Karolinska Development Annual Report en

Annual Report 2015
Table of Contents
02. About Karolinska Development 25. Board of Directors
03. Key Events in 2015 and the Start of 2016 27. Management Team
05. Portfolio Company Highlights 29. Director's Report
07. Message from the Chairman 38. Financial Statements
08. Message from the Chief Executive Officer 89. Auditor's Report
09. Financial Position in Brief 91. Corporate Governance Report for 2015
11. Interview with the Karolinska Development Management Team 95. Auditors Report on the Corporate Governance Report
15. Portfolio Companies 96. Definitions and Glossary
Karolinska Developments Share and Shareholders

24. 97. Dates for Publication of Financial Information
01 Annual Report 2015 Karolinska Development

About Karolinska Development
About Karolinska Development
Karolinska Development AB (Nasdaq Stockholm: KDEV) is a Nordic Karolinska Developments portfolio comprises 12 companies focusing
life sciences investment company. The company focuses on identifying on the development of innovative treatment for life-threatening or
medical innovation and investing in the creation and growth of serious debilitating diseases.
companies developing these assets into differentiated products that
will make a difference to patients lives and provide an attractive return The Company is led by a team of investment professionals
on investment to its shareholders. with strong investment backgrounds, experienced company builders
and entrepreneurs, with access to a strong global network.
Karolinska Development has access to world-class medical innovations
at leading universities and research institutes in the Nordic region,
including the Karolinska Institutet. The Company aims to build
companies around innovative products and technologies, supported
by experienced management teams and advisers, and co-funded by karolinskadevelopment.com
specialist international life science investors, to provide the greatest
chance of success. @Karolinska_Dev
Karolinska Development Annual Report 2015 02

Key Events in 2015 and the Start of 2016
Clear Strategy Streamlined Portfolio

Karolinska Development made good progress during 2015 in executing Karolinska Development successfully completed a portfolio review
its strategy to become a leading Nordic life sciences investment during 2015. This resulted in a streamlined portfolio consisting of
company focused on generating attractive and consistent returns for its companies with the best chances of developing innovative medicines
shareholders. The company is now well positioned to further advance or medtech products that meet a clear medical need, and with the
its strategy with a view to building future value through its more potential of delivering attractive returns to shareholders.
focused portfolio and through new investments.
The portfolio comprised 12 companies at the end of December 2015,
Strengthened Organization compared with 21 companies at the end of 2014.
Karolinska Development strengthened its organization, bringing in

significant investment and operational experience, and put in place a Creating New Investor Syndicates
new structure to support its investment strategy.
to Finance Portfolio Companies
In March 2015, Jim Van heusden, PhD was appointed Chief Executive A key element of the new strategy is to ensure portfolio companies are
Officer. He has more than 20 years experience in life science financed to deliver success. This is achieved via investment from Karolinska
investments and pharmaceutical R&D. He was a Partner at the Development and the proactive syndication of deals with experienced
European investment company Gimv (2001-2013) during which time international life science focused investment firms. Significant progress
he served as a Board member in several European and US biotech has been made with more than 30% of the funds invested in portfolio
companies. Prior to that, he worked in pharmaceutical R&D at Janssen companies in 2015 being contributed by new external investors,
Pharmaceuticals (Johnson & Johnson). increasing to 70% following the recent SEK 437 million Aprea financing.
The current level of funding provides sufficient runway to unlock the
In December, Viktor Drvota, MD PhD, was appointed as Chief Investment potential value of these companies.
Officer. Dr Drvota was Head of Venture Capital Life Science at SEB
Venture Capital since 2002, establishing a strong track record in identifying Another SEK 70 million was raised by third-party syndicates
investment opportunities, building companies and fundraising. He is also for divested companies.
an Associate Professor of Cardiology at Karolinksa Institutet.
Nordic Focus for New Investments
Terje Kalland, MD PhD, Deputy Chief Executive Officer and Chief Scientific
Officer, retired from both positions at the end of December 2015. New investment strategy developed to capitalise on world-class
medical innovation across the Nordic region, including more mature
opportunities where returns may be realised more quickly than from
early stage companies.

Vision
New
to become a leading
Nordic investment
Focused portfolio of
12
leadership
company focused
on life sciences.
team
companies. with significant
investment experience.
New
investment
strategy
to build broad,
SEK 641m
balanced portfolio.
invested in portfolio companies SEK 70m

70% funds raised from
new investors.
raised by 3rd party investors for
divested companies.

Portfolio Company Highlights
A More Focused Portfolio
As a result of the progress made by Karolinska Development implementing its strategy, a more focused portfolio has been built around a number
of companies developing innovative therapeutic and medtech products. Several of these companies have raised further funds or made important
advances with their businesses during 2015 and into 2016.
In March 2016, Aprea a vaso-occlusive crisis. The

announced it raised company entered into a co-
SEK 437 million in a Series B development agreement with
financing from a syndicate Ergomed (February 2015) to
of specialist international conduct the clinical trial.
Aprea life science investors led by Sevuparin received orphan OssDsign

Versant Ventures and 5AM drug designation in SCD in
In June, Aprea reported Ventures (US), and including the US in March 2015 and a In November 2015, OssDsign
updated preliminary data Sectoral Asset Management positive opinion on orphan raised SEK 93 million in an
from its ongoing Phase Ib/II (Canada), and HealthCap drug designation in the EU in equity financing led by new
clinical study with APR-246, (Sweden) as local lead. The January 2015. investors SEB Venture Capital
which suggested that and Fouriertransform, with
funds raised are to advance
APR-246 could be effective continued investment from
the clinical development of
in combination with
APR-246 in ovarian cancer, Co-development Karolinska Development.
chemotherapy in treating The proceeds will be used
to explore its use in other agreement
ovarian cancer. for the market expansion of
cancer indications and to with Ergomed OssDsigns product line of
In July, Aprea strengthened build a presence in the
February 2015 unique craniofacial implants.
its leadership team US. The fundraising is the
with the appointment largest ever completed by
of experienced a Karolinska Development
pharma executive portfolio company and more
In February 2016, Dilaforette Series B financing
signed an agreement with
Bernd R. Seizinger as broadly by any private life raising SEK 93m
Arabian Gulf University to
Executive Chairman. science company in Sweden
support the Phase II trial with
from new
in more than a decade.
sevuparin in SCD patients.
investor syndicate
November 2015
Series B financing
raising SEK 437m Clinical
from new collaboration In January 2016, OssDsign
international Dilaforette with Arabian received CE mark approval
for Cranioplug, an innovative
investor syndicate. Gulf University
device for cranial fixation.
March 2016
Phase II clinical trial initiated SEK 10m
in October with sevuparin
February 2016
in patients with sickle-cell
disease (SCD) experiencing

Divested
Significant New Value retained Divested to

Funds Raised through earn-out stersjstiftelsen
Promimic for Divested agreements March 2015
Companies,
In October, Promimic signed Retained Economic
a strategic agreement with Interest
Amendia Inc. (US) that will Share Swap
allow Amendia to develop More than SEK 70 million was
Promimics HAnano Surface
Refinanced
invested by new syndicates in
technology for use with its companies that were divested
by third parties Economic interest
patient-focused spinal implants. during 2015. As part of these SEK 24m retained
divestments, Karolinska December 2015
Development retains an
Commercial economic interest in the future

value of these companies via
partnerships with earn-out agreements.
Sistema de June 2012
Implante Nacional Karolinska Development
and Amendia divested its entire shareholding Refinanced

in Athera Biotechnologies
September/October 2015 to a consortium led by The
by third parties Industrifonden will provide
Karolinska Development 5%
Foundation for Baltic and SEK 18m of any revenue Industrifonden
East European Studies September 2015 receives from its holdings
In January 2016, Promimic
(stersjstiftelsen) and of Oncopeptides AB up to
announced that its strategic
Industrifonden (December). a maximum of SEK 80m.
partner Sistema de Implante
XSpray Microparticles was Similarly will Karolinska
Nacional had initiated the
divested to stersjstiftelsen Development provide
launch of the first dental
and Recipharm Venture Industrifonden with a
implant coated with Promimic's
Fund (September), and 5% share of any revenue
implant surface HAnano Surface.
Pharmanest was divested to Refinanced Karolinska Development AB
stersjstiftelsen, Recipharm by third parties receives from its holding of
Venture Fund AB and SEK 28m Aprea AB up to a maximum
Praktikerinvest AB (July). In of SEK 80m.
July 2015
April, Axelar was divested to
stersjstiftelsen.

Message from the Chairman
The progress Karolinska

Development has made
is substantial and has laid
a solid foundation for its future
development as a Nordic
investment company.
It has been a year of major changes for Karolinska Development. In To highlight some key achievements during the year: the new
2014, the Board of Directors initiated fundamental and far-reaching management team has undertaken a thorough review of its portfolio
strategic changes with the intention of transforming the way the and refocused resources on a smaller number of companies it
company operates and creating a Nordic life sciences investment believes have the strongest potential for success, which will in turn
vehicle. The aim was to focused on generating attractive and benefit our shareholders.
sustainable returns for shareholders. I am pleased to report that
As part of this process, a more representative approach to valuing the
progress during 2015 in executing the new core strategy has been
retained portfolio companies was implemented, bringing Karolinska
rapid and the new management team has achieved a great deal
Development in line with its international peers, while the value of
over this period.
several non-core companies was written off. Establishing a more
To quickly reiterate our strategy: Karolinska Development aims to representative fair value for the portfolio was an essential process
select the best innovations in the Nordic region, focusing on the to reset expectations and to make it easier for shareholders to see
development of innovative treatments for patients suffering from value-creation as important milestones are achieved.
life-threatening or serious conditions where there exist clear unmet
medical needs. Our approach is to engage actively in our existing
A new era
and future portfolio companies by working with founders and
management to shape the strategic direction of these companies Despite this, the benefits of the new strategy are becoming evident
towards well-defined value-inflection points. across all areas of the business. For example, more than 30% of the
funds invested in our portfolio companies in 2015 were contributed by
new external specialist investors, rising to 70% with the recent Aprea
Strengthening our portfolio companies financing. Some of these companies have made important progress
In order to reduce risk and increase exposure of our companies to with their own development, hitting clinical or commercial milestones.
broader expertise and networks, as well as to access new sources Overall, the portfolio has sufficient funding, structure and focus now to
of funding, we seek to syndicate investments with sophisticated deliver important value-enhancing milestones in the coming years.
international life science investors.
On behalf of the Board I would like to thank the management team
We will also continue to strengthen the leadership in the portfolio companies for the hard work they have committed to implementing the new
through the appointment of serial entrepreneurs and highly experienced life strategy and the achievements they have made. I would also like to
science professionals to the management teams and boards. express my gratitude to Terje Kalland, former Deputy CEO and CSO,
who retired in December.
Working in this way, we believe we can create significant equity
returns over the medium to long term for investors. The majority of our
It has been a challenging year, but I believe that the progress
current portfolio companies are operating in the orphan drug space,
Karolinska Development has made is substantial and has laid a solid
addressing patients with true unmet medical needs; with possibilities
foundation for its future development as a Nordic investment company.
for seeking a faster route to the market, through lower development/
regulatory hurdles and where attractive pricing and reimbursement
conditions eventually can apply.
Bo Jesper Hansen, MD PhD
Chairman of the Board

Message from the
Chief Executive Officer
We now have the right

components in place
to make Karolinska Development
a success.
When I joined Karolinska Development in March 2015, I saw an organisation New investors included Versant Ventures and 5AM Ventures (US), Sectoral
with great potential and access to world-class medical innovation, but was Asset Management (Canada) and HealthCap (Sweden).
in need of significant change in order to harness, cultivate and eventually
capture the value that it could deliver to stakeholders. Our relationships with specialized international investors, such as these, is
anticipated to provide us with access to a broader deal flow, providing more
That process had begun and a new strategy was designed with opportunities to potentially generate greater returns while at the same time
the intention of transforming Karolinska Development into a Nordic allowing us to better manage the risk profile of our overall portfolio.
investment company dedicated to life sciences. The key elements in this
During 2015, we have also made changes to re-align our own organisation,
new strategy are: (i) a clear focus within the portfolio, (ii) an investment
putting in place a new structure that will enable Karolinska Development
strategy based on a companys unique potential to generate attractive
to operate more effectively as a specialist Nordic life sciences investor. In
returns, (iii) an increased emphasis on leadership within our portfolio
December we announced the appointment of Viktor Drvota, an experienced
companies, and (iv) proactively syndicating our investments with
life science investor, as Chief Investment Officer. Viktor brings significant
experienced international life sciences investors.
venture capital experience to the team, and increases our capacity to invest
My focus since joining has been to implement and refine this strategy, in new companies that can generate attractive returns.
working closely with the Board and management team, and with our
portfolio companies. I am pleased to report that significant progress has Looking further ahead
been made across all areas of the business.
As part of our new strategy, we also intend to broaden our search
for new deals to other leading research institutions in the Nordic region
A year of change and also to more mature opportunities, including listed companies,
During the year we have streamlined and strengthened our investment where returns may be realised more quickly than from early stage
portfolio, allowing us to focus resources on the companies we believe companies. We still retain close links to the Karolinska Institutet and
have the best chance of developing innovative medicines or medtech a new agreement with this prestigious institution will allow us to access
products that meet a clear medical need. As a result, at the end of 2015 high-quality opportunities based on our intended co-investment in a new
planned incubator fund, expected in 2016.
we had 12 portfolio companies, compared to 21 at the end of 2014.
I am truly encouraged by the progress that Karolinska Development
The quality and experience of senior management teams and boards is
has made. The company is now more focused and better structured to
crucial to ensuring the success of our portfolio companies, and we were
operate as an investment firm, with a portfolio of exciting prospects that
pleased to see Bernd R. Seizinger, appointed as the Executive Chairman
are funded to deliver key value-generating milestones over the coming
of Aprea bringing significant leadership experience to the company. We
years, and an investment strategy designed to deliver further value from
expect to see further important additions to the leadership teams of our
the most promising opportunities across the Nordic region.
portfolio companies during 2016.
Investing in life sciences is long-term and high-risk, and requires a diligent
We have been working to ensure that our portfolio companies are financed
and patient approach to translate scientific breakthrough into commercial
to deliver success and also to proactively syndicate our deals with
value. There can be no shortcuts. I believe that we now have the right
experienced international life science focused investment firms. More than
components in place to make Karolinska Development a success.
30% of the funds invested in our existing portfolio companies (OssDsign and
That is what attracted me to the organisation one year ago, and I am
Inhalation Sciences) in 2015 were contributed by new external investors.
confident that is what will pave our way to future success.
This percentage is expected to increase in 2016 as we continue to rebuild
confidence among our peers and strengthen our network. Already this
figure has increased to 70% when in March 2016 Aprea raised SEK 437m
Jim Van heusden, PhD
in the largest private financing of a Karolinska Development company, and
Chief Executive Officer, Karolinska Development
by any private Swedish life sciences company in more than a decade.

Financial Position in Brief
Investments and loans in portfolio The Investment Entitys equity to total

companies January-December 2015: assets ratio was:
SEK 130.8m
(2014 SEK 91.6m)
40%
(SEK 247.9m)
Investments and loans in portfolio Divestment of portfolio companies where fair value has been
reduced to zero as a consequence of Karolinska Development
companies January-December 2015
implementing its strategy and focusing its portfolio:
Investments in portfolio companies during the period January-
December 2015 amounted to SEK 130.8m (SEK 91.6m in 2014). NeoDynamics AB, to the amount of SEK -11.1m
Investments were made in Aprea AB (SEK 36.6m), Umecrine Cognition
AB (SEK 21.5m), Akinion Pharmaceuticals AB (SEK 18.0m), Dilaforette NovaSAID AB, to the amount of SEK -74.4m
Holding AB (SEK 17.4m), OssDsign AB (SEK 21.9m), Promimic AB
(SEK 3.5m), Dilafor AB (SEK 2.9m), XSpray Microparticles AB (SEK Pergamum AB, to the amount of SEK -138.1m
3.0m), Clanotech AB (SEK 5.1m), Pharmanest AB (SEK 0.6m) and
KDev Oncology AB (SEK 0.3m). Umecrine Mood AB, to the amount of SEK -59.2m
Other adjustments in the fair value and reduced amount potentially

Value development January-December 2015 to be paid to Rosetta Capital from realised proceeds in KDev
During the year the Investment Entitys operating loss amounted to Investments' amounts to SEK -36m
SEK -1,020.3m (SEK -367.9m in 2014), of which the effect of the
change in fair value of portfolio investments amounted to SEK -976.5m As SEK 130.8m has been invested in portfolio companies during 2015
(SEK -306.1m). The effect of the change in fair value was mainly due to the change in Net Fair Value amounts to SEK -845.8m.
the more representative portfolio valuation implemented starting in the
second quarter, divestment of companies via an earn-out model where Investment Entity profit/loss
fair value has been reduced to zero, and divestment of companies
where fair value has been reduced to zero: Revenues amounted to SEK 3m during the year, compared to
SEK 5m in 2014. Revenue is generated from services provided to
Adoption of a more representative approach to valuing early stage portfolio companies and related companies.
companies amounts to SEK -431m
The Investment Entitys operating loss amounted to SEK -1,020m,
Divestment of portfolio companies and fair value reduced to zero which corresponds to an increase of SEK 652m compared to the
but with potential value retained via an earn-out agreement previous year. As operating expenses decreased to SEK -47m
compared to SEK -69m in 2014 the increase in operating loss was
Athera Biotechnologies AB, to the amount of SEK -89.0m mainly due to an increase in result from changes in fair value that
amounted to SEK -976m compared to SEK -306m in 2014.
Pharmanest AB, to the amount of SEK -124.8m
Loss for the period amounted to SEK -1,055m compared to
XSpray Microparticles AB, to the amount of SEK -84.7m SEK -372m for 2014 or SEK -19.8 per share for 2015 compared
to SEK -7.7 per share for 2014.

Distribution of dividends under waterfall-structure*
Accumulated exit value of all KDev investments
portfolio companies payable as dividend
SEK m
0-220 100%
220-880 65% 35%
880-1320 75% 25%
1320 92% 8%
* When calculating distribution of dividends, any dividends Allocation to Karolinska Development

previous distributed will be taken into account Allocation to Rosetta Capital
Financial position (comparative figures Rosetta Capital deal

refer to 31 December 2014, restated) Net exit proceeds from portfolio companies in KDev Investments' will
be distributed as dividends based on a waterfall structure agreed
The Investment Entitys equity to total assets ratio was
between Karolinska Development and Rosetta Capital. With its current
40% (95%) on 31 December 2015 and equity amounted
shareholding, Karolinska Developments proportion of dividends will be
to SEK 247.9m (SEK 1,256.8m).
0% for accumulated dividends up to SEK 220m, 65% for accumulated
dividends between SEK 220m and SEK 880m, 75% for accumulated
Cash, cash equivalents and short-term investments in the Investment
dividends between SEK 880m and SEK 1320m, and 92% for accumulated
Entity amounted to SEK 297m compared to SEK 141m at year-end
dividends above SEK 1,320m. For example, if SEK 1,000m dividend is
2014, of which SEK 50.2m is provisionally allocated for anticipated
distributed, Karolinska Development will receive 52% of the dividend.
follow-on investments in the KDev Investments' portfolio. Total assets
amounted to SEK 614.5m (SEK 1,321.6m).
Equity ratio and net asset value
With the majority of the portfolio companies financed to next value The Investment entitys equity ratio decreased during the fiscal year
inflection point during 2015 and at the beginning of 2016, future by 55 percentage points to 40%. The net asset value amounted to
investments required by Karolinska Development in the existing portfolio SEK 4.7 per share at the year-end 2015, compared to SEK 23.7
is limited. Current cash will be used to cover limited investments in per share the previous year.
existing portfolio companies, operational costs and new investments.
Accounting principles
Portfolio valuation Karolinska Development is an investment entity according to IFRS
10 Consolidated Financial Statements, which affects financial years
The portfolio Net Fair Value amounted to SEK 268m at the end of
beginning 1 January 2014 or later. The difference versus the 2013
2015, a decrease of SEK 846m compared to the corresponding period
Annual Report is that all portfolio companies, including subsidiaries, are
last year when the Net Fair Value amounted to SEK 1,113m.
measured at fair value. It will therefore be easier to follow the Investment
Entitys net asset value and how the total value development of the
portfolio over time affects the recognized results (see Note 43).

INTERVIEW
Karolinska Development Management Team
Pictured from left to right:
Christian Tange
Chief Financial Officer
Jim Van heusden

Viktor Drvota
Chief Investment Officer

Jim Van heusden, PhD
I feel optimistic and enthusiastic

about the future. We have
achieved a lot in the past
year. We are now in a much
better shape in terms of
the refocused portfolio and
restructured organisation.
The year 2015 has seen considerable change at Karolinska Development as it executes the new strategy
designed to transform the company into a successful Nordic investment company. Here, we get the views
of the management team on the new Karolinska Development and what the future holds.
Q Jim, how has your first year as CEO been? Q Why do you think Karolinska Development
can be successful?
JVh: It has been a challenging year, but I am pleased with the
progress we have made. Our goal is to transform Karolinska JVh: Quite simply, there is world-class medical innovation taking
Development into a leading Nordic life sciences investor delivering place in the Nordic region, and this provides a rich and sustainable
attractive returns for investors through the creation of innovative source of potentially valuable new products. I believe that
medical products for patients. To put us in a position from which we Karolinska Development is very well positioned within this thriving
can achieve this, it has been necessary to make changes. We now community to identify exciting new opportunities at an early stage,
have a smaller and more focused portfolio and these promising and to create the right structures to enable them to generate value
companies are funded to their next value-inflection points. We for all stakeholders, shareholders and patients alike.
have built strong relationships with fellow specialist investors in the
Nordic region and beyond, with whom we will look to syndicate I know that we cannot do this alone, hence our strong emphasis on
future investments in this portfolio and in new opportunities. This investor syndication and strengthening leadership in the companies.
strategy aims to spread the risk while also providing companies I also accept that not everything will be successful, but I am convinced
with exposure to a much broader range of skills, experience and that Karolinska Development now has the right strategy in place to
networks, thereby increasing the chances of success. give these opportunities the best chance possible to be successful.
And with their success, comes our own success.
We have restructured our organisation so that it is better equipped
to function as an investment company, and I am delighted that we
were able to attract experienced life science investor Viktor Drvota Q Viktor, as the newest member of the team,
to join from SEB Venture Capital. can you explain what attracted you to join
Karolinska Development?
I am fully aware that we still have some way to go, true value
creation in the biotech and medtech sectors takes time, there VD: The main thing that attracted me was the opportunity to be
can be no shortcuts and we do not expect any overnight part of a new and truly Nordic-focused investment company.
successes. However, I believe we are now in a much better From my previous role, and based on my history with the
position than we were 12 months ago to achieve our goals Karolinska Institutet, it was clear that its medical research and
and I look forward to the coming year. innovation is top class, but its translation into commercial success
has consistently fallen short.

Viktor Drvota, MD PhD
Chief Investment Officer
The main thing that attracted

me was the opportunity
to be part of a new and
truly Nordic-focused
investment company.
I am delighted that the Karolinska Development board recognised Dilaforette is advancing a novel disease-modifying drug into Phase
that significant change was needed in order to start capitalising on II clinical studies for the treatment of sickle-cell disease with results
that excellence, and more broadly on the high-quality innovation expected later in 2016. The compound has received orphan drug
throughout the Nordic region. Jim and the team have made great designation in the US and Europe.
progress over the past year refining and implementing the strategy for
change to a point now where the company and its portolio looks to VD: From the point of view of near-term value creation, the medtech
be in good shape. companies in our portfolio are very interesting. Both OssDsign and
Promimic are already at commercial stage.
My role is to build on this progress further, by supporting our existing
portfolio companies and identifying new investment opportunities. OssDsign is developing a portfolio of novel cranial and facial implants
I will also be focusing on extending and strengthening our networks that enable improved healing both of soft tissue and bone. OssDsign
throughout the international investment community, where we received its first market approval (CE mark) in Europe in January 2016,
anticipate future syndicate partners and sources of new deals to and is preparing the commercial launch of these products this year.
originate. A busy and exciting year beckons. The company raised SEK 93 million from Karolinska Development, SEB
Venture Capital and Fouriertransform, in November 2015 to support the
Q Which companies in the portfolio are you

commercialisation of its craniofacial implants.
particularly excited about? Promimic, like OssDsign, is a biomaterials company and is developing
a novel coating for implants (HAnano Surface) that improves the
JVh: A major element of the work we did last year was to review integration of the implant, particularly at the interface between bone
and evaluate our portfolio, with a view to establishing a smaller and and soft tissues. Promimic has signed licensing agreements for this
more-focused portfolio built around a number of companies that are technology with several companies, and the first commercial launch
developing novel therapeutic and medtech products designed to took place in Brazil with a coated dental implant.
address significant unmet medical needs.
There are some highly innovative technologies and approaches being

developed at these companies. Aprea, for example, is developing
Q How do you intend to finance these
companies, how valuable can they become
a first-in-class anti-cancer compound, APR-246, that targets and
reactivates the tumor suppressor protein p53. The p53 gene is the
and when do you anticipate exit?
most frequently mutated gene in human cancer, and is present
in approximately 50% of all human tumors. Mutant p53 is often CT: The companies in our focused portfolio all have the potential to
associated with resistance to anti-cancer drugs and poor overall create important value for our shareholders through the development
survival, representing a major unmet medical need in the treatment of of novel approaches to addressing unmet needs in healthcare, be it a
cancer. A compound like APR-246 has the potential to truly transform new drug or medical technology. Importantly, they all have their next
the way many types of cancer are treated. This potential enabled Aprea value-inflection points mapped out, and the impact that achieving
recently to close the largest private financing round (SEK 437 million) for these milestones will have on the value of these companies, and
a biotech company in Sweden for more than a decade, attracting the of our portfolio, should be easier for shareholders to see since we
participation of some major international specialist life science investors. adopted a more representative approach to valuation last year.

Christian Tange, MSc
Chief Financial Officer
As we stand today, our portfolio

companies are sufficiently
well financed, via Karolinska
Development and our co-investors,
to support their advancement
to the next set of value-
generating milestones.
As we stand today, our portfolio companies are sufficiently Q When will we see some new investments
well financed, via Karolinska Development and our co-investors,
and what sort of companies will you look
to support their advancement to the next set of value-generating
to invest in?
milestones. Our strategy to secure longer-term funding for these
companies is through further syndication with international
specialist investors, while the companies themselves will be VD: We cannot be specific about when we might make our first
seeking funding through co-development or commercial new investments but we expect to evaluate several opportunities
partnerships. through these routes over the coming year. As we stand today, we
have funds available to invest and with any portfolio approach, the
JVh: It is always difficult to predict when we might achieve an key is an appropriate level of diversification. Our existing portfolio
exit but our model is clear: for therapeutic companies we aim contains therapeutic and medical technology companies and
to provide finance until proof-of-concept is demonstrated in we will continue to look at companies in both categories, and
Phase II trials, at which point we would look at options such as potentially to extend to other areas as well.
out-licensing, trade sale or IPO to realise our investment; and for
medtech companies, we aim to finance them until break-even and Currently, our therapeutic companies are relatively early stage,
then explore trade sale, M&A or IPO options. certainly pre-revenue and in most cases pre-proof of concept.
In order to create a more balanced portfolio, we will consider
Q How do you intend accessing deals

investing in more mature companies, i.e. those close to or already
at commercial stage.
originating at other Nordic institutions?
VD: There are two mechanisms through which we aim to access Q What does the future hold for
new investment opportunities in Sweden, Norway, Denmark and Karolinska Development?
Finland: first would be through our own direct activities working with
entrepreneurs in the region; and the other mechanism would be via JVh: I feel optimistic and enthusiastic about the future. We have
syndicates, where we would look to lead or co-lead the investment. achieved a lot in the past year, it has been quite a challenge,
but the result is that Karolinska Development is in much better
We are already building on the extensive network I have established shape now in terms of the refocused portfolio and restructured
across the Nordic region so that we can identify potential investment organisation. The current level of funding provides sufficient
opportunities for us to lead. In addition, we are building greater runway to execute our strategy and to unlock the potential value
awareness of Karolinska Developments expertise in leading in our existing portfolio, and we are looking to build value further
deals through interactions with other specialist investors via Jims through new investments.
networks in Europe and US.

