2015 ANNUAL REPORT - Ablynx...ANNUAL REPORT 2015 / ABLYNX 3. INDEX CORPORATE OVERVIEW 5 1. INTRODUCTION 7 Ablynx at a glance 9 2015 achievements 10 Letter to our stakeholders 12 Company

2015ANNUA L RE P OR T

T A K E A L O O K A T O U R 3 D - P R I N T E D

G R A P H S

ANNUAL REPORT 2015 / ABLYNX 3. INDEX

CORPORATE OVERVIEW 5

1. INTRODUCTION 7Ablynx at a glance 92015 achievements 10Letter to our stakeholders 12Company strategy and outlook for 2016 16

2. NANOBODIES® – POWERFUL PLATFORM GENERATING POTENTIALLY INNOVATIVE MEDICINES 19

Platform advantages 20Product pipeline 22Key clinical value drivers 24Key pre-clinical value drivers 30

3. SHAREHOLDERS’ INFORMATION 33Key figures and performance indicators 34Shareholder structure 36The shares in 2015 49Financial calendar 54Analyst coverage 55Contact the IR department 55

4. GLOSSARY 57

CORPORATE GOVERNANCE AND FINANCIAL INFORMATION 61

5. REPORT OF THE BOARD OF DIRECTORS 64

6. RESPONSIBILITY STATEMENT 116

7. FINANCIAL STATEMENTS 120

8. NOTES TO THE FINANCIAL STATEMENTS 124

IND

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INTRODUCTION

ANNUAL REPORT 2015 / ABLYNX CORPORATE OVERVIEW9.

AB

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E LATE-STAGE CLINICAL DEVELOPMENT COMPANY WITH POWERFUL PROPRIETARY TECHNOLOGY PLATFORM

DEDICATED TO CREATING NEW MEDICINES WHICH WILL MAKE A REAL DIFFERENCE TO PATIENTS AND THEIR CAREGIVERS

Ablynx is a clinical-stage biopharmaceutical company engaged in the development of Nanobodies®, proprietary therapeutic proteins based on single-domain antibody fragments.

Due to their small size and unique structure, Nanobodies offer multiple advantages making them ideal building blocks for the generation of novel biological drugs.

>40 PROGRAMMES in the R&D pipeline

6 PRODUCTS in clinical development

9 PHARMA PARTNERS across the globe

>€380 MILLION non-dilutive cash received to date from partners

>€7 BILLIONin potential milestones

PLUS ROYALTIES

€236 MILLION2015 year-end cash position

350 EMPLOYEES15 nationalities

>1,000 PATIENTStreated with Nanobodies

LISTED ON EURONEXTticker: ABLX

€78 MILLION2015 revenue (+57% vs. 2014)

UNIQUE AND POWERFULtechnology platform

>500 PATENTSgranted and pending


2015

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During the year we initiated one Phase III study and three Phase II studies which together will include a total of over 900 patients worldwide. In addition, we completed recruitment of 35 infants in the Phase I/IIa RSV study with ALX-0171 and 345 patients in the Phase IIb combination study with ALX-0061 in RA patients. Finally, 14 new discovery programmes have been initiated, both proprietary and as part of pharmaceutical collaborations.

Caplacizumab (anti-vWF)

• Defined the commercial strategy whereby Ablynx will retain direct control over commercialisation in Europe and the United States (August)

• Initiated the confirmatory international Phase III HERCULES study in patients with acquired TTP (aTTP) (September)

ALX-0061 (anti-IL-6R)

• Initiated a Phase IIb study in RA patients in combination with methotrexate (March); recruitment of 345 patients was completed at year-end, on schedule

• Initiated a Phase IIb RA monotherapy study (April) and recruitment of 251 patients was completed on schedule post year-end, in February 2016

• The first eligible patients from both Phase IIb RA studies rolled-over in the open-label extension study (July)

• Initiated a Phase II study in patients with systemic lupus erythematosus (SLE) (August)

ALX-0171 (anti-RSV)

• The Phase I/IIa safety study with inhaled ALX-0171 completed recruitment in 35 infants, aged 3-24 months, who were hospitalised with an RSV infection (December)

• An independent data monitoring board gave approval to extend this Phase I/IIa study in younger infants, aged 1-5 months, to generate additional data (December)

Immuno-oncology

• Pre-clinical proof-of-concept was achieved with a bi-specific Nanobody programme as part of the extensive immuno-oncology collaboration with Merck & Co., Inc., which triggered a €3.5 million milestone payment to Ablynx (October)

BI 836880 (anti-VEGF/Ang2)

• Ablynx’s partner Boehringer Ingelheim presented compelling pre-clinical proof-of-mechanism data with the bi-specific anti-VEGF/Ang2 Nanobody in multiple in vivo

cancer models (November)


STRATEGIC PARTNERSHIPS

We signed three new pharmaceutical partnerships and extended two existing collaborations in 2015:

In March, we announced an extension of our initial two-year research collaboration with Merck & Co., Inc. to develop and commercialise Nanobodies directed towards an undisclosed voltage-gated ion channel. Merck & Co., Inc. will extend their funding to the end of September 2016.

In May, a research and option agreement was signed with Genzyme to explore the potential of a Nanobody targeting an ion channel that plays a role in multiple sclerosis, triggering an undisclosed exclusivity payment to Ablynx.

In June, we signed an exclusive license agreement with Taisho Pharmaceuticals to develop and commercialise the anti-TNFα Nanobody, ozoralizumab, in Japan. We received an upfront payment of US$3 million and we are entitled to receive development and commercial milestone payments plus royalties.

In July, we significantly expanded our immuno-oncology partnership with Merck & Co., Inc., which was originally signed in February 2014, to include up to 17 programmes with focus on multi-specific Nanobodies. As part of both the original and expansion agreements, we received €33 million in upfront payments and are entitled to receive up to €5.7 billion in future milestone payments, plus royalties.

In November, we entered into a drug discovery collaboration with Novo Nordisk to investigate multi-specific Nanobodies in an undisclosed indication. We received an upfront payment of €5 million early in 2016, and are entitled to receive €4 million in research funding during the initial three year research term of the collaboration and up to €182 million in potential milestones, plus royalties.

FINANCIAL PERFORMANCE

€236.2 MILLIONCASH, CASH EQUIVALENTS, RESTRICTED CASH AND OTHER SHORT TERM INVESTMENTS

€24.8 MILLIONCASH INCOME FROM COLLABORATIONS

€100 MILLIONRAISED THROUGH 5-YEAR CONVERTIBLE BONDS WITH 3.25% COUPON RATE AND 26.5% CONVERSION PREMIUM

95% FREE FLOAT DIVERSIFIED SHAREHOLDER BASE WITH >60% OF INSTITUTIONAL SHAREHOLDING IN UK AND USA


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ANNUAL REPORT 2015 / ABLYNX

DEAR SHAREHOLDERS, COLLEAGUES AND BUSINESS PARTNERS,

2015 WAS A YEAR OF EXCELLENT PROGRESS ACROSS OUR ENTIRE BUSINESS. OUR NANOBODY-BASED DRUGS ADVANCED SUCCESSFULLY INTO THE LATER STAGES OF DEVELOPMENT AS WE STARTED A PHASE III STUDY AND THREE PHASE II STUDIES WHICH TOGETHER WILL INCLUDE A TOTAL OF OVER 900 PATIENTS WORLDWIDE. COLLABORATIONS TO EXPLOIT THE FULL POTENTIAL OF OUR NANOBODY TECHNOLOGY CONTINUE TO FORM A CRUCIAL PART OF OUR HYBRID BUSINESS MODEL AS WE SIGNED THREE NEW PHARMACEUTICAL PARTNERSHIPS AND EXTENDED TWO EXISTING COLLABORATIONS, FURTHER FUELLING OUR BROAD PRODUCT PIPELINE, WHICH NOW INCLUDES OVER 40 PROPRIETARY AND PARTNERED PROGRAMMES. WE ALSO SUCCESSFULLY PLACED €100 MILLION OF FIVE-YEAR CONVERTIBLE BONDS – A PARTICULARLY NOTEWORTHY ACHIEVEMENT IN THE EUROPEAN BIOTECH SECTOR – STRENGTHENING OUR BALANCE SHEET TO FACILITATE THE FINANCING AND EXECUTION OF OUR BUSINESS PLAN.


