Affimed N.V.
Amsterdam, The Netherlands
Annual Report 2015
Affimed Annual Report 2015
Contents
Report by Affimed’s Management Board
Business and financial overview
Risk Management
Corporate Governance
Report by Affimed’s Supervisory Board
Consolidated Financial Statements
Company Financial Statements
Other information
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Affimed Annual Report 2015
Forward-Looking Statements
This Annual Report contains statements that constitute forward-looking statements. Many of the
forward-looking statements contained in this Annual Report can be identified by the use of forward-
looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “will,”
“estimate” and “potential,” among others.
Forward-looking statements appear in a number of places in this Annual Report and include, but are
not limited to, statements regarding our intent, belief or current expectations. Forward-looking
statements are based on our management’s beliefs and assumptions and on information currently
available to our management. Such statements are subject to risks and uncertainties, and actual
results may differ materially from those expressed or implied in the forward-looking statements due to
various factors, including, but not limited to, those identified under the section “Risk Management” in
this Annual Report.
Forward-looking statements speak only as of the date they are made, and we do not undertake any
obligation to update them in light of new information or future developments or to release publicly any
revisions to these statements in order to reflect later events or circumstances or to reflect the
occurrence of unanticipated events.
Affimed Annual Report 2015
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Report by Affimed’s Management Board
Overview
We are a clinical-stage biopharmaceutical company focused on discovering and developing highly
targeted cancer immunotherapies. Our product candidates are being developed in the field of immuno-
oncology, which represents an innovative approach to cancer treatment that seeks to harness the
body’s own immune defenses to fight tumor cells. The most potent cells of the human defense arsenal
are types of white blood cells called Natural Killer cells, or NK-cells, and T-cells. Our proprietary, next-
generation bispecific antibodies, which we call TandAbs because of their tandem antibody structure,
are designed to direct and establish a bridge between either NK-cells or T-cells and cancer cells. Our
TandAbs have the ability to bring NK-cells or T-cells into proximity and trigger a signal cascade that
leads to the destruction of cancer cells. Due to their novel tetravalent architecture (which provides for
four binding domains), our TandAbs bind to their targets with high affinity and have half-lives that allow
regular intravenous administration. We believe, based on their mechanism of action and the preclinical
and clinical data we have generated to date, that our product candidates, alone or in combination, may
ultimately improve response rates, clinical outcomes and survival in cancer patients and could
eventually become a cornerstone of modern targeted oncology care.
Affimed was founded in 2000 based on technology developed by the group led by Professor Melvyn
Little at Deutsches Krebsforschungszentrum, the German Cancer Research Center, or DKFZ, in
Heidelberg.
We have focused our research and development efforts on five proprietary programs for which we
retain global commercial rights. Because our TandAbs bind with receptors that are known to be
present on a number of types of cancer cells, each of our TandAb product candidates could be
developed for the treatment of several different cancers. We intend to initially develop our two clinical
stage product candidates in orphan or high-medical need indications, including as a salvage therapy
for patients who have relapsed after, or are refractory to, that is who do not respond to treatment with,
standard therapies, which we refer to as relapsed/refractory. These patients have a limited life
expectancy and few therapeutic options. We believe this strategy will allow for a faster path to
approval and will likely require smaller clinical trials compared to indications with more therapeutic
options and larger patient populations. We believe such specialized market segments in oncology can
be effectively targeted with a small and dedicated marketing and sales team. We currently intend to
establish a commercial sales force in the United States and/or Europe to commercialize our product
candidates when and if they are approved. We are also active in preclinical development with our
collaborator Amphivena Therapeutics, Inc.
Our offices and laboratories are located at the Technology Park adjacent to the DKFZ in Heidelberg,
where we employ 45 personnel, approximately 70% of whom have an advanced academic degree.
Including AbCheck and Affimed Inc. personnel, our total headcount is 71 (64 full time equivalents). We
are led by experienced executives with a track record of successful product development, approvals
and launches, specifically of biologics. Our supervisory board includes highly experienced experts
from the pharmaceutical and biotech industries, with a specific background in hematology. Affimed
has attracted investments from top-tier venture capital firms, including Aeris Capital, BioMedInvest,
Life Sciences Partners, the venture capital arm of Novo Nordisk A/S, OrbiMed and prominent public
health care specialist funds.
In 2009, we formed AbCheck, our 100% owned, independently run antibody screening platform
company, located in the Czech Republic. AbCheck is devoted to the generation and optimization of
fully human antibodies. Its technologies include a combined phage and yeast display antibody library
and a proprietary algorithm to optimize affinity, stability and manufacturing efficiency. AbCheck also
uses a super human library as well as their newly developed mass humanization technology to
discover and optimize high-quality human antibodies. In addition to providing candidates for Affimed
projects, AbCheck is recognized for its expertise in antibody discovery throughout the United States
and Europe and has been working with globally active pharmaceutical companies such as Eli Lilly,
Daiichi Sankyo, Pierre Fabre and others.
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We have recently established a subsidiary, Affimed Inc., in the U.S. with senior employees in investor
relations, business development and corporate strategy, as well as a senior clinical function.
Business Overview
Our Strategy
Our goal is to engineer targeted immunotherapies, seeking to cure patients by harnessing the power
of innate and adaptive immunity (NK- and T-cells). We are developing single and combination
therapies to treat cancers and other life-threatening diseases. For this, we have developed an entirely
novel antibody platform that delivers two different types of next-generation antibodies, bispecific
TandAbs and Trispecific Abs. Based on the unique properties and mechanism of action of these
products and supported by the preclinical and clinical data we have generated to date, we believe that
our product candidates, alone or in combination, may ultimately improve clinical outcomes in cancer
patients and could eventually become a key element of modern targeted oncology care. Key
elements of our strategy to achieve this goal are to:
(cid:1) Rapidly Advance the Development of our Clinical Stage Product Candidates, including
Combinations with Other Immunotherapies. Our product development strategy initially
targets relapsed or refractory cancer patients who have limited therapeutic alternatives, which
we believe will enable us to utilize an expedited regulatory approval process. We have
initiated a phase 1b clinical trial to investigate AFM13 in combination with pembrolizumab
(KEYTRUDA®) in HL patients that have relapsed after or are refractory to chemotherapy and
Adcetris with an IND active and the first sites opened and recruiting. We anticipate to provide
a first update on the study by the end of 2016 or in the first quarter 2017. In the second
quarter of 2015, a phase 2a proof of concept trial of AFM13 as a monotherapy was initiated by
the German Hodgkin Study Group (GHSG) in HL patients that have received all standard
therapies and have relapsed after or are refractory to Adcetris. This phase 2a trial is ongoing
and recruiting. We are also supporting an investigator-sponsored phase 1b/2a clinical trial of
AFM13 in patients with CD30+ lymphoma conducted by Columbia University for which
Columbia submitted an IND to the FDA that has since become effective. For AFM11, we have
begun a phase 1 dose escalation study designed to evaluate safety and tolerability and to
potentially assess anti-tumor activity after four weeks of therapy in NHL patients. The phase 1
clinical trial is ongoing and recruiting with a modified dose regimen. The amended study
protocol was approved by the applicable regulatory authorities in the third quarter of 2015. We
expect to report first data from this phase 1 trial by the end of 2016. The Company will also
investigate AFM11 in acute lymphocytic leukemia (ALL) with a Phase 1 study anticipated to be
initiated in the third quarter of 2016.
(cid:1) Establish R&D and Commercialization Capabilities in Europe and in the United States
We plan to retain rights for all of our product candidates, although in the future we may enter
into additional collaborations that provide value for our shareholders. We intend to build a
focused marketing and specialty sales team in Europe and in the United States to
commercialize any of our product candidates that receive regulatory approval. We have
established a U.S. presence in order to expand our access to the talent pool, maintain better
control over our studies conducted in North America, maintain and expand our scientific and
medical network, further increase our interaction with the FDA and maintain a close
relationship to the financial community.
(cid:1) Use Our Technology Platforms and Intellectual Property Portfolio to Continue to Build
our Cancer Immunotherapy Pipeline. We generate our product candidates from our
proprietary antibody engineering technology platforms consisting of NK-cell TandAbs, T-cell
TandAbs and Trispecific Abs. We plan to continue to leverage these technologies to develop
new pipeline product candidates. We believe we can utilize our platforms to address additional
targets that we may in-license in the future or identify internally. We intend to continue to
innovate in our field and create additional layers of intellectual property in order to enhance
the platform value and extend the life cycle of our products. We believe our strong intellectual
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property position can be used to support internal development as well as out-licensing and
collaboration opportunities.
(cid:1) Maximize the Value of our Collaboration Arrangements with LLS, Amphivena and
Merck. We have a research agreement with LLS under which LLS has committed to co-fund
up to $4.4 million over two years for the phase 2a monotherapeutic development of AFM13.
We believe that this collaboration will also allow us to expedite patient enrollment for future
trials by leveraging the LLS’s existing relationships with key U.S. investigators. In 2013, we
entered into a license and development agreement with Amphivena, which amended and
restated a 2012 license agreement, to develop a CD33/CD3 TandAb candidate for AML in
exchange for an interest in Amphivena and certain milestone payments. Amphivena has
entered into an agreement with Janssen under which Janssen has the option to acquire
Amphivena upon predetermined terms following acceptance by the FDA of an IND filing for
the product candidate. Affimed has successfully reached its first three milestones, including
the selection and acceptance of a development candidate. The third milestone was achieved
in the first quarter of 2015. In January 2016, we entered into a clinical research collaboration
with Merck & Co to investigate the combination of Merck’s anti PD-1 therapy, KEYTRUDA®
(pembrolizumab), with AFM13 for the treatment of patients with relapsed/refractory HL. We
believe that these collaborations help to validate and more rapidly advance our discovery
efforts, technology platforms and product candidates, and will enable us to leverage our
platforms through additional high-value partnerships. As part of our business development
strategy, we aim to enter into additional research collaborations in order to derive further value
from our platforms and more fully exploit their potential.
(cid:1)
Intensify our Collaboration with Academia. We have entered into collaborations with the
German Hodgkin Study Group, Stanford University, the Mayo Clinic, the Columbia University,
as well as with the German Cancer Research Center DKFZ. We finalized the establishment of
a Scientific Advisory Board in the first half of 2015 and strengthened it through addition of Dr.
Andrew Evens in early 2016. We will continue to engage with key experts in our areas of
interest with activities such as our Hodgkin Lymphoma KOL Day in January 2016.
(cid:1) Utilize AbCheck to Generate and Optimize Antibodies. We formed AbCheck in 2009 to
leverage our antibody screening platform and partner with other biopharmaceutical companies
in fee-for-service engagements. We use AbCheck’s state-of-the-art phage and yeast display
screening technologies as well as a proprietary batch humanization process and
bioinformatics tools to identify and optimize antibodies that are highly specific for the targets
we or our customers select, and that we engineer into TandAbs or Trispecific Abs. AbCheck’s
high-quality capabilities have been validated through multiple international collaborations
including a strategic research partnership with Pierre Fabre.
Our Strengths
We believe we are a leader in developing cancer immunotherapies due to several factors:
(cid:1) Our Lead Product Candidate, AFM13, is a First-in-Class NK-Cell Mediated Cancer
Immunotherapy. AFM13 is a targeted immunotherapy that is currently in development for HL
as a salvage therapy. To engage and activate NK-cells, we have engineered AFM13 with a
unique binding specificity for CD16A. AFM13 binds to CD16A with approximately 1,000-fold
higher affinity than native antibody molecules via the constant region. While native antibodies
bind to CD16A and CD16B with similar affinity, AFM13 does not bind to CD16B at all. CD16B
is expressed on the surface of neutrophils, which show very limited anti-tumor activity and
exist in such large amounts that little would be left for NK-cell binding and tumor cell killing
were AFM13 not to be so selective for only CD16A. We believe that AFM13 is the only
antibody in development that can specifically engage CD16A+ cells, in particular NK-cells,
with very high affinity. In the second quarter of 2015, a phase 2a proof of concept trial of
AFM13 was initiated by the German Hodgkin Study Group (GHSG) in HL patients that have
received all standard therapies and have relapsed after or are refractory to Adcetris. This
phase 2a trial is ongoing and recruiting. The Leukemia and Lymphoma Society, or LLS, has
agreed to co-fund this phase 2a HL study, a further indication of the promise this development
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candidate holds. We are also supporting an investigator-sponsored phase 1b/2a clinical trial of
AFM13 in patients with CD30+ lymphoma conducted by Columbia University for which
Columbia submitted an IND to the FDA that has since become effective. In order to prepare
for further clinical development, we have conducted preclinical studies investigating the
combination of AFM13 with CPIs and checkpoint agonists, or CPAs (collaboration with
Stanford University). Based on data from these studies, we have initiated a phase 1b clinical
trial in collaboration with Merck to investigate AFM13 in combination with pembrolizumab
(KEYTRUDA®) in HL patients that have relapsed after or are refractory to chemotherapy and
Adcetris. We are the sole sponsor of this trial, which we have recently initiated with an IND
active and the first sites opened and recruiting. We anticipate to provide a first update on the
study by the end of 2016 or in the first quarter 2017. A preclinical investigation of the
combination of AFM13 with lenalidomide (collaboration with Mayo Clinic) is still ongoing.
(cid:1) Growing Pipeline of Product Candidates Focused on Key Cancer Indications. By
leveraging our technology platform, we have built a growing pipeline of additional product
candidates. Our second product candidate, AFM11, has demonstrated in preclinical studies
highly specific and effective engagement of T-cells, inducing rapid and potent in vitro and in
vivo tumor cell killing. AFM11 is expected to not require continuous infusion due to its half-life
and has shown 100-fold higher affinity to CD3 compared to a reference molecule with the
same sequence as Amgen’s Blincyto (blinatumomab) and we believe it may have an efficacy
advantage, especially in immunocompromised patients. We have begun a phase 1 dose
ranging study of AFM11 designed to evaluate safety and tolerability and to potentially assess
anti-tumor activity after four weeks of therapy in NHL patients. The phase 1 clinical trial is
ongoing and recruiting with a modified dose regimen. The amended study protocol was
approved by the applicable regulatory authorities in the third quarter of 2015. We believe that
the new, less frequent dosing regimen provides a better opportunity to investigate potential
benefits of AFM11 related to the molecular characteristics of TandAbs, i.e. the longer half-life
and the higher affinity to T-cells compared to BiTEs. We expect to report first data from this
phase 1 trial by the end of 2016. In addition, we are planning to investigate AFM11 in ALL
patients and are preparing a phase 1 dose ranging study that is expected to begin recruitment
in the third quarter of 2016. Our third product candidate, AFM21 (EGFRvIII / CD3), which is in
preclinical development, addresses a target that to date has been elusive and that is abundant
in certain solid tumors, including glioblastoma, prostate cancer and head and neck cancer, but
not found on healthy tissue. In preclinical studies, AFM21 has demonstrated an ability to
selectively kill EGFRvIII-carrying cells and not wild-type EGFR. In addition to the AFM21,
which targets EGFRvIII on tumor cells and CD3 on T-cells, we further advanced an
EGFRvIII/CD16A NK-cell TandAb, called AFM22. An additional CD16A NK-cell TandAb,
called AFM24 targeting EGFR-wild type, a validated solid tumor target has been engineered
and characterized preclinically. Based on data from ongoing experiments, we will decide
which program to advance into IND-enabling studies.
(cid:1) Retained Global Commercial Rights for our Five Candidates in our Product Pipeline.
Our five pipeline product candidates AFM13, AFM11, AFM21, AFM22 and AFM24 are
unencumbered. We retain all options to derive value from our product candidates, including
commercialization in all or select markets when and if they are approved. To maximize the
value of our platform, we will continue to explore partnerships to support the development or
commercialization of our programs in certain territories.
(cid:1) Experienced Management Team with Strong Track Record in the Development and
Commercialization of New Medicines. Members of our management team have extensive
experience in the biopharmaceutical industry, and key members of our team have played an
important role in the development and commercialization of approved drugs. Our Chief
Executive Officer Adi Hoess and our Chief Medical Officer Jens-Peter Marschner were
members of the teams that developed and commercialized Firazyr® and Erbitux®,
respectively, while our Chief Operating Officer Jörg Windisch played a leading role in the
development of Omnitrope®, Binocrit® and Zarzio®.
(cid:1) Strong Technology Base and Solid Patent Portfolio in the Field of Targeted Immuno-
Oncology. We are a leader in the field of bi-and trispecific antibody therapeutics for the
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treatment of cancer. We have a patent portfolio that includes the tetravalent antibody platform
itself. Further, we have a proprietary position in NK-cell engagement, specifically regarding
binding domains directed at CD16A with no cross-reactivity to CD16B. We have more than a
decade of experience in the discovery and development of such complex antibodies, and our
molecular architecture allows for efficient and cost-effective manufacturing. In addition to
supporting internal product development, we believe our strong intellectual property position
can be used to support out-licensing and collaboration opportunities in the field of immuno-
oncology.
Our research and development pipeline
We are developing a pipeline of immune-cell engagers for the treatment of cancer as shown below:
Our lead candidate, AFM13, is a first-in-class NK-cell TandAb designed for the treatment of certain
CD30-positive (CD30+) B- and T-cell malignancies, including Hodgkin lymphoma, or HL. AFM13
selectively binds with CD30, a clinically validated target in HL patients, and CD16A, an integral
membrane glycoprotein receptor expressed on the surface of NK-cells, triggering a signal cascade that
leads to the destruction of tumor cells that carry CD30. In contrast to conventional full-length antibodies,
AFM13 does not bind to CD16B, which prevents binding to other cells, e.g. neutrophils.
We are initially developing AFM13 for HL in the salvage setting for patients who have relapsed after,
or are refractory to, Adcetris (brentuximab vedotin), a CD30-targeted chemotherapy approved by the
U.S. Food and Drug Administration, or FDA, in August 2011 as a salvage therapy for HL.
Approximately half of the patients treated with Adcetris experience disease progression in less than
half a year after initiation of therapy. In a recent phase 1 dose-escalation clinical trial, AFM13 was
well-tolerated and demonstrated tumor shrinkage or slowing of tumor growth, with disease control
shown in 16 of 26 patients eligible for efficacy evaluation. AFM13 also stopped tumor growth in
patients who are refractory to Adcetris. Six out of seven patients who became refractory to Adcetris as
the immediate prior therapy experienced stabilization of disease under AFM13 treatment according
Cheson’s criteria, standard criteria for assessing treatment response in lymphoma. We believe that
based on its novel mode of action, AFM13 may be beneficial to patients who have relapsed or are
refractory to treatment with Adcetris and may provide more durable clinical benefit.
In the second quarter of 2015, a phase 2a proof of concept trial of AFM13 was initiated by the German
Hodgkin Study Group (GHSG) in HL patients that have received all standard therapies and have
relapsed after or are refractory to Adcetris. This 2a trial is ongoing and recruiting. The Leukemia and
Lymphoma Society, or LLS, has agreed to co-fund this phase 2a HL study, a further indication of the
promise this development candidate holds. We are also supporting an investigator-sponsored phase
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1b/2a clinical trial of AFM13 in patients with CD30+ lymphoma conducted by Columbia University for
which Columbia submitted an IND to the FDA that has since become effective.
In order to prepare for further clinical development, we are continuing to perform preclinical studies
investigating the combination of AFM13 with CPIs and checkpoint agonists, or CPAs (collaboration
with Stanford University), and lenalidomide (collaboration with Mayo Clinic). We believe that AFM13
and immunomodulators administered together could lead to greater tumor cell killing because these
molecules may have a synergistic anti-tumor effect involving both NK-cells and T-cells. In preclinical
animal studies of HL using both patient derived xenograft (PDX) and immune cells from blood
(PBMCs), the established tumor was treated with AFM13 and CPIs/CPAs (anti-PD-1, anti-CD137 and
anti-CTLA4) both alone and in combination. While the single agent treatment showed a significant
reduction in tumor growth for most molecules when compared to the control treatment group
(irrelevant IgG), all combinations of AFM13 and CPI/CPA showed enhanced anti-tumor efficacy. We
also analyzed the change in intra-tumoral lymphocyte population compared to IgG treatment. It was
observed that in all AFM13-treated animals (as a single agent and in all combinations), the NK-cell
population in the tumor increased. In addition, while there was no increase of T-cells in animals
treated with only AFM13 or CPIs/CPAs, there was an increase of cytotoxic T-cells detected in animals
treated with AFM13 in combination with a CPI/CPA. These results provide the rationale for the
investigation of combinations with AFM13 in the clinical setting, initially focusing on PD-1. Preclinical
data on the combination with CPIs/CPAs were presented at the American Society of Clinical Oncology
(ASCO) annual meeting in 2015. Based on the preclinical data, we have entered into a collaboration
with Merck and have initiated a clinical phase 1b study investigating the combination of AFM13 with
Merck’s anti PD-1 antibody KEYTRUDA® (pembrolizumab) in patients with relapsed/refractory HL with
an IND active and the first sites opened and recruiting. The trial is designed to establish a dosing
regimen for the combination therapy and assess its safety and efficacy. We anticipate to provide a first
update on the study by the end of 2016 or in the first quarter 2017.
Our second clinical stage candidate, AFM11, is a T-cell TandAb designed for the treatment of certain
CD19+ B-cell malignancies, including non-Hodgkin Lymphoma, or NHL, Acute Lymphocytic Leukemia,
or ALL, and Chronic Lymphocytic Leukemia, or CLL. AFM11 binds selectively with CD19, a clinically
validated target in B-cell malignancies. It also binds to CD3, a component of the T-cell receptor
complex, triggering a signal cascade that leads to the destruction of tumor cells that carry CD19.
Based on its molecular characteristics, in particular its molecular weight, we expect AFM11 will have a
longer half-life than blinatumomab, a bispecific antibody also targeted against CD19 and CD3
developed by Amgen, and approved in the United States and Europe. This should allow administration
through bolus intravenous infusion, rather than continuous infusion, which requires hospitalization or a
portable pump over one or more cycles of four-weeks each with frequent reconstitution and refill of
medication, as is necessary for blinatumomab. In preclinical studies, AFM11 compared to the
blinatumomab reference compound also showed a 100-fold higher affinity to the CD3 receptor,
resulting in up to 40-fold greater cytotoxic potency at low T-cell counts. We have begun a phase 1
dose ranging study of AFM11 designed to evaluate safety and tolerability and to potentially assess
anti-tumor activity after four weeks of therapy in NHL patients. The phase 1 clinical trial is ongoing
and recruiting with a modified dose regimen. The amended study protocol was approved by the
applicable regulatory authorities in the third quarter of 2015. We believe that the new, less frequent
dosing regimen provides a better opportunity to investigate potential benefits of AFM11 related to the
molecular characteristics of TandAbs, i.e. the longer half-life compared to BiTEs and higher affinity to
T-cells. We expect to report first data from this phase 1 trial by the end of 2016. In addition, we are
planning to investigate AFM11 in ALL patients and are preparing a phase 1 dose ranging study that is
expected to be initiated in the third quarter of 2016.
We further are targeting Epidermal Growth Factor Receptor variant III, or EGFRvIII, a receptor that
appears to be highly specific for solid tumors and is prominent in a significant portion of patients with
glioblastoma, hormone refractory prostate cancer and head and neck cancer. Through access to our
proprietary antibody libraries, we isolated antibodies that bind to EGFRvIII but not to wild-type EGFR,
which is also expressed on many healthy tissues. In this context we have developed 2 bispecific
antibodies, AFM21, an EGFRvIII/CD3 T-cell engager, and AFM22, an EGFRvIII/CD16A NK-cell
engager. In preclinical studies, AFM21 and AFM22 have demonstrated a highly selective kill of
EGFRvIII- but not wild-type EGFR- carrying cells. We will further compare the preclinical efficacy of
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both TandAb molecules and thereafter decide which one to advance into IND-enabling studies, which
we expect to commence in 2016, with a potential IND-filing estimated in 2017.
We are also developing AFM24, an NK-cell-engaging TandAb targeting EGFR-wild type, which
represents another validated antigen expressed by a variety of solid tumors. Constitutive EGFR
activation through amplification or dysregulation plays an important role in the pathophysiology of
numerous solid cancers, such as colorectal cancer (CRC), non-small cell lung cancer (NSCLC) or
squamous cell carcinomas of the head and neck (SCCHN). We expect to initiate IND-enabling studies
in 2016, with a potential IND-filing estimated in 2017.
In our collaboration with Amphivena, we are developing a CD33/CD3-specific T-cell TandAb to treat
acute myeloid leukemia (AML). We currently expect Amphivena to file an IND for the lead candidate in
2016.
In addition, we are developing Trispecific Abs for various undisclosed targets which are currently at a
discovery stage to be developed for indications such as multiple myeloma (MM).
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Operating results
To date, we have financed our operations primarily through our public offerings of our common
shares, private placements of equity securities, the incurrence of loans including convertible loans and
through government grants and milestone payments for collaborative research and development
services. Through December 31, 2015, we have raised an aggregate of €171.2 million through the
issuance of equity and incurrence of loans. To date, we have not generated any revenues from
product sales or royalties. Based on our current plans, we do not expect to generate product or royalty
revenues unless and until we or any collaboration partner obtain marketing approval for, and
commercialize, any of our product candidates.
We have generated losses since we began our drug development operations in 2000. For the year
ended December 31, 2015, we incurred a net loss of €20.2 million. As of December 31, 2015, we had
an accumulated deficit of €120.2 million.
