tumors, which is difficult to achieve with
synthetic circRNA approaches. circRNA co-discoverer and pioneer Dr Thomas B Hansen, VP & Head
of Research, drives this program, in close collaboration with the research team of Prof. Michael Uhlin
at the Karolinska Institutet in Stockholm. As we look forward, we aim to strengthen and accelerate
our circRNA platform development in Stockholm, to capture the unique opportunity that lies before us
in an exciting new area of next-generation RNA therapeutics.
Following strong data read-outs in mesothelioma and melanoma in 2020 and 2021, a robust phase 2
development plan for ONCOS-102 has been established by the management team. Step one of this
plan is the proposed multi-cohort SOPHOS-213 study in PD-1 resistant melanoma, where Agenus was
selected as the collaboration partner to supply two next generation checkpoint inhibitors for
combination with ONCOS-102. We are particularly excited about the prospect of the triple treatment
with anti-PD-1 balstilimab, Fc-enhanced anti-CTLA-4 botensilimab and ONCOS-102. However, in the
current challenging biotech financing conditions, it is the view of the Board that the phase 2 study
should only be pursued once an additional partner or additional source of financing can be secured.
The strategy to enhance the TG mutant RAS program is finally bearing fruit. TG01 is now enhanced by
a more potent adjuvant in QS-21 STIMULON, and we have moved to a simplified single sub-cutaneous
injection. We expect that these adjustments should drive stronger mutant RAS T-cell responses and
make the product easier to use for clinicians and patients. Two collaborative trials have recently
opened for recruitment in the USA and Europe, at low cost to Targovax. As such, the company has
delivered on the plan to improve the product and enable cost-efficient continued development. We
anticipate the two clinical studies to progress rapidly and deliver data in 2024-25, setting the program
up for potential partnerships for the next stage of development.
Strategy and strategic focus areas
Targovax is committed to develop its novel RNA platform for oncology and beyond and its innovative
immunotherapies to extend and transform the lives of cancer patients.. The Group is aiming to firmly
establish itself in the forefront of circRNA development and to remain a leader in oncolytic virus and
mutant RAS immunotherapies.
The Group’s strategy is to:
o Establish technical and
in vivo
proof-of-concept for the circVec circRNA vector system in
multiple therapeutic areas to demonstrate platform potential
o Secure an additional partner or other means of financing to enable ONCOS-102 to move
forward into phase 2 development in PD-1 resistant melanoma
o Progress the collaborative TG01 clinical trials in mutant RAS cancers towards data read-
outs to enable partnerships for subsequent late-stage development
o Seek partnerships or additional financing to accelerate development of circRNA into
clinical trials
Annual Report 2022
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Business and technology platforms
Our development pipeline is based on three different approaches to create novel cancer medicines.
In 2022, our research was focused on exploring how circular RNA can be used to create novel
medicines for oncology and beyond. Our new circular RNA platform is clearly differentiated to other
RNA approaches and has the potential to create novel medicines in many different therapeutic areas.
Research has been focused on establishing a strong base to create different novel medicines which
we will continue to explore in 2023.
ONCOS-102 is an immunotherapy which utilizes engineered oncolytic adenovirus armed with GM-
CSF, a potent immune-stimulating transgene, to target solid tumors. ONCOS-102 has multiple effects
which range from directly killing cancer cells to re-activating the patient’s immune cells to detect and
attack cancer cells. The treatment approach harnesses the patient’s own immune system to fight
cancer. In order to make it safer and selective for tumor cells, ONCOS-102 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.
Targovax’s ONCOS immunotherapy technologies are designed to stimulate the immune system in
several ways to recognize and fight cancer. When ONCOS-102 is injected, the innate immune system
wants to fight the virus and sends 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 developing TG-01 a cancer vaccine program based on our 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. In 2022, we have initiated two clinical studies in Norway and the USA to test
different treatment combination for patients with multiple myeloma and pancreatic cancer,
respectively.
Pipeline and newsflow
Two trials run and financed by collaboration partners
Annual Report 2022
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circRNA Platform
Targovax is a leader in circRNA, an emerging area in RNA therapeutics. circRNA offers several
advantages over mRNA, including substantially prolonged half-life and enhanced protein expression.
In January 2022, Targovax appointed circRNA co-discoverer and pioneer Dr Thomas B Hansen as
Vice President and Head of Research to establish and drive Targovax´ circRNA program. A scientific
team is being built at the Karolinska Institute in Stockholm, in collaboration with the research team of
Prof. Michael Uhlin.
Targovax has a unique, proprietary approach to circRNA expression and delivery, circVec. circVec is a
vector system designed for efficient
in situ
circRNA expression which has broad technical
applicability and potential use in multiple disease areas. circVec offers several advantages over
synthetic circRNA approaches, including manufacturing, scalability and stability. It is currently the
only known circRNA programtargeted to treat solid tumors.
To date, technical proof-of-concept (PoC) has been established for the circVec approach, and a key
patent application covering the core design elements of the circVec concept was filed in December
2022. Targovax is now aiming to further enhance the system and demonstrate its versatility in a
variety of set-ups. Experiments are being planned to generate
in vivo
PoC data during the first half of
2023. A comprehensive IP strategy has been devised in close cooperation with experienced advisors
and several patent filings are planned in 2023-24.
Following generation of
in vivo
PoC data, Targovax aims to explore the potential of circVec in various
therapeutic areas and subsequently proceed towards target selection and lead candidate design and
testing. Targovax plans to develop future circRNA candidates both for in-house development, as well
as through partnering with pharmaceutical companies.
ONCOS-102 in PD1- refractory advanced
melanoma
PD-1 CPI refractory advanced melanoma is a major unmet medical need affecting up to 25,000
patients per year globally in the major markets. The diagnosis has poor prognosis and there are
currently no approved treatment options available.
In the recently published phase 1 trial, ONCOS-102 demonstrated a highly competitive response rate
(ORR) of 35% in this patient population in combination with a PD-1 CPI. Importantly, the strong ORR
outcome was corroborated by shrinkage of non-injected lesions and biomarker data showing
significant increase in T-cell infiltration and broad and persistent activation of immune-related gene
signatures in responding patients.
Preparing for a phase 2 multi-cohort trial
Based on the promising early clinical results, Targovax is planning to conduct a larger, phase 2 multi-
cohort study to further explore and validate the benefit of ONCOS-102 in PD-1 CPI refractory
melanoma, subject to additional financing and/or partnerships. For this phase 2 study, our partner
Agenus provides their class-leading Fc-enhanced CTLA-4 antibody (botensilimab) and PD-1antibody
(balstilimab) CPIs for combination with ONCOS-102. In the first part of the study, two groups will
evaluate the safety and efficacy of (1) a higher dose of ONCOS-102 to be tested as a monotherapy
and (2) the low and new higher dose of ONCOS-102 in combination with balstilimab.
Following confirmation of the safety of the increased ONCOS-102 dose, the study is designed to
proceed into its second part adding two more groups. In group (3) ONCOS-102 will for the first time
be combined with a botensilimab and, ultimately, in group (4) the triple combination of ONCOS-102,
balstilimab and botensilimab will be tested.
The US Food and Drug Administration (FDA) has accepted the protocol and given the formal go-
ahead to proceed with this trial.
Phase 1 study results published in Clinical Cancer Research
The phase 1 melanoma data were published in the prestigious
scientific journal Clinical Cancer Research in October 2022:
Link to paper:
Pilot Study of ONCOS-102 and Pembrolizumab: Remodeling of the
Tumor Microenvironment and Clinical Outcomes in Anti–PD-1–
Resistant Advanced Melanoma
Annual Report 2022
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Mutant KRAS platform
The mutant KRAS program is centered around the polyvalent TG vaccines, which cover up to eight
different KRAS mutations. Oncogenic KRAS mutations drive around 30% of all cancers and are
considered highly attractive targets in cancer drug development. In a previous phase 1 trial, Targovax
showed a 6-month survival benefit over standard of care chemotherapy in surgically resected
pancreatic cancer patients for lead candidate TG01. Based on these promising early data and high
unmet medical need, TG01 has attained Orphan Drug Designation in pancreatic cancer in both the US
and Europe.
Targovax has a clinical supply agreement with Agenus to utilize their proprietary vaccine adjuvant QS-
21 STIMULON as an immune-stimulatory component of the TG vaccines for future development and
commercialization. QS-21 has consistently demonstrated powerful antibody and cell-mediated
immune responses both in cancer trials and commercially as a component of the Shingrix
®
and
Mosquirix™ vaccines. QS-21 should further potentiate the TG vaccines by driving stronger anti-mRAS
T-cell responses.
This new and enhanced vaccine approach will be tested in a phase 1/2 trial at Oslo University
Hospital (OUS) evaluating TG01/QS-21 in RAS-mutated multiple myeloma (MM). The trial will be
sponsored and funded by OUS and supported by the research grants from Innovation Norway and the
Norwegian Research Council. The trial is a collaboration between OUS and Targovax and will test
TG01 vaccination as a maintenance monotherapy in 20 KRAS or NRAS mutated MM patients who
continue to have measurable disease after completion of SoC treatment.
In December 2022, Targovax entered into a collaboration agreement with the University of Kansas
Cancer Center (KU Cancer Center) and Agenus Inc. to run a clinical trial testing mutant RAS vaccine
TG01 in combination with anti-PD1 checkpoint inhibitor balstilimab in pancreatic cancer following
surgery and SoC chemotherapy. The trial will be sponsored by KU Cancer Center and led by Dr. Anup
Kasi, a leading expert in gastrointestinal cancers. Agenus will provide balstilimab and the vaccine
adjuvant QS-21 STIMULON™. TG01/QS-21 vaccination +/- balstilimab will be tested in 24 pancreatic
cancer patients who have detectable disease by circulating tumor DNA analysis of blood samples
following surgery and SoC.
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. Our patent portfolio also covers potential future product candidates. The
company continuously works to strengthen and streamline its patent portfolio.
In March 2022, Targovax was granted patents CN108495934 and JP6974350 by the Chinese and
Japanese Patent Offices, respectively, for the same indication, also with validity until 2037. In
addition, ONCOS-102 is protected by composition-of-matter and PD-1 combination patents, providing
broad protection for Targovax’s innovative oncolytic immunotherapy platform and strengthening the
company’s market position.