MATURING PRODUCT PIPELINE

2015 was a year of outstanding execution with six Nanobodies now in late-stage clinical development. We significantly expanded our clinical pipeline with the start of a Phase III study with caplacizumab, our first-in-class wholly-owned bivalent Nanobody to treat acquired TTP, as well as three Phase II studies with the anti-IL-6R Nanobody, ALX-0061, in RA and SLE, for which AbbVie has an option for an exclusive global license. In less than 10 months, we completed recruitment of 345 patients in the Phase IIb RA combination study of ALX-0061 and we completed recruitment of 35 infants in the Phase I/IIa study of our wholly-owned, first-in-class trivalent Nanobody, ALX-0171, to treat RSV, a serious viral respiratory infection. This was the first trial in which a Nanobody was administered to infants by inhalation and could prove to be a very important validation for the platform as a whole, in the general area of inhaled therapeutics, as well as in this particularly challenging indication.

PREPARING FOR OUR FIRST PRODUCT LAUNCH

2015 was also the year in which we expanded our expertise beyond R&D, as we began preparing for our first product launch. Following compelling Phase II TITAN

results with caplacizumab, our anti-vWF Nanobody to treat acquired TTP, we are on track to file for conditional approval of caplacizumab in Europe in early 2017 with the first European launch possible in 2018. In parallel with the European regulatory filing preparations, the confirmatory, international Phase III HERCULES study with caplacizumab has been initiated to support a BLA filing in the United States in 2018. The publication of the Phase II TITAN study in The New England Journal of Medicine on 11 February 2016 was a major accomplishment and is another endorsement of the potential of caplacizumab in the treatment of acquired TTP. We are now defining the commercial infrastructure required to lead the commercialisation of caplacizumab ourselves in Europe and the United States and we will announce further details when these plans are finalised.

HYBRID BUSINESS MODEL CONTINUES TO FUEL THE PIPELINE

It is our ambition to ensure that the unique advantages of our Nanobodies are widely exploited to develop differentiated and innovative medicines which have the potential to make a real difference to patients suffering from severe diseases. To achieve this goal, we are committed to a hybrid business model where we invest directly in our own programmes in specific areas as well as collaborating with pharmaceutical partners at all


stages of discovery and development. These partners are selected for their expertise and experience in certain therapeutic indications as well as having resources which help us advance programmes rapidly. During the past year we have again successfully delivered on this business strategy and initiated four new internal discovery programmes and some 10 new partnered programmes. We broadened our disease scope through partnering with Genzyme (in multiple sclerosis) and Novo Nordisk (in a disease indication that is of strategic importance to them). We significantly expanded our immuno-oncology agreement with Merck & Co., Inc., so that it now includes up to 17 Nanobody programmes for which the first bi-specific Nanobody has already achieved pre-clinical proof-of-concept in in vivo cancer models. We also delivered a breakthrough in our ion channel collaboration with Merck & Co., Inc., resulting in an extension of the research term to September 2016.

AN EXCITING YEAR AHEAD

As we continue to develop and mature, our priorities and objectives remain focused on delivering new hope for patients and sustainable value to all our stakeholders. We look forward to an exciting year with multiple potentially value-creating catalysts, including the results from the Phase I/IIa study with ALX-0171 in 53 infants who were hospitalised with an RSV infection. We also

anticipate top line results from two Phase IIb studies with ALX-0061 in patients with RA and then we will await the decision by AbbVie on whether they wish to exercise their option to license this product in this indication. We also expect the initiation of up to four clinical studies by our collaborators (one of which already started early in 2016) which would trigger milestone payments to Ablynx.

THANK YOU

To conclude, we would like to thank all of our talented employees for their dedication to achieving our goals, our business partners for their enthusiasm and commitment, and our shareholders for supporting us in the creation of a unique European biotech company with, we believe, very significant potential.

Sincerely yours,

Dr Peter Fellner – Chairman

Dr Edwin Moses – CEO


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Ablynx’s strategy is to use the Company’s unique Nanobody technology to develop therapeutics in areas of high unmet medical need where Nanobodies offer a clear advantage over existing products and technologies.

The Company employs a hybrid business model where it invests directly in its own development programmes as well as collaborating with pharmaceutical partners at all stages of discovery and development, selected for their expertise and experience in key areas. In addition, Ablynx will retain some or all rights to commercialise its products, with the first launch of a wholly-owned Nanobody expected in 2018.

Ablynx’s ambition is to develop differentiated and innovative medicines which have the potential to make a real difference to society, as well as creating sustainable value for all its stakeholders.

OUTLOOK 2016 – AN EXCITING YEAR AHEAD

Ablynx remains focused on creating sustainable value, and is well positioned for further growth during the course of 2016 with multiple significant pre-clinical, clinical and commercial catalysts:

Expected clinical study results

ALX-0171 (anti-RSV)Phase I/IIa safety results with inhaled ALX-0171 in 53 infants aged 1-24 months who were hospitalised with an RSV infection (Q2 2016)

ALX-0061 (anti-IL-6R)Top line results from the Phase IIb RA monotherapy and combination therapy studies (AbbVie has an option for global exclusive license) (Q3 2016)

ALX-0761 (anti-IL-17A/F)Phase Ib results in 40 patients with psoriasis (exclusively licensed to Merck KGaA) (H1 2016)


Building the pipeline

Caplacizumab (anti-vWF)Recruitment of patients with acquired TTP in the Phase III HERCULES study will continue and a three -year follow-up study will be initiated in Q3 2016

ALX-0171 (anti-RSV)Initiation of a worldwide Phase II dose-ranging study in approximately 120 infants, aged 1-24 months, who are hospitalised with an RSV infection in Q4 2016

VariousStart of up to four Phase I studies with partners and multiple pre-clinical data points with partners, triggering milestone payments to Ablynx. Initiate and continue about 40 internal and partnered discovery and pre-clinical programmes

Regulatory & Commercial

Caplacizumab (anti-vWF)Continue preparations for the commercialisation of caplacizumab in Europe and the United States, and proceed with the preparations to file the dossier, in early 2017, for conditional approval of caplacizumab in Europe

ALX-0061 (anti-IL-6R)Licensing decision in Q4 2016 by AbbVie for ALX-0061 in RA which, in the case of opt-in, would trigger a US$75 million license payment to Ablynx

VariousExpand existing collaborations and/or initiate new partnerships

NANOBODIES® – POWERFUL PLATFORM GENERATING POTENTIALLY INNOVATIVE MEDICINES

ANNUAL REPORT 2015 / ABLYNX CORPORATE OVERVIEW20.ANNUAL REPORT 2015 / ABLYNX CORPORATE OVERVIEW20.

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GES Nanobodies are a novel class of proprietary therapeutic proteins based on single-

domain antibody fragments that contain the unique structural and functional properties of naturally-occurring heavy chain only antibodies. Due to their small size and unique structure, Nanobodies are ideal building blocks for the generation of novel biological drugs with multiple advantages:

Mix and match

Ability to bind multiple targets with one therapeutic Nanobody molecule. These therapeutic molecules may contain Nanobody building blocks combined with each other (up to 7), combined with other protein domains, or with other molecules or drugs.Multi-specific (binding different targets; currently 2 bi-specific Nanobodies in the clinic), multivalent (binding identical targets; currently 2 Nanobodies in the clinic) and bi-paratopic (binding 2 different epitopes on the same target) Nanobody molecules have been successfully produced and their potential therapeutic effect demonstrated.

Multiple delivery routes

The robust nature and stability of Nanobodies allows administration through multiple delivery routes, including intravenous and subcutaneous injection (currently 5 Nanobodies in the clinic) and nebulisation directly into the respiratory tract (currently 1 Nanobody in the clinic), as well as potentially through the ocular route and orally for local treatment in the gut.

Able to bind and block challenging targets

Nanobodies can interact with epitopes on targets which are hidden or shielded from the much larger conventional antibodies.Functional selective Nanobodies have been generated against GPCRs as well as against ion-gated, ligand-gate and voltage-gated ion channels (multiple programmes on-going, both internally and with partners including Merck & Co., Inc., Novartis and Genzyme).

Multi-specific/multivalent Nanobodies that address multiple targets in a single drug molecule – flexible GS* linker lengths

Inhalation

Nanobodies against ion channels and GPCRs

Ocular Oral-to topical

* glycine-serine linker


Customised half-life

Ability to customise the in vivo half-life of a Nanobody from a few hours to over 3 weeks to achieve the desired properties, such as the use in chronic versus acute indications. Ablynx’s proprietary half-life extension technology is based on a Nanobody that binds to human serum albumin, thereby increasing the in vivo serum half-life of the therapeutic molecule.Two clinical proof-of-concepts have been achieved in patients with rheumatoid arthritis with two Nanobodies that incorporate this proprietary half-life extension technology.