Portfolio Companies
Have the potential for market exclusivity based on intellectual rights

(e.g. patents) and/or orphan drug status.
A Focused Portfolio
Have strong management teams supported by an experienced
Board of Directors.
At the end of 2015, Karolinska Development had a focused portfolio
of 12 therapeutic and medtech companies, which has been shaped Provide an attractive opportunity to syndicate the investment with
based on strict investment criteria that define each companys unique international life sciences investors who can contribute to further
potential to generate attractive returns for shareholders. value creation through their expertise and networks.
Have clear market dynamics to position the company for an

attractive exit or IPO.
Portfolio companies must:
B
e developing a product with clear differentiation and advantages
compared to existing and/or future products.
Future investments will be sought from leading entrepreneurs across
F
ocus on products with a well-defined clinical, regulatory and the Nordic region and may include more mature opportunities where
commercial strategy to maximize commercial value. returns may be realised more quickly than from early stage companies.
Core portfolio companies financed to next value-inflection point
Therapeutics Strategy: Fund to proof-of-concept then license, sell or IPO
Pre-clinical Phase I Phase II Phase III Financing
(expected proof-
sickle cell disease 2016 SEK 10 million
of-concept data)
(expected proof- SEK 437 million

ovarian cancer 2019
of-concept data)
Medtech Strategy: Fund to break-even then sell or IPO
Prototype Development PMA / 510K Market Financing
patient specific craniofacial implants revenue generating SEK 93 million
orthopedic implant coating revenue generating collaborations

Therapeutic Companies Project
APR-246
Primary indication
Ovarian cancer
Development Phase
Phase I/II
Holding in company
(at end December 2015)
62%*
Holding in company
(at end March 2016)
19%*
Other investors
Versant Ventures (US),
5AM Ventures (US),
HealthCap (Sweden)
Sectoral Asset
Management (Canada),
Aprea AB KCIF Co-Investment Fund KB
Origin
Karolinska Institutet
A unique approach to treating More information
a broad range of cancers aprea.com
* Includes indirect holdings

through KDev Investments' and
KCIF Co-Investment Fund
Aprea is a Swedish biotech company focusing on discovery and
development of novel anticancer compounds targeting the tumor
suppressor protein p53. De-activation of p53 results in uncontrolled
growth of the cell leading to cancer. Mutations of the p53 gene occur
in around 50% of tumors and restoring its normal function represents a
The market
very attractive approach for treating a broad range of cancers including
The market potential in ovarian cancer is substantial. There are around
those resistant to cancer chemotherapeutics.
225,000 women living with ovarian cancer in the seven major markets,
Apreas exciting lead drug candidate APR-246, a first-in-class anti-cancer with 67,000 new patients diagnosed each year. Of those diagnosed
compound that targets and reactivates the tumor suppressor protein p53, annually, approximately 20,000 have stage III-IV, recurrent disease with
inducing programmed cell death in many human cancer cells. mutated p53. This is the primary target population for APR-246. The
overall ovarian cancer pharmaceutical market is expected by analysts
In October, Aprea presented updated preliminary data from its ongoing
to grow by more than 13% annually to 2020, reaching a total market
Phase Ib/II PiSARRO clinical study in ovarian cancer at the European
value of USD 2.3 billion.
Society of Gynaecological Oncology congress (ESGO) in Nice, France.
The study is investigating the safety and efficacy of APR-246 in
combination with chemotherapy in second-line treatment of patients Recent progress
with high grade serous ovarian cancer.
S
EK 437 million raised from syndicate of leading international life
At cut-off, all patients treated in the study had stable disease or science investors (March 2016).
better according to the Response Evaluation Criteria In Solid Tumors
P
reliminary Phase Ib results in ovarian cancer presented
(RECIST) criteria. In addition, 13 out of 14 patients had a GCIG CA125
(October 2015).
(tumor antigen biomarker) response after three treatment cycles.
These preliminary efficacy data indicate that APR-246 in combination B
ernd R. Seizinger, MD PhD, appointed Executive Chairman
with chemotherapy has encouraging activity in patients with partially (July 2015) .
platinum sensitive as well as fully platinum sensitive ovarian cancer.
US patent approved for a new formulation of APR-246 (June 2015).
The Phase Ib/II trial is a two-part randomized, controlled study
investigating the safety and antitumor activity of APR-246 administered Expected milestones
in combination with carboplatin and pegylated doxorubicin, compared
with carboplatin and pegylated doxorubicin alone. This element of the F
inal results from the Phase Ib part of the Phase Ib/II study in ovarian
study is due to start in H1 2016. cancer (H1 2016).
The primary endpoint of this Phase II study will be Progression Free Initiate Phase II proof-of-concept part of the Phase Ib/II study in
Survival (PFS). ovarian cancer (H1 2016).

Therapeutic Companies Project
Sevuparin
Primary indication
Sickle-cell disease (SCD)
Development Phase
Phase II
Holding in company
64%*
Other investors
The Foundation for Baltic
and East European
Studies, Praktikerinvest
Origin
Karolinska Institutet,
Uppsala University
More information
dilaforette.se
Dilaforette AB
through KDev Investments'
Targeting relief for sickle cell

disease patients
Dilaforette, a Swedish drug development company, is developing

sevuparin, an innovative, disease-modifying drug which has the potential
to become the best-in-class treatment for sickle cell disease (SCD).
Sevuparins anti-adhesive mechanism means it has the potential to The market

prevent and resolve the microvascular obstructions experienced by
SCD patients. These obstructions cause the severe pain experienced SCD is an orphan disease with approximately 100,000 patients in the
by patients during Vaso-Occlusive Crises (VOCs) and result in high US and 35,000 patients in Europe. In addition to this, there is a large
morbidity through organ damage as well the risk of premature death. patient pool in the Middle East, India, South America and Africa. The
Preclinical data show that that sevuparin can have rapid and clinically average number of VOCs per patient seeking hospital care is in the
relevant effects on the microvascular obstructions. order of one VOC per year. The commercial impact of a SCD treatment
that reduces hospital stay and the use of opioid analgesics is expected
In October, Dilaforette announced that the first patient had been
to be substantial. A label expansion to include also the preventive
enrolled in a multi-center, double-blind, placebo-controlled Phase II
treatment would expand the market size significantly.
study of sevapurin in hospitalized SCD patients experiencing VOC.
The results from this study are expected in H2 2016.
Recent progress
The trial is targeting 70 evaluable patients who will have been
randomized to receive either an intravenous infusion of sevuparin or Clinical collaboration agreement with Arabian Gulf University (Bahrain)
placebo on top of standard pain medication. for Phase II clinical development of sevuparin for SCD (February 2016).
This proof-of-concept study is designed to demonstrate reduced Start of Phase II clinical trial in SCD (October 2015).
time to resolution of VOC, defined as freedom from parenteral opioid
Sevuparin receives orphan drug designation in SCD from the US FDA
use and readiness for discharge from hospital. Secondary end-points
(March 2015).
include pharmacokinetics and safety.
Entered a co-development agreement with Ergomed for the Phase II
The study is taking place in Europe and the Middle East under a co-
clinical development of sevuparin in patients with SCD experiencing
development deal with Ergomed, which will co-invest a proportion of its
acute VOCs (February 2015).
revenues from the clinical and regulatory activities of this trial in return
for an equity stake in Dilaforette. Sevuparin receives positive opinion from the Committee for Orphan
Medicinal Products (COMP) on orphan drug designation in the EU
Dilaforettes aim is to develop a presentation of sevuparin that could
(January 2015).
be self-administered by SCD patients in a timely manner to prevent
VOCs developing.
Expected milestones
SCD Phase II proof-of-concept results (H2 2016).

Medtech Companies Project
Craniomosaic, Cranioplug
Primary indication
Cranial implants
Development Phase
Marketed
Holding in company
29%*
Origin
Karolinska University
Hospital, Uppsala
University
Other investors
SEB Venture Capital
(Sweden),
Fouriertransform (Sweden)
More information
OssDsign AB ossdsign.com
@OssDsign
Commercializing the best * Includes indirect holdings through
craniofacial implants
KCIF Co-Investment Fund
OssDsign is a pioneer in Orphan Medtech, an evolving segment

within the medtech market. OssDsign commercializes novel cranial
and facial implants, based on its proprietary technology platform,
which possess a combination of biological, mechanical and aesthetic
around the world. The indications are relatively price insensitive and on
features that are combined for its clinical uses.
many markets easy to access from a regulatory perspective.
The use of traditional cranio-facial implant materials result in high
complication rates and also carry the lifetime risk of skin penetration OSSDSIGN Cranial and OSSDSIGN Facial are now commercially
and infection. OSSDSIGN Cranial and OSSDSIGN Facial are available in Germany, the UK and the Nordic countries and under
implants custom-made for the individual patient. What makes regulatory preparation and review in key markets outside of Europe,
OSSDSIGN products different are their biological features, which such as the US.
result in better blood flow, improved healing of the soft tissues
covering the implants as well as improved bone formation over time. Recent progress
Enhanced healing means a better implant solution for patients and
cost savings for hospitals. The OSSDSIGN technology platform New financing round of SEK 93 million closed with participation from
combines a proprietary bioceramic formulation with a reinforcing Karolinska Development, SEB Venture Capital and Fouriertransform.
titanium skeleton based on state-of-the-art computer-aided design, (November 2015).
3D printing and moulding techniques.
CE mark received for Cranioplug, an innovative device for cranial
fixation (January 2015).
Expected milestones
Second wave of launch of OSSDSIGN Cranial and OSSDSIGN

The market
Facial on new EU markets and selected markets outside of Europe.
The market for biomaterials products in orthopaedics was Submission of regulatory file for OSSDSIGN Cranial and Cranioplug
estimated at EUR 1.5 billion in 2013.1 The market for OssDsigns in the United States.
lead product in cranioplasty alone is expected to amount to
approximately EUR 100 million in 2017.
References
OssDsign pursues a focused business strategy on a well-defined 1) Orthopedic Network News, 20 July 2014. Based on US market numbers,
patient population. The advantages are that the targeted procedures extrapolated for the global market.
are carried out in a limited number of easily identifiable hospitals 2) Company estimates.

Medtech Companies Project
HAnano Surface
Application:
Implant surface
Development Phase
Marketed
Holding in company
32%*
Other investors
ALMI Invest,
K-Svets Venture
Origin
Chalmers University
of Technology
More information
promimic.com
Promimic AB * Includes indirect ownership
Coatings that enhance the

properties of orthopedic implants
Promimic is a biomaterials company that develops and markets a

unique coating for implants called HAnano Surface, which accelerates
bone integration and increases the anchoring strength of implants.
HAnano Surfaces key advantage is that it can convert any implant to a
material that resembles human bone and thereby create an improved
The market
osteo-conductive interface between human tissue and the implant.
The implant industry is a large, high-growth market which delivers high
The HAnano Surface is nanometer thin, which helps preserve the profit margins. The competition amongst implant manufacturers is
micro-structure of the implant and reduces the risk of cracks in the fierce and each market segment is dominated by four to eight global
coating. Furthermore, the coating improves the hydrophilicity of the companies. The strategies of many of these companies rely on in-
implant, which increases the possibility for bone cells to attach to the licensing new technologies in order to differentiate their products and
surface. The HAnano Surface has been evaluated in both in vitro and in strengthen their market position.
vivo studies, which have shown that it can reduce healing times. The
coating process is easy to implement in the industrial scale production Promimic has a business model designed to meet these needs. It is
of implants. centered on out-licensing its HAnano Surface technology to leading
implant manufacturers so that they can incorporate it into their products.
In September, Promimic, announced a strategic partnership with
Sistema de Implante Nacional (S.I.N), a leading provider of dental
implants in Brazil. The collaboration includes an extensive development
Recent progress
program of both pre-clinical and clinical studies. It also includes a
Promimics partner S.I.N. initiated the launch of the first dental implant
license to S.I.N. to use HAnano Surface technology with its dental
coated with HAnano Surface at CIOSP, the second largest dental trade
implants. In January 2016, Promimic announced that S.I.N had
show in the world. (January 2016).
launched the first product using Promimics technology.
License agreements signed with S.I.N. (Brazil) on dental implants
In October, Promimic signed a strategic agreement with Amendia Inc.
(September 2015) and Amendia (US) on spinal implants (October 2015).
(US) that will allow Amendia to develop HAnano Surface technology for
use with its patient-focused spinal implants.
Expected milestones
Further license agreements with major manufacturers.

BioArctic / Clanotech Project
BAN2401
Primary indication
Alzheimers disease
Development Phase
Phase II
Ownership
3%
Other shareholders
Pr Gellerfors,
Lars Lannfelt
Origin
More information
bioarctic.se
BioArctic Neuroscience AB
BioArctic develops pharmaceuticals, devices and diagnostic methods

for diseases affecting the central nervous system. The companys most
advanced program is BAN2401, a monoclonal antibody for the treatment
of Alzheimers disease, which has been developed together with Eisai.
Phase II clinical trials of BAN2401 are currently ongoing.
Project
CLT-28643
Primary indication
Adjuvant treatment to
glaucoma surgery
Development Phase
Preclinical
Holding in company
80%*
Other shareholders
Yihai Cao
Origin
More information
clanotech.se
Clanotech AB
Clanotech is developing a treatment that may reduce the risk a complementary treatment with the current standard of care for wAMD
of complications in connection with glaucoma surgeries and in patients to achieve a long-lasting effect given in combination with anti-
the treatment of wet age-related macular (wAMD) degeneration. VEGF treatment.
Clanotechs candidate drug CLT-28643 is an 51-integrin antagonist
in preclinical development and has shown anti-inflammatory properties
as well as and ability to inhibit growth of blood vessels and fibrosis.
Clanotechs pharmaceutical candidate has the potential to be used as

Dilafor / Forendo Project
Tafoxiparin
Primary indication
Protracted labor
Development Phase
Phase II
Ownership
47%*
Other investors
The Foundation for Baltic
More information
and East European
Studies, Praktikerinvest dilafor.com
Origin * Includes indirect ownership

Karolinska Institutet through KDev Investments'
pregnant women with risk for thrombosis, but is not appropriate for routine
Dilafor AB use in pregnant women due to the increased risk of bleeding.
Tafoxiparin has been shown in preclinical studies to enhance ripening of

the uterine cervix and to improve uterine contractility. Subgroup analyses of
Dilafor is developing tafoxiparin, a modified from heparin, to eliminate the a Phase II clinical trial in 263 first-time mothers suggest that fewer women
risk of bleeding during protracted labor. Protracted labor is the main cause treated with tafoxiparin than placebo were in labor that lasted more than 12
of emergency surgical deliveries, such as caesarian section or vacuum hours and the results also suggest a trend towards shortening of labor time.
extraction. The condition is often associated with several complications for A Phase II study is being prepared to confirm these results and also to identify
an appropriate dose. The study is planned to start during 2016. Dilafor has a
both mother and child. Heparin has been shown to shorten labor time in
license agreement for the Chinese market with Lees Pharmaceuticals.
Project
Inhibition of
HSD17B1 enzyme
Primary indication
Endometriosis
Development Phase
Preclinical
Holding in company
18%*
Other investors
Novo A/S,
Novartis Venture Fund,
MS Ventures, Finnvera
Origin
University of Turku, Finland
More information
forendo.com
Forendo Pharma Oy
through KCIF Co-investment Fund
Forendo is developing a new treatment for eliminating endometriosis

while at the same time maintaining normal hormonal cycles. Forendo
is developing a HSD17B1 inhibitor, which has been shown to
effectively block formation of estrogen in human endometriosis cells
ex vivo and, in a primate disease model, to cause regression of
endometriosis and relief of the associated inflammatory pain while
maintaining the normal hormonal cycle.

Inhalation Sciences / Lipidor Project
PreciseInhale
Primary indication
Respiratory precision dosing
Development Phase
Marketed
Holding in company
60%*
Other shareholders
Per Gerde, Stockholms
Affrsnglar, ALMI Invest
Origin
More information
inhalation.se
*Includes indirect ownership through

KDev Investments'
Inhalation Sciences Sweden AB
Inhalation Sciences has developed a patented research and formulation and inhaler device development. The business model
development platform that provides the possibility for companies includes sales of instrumentation and technology transfer of the platform
developing inhaled pharmaceuticals to generate high-quality data to pharmaceutical companies as well services to companies without
during the early development stage. The precision dosing system relevant research and development capabilities.
provides the possibility of examining respiratory aerosols prior to any
Project
AKVANO
Application
Topical drug delivery
Development Phase
Product
Ownership
38%
Other shareholders
Cerbios, Medigelium,
Aurena
Origin
Start-up
More information
lipidor.se
Lipidor AB
The use of topical pharmaceuticals is common in treatment of AKVANO addresses key issues behind the low usage rate seen with
dermatological indications, such as psoriasis and eczema. In many topical formulations.
cases, the formulations are inconvenient and results in reduced patient
Results from a clinical Phase I/II study with calcipotriol formulated
use. Lipidor has developed AKVANO, a water-free lipid formulation
with AKVANO showed effect in patients with psoriasis compared to
that is sprayed on the skin. The formulation is safe, free from irritants,
the marketed formulation of calcipotriol. Lipidor has signed a license
dries quickly and feels pleasant on the skin. AKVANO allows for fast
agreement for cosmetic products with CCS Healthcare AB, one of the
and simple application and has excellent cosmetic qualities. Hence
largest Nordic manufacturer of skin care products.

Umecrine Cognition Project
GABA modulator
Primary indication
Hepatic encephalopathy
Development Phase
Phase I
Holding in company
69%*
Other investors
Fort Knox Frvaring AB,
Partnerinvest vre Norrland
AB and Norrlandsfonden AB
Origin
Ume University, Sweden
More information
umecrine.se
* Includes indirect holdings through
Umecrine Cognition AB KCIF Co-Investment Fund and

Umecrine AB
Umecrine Cognition is developing GR3027 in Phase I trials as a Hepatic Encephalopathy in patients with liver disease, a growing area
potential therapy for several major CNS-related disorders. GR3027 is with high unmet medical need. The current lack of therapeutics that
a GABAA receptor modulating steroid antagonist (GAMSA) designed directly addresses the neurocognitive signs and symptoms of Hepatic
to antagonize GABAA receptor activation by endogenous neuroactive Encephalopathy makes a novel treatment likely to become a major
steroids. The primary focus is to develop a treatment for life-threatening contribution for the treatment of this disorder.
overt Hepatic Encephalopathy and long-term treatment in minimal

Karolinska Developments Share and Shareholders
Ownership structure Share capital

On December 31, 2015, Karolinska Development had 2,884 At year-end 2015, the share capital amounted to SEK 26.7m
shareholders. International investors owned 42.18% of the share distributed among 53,449,640 shares. The quota value is SEK 0.50
capital and 33.68% of the votes. On the same date, institutional per share. The net asset value amounted to SEK 4.7 per share.
investors held 37.86% of the share capital and 50.43% of the votes.
All series A shares (each of which carries 10 votes, compared with
Ticker symbol and listing
1 vote for each B share) are held by Karolinska Institutet Holding AB. Karolinska Developments share trades under the ticker symbol
KDEV. The share is listed on NASDAQ OMX Stockholm in the
Share performance Small Cap Index. The ISIN code is SE0002190926.
The closing price on the first trading day was SEK 13.25, and at
The Convertible Bond
year-end 2015 the share traded at SEK 9.60, a decrease of 27.5%.
Karolinska Developments convertible bond outstanding debt
No dividend was paid in 2015.
December 31, 2015 amounts to SEK 426.9m. The convertible bond is
traded under the ticker symbol KDEV KV1 and listed on NASDAQ OMX
Stockholm with ISIN code SE0006510103.
Shareholders
A-shares B-shares Cap % Vote %

Thai Charoen Pokphand Group 0 4,853,141 9.09% 7.25%
Tredje AP-Fonden 0 4,678,500 8.76% 6.99%
Karolinska Institutet Holding AB 1,503,098 2,126,902 6.80% 25.64%
Coastal Investment Management LLC 0 3,470,541 6.50% 5.19%
stersjstiftelsen 0 3,345,537 6.27% 5.00%
OTK Holding A/S 0 1,900,000 3.56% 2.84%
Stift Fr Frmjande & Utveckling AV 0 1,397,354 2.62% 2.09%
Foundation Asset Management AB 0 1,392,035 2.61% 2.08%
Derumi Investeringar AB I Konkurs 0 1,357,555 2.54% 2.03%
Ramsbury Invest AB 0 1,261,278 2.36% 1.88%
Sum top 10 shareholders 1,503,098 25,782,843 51.11% 60.99%
Sum other shareholders 0 26,163,699 48.89% 39.01%
Sum all shareholders 1,503,098 51,946,542 100.00% 100.00%
As of 31 December 2015
Source: Euroclear

Board of Directors
Bo Jesper Hansen Tse Ping
Chairman and Board member since 2013. Born 1958. MD PhD. Vice Chairman and Board member since 2015. Born 1952. Honorary
Other appointments Chairman of Swedish Orphan Biovitrum AB. Doctorate, Fil Dr hc. Other appointments Founder and Chairman of
Board member of GenSpera Inc., Newron SA, Ablynx NV, Orphazyme Sino Biopharmaceutical Limited, one of the largest and most successful
A/S and CMC Kontrast AB. Previous appointments include various pharmaceutical companies in Hong Kong. Mr. Tse Ping is also Vice
positions in Swedish Orphan International AB since 1993, including Chairman of Charoen Pokphand Group (CP Group), the largest company
CEO 19982010. Medical advisor for Synthlabo, Pfizer, Pharmacia in Thailand, where he has extensive experience of major merger and
and Yamanouchi. Founder of Scandinavian Medical Research. acquisition activity including Ping An Insurance, CITIC Group, China
Holdings in Karolinska Development SEK 400,000 convertible loan. Mobile, ITOCHU Corporation, and Marko Group. Previous appointments
include Member of the Ninth, Tenth, and Eleventh National Committee
of the Chinese Peoples Political Consultative Conference. Holdings in
Karolinska Development 4,853,141 shares and SEK 272,858,294 in
convertible bonds (by related legal person).
Niclas Adler Vlad Artamonov

Board member since 2015. Born 1971. PhD MSc. Other appointments Board member since 2012. Born 1978. MBA BSc. Other
Managing Partner Accelerated Innovation Ltd, President Indonesian appointments Board Member of Redbank Energy Ltd. and of
International Institute for Life-sciences, Chairman PT Accelerated Coastal Capital International Ltd., Managing Partner at Coastal
Value, Chairman e-Cognition PTE Ltd, Chairman ITH Immune Therapy
Capital International Ltd. Previous appointments include Investment
Holdings AB, Chairman TLA Targeted Immunotherapies AB, Chairman
Analyst at Greenlight Capital Inc., position in the Global Merger
Accelerated Drug Development AB and Babson Global Professor of
& Acquisition Group at Merrill Lynch in New York. Holdings in
Entrepreneurship Practice. Previous appointments include President
IPMI International Business School, Jakarta, Director Truepoint Partners, Karolinska Development 3,470,541 shares (by related legal person).
Boston, Fellow, Sunningdale Institute, London, Fellow, Centre For
International Business and Management, Judge Business School,
Cambridge University, CEO Jnkping International Business School,
Director FENIX Center for Innovations in Management, Stockholm
School of Economics, Executive Director, Stockholm School of
Entrepreneurship. No holdings in Karolinska Development.

Khalid Islam Carl Johan Sundberg
Board member since 2015. Born 1955. PhD. Other appointments Board member since 2014. Born 1958. Professor of Physiology. Other
Chairman of Fennec Pharma Inc. and Minoryx Therapeutics SL.; appointments Board Director of Cobra Biologics AB, Board Director
Board member of Oxthera AB and Molmed SpA.; Advisor to Kurma of Saniona AB, member of Karolinska Institutet Innovation Council,
Biofund, member of the Editorial Board of Current Drug Discovery research director of the Unit of Bioentrepreneurship, Fellow of the Royal
& Technologies. Previous appointments include President and CEO Swedish Academy of Engineering Sciences, member of the Medical
of Gentium SpA and Arpida AG and various leadership positions in Commission of the International Olympic Committee, Inspector General
research and development in Hoechst Marion Roussel (HMR) and of the Medical Association and Chairman of Research!Sweden. Previous
Marion Merrell Dow (MMD). No holdings in Karolinska Development. assignments include Investment Director at Karolinska Investment Fund,
Board Director of Global Genomics AB, AngioGenetics AB, NsGene AS,
Cellectricon AB, Alfta Rehab Center Holding AB, Karolinska Education
AB and Feelgood Swedish AB, Vice President of Euroscience and
Chairman of the Swedish Professional Associations for Physical Activity
and Sports Medicine. No holdings in Karolinska Development.
Henrijette Richter Hans Wigzell
Board member since 2014. Born 1971. PhD MSc. Other appointments Board member since 2006. Born 1938. Professor Emeritus of
Partner at Sofinnova Partners, Paris and board member of Asceneuron Immunology and MD. Other appointments Chairman of Rhenman &
SA.. Previous positions include Investment Director at Novo Seeds, Novo Partner Asset Management AB. Board member of Swedish Orphan
A/S (2007-2014) where she served on the boards of Cytoguide ApS, Biovitrum AB, Valneva SA, Sarepta Therapeutics Inc. and RaySearch
Avilex Pharma ApS, Affinicon ApS, Orphazyme A/S and EpiTherapeutics Laboratories AB. Member of The Royal Swedish Academy of
A/S. In addition she is on the Board of Directors for the Green Engineering Sciences and of the Royal Swedish Achademy of Sciences.
Development and Demonstration Programme (GUDP) of the Danish Food, Previous assignments include, among others, the President of Karolinska
Agriculture and Fisheries Ministry. No holdings in Karolinska Development. Institutet's Nobel Committee, and President of Karolinska Institutet
and Director General of Smittskyddsinstitutet. Holdings in Karolinska
Development 8,491 shares and SEK 39,992 convertible loan.

Management Team
Jim Van heusden Viktor Drvota

Chief Executive Officer Chief Investment Officer
Appointed in 2015. Born 1971. PhD. Jim has more than 20 years Appointed in 2016. Born 1965. MD PhD. Associate Professor in
experience within life science investments, research and development Cardiology. Viktor has more than 13 years of investment experience with
within the pharmaceutical industry. He is currently a Board director several investments, significant fundraisings, IPOs and exits. He was
at Dilaforette and Aprea. Previously, he was Founder and Managing responsible for Life Sciences at SEB Venture Capital 2002-2016. During
Director at bioskills (2013-2015) and a Partner at the European his appointment at SEB VC he served as a Board member of several
investment company Gimv (2001-2013). During his appointment at biotech and medtech companies including Arexis AB, SBL Vaccin AB,
Gimv he also served as a Board member in several biotech companies Nuevolution AS, Index Pharma AB, Scibase AB, Airsonett AB among
others. Before joining SEB, Viktor worked as Senior Consultant and
including Multiplicom NV (as Chairman), Ablynx NV, ActoGeniX NV,
Associate Professor in Cardiology at the Karolinska Institutet/Hospital,
Pronota NV and Prosensa. During 1993-2001, Jim worked as Senior
Stockholm. He has experience from preclinical as well as clinical research
Scientist at Janssen Pharmaceuticals (Johnson & Johnson). Holdings in
in drug development and medical devices. Viktor has 29 published
Karolinska Development 93,668 shares.
research articles. No holdings in Karolinska Development.
Christian Tange Ulf Richenberg

Chief Financial Officer General Counsel
Appointed in 2014. Born 1966. MSc in Economics and Business Appointed in 2008. Born 1955. Master of Laws. Ulf has 25 years
Administration. Christian has over 15 years experience in experience in business law, including positions as legal counsel of
international growth companies including 12 years within life sciences KIHAB, Esselte AB and Vattenfall, General Counsel of AB Stokab and
as global CFO for CMC Biologics from 2003-2012 and Business Scribona AB and business law consultant at FOI. Other appointments
Controller for Warner Lambert Nordic from 1997-2000. Christian include Chairman of KCIF Fund Management AB. Board member of KD
has also acted as an industrial advisor and consultant for Private Incentive AB. Holdings in Karolinska Development 31,967 shares and
Equity Funds and Corporate Finance Advisors in M&A deals within life SEK 15,543 in convertible loan.
science. Other appointments include Chairman of Dilafor AB, Board
member of Promimic AB and KDev Investments' AB. Holdings in
Karolinska Development 70,278 shares.

Employees
Elisabet Gimbringer Eva Montgomerie

Controller Head of Accounting
Employed since November 2015. Born 1965. Economics and Business Employed since October 2013, Employed within the group since 2007.
education from Stockholm University. Elisabet has worked as an Born 1958. MSc in Business and Economics. Eva has worked within
approved public accountant for 10 years, and as a financial manager, the banking and finance sector for 12 years, 10 years within the food
business controller and financial controller for a number of different and clothing sector and 7 years within life sciences. Other appointments
companies and fields for the last 15 years. Other appointments Board include Finance manager in Dilafor AB and Pharmanest AB. No holdings
member of KD Incentive AB. No holdings in Karolinska Development. in Karolinska Development.