Following our successful research in circular RNA, we filed a patent application for processes which
are important in the formation of circular RNA. We continue to research and will file new patents to
protect our circRNA platform and for specific new treatments.
Annual Report 2022
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Important events in 2022
o In January, received NOK 8.2m grant award by Innovation Norway towards the TG mutant
KRAS vaccine program
o In January, received patents for ONCOS-102 in combination with chemotherapy in China
and Japan
o In January, appointed circRNA discoverer and pioneer Dr Thomas B Hansen as VP of
Research to lead the circRNA pipeline research program
o In February, established a research collaboration with Prof. Michael Uhlin at Karolinska
Institutet in Stockholm, Sweden, for development of circRNA
o In February, strengthened the executive management team with Dr Lubor Gaal as Chief
Financial Officer
o In March, signed a clinical supply agreement with Agenus to include the adjuvant QS-21
STIMULON as an immune-stimulatory component of the TG mutant KRAS cancer vaccines
o In March, announced that an abstract has been accepted for poster presentation at the
American Association for Cancer Research (AACR) Annual Meeting
o In April, refreshed the Board of Directors with the addition of Dr Raphael Clynes and Mr
Thomas Falck
o In April, announced that two ONCOS-102 abstracts have been accepted for poster
presentation at the American Society of Clinical Oncology (ASCO) Annual Meeting in
Chicago 3-7 June 2022
o In May, entered a collaboration with Oslo University Hospital to test TG01/QS-21
vaccination in a phase 1/2 study in multiple myeloma
o In May, signed a clinical collaboration agreement with Agenus for PD-1 and CTLA-4
checkpoint inhibitor supply to the upcoming ONCOS-102 phase 2 melanoma trial
o In June, received IND approval from the US FDA to initiate clinical trials with the enhanced
TG01/QS-21 vaccine in the USA
o In September, the study protocol for the planned multi-cohort phase 2 in melanoma was
approved by the US FDA
o In November, the phase 1b melanoma study was selected for oral presentation at the
prestigious Society for Immunotherapy in Cancer (SITC) annual meeting
o In November, the phase 1b melanoma full study results were published in the high-impact
oncology journal Clinical Cancer Research
o In November, Hubro Therapeutics acquired GM-CSF vaccine adjuvant for NOK 10m from
Targovax ASA in an asset purchase agreement
o In December, a clinical trial collaboration was announced with Agenus and Kansas
University to test TG01 in combination with PD1 checkpoint inhibitor balstilimab in
pancreatic cancer
o In December, the TG01 trial in multiple myeloma at Oslo University Hospital received
regulatory approvals to proceed
Important events after balance sheet date
o In February 2023, agreed the terms and conditions for a convertible bond facility with Atlas
Special Opportunities (“Atlas”) which will secure financing of up to gross NOK 300 million
over three years.
o In March 2023, the extraordinary general meeting (EGM) of Targovax approved the Atlas
agreement.
o In March 2023, announced prioritization of resources toward its circRNA platform
o In March 2023, requested Atlas to subscribe and pay for the first tranche of convertible
bonds, consisting of 15 convertible bonds with an aggregate principal amount equal to
NOK 37,500,000. Atlas requested conversion of convertible bonds with a nominal value of
NOK 2,500,000 which, pursuant to the bond terms, are convertible into 4,026,629 new
shares in the Company at a conversion price of NOK 0.620867
o In March 2023, dosed the first patient with cancer vaccine TG01 in the combination study
with PD-1 checkpoint inhibitor (CPI) balstilimab in mutant RAS pancreatic cancer in the
USA.
o In March, a circRNA poster “
circAde: a circRNA-based system for prolonged and more
effective treatment of cancer”
was accepted to be presented at the AACR Annual Meeting
in April 2023, in Orlando, USA
Annual Report 2022
Page 12
Key figures in the consolidated accounts
In February 2023, Targovax announced that it has agreed the terms and conditions for a convertible
bond facility with Atlas Special Opportunities (“Atlas”) which will secure financing of up to gross NOK
300 million over three years. The agreement was approved by the extraordinary general meeting
(EGM) of Targovax held in March 2023.
The financing will enable Targovax to drive long-term shareholder value by supporting progress for its
three R&D pillars, including:
o Generation of in vivo proof-of-concept data in multiple settings for Targovax´s unique
circRNA program, an area of rapidly growing interest among big pharma and biotech
o Supporting two clinical trials with the enhanced mutant RAS vaccine TG01 led by major
academic centers in Norway and the USA
The financing will be made available to Targovax through an initial tranche of bonds in the total
nominal value of NOK 37.5m upon EGM approval of the agreement, followed by a second tranche of
NOK 30m and subsequent tranches of NOK 25m up to the total nominal value of NOK 300m, with at
least three months between tranches. Targovax has full control over when and how many tranches
are called upon over the 3-year agreement period, thereby ensuring flexible and predictable access to
capital as required.
The convertible bonds will be issued at 92 percent of nominal value and thereby provide Targovax
with a total of up to NOK 276 million in net capital. The bonds will not carry any interest and can be
converted into shares at the discretion of Atlas, at a price determined as 100 percent of the average
volume weighted share price (VWAP) of three of the last 15 trading days preceding the bond
conversion request by Atlas. After conversion, Atlas may sell the Targovax shares in the market
subject to certain pre-defined restrictions. Targovax retains the right to repurchase unconverted
bonds at any time at 110 percent of nominal value.
Income statement (2021 figures in brackets)
In November 2022, Hubro Therapeutics AS acquired Targovax’s GM-CSF process development and
production project. Under the agreement, Hubro will pay Targovax NOK 10 million for the acquisition
of the GM-CSF project, 50% has been paid in the fourth quarter 2022 and 50% is due in the second
quarter 2023. Targovax retains conditional buy-back and supply options, and a share in gross
proceeds in the event of a re-sale of the asset within a time-limited period. Hence, other revenue for
the full year 2022 amounted to NOK 10.0 million (NOK 0 million).
Total operating expenses for the full year 2022 amounted to NOK 503.6 million (NOK 95.6million).
The operating expenses are reported net of governmental grants which amounted to NOK 4.8 for the
full year 2022 (NOK 3.2 million).
Research and development expenses were NOK 47.2 million (NOK 37.4 million) for the full year 2022.
Research and development expenses are driven primarily by preparation costs for starting clinical
trials and manufacturing of clinical supplies.
Payroll and other employee related costs NOK 52.2 million for the full year 2022 (NOK 48.4 million).
The increase in personnel expenses in 2022 compared to 2021 are driven by one-off costs related to
change in management.
Other operating expenses amounted to NOK 11.5 million (NOK 8.5 million) for the full year 2022. The
increase in operating expenses in 2022 compared to 2021 is mainly due to changes in the
organizational structure.
The Depreciation, amortizations and write downs amounted to NOK 392.7 million (NOK 1.3 million)
for the full year 2022. The increase is mainly due to impairment of the recognized intangible assets
related to the acquisition of Oncos Therapeutics OY. The impairment was done for accounting
purposes as the company has made the decision to only proceed with the phase 2 program once a
partnership and / or additional financing has been secured.
The operating loss for the full year was NOK 493.6 million (NOK 95.6 million).
Net financial items amounted to a loss of NOK 1.7 million (loss of NOK 2.4 million) for the full year
related to interest expenses on the Business Finland loans partly offset by net currency gains.
Losses after tax for the full year were NOK 432.9 million (NOK 98.0 million).
Cash flow
Net cash flow from operating activities was negative NOK 108.8 million for the full year 2022
(negative NOK 85.4 million), mainly driven by higher activities in research and development.
Net cash flow from investing activities was negative NOK 5 million for the full year 2022 (NOK 0
million), mainly due to the purchase of equipment.
Net cash flow from financing activities was negative NOK 4.3 million for the full year 2022 (NOK
145.6 million), mainly due to the repayment of borrowings and interest paid to Business Finland. As
Annual Report 2022
Page 13
of 31 December, the total outstanding interest-bearing debt to Business Finland amounted to EUR 6.5
million.
Cash and cash equivalents were NOK 66.0 million on 31 December 2022 compared to NOK 181.7
million on 31 December 2021.
Financial position
Total assets as of 31 December 2022 decreased to NOK 100.4 million from NOK 565.3 million on 31
December 2021 mainly due to lower cash balance from operational activities and the impairment of
the intangible assets.
Total current assets amounted to NOK 94.1 million (NOK 190.9 million), of which cash and cash
equivalents amounted to NOK 66.0 million (NOK 181.7 million).
Total non-current assets were NOK 6.3 million (NOK 374.4 million), of which intangible assets
amounted to NOK 0 million (NOK 371.7 million).
Shareholders’ equity amounted to NOK 2.6 million, decreased from NOK 417.7 million in 2021. The
equity ratio amounted to 2.56 percent compared to 73.9 percent in 2021.
Going concern
The financial statements for 2022 have been prepared under the going concern assumption, as
stipulated in Section 3.3a of the Norwegian Accounting Act. The convertible bond facility with Atlas
Special Opportunities (“Atlas”) will secure financing of up to gross NOK 300 million over three
years and ensures that the Group has available financial resources sufficient for all planned activities,
in the next twelve months as of 31 December 2022. 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.
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 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
Annual Report 2022
Page 14
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.
In the current market conditions the Company has been unable to secure the necessary resources to
conduct a large clinical study and the Company cannot guarantee it will be able to secure the
necessary funding to conduct the next clinical trial for ONCOS-102.
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 and one has SEK 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.
Market developments
Overall pharmaceutical market
The IQVIA Institute predicts that the global pharmaceutical market will reach USD 1.5 trillion by 2023.
The 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.
The U.S. share of global medicine spending will grow up to USD700 billion in 2023, while the
European market will grow up to USD225 billion and the China pharmaceutical market is expected to
grow slower at 3-6% CAGR% and reach ca. USD 170 billion in 2023.
The cancer market
General
In 2019, the global market for cancer medicines was about USD 100 billion and expected to grow to
USD 175 billion by 2025 according to Allied Marked Research in 2019. This represents a growth rate
of close to 8%, which is higher than the pharmaceutical market overall. The market for cancer
immunotherapy was estimated at about USD 60 billion in 2019 growing at a CAGR % of 10-15% to
Annual Report 2022
Page 15
reach up to USD130 billion by 2025. Cancer immunotherapy already accounts for over 50% of the
cancer medicine market and this share is projected to increase over the coming years.
