UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
OR
for
the fiscal year ended
OR
For the transition period from ___________ to ___________
OR
Date of event requiring this shell company report
Commission
file number:
(Exact name of Registrant as specified in its charter)
(Jurisdiction of Incorporation or Organization)
(Address of principal executive offices)
Tel:
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Copies to:
W. David Mannheim
Michael K. Bradshaw, Jr.
Nelson Mullins Riley & Scarborough LLP
301 Hillsborough Street, Suite 1400
Raleigh, NC 27603
Tel: (919) 329-3800
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title
of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title
of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of the period covered by the annual report.
Common shares:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer”, “non-accelerated filer” or “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |||||
| Emerging Growth Company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☐ | Standards as issued by the International | Other ☐ | |
| Accounting Standards Board ☒ |
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes
ALTAMIRA THERAPEUTICS LTD.
TABLE OF CONTENTS
i
ii
Unless otherwise indicated or the context otherwise requires, all references in this annual report on Form 20-F (the “Annual Report”) to “Altamira Therapeutics Ltd.”, or “Altamira”, the “Company”, “we”, “our”, “ours”, “us” or similar terms refer to Altamira Therapeutics Ltd. xPhore™, OligoPhore™, SemaPhore™, and CycloPhore™ are trademarks of the Company; Bentrio® is a registered trademark of Altamira Medica AG, an affiliate of the Company. The trademarks, trade names and service marks appearing in this report are property of their respective owners.
On December 13, 2023, the Company effected a one-for-twenty reverse share split (the “2023 Reverse Share Split”) of the Company’s issued and outstanding common shares, resulting in a par value of $0.002 per common share. Unless indicated or the context otherwise requires, all per share amounts and numbers of common shares in this report have been retrospectively adjusted for the 2023 Reverse Share Split.
The terms “US$” or “$” refer to U.S. dollars and the term “Swiss Franc” and “CHF” refer to the legal currency of Switzerland.
iii
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, or the negatives thereof.
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 “Item 3. Key Information-D. Risk factors” in this Annual Report, including the uncertainties associated with product development, the clinical utility of our product candidates, the timing or likelihood of regulatory filings and approvals, and with our intellectual property position as well as the risks associated with dependence upon key personnel and the need for additional financing. We do not assume any obligation to update forward-looking statements as circumstances change.
iv
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
| A. | Directors and senior management |
Not applicable.
| B. | Advisers |
Not applicable.
| C. | Auditors |
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
A. Offer statistics
Not applicable.
B. Method and expected timetable
Not applicable.
ITEM 3. KEY INFORMATION
| A. | [Reserved] |
| B. | Capitalization and indebtedness |
Not applicable.
| C. | Reasons for the offer and use of proceeds |
Not applicable.
| D. | Risk factors |
You should carefully consider the risks and uncertainties described below and the other information in this Annual Report. Our business, 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. See “Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors.
Risks Related to Our Business and Industry
Our product candidates are still in the development-stage and we have a limited operating history and a history of operating losses. We anticipate that we will continue to incur losses for the foreseeable future.
We are a biopharmaceutical company with our product candidates still in the development stage and a limited operating history. Since inception, we have incurred significant operating losses.
Our losses have resulted principally from expenses incurred in research and development of our product candidates, pre-clinical and clinical research and general and administrative expenses that are required for maintaining our business infrastructure and operating as a publicly listed company.
To date, we have financed our operations through an initial public offering and follow-on offerings of our common shares, private placements of equity securities and short- and long-term loans.
Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. It may be several years, if ever, before we begin to generate meaningful revenues from the out-licensing of our RNA delivery platforms or product candidates. Our failure to become and remain profitable would decrease the value of the Company and could impair our ability to raise capital, expand our business and/or continue our operations.
1
We expect that we will need substantial additional funding before we can expect to become profitable from out-licensing our RNA delivery platforms and product candidates, and there is substantial doubt about our ability to continue as a going concern. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our research and development programs.
We expect our research and development expenses to remain significant as we continue to develop our RNA delivery platforms and advance or initiate the pre-clinical and clinical development of our product candidates. We also expect to continue to incur additional costs associated with operating as a public company. To the extent that we will be unable to generate sufficient cash proceeds from the planned divestiture or partnering of our legacy assets or other partnering activities, we will need substantial additional financing to meet these funding requirements. 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 research and development programs, which could materially harm our business, prospects, financial condition and operating results. This could then result in bankruptcy, or the liquidation of the Company. These factors raise substantial doubt about our ability to continue as a going concern.
The financial statements included in this report have been prepared on a going concern basis, which contemplates the continuity of normal activities and realization of assets and settlement of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The lack of a going concern assessment may negatively affect the valuation of the Company’s investments in its subsidiaries and result in a revaluation of these holdings. The Board of Directors will need to consider the interests of our creditors and take appropriate action to restructure the business if it appears that we are insolvent or likely to become insolvent.
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 research and development programs, which could materially harm our business, prospects, financial condition and operating results. This could then result in bankruptcy, or the liquidation of the Company.
Raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to our intellectual property or future revenue streams.
Until such time, if ever, as we can generate substantial revenues from our RNA delivery platforms, we expect to finance our cash needs through a combination of equity offerings, debt financings, grants, and the divestiture or partnering of our legacy assets. We do not have any committed external source of funds. In the event we need to seek additional funds, we may raise additional capital through the sale of equity or convertible debt securities. In such an event, our shareholders’ ownership interests will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect our shareholders’ rights as holders of our common shares. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property or future revenue streams. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
We are working to divest or partner our legacy assets. We cannot give any assurance that this repositioning will be successful and that we will be able to divest or partner our legacy assets at attractive conditions and within a reasonable period of time.
As we have been strategically repositioning the Company to focus on the development of RNA delivery technology, we have been seeking to partner or divest our legacy assets. These include primarily our Bentrio nasal spray for the protection against airborne allergens and viruses and AM-125 for the treatment of vertigo. On November 21, 2023, we completed the partial spin-off of our Bentrio business through the sale of a 51% stake in the Company’s subsidiary Altamira Medica AG.
Any sale or partnering process is time consuming and requires substantial management time and attention, which may have an effect on our business and results of operations.
Valuation of assets in one or several partial divestiture or partnering transactions depends on a variety of factors such as the valuation of comparable assets, interest for the type of assets and conditions on capital markets. We can provide no assurances that we will successfully sell our remaining stake of 49% in Altamira Medica AG or partner our AM-125 development program, or that we will do so in accordance with our expected timeline. Additionally, any decisions made regarding our deployment or use of any sales or out-licensing proceeds we receive in any sale or partnering transaction involves risks and uncertainties. As a result, our decisions with respect to such proceeds may not lead to increased long-term shareholder value. If a sale or the out-licensing of the AM-125 development program at what we consider to be a reasonable price is not available, we may decide to cease efforts to divest or partner the AM-125 development program.
2
Cyber-attacks or other failures in telecommunications or information technology systems could result in information theft, data corruption and significant disruption of our business operations.
We and certain of our collaborators depend on information technology and telecommunications systems for significant aspects of operations. These information technology and telecommunications systems support a variety of functions, including project management, preclinical and clinical study management, accounting and finance as well as other general and administrative activities. Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. If we are subjected to one or more cyber-attacks or security breaches, we would suffer financial loss. Furthermore, as use of digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication and make us even more at risk. These threats pose a risk to the security of our systems and networks, the confidentiality and the availability and integrity of our data. Any disruption or loss of information technology or telecommunications systems on which critical aspects of our operations depend could have an adverse effect on business.
Risks Related to the Development and Clinical Testing of Our Product Candidates
The xPhore platform and the AM-401 and AM-411 programs are still in preclinical development. If our development programs are unsuccessful, or we are unable to out-license the platforms or programs, or we experience significant delays in doing so, our business, financial condition and results of operations will be materially adversely affected.
We have invested a significant portion of our efforts and financial resources in the acquisition and development of xPhore, AM-401 and AM-411, which are still in preclinical development. Our ability to generate product revenues from the out-licensing of these RNA delivery platforms and drug product candidates, will depend heavily on successful development, obtaining regulatory approval or clearance and eventual commercialization of these product candidates. The success of AM-401 or AM-411 and our other product candidates will depend on several factors, including the following:
| ● | completing nonclinical studies that demonstrate the efficacy and safety of our product candidates; |
| ● | receiving IND or equivalent regulatory clearance from competent regulatory authorities for clinical testing; |
| ● | acceptance of our RNA delivery platforms and drug product candidates by potential collaboration partners or licensees; |
| ● | competing effectively with other platform technologies or therapeutics; and |
| ● | qualifying for, maintaining, enforcing and defending our intellectual property rights and claims. |
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully out-license xPhore, AM-401 or AM-411, which would materially adversely affect our business, financial condition and results of operations.
Drug development involves a lengthy and expensive process with uncertain timelines and uncertain outcomes, and results of earlier in vitro and in vivo studies may not be predictive of future results in humans.
To obtain the requisite regulatory approvals or clearance to test any of our product candidates in humans, we must demonstrate through extensive pre-clinical studies that our products are likely to be safe and effective in humans. The results of pre-clinical studies of our product candidates may not be predictive of the results of future clinical trials in humans. For example, positive results generated to date in pre-clinical studies for our product candidates do not ensure that clinical trials will demonstrate similar results. A number of companies in the biopharmaceutical industry have suffered significant setbacks in early-stage clinical trials due to adverse safety profiles, notwithstanding promising results in pre-clinical studies.
We may decide to seek out-licensing partners for our RNA delivery platforms or product candidates after obtaining regulatory approvals or clearance for testing them in humans or only after conducting one or several early stage clinical trials. If we decide to conduct clinical trials, we will need to ensure that they are conducted in accordance with FDA, EMA and comparable foreign regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and Institutional Review Boards, or IRBs, at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with supplies of our RNA delivery platforms or product candidates produced under applicable current good manufacturing practices (cGMP) and other requirements. We depend on medical institutions and clinical research organizations, or CROs, to conduct our clinical trials in compliance with current good clinical practice, or cGCP, standards. To the extent the CROs fail to enroll participants for our clinical trials, fail to conduct the trials to cGCP standards or are delayed for a significant time in the execution of trials, including achieving full enrollment, we may be affected by increased costs, program delays or both, which may harm our business.
Our product development costs will increase if we experience delays in pre-clinical testing and clinical trials or if we are required to conduct additional studies or trials or other testing beyond the studies, trials and testing that we currently contemplate or conduct, and we may be required to obtain additional funds to complete such additional studies and trials. We cannot assure you that our pre-clinical studies or clinical trials will begin as planned or be completed on schedule, if at all, or that we will not need to restructure our studies or trials after they have begun. Significant study or trial delays also could shorten any periods during which we or potential licensees of ours may have the exclusive right to commercialize our product candidates or to use our RNA delivery platforms for their own product candidates or allow competitors to bring products to market before our potential licensees do or shorten any periods during which our potential licensees have the exclusive right to commercialize our product candidates or use our RNA delivery platforms for their own product candidates, which may harm our business and results of operations.
3
If serious adverse, undesirable or unacceptable side effects are identified during the development of our RNA delivery platforms or product candidates or following approval, if any, we may need to abandon our development of such product candidates, the commercial profile of any approved label may be limited, or we may be subject to other significant negative consequences following marketing approval, if any.
If our RNA delivery platforms or product candidates are associated with serious adverse, undesirable or unacceptable side effects, we or our potential licensees may need to abandon their development or limit development to certain uses or sub-populations in which such side effects are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in pre-clinical or early-stage testing have later been found to cause side effects that restricted their use and prevented further development of the compound for larger indications.
Additionally, if one or more of our product candidates or potential licensee’s product candidates incorporating one of our RNA delivery platforms receives marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:
| ● | regulatory authorities may withdraw approvals of such product; |
| ● | regulatory authorities may require additional warnings on the label; |
| ● | we may be required to create a medication guide outlining the risks of such side effects for distribution to patients; |
| ● | we or our potential licensees could be sued and held liable for harm caused to patients; and |
| ● | our reputation and interest from the biopharmaceutical industry in our RNA delivery platforms or product candidates may suffer. |
Any of these events could prevent us or our potential licensees from achieving or maintaining market acceptance of the particular product candidate, if approved, or of our RNA delivery technology and could significantly harm our business, results of operations and prospects.
Due to our limited resources and access to capital, we must and have in the past decided to prioritize development of certain product candidates; these decisions may prove to have been wrong and may adversely affect our revenues.
Because we have limited resources and access to capital to fund our operations, we must decide which product candidates to pursue and the amount of resources to allocate to each. Our decisions concerning the allocation of research, collaboration, management and financial resources toward particular compounds, product candidates or therapeutic areas may not lead to the development of viable assets for out-licensing and may divert resources away from better opportunities. Similarly, our potential decisions to delay, terminate or collaborate with third parties in respect of certain product development programs may also prove not to be optimal and could cause us to miss valuable opportunities. If we make incorrect determinations regarding the market potential of our product candidates or misread trends in the biopharmaceutical industry our business, financial condition and results of operations could be materially adversely affected.
Risks Related to Commercialization of Our Products and Product Candidates
We operate in highly competitive and rapidly changing industries, which may result in others discovering, developing or commercializing competing products before or more successfully than we do.
The biopharmaceutical industry is highly competitive and subject to significant and rapid technological change. Our success is highly dependent on our ability to discover product candidates, develop and to out-license them successfully. In doing so, we face and will continue to face intense competition from a variety of businesses, including large, fully integrated pharmaceutical companies, specialty pharmaceutical companies and biopharmaceutical companies, academic institutions, government agencies and other private and public research institutions in Europe, the United States and other jurisdictions. These organizations may have significantly greater resources than we do and conduct similar research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and marketing of products that compete with our product candidates.
Risks Related to Our Reliance on Third Parties
If we fail to maintain our current strategic relationship with Washington University, our business, commercialization prospects and financial condition may be materially adversely affected.
We have an exclusive license agreement with Washington University located in St. Louis, Missouri (“WU”). Under this agreement with WU, we are given an exclusive, worldwide, royalty-bearing license (with the right to sublicense) under certain patent rights owned or controlled by WU to research, develop, make, have made, sell, offer for sale, use and import pharmaceutical products covered under such patent rights for all fields of use. Such licensed products may include drug products formulated as nanoparticles, comprising a peptide for delivery as well as a therapeutic nucleotide, for intracellular delivery. These intellectual property rights have been the basis of our research and development of AM-401 and AM-411.
A good relationship with WU is important for our business prospects. If our relationship with WU was to deteriorate substantially or WU challenges our use of their intellectual property or our calculations of the payments we owe under our agreements, our business, financial condition, commercialization prospects and results of operations could be materially adversely affected.
4
We may seek to form additional strategic alliances in the future with respect to our RNA delivery platforms and drug product candidates, and if we do not realize the benefits of such alliance, our business, financial condition, commercialization prospects and results of operations may be materially adversely affected.
The development programs for our RNA delivery platforms and product candidates will require substantial additional cash to fund expenses and may require expertise, such as strategic business development expertise, which we do not currently possess. For example, we currently do not intend to continue the development of our AM-401 and AM-411 product candidates beyond the clearance by regulatory agencies for testing in humans or phase 1 clinical trials. Therefore, in addition to our relationship with WU, we may decide to enter into strategic alliances or create joint ventures or collaborations with pharmaceutical or biopharmaceutical companies for the further development of those product candidates or out-license rights to third parties to use our RNA delivery platform for the development of their own drug products.
We face significant competition in seeking appropriate collaborators. Collaborations are complex and time-consuming to negotiate and document. Any delays in entering into new strategic partnership agreements related to our RNA delivery platforms or product candidates could delay their further development and reduce their competitiveness. We may also be restricted under existing and future collaboration agreements from entering into strategic partnerships or collaboration agreements on certain terms with other potential collaborators. We may not be able to negotiate collaborations on acceptable terms, or at all, for any of our existing or future RNA delivery platforms and product candidates because the potential partner may consider that our research and development pipeline is insufficiently developed to justify a collaborative effort, or that our product candidates and programs do not have the requisite potential to demonstrate safety and efficacy in the target population. If we are unsuccessful in establishing and maintaining a collaboration with respect to a particular RNA delivery platform or product candidate, we may have to curtail the development of that RNA delivery platform or product candidate, reduce the scope of or delay its development program or one or more of our other development programs, delay its potential commercialization, or increase our expenditures and undertake development or commercialization activities at our own expense for which we have not budgeted. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we will not be able to out-license our RNA delivery programs or product candidates to market and generate licensing revenue. Even if we are successful in establishing a new strategic partnership or entering into a collaboration agreement, we cannot be certain that, following such a strategic transaction or license, we will be able to progress the development of the applicable RNA delivery platforms or product candidates as envisaged, or that we will achieve the revenues that would justify such transaction.
We rely on third parties to conduct our nonclinical and clinical trials and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.
We have relied upon and plan to continue to rely upon third-party contract research organizations, or CROs, to monitor and manage data for our ongoing nonclinical and clinical program. We rely on these parties for execution of our nonclinical and clinical studies and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our trials is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to comply with cGMP, cGCP, and Good Laboratory Practice, or GLP, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the EU and comparable foreign regulatory authorities for all of our product candidates in nonclinical and clinical development. Regulatory authorities enforce these regulations through periodic inspections of study sponsors, principal investigators, trial sites and other contractors. If we or any of our CROs or vendors fail to comply with applicable regulations, the data generated in our nonclinical and clinical trials may be deemed unreliable and the EMA, FDA, other regulatory authorities may require us or our licensees to perform additional nonclinical and clinical trials before clearing our product candidates for clinical testing or approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that all of our studies and preclinical or clinical data comply with relevant regulations. Our failure to comply with these regulations may require us to repeat certain studies, which would delay the regulatory clearance or approval process.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our on-going nonclinical and clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our protocols, regulatory requirements, or for other reasons, our clinical trials may be extended, delayed, or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. CROs may also generate higher costs than anticipated. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenue could be delayed.
5
We currently rely on single-source third-party suppliers and other third parties for the sourcing of certain ingredients and the manufacturing of our RNA delivery platforms and drug product candidates and our dependence on these third parties may impair the advancement of our research and development programs.
We currently rely on and expect to continue to rely on third parties, for the manufacturing and supply of chemical compounds for preclinical studies and future clinical trials of our RNA delivery platforms and product candidates. For the foreseeable future, we expect to continue to rely on such third parties for the manufacture of our RNA delivery platforms and any of our drug product candidates Although we have auditing rights with all our manufacturing counterparties, we do not have control over a supplier’s or manufacturer’s compliance with applicable laws, regulations and cGMP standards and other laws and regulations, such as those related to environmental health and safety matters.
We currently procure the peptide, the RNA payloads and certain other ingredients for our RNA delivery platforms and AM-401 and AM-411 as well as formulated intermediate products and final products from single-source suppliers. Although we believe that there are alternate sources of supply that could satisfy our requirements, and we have performed some preliminary investigations to assess this availability, we cannot assure you that identifying alternate sources and establishing relationships with such sources would not result in significant delay in the development or out-licensing of our RNA delivery programs or drug product candidates. Additionally, we may not be able to enter into supply arrangements with alternative suppliers on commercially reasonable terms, or at all. A delay in the development of our RNA delivery platforms or drug product candidates or having to enter into a new agreement with a different third party on less favorable terms than we have with our current suppliers could have a material adverse impact upon on our business.
Risks Related to Intellectual Property
If we or our licensors are unable to obtain and maintain effective patent rights for our RNA delivery platforms, drug product candidates or any future product candidates, or if the scope of the patent rights obtained is not sufficiently broad, we may not be able to compete effectively in our markets.
We rely upon a combination of patents, trade secret protection, and confidentiality agreements to protect the intellectual property related to our technologies, commercial products and drug product candidates. Our success depends in large part on our and our licensors’ ability to obtain and maintain patent and other intellectual property protection in the United States and in other countries with respect to our proprietary technology and products.
We have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies and products that are important to our business. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost, in a timely manner or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which legal principles remain unsolved. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates in the United States or in other foreign countries. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions remain confidential for a period of time after filing, and some remain so until issued. We cannot be certain that we were the first to file any patent application related to our RNA delivery platforms or product candidates, or whether we were the first to make the inventions claimed in our owned patents or pending patent applications, nor can we know whether those from whom we license patents were the first to make the inventions claimed or were the first to file. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover our RNA delivery platforms or product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated, which could allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or out-licensing intellectual property rights without infringing third party patent rights. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for commercial products or drug product candidates, prevent others from designing around our claims or provide us with a competitive advantage. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
We have filed or intend to file several patent applications covering various aspects of our RNA delivery platform and product candidates. We cannot offer any assurances about whether the patents will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be challenged by third parties. Any successful opposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of our RNA delivery platforms or any drug product candidates that we may develop through out-licensing.
6
We may not have sufficient patent terms to effectively protect our products and business.
Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours or otherwise provide us with a competitive advantage. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from generic medications.
While patent term extensions under the Hatch-Waxman Act in the United States and under supplementary protection certificates in Europe may be available to extend the patent exclusivity term for our RNA delivery platforms and product candidates, we cannot provide any assurances that any such patent term extension will be obtained and, if so, for how long. In addition, upon issuance in the United States any patent term can be adjusted based on certain delays caused by the applicant(s) or the U.S. Patent and Trademark Office, or USPTO. For example, a patent term can be reduced based on certain delays caused by the patent applicant during patent prosecution.
While in the United States there is a possibility of obtaining market protection independent from any patent protection for up to three and five years from approval, and in the European Union one may obtain data exclusivity of eight years from approval with an additional two years of market exclusivity (which can potentially be extended by one year), there is no assurance that we can obtain such data exclusivity and market protection with respect to our RNA delivery platforms, AM-401, AM-411, or any of our other drug product candidates. Our issued patents and pending patent applications are expected to expire for our RNA delivery platforms in 2034, for AM-401 in 2034 and 2043, and for AM-411 in 2034, prior to any patent term extensions to which we may be entitled under applicable laws.
If we are unable to maintain effective proprietary rights for our RNA delivery platforms, drug product candidates or any future drug product candidates, we may not be able to compete effectively in our markets.
In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our RNA delivery platform and product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. Moreover, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.
Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors, and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating such trade secrets. In addition, others may independently discover our trade secrets and proprietary information. For example, the FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may change in the future, if at all.
Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the U.S. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the U.S. and abroad. If we are unable to prevent material disclosure of the intellectual property related to our technologies to third parties, we will not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, financial condition and results of operations.
7
Third-party claims of intellectual property infringement may expose us to substantial liability or prevent or delay our development and commercialization efforts.
Our commercial success depends in part on our ability to develop, manufacture, and out-license our RNA delivery platforms or drug product candidates and use our proprietary technology without alleged or actual infringement, misappropriation, or other violation of the patents and proprietary rights of third parties. There have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, and reexamination proceedings before the USPTO and corresponding foreign patent offices. Numerous U.S.- and foreign-issued patents and pending patent applications, which are owned by third parties, exist in the fields for which we are developing our RNA delivery platforms and product candidates. Some claimants may have substantially greater resources than we do and may be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. In addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target us. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our RNA delivery programs and drug product candidates may be subject to claims of infringement of the patent rights of third parties.
Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture, or methods of treatment related to the use or manufacture of our RNA delivery platforms or product candidates. Although we generally conduct certain freedom to operate search and review with respect to our RNA delivery platforms and product candidates, we cannot guarantee that any of our search and review is complete and thorough, nor can we be sure that we have identified each and every patent and pending application in the United States and abroad that is relevant or necessary to the development and out-licensing of our RNA delivery platforms or product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our RNA delivery platforms or product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our RNA delivery platforms or product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to out-license such RNA delivery platform or product candidate unless we obtained a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture, or methods of use, the holders of any such patents may be able to block our ability to develop and out-license the applicable RNA delivery platform or product candidate unless we obtained a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us.
Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and out-license one or more of our RNA delivery platforms or product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
If we fail to comply with the obligations in our Exclusive License Agreement with WU, we could lose intellectual property rights that are important to our AM-401 and AM-411 drug product candidates and further potential drug product candidates.
Our Exclusive License Agreement with WU imposes various development, milestone payment, royalty, and other obligations on us. If we fail to comply with our obligations under the agreement and fail to cure such breach, or we are subject to a bankruptcy, WU has the right to terminate the agreement, in which event we would not be able to develop or market our RNA delivery platforms, AM-401 or AM-411 or any future drug product candidates covered by the license.
In particular, we are required to use commercially reasonable efforts to meet the following development milestones: a) to file an IND application (or regulatory equivalent in foreign jurisdiction) by June 30, 2024, b) to complete a Phase 1 clinical trial 3.5 years after achieving the first milestone, and c) to complete a Phase 2 clinical trial four years after achieving the second milestone. We may elect to extend each of these milestones once by a period of twelve months, and second time by a period of an additional twelve months, by paying WU a nonrefundable fee in the amount of $50,000 for the first extension and $100,000 for the second extension.
8
We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming, and unsuccessful.
Competitors may infringe our patents or the patents of our licensors. To counter such infringement, we may be required to file claims against those competitors, which can be expensive and time-consuming. If we or one of our licensing partners were to initiate legal proceedings against a third party to enforce a patent covering one of our commercial products or drug product candidates, the defendant could counterclaim that the patent covering our commercial product or drug product candidate is invalid, overbroad and/or unenforceable, or that we infringe the defendant’s patents. In patent litigation in the United States, defendant counterclaims alleging invalidity, overbreadth and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable. A court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop a third party from using the technology in question on the grounds that our patents do not cover that technology. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly, which could adversely affect us.
Interference proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms or at all. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to continue our research programs, license necessary technology from third parties, or enter into out-licensing agreement. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common shares.
We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
We employ and utilize the services of individuals who were previously employed or provided services to universities or other biotechnology or pharmaceutical companies. Although we try to ensure that our employees, consultants, and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants, or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s, consultant’s or independent contractor’s former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Our reliance on our advisors, employees and third parties requires us to share our intellectual property and trade secrets, which increases the possibility that a competitor will discover them or that our intellectual property will be misappropriated or disclosed.
Because we rely on our advisors, employees and third-party contractors and consultants to research and develop and to manufacture our commercial products and drug product candidates, we must, at times, share our intellectual property with them. We seek to protect our intellectual property and other proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of these advisors, employees and third parties to use or disclose our confidential information, including our intellectual property and trade secrets. Despite the contractual provisions employed when working with these advisors, employees and third parties, the need to share intellectual property and other confidential information increases the risk that such confidential information becomes known by our competitors, are inadvertently incorporated into the product development of others or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how, intellectual property and trade secrets, a competitor’s discovery of our intellectual property or trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.
In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data potentially relating to our intellectual property, although our agreements may contain certain limited publication rights. For example, any academic institution that we may collaborate with in the future may expect to be granted rights to publish data arising out of such collaboration, provided that we are notified in advance and given the opportunity to delay publication for a limited time period in order for us to secure patent protection of intellectual property rights arising from the collaboration, in addition to the opportunity to remove confidential or trade secret information from any such publication. In the future, we may also conduct joint research and development programs that may require us to share intellectual property under the terms of our research and development or similar agreements. Despite our efforts to protect our intellectual property, our competitors may discover our trade secrets or know how, either through breach of our agreements with third parties, independent development or publication of information by any of our third-party collaborators. A competitor’s discovery of our intellectual property would impair our competitive position and have an adverse impact on our business.
9
We may be subject to claims challenging the inventorship of our patents and other intellectual property.
We may be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our drug product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or our ownership of our patents or other intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting, and defending patents in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. As part of ordinary course prosecution and maintenance activities, we determine whether to seek patent protection outside the U.S. and in which countries. This also applies to patents we have acquired or in-licensed from third parties. In some cases this means that we, or our predecessors in interest or licensors of patents within our portfolio, have sought patent protection in a limited number of countries for patents covering our product candidates. Competitors may use our technologies in jurisdictions where we have not obtained or are unable to adequately enforce patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents, the reproduction of our manufacturing or other know-how or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Risks Related to Employee Matters and Managing Growth
Our future growth and ability to compete depends on retaining our key personnel and recruiting additional qualified personnel.
Our success depends upon the continued contributions of our key management, scientific and technical personnel, many of whom have substantial experience with or been instrumental for us and our projects. Key management includes our executive officers Thomas Meyer, our founder, Chairman and Chief Executive Officer, Covadonga Pañeda, Chief Operating Officer for our RNA delivery activities, and Marcel Gremaud, our Chief Financial Officer, who constitute the Executive Management Committee. Since January 2023, we have received the contributions of Samuel Wickline, Trasir’s founder and our Chief Scientific Adviser for RNA delivery technology on a part-time consulting basis (from June 2021 to December 2022 he served as Chief Scientific Officer).
The loss of key managers, senior scientists or advisors could delay our research and development activities. Laws and regulations on executive compensation, including legislation in Switzerland, may restrict our ability to attract, motivate and retain the required level of qualified personnel. In addition, the competition for qualified personnel in the biopharmaceutical field is intense, and our future success depends upon our ability to attract, retain and motivate highly skilled scientific, technical and managerial employees. We face competition for personnel from other companies, universities, public and private research institutions and other organizations. If our recruitment and retention efforts are unsuccessful in the future, it may be difficult for us to implement our business strategy, which could have a material adverse effect on our business.
Risks Related to Our Common Shares
The price of our common shares may continue to be volatile and may fluctuate due to factors beyond our control.
The share price of publicly traded emerging biopharmaceutical and drug discovery and development companies has been highly volatile and is likely to remain highly volatile in the future. The market price of our common shares may fluctuate significantly in the future due to a variety of factors, including:
| ● | delays in executing on our plans to reposition the Company around RNA delivery technology and to divest or partner our legacy assets; |
| ● | technological innovations or commercial product introductions by us or competitors; |
| ● | changes in government regulations; |
| ● | adverse developments concerning our suppliers or manufacturers; |
10
| ● | developments concerning proprietary rights, including patents and litigation matters; |
| ● | public concern relating to the commercial value or safety of any of our product candidates; |
| ● | financing or other corporate transactions; |
| ● | general market conditions in the biopharmaceutical industry or in the economy as a whole; or |
| ● | other events and factors beyond our control. |
Additionally, these factors may affect the liquidity of our common shares, which may hurt your ability to sell our common shares in the future. In addition, the stock market in general has recently experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of individual companies. Broad market and industry factors may materially affect the market price of companies’ stock, including ours, regardless of actual operating performance.
Future sales, or the possibility of future sales, of a substantial number of our common shares could adversely affect the price of our common shares.
Future sales of a substantial number of our common shares, or the perception that such sales will occur, could cause a decline in the market price of our common shares. We may issue securities, including our common shares and warrants to purchase common shares, at any time and from time to time subject to the limitations set forth in General Instruction I.B.5 of Form F-3. If a large number of our common shares and/or warrants to purchase common shares are sold in the public market, the sales could reduce the trading price of our common shares and impede our ability to raise future capital.
We do not expect to pay dividends in the foreseeable future.
We have not paid any dividends since our incorporation. Even if future operations lead to significant levels of distributable profits, we currently intend that any earnings will be reinvested in our business and that dividends will not be paid until we have an established revenue stream to support continuing dividends. The proposal to pay future dividends to shareholders will in addition effectively be at the discretion of our board of directors after taking into account various factors including our business prospects, cash requirements, financial performance and new product development. In addition, payment of future dividends is subject to certain limitations pursuant to Bermuda law or by our Bye-laws. We are subject to Bermuda law restrictions on the payment of dividends including that no dividends may be declared by our board of directors or paid by the Company if there are reasonable grounds for believing that: (i) we are, or would after the payment be, unable to pay our liabilities as they become due; or (ii) that the realizable value of our assets would thereby be less than our liabilities. Accordingly, investors cannot rely on dividend income from our common shares and any returns on an investment in our common shares will likely depend entirely upon any future appreciation in the price of our common shares.
If we are or become classified as a passive foreign investment company (“PFIC”), our U.S. shareholders may suffer adverse tax consequences as a result.
A non-U.S. corporation, such as our Company, will be considered a PFIC for any taxable year if either (i) at least 75% of its gross income is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income.
Based upon our current and projected income and assets, and projections as to the value of our assets, we do not anticipate that we will be a PFIC for the 2024 taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets, and we have not and will not obtain an opinion of counsel regarding our classification as a PFIC. Fluctuations in the market price of our common shares may cause us to be classified as a PFIC in any taxable year because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our common shares from time to time (which may be volatile). If our market capitalization subsequently declines, we may be or become classified as a PFIC for the 2024 taxable year or future taxable years. Furthermore, the composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and any future fundraising activity. Under circumstances where our revenues from activities that produce passive income significantly increases relative to our revenues from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase. It is also possible that the Internal Revenue Service (the “IRS”) may challenge the classification or valuation of our Company’s assets, including its goodwill and other unbooked intangibles, or the classification of certain amounts received by our Company, which may result in our Company being, or becoming classified as, a PFIC for the 2024 taxable year or future taxable years. Accordingly, there can be no assurance that we will not be a PFIC in the current or for any future taxable year and U.S. investors should invest in our common shares only if they are willing to bear the U.S. federal income tax consequences associated with investments in PFICs.
11
If we were a PFIC for any taxable year during which a U.S. investor held our common shares, certain adverse U.S. federal income tax consequences could apply to the U.S. Holder. See “Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders.”
We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
We report under the Exchange Act, as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act and although we are subject to Bermuda laws and regulations with regard to such matters and furnish semiannual financial information to the SEC, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until four months after the end of each financial year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from the Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common shares.
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. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act of 2002, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also subject us to regulatory scrutiny and sanctions, impair our ability to raise revenue and cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common shares.
Management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2022, and 2023, due to material weaknesses identified in Item 15, “Controls and Procedures,” of the corresponding Annual Reports. The Company did not maintain controls to execute the criteria established in the COSO Framework for the control environment, risk assessment, control activities, information and communication, and monitoring components, which resulted in control deficiencies that constitute material weaknesses, either individually or in the aggregate, within each component of the COSO Framework. This was due to the lack of sufficient resources to execute control activities which contributed to the potential for there to have been material errors in our financial statements in addition to the material misstatement that occurred in our interim reporting for the period ended June 30, 2022.
