xbrli:pureiso4217:DKK401692292023-01-012023-12-31401692292023-01-012023-12-311401692292023-01-012023-12-311401692292023-01-012023-12-311401692292023-01-012023-12-312401692292023-01-012023-12-313401692292023-01-012023-12-314401692292023-01-012023-12-315401692292023-01-012023-12-312401692292023-01-012023-12-31401692292022-01-012022-12-31401692292023-01-012023-12-31fsa:RetainedEarningsMember401692292023-12-31401692292022-12-31401692292023-01-01401692292022-01-01401692292023-01-01fsa:ContributedCapitalMember401692292023-01-01fsa:SharePremiumMember401692292023-01-01fsa:RetainedEarningsMember401692292023-12-31fsa:ContributedCapitalMember401692292023-12-31fsa:SharePremiumMember401692292023-12-31fsa:RetainedEarningsMember401692292023-01-012023-12-31fsa:ContributedCapitalMember401692292023-01-012023-12-31fsa:SharePremiumMember401692292023-01-012023-12-31fsa:OtherShorttermPayablesMemberGrundlag for konklusionKonklusion2024-06-282024-06-28true339635562022-01-012022-12-31Aarhus C80002City Tower, VærkmestergadeDeloitte Statsautoriseret RevisionspartnerselskabKøbenhavnKøbenhavn Ø2100Regnskabsklasse BRevisionspåtegning2023-12-312023-01-01<br /><br />3FruebjergvejZerion Pharma A/S40169229339635562300 København SWeidekampsgade 6Deloitte Statsautoriseret RevisionspartnerselskabÅrsrapportThe Board of Directors and the Executive Board have today considered and approved the annual report of Zerion Pharma A/S for the financial year 01.01.2023 - 31.12.2023.The annual report is presented in accordance with the Danish Financial Statements Act.In our opinion, the financial statements give a true and fair view of the Entity’s financial position at 31.12.2023 and of the results of its operations and cash flows for the financial year 01.01.2023 - 31.12.2023.We believe that the management commentary contains a fair review of the affairs and conditions referred to therein.We recommend the annual report for adoption at the Annual General Meeting.CopenhagenOle Sylvester-Hvid WiborgJorrit Jeroen WaterLars Lykke ThomsenDorte Juhl ArnbjergCarl-Åke CarlssonAllan StichTo the shareholders of Zerion Pharma A/SWe have audited the financial statements of Zerion Pharma A/S for the financial year 01.01.2023 - 31.12.2023, which comprise the income statement, balance sheet, statement of changes in equity, cash flow statement and notes, including a summary of significant accounting policies. The financial statements are prepared in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the Entity’s financial position at 31.12.2023 and of the results of its operations and cash flows for the financial year 01.01.2023 - 31.12.2023 in accordance with the Danish Financial Statements Act.We conducted our audit in accordance with International Standards on Auditing (ISAs) and additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the "Auditor’s responsibilities for the audit of the financial statements" section of this auditor’s report. We are independent of the Entity in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Reference is made to note 1 in the financial statements which describes the significant uncertainties related to the company's ability to continue as a going concern. The Management has in june 2024 obtained written confirmations of intend from shareholders for a share subscription raising DKK 8.2 million. The share subscription is necessary to ensure sufficient cash to continue operations throughout 2024. Our conclusion is not modified in this respect.Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Management is responsible for assessing the Entity’s ability to continue as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:<br />Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. <br />Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control. <br />Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. <br />Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the financial statements, and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern. <br />Evaluate the overall presentation, structure and content of the financial statements, including the disclosures in the notes, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view.<br />We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.Management is responsible for the management commentary. Our opinion on the financial statements does not cover the management commentary, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the management commentary and, in doing so, consider whether the management commentary is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the management commentary provides the information required by relevant law and regulations.