Symphogen A/S Pederstrupvej 93 DK 2750 Ballerup Denmark CVR no

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1 Symphogen A/S Pederstrupvej 93 DK 2750 Ballerup Denmark CVR no Annual Report for the year ended 31 December 2015 Adopted at the Annual General Meeting of shareholders on 10 May Chairman

2 Contents 1. Symphogen in Brief Letter from the CEO Highlights in Financial Highlights for Symphogen Group Product Programs Products and Technology Partnership Status performance and 2016 outlook for Symphogen Group Risk Management Organization and Human Resources Corporate Governance Management Structure Statement by the Executive Management and Board of Directors Independent auditors' report Financial Statements Income Statement for the year ended 31 December Statement of other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Cash Flow Statement Definitions Contacts... 82

3 1. Symphogen in Brief Symphogen is a private biopharmaceutical company leading the field in recombinant antibody mixtures focusing on developing next-generation antibody therapeutics for the treatment of cancer. Symphogen is dedicated to bringing truly innovative oncology products to the market, creating optimally selected antibody mixtures that address multiple oncology targets in a single drug product. Symphogen s pipeline of cancer programs reflects a new approach to fighting cancer with unique mechanisms based on multiple simultaneous attacks on tumors, relevant targets and/or growth hormones in the tumor microenvironment. Symphogen believes this may result in improved efficacy and the potential to reduce the implications of drug resistance, a major therapeutic challenge in cancer as well as in infectious diseases. Symphogen s discovery portfolio of immuno-oncology targets holds promise for influencing the immune system to better fight various cancer indications. In total, Symphogen has raised DKK 2.4 billion in equity capital from premier international investors including Novo A/S, Essex Woodlands Health Ventures and PKA. Symphogen employs 89 people and has offices in Copenhagen and New Jersey. Vision Symphogen develops superior antibody therapeutics by decoding the wisdom of nature. Mission Symphogen will build a self-sustainable oncology company offering truly innovative antibody mixture products to patients by addressing several targets in one single drug product. 3

4 2. Letter from the CEO 2015 became a true transformational year for Symphogen. Dear Shareholder 2015 turned out to be an extraordinarily successful year for Symphogen. Our collaborative partner, Merck KGaA, performed an assessment of their pipeline and returned the rights to Sym004 to Symphogen. Merck KGaA s decision to return Sym004 was not related to new safety or efficacy findings, and we were able to advance this promising drug candidate into three different oncology indications. In addition, our antibody technology platform was validated by Baxalta Inc. through a strategic antibody discovery deal with a significant upfront payment of DKK 1.2 billion. Moreover, the program we do in collaboration with Genentech Inc. entered into the clinic. Finally, we strengthed our balance sheet by raising DKK 503 million as a convertible debt facility from our existing competent and long-term investors. Advancing our lead oncology program Sym004: Symphogen s pipeline progressed significantly during 2015, and in particular we were able to advance clinical evaluation of the lead oncology program, Sym004, within several indications. We completed enrollment of patients in a Phase 2b trial in late-stage metastatic colorectal cancer (mcrc) patients, we initiated a Phase 2 trial in glioblastoma (GBM), and we also initiated a Phase 1b tolerability study in 2 nd line mcrc patients where Sym004 is given in combination with chemotherapy. A maturing pipeline: Symphogen also advanced two pre-clinical antibody mixture programs both targeting tyrosine kinase receptors. The most advanced, Sym015, is a novel combination of two antibodies directed at the MET receptor, which is believed to regulate multiple cellular processes that stimulate cell proliferation, invasion and angiogenesis and is believed to play an important role for various cancers, including gastric cancer, Non-Small Cell Lung Cancer (NSCLC) and renal cancer. Symphogen filed an IND for this program in January Our second pre-clinical antibody mixture program, Sym013, is a mixture of six antibodies that target non-overlapping epitopes on the receptors belonging to the HER family: EGFR, HER2 and HER3 (collectively, pan-her). There is substantial pre-clinical and clinical evidence that mutation, over-expression, amplification or activation of these receptors play important roles in the development and progression of many human epithelial cancers, such as pancreatic cancer, NSCLC, head & neck cancer and triple negative breast cancer, and we believe Sym013 offers a differentiated approach to effectively treat and avoid the development of drug resistance for such cancers. Sym013 is currently in IND-enabling studies, and we plan to submit an IND in Validation of discovery platform: In 2015, Symphogen focused its discovery activities in the rapidly expanding Immuno-Oncology (I-O) field, and in January 2016, this activity was validated by the establishment of a broad collaboration with Baxalta Inc. to develop up to six I-O programs. Under the research, option and license agreement, Symphogen received an upfront payment of DKK 1.2 billion in January Baxalta Inc. will in return receive an option to exclusively license programs from Symphogen following completion of Phase 1 studies in return for additional option exercise fees, milestones and royalty payments. The aggregate potential deal value for the collaboration exceeds DKK 11 billion plus royalties on worldwide sales. 4

5 Symphogen s collaboration with Genentech Inc. for the development of an antibody therapeutic against an infectious disease target entered into a Phase 1 trial during This significant milestone represents further validation of our antibody platform and triggered an undisclosed milestone payment to Symphogen. We will continue to work hard on achieving our mission of transforming cancer from a deadly disease into a chronic disease by developing antibody mixure products tailored to meet the patients' needs. I would like to thank our dedicated and talented employees without whom our successful transformation into a mid-stage antibody development company would not have been possible, and thank you, our shareholders, for your continued support to Symphogen. Thank you. Kirsten Drejer, Ph.D. Chief Executive Officer 5

6 3. Highlights in 2015 In January 2015, Symphogen announced that it regained all rights to Sym004 from its collaborative partner, Merck KGaA, and announced that it would rapidly move forward its clinical development into areas of high unmet medical needs within cancer. In January 2015, Symphogen opened a clinical development office in New Jersey, US. In February 2015, Symphogen issued 1.8 million new preferred I shares of nominally DKK 1 each with a total subscription price of DKK 348 million from its existing investors. In October 2015, Symphogen closed a DKK 503 million convertible debt facility from its existing investors. The convertible debt facility will be used to progress Symphogen s pipeline of unencumbered oncology assets. In October 2015, Symphogen completed the enrollment of 254 patients for its clinical Phase 2b trial for late-stage mcrc patients. In December 2015, Genentech Inc. had for the first time dosed a clinical trial candidate in humans containing a Symphogen-generated antibody conjugated to an undisclosed active agent. Under the collaboration agreement with Genentech Inc., Symphogen received an undisclosed milestone payment. Significant events after the end of the financial year In January 2016, Symphogen and Baxalta Inc. announced a strategic collaboration to accelerate innovation within Immuno-Oncology. Under the research, option and license collaboration agreement, Symphogen would receive DKK 1.2 billion upfront and potential additional payments of up to DKK 10 billion plus royalties on worldwide sales. Baxalta Inc. will in return receive an option to exclusively license such products from Symphogen following completion of Phase 1 studies for additional option exercise fees, milestones and royalty payments. Symphogen s efforts under the agreement require additional resources and competencies, which are expected to be acquired during 2016 and Financial outlook Symphogen expects a negative operating cash flow of DKK million in Symphogen expects to have approx. DKK 1.3 billion in cash resources, including a DKK 503 million debt facility from its existing investors at the end of The significant cash resources provide significant flexibility in Symphogen s continued development of oncology product candidates. 6