Manufacturing

Nanobodies (including multi-specific, multivalent and bi-paratopic constructs) are encoded by single genes and are efficiently produced with high-yields in prokaryotic and eukaryotic hosts, including bacteria, yeast, and mammalian cells. They can be formulated at high concentrations and maintain low viscosity, enabling multiple routes of administration, including low volume injectables.

Hours/days/weeks

High-yield high-concentration, low-viscosity, microbial production

Albumin-binding Nanobody

Fc


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Ablynx’s product pipeline currently includes over 40 wholly-owned and partnered programmes across various stages of development. At the date of this report, six Nanobodies were in clinical development in a wide range of diseases, including haematology, inflammation, respiratory disease and oncology.

The current status and upcoming near term milestones of the Company’s major pre-clinical and clinical value drivers are described in the following sections. More detailed information is also available on the Ablynx website www.ablynx.com.

Product Indication Target Pre-clinical Phase I Phase II Phase III Filing

caplacizumab aTTP vWF

ALX-0061 RA

RA

SLE

IL-6R

IL-6R

IL-6R

ALX-0171 RSV RSV

Up to 17 programmes Immuno-oncology Various

BI 836880 Oncology VEGF/Ang2

ozoralizumab RA

RA

TNFa

TNFa

ALX-0141 Bone disorders RANKL

ALX-0761 Psoriasis IL-17A/IL-17F

~ 15 wholly-owned

and partnered

programmes

Various

http://www.ablynx.com


Product Indication Target Pre-clinical Phase I Phase II Phase III Filing

caplacizumab aTTP vWF

ALX-0061 RA

RA

SLE

IL-6R

IL-6R

IL-6R

ALX-0171 RSV RSV

Up to 17 programmes Immuno-oncology Various

BI 836880 Oncology VEGF/Ang2

ozoralizumab RA

RA

TNFa

TNFa

ALX-0141 Bone disorders RANKL

ALX-0761 Psoriasis IL-17A/IL-17F

~ 15 wholly-owned

and partnered

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Various

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Japan

Greater China

Greater China


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S CAPLACIZUMAB (ANTI-VON WILLEBRAND FACTOR; vWF)

FIRST-IN-CLASS BIVALENT NANOBODY FOR THE TREATMENT OF ACQUIRED TTP

• Wholly-owned Nanobody with Orphan Drug Status in the United States and Europe• Potential to become a critical new component in the current standard of care• Filing for conditional approval in Europe in early 2017, based on Phase II study results• Worldwide Phase III HERCULES study on-going to support BLA submission

in the USA in 2018• Ablynx to lead commercialisation in Europe and in the United States• Market potential of approx. €300 million with first potential launch in Europe in 2018

There remains a high need for a therapeutic that immediately inhibits micro-clot formation in the acute phase of the disease. Caplacizumab has been developed to address that need. It has a unique mode of action by inhibiting the interaction between ultra-large vWF and platelets through binding with the A1 domain of vWF. It thereby immediately prevents platelet aggregation and the formation of micro-clots in the acute, critical phase of acquired TTP.

Acquired thrombotic thrombocytopenic purpura

Life-threatening, ultra-rare, acute blood clotting disorder × Auto-immune disorder characterised by impaired activity of ADAMTS13 (<10% of

that in normal plasma) × Impaired ADAMTS13 activity leaves ultra-large vWF multimers (UL-vWF) un-

cleaved × UL-vWFs bind to platelets, resulting in severe thrombocytopenia (very low

platelet count), and micro-clot formation in the small blood vessels of vital organs × Leads to small blood vessel occlusion, tissue ischaemia and organ damage

Incidence rate × Up to 11 patients per 1 million people

Current standard of care × Daily plasma exchange plus immunosuppressive treatments

High unmet need with no drug specifically approved for this indication × Mortality high (10-20%), with vast majority within 2 weeks post diagnosis × Approximately 36% of patients have a recurrence × Major morbidities after TTP episode, including vital organ damage × Impacts life expectancy and quality of life


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Caplacizumab’s effect has been demonstrated in a worldwide, Phase II TITAN study in 75 patients with acquired TTP. Recently published in The New England Journal of Medicine:• Treatment with caplacizumab resulted in a nearly 40%

reduction in median time to platelet count normalisation

(p=0.005), reduced the use of daily plasma exchange, and

prevented further consumption of platelets in the micro-

clots and small blood vessel occlusion.

• Caplacizumab’s clinical effect has been shown by a low

number of recurrences requiring re-initiation of daily

plasma exchange during treatment with caplacizumab

(N=3) versus placebo (N=11).

• Caplacizumab had an acceptable safety profile:

manageable mild bleeding tendency; with no requirement

for substitution therapy.

Three aTTP experts describe the impact of the NEJM publication:

“Despite the advances in immunosuppressive therapy,

better plasma exchange, better supportive care, the

10% to 15% acute mortality in acquired TTP in an acute

episode has not been impacted. I think caplacizumab

has the potential to do that.”

Dr Spero Cataland Ohio State University, Columbus, USA

“With this drug I can quickly control the patient’s

symptoms. I can detach the platelet from the ultra-

large von Willebrand Factor and not have the

consequences or damage due to microthrombosis,

giving me more time to treat the patient. That is

fantastic. This is the reason why this paper is very

much appreciated by the physician and the patient.”

Dr Flora Peyvandi University of Milan, Italy

“The importance of this paper is twofold. Firstly, it’s

the method of action of the compound, which is

really quite unique. It’s not associated with significant

side effects. It doesn’t appear to be immunogenic.

The second important and probably the most

important reason for this trial is that we’ve always

been stuck in the acute scenario of trying to achieve

a rapid increase in the platelet count, which in itself

is associated with a better outcome for patients,

and that’s exactly what’s been demonstrated in this

paper.”

Dr Marie Scully University College Hospital, London, UK

“

2015 achievements

In August, the commercial strategy was defined whereby Ablynx retains full control over the commercialisation in Europe and the United States. In September, a confirmatory, international, Phase III HERCULES study of caplacizumab was initiated in patients with acquired TTP. Ablynx plans to recruit 92 patients into this study by 2017.

Potential near term milestones

2016 × Prepare filing for conditional approval in Europe × Continue recruitment in Phase III HERCULES study × Define full commercialisation plan × Initiate a three-year follow-up study

2017 × Filing of caplacizumab for conditional approval in Europe × Phase III HERCULES top line results

2018 × First launch in Europe × BLA submission in the United States

“

“

http://www.nejm.org/doi/full/10.1056/NEJMoa1505533?query=featured_home&

http://www.touchoncology.com/gallery/titan-study-caplacizumab-treatment-acquired-thrombotic-thrombocytopenic-purpura


ALX-0171 (ANTI-RSV)

FIRST-IN-CLASS TRIVALENT INHALED NANOBODY FOR THE TREATMENT OF RESPIRATORY SYNCYTIAL VIRUS (RSV) INFECTION

• Wholly-owned Nanobody delivered through inhalation• Potential breakthrough for the treatment of RSV infections• Recruitment of first-in-infant Phase I/IIa safety study completed with results

expected in Q2 2016• Phase II dose-ranging study to start by end 2016• Opportunity in a multi-billion dollar market

Respiratory syncytial virus infection

Major cause of acute upper (colds) and lower (pneumonia and bronchiolitis) respiratory tract infections in infants, young children, and the elderly

Leading cause of infant hospitalisation × >3 million children (<5 years) hospitalised worldwide each year

High incidence rate × 60%-70% of children will have been infected by the age of 1 year

Current standard of care × Only symptomatic treatments available, including corticosteroids

and bronchodilators × Monoclonal antibody (Synagis®) used as prophylaxis

and only approved in high-risk, pre-term infants

High unmet need × 3,000-8,500 deaths in infants <2 years globally, each year × Long-term disease burden (prolonged wheezing and increased risk

for asthma development later in life) × No specific treatment option available


There remains a high need for an effective and specific therapeutic to treat RSV infections. ALX-0171 has been developed to address this unmet need and has first-in-class potential for the treatment of RSV infection. It is administered via nebulisation directly to the site of infection, i.e. the respiratory tract including the lungs, where it inhibits RSV replication and neutralises RSV activity by blocking virus uptake into cells.

ALX-0171 has shown a potent anti-viral effect against a broad range of RSV strains and it demonstrated to have a strong therapeutic effect following administration via nebulisation in a neonatal animal model for infant RSV infection. Repeated daily inhalation of ALX-0171 was proven to be well-tolerated in multiple Phase I clinical studies in adult volunteers, including a study in subjects with hyper-reactive airways.