We expect to continue incurring losses as we continue our preclinical and clinical development
programs, apply for marketing approval for our product candidates and, subject to obtaining regulatory
approval for our product candidates, build a marketing and sales team to commercialize our product
candidates. Our profitability is dependent upon the successful development, approval, and
commercialization of our product candidates and achieving a level of revenues adequate to support
our cost structure. We may never achieve profitability, and unless and until we do, we will continue to
need to raise additional cash. We intend to fund future operations through additional equity and debt
financings, and we may seek additional capital through arrangements with strategic partners or from
other sources.
Collaboration Agreements
We have entered into strategic collaborations for some of our therapeutic programs. As part of our
business development strategy, we aim to increase the number of our research collaborations in order
to derive further value from our platforms and more fully exploit their potential. Key terms of our current
material collaborations are summarized below.
Amphivena
Pursuant to a July 2013 license and development agreement, which amended and restated a 2012
license agreement between us and Amphivena Therapeutics, Inc., or Amphivena, based in San
Francisco, California, we licensed certain technology to Amphivena that enables Amphivena to
develop an undisclosed product candidate for hematologic malignancies. In exchange for the
technology license to Amphivena, we received shares of stock of Amphivena, and, in connection with
an equity financing involving us and other third-party investors, we made cash investments in
Amphivena in exchange for additional shares of stock and entered into certain related agreements
governing our rights as a shareholder of Amphivena. As of December 31, 2015, those cash
investments totaled $0.9 million (€0.7 million), and we owned approximately 21% of the outstanding
equity of Amphivena on a fully diluted basis.
Amphivena has separately entered into a warrant agreement with Janssen Biotech Inc. that has given
Janssen the option to acquire Amphivena following IND acceptance by the FDA of such product
candidate, upon predetermined terms.
Pursuant to the July 2013 license and development agreement between Amphivena and us, we will
perform certain services for Amphivena related to the development of a product candidate for
hematological malignancies, and we have granted Amphivena certain product and technology
licenses, each of which includes the right to grant sublicenses to its affiliates or third parties through
multiple tiers, subject to certain notice requirements. In consideration for the research and
development work to be performed prior to IND acceptance, Amphivena will pay to us service fees
totaling approximately €16 million (net of our share in funding Amphivena) payable upon the
Affimed Annual Report 2015
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achievement of milestones and phase progressions as described under the license and development
agreement.
We recognized revenue of €4.4 million in the third quarter of 2013 upon achievement of the first
milestone consisting of the earned milestone payment of €4.6 million less our share in funding
Amphivena in 2013 of €0.2 million. A further payment of €2.0 million for research and development
services was collected in the first quarter of 2014 and recognized as revenue upon achievement of the
second milestone in the third quarter of 2014, net of our share in funding Amphivena of €0.2 million. In
the third quarter of 2014 we received advance payments in total of €2.4 million for research and
development services prior to achievement of the third milestone and deferred such amount as of
December 31, 2014 until the milestone was achieved. In the first quarter of 2015, we recognized
revenue of €2.4 million for the achievement of the third milestone which had been received in cash in
2014 and deferred until the milestone was achieved. After the achievement of the third milestone, we
continue to provide research and development services to Amphivena for nonrefundable advance
payments of €7.5 million, payable in three installments (€1.3 million, €4.2 million and €2.0 million). The
first two installments totalling €5.2 million (€5.5 million, net of Affimed’s share of €0.3 million) were
received in 2015. We recognized €2.4 million as revenue for these research and development
services in 2015 and €2.8 million was deferred as of December 31, 2015. We are paid in euros under
the license and development agreement.
The Leukemia & Lymphoma Society
In August 2013, we entered into a research funding agreement with The Leukemia & Lymphoma
Society, or LLS, for the clinical development of AFM13. Pursuant to the research funding agreement,
LLS agreed to co-fund the clinical phase 2a development of AFM13 and to contribute up to
approximately $4.4 million (€4.0 million) over two years to support the project. We agreed to match
LLS’s contributions toward the project budget. Our receipt of the $4.4 million (€4.0 million) total that
LLS agreed to contribute was conditioned on the achievement of certain milestones in connection with
the development of AFM13, four of which have been met as of December 31, 2015. We achieved
milestones in January 2014 and April 2014 and recognized revenues of $1.5 million (€1.1 million) in
total for related research and development services in 2014. We received additional milestone
payments and recognized revenues of $1.8 million (€1.6 million) in the second and third quarters of
2015. We must use the funding provided by LLS exclusively with the development program.
In consideration of LLS’s payments to us, we have agreed to pay LLS a mid-single digit royalty on net
sales of products containing AFM13 until we have paid LLS a low single digit multiple of the funding
they provided to us. After we have reached this initial royalty cap, we will pay LLS a sub-single digit
royalty on net sales until the earlier of (i) the expiration of the last to expire patent covering the AFM13
products and (ii) ten years after the initial royalty cap is satisfied. These royalty payments are
calculated on a country-by-country and product-by-product basis. We have also agreed to make
certain low-to-mid-single digit royalty payments to LLS in the event of certain transfers of rights to any
product containing AFM13 or in the event we undergo certain change of control transactions, in each
case up to the royalty cap described above. Amounts paid to us under our agreement with LLS are
paid in U.S. dollars.
Affimed Annual Report 2015
10
Financial Operations Overview
Revenue
To date, our revenues have consisted principally of collaboration and service revenue.
Collaboration revenue. Collaboration revenue of €4.4 million for the year ended December 31, 2013
was from the achievement of the first milestone under the license and development agreement with
Amphivena. Collaboration revenue of €2.9 million for the year ended December 31, 2014 was from the
achievement of the second milestone under the license and development agreement with Amphivena
(€1.8 million) and from the LLS collaboration (€1.1 million). Collaboration revenue of €6.3 million for
the year ended December 31, 2015 was from the achievement of the third milestone under the license
and development agreement with Amphivena (€2.4 million), from research and development services
under the license and development agreement with Amphivena (€2.3 million) and from the LLS
collaboration (€1.6 million).
Service revenue. Service revenue is primarily revenue from service contracts entered into by
AbCheck, our wholly owned, independently operated antibody screening platform. We recognized
€0.7 million, €0.5 million and €1.3 million of service revenue in 2013, 2014 and 2015, respectively.
Service revenue of AbCheck is dependent from third party contracts as well as from the utilization of
the Unit by Affimed. In case Affimed increases or decreases the use of AbCheck’s service capabilities
that has an impact on the ability to generate third party revenues.
In the future, the timing of our revenue may vary significantly from the receipt of the related cash flows,
as the revenue from some upfront or initiation payments is deferred and recognized as revenue over
the estimated service period, while other revenue is earned when received, such as milestone
payments or service fees. Our revenue has varied substantially, especially due to the impact of
Collaboration revenue received from Amphivena, and is expected to continue to vary, from quarter to
quarter and year to year, depending upon, among other things, the structure and timing of milestone
events, the number of milestones achieved, the level of revenues earned for ongoing development
efforts, revenue from service contracts entered into by AbCheck, any new collaboration arrangements
we may enter into and the terms we are able to negotiate with our partners. We therefore believe that
period-to-period comparisons should not be relied upon as indicative of our future revenues.
Other Income
In addition, we have earned income through several grants and/or contracts with the German
government, the European Union and other educational institutions on behalf of the German
government, primarily with respect to research and development activities related to the use of the
TandAb technology in various indication areas.
Research and Development Expenses
Research and development expenses consist principally of:
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
salaries for research and development staff and related expenses, including management
benefits;
costs for production of preclinical compounds and drug substances by contract manufacturers;
fees and other costs paid to contract research organizations in connection with additional
preclinical testing and the performance of clinical trials;
costs of related facilities, materials and equipment;
costs associated with obtaining and maintaining patents and other intellectual property;
(cid:1) amortization and depreciation of tangible and intangible fixed assets used to develop our
product candidates; and
Affimed Annual Report 2015
11
(cid:1) expenses for share-based payments.
We expect that our total research and development expenses in 2016 will be in the range of €34 to
€40 million. Our research and development expenses primarily relate to the following key programs:
(cid:1) AFM13. The phase 2a clinical trial of AFM13 in Hodgkin Lymphoma, or HL, is ongoing and
recruiting. In addition we are supporting an investigator-sponsored phase 1b/2a clinical trial of
AFM13 in patients with CD30+ lymphoma conducted by Columbia University and have
initiated a phase 1b study investigating the combination of AFM13 with Merck’s anti PD-1
antibody KEYTRUDA® (pembrolizumab) in patients with relapsed/refractory HL with an IND
active and the first sites opened and recruiting. We anticipate that our research and
development expense will increase substantially in connection with the preparation and
commencement of these clinical trials. In addition we will incur substantial expenses for the
production of AFM13 clinical trial material and the investigation of commercial scale
production options.
(cid:1) AFM11. The phase 1 clinical trial of AFM11 in patients with non-Hodgkin Lymphoma, or NHL,
is ongoing and recruiting with a modified dose regimen. Due to the protocol amendment, the
trial may require more patients compared to the original protocol. We also are planning to
investigate AFM11 in acute lymphocytic leukemia, or ALL and are preparing a phase 1 dose-
finding study that is expected to begin recruitment in the third quarter of 2016. Therefore, we
anticipate that our research and development expense for the AFM11 program will increase in
2016.
(cid:1) Other development programs. Our other research and development expenses relate to our
preclinical studies of AFM21/AFM 22 and AFM 24, our Amphivena collaboration and early
stage development / discovery activities. We have allocated a material amount of the
proceeds to such discovery activities. The expenses mainly consist of salaries and
manufacturing costs for pre-clinical and clinical study material.
(cid:1)
Infrastructure costs. We incur a significant amount of costs associated with our research and
development that are non-project specific, including intellectual property-related expenses,
depreciation expenses and facility costs. Because these are less dependent on individual
ongoing programs, they are not allocated to specific projects. We assume that facility costs for
further laboratory space and IP related expenses may increase over time.
Since January 1, 2012, we have cumulatively spent €54.7 million on research and development. In the
years ended December 31, 2013, 2014 and 2015, we spent €14.4 million, €9.6 million and €22.0
million on research and development; €0.9 million, €4.2 million and €10.0 million on AFM13; and €6.5
million, €1.2 million and €0.8 million on AFM11. Our research and development expenses may vary
substantially from period to period based on the timing of our research and development activities,
including due to timing of initiation of clinical trials and enrollment of patients in clinical trials. Research
and development expenses are expected to increase as we advance the clinical development of
AFM13 and AFM11 and further advance the research and development of our preclinical product
candidates. The successful development of our product candidates is highly uncertain. At this time we
cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary
to complete the development of, or the period, if any, in which material net cash inflows may
commence from, any of our product candidates. This is due to numerous risks and uncertainties
associated with developing drugs, including the uncertainty of:
(cid:1)
(cid:1)
(cid:1)
(cid:1)
the scope, rate of progress, results and cost of our clinical trials, nonclinical testing, and other
related activities;
the cost of manufacturing clinical supplies and establishing commercial supplies of our product
candidates and any products that we may develop;
the number and characteristics of product candidates that we pursue;
the cost, timing, and outcomes of regulatory approvals;
Affimed Annual Report 2015
12
(cid:1)
(cid:1)
the cost and timing of establishing sales, marketing, and distribution capabilities; and
the terms and timing of any collaborative, licensing, and other arrangements that we may
establish, including any milestone and royalty payments thereunder.
A change in the outcome of any of these variables with respect to the development of AFM13, AFM11
or any other product candidate that we may develop could mean a significant change in the costs and
timing associated with the development of such product candidate. For example, if the U.S. Food and
Drug Administration, or FDA, or other regulatory authority were to require us to conduct preclinical and
clinical studies beyond those which we currently anticipate will be required for the completion of
clinical development, if we experience significant delays in enrollment in any clinical trials or if we
encounter difficulties in manufacturing our clinical supplies, we could be required to expend significant
additional financial resources and time on the completion of the clinical development.
General and Administrative Expenses
Our general and administrative expenses consist principally of:
(cid:1)
salaries for employees other than research and development staff, including benefits;
(cid:1) business development expenses, including travel expenses;
(cid:1) professional fees for auditors and other consulting expenses not related to research and
development activities;
(cid:1) professional fees for lawyers not related to the protection and maintenance of our intellectual
property;
(cid:1)
(cid:1)
cost of facilities, communication and office expenses;
IT expenses;
(cid:1) amortization and depreciation of tangible and intangible fixed assets not related to research
and development activities; and
(cid:1) expenses for share-based payments.
We expect that our general and administrative expenses in 2016 will increase compared to the
expenses in 2015 by roughly 25%, and will continue to increase in the future as our business expands.
These public company-related increases will likely include costs of additional personnel, additional
legal fees, accounting and audit fees, managing directors’ and supervisory directors’ liability insurance
premiums and costs related to investor relations. In addition, we may grant share-based compensation
awards to key management personnel and other employees.
Results of Operations
The numbers below have been derived from our audited consolidated financial statements for the
years ended December 31, 2013, 2014 and 2015. The discussion below should be read along with
these financial statements, and it is qualified in its entirety by reference to them.
Comparison of the years ended December 31, 2014 and 2015
Total Revenue:
Other income—net ............................................................................
Research and development expenses ..............................................
General and administrative expenses ...............................................
Operating income/(loss) .................................................................
Year ended December 31,
2014
2015
(in € thousand)
3,382
381
(9,595)
(2,346)
(8,178)
7,562
651
(22,008)
(7,548)
(21,343)
Affimed Annual Report 2015
Finance income—net ......................................................................
Income/(Loss) before tax ..................................................................
Income taxes .....................................................................................
Income/(loss) for the period ...........................................................
Total comprehensive income/(loss) ..............................................
Earnings/(loss) per common share in € per share ......................
7,753
(425)
166
(259)
(259)
(0.01)
13
1,104
(20,239)
0
(20,239)
(20,239)
(0.71)
Revenue
Revenue increased 124% from €3.4 million in the year ended December 31, 2014 to €7.6 million for
the year ended December 31, 2015, mainly due to higher revenues from the Amphivena collaboration
and higher service revenues at AbCheck in 2015.
Research and development expenses
Year ended
December 31,
R&D Expenses by Project
2014
2015
Change %
Project
AFM13 ....................................................................
AFM11 ....................................................................
Other projects and infrastructure costs .................
Share-based payment expense/(credit) .................
Total .......................................................................
(in € thousand)
4,176
1,249
5,650
(1,480)
9,595
10,004
800
10,593
611
22,008
140%
(36%)
87%
-
129%
Research and development expenses increased 129% from €9.6 million in the year ended December
31, 2014 to €22.0 million in the year ended December 31, 2015, mainly due to higher expenses for
AFM13, other projects and infrastructure. For the year 2016, we anticipate significantly higher
research and development expenses particularly from the expected start of additional clinical trials
with AFM13 (phase 1b/2a trial of AFM13 in patients with CD30+ lymphoma and phase 1b combination
trial of AFM13 with Merck’s anti PD-1 antibody KEYTRUDA® in patients with relapsed/refractory HL),
an additional clinical trial with AFM11 (phase 1 dose ranging study with AFM11 in ALL patients),
production of clinical trial material and preclinical research activities. The variances in project related
expenses between the year ended December 31, 2014 and the corresponding period in 2015 are
mainly due to the following projects:
(cid:1) AFM13. In the year ended December 31, 2015, we incurred higher expenses due to
the ongoing phase 2a clinical trial and the manufacturing of clinical trial material for
this study and for the additional studies expected to start in 2016.
(cid:1) AFM11. In the year ended December 31, 2015, clinical expenses were lower than in
the year ended December 31, 2014 primarily due to higher expenses associated with
the production of the clinical study material and the preparation of the phase 1 clinical
study of AFM11 in 2014, whereas in 2015 we incurred expenses for the ongoing
phase 1 study as well as expenses in relation to the trial protocol amendment.
(cid:1) Other projects and infrastructure costs. In the year ended December 31, 2015,
expenses increased significantly primarily due to higher expenses associated with our
internal R&D activities in 2015. Other projects comprise expenses incurred in relation
to the AFM21 program and our discovery/early stage development activities. We incur
a significant amount of costs associated with our research and development that are
non-project specific, including intellectual property-related expenses, depreciation
expenses and facility costs. Because these are less dependent on individual ongoing
programs, they are not allocated to specific projects.
Affimed Annual Report 2015
14
General and administrative expenses
General and administrative expenses increased 222% from €2.3 million in the year ended December
31, 2014 to €7.5 million in the year ended December 31, 2015. In 2014, general and administrative
expenses were largely affected by a credit to the share-based payment expense of €3.4 million
resulting from a re-measurement gain at consummation of the initial public offering (see Notes 2 and
19 to our financial statements as of December 31, 2015).
Finance income / (costs)-net
We recognized finance income net for the year ended December 31, 2015 of €1.1 million. The income
reflects the net gains from foreign exchange differences less interest expense for borrowings under
the Perceptive Credit Facility.
Finance income decreased in the year ended December 31, 2015 as compared to the year ended
December 31, 2014. The year ended December 31, 2014 was primarily affected by the gain from the
exchange of preferred shares of Affimed Therapeutics AG into common shares of Affimed N.V. and the
decrease in the fair value of the derivative conversion feature embedded in the convertible loan totaling
€10.9 million. These preferred shares and convertible loan were no longer outstanding in 2015.
Income tax expense
During the year ended December 31, 2015, we did not incur any income tax expense.
Comparison of the years ended December 31, 2013 and 2014
Total Revenue:
Other income/(expenses)—net
Research and development expenses
General and administrative expenses
Operating income/(loss)
Finance income/(costs)—net
Income/(Loss) before tax
Income taxes
Income/(loss) for the period
Total comprehensive income/(loss)
Earnings/(loss) per common share in € per share
Revenue
Year ended
December 31,
2013
2014
(in € thousand)
5,087
610
(14,354)
(7,046)
(15,703)
(10,397)
(26,100)
1
(26,099)
(26,099)
(1.76)
3,382
381
(9,595)
(2,346)
(8.178)
7,753
(425)
166
(259)
(259)
(0.01)
Revenue decreased 34% from €5.1 million in the year ended December 31, 2013 to €3.4 million for
the year ended December 31, 2014, mainly due to lower revenues from the Amphivena collaboration,
partially offset by first time revenues from LLS in 2014.
Affimed Annual Report 2015
15
Research and development expenses
R&D Expenses by Project
Project
AFM13 ..............................................................................
AFM11 ..............................................................................
Other projects ...................................................................
Share-based payment expense/(credit) ...........................
Total .................................................................................
Year ended
December 31,
2013
2014
Change %
(in € thousand)
921
6,462
3,950
3,021
14,354
4,176
1,249
5,650
(1,480)
9,595
353%
(81%)
43%
-
(33%)
Research and development expenses decreased 33% from €14.4 million in the year ended December
31, 2013 to €9.6 million in the year ended December 31, 2014, due to a credit to the share-based
payment expense resulting from a re-measurement gain at consummation of the initial public offering
(see Note 2 to our financial statements as of December 31, 2014). The variances in project related
expenses between the year ended December 31, 2013 and the corresponding period in 2014 are
mainly due to the following projects:
• AFM13. In the year ended December 31, 2014 we incurred higher expenses due to the
preparation for the phase 2a clinical trial and the manufacturing of clinical material for the
phase 2a trial.
• AFM11. In the year ended December 31, 2014, clinical expenses were significantly lower
than in the year ended December 31, 2013. In 2013, expenses were higher due to the
manufacturing of materials for clinical trials.
• Other projects. In the year ended December 31, 2014 we continued to incur substantial costs
related to the activities of the Amphivena collaboration. In contrast, in 2013, the collaboration
had only been initiated at the beginning of the third quarter.
•
Infrastructure costs. We incur a significant amount of costs associated with our research and
development that are non-project specific, including intellectual property-related expenses,
depreciation expenses and facility costs. Because these are less dependent on individual
ongoing programs, they are not allocated to specific projects.
General and administrative expenses
General and administrative expenses decreased 67% from €7.0 million in the year ended December
31, 2013 to €2.3 million in the year ended December 31, 2014, due to a credit to the share-based
payment expense of €3.4 million resulting from a re-measurement gain at consummation of the initial
public offering (see Notes 2 and 18 to our financial statements as of December 31, 2014).
We expect that general and administrative expense will increase in the future as our business
expands and we incur additional costs associated with operating as a public company.
Finance income / (costs)-net
We recognized finance income net for the year ended December 31, 2014 of €7.8 million. The income
reflects the following transactions up to the consummation of the initial public offering and
subsequently: the interest expense for preferred shares, the interest expense for the convertible loan,
the interest expense for borrowings under the Perceptive Credit Facility (as defined herein), an
extinguishment gain on the exchange of preferred shares of Affimed Therapeutics AG into common
shares of Affimed N.V., the remeasurement gain resulting from changes in fair value and the
extinguishment gain of the derivative conversion feature (see the table in Note 11 to our financial
statements as of and for the year ended December 31, 2014).
Affimed Annual Report 2015
16
Finance income increased in the year ended December 31, 2014 as compared to the year ended
December 31, 2013 as a result of the transactions described above.
Income tax expense
During the year ended December 31, 2014, we recorded a tax income of €166,000 due to changes in
deferred tax assets.
Liquidity and Capital Resources
Since inception, we have incurred significant operating losses. For the years ended December 31,
2013, 2014 and 2015, we incurred net losses of €26.1 million, €0.3 million and €20.2 million,
respectively. To date, we have financed our operations primarily through public offerings of our
common shares, private placements of equity securities and loans, grants and revenues from
collaboration partners. As of December 31, 2015, we had cash and cash equivalents of €76.7 million.
Our cash and cash equivalents have been deposited primarily in savings and deposit accounts with
original maturities of three months or less. Saving and deposit accounts generate a small amount of
interest income. We expect to continue this investment philosophy but could consider to deposit our
cash in savings and deposit account with slightly longer (6 months) maturities.
Cash Flows
Comparison of the years ended December 31, 2014 and 2015
The table below summarizes our consolidated statement of cash flows for the years ended December
31, 2014 and 2015:
Year ended December
31,
Net cash used in operating activities ................................................................
Net cash used for investing activities ................................................................
Net cash generated from financing activities ....................................................
Net changes to cash and cash equivalents ......................................................
Cash and cash equivalents at the beginning of the year ..................................
Exchange-rate related changes of cash and cash equivalents ........................
Cash and cash equivalents at the end of the year ............................................
2015
2014
(in € thousand)
(10,547)
(298)
44,889
34,044
4,151
1,530
39,725
(18,535)
(277)
53,498
34,686
39,725
2,329
76,740
The increase in net cash used in operating activities by 76% from €10.5 million in the year ended
December 31, 2014 to €18.5 million in the year ended December 31, 2015 was mainly due to higher
cash expenditure for research and development efforts and higher general and administrative cost.
Net cash used for investing activities remained unchanged with €0.3 million.
Net cash generated from financing activities increased from €44.9 million in the year ended
December 31, 2014 to €53.5 million in the year ended December 31, 2015. The 2015 amount mainly
includes the net proceeds from the public offering in May 2015 and the net proceeds received from the
private placement in October 2015.
Affimed Annual Report 2015
17
Comparison of the years ended December 31, 2013 and 2014
The table below summarizes our consolidated statement of cash flows for the years ended December
31, 2013 and 2014:
Net cash used in operating activities ...............................................................
Net cash used for investing activities ...............................................................
Net cash generated from financing activities ...................................................
Net changes to cash and cash equivalents .....................................................
Cash and cash equivalents at the beginning of the year .................................
Exchange-rate related changes of cash and cash equivalents ......................
Cash and cash equivalents at the end of the year ...........................................
Year ended December 31,
2013
2014
(in € thousand)
(5,678)
(157)
5,084
(751)
4,902
0
4,151
(10,547)
(298)
44,889
34,044
4,151
1,530
39,725
The increase in net cash used in operating activities by 84% from €5.7 million in the year ended
December 31, 2013 to €10.5 million in the year ended December 31, 2014 was mainly due to the
increase of cash effective expenses. While cash effective expenses in the year ended December 31,
2013 totaled €12.3 million (total expenses of €20.8 million less non cash effective expenses totaling
€8.5 million), cash effective expenses in the year ended December 31, 2014 totaled €16.1 million
(total expenses of €11.6 million plus non cash effective income totaling €4.5 million).
The increase in net cash used for investing activities from €0.2 million in the year ended
December 31, 2013 to €0.3 million in the year ended December 31, 2014 was due to acquisition of
laboratory equipment.
The increase in net cash generated from financing activities from €5.1 million in the year ended
December 31, 2013 to €44.9 million in the year ended December 31, 2014 was mainly due to an
increase in average cash and cash equivalents following the completion of our initial public offering,
the Series E Financing (as defined herein) and the borrowing of funds under the Perceptive Credit
Facility.
Cash and Funding Sources
Cash and cash equivalents and financial assets as of December 31, 2015 were €76.7 million and were
€66.8 million as of March 31, 2016. Funding sources generally comprise proceeds from the issuance
of equity instruments, revenues from collaboration agreements and government grants.
On July 24, 2014, our subsidiary Affimed Therapeutics AG (now Affimed GmbH) entered into an
agreement for a loan facility (the “Perceptive Credit Facility”) with an affiliate of Perceptive Advisors
LLC. The Perceptive Credit Facility originally provided for aggregate funding of $14.0 million, including
$5.5 million in initial funding and up to an additional $8.5 million of capital available in subsequent
tranches. In 2015, we agreed with Perceptive to cancel the option to draw the remaining available $8.5
million.
