The net profit for Q4 came in at SEK 14.9 (32.0) million. Q4 witnessed of high cost control, with operating expenses decreasing. Personnel expenses amounting to SEK 2.7 (6.5) million and other expenses to SEK 3.6 (4.3) million. Investments in portfolio companies amounted to SEK SEK 43.4 (34.1) million, of which 42.6 (32.5) million were cash investments. The majority of the capital was invested into Aprea Therapeutics (SEK 42.1 million), which recently raised EUR 50 million at the end of 2018 in a financing round to an investment consortium with Redmile Group in the lead. Cash flow in Q4 was SEK -3.5 (8.7) million, compared to SEK -8.5 million in Q3. At the end of the quarter, the cash position and short-term investments amounted to SEK 85.8 (169.6) million. The improved cash burn was largely a result of a new one-year credit facility of SEK 50 million, however, and the financial situation for Karolinska Development remains strained for Karolinska Development. Accounting for the credit facility, the net interest bearing debt now amounts to SEK -392.5 million, compared to SEK 328.1 million in Q3.
It is evident that additional exits are needed in order to clear sight of the financial situation. The convertible loan is due on the 31st of December 2019 unless conversion occurs before that. In this regard, we recognise that continued favourable results is key for from ongoing clinical trials and the outcome will be crucial to Karolinska Development’s further operations.
We believe that the most important data point will be provided by Modus Therapeutics, who we expect to present results from the ongoing phase II trial in sickle cell disease in mid-2019. Futhermore, we expect Aprea Therapeutics to present the final results from the phase II trial in the ongoing in myelodysplastic syndromes (MDS) shortly. The company has already advanced to a phase III trial and has now recruited the first patient, but a positive readout will would establish a more solid proof of concept. Although few patients have been analysed, interim results look promising and indicate a high probability of success. In the latesta analysis, including 20 patients, an objective response rate (ORR) of 95 percent and a complete response rate of 70 percent was shown, which can be compared to an ORR of about 30-50 and a CR of about 20-30 percent with the current standard of care.
Another important portfolio company, Umecrine, is expected to present results from an ongoing trial in hepatic encephalopathy in early 2020. The company recently presented results from a phase IIa trial in idiopathic hypersomnia. Results indicated a good safety profile and pharmacokinetics. Efficacy parameters from this study are subject to further evaluation and the sample size was limited (n=10) which consequently lead to high p-values. Please see our comment (link) on these results from January this year.
We will come back with an update later in this quarter that reflects new holdings of portfolio, new financial position and revised estimates of our included projects in our SOTP. Our current Base Case is SEK 8.25 per share. Our early projections after the Q4’18 report suggest that we will downward adjust our Base Case to ~ SEK 7 per share, we emphasize however that it is based on very early indications. While we are encouraged by the progress in some projects and that KD has too a large extent been able to defend their ownership in most of their portfolios, our revised Base Case will also reflect a further constrained financial situation for the investment entity. We want to see clarity in the financials over the next months.
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