Evaxion(EVAX) - 2025 Q2 - Quarterly Report

Unaudited Condensed Consolidated Interim Statements of Comprehensive Loss The interim comprehensive loss statements show a reduced net loss for the three months ended June 30, 2025, but an increased net loss for the six-month period Comprehensive Loss Analysis For the three months ended June 30, 2025, Evaxion Biotech A/S reported a net loss of $4.831 million, an improvement from $6.198 million in the prior year period; the operating loss also decreased to $4.340 million from $4.581 million; for the six months ended June 30, 2025, the net loss increased to $6.411 million from $5.004 million, primarily due to a significant decrease in finance income, despite a reduction in operating loss Statements of Comprehensive Loss (USD in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $37 | $154 | $37 | $205 | | Research and development | $(2,165) | $(2,752) | $(4,321) | $(5,588) | | General and administrative | $(2,212) | $(1,983) | $(3,924) | $(3,594) | | Operating loss | $(4,340) | $(4,581) | $(8,208) | $(8,977) | | Finance income | $546 | $220 | $3,039 | $5,838 | | Finance expenses | $(1,232) | $(2,036) | $(1,629) | $(2,282) | | Net loss for the period | $(4,831) | $(6,198) | $(6,411) | $(5,004) | | Total comprehensive loss | $(4,162) | $(6,170) | $(5,892) | $(4,894) | | Loss per share – basic and diluted | $(0.02) | $(0.12) | $(0.03) | $(0.10) | Unaudited Condensed Consolidated Interim Statements of Financial Position This section outlines the interim financial position, showing significant asset growth and a shift to positive equity as of June 30, 2025 Financial Position Overview As of June 30, 2025, Evaxion Biotech A/S significantly strengthened its financial position, with total assets increasing to $22.449 million from $12.485 million at December 31, 2024; this was primarily driven by a substantial increase in cash and cash equivalents and prepayments; total equity shifted from a deficit of $1.652 million to a positive $6.226 million, while total liabilities also increased to $16.223 million Statements of Financial Position (USD in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | ASSETS | | | | Total non-current assets | $4,272 | $3,720 | | Total current assets | $18,177 | $8,765 | | TOTAL ASSETS | $22,449 | $12,485 | | EQUITY (DEFICIT) AND LIABILITIES | | | | Share capital | $11,823 | $10,516 | | Other reserves | $119,351 | $106,369 | | Accumulated deficit | $(124,948) | $(118,537) | | Total equity (deficit) | $6,226 | $(1,652) | | Total non-current liabilities | $10,901 | $9,769 | | Total current liabilities | $5,322 | $4,368 | | Total liabilities | $16,223 | $14,137 | | TOTAL EQUITY AND LIABILITIES | $22,449 | $12,485 | - Cash and cash equivalents increased significantly to $14.746 million as of June 30, 2025, from $5.952 million at December 31, 2024[7] Unaudited Condensed Consolidated Interim Statements of Changes in Equity (Deficit) This section analyzes interim equity changes, highlighting a significant improvement to positive equity driven by share issuance for cash Equity Changes Analysis For the six months ended June 30, 2025, total equity (deficit) improved significantly to $6.226 million from a deficit of $1.652 million at December 31, 2024; this positive change was primarily driven by the issuance of shares for cash, which contributed $17.828 million, and other comprehensive income of $519 thousand, partially offset by a net loss of $6.411 million and non-cash effects from derivative liabilities and transaction costs Statements of Changes in Equity (Deficit) (USD in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :----------------------------- | :----------------------------- | | Equity at December 31 | $(1,652) | $(4,729) | | Net loss for the period | $(6,411) | $(5,004) | | Other comprehensive income | $519 | $110 | | Share-based compensation | $131 | $101 | | Issuance of shares for cash | $17,828 | $14,182 | | Non-cash effect from issue of investor warrants classified as derivative liability | $(2,432) | $(1,097) | | Transaction costs | $(1,757) | $(2,310) | | Equity at June 30 | $6,226 | $1,253 | Unaudited Condensed Consolidated Interim Statements of Cash Flows This section details interim cash flows, showing a significant net increase in cash and cash equivalents driven by financing activities Cash Flow Analysis For the six months ended June 30, 2025, Evaxion Biotech A/S experienced a net increase in cash and cash equivalents of $7.866 million, a significant improvement compared to a $2.406 million increase in the prior year period; this was primarily driven by a substantial increase in cash provided by financing activities, which reached $15.593 million, largely from the issuance of shares and exercise of warrants Statements of Cash