7 4. Financial Highlights for Symphogen Group Income Statement Symphogen recognized revenue of DKK 48.5 million in 2015 compared to DKK 98.7 million in Revenue in 2015 consisted of services provided under the collaboration agreement with Merck KGaA and an undisclosed milestone payment from Genentech Inc. Revenue in 2014 consisted of services provided under the collaboration agreement with Merck KGaA. Symphogen incurred research and development costs of DKK million in 2015 compared to DKK million in 2014, representing an increase of DKK million. Research costs increased by DKK 3.2 million from DKK million in 2014 to DKK million in 2015, reflecting the expected development of Symphogen s pre-clinical pipeline and antibody mixture technologies. Development costs increased by DKK million from DKK 12.8 million in 2014 to DKK million in 2015, reflecting Symphogen s continued development of Sym004, which was regained from Merck KGaA effective as of February Symphogen incurred administrative costs of DKK 67.7 million in 2015 compared to DKK 42.1 million in The increase of DKK 25.6 million is mainly due to an increase in the expensed fair value cost of share-based costs of DKK 20.7 million compared to DKK 5.9 million in 2014 and the establishment of a Clinical Development Office in New Jersey, US, in Net financials amounted to a negative of DKK 9.6 million in 2015 compared to a positive of DKK 4.6 million in The decrease of DKK 14.2 million is mainly due to unrealized and realized losses on marketable securities due to a more uncertain financial market in 2015 and unrealized losses on a currency option applied for currency exposure hedging. Statement of Financial Position Total non-current assets amounted to DKK 53.6 million at year-end 2015 compared to DKK 57.0 million at year-end The decrease of DKK 3.4 million reflects a lower level of purchases of equipment and leasehold improvements compared to Cash and marketable securities amounted to DKK million by year-end 2015 compared to DKK million by year-end The positive development of DKK 79.2 million is primarily due to the drawdown of the DKK million investor commitment from existing shareholders in February 2015, less negative cash flow from operating activities of DKK million in Shareholders equity amounted to DKK million at year-end 2015 compared to DKK million at year-end The net increase of DKK 10.2 million is due to the drawdown of the DKK million investor commitment from existing shareholders, partly offset by Symphogen s net loss for the year of DKK million. Cash Flow Statement Cash flows from operating activities amounted to a negative of DKK million in 2015 compared to a negative of DKK 99.6 million in The negative development of DKK million is primarily due to increased clinical development activities in respect of Sym004 in 2015 compared to Cash flows from investing activities amounted to a negative of DKK 52.5 million in 2015 compared to a positive of of DKK 86.1 million in The difference of DKK million primarily reflects the purchase of marketable securities from the drawdown of DKK 347 million investor commitments in February 2015, partly offset by higher sales of marketable securities in 2015 compared to Cash flows from financing activities amounted to a positive of DKK million in 2015 compared to a negative of DKK 1.7 million in The positive difference of DKK million 7

8 is primarily due to proceeds from the issue of new preferred I shares of DKK million in 2015, whereas no new shares were issued in year summary for the Symphogen Group: (in DKK 000, except per share data) Income Statement Revenue 48,526 98,742 74, ,026 9,086 Research and development costs 337, , , , ,682 Administrative costs 67,673 42,122 56,087 72,803 33,531 Operating loss -356, , , , ,127 Net financials -9,638 4,640 7,592 2,364-3,065 Loss for the year -360, , , , ,203 of which share-based costs account for -20,742-5,870-19,584-39,603-8,642 Statement of Financial Position Total non-current assets 53,605 56,952 40,243 22,776 37,319 Cash 64,271 28,015 42,773 47,889 13,532 Marketable securities 217, , , ,431 52,892 Total assets 362, , , , ,748 Shareholders equity at year-end 232, , , ,080 69,186 Average number of shares (1,000) 13,959 13,947 12,462 11,252 9,905 Cash Flow Statement Cash flows from operating activities -257,713-99,633-98,771-46, ,866 Cash flows from investing activities -52,498 86, , ,586-53,014 Hereof investment in property, plant and equipment -8,674 24,376 24,832 8,701 6,776 Cash flows from financing activities 346,022-1, , , ,411 Net cash flow for the year 35,811-15,162-4,935 34,413 2,531 Financial Ratios Equity ratio (%) Earnings per share (EPS) Average number of employees Definition of financial ratios: Equity ratio: Shareholders equity / Total assets x 100 EPS: Net profit (loss) / weighted average number of shares Key figures and financial ratios have been calculated in accordance with Recommendations & Ratios 2015 issued by the Danish Finance Society. 8

9 5. Product Programs Symphogen s product pipeline provides novel approaches to a variety of cancer types and partner targets: 9