The loans outstanding under the Perceptive Credit Facility accrue interest at an annual rate equal to
an applicable margin of nine percent plus one-month LIBOR, with LIBOR deemed to equal 1% if
LIBOR is less than 1% and is payable in monthly installments of interest only through April 2016 and
then principal and interest thereafter in monthly installments through August 2018, with the
outstanding balance to be repaid in full at the end of August 2018. Borrowings under the Perceptive
Credit Facility are secured by a substantial portion of our tangible assets and intellectual property.
Under the loan agreement governing the facility, we are subject to customary affirmative and negative
covenants including limitations on additional indebtedness, limitations on liens, limitations on
acquisitions and other restrictions related to our tangible assets and intellectual property. Additionally,
covenants set forth under the facility will require us to maintain a minimum cash balance of $2.0
million. We have also agreed to achieve certain development milestones for AFM11 and AFM13. We
Affimed Annual Report 2015
18
have entered into a discussion regarding the facility with Perceptive, including with respect to the
development milestones.
Following the closing of our initial public offering, we issued to Perceptive 106,250 warrants at an
exercise price of $8.80 in accordance with the loan agreement governing the facility.
On September 17, 2014, we completed our initial public offering of common shares in which we sold
an aggregate of 8,000,000 common shares at a price to the public of $7.00 per share. The proceeds
to us from the offering were approximately €43.2 million, before deducting the underwriting discounts,
commissions and offering expenses.
In January 2015, we announced that we had been awarded a €2.4 million ($3 million) grant from the
German Federal Ministry of Education and Research (BMBF). The grant, awarded under the BMBF’s
“KMU-innovative: Biotechnology–BioChance” program, will cover approximately 40% of expenses for a
research and development program to develop multi-specific antibodies for the treatment of multiple
myeloma. The grant payments are scheduled to be made periodically through the end of 2017.
On May 12, 2015, we announced the closing of our offering of 5,750,000 common shares at a public
offering price of $7.15 per common share. The total amount includes 750,000 common shares issued
pursuant to the underwriters’ option to purchase additional shares which was exercised on May 7, 2015.
After deducting the underwriting discounts and other offering expenses, the net proceeds of the public
offering were €33.5 million ($37.5 million).
On October 14, 2015, we sold 3.3 million shares to SGR Sagittarius Holding AG, an existing shareholder
affiliated with Aeris Capital AG, in a private placement exempt from registration, resulting in net proceeds
to us of €19.1 million ($21.8 million).
Funding Requirements
We expect that we will require additional funding to complete the development of our product
candidates and to continue to advance the development of our other product candidates. In addition,
we expect that we will require additional capital to commercialize our product candidates AFM13,
AFM11, AFM21/AFM22, AFM24 and to broaden our pre-clinical and clinical NK-cell related
development activities. If we receive regulatory approval for AFM13, AFM11, AFM21/AFM22 or
AFM24, and if we choose not to grant any licenses to partners, we expect to incur significant
commercialization expenses related to product manufacturing, sales, marketing and distribution,
depending on where we choose to commercialize. We also expect to incur additional costs associated
with operating as a public company. Additional funds may not be available on a timely basis, on
favorable terms, or at all, and such funds, if raised, may not be sufficient to enable us to continue to
implement our long-term business strategy. If we are not able to raise capital when needed, we could
be forced to delay, reduce or eliminate our product development programs or commercialization
efforts.
We believe that our existing cash and cash equivalents will enable us to fund our operating expenses
and capital expenditure requirements until the first quarter of 2018. We have based this estimate on
assumptions that may prove to be incorrect, and we could use our capital resources sooner than we
currently expect. Our future funding requirements will depend on many factors, including but not
limited to:
(cid:1)
(cid:1)
the scope, rate of progress, results and cost of our clinical trials, nonclinical testing,
and other related activities;
the cost of manufacturing clinical supplies, and establishing commercial supplies, of
our product candidates and any products that we may develop;
(cid:1)
the number and characteristics of product candidates that we pursue;
Affimed Annual Report 2015
19
(cid:1)
(cid:1)
(cid:1)
the cost, timing, and outcomes of regulatory approvals;
the cost and timing of establishing sales, marketing, and distribution capabilities; and
the terms and timing of any collaborative, licensing, and other arrangements that we
may establish, including any required milestone and royalty payments thereunder.
To address our financing needs, we may raise additional capital through the sale of equity or
convertible debt securities. In such an event, your ownership interest will be diluted, and the terms of
these securities may include liquidation or other preferences that adversely affect your rights as a
holder of our common shares. In this context we are also considering the restructuring of our existing
debt financing with Perceptive or entering into new or additional debt financing agreements to address
our funding needs, including to extend our cash reach.
For more information as to the risks associated with our future funding needs, see “Risk
Management.”
JOBS Act Exemptions
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among
other things, reduce certain reporting requirements for an “emerging growth company.” As an
emerging growth company, we are electing to take advantage of the following exemptions:
(cid:1) not providing an auditor attestation report on our system of internal controls over financial
reporting;
(cid:1) not providing all of the compensation disclosure that may be required of non-emerging growth
public companies under the U.S. Dodd-Frank Wall Street Reform and Consumer Protection
Act;
(cid:1) not disclosing certain executive compensation-related items such as the correlation between
executive compensation and performance and comparisons of the Chief Executive Officer’s
compensation to median employee compensation; and
(cid:1) not complying with any requirement that may be adopted by the Public Company Accounting
Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s
report providing additional information about the audit and the financial statements (auditor
discussion and analysis).
These exemptions will apply for a period of five years following the completion of our initial public
offering (through 2019) or until we no longer meet the requirements of being an “emerging growth
company,” whichever is earlier. We would cease to be an emerging growth company if we were to
have more than $1.0 billion in annual revenue or have more than $700 million in market value of our
common shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a
three-year period.
Affimed Annual Report 2015 20
Risk Management
Our business is exposed to specific industry risks, as well as general business risks. Our financial
condition or results of operations could be materially and adversely affected if any of these risks
occurs, and as a result, the market price of our common shares could decline. This Annual Report
also contains forward-looking statements that involve risks and uncertainties. Our actual results could
differ materially and adversely from those anticipated in these forward-looking statements as a result
of certain factors.
Listed below are the risks perceived by management to be the most significant. The risks faced by
Affimed during 2015 are not limited to this list; a more comprehensive set of risks are described in
Affimed’s form 20-F which was filed with the Securities Exchange Commission on March 30, 2016,
and a copy of which is available from Affimed’s website.
Risks Related to our Business Strategy
Any failure or delay in commencing or completing clinical trials for our products could severely harm
our business. To obtain the requisite regulatory approvals to market and sell any of our products, we
must demonstrate through extensive pre-clinical tests and clinical trials that the products are safe and
effective in humans. Pre-clinical tests and clinical trials are expensive, can take many years and have
an uncertain outcome. A failure of one or more of our pre-clinical programs on clinical trials could
occur at any stage of testing.
Positive or timely results from pre-clinical tests and early clinical trials do not ensure positive or timely
results in later stage clinical trials or product approval by the European Medicines Agency, or EMA,
the U.S. Food and Drug Administration, or FDA or any other regulatory authority. Products that show
positive preclinical or early clinical results often fail in later stage clinical trials.
Any delay in commencing or completing clinical trials for our product candidates would delay
commercialization of our products and severely harm our business and financial condition. It is also
possible that none of our product candidates will complete clinical trials in any of the markets in which
we intend to sell those product candidates. Accordingly, we would not receive the regulatory approvals
needed to market our product candidates.
The regulatory approval process is costly and lengthy and we may not be able to successfully obtain
all required regulatory approvals. The pre-clinical development, clinical trials, manufacturing,
marketing and labeling of pharmaceuticals and medical devices are all subject to extensive regulation
by governmental authorities and agencies in the European Union (“EU”), the US and other
jurisdictions.
We must obtain regulatory approval for products before marketing or selling any of them. The approval
process is typically lengthy and expensive, and approval is never certain.
Additional clinical trials may be required if clinical trial results are negative or inconclusive, which will
require us to incur additional costs and significant delays.
Our products will remain subject to ongoing regulatory review even if they receive marketing approval.
If we fail to comply with continuing regulations, we could lose these approvals and the sale of our
products could be suspended.
Even if we receive regulatory approval to market a particular product, the approval could be
conditional on us conducting additional costly post-approval studies or could limit the indicated uses
included in the labeling of our products. Moreover, the product may later cause adverse effects that
limit or prevent its widespread use, force us to withdraw it from the market or impede or delay our
ability to obtain regulatory approvals in additional countries. In addition, the manufacturer of our
products, and their facilities, will continue to be subject to regulatory review and periodic inspections to
ensure adherence to applicable regulations. After receiving marketing approval, the manufacturing,
Affimed Annual Report 2015 21
labeling, packaging, adverse event reporting, storage, advertising, promotion and the product will
remain subject to extensive regulatory requirements.
Our products may not gain market acceptance. Sales of medical products depend on physicians’
willingness to prescribe the treatment, which is likely to be based on a determination by these
physicians that the products are safe and effective from a therapeutic and cost perspective relative to
competing treatments. We cannot predict whether physicians will make this determination in respect of
our products.
Even if our products achieve market acceptance, the market may prove not to be large enough to
allow us to generate significant revenues.
Our ability to generate revenue from any products that we may develop will depend on reimbursement
and pricing policies and regulations.
Our ability to commercialize our products may depend, in part, on the extent to which reimbursement
for our products will be available from government and health administration authorities, private health
insurers, managed care programs and other third-party payers.
Significant uncertainty exists as to the reimbursement status of newly approved healthcare products.
In many countries, healthcare and pharmaceutical products are subject to a regime of reimbursement
by government health authorities, private health insurers or other organizations. There is increasing
pressure from these organizations to limit healthcare costs by restricting the availability and level of
reimbursement.
Risks Related to our Financial Position and need for Additional Capital
We have a history of operating losses and anticipate that we will continue to incur losses for the
foreseeable future. We may never become profitable.
The business has incurred losses in each year since inception. These losses have arisen mainly from
costs incurred in research and development of our products and general and administrative expenses.
No assurance can be given that we will achieve profitability in the future. Furthermore, if our products
fail in clinical trials or do not gain regulatory approval, or if our products do not achieve market
acceptance, we may never achieve profitability.
Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent
periods.
We expect to need additional funding in the future, which may not be available to us on acceptable
terms, or at all, which could force us to delay or impair our ability to develop or commercialize our
products.
Our current cash and cash equivalents balances may not be sufficient to finance our long term
research, development and commercialization programs. Therefore, additional funds will be required.
There can be no assurance that additional funds will be available on a timely basis, on favorable
terms, or at all, or that such funds, if raised, would be sufficient to enable us to continue to implement
our long term business strategy. If we are unable to raise such additional funds through collaboration
arrangements or equity or debt financing, we may need to delay, scale back or cease expenditures for
some of our longer term research, development and commercialization programs, or grant rights to
develop and market products that we would otherwise prefer to develop and market ourselves,
thereby reducing their ultimate value to us. Our inability to obtain additional funds necessary to
operate the business could materially and adversely affect the market price of our shares and all or
Affimed Annual Report 2015 22
part of an investment in our shares could be lost. In addition, to the extent we raise capital by issuing
additional shares, shareholders’ equity interests would be diluted.
Risks Related to Legal Compliance Matters
Our operations, including our research, development, testing and manufacturing activities, are subject
to numerous environmental, health and safety laws and regulations. If we fail to comply with such laws
and regulations, we could be subject to fines or other sanctions.
The third parties with whom we contract to manufacture our product candidates are also subject to
these and other environmental, health and safety laws and regulations. Liabilities they incur pursuant
to these laws and regulations could result in significant costs or in certain circumstances, an
interruption in operations, any of which could adversely impact our business and financial condition if
we are unable to find an alternate supplier in a timely manner.
Risks Related to Financial Reporting
Effective internal controls over financial reporting are necessary for us to provide reliable financial
reports and, together with adequate disclosure controls and procedures, are designed to prevent
fraud. Any failure to implement required new or improved controls, or difficulties encountered in their
implementation could cause us to fail to meet our reporting obligations. Section 404 of the Sarbanes-
Oxley Act of 2002 requires management of public companies to develop and implement internal
controls over financial reporting and evaluate the effectiveness thereof.
A material weakness is a deficiency or a combination of deficiencies in internal control over financial
reporting such that there is a reasonable possibility that a material misstatement of our financial
statements will not be prevented or detected on a timely basis. No material weaknesses were
identified in connection with the preparation of our financial statements for the years ended December
31, 2014 and 2015. If the implemented internal controls fail to be effective in the future, it could result
in material misstatements in our financial statements, impair our ability to raise revenue, result in the
loss of investor confidence in the reliability of our financial statements and subject us to regulatory
scrutiny and sanctions, which in turn could harm the market value of our common shares.
Risk Management regarding Financial Instruments
Qualitative Disclosure about Market Risk
As a result of our operating and financing activities, we are exposed to market risks that may affect our
financial position and results of operations. Market risk is the potential to incur economic losses on risk
sensitive instruments arising from adverse changes in factors such as foreign exchange rate
fluctuations.
Our senior management is responsible for implementing and evaluating policies which govern our
funding, investments and any use of derivative financial instruments. Management monitors risk
exposure on an ongoing basis.
Credit risk
The Company offers services to its collaboration partners / clients with the possibility to pay with a
certain payment term. The credit risks on these payment terms have been and will continue to be
borne by the Company. It is impossible that these credit risks may increase in the future, which could
have a material adverse effect on its business and/or financial results. The company is aiming to
negotiate advance payments for services provided to clients or collaboration partners. The Company
invoices its collaboration partners, in relation to the contractual agreements (i.e. FTE rates, milestones
reached, etc.). The Company is therefore subject to a certain credit default risk.
Affimed Annual Report 2015 23
The cash and cash equivalents are held with banks, which are rated BBB- to AA- based on Standard
& Poor’s and Moody’s.
Interest rate risks
The group’s interest rate risk arises from cash accounts and long-term borrowings at variable rates.
Affimed entered into a loan agreement of $5.5 million with a variable interest rate of an annual rate of
9% plus one-month LIBOR, with LIBOR deemed to equal 1% if LIBOR is less than 1%. The group
does not expect the LIBOR to exceed the floor or 1% within the foreseeable future, and considers the
interest risk to be low.
Our financial assets are exposed to interest rate risk. A shift in interest rates would have an immaterial
impact on the loss of the group.
Currency risk
Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities
are denominated in a currency that is not the entity’s functional currency. We use the euro as our
functional and reporting currency. The group’s entities are exposed to Czech Koruna (CZK) and US
Dollars (USD). As a result, we are exposed to foreign currency exchange movements. Our material
budgeted future expenses are in euros and US dollar. We have converted into euros only the portion
of the IPO proceeds and the proceeds from our follow-on offering in May and the private placement in
October 2015 that will be spent in euros according to our budget. The company does not apply
additional hedging methods. Assets and liabilities and income and expenses of Group companies,
other than the euro, are translated to euro at foreign exchange rates prevailing at the balance sheet
date and the dates of the transactions respectively. The Company regards its positions in other
countries (in this case outside the Eurozone) as strategic and assumes that, over the longer term,
currency fluctuations will be neutral on balance.
Cash surpluses, held in a currency other than the functional currency, are not used for speculative
purposes. We do not enter into contracts that reflect the changes in the value of foreign currency
exchange rates to preserve the value of assets, commitments and anticipated transactions. Therefore,
fluctuations in exchange rates may distort year-to-year comparisons of financial performance.
In 2015, if the Euro had weakened/strengthened by 10% against the US dollar with all other variables
held constant, the loss would have been approximately €2.8 million higher/lower, mainly as a result of
foreign exchange gains/losses on translation of US dollar-denominated financial assets. The group
considers a shift in the exchange rates of 10% as a realistic scenario.
Net investments in subsidiaries in foreign countries are long-term investments. Their book value
changes through movements of foreign currency exchange rates. We do not hedge the net
investments in foreign subsidiaries.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting the obligations associated
with its financial liabilities which are normally settled by delivering cash. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due.
The Group continually monitors its risk of a shortage of funds using short and mid-term liquidity
planning. This takes account of the expected cash flows from all activities. The supervisory board
undertakes regular reviews of the budget.
In 2014 and 2015, Affimed raised significant funding that it estimates will enable the group to fund
operating expenses and capital expenditure requirements until Q1 2018:
In 2015, the issue of new common shares and the exercise of stock options resulted in net proceeds
of €53.5 million.
Affimed Annual Report 2015 24
The group expects to require additional funding to complete the development of the existing product
candidates. In addition, the group expects to require additional capital to commercialize the products if
regulatory approval is received.
In 2015, Affimed has filed a “shelf registration statement” with the SEC in order to offer and sell
securities to the public in multiple, future offerings.
Affimed Annual Report 2015
25
Corporate Governance Report
I.
GENERAL
Affimed N.V. is a public limited liability company (the "Company," "Affimed," or "we") with
corporate seat in Amsterdam, the Netherlands, governed by Dutch law, and with registered office
in Heidelberg, Germany. Affimed started as a private company with limited liability and was
converted to a Dutch public limited liability company in connection with a corporate reorganization
that occurred prior to the consummation of our initial public offering in 2014. The Company's
common shares began trading on the Nasdaq Global Market on September 12, 2014 under the
symbol "AFMD."
The Dutch Corporate Governance Code
We are subject to various corporate governance requirements and best practices codes, the most
relevant being those in the Netherlands and the United States. As a Dutch company, the Company
is subject to the Dutch Corporate Governance Code ("DCGC" or the "Code") and is required to
disclose in its statutory annual report, filed in the Netherlands, whether it complies with the
provisions of the DCGC. The DCGC contains principles and best practice provisions for managing
boards, supervisory boards, shareholders and general meetings of shareholders, financial
reporting, auditors, disclosure, compliance and enforcement standards. If the Company does not
comply with the provisions of the DCGC (for example, because of a conflicting Nasdaq requirement
or otherwise), the Company must list the reasons for any deviation from the DCGC in this Annual
Report.
In this report, we address our overall corporate governance structure and state to what extent we
apply the provisions of the DCGC. The Company's deviation from certain practices of the DCGC is
due to the Company being listed in the United States with most of Affimed's investors being outside
of the Netherlands, as well as due to the international business focus of the Company. As a
company listed on Nasdaq, the Company also complies with Nasdaq's corporate governance listing
standards (except for instances where we follow our home country's corporate governance
practices in lieu of certain Nasdaq corporate governance requirements as explained below) and the
rules and regulations promulgated by the SEC. Nasdaq investors are often more familiar with
Nasdaq's rules than with the DCGC.
The full text of the DCGC can be found at the website of the Monitoring Commission Corporate
Governance Code (www.commissiecorporategovernance.nl). Further information about the
Company’s corporate governance practices is available at our website
(www.affimed.com/corporate-governance).
II.
MANAGING DIRECTORS AND SUPERVISORY DIRECTORS
The following table lists the members of our current management board:
Name
Adi Hoess
Florian Fischer
Jens-Peter Marschner
Jörg Windisch
Age
Position
54
48
53
45
Chief Executive Officer
Chief Financial Officer
Chief Medical Officer
Chief Operating Officer
The following is a brief summary of the business experience of the members of our management
board.
Affimed Annual Report 2015
26
Adi Hoess, Chief Executive Officer. Dr. Hoess joined us in October 2010 as Chief Commercial
Officer and since September 2011 has served as our Chief Executive Officer. He has more than 20
years of professional experience with an extensive background in general management, business
development, product commercialization, fund raising and M&A. Prior to joining us, Dr. Hoess was
Chief Commercial Officer at Jerini AG and Chief Executive Officer of Jenowis AG. At Jerini AG he was
responsible for business development, marketing and sales and the market introduction of Firazyr. He
also played a major role in the sale of Jerini to Shire plc. Dr. Hoess began his professional career in
1993 at MorphoSys. Dr. Hoess received his Ph.D. in chemistry and biochemistry from the University of
Munich in 1991 and an M.D. from the Technical University of Munich in 1997.
Florian Fischer, Chief Financial Officer. Dr. Fischer joined us in 2005 as Chief Financial Officer on a
part-time basis, which has increased over time to a full time position since September 2014. Dr.
Fischer is founder and Chief Executive Officer of MedVenture Partners, a Munich-based corporate
finance and strategy advisory company focusing on the life sciences and health care industry. Dr.
Fischer was the Chief Financial Officer of Activaero GmbH from 2002 until 2011 and has been
involved with corporate development since 2011. He also served as the Chief Financial Officer of
Vivendy Ltd. from 2008 until 2013 and as a managing director of AbCheck in 2009. Prior to founding
MedVenture Partners, Dr. Fischer worked with KPMG for more than six years until 2002, where he
was responsible for biotech and healthcare assignments. Before joining KPMG, he worked for
Deutsche Bank AG. Dr. Fischer is also a member of the audit committee of Amphivena. He holds a
graduate degree in business administration from Humboldt University, Berlin and a Ph.D. in public
health from the University of Bielefeld.
Jens-Peter Marschner, Chief Medical Officer. Dr. Marschner joined us in 2013 from Merck KGaA
(Merck Serono). He has 19 years of professional experience in clinical development with a focus on
biological compounds. At Merck Serono, Dr. Marschner served as Vice President Immunological
Programs Oncology from 2009-2012 and Vice President Global Medical Affairs from 2003-2009,
primarily in the field of oncology. Dr. Marschner led the clinical development team of cetuximab
(Erbitux®), a monoclonal antibody to treat colorectal cancer, which was successfully launched in 2004.
He started his pharmaceutical career in 1995 at Boehringer Mannheim, which is now part of Roche.
He studied medicine in Jena (Germany), obtained an M.D. in 1991 from Johann-Wolfgang-Goethe-
University in Frankfurt and became a board certified specialist in clinical pharmacology in 1995.
Jörg Windisch, Chief Operating Officer. Dr. Windisch joined us in 2016 after spending 20 years at
Sandoz Biopharmaceuticals (a Novartis company), most recently serving as Chief Science Officer. He
joined Novartis in 1996 in the biologics unit of Sandoz, where he played a leading role in the
development of Somatropin (Omnitrope®), the first ever biosimilar medicine, as well as of Sandoz’
Epoetinalfa (Binocrit®) and Filgrastim (Zarzio®) products. Over the course of 15 years he built an
international technical development organization for biologics and for five years Dr. Windisch also led
the joint biologics technical development and manufacturing organization for Novartis Pharma and
Sandoz. He was involved in the development and manufacturing of about 20 biologics, six of which
are currently marketed. Dr. Windisch was educated in Austria, Germany and the U.S. and received his
Ph.D. in Biochemistry and Molecular Genetics from the University of Innsbruck.
The following table lists the supervisory directors currently in office appointed by the general
meeting of shareholders. Thomas Hecht is the chairman of our supervisory board. The term of
each of our supervisory directors will terminate on the date of the annual general meeting of
shareholders in the year indicated below.
Name
Gender
Nationality
Age
Initial appointment
Bernhard Ehmer
Ulrich Grau
Thomas Hecht
Berndt Modig
M
M
M
M
M
Richard B. Stead
Ferdinand Verdonck M
German
German/US
German
Swedish/US
US
Belgian
61
67
65
57
63
73
January 21, 2016
July 1, 2015
September 17, 2014
September 17, 2014
September 17, 2014
September 9, 2014
Term
2019
2018
2017
2017
2016
2017
Affimed Annual Report 2015
27
The following is a brief summary of the business experience of the Company's supervisory
directors.
Bernhard R.M. Ehmer, Director. Dr. Ehmer has been a member of our supervisory board since 2016.
He has been chairman of the board of management of Biotest AG since January 2015. Prior to this, he
worked for the Imclone Group, a wholly owned subsidiary of Eli Lilly, as president of Imclone Systems
Corporation in the United States and as managing director in Germany. In 2007/2008 he was CEO of
Fresenius Biotech, Germany and before this, Dr. Ehmer headed the Business Area Oncology of Merck
KGaA, Darmstadt and served as head of Global Clinical Operations at Merck. Between 1986 and 1998
he held various functions at Boehringer Mannheim in Germany, Italy and Singapore. Dr. Ehmer holds a
degree in medicine and worked in the Department of Internal Medicine at the Academic Teaching
Hospital of the University of Heidelberg.
Ulrich M. Grau, Director. Dr. Grau served as an advisor to our board from May 2013 until June 2015
and became a board member in July 2015. He has over 30 years of experience in the biotechnology
and pharmaceutical industries including general management, business development, corporate
strategy and the development of new products and technologies. Dr. Grau was Chief Operating Officer
at Micromet from 2011 to 2012. Between 2006 and 2010, Dr. Grau was a founder, President and CEO
of Lux Biosciences, Inc., a clinical stage ophthalmic company. Previously, Dr. Grau served as
President of Research and Development at BASF Pharma/ Knoll where he directed a global R&D
organization whose development pipeline included Humira. The majority of his career was at Aventis
Pharma, where he last held the position of senior VP of global late stage development. Lantus® is
based on his inventions made during his early years as a scientist with Hoechst AG. Dr. Grau received
his Ph.D. in chemistry and biochemistry from the University of Stuttgart and spent three years as a
post-doctoral fellow at Purdue University in the field of protein crystallography.
Thomas Hecht, Chairman. Dr. Hecht has been the chairman of our supervisory board since 2007. He
is head of Hecht Healthcare Consulting in Küssnacht, Switzerland, a biopharmaceutical consulting
company founded in 2002. Dr. Hecht also serves as chairman of the board of directors of Cell Medica
Ltd., Delenex AG and as a director of Humabs BioMed AG. Until the beginning of March 2015, he
served as chairman of the supervisory council of SuppreMol GmbH. Dr. Hecht was previously Vice
President Marketing at Amgen Europe. A seasoned manager and industry professional, he held
various positions of increasing responsibility in clinical development, medical affairs and marketing at
Amgen between 1989 and 2002. Prior to joining the biopharmaceutical industry, he was certified in
internal medicine and served as Co-Head of the Program for Bone Marrow Transplantation at the
University of Freiburg, Germany.