References: Nair et al, Lancet 2010; Byington et al, Pediatrics 2014; Shi et al, J Med Econ 2011; Sigurs et al, Thorax 2010; Beckman et al, Acta Pediatr 2014

2015 achievements

In December, the Phase I/IIa safety study of inhaled ALX-0171 completed recruitment in 35 infants, aged 3-24 months, who were hospitalised with an RSV infection.Also in December, an independent Data Monitoring Committee reviewed safety data available for the first 15 infants from the placebo-controlled part of this Phase I/IIa study and confirmed that the inclusion age for recruitment could be lowered to 1 month of age.Post year-end, in January 2016, the Phase I/IIa study was expanded to include an expansion cohort of 18 additional infants, aged 1-5 months. Recruitment of this expansion cohort was completed ahead of schedule post year-end, in February 2016.


2016 × Top line Phase I/IIa results in 53 hospitalised RSV infected infants × Start Phase II dose-ranging study in approximately 120 hospitalised RSV infected infants, aged 1-24 months

2017 × Complete recruitment of the Phase II dose-ranging study

2018 × Top line results from the Phase II dose ranging study


ALX-0061 (ANTI-IL-6R)

HALF-LIFE EXTENDED NANOBODY FOR THE TREATMENT OF AUTO-IMMUNE DISORDERS

• Compelling Phase IIa results, demonstrating best-in-class potential• Results from Phase IIb RA monotherapy and combination therapy studies expected

in Q3 2016• Decision by AbbVie for an exclusive, global license in RA expected by the end of 2016• Phase II study in SLE on-going with results anticipated in 2018• Opportunity in multi-billion dollar markets

Rheumatoid arthritis (RA)

Chronic, progressive, inflammatory disease of the joints and surrounding tissues × RA is an inflammatory disease that occurs when a person’s immune system mistakenly

starts attacking healthy joints, causing symptoms that may range in severity from patient to patient. These symptoms may include pain, swelling, stiffness, and loss of physical function

× Patients with RA may also experience systemic symptoms, such as low-grade fever, fatigue, or weight loss

× Over time, rheumatoid arthritis symptoms can worsen, everyday tasks may become difficult, and permanent joint damage may occur

High incidence rate × 1.5 million patients in the United States × Approximately 6 million people expected to suffer from RA by 2021 in the 7 major

markets

Current treatment options × Two broad categories: 1) symptomatic treatments (e.g. corticosteroids); 2) disease

modifying agents (DMARDs) to halt the destructive course of RA and prevent debilitating joint damage

× Market-leading drugs include anti-TNFα biological DMARDs × RA drugs had >US$500 million in sales in 2014

Unmet need × Many patients respond initially to their treatment but relapse between 10 and 13 months × >30% of patients do not respond to TNFα inhibitors, the market leading biological

DMARDs × Need for new, differentiating treatments with fewer treatment failures and fewer

inadequate responders × Need for disease modifying therapies with substantial efficacy, particularly on higher-

demanding measures such as remission, ACR50 and ACR70


There remains a high need for new, differentiating treatment options with substantial efficacy. ALX-0061 has been developed to address this unmet need and the results from the Phase IIa study in 37 patients with RA demonstrated that ALX-0061 has best-in-class potential:

• Highly efficacious: treatment with ALX-0061 showed ACR20, ACR50 and ACR70 scores of up to 100%, 75% and 63% respectively, with first onset of activity as of week 2.

• Convenient dosing: wide therapeutic window with potential to dose subcutaneously once a month.

• Favourable safety profile: no dose dependent increase in frequency or severity of adverse events.

2015 achievements

In March, Ablynx initiated a Phase IIb study of ALX-0061, in combination with methotrexate, in patients with RA. Recruitment of 345 patients was completed on schedule in December.

In April, Ablynx initiated a Phase IIb monotherapy study of ALX-0061 in RA patients. Recruitment of 251 patients was completed on schedule post year-end, in February 2016.

In July, the first eligible patients from the Phase IIb RA studies with ALX-0061 rolled-over into the open-label extension study.

In August, Ablynx initiated a Phase II study of ALX-0061 in patients with SLE. The Company plans to recruit 300 patients into this study by 2017.


2016 × Results Phase IIb RA monotherapy study (251 patients) × Results Phase IIb RA combination therapy study (345 patients) × AbbVie’s opt-in decision to license ALX-0061 in RA

2017 × Potential start Phase III RA study

2018 × Top line results RA open-label extension study × Top line results Phase II SLE study × AbbVie’s opt-in decision to license ALX-0061 in SLE

Global exclusive licensing option deal with AbbVie

In September 2013, Ablynx and AbbVie entered into a global license agreement worth up to US$840 million plus double-digit royalties, to develop and commercialise ALX-0061 in RA and SLE. Ablynx received an US$175 million upfront payment and is responsible for Phase II clinical development of ALX-0061 in both RA and SLE. AbbVie will pay a fee for each indication if they exercise the right to license ALX-0061 after completion of the Phase II studies. AbbVie will then be responsible for Phase III development, registration and commercialisation in each indication.

References: Datamonitor Healthcare; Sagient Research/BioMedTracker; Decision Resources


KEY

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CHANGING THE CANCER TREATMENT PARADIGM

• Extensive early-stage pipeline with Merck & Co., Inc., which includes up to 17 fully-funded programmes

• Multiple wholly-owned programmes in early development

WHY NANOBODIES?

• Ideally suited to bind simultaneously to multiple different epitopes or targets with a single Nanobody construct

• “Mix and match” approach allows for the rapid generation of multi-specific Nanobody constructs

• Rapid exploration of combinations: in vivo proof-of-concept in 12-18 months• Multi-specific Nanobody combinations have the potential to increase efficacy and

avoid escape mechanisms• Ease and cost-effective manufacturing• Further formatting flexibility: choice of half-life and potential to combine with Fc

receptor

Extensive immuno-oncology collaboration with Merck & Co., Inc.

In February 2014, Ablynx entered into a research collaboration and licensing agreement with a subsidiary of Merck & Co., Inc., focused on the discovery and development of 5 predefined Nanobody candidates (including multi-specific Nanobody combinations) directed toward so-called immune checkpoint modulators. In July 2015, Ablynx and Merck & Co., Inc. significantly expanded their collaboration to include up to 12 additional Nanobody programmes against individual protein targets and target combinations (mono-specific and multi-specific Nanobodies).Under the terms of both the original and expansion agreements, Ablynx received €33 million in upfront payments and is potentially entitled to receive up to €5.7 billion in future development, regulatory and sales milestone payments, plus royalties. Merck & Co., Inc. will be responsible for clinical development, manufacturing and commercialisation of any products resulting from the collaboration.


2015 achievements

In July, Ablynx significantly expanded its immuno-oncology collaboration with Merck & Co., Inc., which was originally signed in February 2014, to include up to 12 additional programmes with focus on multi-specific Nanobodies. The expansion agreement triggered a €13 million upfront payment to Ablynx, comprising exclusivity fees and FTE payments.

In October, pre-clinical proof-of-concept was achieved with a bi-specific Nanobody programme as part of the immuno-oncology collaboration with Merck & Co., Inc. This Nanobody construct is a selective bi-specific molecule that potently binds to two different immune modulators. The results from the pre-clinical study in relevant tumour models demonstrated that this bi-specific Nanobody construct potently inhibits tumour growth.


2016 - 2018 × Pre-clinical milestones (wholly-owned and with Merck & Co., Inc.) × Start of clinical development with the first programme(s) both internally and as part of the collaboration Merck & Co., Inc.