Directors Report
Directors Report
The Board of Directors and the CEO of Strengthened and streamlined organization
Karolinska Development AB (publ), corporate Karolinska Development strengthened its organization, bringing in
identity number 556707-5048, hereby present significant investment and operational experience, and put in place a
their annual report and consolidated accounts new structure to support its investment strategy.
for the financial year 2015. In March 2015, Jim Van heusden was appointed Chief Executive Officer.
Karolinska Development AB (Nasdaq Stockholm: KDEV) is a Nordic
life sciences investment company. The company focuses on identifying In December 2015, Viktor Drvota was appointed as Chief Investment Officer.
medical innovation and investing in the creation and growth of
companies developing these assets into differentiated products that will Also in December it was communicated that Terje Kalland, the
make a difference to patients lives and provide an attractive return on Companys Deputy Chief Executive Officer and Chief Scientific Officer,
investment to its shareholders. would retire from both positions effective December 31, 2015.
Karolinska Development has access to world-class medical innovations

at leading universities and research institutes in the Nordic region,
A more balanced and focused portfolio
including the Karolinska Institutet. The Company aims to build Karolinska Development successfully completed a portfolio review
companies around innovative products and technologies, supported during 2015. This resulted in a streamlined portfolio consisting of
by experienced management teams and advisers, and co-funded by companies considered by the company to have the best chances of
specialist international life science investors, to provide the greatest developing innovative medicines or medtech products that meet a
chance of success. clear medical need, and of delivering attractive returns to shareholders.
Karolinska Developments portfolio comprises 12 companies As a result, the portfolio comprised 12 companies at the end of
developing innovative treatments for life-threatening or serious December 2015, compared with 21 companies at the end of 2014.
debilitating diseases.
Karolinska Development believes it is crucial to invest in companies
The Company is led by a team of investment professionals with that are developing highly differentiated and commercially attractive
strong investment backgrounds, experienced company builders and products. This is because it is increasingly clear that potential
entrepreneurs, with access to a strong global network. pharmaceutical/medtech partners, driven by the demands of
healthcare payers, are focused on gaining access to novel products
that can deliver both compelling clinical and health economic benefits.
Significant Events During

the Financial Year
This focus on novel products carries a higher degree of risk, which will
be managed in the following ways:
L
everage networks to bring new investors onboard
Karolinska Development and add experienced people to leadership teams
and boards of portfolio companies.
Progress executing new strategy
Karolinska Development made good progress during 2015 in executing D
iversify the portfolio through better-qualified investment
its strategy designed to transform the company into a leading Nordic opportunities originating from a broader range of potential
life sciences investment company focused on generating attractive collaborators, including Karolinska Institutet.
and consistent returns for our shareholders. The Company is now well
positioned to build future value through its more focused portfolio and
through new investments.

Creating new investor syndicates
to finance portfolio companies
Selected Portfolio Companies
Karolinska Development aims to ensure that its portfolio companies
are financed to deliver success and also to proactively syndicate Aprea
deals with experienced international life sciences focused investment
In June, Aprea reported updated preliminary data from its ongoing Phase
firms. Significant progress has been made during 2015 with more
Ib/II clinical study with APR-246, which suggested that APR-246 could
than 30% of the funds invested in the portfolio companies OssDsign
be effective in combination with chemotherapy in treating ovarian cancer.
and Inhalation Sciences being contributed by new external investors,
increasing to 70% following the recent SEK 437m Aprea financing in APR-246 is a first-in-class small molecule drug candidate that re-activates
March 2016. The current level of funding provides sufficient runway to the dysfunctional (mutated) p53 tumor suppressor protein and represents
unlock the potential value of companies within the portfolio. a potentially transformational mechanism for treating multiple cancer types.
In addition to providing syndication opportunities, Karolinska In July, Aprea strengthened its leadership team with the appointment of
Development anticipates that the relationships being built with experienced pharma executive Bernd R. Seizinger as Executive Chairman.
specialist international investors will provide access to a broader
deal flow. This therefore provides more opportunities to generate Dilaforette
greater returns while at the same time allowing the risk profile of the
overall portfolio to be better managed. The Company also believes In October, Dilaforette initiated a Phase II clinical trial with sevuparin in
that these relationships will further benefit investee companies patients with sickle-cell disease (SCD) experiencing a vaso-occlusive
through increased access and exposure to extended international crisis (VOC). Sevuparin acts to prevent and resolve the microvascular
networks and expertise. obstructions experienced by SCD patients, which cause the severe
pain experienced by patients during VOC and result in high morbidity
New funds raised for divested companies, through organ damage as well the risk of premature death. A co-
future value retained development agreement was signed with Ergomed in February 2015
to conduct the trial. Sevuparin received orphan drug designation in
In addition to the important funds raised for Karolinska Developments SCD in the US in March 2015 and a positive opinion on orphan drug
existing portfolio companies, more than SEK 70 million was invested
designation in the EU in January 2015.
by new syndicates in companies that were divested during the year
(Athera Biotechnologies, XSpray Microparticles and Pharmanest).
As part of these divestments, Karolinska Development retains an
OssDsign
economic interest in the future value of these companies via earn-out In November 2015, OssDsign raised SEK 93 million in an
agreements. All of these financings provide external validation of the equity financing led by new investors SEB Venture Capital and
technologies and products being developed by these companies. Fouriertransform, with continued investment from Karolinska
Development. The proceeds will be used for the market expansion of
Nordic focus for new investments OssDsigns product line of unique craniofacial implants, which combine
Karolinska Developments new investment strategy aims to capitalize biological, mechanical and aesthetic features to enhance soft tissue
on opportunities based on world-class medical innovation across the and bone healing.
entire Nordic region, including more mature investments where returns
may be realised more quickly than from early stage companies. Promimic
In October, Promimic signed a strategic agreement with Amendia Inc. (US)
As part of this strategy, a new non-exclusive agreement was signed
that will allow Amendia to develop Promimics HAnano Surface technology
with Karolinska Institutet Holding AB (KIHAB) that will enable Karolinska
Development to look at broader investment opportunities across the for use with its patient-focused spinal implants. HAnano Surface is a
region while continuing to see high-quality opportunities at KIHAB nanometer-thin coating that accelerates bone integration and increases
based on its expected co-investment in a new planned incubator fund, the anchoring strength of implants, thereby enhancing healing.
expected in 2016.
The new incubator initiative and fund aims to focus on identifying

potentially valuable new medical innovations at Karolinska Institutet
at an early (pre-seed) stage. This initiative will provide project
management and funding to these pre-seed ideas to establish a strong
commercial proposition prior to company formation.
Karolinska Development expects to participate in the new incubator

fund alongside a select group of other specialist life sciences investors,
and as a results anticipates having the ability to co-invest in the most
promising investment opportunities.

Divestments investors, Fort Knox Frvaring AB, Partnerinvest vre Norrland AB and
Norrlandsfonden join Karolinska Development in this new financing
As noted above, more than SEK 70 million was invested by new round. The first patients have been enrolled into the Phase I clinical trial.
syndicates in companies that were divested by Karolinska Development
during the year, with Karolinska Development retaining an economic Akinion halts development of AKN-028
interest in the future value of these companies via earn-out agreements.
In March, Akinion halted development of its lead product candidate
In December, Karolinska Development divested its entire shareholding AKN-028, which was being evaluated in a Phase I/II clinical study
in the drug development company Athera Biotechnologies to a for acute myeloid leukemia (AML), due to a small number of patients
consortium led by The Foundation for Baltic and East European Studies experiencing severe liver toxicity. As a consequence, Karolinska
(stersjstiftelsen) and Industrifonden in an earn-out agreement. The Developments portfolio Net Fair Value was decreased by SEK 78 million.
consortium is investing SEK 24 million into Athera to fund further clinical
development of its lead project PC-mAb, currently in clinical Phase I Dilaforette signs clinical collaboration
studies, to become a Phase II-ready project. agreement
In February 2016, Dilaforette signed an agreement with Arabian Gulf
In September, the entire shareholding in drug delivery company XSpray University (AGU) to support the Phase II proof of concept study with
Microparticles AB was divested to a consortium led by stersjstiftelsen sevuparin in SCD patients. AGU will provide up to 1.2 million USD
and Recipharm Venture Fund. The consortium is investing SEK 18 million in non-dilutive funding for the study and assist with patient recruitment.
into XSpray to fund the clinical development of its lead compound, XS004, In return, AGU will receive capped royalties on future product revenues.
developed with its proprietary HyNap drug formulation technology. The study is currently enrolling patients at several clinical sites in the
Middle East.
In July, it was announced that Pharmanest would receive SEK 28
million in new investment from stersjstiftelsen, Recipharm Venture Other portfolio company developments
Fund AB and Praktikerinvest AB. The funds will be used for the further
development of Pharmanests SHACT topical pain relief product for use In January 2016, OssDsign received CE mark approval for Cranioplug, an
in conjunction with insertion of intra-uterine devices to the point of its first innovative device for cranial fixation. Also, in January, Promimic announced
regulatory approval submission in Europe. that its strategic partner Sistema de Implante Nacional had initiated the
launch of the first dental implant coated with HAnano Surface.
The investments in Axelar, NeoDynamics, NovaSAID, Pergamum
and Asarina Pharma (previously Umecrine Mood) were also
written off during the period following extensive efforts to secure
additional financing, licensing deals or M&A solutions. Financial Development
for the Investment Entity
Significant Events after the in 2015
Balance Sheet Date
Development in Fair Value
Aprea raised SEK 437 million in a Series B During the period January-December 2015, the Investment Entitys
financing round operating loss amounted to SEK -1,020.3m (SEK -367.9m), of which
the effect of the change in fair value of portfolio investments amounted
In March 2016, Aprea announced it raised SEK 437 million in a Series to SEK -976.5m (SEK -306.1m). The effect of the change in fair value is
B financing from a syndicate of specialist international life science mainly due to the more representative portfolio valuation implemented
investors led by Versant Ventures and 5AM Ventures (both US), and starting in the second quarter, companies divested with an earn-out
including Sectoral Asset Management (Canada), and HealthCap model where fair value has been reduced to zero and companies
(Sweden) as local lead. The funds raised are to advance the clinical where fair value has been reduced to zero:
development of APR-246 in ovarian cancer, to explore its use in other
cancer indications and to build a presence in the US. The fundraising
is the largest ever completed by a Karolinska Development portfolio
company and more broadly by any private life science company in Adoption of a more representative approach to valuing early stage
Sweden in over a decade. companies amounts to SEK -431m
Umecrine Cognition raises new funds,

Portfolio companies divested and fair value reduced to zero but with
initiates Phase I clinical study a potential proceed from an earn-out agreement
In March, Umecrine Cognition completed a private financing round - Athera Biotechnologies AB, amounts to SEK -89.0m
that will support the clinical development of its lead drug candidate - Pharmanest AB, amounts to SEK -124.8m
GR3027 for hepatic encephalopathy in liver disease patients. New - XSpray Microparticles AB, amounts to SEK -84.7m

Portfolio companies where fair value has been reduced to zero as with SEK 331.7m (SEK 85.9m) through issues of new shares and
a consequence of Karolinska Development implementing its new convertibles, while shares were repurchased for SEK 0.0m (SEK 0.0m).
strategy and focusing its portfolio:
Investments in portfolio companies
- NeoDynamics AB, in the amount of SEK -11.1m
- NovaSAID AB, in the amount of SEK -74.4m Investments in portfolio companies during the year amounted to
- Pergamum AB, in the amount of SEK -138.1m SEK 130.8m (SEK 91.6m).
- Asarina Pharma AB (previously Umecrine Mood AB), in the
amount of SEK -59.2m Investments during the year in KDev Investments portfolio amounted
to SEK 83.5m (Dilaforette Holding AB, SEK 17.4m; Akinion
Other adjustments in the fair value and reduced amount potentially Pharmaceuticals AB, SEK 18.0m; Aprea AB, SEK 36.6m; Dilafor AB,
to be paid to Rosetta Capital from proceeds in KDev Investments' SEK 2.9m; Clanotech AB, SEK 5.1m; Promimic AB, SEK 3.5m) as well
amounts to SEK -36m as in Umecrine Cognition AB, SEK 21.5m; OssDsign AB, SEK 21.9m;
XSpray Microparticles AB, SEK 3.0m; Pharmanest AB, SEK 0.6m; and
KDev Oncology AB, SEK 0.3m.
SEK 130.8M were invested in portfolio companies during 2015 and the
change in Fair Value amounts to SEK -845.8m.
Results Financial Development

The Investment Entitys loss before tax during the year amounted to for the Parent Company
SEK -1,054.7m (SEK -371.5m).
in 2015 (SEKm)
Financial position
The Investment Entitys equity to total assets ratio was 40% (95%) on 31 During 2015, the Parent Companys operating loss amounted to
December 2015 and equity amounted to SEK 247.9m (SEK 1,256.8m). SEK -839.3m (SEK -289.4m), a change of SEK -549.9m compared
with the same period in 2014.
Cash, cash equivalents and short-term investments in the
Investment Entity amounted to SEK 297.2m (SEK 141.3m), of During 2015, impairment losses were recognized on the holdings in KDev
which SEK 50.2m is provisionally allocated for anticipated follow- Investments' AB, SEK -571.1m; Athera Biotechnologies AB, SEK -89.0m;
on investments in the KDev Investments' portfolio. Total assets XSpray Microparticles AB, SEK -60.8m; Pharmanest AB, SEK -39.3m;
amounted to SEK 614.5m (SEK 1,321.6m). Lipidor AB, SEK -11.1m; Umecrine AB, SEK -6.5m; share of result in KCIF
Co-Investment Fund KB, SEK -16.6m; KDev Oncology AB, SEK -0.6m;
Cash flow KCIF Fund Management AB, SEK -0.2m; and KD Incentive AB,
Cash flow for the Investment Entity amounted to SEK 6.7m (SEK -22.4m) SEK -0.2m. Impairment losses totaled SEK -795.5m (SEK -227.6m).
in 2015. Cash flow from operating activities amounted to SEK -325.0m
The Parent Companys net loss during the year amounted to
(SEK -108.0m). Financing activities provided the Investment Entity
SEK -883.5m (SEK -290.8m).
2015 Investments
OSSDsign 22 / 47
Aprea 37 / 3
Dilaforette H. 17 / 5
Umecrine Cognition 21
Akinion 18 / 2
Dilafor 3/5
Clanotech 5/1
Umecrine Mood 5
Lipidor 5
Promimic 3
Xspray 3
Inhalation Science Sweden 2
Investments by Karolinska Development
Pharmanest 1 Investments by other investors

Corporate Governance Future development
Report Historically, Karolinska Development has financed its operations through

issuing shares. Going forward, long-term capital requirements are
expected to be covered by a combination of issuing shares and from cash
The Corporate Governance Report is in a separate document. flow generated by exits of portfolio companies and licensing agreements.
Remuneration guidelines for the CEO Karolinska Development does not provide any forecasts with regard to
the divestment of portfolio companies.
and other senior executives as well
as other conditions
Environment and responsibilities
Remuneration guidelines for senior executives are prepared and
Karolinska Developments operations do not involve any special
approved by the Board of Directors. The guidelines are adopted by the
environmental risks and do not require any special environmentally
Annual General Meeting 2015, see note 5.
related permits or authorizations from authorities. Karolinska
Development undertakes its operations according to the applicable
Board of Directors proposal for
health and safety regulations and offers its employees a safe and
remuneration guidelines for senior executives
sound working environment.
to the Annual General Meeting 2016
Karolinska Development shall maintain remuneration levels and terms

required to recruit and retain senior executives with the competence and
experience needed to achieve the Companys operational goals. Total
Information on Risks
remuneration to senior executives must be competitive, reasonable and and Uncertainties
appropriate. Fixed base salary is determined based on the individuals
area of responsibility and experience. Variable salary (i) is formulated
with the aim of encouraging Karolinska Developments long-term Valuation risks
value creation; (ii) be based upon criteria that are predetermined, clear,
measurable and can be influenced; (iii) has established limits for the Companies active in pharmaceutical development and medical
maximum outcome; and (iv) is not pensionable income. If terminated by technology at an early phase are, by their very nature, difficult to value,
the Company, the term of notice is six months. as lead times are very long and development risks are high. Due to the
uncertainty in these assessments and the subjectivity in the inputs, the
Share capital and owner estimated value of the portfolio may deviate substantially from future
generated value. This is largely due to sensitivities in the valuation
Karolinska Developments share capital at the end of the year amounted calculations to movement of expected milestone or exit dates, costs
to SEK 26.7m distributed into 53,449,640 shares with a quota value of trials and similar assumptions, which are not necessarily accounted
of SEK 0.5, of which 1,503,098 were A-shares and 51,946,542 were for in arriving at an actual deal value in negotiations with partners.
B-shares. The A-shares carry 10 votes per share and the B-shares carry Financing strategy decisions can have an effect on valuations.
one vote per share. As the largest shareholders Thai Charoen Pokphand
Group held a total of 4,853,141 shares representing 9.1 per cent of the Investment risks
capital and 7.25 per cent of the votes, Tredje AP-Fonden held a total of
4,678,500 B-shares representing 8.76 per cent of the capital and 6.99 Risks and uncertainties are primarily associated with investments
per cent of the votes, Karolinska Institutet Holding AB held a total of in portfolio companies and the development of projects in these
1,503,098 A-shares and 2,126,902 B-shares, representing 6.8 per cent companies. The operations of the portfolio companies consist of
of the capital and 25.6 per cent of the votes. the development of early stage pharmaceutical projects. By their
very nature such operations are distinguished by very high risk and
Holding of treasury shares uncertainty in terms of results.
At year-end, the company held 244,285 treasury shares, Financial risks

corresponding to SEK 122,143 of the share capital, and the
consideration paid totaled SEK 4.7m. The purpose of the share Financial risks consist of investments in the form of equity and debt
repurchases is to cover social security costs related to the incentive instruments in portfolio companies as well as risks in the management
programs PSP 2012, PSP 2013 and PSP 2014. of liquid assets.

Future financing needs
Karolinska Development invests in companies deemed to generate

considerable returns. Development of the portfolio companies
research projects will require capital contributions by their investors in
order to capitalize on the value potential. The portfolio companies have
no guarantees that required capital will be obtained to finance their
projects on favorable terms, or that such capital may be obtained at all.
Karolinska Development maintains a strategy to continuously invest in

the portfolio companies in syndicate with other investors. If portfolio
companies are not successful in attracting other investors, Karolinska
Development may choose to invest alone. If Karolinska Development
chooses not to invest in the portfolio companies, investments may be
made solely by other investors, which may have a negative impact on
the valuations of portfolio companies.
Priorities must be made to optimize returns. Portfolio companies may

fail to achieve milestones or meet development milestones according
to plan. In such cases, investors may decide to discontinue investing
in a project. If so, the portfolio companies may have to limit their
operations. Karolinska Developments shareholdings may also be
diluted by other investors, and other investors may refrain from
co-investing on equal terms.
Investments in existing portfolio companies during 2016 are expected to

decrease compared to the previous year as a consequence of several
companies being fully financed until next value-inflection point and
due to Karolinska Developments strategy of investing in syndication
with other investors. Several companies are expected to enter license
agreements with partners, receive non-dilutive grants such as EU
contributions, and third party investments are expected to increase.
Investments in new portfolio companies are expected to increase

during 2016.
Uncertainty in forecasts
Judgments and assumptions about the future outcome of

development projects involving pharmaceuticals and medical
technology are always associated with great uncertainty. There are no
guarantees of the accuracy of forecasted developments.
For a detailed description of risks and uncertainties, see pages 53-55.

Multi-year summary
Investment Entity
2014 2013 2012 2011 2010

SEK m 2015 (restated) (restated) (restated) (restated) (restated)
Income statement
Net sales 3 5 5 4 2 11
Operating expenses -47 -69 -64 -60 -64 -57
Result from change in fair value -976 -306 -533 121 -176 -233
Result from sale of shares in portfolio companies - 2 - - - -
Operating profit/loss -1,020 -368 -592 65 -238 -279
Financial net -34 -4 41 -22 -6 6
Profit/loss after financial items -1,054 -372 -551 43 -244 -273

Balance sheet
Tangible non-current assets - 1 1 - - -
Shares in portfolio companies 268 1,113 1,336 1,827 1,547 1,455
Loans receivable from portfolio companies - 12 6 13 4 -
Other financial assets 38 38 38 9 - -
Total non-current assets 306 1,164 1,381 1,849 1,551 1,455

Other current assets 11 17 5 6 7 101
Short-term investments 278 128 165 174 457 137
Cash and cash equivalents 20 13 35 109 68 73
Total current assets 309 158 205 288 532 311
Total assets 614 1,322 1,586 2,137 2,083 1,765

Equity 248 1,257 1,565 2,116 2,075 1,755
Long-term liabilities 355 35 9 11 - -
Current liabilities 12 30 12 11 8 9
Total liabilities and equity 614 1,322 1,586 2,137 2,083 1,765
Cash flow
Cash flow from operating activities -325 -109 -71 43 -568 -304
Cash flow from financing activities 332 86 -2 -2 563 -7
Cash flow for the year 7 -22 -73 41 -5 -311
Key ratios
Capital employed 603 1,292 1,574 2,126 2,075 1,755
Return on equity -425% -30% -35% 2% -12% -16%
Return on capital employed -175% -29% -35% 2% -12% -16%
Equity to total assets ratio 40% 95% 99% 99% 100% 99%
Average number of employees 13 13 14 16 16 15
Data per share

Profit/loss after tax, SEK -19.84 -7.64 -11.38 0.89 -5.56 -8.22
Equity, SEK 4.6 23.6 32.4 43.6 42.7 52.7
Net asset value, SEK 4.7 23.7 32.5 43.8 42.8 49.9
Share price at year-end, SEK 9.6 13.3 30.9 15.30 25.80 -
Dividend, SEK 0.0 0.0 0.0 0.0 0.0 0.0
Share price/Equity per share 207% 56% 95% 35% 60% -
Share price/Net asset value per share 206% 56% 95% 35% 60% -
Number of shares at year-end 53,449,640 53,384,558 48,531,417 48,531,417 48,531,417 33,331,417
Weighted average number of shares before
and after dilution 53,151,328 48,606,243 48,350,016 48,529,767 43,908,951 33,263,938

Proposed appropriation of profit (SEK)
The following earnings are available for appropriation by the Annual
General Meeting:
Retained loss -793,043,033

Share premium reserve 1,884,309,378
Net profit/loss for the year -883,504,747
Total 207,761,598
The Board of Directors proposes that profits brought forward be

appropriated as follows:
To be carried forward 207,761,598
Total 207,761,598
For information regarding the operating results and financial position

of the Investment Entity and the Parent Company, refer to the
following income statements, balance sheets, statements of cash
flow and accompanying notes. Unless otherwise stated, all amounts
are reported in thousands of Swedish kronor (SEK 000).

Financial Statements
Financial Statements
Income statement for the Investment Entity

SEK 000 Note 2015 2014 (restated)
Revenue 2 2,942 5,030
Other external expenses 3,4 -15,363 -16,447
Personnel costs 5 -31,167 -51,933
Depreciation of tangible non-current assets -212 -212
Change in fair value of shares in portfolio companies 17 -976,488 -306,072
Result from sale of shares in portfolio companies - 1,745
Operating profit/loss -1,020,288 -367,889
Interest income 2,460 637
Interest expenses -40,058 -4
Other financial gains and losses 6 3,213 -4,232
Financial net -34,385 -3,599
Profit/loss before tax -1,054,673 -371,488
Other external expenses
Personnel costs 7 - -
Depreciation of tangible non-current assets -1,054,673 -371,488
Earnings per share

Earnings per share, weighted average, before and after dilution -19.84 -7.64
Number of shares, weighted average 13 53,151,328 48,606,243
Consolidated statement of comprehensive income for the Investment Entity

Net profit/loss for the year -1,054,673 -371,488
Total comprehensive income/loss for the year -1,054,673 -371,488

Balance sheet for the Investment Entity
31 Dec 2014 1 Jan 2014

SEK 000 Note 31 Dec 2015 (restated) (restated)
Assets
Non-current assets
Tangible non-current assets 8 106 317 529
Shares in joint ventures and associated companies 9 267,651 1,113,454 1,336,406
Loans receivable from portfolio companies 10 914 12,062 5,894
Other financial assets 17 38,113 38,113 38,113
Total non-current assets 306,784 1,163,946 1,380,942
Current assets
Accounts receivable - - 3
Receivables from portfolio companies 3,549 895 254
Other short-term receivables 11 5,995 3,103 3,225
Prepaid expenses and accrued income 12 897 12,364 1,477
Short-term investments 17 277,646 128,443 165,334
Cash and cash equivalents 17 19,589 12,885 35,323
Total current assets 307,670 157,690 205,616
TOTAL ASSETS 614,460 1,321,636 1,586,558
Equity and liabilities

Equity
Share capital 13 26,725 26,692 24,266
Share premium 1,874,236 1,828,844 1,768,179
Retained earnings including net profit/loss for the year -1,653,080 -598,724 -227,900
Total equity 247,881 1,256,812 1,564,545
Long-term liabilities
Convertible loan 14 349,205 22,858 -
Other financial liabilities 17 5,439 11,686 9,438
Total long-term liabilities 354,644 34,544 9,438
Current liabilities
Accounts payable 1,444 4,668 2,426
Liabilities to portfolio companies 513 442 442
Other current liabilities 15 4,425 1,023 1,593
Accrued expenses and prepaid income 16 5,553 24,147 8,114
Total current liabilities 11,935 30,280 12,575
Total liabilities 366,579 64,824 22,013
TOTAL EQUITY AND LIABILITIES 614,460 1,321,636 1,586,558

Statement of changes in the Investment Entitys equity
Equity attributable to Investment Entitys shareholders
SEK 000 Note Share capital Share premium Retained earnings Total
Opening equity at 1 Jan 2015 13 26,692 1,828,844 -598,724 1,256,812
Net profit/loss for the year -1,054,673 -1,054,673
Total comprehensive income/loss for the year -1,054,673 -1,054,673
Convertible loan - equity component 49,528 49,528
Issue costs -4,136 -4,136
Effect of incentive programs 317 317
Share issue 33 33
Closing equity at 31 Dec 2015 26,725 1,874,236 -1,653,080 247,881

Opening equity at 1 Jan 2014 24,266 1,768,179 165,159 1,957,604
Effect of change in presentation of Net Fair Value -393,059 -393,059
Opening equity at 1 Jan 2014 (restated) 13 24,266 1,768,179 -227,900 1,564,545
Net profit/loss for the year -371,488 -371,488
Total comprehensive income/loss for the year -371,488 -371,488
Share issue 2,426 60,665 63,091
Closing equity at 31 Dec 2014 (restated) 26,692 1,828,844 -598,724 1,256,812

Opening equity at 1 Jan 2013 13 24,266 1,768,179 323,060 2,115,505
Effect of change in presentation of Net Fair Value -393,059 -393,059
Effect of incentive programs 1,897 1,897
Share repurchase -2,483 -2,483
Closing equity at 31 Dec 2013 (restated) 24,266 1,768,179 -227,900 1,564,545

Statement of cash flows for the Investment Entity
Operating activities
Operating profit/loss -1,020,288 -367,889
Adjustments for items not affecting cash
Depreciation 8 212 212
Change in fair value 17 976,488 306,072
Result from sale of portfolio companies - -1,745
Other items 176 17,253
Proceeds from short-term investments 736 1,478
Interest received/paid 122 356
Cash flow from operating activities before changes -42,554 -44,263
in working capital and operating investments

Cash flow from changes in working capital
Increase (-)/Decrease (+) in operating receivables 2,551 -12,175
Increase (+)/Decrease (-) in operating liabilities -18,346 1,117

Operating investments
Sale of shares in portfolio companies - 1,923
Investments in shares in portfolio companies 33,34,35 -119,292 -77,326
Loans provided to portfolio companies 10 - -15,712
Sale of short-term investments - 38,049
Acquisitions of tangible non-current assets -147,382 -
Cash flow from operating activities -325,023 -108,387

Financing act
Share issue 33 63,091
Convertible debenture issue 364,001 22,858
Issue costs -32,307 -
Cash flow from financing activities 331,727 85,949

6,704 -22,438
Cash flow for the year
Cash and cash equivalents at the beginning of the year 17 12,885 35,323
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 17 19,589 12,885
Supplemental disclosure
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 19,589 12,885
Short-term investments, market value at closing date 277,646 128,443
CASH AND CASH EQUIVALENTS AND SHORT-TERM 297,235 141,328
INVESTMENTS AT THE END OF THE YEAR
1) Surplus liquidity in the Investment Entity is invested in fixed income funds and is recognized as short-term investments with a maturity exceeding three months.
These investments consequently are not reported as cash and cash equivalents and therefore are included in cash flow from operating activities. The supplemental
disclosure is presented to provide a comprehensive overview of the Investment Entitys available funds, including cash, cash equivalents and short-term investments.