Berndt Modig, Director. Mr. Modig has been a member of our supervisory board since 2014. He has
served as Chief Financial Officer of Prosensa Holding N.V. from March 2010 through January 2015
when Prosensa was acquired by BioMarin Pharmaceutical Inc. Mr. Modig also serves as member of
the board of directors and chairman of the audit committee of Auris Medical Holding AG and Axovant
Sciences Ltd. Mr. Modig has more than 25 years of international experience in finance and operations,
private equity and mergers and acquisitions. Before joining Prosensa, Mr. Modig was Chief Financial
Officer at Jerini AG from October 2003 to November 2008, where he directed private financing rounds,
its initial public offering in 2005 and its acquisition by Shire plc in 2008. Prior to Jerini, Mr. Modig
served as Chief Financial Officer at Surplex AG from 2001 to 2003 and as Finance Director Europe of
U.S.-based Hayward Industrial Products Inc. from 1999 to 2001. In previous positions, Mr. Modig was
a partner in the Brussels-based private equity firm Agra Industria from 1994 to 1999 and a Senior
Manager in the Financial Services Industry Group of Price Waterhouse LLP in New York from 1991 to
1994. Mr. Modig served as a director of Mobile Loyalty plc from 2012 to 2013. Mr. Modig has a
bachelor’s degree in business administration, economics and German from the University of Lund,
Sweden and an M.B.A. degree from INSEAD, Fontainebleau, France and is a Certified Public
Accountant.
Richard B. Stead, Director. Dr. Stead has been a member of our supervisory board since 2007. He
has more than 25 years of experience in the biotechnology and pharmaceutical industries, designing
and directing clinical trials, regulatory strategy and licensing activities. He is currently Founder and
Principal of BioPharma Consulting Services, where he is involved in the development of a number of
oncology products including different strategies for cancer immunotherapy. Previously, he was Vice
President, Clinical Research of Immunex Corporation, responsible for oncology and neurology product
development. Dr. Stead has served in various positions in clinical development and played a key role
Affimed Annual Report 2015
28
in the FDA approval and commercialization of Amgen’s first two products, Epogen and Neupogen. Dr.
Stead graduated from the University of Wisconsin and earned an M.D. from Stanford University. He
completed his internship and residency as well as a fellowship in Hematology at Harvard Medical
School and the Brigham and Women’s Hospital followed by post-doctoral research in the Laboratory
of Molecular Biology at the National Cancer institute. He also serves on the boards of Ascend
Biopharmaceuticals Ltd. and the Seattle Reparatory Theatre.
Ferdinand Verdonck, Director. Mr. Verdonck has been a member of our supervisory board since
July 2014. He is chairman of the supervisory board of uniQure N.V. and is a director and a member of
the Audit Committee of Virtus Funds and Laco Information Services. In recent years he was director of
Groupe SNEF, director and member of the audit committee of J.P. Morgan European Investment Trust
and director and chairman of the audit committee of two biotechnology companies in Belgium, Movetis
and Galapagos. He has previously served as chairman of Banco Urquijo and of Nasdaq Europe and
as a director of Dictaphone Corporation. From 1992 to 2003, he was the managing director of Almanij
NV, a financial services company which has since merged with KBC, and his responsibilities included
company strategy, financial control, supervision of executive management and corporate governance,
including board participation in publicly-traded and privately-held companies in many countries. Mr.
Verdonck holds a law degree from KU Leuven and degrees in economics from KU Leuven and the
University of Chicago.
III.
BOARD PRACTICES
Governance structure
Affimed N.V. is a public limited liability company under Dutch law with a two-tier board structure.
Our management board (raad van bestuur) has ultimate responsibility for the overall management
of Affimed. The management board is supervised and advised by a supervisory board (raad van
commissarissen). The management board and the supervisory board are accountable to Affimed’s
shareholders.
Management board
The management board manages our general affairs and ensures that we can effectively
implement our strategy and achieve our objectives.
At least once per year the management board informs the supervisory board in writing of the main
lines of the Company's strategic policy, the general and financial risks and the management and
control system. The management board provides the supervisory board with such necessary
information as the supervisory board requires performing its duties.
We have a strong centralized management board led by Adi Hoess, our Chief Executive Officer,
who has a strong track record in the development and commercialization of new medicines. Our
management team has extensive experience in the biopharmaceutical industry, and key members
of our team have played an important role in the development and commercialization of approved
drugs.
For a more detailed description of the responsibilities of the management board, please refer to the
corporate governance section of our website at www.affimed.com.
Composition of the management board
The number of managing directors is determined by the supervisory board. Currently the
management board consists of four (4) directors.
The size and composition of our management board and the combined experience and expertise of
its members should reflect the best fit for Affimed’s profile and strategy, irrespective of gender.
Affimed Annual Report 2015
29
This aim for the best fit, in combination with the availability of qualifying candidates, has resulted in
Affimed, as of April 30, 2016, having a management board in which all four members are male. In
order to increase gender diversity of the management board, in accordance with article 2:166
section 2 of the Dutch Civil Code, we pay close attention to gender diversity in the process of
recruiting and appointing new management board members. In addition, we continuously recruit
female executives, as demonstrated by the employment of several women to key leadership
positions across the Company in 2015.
Appointment, suspension and dismissal
Managing directors are appointed by the general meeting of shareholders upon a binding
nomination of the supervisory board. The general meeting of shareholders can suspend or dismiss
a management board member by an absolute majority of votes cast, upon a proposal made by the
supervisory board. If another party makes the proposal, a two-thirds majority of the votes cast,
representing more than half of the issued share capital, is required. If this qualified majority is not
achieved, second general meeting as referred to in article 2:120 section 3 of the Dutch Civil Code
may not be convened.
Supervisory board
Our supervisory board supervises the policies of the management board and the general course of
the affairs of the Company's business. The supervisory board gives advice to the management
board and is guided by the Company's interests and its business when performing its duties. The
management board provides the supervisory board with such necessary information as is required
to perform its duties. Currently the supervisory board consists of six (6) supervisory directors.
The Company's articles of association provide for a term of appointment of supervisory directors of
up to four years. Furthermore, the Company's articles of association state that a supervisory
director may be reappointed, but that any supervisory director may be a supervisory director for no
longer than twelve (12) years. The Company's supervisory directors are appointed for different
terms as a result of which only approximately one quarter of the Company's supervisory directors
will be subject to election in any one year. Such an appointment has the effect of creating a
staggered board and may deter a takeover attempt.
The supervisory board meets as often as a supervisory board member deems necessary. In a
meeting of the supervisory board, each supervisory director has a right to cast one vote. All
resolutions by the supervisory board are adopted by an absolute majority of the votes cast. In the
event the votes are equally divided, the chairman has the decisive vote. A supervisory director may
grant another supervisory director a written proxy to represent him at the meeting.
The Company's supervisory board can pass resolutions outside of meetings, provided that the
resolution is adopted in writing and all supervisory directors have consented to adopting the
resolution outside of a meeting.
The Company's supervisory directors do not have a retirement age requirement under the
Company's articles of association.
Composition of the supervisory board
The composition of the supervisory board, including its members’ combined experience and
expertise, independence, and diversity of age and gender, should reflect the best fit for Affimed’s
profile and strategy. This aim for the best fit, in combination with the availability of qualifying
candidates, has resulted in Affimed currently having a supervisory board in which all six members
are male. In order to increase gender diversity in the supervisory board in accordance with article
2:166 section 2 of the Dutch Civil Code, we pay close attention to gender diversity in the process of
recruiting and appointing new supervisory board candidates.
Affimed Annual Report 2015
30
Appointment, suspension and dismissal
Supervisory directors are appointed by the general meeting of shareholders upon a binding
nomination of the supervisory board for a term of up to four years. The general meeting of
shareholders can suspend or dismiss a supervisory board member by an absolute majority of votes
cast, upon a proposal made by the supervisory board. If another party makes the proposal, a two-
thirds majority of the votes cast, representing more than half of the issued share capital, is
required. If this qualified majority is not achieved, a second general meeting as referred to in article
2:120 section 3 of the Dutch Civil Code may not be convened.
Conflicts of interest
Each member of the management board is required to immediately report any potential conflict of
interest to the chairman of the supervisory board and to the other members of the management
board and provide them with all relevant information. Each member of the supervisory board is
required to immediately report any potential conflict of interest to the chairman of the supervisory
board and provide him or her with all relevant information. The chairman determines whether there
is a conflict of interest. If a member of the supervisory board or a member of the management
board has a conflict of interest with the Company, the member may not participate in the
discussions and/or decision-making process on subjects or transactions relating to the conflict of
interest. The chairman of the supervisory board will arrange for such transactions to be disclosed
in the Annual Report.
Dr. Ulrich Grau, who was appointed as Supervisory Director effective July 1, 2015, is a significant
shareholder and Chairman of i-novion Inc. which was engaged by the Company in 2015 prior to his
appointment as Supervisory Director to conduct preclinical services through a services agreement.
In accordance with best practise provision III.6.3, Affimed reports that Dr. Ulrich Grau had a conflict
of interest in relation to the Company entering into this service agreement with i-novion Inc.
Affimed reports that best practise provisions III.6.1 to III.6.3 inclusive have been complied with. Dr.
Grau immediately reported this conflict of interest to the chairman of the supervisory board. The
service agreement was agreed on terms that are customary in the sector concerned and the
supervisory board approved the entering into this service agreement. Dr. Grau did not take part in
discussions and/or decision-making on this topic.
In accordance with best practice provision III.6.4 of the DCGC, Affimed reports that no transactions
between the Company and legal or natural persons who hold at least 10% of the shares in the
Company occurred in 2015.
Supervisory Board Committees
Although the supervisory board retains ultimate responsibility, the supervisory board has delegated
certain of its tasks to its committees.
Audit committee
The audit committee, which consists of Ferdinand Verdonck (Chairman), Berndt Modig and
Bernhard Ehmer (since January 2016), assists the board in overseeing our accounting and
financial reporting processes and the audits of our financial statements. In addition, the audit
committee is directly responsible for the appointment, compensation, retention and oversight of the
work of our independent registered public accounting firm. Our supervisory board has determined
that all members of the audit committee satisfy the “independence” requirements set forth in Rule
10A-3 under the Exchange Act. The supervisory board has determined that Ferdinand Verdonck
and Berndt Modig qualify as “audit committee financial experts,” as such term is defined in the
rules of the SEC.
The audit committee is responsible for recommending the appointment of the independent auditor
to the general meeting of shareholders; the appointment, compensation, retention and oversight of
any accounting firm engaged for the purpose of preparing or issuing an audit report or performing
Affimed Annual Report 2015
31
other audit services; pre-approving the audit services and non-audit services to be provided by our
independent auditor before the auditor is engaged to render such services; evaluating the
independent auditor’s qualifications, performance and independence, and presenting its
conclusions to the full supervisory board on at least an annual basis and reviewing and discussing
with the management board and the independent auditor our annual audited financial statements
and quarterly financial statements prior to the filing of the respective annual and quarterly reports,
among other things.
The audit committee meets as often as one or more members of the audit committee deem
necessary, but in any event at least four times per year. The audit committee meets at least once
per year with our independent accountant, without our management board being present. The audit
committee held five meetings in person and seven meetings by conference call in 2015.
Compensation committee
The compensation committee, which consists of Thomas Hecht (Chairman), Ulrich Grau and
Berndt Modig, assists the supervisory board in determining management board compensation. The
committee recommends to the supervisory board for determination of the compensation of each of
our managing directors. Under SEC and Nasdaq rules, there are heightened independence
standards for members of the compensation committee, including a prohibition against the receipt
of any compensation from us other than standard supervisory director fees. As permitted by the
listing requirements of Nasdaq, we have opted out of Nasdaq Listing Rule 5605(d) which requires
that a compensation committee consist entirely of independent directors.
The compensation committee is responsible for identifying, reviewing and approving corporate
goals and objectives relevant to management board compensation; analysing the possible
outcomes of the variable remuneration components and how they may affect the remuneration of
the managing directors; evaluating each managing director’s performance in light of such goals
and objectives and determining each managing director’s compensation based on such evaluation
and determining any long-term incentive component of each managing director’s compensation in
line with the remuneration policy and reviewing our management board compensation and benefits
policies generally, among other things.
The compensation committee held three meetings in person and two meetings by conference call
in 2015.
Nomination and corporate governance committee
The nomination and corporate governance committee, which consists of Thomas Hecht
(Chairman), Ulrich Grau and Richard B. Stead, assists our supervisory board in identifying
individuals qualified to become members of our supervisory board and management board
consistent with criteria established by our supervisory board and in developing our corporate
governance principles. As permitted by the listing requirements of Nasdaq, we have opted out of
Nasdaq Listing Rule 5605(e) which requires independent director oversight of director nominations.
The nomination and corporate governance committee held four meetings in person and one
meeting by conference call in 2015.
IV.
COMPENSATION OF MEMBERS OF THE MANAGEMENT BOARD AND SUPERVISORY
BOARD
Affimed's remuneration policy aims to attract, motivate and retain the best-qualified workforce. The
objectives and structure of the remuneration policy for the management board is regularly reviewed
and/or evaluated by the supervisory board. The current remuneration policy for the management
board and supervisory board was adopted and approved by the general meeting of shareholders
on 17 September 2014, prior to the consummation of our initial public offering.
Affimed Annual Report 2015
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Compensation of Managing Directors and Supervisory Directors
Dutch law provides that we must establish a policy in respect of the remuneration of our managing
directors and supervisory directors. With respect to remuneration in the form of plans for shares or
rights to shares (such as the Equity Incentive Plan 2014 mentioned below) the policy for managing
directors must set out the maximum number of shares or rights to shares to be granted as well as
the criteria for grants and for amending existing grants. The remuneration policy for the managing
directors provides the supervisory board with a framework within which the supervisory board
determines the remuneration of the managing directors.
Our remuneration policy for our managing directors provides the supervisory board with the
authority to enter into management services agreements with managing directors that provide for
compensation consisting of base compensation, performance-related variable compensation, long-
term equity incentive compensation (as detailed in the terms of the Equity Incentive Plan 2014
described below), pension and other benefits and severance pay and benefits. The remuneration
policy for the managing directors provides that the annual cash bonus payable to managing
directors may not exceed 100% of the annual base gross salary and will be based upon the
achievement of set financial and operating goals for the period. The bonus payments may be
increased in any given year by the supervisory board upon a proposal of the compensation
committee based on any exceptional achievements of that managing director. In addition, the
remuneration policy for managing directors allows for cash termination payments, which may not
exceed 100% of the managing director’s base salary. This policy also allows for additional
compensation and benefits to our managing directors following a change of control.
The remuneration policy for the supervisory board established the compensation for our
supervisory directors. This policy provides for payments and initial and annual equity awards. This
is permissible under Dutch law, but constitutes a deviation from best practice provisions III.7.1 of
the DCGC.
The remuneration policy for our supervisory directors provides that each supervisory director is
entitled to an annual retainer of €20,000, provided that the chairman of the supervisory board is
entitled to an annual retainer of €75,000. In addition, the chairman of the audit committee is entitled
to an additional annual retainer of €15,000 and the chairmen of the compensation and nomination
and corporate governance committees are each entitled to annual retainers of €7,500. Supervisory
directors will also be paid €3,000 for each supervisory board meeting attended in person and
€1,500 for each supervisory board meeting attended by telephone, provided the meeting attended
by telephone exceeds 30 minutes. The members of each committee will be paid €1,500 for each
committee meeting attended in person and €750 for each committee meeting attended by
telephone, provided the meeting attended by telephone exceeds 30 minutes.
In addition, under the remuneration policy for our supervisory directors we granted the chairman of
the supervisory board on the date of the consummation of our initial public offering in September
2014 an initial award of stock options to purchase 35,000 common shares and we will grant any
future chairman of the supervisory board an initial award of stock options to purchase 35,000
common shares on the date of their election as the chairman of the supervisory board. Further,
under the remuneration policy we granted each other supervisory director on the date of the
consummation of our initial public offering in September 2014 an initial award of stock options to
purchase 20,000 common shares and we will grant each other supervisory director an initial award
of stock options to purchase 20,000 common shares on the date of their election as a supervisory
director. These initial stock options will vest over a three-year period in three equal instalments on
the anniversaries of the grant date. In addition, the remuneration policy provides that each
supervisory director is entitled to an annual grant of 10,000 stock options, with the chairman of the
supervisory board entitled to an annual grant of 20,000 stock options. These annual awards will
vest in four quarterly instalments and will be fully vested on the first anniversary of the grant date.
Initial awards and annual awards will be granted automatically on the respective dates of issuance
based on the approval by the shareholders of the remuneration policy and will not require any
further approval by the supervisory board or the company. Supervisory directors are also entitled to
be reimbursed for their reasonable expenses incurred in attending meetings of the supervisory
board and its committees.
Affimed Annual Report 2015
33
The aggregate cash compensation, including benefits in kind, accrued or paid to our managing
directors and supervisory directors with respect to the year ended December 31, 2015, for services
in all capacities was approximately €1.8 million. As of December 31, 2015, we have no amounts
set aside or accrued to provide pension, retirement or similar benefits to our managing directors
and supervisory directors. In 2015, awards for 545,000 stock options were granted to management
and members of the supervisory board. Further details on the managing directors and supervisory
directors individual remuneration are outlined in Note H to the Company only financial statements
and Note 24 to the consolidated financial statements.
Long-term incentive plans
Equity Incentive Plan 2014
In conjunction with the closing of our initial public offering (“IPO”), we established the Affimed N.V.
Equity Incentive Plan 2014 (“the 2014 Plan”) with the purpose of advancing the interests of our
shareholders by enhancing our ability to attract, retain and motivate individuals who are expected
to make important contributions to us. The maximum number of shares available for issuance
under the 2014 Plan equals 7% of the total outstanding common shares on September 17, 2014, or
1,678,891 common shares. On January 1 of any calendar year thereafter, an additional 5% of the
total outstanding common shares on that date becomes available for issuance under the 2014
Plan. The absolute number of shares available for issuance under the 2014 Plan will increase
automatically upon the issuance of additional shares by the Company. The option exercise price
for options under the 2014 Plan is the fair market value of a share as defined in the 2014 Plan on
the relevant grant date. We are following home country rules relating to the re-pricing of stock
options. Under applicable Dutch law, re-pricing is permissible, but constitutes a deviation from the
best practice provisions of the DCGC. As a result, if we engage in re-pricing of stock options, we
would be required to provide an explanation in our annual report for why we do not comply with the
best practice provisions.
Plan administration. The 2014 Plan is administered by our compensation committee. Approval of
the compensation committee is required for all grants of awards under the 2014 Plan. The
compensation committee may delegate to the managing directors the authority to grant equity
awards under the 2014 Plan to our employees.
Eligibility. Managing directors, supervisory directors and other employees and consultants of the
Company are eligible for awards under the 2014 Plan.
Awards. Awards include options and restricted stock units.
Vesting period. Subject to any additional vesting conditions that may be specified in an individual
grant agreement, and the accelerated vesting conditions below, the plan provides for three year
vesting of stock options. One-third of the stock options granted to participants in connection with
the start of their employment vest on the first anniversary of the grant date, with the remainder
vesting in equal tranches at the end of each 3-month period thereafter. Stock options granted to
other participants vest in equal tranches at the end of each 3-month period after the grant date
over the course of the vesting period. The compensation committee will establish a vesting
schedule for awards granted to supervisory directors as well as for any awards in the form of
restricted stock units.
Accelerated vesting. Unless otherwise specified in an individual grant agreement, the 2014 Plan
provides that upon a change of control of the Company (as defined in the 2014 Plan) all then
outstanding equity awards will vest and become immediately exercisable. It also provides that upon
a participant’s termination of service due to (i) retirement (or after reaching the statutory retirement
age), (ii) permanent disability rendering the relevant participant incapable of continuing
employment or (iii) death, all outstanding equity awards that would have vested during a 12 month
period following such termination of service will vest and become immediately exercisable.
Otherwise at termination all unvested awards will be forfeited. If a participant experiences a
termination of service without “cause” or for “good reason” (in each case, as defined in the 2014
Affimed Annual Report 2015
34
Plan) within six months prior to a change of control, the Company will make a cash payment
equivalent to the economic value that the participant would have realized in connection with the
change of control upon the exercise and sale of the equity awards that such participant forfeited
upon his or her termination of service. In connection with a change of control and subject to the
approval of the supervisory board, the management board may amend the exercise provisions of
the 2014 Plan.
Stock Option Equity Incentive Plan 2007
Under the Stock Option Equity Incentive Plan 2007 (the “2007 SOP”), we granted options that were
exercisable for preferred shares. In conjunction with the corporate reorganization in connection
with our initial public offering, all outstanding awards granted under the 2007 SOP were converted
into awards exercisable for common shares of Affimed N.V., and no additional grants will be made
under the 2007 SOP. All awards are fully vested and can be exercised by the beneficiaries. The
2007 SOP is administered by the management board, or with respect to awards to our officers, by
the supervisory board.
Carve Out Agreements
Our pre-IPO shareholders have entered into agreements with our managing directors and certain
of our supervisory directors and consultants that grant the beneficiaries the right to receive
common shares of the company. These agreements were satisfied or will be satisfied in the future
through a transfer to the beneficiaries of in the aggregate 7.78% of the common shares owned by
our pre-IPO shareholders, or the respective market value thereof in cash to the beneficiaries.
Managing director and Supervisory director services agreements
Our managing directors have entered into management services agreements with us which
became effective upon the consummation of our initial public offering in September 2014 (for three
managing directors) and the approval of the shareholder meeting in January 2016 (for one
managing director). These agreements provide for benefits upon a termination of service. Prior to
the closing of our IPO certain of our managing and supervisory directors have entered into
consulting agreements with us. All such consulting agreements were terminated in the course of
our IPO.
The management services agreements are for a definite period of time, which period equals the
term of office of the managing director. In addition, the management services agreements provide
for a termination notice period of six months, both for us and for the managing director. In the event
of an urgent cause, the management services agreements may be terminated with immediate
effect.
Each management services agreement provides for payment of severance upon pre-defined
circumstances such as a termination by us without urgent cause or the existence of certain events
posing the managing director to terminate the management services agreement for urgent cause
(including, but not limited to, a reduction of the managing director's salary) for which the severance
is 100% of the managing director's gross annual compensation.
The management services agreements provide for a lump-sum payment following a change of
control, subject to certain conditions. In the event of termination of the managing services
agreements following a change of control, the aforementioned severance is increased to 150% of
the managing director's gross annual compensation. In addition, the managing director receives an
amount equal to the average variable compensation over the last two years.
Affimed Annual Report 2015
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The management services agreements contain post-termination restrictive covenants, including a
post-termination non-competition covenant, which lasts until six months after the management
services agreement has ended, and a non-solicitation covenant, which lasts until two years after
the management services agreement has ended.
Insurance and Indemnification
Our managing directors and supervisory directors have the benefit of indemnification provisions in
our articles of association. These provisions give managing directors and supervisory directors the
right, to the fullest extent permitted by law, to recover from us amounts, including but not limited to
litigation expenses, and any damages they are ordered to pay, in relation to acts or omissions in
the performance of their duties. However, there is generally no entitlement to indemnification for
acts or omissions that amount to willful (opzettelijk), intentionally reckless (bewust roekeloos) or
seriously culpable (ernstig verwijtbaar) conduct. In addition, upon consummation of our initial public
offering, we entered into agreements with our managing directors and supervisory directors to
indemnify them against expenses and liabilities to the fullest extent permitted by law. These
agreements also provide, subject to certain exceptions, for indemnification for related expenses
including, among others, attorneys’ fees, judgments, penalties, fines and settlement amounts
incurred by any of these individuals in any action or proceeding. In addition to such indemnification,
we provide our managing directors and supervisory directors with directors’ and officers’ liability
insurance.
Insofar as indemnification of liabilities arising under the U.S. Securities Act of 1933 (the “Securities
Act”) may be permitted to supervisory directors, managing directors or persons controlling us
pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable.
V.
Related party transactions
The following is a description of related party transactions Affimed or its direct subsidiary Affimed
GmbH have entered into since January 1, 2015 with any of our members of our supervisory board
or management board and the holders of more than 5% of our common shares.
Agreements with Supervisory Directors
We had a consulting agreement with Ulrich M. Grau, whose term as a supervisory director became
effective as of July 1, 2015. Dr. Grau’s remuneration under the agreement consisted of service
fees for business development, corporate strategy and the development of new products. In June
2015, this consulting agreement was terminated and all associated rights and obligations ceased.
Also, according to a service agreement with i-novion Inc., of which Dr. Grau serves as Chairman of
the Board of Directors, i-novion Inc. conducted certain preclinical services for us. In 2015,
i-novion Inc. received related payments of €138,000 (further details are given on page 30 of this
report).
Agreements with Amphivena
In 2013, we entered into a license and development agreement, which amended and restated a
2012 license agreement, with Amphivena Therapeutics, Inc., or Amphivena, based in San
Francisco, to develop an undisclosed product candidate for hematologic malignancies in exchange
for an interest in Amphivena and certain milestone payments. We have also assigned and licensed
certain technology to Amphivena and provided it with funding.