In 2024, Management remediated these material weaknesses. However, we cannot assure you that the measures we have taken to date, and are continuing to implement, will be sufficient to avoid potential future material weaknesses. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting. See “Item 15. Controls and Procedures” for more information.
We are required to disclose changes made in our internal controls and procedures, and our management is required to assess the effectiveness of these controls annually. However, for as long as we are a “non-accelerated filer” under Securities and Exchange Commission rules, our independent registered public accounting firm is not required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to further financial statement restatements and require us to incur the expense of remediation.
As a Bermuda company, it may be difficult for you to enforce judgments against us or our directors and executive officers.
We are a Bermuda exempted company. As a result, the rights of holders of our common shares are governed by Bermuda law and our memorandum of continuance (the “Memorandum of Continuance”) and Bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in other jurisdictions. All of our executive officers and all of our directors referred to in this Annual Report are not residents of the United States, and a substantial portion of our assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on those persons in the United States or to enforce in the United States judgments obtained in U.S. courts against us or those persons based on the civil liability provisions of the U.S. securities laws. It is doubtful whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the United States, against us or our directors or officers under the securities laws of those jurisdictions or entertain actions in Bermuda against us or our directors or officers under the securities laws of other jurisdictions.
12
Bermuda law differs from the laws in effect in the United States and may afford less protection to holders of our common shares.
We are subject to the laws of Bermuda. As a result, our corporate affairs are governed by the Companies Act 1981 of Bermuda (the “Companies Act”), which differs in some material respects from laws typically applicable to U.S. corporations and shareholders, including the provisions relating to interested directors, amalgamations, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors. Generally, the duties of directors and officers of a Bermuda company are owed to the company only. Shareholders of Bermuda companies typically do not have rights to take action against directors or officers of the company and may only do so in limited circumstances. Class actions are not available under Bermuda law. The circumstances in which derivative actions may be available under Bermuda law are substantially more proscribed and less clear than they would be to shareholders of U.S. corporations. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association (or memorandum of continuance) or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it.
When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company. Additionally, under our Bye-laws and as permitted by Bermuda law, each shareholder has waived any claim or right of action against our directors or officers for any action taken by directors or officers in the performance of their duties, except for actions involving fraud or dishonesty. In addition, the rights of holders of our common shares and the fiduciary responsibilities of our directors under Bermuda law are not as clearly established as under statutes or judicial precedent in existence in jurisdictions in the United States, particularly the State of Delaware. Therefore, holders of our common shares may have more difficulty protecting their interests than would shareholders of a corporation incorporated in a jurisdiction within the United States.
Our Bye-laws restrict shareholders from bringing legal action against our officers and directors.
Our Bye-laws contain a broad waiver by our shareholders of any claim or right of action, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director. This waiver limits the right of shareholders to assert claims against our officers and directors unless the act or failure to act involves fraud or dishonesty.
We have anti-takeover provisions in our Bye-laws that may discourage a change of control.
Our Bye-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions provide for:
| ● | directors only to be removed for cause; |
| ● | restrictions on the time period in which directors may be nominated; |
| ● | our board of directors to determine the powers, preferences and rights of our preference shares and to issue the preference shares without shareholder approval; and |
| ● | an affirmative vote of 66 2/3% of our voting shares for certain “business combination” transactions which have not been approved by our board of directors. |
These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many shareholders. As a result, shareholders may be limited in their ability to obtain a premium for their shares.
Legislation enacted in Bermuda as to economic substance may affect our operations.
Pursuant to the Economic Substance Act 2018 (as amended) of Bermuda (the “ES Act”) that came into force on January 1, 2019, a registered entity other than an entity which is resident for tax purposes in certain jurisdictions outside Bermuda (“non-resident entity”) that carries on as a business any one or more of the “relevant activities” referred to in the ES Act must comply with economic substance requirements. The ES Act may require in-scope Bermuda entities which are engaged in such “relevant activities” to be directed and managed in Bermuda, have an adequate level of qualified employees in Bermuda, incur an adequate level of annual expenditure in Bermuda, maintain physical offices and premises in Bermuda or perform core income-generating activities in Bermuda. The list of “relevant activities” includes carrying on any one or more of the following activities: banking, insurance, fund management, financing, leasing, headquarters, shipping, distribution and service center, intellectual property and holding entities. We are carrying on relevant activities for the purposes of the ES Act and are required to comply with such economic substance requirements. Our compliance with the ES Act could affect the manner in which the Company operates its business or result in additional costs, which could adversely affect its business, financial condition and results of operations.
13
ITEM 4. INFORMATION ON THE COMPANY
A. History and development of the Company
Overview
We are an exempted company organized under the laws of Bermuda. We began our current operations in 2003. On April 22, 2014, we changed our name from Auris Medical AG to Auris Medical Holding AG. Following shareholder approval at an extraordinary general meeting of shareholders held on March 8, 2019 and upon the issuance of a certificate of continuance by the Registrar of Companies in Bermuda on March 18, 2019, the Company discontinued as a Swiss company and, pursuant to Article 163 of the Swiss Federal Act on Private International Law and pursuant to Section 132C of the Companies Act 1981 of Bermuda (the “Companies Act”), continued existence under the Companies Act as a Bermuda company with the name “Auris Medical Holding Ltd.” (the “Redomestication”). By resolution of a Special General Meeting of Shareholders held on July 21, 2021 we adopted the new company name Altamira Therapeutics Ltd.
Our registered office is located at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, telephone number +1 (441) 295 5950. We maintain a website at www.altamiratherapeutics.com where general information about us is available. Investors can obtain copies of our filings with the SEC from this site free of charge, as well as from the SEC website at www.sec.gov. We are not incorporating the contents of our website into this Annual Report.
We are a preclinical-stage biopharmaceutical company developing and supplying peptide-based nanoparticle technologies for efficient RNA delivery to extrahepatic tissues (xPhore platform). The versatile platform is suited for delivery of oligonucleotides (OligoPhore for short interfering RNA or siRNA), mRNA (SemaPhore: linear messenger RNA) and circRNA (CycloPhore: circular mRNA) and made available to pharma or biotech companies through out-licensing. In addition, we are pursuing two flagship siRNA programs using our proprietary OligoPhore delivery technology: AM-401 for KRAS driven cancer and AM-411 for rheumatoid arthritis, both in preclinical development beyond in vivo proof of concept.
In 2023 we took a first step to reposition our company around the RNA delivery business by spinning off a 51% stake in Altamira Medica AG, which manufactures and markets Bentrio, an OTC nasal spray for allergic rhinitis. We thus continue to hold a 49% stake in the Bentrio business (with additional economic rights). Further, we have announced our intention to partner / divest also our legacy assets from our traditional activities, which include the AM-125 program, a nasal spray for vertigo (post Phase 2), as well as our early- to late-stage clinical development programs in tinnitus and hearing loss.
Capital expenditure
Our actual capital expenditures for the years ended December 31, 2024, 2023 and 2022 amounted to $0.1 million, $0 and $2.1 million, respectively. Our capital expenditures were primarily related to production equipment in 2024 and to intangible assets (capitalized expenditures in 2022) created as part of the AM-125 development program.
B. Business overview
Strategy
Our goal is to become a leading biomedical company focused on developing and commercializing RNA delivery technology. We believe that the use of RNA therapeutics – be it siRNA, mRNA or other modalities – to control the expression of disease-relevant genes holds great promise. By engaging targets that are otherwise ‘undruggable’ by small molecules and proteins, whole new avenues are expected to open up with RNA therapeutics for treating intractable diseases. However, delivering RNA therapeutics into the right cell of the right tissue has been one of the key challenges preventing their more widespread adoption so far.
So far, most RNA therapeutics have been directed at the liver using delivery platforms based on lipid nanoparticles or GalNAc, an amino sugar derivative of galactose. In contrast, delivery to non-liver (that is extrahepatic) tissues has been largely elusive so far. Our proprietary peptide polyplex platform xPhore can engage different RNA modalities such as siRNA, mRNA or circular RNA in rapid self-assembly. The technology is designed to allow for systemic or local delivery of RNA payloads with efficient cellular uptake and extensive endosomal release. Importantly, it enables delivery to target tissues outside the liver, creating the potential for developing RNA-based therapies for a range of indications with substantial unmet need.
14
The key elements of our strategy are:
| ● | Leverage xPhore platform through partnering. Considering the suitability of our peptide polyplex platform for multiple therapeutic indications especially in oncology and inflammatory / autoimmune diseases but also elsewhere, and for various types of nucleotides, we aim to leverage the platform through collaborations with other biopharmaceutical companies and the out-licensing of technology for specific indications. In this way, we intend to become a delivery platform company. |
| ● | Demonstrate proof of concept with xPhore. Based on positive results obtained with OligoPhore delivering various siRNA payloads in more than ten different murine disease models, we have selected two among them for further proprietary development, thus adding to the preclinical data package for the xPhore platform. With project AM-401 we are targeting KRAS driven cancer such as colorectal cancer or pancreatic cancer, and with project AM-411 we are targeting rheumatoid arthritis. We intend to develop at least one of these projects up to Investigational New Drug (IND) clearance by the US Food and Drug Administration (FDA) or a Phase 1 clinical trial before seeking to license them out. |
| ● | Focus activities on RNA delivery technology by divesting or partnering our non-RNA businesses. As we aim to expand our activities in RNA delivery technology, we intend to dedicate our full resources and management focus on them. In a first step, we have divested a 51% stake in our Bentrio business in 2023. We intend to divest or partner the remaining legacy assets in 2025. Any proceeds from divestiture or partnering shall be applied to growing the activities in RNA delivery technology. |
Delivering RNA therapeutics to extrahepatic tissues
xPhore is a versatile platform for delivery of nucleic acids such as siRNA, mRNA or circRNA into target cells. Using the same technology, OligoPhore designates the platform for oligonucleotides, whereas SemaPhore designates the platform for linear mRNA and CycloPhore the platform for circRNA. It is based on a proprietary 21 amino acid peptide that can engage any type of RNA in rapid self-assembly into a polyplex. The polyplex has a size, charge, and other physical features that allows escaping hepatic sequestration while increasing circulation time clearance, thus allowing the polyplex to reach other target tissues than the liver. xPhore protects the RNA payload from degradation in the circulation and allows for rapid cellular uptake, while enabling pH-dependent nucleotide maximal endosomal escape and cytoplasmic delivery.
Effective delivery and positive treatment outcomes have been demonstrated with xPhore™ in more than 15 diverse murine models of cancer, cardiovascular, metabolic, inflammatory and autoimmune diseases. All of these results have been published in peer-reviewed journals or presented at scientific conferences.
The polyplex formulations are formed as the peptide carrier condenses nucleic acids by mixing at a pre-defined ratio. The interaction between RNA sequence and peptide is initially electrostatic, but importantly an exothermic process of strong hydrogen bonding takes place between the histidines and nucleic acids to markedly stabilize the polyplex. A coating of albumin or hyaluronic acid is used to further stabilize the system. Once the polyplex is formed it can be injected intravenously or intraperitoneally, or by any other route that reaches the circulation, or it may be applied locally. The polyplex readily escapes leaky vasculature, a feature of various pathologies, and is taken up avidly by cells that are capable of macropinocytosis such as cancer cells or macrophages. However, we also have transfected endothelium, smooth muscle, and other cell types. Once in the endosome, the natural process of acidification disassembles the polyplex. The released peptide interacts with the endosomal membrane to permeabilize it and promotes the release of the RNA payload into the cytoplasm. The peptide is then diluted quickly and broken down, causing no unintended damage to the cell membrane itself.
Market for RNA therapeutics
RNA therapeutics is a rapidly emerging field of human medicine that has the potential to change the standard of care for many diseases and target previously undruggable pathways. Traditional small molecule drugs target active sites of proteins so as to inhibit or alter their function; however, only ∼1.5% of the human genome encodes proteins (Damase et al., 2021), and only 10–14% of proteins have active binding sites that are “druggable” targets for small molecules (Hopkins and Groom, 2002). Thus the “druggable” targets for small molecule therapies are limited. This limitation was addressed in part by recombinant protein technology which has become a significant share of the pharmaceutical market (Damase et al., 2021). However, recombinant proteins have limitations as drugs, particularly due to size and stability issues. By contrast, nucleic-acid based strategies avoid many of these limitations as they make use of the translational machinery of the human cell.
15
RNA therapeutics comprise four broad categories: aptamers, antisense oligonucleotides (ASOs), RNA interference (RNAi) and messenger RNA (mRNA). Aptamers are oligonucleotides that bind to specific target molecules to inhibit signal transduction. ASOs are oligonucleotides that target mRNA to alter gene expression, whereas RNAi (short interfering RNA or siRNA and micro RNA or miRNA) promote the degradation of specific mRNA molecules. mRNA, on the other hand, promotes protein expression either to compensate for a defective gene / protein or to produce a protein to induce a therapeutic response. Regardless of the type of RNA therapeutic, delivery into target cells and tissues has proved to be a major challenge as RNA is inherently unstable and tends to show poor cellular uptake. Various delivery technologies have been developed to address these challenges, including the use of nanocarriers or bioconjugates for targeted delivery. While there has been substantial progress with delivery of RNA therapeutics to the liver, other target tissues and organs have remained difficult to reach.
In 1998, the FDA approved the first ASO based therapeutic and in 2018 the first siRNA therapeutic. Further approvals have followed, and there is a growing number of RNA therapeutics in clinical development. With the rapid development of vaccines against COVID-19, which use mRNA to instruct muscle cells to produce the non-infectious SARS-CoV-2 spike protein to induce specific neutralizing antibodies, some key advantages of RNA-based therapeutics such as rapid design and scale-up in manufacturing have been highlighted. According to a recent report published by Allied Market Research the global market for RNA therapeutics (RNAi and ASOs) reached $4.9 billion in 2021 and is expected to grow to $25.1 billion in 2030. In another recent report by Research and Markets, it is estimated that the global market for mRNA therapeutics should grow from $46.7 billion in 2021 to $101.3 billion by 2026.
Our Product Candidates
xPhore RNA delivery platform
RNA-based therapies are currently one of the most promising fields in medical research. We believe that the use of RNA therapeutics to control the expression of disease-relevant genes holds great promise. By engaging targets that are otherwise ‘undruggable’ by small molecules and proteins, whole new avenues are expected to open with RNA therapeutics for treating intractable diseases. There exist various carriers for delivering nucleic acids into cells, such as viral-based vectors, lipid nanoparticles (LNPs), and ligand conjugates. Although each of these systems exhibits promising features, robust nucleic acid delivery remains the key rate-limiting step for unlocking the full potential of RNA therapeutics. So far, most RNA therapeutics have been directed at the liver using delivery platforms based on lipid nanoparticles (LNPs) or GalNAc-conjugates. In contrast, delivery to non-liver (that is extrahepatic) tissues has been largely elusive so far.
Our solution – xPhore
Our xPhore technology is a highly versatile platform that allows for delivery of nucleic acids into cells, notably into non-liver tissues, using systemic or local administration.
The technology has the following main features:
| ● | Stability: the RNA is complexed and protected from degradation in a nanoparticle polyplex, and it is only released inside of cells after endosomal uptake and not in the circulation |
| ● | Extrahepatic delivery: the nanoparticle is not sequestered in the liver, but will readily permeate inflamed pathological tissues, delivering the payload to the target tissue |
| ● | Endosomal escape: we have co-opted the natural cellular process of endosomal acidification to disassemble the polyplex, which is followed by maximal release of siRNA into the cytoplasm |
| ● | Selectivity: the polyplex silences molecular targets in diseased tissues only |
| ● | Safety: no cellular or adaptive immune response to nanoparticle components or siRNA after multiple serial doses, and no organ toxicities have been observed in mice after serial dosing |
We are aiming to license the xPhore technology to companies in the biopharmaceutical industry for use with their own RNA molecules, providing support for the formulation and process development steps.
16
AM-401 in KRAS driven cancers
With project AM-401 we are applying our xPhore technology to KRAS driven cancers to slow down KRAS driven tumor cell growth and proliferation or to stop it altogether by delivering KRAS siRNA specifically inside tumor cells for gene knock down.
The KRAS gene encodes the Kras protein which controls cell growth, cell maturation, and cell death. Through mutations, the Ras proteins can be rendered persistently active, causing cancer cells to proliferate and spread in the body. Mutations of KRAS are associated with poor prognosis in several cancers, and there is a substantial body of evidence supporting the role of KRAS in the initiation and maintenance of cancer. As described by Herdeis and colleagues in a 2021 publication in the journal Current Opinion in Structural Biology, mutated forms of KRAS are found in one-fifth of all human cancers, including 32% of non-small-cell lung cancers (NSCLCs), 40% of colorectal cancers (CRCs) and 85–90% of pancreatic cancers. According to the American Cancer Society, overall, almost 150,000 new cases of KRAS mutated tumors are diagnosed in the United States alone across these three tumor types each year. It has been estimated that mutations in KRAS alone account for approximately one million deaths per year worldwide (Simanshu et al., 2017).
Since the original discovery of KRAS as an oncogene in 1982, there have been intense efforts to develop a targeted therapeutic for KRAS mutant cancers. Although the role of KRAS mutations in cancer has been known for decades, they have remained a challenging target for therapeutic interventions. KRAS was long considered undruggable, in part because its surface lacked obvious binding sites. In 2021 the FDA approved sotorasib as the first ever treatment for KRAS driven cancer, followed by adagrasib in 2022. Both drugs are small molecules and received accelerated approval as second-line treatments for KRAS G12C-mutated NSCLC.
As described by Strand and colleagues in a 2019 issue of the scientific journal Oncotarget, in vitro and in vivo experiments demonstrated efficient uptake of OligoPhore (then known as p5RHH nanoparticles) with KRAS-targeted siRNA in colorectal and pancreatic cancer cells, strong inhibition of KRAS expression, reduced viability of tumor cells and significant reduction in tumor growth and volume. Importantly, a murine model demonstrated the capacity of the OligoPhore platform to drive targeted delivery of the nanoparticles specifically to tumor cells.
Based on these outcomes, we started in silico and in vitro work to screen and select the most effective siRNA sequences and to optimize their properties. Our polyKRASmut siRNA approach allows to target different KRAS mutations and is thus polyvalent. In vitro data confirmed the ability of polyKRASmut siRNA to knock down a broad range of KRAS mutations in cancer cell lines. These mutations include G12C, G12V, G12D, G12R, G12A, and A146T, which according to an evaluation by Huang and colleagues in a 2021 issue of Signal Transduction and Targeted Therapy account for 90.9% of KRAS mutations reported in pancreatic ductal adenocarcinoma (PDAC), 65.3% in colorectal cancer (CRC) and 80.0% in non-small cell lung cancer (NSCLC). In comparison, the currently approved small molecule inhibitors sotorasib and adagrasib target just one KRAS mutation (G12C), which represents 1.7%, 7.1% and 41.0% of total KRAS mutations in PDAC, CRC and NSCLC, respectively. Since polyKRASmut was tested against only a limited number of mutations, it may potentially knock down other, yet untested mutations.
The process of sequence selection and optimization will be followed by further in vivo testing. Meanwhile, we have been working on the scale up in the synthesis of the peptide base of OligoPhore and process development for the manufacture of the nanoparticles. We intend to review and discuss our plans for IND-enabling preclinical studies with the FDA in the context of a Pre-IND meeting. Subject to the opening of an IND (or equivalent clearance by another regulatory agency), we expect to conduct a Phase 1 clinical trial in patients with KRAS driven cancer either on our own or through a partner from the biopharmaceutical industry.
AM-411 in rheumatoid arthritis
With project AM-411, we are targeting the NF-κB signaling pathway, a critical regulator of immune and inflammatory responses and specifically in rheumatoid arthritis (RA). AM-411 comprises an optimized siRNA targeting p65, one of the components of NF-kB and a key checkpoint in RA inflammation that has generated high interest as a target. However, given NF-kB’s ubiquitous functions, the key challenge is to induce contextual, tissue specific effects, which is not possible with classic small molecule or biologic approaches. AM-411 reduces local inflammation without affecting the NF-κB pathway elsewhere and is less likely to generate resistance because it reduces synthesis of p65 rather than blocking the protein.
17
RA is a chronic inflammatory condition causing joint swelling and pain which may also affect other areas, including the skin, eyes, brain, and cardiovascular system. In the US in 2014, approximately 1.3 million adults suffered from RA, as described by Hunter and colleagues in a 2017 issue of Rheumatology International. According to the World Health Organization (WHO), in 2019 the autoimmune disease affected globally 18 million people. A study by Crowson and colleagues which was published in 2012 in the journal Arthritis and Rheumatism showed that RA affects 1 in 28 women and 1 in 59 men during their lifetime. There is no cure for RA; current treatments seek to manage RA with biologic and non-biologic immunosuppressants, corticosteroids and non-steroidal anti-inflammatory drugs (NSAIDs). While useful, drug resistance occurs in up to 50% of patients and systemic adverse reactions are frequent, including rash, hair loss, altered liver function, low blood cell counts, nausea, increased infections and neuropathy. New biologics targeting JAK/ interleukins have been issued black box warnings by the FDA. According to a market research study by Allied Market Research, the global anti-rheumatics market is expected to grow from $57.9 billion in 2019 to $62.9 billion in 2027, representing the second largest therapeutic area after oncology. Adalimumab, a biologic blocking TNF which is marketed as Humira®, was #1 among RA therapeutics in 2021 and also the world’s largest selling drug outside of Pfizer’s COVID-19 vaccine.
AM-411’s therapeutic potential in RA has already been demonstrated in a study using a collagen antibody–induced arthritis model in mice. As described by Zhou and colleagues in a 2014 issue of the Journal of Clinical Investigation OligoPhore nanoparticles with siRNA targeting NF-κB (p65) potently suppressed early inflammatory arthritis. The treatment effectively reduced inflammatory cytokines and cellular influx into the joints, protected against bone erosions and preserved cartilage integrity. Importantly, the treatment did not affect p65 expression in off-target organs or elicit a humoral response after serial injections.
Based on these outcomes, we started in silico and in vitro work to screen and select the most effective siRNA sequences and to optimize their properties. This will be followed by further in vivo testing. The AM-411 program will benefit from extensive synergies with the AM-401 program and vice versa.
Legacy assets
AM-125
We have been developing AM-125 as a nasal spray reformulation of betahistine for intranasal treatment of vertigo (acute vestibular syndrome; AVS). We started the program in February 2017 through the purchase of various assets related to betahistine dihydrochloride in a spray formulation from Otifex Therapeutics. In 2019 we initiated the “TRAVERS” Phase 2 trial to evaluate the safety and efficacy of AM-125 in 124 patients suffering from AVS following surgery. In June 2022 we reported top-line results from the trial showing good tolerability and a dose- and time-dependent improvement in balance and signs and symptoms of vestibular dysfunction. In parallel to the clinical development, we have been conducting various preclinical studies with AM-125 and working on the analytical and process development for the manufacturing of the drug product. The FDA cleared our IND application in June 2023 which will allow for the conduct of clinical trials in the U.S. In the context of our strategic transition to become a company focused on RNA delivery technology, we intend to out-license or sell the AM-125 program.
Bentrio
In September 2020 we initiated the development of Bentrio, a drug-free nasal spray for protection against airborne viruses and allergens, through our affiliate Altamira Medica AG. Upon application into the nose, Bentrio forms a protective gel layer on the nasal mucosa. This thin layer is designed to prevent the contact of airborne particles with cells; in addition, the composition serves to bind such particles and help with their discharge. The efficacy and safety of Bentrio has been demonstrated in a total of four clinical trials, of which the largest one (“NASAR” study) enrolled 100 patients suffering from seasonal allergic rhinitis. In NASAR, participants self-administered either Bentrio or saline nasal spray for two weeks 3 x per day. The study showed a statistically significant reduction in the mean daily reflective Total Nasal Symptom Score (rTNSS) for Bentrio compared to saline, as well as a statistically highly significant improvement in health-related quality of life and superior global ratings of efficacy by patients and investigators alike.
Since Bentrio does not contain any active substance, it is regulated and marketed as an “over-the-counter” (OTC) medical device. In June 2022 the FDA cleared Bentrio under a 510(k) as a Class II device for the intended use of promoting alleviation of mild allergic symptoms triggered by the inhalation of various airborne allergens. Bentrio is marketed primarily through distributors; Altamira Medica is planning to partner the product for the US and other key markets with one or several well-established providers of OTC consumer health products. In November 2023 we sold 51% of the share capital of Altamira Medica to a Swiss private equity investor. We retained 49% of the company’s share capital, which we intend to divest occasionally.
18
Competition
We face or may face competition from different sources with respect to our xPhore delivery platform and our product candidates AM-401 and AM-411 and any other product candidates that we may seek to develop in the future. Our RNA delivery platforms and any product candidates that we successfully develop will compete with existing RNA delivery platforms and therapies, even if they use different technologies or if they are not licensed specifically for use in our target therapeutic indications or if they lack clear proof of efficacy.
Possible competitors may be other biopharmaceutical companies as well as academic institutions, government agencies and private and public research institutions, which may in the future develop RNA delivery platforms for extrahepatic delivery or products to treat KRAS driven cancer or rheumatoid arthritis. We believe that the key competitive factors affecting the success of our RNA delivery platforms and product candidates in out-licensing are likely to be features such as biodistribution, pharmacokinetics, efficacy, safety and tolerability.
RNA delivery technologies
There are several companies offering commercial- or developmental-stage technologies for delivering RNA payloads to extrahepatic cells. These include Acuitas Therapeutics Inc., Aposense Ltd., Bio-Path Holdings, Inc., Biodrone Therapeutics Inc., Biorchestra Co., Ltd., Entos Pharmaceuticals, Ethris GmbH, Genevant Sciences Corp., Mercurna B.V., NanoVation Therapeutics, Neoregen Biotech Co., Ltd., N4 Pharma PLC, Ovensa Inc., Pantherna Therapeutics GmbH, ReCode Pharmaceuticals, RNATICS GmbH, Sirnaomics Ltd., SiSaf Ltd,, SixFold Bioscience, siRNAgen Therapeutics, TransCode Therapeutics, Inc., Vectiopep LLC, Vector Bioscience Cambridge Ltd., ViaNautis Bio Ltd., 4basebio PLC, or 20Med Therapeutics B.V. Although we consider that our xPhore platform offers unique advantages over current delivery approaches such as lipid nanoparticles, GalNAc conjugates or viral vectors through the ability to use of systemic administration, delivery to extrahepatic tissues, efficient cellular uptake and high levels of endosomal release, it may take time to raise awareness and interest among potential customers within the biopharmaceutical industry, resulting in its successful adoption.
KRAS driven cancers
There are several companies marketing or developing treatments for KRAS driven cancers. Amgen and Mirati Therapeutics obtained an accelerated approval by the FDA for the KRAS G12C small molecule inhibitors sotorasib and adagrasib as second-line treatment in NSCLC with G12C mutated KRAS. Treatments for single KRAS mutations are under development by various other companies, mostly based on small molecule inhibitors (e.g. Genentech, Eli Lilly, Revolution Medicine or Boehringer Ingelheim), but also based on RNA (e.g. Silexion Therapeutics, Nitto Denko). In addition, various treatments for multiple KRAS mutations are under development by companies such as Revolution Medicines, Boehringer Ingelheim, Eli Lilly or Alterome Therapeutics.
The aforementioned developments have the potential to compete with AM-401. In addition, there exist various treatment paradigms for key targets such as NSCLC, CRC and pancreatic cancers, including resection, chemotherapy, treatment with biologics and combinations thereof, and various lines of therapy. The relative positioning within current or future lines of therapy and thus the most relevant competition to AM-401 is uncertain at this point of development.
Rheumatoid arthritis
The market for RA therapeutics is highly competitive and currently dominated by several large pharma companies. They are marketing primarily biologics targeting TNF-α, e.g. adalimumab (AbbVie), infliximab (Johnson & Johnson), or etanercept (Amgen), or other targets such as B cells (rituximab, Roche), T cells (abatacept, BMS), or IL-6 (tocilizumab, Genentech). As the patent and other market access protection has lapsed for several of these biologics, biosimilars have been developed and introduced to the market by competitors. A biosimilar is a biologic that is highly similar to and has no clinically meaningful differences from an existing approved biologic. Further, large companies are marketing various small molecule JAK inhibitors such as upadacitinib (AbbVie), tofacitinib (Pfizer) or baricitinib (Lilly). In addition, there are various older drugs on the market, such as glucocorticoids, non-steroidal anti-inflammatory drugs (NSAIDs) or disease modifying antirheumatic drugs (DMARDs), including methotrexate, hydroxychloroquine and sulfasalazine.
Intellectual Property
Patents
We develop product candidates in disease areas with high unmet medical need, great market potential and where we have a proprietary position through patents covering various aspects of our products, e.g., composition, dosage, formulation, and use, etc. Our success depends on an intellectual property portfolio that supports our out-licensing efforts and future revenue streams as well as erects barriers to our competitors. For example, we have broad disclosures in our patent applications and can pursue patent claims directed to our own leading product candidates as well as claims directed to certain potentially competing products. In addition, our earlier filed patent applications are prior art to others including certain of our competitors who filed their patent applications later than ours. We are maintaining and building our patent portfolio through: filing new patent applications; prosecuting existing applications and licensing and acquiring new patents and patent applications.
19
Despite these measures, any of our intellectual property and proprietary rights could be challenged, invalidated, circumvented, infringed or misappropriated, or such intellectual property and proprietary rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages.
RNA delivery platforms
We are the exclusive licensee under our agreement with Washington University of a portfolio of patents and patent applications that relate to peptide based polyplexes for RNA delivery. The portfolio includes two issued US patents along with their foreign counterparts in various jurisdictions that cover the composition of matter or method of use of the peptide based polyplexes. These licensed patents and patent applications are expected to expire between 2034 and 2037, prior to any patent term extensions to which we may be entitled under applicable laws. In addition, in late 2024, we filed a provisional patent application with the USPTO related to the use of xPhore with circRNA; if granted, the new patent would be expected to expire in 2044.
Flagship programs
We filed several provisional patent applications related to our AM-401 and AM-411 flagship programs with the USPTO describing novel nanoparticle compositions based on xPhore or derivatives thereof in combination with siRNA sequences designed to silence different types of mutated KRAS (polyKRASmut) and p65, respectively. If granted, the new patents would be expected to expire in 2043 or 2044.
Legacy assets
We own a U.S. patent on the composition and use of intranasal betahistine (AM-125); related patents have issued or been allowed in more than 40 other countries to date. These patents are expected to expire in 2038. Further, we own various patents and patent application related to our other legacy assets in tinnitus and hearing loss.
Proprietary Rights
In addition to patent protection, we intend to use other means to protect our proprietary rights. We may pursue marketing exclusivity periods that are available under regulatory provisions in certain countries, including the US, Europe and Japan.
Furthermore, orphan drug exclusivity has been or may be sought where available. Such exclusivity has a term of 7 years in the United States and 10 years in Europe. Some indications for our flagship programs may be eligible for orphan drug designation. In addition, we have acquired a U.S. orphan drug designation for betahistine for the treatment of obesity associated with Prader-Willi syndrome.
We have obtained U.S. trademark registrations for Altamira and several U.S. trademark registrations for betahistine.
In addition, we rely upon unpatented trade secrets, know-how, and continuing technological innovation to develop and maintain our competitive position. We seek to protect our ownership of know-how and trade secrets through an active program of legal mechanisms including assignments, confidentiality agreements, material transfer agreements, research collaborations and licenses.
Collaboration and License Agreements
Washington University
On December 11, 2020, we entered into an Exclusive License Agreement with Washington University (WU), which Exclusive License Agreement was subsequently amended and restated in June 2021 (as so amended and restated, the “Agreement”), with effect as of December 11, 2020. Pursuant to the Agreement, WU granted us an exclusive, worldwide, royalty-bearing license (with the right to sublicense) during the term of the Agreement under certain patent rights owned or controlled by WU to research, develop, make, have made, sell, offer for sale, use and import pharmaceutical products covered under such patent rights for all fields of use. Such licensed products may include “silencing RNA” (siRNAs) pharmaceutical preparations formulated in combination with our proprietary delivery technologies. In consideration for such worldwide, exclusive license, we will be obligated to pay WU: annual license maintenance fees in the low five figures through first commercial sale; pre-clinical and clinical regulatory milestones; sales milestones; and a low single digit royalty based on annual net sales of licensed products worldwide for at least the applicable patent term or period of marketing exclusivity, whichever is longer, but in no case less than a minimum royalty term of 12 years; and a percentage share (in the double digits) of sublicensing revenues received by the Company in connection with licensed products. Such regulatory and sales milestones may total up to an aggregate of $4,375,000. In the event the Company fails to meet certain regulatory diligence milestones, WU will have the right to terminate the license.
In particular, we are required to use commercially reasonable efforts to meet the following development milestones: a) to file an IND (or regulatory equivalent in foreign jurisdiction) June 30, 2024, b) to complete a Phase 1 clinical trial 3.5 years after achieving the first milestone, and c) to complete a Phase 2 clinical trial four years after achieving the second milestone. We may elect to extend each of these milestones once by a period of 12 months, and second time by a period of an additional 12 months, by paying WU a nonrefundable fee in the amount of $50,000 for the first extension and $100,000 for the second extension.
20
Manufacturing
We currently rely on and expect to continue to rely on third parties for the supply of raw materials and the manufacture of key components for our RNA delivery platforms such as relevant peptides and for our drug product candidates, including AM-401, AM-411 and any other drug product candidate. For the foreseeable future, we expect to continue to rely on such third parties. Reliance on third-party providers may expose us to more risk than if we were to manufacture key components for our RNA delivery platforms or product candidates ourselves. We intend to out-license rights to use our RNA delivery platforms and product candidates to other biopharmaceutical companies; however, we intend to retain control of critical manufacturing processes for strategic purposes, in which case we would remain responsible for compliance of the manufacturing with applicable laws, regulations and applicable cGMP standards.
Commercialization Strategy
For our RNA activities, we are not seeking to commercialize any drug products on our own but rather licensing out the technology to partners in the biopharmaceutical industry.
