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Convertible loans (Tables) | 9 Months Ended
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Sep. 30, 2022
Financial Instruments [Abstract] |
Schedule of Derivative Option and Convertible Loan | The following table summarizes the changes in fair value income (expense) and profit or loss activity of the embedded conversion option derivatives during the three and nine months ended September 30, 2022 and 2021:
|  | Three months ended September 30, |  | Nine months ended September 30,
(in KUSD) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Deerfield First Tranche (1) |  | (2,822) |  |  | (3,913) |  |  | 15,556 |  |  | 16,867 |
Deerfield Second Tranche - prior to FDA approval(2) |  | — |  |  | — |  |  | — |  |  | 3,454 |
Deerfield Second Tranche - after FDA approval (1) |  | (1,838) |  |  | (3,030) |  |  | 10,094 |  |  | (4,042) |
Total |  | (4,660) |  |  | (6,943) |  |  | 25,650 |  |  | 16,279 |
(1) The fair value expense recognized during the three and nine months ended September 30, 2022 represents the change in fair value up until the point of exchange on August 15, 2022. (2) In addition to the changes in fair value, the Company recorded a gain of KUSD 1,816 during the nine months ended September 30, 2021 with the receipt of the USD 50 million subsequent disbursement, the establishment of the embedded derivative and residual loan associated with the subsequent disbursement and elimination of the derivative immediately prior to FDA approval of ZYNLONTA.
Schedule of key inputs used for valuation | The warrant obligation has been recorded at an initial fair value of USD 4.0 million on August 15, 2022 and is remeasured to fair value on a quarterly basis. Key inputs for the valuation of the warrant obligation as of August 15, 2022 were as follows:
| As of
| August 15, 2022
Exercise price in USD | 8.30 |
Share price in USD | 10.33 |
Risk-free interest rate | 2.9 | %
Expected volatility | 87 | %
Expected term (months) | 60 months
Dividend yield | — |
Black-Scholes value in USD | 7.51 |
The Company used an independent valuation firm to assist in calculating the fair value of the warrant obligations, using the Black-Scholes option-pricing model. Key inputs for the valuation of the warrant obligations as of September 30, 2022 were as follows:
| As of
| September 30, 2022
Exercise price in USD | 8.30 |
Share price in USD | 4.82 |
Risk-free interest rate | 4.2 | %
Expected volatility | 80 | %
Expected term (months) | 58.5 months
Dividend yield | — |
Black-Scholes value in USD | 2.68 |
Key inputs for the valuations as of August 15, 2022 and December 31, 2021 were as follows: Deerfield First Tranche
| As of
| August 15, 2022 |  | December 31, 2021
Exercise price at 130% of the IPO price of 19.00, in USD | 24.70 |  |  | 24.70 |
Forced conversion price, in USD | 67.93 |  |  | 67.93 |
Share price in USD | 10.33 |  |  | 20.20 |
Risk-free interest rate | 3.2 | % |  | 1.0 | %
Expected volatility | 85 | % |  | 77 | %
Expected term (months) | 32.5 months |  | 40 months
Dividend yield | — |  |  | — |
Recovery rate | 5 | % |  | 5 | %
Implied bond yield | 12.0 | % |  | 8.8 | %
Deerfield Second Tranche
|  | As of
|  | August 15, 2022 |  | December 31, 2021
Exercise price in USD |  | 28.07 |  |  | 28.07 |
Forced conversion price, in USD |  | 77.19 |  |  | 77.19 |
Share price in USD |  | 10.33 |  |  | 20.20 |
Risk-free interest rate |  | 3.2 | % |  | 1.0 | %
Expected volatility |  | 85 | % |  | 77 | %
Expected term (months) |  | 32.5 months |  | 40 months
Dividend yield |  | — |  |  | — |
Recovery rate |  | 5 | % |  | 5 | %
Implied bond yield |  | 12.0 | % |  | 8.8 | %
Schedule of borrowings | Transaction costs have been allocated to the above two components. Transaction costs associated to the warrant obligation have been charged directly to the unaudited condensed consolidated interim statement of operations, while transaction costs associated to the residual loan have been deducted from the loan. See further illustration in table below:
in KUSD |  | Warrant obligation |  | Residual loan |  | Total
Loan Principal |  | 3,957 |  |  | 116,043 |  |  | 120,000 |
Transaction costs |  | (245) |  |  | (7,187) |  |  | (7,432) |
Carrying value of loan at issuance |  |  |  | 108,856 |  |  |
The following table summarizes the interest expense recorded on the convertible loan for the three and nine months ended September 30, 2022 and 2021:
|  | Three months ended September 30, |  | Nine months ended September 30,
(in KUSD) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Deerfield First Tranche |  | 1,132 |  |  | 2,142 |  |  | 5,664 |  |  | 6,184 |
Deerfield Second Tranche |  | 404 |  |  | 819 |  |  | 2,020 |  |  | 1,209 |
Total |  | 1,536 |  |  | 2,961 |  |  | 7,684 |  |  | 7,393 |
The table below provides a rollforward of the Company’s debt obligation relating to the royalty purchase agreement.
(in KUSD) |  |
January 1, 2022 |  | 225,477 |
Less: royalty payments |  | 5,656 |
Plus: interest expense |  | 17,356 |
Less: cumulative catch-up adjustment, Financial income (expense), net |  | 16,033 |
September 30, 2022 |  | 221,144 |
January 1, 2021 |  | — |
Proceeds from the sale of future royalties |  | 225,000 |
Less: transaction costs |  | 6,998 |
Less: royalty payments |  | 213 |
Plus: interest expense |  | 6,752 |
Plus: cumulative catch-up adjustment, Financial expense |  | 936 |
December 31, 2021 |  | 225,477 |

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