Registration rights agreement
Following the consummation of our IPO, we entered into a registration rights agreement with
certain of our existing shareholders pursuant to which we granted them the rights set forth below.
Affimed Annual Report 2015
36
Demand registration rights. Certain of our shareholders that are party to the Registration Rights
Agreement (the “RRA Shareholders”) are entitled to request that we effect up to an aggregate of
four demand registrations under the Registration Rights Agreement, and no more than one
demand registration within any six-month period, covering the RRA Shareholders’ common shares
that are subject to transfer restrictions under Rule 144 (“registrable securities”). The demand
registration rights are subject to certain customary conditions and limitations, including customary
underwriter cutback rights and deferral rights. No demand registration rights exist while a shelf
registration is in effect.
Piggyback registration rights. If we propose to register any common shares (other than in a shelf
registration or on a registration statement on Form F-4, S-4 or S-8), the RRA Shareholders are
entitled to notice of such registration and to include their registrable securities in that registration.
The registration of RRA Shareholders’ registrable securities pursuant to a piggyback registration
does not relieve us of the obligation to effect a demand registration. The managing underwriter has
the right to limit the number of registrable securities included in a piggyback registration if the
managing underwriter believes it would interfere with the successful marketing of the common
shares.
Form F-3 registration rights. When we are eligible to use Form F-3, one or more RRA Shareholders
have the right to request that we file a registration statement on Form F-3. RRA Shareholders will
have the right to cause us to undertake underwritten offerings from the shelf registration, but no
more than one underwritten offering in a six-month period. Each underwritten takedown constitutes
a demand registration for purposes of the maximum number of demand registrations we are
obligated to effectuate.
Subject to limited exceptions, the Registration Rights Agreement provides that we must pay all
registration expenses in connection with a demand, piggyback or shelf registration. The
Registration Rights Agreement contains customary indemnification and contribution provisions.
Indemnification Agreements
We have entered into indemnification agreements with our managing directors and supervisory
directors. The indemnification agreements and our articles of association require us to indemnify
our managing directors and supervisory directors to the fullest extent permitted by law.
VI.
INTERNAL RISK MANAGEMENT AND CONTROL SYSTEMS
Our managing board, including our chief executive officer and chief financial officer, after
evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-
15(e) under the Exchange Act) as of December 31, 2015, have concluded that based on the
evaluation of these controls and procedures required by Rule 13a-15(b) of the Exchange Act, our
disclosure controls and procedures were effective and the risk management and control systems
worked properly in 2015. We conclude that these systems provide a reasonable assurance that the
financial report does not contain any errors of material importance.
The main elements of our internal control and risk management system in relation to the financial
reporting process comprise the following:
- Clear assignment of responsibilities
- Segregation of duties and four eyes principle
- Appropriate financial accounting system including authorisation concepts
- Use of checklists when preparing quarterly and annual financial statements
- Use of guidelines and work procedures
Our internal control system has been discussed with the supervisory board's audit committee and
the external auditors on a regular basis.
Affimed Annual Report 2015
37
A Disclosure Committee is in place, which advises the various officers and departments involved,
including the CEO and the CFO, on the timely review, publication and filing of periodic and current
(financial) reports. In addition to the certification by the CEO and the CFO under U.S. law, each
individual member of the supervisory board and management board must under Dutch law, sign
the consolidated and the company-only financial statements being disclosed and submitted to the
General Meeting of Shareholders for adoption.
A description of the risk factors and the risk management approach, as well as the sensitivity of the
Company's results to external factors and variables are described in more detail in "Risk
Management."
VII.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the
supervision and with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control
over financial reporting based upon criteria established in Internal Control – Integrated Framework
(2013) by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that
evaluation, our management concluded that our internal control over financial reporting was
effective as of December 31, 2015.
VIII.
CODE OF CONDUCT
We have adopted a Code of Conduct which covers a broad range of matters including the handling
of conflicts of interest, compliance issues and other corporate policies such as insider trading and
equal opportunity and non-discrimination standards. Our Code of Conduct applies to all of our
supervisory directors, managing directors and employees. We have published our Code of Conduct
on our website, www.affimed.com.
IX.
SHARES AND SHAREHOLDERS’ RIGHTS
General meeting of shareholders
Affimed shareholders exercise their rights through annual and extraordinary general meetings of
shareholders. We are required to convene an annual general meeting of shareholders in the
Netherlands each year, no later than six months after the end of the Company’s financial year.
Additional extraordinary general meetings of shareholders may be convened at any time by the
supervisory board and the management board. Pursuant to Dutch law, one or more shareholders,
who jointly represent at least 10% of the issued capital may, on their application, be authorized by
a Dutch district court to convene a general meeting of shareholder.
The agenda for the annual general meeting of shareholders must contain certain matters as
specified in our articles of association and under Dutch law, including the adoption of our annual
financial statements. Shareholders are entitled to propose items for the agenda of the general
meeting of shareholders provided that they hold at least 3% of the issued share capital. Proposals
for agenda items for the general meeting of shareholders must be submitted at least 60 days prior
to the date of the meeting. The general meeting of shareholders is also entitled to vote on
important decisions regarding Affimed’s identity or character, including major acquisitions and
divestments.
Affimed Annual Report 2015
38
In accordance with our articles of association, for each general meeting of shareholders, the
management board may determine that a record date will be applied in order to establish which
shareholders are entitled to attend and vote at the general meeting of shareholders. Such record
date shall be the 28th day prior to the day of the general meeting. The record date and the manner
in which shareholders can register and exercise their rights will be set out in the notice of the
meeting.
We encourage participation in Affimed’s general meetings of shareholders. All shareholders and
others entitled to attend general meetings of shareholders are authorized to attend the general
meeting of shareholders, to address the meeting and, in so far as they have such right, to vote.
Voting rights
In accordance with Dutch law and our articles of association, each issued common share and each
issued cumulative preferred share confers the right to cast one vote at the general meeting of
shareholders. Each holder of shares may cast as many votes as it holds shares. Shareholders may
vote by proxy. No votes may be cast at a general meeting of shareholders on shares held by us or
our subsidiaries or on shares for which we or our subsidiaries hold depositary receipts.
Nonetheless, the holders of a right of use and enjoyment (vruchtgebruik) and the holders of a right
of pledge in respect of shares held by us or our subsidiaries in our share capital are not excluded
from the right to vote on such shares, if the right of use and enjoyment (vruchtgebruik) or the right
of pledge was granted prior to the time such shares were acquired by us or any of our subsidiaries.
Neither we nor any of our subsidiaries may cast votes in respect of a share on which we or such
subsidiary holds a right of use and enjoyment (vruchtgebruik) or a right of pledge. Shares which
are not entitled to voting rights pursuant to the preceding sentences will not be taken into account
for the purpose of determining the number of shareholders that vote and that are present or
represented, or the amount of the share capital that is provided or that is represented at a general
meeting of shareholders.
Decisions of the general meeting of shareholders are taken by an absolute majority of votes cast,
except where Dutch law or the articles of association provide for a qualified majority or unanimity.
In accordance with Dutch law and generally accepted business practices, our articles of
association do not provide quorum requirements generally applicable to general meetings of
shareholders. To this extent, our practice varies from the requirement of Nasdaq Listing Rule
5620(c), which requires an issuer to provide in its bylaws for a generally applicable quorum, and
that such quorum may not be less than one-third of the outstanding voting stock.
Under our articles of association, our managing directors and supervisory directors are appointed
by the general meeting of shareholders upon a binding nomination by our supervisory board. The
general meeting of shareholders may overrule the binding nomination by a resolution adopted with
a two-thirds majority of the votes cast representing at least half of the issued share capital. If the
general meeting of shareholders overrules the binding nomination, the supervisory board shall
make a new binding nomination.
Issue of additional shares and pre-emptive rights
Shares may be issued following a resolution by the general meeting of shareholders on a proposal
of the management board made with the approval of the supervisory board. The general meeting of
shareholders may resolve to delegate this authority to the management board for a period of time
not exceeding five years. At the general meeting of shareholders held at September 12, 2014, our
management board was granted the authority, with effect from September 17, 2014 being the date
of our conversion into a Dutch public limited liability company prior to the consummation of our
initial public offering, for a period of five years (i.e., until September 17, 2019) and subject to the
approval of the supervisory board, to resolve to (i) issue common shares (either in the form of
stock dividend or otherwise) and/or grant rights to subscribe common shares in the share capital of
the Company, for a maximum of common shares that can be issued under the size of the
authorised share capital of the Company as per the date of adoption of such resolution and (ii)
issue cumulative preferred shares and/or grant rights to subscribe for cumulative preferred shares,
to a maximum of cumulative preferred shares that can be issued under the size of the authorised
share capital of the Company as per the date of adoption of such resolution.
Affimed Annual Report 2015
39
Upon the issuance of new common shares, holders of Affimed’s common shares have a pre-
emptive right to subscribe to common shares in proportion to the total amount of their existing
holdings of Affimed’s common shares. According to the Company’s articles of association, this pre-
emptive right does not apply to any issuance of shares to Affimed employees.
The general meeting of shareholders may decide to restrict or exclude pre-emptive rights. The
general meeting of shareholders may also resolve to designate the management board as the
corporate body authorized to restrict or exclude pre-emptive rights for a period not exceeding five
years.
At the general meeting of shareholders held at September 12, 2014, with effect from September
17, 2014 being the date of our conversion into a Dutch public limited liability company prior to the
consummation our initial public offering, our management board was granted the authority, for a
period of five years (i.e., until September 17, 2019) and subject to the approval of the supervisory
board, to restrict or exclude the pre-emptive rights of holders of common shares upon the issuance
of common shares and/or upon the granting of rights to subscribe for common shares.
Repurchase by Affimed of its own shares
Affimed may only acquire fully paid shares of any class in its capital for a consideration following
authorization by the general meeting of shareholders and subject to certain provisions of Dutch law
and the Company’s articles of association, if: (i) the Company’s shareholders’ equity less the
payment required to make the acquisition does not fall below the sum of paid-up and called-up
capital and any reserves required by Dutch law or its articles of association and (ii) the Company
and its subsidiaries would not thereafter hold shares or hold a pledge over shares with an
aggregate par value exceeding 50% of its then current issued share capital.
At the general meeting of shareholders held at June 9, 2015, our management board was granted
the authority, for a period of 18 months, with effect from the same date (i.e., until December 9,
2016) and subject to the approval of the supervisory board, to cause the repurchase of common
shares by us of up to 10% of our issued share capital, for a price per share not exceeding 110% of
the most recent closing price of a common share on any stock exchange where the common
shares are listed.
No authorization of the general meeting of shareholders is required if common shares are acquired
by us with the intention of transferring such common shares to our employees under an applicable
employee stock purchase plan.
Articles of Association
Our articles of association outline certain of the Company’s basic principles relating to corporate
governance and organization. The current text of the articles of association is available at the
Trade Register of the Chamber of Commerce and Industry for Amsterdam and on our public
website at www.affimed.com. A resolution to amend the articles of association may only be
adopted by the general meeting at the proposal of the management board with the prior approval
of the supervisory board. A proposal to amend the articles of association whereby any change
would be made in the rights which vest in the holders of shares of a specific class in their capacity
as such, shall require the prior approval of the meeting of holders of the shares of that specific
class.
Auditor
The general meeting of shareholders appoints the external auditor. The audit committee was
closely involved in the evaluation of Affimed's external auditor and recommends to the supervisory
board the external auditor to be proposed for (re)appointment by the general meeting of
shareholders. In addition, the audit committee evaluates and, where appropriate, recommends the
replacement of the external auditors. On June 9, 2015, the general meeting of shareholders
appointed KPMG Accountants N.V. as external auditor for the Company for the financial year 2015.
Anti-Takeover Provisions
Affimed Annual Report 2015
40
Dutch law permits us to adopt protective measures against takeovers. Although we have not
adopted any specific takeover measures, our management board has been designated for a period
of five years from September 17, 2014 (i.e., until September 17, 2019) to issue cumulative
preferred shares and grant rights to subscribe for cumulative preferred shares, up to the amount of
our authorized share capital. Our cumulative preferred shares are a separate class of equity
securities that could be issued for defensive purposes. Such shares would typically have both a
liquidation and dividend preference over our common stock and otherwise accrue cash dividends
at a fixed rate.
X.
COMPLIANCE WITH DUTCH CORPORATE GOVERNANCE CODE
As a Dutch company, the Company is subject to the DCGC and is required to disclose in this
Annual Report, filed in the Netherlands, whether the Company complies with the provisions of the
DCGC. If the Company does not comply with the provisions of the DCGC (for example, because of
a conflicting Nasdaq requirement or otherwise), the Company must list the reasons for any
deviation from the DCGC in this Annual Report. The Company's most substantial deviations from
the DCGC are summarized below.
Remuneration
(cid:1) The Company has granted and intends to grant options and restricted stock units in the future to
members of its supervisory board, which qualifies as a deviation from best practice provision
III.7.1 of the DCGC. Such remuneration is in accordance with the Nasdaq corporate governance
requirements and market practice among companies listed at Nasdaq. The Company is in
competition with other companies in this field and intends to maintain an attractive
compensation package for its current and any future supervisory board members. The number
of option rights granted to each supervisory board member is determined by the general
meeting of shareholders.
(cid:1) The remuneration committee of the Supervisory Board has not prepared a remuneration report
as referred to in best practise provision II.2.12 of the DCGC, which qualifies as a deviation from
best practice provision III.5.10 of the DCGC. An overview of the implementation and planning of
the remuneration of managing and supervisory directors is ample given in the Annual Report.
The disclosures set out under Note 24 of the consolidated financial statements cover to a large
extent these requirements. In addition the remuneration policy is described in more detail in the
annual report (20-F) filed with the Securities and Exchange Commission on March 30, 2016
(available on our website: http://www.affimed.com/sec).
Re-pricing of stock options
(cid:1) The Company is following home country rules relating to the re-pricing of stock options under
the 2014 Plan. Under applicable Dutch law, re-pricing of stock options is permissible, but
constitutes a deviation from best practice provision II.2.7 of the DCGC where it concerns the
stock options granted to the Company's managing directors and supervisory directors. The
Company is in competition with other companies in this field and intends to maintain an
attractive compensation package for its current and any future management and supervisory
board. Therefore such a re-pricing possibility gives the Company more flexibility to react on high
volatility of its shares and maintain issued stock options as a valuable incentive. The re-pricing
is subject to the approval of the respective Committees as defined in the 2014 Plan.
Board nominations and shareholder voting
(cid:1) Pursuant to our articles of association, the supervisory board will nominate one or more
candidates for each vacant seat on the management board or the supervisory board. A
resolution of the Company's general meeting of shareholders to appoint a member of the
management board or the supervisory board other than pursuant to a nomination by the
Company's supervisory board requires at least two-thirds of the votes cast representing more
Affimed Annual Report 2015
41
than half of the Company's issued share capital, which qualifies as a deviation from best
practice provision IV.1.1 of the DCGC. Although a deviation from the provision IV.1.1 of the
DCGC, the supervisory board and the management board hold the view that these provisions
will enhance the continuity of Affimed’s management and policies.
Independence
(cid:1) More than one of our current members of the supervisory board are not deemed independent
based on the standards set out in the DCGC, which qualifies as a deviation from best practice
provisions III.2.1 and III.2.2 of the DCGC. The Company will evaluate for any future composition
of the supervisory board whether to comply again with these best practice provisions III.2.1 and
III.2.2 of the DCGC.
Chairman of the compensation committee
(cid:1) Thomas Hecht, chairman of our supervisory board, chairs the compensation committee, which
qualifies as a deviation from best practice provision III.5.11 of the DCGC. Our compensation
committee is subject to the independence requirements of Nasdaq.
May 19, 2016
On behalf of the Management Board,
Dr. Adi Hoess, CEO,
Dr. Florian Fischer, CFO
Affimed Annual Report 2015
42
Supervisory Board report
The Supervisory Board is an independent corporate body responsible for supervising and advising the
Management Board and overseeing the general course of affairs and strategy of the Company. The
Supervisory Board is guided by the interests of the Company and the enterprise connected with the
Company and will take into consideration the overall good of the enterprise and the relevant interests of all
the Company's stakeholders. We report on the activities of the Supervisory Board in 2015.
We had a number of highlights last year and earlier this year. Together with our collaboration partner,
Stanford University, we presented pre-clinical data at ASCO and ASH on the synergistic effect of our lead
candidate AFM13, a bispecific CD30/CD16A NK-cell-engaging TandAb, in combination with anti-PD-1
CPIs indicating AFM13’s unique ability to trigger the body’s natural immune cascade. Based on this
exciting and encouraging data, we were able to close a collaboration with Merck in the US, which we
announced early 2016 to evaluate AFM13 in combination with Merck’s anti-PD-1 checkpoint inhibitor
KEYTRUDA® in HL. We are currently preparing a Phase 1b clinical trial designed to establish a dosing
regimen for this combination therapy and assess its safety and efficacy in HL patients relapsed/refractory
to chemotherapy including Adcetris™. Affimed is the sole sponsor and Merck will supply us with
KEYTRUDA® for this study.
Our wholly owned subsidiary, AbCheck, and Pierre Fabre Pharmaceuticals entered into a strategic
research partnership in the field of human antibody discovery and optimization, expanding their ongoing
collaboration. Together with its partner Distributed Bio, Inc., AbCheck developed a novel, potent
technology enabling accelerated humanization of rabbit antibodies.
We completed two major financings in 2015. In May, we successfully closed a follow-on offering on the
Nasdaq Global Market, raising a total of about US $37.5 million (€33.5 million) in net proceeds and in
October, we raised $21.8 million (€19.1 million) from Aeris Capital, a long-term existing shareholder. In
addition we received a research grant of €2.4 million from the German Government to fund our trispecific
platform.
In June 2015 we formalized a Scientific Advisory Board comprising renowned scientists and physicians
from a broad range of areas relevant to Affimed’s approach including immuno-oncology, NK-cells,
lymphoma and leukemia.
Over the course of 2015, we established operations in the United States and strengthened our new US
presence with key hires in the areas of Investor Relations, Clinical Development and Corporate Strategy
and Business Development. Early 2016, we also strengthened our management team through the
addition of Dr. Joerg Windisch as Chief Operating Officer with his broad expertise in pharmaceutical
regulatory affairs, quality control and project management and his proven track record in the development
and manufacturing of marketed biologics. At the same time point, Dr. Bernhard Ehmer joined our
Supervisory Board who is a seasoned expert in the industry with extensive international clinical
development experience in biopharmaceuticals.
Composition
The Supervisory Board determines the number of its members, provided that the Supervisory Board shall
always consist of at least three members. The composition of the Supervisory Board changed in 2015. Dr.
Frank Mühlenbeck did not stand for re-election in the Annual General Meeting held on June 9, 2015 and
Dr. Ulrich Grau was elected effective July 1, 2015. Furthermore Michael B. Sheffery left the Supervisory
Board effective June 29, 2015 and was replaced by Dr. Bernhard Ehmer, who was elected in the
extraordinary general meeting on January 21, 2016. Dr. Ehmer, who meets the NASDAQ independence
requirements, joined the Audit Committee and became the new member in addition to Ferdinand
Verdonck (Chairman) and Berndt Modig in the beginning of 2016. The Supervisory Board profile was not
Affimed Annual Report 2015
43
amended in 2015 and the Supervisory Board is of the opinion that its composition is currently in
accordance with such profile.
The following table lists the members of the Supervisory Board. See chapter II. “Managing Directors and
Supervisory Directors” of the Corporate Governance Report of the Management for detailed biographies
including details on their profession, principal positions and other positions. Thomas Hecht is the chairman
of the Supervisory Board. The term of each member will terminate on the date of the annual general
meeting of shareholders in the year indicated below.
Name
Bernhard Ehmer
Ulrich Grau
Thomas Hecht
Berndt Modig
Richard B. Stead
Ferdinand Verdonck September 9, 2014
Initial appointment
January 21, 2016
July 1, 2015
September 17, 2014
September 17, 2014
September 17, 2014
Term
2019
2018
2017
2017
2016
2017
Age
61
67
65
57
63
73
Gender
M
M
M
M
M
M
Nationality
German
German/US
German
Swedish/US
US
Belgian
Meeting and activities
The Supervisory Board held four meetings in person in 2015. The Management Board attended these
meetings. During these meetings, the progress of the various projects, the main risks of the business, the
financial situation and the strategic direction of the Company including structural changes thereto were
discussed.
In addition, the Supervisory Board discussed the Company’s internal control system with the audit
committee and the external independent auditor. The Supervisory Board, on the advice of the audit
committee, also discussed the result of the assessment of the structure and operation of the internal risk
management and control systems as well as significant changes thereto including the need for an internal
audit function. Based on the results of the review of the audit committee the Supervisory Board currently
does not see a need for an internal audit function.
The Supervisory Board reviewed the Company's annual financial statements, including non-financial
information. The report of the external auditor to the annual financial statements is included in the annual
accounts. The Supervisory Board agrees to the contents of the annual accounts and will recommend the
adoption thereof by the annual general meeting of shareholders.
The Supervisory Board meetings were all attended by the complete Supervisory Board. All Supervisory
Board members made adequate time available to give sufficient attention to matters concerning Affimed.
Each of the members was able to frequently attend Supervisory Board meetings.
The members of the Supervisory Board have regular contact with the members of the Management Board
outside of the scheduled meetings of the Supervisory Board. These informal consultations ensure that the
Supervisory Board remains well-informed about the Company’s operations.
The Supervisory Board is responsible for the quality of its own performance and it discusses, once a year
on its own, without the members of the Management Board both its own performance and that of the
individual members, as well as the performance of the Management Board and its individual members. In
2015 the Supervisory Board conducted an evaluation through a self-assessment and was positive, overall,
about the performance of its committees and the Management Board. Further the Supervisory Board was
satisfied with the performance of the Supervisory Board and determined that it works well together, with all
members fully contributing to discussions. Only very few areas of improvement were identified, in
Affimed Annual Report 2015
44
particular the Supervisory Board came to the conclusion, that a further increase in information flow
between the meetings via additional BoD calls would be beneficial and also allow for additional time to
discuss strategic matters. Such activities have been implemented.
During the financial year 2015 one conflict of interest of a Supervisory Board member was reported. We
refer to the chapter Conflict of Interest in the corporate governance report of the annual report for further
information.
Committees of the Supervisory Board
The Supervisory Board has three permanent committees to which certain tasks are assigned. The
committees report back on their activities to the Supervisory Board on a regular basis. The composition of
each committee is detailed in the following table.
Name
audit committee
compensation committee nomination and corporate
governance committee
Bernhard Ehmer
Ulrich Grau
Thomas Hecht
Berndt Modig
Richard B. Stead
Ferdinand Verdonck
member
member
chairman
member
chairman
member
member
chairman
member
Audit committee
The audit committee assists the Supervisory Board in overseeing Affimed’s accounting and financial
reporting processes and the audits of the financial statements. The audit committee meets at least four
times per year and during the regular meetings at least once a year with our external independent auditor,
without the Management Board being present. In 2015, the audit committee’s main areas of focus were
review of quarterly financial statements, the Company’s system of internal controls and risk management,
auditing approach and auditing timelines of quarterly and annual financial statements, discussion of
meeting intervals.
The financial statements of the company for 2015 as presented by the Management Board have been
audited by KPMG as independent external auditors. KPMG attended the audit committee meeting in
which the annual accounts and the auditor’s report were discussed. The Management Board and the audit
committee report to the Supervisory Board annually on their dealings with the external auditor, including
the auditor’s independence. The Supervisory Board takes these reports into account when deciding on the
nomination for the appointment of an external auditor that is submitted to the general meeting of
shareholders.
The audit committee held five meetings in person and seven meetings by conference call in 2015.
Nomination and corporate governance committee
The nomination and corporate governance committee assists the Supervisory Board in identifying
individuals qualified to become members of the Supervisory Board and Management Board consistent
with criteria established by the Supervisory Board and in developing our corporate governance principles.
Affimed Annual Report 2015
45
In 2015, the committee’s main areas of focus were to identify the profile of new supervisory directors,
discussions regarding the profile of a Chief Operating Officer and the selection of suitable candidates for
the vacant position in the Supervisory Board and the new position of the Chief Operating Officer.
The Nomination and corporate governance committee held four meetings in person and one meeting by
conference call in 2015.
Compensation committee
The compensation committee assists the Supervisory Board in determining Management and Supervisory
Board compensation. The main responsibilities of the compensation committee are preparing proposals
for the Supervisory Board on the remuneration policy for the Management Board, to be adopted by the
general meeting of shareholders, and preparing proposals on the remuneration of individual members of
the Management Board. In 2015, the compensation committee’s main areas of focus were to discuss
Management compensation matters and especially to review the achievement by the Management Board
of the performance criteria for 2015. For more information on the remuneration policy, see Compensation
of Managing Directors and Supervisory Directors in the Corporate Governance section in the
management report.
The compensation committee held three meetings in person and two meetings by conference call in 2015.
Remuneration of the Supervisory Board
The compensation of Supervisory Board members consists of a fixed annual fee in cash and an additional
meeting fee for any Supervisory Board meeting or committee meeting. Members of the Supervisory Board
are entitled to annual grants under our share-based compensation plans. Remuneration is subject to an
annual review by the Supervisory Board.
The remuneration of members of the Supervisory Board complies with almost all aspects of the provision
of the Dutch Corporate Governance Code. The exceptions are where it conforms more closely to
customary practice in the biotechnology industry worldwide, in particular in the United States. These
exemptions and further details on the remuneration of the Supervisory Board are disclosed in the
Corporate Governance section in the management report.