Immuno-oncology

“Immuno” in immuno-oncology refers to a person’s own immune system. Immuno-oncology drugs, known as immunotherapies, target the patient’s own immune system to help fight cancer

Cancer is the most common cause of death globally × Each year, approximately 14 million people are diagnosed with cancer × Approximately 8 million patients die of cancer each year × It is expected that in the next 2 decades the number of cancer cases will increase by 70% to approximately 22

million per year

Current immuno-oncology treatment options × Immunotherapies have a proven substantial survival impact and are expected to treat 60% of cancers × First antibody drugs that hit the market target the immune checkpoint modulators CTLA4 and PD1

Next generation × The number of targets in immuno-oncology is increasing × Combination therapies are the next generation immunotherapies × Market in immuno-oncology drugs expected to grow to >US$43 billion by 2020

References: BofA Merrill Lynch, July 2015; MSD Belgium & Luxembourg

SHAREHOLDERS’ INFORMATION


KEY

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IND

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(EUR'000) 2009 2010 2011 2012 2013 2014 2015

R&D income 28,068 29,196 19,861 25,645 33,181 47,710 76,761

Grants 1,615 2,263 2,008 1,082 2,761 1,587 779

Total revenue and grant income

29,683 31,432 21,869 26,727 35,942 49,297 77,540

R&D expenses (42,800) (48,512) (56,307) (46,868) (43,699) (54,488) (83,084)

G&A expenses (9,044) (8,882) (10,423) (9,409) (10,044) (11,052) (11,405)

Total expenses (51,844) (57,394) (66,730) (56,277) (53,743) (65,540) (94,495)

Other operating income/(expense)

1 97 (668) (222) 128 0 0

Operating result (22,160) (25,865) (45,529) (29,772) (17,673) (16,238) (16,955)

Net financial result 2,165 1,395 1,634 1,264 1,797 3,508 (37,592)

Result before taxes

(19,995) (24,470) (43,895) (28,508) (19,470) (12,730) (54,547)

Income tax expense

0 0 0 0 0 0 0

Net result of the year

(19,995) (24,470) (43,895) (28,508) (19,470) (12,730) (54,547)

Basic and diluted loss per share

(0.54) (0.58) (1.01) (0.65) (0.41) (0.24) (1.00)

T O T A L R E V E N U E A N D G R A N T I N C O M E ( € M I L L I O N )

3 03 1

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C A S H - I N C O M E , O P E R A T I N G E X P E N S E S A N D Y E A R - E N D C A S H P O S I T I O N ( € M I L L I O N )

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C A S H - I N C O M E , O P E R A T I N G E X P E N S E S A N D Y E A R - E N D C A S H P O S I T I O N ( € M I L L I O N )


C A S H I N C O M E , O P E R A T I N G E X P E N S E S A N D Y E A R - E N D C A S H P O S I T I O N

N o t e: 2013 c a s h in c o m e in c lu d e s U S $175 mi l l i o n up f r o n t p a y m e n t r e c e i v e d f r o m A b bV i e .

C A SH & E X P ENSE S (€ M I L L I O N)

I N 2015, TOTA L C A SH I N CO ME F R O M CO L L A B O R A -T I O NS C A ME IN AT € 24. 8 MIL L I O N (€ 3 0.1 MI L L I O N I N 2014) . TOTA L O P ER AT I N G E X P ENSE S I N C R E A SED TO €94. 5 MI L L I O N (€ 6 5. 5 MI L L I O N I N 2014) , M A I N LY A S A R E SU LT O F HI G HER R& D E X P ENSE S W HI C H A R E I N L I N E W I T H G R OW T H I N E X T ER N A L D E V ELO P MEN T COS T S R EL AT ED TO C L I N I C A L T R I A L S E X P EN D I T U R E F O R C A P L AC I Z U M A B , A L X- 0 0 61 A N D A L X- 0171. A B LY N X EN D ED T HE Y E A R 2015 W I T H € 23 6 . 2 MI L L I O N I N C A SH , C A SH EQ U I VA L EN T S , R E -S T R I C T ED C A SH A N D OT HER SH O R T T ER M I N V E S T-MEN T S (€ 20 6 . 2 MI L L I O N I N 2014) .

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5 % A V I V A I N V E S T O R S U K

4 % T A U B E H O D S O N S T O N E X U K

4 % B O E H R I N G E R I N G E L H E I M D E

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3 % O P P E N H E I M E R F U N D S U S A

3 % P O L A R C A P I T A L F U N D S P L C U K

6 4 % O T H E R S H A R E H O L D E R S


% O F I N S T I T U T I O N A L S H A R E H O L D E R S B Y G E O G R A P H Y( R E P R E S E N T I N G 7 0 % O F T O T A L S H A R E S O U T S T A N D I N G )

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P E R C E N T A G E O F I N S T I T U T I O N A L S H A R E H O L D E R S B Y G E O G R A P H Y

3 5 % U S A2 8 % B E N E L U X2 7 % U K3 % F R A N C E2 % S C A N D I N A V I A5 % O T H E R


THE

SH

AR

ES

IN 2

015 On 31 December 2015, there were 54,812,374 shares representing a total share capital

of the Company of €102,442,297. The total number of rights (warrants) to subscribe to not yet issued securities conferring voting rights currently was 2,675,031 at 31 December 2015. This number equals the total number of voting rights that may result from the exercise of these warrants. Currently 1,000 convertible bonds are outstanding entitling the holders thereof to 7,733,952 shares of the Company in the aggregate, upon conversion of such convertible bonds. The total number of fully diluted shares of the Company at 31 December 2015 was 65,221,357.

Ablynx’s shares are traded on Euronext Brussels, under the ticker symbol ABLX.

2011 2012 2013 2014 2015

Average daily volume 69,642 116,296 190,926 121,006 165,910

Average daily value 353,980 503,372 1,343,892 1,045,748 1,914,721

Total traded volume 17,975,216 29,771,718 48,686,030 30,795,240 42,472,998

Total traded value 90,972,838 128,863,121 342,692,372 265,619,949 490,168,666

A B S O L U T E P E R F O R M A N C E I N 2 0 1 5

+ 7 5 . 9 4 %

M O N T HJ A N U A R Y J U N E D E C E M B E R

A B S O L U T E P E R F O R M A N C E I N 2 0 1 5

A B S O L U T EP E R F O R M A N C EI N 2 0 1 5

6 0 %

8 0 %

4 0 %

2 0 %

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R E L A T I V E P E R F O R M A N C E I N 2 0 1 5

R E L A T I V E P E R F O R M A N C EI N 2 0 1 5

+ 7 5 . 9 4 % A B L Y N X+ 4 0 . 7 2 % N E X T B I O T E C H+ 3 8 . 5 7 % B E L P H A R M A B I O+ 2 1 . 6 5 % B E L M I D

6 0 %

8 0 %

4 0 %

2 0 %

0 %


FINANCIAL CALENDAR 2016

• 31 March – online publication annual report 2015• 28 April – annual general meeting 2016• 12 May – results Q1 2016• 25 August – half year results 2016• 23 November – results Q3 2016

SHAREHOLDERS’ CLUBS AT ABLYNX

Ablynx organises frequent shareholders’ clubs at its headquarters in Ghent during which individual investors have the opportunity to meet with the CFO and IR, and to visit the laboratories. The events in 2016 will be held in the Dutch language and are scheduled on the following days:

• 18 May at 5.45pm• 14 September at 5.45pm• 7 December at 5.45pm

To attend an event, please register via email: [email protected], stating your name and preferred day.

mailto:investors%40ablynx.com?subject=


ANALYST COVERAGE

At present, Ablynx is covered by six analysts:

Broker Analyst RatingBerenberg Bank Alistair Campbell BuyBryan Garnier Hugo Solvet BuyJefferies Peter Welford BuyKBC Securities Jan De Kerpel BuyKempen & Co Sachin Soni BuyDegroof Petercam Roderick Verhelst Buy

INVESTOR RELATIONS CONTACT

Marieke VermeerschAssociate Director Investor Relations

Ablynx nvTechnologiepark 219052 Zwijnaarde (Ghent)Belgium

Email: [email protected] Tel: +32 9 262 00 82

Website: www.ablynx.com

mailto:marieke.vermeersch%40ablynx.com?subject=

http://www.ablynx.com

GLOSSARY

58.ANNUAL REPORT 2015 / ABLYNX GLOSSARY

Ang2 angiopoietin-2 (Ang2) - an important protein involved in the formation of new blood vessels from pre-existing vessels (angiogenesis), a vital mechanism in the growth of tumours

Bi-specific Nanobody Nanobody construct which binds to two different targets

Bivalent Nanobody Nanobody construct comprising two Nanobodies that bind with the same targets

BLA Biologics License Application - request for permission to introduce, or deliver for introduction, a biologic product into interstate commerce

DMARDs disease modifying anti-rheumatic drugs (defined by their use in RA to slow down disease progression)

Free float Free float is defined as the outstanding capital less shareholdings exceeding 5%, except where such interests are held by (a) collective investment schemes/mutual funds or (b) pension funds. In addition, certain insider holdings (e.g. shares held by directors, employees, founders and family), government holdings and holdings of the company itself (including subsidiaries) are not considered free float, irrespective of the size

IL-17A/F T Helper 17 (Th17) cells and interleukine-17 (IL-17) are associated with the pathology of many human inflammatory and autoimmune disorders like psoriasis, rheumatoid arthritis and multiple sclerosis and have proved to play an important role in animal models mimicking these and other auto-immune disorders. Although IL-17A is the most characterised family member, its closest relative IL-17F has similar biological activity

and possibly even a non-redundant role in vivo.