<br /> Based on the work we have performed, we conclude that the management commentary is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the management commentary.AarhusHenrik Wolff MikkelsenLeon Thomas Ravn Fagerlindmne33747mne49914State Authorised Public AccountantState Authorised Public AccountantPrimary activitiesZerion Pharma A/S (“Zerion” or “the Company”) is a drug development company, based in Copenhagen. The Company was founded in January 2019 as a spinout from the University of Copenhagen based on a decade of research. Zerion has developed a formulation technology, Dispersome®, that enables poorly soluble drugs to become effective pharmaceutical products. The Company applies the technology to 1) improve existing drug products, thereby building its own pipeline of product candidates and 2) partner with major pharmaceutical and biotech companies to solve problems with solubility and bioavailability in their new pharmaceutical candidates (NCEs). Zerion’s R&D activities comprise firstly in-house lab work with the aim to develop better formulations of new and existing drugs. The Company’s research labs are located at the incubator centre, Symbion, where the Company employs about 10 scientists and technicians. Secondly, Zerion conducts external pre-clinical and eventually clinical studies with selected drug candidates which incorporate the Dispersome® technology. Development in activities and financesDuring 2023, the Company made significant progress in its R&D activities. In two partner projects, Zerion developed formulations which allowed the partners to move their drug candidates close to clinical development. Furthermore, the Company moved some of its own products forward although at a modest pace due to the Company’s limited financial resources. In May 2023, the Company raised DKK 7.4 million in a share issue to both existing and new shareholders. Events after the balance sheet dateIn June 2024, the Company signed a binding term sheet with its strategic partner, Hovione. The term sheet implies that Zerion’s IP portfolio will be spun-off into a new IP holding company, initially fully owned by Zerion. Subsequently, Hovione will acquire a 50% share of the IP company at a price, equal to the loan that Zerion obtained from Hovione in 2022. In June 2024, Zerion also obtained written confirmations of intend from shareholders for a share subscription raising DKK8.2 million. With this financing, management estimates that the Company is funded through Q2, 2025 based on current projections. Otherwise, no events have occurred after the balance sheet date to this date, which would influence the evaluation of this annual report 355995632733270677505085666835166837276835902060-5253393-1091265161565589538147537197441028-11947148-208918262974383215614711241102-13505645-22129096-2510000-3393491106246121713-11101891-18857318-11101891-11101891-1885731826259022945727262590229457272625902294572749232681819346783011617552510000339395976175035463315373907229997441036214103621664449158463059477528847220712423255640018520927-14370530-10479005-13730512-99580785209270-10479005-99580786400180-143705302750633310469416445744146633241877001810001938407717949018922489837990153608419872443600691607081281864244323152220271922381333847220712423255593597092400071517595973218600002457320-68034-68034-727840072784000The Company has still lost more than 50% of its equity. The Company aims to re-establish the equity during 2024. As a first step, the Company has in june 2024 entered into a binding Heads of terms with a strategic partner, Hovione, which entails sale of shares in a new IP holding company, to Hovione at a price, equal to the loan that Zerion obtained from Hovione in 2022. Furtermore the Company has In June 2024, also obtained written confirmations of intend from shareholders for a share subscription raising DKK 8.2 million. 537197441028-747855-38325-12157806-2048912329743832-1561471-124110132877132489559-680340-10496624-19236833-217372-12722880-537965-217372-1810253-10713996-21047086178242010662684-269562073974917843532891034918506216-1803647-2540870229997441036211 Going concernZerion Pharma has a negative equity of DKK 13.3 million as per 31 December 2023. During 2023, the Company’s operations were financed by revenues, equity financing and convertible loans from a strategic partner and from private lenders. Further, as mentioned in the management report, the Company has entered into a binding Heads of terms with a strategic partner, Hovione, which entails sale of shares in a new IP holding company, to Hovione at a price, equal to the loan that Zerion obtained from Hovione in 2022. The IP holding company has not been registered to date. In June 2024, Zerion Pharma also obtained written confirmations of intend from shareholders for a share subscription raising DKK 8.2 million. Combined with strict management of costs, incl. a reduction in management salaries, the financing will cover operating costs beyond the fiscal year 2024. The Company is actively searching for additional financing through discussions with current shareholders, partners and potential new investors. Management considers it highly likely that this capital increase will be effectuated, hence required cash will be available for the company in due time in Q3 2024. Consequently, the financial statements are prepared on basis of the going concern assumption. There are however uncertainties related to this assessment of the Company receiving the capital increase, as well as the ability to follow the budget and projections presented in connection to the capital increases. 