Government Regulation
The preclinical and clinical testing, manufacturing, labeling, storage, distribution, record keeping, advertising, promotion, import, export and marketing, among other things, of our RNA delivery platforms and product candidates are subject to extensive regulation by governmental authorities in the United States and other countries. The FDA, under the Federal Food, Drug, and Cosmetic Act, regulates pharmaceutical products in the United States.
We expect that xPhore will be classified by regulatory agencies as nanomaterial carrier which is added to therapeutics with the intention of improving the delivery of the active pharmaceutical ingredient (which is the RNA “payload”). Regulatory agencies seek to verify that such nanomaterial carrier is safe in the amount it will be used, performs its intended function in the drug product, does not adversely affect the performance of the active drug, and is manufactured according to good manufacturing practices.
We expect that AM-401 and AM-411 will be classified by regulatory agencies as drug products which comprise OligoPhore as excipient and the polyKRASmut siRNA and p65 siRNA, respectively, as active substances.
The testing and approval process requires substantial time, effort and financial resources, and the receipt and timing of any approval is uncertain.
Pre-clinical studies include laboratory evaluations of the product candidate, as well as animal studies to assess the potential safety and efficacy of the product candidate. The results of the pre-clinical studies, together with manufacturing information and analytical data, are submitted to the FDA as part of the IND, which must become effective before clinical trials may be commenced. The IND will become effective automatically 30 days after receipt by the FDA, unless the FDA raises concerns or questions about the conduct of the trials as outlined in the IND prior to that time. In this case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can proceed.
21
Pharmaceutical Coverage, Pricing and Reimbursement
In both domestic and foreign markets, our sales of any approved drug products will depend in part on the availability of coverage and adequate reimbursement from third-party payors. Third-party payors include government authorities, managed care providers, private health insurers and other organizations. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products, if approved, unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost of our products. Sales of our products will therefore depend substantially, both domestically and abroad, on the extent to which the costs of our products will be paid by third-party payors.
C. Organizational structure
The registrant corporation, Altamira Therapeutics Ltd., had three wholly owned subsidiaries and one associated company as of December 31, 2024, which are each listed in Exhibit 8.1 filed hereto. We primarily operate our business out of our operating subsidiary Altamira Therapeutics AG (formerly Auris Medical AG).
D. Property, plants and equipment
Our registered office is in Hamilton, Bermuda. We also lease approximately 4,700 square feet of office space in Basel, Switzerland. This property serves as the corporate headquarters of our principal operating subsidiary; approximately 40% of the office space is sublet to a third party.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements, including the notes thereto, included in this Annual Report. The following discussion is based on our financial information prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB), which might differ in material respects from generally accepted accounting principles in other jurisdictions. The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described under “Item 3. Key Information—D. Risk factors” and elsewhere in this Annual Report.
A. Operating Results
Overview
We are a preclinical-stage biopharmaceutical company developing and supplying peptide-based nanoparticle technologies for efficient RNA delivery to extrahepatic tissues (xPhore platform). We are offering biopharmaceutical companies access to our technology for use with their own RNA molecules under collaboration and licensing agreements. In addition, we are pursuing two proprietary flagship development programs using our delivery technology: AM-401 for KRAS driven cancer and AM-411 for rheumatoid arthritis, both in preclinical development beyond in vivo proof of concept. We intend to advance at least one of them to IND clearance or through a Phase 1 clinical trial, at most, before licensing it out. In 2023 we took a first step to reposition our company around the RNA delivery business by spinning off a 51% stake in Altamira Medica AG, which manufactures and markets Bentrio, an OTC nasal spray for allergic rhinitis. We thus continue to hold a 49% stake in the Bentrio business (with additional economic rights). Further, we have announced our intention to partner / divest also our AM-125 program, a nasal spray for vertigo (post Phase 2), as well as our early- to late-stage clinical development programs in tinnitus and hearing loss.
We started our activities in RNA delivery in 2021 through the acquisition of Trasir Therapeutics Inc. In July 2023, we announced our first collaboration with a biopharmaceutical company to develop and evaluate our xPhore delivery platform with a specific RNA molecule developed by the client (Heqet Therapeutics, non-coding RNA for cardiac regeneration therapy). This was followed in 2024 by two further collaborations (March: Univercells, mRNA vaccines; December: undisclosed partner, radiopharmaceuticals). In parallel to these customer specific development activities, we have been advancing the development of the xPhore delivery platform as well as the proprietary development programs for RNA therapeutics (AM-401 and AM-411).
22
We aim to further expand the number of collaborations with biopharmaceutical companies for leveraging our xPhore platform and generating revenues from contract development and contract manufacturing work for customers as well as milestone payments and royalties on customers’ revenues with xPhore delivered RNA molecules. At the same time, we have been investing substantial resources in advancing the xPhore platform with the aim of generating and assembling the required data and information to support IND clearance by the FDA and equivalent regulatory clearances by other health authorities. At a minimum, we are aiming to achieve such IND clearance with either AM-401 or AM-411 in 2026.
While we have been expanding our development activities (and related spending) in RNA delivery over the past few years, we have been decreasing our activities related to our legacy assets, reflecting our strategic repositioning of the Company around the RNA delivery activities. These legacy assets primarily include the two nasal sprays Bentrio, a medical device for the prophylaxis or treatment of allergic rhinitis, and AM-125, a drug product for treatment of vertigo (acute vestibular syndrome, AVS).
Bentrio was first commercialized in 2021, and clinical development was completed in 2023. In November 2023 we sold 51% of the share capital of our subsidiary Altamira Medica AG (“Medica”), which operates our Bentrio business, to a Swiss private equity investor. We retained 49% of Medica’s share capital and have continued to provide certain services to Medica at cost. Bentrio is marketed primarily through distributors; Medica is intends to partner the product for the US, where FDA clearance has already been obtained, and other key markets with well-established providers of consumer health products.
AM-125 is a reformulation of betahistine for intranasal treatment of vertigo (acute vestibular syndrome; AVS). In 2022 we reported the results from a randomized double-blind placebo-controlled Phase 2 clinical trial in AVS showing good tolerability and a dose- and time-dependent improvement in balance and signs and symptoms of vestibular dysfunction. The FDA cleared our IND application in June 2023 which will allow for the conduct of clinical trials in the U.S. We intend to out-license or sell the AM-125 program.
Through the partial spin-off of our Bentrio business in November 2023 we no longer have any commercial stage product in our portfolio. Therefore, we are no longer incurring any sales and marketing expenses. Our general and administrative expenses consist primarily of salaries and related expenses for general and administrative staff, business development, administrative expenses including professional fees for auditors and consulting expenses other than those related to our development activities, the costs of operating as a public company etc.
Results of Operations
The numbers below have been derived from our consolidated financial statements included elsewhere herein. The discussion below should be read along with these consolidated financial statements, and it is qualified in its entirety by reference to them.
Following the partial divestiture of our Bentrio business in November 2023, related activities have been reclassified and are shown as discontinued operations. Please see Note 26 to our audited consolidated financial statements included elsewhere in this Annual Report. Further, amounts for 2023 and 2022 have been re-presented from those previously published to reflect the change in the Company’s presentation currency from Swiss francs to US dollars.
| 2024 | 2023 | 2022 | ||||||||||
| (in thousands of US$) | ||||||||||||
| Other operating income | 75 | 284 | 10 | |||||||||
| Research and development | (3,727 | ) | (3,378 | ) | (15,311 | ) | ||||||
| General and administrative | (3,199 | ) | (3,491 | ) | (3,562 | ) | ||||||
| Operating loss | (6,851 | ) | (6,584 | ) | (18,863 | ) | ||||||
| Finance income | 3 | 394 | 592 | |||||||||
| Finance expense | (837 | ) | (1,857 | ) | (1,268 | ) | ||||||
| Share of loss of an associate | (773 | ) | (44 | ) | - | |||||||
| Loss before tax | (8,458 | ) | (8,091 | ) | (19,539 | ) | ||||||
| Income tax gain/(loss) | - | - | 8 | |||||||||
| Net loss from continuing operations | (8,458 | ) | (8,091 | ) | (19,531 | ) | ||||||
| Discontinued operations: | ||||||||||||
| Profit/(loss) after tax from discontinued operations | - | 3,785 | (8,248 | ) | ||||||||
| Net loss attributable to owners of the Company | (8,458 | ) | (4,306 | ) | (27,779 | ) | ||||||
| Other comprehensive income/(loss): | ||||||||||||
| Items that will never be reclassified to profit or loss | ||||||||||||
| Remeasurements of defined benefit liability, net of taxes of $ 0 | (250 | ) | 35 | 462 | ||||||||
| Items that are or may be reclassified to profit or loss | ||||||||||||
| Foreign currency translation differences, net of taxes of $ 0 | 445 | 361 | (869 | ) | ||||||||
| Share of other comprehensive income of an associate | 19 | 8 | - | |||||||||
| Other comprehensive income/(loss), net of taxes of $ 0 | 214 | 403 | (407 | ) | ||||||||
| Total comprehensive loss attributable to owners of the Company | (8,244 | ) | (3,903 | ) | (28,186 | ) | ||||||
23
Net loss for 2024 increased from 2023 due mainly to the non-recurrence of a contribution from discontinued operations. The operating loss was higher compared to 2023 owing to higher spending on research and development. This increase was partly compensated by a reduction in net finance expense as there were no more interest-bearing convertible loans outstanding in 2024, and foreign currency exchange losses were lower. The share of loss of associate increased in 2024 despite Medica recording a lower loss than in 2023; however, in 2024 Medica was consolidated as a 49% affiliate for the whole year compared to only a few weeks in the remainder of 2023. The deconsolidation of Medica resulted in a one-time profit from discontinued operations in 2023.
Net loss for 2023 decreased substantially from 2022 due mainly to the non-recurrence of a non-cash write-off (impairment) of previously capitalized internal development costs related to the AM-125 project as well as the deconsolidation of Medica. Primarily due to the lack of such impairment in 2023, operating loss improved significantly in 2023. Discontinued operations (Medica) resulted in a substantial loss in 2022, whereas the deconsolidation of Medica resulted in a one-time profit from discontinued operations in 2023.
| Research and development expense | Year Ended December 31, | |||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| (in thousands of US$) | ||||||||||||
| Pre-clinical projects | (1,831 | ) | (562 | ) | (408 | ) | ||||||
| Clinical projects | (73 | ) | (143 | ) | (70 | ) | ||||||
| Product and process development | (20 | ) | (406 | ) | (209 | ) | ||||||
| Employee benefits and expenses | (1,599 | ) | (1,591 | ) | (1,494 | ) | ||||||
| Patents and trademarks | (186 | ) | (462 | ) | (163 | ) | ||||||
| Regulatory projects | (4 | ) | (66 | ) | (36 | ) | ||||||
| Impairment intangible assets | - | - | (12,920 | ) | ||||||||
| Other research and development expense | (15 | ) | (148 | ) | (11 | ) | ||||||
| Total research and development expense | (3,727 | ) | (3,378 | ) | (15,311 | ) | ||||||
Research and development expenses rose in 2024 vs. 2023 due mainly to higher project work related RNA delivery, in particular for pre-clinical testing and product and process development, as well as higher patent expenditures. On the other hand, expenditures for clinical projects decreased as clinical trials were essentially completed in 2023.
Research and development expenses decreased substantially in 2023 compared to 2022 primarily as there was no more non-cash write-off (impairment) of previously capitalized internal development costs related to the AM-125 project. Excluding the impairment charges in 2022, research and development expenses rose in 2023 mainly due to higher activity levels related to our RNA projects.
| General and administrative expense | Year Ended December 31, | |||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| (in thousands of US$) | ||||||||||||
| Employee benefits and expenses | (829 | ) | (730 | ) | (676 | ) | ||||||
| Business development | - | (17 | ) | (17 | ) | |||||||
| Travel expenses | (38 | ) | (48 | ) | (100 | ) | ||||||
| Administration expenses | (2,146 | ) | (2,531 | ) | (2,636 | ) | ||||||
| Lease expenses from short-term lease | (55 | ) | (18 | ) | (6 | ) | ||||||
| Depreciation of Right-of-use assets | (127 | ) | (133 | ) | (124 | ) | ||||||
| Capital tax expenses | (4 | ) | (14 | ) | (3 | ) | ||||||
| Total general and administrative expenses | (3,199 | ) | (3,491 | ) | (3,562 | ) | ||||||
General and administrative expenses in 2024 decreased from 2023 due mainly to lower general administrative expenses, which include fees for legal, accounting and auditing services, expenses related to being a public company and fees for the Board of Directors, among others. This was partly compensated by higher employee benefits primarily due to the reinforcement of headcount in finance and administration.
General and administrative expenses in 2023 decreased from 2022 due mainly to lower general administrative expenses.
24
B. Liquidity and capital resources
Since inception, we have incurred significant operating losses. We have financed our operations through public offerings of our common shares, private placements of equity securities, short-term loans and asset sales.
Cash flow
The table below summarizes our consolidated statement of cash flows including both continuing and discontinued operations for the years ended December 31, 2024, 2023 and 2022:
| Year Ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| (in thousands of US$) | ||||||||||||
| Net cash used in operating activities | (6,114 | ) | (12,811 | ) | (9,092 | ) | ||||||
| Net cash from / used in investing activities | (115 | ) | 1,608 | (2,243 | ) | |||||||
| Net cash from financing activities | 6,505 | 11,821 | 10,295 | |||||||||
| Net effect of currency translation on cash | (11 | ) | 99 | (23 | ) | |||||||
| Cash and cash equivalents at the beginning of the period | 734 | 17 | 1,080 | |||||||||
| Cash and cash equivalents at the end of the period | 999 | 734 | 17 | |||||||||
Net cash used in operating activities decreased substantially in 2024 vs. 2023, reflecting a lower cash loss and essentially no change in net working capital compared to a substantial increase in 2023. Net cash used in operating activities was higher in 2023 than in 2022 primarily due to an increase in net working capital compared to a decrease in net working capital in 2022. The effect of the changes in net working capital were partly compensated by lower spending on research and development costs.
Net cash used in investing activities in 2024 mainly reflects the purchase of production equipment for RNA nanoparticle formulations. In 2023, the net cash proceeds from the partial spin-off of Medica and the subsequent capital contribution to Medica, which was treated as an investment in an associate, resulted in a net cash inflow from investing activities. In 2022 there was a cash outflow from investing activities due to investments in intangible assets (capitalization of development expenses for project AM-125).
The net cash inflow from financing activities in 2024 resulted from the sale of our common shares. It was lower than in 2023 when we obtained proceeds from the sale of our common shares, the exercise of warrants and a convertible loan; these proceeds were partly used for the repayment of convertible and other loans. In 2022, we obtained cash inflows from financing activities through a convertible loan, loans as well as the sale of our common shares.
Cash and cash equivalents were higher at year-end 2024 than at year-end 2023, which in turn were higher than those at year-end 2022.
25
Cash and funding sources
The table below summarizes our sources of financing for the years ended December 31, 2024, 2023 and 2022:
| Equity Capital and Preference Shares | Loans | Total | ||||||||||
| in US$ | in US$ | in US$ | ||||||||||
| 2024 | 6,654,620 | - | 6,654,620 | |||||||||
| 2023 | 10,819,067 | 2,782,415 | 13,601,482 | |||||||||
| 2022 | 4,112,169 | 6,323,170 | 10,435,339 | |||||||||
| Total | 21,585,856 | 9,105,585 | 30,691,441 | |||||||||
During the period, we sold common shares of the Company in several transactions and under various agreements:
| ● | “At the market” offerings as defined in Rule 415(a)(4) promulgated under the Securities Act under agreements with H.C. Wainwright & Co., LLC (“HCW” and the “HCW Sales Agreement”) and A.G.P./Alliance Global Partners (“A.G.P.” and the “A.G.P. Sales Agreement”); |
| ● | “Equity line” sales under an agreement with Lincoln Park Capital Fund, LLC (“LPC” and the “LPC Commitment Purchase Agreement”); |
| ● | Public offerings with HCW acting as placement agent (the “2024 Public Offering” and the “2023 Public Offering”); |
| ● | Warrant exercises under an agreement with FiveT Investment Management Ltd. (“FiveT IM” and the “Warrant Inducement Agreement”) |
Further, we obtained loans from several parties, as follows:
| ● | Convertible loans from FiveT IM (the “2023 FiveT Loan” and the “2022 FiveT Loan”); |
| ● | Loans from private investors. |
All loans were paid back or converted into common shares in 2023 and 2022, and there were no loans outstanding in 2024.
See Note 30 to our audited financial statements for further information.
Commitments and Contingencies
We have no ongoing material financial commitments, such as lines of credit or guarantees that are expected to affect our liquidity over the next five years, other than leases.
Funding requirements; Going Concern
We expect that we will require additional funding to continue the research and development program for our RNA delivery platforms and our product candidates AM-401 and AM-411. We also expect to continue to incur additional costs associated with operating as a public company. To the extent that we will be unable to generate sufficient cash proceeds from the planned divestiture or partnering of our AM-125 development program and from our 49% stake in Medica or other partnering activities, we will need substantial additional financing to meet these funding requirements. However, 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 research and development programs, which could materially harm our business, prospects, financial condition and operating results. This could then result in bankruptcy, or the liquidation of the Company.
These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements included in this report have been prepared on a going concern basis, which contemplates the continuity of normal activities and realization of assets and settlement of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The lack of a going concern assessment may negatively affect the valuation of the Company’s investments in its subsidiaries and result in a revaluation of these holdings. The board of directors will need to consider the interests of our creditors and take appropriate action to restructure the business if it appears that we are insolvent or likely to become insolvent.
For more information as to the risks associated with our future funding needs, see “Item 3. Key Information—D. Risk factors.”
26
Significant accounting policies and use of estimates and judgment
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with IFRS Accounting Standards. The preparation of these consolidated financial statements requires us 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.
Our significant accounting policies are more fully described in the notes to our audited consolidated financial statements appearing elsewhere in this Annual Report.
Recent accounting pronouncements
See Note 4 to our audited consolidated financial statements included elsewhere in this Annual Report for a full description of recent accounting pronouncements, including the expected dates of adoption and effects on the Company’s financial condition, results of operations and cash flows.
C. Research and development, patents and licenses, etc.
See “Item 4. Information on the Company—A. History and Development of the Company,” “Item 4. Information on the Company—B. Business Overview” and “Item 5. Operating and Financial Review and Prospects—A. Operating Results – Results of Operations.”
| D. | Trend information |
See “Item 5. Operating and Financial Review and Prospects.”
| E. | Critical Accounting Estimates |
Not applicable.
| F. | Safe harbor |
See “Forward-Looking Statements.”
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | Directors and senior management |
Our directors have been elected for a one-year term and, accordingly, the term will expire at the time of our 2025 annual general meeting. The following table presents information about our executive officers and directors.
| Initial | ||||||||||
| Year of | ||||||||||
| Name | Position | Age | Appointment | |||||||
| Executive Officers | ||||||||||
| Thomas Meyer | Chairman, Director and Chief Executive Officer | 57 | 2003 | |||||||
| Covadonga Pañeda | Chief Operating Officer | 51 | 2022 | |||||||
| Marcel Gremaud | Chief Financial Officer | 67 | 2021 | |||||||
| Non-Executive Directors | ||||||||||
| Mats Blom | Director | 60 | 2017 | |||||||
| Alain Munoz | Director | 76 | 2018 | |||||||
| Dominik Lysek | Director | 50 | 2024 | |||||||
Unless otherwise indicated, the current business addresses for our executive officers and directors is Altamira Therapeutics Ltd., Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
27
Executive Officers
Thomas Meyer, Founder, Chairman of the Board of Directors and Chief Executive Officer: Mr. Meyer founded Auris Medical in April 2003 and has served as Chairman and CEO since that time. Prior to founding us, he was the Chief Executive Officer of Disetronic Group, a leading Swiss supplier of precision infusion and injection systems. He worked for Disetronic in various functions starting in 1988, becoming member of the Board of Directors in 1996, Deputy Chief Executive Officer in 1999 and Chief Executive Officer in early 2000. Prior to joining Disetronic, he advised several Swiss companies in strategy, marketing and corporate finance. He has been the Chairman of the Board of Directors of PharmaTrail Ltd. since 2020. He holds a Ph.D. (Dr.rer.pol.) in business administration from the University of Fribourg, Switzerland.
Covadonga Pañeda, Chief Operating Officer (RNA) (from April 2022): Ms. Pañeda, Ph.D., has over 15 years of experience in drug development. From 2011 to 2018, she served as R&D Manager at Sylentis S.A., a clinical stage RNAi biopharma company, served as R&D Senior Project Leader from 2018 to 2019 at Exeltis (Insudpharma), a company focused on the development of branded pharmaceuticals, served as Director of Development from 2019 to 2020 at Canaan Research and Investment, a venture capital fund focused on biotechnology companies, and most recently, from 2020 to 2022, she served as Director of Development at Limm Therapeutics, a neuroimmune biopharma company. Dr. Pañeda obtained a Ph.D. in Biochemistry and Molecular Biology at the Faculty of Medicine at Universidad Autónoma, Madrid, Spain, and spent several years as a Post-doc at the Scripps Research Institute, La Jolla, CA. In April 2022 Ms. Pañeda joined us as Chief Development Officer and was promoted to Chief Operating Officer effective January 1, 2023.
Marcel Gremaud, Chief Financial Officer: Mr. Gremaud, CPA, has been Altamira Therapeutics’ Chief Financial Officer since November 2021. In 2001 he founded Gremaud GmbH, an audit and accounting company, and as its owner and CEO has been supporting various companies in financial consolidation and accounting in accordance with international accounting and reporting standards. Mr. Gremaud has more than 30 years’ experience in controlling and accounting in international pharma companies and start-ups.
Non-Executive Directors
Mats Blom, Director: Mr. Blom has been a member of our Board of Directors since April 2017. Mr. Blom was Chief Financial Officer (CFO) of NorthSea Therapeutics B.V., a biotechnology company focused on oral, structurally engineered lipid therapeutics. Prior to joining NorthSea, he served as CFO of Modus Therapeutics A/B, a biotechnology company developing therapeutics to restore healthy blood flow for patients with debilitating diseases, Zealand Pharma A/B, a biotechnology company focused on the discovery, design and development of innovative peptide-based medicines, and Swedish Orphan International, an orphan drug company acquired by BioVitrum in 2009. In addition, Mr. Blom has extensive managerial experience and has held CFO positions at Active Biotech AB and Anoto Group AB. Previously, he served as a management consultant at Gemini Consulting and Ernst & Young. He is currently a member of the Board of Directors of Hansa Biopharma AB (HNSA), Egetis Therapeutics AB (EGTX) and Pephexia Therapeutics ApS. Mats Blom holds a BA in Business Administration and Economics from the University of Lund and an MBA from IESE University of Navarra, Barcelona.
Alain Munoz, Director: Mr. Munoz, MD, has been a member of our Board of Directors since March 2018 and previously served on our Board of Directors between 2007 and 2015. Mr. Munoz is an entrepreneur and independent management consultant in the pharmaceutical and biotechnology industry. From 1990 to 2000, Mr. Munoz worked with the Fournier Group, as Research and Development Director and then Senior Vice President of the Pharmaceutical Division. He joined Fournier from Sanofi Research, where he started as Director in the cardiovascular and anti-thrombotic products department and then as Vice President international development. Mr. Munoz is qualified in cardiology and anesthesiology from the University Hospital of Montpellier, France where he was head of the clinical cardiology department. He has been a member of the Scientific Committee of the French Drug Agency. He serves as an independent Board Member of biotechnology companies.
Dominik Lysek, Director: Mr. Lysek has been a member of our Board of Directors since May 2024. Mr. Lysek is an entrepreneur and member of the Board of Directors of various start-up companies. He currently serves as the CEO of PharmaTrail Ltd., a provider of blockchain-based clinical trial software. In 2010 he founded credentis ag, a Swiss company dedicated to the development of a self-assembling peptide for dental enamel regeneration. Supported by venture capital and private investors, he led and grew the company up to its profitable sale to vVardis AG in 2020. Prior to founding credentis, Mr. Lysek worked as clinical project manager in the biotech and medtech industry. He is currently a member of the Board of Directors of ActivCell Group AG, Enzian Health AG, PharmaTrail AG, and Stiftung Futuri (non-profit). He obtained a Master of Chemistry at the University of Edinburgh and holds a PhD in Biophysics from ETH Zurich, where he worked in the research group of Nobel laureate Kurt Wüthrich.
28
B. Compensation
For the year ended December 31, 2024, the aggregate compensation accrued or paid to the members of our board of directors and our executive officers for services in all capacities was $1,262,177 (2023: $1,398,434).
For the year ended December 31, 2024, the amount set aside or accrued by us to provide pension, retirement or similar benefits to members of our board of directors or executive officers amounted to a total of $44,469 (2023: $49,050).
Compensation awarded to the Board of Directors in 2024
The total compensation of the members of the board of directors in 2024 is outlined below:
| Cash | Social | Stock | ||||||||||||||
| In US$ | Compensation | Contributions | Options (3) | Total | ||||||||||||
| Thomas Meyer, Chairman (1) | - | - | - | |||||||||||||
| Margarit Schwarz (2) | 16,875 | - | - | 16,875 | ||||||||||||
| Dominik Lysek | 22,500 | - | - | 22,500 | ||||||||||||
| Mats Blom | 45,000 | - | 18,227 | 63,227 | ||||||||||||
| Alain Munoz | 45,000 | - | 18,227 | 63,227 | ||||||||||||
| Total | 129,375 | - | 36,454 | 165,829 | ||||||||||||
| (1) | Disclosed under “Compensation Awarded to Our Executive Officers” below. The Chief Executive Officer does not receive any additional compensation for the exercise of the office of the Chairman. |
| (2) | Serving up to the 2024 Annual General Meeting on May 16, 2024. |
| (3) | In 2024, 20,734 options were granted to each eligible member of the Board of Directors, with an exercise price of $1.56 per common share and an expiration date of May 16, 2032. The fair value calculation of the options was based on the Black-Scholes option pricing model. Assumptions were made regarding inputs such as volatility and the risk-free rate in order to determine the fair value of the options. |
Compensation Awarded to our Executive Officers in 2024
The total compensation and the highest individual compensation to our executive officers in 2024 are outlined below:
| Social | ||||||||||||||||||||
| contributions | ||||||||||||||||||||
| Fixed Cash | Variable | and fringe | Stock | |||||||||||||||||
| in USD | Compensation | Compensation (1) | benefits | Options (2) | Total | |||||||||||||||
| Thomas Meyer, Chief Executive Officer (3) | 317,000. | 51,334. | 75,660. | 162,175. | 606,168. | |||||||||||||||
| Executive Officers Total (4) | 621,729 | 115,327 | 98,188 | 261,105 | 1,096,348 | |||||||||||||||
| (1) | The variable compensation is paid in common shares or deferred for payment in cash, subject to certain conditions. |
| (2) | 2024 option grants, exercise prices of $1.57 and $0.48; expiration date April 30, 2032, and October 31, 2032, respectively. The fair value calculation of the options was based on the Black-Scholes option pricing model. Assumptions were made regarding inputs such as volatility and the risk-free rate in order to determine the fair value of the options. |
| (3) | Highest paid executive. |
| (4) | On December 31, 2024, we had three executive officers, of which one was remunerated on a consulting basis (not included in this table). |
29
Employment Agreements
We have entered into employment and/or consulting agreements with our executive officers Thomas Meyer, Covadonga Pañeda and Marcel Gremaud. The employment and/or consulting agreements provide for the compensation that the executive officers are entitled to receive, including certain equity grants, and the employment agreement of Mr. Meyer contains a termination notice period of six months. The Company will have title to the intellectual property rights developed in connection with the executive officer’s employment, if any.
None of our directors has entered into service agreements with the Company. However, we may in the future enter into employment or services agreements with such individuals, the terms of which may provide for, among other things, cash or equity-based compensation and benefits.
Clawback Policy
On November 15, 2023, in accordance with Rule 10D-1 promulgated under the Exchange Act and Nasdaq Listing Rule 5608, we adopted an incentive compensation recoupment policy. Following the delisting of our common shares from Nasdaq in December 2024, the policy was revoked.
Equity Incentive Plans
Equity Incentive Plan
In August 2014, as amended and restated in June 2019, we established the EIP with the purpose of motivating and rewarding those employees and other individuals who are expected to contribute significantly to our success and advancing the interests of our shareholders by enhancing our ability to attract, retain and motivate individuals. The option exercise price for options under the EIP is determined by the compensation committee at the time of grant but shall not be less than the par value of a common share on the grant date. As of December 31, 2024, 303,313 common shares were available for award under the EIP.
Plan administration. The EIP is administered by our compensation committee. Approval of the committee is required for all grants of awards under the EIP. The committee may delegate to one or more officers the authority to grant options and stock appreciation rights, and the committee may delegate to another committee (which may consist of solely one director) the authority to grant all types of awards.
Eligibility. Any director, employee, consultant or any other individual who provides services to us or any of our affiliates is eligible to be selected to receive an award under the EIP.
Awards. Awards include options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based awards.
Vesting period. The committee determines the time or times at which an option becomes vested and exercisable, provided that the minimum vesting period is 12 months. The committee may specify in an award agreement that an “in-the-money” option be automatically exercised on its expiration date. For restricted stock and restricted stock units, the award agreement will specify the vesting schedule and, with respect to restricted stock units, the delivery schedule.
30
Accelerated vesting. Subject to any additional vesting conditions that may be specified in an individual award agreement, the EIP provides that upon a change of control of the Company (as defined in the EIP) the committee may cause options and stock appreciation rights to be cancelled in consideration of full acceleration of the award or a substitute award with equal intrinsic value (as defined in the EIP). It also provides that the committee may decide, or include in any award agreement, the circumstances in which, and the extent to which, an award may be exercised, settled, vested, paid or forfeited in the event of a participant’s termination of service prior to exercise or settlement of an award.
Amendment. Our board of directors has the authority to amend the EIP subject, in certain circumstances, to required shareholder approval or the consent of an affected participant.
Indemnification
Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act.
Our Bye-laws provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. Our Bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of the company’s directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. We have purchased and maintain a directors’ and officers’ liability policy for such a purpose.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Company, the Company has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.
C. Board practices
Board Composition and Election of Directors
Our board of directors is currently composed of four members, see “Item 6. Directors, Senior Management and Employees—A. Directors and senior management.” Each director is elected for a one-year term.
Our Bye-laws provide that directors may be elected at either the annual general meeting or a special general meeting. Unless shareholders determine otherwise, under our Bye-laws directors hold office until the next annual general meeting or until their successors are elected or appointed or their office is otherwise vacated.
We are a foreign private issuer. As a result, our corporate governance requirements may differ in certain aspects from those applicable to public companies in the U.S. For an overview of our corporate governance principles, see “Item 16G. Corporate governance.”
31
Committees of the Board of Directors
Audit Committee
The audit committee, which consists of Mats Blom, Alain Munoz and Dominik Lysek, assists our board of directors 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. Mr. Blom serves as chairman of the committee. The audit committee consists exclusively of members of our board of directors who are financially literate, and Mr. Blom is considered an “audit committee financial expert” as defined by the SEC. Our board of directors has determined that Mr. Blom, Mr. Munoz and Mr. Lysek satisfy the “independence” requirements set forth in Rule 10A-3 under the Exchange Act.
The audit committee is governed by a charter. The audit committee is responsible for, among other things:
| ● | the appointment, compensation, retention and oversight of any auditor or accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest 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; |
| ● | reviewing and discussing with the independent auditor its responsibilities under generally accepted auditing standards, the planned scope and timing of the independent auditor’s annual audit plan(s) and significant findings from the audit; |
| ● | obtaining and reviewing a report from the independent auditor describing all relationships between the independent auditor and the Company consistent with the applicable PCAOB requirements regarding the independent auditor’s communications with the audit committee concerning independence; |
| ● | confirming and evaluating the rotation of the audit partners on the audit engagement team as required by law; |
| ● | reviewing with management and the independent auditor, in separate meetings whenever the Audit Committee deems appropriate, any analyses or other written communications prepared by the Management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative IFRS methods on the financial statements; and other critical accounting policies and practices of the Company; |
| ● | reviewing, in conjunction with the Chief Executive Officer and Chief Financial Officer of the Company, the Company’s disclosure controls and procedures and internal control over financial reporting; |
| ● | establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and |
| ● | approving or ratifying any related person transaction (as defined in our related person transaction policy) in accordance with our related person transaction policy. |
The audit committee meets at least four times per year.
32
Compensation Committee
The compensation committee, which consists of Alain Munoz and Mats Blom, assists our board of directors in overseeing our cash compensation and equity award recommendations for our executive officers along with the rationale for such recommendations, as well as summary information regarding the aggregate compensation provided to our directors and executive officers. While Bermuda law does not require that we adopt a compensation committee, we have established a compensation committee in accordance with our Bye-laws.
D. Employees
As of December 31, 2024, we had 13 employees (11.3 full time equivalents, FTEs). The breakdown by cost centers is as follows: Research & Development: 8.4 FTEs, General & Administration: 2.9 FTEs. All employees were located in Switzerland. None of our employees is subject to a collective bargaining agreement or represented by a trade or labor union. We consider our relations with our employees to be good.
| E. | Share ownership |
See “Item 7. Major Shareholders and Related Party Transactions—A. Major shareholders.”
| F. | Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| A. | Major shareholders |
The following table presents information relating to the beneficial ownership of our common shares as of April 15, 2025 by:
| ● | each person, or group of affiliated persons, known by us to own beneficially 5% or more of our outstanding common shares; |
| ● | each of our executive officers and directors; and |
| ● | all executive officers and directors as a group. |
The number of common shares beneficially owned by each entity, person, executive officer or director is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any common shares over which the individual has sole or shared voting power or investment power as well as any common shares that the individual has the right to acquire within 60 days of April 15, 2025, through the exercise of any option, warrant or other right. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all common shares held by that person.