The Cancer Epidemiology
Cancer Research UK estimates that cancer accounted for close to 10 million deaths globally in 2018,
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 maintained globally. A
62% increase from 2018, with a higher rate 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 selected depending on the type, stage and profile of the cancer, as well as the patient’s overall
physical condition and age.. 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
Immunotherapy is a form of therapy designed to activate a patient’s immune system to attack and kill
cancer cells. The immune system can be utilized in several ways, but the most common is to
stimulate or “boost” the immune response and to recognize cancer cells as bad or foreign cells which
need to be removed. This can be achieved by giving 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 treatment approaches, of which antibodies which
target immune checkpoints, so-called “checkpoint inhibitors”, are the most successful concept so far.
The leading checkpoint inhibitor antibody Keytruda (MSD) which inhibits a target called PD-1 had
sales close to USD20 billion in 2022. Another approach is oncolytic viruses which are genetically
engineered viruses that selectively infect and kill cancer cells through a process where the cell
membrane is broken down, referred to as “lysis”. When cancer cells are lysed many tumor antigens
(tumor associated antigens (TAAs) and neoantigens) are released, which an activated immune
system can detect and mount an immune response against. As a result, the patient’s immune cells
(e.g. T-cells) learn to recognize and eradicate cancer cells there and throughout the body.
Organization
The Group’s management team at year-end consisted of Erik Digman Wiklund, CEO, Lubor Gaal, Chief
Financial Officer, Lone Ottesen, Chief Medical Officer, Victor Levitsky, Chief Scientific Officer, Ingunn
Munch Lindvig, VP and Head of Regulatory and Ola Melin, VP and Head of Manufacturing.
The Board of Directors held 13 meetings in 2022. All members of the Board of Directors are
shareholder-elected. The members of the Board of Directors were at the end of 2022 Damian Marron
(Chairperson), Sonia Quaratino, Robert Burns, Eva-Lotta Allan, Diane Mellett, Raphael Clynes and
Bente-Lill B. Romøren.
Drop-down demerger completed
In July 2022, the Company completed the demerger and merger plan for the transfer of the
operational activities of the Company to its wholly-owned subsidiary, Targovax Solutions AS. The plan
was approved at the Company’s general meeting on 20 April 2022.
The background for the drop-down demerger was that the Board of Directors wished to establish a
group holding structure with separate operating companies, rather than having operations in the
listed parent company. For further information please see note 5 in Targovax ASA’s annual accounts
and notes.
Targovax has offices in Lysaker, Norway, in Espoo, Finland and in Hässelby, Sweden.
Annual Report 2022
Page 16
Corporate social responsibility
Targovax (OSE:TRVX) is a clinical stage cancer immunotherapy and RNA therapeutics company.
Targovax´ clinical programs aim to activate the patient´s own immune system to fight cancer, and to
bring benefit to cancer patients with few available treatment alternatives. 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 against the tumor. ONCOS-102 has
demonstrated excellent safety, strong immune responses and clinical efficacy in several cancer
types, both as monotherapy and in combinations. Targovax´ second clinical stage program is a KRAS
immunotherapy, with lead candidate TG01 currently being tested in studies in RAS-mutated
pancreatic cancer and multiple myeloma. Building on deep experience from immunotherapy and viral
engineering, Targovax is establishing a cutting-edge circular RNA (circRNA) platform. It´s unique and
proprietary circVec vector-system for circRNA expression and delivery has broad potential
applications and is being explored in multiple settings.
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
20 December 2022. 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.
Targovax is subject to the Transparency Act, which entered into force on 1 July 2022.
1
Including consultants
In Targovax, we work continuously to comply with human rights and to ensure that working
conditions for all employees comply with human-rights and dignity. Our Code of Conduct commits us
to practice fair dealing, honesty and integrity in every aspect in dealing with other employees,
business relations and customers, the public, the business community, shareholders, suppliers,
competitors and government authorities. The annual ESG Report, which will be published by 30 June
2023, will include assessment in compliance with the Transparency Act.
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.
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 2022, Targovax had a total of 22 employees, of which 21 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. Targovax’s workforce by gender and employment:
Workforce Men Women Total
Total workforce
1
9 14 23
Total workforce full-time employees 8 13 22
Total workforce part-time employees 1 0 1
Number of non-permanent employees 0 0 0
Annual Report 2022
Page 17
The working environment is measured at least once a year through employee surveys. For the 2022
survey, 90 percent of the employees answer that they feel valued as a member of the organization
and 90 percent of employees answer that they feel motivated in their work. 52% percent of
Targovax’s workforce hold a master’s degree and 43 percent hold 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 2022. Absence due to illness in the group was 1.52
percent in 2022. 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 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
evaluates each candidate’s ethical and responsible business conduct including environment, health
and safety policy.
The main source of climate emissions from Targovax in 2022 was emissions from the use of
electricity for Targovax offices in Norway and Finland. The company also has emissions from waste
generated from Targovax’ offices. The company has not identified any direct emissions from its
business activities.
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.
Annual Report 2022
Page 18
Shareholder information
During 2022 the Targovax share was traded in the NOK 0.96 – 2.20 range. During 2022, 285 million
shares were traded, with a total value of NOK 421 million. Closing price on 31 December 2022 was
NOK 1.11 per share, corresponding to a market-value of NOK 207 million.
As of 7 April 2023, there were 188,577,572 shares outstanding in Targovax, distributed amongst
6,522 shareholders. The 20 largest shareholders control 30.3 percent of total shares outstanding.
The estimated share ownership situation on 7 April 2022
Estimated
Shareholder
Shares mill
Ownership
HØSE AS
6.4
3.4 %
Nordnet Bank AB (nom.)
5.6
3.0 %
Goldman Sachs International (nom.)
5.2
2.8 %
BÆKKELAGET HOLDING AS
5.1
2.7 %
SIVILINGENIØR JON-ARILD ANDREASSEN
4.9
2.6 %
RADFORSK INVESTERINGSSTIFTELSE
4.4
2.3 %
NORDNET LIVSFORSIKRING AS
3.2
1.7 %
Danske Bank A/S (nom.)
2.3
1.2 %
VAKTMESTERGRUPPEN AS
2.2
1.2 %
Ramsvik
2.0
1.1 %
THORENDAHL INVEST AS
2.0
1.1 %
RAGNVALD GABRIELSEN AS
2.0
1.0 %
PETTERSEN GRUPPEN AS
1.8
1.0 %
PETTERSEN
1.7
0.9 %
GRANUM & CO AS
1.5
0.8 %
The Bank of New York Mellon SA/NV (nom.)
1.5
0.8 %
WESTERHEIM
1.4
0.8 %
SKIPPERUD
1.4
0.8 %
LUNDE
1.4
0.7 %
TOLK-EN AS
1.2
0.7 %
20 largest shareholders
57.1
30.3 %
Other shareholders (6 502)
131.5
69.7 %
Total shareholders
188.6
100.0 %
As per 31 December 2022, key management and members of the Board holds a total of 724,968
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 April 2022. Information
about the work in the Compensation Committee and applied compensation principles for the
management team in 2021 and 2022 respectively are in the Compensation Report submitted in note
10 to the Annual Accounts.
The Remuneration Report for 2022 will be subject for approval in the Annual General Meeting in May
2023.
Annual Report 2022
Page 19
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 790.3 million (NOK 51.4 million). The loss mainly relates to the impairment of the
demerger/merger receivables from its subsidiary Targovax Solutions AS of NOK 786.4m. The
impairment was done for accounting purposes as the company announced prioritization of resources
toward its circRNA platform. For further information please see note 14 in the annual accounts for
Targovax ASA.
Equity at the end of 2022 amounted to NOK 1.5 million compared to NOK 790.9 million at the end of
2021. Despite having lost more than half of the share capital, the Board is of the opinion that
Targovax ASAs equity and liquidity is sufficient to secure its operations for the upcoming year. The
convertible bond facility with Atlas will secure additional share capital and liquidity of up to gross
NOK 300 million over three years and ensures that the holding company has sufficient financial
resources for planned activities. Further, Targovax ASA will be seeking additional sources of
capitalization of the holding company and any of its subsidiaries to strengthen the share capital and
liquidity of the Group.
Total cash amounted to NOK 2.5 million at the end of 2022 compared to NOK 170.0 million at the end
of 2021.
Targovax ASA’s annual result amounted to a loss of NOK 790.3 million. The Board of Directors
proposed that the loss is transferred to accumulated loss.
Outlook
Targovax now has the necessary capabilities, organization, and flexible access to capital to advance
its R&D programs. During 2022 the company executed on all major development goals and is
expected to build on this momentum in 2023 and deliver several important milestones on both the
clinical and pre-clinical programs, with an aim to secure a partnership to enable continued phase 2
development of ONCOS-102. The core R&D priority in the short- to mid-term will be to accelerate the
circRNA platform development to fully unlock the potential of the unique circVec vector system and
capitalize on the strong momentum and early-mover advantage Targovax has established in this
rapidly evolving novel area of drug development.
Lysaker, 13 April 2023
The Board of Directors of Targovax ASA
Damian Marron Bente-Lill Romøren Thomas Falck
Chairperson of the Board Board member Board member
Eva-Lotta Allan Diane Mellett Raphael Clynes
Board member Board member Board member
Sonia Quaratino Robert Burns Erik Digman Wiklund
Board member Board member Chief Executive Officer
Annual Report 2022
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 2022 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 2022
with the file name Targovax Annual Report 2022-12-31 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,13 April 2023
The Board of Directors of Targovax ASA
Damian Marron Bente-Lill Romøren Thomas Falck
Chairperson of the Board Board member Board member
Eva-Lotta Allan Diane Mellett Raphael Clynes
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 seven individuals per 13 April 2023. Set out below are
brief biographies of the members of Management. Holdings of shares and share options as of 13
April 2023 and includes close associates.
Erik Digman Wiklund was hired as the Company’s CFO in April
2017, and transitioned into the CBO role in October 2018. In
October 2021 he was appointed CEO of Targovax. Dr Wiklund
previously worked for the Norwegian cancer biotechnolog
y
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 holds a PhD in Molecular
Biology from Aarhus University, D
enmark, 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 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 citiz
en and
resides in Norway
.