10 6. Products and Technology Symphogen s Antibody Mixture Approach in Cancer If diseases were caused only by a single target or mechanism, they would be relatively easy to treat. Such diseases could ideally be suited for treatment with a single monoclonal antibody able to block the disease-causing target or mechanism. However, most diseases are complex, and cancer is no exception. Not only do multiple oncogenes and immune system regulators (also known as immuno-oncology targets) cause and/or maintain tumors, but once therapies have been administered, further biological mechanisms may be triggered, often resulting in acquired resistance to the therapy provided and poor patient outcome. Such complex diseases require a novel approach with a therapy able to selectively impact multiple targets simultaneously. At Symphogen, we provide a differentiated approach in cancer through the development of mixtures of monoclonal antibodies with novel mechanisms of action, which could translate to superior anti-cancer activity. Symphogen believes that antibody mixtures have the potential to treat some of the most difficult types of cancers: tumors with primary or acquired resistance to existing monoclonal antibody therapies. Importantly, the ability to affect multiple cancer targets offers the promise to alter cancer from an acute, deadly disease into a chronic disease that can be effectively managed through maintenance therapy, or in some cases be eliminated entirely. Monoclonal antibody therapies have enjoyed significant success in treatment of patients with cancer. Global sales of monoclonal antibodies for cancer reached approximately USD 28.9 billion in 2014 and are forecast to increase to USD 55 billion by In 2015, the immune checkpoint antibody treatments (Yervoy and Opdivo both marketed by BMS and Keytruda marketed by Merck & Co.) substantially impacted the market for cancer treatment by antibodies. By the 3 rd quarter of 2015, total sales of these agents had reached an annualized rate of over USD 1 billion. Further growth of these agents, which have already demonstrated the ability to significantly impact the course of metastatic melanoma, NSCLC and renal cancer, is expected to drive dramatic growth of the cancer antibody market. A recent report from Leerink Partners 2 estimates immuno-oncology treatment sales of USD 34 billion by In spite of the major advances provided by the immune checkpoint inhibitors and other targeted therapies, patients with tumors refractory to treatment and patients relapsing on treatment due to development of resistance to monoclonal antibody therapies remain a major therapeutic challenge. In fact, while a minority of patients may respond dramatically to immune checkpoint inhibitors, the majority of patients do not respond to monotherapy. Thus, there is a continued medical need for new and more effective, targeted therapies that address multiple mechanisms of cancer establishment and maintenance. Multiple Antibodies Targeting a Single Receptor/Target Sym004 - Symphogen was the first biotechnology company to exploit the early findings that combining two monoclonal antibodies binding to non-overlapping epitopes of a tyrosine kinase receptor can create new mechanisms of action. 3 Our first oncology product candidate in the clinic, Sym004, employed this strategy against the Epidermal Growth Factor Receptor (EGFR), resulting in EGFR cross- 1 Global Data 2 Leerink Partners, Jan Drebin J.A et al., Oncogene Apr;2(4):387-94n 10

11 linking, rapid internalization and degradation. This unique mechanism of action has been confirmed in both pre-clinical studies and tumor biopsies from patients treated with Sym004. Sym004, the most advanced program in Symphogen s portfolio, is currently in a Phase 2b trial in latestage mcrc, in a Phase 2 trial in GBM and in a Phase 1b trial in 2 nd line mcrc. Sym015/MET is a novel combination of two antibodies directed at the MET receptor, a tyrosine kinase receptor believed to regulate multiple cellular processes that stimulate cell proliferation, invasion and angiogenesis. Dysregulation of the MET/HGF pathway in solid tumors is often associated with a poor clinical outcome and may also confer resistance to targeted therapeutics, chemotherapy and radiotherapy. Pre-clinical data show that Sym015 effectively down-modulates MET, particularly in models of tumors with MET amplification. Pre-clinical studies indicate that the unique mechanism of action of Sym015 may provide improved efficacy in comparison to monoclonal antibodies in development in this field. Symphogen filed an IND for this program in January Multi-Target Inhibition Sym013/Pan-HER is a mixture of six antibodies that target non-overlapping epitopes on EGFR, HER2 and HER3 (two antibodies against each receptor). Combinations of two monoclonal antibodies binding to non-overlapping epitopes on the respective targets have shown to give more efficacious receptor down-modulation and superior in vitro cancer cell growth inhibition as compared to individual monoclonal antibodies. There is substantial pre-clinical and clinical evidence that mutation, overexpression, amplification or activation of EGFR, HER2, and HER3, or ligand over-expression play important roles in the development, progression and acquired resistance of many human epithelial cancers. It is expected that a mixture of Pan-HER targeting antibodies will be more capable of dealing with tumor plasticity than existing targeted therapies, both in terms of receptor dependency and the development of acquired resistance due to receptor tyrosine kinase up-regulation, cross-talk or increased ligand production. Sym013 is currently in IND-enabling studies, and Symphogen plans to submit an IND in Expansion into Immuno-Oncology (I-O) In 2015, Symphogen focused its discovery activities in the rapidly expanding I-O field. The potential to activate a cancer patient s immune system to battle disease has recently been validated by market entrants, including BMS ipilimumab (Yervoy ), nivolumab (Opdivo ) and Merck s pembrolizumab (Keytruda ). These monoclonal antibody immune checkpoint inhibitors have been shown to provide significant clinical benefit to an important minority of patients with melanoma, lung cancer and renal cancer. Symphogen has focused its internal activities in this area by creating combinations of antibodies against immuno-oncology targets with the goal of obtaining responses in a larger percentage of patients, improving tumor control in responsive patients and potentially improving the durability of response. In 2015, Symphogen intensified its discovery activities in the I-O field, and in December 2015 this activity was validated by the establishment of a broad collaboration with Baxalta Inc. to develop up to six I-O programs. Under the research, option and license agreement, Symphogen received an upfront payment of DKK 1.2 billion in January Baxalta will in return receive an option to exclusively license six programs from Symphogen following completion of Phase 1 studies in return for additional option exercise fees, milestones and royalty payments. The aggregate, potential deal value for the collaboration is DKK 11 billion plus royalties on worldwide sales. 11