IL-6R receptor of interleukin-6 (IL-6R) - a cytokine involved in a wide range of biological activities

Multi-specific Nanobody Nanobody construct which binds to multiple different targets

Nanobody® protein that is composed of one or more binding domains with the structural and functional characteristics of naturally occurring heavy chain variable domains (VHH’s) from Camelidae. Nanobody® is a registered trademark of Ablynx

Orphan drug drug treating a rare disease - the grant of orphan drug status by the authorities provides certain privileges, intended to stimulate the research, development and commercialisation of orphan drugs including market exclusivity of ten years in Europe and seven years in the USA

Phase I first stage of testing in human subjects. Normally, a small (20-100) group of healthy volunteers will be selected. This phase includes trials designed to assess the safety (pharmacovigilance), tolerability, pharmacokinetics, and pharmacodynamics of a drug

Phase II once the initial safety of the study drug has been confirmed in Phase I trials, Phase II trials are performed on larger patient groups (20-300) and are designed to assess how well the drug works, as well as to continue Phase I safety assessments in a larger group of patients

Phase III Phase III studies are randomised controlled multi-centre trials on large patient groups (300-3,000 or more

59.ANNUAL REPORT 2015 / ABLYNX GLOSSARY

depending upon the disease/medical condition studied) and are aimed at being the definitive assessment of how effective the drug is in comparison with current ‘gold standard’ treatment. Because of their size and comparatively long duration Phase III trials are the most expensive, time-consuming and difficult trials to design and run, especially in therapies for chronic medical conditions

Pre-clinical involves in vitro (test tube or cell culture) and in vivo (animal) experiments using wide-ranging doses of the study drug to obtain preliminary efficacy, toxicity and pharmacokinetic information

Proof-of-concept study clinical trial to demonstrate the product is effective in patients

RA rheumatoid arthritis - autoimmune disease that causes chronic inflammation of the joints, the tissue around the joints, as well as other organs in the body

RANKL Receptor Activator of Nuclear factor Kappa-B Ligand - a key regulator in bone remodelling

RSV respiratory syncytial virus – virus that infects the respiratory tract

SLE systemic lupus erythematosus (SLE) - complex, multi-organ, autoimmune disorder characterised by the production of pathogenic autoantibodies and tissue deposition of immune complexes, which result in widespread tissue damage

TNFα protein named Tumour Necrosis Factor-alpha - a cytokine involved in systemic inflammation

TTP thrombotic thrombocytopenic purpura - a rare thrombotic disorder

UL-vWF ultra-large vWF multimers

VEGF vascular endothelial growth factor (VEGF), an important protein involved in the formation of new blood vessels from pre-existing vessels (angiogenesis), a vital mechanism in the growth of tumours

vWF von Willebrand factor - a blood glycoprotein involved in haemostasis

CORPORATE GOVERNANCE AND FINANCIAL INFORMATION62.ANNUAL REPORT 2015 / ABLYNX

01. REPORT OF THE BOARD OF DIRECTORS 641.1. Strategic Highlights1.2. Analysis of Results of Operations1.3. Balance Sheet Analysis1.4. Cash Flow Analysis1.5. Outlook 20161.6. Corporate Governance Statement1.7. Transactions within the Authorised Capital1.8. Acquisition of Own Securities1.9. Use of Financial Instruments by the Company1.10. Circumstances that could considerably affect the Development of the

Company1.11. Research and Development 1.12. Conflicting Interests of Directors (Art. 523 of the Belgian Companies Code)1.13. Independence and Expertise of at least one Member of the Audit

Committee1.14. Justification of the Valuation Rules1.15. Appropriation of Results1.16. Important Events subsequent to the Accounting Reference Date1.17. Grant of Discharge to the Directors and the Statutory Auditor

02. RESPONSIBILITY STATEMENT 116

03. STATUTORY AUDITOR’S REPORT 117

04. BALANCE SHEET 120

05. STATEMENT OF COMPREHENSIVE INCOME 121

06. CASH FLOW STATEMENTS 122

07. STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY 123

08. NOTES TO THE FINANCIAL STATEMENTS 1248.1. General Information8.2. Summary of Significant Accounting Policies8.3. Financial Risk Management

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CORPORATE GOVERNANCE AND FINANCIAL INFORMATION63.ANNUAL REPORT 2015 / ABLYNX

8.4. Critical Accounting Estimates and Judgements8.5. Segment Information8.6. Intangible Fixed Asset8.7. Property, Plant and Equipment8.8. Restricted Cash8.9. Non-current R&D tax incentive receivables8.10. Trade Receivables and Other Current Assets8.11. Other Short-term Investments8.12. Cash and Cash Equivalents8.13. Financial Instruments by Category8.14. Share Capital8.15. Share-Based Payments8.16. Borrowings8.17. Trade Payables and Other Current Liabilities8.18. Deferred Income Tax8.19. Retirement Benefit Obligations8.20. Revenue Recognition8.21. Research and Development Expenses 8.22. General and Administrative Expenses8.23. Other Income and Expenses8.24. Employee Benefit Expense8.25. Operating Leases8.26. Finance Income and Expenses8.27. Income Tax Expense8.28. Loss Per Share8.29. Contingencies and Arbitrations8.30. Commitments8.31. Related Party Transactions8.32. Events after the Balance Sheet Date

09. DISCLOSURE AUDIT FEES 189

10. CONDENSED STATUTORY FINANCIAL STATEMENTS OF ABLYNX 190

11. SUMMARY OF VALUATION RULES AND ADDITIONAL INFORMATION 19511.1. Principles11.2. Specific Rules

ANNUAL REPORT 2015 / ABLYNX 64. CORPORATE GOVERNANCE AND FINANCIAL INFORMATION

Dear Shareholders,

We are pleased to present the financial statements for the fiscal year ended 31 December 2015 which have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU.

1.1. STRATEGIC HIGHLIGHTS

In 2015, total revenues and grant income increased by 57% to €77.5 million (2014: €49.3 million) driven by increased funding for full-time equivalents and increased recognised income, mainly from the upfront payment by AbbVie made in 2013. Total research and development costs increased to €83.1 million (2014: €54.5 million) in line with growth in external development costs, which are largely related to clinical trials expenditure for caplacizumab, ALX-0061 and ALX-0171. General and administrative costs remained broadly unchanged at €11.4 million (2014: €11.0 million). The operating loss increased to €17.0 million (2014: €16.2 million). The net loss for the period was €54.5 million (2014: €12.7 million). The net cash burn in 2015 (excluding the net proceeds of €97.2 million from the convertible bonds, announced on 20 May 2015) was €67.2 million. The Company ended the year with €236.2 million in cash, cash equivalents, restricted cash and other short-term investments.

Pipeline update

At the end of 2015, there were five Nanobodies in clinical development, both internally and as part of collaborations.

In March 2015, Ablynx initiated a Phase IIb study of the anti-IL-6R Nanobody (ALX-0061), in combination with methotrexate, in patients with rheumatoid arthritis (RA). Recruitment of 345 patients was completed on schedule at year-end.

In April 2015, Ablynx initiated a Phase IIb monotherapy study of ALX-0061 in RA patients. Recruitment of 251 patients was completed in February 2016, also on schedule.

In July 2015, the first eligible patients from the Phase IIb RA studies with ALX-0061 rolled over into the open-label extension study.

In August 2015, Ablynx initiated a Phase II study with ALX-0061 in patients with systemic lupus erythematosus (SLE). The Company plans to recruit 300 patients in this study by 2017.

In September 2015, Ablynx initiated the confirmatory, international Phase III

01.

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65.ANNUAL REPORT 2015 / ABLYNX CORPORATE GOVERNANCE AND FINANCIAL INFORMATION

HERCULES study of the anti-vWF Nanobody, caplacizumab, in patients with acquired TTP (aTTP). The Company plans to recruit 92 patients into this study by 2017. In February 2016, the Phase II TITAN study of caplacizumab was published in the New England Journal of Medicine.

In October 2015, pre-clinical proof-of-concept was achieved with a bi-specific Nanobody programme as part of the extensive immuno-oncology collaboration with Merck & Co., Inc., which triggered a €3.5 million milestone payment to Ablynx.

In November 2015, Ablynx's partner Boehringer Ingelheim presented compelling pre-clinical proof-of-mechanism data with the bi-specific anti-VEGF/Ang2 Nanobody in multiple in vivo cancer models. A Phase Ib study with this anti-VEGF/Ang2 Nanobody in patients with solid tumours was initiated by Boehringer Ingelheim in January 2016, triggering a €8 million milestone payment to Ablynx. Boehringer Ingelheim expects to recruit 80 patients in this study with top line efficacy results expected in 2018. In addition, a Phase II study with this Nanobody is expected to start in 2017, which would trigger a milestone payment to Ablynx.