Erik Digman Wiklund
Chief Executive Officer
Shares:
100 000
Share options: 1
800 000
Lone Ottesen
Chief Medical Officer
Shares:
47 000
Share options:
890 000
Ingunn Munch Lindvig
V
P and Head of Regulatory Affairs
Shares: 10 000
Share options:
792 000
Lone Ottesen is a highly experienced drug developer having
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. She got her MD and PhD at Aarhus University in
D
enmark 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
cancer
s. Dr Ottesen joined Targovax as Chief Development
officer and transitioned to Chief Medical Officer in 2022. She is
the medical and clinical head for all Targovax Clinical
Development activities across the portfolio. She is a Danish &
British citizen and
resides in the UK.
Ola Melin joined 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 manufactur
ing process and
supply chain. Prior to that he spent eighteen years at Biovitrum
and Sobi AB, where Melin held senior leadership roles as Head
of External Manufacturing and Head of Product Supply, as well
as other CMC positions. He 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
VP and
Head of Manufacturing
Shares:
50 000
Share options:
725 000
Annual Report 2022
Page 22
Lubor Gaal is an experienced industry executive with over 25
years of experience working in pharma or biotech companies in
Europe and the USA. Most recently, he served as Managing
Director at Locust Walk, a global life science boutique
investment bank. At Locust Walk, Dr Gaal was responsible f
or
overseeing all European strategic transactions, including
financings, M&A and licensing. Before Locust Walk, he was
Head of External Innovation and Licensing (BD) and a member
of the R&D Management Committee at Almirall; and Head of
Search and Evaluatio
n Europe for oncology, genetic and other
disorders for Bristol
-Myers Squibb. Prior to that, Dr Gaal held
executive management positions at biotech companies
Neuro3d (CNS) and Vectron Therapeutics (Oncology and
artificial viral vectors), and global business
development roles
at Bayer Pharma. Dr Gaal has a Ph.D. in molecular and cell
biology from the UC Berkeley, USA and a B.Sc. in Neurosciences
from U. of Sussex, UK. Dr. Lubor Gaal is a Belgian citizen and
resides in Spain
.
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 i
s 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 In
stitute 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 O
ncology 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:
700 000
Victor Levitsky
Chief
Scientific Officer
Shares:
10 000
Share options:
645 000
Thomas Hansen has over 15 years’ experience in academic
research. Before joining Targovax he worked as
assistant
professor at Aarhus University where he led a research team
focusing on RNA biology and bioinformatics. In 2011, Dr
Hansen pioneered the discovery of circular RNA in human cells,
and later in 2013 published the first functional characterization
o
f circular RNA in Nature. Dr Hansen holds a PhD in Molecular
Biology and Bioinformatics from Aarhus University, Denmark.
Dr
Thomas Hansen
is a Danish citizen and resides in Denmark. He
joined Targovax management team 1 January 2023.
Thomas Birkballe Hansen
VP and Head of Research
Shares:
0
Share options:
500 000
Annual Report 2022
Page 23
Board of Directors
The Board of Directors consists of eight individuals as per 13 april 2023. Set out below are brief
biographies of the members of Board. Holdings of shares, share options and RSUs as of 13 April
2023 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 Cantargia, a clinical stage monoclonal
antibody company for oncology and autoimmune diseases
listed on Nasda
q Stockholm and Resolys Bio Inc., a private, late
pre
-clinical U.S. company and Maripossa Ltd and Onyx
Therapeutics Ltd, UK statrt
-ups. He is also Chair of the Board of
Imophoron Ltd and of CytoSeek Ltd, private early stage UK
companies and Head of Biophar
ma 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 citi
zen and resides in
France
.
Dr Quaratino is an R&D executive with strong experience in
clinical development and immunology research, from academia
where she was a Professor of Immunology, to large Pharma and
Biotech. Currently, she is
also a Non-Executive Director at Ichnos
Science, USA, Chair of the Scientific and Clinical Advisory Board
at Stipe, Denmark, and member of the SCAB at Anaveon,
Switzerland. She covers an Executive role as CMO at
Georgiamune, USA. Dr Quaratino was previous
ly CMO at Kymab
(UK) from 2017 until its acquisition by Sanofi in 2021. She was
Gloabl Clinical Program Leader in Oncology at Novatis
(Switzerland), Senior Medical Director in Oncology and Advisor
in Immunology at Merck Serono (Germany).
Dr. Quaratino is an
Italian citizen and resides in Germany
.
Damian Marron
Chairperson (b. 1963)
Shares:
0
Share options:
0
Sonia Quaratino
Board Member
(b. 1962)
Shares:
0
Share options:
0
Diane Mellett
Board Member
(b. 1960)
Shares:
102 078
Share options:
0
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.
Dr. Robert Burns is an advisor to companies developing immune
based therapies in cancer and autoimmune indications. He has
been involved for more than 3
5 years in building biotechnology
companies focused on immuno
-oncology. Dr. Burns is currently
chairman of Affibody AB in Sweden, a company developing
novel th
erapies in autoimmune and inflammation indications. He
was a member of the board of directors of Oncos Therapeutics
OY prior to the Company's
merger with 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 Dir
ector of
Technology Licensing at the
New York based 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.
Robert Burns
Board Member
(b. 1947)
Shares: 275 454
Share options:
0
Annual Report 2022
Page 24
Thomas Falck is an experienced CEO, CFO, Board Chair and
Non
-Executive Director, Venture Capitalist & Growth Investor
with demonstrated success in defining and delivering profitable
growth while undertaking strategic and organizational change.
He has broad exper
ience with Private Equity, Venture Capital,
Stock Listed, Family and Government owned entities. Mr Falck
holds an MBA from The Darden School at the University of
Virginia and is a graduate of the Norwegian Naval Academy and
the Norwegian Defense University
College. In addition, Mr Falck
has attended Executive Programs at Singularity University and
Harvard Business School. He is a Norwegian citizen and resides
in Norway.
Dr Clynes is an internationally recognized cellular immunologist
and medical oncologist. Dr Clynes was on the faculty at
Columbia University where he developed several novel
therap
eutic approaches in cancer and autoimmunity. Since
joining industry in 2014, Dr Clynes has led clinical
immunotherapy development, including checkpoint inhibitors,
novel engineered cytokines and CD3 and CD28 bispecifics, at
Bristol Myers Squibb (BMS) and a
t Xencor, where he is currently
VP Translational Biology. Dr Clynes is an MIT graduate, MD/PhD
and MSKCC
-trained medical hematologist/oncologist. As a
well
-recognized expert in clinical immunology, Dr Clynes has
extensive prior experience as a contributing
member of multiple
scientific advisory boards in biopharma and review boards at
international research foundations. He is a US citizen and
resides in USA
.
Thomas Falck
Board
Member (b. 1966)
Shares:
0
Share options:
0
Eva-Lotta Allan
Board
Member (b. 1959)
Shares:
94 859
Share options:
0
Raphael Clynes
Board
Member (b. 1961)
Shares:
0
Share options:
0
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
also
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
Instit
ute in Stockholm. Ms. Allan is a Swedish citizen and
resides in the United Kingdom
.
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 h
ealthcare 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 Trondhei
m. Ms.
Bjerkelund Romøren is a Norwegian citizen and resides in
Norway
.
Bente-Lill Romøren
Board Member (b. 1949)
Shares:
35 577
Share options:
0
Annual Report 2022
Page 25
Corporate Governance
Report 2022
1. Implementation and reporting on corporate governance
.......................... 26
2. Business ................................................................................................. 26
3. Equity and dividends .............................................................................. 26
4. Equal treatment of shareholders .......................................................... 27
5. Share and negotiability .......................................................................... 27
6. General meetings ................................................................................... 28
7. Nomination Committee ......................................................................... 28
8. Board of Directors; composition and independence ........................... 29
9. The work of the Board of Directors ...................................................... 30
10. Risk management and internal control .............................................. 32
11. Remuneration of the Board of Directors ............................................ 32
12. Remuneration for executive personnel .............................................. 33
13. Information and communication ........................................................ 33
14. Take-overs ............................................................................................ 33
15. Auditor .................................................................................................. 34
Annual Report 2022
Page 26
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
20 December 2022 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 2022.
Deviations from the recommendation: None
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.
Annual Report 2022
Page 27
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 2022 was NOK 3 million, which corresponds to an equity ratio of 2.6 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 the lower of (a) NOK 2,600,000 and (b) 10% of the Company’s
outstanding shares, options and RSUs. This applies until the Annual General Meeting in 2023.
For the period between the Annual General Meetings in 2023 and 2024, 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
Annual Report 2022
Page 28
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
nomination committee, elects the members and the Chairperson of the Nomination Committee, and
Annual Report 2022
Page 29
determines their remuneration. The current Nomination Committee was elected at the General
Meeting 20 April 2022. 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 2022.
All members of the Nomination Committee are independent of the Company’s Board of Directors and
executive management, and none are 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 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: none.
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 Nomination Committee shall give weight to the proposed candidates’ experience, qualifications,
and their capacity to serve as officers of the Company in a satisfactory manner. Emphasis will also
be given to ensuring reasonable representation in terms of gender, equality and background, and to
ensuring the independence of members of the Company’s Board.
The Board of Directors consists of eight members, and currently has the following composition:
Damian Marron (Chair), Robert Burns, Eva-Lotta Allan, Diane Mellett, Sonia Quaratino, Thomas Falck,
Annual Report 2022
Page 30
Bente-Lill Romøren, Raphael Clynes,. The current Board of Directors was elected at the General
Meeting 20 April 2022 and 50 percent of the Board members are women. For more information on
each board member, please see section “Board of Directors”.
Participation on Board of Directors meetings and Board committee meetings during 2022:
Participation in
meetings
Board
Meetings
Audit Committee
Compensation
committee
Governance
Committee
Damian Marron
13
4
2
Sonia Quaratino
9
Bente-Lill Romøren
13
2
Robert Burns
12
2
Eva-Lotta Allan 12 2
Diane Mellett
11
4
2
Thomas Falck*
7
2
2
Raphael Clynes*
8
*Thomas Falck and Raphael Clynes was elected to the Board of Directors in the Annual General
Meeting in 2022.
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.
Annual Report 2022
Page 31
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 20 December 2022
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.
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 12 May 2022. 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 Thomas Falck.
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.
Four meetings were held in 2022.
Compensation committee
The members of the Compensation Committee are Thomas Falck (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.