12 Moving into Advanced Clinical Testing: Sym004 / EGFR Sym004 was our first oncology product candidate to enter into the clinic. In November 2014, Merck KGaA gave Symphogen notice that it would return all rights to Sym004 to Symphogen. Effective as of February 2015, Symphogen wholly owns this Phase 2b asset and is moving rapidly to advance clinical evaluation of this promising product candidate. Sym004 targets the cancer-promoting epidermal growth factor receptor (EGFR). Sym004 is a mixture of two synergistic full-length anti-egfr antibodies that bind two non-overlapping epitopes of the EGFR. Pre-clinical and clinical data demonstrate that Sym004, unlike the currently marketed anti-egfr monoclonal antibodies cetuximab, panitumumab and necitumumab, has a unique mechanism of action, resulting in elimination of EGFR from the cell surface followed by degradation. Symphogen believes that the unique mechanism of action and differentiated efficacy profile of Sym004 offer significant advantages against single monoclonal antibodies in a variety of tumor types and across multiple clinical indications. Sym004 Clinical Development Plan The clinical strategy for Sym004 centers on pursuing indications with four characteristics: (i) strong preclinical and/or clinical evidence of Sym004 efficacy, (ii) lack of proven efficacy with currently marketed anti-egfr mabs, (iii) high unmet medical needs and (iv) the potential for break-through designation and/or accelerated approval given the paucity of current treatments. Sym004 is currently being studied in three such indications in on-going clinical trials: in late-stage mcrc, in 2 nd line mcrc and in GBM. In 2015, a study in Japanese patients with esophageal squamous cell carcinoma (ESCC) was successfully completed. Studies in additional squamous cancers, such as NSCLC, along with biomarker-specific segments of the mcrc patient population are currently being evalued for further development. Sym004 in mcrc: Improving Upon a Clinically Validated Mechanism Monoclonal antibodies directed against the EGFR are important therapeutics used in a number of cancer therapy indications. The two major anti-egfr antibodies are cetuximab (Erbitux ) and panitumumab (Vectibix ). While studies have demonstrated the benefit of these products, they are prone to resistance development. Symphogen believes that Sym004 s unique mechanism of action of receptor elimination may provide additional benefit to mcrc patients beyond what is provided by the current monoclonal antibodies. Sym004 is being studied in two separate lines of mcrc. The most advanced is a phase 2b study in patients with wild-type KRAS mcrc, who have acquired resistance to treatment with standard chemotherapy plus anti-egfr monoclonal antibodies. This large international multi-center, randomized clinical trial of 254 patients was fully enrolled in October 2015, two months ahead of schedule. The data end-points include overall survival, progression-free survival, response rate and safety. Dependent on the results, Symphogen may elect to meet with relevant regulatory authorities to discuss the potential path to market in this indication. Symphogen had previously generated clinical data from a phase 2a trial in this same patient population. This 41-patient study demonstrated anti-tumor activity with a significant portion of these heavily pretreated patients obtaining stable disease and in many cases tumor shrinkage. Preliminary data from this study were presented at the annual ASCO meetings in 2013 and 2014, and in June 2015 the full results were published in the journal Cancer Discovery. 12

13 In late 2015, a Phase 1b study was opened in 2 nd line mcrc patients in combination with the widely used chemotherapy regimen FOLFIRI. Safety results from this study are expected to pave the way for initiation of a Phase 2 or 3 study in 2 nd line mcrc, a significant market potential for Sym004. Sym004 in GBM: Proof of Concept in a High Unmet Medical Need Indication Glioblastoma (GBM) is a devastating brain cancer that has an exceedingly poor prognosis. In late 2015, Symphogen initiated a proof of concept Investigator Sponsored Study of Sym004 in patients with GBM. GBM tumors frequently carry a mutation of EGFR, EGFRvIII, which is a negative prognostic factor of survival. Pre-clinical studies indicate that Sym004 binds to both EGFR and EGFRvIII, and patient-derived xenograph pre-clinical models have shown strong efficacy of Sym004 relevant to GBM patients. Sym004 in ESCC: Initial Investigation of Safety in Asian Patients and Efficacy Exploration in Squamous Cancers In 2015, Merck KGaA completed a Phase 1b study in Japanese ESCC patients on behalf of Symphogen. Depending on the final results, this study may support our hypothesis that Sym004 will have application in cancers, which are squamous in nature, including squamous NSCLC, ESCC and SCCHN. Data from this study are expected to be presented at a major oncology meeting during Future Studies: Opportunity to Employ Newly Discovered Biomarkers and Combinations Over the last two years, important new data have emerged relating to potential biomarkers for anti- EGFR therapies in specific cancer patient populations. Symphogen is working with its advisors and investigators to identify enriched patient populations, which may respond to Sym004 and offer the potential for accelerated approval/rapid market entry. One such opportunity is to target patients with extracellular domain mutations of the EGFR, an important mechanism of resistance to monotherapy with cetuximab and panitumumab. A second biomarker for a sub-set of patients with NSCLC is also currently being explored for potential study in Finally, and perhaps most importantly, the potential benefit of combining an effective anti-egfr therapy with immune-checkpoint inhibition has been widely hypothesized to be an important approach to improve additional efficacy beyond monotherapy. Symphogen plan to be in a position to test this hypothesis during Sym004 Market Potential mcrc: Colorectal cancer is the third most common cancer in the world, with nearly 1.4 million new cases diagnosed in In spite of the new biological-based therapies and more effective chemotherapeutic regimens, the expected life span of patients who are diagnosed with mcrc has only improved slightly. In particular, there is a high unmet medical need for those patients who have failed traditional therapies. As evidence of this, in 2013 a new therapy, regorafenib (STIVARGA ) was approved for this patient population, in spite of only providing an overall survival benefit of 1.2 months and an improvement in progression-free survival of just 0.2 months. In addition, STIVARGA, a multikinase inhibitor has serious adverse events, which have limited the patient population who can tolerate this treatment. In 2015, TAS-102 (Taiho) was approved for this same patient population, providing only an approx. 1 month improvement in survival. Given the paucity of drugs in development for late-stage mcrc and the evidence of benefit and tolerability to date for Sym004, we believe that, if approved, Sym004 would represent a significant step forward in the treatment of this disease. 4 World Cancer Research Fund International 13

14 If our current trial substantiates the potential to combine Sym004 with FOLFIRI in 2 nd line mcrc, a significant market opportunity would open up for Symphogen. Current forecast sales of 2 nd line mcrc therapies in the seven major pharmaceutical markets will total approx. USD 1.5 billion in Glioblastoma (GBM): GBM is the most common primary malignant brain tumor. GBM is the most aggressive form of brain cancer and is associated with an extremely poor prognosis and survival. In 2013, there were an estimated 27,230 new incident cases of GBM in the seven major pharmaceutical markets. 6 The major treatment for GBM, Temodar, is now available generically, in part accounting for the relatively small size of the US GBM treatment market, which was estimated to be USD 408 million in Significant market potential is estimated for a more effective treatment of this devastating disease. Squamous Cancers: Cancers characterized by the squamous nature of tumors cells include squamous NSCLC, squamous ESCC and squamous SCCHN. Pre-clinical and clinical evidence point to a potential role of Sym004 in the treatment of squamous carcinomas. Squamous NSCLC represents one of the most common forms of cancer world-wide. Squamous NSCLC starts in the flat cells that line the inside of the airways in the lungs and is often linked to a history of smoking. Standard treatment includes surgery and chemotherapy. Recent approval of the immuno-oncology agent Opdivo is expected to significantly impact this market segment with improved survival benefit versus gemcitabine. Significant unmet medical needs still remain in this difficult-to-treat, cancer. ESCC is particularly prevalent in Asian countries, notably China, Japan and Korea. In these countries, more than 90% of all esophageal cancers are of the squamous type. Drug treatment consists of chemotherapeutics and chemo radiation. Despite these treatments, the overall survival rate for patients with esophageal cancer is still very low, within a range of 10% to 15%. SCCHN is a devastating cancer with a poor survival prognosis. The anti-egfr mab cetuximab has been available in this indication for many years and has demonstrated a benefit when combined with radiation, a standard therapy for SCHHN. Data generated with Sym004 in late-stage SCCHN patients indicate efficacy, resulting in tumor shrinkage. 5 Source: Global Data, Source: Datamonitor Healthcare, Source: BioMedtracker