In December 2015, the Phase I/IIa safety study with the inhaled anti-RSV Nanobody, ALX-0171, completed recruitment in 35 infants, aged 3-24 months, who were hospitalised with a respiratory syncytial virus (RSV) infection. Also in this month, an independent Data Monitoring Committee reviewed safety data available for the first 15 infants from the placebo-controlled part of this Phase I/IIa study and confirmed that the inclusion age for recruitment could be lowered to 1 month. The Company then decided to generate additional data during the current RSV season in the Northern Hemisphere by expanding the Phase I/IIa study to include up to 18 additional infants, aged 1-5 months. Recruitment of this expansion cohort was completed ahead of schedule in February 2016.

Partnerships update

In March 2015, Ablynx announced an extension of its initial two-year research collaboration with Merck & Co., Inc. to develop and commercialise Nanobodies directed towards an undisclosed voltage gated ion channel. Merck & Co., Inc. extended their funding to the end of September 2016. This ion channel collaboration was announced in October 2012 and included a €6.5 million upfront payment and €2 million in initial research funding.

In May 2015, a research and option agreement was signed with Genzyme to explore the potential of a Nanobody targeting an ion channel that may play a role in multiple sclerosis, triggering an undisclosed exclusivity payment to Ablynx.

In June 2015, Ablynx and Taisho Pharmaceuticals signed an exclusive license


agreement to develop and commercialise the anti-TNFα Nanobody, ozoralizumab, in Japan. Ablynx received an upfront payment of US$3 million and is entitled to receive development and commercial milestone payments plus royalties.

In July 2015, Ablynx significantly expanded its immuno-oncology partnership with Merck & Co., Inc. which was originally signed in February 2014, to include a total of up to 17 programmes with a focus on multi-specific Nanobodies. As part of both the original and expansion agreements, Ablynx received €33 million in upfront payments and is entitled to receive up to €5.7 billion in future milestone payments, plus royalties.

In November 2015, Ablynx and Novo Nordisk entered into a drug discovery collaboration to investigate multi-specific Nanobodies in an undisclosed indication. Ablynx received an upfront payment of €5 million in early 2016, and is entitled to receive €4 million in research funding during the initial three-year term of the collaboration and up to €182 million in potential milestones, plus royalties.

Corporate developments

In November 2015, Ablynx announced that Dr Robert K. Zeldin had joined the Company as the new Chief Medical Officer (CMO), effective 1 December 2015, to lead the Company’s global clinical development, regulatory and medical affairs activities. Dr Zeldin brings significant industry experience, having held senior level clinical development positions with Merck & Co., Inc. and Novartis Pharmaceuticals Corp. Dr Zeldin replaces Dr Dominique Tersago who previously held the CMO position.

1.2. ANALYSIS OF RESULTS OF OPERATIONS

Total income

Total revenues and grant income increased by 57% to €77.5 million (2014: €49.3 million), driven by increased FTE funding and increased recognised income, mainly from the upfront payment by AbbVie made in 2013.

Research and development expenses

Total research and development costs increased to €83.1 million (2014: €54.5 million) in line with growth in external development costs, which are largely related to clinical trials expenditure for caplacizumab, ALX-0061 and ALX-0171.


General and administrative expenses

General and administrative costs remained broadly unchanged at €11.4 million (2014: €11.0 million).

Operating result

As a result of the foregoing, the operating loss increased to €17.0 million (2014: €16.2 million).

Net financial result

The net financial loss of €37.6 million comprises finance income of €1.8 million, which relates to interest income and exchange gains, and finance costs of €39.4 million. These finance costs mainly include non-cash expenditure resulting from the fair value calculation and amortisation of the convertible bond components (as a result of the higher share price at year-end compared to the share price at the time of the convertible bonds issuance), and the semi-annual interest paid on the convertible bonds of €1.6 million.

Net result

As a result of the foregoing, the net loss for 2015 increased to €54.5 million (2014: €12.7 million).

Loss for the period

As the Company incurred losses in all of the relevant periods, the Company had no taxable income and therefore paid no income taxes.

1.3. BALANCE SHEET ANALYSIS

The Company’s intangible assets include a portfolio of patents, which are fully amortised, and technology licenses which are being amortised over 5, 18 and 20 years. The intangible assets also include software licenses. The Company expenses all its research and development activities.

The Company’s non-current tangible assets include the Company’s laboratory and office equipment, the investments in its facilities, tax receivables and €1.6 million restricted cash, which is a cash pledge that the Company has provided for the lease of its headquarter building. The Company owns one small facility (which it previously rented) and continues to invest in equipment for its research activities. Non-current tax


receivables include an R&D tax credit receivable of €14.5 million.

The Company’s current assets of €246.1 million consist mainly of cash and cash equivalents and other short-term financial investments. Current tax receivables include an R&D tax receivable of €1.2 million.

Shareholders’ equity decreased from €75.5 million at the end of 2014 to €27.9 million at the end of 2015, mainly as a result of the incorporation of the loss for the period.

Non-current liabilities relate to the senior unsecured bonds due on 27 May 2020 with a principal value of €100 million.

Current liabilities consist mainly of trade payables and deferred income related to the upfront payments received from partners.

1.4. CASH FLOW ANALYSIS

Cash flow from operating activities represented a net outflow of €69.0 million in 2015 compared to a net outflow of €32.3 million in 2014. The difference primarily relates to the higher number of clinical trials being run by the Company.

Cash flow from investing activities represented a net outflow of €39.7 million compared to a net outflow of €6.2 million in 2014. The net cash outflow comprises primarily the net movements in cash and cash equivalents (on deposit with a term of less than 1 month) and other short-term financial investments (on deposit with a term greater than 1 month).

Cash flow from financing activities represented a net inflow of €100.6 million compared to a net inflow of €39.7 million in 2014. The difference primarily relates to €97.2 million net proceeds from the issuance of convertible bonds and €5.2 million from the exercise of warrants.

The Company ended the period with a total liquidity position of €236.2 million (2014: €206.2 million) which consists of cash and cash equivalents of €3.6 million, other short-term financial investments of €231.0 million and restricted cash of €1.6 million.

1.5. OUTLOOK 2016

In the second quarter of 2016, the Company expects to report Phase I/IIa results from its study of the wholly-owned, inhaled anti-RSV Nanobody, ALX-0171, in 53 infants, who had been hospitalised with an RSV infection.


In the first half of 2016, it is expected that the results will be announced from the Phase Ib study of the bi-specific anti-IL-17A/F Nanobody (ALX-0761), exclusively licensed to Merck KGaA (Merck Serono), in patients with moderate to severe psoriasis.

In the third quarter of 2016, the Company expects that the first patients from the Phase III HERCULES study of its wholly-owned anti-vWF Nanobody, caplacizumab, will have rolled-over into a three-year follow-up study to evaluate the long term safety and clinical effect of caplacizumab.

In the third quarter of 2016, Ablynx expects to communicate top line results from the monotherapy and combination therapy studies with the anti-IL-6R Nanobody, ALX-0061, in patients with RA. Following a review of the complete RA data package, AbbVie is expected to decide before the end of 2016 whether it wishes to exercise its option to license ALX-0061 in RA. If AbbVie decides to exercise its option, Ablynx will receive a US$75 million milestone payment and AbbVie will then be responsible for providing all the resources to further develop and commercialise ALX-0061 in this indication. Ablynx will then be eligible to receive regulatory and sales milestones plus double-digit royalties.

In the fourth quarter of 2016, Ablynx intends to initiate a worldwide, Phase II dose ranging study with inhaled ALX-0171 in approximately 120 infants, aged 1-24 months, who are hospitalised with an RSV infection.

During 2016, the Company expects that up to 4 new partnered programmes could enter the clinic (Boehringer Ingelheim already started a Phase Ib trial with the anti-VEGF/Ang2 Nanobody in January 2016) and additional pre-clinical data with partners may be obtained, thereby triggering milestone payments to Ablynx.

The net cash burn for the full year 2016 is expected to be in the range of €65-75 million, not including the potential licensing payment of US$75 million by AbbVie for ALX-0061 in RA.

1.6. CORPORATE GOVERNANCE STATEMENT

1.6.1. REFERENCE CODE – COMPLY OR EXPLAIN

The Corporate Governance of the Company has been organised pursuant to the Belgian Companies Code and the Company’s Articles of Association. The Company’s Corporate Governance Charter is available on the Ablynx website via the following link: http://www.ablynx.com/investors/corporate-governance/principles-codes-and-guidelines/. The Company’s Corporate Governance Charter and this Corporate

http://www.ablynx.com/investors/corporate-governance/principles-codes-and-guidelines/

http://www.ablynx.com/investors/corporate-governance/principles-codes-and-guidelines/


Governance Statement have been adopted in accordance with the recommendations set out in the Belgian Corporate Governance Code (the “CGC”) that was issued on 9 December 2004 by the Belgian Corporate Governance Committee and subsequently amended on 12 March 2009. The Charter is regularly updated and the date of modification is mentioned each time.