Income statement for the Parent Company
Net sales 23 2,942 5,030
Revenue 2,942 5,030
Other external expenses 24,25 -15,363 -16,447
Personnel costs 26 -31,167 -51,933
Impairment losses on shares in subsidiaries, joint ventures, 27 -795,470 -227,555
associated companies and other long-term securities holdings
Result from sale of shares in portfolio companies 28 - 1,693
Operating profit/loss -839,270 -289,424

Interest income and similar income items 29 2,806 2,497
Interest expenses and similar expense items 30 -47,039 -3,847

Taxes 31 0 0
NET PROFIT/LOSS FOR THE YEAR -883,503 -290,774
Consolidated statement of comprehensive income for the Parent Company


Balance sheet for the Parent Company
31 Dec 2014
SEK 000 Note 31 Dec 2015 (restated)
Assets
Non-current assets
Machinery and equipment 32 106 317
Financial assets
Shares in subsidiaries 33 150 40,212
Shares in joint ventures 34 190,515 845,771
Shares in associated companies 34 38,249 33,012
Other long-term securities holdings 35 599 7,115
Loans receivable from joint ventures and associated companies 37 27,523 12,062
Other financial assets 37 33,386 33,493
Total non-current assets 37 290,528 971,982
Current assets
Receivables from subsidiaries 3,549 895
Other current receivables 38 5,995 3,103
Prepaid expenses and accrued income 39 2,500 12,364
Short-term investments 277,646 128,443
Cash and cash equivalents 19,589 12,885
Total current assets 309,279 157,690
TOTAL ASSETS 599,807 1,129,672
Equity
Restricted equity
Share capital 13 26,725 26,692
Unrestricted equity
Share premium reserve 1,884,310 1,838,918
Retained earnings -793,045 -502,588
Total equity 234,487 1,072,248
Convertible loan 14 349,205 22,858
Pension obligations 4,180 4,286
Total long-term liabilities 353,385 27,144
Current liabilities
Accounts payable 1,444 4,668
Liabilities to subsidiaries 513 442
Other current liabilities 40 4,425 1,023
Accrued expenses and prepaid income 41 5,553 24,147
Total current liabilities 11,935 30,280
Total liabilities 365,320 57,424
TOTAL EQUITY AND LIABILITIES 599,807 1,129,672
Pledged assets and contingent liabilities

SEK 000 Note 31 Dec 2015 31 Dec 2014 (restated)
Pledged assets 18 4,180 4,286
Total 4,180 4,286

Statement of changes in equity for the Parent Company
Restricted equity Unrestricted equity
Share premium Accumulated Net profit/loss

SEK 000 Note Share capital reserve losses for the period Total equity
Opening equity at 1 Jan 2015 13 26,692 1,838,918 -502,588 -290,774 1,072,248
Appropriation of loss -290,774 290,774 0
Total 26,692 1,838,918 -793,362 -883,503 188,745
Convertible loan - equity component 49,528 49,528
Issue costs -4,136 -4,136
Share issue 33 33
Closing equity at 31 Dec 2015 26,725 1,884,310 -793,045 -883,503 234,487

Opening equity at 1 Jan 2014 13 24,266 1,778,253 -550,566 47,314 1,299,267
Appropriation of profit 47,314 -47,314 0
Effect of changes in presentation of Net Fair Value -212,644 -212,644
Total 24,266 1,778,253 -503,252 -290,774 1,008,493
Share issue 2,426 60,665 63,091
Closing equity at 31 Dec 2014 (restated) 26,692 1,838,918 -502,588 -290,774 1,072,248

Statement of cash flows for the Parent Company
Operating profit/loss -839,270 -289,424
Adjustments for items not affecting cash
Depreciation and impairment losses 27,32 795,682 227,767
Result from sale of shares in portfolio companies - -1,693
Other items 176 17,253
Proceeds from short-term investments 736 1,478
Cash flow from operating activities before changes in working capital and operating investments -42,554 -44,263

Increase (-)/Decrease (+) in operating receivables 1,951 -12,174
Increase (+)/Decrease (-) in operating liabilities -18,346 1,116

Acquisitions of subsidiaries of 33 - -7,677
Investments in shares in joint ventures and associated companies 34 -83,521 -69,649
Sale of short-term investments - 38,049
Short-term investments -147,382
Sale of shares in joint ventures and associated companies - 1,923
Repaid loans provided to associated companies 37 4 038 -
Loans provided to associated companies 37 -39,209 -15,712
Cash flow from operating activities -325,023 -108,387

Financing activities
Share issue 33 63,091
Convertible debenture issue 364,001 22,858
Issue costs -32,307 -

Cash flow for the year 6,704 -22,438
Cash and cash equivalents at the beginning of the year 12,885 35,323
Short-term investments, market value at closing date 277,646 128,443
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 297,235 141,328
AT THE END OF THE YEAR
1) Surplus liquidity in the Parent Company is invested in fixed income funds and is recognized as short-term investments with a maturity exceeding three months.
These investments consequently are not reported as cash and cash equivalents and therefore are included in cash flow from operating activities. The supplemental
disclosure is presented to provide a comprehensive overview of the Parent Companys available funds, including cash, cash equivalents and short-term investments.

Notes to the financial statements
Note 1
the application of accounting policies and carrying amounts of assets,
liabilities, revenue and expenses. The estimates and assumptions are
based on historical experience and various other factors which are
considered appropriate under prevailing conditions. The results of these
Accounting policies estimates and assumptions are then used to assess the carrying amounts
of assets and liabilities that are not otherwise evident from other sources.
Operations in general The actual result may differ from these estimates and assessments.
Karolinska Development AB (publ) (Karolinska Development,
Investment Entity or the Company) obtains funds from several Estimates and assumptions are reviewed periodically. Changes
independent investors/shareholders by issuing shares and interest- in estimates are recognized in the period the change is made if
bearing instruments. The Company invests the proceeds in portfolio the change only affects that period or in the period the change
companies that develop medical innovations, as described below, is made and future periods if the change affects both the current
and whose sole purpose is to generate a return through capital period and future periods.
appreciation and investment income. These temporary investments,
which are not investment entities, are designated portfolio companies The following accounting policies for the Investment Entity have
below. The Company, with Corporate Identity Number 556707-5048, been applied consequently to all periods presented in the financial
is a limited liability company with its registered office in Solna, Sweden. statements, unless otherwise stated below.
Karolinska Development AB aims to create value for investors, patients
and researchers by investing in portfolio companies that develop
Amendments to the accounting policies
products that can be sold or out-licensed with high returns. The
business model is to select the most commercially attractive medical
and disclosures
innovations, develop innovations to the stage where the greatest Error correction regarding potential distribution to Rosetta Capital,
return on investment can be achieved and commercialize innovations implemented during the second quarter 2015. See Note 17. New
through the sale of portfolio companies or out-licensing of products.
valuation guidlines regarding fair value of portfolio companies was
Future deal flow will be sourced via an amended agreement with
implemented during the second quarter 2015. See Note 1 and 17.
Karolinska Institutet Innovations AB, through an extended network of
New accounting policy regarding loans to portfolio companies in the
contracts at research institutions across the Nordic region, and through
Investment Entity, implemented during second quarter 2015. See Note 9.
relationships with other specialist life sciences investors.
Compliance with generally accepted New and amended standards applied

accounting policies and law by the Investment Entity
The consolidated financial statements have been prepared in New or amended IFRS standards and interpretations from the
accordance with International Financial Reporting Standards (IFRS) IFRS Interpretations Committee have not had an impact on the
issued by the International Accounting Standards Board (IASB) and Investment Entity.
the interpretations of the IFRS Interpretations Committee, as adopted
by the EU. Furthermore, recommendation RFR 1 Supplementary New and amended IFRS and interpretations
Accounting Regulations for Groups and statements UFR 3-9 from the that have not yet entered into force
Swedish Financial Reporting Board have been applied.
The Investment Entity has chosen not to apply the following new
and amended IFRS and interpretations that have issued but not yet
Conditions when preparing been adopted:
the financial statements
This is an English translation of the Swedish annual report. In the IFRS 9 Financial Instruments covers the classification,
event of any discrepancy between the content of the two versions, the measurement and recognition of financial liabilities and assets.
Swedish version shall prevail. IFRS 9 requires financial assets to be classified in two categories:
at fair value or accrued cost. The classification is determined upon
The Companys functional currency is Swedish kronor, which is also initial measurement based on the Companys business model
the reporting currency of the Investment Entity. This means that the and the characteristics of contractual cash flows. For financial
financial statements are presented in Swedish kronor. All figures, liabilities, there are no major changes compared with IAS 39. The
unless otherwise indicated, are rounded to the nearest thousand. largest change relates to liabilities at fair value, where part of the
Assets and liabilities are recognized at historical cost, except for certain change in fair value attributable to the liabilitys credit risk will be
financial assets and liabilities measured at fair value. Financial assets recognized in other comprehensive income rather than profit or
and liabilities measured at fair value consist of holdings in subsidiaries loss, provided this does not cause inconsistency in the accounts.
(except subsidiaries that provide services related to the Investment The Investment Entity intends to apply the new standard no later
Entitys investment activities), joint ventures and associated companies, than the financial year beginning 1 January 2018 and has not yet
other securities holdings, other financial assets and liabilities, and evaluated the effects.
short-term investments classified as financial assets held for sale.
None of the other IFRS or interpretations that have not yet
The preparation of the financial statements in conformity with IFRS been adopted are expected to a have a material impact on the
requires management to make estimates and assumptions that affect Investment Entity.

Significant accounting policies Karolinska Development considers all the facts and circumstances in
assessing whether it controls an investee. The Company reassesses
Classification whether control exists if the facts and circumstances suggest that one
or more of the controlling factors have changed.
The Investment Entitys non-current assets and long-term liabilities are
essentially limited to amounts that are expected to be recovered or
settled more than twelve months after the closing date. Current assets Associated companies
and current liabilities of the Investment Entity essentially comprise An associated company is an entity over which the Investment Entity
amounts that are expected to be recovered or settled within twelve exercises significant influence through the ability to participate in
months of the closing date. decisions related to the financial and operational strategies of the
business. This situation normally occurs when the Investment Entity,
Operating segments directly or indirectly, owns shares representing 2050 percent of the
votes, or receives significant influence through agreements.
An operating segment is a component of a company engaged in a
business activity from which it may earn revenue and incur expenses,
Karolinska Development is an investment entity in accordance with
whose operating income is regularly reviewed by the Companys chief
IAS 28 Investments in Associates and Joint Ventures and has chosen
operating decision maker, and for which there is separate financial
to recognize its holdings in associated companies at fair value with
information. The Investment Entitys reporting of operating segments
changes in value through profit or loss in accordance with IAS 39
complies with the internal reporting to the chief operating decision
Financial Instruments: Recognition and Measurement. The accounting
maker. The chief operating decision maker has the function of
policy for financial assets at fair value through profit or loss is described
assessing the profit/loss of the operating segments and determining
in the section on financial instruments below.
the allocation of resources. In the Investment Entitys assessment, the
management constitutes the chief operating decision maker. In internal
reporting, the management evaluates the Investment Entitys result, but
Joint ventures
does not analyze the results for various parts of the Investment Entity. A joint venture is a joint arrangement whereby two or more parties
Consequently, the Investment Entity is considered a single reportable that share joint control of the arrangement have the rights to its net
operating segment. assets. Joint control means contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant
Consolidating policies activities require the unanimous consent of the parties sharing control.
Karolinska Development has determined that it meets the definition

Karolinska Development has chosen to recognize its holdings in joint
of an investment entity. An investment entity does not consolidate its
ventures at fair value with changes in value through profit or loss, which
subsidiaries or apply IFRS 3 Business Combinations when it obtains
is permitted in accordance with IAS 28.
control over another company, with the exception of subsidiaries that
provide services associated with the investment entitys investing
operations. An investment entity instead measures its holdings in
Significant assessments in the application
portfolio companies at fair value through profit or loss in accordance of the accounting policies
with IAS 39 Financial Instruments: Recognition and Measurement. The following section describes the most significant assessments,
Karolinska Development does not have any holdings in other besides those containing estimates (see below), which management
investment entities that will be consolidated in any reporting period. has made in the application of the Investment Entitys accounting
policies and which have the most significant impact on the amounts
Subsidiaries recognized in the financial statements.
Subsidiaries are companies under the control of the Investment Entity.

Consequently, an investor controls an investee only if the investor has: Qualification as an investment entity
In Karolinska Developments assessment, the Company meets the
criteria for an investment entity. An investment entity is a company that
meets the following criteria:
a) power over the investee;
b) exposure, or rights, to variable returns from its involvement with the

investee; and a) it obtains funds from one or more investors for the purpose of
providing the investor(s) with investment management services;
c) the ability to use its power over the investee to affect the amount of
b) it commits to its investor(s) that its business purpose is investing
the investors returns.
funds solely for returns from capital appreciation, investment
income, or both; and
c) it measures and evaluates the performance of substantially all its

investments on a fair value basis.

In Karolinska Developments assessment, the Company also has the Influence over the portfolio companies
following typical characteristics to qualify as an investment entity:
Karolinska Developments ownership interests in its portfolio companies
a) it has more than one investment; range from a few percent up to 100%. A relatively large proportion of
Karolinska Developments share of the portfolio companies lies within
b) it has more than one investor; the range of 40-60% and in some cases fluctuates over time through
investments that increase or dilute Karolinska Developments holdings.
c) it has investors that are not related parties of the entity; and/or
Karolinska Development normally enters into shareholder agreements
d) it has ownership interests in the form of equity or similar interests. with other shareholders in portfolio companies. Where shareholder
agreements assure other investors or founders of influence, Karolinska
Development is not considered to have control, even if its ownership
interest formally exceeds 50%. Karolinska Development has therefore
Karolinska Development has investments in several portfolio chosen to recognize its holdings at fair value through profit or loss as
companies, has several investors that are not related parties to the holdings in associated companies or joint ventures depending on the
Company and the investments are in equities. degree of control.
The following significant assessments have been made in determining Important sources of uncertainty in estimates
whether the Company qualifies as an investment entity:
Following are the most important future assumptions and other
important sources of uncertainty at the end of the reporting period that
entail a significant risk of material adjustments in the carrying amounts
Karolinska Development invests in portfolio companies for the of assets and liabilities during the next financial year.
purpose of generating a return in the form of capital appreciation
and investment income. Karolinska Development does not receive, Valuation of portfolio companies
nor does it have as its aim to receive, benefits from the Companys
As a complement to the application of IFRS 13, fair value is measured
investments that are not available to other parties not related to
according to the fundamental valuation methodology based on
the investee. The commercial purpose is not to develop medical
International Private Equity and Venture Capital Valuation Guidelines
products as such, but rather to invest to create and maximize
(IPEV Guidelines).
the return. An important factor in the assessment is Karolinska
Developments involvement in the investments operations, since
Valuation method
the Company provides certain services to support the development
projects in the portfolio investments. Because of its influence as The valuation of the companys portfolio is based on the International
a shareholder, Karolinska Development normally appoints one or Private Equity and Venture Capital Valuation Guidelines (IPEV) and IFRS
more board members of the portfolio companies. Despite that it 13 Fair Value Measurement. Based on the valuation criteria provided
provides certain services to the portfolio companies, Karolinska by these rules, an assessment is made of each company to determine
Development has reached the conclusion that it meets the criteria a valuation method. This takes into account whether the companies
for an investment entity. have recently been financed or involved with a transaction that includes
an independent third party. If there is no valuation available based on a
Moreover, the primary criterion of evaluating the portfolio companies similar transaction, discounted cash flow models (DCF) may be used.
is based on fair value. Although Karolinska Development also
DCFs of the underlying business consider all of the cash flows of a
monitors the portfolio companies through studies and clinical trials,
portfolio company, which are then discounted with an appropriate
for instance, the primary purpose of monitoring these key terms is
rate and also risk adjusted to take the development risks in
to better understand changes in fair value and assess the need for
pharmaceutical development into consideration. The revenue streams
additional future investments.
are approximated from epidemiological data on the intended
therapeutic indication and a number of assumptions such as pricing
The Company has a documented exit strategy for all its portfolio
per patient and year, market share and market exclusivity (from IPR
companies. Karolinska Developments investment strategy is to
and regulatory market protection). As described in the IPEV Valuation
retain investments for a limited period. In every decision whether Guidelines, the inputs in the DCF models are constructed with a
to invest in a company, the company and/or development project high level of subjectivity. Hence, this method is only suitable for late
in question must have clear potential for a final exit, e.g., through stage assets, either pharmaceutical companies with lead projects
a sale to an outside party, that the asset can be transferred or in late stage (Phase III) development or technology projects with an
that there is a potential that the project (portfolio company) will be established market presence and where the revenues can be projected
licensed to an outside party with a high return to global partners. with a higher degree of confidence than in products in earlier stages
The exit strategies are taken into consideration in the valuations. of development. As of 31 December 2015, there are no portfolio
companies valued by DCF.

Companies with an established sales revenue stream may be valued by Net asset value, defined as a portfolio companys assets minus its
sales multiples. The multiples should be derived from current market- liabilities, is used as the fair value of portfolio companies without current
based multiples for comparable companies. As with DCF valuations, this operations. This typically occurs in companies considered financial
method requires that the company has a mature market presence and assets as a consequence of discontinued development projects or
its sales forecasts can be made with sufficient certainty. Furthermore, withdrawn products. In essence, these companies are valued by their
as this method only considers revenue streams, the IPEV Valuation liquidation value.
Guidelines stipulate that non-operating assets or liabilities need to be
taken into account when applying this method. As of 31 December General valuation policies for
2015, no companies were valued according to sales multiples. DCF calculations
Early stage companies, defined as pharmaceutical assets prior to
Phase III development and technology assets prior to establishing
targeted and sustainable sales revenues, which have not recently been Market analysis
financed by a transaction involving a third party investor are valued at
Estimates are made regarding total population, target population,
the price of the most recent investment, corresponding to the last post-
prevalence and treatable patients in the U.S., Europe and the
money valuation of the portfolio company. Companies in such early
Japanese market. These markets represented approximately 70% of
stages of development typically show a relatively flat value appreciation
global pharmaceutical sales in 2012 (according to IMS Health). As a
through the financing rounds as they complete preclinical and early
precautionary principle, other markets are excluded in the valuation.
clinical milestones. Significant value appreciation is unlikely during this
period and the post-money valuation, despite not being validated by an
external investor, is considered a good approximation of fair value.
License agreement/exit
Such situations arise when Karolinska Development alone or with other
investors that have participated in previous investment rounds reinvest Estimates are made regarding product launch year and time of exit
in portfolio companies. Should a new investor join an investment round, based on development plans.
the valuation method will fall under a higher valuation priority, although
the actual metric post-money valuation is the same as if only Licensing is usually assumed to be carried out after Phase II.
existing owners participate.
For medical technology companies, an exit is usually assumed after
Should Karolinska Development opt out of an investment round launch of the product.
with no intention to participate in later rounds, the price in the most
recent investment may still be a valid valuation method, provided that
these circumstances lead to a disproportionate post-money valuation
because of the loss of negotiating power over pricing (and Karolinska Peak sales and royalty rates
Developments ownership may be drastically diluted). However, as
Karolinska Development unwillingness to invest likely reflects a lower Estimates are made regarding market penetration, market share
and total annual treatment cost for each market.
perceived value compared to previous post-money valuations, a
lowering of value is often a good indication of fair value in such cases.
A sales curve is generated based on an estimation of peak sales,
time to peak and decline in sales after patent expiry.
As the share price of internal financing rounds is decided by existing
investors, caution is taken to ensure that the share price is not
Estimated royalty rates depend on the time of licensing, product
artificially inflated. In each quarterly fair value assessment the post-
type and market potential.
money valuation by internal investment rounds is benchmarked against
portfolio company progress (e.g., met or failed milestones), comparable
All sales are adjusted downward by the estimated probability of not
values for peer companies, bids from external investors and other reaching the market.
applicable valuation methods to ensure that the post-money valuation
is at an appropriate level to be considered fair value.
The cautious approach is particularly applied if an investment round Value of contracts and value distribution
is followed by a round that included a then third party investor. An
increase in fair value may be merited if, e.g., milestones have been The estimated contract value (including royalties) is based on
reached during the time between investments, although in certain an estimate of sales potential and the buyers development,
cases a large increase may not be considered. In these cases the manufacturing and marketing costs for the particular project.
amount invested since the investment round with third party investors
should be added to correspond to the appreciation in value, while Contract value is based on a value allocation principle in
additional increases in value are not be included until the valuation is which the sellers portion of the total value increases with the
validated by new third party investors. maturation of the project.

In the model, the portfolio company receives approximately 40% of Revenue
total rNPV after Phase II.
Revenue is measured at the fair value of the remuneration received or
Payments are probability adjusted based on the development receivable, net of value added tax.
phase the project is in at the time of the contract.
Sales of services
Revenue primarily consists of invoiced services rendered to portfolio
companies. These services consist of management, communication,
Costs
finance and administration, including legal and analytical operations.
Estimates are made of the cost of each phase of development

Revenue for services rendered is recognized in the period in which the
based either on the portfolio companys forecasts or according to
service is rendered.
industry standards.
For pharmaceutical projects, the costs are probability adjusted Operating expenses and financial income
depending on the phase of development. and expenses
For medical technology companies, no probability adjustment of

Financial income and expenses
development costs is made. Financial income and expenses consist of interest income on bank
deposits, receivables and interest-bearing securities, interest on loans,
dividend income, foreign exchange differences, and unrealized and
realized gains on financial deposits.
Probability adjustment
Interest income on receivables and interest on debt are recognized
The probability of reaching each phase of development is estimated. over their term to maturity using the effective interest method. The
effective interest rate is the rate that makes the present value of
Recognized statistics are used as a reference. all estimated future cash payments and disbursements over the
expected interest rate duration equal to the carrying amount of the
receivable or liability.
A change in any of these assumptions would affect the valuation and Interest income includes accrued transaction costs and any discounts,
may have a significant impact on the Investment Entitys results of premiums and other differences between the original value of the claim
operations. Additional disclosures on the sensitivity in these valuations and the amount received at maturity.
to reasonable possible changes in inputs as described above are
included in the notes to these financial statements. Issue costs and similar direct transaction costs for raising loans are
distributed over the term of the loan.
Foreign currencies
Dividend income is recognized when the shareholders right to receive
Transactions in foreign currencies payment is established.
Transactions in foreign currencies are translated into the functional
currency at the exchange rate prevailing on the transaction date. Earnings per share
Monetary assets and liabilities denominated in foreign currencies are
Earnings per share before dilution are calculated by dividing the
translated into the functional currency at the exchange rate prevailing
net profit/loss for the year attributable to the Investment Entitys
on the closing date. Exchange differences arising on translation are
shareholders by a weighted average number of shares outstanding
recognized through profit or loss. Non-monetary assets and liabilities
during the period.
measured at historical cost are translated into the exchange rate on
the transaction date. Non-monetary assets and liabilities carried at fair
The weighted average number of outstanding shares is calculated
value are translated into the functional currency at the rate prevailing on
by adjusting the number of shares outstanding at the beginning of
the date when the fair value was determined. The change in exchange
the period for share issues and repurchases made during the period,
rates is then recognized in the same manner as other changes in the
multiplied by the number of days that the shares were outstanding in
value of the asset or liability.
relation to the total number of days in the period. For diluted earnings
per share, the number of shares is adjusted for all dilutive potential
The Investment Entitys functional currency, as well as its reporting
shares, which include warrants. The warrants are dilutive if the exercise
currency, is Swedish kronor.
price is less than the estimated fair value of the Investment Entity's
shares and this reduces earnings per share after dilution.

Financial instruments Financial assets held for trading
Financial instruments recognized in the balance sheet include, on
the asset side, shares and participations, other financial assets,
A financial asset is classified as held for trading if it:
loans, accounts receivable, short-term investments, cash and cash
equivalents. The liability side consists of borrowings, other financial
has been acquired principally for the purpose of selling it or buying
liabilities and accounts payable.
back in the near term;
Financial instruments that are not derivatives are initially recognized

o
n initial recognition is part of a portfolio of identified financial
at acquisition cost, corresponding to the instruments fair value plus
instruments that are managed together and has a recent actual
transaction costs for all financial instruments except those belonging
pattern of short-term profit-taking; or
to the category financial assets at fair value through profit or loss,
which are measured at fair value, net of transaction costs. Subsequent
is a derivative that is not designated as an effective
measurement depends on how they are classified as below.
hedging instrument.
A financial asset or financial liability is recognized in the balance

sheet when the Investment Entity becomes a party according to the
instruments contractual terms. Accounts receivable are recognized
Fixed income funds and corporate bonds have been assessed as
in the balance sheet once the invoice has been sent. Liabilities are
belonging to this category.
recognized when the counterparty has performed and a contractual
obligation to pay exists, even if the invoice has not yet been received.
Accounts payable are recognized when the invoice is received.
Loans receivable and accounts receivable
Loans receivable and accounts receivable are financial assets that
A financial asset is derecognized from the balance sheet when the are not derivatives, have fixed or determinable payments and are not
contractual rights are realized, expire or the Investment Entity loses quoted on an active market. Assets in this category are measured
control over them. The same applies to part of a financial asset. at amortized cost. Amortized cost is determined from the effective
A financial liability is derecognized from the balance sheet when the interest rate calculated on the acquisition date. Accounts receivable
contractual obligation is fulfilled or otherwise extinguished. The same are recognized at the amount that is expected to be received after an
applies to part of a financial liability. allowance for impaired receivables. As the expected maturity time is
short, the nominal value is recognized without discounting. Cash and
The acquisition and disposal of financial assets are recognized on the cash equivalents, including short-term investments with a maximum
trade date, i.e., the date when the Investment Entity pledges to acquire three-month term, as well as other short-term receivables, have been
or dispose of the asset, except in the cases where the Investment assessed as belonging to this category.
Entity acquires or disposes of listed securities, in which case settlement
date accounting applies. Cash and cash equivalents
The fair value of listed financial assets corresponds to the assets Cash and cash equivalents include cash and bank balances and
quoted purchase price on the closing date. other short-term liquid investments that are readily convertible to
cash and are subject to an insignificant risk of changes in value. To be
IAS 39 classifies financial instruments in categories. The classification classified as cash and cash equivalents, the duration may not exceed
depends on the purpose of the acquisition of the financial instrument. three months from the date of acquisition. Cash and bank balances
Management determines the classification at the original purchase are categorized as Loans and receivables, which are measured at
date. The classification determines how the financial instrument is the amortized cost. Because the bank balances are payable upon
valued after initial accounting. demand, amortized cost corresponds to the nominal amount.
The Investment Entity has financial instruments in the following categories: Financial liabilities at fair value through
profit or loss
Financial assets at fair value through profit
This category comprises financial liabilities held for trading and
or loss (FVTPL) derivatives that are not used for hedge accounting. Liabilities in this
This category has two subgroups: held for trading and financial assets category are measured at fair value with changes in value recognized
designated at FVTPL. Financial assets in this category are measured through profit or loss. Other financial liabilities have been assessed as
continuously at fair value with changes in value recognized through belonging to this category. For the presence, no liabilities in this category.
profit or loss.
Other financial liabilities
This category includes shares in portfolio companies, other financial
This category includes loans and other financial liabilities, e.g.,
assets and short-term investments.
accounts payable. Loans are measured at amortized cost. Amortized

cost is based on the effective interest rate calculated when the liability be vested. If a previous estimate is revised, the effect is recognized in
was incurred. For accounts payable, if the expected duration is short, income with a corresponding adjustment in equity.
the nominal value is recognized without discounting.
Social security costs attributable to share-based payment are
Impairment testing of financial assets expensed over the vesting period.
Financial assets, with the exception of those measured at fair value