Two meetings were held in 2022.
Annual Report 2022
Page 32
Corporate Governance Committee
The members of the Corporate Governance Committee are Bente-Lill Romøren (chair), 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
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
Two meetings were held in 2022.
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 20 April 2022 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 2021-2022 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.
Annual Report 2022
Page 33
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.
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 in the Annual Report.
Deviations from the recommendation: None
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 20 April 2022 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 in the Annual Report.
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.
Annual Report 2022
Page 34
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. 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.
De
Annual Report 2022
Page 35
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 in the Annual
Report, 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
Annual Report 2022
Page 36
.
TARGOVAX GROUP 2021
Accounts
and notes
Consolidated statement of profit or loss ............................................................. 36
Consolidated Statement of comprehensive income ........................................... 37
Consolidated statement of financial position ..................................................... 38
Consolidated statement of changes in equity ..................................................... 39
Consolidated statement of cash flow .................................................................. 40
1. General information ........................................................................................ 41
2. Summary of significant accounting principles ................................................. 41
3. Important accounting estimates and discretionary assessments ................... 43
4. Segments ......................................................................................................... 44
5. Financial instruments and risk management objectives and policies ............. 44
6. Revenue recognition ........................................................................................ 49
7. Research and development expenses ............................................................. 49
8. Government grants .......................................................................................... 49
9. Payroll and related expenses ........................................................................... 50
10. Related parties and Management ................................................................. 51
11. Share-based compensation ........................................................................... 61
12. Other operating expenses ............................................................................. 65
13. Financial instruments .................................................................................... 65
14. Tax .................................................................................................................. 66
15. Intangible assets and impairment test .......................................................... 68
16. Property, plant and equipment ..................................................................... 69
17. Leases ............................................................................................................. 70
18. Receivables ..................................................................................................... 72
19. Cash and cash equivalents ............................................................................. 72
20. Share capital and shareholder information ................................................... 73
21. Interest-bearing debt ..................................................................................... 75
22. Current liabilities ............................................................................................ 76
23. Events after the reporting date ...................................................................... 77
Annual Report 2022
Page 37
Consolidated statement of profit or loss
Amounts in NOK thousands except per share data
Note
2022
2021
Other revenues
6
Total revenue
Research and development expenses
7,8
-47 228
-37 440
Payroll and related expenses
7,8,9,10,11
-52 238
-48 386
Other operating expenses
7,8,12
-11 454
-8 466
Depreciation, amortizations and write downs
15,16,17
-392 673
-1 309
Total operating expenses
-503 593
-95 601
Operating profit/loss (-)
-493 591
-95 601
Finance income
13
Finance expense
13,21
-5 097
-2 667
Net finance income (expense)
-1 737
-2 422
Loss before income tax
-495 328
-98 023
Income tax income/(expense)
14
Loss for the period
-432 898
-97 971
Earnings/loss (-) per share
Basic and dilutive earnings/loss (-) per share
20
-2.30
-1.10
Consolidated Statement of comprehensive income
Amounts in NOK thousands except per
Note
2022
2021
Income/loss (-) for the period
-432 898
-97 971
Items that may be reclassified to profit or
Exchange differences arising from the
translation of foreign operations
-12 927
Total comprehensive income/loss (-) for
the period
-419 273
-110 898
Annual Report 2022
Page 38
Consolidated statement of financial position
Amounts in NOK thousands
Note
31.12.2022
31.12.2021
ASSETS
Intangible assets
15
Property, plant, and equipment
16
Right-of-use assets
17
Total non-current assets
Receivables
13,18
Cash and cash equivalents
19
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
20
Share premium reserve
-
-
Other reserves
Retained earnings
-123 672
Translation differences
Total equity
Non-current liabilities
Interest-bearing liabilities
21
Deferred tax
14
-
Lease liabilities
17
-
Total non-current liabilities
Amounts in NOK thousands
Note
31.12.2022
31.12.2021
Current liabilities
Interest-bearing liabilities
21,22
Short-term lease liabilities
17,22
Trade payables
22
Accrued public charges
22
Other current liabilities
22
Total current liabilities
TOTAL EQUITY AND LIABILITIES
Lysaker, 13 April 2023
The Board of Directors of Targovax ASA
Damian Marron Bente-Lill Romøren Thomas Falck
Chairperson of the Board Board member Board member
Eva-Lotta Allan Diane Mellett Raphael Clynes
Board member Board member Board member
Sonia Quaratino Robert Burns Erik Digman Wiklund
Board member Board member Chief Executive Officer
Annual Report 2022
Page 39
Consolidated statement of changes in equity
Amounts in NOK thousands
Note
Share
capital
Share
premium
Other
reserves
Translation
differences
Retained earnings
(accumulated
Total
equity
Balance at 31 December 2020
-778 136
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 - Private Placement and repair offering
20
Transaction costs - Private Placement
-26 040
-26 040
Share issuance, employee share options & RSU’s
20
Transaction costs – Share based payments
-59
-59
Recognition of share-based payments & RSU's
11
Reclassification of Share premium
-1 185 396
Balance at 31 December 2021
Loss for the period
-432 898
-432 898
Exchange differences arising from the translation of foreign operations
-
Other comprehensive income/loss, net of tax
-
Total comprehensive income for the period
-432 898
-419 273
Transaction costs – Acquisition of a subsidiary
-20
-20
Share issuance, employee share options & RSU’s 20 15 5 20
Transaction costs – Share based payments
-47
-47
Recognition of share-based payments & RSU's
11
Reclassification of Share premium
-62
Balance at 31 December 2022
-123 672
Annual Report 2022
Page 40
Consolidated statement of cash flow
Amounts in NOK thousands
Note
2022
2021
Cash flow from operating activities
Loss before income tax
-495 328
-98 023
Adjustments for:
Finance income
13
-3 360
-245
Finance expense
13
Interest received
13
Other finance income/expense
13
-247
Share option and RSU expense
11
Depreciation, amortizations and write downs
16,17
Change in receivables
18
-18 890
-4 348
Change in other current liabilities
22
Net cash flow from /(used in) operating activities
-108 841
-85 402
Cash flow from investing activities
Purchases of property, plant, and equipment (PPE)
16
-4 935
Purchases of intangible assets
15
-24
Net cash received from/(paid in) investing activities
-4 959
Cash flow from financing activities
Repayment of borrowings
21
-2 086
-2 023
Repayment of lease liabilities
17
-1 515
-1 468
Interest paid
13
-680
-710
Proceeds from issuing shares -Rights issue, Private Placement and repair offering
20
Payment for share issue cost – Rights issue, Private Placement and repair offering
-20
-25 329
Proceeds from exercise of share options & RSUs
20
Payment for share issue cost – share options & RSUs
-47
-59
Net cash generated from financing activities
-4 328
Net increase/(decrease) in cash and cash equivalents
-118 129
Net exchange gain/loss on cash and cash equivalents
-848
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
19
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Annual Report 2022
TARGOVAX ASA 2022
Accounts
and notes
Statement of profit or loss Targovax ASA ......................................................... 79
Statement of comprehensive income Targovax ASA ....................................... 79
Statement of financial position Targovax ASA .................................................. 80
Statement of changes in equity – Targovax ASA ............................................... 81
Statement of cashflow – Targovax ASA ............................................................. 82
1. General information ...................................................................................... 83
2. Summary of significant accounting principles ............................................... 83
3. Important accounting estimates and discretionary assessments ................. 84
4. Segments ....................................................................................................... 85
5. Drop-down demerger/merger 2022 .............................................................. 85
6. Financial instruments and risk management objectives and policies ........... 86
7. Revenue recognition ...................................................................................... 88
8. Research and development expenses ........................................................... 88
9. Government grants ........................................................................................ 89
10. Payroll and related expenses ....................................................................... 90
11. Related parties and Management ............................................................... 90
12. Share-based compensation ......................................................................... 91
13. Other operating expenses ............................................................................ 95
14. Financial instruments ................................................................................... 95
15. Tax ................................................................................................................ 97
16. Investments in subsidiaries .......................................................................... 98
17. Leases .......................................................................................................... 99
18. Receivables ................................................................................................ 101
19. Cash and cash equivalents ......................................................................... 102
20. Share capital and shareholder information ............................................... 102
21. Current liabilities ........................................................................................ 104
22. Events after the reporting date .................................................................. 104
Page 79
Annual Report 2022
Statement of profit or loss
Targovax ASA
Amounts in NOK thousands expect per share data
Note
2022
2021
Other revenues
7,11
-
16 041
Total revenue
-
16 041
Research and development expenses
8,9
-
-15 494
Payroll and related expenses
8,9,10,11,12
-2 485
-42 847
Other operating expenses
8,9,13
-1 224
-7 135
Depreciation, amortizations and write downs
17
-
-947
Total operating expenses
-3 709
-66 424
Operating profit/loss (-)
-3 709
-50 383
Finance income
14
-
269
Finance expense
14
-786 614
-1 333
Net finance income (expense)
-786 614
-1 063
Loss before income tax
-790 322
-51 447
Income tax expense
15
Loss for the period
-790 322
-51 447
Earnings/loss (-) per share
Basic and dilutive earnings/loss (-) per share
20
-4.19
-0.58
Statement of comprehensive income
Targovax ASA
Amounts in NOK thousands expect per share data
2022
2021
Income/loss (-) for the period
-790 322
-51 447
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
-790 322
-51 447
Page 80
Annual Report 2022
Statement of financial position
Targovax ASA
Amounts in NOK thousands
Note
31.12.2022
31.12.2021
ASSETS
Investments in subsidiaries
5,16
-
636 077
Right-of use assets
5,17
-
2 013
Total non-current assets
-
638 090
Receivables
5,9,11,14,18
871
5 897
Cash and cash equivalents
5,19
2 491
169 996
Total current assets
3 362
175 892
TOTAL ASSETS
3 362
813 983
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
20
18 847
18 833
Share premium reserve
-
-
Other reserves
7 810
53 279
Retained earnings
-25 221
718 772
Total equity
1 437
790 884
Non-current liabilities
Lease liabilities
5,17
-
1 126
Total non-current liabilities
-
1 126
Current liabilities
Short-term lease liabilities
5,17
-
1 040
Trade payables
5,21
-
3 380
Accrued public charges 5,21
284 2 817
Other current liabilities
5,21
1 642
14 735
Total current liabilities
1 926
21 972
TOTAL EQUITY AND LIABILITIES
3 362
813 983
Lysaker, 13 April, 2023
The Board of Directors of Targovax ASA
Damian Marron Bente-Lill Romøren Thomas Falck
Chairperson of the Board Board member Board member
Eva-Lotta Allan Diane Mellett Raphael Clynes
Board member Board member Board member
Sonia Quaratino Robert Burns Erik Digman Wiklund
Board member Board member Chief Executive Officer
Page 81
Annual Report 2022
Statement of changes in equity – Targovax ASA
Amounts in NOK thousands
Note
Share
capital
Share
premium
Other
reserves
Retained earnings
(accumulated
Total
equity
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
-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
12
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
Effect of demerger/merger
-
-
-46 372
46 372
-
Balance at 01 January 2022
18 833
-
6 907
765 144
790 884
Loss for the period
-790 322
-790 322
Other comprehensive income/loss, net of tax
-
Total comprehensive income for the period
-790 322
-790 322
Share issuance, employee share options & RSUs
21
15
5
20
Transaction costs – employee share options & RSUs
-47
-47
Recognition of share-based payments & RSU's
12
903
903
Reclassification of Share premium
42
-42
-
Balance at 31 December 2022
18 847
-
7 810
-25 221
1 437
Annual Report 2022
Page 82
Statement of cashflow – Targovax ASA
Amounts in NOK thousands
Note
2022
2021
Cash flow from operating activities
Loss before income tax
-790 322
-51 447
Adjustments for:
Finance income
14
-
-269
Finance expense
14
-
1 333
Interest received
14
-
244
Other finance expense
14
-
-53
Share option expense
12
903
6 319
Depreciation
17
-
947
Impaired receivable
14
786 448
-
Impaired investment in subsidiary
60
-
Change in receivables
18
545
-19 058
Change in other current liabilities
21
1 926
8 149
Net cash flow from /(used in) operating activities
-441
-53 836
Cash flow from investing activities
Effect of demerger/merger – cash transferred to Targovax Solutions AS
5
-166 996
-
Investment in subsidiary
16
-40
-29 593
Net cash received from/(paid in) investing activities
-167 036
-29 593
Cash flow from financing activities
Repayment of lease liabilities
17
-
-1 128
Proceeds from issuing shares -Rights issue, Private Placement and repair offering
20
-
175 000
Payment for share issue cost – Rights issue, Private Placement and repair offering
-
-25 329
Proceeds from exercise of RSUs
20
20
200
Payment for share issue cost – RSUs
-47
-59
Net cash generated from financing activities
28
148 683
Net increase/(decrease) in cash and cash equivalents
-167 505
65 254
Net exchange gain/loss on cash and cash equivalents
-
-1 001
Cash and cash equivalents at beginning of period
169 996
105 743
Cash and cash equivalents at end of period
19
2 491
169 996
Annual Report 2022
Page 83
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. The Company operates as a s a pure holding
company from the year 2022.