15 Anti-EGFR mab Competition To date, four anti-egfr monoclonal antibodies, Erbitux (cetuximab), Vectibix (panitumumab),taixinsheng (nimotuzumab) and Portrazza (necitumumab), have been approved by regulatory authorities. Erbitux is approved for SCCHN, and mcrc. Vectibix is approved for wild-type RAS mcrc. Taixinsheng is approved in China for SCCHN. Portrazza was approved by the US FDA in 2015 for the treatment of first-line squamous NSCLC. Erbitux dominates the anti-egfr mab market worldwide with 2015 sales estimated at over USD 1.7 billion and is marketed by Eli Lilly and Merck KGaA. Vectibix is marketed by Amgen and Takeda with sales of USD 0.5 billion in Taixinsheng and other brands of nimotuzumab are believed to sell modestly in comparison with the market leaders. Sales of Erbitux in particular continue to grow after more than ten years in the market, driven by new indications and increased acceptance for use in the large 1 st line mcrc patient segment, particularly in Europe. Erbitux will lose its patent protection in 2018, while Vectibix patents begin to expire in A number of biosimilars to Erbitux are believed to be in development, although it is unclear to what extent approvals will be obtained following patent expiration. Symphogen believes that its highly differentiated mechanism of action and strategy to pursue indications for which currently marketed anti-egfr mabs are not indicated will provide significant competitive advantages in relation to both existing competitors and future biosimilar offerings. In 2013, Roche s glycol-engineered anti-egfr mab RG7160 (imgatuzumab), which was in Phase 2 trials for mcrc, was discontinued. Published Phase 1 data for imgatuzumab indicated a higher prevalence of infusion reactions than seen with Sym004 or other anti-egfr mabs. Merrimack Pharmaceuticals Inc. has MM-151, a three-mab mixture directed against EGFR, in late Phase 1 development. During the 2016 JP Morgan healthcare meeting, Merrimack stated that they are in the planning stages for a Phase 2 study in mcrc. Given the preliminary nature of the data available on MM-151, it is not possible to directly compare the activity of MM-151 with the more extensive clinical data obtained to date with Sym

16 Sym015 (MET) Market Opportunity The MET receptor is associated with worse patient outcome across a number of highly prevalent cancers, including NSCLC, breast, melanoma, prostate, gastric cancer and colorectal cancer. Pre-clinical data generated by Symphogen and early clinical data from subset analyses of other MET inhibitors have identified biomarkers which Symphogen believes will aid proper patient selection for our product candidate. Symphogen plans to focus on rapidly generating clinical data in a basket study of indications where MET is believed to play a significant role, including gastric cancer, NSCLC and renal cancer. NSCLC Lung cancer is the second-most commonly diagnosed cancer in the US. The American Cancer Society estimates that 158,080 patients will die from lung cancer in 2016, which makes lung cancer the leading cause of cancer deaths in the US. Lung cancer is also highly prevalent in Asia and other areas where smoking is common. Datamonitor Healthcare estimates that there were 445,640 incident cases of lung cancer (all types) across the US, Japan and five major EU markets in Treatments for NSCLC include surgery, target therapy, chemotherapy and recently immune checkpoint inhibition for those patients who have the squamous form of the disease. Gastric Cancer Gastric cancer is the fourth-most common cancer after lung, breast, colon and rectal cancers. 8 Across the seven major pharmaceutical markets, incidence rates of gastric cancer are highest in Japan, followed by Italy, whereas in the US and other European markets, incidence rates are moderately low. Treatment of gastric cancer includes surgery, chemotherapy, radiation therapy and in HER-2-positive patients use of trastuzumab (Herceptin ) marketed by Genentech Inc. Renal Cancer Approximately half of renal cancer cases in the major pharmaceutical markets occur in the US. In 2016, it is expected there will be 62,700 new cases of renal cancer in the US and 14,200 deaths. 9 There is a range of new treatments available for late-stage renal cancer, including targeted therapies, antiangiogenic therapy and immune checkpoint inhibition. Given the extensive range of treatments available for this cancer type, Symphogen will focus on identification of biomarkers that would allow identification of patients with unique sensitivity to treatment with Sym015. MET Inhibitor Competition The MET field has been a very active research and clinical development field over the last decade. Small molecule inhibitors of MET and monoclonal antibodies targeting MET are currently in clinical development. Symphogen believes that it can benefit from the data generated by others to aid in its clinical development plans for Sym015. The key competitors in the MET antibody field are shown below 10 : 8 Ferlay et al., Source: ACS: Cancer Facts and Figures, Source: clinicaltrials.gov, January

17 MET Antibody Program Developer Current Stage Indications emibetuzumab Eli Lilly Phase 2 NSCLC, gastric cancer ABT-700 AbbVie Phase 1 Solid tumors ARGX-111 argen-x Phase 1 Solid tumors LY (MET/EGFR bispecific) Eli Lilly Phase 1` Solid tumors Sym013 (Pan-HER) Extensive preclinical animal model testing indicates that Pan-HER may have efficacy across a broad range of cancer types. Notable preclinical results have been obtained in patient-derived xerograph models of pancreatic cancer, squamous NSCLC and triple negative breast cancer (TNBC). Pan-HER Market Opportunity Pancreatic Cancer The leading indication for the Pan-HER program is for the treatment of pancreatic cancer, a devastating disease with an extremely poor prognosis. There are several forms of pancreatic cancer, the most common of which is pancreatic adenocarcinoma, accounting for about 85% of all cases. Pancreatic cancers were the seventh-most common cause of cancer death, resulting in 330,000 deaths worldwide. In the US, pancreatic cancer is the fourth-most common cause of cancer death. The prognosis for pancreatic adenocarcinoma is poor, as just 25% of patients survive one year and only 5% are alive 5 years after having been diagnosed. Advances in treatment of pancreatic cancer have been difficult to achieve. In 2013 Abraxane, a drug consisting of paclitaxel protein-bound particles, was approved for treatment of metastatic pancreatic cancer. This was the first drug approved in the US since 2006 when gemcitabine (Gemzar ), the current standard of care for pancreatic cancer, was approved. Patients treated with Abraxane plus gemcitabine lived just 1.8 months longer on average than those treated with gemcitabine alone and had a progression-free survival benefit of just 1.8 months more than participants who only received gemcitabine. Unmet needs in this market are extensive, including the need for a more effective 1 st line treatment therapies and additional therapeutics to treat Gemzar /Abraxane -resistant patients. Squamous Non-Small Cell Lung Cancer (NSCLC) Promising pre-clinical data supports the potential use of Pan-HER to treat patients with the squamous form of NSCLC, which accounts for 35% of all NSCLC patients with approximately 630,000 patients diagnosed world-wide. Squamous NSCLC is more common in men than in women and is closely associated with a history of smoking. Treatment options for squamous NSCLC have centered around the use of chemotherapy, surgery and radiation. During 2015, Eli Lilly received approval for its fully human anti-egfr antibody Protarzza (necitumumab) for the treatment of 1 st line metastatic NSCLC despite clinical results demonstrating only a 1.3 month improvement in overall survival in this patient population. In 2014, BMS received approval of its immune checkpoint antibody Opdivo for treatment of advanced squamous NSCLC. Analysts' estimates of the sales potential for the first partial year of Opdivo sales in this indication range from USD million, with longer-term expectations of billions of dollars. Symphogen believes that Pan-HER would be complementary to the use of Opdivo 17