Taxation
through profit or loss, are tested for impairment when there is an
indication of impairment at the end of each reporting period. Financial Income tax comprises current and deferred taxes. Income taxes are
assets are considered impaired when there is objective proof, as a recognized through profit or loss except when the underlying transaction
result of one or more events that have occurred after the initial date of is recognized through other comprehensive income against equity or
recognition of the financial asset, that the estimated future cash flows directly against equity, whereby the associated tax effect is recognized
for the investment have been impacted. through other comprehensive income or directly against equity.
For financial assets at amortized cost, the impairment represents the Current tax is tax to be paid or received for the current year, applying
difference between the assets carrying amount and the present value the tax rates enacted or substantively enacted by the closing date. This
of estimated future cash flows discounted to the original effective includes adjustments to current tax attributable to prior periods.
interest rate.
Deferred tax is calculated on the difference between recognized
Share capital tax and tax values of the Investment Entitys assets and liabilities.
Deferred tax is accounted for using the balance sheet liability method.
Dividends Deferred tax liabilities are generally recognized for all taxable temporary
differences, while deferred tax assets are recognized to the extent it is
Dividends are recognized as a liability after the AGM has approved
probable that the amounts can be offset against future taxable profits.
the dividend.
Deferred tax assets for deductible temporary differences and tax

Employee benefits
losses carried forward are recognized only to the extent it is probable
Defined contribution pension plans that they will be utilized. The value of deferred tax assets is reduced
when it is no longer considered probable that they can be utilized. The
Obligations stemming from defined contribution pension plans are
carrying amount of deferred tax assets is tested at each closing date
expensed through profit or loss as incurred.
and reduced to the extent it is no longer probable that sufficient taxable
profit will be available to allow all or part of the asset to be recovered.
Certain individual pension undertakings have been guaranteed in
the form of Company-owned endowment insurance policies. The
Deferred tax assets and liabilities are offset when they relate to income
Investment Entity has no further obligation to cover possible shortfalls
taxes levied by the same authority and the Investment Entity intends to
in the endowment insurance or to pay any amount in excess of
settle the tax on a net basis.
deposited premiums, which is why these pension plans are accounted
for as defined contribution pension plans. Accordingly, the payment
Contingent liabilities
of premiums corresponds to a final settlement of the undertaking
vis--vis the employee. In accordance with IAS 19 and the regulations A contingent liability is recognized when there is a possible obligation
for defined contribution pension plans, the Investment Entity therefore as a result of past events and whose existence is confirmed only by
reports no assets or liabilities, with the exception of specific payroll one or more uncertain future events, or when there is a commitment
taxes related to these endowment insurance policies. that is not recognized as a liability or provision because it is not
probable that an outflow of resources will be required.
Share-based payment
Information on risks and uncertainties
The Performance and Matching Share Rights allotted to senior
executives are measured at fair value on the allotment date. The fair Investment Entity and Parent Company
value of Performance and Matching Share Rights on the allotment date
Risks and uncertainties primarily consist of risks associated with the
has been established by the Black-Scholes pricing model. For more
Investment Entitys investing activities and indirectly of operational risks
information on the valuation, see Note 5.
in the portfolio companies development operations, and financial risks.
The fair value set on the allotment date is expensed with a
corresponding adjustment in equity distributed over the vesting Future financing needs
period, based on the Investment Entitys estimate of the number of Future investments in new and existing portfolio companies will require
Performance and Matching Share Rights it expects to be vested. On capital. There is no guarantee that capital can be obtained on favorable
each closing date, the Investment Entity reevaluates its estimate of terms or in sufficient amounts to finance the operations in accordance
the number of Performance and Matching Share Rights it expects to with the business plan, or that such capital can be obtained at all. The

convertible loan can be converted to shares at a conversion rate of on the potential value of a portfolio company. Other factors affecting
SEK 22 per series B shares; there is no guarantee the share price will the future cash flow are the success of competitors and demand from
rise to SEK 22 before December 2019. potential buyers at any given point in time.
Risks concering access to new Long time to product launch

investment opportunities The time it takes for a product candidate to pass through the whole
Karolinska Development signed a new non-exclusive deal flow research and development process, establish strong intellectual
agreement with Karolinska Institutet Holding AB (KIHAB). property rights, meet all regulatory requirements and find strong
marketing and distribution partners is often underestimated.
As a consequence, Karolinska Development no longer has exclusive Introducing previously unknown or accepted products and
access to deal flow coming from Karolinska Institutet. technologies with unknown compensation models takes time and
involves significant marketing and sales costs.
As part of the new agreement, KI, via its holding company KIHAB,
plans to establish a new incubator fund initiative focused on identifying Competitors
potentially valuable new medical innovations at KI at an early pre-
The market for the portfolio companies product candidates and new
seed stage and providing the project management and funding to
technologies is subject to fierce competition and is rapidly changing.
establish a strong commercial proposition prior to company formation.
Competitors of the portfolio companies are often large multinationals.
Karolinska Development intends to invest in the incubator fund, but if
These companies are already established in the portfolio companies
no investment would be done or the incubator fund would not be set
markets and may have competitive advantages. They can swiftly
up, Karolinska Development would have no access to opportunities
allocate major resources to new research and development and to
coming from KI.
new market conditions. They may also, in contrast with the portfolio
companies, have superior financial resources and expertise in research
Furthermore, other investment companies are active in the same sector
and development, clinical trials, obtaining regulatory approvals and
as Karolinska Development and as such may be in competition for the
marketing. However, it is worth noting that these companies can also
same investment opportunities.
function as strategic partners or customers of the portfolio companies.
If no investment opportunities can be identified or if no new investments

Competitors may develop more effective, cheaper or more
could be made, it can be assumed that this will have a significant
suitable products, obtain patent protection more rapidly, or
negative impact on Karolinska Developments business prospects.
manage to commercialize their products faster than Karolinska
Developments portfolio companies. These competing products
Uncertainties in future assessments may make the portfolio companies product candidates obsolete
Judgments and assumptions about the future outcome of development or limit the portfolio companies opportunities to generate profits
projects involving pharmaceuticals and medical technology are always from their product candidates.
associated with great uncertainty. There are no guarantees of the
accuracy of forecasted developments. Risks concerning the portfolio companies
intellectual property rights
Development of portfolio companies
The success of the portfolio companies rests in large part on their
The majority of portfolio companies are at an early stage of ability to protect the methods and technologies they develop with
development. In spite of the fact that the portfolio companies, in the patents and other intellectual property rights. Even if the portfolio
opinion of Karolinska Development, have great commercial potential companies obtain patents, they eventually may not provide
and in many cases have completed significant development work, comprehensive protection or be effective in claims against third parties.
additional research and development remains necessary before the
companies innovations and technologies can be commercialized. Risks regarding valuations
The results of future research and development will be crucial
to the portfolio companies product candidates. The portfolio Companies active in pharmaceutical development and medical
companies product development may fail, just like all development technology at an early stage are, by their very nature, difficult to value,
of pharmaceuticals or other biotechnological products, e.g., if one or since the lead times are very long and development risks are significant.
all of the portfolio companies product candidates lack the targeted
effect, give rise to side effects or otherwise fail to meet regulatory Interest rate risk
requirements, or fail to obtain regulatory approvals or licenses. Interest rate risk is the risk that changes in market interest rates
could affect cash flow or the fair value of financial assets or liabilities.
Expected positive cash flow from the sale of portfolio companies is
Karolinska Development has no significant loans or other long-term
dependent upon the scientific results of development projects. Such
debt, so the Groups interest rate risk is primarily attributable to surplus
results may be a successfully demonstrated target profile, failure or a
liquidity. Surplus liquidity in the Group is invested in fixed income funds
partially demonstrated target profile. Each result has a direct impact
or interest-bearing instruments; see also Note 17.

Risk diversification
Note 2
Karolinska Development invests in early stage projects, which are
generally associated with higher risk than investments in mature
companies. Karolinska Developments ambition is to diversify this risk Revenue distribution
by investing in a broad portfolio of biotechnology, diagnostics and
medical technology companies at different stages of maturity. Services rendered are comprised of invoiced services provided
to portfolio companies in Sweden. These services consist of
management, communication, finance and administration, including
legal and analytical operations.
Revenue per significant revenue source
SEK 000 2015 2014
Services rendered 2,942 5,013
Other revenue - 17
Total revenue 2,942 5,030
Note 3
Other external expenses

Fees and remuneration to the Groups auditors
SEK 000 2015 2014
EY
Audit services 640 -
Audit related services 785 -
Tax consulting - -
Other services - -
Total 1,425 0
Deloitte
Audit services - 719
Audit related services 854 1,431
Tax consulting 41 877
Other services 110 231
Total 1,005 3,258
The audit fee refers to the auditors reimbursement for execution of

the statutory audit. This work includes the audit of the annual report
and annual accounts, the administration of the Board of Directors
and the CEO, and fees for advice offered in connection with the audit
assignment. Audit related services primarily involve quality assurance
services other than the statutory audit.

Note 4
Defined contribution pension plans
The Investment Entity has defined contribution pension plans. Payments
to these plans are made on an ongoing basis according to the regulations
Operating leases of each plan.
The Investment Entity has chosen to finance premises and equipment Remuneration to senior executives
through operating leases. Expensed leasing payments and future
contractual leasing payments are indicated below. The remuneration guidelines for senior executives are prepared by the
Board and resolved by the Annual General Meeting. According to the 2015
remuneration guidelines for senior executives, the main features are as
SEK 000 2015 2014 follows. Karolinska Development will maintain the remuneration levels and
terms required to recruit and retain senior executives with the competence
Expensed leasing payments during the period 2,080 1,992
and experience needed to achieve the Companys operational goals. Total
Future leasing payments remuneration to senior executives must be competitive, reasonable and
Within one year 1,060 1,462 appropriate. Fixed base salary is determined based on the individuals area
of responsibility and experience. Variable salary (i) is formulated with the
Between one year and five years 0 996 aim of encouraging Karolinska Developments longterm value creation; (ii)
Total future leasing payments 1,060 2,458 is governed by criteria that are predetermined, clear, measurable and can
be influenced; (iii) has established limits for the maximum outcome; and (iv)
is not pensionable income. If terminated by the Company, the CEO term of
notice is six months. Severance applies only to the CEO.
The table on the next page shows the remuneration to the CEO and other
senior executives during the financial year.
Note 5
Employees and personnel costs

Average number of employees
Full-time 2015 Of whom Of whom 2014 Of whom Of whom

equivalent women men women men
Investment 12 33% 67% 13 27% 73%

Entity
Total 12 33% 67% 13 27% 73%
Remuneration expenses for employees
Salaries, other remuneration and social

security expenses
2015 2014
SEK 000 Salaries and S
ocial security Salaries and Social security
remuneration expenses remuneration expenses
Investment Entity 23,536 6,527 43,399 7,363
(of` which pension 3,145 763 5,524 1,340

expenses)

2015
Base salary1/ Variable benefits and Pension costs Total
SEK 000 Board fee remuneration remuneration costs remuneration
Jim Van heusden, CEO1 1,853 360 150 249 2,612
Bruno Lucidi, former CEO2 3,546 3,546
Terje Kalland, Deputy CEO3 3,305 433 5 865 4,607
Other senior executives (5 persons) 6,467 545 145 1,869 9,025
Total management 15,170 1,338 300 2,982 19,790
Bo Jesper Hansen, Consultant4 880 880
Bo Jesper Hansen, Chairman 400 400
Hans Wigzell, Board member 200 200
Carl-Johan Sundberg, Board member 200 200
Henrijette Richter, Board member 200 200
Robert Holland, Board member 100 100
Charlotte Edenius, Board member 100 100
Vlad Artamonov, Board member 200 200
Tse Ping, Board member 100 100
Khalid Islam, Board member 100 100
Niclas Adler, Board member 100 100
Total board of directors 2,580 - - - 2,580
Total 17,750 1,338 300 2,982 22,370
1Salary
for nine months. 2Including salary, severance pay and pension contribution, all as costs and payed during 2015. Bonus payed during 2015 but as cost
2014 amounts to SEK 1,497 thousand, is not included in this table. 3Salary payed in December regarding three month in 2016 is included. Bonus payed during
2015 but as cost 2014 amounts to SEK 1,576 thousand, is not included in this table. 4As a consultant outside the role as Chairman of the Board.
2014
Base salary1/ Variable benefits and Pension costs Total
SEK 000 Board fee remuneration2 remuneration costs remuneration
Bruno Lucidi, CEO 783 45 73 901
Torbjrn Bjerke, former CEO 3,569 4,729 1,693 9,991
Klaus Wilgenbus, former CEO 450 450
Terje Kalland, Deputy CEO 2,223 5 663 2,891
Bo Jesper Hansen, Chairman 400 400
Hans Wigzell, Board member 200 200
Per-Olof Edin, former Board member 200 200
Rune Fransson, former Board member 40 40
Klaus Wilgenbus, former Board member 200 200
Charlotte Edenius, Board member 200 200
Vlad Artamonov, Board member 200 200
Henrijette Richter, Board member 200 200
Robert Holland, Board member 200 200
Carl Johan Sundberg, Board member 200 200
Other senior executives (7 persons) 9,880 6,473 19 2,644 19,016
Total 18,945 6,473 4,798 5,072 35,288
1Base salary excluding vacation compensation. 2Reserve for Bonus program 2014:1.

Gender distribution of Board and management OrfaCare
Karolinska Development AB has entered into an agreement with a

2015 2014 company related to the Chairman of the Board, OrfaCare Consulting
Board GmbH, regarding consultations by the Chairman of the Board, Bo
Jesper Hansen.The consultancy agreement is unrelated to his position
Men 7 5 as Chairman of the company. The agreement is valid from 1 March
Women 1 2 2015, after extension, until the date of the Company's Annual General
Meeting 2017. The consultancy fee until prolongation, is market based
8 7
and amounted to SEK 880 thousand during 2015.
CEO and other senior executives
Men 6 4
Variable remuneration
Karolinska Development has four categories of programs with variable
Women 2 2
salaries. One is a combined warrant and profitsharing program for senior
8 6 executives, consisting of three program stages, which was adopted by
the AGMs in 2008, 2009 and 2010 (all programs have experid without
any subscription by the participants). In 2012, 2013, 2014 and 2015,
Compensation to CEO the AGMs resolved to introduce new Performance Share Programs,
PSP 2012 for senior executives, PSP 2013, PSP 2014 and PSP 2015
Pension terms for all personnel. In 2014, the Board of Directors resolved to introduce
A contractual pension equivalent to 13% of gross salary, consisting of an incentive program, STI 2014, and the 2015 AGM resolved to introduce
premium-based compensation. a long-term incentive program, STI 2015, for senior executives. In 2014,
the Board of Directors resolved to introduce Bonus Program 2014:1 for
Incentive program for the CEO
senior executives.
An incentive program has been implemented for the CEO based on exits
in the portfolio. The compensation amounts to 2.0% of the net proceeds
20082010 Profit-sharing programs
paid to the company upon the exit. The compensation is paid out only
during employment, not during the term of notice. The compensation is The profit-sharing plan is based on annual sub-plans. The first sub-plan
limited to SEK 25 million per calendar year. The 2% compensation will relates to Karolinska Development s investment portfolio as of 31 December
include all cost for the company in relation to the payment therof. In the 2007. The subsequent sub-plans relate to the investments in Karolinska
event the program and an STI program cover the same event that triggers Development as of December 31 which the Com- pany completed during the
payment, there is no double payment. calendar year immediately preceding the issuance of the respective sub-plan.
Compensation to former CEOs Each profit sharing plan lasts 15 years and provides entitlement to a
certain portion of return proceeds from divested investments to which
Torbjrn Bjerke the plan refers. The first settlement will take place after the fifth year of
the term; this payment takes into account the returns during years 1-5
Torbjrn Bjerke, who stepped down as CEO on 30 September 2014, was
of the term. Thereafter, payments are made annually, retroactively until all
entitled to a six-month term of notice and twelve months of severance.
the investments that the sub-plan refers to have finally been disposed of
During this period, Torbjrn Bjerke has a contractual pension amounting to 21
or until the 15-year limit is reached and the sub-plan matures. Payments
percent of his gross salary, which is comprised of a premium-based provision.
must be made as soon as possible after the AGM has been held.
Bruno Lucidi
Each sub-plan provides entitlement to a cash payment equivalent to a
Bruno Lucidi, who took the position of CEO on 15 October 2014 and total of 5 percentage points of the portion of returns realized from the
stepped down as CEO on 28 January 2015, had a contractual term of investments that the sub-plan relate to, in excess of a threshold rate of 6
notice of six months and under certain circumstances six months of percent for the years 2008-2012 and 8 percent for the year 2013 onwards.
contractual severance. During his term of notice, Bruno Lucidi has a
contractual pension amounting to 21 percent of his gross salary, which is Disbursement pursuant to each sub-plan should be limited as follows: To
comprised of a premium-based provision. the extent that returns exceed an annual return of 35 percent, the portion
that exceeds the returns accruing to participants in the profit-sharing
Other senior executives plan will be halved (i.e., if the rate was previously 5 percent, as indicated
above, it will in this part instead be 2.5 percent). To the extent that returns
Severance exceed 50 percent, the amount in excess of
No severance agreements are in place for other senior executives of

Karolinska Development. 50 percent will be further halved (i.e., if the rate was previously 2.5
percent, as indicated above, it will in this part instead be 1.25 percent).
Excess returns above 60 percent are not eligible for profit-sharing.

All investment managers (including the CEO and CFO) who were the measurement must be made not later than 23 November 2012.
employed during all, or part of, the preceding calendar year, and who The established measurement period was 27 August 2012 through 7
are still employed and have not been terminated on the issue date of September 2012. The Start Price was set at SEK 15.70. The End Price
the sub-plan, participate in the sub-plan. Participation in each sub-plan is measured as the average over ten trading days beginning on 2 May
is proportionate to participation in the portion of the warrant program 2015. For any allotment to be made, the share price must rise by six
issued in conjunction therewith, in accordance with the above, whereby percent annually. For a maximum allotment (five Performance Shares
50 percent participation in a portion of the warrant program leads to full per Saving Share), the share price must rise by 30 percent. Within this
participation in the profit-sharing plan. Conny Bogentoft and Ola Flink span, allotments will be made proportionately. Allotments are capped at
will participate in the profit-sharing plan as described above even after ten times the Start Price, after which the number of allotted Performance
termination of employment under the same conditions as in the warrant Share Rights is reduced. The participants will be compensated in cash for
program, with the corresponding increase in the total profit-sharing space dividends paid during the period.
that this can lead to after a successor has been hired.
In December 2012, the participants acquired 80,000 Savings Shares.
Termination of employment during the term: Unearned profit-sharing The fair value of a Matching Share Right on the allotment date in
expires auto- matically. Each sub-plan is vested at a rate of 20 percent per December 2012 has been set at SEK 14 based on the Black-Scholes
year from issuance. For Conny Bogentoft and Ola Flink, vesting occurs option pricing model. The inputs in the model were a share price of
even after the termination of employment provided that they are still active SEK 14.65, an exercise price of SEK 0.5, an anticipated maturity 3.1
years, an anticipated volatility of 42.5%, an anticipated dividend of zero
in the Company on a consulting basis.
percent and a risk-free rate of interest of 0.87%. The fair value of a
Performance Share Right on the allotment date in December 2012 was
The cooperation with the European Investment Fund entitles Karolinska
set at SEK 7.20 based on a Monte Carlo simulation. The inputs in the
Develop- ment to a share in the profits of the co-investment structure beyond
model were a share price of SEK 14.65, an exercise price of SEK 0.5,
Karolinska Developments capital input in the structure, provided that 37.5
an anticipated maturity 3.1 years, an anticipated dividend of zero percent
percent of this profit is further distributed through Karolinska Developments
and a risk-free rate of interest of 0.87%. The condition related to share
profit-sharing plan. This redistribution has been implemented in the profit-
price performance has been taken into account in the valuation of the
sharing plan so that this right to profit-sharing is divided between the
Performance Share Rights. Anticipated volatility is based on historical
sub-plans for 2010, 2011 and 2012 in relation to the size of the plans. The
volatility and comparisons with similar companies.
right to profit-sharing through the cooperation with the European Investment
Fund therefore applies beyond the profit-sharing based on excess returns as The company has covered social security contributions related to the
described above. Because of the limited returns to date, this approach has program by acquiring 150,600 of its own shares.
not had any accounting effects.
Cost cuts of SEK 1.7m (SEK 0.0m) were recognized for the share-based
Performance Share Program 2012 (PSP 2012) incentive program in 2015.
On 23 May 2012, the Annual General Meeting decided on a Performance

The program was concluded in 2015, at which point a total of 65,082 Matching
Share Program for management based on the participants acquiring
Shares had been allocated. No Performance Shares were awarded. Among
shares (Saving Shares) on the open market. For each Savings Share, management Torbjrn Bjerke was awarded shares to a value amounted to
participants will be allotted, free of charge, one Matching Share Right SEK 295 thousand, Terje Kalland SEK 196 thousand and other management
and a maximum of five Performance Share Rights. The maximum number SEK 148 thousand.
of Performance and Matching Share Rights is 480,000. The program
comprises a maximum of ten participants.
Performance Share Program 2013 (PSP 2013)
Each Performance and Matching Share Right is entitled to the allocation On 14 May 2013, the Annual General Meeting decided on a new
of one subscription option. Each subscription option entitles its holder to Performance Share Program for employees where participants acquire
acquire one series B share at a subscription price corresponding to the shares (Saving Shares) on the open market. For each Savings Share
shares par value and assuming that the option is exercised as soon as participants receive, free of charge, a maximum of one Matching
possible after receiving the subscription option. Subscription options will Share Right and five Performance Shares. The maximum number of
Performance Shares and Matching Share Rights is 480,000. The program
be allocated after publication of the companys interim report for the first
comprises a maximum of seventeen participants.
quarter 2015, though no earlier than three years after the agreement on
PSP 2012 was signed (vesting period).
Each Performance and Matching Share Right is entitled to the allotment
of one subscription option. Each subscription option entitles its holder to
There are no performance conditions for the Matching Share Rights, but
acquire one series B share at a subscription price corresponding to the
each participant must remain an employee during the vesting period and
shares par value and assuming that the option is exercised as soon as
may not have sold their Savings Shares. The Performance Share Rights
possible after receiving the subscription option. Subscription options will
have the same terms as the Matching Share Rights. In addition, there
be allotted after publication of the companys interim report for the first
is a target related to Karolinska Developments share price performance
quarter 2016, though no earlier than three years after the agreement on
and a comparison between the so-called Start Price and End Price. PSP 2013 was signed (the vesting period).
The Start Price is measured as the average over ten trading days. The
Board of Directors determines the measurement period. However,

There are no performance conditions for the Matching Share Rights, so-called Start Price and End Price. The Start Price, measured as an
but each participant must remain an employee during the vesting period average over ten trading days from 18 May 2014 through 28 May 2014,
and may not have sold their Saving Shares. The Performance Shares is SEK 24.45. The End Price is measured as the average over ten trading
have the same terms as the Matching Share Rights. In addition, there days beginning on 2 May 2017. For an allotment, the share price must
is a target related to Karolinska Developments share price performance rise by a total of 30% above the Start Price. For a maximum allotment
and a comparison between the so-called Start Price and End Price. (five Performance Shares per Savings Share), the share price must rise
The Start Price is measured as an average over ten trading days. The by 75% above the Start Price. Within this span, allotments are made
Board of Directors determines the measurement period. However, the proportionately. Allotments are capped at 35 times the Start Price, after
measurement must be made not later than 14 November 2013. The which the number of allotted Performance Shares is reduced. Participants
established measurement period was 27 June 2013 through 10 July will be compensated in cash for dividends paid during the period.
2013. The Start Price was set at SEK 26.44. The End Price is measured
as the average over ten trading days beginning on 2 May 2016. For an The company intends to cover social security contributions related to
allotment to be made, the share price must rise by six percent annually. the program by acquiring and transferring a maximum of 182,000 of its
For a maximum allotment (five Performance Shares per Savings Share), the own shares. As of 31 December 2014, 41,200 Savings Shares had been
share price must rise by 30 percent. Within this span, allotments are made acquired. The companys own shares are not repurchased.
proportionately. Allotments are capped at 20 times the Start Price, after
which the number of allotted Performance Shares is reduced. Participants An expense of SEK 0.5m (SEK 0.0m) was recognized for the share-
will be compensated in cash for dividends paid during the period. based incentive program in 2015. 26 per cent of the expenses estimates
for Terje Kalland, 65 per cent for other management and 9 per cent for
In September 2013, participants acquired 49,700 Saving Shares. The fair other employees.
value of a Matching Share Right on the allotment date in September 2013
was set at SEK 26.12 based on the Black-Scholes option-pricing model.
Performance based share incentive program
The inputs in the model were a share price of SEK 26.60, an exercise price
2014 II (PSP 2014 II)
of SEK 0.5, an anticipated maturity of 3.1 years, an anticipated volatility of
42.5%, an anticipated dividend of zero percent and a risk-free rate of interest Performance based share incentive program PSP 2014 II,
of 1.47%. The fair value of a Performance Share on the allotment date in adopted by the Extraordinary General Meeting on 4 December 2014,
September 2013 was set at SEK 14.98 based on a Monte Carlo simulation. has not been implemented.
The inputs in the model were a share price of SEK 26.60, an exercise price
of SEK 0.5, an anticipated maturity of 3.1 years, an anticipated dividend of Performance based share incentive program
zero percent and a risk-free rate of interest of 1.47%. The condition related to 2015 (PSP 2015)
share price performance has been taken into account in the valuation of the
Performance Share Rights. Anticipated volatility is based on historical volatility The 2015 Annual General Meeting adopted a new performance based
and comparisons with similar companies. share incentive program for employees where participants acquire
shares (Savings Shares) on the open market. Under certain conditions
The company has covered social security contributions related to the participants may receive, free of charge, a maximum of five Performance
program by acquiring 93,685 of its own shares. Shares and one Matching Share Right from the company for each Savings
Share they purchase. Matching Share Rights and Performance Shares are
An expense of SEK 0.9m (SEK 0.9m) was recognized for the share-based allotted after three years. The maximum number of Performance Shares
incentive program in 2015. 76 per cent of the expenses estimates for Terje and Matching Share Rights was 1,078,410. The program comprises a
Kalland, 23 per cent for other management and 1 per cent for other employees. maximum of ten participants.
Performance based share incentive program To receive Matching Share Rights, a participant must still be employed
during the vesting period. The Performance Shares have a target
2014 (PSP 2014)
related to Karolinska Developments share price performance and a
On 14 May 2014, the Annual General Meeting adopted a new comparison between the so-called Start Price and End Price. The Start
performance based share incentive program for employees where Price, measured as an average over ten trading days from 21 May 2015
participants acquire shares (Savings Shares) on the open market. Under through 3 June 2015, is SEK 11.39. The End Price is measured as the
certain conditions participants may receive, free of charge, a maximum average over ten trading days beginning on 2 May 2018. For an allotment,
of five Performance Shares and one Matching Share Right from the the share price must rise by a total of 15% above the Start Price. For a
company for each Savings Share they purchase. Matching Share Rights maximum allotment (five Performance Shares per Savings Share), the
and Performance Shares are allotted after three years. The maximum share price must rise by 100% above the Start Price. Within this span,
number of Performance Shares and Matching Share Rights is 761,350. allotments are made proportionately. Allotments are capped at 35 times
The program comprises a maximum of fourteen participants. the Start Price, after which the number of allotted Performance Shares
is reduced. Participants will be compensated in cash for dividends paid
Although there are no performance conditions for the Matching Share during the period.
Rights, each participant must remain an employee during the vesting
period. The Performance Shares have a target related to Karolinska The company intends to cover social security contributions related to
Developments share price performance and a comparison between the the program by acquiring and transferring a maximum of 338,840 of its

own shares. As of 30 September 2015, 74,850 Savings Shares had been
acquired, which are related to previous share based programs, however.
The companys own shares are not repurchased.
An expense of SEK 0.4m (SEK 0.0m) was recognized for the share-based
incentive program in 2015. All expenses for CEO Jim Van heusden.
Short Term Incentive Program 2014 (STI 2014)
In 2014, the Board of Directors decided on a Short Term Incentive

Program for senior executives based on a number of specific corporate
goals set by the Board for 2014. The goals were designed to promote
Karolinska Developments long-term value appreciation. Each goal
was weighed based on priority, which impacted the calculation of the
remuneration. The remuneration was dependent on whether one or more
goals were met and had a fixed cap corresponding to two months base
salary for each participant. The Companys expense was SEK 0.3m.
Short Term Incentive Program 2015 (STI 2015)

In 2015, the Board of Directors decided on a Short Term Incentive
Program, STI 2015, for senior executives based on a number of
specific corporate and personal goals established for 2015. The goals
are designed to promote Karolinska Developments long-term value
appreciation. The remuneration is dependent on whether one or more
goals are met and has a fixed cap corresponding to three months base
salary for each participant. Goals were partly met, which rendered an
accrual of SEK 1.5m.
Bonus Program 2014:1

In 2014, the Board of Directors decided on a bonus program for senior
executives that entitled participants to a bonus if the Company, before 31
March 2015, implemented a directed issue of shares or other securities
in return for cash payment to external investors that were not already
shareholders in the Company. The total bonus amount in the program
(which also covers social security expenses) amounted to a total of two
percent of the issue proceeds excluding transaction costs. The maximum
bonus per participant is SEK 5m (including social security expenses).
Proceeds from the directed issue and proceeds from any part of the rights
issue not subscribed by current shareholders served as the basis for
the calculation. Participants were to use at least half (net after tax) of the
amount paid to participants to acquire shares in Karolinska Development.
The expense for the Company was SEK 7.8m. As of 31 December 2014,
a bonus reserve of SEK 8.5m was charged against personnel costs.

