Nyxoah : Q1 2024 Report

Annual report 2023



Table of contents

1 Report of the Board of Directors to the Shareholders for the Financial Year ending December 31, 2023

1.1	Business overview___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	14
1.2	Our competitive strengths________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	18
1.3	Our strategy	____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	19
1.4	Our solution	____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	21
	1.4.1	Overview of the Genio system_ ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	21
	1.4.2	Components of the Genio system_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	21
	1.4.3	Benefits	of the Genio system__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	22
	1.4.4	Treating patients with the Genio system__________________________________________________________________________________________________________________________________________________________________________________________________________________________	23
1.5	Clinical results and studies_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	25
	1.5.1	BLAST OSA trial____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	25
	1.5.2	BETTER SLEEP trial_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	28
	1.5.3	EliSA trial____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	29
	1.5.4	Pivotal DREAM trial_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	29
	1.5.5	ACCCESS trial__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	30
1.6	Sales and marketing____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	30
1.7	Research and development	_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	31
1.8	Manufacturing and supply___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	32
1.9	Post balance sheet events_ __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	32
1.10	Financial review of the year ending December 31, 2023________________________________________________________________________________________________________________________________________________________________	33
	1.10.1	Analysis of the consolidated statements of loss and other comprehensive loss___________________________________________________________________________	33
	1.10.2	Analysis of the consolidated balance sheets____________________________________________________________________________________________________________________________________________________________________________________________________________	34
	1.10.3	Analysis of the consolidated net cash burn rate_______________________________________________________________________________________________________________________________________________________________________________________________	36
1.11	Personnel_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	37
1.12	Environment	___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	37
1.13	Risks and uncertainties_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	37
1.14	Going concern_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	38
1.15	Events and	circumstances	that could have a significant impact	on the future
	development of the Company_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	38

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2	Corporate Governance
	2.1	General________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	40
	2.2	Board of Directors___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	40
		2.2.1	Composition of the Board of Directors______________________________________________________________________________________________________________________________________________________________________________________________________________________________	40
		2.2.2	Director Independence_ ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	43
		2.2.3	Committees within the Board of Directors_________________________________________________________________________________________________________________________________________________________________________________________________________________	44
		2.2.4	Meetings of the Board and the committees_____________________________________________________________________________________________________________________________________________________________________________________________________________	47
	2.3	Executive Management ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	49
	2.4	Conflicts of Interest___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	49
	2.5	Related Party Transactions__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	52
	2.6	Deviations from the Belgian Code on Corporate Governance ______________________________________________________________________________________________________________________________________	52
	2.7	Diversity policy _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	53
	2.8	Remuneration report________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	54
		2.8.1	Introduction _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	54
		2.8.2	Total remuneration_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	57
		2.8.3	Share based remuneration____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	60
		2.8.4	Severance payment_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	63
		2.8.5	Use of the right to reclaim____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	63
		2.8.6	Derogations from the remuneration policy_ ______________________________________________________________________________________________________________________________________________________________________________________________________________	63
		2.8.7	Evolution of the remuneration and the performance of the Company____________________________________________________________________________________________________________	63
	2.9 Description of the principal risks associated with the activities of the Company______________________________________________________________	65
		2.9.1	Risks related to our financial position _ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________	65
		2.9.2	Risks related to development of our products and product candidates_________________________________________________________________________________________________________	67
		2.9.3	Risks related to our dependence on third parties and on key personnel_______________________________________________________________________________________________________	70
		2.9.4	Risks related to manufacturing____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	73
		2.9.5	Risks related to legal and regulatory compliance matters___________________________________________________________________________________________________________________________________________________________	74
		2.9.6	Risks related to intellectual property________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	81
		2.9.7	Risks related to the ordinary shares____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	84

3	Shares and Shareholders
	3.1	Group structure_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	88
	3.2	Share capital and shares_ __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	88
		3.2.1	Capital increases and issuance of shares in 2023__________________________________________________________________________________________________________________________________________________________________________________________	88
		3.2.2	Outstanding subscription rights_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	89
		3.2.3	Number, form and transferability of shares________________________________________________________________________________________________________________________________________________________________________________________________________________	90
		3.2.4	Rights attached to the shares_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	90
		3.2.5	Procedure for changes in share capital______________________________________________________________________________________________________________________________________________________________________________________________________________________________	90
		3.2.6	The Company's authorised capital_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	91
		3.2.7	Purchase and sale of own shares____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	91
		3.2.8	Anti-takeoverprovisions _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	92
		3.2.9	Material contracts containing change of control clauses_____________________________________________________________________________________________________________________________________________________________	92
		3.2.10 Procedure for amending the Company's articles of association __________________________________________________________________________________________________________________________________	93

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3.3 Shareholders__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	93
3.3.1	Major shareholders_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	93
3.3.2	Agreements between shareholders of the Company____________________________________________________________________________________________________________________________________________________________________________	94
3.3.3	Agreements between the Company and major shareholders______________________________________________________________________________________________________________________________________________	94

Consolidated Financial Statements as of December 31, 2023

4.1	Statement by the Board of Directors________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	98
4.2	Consolidated balance sheets_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	99