18 and similar I-O treatments. Such an approach would provide dual activity by blocking tumor signalling and engaging the immune system to provide long-term control of the disease. Triple Negative Breast Cancer (TNBC) TNBC is a rare form of breast cancer, representing 10-20% of all breast cancer diagnoses, but it is the deadliest form of breast cancer. World-wide, it is believed that about 200,000 patients are diagnosed with TNBC each year. TNBC is more aggressive than other cancers and is more likely to reoccur. The 5- year survival rate for TNBC patients is just 77%, while for other breast cancers the average 5-year survival rate is approximately 93%. Treatment centers around surgery, radiation and chemotherapy. As with squamous NSCLC, the most promising new treatment approaches include I-O treatments such as Merck s Keytruda, although to date the response rates to these treatments have been relatively lower than those seen in melanoma and squamous NSCLC. Treatment of this difficult patient population with Pan-HER may allow improved response rates and/or durability of response. Sym013 Competition Symphogen is unaware of any antibody programs in development directly targeting EGFR, HER-2 and HER-3. Thus, we believe we are in a uniquely strong competitive situation with this program. Immuno Oncology (I-O) Market Potential The I-O field has rapidly expanded to become the most exciting area of cancer research today. The potential to activate a cancer patient s immune system to battle disease has recently been validated by market entrants including BMS Yervoy and Opdivo and Merck s Keytruda. These I-O compounds have been shown to provide significant benefits to an important minority of patients with melanoma, squamous NSCLC and renal cancer. Symphogen is focusing its activities in this area by creating combinations of I-O targets with the goal of obtaining responses in a larger percentage of patients, improving tumor control in responsive patients and potentially improving the durability of response. In early 2015, Symphogen underwent a strategic review of its immuno-oncology activities, resulting in the decision to seek a partner to allow Symphogen to effectively compete in the rapidly evolving immunooncology scientific and clinical environment. The result of this process was the consummation in December of 2015 of a broad collaboration agreement with Baxalta Inc. The identity of the programs that the partnership will be working on has not been disclosed. Technologies Symphogen has pioneered the development of superior antibody mixture therapeutics to treat serious human diseases, focusing on oncology. Symphogen s programs are created using a combination of proprietary technologies: a unique antibody discovery platform called Symplex, a functional lead selection process called SymSelect and antibody mixture manufacturing platforms. Symphogen has built significant competencies specifically related to the development of antibody mixture drug candidates which are unique in the industry and encompass drug candidate identification, regulatory, clinical development and manufacturing know-how. This unique combination of proprietary technologies and know-how provides Symphogen with the ability to develop differentiated and superior antibody therapeutics. List of Publications 2015 In vivo imaging of therapy response to a novel pan-her antibody mixture using FDG and FLT positron emission tomography. Oncotarget Nov 10;6(35):

19 The genomic landscape of response to EGFR blockade in colorectal cancer. Nature Oct 8;526(7572): doi: /nature Pan-HER, an Antibody Mixture Simultaneously Targeting EGFR, HER2, and HER3, Effectively Overcomes Tumor Heterogeneity and Plasticity. Clin Cancer Res Sep 15;21(18): A proof of concept trial of the anti-egfr antibody mixture Sym004 in patients with squamous cell carcinoma of the head and neck. Cancer Chemother Pharmacol Jul;76(1): Sym004: Truly a New Level of Anti-EGFR Treatment? Cancer Discov; 5(6); Targeting Three Distinct HER2 Domains with a Recombinant Antibody Mixture Overcomes Trastuzumab Resistance. AACR,

20 7. Partnership Status Option Agreement with Baxalta, Inc. In January 2016, Symphogen and Baxalta Inc. announced a strategic collaboration agreement providing Baxalta Inc. with option rights for up to six I-O programs developed by Symphogen. The identity of the programs has not been disclosed. Under the agreement, Symphogen received an upfront payment of DKK 1.2 billion in January Under the agreement, Symphogen must at its own cost, provide R&D efforts to develop up to six programs through Phase 1 clinical trials. Baxalta Inc. has received an option to exclusively license programs from Symphogen following completion of Phase 1 studies in return for additional option exercise fees, milestones and royalty payments. The aggregate potential deal value of the collaboration is DKK 11 billion plus royalties on worldwide sales. Development and License Agreement with Genentech, Inc. In 2008, Symphogen entered into a strategic collaboration with Genentech Inc. for the development of antibody therapeutics against undisclosed infectious disease targets. In 2015, Genentech Inc. entered into Phase 1 trial, a Symphogen-derived antibody, releasing an undisclosed milestone payment. Under the terms of the agreement, Genentech Inc. made an upfront payment to Symphogen as well as an equity investment in Symphogen. Symphogen is eligible for milestone payments exceeding DKK 700 million upon the successful achievement of certain research and development milestones, as well as royalties on worldwide sales. Sym004 License Agreement with Merck KGaA (terminated) In September 2012, Symphogen licensed Sym004 to Merck KGaA on an exclusive worldwide basis. Under the terms of the agreement, Symphogen received an up-front payment of DKK 150 million. Symphogen was also eligible to receive up to DKK 1.7 billion for clinical and regulatory milestones, DKK 1.9 billion in potential combined sales performance milestones and tiered royalties on net worldwide sales. Further, Merck KGaA was responsible for all future development of Sym004. Effective as of 25 February 2015, Symphogen and Merck KGaA terminated the agreement, resulting in the return of all rights to Symphogen. In return for Merck KGaA s contributions to the development of Sym004, Symphogen will pay a low, single-digit royalty on any future worldwide net sales from Sym