Common shares that a person has the right to acquire within 60 days of April 15, 2025, are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all executive officers and directors as a group. Unless otherwise indicated below, the address for each beneficial owner is Altamira Therapeutics Ltd., Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
The percentage of common shares beneficially owned is based on 4,662,080 common shares issued and outstanding as of April 15, 2025. Each common share confers the right on the holder to cast one vote at a general meeting of shareholders and no shareholder has different voting rights.
33
| Shares Beneficially | ||||||||
| Owned | ||||||||
| Shareholder | Number | Percent | ||||||
| 5% Shareholders | ||||||||
| - | — | — | ||||||
| Executive Officers and Directors | ||||||||
| Thomas Meyer, (1) | 26,451 | 0.57 | % | |||||
| Mats Blom (2) | 23,273 | * | ||||||
| Dominik Lysek (3) | 738 | * | ||||||
| Alain Munoz (2) | 23,263 | * | ||||||
| Covadonga Pañeda (2) | 2,865 | * | ||||||
| Marcel Gremaud (2) | 147 | * | ||||||
| All current directors and executive officers as a group (6 persons) | 76,737 | 1.65 | % | |||||
| * | Indicates beneficial ownership of less than 1% of the total outstanding common shares. |
| (1) | Consists of 20,000 common shares, warrants to purchase 920 common shares and options to purchase 5,531 common shares under the EIP. |
| (2) | Consists of options to purchase common shares under the Company’s EIP. |
| (3) | Consists of 43 common shares and warrants to purchase 695 common shares. |
Holders
As of April 15, 2025, we had four shareholders of record of our common shares.
Significant Changes in Ownership by Major Shareholders
None
| B. | Related party transactions |
Related Person Transaction Policy
We have a related person transaction policy in place under which any such transaction must be approved or ratified by the audit committee or the board of directors.
Indemnification Agreements
We have entered into indemnification agreements with our directors and executive officers. The indemnification agreements and our Bye-laws require us to indemnify our directors and executive officers to the fullest extent permitted by law.
Employment Agreements
Certain of our executive officers have entered into employment agreements with the Company, certain of which provide for notice of termination periods and include restrictive covenants. None of our directors have entered into service agreements with the Company. See “Item 6. Directors, Senior Management and Employees—B. Compensation—Employment Agreements.”
Mandate Agreements
Gremaud GmbH has provided the Chief Financial Officer for the Company since November 18, 2021. The Chief Financial Officer is an employee of Gremaud GmbH and is not paid directly by the Company. Fees paid to Gremaud GmbH for CFO services were $213,714 for 2024 compared to $276,313 in 2023.
Loan Agreements
Thomas Meyer, the Company’s CEO, contributed CHF 200,000 to a loan to us from September 2022 to July 2023. From December 2022 to March 2023, Mr. Meyer’s spouse provided one of our subsidiaries with a short-term loan of CHF 100,000.00.
| C. | Interests of experts and counsel |
Not applicable.
34
ITEM 8. FINANCIAL INFORMATION
| A. | Consolidated statements and other financial information Financial Statements |
See “Item 18. Financial Statements,” which contains our financial statements prepared in accordance with IFRS Accounting Standards.
Legal Proceedings
From time to time we may become involved in legal proceedings that arise in the ordinary course of business. During the period covered by the financial statements contained herein, we have not been a party to or paid any damages in connection with litigation that has had a material adverse effect on our financial position.
No assurance can be given that future litigation will not have a material adverse effect on our financial position. See “Item 3. Key Information—D. Risk factors.”
Dividends and Dividend Policy
We have never paid or declared any cash dividends on our shares, and we do not anticipate paying any cash dividends on our common shares in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors and any payment of dividends will, amongst other requirements, be subject to legal restrictions.
B. Significant changes
A discussion of the significant changes in our business can be found under “Item 4. Information on the Company—A. History and development of the Company” and “Item 4. Information on the Company—B. Business Overview.”
ITEM 9. THE OFFER AND LISTING
A. Offering and listing details
Not applicable.
B. Plan of distribution
Not applicable.
C. Markets
Our common shares began trading on OTCQB on December 20, 2024, under the symbol “CYTOF”. They previously traded under the symbol “CYTO” on the Nasdaq Capital Market. On September 30, 2024, we had received a delisting notice from Nasdaq due to the Company’s failure to comply with Rule 5550(a)(2) of Nasdaq’s listing rules, which requires listed securities to maintain a minimum bid price of $1.00 per share. We filed an appeal with Nasdaq’s hearing panel (the “Panel”) to present our plan for regaining compliance with the rule; however, our request was denied by the Panel.
D. Selling shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share capital
Not applicable.
35
B. Memorandum of Continuance and Bye-laws
We are an exempted company incorporated under the laws of Bermuda. On January 24, 2019, our board of directors determined that it would be in our best interest to change our legal seat and jurisdiction of incorporation, respectively, from Switzerland to Bermuda (Redomestication). Our shareholders approved the Redomestication and adopted the Memorandum of Continuance and the Bye-laws at an extraordinary meeting of shareholders held on March 8, 2019. Upon the issuance of a certificate of continuance by the Registrar of Companies in Bermuda on March 18, 2019, the Company discontinued as a Swiss company and, pursuant to Article 163 of the Swiss Federal Act on Private International Law and pursuant to Section 132C of the Companies Act continued existence under the Companies Act as a Bermuda company.
Set forth below is a description of our share capital, Memorandum of Continuance and Bye-laws. Additionally, set forth below is a comparison of select provisions of the corporate laws of Delaware and Bermuda showing the default positions in each jurisdiction that govern shareholder rights. Such summaries do not purport to be complete and are subject to, and are qualified by reference to, all provisions of our Memorandum of Continuance and Bye-laws included as exhibits to this Annual Report.
Share Capital
As of December 31, 2024, our authorized share capital consisted of 100,000,000 common shares, par value $0.002 per share, and 20,000,000 preference shares, par value $0.0001 per share, and there were 4,662,080 common shares issued and outstanding, excluding 1,176,084 common shares issuable upon exercise of options and 16,445,116 common shares issuable upon exercise of warrants, and no preference shares issued and outstanding. All the Company’s issued and outstanding shares are fully paid in.
Pursuant to our Bye-laws, subject to any resolution of the shareholders to the contrary, our board of directors is authorized to issue any of our authorized but unissued shares. There are no limitations on the right of non-Bermudians or non-residents of Bermuda to hold or vote our shares.
Common Shares
Holders of common shares have no pre-emptive, redemption, conversion or sinking fund rights. Holders of common shares are entitled to one vote per share on all matters submitted to a vote of holders of common shares. Unless a different majority is required by law or by our Bye-laws, resolutions to be approved by holders of common shares require approval by a simple majority of votes cast at a general meeting at which a quorum is present.
In the event of our liquidation, dissolution or winding up, the holders of common shares are entitled to share equally and ratably in our assets, if any, remaining after the payment of all of our debts and liabilities, subject to any liquidation preference on any issued and outstanding preference shares.
Preference Shares
Pursuant to Bermuda law and our Bye-laws, our board of directors by resolution may establish one or more series of preference shares having such number of shares, designations, dividend rates, relative voting rights, conversion or exchange rights, redemption rights, liquidation rights and other relative participation, optional or other special rights, qualifications, limitations or restrictions as may be fixed by the board without any further shareholder approval. Such rights, preferences, powers and limitations as may be established could have the effect of discouraging an attempt to obtain control of us.
36
Dividend Rights
Under Bermuda law a company may not declare or pay dividends if there are reasonable grounds for believing that: (i) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) the realizable value of its assets would thereby be less than its liabilities. Under our Bye-laws, each common share is entitled to dividends if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of the holders of any preference shares.
Variation of Rights
If at any time we have more than one class of shares, the rights attaching to any class, unless otherwise provided for by the terms of issue of the relevant class, may be varied either: (i) with the consent in writing of the holders of 75% of the issued shares of that class; or (ii) with the sanction of a resolution passed by a majority of the votes cast at a general meeting of the relevant class of shareholders at which a quorum consisting of at least two or more persons holding or representing issued and outstanding shares of the relevant class is present. Our Bye-laws specify that the creation or issue of shares ranking equally with existing shares will not, unless expressly provided by the terms of issue of existing shares, vary the rights attached to existing shares. In addition, the creation or issue of preference shares ranking prior to common shares will not be deemed to vary the rights attached to common shares or, subject to the terms of any other series of preference shares, to vary the rights attached to any other series of preference shares.
Transfer of Shares
Our board of directors may in its absolute discretion and without assigning any reason refuse to register the transfer of a share that it is not fully paid. Our board of directors may also refuse to recognize an instrument of transfer of a share unless it is accompanied by the relevant share certificate and such other evidence of the transferor’s right to make the transfer as our board of directors shall reasonably require. Subject to these restrictions, a holder of common shares may transfer the title to all or any of his common shares by completing a form of transfer in the form set out in our Bye-laws (or as near thereto as circumstances admit) or in such other common form as the board may accept. The instrument of transfer must be signed by the transferor and transferee, although in the case of a fully paid share our board of directors may accept the instrument signed only by the transferor.
Share Split and Reverse Share Split effected by consolidating our common shares
Our board of directors may in its absolute discretion and without further approval of shareholders divide, consolidate or sub-divide our share capital in any manner permitted by the Companies Act, including approving a reverse share split by consolidating our common shares (together with a corresponding increase in the par value thereof) in a ratio determined by the board of directors. Our Bye-laws also provide that upon an alteration or reduction of share capital where fractions of shares or some other difficulty would arise, our board of directors may deal with or resolve the same in any manner as it thinks fit.
Meeting of Shareholders
Under Bermuda law, a company is required to convene at least one general meeting of shareholders each calendar year (the “annual general meeting”). However, the members may by resolution waive this requirement, either for a specific year or period of time, or indefinitely. When the requirement has been so waived, any member may, on notice to the company, terminate the waiver, in which case an annual general meeting must be called.
37
Bermuda law provides that a special general meeting of shareholders may be called by the board of directors of a company and must be called upon the request of shareholders holding not less than 10% of the paid-up capital of the company carrying the right to vote at general meetings. Bermuda law also requires that shareholders be given at least five days’ advance notice of a general meeting, but the accidental omission to give notice to any person does not invalidate the proceedings at a meeting. Our Bye-laws provide that the board of directors may convene an annual general meeting or a special general meeting. Under our Bye-laws, at least 14 days’ notice of an annual general meeting or a special general meeting must be given to each shareholder entitled to vote at such meeting. This notice requirement is subject to the ability to hold such meetings on shorter notice if such notice is agreed: (i) in the case of an annual general meeting by all of the shareholders entitled to attend and vote at such meeting; or (ii) in the case of a special general meeting by a majority in number of the shareholders entitled to attend and vote at the meeting holding not less than 95% in nominal value of the shares entitled to vote at such meeting. The quorum required for a general meeting of shareholders is two or more persons present in person at the start of the meeting and representing in person or by proxy issued and outstanding common shares.
Access to Books and Records and Dissemination of Information
Members of the general public have a right to inspect the public documents of a company available at the office of the Registrar of Companies in Bermuda. These documents include the company’s memorandum of association (or memorandum of continuance), including its objects and powers, and certain alterations to the memorandum of association (or memorandum of continuance). The shareholders have the additional right to inspect the Bye-laws of the Company, minutes of general meetings and the company’s audited financial statements, which must be presented to the annual general meeting. The register of members of a company is also open to inspection by shareholders and by members of the general public without charge. The register of members is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of members for not more than thirty days in a year). A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. A company is required to keep at its registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without charge. A company is also required to file with the Registrar of Companies in Bermuda a list of its directors to be maintained on a register, which register will be available for public inspection subject to such conditions as the Registrar may impose and on payment of such fee as may be prescribed. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.
Election and Removal of Directors
Our Bye-laws provide that our board shall consist of three directors or such greater number as the board may determine. Our board of directors currently consists of five directors. Each director shall hold office for such term as the shareholders may determine or, in their absence of such determination, until the next annual general meeting or until their successors are elected or appointed or their office is otherwise vacated.
Any shareholder or shareholders holding or representing not less than 5% of the total voting rights wishing to propose for election as a director someone who is not an existing director or is not proposed by our board must give notice of the intention to propose the person for election. Where a director is to be elected at an annual general meeting, that notice must be given not less than 90 days nor more than 120 days before the anniversary of the last annual general meeting prior to the giving of the notice or, in the event the annual general meeting is called for a date that is not 30 days before or after such anniversary the notice must be given not later than 10 days following the earlier of the date on which notice of the annual general meeting was posted to members or the date on which public disclosure of the date of the annual general meeting was made. Where a director is to be elected at a special general meeting, that notice must be given not later than 10 days following the earlier of the date on which notice of the special general meeting was posted to members or the date on which public disclosure of the date of the special general meeting was made.
A director may be removed, with cause, by the shareholders, provided notice of the shareholders meeting convened to remove the director is given to the director. The notice must contain a statement of the intention to remove the director and must be served on the director not less than fourteen days before the meeting. The director is entitled to attend the meeting and be heard on the motion for his removal.
38
Proceedings of Board of Directors
Our Bye-laws provide that our business is to be managed and conducted by our board of directors. Our Bye-laws provide that only natural persons may be elected or appointed as directors, and the election or appointment of a corporation, partnership or similar entity as a director is not permitted. There is no requirement in our Bye-laws or Bermuda law that directors hold any of our shares. There is also no requirement in our Bye-laws or Bermuda law that our directors must retire at a certain age.
The remuneration of our directors is determined by our board of directors, and there is no requirement that a specified number or percentage of “independent” directors must approve any such determination. Our directors may also be paid all travel, hotel and other expenses properly incurred by them in connection with our business or their duties as directors.
Provided a director discloses a direct or indirect interest in any contract or arrangement with us as required by Bermuda law, such director is entitled to vote in respect of any such contract or arrangement in which he or she is interested.
Indemnification of Directors and Officers
Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act.
Our Bye-laws provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. Our Bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of the company’s directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. We have purchased and maintain a directors’ and officers’ liability policy for such a purpose. See “Comparison of Corporate Law—Indemnification of directors and executive management and limitation of liability.”
Amendment of Memorandum of Continuance and Bye-laws
Bermuda law provides that the memorandum of association (or memorandum of continuance) of a company may be amended by a resolution passed at a general meeting of shareholders. Our Bye-laws provide that no bye-law shall be rescinded, altered or amended, and no new bye-law shall be made, unless it shall have been approved by a resolution of our board of directors and by a resolution of our shareholders. In the case of certain Bye-laws, such as the Bye-laws relating to election and removal of directors, approval of business combinations and amendment of bye-law provisions, the required resolutions must include the affirmative vote of at least 66 2⁄3% of our directors then in office and of at least 66 2⁄3% percent of the votes attaching to all shares in issue.
Under Bermuda law, the holders of an aggregate of not less than 20% in par value of a company’s issued share capital or any class thereof have the right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association (or memorandum of continuance) adopted by shareholders at any general meeting, other than an amendment which alters or reduces a company’s share capital as provided in the Companies Act. Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda court. An application for an annulment of an amendment of the memorandum of association (or memorandum of continuance) must be made within twenty-one days after the date on which the resolution altering the company’s memorandum of association (or memorandum of continuance) is passed and may be made on behalf of persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose. No application may be made by shareholders voting in favor of the amendment.
39
Amalgamations, Mergers and Business Combinations
The amalgamation or merger of a Bermuda company with another company or corporation (other than certain affiliated companies) requires an amalgamation or merger agreement that is approved by the company’s board of directors and by its shareholders. Unless the Company’s Bye-laws provide otherwise, the approval of 75% of the shareholders voting at such meeting is required to approve the amalgamation or merger agreement, and the quorum for such meeting must be two persons holding or representing more than one-third of the issued shares of the company. Our Bye-laws provide that an amalgamation or a merger (other than with a wholly owned subsidiary or as described below) that has been approved by the board must only be approved by a majority of the votes cast at a general meeting of the shareholders at which the quorum shall be two or more persons present in person and representing in person or by proxy issued and outstanding common voting shares. Any amalgamation or merger or other business combination (as defined in the Bye-laws) not approved by our board of directors must be approved by the holders of not less than 66 2⁄3% of all votes attaching to all shares then in issue entitling the holder to attend and vote on the resolution.
Under Bermuda law, in the event of an amalgamation or merger of a Bermuda company with another company or corporation, a shareholder of the Bermuda company who did not vote in favor of the amalgamation or merger and who is not satisfied that fair value has been offered for such shareholder’s shares may, within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair value of those shares.
Our Bye-laws contain provisions regarding “business combinations” with “interested shareholders”. Pursuant to the Bye-laws, in addition to any other approval that may be required by applicable law, any business combination with an interested shareholder within a period of three years after the date of the transaction in which the person became an interested shareholder must be approved by our board and authorized at an annual or special general meeting by the affirmative vote of at least 66 2⁄3% of our issued and outstanding voting shares that are not owned by the interested shareholder, unless: (i) prior to the time that the shareholder becoming an interested shareholder, our board of directors approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; or (ii) upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of our issued and outstanding voting shares at the time the transaction commenced. For purposes of these provisions, “business combinations” include mergers, amalgamations, consolidations and certain sales, leases, exchanges, mortgages, pledges, transfers and other dispositions of assets, issuances and transfers of shares and other transactions resulting in a financial benefit to an interested shareholder. An “interested shareholder” is a person that beneficially owns 15% or more of our issued and outstanding voting shares and any person affiliated or associated with us that owned 15% or more of our issued and outstanding voting shares at any time three years prior to the relevant time.
Compulsory Acquisition of Shares Held by Minority Holders
An acquiring party is generally able to acquire compulsorily the common shares of minority holders in the following ways:
(1) By a procedure under the Companies Act known as a “scheme of arrangement.” A scheme of arrangement could be effected by obtaining the agreement of the company and of holders of its shares (or any class of shares), representing in the aggregate a majority in number and at least 75% in value of the shares or class of shares present and voting at a court ordered meeting held to consider the scheme or arrangement. The scheme of arrangement must then be sanctioned by the Bermuda Supreme Court. If a scheme of arrangement receives all necessary agreements and sanctions, upon the filing of the court order with the Registrar of Companies in Bermuda, all holders of common shares could be compelled to sell their shares under the terms of the scheme or arrangement.
(2) If the acquiring party is a company it may compulsorily acquire all the shares of the target company, by acquiring pursuant to a tender offer 90% of the shares or class of shares not already owned by, or by a nominee for, the acquiring party (the offeror), or any of its subsidiaries. If an offeror has, within four months after the making of an offer for all the shares or class of shares not owned by, or by a nominee for, the offeror, or any of its subsidiaries, obtained the approval of the holders of 90% or more of all the shares to which the offer relates, the offeror may, at any time within two months beginning with the date on which the approval was obtained, require by notice any nontendering shareholder to transfer its shares on the same terms as the original offer. In those circumstances, nontendering shareholders will be compelled to sell their shares unless the Supreme Court of Bermuda (on application made within a one-month period from the date of the offeror’s notice of its intention to acquire such shares) orders otherwise.
(3) Where one or more parties holds not less than 95% of the shares or a class of shares of a company, such holder(s) may, pursuant to a notice given to the remaining shareholders or class of shareholders, acquire the shares of such remaining shareholders or class of shareholders. When this notice is given, the acquiring party is entitled and bound to acquire the shares of the remaining shareholders on the terms set out in the notice, unless a remaining shareholder, within one month of receiving such notice, applies to the Supreme Court of Bermuda for an appraisal of the value of its shares. This provision only applies where the acquiring party offers the same terms to all holders of shares whose shares are being acquired.
40
Anti-Takeover Provisions
Two-thirds supermajority shareholder voting requirement: Our Bye-laws provide that, except to the extent that a proposal has received the prior approval of the board, the approval of an amalgamation, merger or consolidation with or into any other person shall require the affirmative vote of not less than 66 2⁄3% of all votes attaching to all shares then in issue entitling the holder to attend and vote on the resolution (except for certain “business combinations” with “interested shareholders” as set forth in Amalgamations, Mergers and Business Combinations above).
Amendments to the Bye-laws: Our Bye-laws provide that no bye-law may be rescinded, altered or amended and no new bye-law may be made until the same has been approved by a resolution of the board and by a resolution of the shareholders. In the case of certain Bye-laws, such as the Bye-laws relating to election and removal of directors, approval of business combinations and amendment of bye-law provisions, the required resolutions must include the affirmative vote of at least 66 2⁄3% of our directors then in office and of at least 66 2⁄3% percent of the votes attaching to all issued and outstanding shares.
Limitations on the election of directors: Our Bye-laws provide that a person may be proposed for election or appointment as a director at a general meeting either by the board or by one or more shareholders holding our shares which in the aggregate carry not less than 5% of the voting rights in respect of the election of directors. In addition, unless a person is proposed for election or appointment as a director by the board, when a person is proposed for appointment or election as a director, written notice of the proposal must be given to us as follows. Where a director is to be appointed or elected: (1) at an annual general meeting, such notice must be given not less than 90 days nor more than 120 days before the anniversary of the last annual general meeting prior to the giving of the notice or, in the event the annual general meeting is called for a date that is not 30 days before or after such anniversary the notice must be given not later than 10 days following the earlier of the date on which notice of the annual general meeting was posted to shareholders or the date on which public disclosure of the date of the annual general meeting was made; and (2) at a special general meeting, such notice must be given not later than 10 days following the earlier of the date on which notice of the special general meeting was posted to shareholders or the date on which public disclosure of the date of the special general meeting was made.
Shareholder Suits
Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association (or memorandum of continuance) or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it.
When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.
Our Bye-laws contain a provision by virtue of which our shareholders waive any claim or right of action that they have, both individually and on our behalf, against any director or officer in relation to any action or failure to take action by such director or officer, except in respect of any fraud or dishonesty of such director or officer. The SEC has advised that the operation of this provision as a waiver of the right to sue for violations of federal securities laws would likely be unenforceable in U.S. courts.
Capitalization of Profits and Reserves
Pursuant to our Bye-laws, our board of directors may (i) capitalize any part of the amount of our share premium or other reserve accounts or any amount credited to our profit and loss account or otherwise available for distribution by applying such sum in paying up unissued shares to be allotted as fully paid bonus shares pro-rata (except in connection with the conversion of shares) to the shareholders; or (ii) capitalize any sum standing to the credit of a reserve account or sums otherwise available for dividend or distribution by paying up in full, partly paid or nil paid shares of those shareholders who would have been entitled to such sums if they were distributed by way of dividend or distribution.
41
Exchange controls
The permission of the Bermuda Monetary Authority is required, under the provisions of the Exchange Control Act 1972 and related regulations, for all issuances and transfers of shares (which includes the common shares of the Company) of Bermuda companies to or from a non-resident of Bermuda for exchange control purposes, other than in cases where the Bermuda Monetary Authority has granted a general permission. The Bermuda Monetary Authority, in its notice to the public dated June 1, 2005, has granted: (i) a general permission for the issue and subsequent transfer of any securities, other than any “Equity Securities” (which would include the common shares of the Company), of a Bermuda company of from and/or to a non-resident of Bermuda for exchange control purposes; and (ii) a general permission for any “Equity Security” (which would include the common shares of the Company) to be: (a) transferred into the name of a nominee or other registered holder where the transfer involves no change in the ultimate beneficial ownership of the Equity Security in question; (b) issued or transferred to or among any person who are holders of Equity Securities of the company, provided (i) no existing holder (other than an existing holder that has, or whose ultimate beneficial owner has, any of its own Equity Securities listed on an Appointed Stock Exchange) of less than 10% of the Equity Securities in the company will, as a result of any such issue or transfer, hold 10% or more of the Equity Securities in the company; and (ii) no existing holder (other than an existing holder that has, or whose ultimate beneficial owner has, any of its own Equity Securities listed on an Appointed Stock Exchange) of between 10% and 50% of the Equity Securities in the company will, as a result of any such issue or transfer, hold more than 50% of the Equity Securities in the company. Where a holder or proposed holder of the Company’s common shares seeks to (i) beneficially hold 10% or more of the total issued common shares of the Company or (ii) hold more than 50% of the total issued common shares of the Company where such holder or proposed holder does not already hold more than 50% of such shares, the prior to such issuance or transfer of common shares of the Company to such holder or proposed holder, the prior permission of the Bermuda Monetary Authority must be sought by the Company. The holder or proposed holder will need to provide certain information and documents to the Company, including that of the ultimate beneficial owner and any person to beneficially hold 10% or more of the Company’s common shares, in order for the Company to submit an application for permission to the Bermuda Monetary Authority. There can be no assurance that the Bermuda Monetary Authority will grant its permission to such an issuance or transfer in a timely manner or at all. In granting the general permissions the Bermuda Monetary Authority accepts no responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this Annual Report.
Registrar or Transfer Agent
A register of holders of the common shares is maintained by Conyers Corporate Services (Bermuda) Limited in Bermuda, and a branch register is maintained in the United States by Equiniti Trust Company, LLC, who serves as branch registrar and transfer agent.
Untraced Shareholders
Our Bye-laws provide that our board of directors may forfeit any dividend or other monies payable in respect of any shares which remain unclaimed for six years from the date when such monies became due for payment. In addition, we are entitled to cease sending dividend warrants and checks by post or otherwise to a shareholder if such instruments have been returned undelivered to, or left uncashed by, such shareholder on at least two consecutive occasions or, following one such occasion, reasonable enquires have failed to establish the shareholder’s new address. This entitlement ceases if the shareholder claims a dividend or cashes a dividend check or a warrant.
Certain Provisions of Bermuda Law
We have been designated by the Bermuda Monetary Authority as a non-resident for Bermuda exchange control purposes. This designation allows us to engage in transactions in currencies other than the Bermuda dollar, and there are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to United States residents who are holders of our common shares.
The permission of the Bermuda Monetary Authority is required, under the provisions of the Exchange Control Act 1972 and related regulations, for all issuances and transfers of shares (which includes the common shares of the Company) of Bermuda companies to or from a non-resident of Bermuda for exchange control purposes, other than in cases where the Bermuda Monetary Authority has granted a general permission. The Bermuda Monetary Authority, in its notice to the public dated June 1, 2005, has granted: (i) a general permission for the issue and subsequent transfer of any securities, other than any “Equity Securities” (which would include the common shares of the Company), of a Bermuda company of from and/or to a non-resident of Bermuda for exchange control purposes; and (ii) a general permission for any “Equity Security” (which would include the common shares of the Company) to be: (a) transferred into the name of a nominee or other registered holder where the transfer involves no change in the ultimate beneficial ownership of the Equity Security in question; (b) issued or transferred to or among any person who are holders of Equity Securities of the company, provided (i) no existing holder (other than an existing holder that has, or whose ultimate beneficial owner has, any of its own Equity Securities listed on an Appointed Stock Exchange) of less than 10% of the Equity Securities in the company will, as a result of any such issue or transfer, hold 10% or more of the Equity Securities in the company; and (ii) no existing holder (other than an existing holder that has, or whose ultimate beneficial owner has, any of its own Equity Securities listed on an Appointed Stock Exchange) of between 10% and 50% of the Equity Securities in the company will, as a result of any such issue or transfer, hold more than 50% of the Equity Securities in the company. Where a holder or proposed holder of the Company’s common shares seeks to (i) beneficially hold 10% or more of the total issued common shares of the Company or (ii) hold more than 50% of the total issued common shares of the Company where such holder or proposed holder does not already hold more than 50% of such shares, the prior to such issuance or transfer of common shares of the Company to such holder or proposed holder, the prior permission of the Bermuda Monetary Authority must be sought by the Company. The holder or proposed holder will need to provide certain information and documents to the Company, including that of the ultimate beneficial owner and any person to beneficially hold 10% or more of the Company’s common shares, in order for the Company to submit an application for permission to the Bermuda Monetary Authority. There can be no assurance that the Bermuda Monetary Authority will grant its permission to such an issuance or transfer in a timely manner or at all. In granting the general permissions the Bermuda Monetary Authority accepts no responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this Annual Report. Certain issues and transfers of common shares involving persons deemed resident in Bermuda for exchange control purposes require the specific consent of the Bermuda Monetary Authority.
In accordance with Bermuda law, share certificates are only issued in the names of companies, partnerships or individuals. In the case of a shareholder acting in a special capacity (for example as a trustee), certificates may, at the request of the shareholder, record the capacity in which the shareholder is acting. Notwithstanding such recording of any special capacity, we will not be bound to investigate or see to the execution of any such trust. We will take no notice of any trust applicable to any of our shares, whether or not we have been notified of such trust.
42
Comparison of Corporate Law
Set forth below is a comparison of select provisions of the corporate laws of Delaware and Bermuda showing the default positions in each jurisdiction that govern shareholder rights.
| DELAWARE CORPORATE LAW | BERMUDA CORPORATE LAW | |
| Mergers and similar arrangements | ||
| Under the Delaware General Corporation Law, with certain exceptions, a merger, consolidation, sale, lease or transfer of all or substantially all of the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. A shareholder of a Delaware corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration such shareholder would otherwise receive in the transaction. The Delaware General Corporation Law also provides that a parent corporation, by resolution of its board of directors, may merge with any subsidiary, of which it owns at least 90.0% of each class of capital stock without a vote by the shareholders of such subsidiary. Upon any such merger, dissenting shareholders of the subsidiary would have appraisal rights. | The amalgamation or merger of a Bermuda company with another company or corporation (other than certain affiliated companies) requires the amalgamation or merger agreement to be approved by the company’s board of directors and by its shareholders. Unless the company’s bye-laws provide otherwise, the approval of 75% of the shareholders voting at a general meeting is required to approve the amalgamation or merger agreement, and the quorum for such meeting must be two persons holding or representing more than one-third of the issued shares of the company. The Bye-laws provide that a merger or an amalgamation (other than with a wholly owned subsidiary or as described below) that has been approved by the board must only be approved by a majority of the votes cast at a general meeting of the shareholders at which the quorum shall be two or more persons present in person and representing in person or by proxy issued and outstanding voting shares. | |
| The Bye-laws contain provisions regarding “business combinations” with “interested shareholders”. Pursuant to our Bye-laws, in addition to any other approval that may be required by applicable law, any business combination with an interested shareholder within a period of three years after the date of the transaction in which the person became an interested shareholder must be approved by our board and authorized at an annual or special general meeting by the affirmative vote of at least 66 and 2/3rds% of our issued and outstanding voting shares that are not owned by the interested shareholder, unless: (i) prior to the time that the shareholder becoming an interested shareholder, our board of directors approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; or (ii) upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of our issued and outstanding voting shares at the time the transaction commenced. For purposes of these provisions, “business combinations” include mergers, amalgamations, consolidations and certain sales, leases, exchanges, mortgages, pledges, transfers and other dispositions of assets, issuances and transfers of shares and other transactions resulting in a financial benefit to an interested shareholder. | ||
| An “interested shareholder” is a person that beneficially owns 15% or more of our issued and outstanding voting shares and any person affiliated or associated with us that owned 15% or more of our issued and outstanding voting shares at any time three years prior to the relevant time. | ||
| Under Bermuda law, in the event of an amalgamation or merger of a Bermuda company with another company or corporation, a shareholder of the Bermuda company who did not vote in favor of the amalgamation or merger and who is not satisfied that fair value has been offered for such shareholder’s shares may, within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair value of those shares. Note that each share of an amalgamating or merging company carries the right to vote in respect of an amalgamation or merger whether or not is otherwise carries the right to vote. | ||
43
| DELAWARE CORPORATE LAW | BERMUDA CORPORATE LAW | |
| Shareholders’ suits | ||
| Class actions and derivative actions generally are available to shareholders of a Delaware corporation for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action. | Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it. | |
| When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company. | ||
| The Bye-laws contain a provision by virtue of which our shareholders waive any claim or right of action that they have, both individually and on our behalf, against any director or officer in relation to any action or failure to take action by such director or officer, except in respect of any fraud or dishonesty of such director or officer. | ||
Shareholder vote on board and management compensation
Under the Delaware General Corporation Law, the board of directors has the authority to fix the compensation of directors, unless otherwise restricted by the certificate of incorporation or bylaws. |
The Bye-laws contain a provision that the board of directors has the power to determine the remuneration, if any, of the directors. |
Annual vote on board renewal
Unless directors are elected by written consent in lieu of an annual meeting, directors are elected in an annual meeting of stockholders on a date and at a time designated by or in the manner provided in the bylaws. Re-election is possible. |
The Bye-laws provide that the directors shall hold office for such term as the shareholders may determine or, in their absence of such determination, until the next annual general meeting, or until their successors are elected or appointed or their office is otherwise vacated. Re-election is possible. | |
Classified boards are permitted. |
Provision for staggered boards of directors may be included in a company’s bye-laws. |
44
| DELAWARE CORPORATE LAW | BERMUDA CORPORATE LAW |
Indemnification of directors and executive management and limitation of liability
| The Delaware General Corporation Law provides that a certificate of incorporation may contain a provision eliminating or limiting the personal liability of directors (but not other controlling persons) of the corporation for monetary damages for breach of a fiduciary duty as a director, except no provision in the certificate of incorporation may eliminate or limit the liability of a director for: | Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act. | |||
| ● |
any breach of a director’s duty of loyalty to the corporation or its shareholders; |
|||
| ● | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | |||
| ● | statutory liability for unlawful payment of dividends or unlawful stock purchase or redemption; or | |||
| ● | any transaction from which the director derived an improper personal benefit. | |||
A Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any proceeding, other than an action by or on behalf of the corporation, because the person is or was a director or officer, against liability incurred in connection with the proceeding if the director or officer acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation; and the director or officer, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. |
The Bye-laws contain provisions that provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. Our bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of the company’s directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. We have purchased and maintain a directors’ and officers’ liability policy for such a purpose. | |
Unless ordered by a court, any foregoing indemnification is subject to a determination that the director or officer has met the applicable standard of conduct: |
| ● | by a majority vote of the directors who are not parties to the proceeding, even though less than a quorum; | |||
| ● | by a committee of directors designated by a majority vote of the eligible directors, even though less than a quorum; | |||
| ● | by independent legal counsel in a written opinion if there are no eligible directors, or if the eligible directors so direct; or by the shareholders. | |||
Moreover, a Delaware corporation may not indemnify a director or officer in connection with any proceeding in which the director or officer has been adjudged to be liable to the corporation unless and only to the extent that the court determines that, despite the adjudication of liability but in view of all the circumstances of the case, the director or officer is fairly and reasonably entitled to indemnity for those expenses which the court deems proper. |
||||
45
| DELAWARE CORPORATE LAW | BERMUDA CORPORATE LAW |
Directors’ fiduciary duties
| A director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: | At common law, members of a board of directors owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following elements: (i) a duty to act in good faith in the best interests of the company; (ii) a duty not to make a personal profit from opportunities that arise from the office of director; (iii) a duty to avoid conflicts of interest; and (iv) a duty to exercise powers for the purpose for which such powers were intended. | |||
| ● | the duty of care; and | |||
| ● | the duty of loyalty. | |||
The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence a breach of one of the fiduciary duties. |
The Companies Act also imposes a duty on directors and officers of a Bermuda company to: (i) act honestly and in good faith with a view to the best interests of the company; and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
In addition, the Companies Act imposes various duties on directors and officers of a company with respect to certain matters of management and administration of the company. | |
Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation. |
Shareholder action by written consent
A Delaware corporation may, in its certificate of incorporation, eliminate the right of shareholders to act by written consent. |
The Companies Act provides that shareholders may take action by written consent, except in respect of the removal of an auditor from office before the expiry of his term or in respect of a resolution passed for the purpose of removing a director before the expiration of his term of office. A resolution in writing is passed when it is signed by the members of the company who at the date of the notice of the resolution represent such majority of votes as would be required if the resolution had been voted on at a meeting or when it is signed by all the members of the company or such other majority of members as may be provided by the bye-laws of the company. |
46
| DELAWARE CORPORATE LAW | BERMUDA CORPORATE LAW |
Shareholder proposals
A shareholder of a Delaware corporation has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. |
Shareholder(s) may, as set forth below and at their own expense (unless the company otherwise resolves), require the company to: (i) give notice to all shareholders entitled to receive notice of the annual general meeting of any resolution that the shareholder(s) may properly move at the next annual general meeting; and/or (ii) circulate to all shareholders entitled to receive notice of any general meeting a statement in respect of any matter referred to in the proposed resolution or any business to be conducted at such general meeting. The number of shareholders necessary for such a requisition is either: (i) any number of shareholders representing not less than 5% of the total voting rights of all shareholders entitled to vote at the meeting to which the requisition relates; or (ii) not less than 100 shareholders. | |
Pursuant to the Bye-laws, any shareholder or shareholders holding or representing not less than 5% of the total voting rights wishing to propose for election as a director someone who is not an existing director or is not proposed by our board must give notice of the intention to propose the person for election in accordance with the Bye-laws. |
Cumulative voting
Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation provides for it. |
Under Bermuda law, the voting rights of shareholders are regulated by the company’s bye-laws and, in certain circumstances, by the Companies Act. The bye-laws provide for a plurality of voting for elections of directors, and cumulative voting for elections of directors is not permitted. |
Removal of directors
A Delaware corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. |
Under the Bye-laws, a director may be removed, with cause, by the shareholders, provided notice of the shareholders meeting convened to remove the director is given to the director. The notice must contain a statement of the intention to remove the director and must be served on the director not less than fourteen days before the meeting. The director is entitled to attend the meeting and be heard on the motion for his removal. |
Transactions with interested shareholders
The Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or group who or which owns or owned 15.0% or more of the corporation’s outstanding voting stock within the past three years. |
There is no similar law in Bermuda.