Independence of the Supervisory Board
The Supervisory Board is a separate corporate body that is independent of the Management Board of the
Company. Members of the Supervisory Board can neither be a member of the Management Board nor an
employee of Affimed. Three of our Supervisory Board members, Dr. Thomas Hecht, Dr. Ulrich Grau and
Dr. Richard Stead, do not meet the independence requirements according to the Dutch Corporate
Governance Code (see also the Corporate Governance section in the management report in which
deviations from the Dutch Corporate Governance Code are disclosed).
Affimed Annual Report 2015
46
Appreciation
The Supervisory Board is of the opinion that during the year 2015, its composition, mix and depth of
available expertise, working processes, level and frequency of engagement in all critical Company
activities, and access to all necessary and relevant information and the Company’s management and staff
were satisfactory and enabled it to carry out its duties towards all the Company’s stakeholders.
The members of the Supervisory Board would like to express their gratitude and appreciation to the
Management Board and employees of Affimed for their efforts and performance in 2015. In particular, the
Supervisory Board would very much like to thank our shareholders for their continued support.
May 19, 2016
On behalf of the Supervisory Board,
Dr. Thomas Hecht,
Chairman of the Supervisory Board
Affimed Annual Report 2015
47
Consolidated Financial Statements
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Affimed Annual Report 2015
52
Notes to the consolidated financial statements
(in € thousand)
1.
Reporting entity
Affimed N.V. (in the following Affimed or Company) is a Dutch company with limited liability (naamloze
vennootschap) and has its corporate seat in Amsterdam, the Netherlands. The Company was founded
as Affimed Therapeutics B.V. on May 14, 2014 as private company with limited liability (besloten
vennootschap met beperkte aansprakelijkheid) for a purpose of a corporate reorganization of Affimed
Therapeutics AG and converted its legal form under Dutch law to a public company with limited liability
for an initial public offering of its common shares.
The consolidated financial statements of Affimed as of and for the year ended December 31, 2015
comprise the Company and its wholly owned and controlled subsidiaries Affimed GmbH, Heidelberg,
Germany (former Affimed Therapeutics AG), AbCheck s.r.o., Plzen, Czech Republic and Affimed Inc.,
Delaware, USA. Financial information presented in the consolidated financial statements for periods
prior to the consummation of the corporate reorganization on September 17, 2014 is that of Affimed
GmbH and its subsidiary AbCheck s.r.o. Affimed N.V. had not conducted any operations and had not
held any assets or liabilities, including contingent liabilities, prior to the reorganization. Affimed Inc.
was formed in February 2015 and provides internal services for the Group.
Affimed is a clinical-stage biopharmaceutical group focused on discovering and developing targeted
cancer immunotherapies. The Company’s product candidates are developed in the field of immuno-
oncology, which represents an innovative approach to cancer research that seeks to harness the
body’s own immune system to fight tumor cells. Affimed has own research and development programs
and collaborations, where the Company is performing research services for third parties.
2.
Corporate Reorganization as of September 17, 2014
At the initial step of the corporate reorganization, the shareholders of Affimed Therapeutics AG
subscribed for 15,984,168 common shares in Affimed Therapeutics B.V and agreed to transfer their
common shares and their preferred shares in Affimed Therapeutics AG to Affimed Therapeutics B.V in
consideration therefore. Simultaneously, the share in Affimed Therapeutics B.V. held by Stichting
Affimed Therapeutics was cancelled, and as a result, Affimed Therapeutics AG became a wholly
owned subsidiary of Affimed Therapeutics B.V. The legal form of Affimed Therapeutics B.V. was
converted from a Dutch private company with limited liability to a Dutch public Company with limited
liability, which resulted in a name change into Affimed N.V.
In conjunction with the corporate reorganization, the outstanding awards granted under the Stock
Option Equity Incentive Plan 2007 (ESOP 2007) as well as under the carve-out plan, were converted
into awards exercisable for common shares of Affimed N.V. The carve-out plan granted the right to
receive a cash payment equal to a certain percentage of the fair value of Affimed Therapeutics AG
upon the occurrence of a defined exit event.
The securities of Affimed Therapeutics AG were exchanged for common shares of Affimed B.V.
according to the following ratios:
(i)
(ii)
Common shares and Series D preferred shares on an one-to 7.54 ratio except for shares
held by a less than 5% shareholder, which were exchanged on a one- to 15.46 basis;
Series E preferred shares on a one-to-13.70 basis;
Affimed Annual Report 2015
53
Notes to the consolidated financial statements
(in € thousand)
(iii)
ESOP 2007 awards into awards exercisable for common shares of Affimed N.V. on a one-
to 7.54 basis.
The carve-out plan provided for a transfer to the grantees of 7.78% of the common shares of the
Company owned by the pre-IPO shareholders of the Company at the expiration of the lock up
agreements entered into in connection with the IPO. As a result of the consummation of the corporate
reorganization, the Company is no longer obliged to deliver cash or common shares to the grantees
under the carve-out plan.
The conversion of preferred shares in Affimed Therapeutics AG that had been classified as liability into
common shares of Affimed N.V. resulted in a gain of €4,835 recognized as finance income.
3.
Basis of preparation – consolidated financial statements
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board as adopted in the
European Union (EU-IFRSs) and with Section 2:362(9) of Netherlands Civil Code.
With reference to the income statement of the Company, use has been made of the exemption
pursuant to Section 402 of Book 2 of the Netherlands Civil Code.
The consolidated financial statements were authorized for issuance by the management board and
supervisory board on May 19, 2016.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis. The Group did
not opt for a valuation of liabilities at fair value through profit or loss.
Consolidation
The Company controls an entity when the Company has power over the investee, is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. A subsidiary is consolidated from the date on which control is
transferred to the Company. It is de-consolidated from the date control ceases.
Intercompany transactions, balances and unrealized gains on transactions between group companies
are eliminated.
Functional and presentation currency
These consolidated financial statements are presented in euro, which is also the subsidiaries’
functional currency. All financial information presented in euro has been rounded to the nearest
thousand (abbreviated €) or million (abbreviated € million).
Affimed Annual Report 2015
54
Notes to the consolidated financial statements
(in € thousand)
Presentation of consolidated statement of comprehensive loss
The line items include revenue, research and development expenses and general and administrative
expenses. Cost of sales and gross profit are not meaningful measures for Affimed as a clinical-stage
biopharmaceutical company with a focus on research and development activities. All expenses with
regards to own research and development and collaboration and research service agreements are
presented in research and development expenses.
4.
Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements.
Current and non-current distinction
Affimed presents current and non-current assets and current and non-current liabilities as separate
classifications in the statement of financial position. Affimed classifies all amounts expected to be
recovered or settled within twelve months after the reporting period as current and all other amounts
as non-current.
Foreign currency transactions
Transactions in foreign currencies are translated to euro at exchange rates at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
translated to euro at the exchange rate at the reporting date.
The foreign currency gain or loss on monetary items is the difference between amortized cost in the
functional currency at the beginning of the period, adjusted for effective interest and payments during
the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the
reporting period.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction.
Foreign exchange gains or losses that relate to borrowings and cash and cash equivalents are
presented in the statement of comprehensive loss within ‘finance income/costs net’. All other foreign
exchange gains and losses are presented in the statement of comprehensive loss within ‘Other
income/expenses – net’.
Notes to the cash flow statement
The cash flow statement has been prepared using the indirect method for cash flows from operating
activities. The cash disclosed in the cash flow statement is comprised of cash and cash equivalents.
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term bank deposits
and are not subject to a significant risk of changes in value. Interest paid and received is included in
Affimed Annual Report 2015
55
Notes to the consolidated financial statements
(in € thousand)
the cash flow from operating activities.
Revenue recognition
The Group licenses its intellectual property to third parties that use the intellectual property to develop
product candidates and provides related research and development services to those parties or
provides research services based on intellectual property provided by the customer for those services.
The research services are performed on a “best efforts” basis without a guarantee of technological or
commercial success.
Collaboration and license agreements are evaluated to determine whether they involve multiple
elements that can be considered separate units of accounting. To date, the Group has not licensed or
sold its intellectual property without continuing involvement by providing the related research and
development services. Accordingly, the deliverables under the Group’s collaboration and license
agreements have not qualified as separate units of accounting.
Revenue from collaborative or other research service agreements is recognized according to the stage
of completion.
Non-refundable upfront licensing fees, research funding or technology access fees that have generally
no stand-alone value to the customer and require continuing involvement in the form of research and
development services or other efforts by the Group are recognized as revenue over the term of the
service agreement which is the period of performance.
Milestone payments are contingent upon the achievement of contractually stipulated targets. The
achievement of these milestones depends largely on meeting specific requirements laid out in the
collaboration and license agreements. Consideration that is contingent upon achievement of a
milestone is recognized in its entirety as revenue in the period in which the milestone is achieved, but
only if the consideration earned from the achievement of a milestone meets all the criteria for the
milestone to be considered substantive at the inception of the agreement. For a milestone to be
the milestone must (i) be
considered substantive,
commensurate with either the Group's performance to achieve the milestone or the enhancement of
the value of the item delivered as a result of a specific outcome resulting from the Group's
performance to achieve the milestone, (ii) relate solely to past performance, and (iii) be reasonable
relative to all deliverables and payment terms in the collaboration agreement.
the consideration earned by achieving
Research and development
Research expenses are recognized as expenses when incurred. Costs incurred on development
projects are recognized as intangible assets as of the date as of which it can be established that it is
probable that future economic benefits attributable to the asset will flow to the Group considering its
technological and commercial feasibility. Given the current stage of the development of the Group’s
products, no development expenditures have yet been capitalized. Intellectual property-related costs
for patents are part of the expenditure for the research and development projects. Therefore,
registration costs for patents are expensed when incurred as long as the research and development
project concerned does not meet the criteria for capitalization.
Affimed Annual Report 2015
56
Notes to the consolidated financial statements
(in € thousand)
As part of the process of preparing the consolidated financial statements Affimed is required to
estimate its accrued expenses. This process involves reviewing quotations and contracts, identifying
services that have been performed on its behalf, estimating the level of service performed and the
associated cost incurred for the service when Affimed has not yet been invoiced or otherwise notified
of the actual cost. The majority of Affimed’s service providers invoice monthly in arrears for services
performed or when contractual milestones are met. Affimed makes estimates of its accrued expenses
as of each balance sheet date in the consolidated financial statements based on facts and
circumstances known to it at that time. Affimed periodically confirms the accuracy of its estimates with
the service providers and makes adjustments if necessary.
Employee benefits
(i)
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
the related service is provided.
A liability is recognized for the amount expected to be paid under a short-term cash bonus, if the
Group has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee, and the obligation can be estimated reliably.
(ii)
Share-based payment transactions
The Company’s share-based payment awards outstanding as of December 31, 2014 and 2015 are
classified as equity-settled share-based payment plans. Fair value of share-based equity-settled
compensation plans is measured at grant date and compensation cost is recognized over the vesting
period with a corresponding increase in equity. Fair value is estimated using the Black-Scholes-Merton
formula. The formula determines the value of an option based on input parameters like the value of the
underlying instrument, the exercise price, the expected volatility of share price returns, dividends, the
risk-free interest rate and the time to maturity of the option. The number of stock options expected to
vest is estimated at each measurement date.
Prior to the corporate reorganization, all share-based payment awards were classified as cash-settled
awards. They were measured based on the services received and the fair value of the liability. Until
the cash-settled awards were converted into equity-settled awards in the corporate reorganization (see
note 2), the related liability was re-measured at fair value up to the modification date with any changes
in fair value recognized in comprehensive loss for the period.
Government grants
The Group receives certain government grants that support its research effort in defined projects.
These grants generally provide for reimbursement of approved costs incurred as defined in the
respective grants. Income in respect of grants also includes contributions towards the costs of
research and development. Income is recognized when costs under each grant are incurred in
accordance with the terms and conditions of the grant and the collectability of the receivable is
reasonably assured.
Affimed Annual Report 2015
57
Notes to the consolidated financial statements
(in € thousand)
Government grants relating to costs are deferred and recognized in the income statement over the
period necessary to match them with the costs they are intended to compensate. When the cash in
relation to recognized government grants is not yet received the amount is included as a receivable on
the statement of financial position.
The Group recognizes income from government grants under ‘Other income’ in the consolidated
statement of comprehensive loss.
Lease payments
Payments made under operating leases are recognized in profit or loss on a straight-line basis over
the term of the lease.
Finance income and finance costs
Finance income comprises interest income from interest bearing bank deposits. Interest income is
recognized as it accrues in profit or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings and fair value adjustments of embedded
derivative conversion features. Borrowing costs are recognized in profit or loss using the effective
interest method.
Intangible assets
Intangible assets comprise mainly purchased technology licenses and software. Intangible assets are
initially measured at acquisition cost, including any directly attributable costs of preparing the asset for
its intended use less accumulated amortization. Amortization begins when an asset is available for use
and amortization is calculated using the straight-line method to allocate their cost over their estimated
useful lives, as follows:
(cid:1)
(cid:1)
Technology licenses: 3-14 years
Software: 3 years
The Group only owns intangible assets with a definite useful life.
The useful lives of intangible assets are reviewed at each reporting date. The effect of any adjustment
to useful lives is recognized prospectively as a change of accounting estimate.
(cid:0)(cid:2)(cid:3)(cid:4)(cid:2)(cid:5)(cid:6)(cid:7)(cid:8) (cid:10)(cid:11)(cid:12)(cid:13)(cid:6)(cid:14)(cid:2)(cid:11)(cid:2)(cid:15)(cid:16)(cid:4) (cid:3)(cid:15)(cid:8) (cid:2)(cid:17)(cid:18)(cid:10)(cid:12)(cid:11)(cid:2)(cid:15)(cid:16)
Leasehold improvements and equipment comprise mainly leasehold improvements, laboratory
equipment and other office equipment. Leasehold improvements and equipment are stated at
historical cost less accumulated depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
All repairs and maintenance are charged to profit or loss during the financial period in which they are
incurred, because it does not constitute a separate asset.
Affimed Annual Report 2015
58
Notes to the consolidated financial statements
(in € thousand)
Depreciation on leasehold improvements and equipment is calculated using the straight-line method to
allocate their cost over their estimated useful lives, as follows:
•
•
Leasehold improvements: 8-10 years
Equipment: 3-14 years
Leasehold improvements are depreciated over the shorter of the expected lease term for the buildings
the assets relate to or the estimated useful life.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount
and are recognized within other income - net in the consolidated statement of comprehensive loss.
Inventories
Inventories are measured at the lower of cost or net realizable value and comprise chemical
substances and other consumables used for research and development. The cost of inventories is
based on the average cost-principle and includes expenditure incurred in acquiring the inventories,
import duties, as well as transport and other costs directly attributable to the purchase.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
(iii) Non-derivative financial assets
The Group’s only class of non-derivative financial assets is trade and other receivables and cash and
cash equivalents.
Receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets and measured as loans and
receivables (see note 16). Loans and receivables are subsequently carried at amortized cost using the
effective interest method.
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three
months or less.
(iv) Non-derivative financial liabilities
The Group’s classes of financial liabilities are borrowings, trade and other payables and, prior to the
corporate reorganization, convertible loans and preferred shares. The Group initially recognizes non-
derivative financial liabilities on the date that they are originated and measures them at amortized cost
using the effective interest rate method. The Group derecognizes a financial liability when its
Affimed Annual Report 2015
59
Notes to the consolidated financial statements
(in € thousand)
contractual obligations are discharged, cancelled or expire.
(v) Compound financial instruments
The Company entered into the Perceptive loan agreement pursuant to which it issued warrants to
purchase common shares of the Company at the option of the holder (see note 20). The number of
shares to be issued does not vary with changes in their fair value.
The liability component of the Perceptive loan agreement was recognized initially at the fair value of a
similar liability that did not have a warrant. The equity component was recognized initially at the
difference between the fair value of the compound financial instrument as a whole and the fair value of
the liability component. Subsequent to initial recognition, the liability component is measured at
amortized cost using the effective interest method. The equity component is not re-measured
subsequent to initial recognition except on conversion or expiry.
(vi) Embedded derivatives
Embedded derivatives are separated from the host contract and accounted for as a derivative if the
economic characteristics and risks of the embedded derivative are not closely related to the economic
characteristics and risks of the host contract. Prior to the corporate reorganization, the conversion
features into Series D preferred shares included in the convertible loan issued in 2012 and into Series
D or the highest class of preferred shares included in the convertible loan issued in 2013 were
embedded derivatives. The Group measured the fair value of the embedded derivative on initial
recognition as the difference between the fair value of the hybrid instrument and the fair value of the
host contract - the loan. The initial recognition amount of the host contract was calculated as the
difference between the issuance price and the fair value of the embedded derivative. The fair value of
the host contract was derived from quoted third party offers for similar loans without a conversion
feature. Subsequently, the embedded derivatives were measured at fair value through profit or loss
with reference to the fair value of Series D preferred shares (see note 11).
Offsetting
Financial assets and liabilities are reported at their net amount in the statement of financial position if
there is a legally enforceable right of setoff and there is an intention to settle by setoff. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal
course of business and in the event of default, insolvency or bankruptcy of the company or the
counterparty.
Impairment
(vii) Trade and other receivables
Trade and other receivables are assessed at each reporting date to determine whether there is
objective evidence that they are impaired. Trade or other receivables are impaired if objective
evidence indicates that a loss event has occurred after the initial recognition of the receivable, and that
the loss event had a negative effect on the estimated future cash flows of that receivable that can be
estimated reliably. A loss event is the inability of a debtor to pay because of its bankruptcy. All
Affimed Annual Report 2015
60
Notes to the consolidated financial statements
(in € thousand)
receivables are assessed for specific impairment. Losses are recognized in profit or loss and reflected
in an allowance account against receivables. When a subsequent event causes the amount of
impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. No
impairments or reversals of impairments were recognized in 2013, 2014 or 2015.
(viii) Non-financial assets
Assets that are subject to depreciation / amortization are reviewed for impairment whenever events or
changes in circumstances indicate the carrying amount may not be recoverable. An impairment loss is
recognized as the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. Non-
financial assets that were previously impaired are reviewed for possible reversal of the impairment at
each reporting date.
Income taxes
Income taxes comprise current and deferred tax. Current tax and deferred tax are recognized in profit
or loss except to the extent that it relates to items recognized directly in equity or in other
comprehensive loss.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred
tax is not recognized for temporary differences associated with assets and liabilities if the transaction
which led to their initial recognition is a transaction that is not a business combination and that affects
neither accounting nor taxable profit or loss.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the
reporting date.
Deferred tax assets and liabilities are presented net if there is a legally enforceable right to offset.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against which
they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.
Fair Value Measurement
All assets and liabilities for which fair value is recognized in the consolidated financial statements are
organized in accordance with the following fair value hierarchy, based on the lowest level input
parameter that is significant on the whole for fair value measurement:
Affimed Annual Report 2015
61
Notes to the consolidated financial statements
(in € thousand)
•
•
•
Level 1 – Prices for identical assets or liabilities quoted in active markets (non-adjusted)
Level 2 – Measurement procedures, in which the lowest level input parameter significant on the
whole for fair value measurement is directly or indirectly observable for on the market
Level 3 – Measurement procedures, in which the lowest level input parameter significant on the
whole for fair value measurement is not directly or indirectly observable for on the market
The carrying amount of all trade and other receivables, cash and cash equivalents and trade and other
payables is a reasonable approximation of the fair value and therefore information about the fair
values of those financial instruments has not been disclosed. The note disclosure for the fair value of a
loan (financial liability) is based on level 2 measurement procedures (see note 20).
Loss per share
Affimed presents loss per share data for its common shares. Loss per common share is calculated by
dividing the loss of the period by the weighted average number of common shares outstanding during
the period, adjusted for the stock split in 2014 (see note 18). The Company has granted warrants
under the Perceptive loan agreement (see note 20) and options to share-based payment programs
(see note 19) which potentially have a dilutive effect. As of December 31, 2015, December 31, 2014
and December 31, 2013 no instruments actually had a dilutive effect.
Critical judgments and accounting estimates
The preparation of the consolidated financial statements in conformity with IFRS requires management
to make judgments, estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods
affected.
In preparing these financial statements, the critical judgments made by management in applying the
Group's accounting policies resulted in the following accounting estimates:
(i)
Share-based payments
The fair value of stock options issued by Affimed N.V. is estimated using the Black-Scholes-Merton
formula. The formula determines the value of an option based on input parameters like the value of the
underlying instrument, the exercise price, the expected volatility of share price returns, dividends, the
risk-free interest rate and the time to maturity of the option. The fair value of share-based equity-
settled compensation plans is measured at grant date and compensation cost is recognized over the
vesting period with a corresponding increase in equity. The number of stock options expected to vest
is estimated at each measurement date.
(ii)
Revenue recognition
Elements of consideration in collaboration and license agreements are non-refundable up-front
Affimed Annual Report 2015
62
Notes to the consolidated financial statements
(in € thousand)
research funding payments, technology access fees and milestone payments. Generally, the Group
has continuing performance obligations and therefore up-front payments are deferred and the related
revenues recognized in the period of the expected performance. Technology access fees are generally
deferred and recognized over the expected term of the research service agreement on a straight line
basis.
The Group estimates that the achievement of a milestone reflects a stage of completion under the
terms of the agreements and recognizes revenue when a milestone is achieved. If the research
service is cancelled due to technical failure, the remaining deferred revenues from upfront payments
are recognized.
New standards and interpretations applied for the first time
A number of amendments to standards and new or amended interpretations are effective for annual
periods beginning on or before January 1, 2015, and have been applied in preparing these financial
statements.
Standard/interpretation
Annual Improvements to IFRSs 2010-2012 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle
Effective Date 1
February 1, 2015
January 1, 2015
1 Shall apply for periods beginning on or after the effective date.
None of these amendments to standards and new or amended interpretations had an effect on the
consolidated financial statements of the Group.
New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations are effective for annual periods
beginning after December 31, 2015, and have not been applied in preparing these consolidated
financial statements.
Standard/interpretation
Annual Improvements to IFRSs 2012-2014 Cycle
Amendments to IAS 16, 38 Clarification of acceptable methods
of depreciation and amortization
Amendments to IAS 1 Disclosure Initiative
Amendments to IAS 7 Disclosure Initiative
Amendments to IFRS 10, 12 and IAS 28 Investment Entities
Amendment to IFRS 11 Accounting for Acquisitions of Interests in
Joint Operations
IFRS 15 Revenue from Contracts with Customers
IFRS 9 Financial Instruments (2014)
IFRS 16 Leases
Effective Date 1
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2018
January 1, 2018
January 1, 2019
Affimed Annual Report 2015
63
Notes to the consolidated financial statements
(in € thousand)
1 Shall apply for periods beginning on or after the effective date.
The Group is assessing the potential impact that IFRS 9, 15 or 16 could have on its consolidated
financial statements. The other new or amended standards and interpretations are not expected to
have a significant effect on the consolidated financial statements of the Group.
5.
Segment reporting
(i)
Information about reportable segment
The Group is active in the discovery, pre-clinical and clinical development of antibodies based on core
technology. The activities are either conducted as own project development or for third party
companies. Management of resources and reporting to the decision maker is based on the Group as a
whole.
(ii)
Geographic information
The geographic information below analyses the Group’s revenue and non-current assets by the
country of domicile and other countries. In presenting the following information, segment revenue has
been based on the geographic location of the customers and segment assets were based on the
geographic location of the assets.
Discovery activities and research services are conducted in both the Heidelberg and Plzen premises.
Pre-clinical and clinical activities are conducted and coordinated from Heidelberg.
Revenues:
Germany
Europe
USA
Non-current assets as of December 31:
Germany
Czech Republic
(iii)
Major Customers
2013
TEUR
350
344
4,393
5,087
2014
TEUR
111
367
2,904
3,382
695
351
1,046
2015
TEUR
125
711
6,725
7,562
692
295
987
In 2013, the Group’s revenue from the Amphivena collaboration agreement exceeded 10%. In 2014
and 2015, the Group’s revenue with each of its two collaboration partners, Amphivena and the
Leukemia and Lymphoma Society (in the following LLS), exceeded 10% (see note 6).
Affimed Annual Report 2015
64
Notes to the consolidated financial statements
(in € thousand)
6.
Revenue
Collaboration agreement Amphivena
Affimed is party to a collaboration with Amphivena Therapeutics Inc., San Francisco, USA (in the
following Amphivena) to develop a product candidate for hematologic malignancies. The collaboration
consists of a series of linked transactions which in substance form a research and development
collaboration. Amphivena is a structured entity with one project and uses the funding it receives from
investors (which include Affimed) and Janssen Biotech Inc., Horsham, USA (in the following Janssen)
to pay Affimed for its research and development services. Once approval of an investigational new
drug application (IND) for the product candidate is obtained, Janssen has an option to acquire
Amphivena on predetermined terms.
The relevant linked agreements consist of:
•
•
•
a license and development agreement between Affimed and Amphivena,
a stock purchase agreement between Amphivena, its investors (which include Affimed) for
purposes of financing Amphivena, and
a warrant agreement between Amphivena and Janssen for purposes of financing Amphivena
and providing Janssen the option to acquire the results of the research and development
activities through an acquisition of Amphivena following IND approval.
Pursuant to the license and development agreement between Affimed and Amphivena, Affimed grants
a license to intellectual property and agreed to perform certain services for Amphivena related to the
development of a product candidate for hematological malignancies. In consideration for the research
and development work to be performed, Amphivena could be required to pay to Affimed service fees
totaling approximately €16 million (net of Affimed’s share in funding Amphivena) payable according to
the achievement of milestones and phase progressions as described under the license and
development agreement.