21 Performance and 2016 Outlook for Symphogen Group Income Statement and Statement of Comprehensive Income Symphogen reported a net loss of DKK million in 2015, compared to a net loss of DKK million in The net loss excluding share-based payments totaled DKK million in 2015, compared to a net loss excluding share-based payments of DKK million in The development is due to a decrease in revenue of DKK 50.2 million, an increase in operating costs of DKK million, lower net financials of DKK 14.6 million and an increase in taxable income of DKK 0.4 million. Revenue Symphogen recognized revenue of DKK 48.5 million in 2015 compared to revenue of DKK 98.7 million in Revenue in 2015 consisted of services provided under the collaboration agreement with Merck KGaA and an undisclosed milestone payment from Genentech Inc. Revenue in 2014 consisted of services provided under the collaboration agreement with Merck KGaA. Costs Research costs increased by DKK 3.2 million, or 2%, from DKK million in 2014 to DKK million in Excluding share-based costs, research costs decreased by DKK 0.7 million, or 0%. Development costs increased by DKK million, or 1,130%, from DKK 12.8 million in 2014 to DKK million in Excluding share-based costs, development costs increased by DKK million, or 1,123%. The increase in development costs results from the fact that Symphogen since 25 February 2015 has been responsible for the development activities relating to Sym004, whereas in 2014, Merck KGaA was responsible for the development activities relating to Sym004. Administrative costs increased by DKK 25.6 million, or 61%, from DKK 42.1 million in 2014 to DKK 67.7 million in Excluding share-based costs, administrative costs increased by DKK 9.3 million, or 23%. Overall, administrative costs accounted for 17% of Symphogen s total operating expenses in 2015, compared to 18% in The average number of employees decreased from 104 in 2014 to 99 in Net financials Net financials amounted to expenses of DKK 9.6 million in 2015 compared to income of DKK 4.6 million in Financial income increased by DKK 0.9 million, from DKK 12.5 million in 2014 to DKK 13.4 million in Financial expenses increased by DKK 15.1 million, from DKK 7.9 million in 2014 to DKK 23.0 million in The increase in net financials is primarily due to unrealized and realized loss on marketable securities due to a more uncertain financial market in 2015 and loss on a currency option applied for hedging of currency exposure. Please refer to note 5 of the financial statements for further details on net financials. Income taxes The loss for the year includes a tax income for the year of DKK 5.8 million primarily related to the Danish tax credit scheme for research and development costs. Beyond this, Symphogen has deferred tax assets of DKK million, which are not recognized in the statement of financial position, since it 21

22 has not been established with sufficient certainty if the tax assets can be offset against future taxable income. Please refer to notes 2 and 6 of the financial statements for further details on income taxes. Allocation of loss The Board of Directors proposes that the loss for the year of DKK million be carried forward to next year. Statement of financial position Total assets were DKK million at 31 December 2015, as compared to DKK million at 31 December Cash, cash equivalents and marketable securities amounted to DKK million at 31 December 2015, as compared to DKK million at 31 December The increase of DKK 79.2 million is primarily due to the drawdown of the DKK million investor commitment from existing shareholders in February 2015 less the negative cash flow from operating activities of DKK million. The net carrying amount of property, plant and equipment totaled DKK 53.6 million at 31 December 2015, as compared to DKK 56.9 million at 31 December The decrease of DKK 3.4 million is mainly related to lower investments in refurbishment and laboratory equipment in 2015 compared to 2014 when Symphogen relocated to its new domicile. Please refer to note 8 Property, Plant and Equipment of the financial statements for further details on property, plant and equipment. Statement of changes in equity Shareholders equity increased from DKK million at 31 December 2014, to DKK million at 31 December 2015, due to adjustments in accordance with share-based payments of DKK 22.3 million and the net loss excluding such payments of DKK million for the year. Please refer to the statement of changes in equity for further details. Related party transactions Symphogen s affiliates, the members of Symphogen s Executive Management and Board of Directors, the shareholders or companies controlled by these parties are considered to be related parties. Please refer to note 16 of the financial statements for a description of related party transactions. Environmental impact Symphogen does not issue separate environmental reports, since Symphogen s current activities are deemed to have a very limited impact on the environment. As Symphogen does not carry on industrial commercial production, discharges into the air, soil and water are limited. The Company s research and development activities are carried on from state-of-theart laboratories facilities in Ballerup, Denmark, which are designed to reduce any environmental impact. Furthermore, Symphogen has implemented policies for the handling of waste materials from its laboratory facilities in accordance with regulatory requirements. Symphogen considers it important to maintain a good working environment and to meet regulatory requirements regarding the way the workplace is designed. This also includes the psychological and 22

23 physical work environment. In 2015, Symphogen reported one industrial accident compared to two in The reported absence due to illness was 2.5% in 2015 compared to 3.1% in Outlook for 2016 and financing The return of Sym004 rights from Merck KGaA in 2015 will continue to direct Symphogen s operations towards further development of its proprietary oncology pipeline. Sym004 is currently in advanced clinical development (Phase 2b) in late-stage mcrc, and the expected read-out from this clinical study will, together with additional clinical studies and biomarker related work, guide Symphogen towards a potential approval strategy for Sym004. We filed an IND for our MET program (Sym015) in January 2016 and expect to initiate Phase 1 clinical studies early 2016 for this exciting program. Additionally, our six-mixture program, Sym013, addressing three HER family receptors is undergoing IND-enabling studies, and we plan to submit an IND in 2016 for this innovative program. The strategic collaboration agreement with Baxalta Inc. will allow Symphogen and Baxalta Inc. to further explore Symphogen s technology within the I-O field, and it is expected that the collaboration will generate several clinical candidates going forward. The growing clinical pipeline and the strategic collaboration with Baxalta Inc. will require additional resources and capabilities during Through the establishment of a DKK 503 million debt facility, the DKK 1.2 billion upfront payment from Baxalta Inc. and the cash balance including marketable securities as of 31 December 2015, Symphogen secured a very unique and strong balance sheet to further advance its pipeline towards a selfsustainable oncology-focused biotech company. Symphogen expects increased activity related to its successful development of antibody mixtures and expects to incur a negative operating cash flow of DKK million and have cash resources, including its debt facility, of approx. DKK 1.3 billion by the end of