The Bye-laws contain provisions regarding “business combinations” with “interested shareholders” which are described above under “mergers and similar arrangements.” |
Dissolution; Winding up
Unless the board of directors of a Delaware corporation approves the proposal to dissolve, dissolution must be approved by shareholders holding 100.0% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. |
A Bermuda company may be wound up by the Bermuda court on application presented by the company itself, its creditors (including contingent or prospective creditors) or its contributories. The Bermuda court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the Bermuda court, just and equitable to do so.
A Bermuda company limited by shares may be wound up voluntarily when the shareholders so resolve in general meeting. In the case of a voluntary winding up, the company shall, from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up thereof. |
47
| DELAWARE CORPORATE LAW | BERMUDA CORPORATE LAW |
Variation of rights of shares
A Delaware corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. |
Under the Bye-laws, if at any time we have more than one class of shares, the rights attaching to any class, unless otherwise provided for by the terms of issue of the relevant class, may be varied either: (i) with the consent in writing of the holders of 75% of the issued shares of that class; or (ii) with the sanction of a resolution passed by a majority of the votes cast at a general meeting of the relevant class of shareholders at which a quorum consisting of at least two persons holding or representing issued shares of the relevant class is present. The Bye-laws specify that the creation or issue of shares ranking equally with existing shares will not, unless expressly provided by the terms of issue of existing shares, vary the rights attached to existing shares. In addition, the creation or issue of preference shares ranking prior to common shares will not be deemed to vary the rights attached to common shares or, subject to the terms of any other series of preference shares, to vary the rights attached to any other series of preference shares. |
Amendment of governing documents
A Delaware corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. |
A Bermuda company’s memorandum of association and bye-laws may be amended by resolutions of the board of directors and the shareholders, subject to the company’s bye-laws. |
Inspection of Books and Records
Shareholders of a Delaware corporation, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose, and to obtain copies of list(s) of shareholders and other books and records of the corporation and its subsidiaries, if any, to the extent the books and records of such subsidiaries are available to the corporation. |
Members of the general public have a right to inspect the public documents of a company available at the office of the Registrar of Companies in Bermuda. These documents include the company’s memorandum of association/continuance, including its objects and powers, and certain alterations to the memorandum of association/continuance. The shareholders have the additional right to inspect the bye-laws of the company, minutes of general meetings and the company’s audited financial statements, which must be presented to the annual general meeting. The register of members of a company is also open to inspection by shareholders and by members of the general public without charge, and members of the public may require a copy of the register on payment of a fee. The register of members is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of members for not more than thirty days in a year). A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. A company is required to keep at its registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records. |
48
| DELAWARE CORPORATE LAW | BERMUDA CORPORATE LAW |
Payment of dividends
The board of directors may approve a dividend without shareholder approval. Subject to any restrictions contained in its certificate of incorporation, the board may declare and pay dividends upon the shares of its capital stock either:
out of its surplus, or
in case there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. |
Under Bermuda law, the board of directors may declare a dividend without shareholder approval, but a company may not declare or pay dividends if there are reasonable grounds for believing that: (i) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) that the realizable value of its assets would thereby be less than its liabilities. Under the Bye-laws, each common share is entitled to dividends if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of the holders of any preference shares. | |
Stockholder approval is required to authorize capital stock in excess of that provided in the charter. Directors may issue authorized shares without stockholder approval. |
Creation and issuance of new shares
All creation of shares requires the board of directors to adopt a resolution or resolutions, pursuant to authority expressly vested in the board of directors by the provisions of the company’s certificate of incorporation. |
The authorized share capital of a Bermuda company is determined by the company’s shareholders. |
C. Material contracts
Except as otherwise disclosed in this Annual Report (including the Exhibits), we are not currently, and have not been in the last two years, party to any material contract, other than contracts entered into in the ordinary course of business.
D. Exchange controls
We have been designated by the Bermuda Monetary Authority as a non-resident for Bermuda exchange control purposes. This designation allows us to engage in transactions in currencies other than the Bermuda dollar, and there are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to United States residents who are holders of our common shares.
The permission of the Bermuda Monetary Authority is required, under the provisions of the Exchange Control Act 1972 and related regulations, for all issuances and transfers of shares (which includes the common shares of the Company) of Bermuda companies to or from a non-resident of Bermuda for exchange control purposes, other than in cases where the Bermuda Monetary Authority has granted a general permission. The Bermuda Monetary Authority, in its notice to the public dated June 1, 2005, has granted: (i) a general permission for the issue and subsequent transfer of any securities, other than any “Equity Securities” (which would include the common shares of the Company), of a Bermuda company of from and/or to a non-resident of Bermuda for exchange control purposes; and (ii) a general permission for any “Equity Security” (which would include the common shares of the Company) to be: (a) transferred into the name of a nominee or other registered holder where the transfer involves no change in the ultimate beneficial ownership of the Equity Security in question; (b) issued or transferred to or among any person who are holders of Equity Securities of the company, provided (i) no existing holder (other than an existing holder that has, or whose ultimate beneficial owner has, any of its own Equity Securities listed on an Appointed Stock Exchange) of less than 10% of the Equity Securities in the company will, as a result of any such issue or transfer, hold 10% or more of the Equity Securities in the company; and (ii) no existing holder (other than an existing holder that has, or whose ultimate beneficial owner has, any of its own Equity Securities listed on an Appointed Stock Exchange) of between 10% and 50% of the Equity Securities in the company will, as a result of any such issue or transfer, hold more than 50% of the Equity Securities in the company. Where a holder or proposed holder of the Company’s common shares seeks to (i) beneficially hold 10% or more of the total issued common shares of the Company or (ii) hold more than 50% of the total issued common shares of the Company where such holder or proposed holder does not already hold more than 50% of such shares, the prior to such issuance or transfer of common shares of the Company to such holder or proposed holder, the prior permission of the Bermuda Monetary Authority must be sought by the Company. The holder or proposed holder will need to provide certain information and documents to the Company, including that of the ultimate beneficial owner and any person to beneficially hold 10% or more of the Company’s common shares, in order for the Company to submit an application for permission to the Bermuda Monetary Authority. There can be no assurance that the Bermuda Monetary Authority will grant its permission to such an issuance or transfer in a timely manner or at all. In granting the general permissions the Bermuda Monetary Authority accepts no responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this Annual Report. Certain issues and transfers of common shares involving persons deemed resident in Bermuda for exchange control purposes require the specific consent of the Bermuda Monetary Authority.
E. Taxation
The following summary contains a description of the material Bermuda and U.S. federal income tax consequences of the acquisition, ownership and disposition of common shares, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase common shares. The summary is based upon the tax laws of Bermuda and regulations thereunder, of Switzerland and regulations thereunder and on the tax laws of the United States and regulations thereunder as of the date hereof, which may be subject to change.
49
Bermuda Tax Considerations
At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by us or by our shareholders in respect of our shares.
Material U.S. Federal Income Tax Considerations for U.S. Holders
The following is a description of the material U.S. federal income tax consequences to the U.S. Holders (defined below) of owning and disposing of common shares, but it does not purport to be a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to hold the common shares. This discussion applies only to a U.S. Holder that acquires our common shares at their original issuance and holds common shares as capital assets for U.S. federal income tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of the U.S. Holder’s particular circumstances, including alternative minimum tax consequences, the potential application of the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), known as the Medicare contribution tax and tax consequences applicable to U.S. Holders subject to special rules, such as:
| ● | banks, certain financial institutions and insurance companies; |
| ● | brokers, dealers or traders in securities or persons who use a mark-to-market method of tax accounting; |
| ● | persons holding common shares as part of a straddle, wash sale, conversion transaction or persons entering into a constructive sale with respect to the common shares; |
| ● | persons whose functional currency for U.S. federal income tax purposes is not the US$; |
| ● | entities classified as partnerships for U.S. federal income tax purposes and other pass through entities, and investors in such pass through entities; |
| ● | tax-exempt entities, including an “individual retirement account” or “Roth IRA”; |
| ● | persons that own or are deemed to own ten percent or more of the stock by vote or value of our shares; |
| ● | persons who acquired our common shares pursuant to the exercise of an employee stock option or otherwise as compensation; or |
| ● | persons holding shares in connection with a trade or business conducted outside of the United States. |
If an entity that is classified as a partnership for U.S. federal income tax purposes holds common shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships or other pass-through entities holding common shares and partners in such partnerships should consult their tax advisers as to their particular U.S. federal income tax consequences of holding and disposing of the common shares.
This discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury regulations, all as of the date hereof, any of which is subject to change, possibly with retroactive effect.
A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of common shares and is:
| ● | an individual who is a citizen or resident of the United States; |
| ● | a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state therein or the District of Columbia; |
| ● | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
| ● | a trust with respect to which a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or that has a valid election in effect to be treated as a U.S. person under applicable U.S. Treasury Regulations. |
U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of common shares in their particular circumstances.
50
Passive Foreign Investment Company Rules
Special U.S. tax rules apply to U.S. Holders of stock in a company that are considered to be a PFIC. In general, a non-U.S. corporation will be considered a PFIC for any taxable year in which (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and capital gains. Cash is a passive asset for PFIC purposes. Goodwill (the value of which may be determined by reference to the company’s market capitalization) is generally treated as an active asset to the extent attributable to activities intended to produce active income.
Based upon our current and projected income and assets, and projections as to the value of our assets, we do not anticipate that we will be a PFIC for the 2025 taxable year or the foreseeable future. There can be no assurance that the IRS will agree with our conclusion and that the IRS would not successfully challenge our position. Furthermore, there can be no assurance regarding our PFIC status for the current year or any particular year in the future because PFIC status is factual in nature, depends upon factors not wholly within our control, generally cannot be determined until the close of the taxable year in question and is determined annually. Our status as a PFIC will depend on the nature and composition of our income and the nature, composition and value of our assets (which may be determined based on the fair market value of each asset, with the value of goodwill and going concern value being determined in large part by reference to the market value of our common shares, which may be volatile). Our status may also depend, in part, on how quickly we utilize the cash proceeds from our fundraising activities in our business. Accordingly, there can be no assurance that we will not be a PFIC in the current or for any future taxable year. Therefore, U.S. Holders should invest in our common shares only if they are willing to bear the U.S. federal income tax consequences associated with investments in PFICs.
U.S. Holders should consult their tax advisers concerning our PFIC status and the tax considerations relevant to an investment in a PFIC.
Taxation of Distributions
As discussed above under “Item 8. Financial Information—Dividends and Dividend Policy,” we do not currently expect to make distributions on our common shares. In the event that we do make distributions of cash or other property, subject to the PFIC rules described above, distributions paid on common shares, other than certain pro rata distributions of common shares, will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we may not calculate our earnings and profits under U.S. federal income tax principles, we expect that distributions generally will be reported to U.S. Holders as dividends. The U.S. dollar amount of any dividend will be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the dividend.
Sale or Other Disposition of Common Shares
Subject to the PFIC rules described above, for U.S. federal income tax purposes, gain or loss realized on the sale or other disposition of common shares will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder held the common shares for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the common shares disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. The deductibility of capital losses is subject to limitations. U.S. Holders should consult their tax advisers regarding the proper treatment of gain or loss, the availability of a foreign tax credit, and for U.S. Holders that sell common shares for an amount denominated in a currency other than the U.S. dollar should consult their tax advisers regarding any potential foreign currency gain or loss that may have to be recognized.
Information Reporting and Backup Withholding
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.
Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the IRS.
51
Information Reporting with Respect to Foreign Financial Assets
Certain U.S. Holders who are individuals and certain entities may be required to report information relating to an interest in our common shares, subject to certain exceptions (including an exception for common shares held in accounts maintained by certain U.S. financial institutions). U.S. Holders should consult their tax advisers regarding whether or not they are obligated to report information relating to their ownership and disposition of the common shares.
The above description is not intended to constitute a complete analysis of all tax consequences relating to the ownership and disposition of our common shares. You should consult your tax advisor concerning the tax consequences of the ownership and disposition of our common shares in your particular situation.
| F. | Dividends and paying agents |
Not applicable.
| G. | Statement by experts |
Not applicable.
| H. | Documents on display |
We are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. The SEC maintains an Internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.
Under Bermuda law shareholders have the right to inspect the bye-laws of the company, minutes of general meetings and the company’s audited financial statements, which must be presented to the annual general meeting. The register of members of a company is also open to inspection by shareholders and by members of the general public without charge. The register of members is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of members for not more than thirty days in a year).
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
| I. | Subsidiary information |
Not applicable.
| J. | Annual Report to Security Holders |
Not applicable.
52
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Credit Risk
We manage credit risk on a group basis. Credit risk arises from cash and cash equivalents and deposits with banks, as well as from other receivables. Our policy is to invest funds in low-risk investments including interest bearing deposits. Only independent banks and financial institutions are used and banks with which we currently hold term deposits have a minimum S&P rating of “A”. Receivables are not past due and not impaired and include only well-known counterparties.
We hold cash and cash equivalents in our principal operating currencies (CHF, US$, EUR).
Market Risk
In the ordinary course of our business activities, we are exposed to various market risks that are beyond our control, including fluctuations in foreign exchange rates, and which may have an adverse effect on the value of our financial assets and liabilities, future cash flows and profit. As a result of these market risks, we could suffer a loss due to adverse changes in foreign exchange rates. Our policy with respect to these market risks is to assess the potential of experiencing losses and the consolidated impact thereof, and to mitigate these market risks.
Currency Risk
We operate internationally and are exposed to foreign exchange risk arising from various exposures, primarily with respect to the US Dollar and Euro. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. To manage foreign exchange risk we maintain foreign currency cash balances to cover anticipated future purchases of materials and services in foreign currencies. We do not hedge our foreign exchange risk.
See Note 5 to our audited financial statements for further information.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
| A. | Debt securities |
Not applicable.
| B. | Warrants and rights |
Not applicable.
| C. | Other securities |
Not applicable.
| D. | American Depositary Shares |
Not applicable.
53
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
| A. | Defaults |
No matters to report.
| B. | Arrears and delinquencies |
No matters to report.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
| E. | Use of Proceeds |
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
A. Disclosure Controls and Procedures
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, as of December 31, 2024.
Based on the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of December 31, 2024, in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods in SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
As of December 31, 2022, and 2023, management had concluded that the Company’s internal control over financial reporting was not effective, due to material weaknesses identified. As described below, management remediated these material weaknesses in 2024.
B. 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 defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS Accounting Standards. 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 the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was effective as of December 31, 2024.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements, including the possibility of human error, the circumvention or overriding of controls, or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
Remediation of Material Weaknesses in Internal Control Over Financial Reporting
As of December 31, 2022, and 2023, the Company did not maintain controls to execute the criteria established in the COSO Framework for the control environment, risk assessment, control activities, information and communication, and monitoring components, which resulted in control deficiencies that constituted material weaknesses, either individually or in the aggregate, within each component of the COSO Framework. This was due to the lack of sufficient resources to execute control activities which contributed to the potential for there to have been material errors in our financial statements.
54
In 2024, Management completed the implementation of a plan to remediate material weaknesses identified in the past. The remediation measures included the following, amongst others:
| ● | Hiring of a Head of Finance and Administration to increase our internal capacities; |
| ● | Implementing an effective risk assessment process to identify and analyze risks caused by changes in our business that could impact our system of internal control, including re-designing existing controls as necessary; |
| ● | Reporting on a regular basis to the Company’s Audit Committee on the effectiveness of internal controls; |
| ● | Enhancing the design of control activities to operate at a level of precision to identify all potentially material errors, and training control owners to improve required retention of documentation evidencing their execution of control activities; |
| ● | Designing and implementing controls over the generation and communication of relevant quality information to be utilized in the execution of control activities; and |
| ● | Investing in training of personnel and hiring additional resources with appropriate expertise to plan and perform more timely and thorough monitoring activities over our internal control over financial reporting. |
We cannot assure you that the measures we have taken to date, and are continuing to implement, will be sufficient to prevent potential future material weaknesses. However, having operated the relevant controls for a sufficient period, management has concluded, through testing, that these controls are effective. We will continue to monitor and evaluate the effectiveness of our internal control over financial reporting.
55
| C. | Attestation Report of the Registered Public Accounting Firm |
Not applicable.
D. Changes in Internal Control over Financial Reporting
Other than described above in this Item 15, there have been no changes in our internal control over financial reporting during the year ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. [RESERVED]
ITEM 16A. Audit committee financial expert
Our board of directors has determined that Mats Blom is the audit committee financial expert, as that term is defined by the SEC, and is independent for the purposes of SEC rules.
ITEM 16B. Code of ethics
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics 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 Business Conduct and Ethics applies to all of our directors, executive officers and employees. We have published our Code of Business Conduct and Ethics on our website, www.altamiratherapeutics.com. The information contained on our website is not a part of this Annual Report.
ITEM 16C. Principal Accountant Fees and Services
| In US$ 1,000 | 2024 | 2023 | ||||||
| Audit fees | 505 | 302 | ||||||
| Audit related fees | 158 | 276 | ||||||
| Total fees | 663 | 578 | ||||||
In 2024 we were billed $474,750 by our auditors BDO AG in connection with audit services for our annual filing as well as interim review, group audit, and statutory audits plus $ 38,555 in connection with audit-related services for work in connection with our equity offerings and registration statements. In 2023 we were billed $161,288 by BDO AG in connection with audit services for our interim review, and preparations for the audit of our 2023 accounts.
In 2024 we were billed $30,293 by our former auditors Deloitte AG in connection with audit services for our annual filing plus $119,740 in connection with audit-related services for work in connection with our equity offerings and registration statements. In 2023 we were billed $140,554 by Deloitte AG in connection with audit services for our annual filing as well as interim review, group audit, and statutory audits plus $276,245 in connection with audit-related services for work in connection with our equity offerings and registration statements.
Pre-Approval Policies and Procedures
To ensure the independence and objectivity of the Company’s external auditors, the provision of all non-audit services by the external auditors are pre-approved by the Audit Committee.
ITEM 16D. Exemptions from the listing standards for audit committees
Not applicable.
ITEM 16E. Purchases of equity securities by the issuer and affiliated purchasers
In 2024, no purchases of our equity securities were made by or on behalf of Altamira Therapeutics Ltd. or any affiliated purchaser.
ITEM 16F. Change in registrant’s certifying accountant
Not applicable.
ITEM 16G. Corporate governance
Not applicable.
56
ITEM 16H. Mine safety disclosure
Not applicable.
ITEM 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection
Not applicable.
ITEM 16J. Disclosure Regarding Insider Trading Policy
We have
ITEM 16K. Disclosure Regarding Cybersecurity
Risk management and strategy
We and certain of our collaborators depend on information systems for significant aspects of operations. These information systems support a variety of functions, including project management, preclinical and clinical study management, accounting and finance as well as other general and administrative activities. Information systems are subject to various cybersecurity risks.
We have implemented certain tools and processes to aid us in our efforts to identify, assess, prevent, and manage such cybersecurity risks. We identify and assess risks from cybersecurity threats as part of our overall risk assessment process. We collaborate with subject matter specialists, as necessary, to gather insights for identifying and assessing cybersecurity threat risks, their likelihood and severity, and potential preventative measures and mitigations. For the prevention and management of cybersecurity risks, we rely on:
| ● | Use of specialized third-party service providers: our Company utilizes |
| ● | Security by design: our third-party service providers deploy systems safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and identity and access management. |
| ● | Proactive surveillance: our |
| ● | Incident response and recovery plans: our third-party service providers have established and maintain plans that address their and the Company’s response to a cybersecurity incident and the processes for recovery from such incident, including protected backup solutions. |
| ● | Trainings: as part of our overall quality management system, we have established and maintain standard operating procedures (SOPs) for information systems, on which we periodically train our staff. These SOPs include processes related to cybersecurity risks. |
Governance
Our Board of Directors recognizes
the importance of managing the risk of cybersecurity threats to the Company.
Our Head of Finance and Administration
is
57
PART III
ITEM 17. Financial statements
We have responded to Item 18 in lieu of this item.
ITEM 18. Financial statements
Financial Statements are filed as part of this Annual Report, see page F-1.
ITEM 19. Exhibits
(a) The following documents are filed as part of this registration statement:
58
| * | Filed herewith |
| † | Portions of this exhibit have been redacted pursuant to Item 4 of the “Instructions As To Exhibits” of Form 20-F because the Company customarily and actually treats the redacted information as private or confidential and the omitted information is not material. The Company hereby agrees to furnish an unredacted copy of the exhibit to the Commission upon request. |
| (b) | Financial Statement Schedules |
None.
59
Signatures
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
| ALTAMIRA THERAPEUTICS LTD. | |||
| By: | /s/ Thomas Meyer | ||
| Name: | Thomas Meyer | ||
| Title: | Chief Executive Officer | ||
| Date: April 30, 2025 | |||
60
Index to Consolidated Financial Statements
Audited Consolidated Financial Statements — Altamira Therapeutics Ltd.
As of December 31, 2024, and 2023 and for the years ended December 31, 2024, 2023, and 2022
Pursuant to Rule 3-09 of Regulation S-X, which requires the inclusion of separate audited financial statements for significant investments that are accounted for under the equity method, the audited consolidated financial statements comprise also the separate audited consolidated financial statements for the associate company Altamira Medica AG.
Audited Consolidated Financial Statements — Altamira Medica AG
As of December 31, 2024 and 2023 and for the years ended December 31, 2024 and 2023.
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Altamira Therapeutics, Ltd.
Opinion on the Financial Statements
We have audited, before the effects of the retrospective adjustments for the discontinued operations, the change in presentation currency and the 2023 reverse share split discussed in Note 26, Note 2 and Note 14, respectively, to the financial statements, the accompanying consolidated statements of profit or loss and other comprehensive income / (loss), changes in equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”) (the 2022 financial statements before the effects of the retrospective adjustments discussed in Note 26, Note 2 and Note 14 to the financial statements are not presented herein) of Altamira Therapeutics, Ltd. and subsidiaries (the “Company”). In our opinion, the 2022 financial statements, before the effects of the retrospective adjustments for the discontinued operations, the change in presentation currency and the 2023 reverse share split discussed in Note 26, Note 2 and Note 14, respectively, to the financial statements, present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended December 31, 2022, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB).
We were not engaged to audit, review, or apply any procedures to the retrospective adjustments for the discontinued operations, the change in presentation currency and the 2023 reverse share split discussed in Note 26, Note 2 and Note 14, respectively, to the financial statements, and accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied. Those retrospective adjustments were audited by other auditors.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Deloitte AG
| /s/ Roland Mueller | /s/ Adrian Kaeppeli | |
| Auditor in Charge |
Zurich, Switzerland
May 16, 2023
We began serving as the Company’s auditor in 2014. In 2023 we became the predecessor auditor.
F-2
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Altamira Therapeutics Ltd
Hamilton, Bermuda
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial position of Altamira Therapeutics Ltd and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of profit or (loss) and comprehensive income/(loss), changes in equity and cash flows for the year ended December 31, 2024 and 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
We have also audited the retrospective adjustments to the 2022 consolidated financial statements to apply the effects of the discontinued operations, the reverse share split, and the change in presentation currency, as described in Notes 2, 14 and 26. In our opinion, such retrospective adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2022 consolidated financial statements of the Company other than with respect to these retrospective adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 financial statements taken as a whole.
Going Concern Uncertainty
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s future viability is dependent on its ability to raise additional capital through public or private financings or collaboration agreements to finance its future operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
F-3
Critical Audit Matter
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Accounting for Equity Offering and amendment of terms of warrants
As describe in note 14 to the consolidated financial statements, on September 19, 2024 the Company closed a public offering of 377,000 common shares and 5,178,556 pre-funded warrants accompanied by Series A-1 common warrants to purchase up to 5,555,556 common shares and Series A-2 common warrants to purchase up to 5,555,556 common shares, at a combined public offering price of $0.72 per share. In connection with the equity offering, the Company agreed to amend the terms of the common warrants issued in the 2023 offering. Under the amendment, the exercise price on 555,556 warrants was lowered from CHF 8.00 per common share to the exercise prices of the newly issued Series A-1 and Series A-2 common warrants, i.e. to $0.72 per common share, and their duration was extended from July 10, 2028, to September 19, 2029.
We identified the accounting treatment of the equity offering and amendment of terms of the warrants as a critical audit matter. Determining of the accounting treatment required complex evaluation to: (a) identify the different features embedded in the security purchase agreement and warrant amendment agreement, (b) assess if the conditions requiring one or more of the identified embedded features to be accounted separately and (c) determine the appropriate classification of the embedded features as equity instruments.
The primary procedures we performed to address this critical audit matter included:
| ● | Analyzing the terms and conditions of the security purchase agreement and warrant amendment agreement and identified embedded features and other contractual terms affecting the accounting of the equity offering and the amendment of terms of the warrants. |
| ● | Evaluating the Company’s accounting policies and procedures for recognizing equity offering and related embedded derivatives as well as the amendment of terms of the warrants. |
| ● | Utilizing professionals with specialized knowledge and expertise to assist reviewing the appropriateness the methodology and model used to establish fair values of the features. |
| ● | Assessing appropriateness of classification and disclosures resulting from such transaction. |
BDO AG
| /s/ Christoph Tschumi | /s/ Grégoire Weber |
We have served as the Company’s auditor since 2023.
Zurich, April 30, 2025
F-4
Consolidated Statement of Profit or Loss and Other Comprehensive Income/(Loss) of Altamira Therapeutics Ltd and subsidiaries
For the Years Ended December 31, 2024, 2023 and 2022 (in US$)
| Note | 2024 | 2023 1) | 2022 1) | |||||||||||
| Other operating income | 19 | |||||||||||||
| Research and development | 20 | ( |
) | ( |
) | ( |
) | |||||||
| General and administrative | 21 | ( |
) | ( |
) | ( |
) | |||||||
| Operating loss | ( |
) | ( |
) | ( |
) | ||||||||
| Finance income | ||||||||||||||
| Finance expense | 23 | ( |
) | ( |
) | ( |
) | |||||||
| Share of loss of an associate | 10 | ( |
) | ( |
) | |||||||||
| Loss before tax | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax gain | 24 | |||||||||||||
| Net loss from continuing operations | ( |
) | ( |
) | ( |
) | ||||||||
| Discontinued operations: | ||||||||||||||
| Profit/(loss) after tax from discontinued operations | 26 | ( |
) | |||||||||||
| Net loss attributable to owners of the Company | ( |
) | ( |
) | ( |
) | ||||||||
| Other comprehensive income/(loss): | ||||||||||||||
| Items that will never be reclassified to profit or loss | ||||||||||||||
| Remeasurements of defined benefit liability, net of taxes of $ |
( |
) | ||||||||||||
| Items that are or may be reclassified to profit or loss | ||||||||||||||
| Foreign currency translation differences, net of taxes of $ |
( |
) | ||||||||||||
| Share of other comprehensive income of an associate | ||||||||||||||
| Other comprehensive income/(loss), net of taxes of $ |
( |
) | ||||||||||||
| Total comprehensive loss attributable to owners of the Company | ( |
) | ( |
) | ( |
) | ||||||||
| Loss per share | ||||||||||||||
| Basic and diluted loss per share | 25 | ( |
) | ( |
) | ( |
) | |||||||
| Basic and diluted loss per share from continuing operations | 25 | ( |
) | ( |
) | ( |
) | |||||||
| 1) |
The accompanying notes form an integral part of these consolidated financial statements.
F-5
Consolidated Statement of Financial Position of Altamira Therapeutics Ltd and subsidiaries
As of December 31, 2024 and 2023, and January 1, 2023
(in US$)
| December 31, | December 31, | January 1, | ||||||||||||||
| Note | 2024 | 2023 1) | 2023 1) | |||||||||||||
| ASSETS | ||||||||||||||||
| Non-current assets | ||||||||||||||||
| Property and equipment | 7 | |||||||||||||||
| Right-of-use assets | 8 | |||||||||||||||
| Intangible assets | 9 | |||||||||||||||
| Other non-current financial assets | ||||||||||||||||
| Investment in an associate | 10 | |||||||||||||||
| Total non-current assets | ||||||||||||||||
| Current assets | ||||||||||||||||
| Inventories | ||||||||||||||||
| Trade receivables | ||||||||||||||||
| Other receivables | 11 | |||||||||||||||
| Prepayments | 12 | |||||||||||||||
| Derivative financial instruments | 5,14 | |||||||||||||||
| Cash and cash equivalents | 13 | |||||||||||||||
| Total current assets | ||||||||||||||||
| Total assets | ||||||||||||||||
| EQUITY AND LIABILITIES | ||||||||||||||||
| Equity | ||||||||||||||||
| Share capital | 14 | |||||||||||||||
| Share premium | 15 | ( | ) | |||||||||||||
| Other reserves | ||||||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||||||
| Total shareholders’ equity/(deficit) attributable to owners of the Company | ( | ) | ||||||||||||||
| Non-current liabilities | ||||||||||||||||
| Non-current lease liabilities | 8 | |||||||||||||||
| Employee benefit liability | 22 | |||||||||||||||
| Deferred income | ||||||||||||||||
| Deferred tax liabilities | ||||||||||||||||
| Total non-current liabilities | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Loan | 30 | |||||||||||||||
| Current lease liabilities | 8 | |||||||||||||||
| Trade and other payables | 17 | |||||||||||||||
| Accrued expenses | 18 | |||||||||||||||
| Total current liabilities | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| Total equity and liabilities | ||||||||||||||||
| 1) |
The accompanying notes form an integral part of these consolidated financial statements.