Targovax ASA ("the Company") and its subsidiaries (together the Group) is a clinical stage cancer
immunotherapy and RNA therapeutics company. Targovax´ clinical programs aim to activate the
patient´s own immune system to fight cancer, and to bring benefit to cancer patients with few
available treatment alternatives. 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 against the tumor. ONCOS-102 has demonstrated excellent safety, strong immune
responses and clinical efficacy in several cancer types, both as monotherapy and in combinations.
Targovax is aiming to progress ONCOS-102 into a randomized phase 2 trial in melanoma patients
resistant to PD-1 checkpoint inhibitor treatment through one or more partnerships.
Targovax´ second clinical stage program is a KRAS immunotherapy, with lead candidate TG01
currently being tested in studies in RAS-mutated pancreatic cancer and multiple myeloma. Building
on broad industry and academic networks, these collaborative trials are highly cost-efficient for
Targovax, and are supported by prestigious research grants from Innovation Norway and the
Norwegian Research Council.
Building on deep experience from immunotherapy and viral engineering, Targovax is establishing a
cutting-edge circular RNA (circRNA) platform. It´s unique and proprietary circVec vector-system for
circRNA expression and delivery has broad potential applications and is being explored in multiple
settings. The aim is to develop novel clinical candidates for in-house development, as well as to forge
early partnerships to broaden and accelerate the circRNA pipeline development .
These financial statements have been approved for issue by the Board of Directors on 13 April 2022
and are subject to approval by the Annual General Meeting in May 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
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 2022:
o Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
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Annual Report 2022
o Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37
o Reference to the Conceptual Framework – Amendments to IFRS 3.
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 2022 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 February 2023, Targovax announced that it has agreed the terms and conditions for a convertible
bond facility with Atlas Special Opportunities (“Atlas”) which will secure financing of up to gross NOK
300 million over three years. The agreement was approved by an extraordinary general meeting
(EGM) of Targovax held 9 March 2023, please see Note 22. In March 2023, the Company announced
prioritization of resources toward its circRNA platform and, it is the view of the Board that the phase 2
study should only be pursued once a partner or additional source of financing can be secured. 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.
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 12 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 16 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 15 Taxes.
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Annual Report 2022
4. Segments
The Company's activities during 2022 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. Drop-down demerger/merger 2022
In July 2022, the Company completed the demerger and merger plan for the transfer of the
operational activities of the Company to its wholly-owned subsidiary, Targovax Solutions AS. The plan
was approved at the Company’s general meeting on 20 April 2022. The background for the drop-down
demerger was that the Board of Directors wished to establish a group holding structure with separate
operating companies, rather than having operations in the listed parent company.
The drop-down demerger/merger included a demerger of operations and assets from Targovax ASA
to Athomstart Invest 586 AS and a merger between Athomstart Invest 586 AS and the Company's
wholly-owned subsidiary Targovax Solutions AS.
As the merger consideration is settled by Targovax ASA, a receivable was created between Targovax
ASA (creditor) against Targovax Solution AS (debtor). The receivable will have a nominal value equal
to the book value of the assets, rights, and obligations transferred to Targovax Solution AS by the
Merger.
The Merger was implemented with accounting and economic effect from 1 January 2022. From this
point in time, Targovax Solution AS is considered to have acquired all assets, rights, and obligations
which Targovax Solution AS shall acquire. For accounting purposes, the Demerger/Merger will be
carried out with continuity.
The 15 employees in Targovax ASA were transferred to Athomstart Invest 586 AS in connection with
the Demerger, and then to Targovax Solution AS in the Merger. The transferred employees will
continue their employment on current and unaltered conditions.
Targovax
ASA
Targovax
Solutions AS
Targovax
ASA
Amounts in NOK thousands
31.12.2021
01.01.2022
01.01.2022
ASSETS
Investments in subsidiaries
636 077
636 077
-
Right-of use assets
2 013
2 013
-
Total non-current assets
638 090
638 090
-
Receivables
5 897
5 897
-
Receivable demerger - Targovax Solutions AS
-
43 656
Receivable merger - Targovax Solutions AS
-
744 228
Cash and cash equivalents
169 996
166 996
3 000
Total current assets
175 892
172 892
790 884
TOTAL ASSETS
813 983
810 983
790 884
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
18 833
-
18 833
Other reserves
53 279
46 372
6 907
Retained earnings
718 772
-46 372
765 144
Total equity
790 884
-
790 884
Non-current liabilities
Lease liabilities
1 126
1 126
-
Total non-current liabilities
1 126
1 126
-
Current liabilities
Short-term lease liabilities
1 040
1 040
-
Trade payables
3 380
3 380
-
Trade payable - Targovax ASA
787 884
Accrued public charges
2 817
2 817
-
Other current liabilities
14 735
14 735
-
Total current liabilities
21 972
809 856
-
TOTAL EQUITY AND LIABILITIES
813 983
810 983
790 884
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Annual Report 2022
6. 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.
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 2022 and 2021:
2022
2021
Amounts in NOK thousands
1% point
increase
1% point
decrease
1% point
increase
1% point
decrease
Loss before income tax effect
25
-25
1 700
-1 700
Foreign currency risk
Fluctuations in exchange rates could affect the Company’s cash flow and financial condition.
Due to the drop-down demerger/merger in 2022 where the operating activities were transferred to
Targovax Solutions AS, please see Note 5, the Company has decreased its currency exposure
significantly. The Company has no currency exposure in 2022, but for the year 2021 the Company had
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. For the year 2021, the Company was
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 2022 and 2021.
The Company’ s sensitivity to a 10% increase/decrease in EUR against NOK:
2022
2021
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
-
-
534
- 534
The Company’ s sensitivity to a 10% increase/decrease in USD against NOK:
2022
2021
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
-
-
3
-3
The Company’ s sensitivity to a 10% increase/decrease in GBP against NOK:
2022
2021
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
-
-
125
-125
Page 87
Annual Report 2022
The Company’ s sensitivity to a 10% increase/decrease in CHF against NOK:
2022
2021
Amounts in NOK thousands
10% point
increase
10% point
decrease
10% point
increase
10% point
decrease
Loss before income tax effect
-
-
147
-147
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. The receivable from the dropdown demerger/merger in 2022 of NOK 786 million was
impaired in 2022 due to the company’s decision to only proceed with the phase 2 program once a
partnership and / or additional financing has been secured 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.
Cash at bank:
2022
2021
Rating
Amounts in NOK thousands
Amount
In %
Amount
In %
Cash at bank:
2 491
100%
169 680
100%
Nordea Bank AB
2 491
100%
169 680
100%
AA-
DNB Bank ASA
-
0%
-
0%
AA-
Money market funds:
-
0%
316
0%
Nordea Likviditet III
-
0%
316
0%
Total
2 491
100%
169 996
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.
2022
2021
Amounts in NOK thousands
Carrying
amounts
Fair value
Carrying
amounts
Fair value
Receivables
871
871
5 897
5 897
Cash and cash equivalents
2 491
2 491
169 996
169 996
Total financial assets
3 362
3 362
175 892
175 892
Lease liabilities
-
-
2 166
2 166
Trade payables
-
-
3 380
3 380
Total financial liabilities
-
-
5 546
5 546
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Annual Report 2022
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 Group has entered into an
investment agreement with Atlas Special Opportunities, to secure financing by the issuance of
convertible bonds with a nominal value of up to NOK 300 million over three years. This facility,
approved by the EGM 9 march 2022, will provide the Group and the Company with sufficient cash to
meet its obligations as at 31 December 2022 and related to planned activities in the next 12 months.