24 9. Risk Management Symphogen is exposed to various risk factors, which may have a significant impact on its business if not properly addressed. Symphogen frequently performs risk assessments with external partners such as insurance companies to maintain an up-to-date, balanced view of business-related risks. Symphogen performs an evaluation of the scientific, commercial and financial risks on a quarterly basis. Below is a summary of some of Symphogen s key risk areas and how such risks are addressed. Scientific risks Symphogen distinguishes between two kinds of scientific risk factors: technology risks and development risks. Technology risks include the risks that Symphogen s technology platforms as such do not represent therapeutically relevant, technologically feasible or commercially viable products. Development risks include the risks that the selected therapeutic target for the antibodies, the scientific rationale and animal models or human trials are not relevant or the developed product does not prove to be safe or reliable in treating the disease in question. Technology risks The technology risks associated with the development of antibody mixtures are primarily related to manufacturing, characterization and regulatory approval of these products. Symphogen has developed a unique manufacturing platform for consistent batch-to-batch production of antibody mixtures as well as characterization technologies, which address the increased complexity of its products, in order to satisfy the regulatory agencies. Further, Symphogen has an ongoing dialogue with the regulatory agencies in the US and Europe in order to define the data requirements in support of its products. Symphogen has significantly reduced the technology risk in relation to its technology platforms through the successful completion of the scale-up and manufacturing of clinical materials, the successful completion of human clinical trials in the US and Europe and by establishing a regulatory path for future activities through extensive dialogue with the regulatory authorities in the US and Europe. Development risks The creation and development of therapeutic products within the biotechnology and pharmaceutical industry is subject to considerable risks. Since everything is often not known about the nature of diseases or the way new potential therapeutic products can affect the disease process, a significant number of products do not successfully reach the marketplace. Any product undergoing pre-clinical or clinical development is subject to an inherent development risk, which includes factors such as timelines and quality of clinical suppliers and the availability of suitable patients to be enrolled in the clinical trials. Further, the outcome of pre-clinical as well as clinical studies is never certain, and the subsequent ability to obtain regulatory approval of the products is not guaranteed. Symphogen is developing antibody therapeutics which, as a therapeutic class, has enjoyed not only significant sales in recent years but also a higher success rate than other therapeutic classes. In addition to this, Symphogen seeks to minimize the risk by developing a broad portfolio of products, including a number of products against validated targets, thus increasing the chances of success and diversifying the development risk. Before initiating significant investments in a pre-clinical development project, Symphogen performs extensive research in order to identify the risk and deliverables, including an assessment of the risk related to: the scientific rationale, the intellectual property position, the availability and quality of starting material, the in-house knowledge and the strength of experimental models, the ability to 24

25 attract and retain employees who possess the relevant knowledge and experience, advantages and limitations of Symphogen s technologies in relation to the specific project, the complexity of clinical development and the speed at which proof-of-concept can be established, and the potential stop-go decisions, including recognition of adverse effects in pre-clinical and clinical development. Commercial risks Symphogen is subject to commercial risk factors of a diverse nature, including market size and competition for Symphogen s products in development, the ability to attract the interest of potential partners, development time and cost of development programs, and patent protection. Commercial risks are addressed by developing a portfolio of product candidates which will enhance commercial opportunities and reduce Symphogen s reliance on individual products. Furthermore, Symphogen pursues, where relevant, a partnering strategy, which contributes to reducing the commercial risks. Symphogen actively seeks partnerships with biotech and pharmaceutical companies through several types of collaborations including, among others, research and development agreements, where Symphogen licenses development and marketing rights to a product identified by Symphogen under research sponsored by the partner, and product licensing agreements where Symphogen licenses development and marketing rights to a product, which has been identified and developed by Symphogen, in return for research funding, upfront and milestone payments, and royalties on product sales. The selected structure depends on, among other things, the market structure and the estimated risk, and time and costs for developing the product. Symphogen believes that this strategy offers a reduced exposure on each project and provides the possibility to add critical additional competences such as clinical development and marketing competences to Symphogen, thereby reducing the burden on Symphogen. Symphogen has entered into strategic collaboration with partners who possess commercial capabilities. Financial risks Symphogen is exposed to certain financial risk factors, including risks associated with its cash management, the short-term liquidity profile of development programs, liquidity from partnerships, and the ability to attract interest and capital from existing and new financial investors. Please refer to note 22 of the financial statements for a more detailed description of financial risks. The Board of Directors has adopted guidelines for the management of the Company s cash and cash equivalents, including marketable securities. This treasury policy describes, among other elements, which marketable securities investments can be made and that the investments must be handled and managed by professional investment departments. Furthermore, the treasury policy provides guidelines on the use of financial instruments. The Board of Directors reviews the document at least once a year to ensure that the guidelines are sound and in line with the Company s operations. Human resource risks In the conduct of our business, Symphogen is exposed to the risk of not being able to retain and attract talent. Symphogen have implemented a comprehensive compensation package including long-term incentives to retain and attract talent. Further, to avoid the risk of losing proprietary knowledge and 25

26 know-how, Symphogen has implemented a policy for securing that such knowledge and know-how is retained. Information technology risks Symphogen is depending on its current and future information technology infrastructure and integrity. Symphogen evaluates the information technology infrastructure and integrity on an on-going basis and at least bi-annually performs a risk assessment. Securing the Company s operations and assets Symphogen has taken out insurance to cover any operating losses, losses due to claims in connection with clinical studies and loss of assets in connection with fire, theft or the like. All insurance policies are handled by an external insurance broker whom reports at least once a year as to whether the Company s insurance cover is considered to be sufficient and reasonable. 26

27 10. Organization and Human Resources Symphogen is organized as a combined project and line organization with various Research, Pre-clinical, CMC, Clinical and Regulatory departments. The line organization provides skills and services within particular areas of research and pre-clinical and clinical development, whereas the project organization coordinates the activities and draws on the resources of the line organization in accordance with the particular requirements of each project, as it moves from early discovery through pre-clinical and clinical development. Further, the line organization is supported with a number of specialists and service functions such as business development, QA, HR, IT, finance and administration. The average number of employees decreased from 104 in 2014 to 99 in 2015, and the number of employees at 31 December, decreased from 108 in 2014 to 89 in At the end of 2015, 69 people, or 77% of the employees, were engaged in research and development activities, which was in line with In January 2015, Symphogen reorganized to further focus on development of its proprietary oncology pipeline, including Sym004. The technical demands of biotechnology require a high educational level of Symphogen s employees. At the end of 2015, 32 employees, or 36%, held a Ph.D. or a doctor s degree. In addition, 16 employees, or 18%, held a master s degree. 27