Flows (USD in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net loss for the period | $(6,411) | $(5,004) | | Net cash used in operating activities | $(7,724) | $(8,985) | | Net cash used in investing activities | $(3) | $(3) | | Net cash provided by financing activities | $15,593 | $11,394 | | Net increase in cash and cash equivalents | $7,866 | $2,406 | | Cash and cash equivalents at January 1 | $5,952 | $5,583 | | Cash and cash equivalents at June 30 | $14,746 | $7,993 | Notes to Unaudited Condensed Consolidated Interim Financial Statements This section provides detailed notes to the interim financial statements, covering company information, accounting policies, financial instruments, and significant events Note 1. General Company Information Evaxion Biotech A/S is a clinical-stage TechBio company leveraging its AI-Immunology™ platform to develop novel vaccines for cancer, bacterial, and viral infections; the platform has demonstrated a link between AI predictions and clinical response in metastatic melanoma patients, aiming to reduce development costs and risks; partnerships are a key strategy for realizing value - Evaxion Biotech A/S is a clinical-stage TechBio company utilizing its AI-Immunology™ platform to develop novel vaccines for various cancers, bacterial, and viral infections[14] - The AI-Immunology™ platform has shown a link between AI predictions and clinical response in metastatic melanoma cancer patients, aiming to reduce development costs and risks[14] - Partnerships are a key element in the company's strategy to realize the value of its AI-Immunology™ opportunities[14] Note 2. Liquidity and Going Concern Assessment Management and the Board of Directors are confident in the Company's ability to continue as a going concern, with sufficient cash to finance operations into mid-2026; this confidence is bolstered by successful public and at-the-market (ATM) offerings in January 2025, securing $10.8 million and $5.0 million respectively; the Company also has an ATM program with JonesTrading and a convertible notes agreement with Global Growth Holding Limited (GGH) for potential future financing - Management and the Board of Directors believe the Company has adequate resources to meet its obligations and continue operations into mid-2026[16] - In January 2025, the Company secured $10.8 million from a public offering and approximately $5.0 million from an at-the-market (ATM) offering[16][23][72] - The Company has a 'Capital on Demand™ Sales Agreement' with JonesTrading for ATM offerings and a financing agreement with Global Growth Holding Limited (GGH) for up to $20.0 million in convertible notes[18][20] - On January 17, 2025, the Company approved a reduction in share capital by DKK 58,980,417 to cover losses and reduced the nominal value of shares from DKK 1 to DKK 0.25 per share[21][70] Note 3. Summary of Significant Accounting Policies The unaudited condensed consolidated interim financial statements are prepared in accordance with IAS 34, consistent with IFRS accounting standards; the adoption of amendments to IAS 21 regarding 'Lack of Exchangeability' on January 1, 2025, did not materially impact the Company's financial statements; no other new IFRS or IFRIC interpretations effective during the period had a material impact, and future standards are not expected to have a significant impact - Financial statements are prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' and should be read in conjunction with the annual consolidated financial statements prepared under IFRS[26] - The adoption of amendments to IAS 21, 'Lack of Exchangeability,' on January 1, 2025, did not have any material impact on the Company's financial statements[29][30] - No other new IFRS or IFRIC interpretations effective during the six months ended June 30, 2025, had a material impact, and future standards are not expected to have a significant impact[30][31] Note 4. Significant Accounting Judgements, Estimates, and Assumptions The preparation of financial statements requires management to make significant judgments, estimates, and assumptions; key areas involving significant accounting estimates include the going concern assessment, liability-classified warrants, and share-based compensation; these interim statements should be read with the annual consolidated financial statements for full disclosure on critical accounting judgments and estimation uncertainties - Significant accounting estimates are made in areas such as going concern, liability-classified warrants, and share-based compensation[35] - The unaudited condensed consolidated interim financial statements do not include all disclosures for critical accounting judgments and estimation uncertainties required in the annual consolidated financial