Hence, the Company is funded into 2024. The Company will need new funding for the next phases of
the development program. All liabilities at year-end are short-term and fall due within one year of the
reporting date.
The below tables analyses the Company’s current and non-current financial liabilities, at 31 December
2022 and 2021 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 2022
On
demand
Less than 3
months
3 to 12
months
1 to 5
years
>5
years
Total
(
Amounts in NOK
thousands
)
Lease liabilities
-
-
-
-
-
Trade payables
-
-
-
-
-
-
Accrued public charges
-
284
-
-
-
284
Other current liabilities
-
1 642
-
-
-
1 642
Total
-
1 926
-
-
-
1 926
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
7. 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
2022
2021
Revenue from subsidiary
-
16 041
Other revenue
-
-
Total operating revenue
-
16 041
The Company’s products are still in the research and development phase, and it has no revenue from
sales of products yet.
Subsequent of the drop-down demerger/merger in 2022 all operating activities in the Company were
transferred to Targovax Solutions AS. Due to this the Company has no revenue from subsidiary in
2022.
8. 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.
Subsequent of the drop-down demerger/merger in 2022 all operating activities in the Company were
transferred to Targovax Solutions AS. Due to this the Company has no R&D activities in 2022.
Page 89
Annual Report 2022
The following table gives an overview of the Company’s research and development expenditures
compared to the total operating expenses:
2022
2021
Amounts in NOK thousands
Total
Of which
R&D
Total
Of which
R&D
R&D expenses
-
-
15 494
15 494
Payroll and related expenses
2 485
-
42 847
18 463
Other operating expenses
1 224
-
7 135
23
Depreciation, amortizations and
write downs
- -
947 -
Total
3 709
-
66 424
33 980
The following research and development expenditures have been expensed:
Amounts in NOK thousands
2022
2021
R&D related consultancy and other expenses
-
4 325
Cost of manufacturing for R&D
-
11 686
Patent expenses
-
2 370
Government grants
-
-2 888
Total research and development expenses
-
15 494
See note 10 for more information about payroll and related expenses and Note 13 for more
information about other operating expenses.
9. 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.
Subsequent of the drop-down demerger/merger in 2022, grants awarded to the Company were
transferred to Targovax Solutions AS.
Consequently, the Company has, for SkatteFUNN projects during the full year 2022 recognized NOK 0
million (NOK 3.3 million in 2021) as cost reduction in Research and development expenses, Payroll
and related expenses and 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
2022
2021
Research and development expenses
-
2 888
Payroll and related expenses
-
374
Other operating expenses
-
1
Total grants
-
3 263
Specification of grants receivables:
Amounts in NOK thousands
2022
2021
Grants from SkatteFUNN
-
3 263
Total grants receivable
-
3 263
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Annual Report 2022
10. 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.
In 2022, Targovax ASA has completed a drop-down demerger approved by the annual general
meeting (AGM) of the Company on 20 April 2022. All of Targovax ASA’s employees were transferred
to Targovax Solutions AS, please see Note 5. Hence, the payroll and related expenses for 2022
relates to the Company’s Board of Directors.
Bonus scheme
In 2018 Targovax implemented a bonus system covering all employees. In 2021 the Company
recognized 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 11 Related parties and Management.
Defined contribution plans
Targovax ASA had a defined contribution pension plan as required by the Norwegian Law in 2021.
This pension plan applied to all employees of Targovax ASA. Members of the Management Team
with residence outside Norway were not part of the company’s respective national pension plans. The
company paid 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 were paid
to pension insurance plans and charged to the statement of profit or loss in the period to which the
contributions relate.
Total payroll and related expenses for the Company are:
Amounts in NOK thousands
2022
2021
Salaries and bonus
1 380
28 394
Employer’s national insurance contributions
202
3 657
Share-based compensation
1)
903
6 319
Pension expenses – defined contribution plan
-
1 323
Other
-
3 529
Governmental grants
-
-374
Total payroll and related expenses
2 485
42 847
1) Share-based compensation has no cash effect.
Number of employees calculated on a full-time basis as at end of
period
0
15,0
Number of employees as at end of period
0
15
11. Related parties and Management
For the remunerations to the Board of Directors for 2022, and as there are no difference between the
Group and the Company concerning Management Team remunerations in the year 2021, please see
Note 10 Related parties and Management in the Group’s consolidated financial statements. See Note
10 Payroll and related expenses and Note 12 Share-based compensation for accounting principle for
payroll and related expenses and equity-settled share-based payments in the Company’s financial
statements.
Related party transactions:
2022
2021
Amounts in NOK thousands
Revenue
(expense)
Receivable
(Payable) at
31 December
Revenue
(expense)
Receivable
(Payable) at
31
Subsidiaries:
expense related to subsidiaries
- -
-1 743 -
receivables related to subsidiaries
- -
- -
revenue related to subsidiaries
- -
16 041 -
Levitski V-Biopharm Consulting
-
-
-1 644
-
Page 91
Annual Report 2022
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 27,085 per month for a 100% position.
Viktor Levitsky reduced his position from 100% to 20% as of 1 November 2021. The consulting
agreement was transferred to Targovax Solutions AS as at 01.01.2022.
Remuneration to the statutory auditor (excl. VAT):
Amounts in NOK thousands
2022
2021
Statutory audit 100 400
Other attestation services
-
-
Tax services
-
-
Other services
-
45
Total
100
445
12. 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 April 2022 the Board of Directors was authorized to increase
the Group’s share capital in connection with share incentive arrangements by up to NOK 2 600 000.
This authorization replaces the previous authorizations to increase the share capital by up to the
lower of NOK 1 250,000 and b) 10% of the Company’s outstanding shares, options and RSUs given to
the Board of Directors at the AGM held in March 2021.
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.
Page 92
Annual Report 2022
There were granted 4 555 000 share options during 2022 and 2 225 000 share options during 2021.
As of 31 December 2022, there are in total 10 781 275 (7 743 106 at 31 December 2021) outstanding
options for all option programs, 10 781 275 (7 652 698 at 31 December 2021)) options under the LTI
Option Program and none (90 408 at 31 December 2021) 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
2021 is estimated at average of 81,06% and 75,82 %%, based on the volatility of comparable listed
companies. The volume weighted average interest rate applied to the share options grants in 2022
and 2021 is 2,87% and 1,33%.
The following table shows the changes in outstanding options in 2022 and 2021:
2022
2021
No. of
options
Weighted avg.
exercise price
(in NOK)
No. of
options
Weighted avg.
exercise price
(in NOK)
Outstanding at 1 January
7 743 106
10.13
7 310 067
12.94
Granted during the period
4 555 000
1.20
2 225 000
4.59
Exercised during the period
-11 981
0.51
-29 788
6.64
Forfeited
-586 050
7.87
-1 124 017
8.70
Expired
-918 800
14.61
-638 156
19.83
Outstanding no. of options
at end of period
10 781 275
6.11
7 743 106
10.13
1) See Note 11 Related parties and Management for further information on granted share options to
Management Team.
The average fair value of options granted in 2022 was 0.68 per share and 2.49 per share in 2021.
The weighted- average assumptions used to determine the Black Scholes fair value of options
granted in 2022 and 2021 were:
Amounts in NOK thousands
2022
2021
Volatility (%)
81.06
75.82
Expected life (in years)
3.66
3.66
Risk-free interest rate (%)
2.87
1.33
Share price (NOK)
1.19
4.62
Exercise price (NOK)
1.20
4.59
The expensed share options, NOK 3.3 million in 2022 (Targovax Solutions AS: NOK 2.8 million,
Targovax OY: NOK 0.5 million and Circio AB: NOK 13 thousand) and NOK 5.8 million in 2021
(Targovax ASA: NOK 5.2 million and Targovax OY: NOK 0.6 million), includes management estimate
for employee turnover. The estimated turnover rate used for the year 2022 and 2021 was 10%.
Annual Report 2022
Page 93
At 31 December 2022, 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
12/31/2022
Weighted average remaining
contractual life
Weighted average remaining
years until vesting
Weighted average
exercise price
Vested outstanding per
12/31/2022
Weighted average
exercise price
Weighted average
remaining life vested
0.00-1.15
4 110 000
6.97
2.13
1.15
-
-
-
1.16-1.53
315 000
6.21
1.36
1.52
-
-
-
1.54-2.18
1 155 000
5.99
1.14
2.17
285 000
2.18
5.98
2.19-6.06
1 201 375
4.46
0.55
5.64
638 510
5.91
3.58
6.07-7.00
95 000
5.27
0.69
6.70
39 888
6.67
5.13
7.01-9.70
2 331 165
3.78
0.36
8.70
1 514 538
8.54
3.09
9.71-21.00 822 000
1.11 0.00 15.56 822 000
16.56 1.11
21.01-25.65
751 735
0.75
0.00
22.48
751 735
22.48
0.75
Total
10 781 275
4.98
1.12
6.11
4 051 671
11.87
2.56
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
From 1 January 2023 to 13 April 2023, no share options were granted to members of management, and 15,000 share options were granted to other employees of the Group.
Annual Report 2022
Page 94
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
2022-2023 have been set out in the minutes from the Annual General Meeting 20 April 2022. The
Annual General Meeting 20 April 2022 decided to remunerate the Board of Directors for the period
between the AGM 2022 to the AGM 2023 with a combination of cash and Restricted Stock Units
(RSUs), hence at the AGM 20 April 2022, additional 559 589 RSUs were granted to the Board of
Directors. Further, the RSU-holders have in total received 79,006 additional RSUs as an adjustment
for the increased share float following the right and repair issues previously completed by the
Company pursuant to the terms and conditions of the RSU agreements.
The average fair value of RSUs granted in 2022 was 1.75 per share and 8.67 per share in 2021. The
weighted- average assumptions used to determine the Black Scholes fair value of RSUs granted in
2022 and 2021 were:
Amounts in NOK thousands
2022
2021
Volatility (%)
84.30
65.00
Expected life (in years)
1
1
Risk-free interest rate (%)
1.56
0.23
Share price (NOK)
1.75
8.77
Exercise price (NOK)
0.10
0.10
The expensed RSUs in 2022 and 2021 was NOK 0.9 million and NOK 1.1 million. A total of 802 921
RSUs was outstanding at 31 December 2022.