Affimed recognized revenue of €8.6 million upon achievement of three milestones consisting of the
earned milestone payments of €9.0 million less Affimed’s share in funding Amphivena of €0.4 million in
2013 (€4.4 million), 2014 (€1.8 million) and 2015 (€2.4 million).
After the achievement of the third milestone, the Group continues to provide research and
development services to Amphivena for nonrefundable advance payments of €7.5 million in the
aggregate, payable in three installments (€1.3 million, €4.2 million and €2.0 million). Revenue for these
research and development services is recognized, net of Affimed’s share in funding Amphivena of €0.3
million, over the service performance period. The first two installments of €5.2 million (€5.5 million, net
of Affimed’s share of €0.3 million) were received in 2015. The Company recognized €2.4 million as
revenue for these research and development services in 2015, €2.8 million were deferred as of
December 31, 2015.
Amphivena has obtained funding solely by issuing preferred stock to investors and under the warrant
agreement with Janssen. Investors have provided financing in exchange for preferred stock issued by
Amphivena under the terms of a stock purchase agreement. Affimed has participated in the financing
of Amphivena in the amount of €0.7 million.
Affimed Annual Report 2015
65
Notes to the consolidated financial statements
(in € thousand)
Collaboration agreement The Leukemia & Lymphoma Society (LLS)
Affimed is party to a collaboration with LLS to fund the development of a specific TandAb. Under the
terms of the agreement, LLS has agreed to contribute up to $4.4 million contingent upon the
achievement of certain milestones.
In the event that the research and development is successful, Affimed must proceed with
commercialization of the licensed product. If Affimed decides for business reasons not to continue the
commercialization, Affimed must at its option either repay the amount funded or grant a license to LLS
to enable LLS to continue with the development program. In addition, LLS is entitled to receive
royalties from Affimed based on the Group’s future revenue from any licensed product, with the
amount of royalties not to exceed three times the amount funded.
The Company achieved several milestones and recognized revenue for related payments of €1.1
million in 2014 and €1.6 million in 2015 for research and development services.
Research service agreements
AbCheck has entered into certain research service agreements. These research service agreements
provide for non-refundable upfront technology access research funding or capacity reservation fees
and milestone payments. The Group recognized revenue of €344 in 2013, €478 in 2014 and €1,126 in
2015.
7.
Other income and expenses - net
Other income and expense, net mainly comprises income from government grants for research and
development projects of €716 (2014: €381, 2013: €533). In 2013, losses from the disposal of assets of
€33 were included.
8.
Research and development expenses
The following table shows the different types of expenses allocated to research and development
costs:
Third-party services
Personnel expenses
Legal, consulting and patent expenses
Cost of Materials
Amortisation and depreciation
Operating lease expenses
Other expenses
2013
2014
2015
5,680
5,273
1,405
709
427
258
602
14,354
5,558
292
1,549
844
428
243
681
9,595
15,386
3,637
902
902
308
267
606
22,008
Affimed Annual Report 2015
66
Notes to the consolidated financial statements
(in € thousand)
In 2014, personnel expenses and Legal, consulting and patent expenses include gains for share
based payments resulting from the decrease in the carrying amount of the liability for share-based
payments prior to the corporate reorganization (see note 19).
9.
General and administrative expenses
The following table shows the different types of expenses allocated to general and administrative
costs:
Personnel expenses
Legal, consulting and audit fees
Operating lease expenses
Other expenses
2013
2014
2015
5,165
1,445
71
365
7,046
-2,836
4,391
81
710
2,346
3,658
2,468
89
1,333
7,548
In 2014, personnel expenses and Legal, consulting and audit fees include gains for share based
payments resulting from the decrease in the carrying amount of the liability for share-based payments
due to the corporate reorganization (see note 19).
10. Employee benefits
The following table shows the items of employee benefits:
Wages and salaries
Social security costs
2013
2014
2015
2,490
430
2,920
3,176
470
3,646
5,066
583
5,649
The employer's contributions to pension insurance plans of €269 (2014: €242, 2013: €216) are
classified as payments under a defined contribution plan, and are recognized in full as an expense
accordingly.
Affimed Annual Report 2015
67
Notes to the consolidated financial statements
(in € thousand)
11. Finance income and finance costs
2013
2014
2015
Gain from exchange of Preferred Shares of Affimed AG into
Common Shares of Affimed N.V. (see note 2)
Changes in fair value of derivative conversion feature
Interest Preferred Shares
Interest Convertible Loan
Interest Perceptive Loan Agreement (see note 20)
Foreign exchange differences
Other finance income/finance costs
Finance income/costs - net
0
-5,553
-4,478
-359
0
-11
4
-10,397
4,835
6,094
-3,617
-402
-260
1,106
-3
7,753
0
0
0
0
-703
1,808
-1
1,104
On June 23, 2014, the investors and the Company agreed to a conversion of the loan granted by
several shareholders as of June 28, 2013 into Series E preferred shares of Affimed Therapeutics AG.
Subsequently, all preferred shares were exchanged for newly issued common shares of Affimed N.V.
(see note 2). Through the date of conversion, interest costs of €402 have been recognized in 2014
(2013: €359). A re-measurement gain from changes in the fair value of the derivative conversion
feature of €6,094 was recognized in 2014 (2013: loss of €5,553).
Affimed Annual Report 2015
68
Notes to the consolidated financial statements
(in € thousand)
12.
Income taxes
The Company did not incur any material income tax in the periods presented. As of December 31,
2015 deferred tax liabilities from temporary differences result mainly from borrowings (€142) and other
assets (€45). Deferred tax assets from differences resulting from trade and other receivables (€338),
intangible assets (€44) and trade and other payables (€15) have not been recognized as deferred tax
assets as no sufficient future taxable profits or offsetting deferred tax liabilities are available. A
reconciliation between actual income taxes and the expected tax benefit from the loss before tax
multiplied by the Company's applicable tax rate is presented below:
Loss before tax
Income tax benefit at tax rate of
29.825 %
Adjustments due to impairment of
deferred tax assets
change in permanent differences
Adjustments for local tax rates
Non deductible expenses
Other
Income taxes
2013
-26,100
7,784
-7,818
0
-9
0
44
1
2014
-425
127
2,787
-2,837
119
0
-30
166
2015
-20,239
6,036
-6,251
199
18
163
-165
0
In Germany, Affimed has tax losses carried forward of €89.2 million (2014: €68.2 million) for corporate
income tax purposes and of €89.0 million (2014: €68.0 million) for trade tax purposes that are available
indefinitely for offsetting against future taxable profits of that entity. Restrictions on the utilization of tax
losses
Act
(Wachstumsbeschleunigungsgesetz).
Acceleration
Economic
mitigated
through
Growth
were
According to the provisions of this act unused tax losses of a corporation as at the date of a qualified
change in ownership are preserved to the extent they are compensated by an excess of the fair value
of equity for tax purposes above its carrying amount of the Company. The maximum amount of tax
losses at risk of being lost due to ownership changes is approximately €59 million. Deferred tax assets
have not been recognized in respect of any losses carried forward as no sufficient taxable profits of
Affimed are expected.
In the Czech Republic, AbCheck incurred tax losses of €0.3 million (2014: €0.6 million) available within
five years from the year incurred for offsetting against future taxable profits for which no deferred tax
assets has been recognized.
Affimed Annual Report 2015
69
Notes to the consolidated financial statements
(in € thousand)
13.
Intangible assets
The following table shows the reconciliation of intangible assets for the year 2014:
Technology
licenses
Office software
Total
Cost as of January 1
Additions
Reallocation
Cost as of December 31
Accumulated depreciation as of
January 1
Reallocation
Additions
Accumulated depreciation as of
December 31
Carrying amount as of January 1
Carrying amount as of December 31
342
19
200
561
222
195
115
532
120
29
301
27
-200
128
263
-195
17
85
38
43
The following table shows the reconciliation of intangible assets for the year 2015:
Technology
licenses
Office software
Cost as of January 1
Additions
Disposals
Cost as of December 31
Accumulated depreciation as of
January 1
Additions
Disposals
Accumulated depreciation as of
December 31
Carrying amount as of January 1
Carrying amount as of December 31
561
0
-183
378
532
10
-183
359
29
19
128
28
-48
108
85
18
-48
55
43
53
643
46
0
689
485
0
132
617
158
72
Total
689
28
-231
486
617
28
-231
414
72
72
Affimed Annual Report 2015
70
Notes to the consolidated financial statements
(in € thousand)
14. Leasehold improvements and equipment
The following table shows the reconciliation of tangible assets for the year 2014:
Leasehold
improvements
Laboratory
equipment,
furniture and
fixtures
Cost as of January 1
Additions
Disposals
Cost as of December 31
Accumulated depreciation as of
January 1
Additions
Disposals
Accumulated depreciation as of
December 31
Carrying amount as of January 1
Carrying amount as of December 31
183
2
0
185
181
1
0
182
2
3
2,502
258
-55
2,705
1,470
309
-45
1,734
1,032
971
The following table shows the reconciliation of tangible assets for the year 2015:
Leasehold
improvements
Laboratory
equipment,
furniture and
fixtures
Cost as of January 1
Additions
Disposals
Cost as of December 31
Accumulated depreciation as of
January 1
Additions
Disposals
Accumulated depreciation as of
December 31
Carrying amount as of January 1
Carrying amount as of December 31
185
23
-179
29
182
4
-179
7
3
22
2,705
226
-609
2,322
1,734
304
-609
1,429
971
893
Total
2,685
260
-55
2,890
1,651
310
-45
1,916
1,034
974
Total
2,890
249
-788
2,351
1,916
308
-788
1,436
974
915
Affimed Annual Report 2015
71
Notes to the consolidated financial statements
(in € thousand)
15.
Inventories
Inventories comprise laboratory materials and supplies of €228 (2014: €199). No impairment was
recognized. Total consumption of inventories recognized in profit or loss amounts to €906 (2014: €900,
2013: €731).
16. Trade and other receivables
The trade receivables as at December 31, 2015 of €105 (2014: €5) are all due in the short-term, do not
bear interest and are neither overdue nor impaired. Other receivables are all due short-term and
mainly comprise receivables for research and development grants and other government subsidies of
€68 (2014: €114) and value-added tax receivables of €607 (2014: €697).
17. Other assets
Other assets of €452 comprise deferred expenses related to short-term research projects of €300 and
a prepayment of €152 related to probable future equity transactions based on the shelf registration
filing (see note 18).
18. Equity
At December 31, 2015 the share capital of €333 (2014: €240) is divided into 33,259,404 (2014:
23,984,168) common shares with a par value of €0.01.
As of September 17, 2014, upon consummation of the corporate reorganization, all common and
preferred shares in Affimed Therapeutics AG were exchanged for 15,984,168 common shares of
Affimed (see note 2). In addition, in the initial public offering, the Company issued an aggregate of
8,000,000 common shares at a price of $7.00 per share. In the offering, capital reserves of €37,871
were recognized net of issuing costs of €5,342.
The exchange of 37,935 common shares of Affimed Therapeutics AG for 286,160 shares of Affimed
N.V. on a 7.54-for-one basis was retrospectively accounted as a stock split. The exchange of the
preferred shares of Affimed Therapeutics AG did not represent a stock split as the preferred shares did
not contain a conversion right into common shares.
On May 12, 2015, the Company issued 5,750,000 common shares at a public offering at a price of
$7.15 per common share. After deducting the offering expenses of €3,091, equity increased by the net
proceeds of the public offering of €33,490. In October 2015, an existing shareholder purchased
3,325,236 common shares at $6.55 per share in a private placement, leading to an equity increase of
€19,064, net of related expenses of €25.
According to the articles of association of Affimed N.V., up to 55,000,000 common shares and
55,000,000 preferred shares with a par value of €0.01 are authorized to be issued. As of December
31, 2015, 33,259,404 common shares have been issued and are outstanding. Preferred shareholders
Affimed Annual Report 2015
72
Notes to the consolidated financial statements
(in € thousand)
are entitled to receive a fixed dividend yield prior to common shareholders, unpaid preferred dividends
accumulate. As of December 31, 2015 no preferred shares have been issued.
19. Share based payments
Affimed Therapeutics AG had granted share-based payment awards to its managing and supervisory
directors and consultants pursuant to two incentive plans: (i) the ESOP 2007 Plan granted options to
acquire preferred shares at the issue price of EUR 30.89 per Series D preferred share after vesting but
during the contractually agreed ten year life of the award and (ii) the carve-out plan granted the right to
receive a cash payment equal to a certain percentage of the fair value of the Company contingent
upon the occurrence of a defined exit event. The awards pursuant to both share-based incentive plans
were accounted for as cash settled until their modification in the corporate reorganization (see note 2).
The ESOP 2007 awards entitled the beneficiary to a cash payment encompassing all preference rights
and payments connected to the preferred shares, net of the strike price owed by the beneficiary. In
2013, 13,081 ESOP 2007 awards were replaced by awards under the carve-out plan. The
replacement was accounted as a modification. The incremental fair value of €1,271 represents the
difference between the fair value of the cancelled awards and the replacement awards.
Pursuant to the carve-out plan, awards entitled the beneficiaries to cash payments of an aggregate of
7.78% of the fair value of the Company in case of a defined exit event, including an initial public
offering. The plan had a three year service condition, whereby 50% of the entitlements vested after
one year, further 25% after two years and the remaining 25% after three years. In case of a successful
sale of the Company during the vesting period an accelerated vesting would have applied and all
entitlements vested immediately.
The ESOP 2007 and carve-out plan were both modified in the reorganization (see note 2).
In 2015, 200,000 options of the ESOP 2007 were exercised at the exercise price of $5.29. As of
December 31, 2015, 534,142 (December 31, 2014: 734,142) ESOP 2007 options were outstanding.
In the corporate reorganization on September 17, 2014, an equity-settled share based payment
program was established by Affimed N.V. (ESOP 2014). Based on this program, the Company
granted 555,000 awards in 2014 and 795,000 awards in 2015 to certain members of the Management
Board, the Supervisory Board, consultants and employees. The awards vest in installments over three
years, and the final exercise date of the options is 10 years after the grant date of the instruments.
As of December 31, 2015, 1,350,000 ESOP 2014 awards were outstanding (December 31, 2014:
555,000), 259,583 awards (December 31, 2014: 0) were vested. No awards were either forfeited or
exercised. The options outstanding at December 31, 2015 had an exercise price in the range of $5.18
to $13.47 (2014: $6.20 to $6.27).
The expense of the granted options is recorded over the vesting period, starting from the service
commencement date, which is generally the grant date.
In 2015, an expense of €2,220 was recognized affecting research and development expenses (€611)
Affimed Annual Report 2015
73
Notes to the consolidated financial statements
(in € thousand)
and general and administrative expenses (€1,609). In 2014, a net gain for share-based compensation
of €4,892 was recognized affecting research and development expenses (€1,480) and general and
administrative expenses (€3,412) including a gain of €8,261 due to the re-measurement of the ESOP
2007 awards and the carve-out plan as of September 17, 2014, the modification date. In 2013, an
expense of €8,054 was recognized affecting research and development expenses (€3,021) and
general and administrative expenses (€5,033).
The fair value of options granted under the ESOP 2014 program was determined using the Black-
Scholes valuation model. As the Company was listed on the NASDAQ the closing price of the common
shares at grant date was used. Other significant inputs into the model were volatility of 65%, an
expected option life of 5.9 years, annual risk-free interest rates at grant date in the range of -0.07% to
0.34% and a zero dividend yield. Expected volatility is estimated based on the observed daily share
price returns of selected guideline companies measured over a historic period equal to expected life,
with the peer group as unsufficient trading data are available to use the share price returns of Affimed
to estimate volatility over a historic period equal to expected life. As of December 31, 2015 weighted
average fair value of the options was $4.41 (2014: $3.63) and weighted average remaining contractual
life was 9.2 years (2014: 9.7 years).
20. Borrowings
In July 2014, the Company entered into a credit facility agreement of $14 million and drew an amount
of $5.5 million as of July 31, 2014. Repayment will start in April 2016 in monthly installments of $200,
with the final balance due in August 2018. Finance costs comprise interest of an annual rate of 9%
plus one month LIBOR, with LIBOR deemed to equal 1% if LIBOR is less than 1%, and an
arrangement fee in the amount of 2% of the facility. In addition, the Company issued 106,250 warrants
to the lender. The warrants are convertible into common shares of the Company with a strike price of
$8.80. Upon initial recognition, the fair value of the warrant of €613 was recognized in equity, net of tax
of €183. Fair value was determined using the Black-Scholes-Merton formula, with an expected
volatility of 65% and an expected time of six years to exercise of the warrant. The contractual maturity
of the warrant is ten years.
In 2015, the Company and Perceptive agreed to cancel the option to draw the outstanding facility of
$8.5 million.
The loan is collateralized by shares in AbCheck s.r.o., certain bank accounts, receivables and certain
intellectual property rights with a total carrying amount of €6,202 (2014: €6,844).
The loan is measured at amortized cost using the effective interest method. Interest costs of €703
(2014: €258) and foreign exchange losses of €527 (2014: €424) have been recognized in profit or loss.
As of December 31, 2015 the fair value of the liability amounts to €4,978 whereas the carrying amount
is €4,576. As of December 31, 2014 the Company believes that the fair value of the liability did not
differ significantly from its carrying amount (€3,895). According to the repayment schedule €1,472
(December 31, 2014: €0) were classified as current liabilities.
Affimed Annual Report 2015
74
Notes to the consolidated financial statements
(in € thousand)
21. Trade and other payables
Trade and other payables comprise trade payables of €3,743 (2014: €3,396) and are normally settled
within 30 days or at a separate settlement date which was agreed between the parties. Other payables
mainly comprise payroll and employee related liabilities for withholding taxes and social security
contributions of €444 (2014: €281) and payables due to employees for outstanding bonus, holidays
and other accruals. Other payables are normally settled within 30 days.
22. Loss per share
Loss per common share is calculated by dividing the loss of the period by the weighted average
number of common shares outstanding during the period, adjusted for reorganization of the Company
(see note 2).
2013
2014
2015
Net loss
(26,099)
(259)
(20,239)
Weighted number of common
shares outstanding
14,803,450
17,632,825
28,477,438
Loss per share in € per share
(1.76)
(0.01)
(0.71)
No instruments had a dilutive effect.
23. Operating leases and other commitments and contingencies
(ix) Lease and other commitments
The Group has entered into rental agreements for premises as well as into leases for vehicles and the
use of licenses. These contracts have an average life of between one and four years with renewal
options included in some contracts. There are no restrictions placed upon the lessee by entering into
these leases. In 2015, lease expenses of €356 and license fees of €278 have been recognized in
consolidated statement of comprehensive income (2014: €324 and €248; 2013: €328 and €260).
Affimed Annual Report 2015
75
Notes to the consolidated financial statements
(in € thousand)
Future minimum lease payment obligations under non-cancellable operating leases as of the reporting
date are as follows:
2014
664
561
42
1,267
2015
642
990
0
1,632
Within one year
Between one and five years
More than five years
(x) Contingencies
Affimed has entered into various license agreements that contingently trigger payments upon
achievement of certain milestones and royalty payments upon commercialization of a product in the
future.
24. Related parties
(i) Shareholders
As of December 31, 2015 one shareholder holds more than 20% of the voting rights (2014 and 2013
two shareholders).
(ii) Transactions with key management personnel
The compensation of managing directors and other key management personnel comprised of the
following:
Short-term employee benefits
Share-based payments
2013
2014
2015
837
5,367
6,204
911
-3,253
-2,342
1,633
1,474
3,107
Remuneration of Affimed’s managing directors comprises fixed and variable components and share-
based payment awards. In addition, the managing directors receive supplementary benefits such as
fringe benefits and allowances. In the case of an early termination, the managing directors receive a
severance.
Compensation for other key management personnel comprises fixed and variable components and
Affimed Annual Report 2015
76
Notes to the consolidated financial statements
(in € thousand)
share-based payment awards.
The supervisory directors of Affimed N.V., appointed as of September 12, 2014, received
compensation for their services on the supervisory board of €296 (2014: €85), the supervisory
directors of Affimed Therapeutics AG, the predecessor of Affimed N.V., did not receive compensation
for their services on the supervisory board. In 2015, the Group recognized expenses for share-based
payments for board members of €478 (2014: €727, 2013: €245).
Selected managing directors and supervisory directors entered into service and consulting agreements
with the Company:
Dr. Florian Fischer is founder and Chief Executive Officer of MedVenture Partners, a Munich-based
corporate finance and strategy advisory company focusing on the life sciences and health care
industry. MedVenture Partners rendered services for a consideration of €129 in 2014 and €30 in 2013.
The contract with MedVenture Partners was terminated following the IPO in 2014.
Dr. Adolf Hoess received compensation for consulting services of €163 in 2014 and €314 in 2013. The
consulting contract with Dr. Adolf Hoess was terminated following the IPO in 2014.
Dr. Thomas Hecht is Head of Hecht Healthcare Consulting (HHC) in Küssnacht, Switzerland, a
biopharmaceutical consulting company. In 2013, he rendered services amounting to €65, in 2014 he
received €49.
Dr. Richard B. Stead is Founder and Principal of BioPharma Consulting Services LLC, where he is
involved in the development of a number of oncology products including different strategies for cancer
immunotherapy. In 2013, he rendered services amounting to €40, in 2014, he received €25.
Dr. Ulrich Grau is a significant shareholder and Chairman of the Board of Directors of i-novion Inc.,
which was engaged by the Company to conduct preclinical services. In 2015, i-novion Inc. received
related payments of €138.
The following table provides the total amounts of outstanding balances related to key management
personnel:
Thomas Hecht
Richard Stead
Berndt Modig
Ferdinand Verdonck
Eugene Zhukovsky
Ulrich Grau
Outstanding balances
December 31,
2014
December 31,
2015
19
6
7
7
16
0
19
6
9
11
0
13
Affimed Annual Report 2015
77
Notes to the consolidated financial statements
(in € thousand)
25. Financial risk management
(xi) Financial risk management objectives and policies
The Group’s principal financial instruments comprise short-term deposits at commercial banks with a
maturity on inception of three months or less and investor loans presented in borrowings. The main
purpose of these financial instruments is to raise funds for the Group's operations. The Group has
various other financial assets and liabilities such as trade and other receivables and trade and other
payables, which arise directly from its operations.
The main risks arising from the Group's financial instruments are credit risk and liquidity risk. The
measures taken by management to manage each of these risks are summarized below.
(xii) Credit risk
The Company’s financial assets comprise to a large extent cash and cash equivalents. In addition
financial assets include trade and other receivables. The total carrying amount of cash and cash
equivalents (€76.7 million, 2014: €39.7 million) and trade and other receivables (€0.9 million, 2014:
€0.9 million) represents the maximum credit exposure of €77.6 million (2014: €40.7 million).
The cash and cash equivalents are held with banks, which are rated BBB- to AA- based on Standard &
Poor’s and Moody’s.
(xiii)
Interest rate risk
The group’s interest rate risk arises from cash accounts and long-term borrowings at variable rates.
Affimed entered into the Perceptive loan agreement pursuant to which it borrowed $5.5 million with a
variable interest rate of an annual rate of 9% plus one-month LIBOR, with LIBOR deemed to equal 1%
if LIBOR is less than 1%. The group does not expect the LIBOR to exceed the floor of 1% within the
foreseeable future, and considers the interest risk to be low.
Bank accounts of €38.5 million (2014: €7.0 million) are exposed to interest rate risk. A shift in interest
rates (increase or decrease) would not have a material impact on the loss of the group.
(xiv) Foreign currency risk
Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities
are denominated in a currency that is not the entity’s functional currency.
The group’s entities are exposed to Czech Koruna (CZK) and US Dollars (USD). The net exposure as
of December 31, 2015 was €27,423 (2014: €5,983) and mainly relates to US Dollars.
In 2015, if the Euro had weakened/strengthened by 10% against the US dollar with all other variables
held constant, the loss would have been €2,794 (2014: €611) higher/lower, mainly as a result of
foreign exchange gains/losses on translation of US dollar-denominated financial assets. The group
Affimed Annual Report 2015
78
Notes to the consolidated financial statements
(in € thousand)
considers a shift in the exchange rates of 10% as a realistic scenario.
Loss is more sensitive to movement in exchange rates shifts in 2015 than in 2014 because of the
increased volume of US dollar-denominated transactions.
The following significant exchange rates have been applied during the year:
2013
2014
2015
CZK or USD/EUR
CZK or USD/EUR
CZK or USD/EUR
CZK - Average Rate
CZK - Spot rate
USD - Average Rate
USD - Spot rate
0.03850
0.03640
0.75340
0.72633
0.03632
0.03606
0.75273
0.82366
0.03666
0.03701
0.90190
0.91853
(xv) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting the obligations associated
with its financial liabilities which are normally settled by delivering cash. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due.
The Group continually monitors its risk of a shortage of funds using short and mid-term liquidity
planning. This takes account of the expected cash flows from all activities. The supervisory board
undertakes regular reviews of the budget.
In 2014 and 2015, Affimed raised significant funding that it estimates will enable the group to fund
operating expenses and capital expenditure requirements until Q1 2018:
In 2015, the issue of new common shares and the exercise of stock options resulted in net proceeds of
€53,498 (see note 18).
The group expects to require additional funding to complete the development of the existing product
candidates. In addition, the group expects to require additional capital to commercialize the products if
regulatory approval is received.
In 2015, Affimed has filed a “shelf registration statement” with the SEC in order to offer and sell
securities to the public in multiple, future offerings.