F-6
Consolidated Statement of Changes in Equity of Altamira Therapeutics Ltd and subsidiaries
As of December 31, 2024, 2023 and 2022
(in US$)
| Foreign | Retained | |||||||||||||||||||||||||
| Currency | earnings / | Total | ||||||||||||||||||||||||
| Share | Share | Other | Translation | (Accumulated | Equity / | |||||||||||||||||||||
| Note | Capital | Premium | Reserves | Reserve | Deficit) | (Deficit) | ||||||||||||||||||||
| As of January 1, 2022 1) | ( | ) | ||||||||||||||||||||||||
| Total comprehensive loss | ||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Transactions with owners of the Company | - | |||||||||||||||||||||||||
| Capital increase | ||||||||||||||||||||||||||
| Transaction costs | ( | ) | ( | ) | ||||||||||||||||||||||
| Conversion of convertible loan | ||||||||||||||||||||||||||
| Recognition of equity components of convertible loans with warrants | ||||||||||||||||||||||||||
| Reduction of share premium | ||||||||||||||||||||||||||
| Share based payments | ||||||||||||||||||||||||||
| Balance at December 31, 2022 1) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| - | ||||||||||||||||||||||||||
| As of January 1, 2023 1) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Total comprehensive loss | ||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||
| Other comprehensive income / (loss) | ||||||||||||||||||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||||
| Transactions with owners of the Company | - | |||||||||||||||||||||||||
| Capital increase | 14 | |||||||||||||||||||||||||
| Proceeds from public offering | 14 | |||||||||||||||||||||||||
| Proceeds from exercise of warrants | 14 | |||||||||||||||||||||||||
| Transaction costs | ( | ) | ( | ) | ||||||||||||||||||||||
| Conversion of convertible loan | 30 | |||||||||||||||||||||||||
| Reclassification equity component on conversion or repayment | 30 | ( | ) | ( | ) | |||||||||||||||||||||
| Recognition of equity component of loans with warrants | ||||||||||||||||||||||||||
| Value of warrants and prefunded warrants | 14 | ( | ) | |||||||||||||||||||||||
| Fair value change of warrants | ( | ) | ( | ) | ||||||||||||||||||||||
| Reduction of share capital | 14 | ( | ) | |||||||||||||||||||||||
| Reduction of share premium | 15 | ( | ) | |||||||||||||||||||||||
| Transfer to profit or loss | ( | ) | ( | ) | ||||||||||||||||||||||
| Share based payments | 16 | |||||||||||||||||||||||||
| Balance at December 31, 2023 1) | ( | ) | ||||||||||||||||||||||||
| As of January 1, 2024 | ( | ) | ||||||||||||||||||||||||
| Total comprehensive loss | - | |||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||
| Other comprehensive income / (loss) | ( | ) | ||||||||||||||||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||||
| Transactions with owners of the Company | ||||||||||||||||||||||||||
| Capital increase | 14 | |||||||||||||||||||||||||
| Proceeds from public offering | 14 | |||||||||||||||||||||||||
| Transaction costs | ( | ) | ( | ) | ||||||||||||||||||||||
| Proceeds from exercise of prefunded warrants | - | |||||||||||||||||||||||||
| Reclassification equity component on conversion or repayment | ( | ) | ||||||||||||||||||||||||
| Value of warrants and prefunded warrants | 14 | ( | ) | |||||||||||||||||||||||
| Reduction of share premium | 15 | ( | ) | |||||||||||||||||||||||
| Share based payments | 16 | |||||||||||||||||||||||||
| Balance at December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||
| 1) |
The accompanying notes form an integral part of these consolidated financial statements.
F-7
Consolidated Statement of Cash Flows of Altamira Therapeutics Ltd and subsidiaries
For the Years Ended December 31, 2024, 2023, and 2022,
including cash flows from continuing and discontinued operations.
(in US$)
| Note | 2024 | 2023 1) | 2022 1) | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Adjustments for: | ||||||||||||||||
| Depreciation | 8 | |||||||||||||||
| Impairment of intangible assets | ||||||||||||||||
| Share in result of an associate | 10 | |||||||||||||||
| Loss / (gain) on disposal of discontinued operations | ( | ) | ||||||||||||||
| Deferred income | ||||||||||||||||
| Unrealized foreign currency exchange loss/(gain), net | ( | ) | ||||||||||||||
| Net interest expense | ||||||||||||||||
| Share based payments | 16 | |||||||||||||||
Transaction costs | 23 | - | ||||||||||||||
| Employee benefits | ||||||||||||||||
| Revaluation loss derivative financial instruments | ( | ) | ||||||||||||||
| Gain on modification of financial instruments | ( | ) | ||||||||||||||
| Income tax gain | 24 | ( | ) | ( | ) | |||||||||||
| ( | ) | ( | ) | ( | ) | |||||||||||
| Changes in: | ||||||||||||||||
| Inventories | ( | ) | ||||||||||||||
| Trade and other receivables | ( | ) | ( | ) | ||||||||||||
| Prepayments | ||||||||||||||||
| Trade and other payables | ( | ) | ||||||||||||||
| Accrued expenses | ( | ) | ||||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||||||
| Cash flows from investing activities | ||||||||||||||||
| Purchase of property and equipment | 7 | ( | ) | |||||||||||||
| Purchase of intangibles | ( | ) | ||||||||||||||
| Cash received from / (paid for) other financial assets | ( | ) | ||||||||||||||
| Investment in an associate | ( | ) | ||||||||||||||
| Interest received | ||||||||||||||||
| Disposal of subsidiaries | ||||||||||||||||
| Net cash from / used in investing activities | ( | ) | ( | ) | ||||||||||||
| Cash flows from financing activities | ||||||||||||||||
| Proceeds from offerings and warrant exercises | 14 | |||||||||||||||
| Transaction costs | 14 | ( | ) | ( | ) | ( | ) | |||||||||
| Proceeds from loans | ||||||||||||||||
| Repayment of loan | ( | ) | ||||||||||||||
| Repayment of lease liabilities | 8 | ( | ) | ( | ) | ( | ) | |||||||||
| Interest paid | ( | ) | ( | ) | ( | ) | ||||||||||
| Net cash from financing activities | ||||||||||||||||
| Net increase / (decrease) in cash and cash equivalents | ( | ) | ||||||||||||||
| Cash and cash equivalents at beginning of the period | ||||||||||||||||
| Net effect of currency translation on cash and cash equivalents | ( | ) | - | |||||||||||||
| Cash and cash equivalents at end of the period | ||||||||||||||||
| 1) |
Non-cash changes related to financial liabilities are disclosed in Note 5.
F-8
1. Reporting entity
Altamira Therapeutics Ltd. (the “Company”) is an exempted company incorporated under the laws of Bermuda.
These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the “Company” and individually as “Company entities”). The Company is the ultimate parent of the following Company entities:
| ● | Altamira Therapeutics AG, Basel, Switzerland ( |
| ● | Otolanum AG, Basel, Switzerland ( |
| ● | Altamira Therapeutics, Inc., Newark, Delaware, United States
( |
| 1) | Formerly Auris Medical AG. The subsidiary was merged with its sister company Altamira Therapeutics AG, Basel, on June 30, 2024, adopting the name of the latter. |
Associated companies:
| ● | Altamira Medica AG, Basel,
Switzerland ( |
| ● | Altamira Medica Ltd., Dublin, Ireland ( |
| ● | Altamira Medica Pty Ltd, Melbourne, Australia ( |
| 2) | On November 21, 2023, the Company divested partially its
Bentrio business by selling a |
| 3) | Formerly Auris Medical Ltd.; the subsidiary was sold to Altamira Medica AG effective January 2, 2024. |
| 4) | Formerly Auris Medical Pty Ltd |
Altamira is a preclinical-stage
biopharmaceutical company developing and supplying peptide-based nanoparticle technologies for efficient RNA delivery to extradihepatic
tissues (xPhore platform). The versatile platform is suited for delivery of oligonucleotides (OligoPhore for siRNA), mRNA (SemaPhore for
mRNA) and circRNA (CycloPhore: circular mRNA) and made available to pharma or biotech companies through out-licensing. In addition, Altamira
is pursuing two flagship siRNA programs using its proprietary OligoPhore delivery technology: AM-401 for KRAS driven cancer and AM-411
for rheumatoid arthritis, both in preclinical development beyond in vivo proof of concept. In addition, the Company holds a
2. Basis of preparation
Statement of compliance
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board and Interpretations (“IFRS Accounting Standards”).
These consolidated financial statements were approved by the Board of Directors and the Audit Committee of the Company on April 29, 2025.
Basis of measurement
The consolidated financial statements are prepared on the historical cost basis, except for the revaluation to fair value of certain financial liabilities. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The principal accounting policies adopted are set out below.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
| ● | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date F-10 |
F-9
| ● | Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and |
| ● | Level 3 inputs are unobservable inputs for the asset or liability. |
Functional and presentation currency
These consolidated financial statements are presented in U.S. dollars (“US$” or “$”), which was determined to be the Company’s functional currency (“functional currency”) and elected as the Company’s presentation currency, effective January 1, 2024. Previously, Swiss francs had been the Company’s functional and presentation currency. However, the Company’s Board of Directions determined that a switch to US$ was appropriate since over time transactions denominated in US$ had become more important relative to those denominated in Swiss francs and given the trading of the Company’s common shares in the USA. The change in functional currency of the Company was applied prospectively from the effective date. All items in the Company’s balance sheet were converted into the new functional currency using the exchange rate at the date of change, the resulting translated amounts for non-monetary items are treated as their historical cost. The change in presentation currency was applied retrospectively to the Company’s financial reporting and all comparative statements and notes have been restated accordingly applying the foreign exchange translation principles as set out below.
Going Concern
We expect our research and development expenses to remain significant as we continue to develop our RNA delivery platforms and advance or initiate the pre-clinical and clinical development of our product candidates. We also expect to continue to incur additional costs associated with operating as a public company. To the extent that we will be unable to generate sufficient cash proceeds from the planned divestiture or partnering of our legacy assets or other partnering activities, we will need substantial additional financing to meet these funding requirements. 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 research and development programs, which could materially harm our business, prospects, financial condition and operating results. This could then result in bankruptcy, or the liquidation of the Company. These factors raise substantial doubt about our ability to continue as a going concern.
The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal activities and realization of assets and settlement of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The lack of a going concern assessment may negatively affect the valuation of the Company’s investments in its subsidiaries and result in a revaluation of these holdings. The Board of Directors will need to consider the interests of our creditors and take appropriate action to restructure the business if it appears that we are insolvent or likely to become insolvent.
Use of estimates and judgments
The preparation of financial statements in conformity with IFRS Accounting Standards 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 of accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
F-10
Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements are described below.
Income taxes
As disclosed in Note 25 the
Company has significant tax losses in Switzerland. These tax losses represent potential value to the Company to the extent that the Company
is able to create taxable profits in Switzerland prior to expiry of such losses. Tax losses may be used within
The Company also has tax
losses in the United States,
At December 31, 2024, the Company has not recorded any deferred tax assets in relation to these tax losses (December 31, 2023: ), Deferred tax assets on tax losses are only considered to the extent that they offset taxable temporary differences within the same entity. The key factors which have influenced management in arriving at this evaluation are the fact that the business is still in a development phase and the Company has not yet a history of making profits. Should management’s assessment of the likelihood of future taxable profits change, a deferred tax asset will be recorded. Income tax gain reflects the reassessment of deferred tax assets and liabilities booked in the 2024 fiscal year.
Impairment testing
As of December 31, 2024, the Company’s intangible
assets of $
The investment in an associate comprises the Company’s
Development expenditures
The project stage forms the basis for the decision as to whether costs incurred for the Company’s development projects can be capitalized. We do not capitalize clinical development expenditures until the Company obtains regulatory approval (i.e. approval to commercially use the product), as this is considered to be essentially the first point in time where it becomes probable that future revenues can be generated. Up to 2022, direct development expenditures for the Company’s intranasal betahistine program for the treatment of vertigo (AM-125) were capitalized as the development is primarily focused on the delivery route and formulation and not the drug itself (already an approved generic) and aims to demonstrate higher bioavailability through intranasal delivery. All capitalized direct development expenditures were impaired as of December 31, 2022, based on the impairment test performed under IFRS Accounting Standards. No development costs were capitalized in 2024 or 2023.
As of each reporting date, the Company estimates the level of service performed by the vendors and the associated costs incurred for the services performed. As part of the process of preparing the Company’s financial statements, the Company is required to estimate its accrued expenses. This process involves reviewing contracts, identifying services that have been performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred for the service when it has not yet been invoiced or otherwise notified of the actual cost.
Employee benefits
The Company maintains a pension plan for all employees in Switzerland through payments to a legally independent collective foundation. This pension plan qualifies under IFRS Accounting Standards as defined benefit pension plan.
The Company’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The Company makes relevant actuarial assumptions with regard to the discount rate, future salary increases and life expectancy.
F-11
Research and Development and Accrued Expenses
The Company records the costs associated with research, nonclinical and clinical trials, and manufacturing process development as incurred. These costs are a significant component of the Company’s research and development expenses, with a substantial portion of the Company’s on-going research and development activities being conducted by third party service providers, including contract research and manufacturing organizations.
The Company accrues for expenses resulting from obligations under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and other outside service providers for which payment flows do not match the periods over which materials or services are provided to the Company. Accrued expenses are recorded based on estimates of services received and efforts expended pursuant to agreements established with CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. The Company makes significant judgments and estimates in determining the accrued expense balance in each reporting period. In the event advance payments are made to a CRO, CMO, or outside service provider, the payments will be recorded as prepayments which will be expensed as the contracted services are performed. Inputs, such as the services performed, the number of patients enrolled, or the trial duration, may vary from the Company’s estimates. As actual costs become known, the Company adjusts its prepayments and accrued expenses.
3. Material accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, unless otherwise indicated.
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it 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. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Transactions eliminated on consolidation
All inter-company balances, transactions and unrealized gains on transactions have been eliminated in consolidation. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Investment in an associate
On November 21, 2023, the
Company divested partially its Bentrio business by selling a
F-12
Segment reporting
A segment is a distinguishable component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components.
The Chief Executive Officer is determined to be the Company’s Chief Operating Decision Maker (“CODM”). The CODM assesses the performance and allocates the resources of the Company as a whole, as all of the Company’s activities are focusing on the development of therapeutics for important unmet medical needs. Financial information is only available for the Company as a whole. Therefore, management considers there is only one operating segment under the requirements of IFRS 8, Operating Segments.
Foreign currency
Foreign currency transactions
Items included in the financial statements of Company entities are measured using the currency of the primary economic environment in which the entity operates. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are generally recognized in profit or loss. If they are attributable to part of the net investment in a foreign operation, they are recognized in OCI until the net investment is disposed of, at which time the cumulative amount is reclassified to profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are not re-translated.
Foreign operations
Assets and liabilities of Company entities whose functional currency is other than US$ are included in the consolidation by translating the assets and liabilities into the reporting currency at the exchange rates applicable at the end of the reporting period. Income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transaction).
These foreign currency translation differences are recognized in Other Comprehensive income/(loss) and presented in the foreign currency translation reserve in equity. When a foreign operation is disposed of such that control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
Closing exchange rates for the most significant foreign currencies relative to US$:
| Geographical | December 31, | December 31, | December 31, | |||||||||||||
| Currency | area | 2024 | 2023 | 2022 | ||||||||||||
| USD | Dollar | |||||||||||||||
| CHF | Swiss Franc | |||||||||||||||
| EUR | Euro | |||||||||||||||
Average exchange rates for the most significant foreign currencies relative to US$:
| Geographical | ||||||||||||||||
| Currency | area | 2024 | 2023 | 2022 | ||||||||||||
| USD | Dollar | |||||||||||||||
| CHF | Swiss Franc | |||||||||||||||
| EUR | Euro | |||||||||||||||
F-13
Property and equipment
Property and equipment are
measured at historical costs less accumulated depreciation and any accumulated impairment losses. Historical costs include expenditures
that are directly attributable to the acquisition of the items. When parts of an item of tangible assets have different useful lives,
they are accounted for as separate tangible asset items (major components). Depreciation is calculated on a straight-line basis over the
expected useful life of the individual asset.
| Production equipment | |
| Office furniture and electronic data processing equipment (“EDP”) |
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. When an asset is reviewed for impairment, the asset’s carrying amount may be written down immediately to its recoverable amount, provided the asset’s carrying amount is greater than its estimated recoverable amount. Management assesses the recoverable amount by assessing the higher of its fair value less costs to sell or its value in use.
Cost and accumulated depreciation related to assets retired or otherwise disposed are removed from the accounts at the time of retirement or disposal and any resulting gain or loss is included in profit or loss in the period of disposition.
Intangible assets
Research and development
Expenditures on the Company’s research programs are not capitalized; they are expensed when incurred.
Expenditures on the Company’s development programs are generally not capitalized except if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. For the development projects of the Company, these criteria are generally only met when regulatory approval for commercialization is obtained. For the AM-125 program for the treatment of vertigo it was the Company’s assessment up to 2022 that the criteria mentioned above were met, and therefore direct development expenditures were capitalized for AM-125 up to 2022, including intellectual property-related costs for the prosecution and registration of patents. As of December 31, 2022, all capitalized direct development costs related to AM-125 were impaired based on the impairment test performed under IFRS Accounting Standards. The impairment was recognized as R&D expense in 2022.
F-14
Licenses, intellectual property and data rights
Intellectual property rights that are acquired by the Company are capitalized as intangible assets if they are controlled by the Company, are separately identifiable and are expected to generate future economic benefits, even if uncertainty exists as to whether the research and development will ultimately result in a marketable product. Consequently, upfront and milestone payments to third parties for the exclusive use of pharmaceutical compounds in specified areas of treatment are recognized as intangible assets.
Measurement
Intangible assets acquired that have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.
Amortization
All licenses of the Company
have finite lives. Amortization will commence once the Company’s intangible assets are available for use which will be the case
after regulatory approvals are obtained and the related products are available for use. Amortization of licenses is calculated on a straight-line
basis over the period of the expected benefit or until the license expires, whichever is shorter. The estimated useful life is
Impairment of non-financial assets
Property and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). 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 to sell or value in use. Impairment losses are recognized in profit or loss. Assets that were previously impaired are reviewed for possible reversal of the impairment at each reporting date. Any increase in the carrying amount of an asset will be based on the depreciated historical costs had the initial impairment not been recognized.
Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurements of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period during which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accumulation of interest and reduced by the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
F-15
Short-term leases and leases of low-value assets
The Company applies the short-term
lease recognition exemption to its short-term leases. It also applies the lease of low-value assets recognition exemption to leases that
are considered of low value (i.e. below $
Associates
Where the Company has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognized in the consolidated statement of financial position at cost. An investment in an associate that represents the retained interest in a former subsidiary is recognized at its fair value at the date when control is lost. Subsequently associates are accounted for using the equity method, where the Company’s share of post-acquisition profits and losses and other comprehensive income is recognized in the consolidated statement of profit and loss and other comprehensive income (except for losses in excess of the Company’s investment in the associate unless there is an obligation to make good on those losses).
Profits and losses arising on transactions between the Company and its associates are recognized only to the extent of unrelated investors’ interests in the associate. The investor’s share in the associate’s profits and losses resulting from these transactions is eliminated against the carrying value of the associate.
Any premium paid for an associate above the fair value of the Company’s share of the identifiable assets, liabilities and contingent liabilities acquired is capitalized and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost comprises direct materials and, where applicable, direct labor costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first-in, first-out method. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Discontinued operations
A discontinued operation is a component of the Company’s business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.
Discontinued operations are presented in the consolidated statement of comprehensive income/(loss) as a single line which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognized on the re-measurement to fair value less costs to sell or on disposal of the assets or disposal Companies constituting discontinued operations.
When an operation is classified as a discontinued operation, the comparative statement of profit or loss is re-presented as if the operation had been discontinued from the start of the comparative year. The objective is to provide the users of the financial statements with the most useful information to evaluate the financial effects of discontinued operations. Transactions between continuing and discontinued operations are presented as part of the respective continuing or discontinued operations. However, intragroup transactions between continuing and discontinued operations are eliminated in the financial statements as a whole.
Financial instruments
The Company classifies its financial assets in the following categories: loans and receivables based on the expected loss model. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Recognition and derecognition of non-derivative financial assets and liabilities
The Company initially recognizes loans and receivables and debt securities issued on the date when they are originated. All other financial assets and financial liabilities are initially recognized on the trade date.
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognized financial assets that is created or retained by the Company is recognized as a separate asset or liability.
The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled, or expired.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
F-16
Non-derivative financial assets and liabilities—measurement
Loans and receivable
These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortized cost using the effective interest method, less expected losses.
Cash and cash equivalents
The Company considers all short-term, highly liquid investments that are readily convertible into known amounts of cash, and which are subject to an insignificant risk of changes in value with original maturities of three months or less at the date of the purchase, to be cash equivalents.
Non-derivative financial liabilities—measurement
Non-derivative financial liabilities are initially recognized at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method.
Convertible loans
In a convertible loan classified as a hybrid contract containing a host and a separated embedded derivative, both classified as liability, the carrying amount of the host contract at initial recognition is the difference between the carrying amount of the hybrid contract and the fair value of the embedded derivative. Transaction costs that relate to the issue of the convertible loan are allocated to the host and embedded derivative in proportion to the allocation of the gross proceeds. Transaction costs relating to the embedded derivative are immediately recognized in profit and loss. Transaction costs relating to the host contract are included in the carrying amount of the liability. The host contract is then subsequently measured at amortized cost, using the effective interest method.
Share capital
All shares of the Company are registered shares and classified as part of shareholders’ equity. Incremental costs directly attributable to the issue of the Company’s shares, net of any tax effects, are recognized as a deduction from equity. The warrants are classified as a financial liability at fair value through profit or loss and the cost allocated to the liability component will be immediately expensed to the income statement.
The Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future.
Impairment of non-derivative financial assets
Financial assets are assessed at each reporting date to determine whether there is objective evidence of impairment.
Objective evidence that financial assets are impaired includes:
| ● | default or delinquency by a debtor; |
| ● | indications that a debtor or issuer will enter bankruptcy; |
| ● | adverse changes in the payment status of borrowers or issuers; |
| ● | the disappearance of an active market for a security; or |
| ● | observable data indicating that there is measurable decrease in expected cash flows from a company of financial assets. |
F-17
Financial assets measured at amortized cost
The Company considers evidence of impairment for these assets at an individual asset level. An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss is reversed through profit or loss.
Derivative Financial Instruments
Derivative financial instruments (assets) are accounted as the cost to obtain the rights from a third party to issue shares under the purchase agreement. The fair value calculation of the derivative financial instrument (asset) is adjusted on the utilization of the asset based on total dollar amount of the purchase agreement. At each period-end, relative to the portion of shares sold under the contract, a portion of the option value is derecognized to equity. In addition, an assessment is made at each period-end, whether the contract will still be used in the future, if not the remaining option value is derecognized and recorded as transaction costs through the profit and loss statement.
Derivative financial instruments (liabilities) are accounted at fair value and changes in fair value are shown as profit or loss. The fair value calculation of the derivative financial instruments is based on the Black-Scholes option pricing model. Assumptions are made for volatility and the risk-free rate in order to estimate the fair value of the instrument. Transaction cost related to derivative financial instruments are recorded through profit and loss.
Embedded Derivatives
Derivatives may be embedded in another contractual arrangement. The Company accounts for an embedded derivative separately from the host contract when:
| - | The host contract is not an asset in the scope of IFRS 9 |
| - | The host contract is not itself carried at fair value through profit and loss (FVPL) |
| - | The terms of the Embedded Derivative would meet the definition of a derivative if they were contained in a separate contract |
| - | The economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host |
The separated embedded derivative in the loan agreement with FiveT Investment Management Ltd. (“FiveT IM” and the “2022 FiveT Loan”) was initially measured at fair value by an independent consultant applying a simulation-based valuation approach. On December 31, 2022, the embedded derivative was measured based on the Black-Scholes option pricing model, resulting in a fair value of zero. Assumptions are made for volatility, risk free rate and other features of the instrument. All changes in the fair value of embedded derivatives were recognized in profit and loss.
The 2023 FiveT Loan was classified as a compound financial instrument containing a host liability and two equity components (conversion right and warrants). The fair value of the liability component was determined first by discounting the future cash flows at the rate of interest that would apply to an identical financial instrument without these features. The equity components were measured at the residual amount, by deducting the amount calculated for the liability component from the fair value of the instrument as a whole. The residual amount was allocated to the two equity components based on their relative fair values. The host liability was subsequently measured at amortized cost, using the effective interest rate method.
F-18
Income tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in Other Comprehensive Income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
Deferred tax
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is not recognized for:
| ● | temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; |
| ● | temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and |
| ● | taxable temporary differences arising on the initial recognition of goodwill. |
Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realized, or the deferred income tax liability is settled.
Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences 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.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis.
Employee benefits
The Company maintains a pension plan for all employees in Switzerland through payments to a legally independent collective foundation. This pension plan qualifies under IFRS Accounting Standards as defined benefit pension plan. There are no pension plans for the subsidiaries outside Switzerland.
The Company’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in Other Comprehensive Income. Past service costs, including curtailment gains or losses, are recognized immediately in general and administrative expenses within the operating results. Settlement gains or losses are recognized in general and administrative expenses within the operating results. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period or in case of any significant events between measurement dates to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.
F-19
Share-based compensation
The Company maintains a share-based payment plan in the form of a stock option plan for its employees, members of the Board of Directors as well as key service providers. Stock options are granted at the Board’s discretion without any contractual or recurring obligations.
The share-based compensation
plans qualify as equity settled plans. The grant-date fair value of share-based payment awards granted to employees is recognized as an
expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. Under
the Company’s Long Term Equity Incentive Plan (the “Equity Incentive Plan” or “EIP”),
The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. Share-based payments that are not subject to any further conditions are expensed immediately at grant date. In the year the options are exercised the proceeds received net of any directly attributable transaction costs are credited to share capital (par value) and share premium.
Valuation of share options
Option pricing and values are determined based on the Black Scholes option pricing model and assumptions are made for inputs such as volatility of the Company’s stock and the risk-free rate.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, where it is more likely than not that an outflow of resources will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Revenue recognition
The Company recognizes revenue from the license of intellectual property and from the sale of products. To assess revenue recognition for arrangements that the Company determines are within the scope of IFRS 15, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of IFRS 15, the Company assesses the services promised within each contract and determine those that are performance obligations and assess whether each promised service is distinct.
License of intellectual property
The Company recognizes as revenue its non-refundable license fees, milestone payments and royalties when its customer obtains control of promised services, in an amount that reflects the consideration which the Company expects to receive in exchange for those rendered services. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues when the license conveys a right of use, or there is a right of access to the underlying intellectual property. However, revenue for a license that provides a right to use the Company’s intellectual property before the beginning of the period during which the customer is able to use and benefit from the license is deferred. Revenue from sales-based royalty, in exchange for a license of intellectual property is recognized only when the subsequent sale occurs and the performance obligation to which the sales-based royalty has been allocated has been satisfied (in whole or in part). Revenue from license fees is related to discontinued operations (Bentrio business divested on November 21, 2023).
Sale of products
Up to the partial divestiture of the Bentrio business on November 21, 2023, the Company sold a single product, Bentrio, a drug-free nasal spray for protection against airborne viruses and allergens. Due to the partial divestiture of the Bentrio business, revenue from Bentrio sales in 2023 and 2022 is presented as part of the result from discontinued operations. Revenue from sale of products is recognized at the point in time when control of the asset is transferred to the customer, generally on delivery of the product if no other agreement has been made. Revenue is net of value-added tax, rebates, discounts and returns.
F-20
Government grants
Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related research and development costs for which the grants are intended to compensate. Government grants that are receivable as compensation for expenses already incurred are recognized in profit or loss in the period in which they become receivable. The income from grants related to R&D expenditures are presented separately under the heading of ‘other operating income’. Grants that relate to the acquisition of an asset are recognized in profit or loss as the asset is depreciated or amortized. These grants are recognized as a reduction in the cost of the asset.
Up to 2023 Altamira Medica
Pty Ltd obtained credits under the Australian R&D Tax Incentive program (R&DITC) which are reported under discontinued operations.
The program provides a tax offset of
In 2023, Altamira Therapeutics Inc. obtained payments under a grant from the NIH National Institutes of Health, for certain R&D expenses related to the development of “a Peptide-Based Polyplex Platform for Nucleotides Delivery to the Sites of Inflammation”. The income from the NIH grant which is related to R&D expenditures is recognized in profit or loss as other operating income (refer to Note 19).
Earnings/(loss) per share
Basic earnings/(loss) per share are calculated by dividing the net profit/(loss) attributable to owners of the Company by the weighted average number of shares outstanding during the period. Diluted earnings/(loss) per share are calculated by dividing the net profit/(loss) attributable to the owners of the Company by the weighted average number of shares outstanding during the period adjusted for the conversion of all dilutive potential ordinary shares. Earnings/(loss) per share is calculated on the net profit/(loss) attributable to owners of the company as a whole and to continuing and discontinued operations (refer to notes 25 and 26).
4. New standards, amendments and interpretations adopted by the Company
In 2024, the following revised standards were adopted:
Adoption did not have any material impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements.
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after January 1, 2025, and have not been applied in preparing these consolidated financial statements.
F-21
| Planned | ||||||||||||
| application | ||||||||||||
| Effective | by the | |||||||||||
| Standard/Interpretation | Impact | date | Company | |||||||||
| New standards, interpretations or amendments | ||||||||||||
| 1 | ) | |||||||||||
| 1 | ) | |||||||||||
| 2 | ) | |||||||||||
| 3 | ) | |||||||||||
| (1) |
| (2) |
| (3) |
5. Financial instruments and risk management
The following table shows the carrying amounts of financial assets
and financial liabilities:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Financial assets | ||||||||
| At amortized cost | ||||||||
| Cash and cash equivalents | ||||||||
| Other non-current financial assets | ||||||||
| Other receivables | ||||||||
| At fair value through profit and loss | ||||||||
| Derivative financial instruments | ||||||||
| Total financial assets | ||||||||
| Financial liabilities | ||||||||
| At amortized cost | ||||||||
| Trade and other payables | ||||||||
| Accrued expenses | ||||||||
| Non-current lease liabilities | ||||||||
| Current lease liabilities | ||||||||
| Total financial liabilities | ||||||||
Fair values
The carrying amount of cash and cash equivalents, financial assets, trade and other receivables, trade and other payables, accrued expenses, loan and lease liabilities is a reasonable approximation of their fair value due to the short-term nature of these instruments.
| Fair values as at | ||||||||||||
| December 31, | December 31, | Fair value | ||||||||||
| Financial assets / liabilities | 2024 | 2023 | hierarchy | Valuation technique(s) and key input(s) | ||||||||
| Derivative financial | Liability | Liability | Level 2 | Black-Scholes option pricing model. | ||||||||
| Liabilities – warrants from public offerings | — | The share price is determined by Company’s quoted price. The strike price and maturity are defined by the contract. The volatility assumption is driven by Company’s historic quoted share price and the risk free rate is estimated based on observable yield curves at the end of each reporting period. | ||||||||||
Derivative financial asset - Option LPC purchase agreement | Asset | Level 3 | The fair value is equal to the price paid to the counterparty for obtaining the right under the purchase agreement. The price paid corresponds to the fair value of 2,500 commitment shares issued to LPC as consideration for its commitment to purchase our common shares under the purchase agreement. Subsequently the fair value was adjusted for the part of the right consumed through equity. The Commitment Purchase Agreement expired on January 1, 2025. The remaining fair value of $240,399 was derecognized and recorded as transaction costs through profit and loss. | |||||||||
F-22
Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk, credit risk, interest rate and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. Management identifies, evaluates and controls financial risks. No financial derivatives have been used in 2024 and 2023 to hedge risk exposures. The Company invests its available cash in instruments with the main objectives of preserving principal, meeting liquidity needs and minimizing foreign exchange risks. The Company allocates its liquid assets to first tier Swiss or international banks.
Liquidity risk
The Company’s principal source of liquidity is its cash reserves which are mainly obtained through the issuance of new shares. The Company has succeeded in raising capital to fund its development activities to date and has raised funds that will allow it to meet short-term development expenditures. The Company will require regular capital injections to continue its development work, which may be dependent on meeting development milestones, technical results and/or commercial success. Management monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs. The ability of the Company to maintain adequate cash reserves to sustain its activities in the medium term is highly dependent on the Company’s ability to raise further funds. Consequently, the Company is exposed to continued liquidity risk.
The table below analysis
the remaining contractual maturities of financial liabilities, including estimated interest payments as of December 31, 2024, and 2023.
| Between 3 | ||||||||||||||||||||
| Carrying | Less than | months and 2 | 2 years and | |||||||||||||||||
| amount | 3 months | years | later | Total | ||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Trade and other payables | ||||||||||||||||||||
| Accrued expenses | ||||||||||||||||||||
| Non-current lease liabilities | ||||||||||||||||||||
| Current lease liabilities | ||||||||||||||||||||
| Total | ||||||||||||||||||||
| Between 3 | ||||||||||||||||||||
| Carrying | Less than 3 | months and 2 | 2 years and | |||||||||||||||||
| amount | months | years | later | Total | ||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Trade and other payables | ||||||||||||||||||||
| Accrued expenses | ||||||||||||||||||||
| Current lease liabilities | ||||||||||||||||||||
| Total | ||||||||||||||||||||
| Non-cash changes | ||||||||||||||||||||
| Financing | Fair | |||||||||||||||||||
| Cash | value | Other | ||||||||||||||||||
| 01.01.2024 | Flows 1) | revaluation | changes 2) | 31.12.2024 | ||||||||||||||||
| Lease liabilities | ( | ) | ||||||||||||||||||
| Total | ( | ) | ||||||||||||||||||
| Non-cash changes | ||||||||||||||||||||
| Financing | Fair | |||||||||||||||||||
| Cash | value | Other | ||||||||||||||||||
| 01.01.2023 | Flows 1) | revaluation | changes 2) | 31.12.2023 | ||||||||||||||||
| Loans | ( | ) | ||||||||||||||||||
| Lease liabilities | ( | ) | ( | ) | ||||||||||||||||
| Total | ( | ) | ||||||||||||||||||
| 1) |
| 2) |
F-23
Credit risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents and deposits with banks, as well as from trade and other receivables. The Company’s policy is to invest funds in low-risk investments including interest bearing deposits. Trade and other receivables were current as of December 31, 2024, and December 31, 2023, not impaired and included only well-known counterparties.
The Company has been holding cash and cash equivalents in the Company’s principal operating currencies (US$, CHF, EUR) with international banks of high credit rating.