The following table shows the changes in outstanding RSUs in 2022 and 2021:
2022
2021
No. of
RSU’s
Weighted avg.
exercise price
(in NOK)
No. of
RSU’s
Weighted avg.
exercise price
(in NOK)
Outstanding at 1 January 299 537 0.10
199 084 0.10
Granted during the period
638 595
0.10
121 752
0.10
Exercised during the period
-135 211
0.10
-21 299
0.10
Forfeited
-
-
-
-
Expired
-
-
-
-
Outstanding no. of Restricted
Stock Units at end of period
802 921
0.10
299 537
0.10
From 1 January 2023 to 13 April 2023 no RSUs have been granted to Board of Directors.
Page 95
Annual Report 2022
13. 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
2022
2021
Consultancy, advisors' expenses and IR
718
3 611
Travel expenses
7
344
Facilities expenses
-
358
IT services and IT-related accessories
16
1 349
Conferences and training - 248
Other
483
1 226
Government Grants
-
-1
Total operating expenses
1 224
7 135
14. 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
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Annual Report 2022
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
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
2022 and 2021 the Company has TNOK 21 and TNOK 0 in trade receivables, TNOK 480 924 and
TNOK 0 in receivable from subsidiaries, TNOK 0 and TNOK 3 263 in government grant receivables
and the Company has TNOK 802 and TNOK 801 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
2022
2021
Interest income on Money Market fund, Nordea Likviditet III
-
269
Total finance income
-
269
Finance expense is:
Amounts in NOK thousands
2022
2021
Interest expense on lease liabilities
-
253
Other interest expense
-
169
Net currency loss - bank and other operating items
3
911
Impairment receivable Targovax Solutions AS
786 448
Impairment investment in Targovax Solutions AS
60
Other finance expense
103
-
Total finance expense
786 614
1 333
Page 97
Annual Report 2022
The impaired receivable of 786 448 relates to the demerger and merger plan for the transfer of the
operational activities of the Company to its wholly-owned subsidiary, Targovax Solutions AS.
As the merger consideration was settled by Targovax ASA, a receivable was created between
Targovax ASA (creditor) against Targovax Solution AS (debtor). The receivable had a nominal value
equal to the book value of the assets, rights, and obligations transferred to Targovax Solution AS by
the Merger. For accounting purposes Targovax Solutions AS fully impaired its investment in
Targovax Oy in 2022, hence the receivable from Targovax Solutions AS was impaired with NOK 786
million.
15. 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 529
million at 31 December 2022 (31 December 2021: NOK 526 million).
No current or deferred tax charge or liability has been recognized for 2022 or 2021.
The tax effects of temporary differences and tax losses carried forward at 31 December are as
follows:
Amounts in NOK thousands
2022
2021
Fixed assets
-
-56
Leasing
-
-153
Share options and RSUs
-89
-82
Financial instruments
-
30
Tax loss carried forward
-529 097
-526 090
Temporary differences and tax losses carried forward at 31.12 -529 186 -526 351
Deferred tax asset (22% (2021;22%)) not recognized
116 421
115 797
Deferred tax asset
-
-
Amounts in NOK thousands
2022
2021
Loss before income tax
-790 322
-51 447
Tax calculated at (22%) / (22%)
-173 871
-11 318
Tax effect permanent differences
173 247
-5 067
Change in deferred tax not recognized
624
16 385
Tax expense
-
-
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Annual Report 2022
16. 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 Solutions AS
Lysaker, Norge
2022
NOK 30
100 %
Subsidiaries of Targovax Solutions AS:
- Targovax OY
Espoo, Finland
2015
EUR 4 035
100%
- Circio AB
Hässelby, Sweden
2022
SEK 50
100%
Page 99
Annual Report 2022
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
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
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Annual Report 2022
• 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 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
Acquisition cost 1 January 2022
3 679
3 679
Disposal of right-of-use assets
1
-3 679
-3679
Acquisition cost 31 December 2022
-
-
Accumulated depreciation and impairment 1 January 2022
944
944
Depreciation 2021
Disposals
1
-944
-944
Accumulated depreciation and impairment 31 December 2022
-
-
Carrying amount of right-of-use assets 31 December 2022
-
-
Remaining lease term at 31 December 2021
0 year
1) As a consequence of the reorganization done in 2022, all the lease agreements in
Targovax ASA were transferred to Targovax Solutions AS as at 01.01.2022, please see 5.
Drop-down demerger/merger 2022 for more information.
Page 101
Annual Report 2022
Lease liabilities
Summary of the lease liabilities
Buildings
Total
Amounts in NOK thousands
Total lease liabilities at 01.01.2022
2 166
2 166
Disposal of lease liabilities
1)
-2 166
-2 166
Cash payments for the principal portion of the lease liability
-
-
Cash payments for the interest portion of the lease liability
-
-
Interest expense on lease liabilities
-
-
Currency exchange differences
-
-
Total lease liabilities at 31 December 2022
-
-
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)
-
-
Operating expenses in the period related to low value assets (excluding short-
term leases included above)
-
-
Total lease expenses included in other operating expenses
-
-
Please see note 21. Current liabilities for current lease liabilities and Statement of cash flow for
cash outflow for leases.
1) As a consequence of the reorganization done in 2022, all the lease agreements in
Targovax ASA were transferred to Targovax Solutions AS as at 01.01.2022, please see 5.
Drop-down demerger/merger 2022 for more information.
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
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 2022 or
2021.
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
Page 102
Annual Report 2022
financial position, see Note 9 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
2022
2021
Trade receivables
21
-
Receivable government grants
-
3 263
Short-term deposits
802
801
Financial asset receivables
823
4 064
Other receivables
49
1 832
Total receivables
871
5 897
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
2022
2021
Bank deposits
2 491
169 680
Money Market fund, Nordea Likviditet III
316
Total cash and cash equivalents
2 491
169 996
Restricted cash specification:
Amounts in NOK thousands
2022
2021
Income tax withholding from employee compensation
-
2 299
Rent deposits
1
802
801
Total restricted cash
802
3 100
1 Classified as Receivables.
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.
Share capital as at 31 December 2022 is 18 847 378.30 (31 December 2021: 18 832 659.10)
comprising 188 473 783 ordinary shares at nominal value NOK 0.10 (31 December 2021: 188 326
591 at NOK 0.10). All shares carry equal voting rights.
The movement in the number of shares during the period was as follows:
2022
2021
Ordinary shares at beginning of period
188 326 591
86 531 318
Share issuance – Rights Issue, private placement and
repair offering
-
101 744 186
Share issuance, employee share options and RSUs
147 195
51 087
Ordinary shares at end of period
188 473 783
188 326 591
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Annual Report 2022
The 20 largest shareholders are as follows at 31 December 2022:
Shareholder
# shares
%
HealthCap
12 405 584
6.6 %
Avanza Bank Ab
6 780 335
3.6 %
Goldman Sachs International
5 186 163
2.8 %
Bækkelaget Holding As
5 053 867
2.7 %
Radforsk Investeringsstiftelse
4 427 255
2.3 %
Sivilingenør Jon-Arild Andreassen AS
4 343 611
2.3 %
Nordnet Bank AB
4 272 388
2.3 %
Høse As
3 069 012
1.6 %
Nordnet Livsforsikring AS
2 721 999
1.4 %
Thorendahl Invest AS
2 000 000
1.1 %
Danske Bank AS
1 979 138
1.1 %
Vaktmestergruppen AS
1 911 241
1.0 %
Pettersen Gruppen AS
1 708 408
0.9 %
Egil Pettersen
1 548 889
0.8 %
Tor Westerheim
1 437 500
0.8 %
Arild Staxwold Skipperud
1 401 405
0.7 %
The Bank Of New York Mellon SA/NV
1 292 313
0.7 %
Ove Steinar Farstad
1 264 449
0.7 %
Espen Olsen
1 200 000
0.6 %
UBS Switzerland AG
1 086 050
0.6 %
20 largest shareholders
65 089 607
34.5 %
Other shareholders (6 549)
123 384 176
65.5 %
Total shareholders
188 473 783
100.0 %
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 %
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Annual Report 2022
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
2022
2021
Loss for the period
-790 322
-51 447
Average number of outstanding shares during the period
188 432
89 076
Earnings/ loss per share - basic and diluted
-4.19
-0.58
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.
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
2022
2021
Short-term lease liabilities
-
1 040
Trade payables
-
3 380
Financial liabilities
-
4 420
Other current liabilities
1 926
17 552
Total current liabilities
1 926
21 972
22. Events after the reporting date
Post-period highlights
• In February 2023, agreed the terms and conditions for a convertible bond facility with
Atlas Special Opportunities (“Atlas”) which will subject to conditions secure financing of
up to gross NOK 300 million over three years.
• In March 2023, the extraordinary general meeting (EGM) of Targovax approved the Atlas
agreement.
• In March 2023, announced prioritization of resources toward its circRNA platform. The
recognized intangible asset related to the acquisition of Oncos Therapeutics OY of NOK
391 million was therefore fully impaired as at 31 December 2022, and hence the
recognized deferred tax liability as per 31 December 2022 of NOK 60.4 million was
derecognized.
• In March 2023, requested Atlas to subscribe and pay for the first tranche of convertible
bonds, consisting of 15 convertible bonds with an aggregate principal amount equal to
NOK 37,500,000. Atlas requested conversion of convertible bonds with a nominal value of
NOK 2,500,000 which, pursuant to the bond terms, are convertible into 4,026,629 new
shares in the Company at a conversion price of NOK 0.620867
• In March 2023, dosed the first patient with cancer vaccine TG01 in the combination study
with PD-1 checkpoint inhibitor (CPI) balstilimab in mutant RAS pancreatic cancer in the
USA.
• In March, a circRNA poster “
circAde: a circRNA-based system for prolonged and more
effective treatment of cancer”
was accepted to be presented at the AACR Annual Meeting
in April, in Orlando, USA.
Page 105
Annual Report 2022
Please see
Key figures in the consolidated accounts
in the Director’s report for further details.
Auditors report
Targovax annual report 2021
Page 106
Targovax annual report 2021
Page 107
|x|x|x
Targovax Group
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
Swedish office:
Sjöhällsstigen 32,
165 71 HÄSSELBY
Sweden
www.targovax.com