2 Other operating incomeOther operating income includes DKK 0 from Innobooster grants (DKK 68k in 2022).3 Staff costs2023 DKK2022 DKKWages and salaries5,513,5478,796,149Pension costs544,927650,059Other social security costs98,08491,9396,156,5589,538,147Average number of full-time employees111211124 Other financial expenses2023 DKK2022 DKKOther interest expenses1,535,2931,194,984Exchange rate adjustments26,17846,1181,561,4711,241,102<br />2023 DKK2022 DKKOther interest expenses1,535,2931,194,984Exchange rate adjustments26,17846,1181,561,4711,241,1025 Tax on profit/loss for the year2023 DKK2022 DKKCurrent tax(2,510,000)(3,393,491)(2,510,000)(3,393,491)6 Property, plant and equipmentOther fixtures and fittings, tools and equipment DKKCost beginning of year3,607,307Additions217,372Cost end of year3,824,679Depreciation and impairment losses beginning of year(661,580)Depreciation for the year(537,197)Depreciation and impairment losses end of year(1,198,777)Carrying amount end of year2,625,9027 Tax receivableThe outstanding corporate tax receivable included in the balance sheet relates to the use of the tax credit scheme under section 8X of the Danish Tax Assessment Act, whereby the Company receives payment for the tax value of losses resulting from research and development expenses. Based on the review of the criteria forusing the scheme, it is management's clear understanding that the company is eligible to use the scheme, and the recognition has been made based on thisassessment. There is a risk that the Danish Tax Authority may determine that the conditions for using the scheme have not been met. If so, subsequent financial years will be negatively affected by the reduction of the outstanding corporate tax receivable through "Tax for the year" in the statement of profit or loss and other comprehensive income. 8 Non-current liabilities other than provisionsDue within 12 months 2023 DKKDue within 12 months 2022 DKKDue after more than 12 months 2023 DKKDebt to other credit institutions922,489272,9902,750,633Convertible and dividend-yielding debt instruments0565,00016,445,744Other payables00187,700922,489837,99019,384,077Debt to other credit institutions include convertible loans from EIFO a commercial partner and private investors amounting to in total approx. DKK 20.0 million. 9 Other payables2023 DKK2022 DKKWages and salaries, personal income taxes, social security costs, etc. payable360,069332,833Other costs payable01,274,248360,0691,607,08110 Changes in working capital2023 DKK2022 DKKIncrease/decrease in receivables943,617346,978Increase/decrease in trade payables etc.(1,691,472)(385,303)(747,855)(38,325)11 Contingent assetsThe Company has total tax assets of a tax base of DKK 4,817k which are not recognised in the financial statements due to the uncertainty of utilising the tax assets. The Company has a tax loss carryforward of DKK 4,985k.12 Contingent liabilitiesThe Company has entered into an operating lease for its lab facilities at Symbion with a non-cancellable lease term of three months, which as of 31 December 2023 constitutes a contractual obligation of DKK 339 thousand. 13 Assets charged and collateralThe Company does not have pledges or collaterals. This annual report has been presented in accordance with the provisions of the Danish Financial Statements Act governing reporting class B enterprises with addition of a few provisions for reporting class C.The accounting policies applied to these financial statements are consistent with those applied last year.falseRecognition and measurementAssets are recognised in the balance sheet when it is probable as a result of a prior event that future economic benefits will flow to the Entity, and the value of the asset can be measured reliably. Liabilities are recognised in the balance sheet when the Entity has a legal or constructive obligation as a result of a prior event, and it is probable that future economic benefits will flow out of the Entity, and the value of the liability can be measured reliably. On initial recognition, assets and liabilities are measured at cost. Measurement subsequent to initial recognition is effected as described below for each financial statement item. Anticipated risks and losses that arise before the time of presentation of the annual report and that confirm or invalidate affairs and conditions existing at the balance sheet date are considered at recognition and measurement. Income is recognised in the income statement when earned, whereas costs are recognised by the amounts attributable to this financial year.Foreign currency translationOn initial recognition, foreign currency transactions are translated applying the exchange rate at the transaction date. Receivables, payables and other monetary items denominated in foreign currencies that have not been settled at the balance sheet date are translated using the exchange rate at the balance sheet date. Exchange differences that arise between the rate at the transaction date and the rate in effect at the payment date, or the rate at the