The Company’s maximum exposure to credit risk is represented by the carrying amount of each financial asset in the consolidated statement of financial position:
| December 31, | December 31, | |||||||
| Financial assets | 2024 | 2023 | ||||||
| Cash and cash equivalents | ||||||||
| Other non-current financial assets | ||||||||
| Trade receivables | ||||||||
| Other receivables | ||||||||
| Total | ||||||||
Market risk
Currency risk
The Company operates internationally
and is exposed to foreign exchange risk arising from various exposures, primarily with respect to CHF and Euro. Foreign exchange risk
arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
| 2024 | 2023 | |||||||||||||||||||
| in USD | CHF | USD | EUR | USD | EUR | |||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||
| Trade and other receivables | ||||||||||||||||||||
| Trade and other payables | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Accrued expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net statement of financial position | ||||||||||||||||||||
| exposure -asset/(liability) | ( | ) | ( | ) | ( | ) | ||||||||||||||
As of December 31, 2024,
a
Capital risk management
The Company and its subsidiaries are subject to capital maintenance requirements under local law in the country in which it operates. To ensure that statutory capital requirements are met, the Company monitors capital, at the entity level, on an interim basis as well as annually. From time to time the Company may take appropriate measures or propose capital increases to ensure the necessary capital remains intact.
6. Segment information
Geographical information
| December 31, 2023 | December 31, 2024 | |||||||
| Property and equipment | ||||||||
| Right-of-use assets | ||||||||
| Intangible assets | ||||||||
| Total Switzerland | ||||||||
Non-current assets for geographical information exclude financial instruments and investments in associated companies.
F-24
7. Property and Equipment
| Office | ||||||||||||
| Production | furniture | |||||||||||
| equipment | and EDP | Total | ||||||||||
| At cost | ||||||||||||
| As of January 1, 2023 | ||||||||||||
| Exchange differences | ||||||||||||
| As of December 31, 2023 | ||||||||||||
| Additions | ||||||||||||
| Exchange differences | ( | ) | ( | ) | ( | ) | ||||||
| As of December 31, 2024 | ||||||||||||
| Accumulated depreciation | ||||||||||||
| As of January 1, 2023 | ( | ) | ( | ) | ( | ) | ||||||
| Exchange differences | ( | ) | ( | ) | ( | ) | ||||||
| As of December 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||
| Exchange differences | ||||||||||||
| As of December 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||
| Net book value | ||||||||||||
| As of December 31, 2023 | ||||||||||||
| As of December 31, 2024 | ||||||||||||
| 8. Right-of-use assets and lease liabilities | ||||||||
| Office | ||||||||
| Right-of-use assets | building | Total | ||||||
| At cost | ||||||||
| As of January 1, 2023 | ||||||||
| Lease modification | ( | ) | ( | ) | ||||
| Exchange differences | ||||||||
| As of December 31, 2023 | ||||||||
| Lease modification | ||||||||
| Exchange differences | ( | ) | ( | ) | ||||
| As of December 31, 2024 | ||||||||
| Accumulated depreciation | ||||||||
| As of January 1, 2023 | ( | ) | ( | ) | ||||
| Charge for the year | ( | ) | ( | ) | ||||
| Exchange differences | ( | ) | ( | ) | ||||
| As of December 31, 2023 | ( | ) | ( | ) | ||||
| Charge for the year | ( | ) | ( | ) | ||||
| Exchange differences | ||||||||
| As of December 31, 2024 | ( | ) | ( | ) | ||||
| As of December 31, 2023 | ||||||||
| As of December 31, 2024 | ||||||||
| December 31, | December 31, | |||||||
| Low value and short-term lease expenses | 2024 | 2023 | ||||||
| Expense related to short-term leases | ||||||||
| Expense related to leases of low value assets | ||||||||
| Total | ||||||||
| December 31, | December 31, | |||||||
| Lease liabilities | 2024 | 2023 | ||||||
| As of January 1 | ||||||||
| Additions | ||||||||
| Interest expense | ||||||||
| Repayment of lease liability | ( | ) | ( | ) | ||||
| Lease modification | ( | ) | ||||||
| Exchange differences | ( | ) | ||||||
| As of December 31 | ||||||||
| thereof non-current | ||||||||
| thereof current | ||||||||
F-25
| December 31, | December 31, | |||||||
| Maturities of lease liabilities | 2024 | 2023 | ||||||
| Year 1 | ||||||||
| Year 2 | ||||||||
| Year 3 | ||||||||
| Year 4 | ||||||||
| Year 5 | ||||||||
| Undiscounted lease payments | ||||||||
| Less: unearned interest | ( | ) | ( | ) | ||||
| Total | ||||||||
The total cash outflows
for the principal element of lease payment amounted to $
The office lease in Basel,
Switzerland, was renewed in 2024 for
| 9. Intangible assets | ||||||||||||||||||||
| IP & Data | Internally | |||||||||||||||||||
| Licenses | rights | Patents | generated | Total | ||||||||||||||||
| At cost | ||||||||||||||||||||
| As of January 1, 2023 | ||||||||||||||||||||
| Exchange differences | ||||||||||||||||||||
| As of December 31, 2023 | ||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||
| Accumulated amortization and impairment losses | ||||||||||||||||||||
| As of January 1, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Exchange differences | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| As of December 31, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| As of December 31, 2024 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net book value | ||||||||||||||||||||
| As of December 31, 2023 | ||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||
F-26
Intangible assets comprise upfront and milestone payments related to licenses and capitalized development costs.
Commencing with the business year 2018, the Company recorded intangibles related to direct development expenditure of its AM-125 program. In 2019, a US patent on AM-125 was issued and a related EU application was allowed. As a consequence, we started to capitalize patent prosecution and registration costs until and including the year 2022.
Based on the impairment testing
performed under IFRS Accounting Standards as of December 31, 2022, all intangible assets related to the AM-125 project were written off.
Accordingly, in the year 2022 the Company recorded an impairment of $
As at December 31, 2024, intangible assets only include a license. The license is related to the acquisition of Trasir in 2021, which was treated as an asset acquisition because substantially all the fair value of Trasir was concentrated in a worldwide exclusive license agreement with Washington University. Amortization will commence once the intangible assets are available for use, which will be the case after regulatory approvals are obtained and the related products are available for use.
10. Investment in an associate
On November 21, 2023, the
Company closed the transaction for the partial divestiture of its Bentrio business, by selling a
Until the date of the transaction,
Altamira Medica AG and Altamira Medica Pty Ltd., were fully consolidated as the Company had control of these wholly owned subsidiaries.
Following the sale, the new owner holds the majority of the voting rights and may appoint a majority of the Board of Directors of Medica.
As a result of the transaction the Company has lost control but has the power to participate in the financial and operating policy decisions
of its former subsidiary. Therefore, the retained share of
Further, the transaction
included a cash contribution of CHF
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Current assets | ||||||||
| Non-current assets | ||||||||
| Current liabilities | ( | ) | ( | ) | ||||
| Non-current liabilities | ( | ) | ( | ) | ||||
| Equity | ( | ) | ( | ) | ||||
| Company’s share in equity - | ( | ) | ( | ) | ||||
| Goodwill | ||||||||
| Company’s carrying amount of the investment | ||||||||
The associate had no contingent liabilities or capital commitments as at 31 December 2024 and 2023.
| 1.1. - 31.12.2024 | 1.11. - 31.12.2023 | |||||||
| Revenue from contracts with customers | ||||||||
| Cost of sales | ( | ) | ( | ) | ||||
| Operating expenses | ( | ) | ( | ) | ||||
| Finance costs | ( | ) | ( | ) | ||||
| Loss before tax | ( | ) | ( | ) | ||||
| Income tax gain / (expense) | ( | ) | ||||||
| Loss after tax | ( | ) | ( | ) | ||||
| Other comprehensive income | ||||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||
| Company’s share of loss for the period | ( | ) | ( | ) | ||||
| Company’s share of other comprehensive income | ||||||||
F-27
11. Other receivables
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Receivable from related parties | ||||||||
| Receivable from suppliers and other | ||||||||
| Value added tax receivable | ||||||||
| Total other receivables | ||||||||
Other receivables were not
considered impaired in the years presented herein. Receivables from related parties of $
12. Prepayments
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Advance payments to suppliers | ||||||||
| Insurance | ||||||||
| Total prepayments | ||||||||
13. Cash and cash equivalents
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Cash in bank accounts | ||||||||
| Total cash and cash equivalents | ||||||||
F-28
14. Capital, reserves and warrants
| December 31, 2024 | December 31, 2023 | |||||||||||||||
| Number | US$ | Number | US$ | |||||||||||||
| Common shares with par value of $ | ||||||||||||||||
| Total | ||||||||||||||||
| Common Shares | ||||||||
| (Number) | ||||||||
| 2024 | 2023 | |||||||
| As of January 1 | ||||||||
| Exercise of warrants and pre-funded warrants | ||||||||
| Public Offering | ||||||||
| LPC equity line | ||||||||
| ATM program | ||||||||
| Conversion convertible loan | ||||||||
| Fractional shares | ( | ) | ||||||
| Total, as of December 31 | ||||||||
| * |
On September 19, 2024 the
Company closed a public offering of
On January 19, 2024, we entered
into a sales agreement with H.C. Wainwright & Co., LLC (“HCW” and the “HCW Sales Agreement”). Pursuant to
the terms of the HCW Sales Agreement we may offer and sell our common shares, from time to time through HCW by any method deemed to be
an “at-the-market” offering as defined in Rule 415(a)(4) promulgated under the Securities Act. In 2024, we issued
F-29
The HCW Sales Agreement effectively
replaced the sales agreement that we had concluded with A.G.P./Alliance Global Partners (“A.G.P.” and the “A.G.P. Sales
Agreement”) on November 30, 2018 and amended on April 5, 2019. Pursuant to the terms of the A.G.P. Sales Agreement, the Company
could offer and sell its common shares, from time to time through A.G.P. by any method deemed to be an “at-the-market” (ATM)
offering as defined in Rule 415(a)(4) promulgated under the Securities Act. In 2023 we sold
On July 10, 2023, the Company
closed a public offering of
In connection with the 2024
Public Offering, the Company agreed to amend the terms of the common warrants issued in the 2023 Public Offering. Under the amendment,
the exercise price on
On May 1, 2023, we entered
into the 2023 FiveT Loan agreement, pursuant to which FiveT IM loaned CHF
Commencing 60 days after
May 4, 2023, we were to repay at least 1/20th of the outstanding loan plus accrued interest pro rata in monthly tranches which, at our
discretion, could be paid at any time during the month either in: (i) cash plus
F-30
Further, FiveT IM received
warrants to purchase an aggregate of
On February 4, 2022, the
Company entered into a convertible loan agreement with FiveT IM (the “2022 FiveT Loan”). The 2022 FiveT Loan of CHF
On December 5, 2022, the
Company entered into a purchase agreement and a Registration Rights Agreement with Lincoln Park Capital Fund, LLC (the “2022 Commitment
Purchase Agreement”). Pursuant to the purchase agreement, LPC agreed to subscribe for up to $
15. Share premium
At the Company’s
annual general meeting held on May 16, 2024, the shareholders approved the reduction of the share premium account to zero and to credit
the amount of the reduction to accumulated deficit. The reduction amounted to $
Authorized share capital
Our authorized share capital
as of December 31, 2024, consisted of
16. Share-based compensation
Description
In 2014, the Company introduced
an equity incentive plan (the “EIP”), which was amended in 2017 and 2019. In 2024, the Company granted
Holders of vested options
are entitled to purchase common shares of the Company. Under the Equity Incentive Plan, the Board of Directors defined the exercise price
as the average daily closing price of the Company’s shares during the 30 days preceding the date of grant. All options are to be
settled by the physical delivery of shares.
| Number of | Contractual | |||||||
| options | life of | |||||||
| Plan | outstanding | Vesting conditions | options | |||||
| Equity Incentive Plan Board | ||||||||
| Equity Incentive Plan Management & Staff | ||||||||
| Equity Incentive Plan Management & Staff | ||||||||
F-31
Measurement of fair values
The fair value of the options was measured based on the Black-Scholes formula.
| Stock Option Plan | |||||||
| Equity Incentive | Equity Incentive | Equity Incentive | Equity Incentive | ||||
| Plan 2024 | Plan 2024 | Plan 2023 | Plan 2023 | ||||
| Fair value at grant date | |||||||
| Share price at grant date | $ | $ | $ | $ | |||
| Exercise price | $ | $ | $ | $ | |||
| Expected volatility | |||||||
| Expected life | |||||||
| Expected dividends | |||||||
| Risk-free interest rate | |||||||
| 1) |
| 2) |
The Company uses its own historic volatility to calculate expected volatility. The expected life of all options is assumed to correspond to the vesting period.
The total expense recognized for equity-settled
share-based payment transactions was $
The unamortized portion of the grant-date fair value of
share-based payments at December 31, 2024 amounted to
The range of exercise prices for outstanding options
was $
| 2024 | 2023 | |||||||||||||||||||||||
| Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||
| average | average | average | average | |||||||||||||||||||||
| Number of | exercise | remaining | Number of | exercise | remaining | |||||||||||||||||||
| options | price | term | options | price | term | |||||||||||||||||||
| Outstanding at January 1 | ||||||||||||||||||||||||
| Impact of repricing | ( | ) | ||||||||||||||||||||||
| Forfeited during the year | ( | ) | ( | ) | ||||||||||||||||||||
| Exercised during the year | ||||||||||||||||||||||||
| Granted during the year | ||||||||||||||||||||||||
| Outstanding at December 31 | | | ||||||||||||||||||||||
| Exercisable at December 31 | ||||||||||||||||||||||||
17. Trade and other payables
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Trade accounts payable - third parties | ||||||||
| Other payables | ||||||||
| Total trade and other payables | ||||||||
F-32
18. Accrued expenses
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Accrued research and development costs | ||||||||
| Professional fees | ||||||||
| Accrued vacation & overtime | ||||||||
| Employee benefits incl. Share based payments | ||||||||
| Other | ||||||||
| Total accrued expenses | ||||||||
19. Other operating income
| 2024 | 2023 | 2022 | ||||||||||
| Income from government grant | ||||||||||||
| Income from sublease to related party | ||||||||||||
| Other income | ||||||||||||
| Total other operating income | ||||||||||||
20. Research and development expense
| 2024 | 2023 | 2022 | ||||||||||
| Pre-clinical projects | ||||||||||||
| Clinical projects | ||||||||||||
| Product and process development | ||||||||||||
| Employee benefits and expenses | ||||||||||||
| Patents and trademarks | ||||||||||||
| Regulatory projects | ||||||||||||
| Impairment intangible assets | ||||||||||||
| Other research and development expense | ||||||||||||
| Total research and development expense | ||||||||||||
21. General and administrative expenses
| 2024 | 2023 | 2022 | ||||||||||
| Employee benefits and expenses | ||||||||||||
| Business development | ||||||||||||
| Travel expenses | ||||||||||||
| Administration expenses | ||||||||||||
| Lease expenses from short-term lease | ||||||||||||
| Depreciation of Right-of-use assets | ||||||||||||
| Capital tax expenses | ||||||||||||
| Total general and administrative expenses | ||||||||||||
F-33
22. Employee benefits
| 2024 | 2023 | 2022 | ||||||||||
| Salaries | ||||||||||||
| Pension costs | ||||||||||||
| Other social benefits | ||||||||||||
| Share based payments costs | ||||||||||||
| Other personnel expenditures | ||||||||||||
| Recharged to related party | ( | ) | ||||||||||
| Total employee benefits | ||||||||||||
| Employee benefits attributable to continuing operations | ||||||||||||
| Employee benefits attributable to discontinued operations | ||||||||||||
Benefit plans
The Company participates in a retirement plan (the “Plan”) organized as an independent collective foundation, that covers all of its employees in Switzerland, including management. The collective foundation is governed by a foundation board. The board is made up of an equal number of employee and employer representatives of the affiliated companies. The Company has no direct influence on the investment strategy of the collective foundation. Moreover, certain elements of the employee benefits are defined in the same way for all affiliated companies. This is mainly related to the annuity factors at retirement and to interest allocated on retirement savings. The employer itself cannot determine the benefits or how they are financed directly. The foundation board of the collective foundation is responsible for the determination of the investment strategy, for making changes to the pension fund regulations and in particular also for defining the financing of the pension benefits.
The old age benefits are
based on retirement savings for each employee, coupled with annual retirement credits and interest (there is no possibility to credit
negative interest). At retirement age, the insured members can choose whether to take a pension for life, which includes a spouse’s
pension, or a lump sum. In addition to retirement benefits, the plan benefits also include disability and death benefits. Insured members
may also buy into the scheme to improve their pension provision up to the maximum amount permitted under the rules of the plan and may
withdraw funds early for the purchase of a residential property for their own use subject to limitations under Swiss law. On leaving the
Company, retirement savings are transferred to the pension institution of the new employer or to a vested benefits institution. This type
of benefit may result in pension payments varying considerably between individual years. In defining the benefits, the minimum requirements
of the Swiss Law on Occupational Retirement, Survivors and Disability Pension Plans (BVG) and its implementing provisions must be observed.
The BVG defines the minimum pensionable salary and the minimum retirement credits. In Switzerland, the minimum interest rate applicable
to these minimum retirement savings is set by the Swiss Federal Council at least once every
The assets are invested by the collective foundation to which many companies contribute, in a diversified portfolio that respects the requirements of the Swiss BVG. Therefore, disaggregation of the pension assets and presentation of plan assets in classes that distinguish the nature and risks of those assets is not possible. Under the Plan, both the Company and the employee share the costs equally. The structure of the plan and the legal provisions of the BVG mean that the employer is exposed to actuarial risks. The main risks are investment risk, interest risk, disability risk and the risk of longevity. Through the affiliation to a collective foundation, the Company has minimized these risks, since they are shared between a much greater number of participants.
For accounting purposes under IFRS Accounting Standards, the plan is treated as a defined benefit plan.
The following tables present information about the net defined benefit liability and its components:
| Change in defined benefit obligation | ||||||||
| 2024 | 2023 | |||||||
| Defined benefit obligation at January 1 | ||||||||
| Service costs | ||||||||
| Plan participants’ contribution | ||||||||
| Interest cost | ||||||||
| Actuarial losses | ||||||||
| Benefits paid through pension assets | ( | ) | ||||||
| Exchange differences | ( | ) | ||||||
| Defined benefit obligation at December 31 | ||||||||
F-34
The defined benefit obligation includes only liabilities
for active employees. The weighted average modified duration of the defined benefit obligation at December 31, 2024, is
| Change in fair value of plan assets | ||||||||
| 2024 | 2023 | |||||||
| Fair value of plan assets at January 1 | ||||||||
| Interest income | ||||||||
| Return on plan assets excluding interest income | ||||||||
| Employer contributions | ||||||||
| Plan participants’ contributions | ||||||||
| Benefits paid through pension assets | ( | ) | ||||||
| Administration expense | ( | ) | ( | ) | ||||
| Exchange differences | ( | ) | ||||||
| Fair value of plan assets at December 31 | ||||||||
Expected employer and plan participants’
contributions to the plan for the annual reporting period 2025 are $
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Present value of funded defined benefit obligation | ||||||||
| Fair value of plan assets | ( | ) | ( | ) | ||||
| Net defined benefit liability | ||||||||
| Defined Benefit Cost | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Service cost | ||||||||||||
| Net interest expense | ||||||||||||
| Administration expense | ||||||||||||
| Total defined costs for the year recognized in profit or loss | ||||||||||||
| Remeasurement of the Defined Benefit Liability | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Actuarial loss (gain) arising from changes in financial assumptions | ( | ) | ||||||||||
| Actuarial loss (gain) arising from experience adjustments | ( | ) | ( | ) | ||||||||
| Actuarial gain arising from demographic assumptions | ( | ) | ||||||||||
| Return on plan assets excluding interest income | ( | ) | ( | ) | ||||||||
| Total defined benefit cost for the year recognized in the other comprehensive income | ( | ) | ( | ) | ||||||||
| Assumptions | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Discount rate | % | % | % | |||||||||
| Future salary increases | % | % | % | |||||||||
| Pension indexation | % | % | % | |||||||||
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
| 2024 | 2023 | |||||||
| Change in assumption | ||||||||
| Discount rate | ( | ) | ( | ) | ||||
| Salary increase | ( | ) | ( | ) | ||||
| Pension indexation | ||||||||
| Change in assumption | | | ||||||
| Life expectancy | ||||||||
F-35
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligations to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as that used in calculating the pension liability recorded on consolidated balance sheets. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
23. Finance income and finance expense
| 2024 | 2023 | 2022 | ||||||||||
| Interest income | ||||||||||||
| Revaluation gain from derivative financial instruments | ||||||||||||
| Gain on modification of financial instruments | ||||||||||||
| Total finance income | ||||||||||||
| Interest expense (incl. bank charges) | ||||||||||||
| Net foreign currency exchange loss | ||||||||||||
| Revaluation loss from derivative financial instruments | ||||||||||||
| Loss on modification of financial instruments | ||||||||||||
| Transaction costs | ||||||||||||
| Total finance expense | ||||||||||||
| Finance expense, net | ( | ) | ( | ) | ( | ) | ||||||
On December 5, 2022, the
Company entered into a purchase agreement and a Registration Rights Agreement with Lincoln Park Capital Fund, LLC (the “2022 Commitment
Purchase Agreement”). Pursuant to the purchase agreement, LPC agreed to subscribe for up to $
In 2023, the
revaluation gain from derivative financial instruments of $
Total interest expense recognized
using the effective interest rate method amounted to $
24. Taxation
The Company’s income tax expense recognized in the consolidated statement of profit or loss and other comprehensive loss was as follows:
| 2024 | 2023 | 2022 | ||||||||||
| Deferred income tax expense from continuing operations | ( | ) | ||||||||||
| Deferred income tax gain from continuing operations | ||||||||||||
| Deferred income tax expense from discontinued operations | ( | ) | ||||||||||
| Deferred income tax gain from discontinued operations | ||||||||||||
| Income tax gain | ||||||||||||
F-36
The Company’s
effective income tax expense differed from the expected theoretical amount computed by applying the Company’s applicable weighted
average tax rate of
Reconciliation
| 2024 | 2023 | 2022 | ||||||||||
| Loss before income tax from continuing operations | ( | ) | ( | ) | ( | ) | ||||||
| Profit/(loss) before income tax from discontinued operations | ( | ) | ||||||||||
| Accounting Profit before income tax | ( | ) | ( | ) | ( | ) | ||||||
| Income tax at statutory tax rates applicable to results in the respective countries | ||||||||||||
| Effect of unrecognized temporary differences | ( | ) | ( | ) | ||||||||
| Effect of unrecognized taxable losses | ( | ) | ( | ) | ( | ) | ||||||
| Effect of impact from application of different tax rates | ( | ) | ( | ) | ||||||||
| Other effects | ||||||||||||
| Income tax gain | ||||||||||||
| Income tax gain reported in the statement of profit or loss | ||||||||||||
| Income tax gain/(loss) attributable to discontinued operations | ||||||||||||
As of December 31, 2024,
the Company had unrecognized tax loss carryforwards amounting to $
The Company’s unrecognized tax loss carryforwards with their expiry dates are as follows:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Within 1 year | ||||||||
| Between 1 and 3 years | ||||||||
| Between 3 and 7 years | ||||||||
| More than 7 years | ||||||||
| Total | ||||||||
Due to the uncertainty surrounding the future results of operations and the uncertainty as to whether the Company can use the loss carryforwards for tax purposes, deferred tax assets on tax loss carryforwards were only considered to the extent that they offset taxable temporary differences within the same taxable entity. No deferred tax assets are calculated on temporary differences related to pension obligations from IAS 19.
The tax effect of the major unrecognized temporary differences and loss carryforwards is presented in the table below:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Deductible temporary differences | ||||||||
| Investment in an associate | ||||||||
| Employee benefit plan | ||||||||
| Intangible assets | ||||||||
| Deferred income | ||||||||
| Total potential tax assets | ||||||||
| Potential tax assets from loss carry-forwards not recognized | ||||||||
| Total potential tax assets from loss carry-forwards and temporary differences not recognized | ||||||||
F-37
25. Loss per share
| Loss per share | 2024 | 2023 | 2022 | |||||||||
| Loss attributable to owners of the Company | ( | ) | ( | ) | ( | ) | ||||||
| Weighted average number of shares outstanding | ||||||||||||
| Basic and diluted loss per share | ( | ) | ( | ) | ( | ) | ||||||
| Loss per share for continuing operations | 2024 | 2023 | 2022 | |||||||||
| Loss attributable to owners of the Company | ( | ) | ( | ) | ( | ) | ||||||
| Weighted average number of shares outstanding | ||||||||||||
| Basic and diluted loss per share | ( | ) | ( | ) | ( | ) | ||||||
For the years ended December
31, 2024, and 2023 basic and diluted loss per share is based on the weighted average number of shares issued and outstanding and excludes
shares to be issued under the Stock Option Plans (Note 16) as they would be anti-dilutive. As of December 31, 2024, the Company had
26. Discontinued operations
On November 21, 2023, the
Company closed the transaction for the partial divestiture of its Bentrio business, by selling a
Result of discontinued operations:
| 2024 | 2023 | 2022 | ||||||||||
| Revenue | ||||||||||||
| Cost of Sales | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||
| Operating expenses | ( | ) | ( | ) | ||||||||
| Financial income/(expense), net | ( | ) | ||||||||||
| Tax (expense)/credit | ||||||||||||
| Gain on disposal of discontinued operation | ||||||||||||
| Profit after tax from discontinued operations | ( | ) | ||||||||||
Earnings per share from discontinued operations
| 2024 | 2023 | 2022 | ||||||||||
| Basic and diluted earnings / (loss) per share from discontinued operations | ( | ) | ||||||||||
Statement of cash flows:
| 2024 | 2023 | 2022 | ||||||||||
| Operating activities | ( | ) | ( | ) | ||||||||
| Investing activities | ||||||||||||
| Financing activities | ||||||||||||
| Net cash from discontinued operations | ( | ) | ( | ) | ||||||||
F-38
27. Commitments and contingencies
Lease commitments
The future minimum lease payments under non-cancellable lease term that are not accounted for in the statement of financial position were as follows:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Within one year | ||||||||
| Between one and five years | ||||||||
| Total | ||||||||
Lease expenses of
$
28. Related party transactions
For purposes of these consolidated financial statements, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. Also, parties under common control of the Company are considered to be related. Key management personnel are also related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.
As of December 31, 2024,
the Company held a receivable of $
The Company provides services
in the areas of research and development, marketing and sales and administration to Medica. In 2024 the Company re-charged personnel costs
in the amount of $
PharmaTrail AG, a company
founded by our Chief Executive Officer Thomas Meyer and led by Dominik Lysek as Chief Executive Officer, who is a member of our Board
of Directors, has been renting part of our office space in Basel, Switzerland, under a sublease agreement. The rent payments received
by us from PharmaTrail amounted to $
Gremaud GmbH provides the
Chief Financial Officer to the Company since November 19, 2021. The Chief Financial Officer is an employee of Gremaud GmbH and is not
paid directly by the Company. Fees paid to Gremaud GmbH for CFO services in 2024 were $
Samuel Wickline, Ph.D., the founder of Trasir, has been providing consulting services as Chief Scientific Adviser to the Company since January 2023.
He was employed as Chief
Scientific Officer from June 2021 to December 2022. Fees paid to Dr Wickline amounted to $
In September 2022,
Thomas Meyer, the Company’s CEO, lent CHF
From December 2022 to March
2023, Mr. Meyer’s spouse provided one of the Company’s subsidiaries with a short-term loan of CHF
F-39
29. Compensation of the members of the Board of Directors and Management
In 2024, the compensation
paid to management, excluding share bonuses and share-based payment charge, amounted to $
| Executive Management | Board of Directors | Total | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | ||||||||||||||||||||||||||||
| Short term benefits | ||||||||||||||||||||||||||||||||||||
| Post-employee benefits years | ||||||||||||||||||||||||||||||||||||
| Share bonuses | ||||||||||||||||||||||||||||||||||||
| Share-based payment | ||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
In 2024, $
Members of the Board of Directors
and management held
30. Loans
Convertible loans agreements
| 2023 | ||||
| As of January 1 | ||||
| Gross proceeds at disbursement date | ||||
| Embedded derivative, separated | ( | ) | ||
| Carrying amount at initial recognition | ||||
| Repayment in cash | ( | ) | ||
| Converted principal amount | ( | ) | ||
| Amortization | ||||
| Exchange differences | ||||
| Convertible loan balance at December 31 | ||||
See Note 14 for a description of the Company’s loans and convertible loans, in 2024 there were no loans or convertible loans.
On May 1, 2023, the Company
and FiveT IM entered into the 2023 FiveT Loan, which was amortized early through aggregate cash payments of $
F-40
On December 15, 2023, we
issued to FiveT IM new warrants to purchase
On April 13, 2023, the Company
and FiveT IM entered into an amendment to the 2022 FiveT Loan, which reduced the conversion price. From April 13, 2023, to April 17, 2023,
FiveT IM converted the entire 2022 FiveT Loan into an aggregate of
The 2022 FiveT Loan was classified
as a hybrid contract containing a host that is a financial liability and embedded derivatives separated from the host and measured at
fair value with all changes in fair value recognized in profit or loss. The embedded financial derivatives were initially valued by an
independent consultant, applying a simulation-based valuation approach. The valuation of the embedded financial derivatives was based
on input parameters, classified as Level 3. One of the significant inputs was the historical volatility of the Company’s common
shares. The underlying share price development was simulated based on a Geometric Brownian Motion (GBM). In accordance with the GBM definition,
a normalized, sustainable level of volatility was applied. The normalized volatility used at initial recognition was
As of December 31, 2022,
the carrying amount of the host for the unconverted outstanding loan amounted to $
In September 2022 and December
2022 we entered into a total of three loan agreements with five investors for an aggregate loan amount of $
The loans with warrants
were classified as a hybrid contract containing a host that is a financial liability and embedded derivatives (warrants) separated from
the host. The embedded derivatives were classified as an equity component as they might be settled by the Company exchanging a fixed
amount of cash for a fixed number of its own equity instruments. The embedded derivatives were valued at initial recognition applying
a Black-Scholes option pricing model. The valuation was based on input parameters, classified as Level 3. The fair value of the embedded
derivatives at initial recognition amounted to $
31. Events after the balance sheet date
On March 4, 2025, Altamira Therapeutics AG (“ATAG”), a wholly owned subsidiary of Altamira Therapeutics Ltd., and Altamira
Medica AG (“Medica”), an associate company, agreed to amend their framework agreement (the “Framework Agreement”),
under which ATAG was entitled to receive, in connection with present and future licensing of rights in and to Bentrio by Medica to third
parties, an amount equal to
On April 3, 2025, ATAG entered into a mandatory convertible loan agreement with a private investor (the “ATAG Loan”). The
ATAG Loan of CHF
F-41
Independent Auditor’s Report
Board of Directors
Altamira Medica AG
Basel
Opinion
We have audited the consolidated financial statements of Altamira Medica AG and its subsidiaries (the Company), which comprise the consolidated statement of financial position as of December 31, 2024, and the related consolidated statements of profit or loss and other comprehensive income/(loss), changes in deficit, and cash flows for the year then ended, including the required comparative information, and the related notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended, including the required comparative information, in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company, and have fulfilled our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit, which include relevant ethical requirements in the United States of America and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations, negative operating cash flows and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Responsibilities of Management and Those Charged With Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that cast substantial doubt about the Company’s ability to continue as a going concern for at least, but not limited to, twelve months from December 31, 2024; to disclose, as applicable, matters related to going concern; and to use the going concern basis of accounting, unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
F-42
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and ISAs will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with GAAS and ISAs, we:
| ● | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| ● | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements. |
| ● | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
| ● | Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit of the Company. We remain solely responsible for our audit opinion. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
BDO AG
| /s/ Christoph Tschumi | /s/ Grégoire Weber |
Zurich, April 30, 2025
F-43
Altamira Medica AG
Consolidated Statement of Profit or Loss and Other Comprehensive Income/(Loss)
For the Years Ended December 31, 2024 and 2023
(in CHF)
| Note | 1.1.- 31.12.2024 | 1.1.- 31.12.2023 | ||||||||||
| Revenue | 14 | 220,591 | 158,213 | |||||||||
| Cost of sales | 15 | (347,463 | ) | (225,889 | ) | |||||||
| Gross profit/(loss) | (126,872 | ) | (67,676 | ) | ||||||||
| Other operating income | 16 | 4,548 | 134,075 | |||||||||
| Research and development | 17 | (823,193 | ) | (1,425,373 | ) | |||||||
| Selling, general and administrative | 18 | (458,272 | ) | (372,479 | ) | |||||||
| Operating loss | (1,403,789 | ) | (1,731,453 | ) | ||||||||
| Finance income | 19 | 25,127 | 287,032 | |||||||||
| Finance expense | 19 | (56,878 | ) | (433,956 | ) | |||||||
| Loss before tax | (1,435,540 | ) | (1,878,377 | ) | ||||||||
| Income tax gain | 20 | 45,667 | 98,872 | |||||||||
| Net loss attributable to owners of the Company | (1,389,873 | ) | (1,779,505 | ) | ||||||||
| Items that are or may be reclassified to profit or loss | ||||||||||||
| Foreign currency translation differences, net of taxes of CHF 0 | 34,677 | 138,583 | ||||||||||
| Other comprehensive income, net of taxes of CHF 0 | 34,677 | 138,583 | ||||||||||
| Total comprehensive loss attributable to owners of the Company | (1,355,196 | ) | (1,640,922 | ) | ||||||||
The accompanying notes form an integral part of these consolidated financial statements.