1. Consolidated statements of loss and other comprehensive loss_______________________________________________________________________________________________________________________________ 101
2. Consolidated statements of changes in equity_______________________________________________________________________________________________________________________________________________________________________________________________________ 102
3. Consolidated statements of cash flow_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 104

Notes to the Consolidated Financial Statements

1. General information____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 108
2. Material accounting policies_ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 109 5.2.1 Basis of Preparation and Going Concern_______________________________________________________________________________________________________________________________________________________________________________________________________________________ 109

5.2.2	New and amended standards and interpretations applicable_______________________________________________________________________________________________________________________________________________	109
5.2.3	Basis of Consolidation___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	110
5.2.4	Foreign Currency Translations______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	110
5.2.5	Intangible Assets	________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	111
5.2.6	Property, Plant and Equipment____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	111
5.2.7	Impairment of Intangible Assets and Property, Plant and Equipment___________________________________________________________________________________________________________________	112
5.2.8	Financial Assets____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	112
5.2.9	Financial Liabilities_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	113
5.2.10	Fair value measurement_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	113
5.2.11	Inventory___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	114
5.2.12	Cash and Cash Equivalents__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	114
5.2.13	Income Taxes___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	114
5.2.14	Employee Benefits_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	115
5.2.15	Share-BasedCompensation_ ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	115
5.2.16	Provisions________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	116
5.2.17	Leases______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	116
5.2.18	Revenue______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	117
5.2.19	Recoverable cash advances and other government grants______________________________________________________________________________________________________________________________________________________	117
5.2.20	Segment Reporting______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	118
5.2.21	Significant events	and transactions of the reporting period_____________________________________________________________________________________________________________________________________________________	119
5.3 Capital Management	_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	119

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5.4 Management of Financial Risks_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 119

1. Market Risk________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________119
2. Credit risk____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________120
3. Foreign Exchange Risk_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________120
4. Interest rate risk_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________121
5. Liquidity Risk__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________121
6. Fair Value______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________121

5.5 Critical accounting estimates and assumptions______________________________________________________________________________________________________________________________________________________________________________________122

5.5.1

Critical Judgments___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 122

5.5.2 Critical Accounting Estimates and Assumptions_________________________________________________________________________________________________________________________________________________________________________________ 123

1. Subsidiaries_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 124
2. Property, Plant and Equipment__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________125

5.8

Intangible assets____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 126

1. Right of use assets and lease liabilities____________________________________________________________________________________________________________________________________________________________________________________________________________________________127
2. Other long-termreceivables_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 128
3. Inventory__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 128
4. Trade and Other receivables____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 129
5. Cash and cash equivalents__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 129
6. Financial assets_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________130
7. Capital, Share Premium, Reserves_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________130
8. 1. Capital and share premium_ ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________130
   2. Reserves________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 132

5.16 Share-Basedcompensation______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________132

1. Description of the equity-settled share-basedincentive plans____________________________________________________________________________________________________________________________ 133
2. Accounting for Equity-settled Share-BasedPayment______________________________________________________________________________________________________________________________________________________________137
3. Fair value_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________137

5.17 Financial Debt______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________140 5.17.1 Financial debt related to recoverable cash advances________________________________________________________________________________________________________________________________________________________________141

5.17.2 Other Loans_ __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 143

5.18 Trade payables___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 143

5.19 Other payables__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 144 5.19.1 Derivatives_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________144

1. Revenue and cost of goods sold__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 146
2. Operating expenses_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________147
3. Research and Development expenses____________________________________________________________________________________________________________________________________________________________________________________________________________________________147
4. Selling, General and Administrative expenses______________________________________________________________________________________________________________________________________________________________________________________________ 148
5. Other operating income and expenses_______________________________________________________________________________________________________________________________________________________________________________________________________________________ 149
6. Employee Benefits___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 149

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5.26 Pension Schemes_ _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	150
5.26.1	Defined	contribution	plan______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	150
5.26.2 Defined	benefit plan	__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	150

1. Financial Income_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 153
2. Financial Expense______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 153
3. Income taxes and deferred taxes_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 154
4. Loss Per Share (EPS)____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 157

5.31 Other commitments_ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	157
5.31.1	Capital commitments_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	157
5.31.2	Lease expenses____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	157
5.31.3	Other commitments_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	158

5.32 Related Party Transactions__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 158

5.32.1	Remuneration of Key Management___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	158
5.32.2 Transactions with Non-ExecutiveDirectors and Shareholders:________________________________________________________________________________________________________________________________________	158
5.32.3 Transactions with related parties______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________	159

1. Events after the Balance-SheetDate_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 160
2. Statutory Auditor Services and Performance of Exceptional Activities or Execution of
   Special Instructions Performed by the Auditor_________________________________________________________________________________________________________________________________________________________________________________________________________ 160

Statutory Auditors Report

Statutory Auditors Report__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 161

Statutory Accounts as of December 31, 2023

1. Balance sheet______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 168
2. Profit and loss account________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 172
3. Appropriation account__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 174

7.4

Valuation rules _ _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

175

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Annual Report 2023

10		Nyxoah SA Annual Report 2023