balance sheet date, are recognised in the income statement as financial income or financial expenses. Property, plant and equipment, intangible assets, inventories and other non-monetary assets that have been purchased in foreign currencies are translated using historical rates.RevenueRevenue from the sale of services is recognised in the income statement when delivery is made to the buyer. Revenue is recognised net of VAT, duties and sales discounts and is measured at fair value of the consideration fixed.Other operating incomeOther operating income comprises income of a secondary nature as viewed in relation to the Entity’s primary activities, including grants received.Research and development costsThe item includes external research and development costs that do not qualify for capitalisation. Other external expensesOther external expenses include expenses relating to the Entity’s ordinary activities, including expenses for premises, marketing costs and administrative costs. Staff costsStaff costs comprise salaries and wages, and social security contributions, pension contributions, etc for entity staff.Depreciation, amortisation and impairment lossesDepreciation, amortisation and impairment losses relating to property, plant and equipment comprise depreciation, amortisation and impairment losses for the financial year of property, plant and equipment.Other financial incomeOther financial income comprises interest income, including interest income on transactions in foreign currencies etc.Other financial expensesOther financial expenses comprise interest expenses, including interest expenses on transactions in foreign currencies etc.Tax on profit/loss for the yearTax for the year, which consists of current tax for the year and changes in deferred tax, is recognised in the income statement by the portion attributable to the profit for the year and recognised directly in equity by the portion attributable to entries directly in equity.Other taxesThe item includes tax amounts calculated on a basis other than income for the year, which are not refunded to the Entity.Property, plant and equipmentOther fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses. Cost comprises the acquisition price, costs directly attributable to the acquisition and preparation costs of the asset until the time when it is ready to be put into operation. The basis of depreciation is cost less estimated residual value after the end of useful life. Straight-line depreciation is made on the basis of the following estimated useful lives of the assets:Useful life Other fixtures and fittings, tools and equipment5 - 10 yearsEstimated useful lives and residual values are reassessed annually. Items of property, plant and equipment are written down to the lower of recoverable amount and carrying amount.ReceivablesReceivables are measured at amortised cost, usually equalling nominal value less write-downs for bad and doubtful debts.Tax payable or receivableCurrent tax payable or receivable is recognised in the balance sheet, stated as tax computed on this year's taxable income, adjusted for prepaid tax.PrepaymentsPrepayments comprise incurred costs relating to subsequent financial years. Prepayments are measured at cost.CashCash comprises bank deposits.Other financial liabilitiesOther financial liabilities are measured at amortised cost, which usually corresponds to nominal value.Cash flow statementThe cash flow statement shows cash flows from operating, investing and financing activities, and cash and cash equivalents at the beginning and the end of the financial year. Cash flows from operating activities are presented using the indirect method and calculated as the operating profit/loss adjusted for non-cash operating items, working capital changes, and financial income, financial expenses and income tax paid. Cash flows from investing activities comprise payments in connection with purchase, development, improvement and sale, etc of property, plant and equipment. Cash flows from financing activities comprise changes in the size or composition of the contributed capital and related costs, and the raising of loans, repayments of interest-bearing debt, including lease liabilities. Cash and cash equivalents comprise cash.The cash flow statement shows cash flows from operating, investing and financing activities, and cash and cash equivalents at the beginning and the end of the financial year. Cash flows from operating activities are presented using the indirect method and calculated as the operating profit/loss adjusted for non-cash operating items, working capital changes, and financial income, financial expenses and income tax paid. Cash flows from investing activities comprise payments in connection with purchase, development, improvement and sale, etc of property, plant and equipment. Cash flows from financing activities comprise changes in the size or composition of the contributed capital and related costs, and the raising of loans, repayments of interest-bearing debt, including lease liabilities. Cash and cash equivalents comprise cash.2024-06-28Ulrik Bayer