F-44
Altamira Medica AG
Consolidated Statement of Financial Position
As of December 31, 2024 and 2023
(in CHF)
| December 31, | December 31, | |||||||||||
| Note | 2024 | 2023 | ||||||||||
| ASSETS | ||||||||||||
| Non-current assets | ||||||||||||
| Property and equipment | 54,734 | - | ||||||||||
| Other non-current financial assets | 5 | 14,100 | 102,157 | |||||||||
| Total non-current assets | 68,834 | 102,157 | ||||||||||
| Current assets | ||||||||||||
| Inventories | 6 | 153,490 | 331,061 | |||||||||
| Trade receivables | 21,163 | 100,392 | ||||||||||
| Other receivables | 7 | 12,648 | 282,816 | |||||||||
| Prepayments | 8 | 0 | 171,995 | |||||||||
| Cash and cash equivalents | 9 | 163,204 | 490,388 | |||||||||
| Total current assets | 350,504 | 1,376,652 | ||||||||||
| Total assets | 419,338 | 1,478,809 | ||||||||||
| EQUITY AND LIABILITIES | ||||||||||||
| Deficit | ||||||||||||
| Share capital | 10 | 3,000,000 | 3,000,000 | |||||||||
| Share premium | 17,494,413 | 17,494,413 | ||||||||||
| Other reserves | 173,260 | 138,583 | ||||||||||
| Accumulated deficit | (22,116,255 | ) | (20,726,382 | ) | ||||||||
| Total shareholders’ deficit attributable to owners of the Company | (1,448,582 | ) | (93,386 | ) | ||||||||
| Non-current liabilities | ||||||||||||
| Deferred income | 13 | 932,200 | 932,200 | |||||||||
| Deferred tax liabilities | 20 | 0 | 57,211 | |||||||||
| Total non-current liabilities | 932,200 | 989,411 | ||||||||||
| Current liabilities | ||||||||||||
| Loan | 22 | 250,000 | 18,905 | |||||||||
| Trade and other payables | 11 | 449,007 | 327,582 | |||||||||
| Contract liabilities | 80,504 | 175,457 | ||||||||||
| Accrued expenses | 12 | 156,209 | 60,840 | |||||||||
| Total current liabilities | 935,720 | 582,784 | ||||||||||
| Total liabilities | 1,867,920 | 1,572,195 | ||||||||||
| Total equity and liabilities | 419,338 | 1,478,809 | ||||||||||
The accompanying notes form an integral part of these consolidated financial statements.
F-45
Altamira Medica AG
Consolidated Statement of Changes in Deficit
As of December 31, 2024 and 2023
(in CHF)
| Foreign | ||||||||||||||||||||||||
| Currency | ||||||||||||||||||||||||
| Share | Share | Translation | Accumulated | Total | ||||||||||||||||||||
| Note | Capital | Premium | Reserve | Deficit | Deficit | |||||||||||||||||||
| As of January 1, 2023 | 3000,000 | - | - | (18,946,877 | ) | (15,946,877 | ) | |||||||||||||||||
| Total comprehensive loss | ||||||||||||||||||||||||
| Net loss | - | - | - | (1,779,505 | ) | (1,779,505 | ) | |||||||||||||||||
| Other comprehensive income | - | - | 138,583 | - | 138,583 | |||||||||||||||||||
| Total comprehensive loss | - | - | 138,583 | (1,779,505 | ) | (1,640,922 | ) | |||||||||||||||||
| Contribution loans related parties | - | 16,494,413 | - | - | 16,494,413 | |||||||||||||||||||
| Capital increase | - | 1,000,000 | - | - | 1,000,000 | |||||||||||||||||||
| Balance at December 31, 2023 | 3,000,000 | 17,494,413 | 138,583 | (20,726,382 | ) | (93,386 | ) | |||||||||||||||||
| As of January 1, 2024 | 3,000,000 | 17,494,413 | 138,583 | (20,726,382 | ) | (93,386 | ) | |||||||||||||||||
| Total comprehensive loss | ||||||||||||||||||||||||
| Net loss | - | - | - | (1,389,873 | ) | (1,389,873 | ) | |||||||||||||||||
| Other comprehensive income | - | - | 34,677 | - | 34,677 | |||||||||||||||||||
| Total comprehensive loss | - | - | 34,677 | (1,389,873 | ) | (1,355,196 | ) | |||||||||||||||||
| Balance at December 31, 2024 | 3,000,000 | 17,494,413 | 173,260 | (22,116,255 | ) | (1,448,582 | ) | |||||||||||||||||
The accompanying notes form an integral part of these consolidated financial statements.
F-46
Altamira Medica AG
Consolidated Statement of Cash Flows
For the Years Ended December 31, 2024 and 2023
(in CHF)
| Note | 1.1.-31.12.2024 | 1.1.-31.12.2023 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss | (1,389,873 | ) | (1,779,505 | ) | ||||||||
| Adjustments for: | ||||||||||||
| Income tax gain | 20 | (45,667 | ) | (98,872 | ) | |||||||
| (1,435,540 | ) | (1,878,377 | ) | |||||||||
| Changes in: | ||||||||||||
| Inventories | 177,571 | (319,416 | ) | |||||||||
| Trade and other receivables | 355,836 | 361,112 | ||||||||||
| Prepayments | 174,142 | 404,046 | ||||||||||
| Trade and other payables | 34,886 | 1,465,502 | ||||||||||
| Accrued expenses | 95,265 | (548,997 | ) | |||||||||
| Cash used in operations | (597,840 | ) | (516,130 | ) | ||||||||
| Income tax paid | (12,278 | ) | - | |||||||||
| Net cash used in operating activities | (610,118 | ) | (516,130 | ) | ||||||||
| Cash flows from investing activities | ||||||||||||
| Purchase of equipment | (54,734 | ) | - | |||||||||
| Other financial assets | 88,057 | 2,065 | ||||||||||
| Net cash from investing activities | 33,323 | 2,065 | ||||||||||
| Cash flows from financing activities | ||||||||||||
| Capital increase | 10 | - | 1,000,000 | |||||||||
| Proceeds from loan | 250,000 | - | ||||||||||
| Net cash from financing activities | 250,000 | 1,000,000 | ||||||||||
| Net increase in cash and cash equivalents | (326,795 | ) | 485,935 | |||||||||
| Cash and cash equivalents at beginning of the period | 490,388 | 4,950 | ||||||||||
| Net effect of currency translation on cash | (389 | ) | (497 | ) | ||||||||
| Cash and cash equivalents at end of the period | 163,204 | 490,388 | ||||||||||
F-47
1. Reporting entity
Altamira Medica AG, Basel, Switzerland (“Medica”), is a corporation organized in accordance with Swiss law and domiciled in Switzerland. Medica manufactures and markets Bentrio, an OTC nasal spray for allergic rhinitis.
Until November 2023, Medica was a wholly owned subsidiary of Altamira Therapeutics Ltd., an exempted company incorporated under the laws of Bermuda. On November 21, 2023, Altamira Therapeutics Ltd. divested partially its Bentrio business by selling a 51% stake in Medica and its 100% subsidiary Altamira Medica Pty Ltd, Melbourne, Australia. Since then, 51% of the Company has been owned by a private investor and 49% by Altamira Therapeutics AG, a subsidiary of Altamira Therapeutics Ltd. Effective January 1, 2024, Medica also acquired Altamira Medica Ltd., Dublin, Ireland (formerly Auris Medical Ltd.).
These consolidated financial statements comprise Medica and its wholly owned subsidiaries Altamira Medica Pty Ltd and Altamira Medica Ltd. (together “Medica”). They are presented for 2024 and for the full year ending December 31, 2023, for better comparability (although the partial sale of the Bentrio business took place only on November 21, 2023).
2. Basis of preparation
Statement of compliance
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board and Interpretations (“IFRS Accounting Standards”).
Basis of measurement
The consolidated financial statements are prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services and the cost incurred to put in use. The principal accounting policies adopted are set out below.
Functional and reporting currency
These consolidated financial statements are presented in Swiss Francs (“CHF”), which is the functional currency of Medica and also its reporting currency.
Going concern
Medica has been incurring losses and negative cash flows from operations since inception related primarily to the development of Bentrio and secondarily to the launch of the product in certain markets. Although the development of the product was essentially completed in 2023, we may generate losses from operations for 2025 and possibly beyond as the revenues from product sales may not fully cover operating expenditures, yet. Medica expects its operations to become profitable once sustainable commercial operations are achieved, which will depend, among others, by the quantities and prices at which Bentrio can be sold to distributors, the product’s take-up by consumers, marketing and promotional activities of distributors, the timing and success of requests for market approval or clearance by regulatory authorities, the launch of the product in new markets and the conclusion of additional distribution or licensing agreements.
The financial statements included in this report have been prepared on a going concern basis, which contemplates the continuity of normal activities and realization of assets and settlement of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. and we may have to use our capital resources sooner than we currently expect, raise additional capital from our current shareholders or outside investors, or we may have to reduce or delay certain of our operations. Our assumptions regarding the timing and magnitude of revenues from product sales and licensing revenues may prove to be wrong, The Board of Directors will need to consider the interests of our creditors and take appropriate action to restructure the business if it appears that we are insolvent or likely to become insolvent.
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 operation, which could materially harm our business, prospects, financial condition and financial results. This could then result in bankruptcy, or the liquidation of our company. This uncertainty raises significant doubt about the Company’s ability to continue as a going concern. Since there are ongoing efforts in place to mitigate the uncertainty, these financial statements do not include any adjustments that might result from the outcome of this uncertainty.
F-48
Use of estimates and judgments
The preparation of financial statements in conformity with IFRS Accounting Standards 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 of accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements are described below.
Income taxes
As disclosed in Note 20 Medica has significant tax losses in Switzerland. These tax losses represent potential value to Medica to the extent that Medica is able to create taxable profits in Switzerland prior to expiry of such losses. Tax losses may be used within 7 years from the year the losses arose.
At December 31, 2024, Medica has not recorded any deferred tax assets in relation to these tax losses. Deferred tax assets on tax losses are only considered to the extent that they offset taxable temporary differences within the same entity. The key factors which have influenced management in arriving at this evaluation are the fact that Medica has not yet a history of making profits. Should management’s assessment of the likelihood of future taxable profits change, a deferred tax asset will be recorded. Income tax gain reflects the reassessment of deferred tax assets and liabilities booked in the 2024 fiscal year.
Research and Development and Accrued Expenses
Medica records the costs associated with research, nonclinical and clinical trials, and manufacturing process development as incurred. These costs are a significant component of Medica’s research and development expenses, with a substantial portion of Medica’s on-going research and development activities being conducted by third party service providers, including contract research and manufacturing organizations.
Medica accrues for expenses resulting from obligations under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and other outside service providers for which payment flows do not match the periods over which materials or services are provided to Medica. Accrued expenses are recorded based on estimates of services received and efforts expended pursuant to agreements established with CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. Medica makes significant judgments and estimates in determining the accrued expense balance in each reporting period. In the event advance payments are made to a CRO, CMO, or outside service provider, the payments will be recorded as prepayments which will be expensed as the contracted services are performed. Inputs, such as the services performed, the number of patients enrolled, or the trial duration, may vary from Medica’s estimates. As actual costs become known, Medica adjusts its prepayments and accrued expenses.
F-49
3. Material accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, unless otherwise indicated.
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by Medica. Medica controls an entity when it 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. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Transactions eliminated on consolidation
All inter-company balances, transactions and unrealized gains on transactions have been eliminated in consolidation. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Foreign currency
Foreign currency transactions
Items included in the financial statements of Medica entities are measured using the currency of the primary economic environment in which the entity operates. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are not re-translated.
Foreign operations
Assets and liabilities of Medica entities whose functional currency is other than CHF are included in the consolidation by translating the assets and liabilities into the reporting currency at the exchange rates applicable at the end of the reporting period. Income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transaction).
These foreign currency translation differences are recognized in Other Comprehensive income/(loss) and presented in the foreign currency translation reserve in equity. When a foreign operation is disposed of such that control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
F-50
Closing rates for the most significant foreign currencies relative to CHF:
| Geographical | December 31, | December 31, | December 31, | |||||||||||||
| Currency | area | 2024 | 2023 | 2022 | ||||||||||||
| CHF | Swiss Franc | Switzerland | 1.0000 | 1.0000 | 1.0000 | |||||||||||
| US$ | Dollar | United States | 0.9078 | 0.8451 | 0.9251 | |||||||||||
| EUR | Euro | Europe | 0.9400 | 0.9287 | 0.9901 | |||||||||||
| AUD | Dollar | Australia | 0.5617 | 0.5735 | 0.6305 | |||||||||||
Average exchange rates for the year for the most significant foreign currencies relative to CHF
| Geographical | ||||||||||||
| Currency | area | 2024 | 2023 | |||||||||
| CHF | Swiss Franc | Switzerland | 1.0000 | 1.0000 | ||||||||
| US$ | Dollar | United States | 0.8806 | 0.8985 | ||||||||
| EUR | Euro | Europe | 0.9528 | 0.9721 | ||||||||
| AUD | Dollar | Australia | 0.5809 | 0.5971 | ||||||||
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost comprises direct materials and, where applicable, direct labor costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first-in, first-out method. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Financial instruments
Medica classifies its financial assets in the following categories: loans and receivables based on the expected loss model. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Recognition and derecognition of non-derivative financial assets and liabilities
Medica initially recognizes loans and receivables issued on the date when they are originated. All other financial assets and financial liabilities are initially recognized on the trade date.
Medica derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognized financial assets that is created or retained by Medica is recognized as a separate asset or liability.
Medica derecognizes a financial liability when its contractual obligations are discharged, cancelled, or expired.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, Medica has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
F-51
Non-derivative financial assets and liabilities—measurement
Loans and receivables
These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortized cost using the effective interest method, less expected losses.
Cash and cash equivalents
Medica considers all short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value with original maturities of three months or less at the date of the purchase to be cash equivalents.
Non-derivative financial liabilities—measurement
Non-derivative financial liabilities such as loans, trade and other payables are initially recognized at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method.
Share capital
All shares of Medica are registered shares and classified as part of shareholders’ equity. Incremental costs directly attributable to the issue of Medica’s shares, net of any tax effects, are recognized as a deduction from equity.
Medica has not paid any dividends since its inception.
Impairment of non-derivative financial assets
Financial assets are assessed at each reporting date to determine whether there is objective evidence of impairment.
Objective evidence that financial assets are impaired includes:
| ● | default or delinquency by a debtor; |
| ● | indications that a debtor or issuer will enter bankruptcy; |
| ● | adverse changes in the payment status of borrowers or issuers; |
| ● | the disappearance of an active market for a security; or |
| ● | observable data indicating that there is measurable decrease in expected cash flows for the Company from financial assets. |
Financial assets measured at amortized cost
Medica considers evidence of impairment for these assets at an individual asset level. An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account. When Medica considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss is reversed through profit or loss.
F-52
Income tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in Other Comprehensive Income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
Deferred tax
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is not recognized for:
| ● | temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; |
| ● | temporary differences related to investments in subsidiaries to the extent that Medica is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and |
| ● | taxable temporary differences arising on the initial recognition of goodwill. |
Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences 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.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities and when they relate to income taxes levied by the same taxation authority and Medica intends to settle its tax assets and liabilities on a net basis.
Revenue recognition
Medica recognizes revenue from the licensing of intellectual property rights and from the sale of products. To assess revenue recognition for arrangements that Medica determines are within the scope of IFRS 15, Medica performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) Medica satisfies a performance obligation. Medica only applies the five-step model to contracts when it is probable that Medica will collect the consideration it is entitled to in exchange for services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of IFRS 15, Medica assesses the services promised within each contract to determine those that are performance obligations and assess whether each promised service is distinct.
Licensing of intellectual property rights
Medica recognizes as revenue its non-refundable license fees, milestone payments and royalties when its customer obtains control of promised services, in an amount that reflects the consideration which Medica expects to receive in exchange for those rendered services. If the license to Medica’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, Medica recognizes revenues when the license conveys a right of use, or there is a right of access to the underlying intellectual property. However, revenue for a license that provides a right to use Medica’s intellectual property before the beginning of the period during which the customer is able to use and benefit from the license is deferred. Revenue from sales-based royalty, in exchange for a license of intellectual property is recognized only when the subsequent sale occurs and the performance obligation to which the sales-based royalty has been allocated has been satisfied (in whole or in part).
Sale of products
Medica sells a single product, Bentrio, a drug-free nasal spray for protection against airborne allergens. Revenue from sale of products is recognized at the point in time when control of the asset is transferred to the customer, generally on delivery of the product if no other agreement has been made. Revenue is net of value-added tax, rebates, discounts and returns.
F-53
Government grants
Government grants are not recognized until there is reasonable assurance that Medica will comply with the conditions attaching to them and that the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which Medica recognizes as expenses the related research and development costs for which the grants are intended to compensate. Government grants that are receivable as compensation for expenses already incurred are recognized in profit or loss in the period in which they become receivable. The income from grants related to R&D expenditures are presented separately under the heading of ‘other operating income’.
Altamira Medica Pty Ltd has access to credits under the Australian R&D Tax Incentive program (R&DTI). The program provides a tax credit of 43.5% of eligible R&D expenditures if the applicant qualifies as a Base Rate Entity (“BRE”), or a tax offset of 48.5% if the applicant is not a BRE. The assessment is carried out annually and the calculation of tax credits available are adjusted accordingly. If the tax offset exceeds Medica’s tax liability, the balance is paid in cash after submission of a valid claim. Based on the specific features of the program, IAS 20 Government Grants is applied for the accounting treatment of the Australian R&DTI. The reimbursement application is made by Medica annually, once the fiscal year is closed, based on the financial statements.
New standards, amendments and interpretations adopted by Medica
In 2024, the following revised standards have been adopted:
| IAS 7 & IFRS 7 | Amendments to IAS 7 and IFRS 7, Supplier Finance Arrangements |
| IFRS 16 | Amendments to IFRS 16, Lease Liability in a Sale and Leaseback |
| IAS 1 | Amendments to IAS 1, Non-current Liabilities with Covenants |
| IAS 1 | Amendments to IAS 1, Classification of Liabilities as Current or Non-current |
Adoption has not had a material impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements.
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after January 1, 2025, and have not been applied in preparing these consolidated financial statements.
| Planned | |||||||
| application | |||||||
| Effective | by the | ||||||
| Standard/Interpretation | Impact | date | Company | ||||
| New standards, interpretations or amendments | |||||||
| IAS 21 | Amendments to IAS 21, Lack of Exchangeability | 1) | January 1, 2025 | FY 2025 | |||
| IFRS 9 & 7 | Amendments to IFRS 9 and 7, Classification and Measurement of | 1) | January 1, 2026 | FY 2026 | |||
| Financial Instruments | |||||||
| IFRS 18 | IFRS 18, Presentation and Disclosures in Financial Statements | 1) | January 1, 2027 | FY 2027 | |||
| IFRS 19 | IFRS 19, Subsidiaries without Public Accountability: Disclosures | 1) | January 1,2027 | FY 2027 | |||
The Company is currently assessing the effect of these new accounting standards and amendments. IFRS 18 will not have an effect on the recognition and measurement of items in the consolidated financial statements. However, it is expected to have a significant effect on the presentation and disclosure of certain items. The Company does not expect to be eligible to apply IFRS 19.
F-54
4. Financial instruments and risk management
The following table shows the carrying amounts of financial assets and financial liabilities:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Financial assets | ||||||||
| At amortized cost | ||||||||
| Cash and cash equivalents | 163,204 | 490,388 | ||||||
| Trade receivables | 21,163 | 100,392 | ||||||
| Other receivables | 12,648 | 4,053 | ||||||
| Other non-current financial assets | - | 102,157 | ||||||
| Total financial assets | 197,015 | 696,990 | ||||||
| Financial liabilities | ||||||||
| At amortized cost | ||||||||
| Loan | 250,000 | 18,905 | ||||||
| Trade and other payables | 449,007 | 327,582 | ||||||
| Accrued expenses | 156,209 | 60,840 | ||||||
| Total financial liabilities | 855,216 | 407,327 | ||||||
Fair values
The carrying amount of cash and cash equivalents, trade and other receivables, trade and other payables and accrued expenses is a reasonable approximation of their fair value due to the short-term nature of these instruments.
Financial risk factors
Medica’s activities expose it to a variety of financial risks: market risk, credit risk, interest rate and liquidity risk. Medica’s overall risk management program seeks to minimize potential adverse effects on Medica’s financial performance. Management identifies, evaluates and controls financial risks. No financial derivatives have been used in 2024 to hedge risk exposures. Medica invests its available cash in instruments with the main objectives of preserving principal, meeting liquidity needs and minimizing foreign exchange risks. Medica allocates its liquid assets to first tier Swiss or international banks.
Liquidity risk
Medica’s principal sources of liquidity are its product revenues, licensing revenues and cash reserves. The ability of Medica to maintain adequate cash reserves to sustain its activities in the medium term is highly dependent on Medica’s ability to grow product revenues, generate additional licensing revenues and, if needed, raise further funds. Consequently, Medica is exposed to continued liquidity risk.
The table below analysis the remaining contractual maturities of financial liabilities, including estimated interest payments, if any, as of December 31, 2024. The amounts disclosed in the table are the undiscounted cash flows:
| Between 3 | ||||||||||||||||||||
| Carrying | Less than 3 | months and 2 | 2 years and | |||||||||||||||||
| amount | months | years | later | Total | ||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Trade and other payables | 449,007 | 449,007 | - | - | 449,007 | |||||||||||||||
| Accrued expenses | 156,209 | 156,209 | - | - | 156,209 | |||||||||||||||
| Loan | - | - | - | - | ||||||||||||||||
| Total | 605,216 | 605,216 | - | - | 605,216 | |||||||||||||||
| Between | ||||||||||||||||||||
| Carrying | Less than 3 | 3 months and 2 | 2 years and | |||||||||||||||||
| amount | months | years | later | Total | ||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Trade and other payables | 327,582 | 327,582 | - | - | 327,582 | |||||||||||||||
| Accrued expenses | 60,840 | 60,840 | - | - | 60,840 | |||||||||||||||
| Loan | - | 18,905 | - | - | 18,905 | |||||||||||||||
| Total | 388,422 | 407,327 | - | - | 407,327 | |||||||||||||||
F-55
Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks, as well as from trade and other receivables. Medica’s policy is to invest funds in low-risk investments including interest bearing deposits. Trade and other receivables were current as of December 31, 2024, not impaired and included only well-known counterparties.
Medica has been holding cash and cash equivalents in Medica’s principal operating currencies (CHF, US$, EUR and AUD) with international banks of high credit rating.
Medica’s maximum exposure to credit risk is represented by the carrying amount of each financial asset in the consolidated statement of financial position:
| in CHF | 2024 | 2023 | ||||||
| Cash and cash equivalents | 163,204 | 490,388 | ||||||
| Trade receivables | 21,163 | 100,392 | ||||||
| Other receivables | 12,648 | 282,816 | ||||||
| Other non-current financial assets | 14,100 | 102,157 | ||||||
| Total | 211,115 | 975,753 | ||||||
Market risk
Currency risk
Medica operates internationally and is exposed to foreign exchange risk arising from various exposures, primarily with respect to US Dollar, Euro and Australian Dollar. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The summary of quantitative data about the exposure of Medica’s financial assets and liabilities to currency risk was as follows:
| 2024 | 2023 | |||||||||||||||||||||||
| in CHF | USD | EUR | AUD | USD | EUR | AUD | ||||||||||||||||||
| Cash and cash equivalents | 6,809 | 29,609 | 15,170 | 10,651 | 19,334 | - | ||||||||||||||||||
| Trade and other receivables | - | 21,163 | - | - | 100,392 | - | ||||||||||||||||||
| Loan to group company | - | - | 1,679,936 | - | - | 1,744,686 | ||||||||||||||||||
| Other non-current financial assets | - | 14,100 | - | - | 102,157 | - | ||||||||||||||||||
| Trade and other payables | (29,496 | ) | (101,042 | ) | (53,444 | ) | (3,489 | ) | (22,447 | ) | (54,567 | ) | ||||||||||||
| Accrued expenses | - | (151,044 | ) | - | - | (52,893 | ) | - | ||||||||||||||||
| Net statement of financial position | ||||||||||||||||||||||||
| exposure -asset/(liability) | (22,687 | ) | (201,314 | ) | 1,641,662 | 7,162 | 146,543 | 1,690,119 | ||||||||||||||||
As of December 31, 2024, a 5% increase or decrease in the US$/CHF exchange rate with all other variables held constant would have resulted in a CHF 1,030 (2023: CHF 358) increase or decrease in the net result. A 5% increase or decrease in the EUR/CHF exchange rate with all other variables held constant would have resulted in a CHF 9,197 (2023: CHF 7,327) increase or decrease in the net result. Also, a 5% increase or decrease in the AUD/CHF exchange rate with all other variables held constant would have resulted in a CHF 46,110 (2023: CHF 84,506) increase or decrease in the net result. Medica has a subsidiary in Australia, whose net assets are exposed to foreign currency translation risk.
Capital risk management
Medica and its subsidiaries are subject to capital maintenance requirements under local law in the country in which it operates. To ensure that statutory capital requirements are met, Medica monitors capital, at the entity level, on an interim basis as well as annually. From time to time Medica may take appropriate measures or propose capital increases to ensure the necessary capital remains intact.
F-56
5. Other non-current financial assets
Other non-current financial assets include bank balances that are restricted to secure possible obligations in connection with VAT.
6. Inventories
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Finished goods | 6,451 | 109,991 | ||||||
| Raw materials | 147,039 | 217,283 | ||||||
| Advance payments | - | 3,787 | ||||||
| Total | 153,490 | 331,061 | ||||||
7. Other receivables
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| R&D tax credit receivable | - | 220,041 | ||||||
| Value added tax receivable | 12,440 | 58,722 | ||||||
| Receivable from suppliers and other | 208 | 4,053 | ||||||
| Total other receivables | 12,648 | 282,816 | ||||||
The R&D tax credit receivable as of December 31, 2023 relates to the reimbursement application for compensation of R&D expenditures incurred by Altamira Medica Pty Ltd in 2023 under the Australian R&DITC program. The tax credit amount was paid in 2024.
8. Prepayments
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Advance payments to suppliers | - | 171,995 | ||||||
| Total prepayments | - | 171,995 | ||||||
9. Cash and cash equivalents
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Cash in bank accounts | 163,204 | 490,388 | ||||||
| Total cash and cash equivalents | 163,204 | 490,388 | ||||||
F-57
10. Capital and reserves
Share capital
The issued share capital of the Company at December 31 consisted of:
| December 31, | December 31, | |||||||||||||||
| 2024 | 2023 | |||||||||||||||
| Number | CHF | Number | CHF | |||||||||||||
| Common shares with a par value of CHF 1.00 each | 3,000,000 | 3,000,000 | 3,000,000 | 3,000,000 | ||||||||||||
| Total | 3,000,000 | 3,000,000 | 3,000,000 | 3,000,000 | ||||||||||||
| Common Shares | Common Shares | |||||||
| (Number) | (Number) | |||||||
| 2024 | 2023 | |||||||
| As of January 1 | 3,000,000 | 3,000,000 | ||||||
| As of December 31 | 3,000,000 | 3,000,000 | ||||||
11. Trade and other payables
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Trade and other payable - third parties | 316,484 | 327,582 | ||||||
| Trade and other payable - related party | 132,523 | - | ||||||
| Total trade and other payables | 449,007 | 327,582 | ||||||
12. Accrued expenses
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Accrued deliveries and services from suppliers | 156,209 | 60,840 | ||||||
| Total accrued expenses | 156,209 | 60,840 | ||||||
13. Deferred income
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Upfront payment | 932,200 | 932,200 | ||||||
| Total deferred income | 932,200 | 932,200 | ||||||
As of December 31, 2024, deferred income includes an upfront payment of $1 million (CHF 0.9 million) related to the exclusive licensing and distribution agreement with Nuance Pharma for Bentrio in the licensing territory (Mainland China, Hong Kong, Macau and South Korea). Revenue recognition for the upfront payment is deferred until transfer of production to Nuance, which will occur 4 years after Nuance obtaining the first national registration of Bentrio in the territory or upon Nuance’s cumulative orders for Bentrio from the Company reaching a contractually defined minimum quantity, whichever comes later.
F-58
14. Total revenue
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Product sales | 220,591 | 158,213 | ||||||
| Total revenues | 220,591 | 158,213 | ||||||
Revenues were generated from the sale of Bentrio predominantly to the Company’s distributors and to a smaller extent to wholesalers and end consumers in Germany.
15. Cost of sales
| 2024 | 2023 | |||||||
| Product purchases, packaging and logistics | 347,463 | 171,496 | ||||||
| Inventory write-down | - | 54,393 | ||||||
| Total cost of sales | 347,463 | 225,889 | ||||||
Inventory was written down in 2023 as certain products approached the minimum of shelf life required by distributors and wholesalers to carry the product.
16. Other operating income
| 2024 | 2023 | |||||||
| Income from R&D tax incentive (Government grant) | - | 134,075 | ||||||
| Other income | 4,548 | - | ||||||
| Total other operating income | 4,548 | 134,075 | ||||||
17. Research and development
| 2024 | 2023 | |||||||
| Clinical projects | 351,886 | 712,399 | ||||||
| Quality assurance | 115,728 | 124,112 | ||||||
| Patents and trademarks | 20,483 | 78,089 | ||||||
| Regulatory projects | 136,211 | 42,198 | ||||||
| R&D costs charged by related parties | 176,686 | 459,988 | ||||||
| Other R&D costs | 22,199 | 8,588 | ||||||
| Total research and development | 823,193 | 1,425,373 | ||||||
Research and development expense was incurred mainly for the completion of the clinical trial with Bentrio in seasonal allergic rhinitis in Australia, comprising external costs as well as personnel expenses billed for work performed by employees of Altamira Therapeutics AG, a related party, on behalf of Medica.
F-59
18. Selling, general and administrative
| 2024 | 2023 | |||||||
| Marketing and sales expenses | 8,672 | 61,630 | ||||||
| Administration expenses | 43,933 | 105,012 | ||||||
| SG&A costs charged by related parties | 405,667 | 192,493 | ||||||
| Other selling, general and administrative | 13,343 | |||||||
| Total general and administrative | 458,272 | 372,479 | ||||||
Selling, general and administrative expenses include personnel expenses billed for work performed by employees of Altamira Therapeutics AG, a related party, on behalf of the Company.
19. Finance income and finance expense
| 2024 | 2023 | |||||||
| Interest income – third parties | 4,713 | 127 | ||||||
| Interest income – related party | - | 1,889 | ||||||
| Foreign currency exchange gain | 20,414 | 285,015 | ||||||
| Total finance income | 25,127 | 287,031 | ||||||
| Interest expense – third parties | - | 2,647 | ||||||
| Interest expense – related party | 2,912 | 301,726 | ||||||
| Foreign currency exchange loss | 44,863 | 120,368 | ||||||
| Bank charges | 9,103 | 9,215 | ||||||
| Total finance expense | 56,878 | 433,956 | ||||||
| Finance expense, net | (31,751 | ) | 146,924 | |||||
Foreign currency exchange gains and losses in 2024 were incurred primarily related to the translation of inter-company loans denominated in other currencies than Swiss Francs.
20. Taxation
The Company’s income tax expense recognized in the consolidated statement of profit or loss and other comprehensive loss was as follows:
| 2024 | 2023 | |||||||
| Current income tax expense | (12,278 | ) | - | |||||
| Deferred income tax gain | 57,945 | 98,872 | ||||||
| Income tax gain | 45,667 | 98,872 | ||||||
F-60
The Company’s effective income tax expense differed from the expected theoretical amount computed by applying Medica’s applicable tax rate of 12.90% in 2024 and 16.92% in 2023 as summarized in the following table:
Reconciliation
| 2024 | 2023 | |||||||
| Accounting Loss before income tax | (1,435,540 | ) | (1,878,377 | ) | ||||
| Income tax at the Company’s statutory tax rate | 185,168 | 265,020 | ||||||
| Effect of unrecognized taxable losses | (158,674 | ) | (265,020 | ) | ||||
| Effect of unrecognized temporary differences | - | 71,066 | ||||||
| Other effects | 19,173 | 27,806 | ||||||
| Income tax gain | 45,667 | 98,872 | ||||||
The tax effect of taxable temporary differences that give rise to deferred income tax liabilities or to deferred income tax assets as of December 31, 2024, is presented below:
| December 31, | December 31, | |||||||
| Deferred Tax Liabilities | 2024 | 2023 | ||||||
| Other receivables | - | 57,211 | ||||||
| Total | - | 57,211 | ||||||
As of December 31, 2024, Medica had unrecognized tax loss carryforwards amounting to CHF 19.4 million.
Medica’s unrecognized tax loss carryforwards with their expiry dates are as follows:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Within 1 year | - | |||||||
| Between 1 and 3 years | - | |||||||
| Between 3 and 7 years | (19,380,143 | ) | (18,032,979 | ) | ||||
| More than 7 years | - | |||||||
| Total | (19,380,143 | ) | (18,032,979 | ) | ||||
Due to the uncertainty surrounding the future results of operations and the uncertainty as to whether Medica can use the loss carryforwards for tax purposes, deferred tax assets on tax loss carryforwards were only considered to the extent that they offset taxable temporary differences within the same taxable entity.
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Deductible temporary differences | ||||||||
| Deferred income | 111,025 | 111,025 | ||||||
| Total potential tax assets | 111,025 | 111,025 | ||||||
| Potential tax assets from loss carry-forwards not recognized | 2,308,175 | 2,147,728 | ||||||
| Total potential tax assets from loss carry-forwards and temporary differences not recognized | 2,419,200 | 2,258,753 | ||||||
F-61
21. Commitments and contingencies
As of December 31, 2024, Medica had no significant commitments or contingent liabilities.
22. Related party transactions
For purposes of these consolidated financial statements, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. Also, parties under common control of Medica are considered to be related. Key management personnel are also related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.
As of December 31, 2024, Altamira Therapeutics AG held two loans granted to the Company in the amount of CHF 300,945 and CHF 17,993.
As of December 31, 2024, there was a loan of CHF 250,000 outstanding, which had been granted by Sigma Holding AG, an entity controlled by the Company’s majority shareholder.
In 2024, Altamira Therapeutics AG charged the Company CHF 176,686 for R&D services and CHF 233,620 for selling and CHF 172,046 for general and administrative services (2023: 459,988 and CHF 154,164 and CHF 38,329 respectively).
In 2024, interest expense to related parties amounted to CHF 2,912 (2023 CHF 301,726) and interest income from related parties to CHF 0.00 (2023 CHF 1,889) The interest expenses and income related to Altamira Therapeutics Ltd. and its subsidiaries.
23. Events after the balance sheet date
On March 7, 2025, Medica announced that the U.S. Patent and Trademark had issued a Notice of Allowance for a patent (application #17/466,142) relating to the composition of Bentrio. The patent claims are directed to the key ingredients and composition of Bentrio’s proprietary formulation.
F-62