Note 6
Unrecognized deferred tax assets
Deductible temporary differences and tax losses carried forward for which
deferred tax assets have not been recognized through profit or loss and the
Interest expenses balance sheet primarily relate to losses generated by the Parent Company.
Deferred tax assets have not been recognized for these losses, since it is
SEK 000 2015 2014 unlikely that Karolinska Development AB will be able to utilize the tax losses
(restated) carried forward to offset against future taxable profits, despite that there is
Accrued interest convertible loan -40 045 - no time limit on these tax losses carried forward. Unrecognized deferred
tax assets for Karolinska Development amounted to SEK 45,435 thousand
Interest expenses -13 -4
(SEK 79,294 thousand) at year-end 2015, and SEK 64,337 thousand
Total -40 058 -4 (SEK 64,337 thousand) relates to deficits that are restricted by Group
contributions and mergers.
Other financial gains and losses
SEK 000 2015 2014

(restated)
Change in value of short-term investments -796 1,188
Note 8
Exchange rate gains and losses -111 -56

Revaluation of financial liability 6,248 -2,249 Tangible non-current assets
Reversal of impairment - -
of receivables from portfolio companies
SEK 000 31 Dec 2015 31 Dec 2014
Impairment of receivables from portfolio companies -2,462 -3,786 (restated)
Other financial income 334 671 Accumulated acquisition cost
Total 3,213 -4,232
At the beginning of the year 659 659
Investments during the year - -
Closing balance 659 659
Note 7 Accumulated amortization and impairments
At the beginning of the year -342 -130
Taxes Depreciation for the year -212 -212
Reconciliation of effective tax rate Sales and disposals 1 -
Carrying amount -553 -342

SEK 000 % 2015 % 2014
(restated) Accumulated acquisition cost 106 317
Profit/loss before tax -1,054,673 -371,488
Income tax expense calculated 22.0% 232,028 22.0% 81,727
at applicable rate in the Finance leases
Parent Company
The Investment Entity did not enter into any finance leases in 2015,
Tax effect of
Nondeductible expenses -2,346 -2,018 2014 or any prior period.
Tax-exempt revenue 2,610 546

Issue costs 4,875 2,233
Changes in fair value, -214,827 -67,336
nontaxable
Increase in tax losses carried -22,340 -15,152
forward without corresponding
capitalization of deferred taxes
Recognized current tax 0.0% 0 0.0% 0
Change in deferred tax 0.0% - 0.0% -

Recognized deferred tax 0.0% - 0.0% -
Total recognized tax 0.0% - 0.0% -

Note 9 Note 11
Shares in portfolio companies Accounts receivable
SEK 000 31 Dec 2015 31 Dec 2014 SEK 000 31 Dec 2015 31 Dec 2014
(restated) (restated)
Accumulated fair value Tax receivables 5,522 958
At the beginning of the year 1,113,454 1,729,465 VAT receivables 378 2,068
Effect of change in presentation of fair value - -393,059 Other 95 77
Investments during the year 102,624 83,984 Total 5,995 3,103
Reclassification from receivables 28,211 -

from portfolio companies, see note 10
Repayment of shareholder contributions -150 -864
Changes in fair value in profit/loss for the year -976,488 -306,072

Note 12
Closing balance 267,651 1,113,454
Prepaid expenses and accrued income
Note 10 SEK 000 31 Dec 2015 31 Dec 2014

(restated)
Prepaid rental expenses 533 510
Loans receivable from portfolio companies Accrued interest income 91 367
Insurance premiums 200 459

SEK 000 31 Dec 2015 31 Dec 2014
(restated) Accrued income - 364
Loans receivable from portfolio companies Prepaid issue costs - 10,148
At the beginning of the year 12,062 5,894 Other 73 516
Loans provided 39,209 15,712 Total 897 12,364
Interest 1,602 -
Conversions -13,920 -5,894
Repaid loans -4,038 -
Reclassification to fair value portfolio -28,211 -

companies, see Note 9
Impairment losses -5,790 -3,650
Total 914 12,062
The Investment Entitys investments in portfolio companies are in the form

of new issued shares or through loans that are interest bearing and mature
or are converted to shares within 12 months.

Note 13
Equity
Changes in share capital
Year Transaction Number Share Number Number Subscription Par

of shares capital of A shares of B shares price value
Total per 1 Jan 2011 33,331,417 16,665,709 1,503,098 31,828,319 0.5
April 2011 Share issue 15,200,000 7,600,000 0 15,200,000 40 0.5
Total per 31 Dec 2011 48,531,417 24,265,709 1,503,098 47,028,319 0.5
Total per 31 Dec 2012 48,531,417 24,265,709 1,503,098 47,028,319 0.5
Total per 31 Dec 2013 48,531,417 24,265,709 1,503,098 47,028,319 0.5
December 2014 Share issue 4,853,141 2,426,570 4,853,141 13 0.5
Total per 31 Dec 2014 53,384,558 26,692,279 1,503,098 51,881,460 0.5
December 2015 Share issue 65,082 32,541 65,082 0.5
Total per 31 Dec 2015 53,449,640 26,724,820 1,503,098 51,946,542 0.5
Net asset value per share During the fourth quarter 2012, the Parent Company and the Investment
Entity repurchased 150,600 shares with a par value of SEK 0.5 for
Investment Entity consideration amounting to SEK 2,243,879. The shares were repurchased
SEK 000 31 Dec 2015 31 Dec 2014 to cover the social security expenses in the incentive program PSP 2012
(restated) resolved by the Annual General Meeting in 2012.
Net assets
During the third quarter 2013, the Parent Company and the Investment
Cash and cash equivalents 19,589 12,885 Entity repurchased 93,685 shares with a par value of SEK 0.5 for
consideration amounting to SEK 2,483,025. The shares were repurchased
to cover the social security expenses in the incentive program PSP 2013
Loans receivable from portfolio companies 12,062 resolved by the Annual General Meeting in 2013.
Net financial assets and liabilities 32,674 3,569

The Investment Entity and the Parent Company are holding 244,285
Convertible loan -349,205 -22,858 treasury shares. This represents a total of SEK 122,143 of the share capital,
and the consideration paid amounts to SEK 4,726,904.
Total net assets -19,296 134,101
Other contributed capital
Relates to capital contributed by the owners.
Estimated fair value of portfolio companies 267,651 1,113,454
Total net asset value 248,355 1,247,555 Retained earnings incl. net profit/loss
for the year
Number of shares 53,205,355 53,140,273
Retained earnings including current year results include retained earnings
of the Parent Company. Previous allocations to the statutory reserve are
included in this equity item.
Net asset value per share 4.67 23.48
Earnings per share basic and diluted

Investment Entity
SEK 000 2015 2014
The number of shares amounts to 53,449,640, of which 1,503,098 are (restated)
series A shares and 51,946,542 are series B shares. Series A shares carry
ten votes per share and series B shares carry one vote per share. All shares Net profit/loss for the year -1,054,673 -371,488
have an equal right to the Companys assets in the case of liquidation and
Weighted average number of shares 53,151,328 48,606,243
profit distributions. All series B shares have been listed for trading on the
main list of Nasdaq Stockholm since 15 April 2011. Earnings per share, SEK -19.84 -7.64

Note 14 Note 15
Convertible loan Other current liabilities

Karolinska Development has issued convertibles, so-called compound
financial instruments, in which the holder has right to convert to shares and SEK 000 31 Dec 2015 31 Dec 2014
(restated)
where the number of shares that are issued is not affected by changes in
the fair value of the shares. Other taxes and fees 4,424 1,021
Other 1 2
The liability component of a compound financial instrument is initially
recognized at fair value for a similar liability without a conversion right
to shares. The equity component is initially recognized as the difference Total 4,425 1,023
between the total fair value of the compound financial instrument and the
fair value of the liability component. Directly attributable transaction costs
are allocated to the liability and equity components in proportion to their
initial carrying amounts.
After acquisition, the liability component of the compound financial Note 16

instrument is valued at amortized cost using the effective interest method.
The equity component of a compound financial instrument is not revalued
after acquisition, except upon conversion or redemption. Accrued expenses and prepaid income
The Investment Entity issued convertibles with a nominal amount of
SEK 000 31 Dec 2015 31 Dec 2014
SEK 386,859 thousand as of 2 January 2015 which carry a nominal interest (restated)
rate of 8 percent. The convertible falls due for payment on 31 December
2019 at the nominal amount of SEK 568,423 thousand (provided that Salaries and remuneration to employees 1,380 13,042
the accrued interest becomes interest-bearing) or can be converted to Accrued remuneration to Board of Directors 216
shares on the request of the holder at a price of SEK 22 per series B share.
The value of the liability and equity components (conversion right) was Accrued auditor and consultant fees 90 2,306
determined on the date of issuance. Payroll tax and accrued pension costs 2,025 3,571
The convertibles are presented in the balance sheet according to the Accrued employers contributions 1,682 4,903
following table. Other 376 109
Total 5,553 24,147

SEK 000 31 Dec 2015 31 Dec 2014
Nominal value of convertible 386,859 22,858

debentures issued on 2 January 2015
Less issue costs -28,171 -
Equity component -49,528 -
Liability upon issuance 2 January 2015 309,160 22,858
Accrued interest expenses 40,045 -
Interest paid - -
Total 349,205 22,858

Note 17
Financial assets and liabilities

Financial assets and liabilities by category
2015
Financial assets at fair value
through profit or loss
SEK 000 Financial assets Held for Loan and Other financial Total carrying Fair value
designated at FVTPL trading receivables liabilities amount
Shares in portfolio companies 267,651 267,651 267,651
at fair value through profit or loss
Loans receivable from portfolio companies 914 914 914
Other financial assets 38,113 38,113 38,113
Receivables from portfolio companies 3,549 3,549 3,549
Short-term investments at fair value through profit or loss 277,646 277,646 277,646
Cash and cash equivalents 19,589 19,589 19,589
Total 305,764 277,646 24,052 0 607,462 607,462
Convertible loan 349,205 349,205 349,205
Other financial liabilities 5,439 5,439 5,439
Total 356,601 356,601 356,601
Financial assets at fair value through profit or loss
2014 (restated)
Financial assets at fair value
through profit or loss
SEK 000 Financial assets Held for Loan and Other financial Total carrying Fair value
designated at FVTPL trading receivables liabilities amount
Shares in portfolio companies 1,113,454 1,113,454 1,113,454
Loans receivable from portfolio companies 12,062 12,062 12,062
Other financial assets 38,113 38,113 38,113
Receivables from portfolio companies 895 895 895
Short-term investments at fair value through profit or loss 128,443 128,443 128,443
Cash and cash equivalents 12,885 12,885 12,885
Total 1,151,567 128,443 25,842 0 1,305,852 1,305,852
Convertible loan 22,858 22,858 22,858
Other financial liabilities 11,686 11,686 11,686
Total 39,654 39,654 39,654

Short-term investments Level 1- Fair value determined on the basis of observed (unadjusted)
quoted prices in an active market for identical assets and liabilities
Surplus liquidity that may temporarily arise in Karolinska Development
is placed in fixed-income funds or interest-bearing instruments and is Level 2- Fair value determined based on inputs other than quoted prices
recognized as short-term investments with a remaining duration exceeding included within Level 1 that are observable for the asset or liability,
three months. directly or indirectly
Fair value measurement Level 3- Fair value determined based on valuation models where
significant inputs are based on non-observable data
Following a review of the companys approach to valuating investments
in the portfolio, the company implemented new guidelines to estimate fair
value in Level 3 as of 30 June 2015.
The carrying amounts of financial assets and liabilities measured at

The table below shows financial instruments measured at fair value based
amortized cost approximate their fair value.
on the classification in the fair value hierarchy. The various levels are defined
as follows:
Investment Entitys assets and liabilities at fair value as of 31 December 2015
SEK 000 Level 1 Level 2 Level 3 Total

Financial assets
Shares and participations at fair value through profit or loss 267,651 267,651
Loans receivable from portfolio companies 914 914
Other financial receivables 38,113 38,113
Receivables from portfolio companies 3,549 3,549
Total 297,235 4,463 305,764 607,462
Financial liabilities
Other financial liabilities 5,439 5,439
Liabilities to portfolio companies 513 513
Total 1,957 5,439 7,396

Investment Entitys assets and liabilities at fair value as of 31 December 2014, restated
SEK 000 Level 1 Level 2 Level 3 Total

Financial assets
Shares and participations at fair value through profit or loss 1,113,454 1,113,454
Loans receivable from portfolio companies 12,062 12,062
Other financial receivables 38,113 38,113
Receivables from portfolio companies 895 895
Total 141,328 12,957 1,151,567 1,305,852
Financial liabilities
Convertible loan 22,858 22,858
Other financial liabilities 11,686 11,686
Total 27,968 11,686 39,654

The following describes the main methods and assumptions used to
Short-term loans receivable from
determine the fair value of financial assets and liabilities in the tables above.
related parties
Shares in associated companies and other Fair value is based on market prices and generally accepted methods,
long-term holdings (unlisted holdings) which means that future cash flows have been discounted at the current
rate for the remaining term.
The valuation of unlisted holdings is based on the International Private
Equity and Venture Capital Valuation Guidelines. For a further description,
Financial assets and liabilities
see Note 1 Accounting policies, Valuation of portfolio companies. at amortized cost
A fair value estimate based on discounted future cash flows, where the
most significant input is a discount rate that reflects the counterpartys
credit risk, does not produce a significant difference compared with the
carrying amounts of recognized financial assets and liabilities in Level 2.
The carrying amounts of all financial assets and liabilities are therefore
considered a good approximation of fair value.
Changes in financial assets and liabilities on Level 3 in 2015
SEK 000 Shares in portfolio Other financial Other financial

Companies assets liabilities
At the beginning of the year 1,113,454 38,113 11,686
Acquisitions 130,835 - -
Disposals -150 - -
Gains and losses realized in profit or loss -976,488 - -6,247
Carrying amount at year-end 267,651 38,113 5,439
Total unrealized gains and losses for the period included in profit or loss -976,488 - 6,247
Gains and losses in profit/loss for the year for assets -976,488 - 6,247
and liabilities included in the closing balance
In 2015, loans receivable from portfolio companies were transferred to Level 3 in accordance with the new accounting policies.
Changes in financial assets and liabilities on Level 3 in 2014
SEK 000 Shares in portfolio Other financial Other financial

Companies assets liabilities
At the beginning of the year 1,729,465 38,113 9,438
Transfers to and from Level 3 - - -
Acquisitions 83,984 - -
Disposals -864 - -
Effect of change of presentation of fair value -393,059 - 0
Gains and losses realized in profit or loss -306,072 - 2,248
Carrying amount at year-end 1,113,454 38,113 11,686
Total unrealized gains and losses for the period included in profit or loss -306,072 - -2,248
Gains and losses in profit/loss for the year for assets -306,072 - -2,248
and liabilities included in the closing balance
There were no transfers between Level 1 and 2 in 2014.

The Investment Entity recognizes transfers between levels in the fair value hierarchy on the date when an event or changes occur that give rise to the transfer.

Impact of fair value of portfolio companies Information on fair value measurement
In the table below, Total Fair Value is the aggregate proceeds that would in level 3
be received by Karolinska Development and KDev Investments' if the The valuation of the companys portfolio is based on the International
shares in their portfolio companies were sold in an orderly transaction Private Equity and Venture Capital Valuation Guidelines (IPEV) and IFRS 13
between market participants on the measurement date. The calculation of Fair Value Measurement. For description on fair value measurement in level
the fair value is based on IFRS 13 standards on calculating and reporting 3 see Note 1 Accounting policies, Valuation method.
fair value and the International Private Equity and Venture Capital Valuation
Guidelines (IPEV Valuation Guidelines) decided by the IPEV that represent Financial risks
current best practice on the valuation of private equity investments. The
effect of the change in fair value was mainly due to the more representative Through its activities, the Investment Entity is exposed to various financial
portfolio valuation, which was implemented in the second quarter, and the risks. Financial risks refer to fluctuations in operating results and cash flow
revaluations and divestments during the first half of 2015. as a result of changes in exchange rates, interest rates, refinancing and
credit risks. Responsibility for the Investment Entitys financial transactions
Impact on fair value of the agreement and risks rests with both the Parent Companys finance department and
the local subsidiaries. The overarching objective of the finance function is
with Rosetta Capital to provide cost-effective financing and to minimize adverse effects on the
Potential distribution to Rosetta Capital is the amount that KDev Investment Entitys earnings from market fluctuations.
Investments', according to the investment agreement between Karolinska
Development and Rosetta Capital, is obligated to distribute to Rosetta Currency risk
Capital from the proceeds received by KDev Investments' (KDev Investments
Currency risk is the risk that changes in exchange rates will negatively
fair value). The distribution to Rosetta Capital will only happen when KDev
impact the Investment Entity. The Investment Entitys foreign exchange
Investments' distributes dividends. If Rosetta Capital has not received 2.5
exposure consists of transaction exposure resulting in exposure in foreign
times the amount invested in KDev Investments' by Rosetta Capital by
currency linked to the contractual cash flows and balance sheet items
7 March 2018, Rosetta Capital may require Karolinska Development to
where changes in exchange rates affect the results and cash flows. The
acquire Rosettas shares in KDev Investments'. The price payable for the
Investment Entitys exposure to currency risk is not significant.
KDev Investment shares is the fair value of the shares, capped at 10% of the
market capitalization of Karolinska Development at the time of the purchase.
Karolinska Development can decide whether to pay the purchase price in Credit risk
cash or in the form of Karolinska Development shares. Credit risk is the risk that the counterparty to a transaction fails to fulfill its
obligations under the contract and that any guarantee does not cover the
Net Fair Value after potential distribution to Rosetta Capital is the net Investment Entitys claim. Maximum credit risk exposure is equivalent to the
aggregate proceeds that Karolinska Development will receive after KDev book value of financial assets.
Investments distribution of proceeds to Rosetta Capital.
The credit risk in cash, cash equivalents and short-term investments is limited
Expanded fair value calculations taking into as the Investment Entitys counterparties are banks with high credit ratings.
consideration the portfolio valuation and
potential distribution to Rosetta Capital Assets exposed to credit risk
SEK 000 31 Dec 2015 31 Dec 2014
SEK m 31 Dec 2015 31 Dec 2014 (restated)
Fair value of Karolinska Development 134 485 Loans receivable from portfolio companies 914 12,062
Fair value of KDev Investments' 458 1,167 Other financial assets 38,113 38,113
Total fair value 592 1,652 Receivables from portfolio companies 3,549 895
Potential distribution to Rosetta Capital 324 539 Other short-term receivables 5,995 3,103
of fair value of KDev Investments'
Net fair value after potential 268 1,113
distribution to Rosetta Capital Cash and cash equivalents 19,589 12,885
Maximum exposure to credit risk 345,806 195,501

Price risk
The Investment Entity is exposed to share price risk on the Investment
Entitys holdings in portfolio companies measured at fair value (shares
in associated companies, joint ventures and other long-term securities
holdings). The Investment Entity otherwise is not exposed to valuation risk.
Interest risk
Interest risk is the risk that changes in market interest rates affect cash flow
or the fair value of financial assets or liabilities.
Liquidity risk
Liquidity risk is the risk that the Investment Entity cannot meet its short-
term payment obligations. The Investment Entitys guidelines state that the
liquidity reserve must remain at such a level that it meets the Investment
Entitys ongoing liquidity requirements and requirements for investments
in portfolio companies for the following six-month period. The Companys
liquid funds on the closing date provide the Investment Entity with the
scope to maintain an active strategy with regard to investments in the
portfolio companies for 12 months. This makes it possible to retain current
ownership interests in the portfolio companies.

2015
SEK 000 Within 3 months 3-12 months 1-5 years Over 5 years Total
Convertible loan - - 349,205 - 349,205
Accrued interest convertible loan1 - - - - 0
Accounts payable 1,444 - - - 1,444
Liabilities to portfolio companies 513 - - - 513
Other current liabilities 4,425 - - - 4,425
Total 6,382 - 349,205 - 355,587
1See Note 14 Convertible loan
2014 (restated)
SEK 000 Within 3 months 3-12 months 1-5 years Over 5 years Total
Convertible loan - - 22,858 - 22,858
Accounts payable 4,668 - - 4,668
Liabilities to portfolio companies 442 - - - 442
Other current liabilities 1,023 - - - 1,023
Total 6,133 - 22,858 - 28,991
Management of capital risks pension plans. Accordingly, payment of premiums corresponds to final
settlement of the undertaking vis--vis the employee.
The Investment Entitys capital management objective is to ensure the
Investment Entitys capacity to continue operations, generate reasonable In accordance with IAS 19 and the regulations for defined contribution
returns for shareholders and provide benefits to other stakeholders. The pension plans, the Investment Entity therefore reports no assets or
Investment Entitys policy is to minimize the risks in capital management. liabilities, with the exception of special payroll contributions, related to these
In accordance with the Investment Entitys investment guidelines, surplus endowment insurance policies. The Parent Company recognizes an asset
liquidity is managed by an external manager. The portfolio will maintain an and corresponding liability.
average term of no longer than 1.5 years and invest in fixed income funds or
interest-bearing instruments. Rosetta put option
On 7 March 2013, Rosetta Capital IV LP acquired 13.66% of KDev
Investments' AB for a total purchase price of SEK 220m. According to the
Note 18
transfer agreement, Karolinska Development is obligated, under certain
conditions, to redeem Rosettas shares in KDev Investments' AB on or after
7 March 2018. According to the terms, Rosetta has the right to request
redemption if Rosetta has not received a return equivalent to 2.5 times
Pledged assets and contingent liabilities the capital invested to acquire the shares in KDev Investments' AB. The
value of the put option corresponds to the fair value of the shares in KDev
SEK 000 31 Dec 2015 31 Dec 2014
Investments' that Rosetta owns at the time of redemption. The obligation is
Pledged assets limited to a value corresponding to ten percent of the outstanding shares in
Karolinska Development and can be fulfilled through the issuance of shares or
Endowment insurance 4,180 4,286
payment in cash. Karolinska Development has the right to choose the form of
Total pledged assets 4,180 4,286 payment. Karolinska Development considers the fair value of the put option in
issue to be zero as of the closing date.
Endowment insurance
Individual pension undertakings have been guaranteed in the form of
Company-owned endowment insurance policies. The Investment Entity has
no further obligation to cover possible shortfalls in the endowment insurance
or to pay any amount in excess of the premiums paid, due to which the
Investment Entity considers these pension plans to be defined contribution

Note 19 Compensation and profit distribution
FMAB is entitled to an annual management fee corresponding to

2.5 percent of the capital committed to KCIF during the investment period
Related parties and 1 percent of invested capital thereafter. In practice, FMAB fulfills its
obligations to manage the operations of KCIF by purchasing services from
Affiliates Karolinska Development according to a service agreement. The service
agreement entitles Karolinska Development to annual compensation
The Investment Entity has a related party relationship with its subsidiaries, equivalent to what remains of the management fee after deducting FMABs
joint ventures, associated companies and the companies in the Karolinska other expenses and a certain buffer for future expenses in FMAB. Any
Institutet Holding AB Group. dividends from KCIF will essentially be distributed as follows. First, EIF and
Karolinska Development will receive an amount corresponding to the portion
Other contingent liabilities of the committed capital paid to KCIF at the time of the dividend payment
and annual interest of 6 percent on this amount. Secondly, 80 percent of
In 2015, Karolinska Development, Karolinska Institutet Holding AB (KIHAB)
the remaining funds will be distributed to EIF and Karolinska Development
and Karolinska Institutet Innovations AB (KIAB) signed a new, non-exclusive
in proportion to their capital investment. The remaining 20 percent will be
deal flow agreement to ensure Karolinska Developments access to research
distributed to Karolinska Development on the condition that 25 percent of the
projects through KIABs flow of innovations from cutting-edge research at
amount is redistributed to KIAB and at least 37.5 percent is redistributed to
Karolinska Institutet and other academic institutions across the Nordic region.
the investment managers through Karolinska Developments profit-sharing
As part of the new agreement, KI, through its holding company, KIHAB,
program.
plans to establish a new incubator fund focused on identifying potentially
valuable new medical innovations at KI at an early (pre-seed) stage, and to
Through its ownership and managerial role, Karolinska Development has
provide project management and funding to establish a strong commercial
concluded that it controls FMAB and therefore considers FMAB to be
proposition prior to company formation. KD will be a cornerstone investor
a subsidiary. The indirect ownership in the portfolio companies through
in the new incubator fund alongside a select group of other specialist life
KCIF holding has been included in Karolinska Developments share of the
science investors. Given its strong relationship to KI and its investment in
portfolio companies.
the fund, KD expects to continue to invest in the most promising investment
opportunities generated as a result of this new fund.
Furthermore, the Investment Entity has rendered services to the portfolio

companies on technical studies and administration. Prices of services
rendered have been market based.
Karolinska Development and the European Investment Fund (EIF) have

entered into an agreement whereby EIF invests in parallel with Karolinska
Development in portfolio companies. The investments are made through
KCIF Co-Investment KB (KCIF). In November 2009, KCIF entered into an
agreement with Karolinska Development according to which KCIF will invest
in parallel with Karolinska Development at a ratio of 27:73 (KCIF: Karolinska
Development) on the condition that certain stated investment criteria are
fulfilled. The investors and limited partners in KCIF are EIF, which has
committed EUR 12.9m, and Karolinska Development, which has committed
EUR 4.5m. The amounts are paid to KCIF as needed to make investments, to
cover KCIFs expenses, and to pay an annual management fee to KCIF Fund
Management AB (FMAB), a limited partner responsible for the operation of
KCIF. The management fee for the financial year 2015 amounted to SEK 885
thousand (1,053).
FMAB is 37.5 percent owned by Karolinska Development, 25 percent by

KIAB and 37.5 percent by investment managers employed by Karolinska
Development. The investment managers hold high-vote shares and together
control a majority of the votes in FMAB. Karolinska Development, KIAB and
the investment managers have entered into to a shareholder agreement
regarding FMAB. The shareholder agreement includes a number of rules to
protect the minority shareholders, Karolinska Development and KIAB.

2015 2014
SEK 000 Sale of Interest Purchase Sale of Interest Purchase of
services income of services services income services
Associate relationship
Owner: Karolinska Institutet Holding Group 0 - 2,242 1 - 2,227
(of which rental cost) (2,039) (1,949)
Other joint ventures and associated companies 3,344 2,363 0 4,523 269 20
Total 3,344 2,363 2,242 4,524 269 2,247
31 Dec 2015 31 Dec 2014

SEK 000 Liability to Receivable Liability to Receivable
associates from associates associates from associates
Karolinska Institutet Holding Group 26 - 187 -
Portfolio companies 0 29,302 462 13,228
Total 26 29,302 648 13,228
Note 20
Subsidiaries
Shares in subsidiaries are recognized at acquisition cost in the Parent

Companys financial statements. Acquisition-related costs for subsidiaries,
Significant events after the closing date which are expensed in the consolidated financial statements, comprise a
See Directors Report, page 30. portion of the acquisition cost of shares in subsidiaries.
Associated companies and joint ventures
Note 21
Shares in associated companies and joint ventures are recognized at
acquisition cost in the Parent Companys financial statements. Dividends are
recognized as revenue when they are adopted by the Annual General Meeting.
The Parent Companys accounting policies Other long-term securities holdings
The Parent Companys annual report has been prepared in accordance with Shares in other long-term securities holdings are recognized at acquisition
the Swedish Annual Accounts Act (1995:1554) and recommendation RFR cost in the Parent Companys financial statements.
2 Accounting for Legal Entities from the Swedish Financial Reporting Board.
Statements UFR 3-9 from the Swedish Financial Reporting Board have Impairments
been applied as well. Application of RFR 2 means that the Parent Company
will apply all EU-approved IFRS as far as possible within the framework of The Company reports holdings in subsidiaries, joint ventures, associated
the Annual Accounts Act and the Pension Obligations Vesting Act and take companies and other long-term securities holdings according to the cost
into consideration the relationship between reporting and taxation. The method. If holdings in subsidiaries, joint ventures, associated companies or
policies described in Note 1 regarding the Investment Entity also apply to other long-term securities holdings are valued at below cost on the closing
the Parent Company unless otherwise indicated below. date, the holding is written down to the lower value.
The following accounting policies for the Parent Company have been Shareholder contributions
applied consistently to all periods presented in the Parent Companys
financial statements. Shareholder contributions are recognized directly against the recipients
shareholders equity and against the shares and participations of the
contributor to the extent that impairment is not required.

