Karolinska Development AB (publ) - Interim report January-March, 2011

STOCKHOLM - May 26, 2011. Karolinska Development AB (publ) announces publication of its Interim Report January-March, 2011. The full report is also available on the company's website.

Torbjörn Bjerke, CEO Karolinska Development, comments: "Since I took over as CEO of Karolinska Development in the middle of January this year, we have successfully listed the company on NASDAQ-OMX Stockholm generating SEK 577m after issue costs. Importantly we attracted top quality institutional investors from Sweden, Norway, the US and the UK. 

With the increased funding through the IPO, Karolinska Development is even more strongly positioned to build and invest in pioneering projects, from Karolinska Institutet and other top-ranked universities, that could solve significant unmet medical needs. Furthermore, it will enable us to develop our highest-priority portfolio companies more quickly, and provide a higher level of funding for promising new projects.

The recent SEK 123 million funding round, led by Karolinska Development, for one of our accelerated growth portfolio companies, Axelar, is a demonstration of Karolinska Development's investment strategy. Axelar is focusing on the development of anti-cancer products and is currently in clinical Phase I/II. The funding will play a key role in progressing the company's lead product to proof-of-concept in patients suffering from lung cancer.

During the period, a number of our portfolio companies have also shown positive clinical and commercial development. Examples include Axelar and Aprea, which concluded their Phase I/II clinical studies in cancer patients, and Promimic, which received approval from the FDA to market and sell its product in the USA. We have divested small portions of our portfolio to KCIF, our co-investment vehicle with the European Investment Fund, and undertaken our first joint investment with Kurma Biofund. I am pleased with the progress we have made so far, but I recognize we will need more and bigger deals in the future to capitalize on the portfolio. We have therefore a significant focus on business development and commercialization of our portfolio companies. At the same time, we will continue to review and prioritize the portfolio to optimize near-term value creation."

Today, Karolinska Development will host a conference call at 14.00 CET. Participant access numbers: +46 (0)8 505 137 86, UK: +44 (0)20 713 620 51, confirmation code: 1743784. The conference call can also be followed as an audiocast on www.karolinskadevelopment.com.

Group
January - March 2011

• Revenue amounted to SEK 2.9m (2.6)
• Profit/loss after tax amounted to SEK -37.5m (0.1) of which SEK -12.3m (18.7) comprised net changes in fair value which do not impact the cash flow
• During the period, investments in portfolio companies (including subsidiaries, joint ventures and associates) amounted to SEK 35.7m (46.3)
• Cash flow for the period amounted to SEK 34.5m (-210.1)
• The total valuation of the whole portfolio at 31 March 2011 according to the International Private Equity and Venture Capital Valuation Board Guidelines (including subsidiaries, associates and other financial investments) was SEK 1,461.9m (1,564). The value as at 31 December 2010 amounted to SEK 1,454.7m
• Earnings/loss per share both before and after dilution amounted to SEK -1.04 (-0.05)
• Net asset value per share amounted to SEK 53.0 (61.3)

Significant events during the period

• Torbjörn Bjerke appointed as new CEO of Karolinska Development
• Terje Kalland appointed as new CSO of Karolinska Development
• The collaboration with the European Investment Fund resulted in that the jointly owned KCIF Co-Investment Fund KB acquired shares from Karolinska Development in the portfolio companies Aprea AB, Athera Biotechnologies AB, Umecrine Mood AB, and XSpray Microparticles AB
• The biomaterials company Promimic AB received a 510 (k) approval for the implant surface HANANO Surface(TM). The approval means the company can market and sell the surface in the United States in the field of dental implants
• Aprea AB reported completion of the Phase I/II safety study with its candidate drug APR-246 in cancer patients, showing that the compound is safe and tolerated
• Karolinska Development AB decided to broaden its shareholder base through a new issue of Series B shares and to apply for a listing of Karolinska Development's Series B shares on the NASDAQ OMX Stockholm exchange
• Karolinska Development extended its portfolio by investing in BioChromix AB - a Swedish in vitro diagnostic company focusing on Alzheimer's disease  
  
  
  

Significant events after the end of the period

• Axelar AB announced positive interim results from its ongoing Phase I/II study - its primary endpoint was successfully reached, identifying the appropriate Phase II dose as well as providing evidence that AXL1717 is safe and tolerated
• Kurma Biofund carried out its first joint investment in the portfolio company Umecrine Mood AB
• Karolinska Development AB was listed on NASDAQ OMX Stockholm on 15 April 2011. In conjunction with the listing, a total of 15,200,000 Series B shares were issued raising SEK 608.0m gross and SEK 576.7m net of issue costs.
• Karolinska Development took the lead in a SEK 123 million funding round of one of its accelerated growth portfolio companies, Axelar AB
• Karolinska Development participated in an offset share issue in its portfolio company Pergamum of SEK 77.6m
• KCIF Co-Investment Fund KB acquired shares in Pharmanest AB and Umecrine Mood AB from Karolinska Development

Parent company
January - March 2011

• Revenue amounted to SEK 0.9m (2.6)
• Operating loss amounted to SEK -19.0m (-9.8)
• Investments in subsidiaries during the period amounted to SEK 18.0m (11.5) and in Joint Ventures, associates and other financial investments to SEK 17.7m (34.8)

For further information, please contact:
Torbjörn Bjerke, CEO
Phone: +46 (0)72 744 41 23, e-mail: torbjorn.bjerke@karolinskadevelopment.com

Gunnar Casserstedt, CFO
Phone: +46 (0)73 068 37 00, e-mail: gunnar.casserstedt@karolinskadevelopment.com

Note

Karolinska Development presents the information provided in accordance with NASDAQ OMX Stockholm's regulatory framework for issuers. The information was provided for publication on May 26, 2011 at 08:30. This report has been published in both Swedish and English. In the event of any discrepancy in content between the two versions, the Swedish version shall prevail.

TO THE EDITORS

About Karolinska Development
Karolinska Development aims to create value for investors, patients, and researchers by developing innovations from world class research into products that can be sold or out-licensed with high returns. The business model is to: SELECT the most commercially attractive medical innovations; DEVELOP these to the stage where the greatest return on investment can be achieved; and COMMERCIALIZE the innovations through the sale of companies or out licensing of products. This will result in upfront payments, milestone payments and royalties.

An exclusive deal flow agreement with Karolinska Institutet Innovations AB, along with other cooperation agreements with leading Nordic universities, delivers a continuous flow of innovations.

Karolinska Development's flexible exit strategy enables projects to be exited at whichever stage of development offers the greatest return on investment, usually after Phase II clinical trials have indicated the desired pharmaceutical effect on patients - this being an important value enhancing step.

Today, the portfolio consists of over 40 projects at various stages, from concept development to Phase II clinical trials, twelve projects are in clinical trials with six in Phase II. The portfolio is particularly strong in the areas of cancer, dermatology, inflammation, cardiovascular disease, women's health and diseases that affect the central nervous system. www.karolinskadevelopment.com