statements[34] Note 5. Revenue Evaxion Biotech A/S recognized nominal revenue from its collaborative research agreement with MSD and a grant from the Gates Foundation during the three and six months ended June 30, 2025; the Gates Foundation awarded a $0.1 million grant in June 2025 to explore new polio vaccine designs using Evaxion's AI-Immunology™ platform, with the remainder of the revenue expected to be recognized through August 2025 Revenue Recognition (USD in millions) | Revenue Source | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------- | :------------------------------- | :----------------------------- | | MSD collaborative agreement | Nominal | $0.1 | | Gates Foundation Grant | Nominal | Nominal | - In June 2025, the Gates Foundation awarded the Company a $0.1 million grant for designing a new polio vaccine, leveraging Evaxion's AI-Immunology™ platform[38] Note 6. Financial Instruments and Risk Management Evaxion manages liquidity, market (foreign exchange), and credit risks; the Company has sufficient funds into mid-2026, primarily faces foreign currency risk from USD operating expenses, and has limited credit risk due to high-credit-rating bank deposits; capital is managed through equity issuance, grants, licensing, or borrowings; the Company's 2025 Investor Warrants were initially classified as derivative liabilities but were partially reclassified to equity after an amendment in May 2025 - The Company has sufficient funds available to finance operations into mid-2026, mitigating liquidity risk[41] - Primary market risk is foreign currency risk, mainly from USD-denominated operating expenses, managed by converting financing proceeds to match expected cash outflows[42][43] - Credit risk is limited to deposits with banks with high credit ratings, and no material credit risk is recognized[44] Financial Liabilities Measured at Fair Value (June 30, 2025) | Liability | Level 3 (USD in thousands) | | :-------------------- | :------------------------- | | 2025 Investor Warrants | $1,131 | Financial Liabilities Measured at Amortized Cost (June 30, 2025) | Liability | Level 3 (USD in thousands) | | :--------------- | :------------------------- | | EIB Loan | $8,866 | | Loan from lessor | $826 | - The 2025 Investor Warrants were initially classified as derivative financial instruments due to foreign currency exercise price but were partially reclassified to equity after an amendment in May 2025[51][52] Note 7. Borrowings Evaxion's borrowings primarily consist of a loan from a lessor for laboratory facilities and an EIB Loan; the loan from the lessor, totaling $1.3 million, finances lab and office rebuilding at a 6% fixed interest rate over 8 years; the EIB Loan, received in February 2022 for €7.0 million (approximately $7.8 million), carries a 3% fixed interest rate and a 4% payment-in-kind interest rate, repayable in full six years after drawdown - The Company obtained $1.3 million in financing from DTU Science Park A/S for rebuilding laboratory and office facilities, repayable at a fixed interest rate of 6% over 8 years[57] - The EIB Loan, totaling €7.0 million (approximately $7.8 million), was received in February 2022, with a 3% fixed interest rate and a 4% payment-in-kind interest rate, repayable in full six years after drawdown[59] Summary of Borrowings (USD in thousands) | Borrowing Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Loan from lessor | $826 | $815 | | EIB Loan | $8,389 | $7,352 | | Total Borrowings | $9,215 | $8,167 | | Less: Borrowings, current portion | $(184) | $(159) | | Total Borrowings, non-current portion | $9,031 | $8,008 | Note 8. Share-Based Payments Evaxion operates a warrant program for employees, consultants, and board members, with warrants vesting over various periods and expiring between 2031 and 2036; as of June 30, 2025, warrants represented 4.3% of outstanding ordinary shares; the Company recognized $0.1 million in share-based compensation service cost for the six months ended June 30, 2025; fair value determination involves significant judgment regarding expected life and volatility, with volatility based on peer group data - The Company grants equity-settled warrants to employees, consultants, and board members, with vesting periods and expiration dates ranging from 2031 to 2036[62] - As of June 30, 2025, the number of warrants as a percentage of outstanding ordinary shares was 4.3%, up from 1.4% at June 30, 2024[62] Warrants Granted and Exercisable | Metric | June 30, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------ | | Warrants granted as at December 31 | 3,044,794 | 2,738,473 | | Warrants granted during period | 1,372,407 | 538,460 | | Warrants forfeited | (83,662) | (84,559) | | Warrants granted as at June 30 | 4,333,539 | 3,192,374 | | Warrants exercisable as at June 30 | 2,953,561 | 2,258,206 | Assumptions for Warrants Issued | Assumption | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :----------------------------- | :----------------------------- | | Expected term (in years) | 5.0 – 7.0 | 5.0 – 7.0 | | Risk-free interest rate | 3.96% – 4.09% | 4.71% – 4.72% | | Expected volatility | 85% | 85% | | Share price | $0.05 | $0.42 | Note 9. Financial Income and Expenses For the six months ended June 30, 2025, Evaxion reported net financial income of $1.410 million, a decrease from $3.556 million in the prior year period; this change was primarily driven by a significant reduction in the change in fair value of derivative liability, which decreased from $5.368 million in 2024 to $2.722 million in 2025 Financial Income and Expenses (USD in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Financial income: | | | | | | Interest income, bank | $30 | $41 | $59 | $95 | | Foreign exchange gains | $208 | $131 | $208 | $203 | | Change in fair value of derivative liability | $308 | — | $2,722 | $5,368 | | Total financial income | $546 | $220 | $3,039 | $5,838 | | Financial expenses: | | | | | | Interest expenses | $(202) | $(185) | $(391) | $(374) | | Foreign exchange losses | $(337) | $(123) | $(439) | $(139) | | Change in fair value of derivative liability | $(654) | $(1,654) | $(724) | $(1,654) | | Total financial expenses | $(1,232) | $(2,036) | $(1,629) | $(2,282) | | Net financial items | $(686) | $(1,816) | $1,410 | $3,556 | Note 10. Capital Structure and Financial Matters Evaxion's share capital underwent significant changes in early 2025, including a capital reduction on January 17, 2025, decreasing the nominal value per share from DKK 1 to DKK 0.25; this was followed by a public offering on January 31, 2025, generating $10.8 million in gross proceeds from the sale of ADSs and warrants, and additional sales through the JonesTrading Sales Agreement on January 24, 2025, yielding approximately $5.0 million Changes in Share Capital (Six Months Ended June 30, 2025) | Event | Number of Ordinary Shares | Share Capital (DKK in thousands) | | :-------------------------------------- | :------------------------ | :------------------------------- | | Share capital, December 31, 2024 | 70,130,556 | 70,131 | | Capital increase at January 8, 2025 (exercised warrants) | 6,360,000 | 6,360 | | Capital increase at January 16, 2025 (exercised warrants) | 2,150,000 | 2,150 | | Capital decrease at January 17, 2025 | — | (58,980) | | Capital increase at January 24, 2025 (JonesTrading sales agreement) | 34,820,000 | 8,705 | | Capital increase at January 31, 2025 (Public offering) | 177,451,100 | 44,362 | | Capital increase at January 31, 2025 (Public offering) | 22,416,952 | 5,604 | | Capital increase at February 5, 2025 (exercised warrants) | 2,500,000 | 625 | | Share capital, June 30, 2025 | 315,828,608 | 78,957 | - On January 17, 2025, the Company completed a capital reduction, decreasing the nominal value of capital per share from DKK 1 to DKK 0.25[70] - The January 2025 public offering generated gross proceeds of $10.8 million from the sale of 3,997,361 ADSs and accompanying warrants[71] - Sales through the JonesTrading Sales Agreement on January 24, 2025, yielded approximately $5.0 million from 34,820,000 ordinary shares represented by ADSs, concluding sales under this agreement[72] Note 11. Commitments and Contingencies Evaxion may be involved in legal proceedings and claims in the ordinary course of business; however, the Company believes that any adverse outcome of existing claims would not have a material effect on its unaudited condensed consolidated interim financial statements - The Company does not anticipate any material effect on its financial statements from potential legal proceedings or claims[73] Note 12. Events After the Reporting Period On July 11, 2025, Evaxion finalized a debt settlement agreement with the European Investment Bank (EIB), converting €3.5 million of its €7 million loan into equity via a purchase of ordinary Evaxion warrants at a premium; this agreement immediately increases Evaxion's equity by $4.1 million (€3.5 million), reduces overall liabilities, simplifies the balance sheet, and improves financial flexibility and cash flow - On July 11, 2025, Evaxion finalized a debt settlement agreement with the EIB, converting €3.5 million of its €7 million loan into equity[75] - The conversion involves EIB purchasing ordinary Evaxion warrants at a price of $4.87, representing an 89% premium to the share price on July 11, 2025[75] - This agreement immediately increases Evaxion's equity by $4.1 million (€3.5 million), bolstering its capital structure, reducing liabilities, and improving financial flexibility and cash flow[75]