Pensions
Note 24
In the Parent Company, company-owned endowment insurance is
recognized as a financial asset in the balance sheet at acquisition cost. The
pension obligation is recognized as a provision for an equal amount. Other external expenses
Changes in accounting policies Auditor and consultant fees

SEK 000 2015 2014
No accounting policies were changed during the year. Error correction (restated)
regarding potential distribution to Rosetta Capital, implemented during the
EY
second quarter 2015. The effect of the changes of Net Fair Value amounts
Audit services 640 -
to SEK -212,644 thousand. See Note 43 for recalculated income statement
and balance sheet. Audit related services 785 -
Tax consulting - -
Other services - -
Note 22 Total 1,425 0
Deloitte
Audit services - 719

Information on the Parent Company
Audit related services 854 1,431
Karolinska Development AB (publ), Corporate Identity Number 556707-5048, Tax consulting 41 877
is a Swedish limited liability company with its registered office in Solna.
Other services 110 231
Total 1,005 3,258
Note 23 Auditor fees refer to the auditors remuneration for the statutory audit. The
work includes the examination of the annual report and accounting records,
the administration by the Board and the CEO, and fees for auditing advice
Information on the Parent Company in connection with the audit assignment. Audit related services primarily
SEK 000 2015 2014 relate to quality assurance services other than the statutory audit.
(restated)
Service revenue from portfolio companies 1,696 5,013
Note 25
Invoiced costs 1,246 17
Total revenue 2,942 5,030
Operating leases
The Parent Company has chosen to finance premises and equipment

through operating leases. Expensed leasing payments and future
contractual leasing payments are indicated below.
SEK 000 2015 2014

(restated)
Expensed leasing payments during the period 2,080 1,992
Future leasing payments
Within one year 1,060 1,462
Between one year and five years 0 996
Total future leasing payments 1,060 2,458

Note 26 Note 28
Employees and personnel costs Result from sale of shares in portfolio

Average number of employee companies
Full-time 2015 Of whom Of whom 2014 Of whom Of whom SEK 000 2015 2014
equivalent women men women men
Capital gain/loss
Parent 12 33% 67% 13 27% 73%
Company BioChromix Pharma AB - 355
KDev Exploratory AB - 1,413

Total 12 33% 67% 13 27% 73%
Limone AB - -35
HBV Theranostica AB - -29

Employee benefits
BioChromix Newco AB - -8
SEK 000 2015 2014 NephroGenex Inc - -3
Salaries and remuneration 20,391 37,875 Gain/loss on sale of portfolio companies 0 1,693
Social security costs 6,527 7,363
Pension costs 3,145 5,524
Total 30,063 50,762

Note 29
Salaries and other remuneration distributed
Interest income and similar income
between Board members and other employees
2015 2014 SEK 000 2015 2014
SEK 000 Board Other Board Other Interest income 2,460 637
and CEO employees and CEO employees Change in value of short-term investments - 1,188
Salaries and remuneration 12,231 8,160 13,844 24,031 Exchange rate gains 12 -
Pension costs 1,114 2,031 2,428 3,096 Reversal of impaired receivables from - -
joint ventures and associated companies
Total 13,345 10,191 16,272 27,127
Other financial income 334 672
Total 2,806 2,497
Note 27
Note 30
Impairment
SEK 000 2015 2014 (restated)

Interest expenses and similar expenses
Impairment of shares in subsidiaries -40,213 -142 SEK 000 2015 2014
Impairment of shares in joint -748,741 -226,532 Interest expenses -13 -4

ventures and associated companies
Accrued interest convertibles -40,045
Impairment of other long-term -6,516 -881
Change in value of short-term investments -796
securities holdings
Exchange rate losses -124 -58
Total -795,470 -227,555
Impairment of receivables from -6 061 -3 785
portfolio companies
The effect of the impairment was mainly due to the more representative valuation
of the portfolio, which was implemented in the second quarter 2015. See Note 1. Total -47,039 -3,847

Note 31 Note 32
Taxes Tangible non-current assets
SEK 000 % 2015 % 2014 SEK 000 31 Dec 2015 31 Dec 2014
(restated) Accumulated acquisition cost
Profit/loss before tax -883,503 -290,774 At the beginning of the year 659 659
Income tax expense 22.0% 194,371 22.0% 63,970 Investments during the year - -
calculated at applicable rate Closing balance 659 659
in the Parent Company Accumulated amortization and impairments
Tax effect of At the beginning of the year -342 -130
Non-deductible expenses -177,350 -51,596 Depreciation for the year -212 -212
Disposals 1 0
Tax-exempt income 444 546
Closing balance -553 -342
Issue costs 4,875 2,233
Carrying amount 106 317
Increase in tax losses carried -22,340 -15,152
forward without corresponding
capitalization of deferred tax
Recognized tax 0.0% 0 0.0% 0 Note 33

Unrecognized deferred tax assets Shares in subsidiaries
Deductible temporary differences and tax losses carried forward for which SEK 000 2015 2014
deferred tax assets have not been recognized through profit or loss or the
balance sheet mainly refer to the deficits incurred in the Parent Company. Accumulated book value
Deferred tax assets have not been recognized for these deficits as it is unlikely At the beginning of the year 40,212 32,875
that Karolinska Development AB will be able to offset the amounts against Investments during the year 300 7,677
future taxable profits, despite that there is no time limit on the tax losses carried
Repayment of shareholder contributions -149 -198
forward. Unrecognized deferred tax assets for Karolinska Development as of 31
Impairment -40,213 -142
December 2015 amounted to SEK 45,435 thousand (SEK 79,294 thousand),
and SEK 64,337 thousand (SEK 64,337 thousand) refers to deficits that are Closing balance, book value 150 40,212
restricted by Group contributions and mergers.
Specification of holdings in subsidiaries
Name Total holding Book value in

Parent Company
SEK 000 31 Dec 31 Dec 31 Dec 31 Dec
2015 2014 2015 2014
Avaris AB (in liquidation) 94.87% 94.87% 150 308
KCIF 37.50% 37.50% - 196
Fund Management AB
KD Incentive AB 100.00% 100.00% - 172
KDev Oncology AB 100.00% 100.00% - 253
Pharmanest AB - 60.24% - 39,283
Total book value 150 40,212
Including indirect ownership interest through portfolio company. Ownership

interest corresponds to formal voting rights according to the participating
interest. In addition, a shareholder agreement has been entered into in
some cases giving Karolinska Development controlling interest.

Investments in subsidiaries
Note 34
SEK 000 2015 2014
HBV Theranostica AB - -
Shares in joint ventures
KCIF Fund Management AB - - and associated companies
KD Incentive AB - -
SEK 000 2015 2014
KDev Exploratory AB - - (restated)
KDev Oncology AB 300 - Accumulated book value
Limone AB - - At the beginning of the year 878,783 1,029,008
Pharmanest AB - 7,677 Investments during the year 98,722 76,307
Total investments in subsidiaries 300 7,677 Effect of change in presentation of fair value - -212,644
Impairment -748,741 -13,888
Non-cash investments in subsidiaries Closing balance, book value 228,764 878,783
SEK 000 2015 2014
Other non-cash investments
KDev Oncology AB 300 -
Total non-cash investments 300 -

Specification of holdings in joint ventures
Name Total holding Book value in Parent Company
SEK 000 31 Dec 2015 31 Dec 2014 31 Dec 2015 31 Dec 2014 restated
Athera Biotechnologies AB - 65.44% - 89,048
Forendo Pharma Oy 18.42% 18.42% 13,074 13,074
KDev Investments' AB 87.39% 87.09% 133,570 627,920
Akinion Pharmaceuticals AB 82.05% 80.73% - -
Aprea AB 61.95% 61.74% - -
Aprea Personal AB 61.95% 61.74% - -
Asarina Pharma AB (formerly Umecrine Mood AB) 3.41% 35.3% - -
Axelar AB - 43.31% - -
Biosergen AS 5.73% 59.76% - -
Clanotech AB 79.95% 79.68% - -
Dilafor AB 46.85% 47.03% - -
Dilaforette Holding AB 64.13% 63.58% -
Dilaforette AB 64.13% 63.58% - -
Inhalation Sciences Sweden AB 59.85% 68.17% - -
NeoDynamics AB (bankruptcy filed) 19.29% 18.04% - -
NovaSAID AB 77.44% 77.44% - -
Pergamum AB - 56.38% - -
DermaGen AB - 56.38% - -
Herantis Pharma Oy - 0.95% - -
Lipopeptide AB - 58.38% - -
XImmune AB - 4.49% - -
Promimic AB 32.04% 30.75% - -
Lipidor AB 37.94% 49.89% 7,171 18,239
Umecrine Cognition AB 68.52% 68.52% 36,700 36,700
XSpray Microparticles AB - 63.42% - 60,790
Total book value 190,515 845,771
Including indirect ownership interest through portfolio company. Ownership interest corresponds to formal voting rights according to the participating interest. In
addition, a shareholder agreement has been entered into in some cases giving Karolinska Development controlling interest.
Specification of holdings in associated companies

KCIF Co-Investment Fund KB 26.00% 26.00% 6.456 23,157
OssDsign AB 29.17% 25.81% 31,796 9,855
Total book value 38,252 33,012

Investments in joint ventures
and associated companies
Note 35
SEK 000 2015 2014
Other long-term securities holdings
Forendo Pharma Oy - 3,544
SEK 000 2015 2014
KCIF Co-Investment Fund KB - 3,823
Accumulated book value
KDev Investments' AB 76,782 47,224
At the beginning of the year 7,115 8,714
OssDsign AB 21,940 -
Disposals - -718
Umecrine Cognition AB - 15,000
Impairment -6,516 -881
XSpray Microparticles AB - 6,716
Closing balance, book value 599 7,115
Total investments in joint ventures 98,722 76,307
Non-cash investments in joint ventures

SEK 000 2015 2014
Conversions of previously provided loans
KDev Investments' AB - 6,658
OssDsign AB
13,920 -
Total non-cash investments 13,920 6,658
Specification of holdings in other long-term securities

BioArctic NeuroScience AB 3.17% 3.17% 599 600
Umecrine AB 10.41% 10.41% - 6,515
Total book value 599 7,115

Note 36
Parent Companys holdings in subsidiaries, joint ventures and associated companies

Company Registered office Corporate Identity Number of shares Equity, Profit/loss,
Number SEK 000 SEK 000
Akinion Pharmaceuticals AB Solna 556777-0978 47,773 6,983 -20,244
Aprea AB Stockholm 556631-2285 537,488 -635 -41,753
Aprea Personal AB Stockholm 556771-4034 1,000 97 -1
Asarina Pharma AB (formerly Umecrine Mood AB) Ume 556698-0750 1,972,840 5,682 -5,098
Avaris AB (in liquidation) Huddinge 556614-2112 443,580 222 25
Biosergen AS Trondheim NO 687622075 4,506,669 6,370 -1,676
ClanoTech AB Solna 556706-6658 64,628 2,531 -7,375
Dilafor AB Stockholm 556642-1045 245,425 1,126 -9,686
Dilaforette Holding AB Stockholm 556851-9523 901,340 90,605 -171
Forendo Pharma Oy bo FI 2520329-3 1,028 49,536 -30,823
Inhalation Sciences Sweden AB Solna 556665-6038 371,005 5,284 -2,426
KCIF Fund Management AB Solna 556777-9219 37,500 220 1
KCIF Co-Investment Fund KB Solna 969744-8810 26 25,481 -63,591
KD Incentive AB Solna 556745-7675 100,000 162 -2
KDev Investments' AB Solna 556880-1608 1,228,519 416,107 -444,437
KDev Oncology AB Solna 556683-9345 313,345 455 -33
Lipidor AB Stockholm 556779-7500 897 1,487 -4,479
NeoDynamics AB (in bankruptcy) Stockholm 556656-3341 8,495 - -
NovaSAID AB Solna 556669-2181 530,505 219 -233
OssDsign AB Uppsala 556841-7546 69,617 55,713 -18,357
Promimic AB Gteborg 556657-7754 159,221 10,161 -2,421
Umecrine Cognition AB Ume 556698-3655 2,531,283 3,536 -15,248
Note 37
Loans receivable from portfolio companies

and other financial assets
Loans receivable from portfolio companies Other financial assets - -
At the beginning of the year 12,062 5,894 Receivable Rosetta Capital 29,206 29,206
Value of capital insurance 4,180 4,287
Loans provided 39,209 15,712
Total 33,386 33,493
Conversions -13,920 -5,894
Repayments -4,038 -
Impairment -5,790 -3,650
Total 27,523 12,062

Note 38 Note 41
Other short-term receivables Accrued expenses and prepaid income
Tax receivables 5,522 958 Salaries and remuneration to personnel 1,380 13,042
VAT receivables 378 2,068 Remuneration to Board of Directors 0 216
Other 95 77 Auditor and consulting fees 90 2,306
Total 5,995 3,103 Payroll tax and accrued pension costs 2,025 3,571
Social security contributions 1,682 4,903
Other 376 109
Total 5,553 24,147
Note 39
Prepaid expenses and accrued income
SEK 000 31 Dec 2015 31 Dec 2014

Note 42
Prepaid rental expenses 533 510
Accrued interest income 1,693 367

Related parties
Insurance premiums 200 459 Affiliates

Accrued income - 364
The Parent Company has a related party relationship with its subsidiaries,
Prepaid issue costs - 10,148 joint ventures, associated companies and the companies in the Karolinska
Other 74 516 Institutet Holding AB Group.
Total 2,500 12,364 Karolinska Development has signed a new deal flow agreement with KIAB
and its parent company, KIHAB, one of Karolinska Developments largest
shareholders, to ensure Karolinska Developments access to research
projects through KIABs flow of innovations from cutting-edge research
at Karolinska Institutet and other academic institutions across the Nordic
region. Furthermore, Karolinska Development has rendered services to the
Note 40 portfolio companies on technical studies and administration. The prices of

these services rendered are market based.
Other current liabilities
SEK 000 31 Dec 2015 31 Dec 2014
Other taxes and fees 4,424 1,021
Other 1 2
Total 4,425 1,023

2015 2014
SEK 000 Sale Interest Purchase Sale Interest Purchase
of services income of services of services income of services
Owner: Karolinska Institutet Holding Group 0 - 2,242 1 - 2,227
(of which rental cost) (2,039) (1,949)
Subsidiaries 935 0 2,184 1,317 148 -
Joint ventures and associated companies 2,408 2,363 0 3,206 121 20
Total 3,344 2,363 4,426 4,524 269 2,247
31 Dec 2015 31 Dec 2014

SEK 000 Liability Receivable Liability Receivable
to associate from associate to associate from associate
Owner: Karolinska Institutet Holding Group 26 - 187 -
Subsidiaries 0 382 442 2,620
Joint ventures and associated companies 0 28,920 20 10,608
Total 26 29,302 648 13,228
Note 43
Changes in presentation of Net Fair Value
Karolinska Developments management and Board of Directors, in The preference shares give Rosetta Capital preferential rights to dividends,
consultation with the Companys auditors, have decided to revise how which in prior periods has been described in the notes (Note 20 in the
Rosetta Capitals preference shares in KDev Investments' (KDI) affect the annual report for 2014).
Net Fair Value of Karolinska Developments holding in KDI.
The error, which was corrected in the second quarter 2015, reduces the
Rosetta Capital owns 7.53% of common shares and preference shares Net Fair Value of Karolinska Developments holding in KDI.
in KDI, which comprises 10 portfolio companies as of 30 June 2015.

Effect of changes in presentation of Net Fair Value on income statement for comparative
figures 2014 for the Investment Entity
SEK 000 2014 Full-year Effect of changes in 2014 Full-year

(previously published) presentation of Net Fair Value (restated)
Revenue 5,030 5,030
Other external expenses -16,447 -16,447
Personnel costs -51,933 -51,933
Changes in Net Fair Value of shares in portfolio companies -310,399 4,327 -306,072
Result from sale of subsidiaries 1,745 1,745
Operating profit/loss -372,216 4,327 -367,889
Profit/loss before tax -375,815 4,327 -371,488
Taxes - - -
NET PROFIT/LOSS FOR THE PERIOD -375,815 4,327 -371,488
Effect of changes in presentation of Net Fair Value on earnings per share for comparative
figures 2014 for the Investment Entity
SEK 2014 Full-year Effect of changes in 2014 Full-year

Affiliates Affiliates Affiliates Affiliates
Number of shares, weighted average 48,606,243 48,606,243
Effect of changes in presentation of Net Fair Value on statement of comprehensive

income for comparative figures 2014 for the Investment Entity

Net profit/loss for the period -375,815 4,327 -371,488
Total comprehensive income/loss for the period -375,815 4,327 -371,488

Effect of changes in presentation of Net Fair Value on the Investment Entitys
balance sheet for comparative figures 2014
SEK 000 31 Dec 2014 Effect of changes 31 Dec 2014 1 Jan 2014 Effect of changes 1 Jan 2014
(previously in presentation of (restated) (previously in presentation (restated)
published) Net Fair Value published) Net Fair Value
Assets
Non-current assets
Tangible non-current assets 317 317 529 529
Shares in portfolio companies, 1,502,186 -388,732 1,113,454 1,729,465 -393,059 1,336,406
Loans receivable 12,062 12,062 5,894 5,894
from portfolio companies
Other financial assets 38,113 38,113 38,113 38,113
Total non-current assets 1,552,678 -388,732 1,163,946 1,774,001 -393,059 1,380,942

Current assets
Accounts receivable - - 3 3
Receivables from portfolio companies 895 895 254 254
Other short-term receivables 3,103 3,103 3,225 3,225
Prepaid expenses and accrued income 12,364 12,364 1,477 1,477
Short-term investments, 128,443 128,443 165,334 165,334
Cash and cash equivalents 12,885 12,885 35,323 35,323
Total current assets 157,690 0 157,690 205,616 0 205,616
TOTAL ASSETS 1,710,368 -388,732 1,321,636 1,979,617 -393,059 1,586,558

Equity
Share capital 26,692 26,692 24,266 24,266
Share premium 1,828,844 1,828,844 1,768,179 1,768,179
Retained earnings -209,992 -388,732 -598,724 165,159 -393,059 -227,900
Total equity 1,645,544 -388,732 1,256,812 1,957,604 -393,059 1,564,545

Convertible loan 22,858 22,858 - -
Other financial liabilities 11,686 11,686 9,438 9,438
Total long-term liabilities 34,544 0 34,544 9,438 9,438

Current liabilities
Accounts payable 4,668 4,668 2,426 2,426
Liabilities to portfolio companies 442 442 442 442
Other current liabilities 1,023 1,023 1,593 1,593
Accrued expenses and prepaid income 24,147 24,147 8,114 8,114
Total current liabilities 30,280 0 30,280 12,575 - 12,575
Total liabilities 64,824 0 64,824 22,013 22,013
TOTAL EQUITY AND LIABILITIES 1,710,368 -388,732 1,321,636 1,979,617 -393,059 1,586,558

Effect of changes in presentation of Net Fair Value on statement of cash flows
for comparative figures 2014 for the Investment Entity

Operating profit/loss -372,216 4,327 -367,889
Adjustments for non-cash items
Adjustment for depreciation of amortization 212 212
Adjustment for changes in fair value 310,399 -4,327 306,072
Result from sale of shares in portfolio companies -1,745 -1,745
Other items 17,253 17,253
Realized changes in value of short-term investments 1,478 1,478
Cash flow from operating activities -44 263 0 -44,263

before changes in working capital and operating investments
Increase (-)/Decrease (+) in operating receivables -12,175 -12,175
Increase (+)/Decrease (-) in operating liabilities 1,117 1,117
Investments in shares in portfolio companies 1,923 1,923
Sale of shares in portfolio companies -77,326 -77,326
Loans provided to associated companies -15,712 -15,712
Change in short-term investments 38,049 38,049
Cash flow from operating activities -108,387 0 -108,387
Financing activities
Share repurchase - -
Share issue -
Share issue 63,091 63,091
Convertible issue 22,858 22,858
Cash flow for the period -22,438 -22,438
Cash and cash equivalents at the beginning of the year 35,323 35,323
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 12,885 0 12,885

Effect of changes in presentation of Net Fair Value on parent companys income
statement for comparative figures 2014

Net sales 5,030 5,030
Revenue 5,030 0 5,030
Other expenses -16,447 -16,447
Personnel costs -51,933 -51,933
Impairment losses on shares in subsidiaries, -14,911 -212,644 -227,555

joint ventures, associated companies and other long-term securities holdings
Result from sale of shares in portfolio companies 1,693 1,693
Operating profit/loss -76,780 -212,644 -289,424
NET PROFIT/LOSS FOR THE PERIOD -78,130 -212,644 -290,774
Effect of changes in presentation of Net Fair Value on parent companys

statement of comprehensive income for comparative figures 2014

Net profit/loss for the period -78,130 -212,644 -290,774
Total comprehensive income/loss for the period -78,130 -212,644 -290,774

Effect of changes in presentation of Net Fair Value on parent companys balance
sheet for comparative figures 2014

Assets
Non-current assets
Tangible non-current assets 317 317
Shares in subsidiaries, joint ventures, associated 1,138,754 -212,644 926,110
companies and other long term-securities holdings
Loans receivable from portfolio companies 12,062 12,062
Other financial assets 33,493 33,493
Total non-current assets 1,184,626 -212,644 971,982

Current assets
Accounts receivable - -
Receivables from portfolio companies 895 895
Other short-term receivables 3,103 3,103
Prepaid expenses and accrued income 12,364 12,364
Total current assets 157,690 0 157,690
TOTAL ASSETS 1,342,316 -212,644 1,129,672

Equity
Restricted equity 26,692 26,692
Share capital
Unrestricted equity
Share premium reserve 1,838,918 1,838,918
Accumulated losses -502,588 -502,588
Net profit/loss for the period -78,130 -212,644 -290,774
Total equity 1,284,892 -212,644 1,072,248

Convertible loan 22,858 22,858
Accrued interest convertible loan - -
Pension obligations 4,286 4,286
Total long-term liabilities 27,144 0 27,144

Current liabilities
Other current liabilities 1,023 1,023
Accrued expenses and prepaid income 24,147 24,147
Total current liabilities 30,280 0 30,280
Total liabilities 57,424 0 57,424
TOTAL EQUITY AND LIABILITIES 1,342,316 -212,644 1,129,672

Signing of the annual financial statements Investment Entitys financial position and results, and that the administration
report for the Investment Entity provides a true and fair overview of the
The Board of Directors and CEO hereby certify that the annual report Investment Entitys operations, financial position and results, and that it
has been prepared according to the Annual Accounts Act and RFR 2 describes significant risks and uncertainties facing the Investment Entity.
and provides a true and fair view of the Companys financial position and
results and that the administration report provides a true and fair overview
of the Companys operations, financial position and results, and that it The annual report and the Investment Entity report have been approved
describes significant risks and uncertainties facing the Company. The Board for presentation by the Board on April 2016. The Investment Entitys
of Directors and CEO hereby certify that the Investment Entity report has and parent companys income statements and balance sheets will be
been prepared according to the International Financial Reporting Standards presented for adoption by the Annual General Meeting of shareholders
(IFRS), as adopted by the EU, and provides a true and fair overview of the on 25 May 2016.
Solna, 25 April 2016
Bo Jesper Hansen Tse Ping Niclas Adler

Chairman Board member Board member
Vlad Artamonov Khalid Islam Henrijette Richter

Board member Board member Board member
Carl Johan Sundberg Hans Wigzell Jim Van heusden

Board member Board member CEO
Our Auditors Report was presented on 25 April 2016
Ernst & Young AB
Bjrn Ohlsson
Authorized Public Accountant

Auditors Report
To the annual meeting of the shareholders of Karolinska Development AB An audit involves performing procedures to obtain audit evidence about the
(publ), corporate identity number 556707-5048 amounts and disclosures in the annual accounts for the parent company
and the financial statements for the investment entity. The procedures
selected depend on the auditors judgement, including the assessment of
Report on the annual accounts for the parent the risks of material misstatement of the annual accounts for the parent
company and the financial statements for the company and the financial statements for the investment entity, whether due
investment entity to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the companys preparation and fair presentation
We have audited the annual accounts for the parent company and the
of the annual accounts for the parent company and the financial statements
financial statements for the investment entity of Karolinska Development
for the investment entity in order to design audit procedures that are
AB (publ) for the year 2015-01-01 2015-12-31. The annual accounts for
appropriate in the circumstances, but not for the purpose of expressing an
the parent company and the financial statements for the investment entity
opinion on the effectiveness of the companys internal control. An audit also
are included in the printed version of this document from page 39.
includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board of Directors
and the Managing Director, as well as evaluating the overall presentation of
Responsibilities of the Board of Directors
the annual accounts for the parent company and the financial statements
and the Managing Director for the annual for the investment entity.
accounts for the parent company and the
financial statements for the investment entity We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinions.
The Board of Directors and the Managing Director are responsible for the
preparation and fair presentation of these annual accounts in accordance
with the Annual Accounts Act and the financial statements for the Opinions
investment entity in accordance with International Financial Reporting
In our opinion, the annual accounts have been prepared in accordance
Standards, as adopted by the EU, and the Annual Accounts Act, and for
with the Annual Accounts Act and present fairly, in all material respects,
such internal control as the Board of Directors and the Managing Director
the financial position of the parent company as of 31 December 2015 and
determine is necessary to enable the preparation of annual accounts for the
of its financial performance and its cash flows for the year then ended in
parent company and the financial statements for the investment entity that
accordance with the Annual Accounts Act. The financial statements for
are free from material misstatement, whether due to fraud or error.
the investment entity have been prepared in accordance with the Annual
Accounts Act and present fairly, in all material respects, the financial position
Auditors responsibility of the group as of 31 December 2015 and of their financial performance
and cash flows for the year then ended in accordance with International
Our responsibility is to express an opinion on these annual accounts Financial Reporting Standards, as adopted by the EU, and the Annual
for the parent company and the financial statements for the investment Accounts Act. The statutory administration report is consistent with the
entity based on our audit. We conducted our audit in accordance with other parts of the annual accounts and the financial statements for the
International Standards on Auditing and generally accepted auditing investment entity.
standards in Sweden. Those standards require that we comply with

ethical requirements and plan and perform the audit to obtain reasonable We therefore recommend that the annual meeting of shareholders adopt
assurance about whether the annual accounts for the parent company the income statement and balance sheet for the parent company and the
and the financial statements for the investment entity are free from investment entity.
material misstatement.

Other matters As a basis for our opinion concerning discharge from liability, in addition to
our audit of the annual accounts for the parent company and the financial
The audit of the annual accounts for the parent company and the statements for the investment entity, we examined significant decisions,
financial statements for the investment entity for 2015 was performed actions taken and circumstances of the company in order to determine
by another auditor who submitted an auditors report dated April 2015, whether any member of the Board of Directors or the Managing Director
with unmodified opinions in the Report on the annual accounts and the is liable to the company. We also examined whether any member of the
financial statements. Board of Directors or the Managing Director has, in any other way, acted
in contravention of the Companies Act, the Annual Accounts Act or the
Articles of Association.
We believe that the audit evidence we have obtained is sufficient and

Report on other legal and appropriate to provide a basis for our opinions.
regulatory requirements Opinions
We recommend to the annual meeting of shareholders that the profit be

In addition to our audit of the annual accounts for the parent company
appropriated in accordance with the proposal in the statutory administration
and the financial statements for the investment entity, we have also
report and that the members of the Board of Directors and the Managing
audited the proposed appropriations of the companys profit or loss and
Director be discharged from liability for the financial year.
the administration of the Board of Directors and the Managing Director of
Karolinska Development AB (publ) for the year 2015-01-01 2015-12-31.
Responsibilities of the Board of Directors Stockholm, 25 April 2016

and the Managing Director
Ernst & Young AB
The Board of Directors is responsible for the proposal for appropriations of
the companys profit or loss, and the Board of Directors and the Managing Bjrn Ohlsson
Director are responsible for administration under the Companies Act. Authorized Public Accountant
Auditors responsibility
Our responsibility is to express an opinion with reasonable assurance on

the proposed appropriations of the companys profit or loss and on the
administration based on our audit. We conducted the audit in accordance
with generally accepted auditing standards in Sweden.
As a basis for our opinion on the Board of Directors proposed

appropriations of the companys profit or loss, we examined whether the
proposal is in accordance with the Companies Act.