(xvi) Capital management
Affimed Annual Report 2015
79
Notes to the consolidated financial statements
(in € thousand)
The primary objective of the Group's capital management is to ensure that it maintains its liquidity in
order to finance its operating activities and meet its liabilities when due.
The Group manages its capital structure primarily through equity.
Affimed Annual Report 2015
80
Company Financial Statements
Balance sheet of Affimed N.V.
Income statement of Affimed N.V.
Notes to the financial statements of Affimed N.V.
Affimed Annual Report 2015
83
Notes to the Company financial statements for the year ended 31 December
2015
26. General information
Affimed N.V. (in the following Affimed or Company) has its corporate seat in Amsterdam. The Company
was founded as Affimed Therapeutics B.V. on May 14, 2014 as private company for the purpose of a
corporate reorganization of Affimed Therapeutics AG, Heidelberg, Germany and converted its legal form
under Dutch law to a public company with limited liability for an initial public offering of its common
shares.
Prior to the consummation of the corporate reorganization on September 17, 2014 Affimed N.V. or
Affimed B.V. had not conducted any operations and had not held any assets or liabilities, including
contingent liabilities, prior to the reorganization.
At the initial step of the corporate reorganization, the shareholders of Affimed Therapeutics AG
subscribed for 15,984,168 common shares in Affimed Therapeutics B.V and agreed to transfer their
common shares and their preferred shares in Affimed Therapeutics AG to Affimed Therapeutics B.V. in
consideration therefore. Simultaneously, the share in Affimed Therapeutics B.V. held by Stichting
Affimed Therapeutics was cancelled, and as a result, Affimed Therapeutics AG became a wholly owned
subsidiary of Affimed Therapeutics B.V. The legal form of Affimed Therapeutics B.V. was converted
from a private company with limited liability to a public Company with limited liability, which resulted in
a name change into Affimed N.V.
The Company financial statements are part of the 2015 financial statements of Affimed N.V.
27. Basis of preparation
The company financial statements have been prepared in accordance with Title 9, Book 2 of the
Netherlands Civil Code.
For setting the principles for the recognition and measurement of assets and liabilities and determination
of the result for its company financial statements, the Company makes use of the option provided in
section 2:362(8) of the Netherlands Civil Code. This means that the principles for the recognition and
measurement of assets and liabilities and determination of the result (hereinafter referred to as principles
for recognition and measurement) of the company financial statements of the Company are the same
as those applied for the consolidated EU-IFRS financial statements. See the notes to the consolidated
EU-IFRS financial statements for a description of these principles.
In case no other policies are mentioned, reference is made to the accounting policies as described in
the accounting policies in the consolidated EU-IFRS financial statements. For an appropriate
interpretation, the Company financial statements should be read in conjunction with the EU-IFRS
consolidated financial statements.
Participating interests in group companies
Participating interests in group companies are accounted for in the company financial statements
according to the net asset method. Net asset value is based on the measurement of assets, provisions
and liabilities and determination of net result based on the principles applied in the consolidated financial
statements. Participations with a negative net asset value are valued at nil. A share of the profits from
the participation, in later years, will only be processed if and insofar as the cumulative unrecognized
share has compensated the loss. However, if the Company wholly or partly guarantees the debts of a
participation, or has the constructive obligation to allow the participation (for its share) to pay its debts,
a provision is recognized in the amount of the expected payments by the Company on behalf of the
participation. The provision is formed primarily at the expense of long-term unsecured receivables that
should actually be seen as part of net investment, and the remainder presented under provisions.
Affimed Annual Report 2015
84
Result of participating interests
The share in the result of participating interests consists of the share of the Company in the result of
these participating interests. Results on transactions involving the transfer of assets and liabilities
between the Company and its participating interests and mutually between participating interests
themselves, are eliminated to the extent that they can be considered as not realised.
The financial information of the Company is included in the consolidated financial statements. For this
reason, in accordance with Section 402, Book 2 Netherlands Civil Code, the income statement of the
Company exclusively states the share in the result of participating interests after taxation and the other
result after taxation.
28. Financial fixed assets
Financial fixed assets solely include the investment of the Company in its fully owned subsidiary Affimed
GmbH (former Affimed Therapeutics AG), with statutory seat in Heidelberg, Germany.
Movements in the financial fixed assets were as follows:
In € thousand
Affimed GmbH
Total
Opening Net asset value January 1, 2015
Capital contribution
Share in result of participating interest
3,370
14,851
(16,619)
3,370
14,851
(16,619)
Net asset value at December 31, 2015
1,602
1,602
29. Cash and cash equivalents
All amounts are free disposal of Affimed N.V.
30. Equity
As of December 31, 2015 the number of issued common shares is 33,259,404 with a par value of €0.01
per share. All issued shares are fully paid. Besides the minimum amount of share capital to be held
under Dutch law, there are no distribution restrictions applicable to equity of the Company.
As the structure of the equity components for the Company financial statements is largely based on
legal aspects, the presentation of the movement in shareholder’s equity is different from the presentation
in the consolidated financial statements.
Affimed Annual Report 2015
85
The movement in shareholder’s equity is as follows:
In € thousand
Issued
capital
Other
reserves
Unappro-
priated
result
May 14, 2014
Issue of common shares
Effects of corporate
reorganization
Issue of common shares on IPO
Share issuance costs
Net result
Share-based payments
-
160
80
-
-
-
55
-
-
1,040
43,133
(5,343)
-
299
-
-
-
-
-
(7,574)
-
Total
equity
-
160
1,040
43,213
(5,343)
(7,574)
299
December 31, 2014
240
39,129
(7,574)
31,795
January 1, 2015
240
39,129
(7,574)
31,795
Issue of common shares
Share issuance costs
Share options exercised
Net result
Share-based payments
91
-
2
-
-
55
55,580
(3,117)
942
-
2,220
-
-
(20,239)
-
55,671
(3,117)
944
(20,239)
2,220
December 31, 2015
333
94,754
(27,813)
67,274
Issued capital
As of September 17, 2014, upon consummation of the corporate reorganization, all common and
preferred shares in Affimed Therapeutics AG were exchanged for 15,984,168 common shares of
Affimed N.V. (see Note 2 of the consolidated financial statements). In addition, in the initial public
offering, the Company issued an aggregate of 8,000,000 common shares at a price of $7.00 per share.
In total an amount of €43.1 million was recognized in other reserves.
In May and October 2015, the Company issued 5,750,000 and 3,325,236 common shares at $7.15 per
share and $6.55 per share respectively. In total an amount of €55.6 million was recognized in other
reserves.
According to the articles of association of the Company, up to 55,000,000 common shares and
55,000,000 preferred shares with a par value of €0.01 are authorized to be issued. Preferred
shareholders are entitled to receive a fixed dividend yield prior to common shareholders, unpaid
preferred dividends accumulate. As of December 31, 2015 no preferred shares have been issued.
Other reserves
Upon the consummation of the corporate reorganization in 2014 an amount of €1.0 million was
recorded in other reserves. This amount relates to the effects of the corporate reorganization as
described in more detail in the notes to the consolidated financial statements.
The Company has adopted a share-based compensation plan (ESOP 2014), pursuant to which the
Company’s directors, selected employees and consultants are granted the right to acquire common
shares of the Company (note 19 of the consolidated financial statements). The share-based payment
expenses are recorded in the income statement. The ESOP 2014 plan is equity-settled. In case of an
Affimed Annual Report 2015
86
equity-settled plan, there is no obligation to transfer economic benefits, therefore the credit entry should
be recognized as an increase in equity. The Company uses “Other reserves” as the equity classification.
31. Payables to subsidiaries
These payables relate to Affimed GmbH and do not bear interest.
32. Other current payables
In € thousand
Trade payables
Social security and wage tax
Other liabilities
Total
33. Other result after taxation
In € thousand
Other income (service fee)
General and administrative expenses
Net result of net sales
Financial income
Financial expense
Net financial result
Result before taxation
Taxation
Result after taxation
December
31, 2015
December
31, 2014
325
182
513
1,020
124
137
233
494
January 1 until
December 31,
2015
May 14 until
December 31,
2014
750
(6,539)
(5,789)
2,408
(239)
2,169
(3,620)
0
(3,620)
294
(2,402)
(2,108)
1,325
(1)
1,324
(784)
0
(784)
Effective October 1, 2014 the Company formalized a service agreement with Affimed Therapeutics
AG. The service fee includes the reimbursement of the net service expenses and a mark-up rate (at
arms-length) on these net service expenses.
34. Employee benefits and number of employees
The average number of employees during 2015 was three employees and consisted of managing
directors only. The managing director’s compensation is shown in note 35.
Affimed Annual Report 2015
87
35. Related-party transactions
Director’s remuneration 2015
Managing directors
(in € thousand)
Periodically paid compensation
Bonuses
Total cash compensation
2014 Plan share-based payment
expense4
Total share-based payment
expense
Supervisory directors
Hoess
Fischer Marschner
Total
424
149
573
774
774
319
83
402
298
298
319
83
402
252
252
1,062
315
1,377
1,324
1,324
(in € thousand)
Grau8 Hecht Modig
Stead Verdonck
Total
Periodically paid compensation
Service fees
Total cash compensation
2014 Plan share-based payment
expense4 .......................................
Total share-based payment
expense .......................................
24
138
162
47
47
120
-
120
167
167
51
-
51
88
88
40
-
40
88
88
61
-
61
88
88
296
138
434
478
478
Director’s remuneration 2014
Managing directors
(in € thousand)
Periodically paid compensation ..........
Consulting service fees .......................
Bonuses ..............................................
Total cash compensation .................
2014 Plan share-based payment
expense4 ..........................................
Hoess1 Fischer2 Marschner Zhukovsky3 Total
122
163
175
460
139
92
129
98
319
56
254
-
98
352
50
50
-
22
72
0
518
292
393
1,203
245
Other share-based payment
(3,021)
(916)
1,757
(1,318)
(3,498)
expense/(credit) 5 .............................
Total share-based payment
(2,882)
(860)
1,807
(1,318)
(3,253)
expense/(credit) .............................
Affimed Annual Report 2015
88
Supervisory directors
(in € thousand)
Hecht6 Modig Stead7 Verdonck Total
Periodically paid compensation ..................
Consulting service fees ...............................
Total cash compensation .........................
2014 Plan share-based payment expense4
Other share-based payment expense5 .......
Total share-based payment expense ......
36
49
85
20
32
52
16
-
16
11
-
11
13
25
38
11
642
653
20
-
20
11
-
11
85
74
159
53
674
727
1 Dr. Adi Hoess received compensation for consulting services of €163,000 in 2014. The consulting
contract with Dr. Adi Hoess was terminated following the IPO in 2014 and Dr. Adi Hoess is now
directly employed by Affimed N.V.
2 Dr. Florian Fischer is founder and Chief Executive Officer of MedVenture Partners, a Munich-based
corporate finance and strategy advisory company focusing on the life sciences and health care industry.
MedVenture Partners rendered services for a consideration of €129,000 in 2014. The service contract
with MedVenture Partners was terminated following the IPO in 2014 and Dr. Florian Fischer is now
directly employed by Affimed N.V.
3 Dr. Eugene Zhukovsky served as CSO until March 31, 2014.
4 Expense related to the issue of options under the 2014 Plan. Details of options granted are summarized
in the table below.
5 Expense/(credit) related to the re-measurement of the 2007 SOP and the carve-out plan described in
Notes 2 and 18 to our consolidated financial statements 2014.
6 Pursuant to a consulting agreement with Hecht Healthcare Consulting (HHC), whose managing director
is our supervisory director Thomas Hecht, we received consulting services until September 2014.
7 Pursuant to a consulting agreement with BioPharma Consulting Services LLC (BioPharma), whose
principal is our supervisory director Richard B. Stead, we received consulting services until September
2014.
8 Dr. Ulrich Grau is a significant shareholder and Chairman of the Board of Directors of i-novion Inc.,
which was engaged by the Company to conduct preclinical services. In 2015, i-novion Inc. received
related payments of €138,000. Dr. Ulrich Grau was appointed by the general meeting of shareholders
on June 9, 2015, and his term was effective as of July 1, 2015.
For further details and other information with regard to related-party transactions as well as Management
and Supervisory Director’s compensation reference is made to note 24 of the consolidated financial
statements.
Affimed Annual Report 2015
89
Stock options granted under the Equity Incentive Plan 2014
Awards granted in 2015
Managing directors
Beneficiary
Grant date
Number of
options
outstanding*
Strike
price USD Expiration date
Adi Hoess ........................
Florian Fischer ................
Jens-Peter Marschner .....
Total
September 4, 2015
September 4, 2015
September 4, 2015
290,000
105,000
80,000
475,000
9.42 September 4, 2025
9.42 September 4, 2025
9.42 September 4, 2025
Supervisory directors
Beneficiary
Grant date
Number of
options
outstanding*
Strike
price USD Expiration date
Ulrich Grau ......................
Thomas Hecht .................
Berndt Modig ...................
Richard Stead .................
Ferdinand Verdonck ........
Total
July 1, 2015
June 9, 2015
June 9, 2015
June 9, 2015
June 9, 2015
20,000
20,000
10,000
10,000
10,000
70,000
13.47
12.44
12.44
12.44
12.44
July 1, 2025
June 9, 2025
June 9, 2025
June 9, 2025
June 9, 2025
Awards granted in 2014
Managing directors
Beneficiary
Grant date
Number of
options
outstanding*
Strike
price USD Expiration date
Adi Hoess
Florian Fischer
Jens-Peter Marschner
Total
Supervisory directors
September 17, 2014
September 17, 2014
September 17, 2014
250,000
100,000
90,000
440,000
6.27 September 17, 2024
6.27 September 17, 2024
6.27 September 17, 2024
Beneficiary
Grant date
Number of
options
outstanding*
Strike
price USD Expiration date
Thomas Hecht
Berndt Modig
Richard Stead
Ferdinand Verdonck
Total
September 17, 2014
September 17, 2014
September 17, 2014
September 17, 2014
35,000
20,000
20,000
20,000
95,000
6.27 September 17, 2024
6.27 September 17, 2024
6.27 September 17, 2024
6.27 September 17, 2024
* There are no exercised or forfeited options as of December 31, 2014 and 2015.
Affimed Annual Report 2015
90
For further disclosure related to the share-options we refer to note 19 of the consolidated financial
statements. The Company aims to meet its obligations by virtue of the granted option rights by issuing
new shares (no purchase of treasury shares).
36. Audit fees
With reference to Section 2:382a(1) and (2) of the Netherlands Civil Code, the following fees for the
financial year have been charged by KPMG Accountants N.V. to the Company, its subsidiaries and
other consolidated entities.
(in € thousand)
Audit of the financial statements
Other audit engagements
Tax-related advisory services
Other non-audit services
(in € thousand)
Audit of the financial statements
Other audit engagements
Tax-related advisory services
Other non-audit services
KPMG
Accountants
N.V.
2015
Other KPMG
network
Total
KPMG
2015
2015
36
0
0
0
36
106
180
0
14
300
142
180
0
14
336
KPMG
Accountants
N.V.
2014
Other KPMG
network
Total
KPMG
2014
2014
27
0
0
0
27
425
238
0
0
663
452
238
0
0
690
Affimed Annual Report 2015
91
Signing of the financial statements
May 19, 2016
Originally signed by:
Management Board:
Dr. Adi Hoess, CEO
Dr. Florian Fischer, CFO
Dr. Jens-Peter Marschner, CMO
Dr. Jörg Windisch, COO
Supervisory Board:
Dr. Thomas Hecht, Chairman
Dr. Bernhard Ehmer
Dr. Ulrich Grau
Berndt Modig
Dr. Richard B. Stead
Ferdinand Verdonck
Affimed Annual Report 2015
92
Other information
Provisions in the Articles of Association governing the appropriation of profit
The company’s Articles of Association provide under chapter 10 provisions about the appropriation
of profit, the full text is as follows:
Chapter 10
Profit and loss. Distributions on shares.
Article 10.1.
10.1.1. The management board will keep a share premium reserve and profit reserve for the
common shares to which only the holders of the common shares are entitled.
10.1.2. The company may make distributions on shares only to the extent that its shareholders'
equity exceeds the sum of the paid-up and called-up part of the capital and the reserves which
must be maintained by law.
10.1.3. Distributions of profit, meaning the net earnings after taxes shown by the adopted annual
accounts, shall be made after the adoption of the annual accounts from which it appears that they
are permitted, entirely without prejudice to any of the other provisions of the articles of
association.
10.1.4.
a. A dividend shall be paid out of the profit, if available for distribution, first of all on the
cumulative preference shares in accordance with this paragraph.
b. The dividend paid on the cumulative preference shares shall be based on the percentage,
mentioned immediately below, of the amount called up and paid-up on those shares. The
percentage referred to in the previous sentence shall be equal to the average of the EURIBOR
interest charged for cash loans with a term of twelve months as set by the European Central
Bank - weighted by the number of days to which this interest was applicable - during the financial
year for which this distribution is made, increased by a maximum margin of five hundred (500)
basis points to be fixed upon issue by the management board; EURIBOR shall mean the Euro
Interbank Offered Rate.
c. If in the financial year over which the aforesaid dividend is paid the amount called up and paid-
up on the cumulative preference shares has been reduced or, pursuant to a resolution to make a
further call on said shares, has been increased, the dividend shall be reduced or, if applicable,
increased by an amount equal to the aforesaid percentage of the amount of such reduction or
increase, as the case may be, calculated from the date of the reduction or, as the case may be,
from the date when the further call on the shares was made.
d. If and to the extent that the profit is not sufficient to pay in full the dividend referred to under a
of this paragraph, the deficit shall be paid to the debit of the reserves provided that doing so shall
not be in violation of article 10.1.2. If and to the extent that the dividend referred to under a. of
this article 10.1.4 cannot be paid to the debit of the reserves, the profits earned in subsequent
years shall be applied first towards making to the holders of cumulative preference shares such
payment as will fully clear the deficit, before the provisions of the following paragraphs of this
article can be applied. No further dividends on the cumulative preference shares shall be paid
than as stipulated in this article 10.1.4, in article 10.2 and in article 11.2. Interim dividends paid
over any financial year in accordance with article 10.2 shall be deducted from the dividend paid
by virtue of this article 10.1.4.
e. If the profit earned in any financial year has been determined and in that financial year one or
more cumulative preference shares have been cancelled against repayment, the persons who
Affimed Annual Report 2015
93
were the holders of those shares shall have an inalienable right to payment of dividend as
described below. The amount of profit, if available for distribution, to be distributed to the
aforesaid persons shall be equal to the amount of the dividend to which by virtue of the provision
under a. of this paragraph they would have been entitled if on the date of determination of the
profit they had still been the holders of the aforesaid cumulative preference shares, calculated on
the basis of the period during which in the financial year concerned said persons were holders of
said shares, such dividend shall be reduced by the amount of any interim dividend paid in
accordance with article 10.2.
f. If in the course of any financial year cumulative preference shares have been issued, with
respect to that financial year the dividend to be paid on the shares concerned shall be reduced
pro rata to the day of issue of said shares.
g. If the dividend percentage has been adjusted in the course of a financial year, then for the
purposes of calculating the dividend over that financial year the applicable rate until the date of
adjustment shall be the percentage in force prior to that adjustment and the applicable rate after
the date of adjustment shall be the altered percentage.
10.1.5. The management board may determine, with the approval of the supervisory board, that
any amount remaining out of the profit, after application of article 10.1.4 shall be added to the
reserves.
10.1.6. The profit remaining after application of article 10.1.4 and 10.1.5 shall be at the disposal
of the general meeting, provided that no further distribution shall be made on the cumulative
preference shares. The general meeting may resolve to carry it to the reserves or to distribute it
among the holders of common shares.
10.1.7. On a proposal of the management board - which proposal must be approved by the
supervisory board -, the general meeting may resolve to distribute to the holders of common
shares a dividend in the form of common shares in the capital of the company.
10.1.8. Subject to the other provisions of this article 10.1 the general meeting may, on a proposal
made by the management board which proposal is approved by the supervisory board, resolve to
make distributions to the holders of common shares to the debit of one or several reserves which
the company is not prohibited from distributing by virtue of the law.
10.1.9. No dividends on shares shall be paid to the company on shares which the company itself
holds in its own capital or the depositary receipts issued for which are held by the company,
unless such shares are encumbered with a right of use and enjoyment or pledge.
10.1.10. Any change to an addition as referred to in article 10.1.4 under b and g shall require the
approval of the meeting of holders of cumulative preference shares. If the approval is withheld
the previously determined addition shall remain in force.
10.1.11. The management board is authorised to determine how a deficit appearing from the
annual accounts will be accounted for.
Interim distributions.
Article 10.2.
10.2.1. The management board may resolve with the approval of the supervisory board, to make
interim distributions to the shareholders or to holders of shares of a particular class if an interim
statement of assets and liabilities shows that the requirement of article 10.1.2 has been met.
10.2.2. The interim statement of assets and liabilities shall relate to the condition of the assets
and liabilities on a date no earlier than the first day of the third month preceding the month in
which the resolution to distribute is published. It shall be prepared on the basis of generally
acceptable valuation methods. The amounts to be reserved under the law and the articles of
Affimed Annual Report 2015
94
association shall be included in the statement of assets and liabilities. It shall be signed by the
managing directors and supervisory directors. If one or more of their signatures are missing, this
absence and the reason for this absence shall be stated.
10.2.3. In the event that all cumulative preference shares are cancelled against repayment, on
the day of such repayment a dividend shall be paid, this dividend to be equal to the premium paid
on the share concerned at its issue increased by a distribution to be calculated in accordance
with the provisions of article 10.1.4 and over the period over which until the date of repayment no
earlier distribution as referred to in the first sentence of article 10.1.4 has been made, all this
provided that the requirement of article 10.1.2 has been met as demonstrated by an interim
statement of assets and liabilities as referred to article 10.2.2.
10.2.4. Any proposal for distribution of a dividend on common shares and any resolution to
distribute an interim dividend on common shares shall immediately be published by the
management board in accordance with the applicable stock exchange regulations at the
company's request. The notification shall specify the date when and the place where the dividend
shall be payable or - in the case of a proposal for distribution of dividend - is expected to be made
payable.
10.2.5. Dividends shall be payable no later than thirty (30) days after the date when they were
declared, unless the body declaring the dividend determines a different date.
10.2.6. Dividends which have not been claimed upon the expiry of five (5) years and one (1) day
after the date when they became payable shall be forfeited to the company and shall be carried
to the reserves.
10.2.7. The management board may determine that distributions on shares shall be made
payable either in euro or in another currency.
Proposal for result appropriation for the Financial Year 2015
The General Meeting of Shareholders will be asked to approve the following appropriation of the
2015 loss for the period, amounting to EUR 20,239,000, to be added to the accumulated losses.
Branch offices
Affimed N.V. operates through the following branch offices (direct or indirect wholly owned
subsidiaries):
- Affimed GmbH, Germany
- AbCheck s.r.o., Czech Republic
- Affimed Inc., USA
Other participation
- Amphivena Therapeutics Inc., USA (participation of 21%)
Independent auditor’s report
The independent auditor’s report is set forth on the following page.
Affimed Annual Report 2015
95
Independent auditor’s report
To: the General Meeting of Shareholders of Affimed N.V.
Report on the financial statements
We have audited the accompanying financial statements 2015 of Affimed N.V.,
Amsterdam, as set forth on pages 47 to 91. The financial statements include the
consolidated financial statements and the company financial statements. The
consolidated financial statements comprise the consolidated statement of
financial position as at 31 December 2015, the consolidated statements of
comprehensive income, changes in equity and cash flows for the year then
ended, and the notes, comprising a summary of the significant accounting
policies and other explanatory information. The company financial statements
comprise the company balance sheet as at 31 December 2015, the company
profit and loss account for the year then ended, and the notes, comprising a
summary of the accounting policies and other explanatory information.
The Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and fair presentation of
these financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union and with Part 9 of Book 2 of the
Netherlands Civil Code, and for the preparation of the management board report in
accordance with Part 9 of Book 2 of the Netherlands Civil Code.
Furthermore, the Board of Directors is responsible for such internal control as they
determine it is necessary to enable the preparation of the financial statements that
are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with Dutch law, including the Dutch
Standards on Auditing. This requires that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the company’s
preparation and fair presentation of the financial statements 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 company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the
Affimed Annual Report 2015
96
reasonableness of accounting estimates made by the board of directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion with respect to the consolidated financial statements
In our opinion, the consolidated financial statements give a true and fair view of the
financial position of Affimed N.V. as at 31 December 2015 and of its result and its cash
flows for the year then ended in accordance with International Financial Reporting
Standards as adopted by the European Union and with Part 9 of Book 2 of the
Netherlands Civil Code.
Opinion with respect to the company financial statements
In our opinion, the company financial statements give a true and fair view of the
financial position of Affimed N.V. as at 31 December 2015 and of its result for the year
then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code.
Report on other legal and regulatory requirements
Pursuant to the legal requirements under Section 2:393 sub 5 at e and f of the
Netherlands Civil Code, we have no deficiencies to report as a result of our
examination whether the board report, to the extent we can assess, has been prepared
in accordance with Part 9 of Book 2 of this Code, and whether the information as
required under Section 2:392 sub 1 at b – h has been annexed. Further, we report that
the board report, to the extent we can assess, is consistent with the financial
statements as required by Section 2:391 sub 4 of the Netherlands Civil Code.
Utrecht, 20 May 2016
KPMG Accountants N.V.
J.G.R. Wilmink RA