Corporate Governance Report for 2015
Introduction Authorization to the Board to issue new

shares or acquire its own shares
The Annual General Meeting on 20 May 2015 authorized the Board, for the
This Corporate Governance Report has been prepared in accordance with
period up until the next annual general meeting to adopt decisions, whether
the Swedish Code of Corporate Governance and the Swedish Annual
on one or several occasions without pre-emption rights for the shareholders
Accounts Act.
to issue new shares of series B up to a maximum of ten percent of the
share capital.
The Annual General Meeting also authorized the Board to decide on acquisition
Corporate Governance at of up to 583,125 own shares to cover social security charges related to the
Karolinska Development PSP 2012-2015 incentive program. No repurchase has been executed under
this mandate. The companys total holding is 244,285 shares.
Holdings of ten percent or more of the votes

Application of the Swedish Code of
Corporate Governance There is one holding that represents more than one tenth of the voting
rights for all shares in Karolinska Development, Karolinska Institutet Holding
Karolinska Development complies with the Swedish Code of Corporate AB, the only holder of non-listed series A shares, with 25.62 percent of the
Governance (the Code) with one deviation. The Nomination Committee votes (6.79 percent of the shares).
has decided to appoint Niclas Adler who is native Swedish and is familiar
with Swedish Corporate Governance, in addition fully understands the
company's needs, as chairman of the Committee. Niclas Adler is also a Nomination Committee
director of the Company. The Nomination Committee believes it is essential
that the work of the Committee shall be chaired by the person nominated The five largest owners (as set forth in the share register kept by Euroclear
by the largest shareholder, Thai Charoen Pokphand Group. Sweden AB as of 31 August, 2015) have each appointed one member
of the Nomination Committee for the Annual General Meeting 2016. The
Information on the Companys website members of the Nomination Committee have elected a chairman among
themselves. The Nomination Committee consists of Niclas Adler (Chairman),
appointed by Sino Biopharmaceutical; Magnus Persson, appointed by
On its website, the Company has a special section for corporate
Karolinska Institutet Holding AB; Peter Lundkvist, appointed by Tredje AP-
governance issues under the section Corporate Governance
fonden (Third Swedish National Pension Fund); Gillis Cullin, appointed by
(http://www.karolinskadevelopment.com/en/ir/corporate-governance/).
stersjstiftelsen (The Foundation for Baltic and East European Studies);
and Todd Plutsky, appointed by Coastal Investment Management
General meetings
If a member of the Nomination Committee resigns or is prevented from
The principles for the general meetings, decisions by the general meetings,
pursuing his/her assignment, the shareholder that has appointed such
the rights of the shareholders and how these rights are exercised, comply
member shall appoint a new member. In the event that the shareholding
with applicable legal requirements.
in the Company is materially changed, before the Nomination Committee
has completed its assignment, the Nomination Committee may decide to
Composition of the Board and functions, etc.
change the composition of the Nomination Committee, as determined by
the Nomination Committee (considering the principles applicable for the
According to the Articles of Association, the Board shall consist of not
appointment of the Nomination Committee). No fees shall be paid to the
less than three and not more than nine directors. Deputies shall not be
members of the Nomination Committee. Out of pocket expenses shall be
appointed. At the Annual General Meeting 2014, eight directors and no
reimbursed by the Company.
deputies were elected.
Regulations regarding the appointment and

dismissal of directors and amendments to
the Articles of Association
The Articles of Association contain no special regulations regarding the

appointment and dismissal of directors and no special regulations regarding
amendments to the Articles of Association.

Board of Directors
Henrijette Richter Director since 2014. Born 1971. PhD MSc. Other
appointments Partner at Sofinnova Partners, Paris. Previous positions
include Investment Director at Novo Seeds, Novo A/S (2007-2014) where
she served on the boards of Cytoguide ApS, Avilex Pharma ApS, Affinicon
ApS, Orphazyme A/S and EpiTherapeutics A/S. In addition she is on
Composition of the Board
the Board of Directors for the Green Development and Demonstration
Programme (GUDP) of the Danish Food, Agriculture and Fisheries Ministry.
The Companys Board consists of eight directors, Bo Jesper Hansen
No holdings in Karolinska Development.
(Chairman), Tse Ping, Hans Wigzell, Henrijette Richter, Carl Johan
Sundberg, Niclas Adler, Khalid Islam and Vlad Artamonov.
Niclas Adler Board member since 2015. Born 1971. PhD MSc. Other
appointments Managing Partner Accelerated Innovation Ltd, President
Information on remuneration to Board as determined by the Annual General
Indonesian International Institute for Life-sciences, Chairman PT
Meeting, can be found in the annual report under the note Employees and
Accelerated Value, Chairman e-Cognition PTE Ltd, Chairman ITH Immune
costs for employees.
Therapy Holdings AB, Chairman TLA Targeted Immunotherapies AB,
Chairman Accelerated Drug Development AB and Babson Global
Elected directors
Professor of Entrepreneurship Practice. Previous appointments include
President IPMI International Business School, Jakarta, Director Truepoint
Bo Jesper Hansen Chairman and director since 2013. Born 1958.
Partners, Boston, Fellow, Sunningdale Institute, London, Fellow, Centre
MD PhD. Other appointments Chairman of Swedish Orphan Biovitrum
For International Business and Management, Judge Business School,
AB and Topotarget A/S. Board member of Hyperion Therapeutics Inc.,
Cambridge University, CEO Jnkping International Business School,
GenSpera Inc., Newron SA, Ablynx NV, Orphazyme A/S and CMC
Director FENIX Center for Innovations in Management, Stockholm
Kontrast AB. Previous appointments include various positions in Swedish
School of Economics, Executive Director, Stockholm School of
Orphan International AB since 1993, including CEO 19982010. Medical
Entrepreneurship. No holdings in Karolinska Development.
advisor for Synthlabo, Pfizer, Pharmacia and Yamanouchi. Founder of
ScanStyrelseledamot sedan 2012. Fdd 1978. MBA, B.Sc. vriga uppdrag
Carl Johan Sundberg Board member since 2014. Born 1958. Professor
Styrelseledamot i Redbank Energy Ltd. samt i Coastal Capital International
of Physiology. Other appointments Board Director of Cobra Biologics
Ltd., Managing Partner vid Coastal Capital International Ltd. Tidigare
AB, Coordinator Science and Society, the Vice-Chancellor's Office at KI,
uppdrag inkluderar Investment Analyst fr Greenlight Capital Inc., position
member of Karolinska Institutet Innovation Council, director of the Unit of
inom Global Merger & Acquisition Group vid Merrill Lynch i New York.
Bioentrepreneurship, Fellow of the Royal Swedish Academy of Engineering
Innehav i Karolinska Development 3 470 541 (genom nrstende juridisk
Sciences, member of the Medical Commission of the International Olympic
person).inavian Medical Research. Holdings in Karolinska Development SEK
Committee, Inspector General of the Medical Association and Chairman
400,000 convertible loan.
of Research!Sweden. Previous assignments include Investment Director
at Karolinska Investment Fund, Board Director of Global Genomics AB,
Tse Ping Vice Chairman and Board member since 2015. Born 1952.
AngioGenetics AB, NsGene AS, Cellectricon AB, Alfta Rehab Center
Honorary Doctorate, Fil Dr hc. Other appointments Founder and Chairman
Holding AB, Karolinska Education AB and Feelgood Swedish AB, Vice
of Sino Biopharmaceutical Limited, one of the largest and most successful
President of Euroscience and Chairman of the Swedish Professional
pharmaceutical companies in Hong Kong. Mr. Tse Ping is also Vice
Associations for Physical Activity and Sports Medicine. No holdings in
Chairman of Charoen Pokphand Group (CP Group), the largest company
Karolinska Development.
in Thailand, where he has extensive experience of major merger and
acquisition activity including Ping An Insurance, CITIC Group, China Mobile,
Khalid Islam Board member since 2015. Born 1955. PhD. Other
ITOCHU Corporation, and Marko Group. Previous appointments include
appointments Board member of Pcovery Aps, Adenium Aps, Oxthera AB,
Member of the Ninth, Tenth, and Eleventh National Committee of the
Fennec Pharma Inc. and Molmed SpA.; Advisor to Kurma Biofund, member
Chinese Peoples Political Consultative Conference. Holdings in Karolinska
of the Editorial Board of Current Drug Discovery & Technologies and of
Development 4,853,141 shares and SEK 272,858,294 in convertible bonds
the International Scientific Advisory Board of The Network of Excellence
(by related legal person).
for Pathogenomics. Previous appointments include President of Gentium
SpA and Arpida AG and various leadership positions in research and
Hans Wigzell Director since 2006. Born 1938. Professor of Immunology
development in Hoechst Marion Roussel (HMR) and Marion Merrell Dow
and MD. Other appointments Chairman of Rhenman & Partner Asset
(MMD). No holdings in Karolinska Development.
Management AB. Board member of Swedish Orphan Biovitrum AB,
Valneva SA, Sarepta Therapeutics Inc. and RaySearch Laboratories AB.
Vlad Artamonov Director since 2012. Born 1978. MBA BSc. Other
Member of The Royal Swedish Academy of Engineering Sciences and
appointments Board Member of Redbank Energy Ltd. and of Coastal
of the Royal Swedish Achademy of Sciences. Previous assignments
Capital International Ltd., Managing Partner at Coastal Capital International
include, among others, the President of Karolinska Institutet's Nobel
Ltd. Previous appointments include Investment Analyst at Greenlight Capital
Committee, and President of Karolinska Institutet and Director General of
Inc., position in the Global Merger & Acquisition Group at Merrill Lynch
Smittskyddsinstitutet. Holdings in Karolinska Development 8,491 shares.
in New York. Holdings in Karolinska Development 3,470,541 shares (by
related legal person).

Independence requirements Besides the Audit Committee and the Remuneration the board has decided
to form an Asian Committee, with Tse Ping as Chairman and Bo Jesper
Hansen, Niclas Adler and Henrijette Richter as members. The Asian
The table below indicates which elected directors are considered
Committee has not yet commenced its work.
independent in relation to the Company and its management as well as in
relation to the Companys major shareholders, according to the definitions
stipulated in the Code.
Audit Committee
Karolinska Developments Audit Committee consists of four members:
Name Function Elected Independent of:
Bo Jesper Hansen (Chairman), Hans Wigzell, Niclas Adler and Henrijette
company major
Richter, each being independent in relation to the Company and its
/mgmt. holders
management as well as in relation to the Companys major shareholders.
Bo Jesper Hansen Chairman 2013 yes yes
Tse Ping director 2015 yes yes The main tasks of the Audit Committee are to
Hans Wigzell director 2006 yes yes
Henrijette Richter director 2014 yes yes monitor the Company's financial reporting,
Carl Johan Sundberg director 2014 yes no

m
onitor the efficiency of the Company's internal control, internal audit
Niclas Adler director 2015 yes yes and risk management, with respect to financial reporting,
Khalid Islam director 2015 yes yes
Vlad Artamonov director 2012 yes yes remain informed about the audit of group reporting and financial
statements,
A major holder means a holder controlling, directly or indirectly, at least ten review and monitor the impartiality and independence of the auditor, and
in that respect particularly pay attention to non-audit services provided
per cent of the shares or votes.
by the auditor, and
The Company meets the Code requirement that a majority of the elected
assist in the preparation of proposals to the Annual General Meeting
directors must be independent in relation to the Company and its
regarding election of auditors.
management, and that a minimum of two of these must be independent in
relation to major shareholders.
The Audit Committee has met nine times during 2015. Bo Jesper Hansen
The Board's work etc. and Hans Wigzell have been present at all meetings, and Henrijette Richter
at six meetings. Niclas Adler who became a member of the committee
According to the Rules of procedure, the Board shall normally meet six during the year has not attended a meeting.
times per year. During 2015, the Board held 30 meetings, of which 14
were per capsulam decision. Om the remaining 16 board meetings Bo Remuneration Committee
Jesper Hansen attended 15, Hans Wigzell 16, Henrijette Richter 15, Vlad
Artamonov 14, Robert Holland (who resigned at the AGM) 9, Charlotte Karolinska Developments Remuneration Committee consists of four
Edenius (who resigned at the AGM) 7, Khalid Islam (who was elected at the members: Bo Jesper Hansen (Chairman), Hans Wigzell, Carl Johan
AGM) 7, Niclas Adler (who was elected at the AGM) 6 and Tse Ping (who Sundberg and Vlad Artamonov, each being independent in relation to the
was elected at the AGM) 0. Company and its management as well as in relation to the Companys
major shareholders.
The number of extraordinary board meetings is mainly due to issues related
to the financing, valuation issues and divestment of portfolio companies.
The main tasks of the Remuneration Committee are to
The General Counsel of the company, Ulf Richenberg is the secretary at the
prepare the Board's decisions on issues concerning principles for
board meetings. remuneration, remunerations and other terms of employment for the
executive management,
The Board annually adopts rules of procedure, an instruction on the
delegation of work between the Board and the CEO, and an instruction monitor and evaluate programs for variable remuneration, both
on financial reporting to the Board. The Board also adopts policies, which ongoing and those that have ended during the year, for the executive
constitute a foundation for the Company's internal control systems. These management, and
are the Information Policy, IT Security Policy, Gender Equality Policy,
monitor and evaluate the application of the guidelines for remuneration
Environmental Policy, HR Policy, Ethics Policy, Investment Policy and
that the Annual General Meeting is legally obliged to establish, as well as
Dividend Policy.
the current remuneration structures and levels in the company.
The board evaluation of the board work has been conducted through
a questionnaire distributed to all directors. The aggregated result of the
questionnaire has been distributed to the directors and been subject to The Remuneration Committee had one meeting during 2015, at which all
internal discussion. The full result of the evaluation has been submitted to members were present.
the Nomination Committee.

Chief Executive Officer alia: (i) the existence, at a given date, of an asset or liability, (ii) that a business
transaction or an event has occurred during the period and relates to the
Company, (iii) that there are no assets, liabilities or business transactions
Jim Van heusden. Born 1971. PhD. Appointed in 2015. Jim Van heusden
which are not recorded or items for which the necessary information is
has over 20 years of experience within venture capital, research and
missing, (iv) that each asset and liability is recorded and valued in accordance
development within the pharmaceutical industry, including as Founder and
with law, generally accepted accounting principles and internal valuation
Managing Director at bioskills (2013-2015) and as Partner at the European
rules; (v) that the business transactions are recorded at the correct amount
investment company Gimv (2001-2013). During his appointment at Gimv
and that profit and expenses are attributable to the correct period, (vi) that an
he also served as a Board member in several biotech companies including
asset or liability relates to the Company on a specified date and, (vii) that an
Multiplicom NV (as Chairman), Ablynx NV, ActoGeniX NV, Pronota NV and
item is classified and described in accordance with law, generally accepted
Prosensa. During 1993-2001, Jim Van heusden worked as Senior Scientist
accounting principles and listing rules.
at Janssen Pharmaceuticals (Johnson & Johnson). Holdings in Karolinska
Development 93,668 shares. Control Activities. The financial reporting is subject to control activities
aimed at preventing, detecting and correcting errors and discrepancies.
Deputy CEO These consist of a specified allocation of work, documented and clearly
described rules for how business transactions are to be approved as well
Terje Kalland. Born 1951. MD PhD. Terje Kalland was deputy CEO during as their traceability, the application of accounting and valuation principles,
2015. He retired 31 December 2015 and left the position as Deputy CEO. analytical monitoring, account reconciliation, monitoring of agreements,
No new Deputy CEO has been appointed. board resolutions, policies and certification procedures.
As relates to the portfolio, regular follow-ups are made of planned and

implemented investments in terms of whether the companies have met the
stipulated targets for further investments. Furthermore, evaluations are made
The main components of and priorities set among the companies projects. Scientific results and
the Company's system for

business opportunities are both monitored. This is done continuously both in
regularly meetings in the R&D Team an in regularly management meetings.
internal control and risk There is also a monthly analysis of how different activities in portfolio
management in relation to companies affect the valuation of these in the parent company and the
consolidated financial statements. Valuation effects are reported to and
financial reporting finally approved by the CFO and the CEO.
Communications. The internal financial reporting complies with stipulated

reporting plans. The Companys rules of procedure and the instruction on
reporting to the Board include detailed descriptions as to when and what
Internal control and risk management should be reported to and handled by the Board. The Companys CFO, with
at Karolinska Development the support of controllers, is responsible for the financial reporting to the
Board, which includes information on the Companys results and financial
Internal control is designed to provide reasonable assurance as to the position. Reporting plans are aimed at ensuring complete, accurate and
reliability of external financial reporting and compliance with the law, timely information to the Companys management and the Board.
generally accepted accounting principles and rules for listed companies.
The Company has quite few employees, all active at the same workplace.
The key elements of the Companys system for internal control and risk Aside from the above-mentioned Management Meetings, regular
management related to financial reporting are presented below. The Companys information meetings are held, which enables quick and accurate internal
internal control comprises mainly the areas of Control Environment, Risk communication and information.
Assessment, Control Activities, Communications and Monitoring.
Monitoring. Internal rules on internal control and risk management are
Control environment. The control environment constitutes the basis updated at least annually and when necessary. Assessment of compliance
for the internal control. Karolinska Development has a flat organizational is performed on a detailed level. The Audit Committee meets prior to Board
structure with a clear division of responsibilities and rights. There is an meetings where interim reports are to be discussed. The auditors are
established system of governing documents in the form of Policies adopted present at the meetings of the Audit Committee and meet annually with the
by the board and Instructions adopted by the CEO. Within the framework directors without anyone from management present.
of overarching policies, they govern decisions, authorization and processes
involving purchases, payments and investments. Among these documents, Specific assessment of the need
the Valuation Guidelines, governing methods and processes for valuation for internal audit
of the portfolio, should be mentioned. The documentation is centrally
accessible to all employees through the Companys internal IT network. Karolinska Development has no internal audit function. The Board is of the
The Company has employed personnel responsible for controlling and legal opinion that there is no need for an internal audit function at present. The
functions, who jointly work towards a well-functioning control environment reasons are that the Company has relatively few employees, its business
as one of their specifically stated goals. These governing documents form is established in only one location, the majority of significant transactions
the basis for how transactions should be handled, recorded and reported. are similar in character and relatively straightforward, and there is a clear
internal accountability within the Company.
Risk assessment. The Company works continuously with a structured risk
assessment with regard to issues which have an impact on the Company's Solna, April 2016
financial position and result. Special attention is paid to the risk of irregularities
Board of Directors of Karolinska Development AB
and favoritism at the Companys expense. Risk assessment includes inter

Auditors Report on the Corporate Governance Statement
To the annual meeting of the shareholders of Karolinska Development AB

(publ), corporate identity number 556707-5048
It is the Board of Directors that is responsible for the corporate governance

statement for the year 2015 on pages 91-94 and that it has been prepared
in accordance with the Annual Accounts Act.
We have read the corporate governance statement and based on that

reading and our knowledge of the company and the investment entity we
believe that we have a sufficient basis for our opinions. This means that our
statutory examination of the corporate governance statement is different
and substantially less in scope than an audit conducted in accordance
with International Standards on Auditing and generally accepted auditing
standards in Sweden.
In our opinion, the corporate governance statement has been prepared and
its statutory content is consistent with the annual accounts for the parent
company and the financial statements for the investment entity.
Stockholm, 25 April 2016
Ernst & Young AB
Bjrn Ohlsson
Authorized Public Accountant

Definitions and Glossary
Definition of Key Terms

Karolinska Karolinska Development AB (publ.), Corporate
Development Identity Number 556707-5048.
Portfolio companies Companies that are wholly or partially owned

Capital employed Total equity and interest-bearing liabilities. by Karolinska Development (subsidiaries,
associated companies and other long-
Return on equity Profit/loss after financial items divided by equity. term securities holdings) and are active
in pharmaceuticals, medical technology,
Return on Profit/loss after financial items divided theranostics and formulation technology.
capital employed by capital employed.
Fair value From the regulatory framework for issuers it is clear
Equity to total Equity divided by total assets. that companies listed on a public marketplace
assets ratio that constitute groups must apply the International
Financial Reporting Standards, IFRS. These
Profit/loss after tax attributable to the Parent
After-tax standards apply only to the consolidated financial
earnings per share Companys shareholders divided by the weighted statements. Application of these standards allows
average number of shares before and after dilution. groups of an investment nature to apply fair value
in the calculation of the assets values. These
Equity per share Equity divided by the number of shares calculations are made on the basis of established
outstanding at year-end. principles and are not included in the legal entities
included in the Groups reporting and do not affect
Net asset value Estimated fair value of total portfolio holdings, cash flow. This is exemplified by the fact that that
per share cash and cash equivalents, financial assets less the Parent Companys assets are not recognized at
interest-bearing liabilities in relation to the number acquisition cost rather than fair value.
of shares outstanding at year-end.
Fair value is calculated according to the
International Private Equity and Venture Capital
Valuation Guidelines. Accordingly, fair value
Definitions is calculated differently depending on what

is considered to provide the best estimate of
market value in the particular case. For Karolinska
Development, this means that the fair value of all
Deal flow agreement Agreement between Karolinska Development and
portfolio companies are obtained by using the
KIAB giving Karolinska Development access to
value of the most recently financing or similar
research projects that are evaluated by KIAB.
transaction that includes a third party. If there is
no valuation available based on such transaction,
Karolinska Institutet Karolinska Institutet, Corporate Identity Number
discounted cash flow models (DCF) may be used.
202100-2973 Karolinska Institutet is one of the
worlds leading medical universities and awards
the Nobel Prize in Physiology or Medicine.
KIHAB Karolinska Institutet Holding AB, Corporate

Glossary
Identity Number 556525-6053.
KIHAB is owned by Karolinska Institutet. KIHAB Adjuvant treatment An add-on treatment in order to prevent disease
is the Parent Company of a group of five wholly relapse by increasing the overall efficacy of
owned subsidiaries, including Karolinska Institutet a treatment.
Innovations AB (KIAB) and Karolinska Institutet
Science Park AB. Amino acids Amino acids are the chemical building blocks that
can be combined in chains, or sequences, to form
KIAB Karolinska Institutet Innovations AB, Corporate proteins and peptides.
Identity Number 556528-3909.
AML Acute myeloid leukemia. A form of blood cancer
KIAB, which is owned (indirectly) by Karolinska that originates from the bone marrow. The disease
Institutet, identifies projects with high commecial results in high growth of defective white blood
potential at an early stage by actively seeking new cells that stunt growth of normal white blood cells
ideas from Karolinska Institutet and other Nordic and thereby harming the immune response.
universities. KIAB leads and also finances the
project development in early phases, where the
objective is to establish a licensing agreement or a
start-up company.

Antibodies Proteins that are a part of the immune response Programmed cell A suicide mechanism a cell may go through if it is
system.Antibodies bind foreign agents (e.g. death somehow damaged.
pathogens) thereby marking those agents for
attack from the immune system. Protein Large molecules built from sequences of amino
acids. Proteins are used in many different ways
Biomarker Substance that indicates specific biological in an organism; they provide structure for cells
processes, for example diseases, and can and tissues, they catalyze chemical reactions in
therefore be used as a tool for diagnosis. the form of enzymes and they are involved in the
signaling in and between cells.
Chemotherapy Pharmaceuticals that target fast growing cells, for
example cancer cells. These compounds usually Randomized (study) A study in which the trial participants are randomly
work by halting the cell division process. The allocated into two or more treatment groups that
treatment of a cancer patient with cytotoxics is are given different treatments or placebo.
referred to as chemotherapy.
Receptor A large molecule, usually a protein, which is attached
Double blind (study) A setup of a clinical study where neither the to cell membranes and binds to a target molecule.
individuals participating in the study or the The target molecule can be a hormone that has a
study staff know which treatment group the certain effect on the cell to which it binds to.
individuals are in.
Small molecule Molecule with a low molecular weight. As
Endogenous Derived from Greek proceeding from within. opposed to large molecules like therapeutic
Substances that originates from within the proteins or antibodies, small molecules can be
administered orally. Steroids Type of organic
own body.
molecules that among other things include
natural hormones.
Ex vivo From Latin, literally outside of the living. Refers to
studies done in laboratory settings, conducted on
Steroids Type of organic molecules that among other
tissue separated from the organism.
things include natural hormones.
FDA Food and Drug Administration. US authority

Thrombosis Formation of a blood clot in blood vessels.
that, among other things, is responsible for
regulating pharmaceutical and medicinal Topical Administration through body surfaces, usually
technology products. through the skin.
Heparin A natural anticoagulant substance that prevents

the formation of blood clots as well as the
Dates for Publication of

extension of existing blood clots.
In vivo From Latin, literally inside of the living. Refers to

studies conducted on living organisms. Financial Information
Monoclonal Type of antibodies that are derived from identical
antibodies parental cells and therefore have the same specificity. Interim report January - March 2016 10 May 2016
Interim report January - June 2016 31 August 2016
Mutated gene Changes in a cells DNA that may change the
Interim report January - September 2016 23 November 2016
function of a gene.
Year-end report January - December 2016 February 2017
Pathogen Infectious agent that causes disease. Annual report 2016 April 2017
Placebo-controlled A clinical study that includes a control group that

study receives an inactive (placebo) treatment but is
otherwise treated exactly like the group that
receives the real treatment.

Karolinska Development
karolinskadevelopment.com Tomtebodavgen 23 A
SE-171 65 Solna
Sweden
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Annual Report 2015

02. About Karolinska Development 25. Board of Directors

05. Portfolio Company Highlights 29. Director's Report

07. Message from the Chairman 38. Financial Statements

15. Portfolio Companies 96. Definitions and Glossary

Karolinska Developments Share and Shareholders

01 Annual Report 2015 Karolinska Development

About Karolinska Development

Karolinska Development Annual Report 2015 02

Clear Strategy Streamlined Portfolio

Karolinska Development strengthened its organization, bringing in

03 Annual Report 2015 Karolinska Development

invested in portfolio companies SEK 70m

Karolinska Development Annual Report 2015 04

A More Focused Portfolio

In March 2016, Aprea a vaso-occlusive crisis. The

of specialist international conduct the clinical trial.

Aprea life science investors led by Sevuparin received orphan OssDsign

05 Annual Report 2015 Karolinska Development

Significant New Value retained Divested to

Commercial economic interest in the future

and Amendia divested its entire shareholding Refinanced

Karolinska Development Annual Report 2015 06

The progress Karolinska

07 Annual Report 2015 Karolinska Development

We now have the right

Karolinska Development Annual Report 2015 08

Investments and loans in portfolio The Investment Entitys equity to total

Other adjustments in the fair value and reduced amount potentially

09 Annual Report 2015 Karolinska Development

220-880 65% 35%

880-1320 75% 25%

* When calculating distribution of dividends, any dividends Allocation to Karolinska Development

Financial position (comparative figures Rosetta Capital deal

Karolinska Development Annual Report 2015 10

Karolinska Development Management Team

Pictured from left to right:

Jim Van heusden

11 Annual Report 2015 Karolinska Development

I feel optimistic and enthusiastic

Karolinska Development Annual Report 2015 12

The main thing that attracted

Q Which companies in the portfolio are you

There are some highly innovative technologies and approaches being

13 Annual Report 2015 Karolinska Development

As we stand today, our portfolio

Q How do you intend accessing deals

Karolinska Development Annual Report 2015 14

Have the potential for market exclusivity based on intellectual rights

Have clear market dynamics to position the company for an

Core portfolio companies financed to next value-inflection point

Therapeutics Strategy: Fund to proof-of-concept then license, sell or IPO

Pre-clinical Phase I Phase II Phase III Financing

(expected proof- SEK 437 million

Medtech Strategy: Fund to break-even then sell or IPO

Prototype Development PMA / 510K Market Financing

patient specific craniofacial implants revenue generating SEK 93 million

orthopedic implant coating revenue generating collaborations

15 Annual Report 2015 Karolinska Development

* Includes indirect holdings

Karolinska Development Annual Report 2015 16

Targeting relief for sickle cell

Dilaforette, a Swedish drug development company, is developing

02. About Karolinska Development 25. Board of Directors

Other adjustments in the fair value and reduced amount potentially

Have the potential for market exclusivity based on intellectual rights

Have clear market dynamics to position the company for an

Second wave of launch of OSSDSIGN Cranial and OSSDSIGN

Umecrine Cognition raises new funds,