The Company has opted for a two-tier governance structure. As a result, the governance structure of Ablynx is based on a distinction between:

• The management of Ablynx (including the daily management), a task conducted

by the Executive Committee (“Directiecomité”) within the meaning of Art. 524bis

of the Belgian Companies Code and within the framework of the general strategy

defined by, and under the supervision of the Board of Directors; and

• The development of the general strategy of Ablynx, the supervision of the

Executive Committee and the exercise of specific powers attributed by the Belgian

Companies Code, the Company’s Articles of Association and the Company’s

Corporate Governance Charter, which fall within the powers of the Board of

Directors.

All transactions involving conflicts of interests were in line with the precisions of the Corporate Governance Charter and are listed in the annual report under point 1.12.

The Company’s Board of Directors complies with the Corporate Governance Charter (CGC), and believes that certain deviations from its provisions are justified in view of the Company’s particular situation. These deviations include the following:

• Provision 2.1 CGC: gender diversity. Since the IPO, the Board was mainly

composed of men. The Company commits to build a diverse list of candidates for

new positions in the future.

• Provision 2.9 CGC: the Company has no Company Secretary. The CFO acts as

Company Secretary with the assistance of external counsels.

• Provision 5.2 CGC: the Company has no overall formal internal auditor because

of the size of the Company. However, the Audit Committee regularly evaluates

the need for this function and/or commissions external parties to conduct specific

internal audit missions and report back to the Audit Committee.

• Provision 7.7 CGC: only the independent Directors shall receive a fixed

remuneration in consideration of their membership to the Board of Directors and

their attendance in the meetings of the committees of which they are members.

In principle, they will not receive any performance-related remuneration, nor will

any options or warrants be granted to them in their capacity as Director. However,

upon recommendation of the Nomination and Remuneration Committee, the

Board of Directors may propose to the Shareholders Meeting to deviate from that


principle in application of Art. 554 BCC, if, to the Board of Directors’ reasonable

opinion, the granting of options or warrants would be necessary or useful to attract

or retain independent Directors with the most relevant experience and expertise.

1.6.2. CAPITAL AND SHARES

The following capital increases took place in 2015:

On 19 January 2015, the Company issued 115,946 new shares in exchange for €909,426.07 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €216,819.02 and €692,607.05 respectively.

On 16 March 2015, the Company issued 174,302 new shares in exchange for €1,292,682.18 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €325,944.74 and €966,737.44 respectively.

On 17 April 2015, the Company issued 20,165 new shares in exchange for €112,425.70 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €37,603.55 and €74,822.15 respectively.

On 27 May 2015, the Company raised €100 million through a private placement of €100 million senior unsecured bonds due 27 May 2020. The bonds were placed through an accelerated book building placement with qualified investors outside the United States, in accordance with Regulation S under the Securities Act. The bonds will mature on 27 May 2020 (5 years), are in dematerialised form in the denomination of €100,000 each, are issued at par and will be redeemed at par at maturity. The bonds will pay a coupon of 3.25% per annum, payable semi-annually in arrears on 27 November and 27 May of each year, beginning on 27 November 2015. The annual yield to maturity of the bonds is 3.25%. The initial price for the conversion of the bonds into ordinary shares of the Issuer shall be €12.93, representing approximately a 26.5% premium above the reference price of €10.2219, being the VWAP of the ordinary shares on Euronext Brussels on 20 May 2015. At the initial conversion price, the convertible bonds will be convertible into 7,733,952 fully paid-up ordinary shares of the Issuer. Conversion of the convertible bonds in Ablynx ordinary shares is at the option of the holder. In case of conversion: a cash alternative election (at the option of the issuer) is available including a number of restrictions. As the issuer has the cash alternative election, it has a choice over how the share conversion option will be settled (i.e. net in cash or by exchanging shares for cash). Therefore the share conversion option is a derivative at Fair Value Through Profit and Loss (“FVTPL”) according to IAS 39, not an own equity instrument (cf. IAS 32.26).


On 3 June 2015, the Company issued 83,000 new shares in exchange for €410,955 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €155,210 and €255,745 respectively.

On 17 July 2015, the Company issued 79,885 new shares in exchange for €600,491.30 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €149,384.95 and €451,106.35 respectively.


On 19 October 2015, the Company issued 5,200 new shares in exchange for €41,249 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €9,724 and €31,525 respectively.

On 7 December 2015, the Company issued 7,250 new shares in exchange for €61,390 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €13,557.50 and €47,832.50 respectively.

On 15 December 2015, the Company issued 287,500 new shares in exchange for €1,532,750 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €535,000 and €997,750 respectively.

The share capital consists of shares, which are fully paid up, with a par value of €1.87 per share.

• Number of shares on 31 December 2014 54,014,159• Number of new shares (exercise of warrants) 798,215• Number of shares on 31 December 2015 54,812,374

During the Extraordinary General Shareholders Meeting of 16 March 2015, the issuance of a maximum number of 850,000 warrants was approved and 541,499 warrants have subsequently been granted, of which 442,801 have been accepted on 3 June 2015 and on 17 July 2015 (129,490 warrants at €9.5/warrant, 20,000 warrants at €10.13/warrant for employees and 293,311 warrants at €10.22/warrant for consultants).


Each warrant gives the beneficiary the right to subscribe to one share of the Company (equity-settled). The warrants are granted for free and have an exercise price equal to the lowest of the average closing rate of the share on Euronext Brussels during a period of thirty days before the Date of the Offer and the last closing rate prior to the Date of the Offer for employees and for consultants the highest of the following two values: (i) the average closing rate of the shares on Euronext Brussels during the period of thirty days preceding the Date of the Decision, as mentioned in a letter to be sent to the Selected Participants subsequently to the Date of the Decision, and (ii) the lowest of the following two values: (a) the average closing rate of the share on Euronext Brussels during a period of thirty days preceding the Date of the Offer, or (b) the last closing rate preceding the Date of the Offer. The warrants vest over 4 years: 25% of the warrants vest after one year; after that date the remaining 75% become vested on a monthly basis (2.083% per month).

The duration of the warrants is 7 years as of the issue date of the warrants. The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were granted (thus starting as of 1 January 2019 until 15 January 2022). In the case of a normal termination of the employee contract or the consulting agreement, all the vested warrants need to be exercised during the current or if not yet exercisable during the first exercisable period. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed. All non-vested warrants become lapsed at the moment of termination of the agreement. Warrants that have not been exercised within 7 years of their creation become null and void.

During the Board Meeting of 14 September 2015, the issuance of a maximum number of 290,000 warrants was approved and 257,500 warrants have subsequently been granted, of which 233,000 have been accepted on 7 December 2015 and on 18 January 2016 (68,000 warrants at €12.29/warrant, 15,000 warrants at €11.67/warrant for employees and 150,000 warrants at €12.10/warrant for consultants).

Each warrant gives the beneficiary the right to subscribe to one share of the Company (equity-settled). The warrants are granted for free and have an exercise price equal to the lowest of the average closing rate of the share on Euronext Brussels during a period of thirty days before the Date of the Offer and the last closing rate prior to the Date of the Offer. The warrants vest over 3 years: 28% of the warrants vest after one year; after that date the remaining 72% become vested on a quarterly basis (9% per quarter).


The duration of the warrants is 7 years as of the issue date of the warrants. The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were offered (thus starting as of 1 January 2019 until 15 January 2022). In the case of a normal termination of the employee Contract or the Consulting Agreement, all the vested warrants need to be exercised during the first fifteen days of the quarter in which the end of the employment Agreement, Consultant Agreement or Director’s Appointment falls, even if such exercise period precedes the beginning of the fourth year following the calendar year in which the Date of the Offer lies. The tax consequences of such exercise will exclusively be borne by the relevant warrant holder. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed. All non-vested warrants become lapsed at the moment of termination of the agreement. Warrants that have not been exercised within 7 years of their creation become null and void.

The Company had a total of 2,675,031 outstanding warrants at the end of 2015.


1.6.3. SHAREHOLDERS AND SHAREHOLDER STRUCTURE

As at 31 December 2015, the shareholding structure is as follows (based on the most recent transparency declarations):

Shareholder Address Voting rights % of voting rights

Aviva Investors Global Services Limited No 1, Poultry London, EC2R 8EJ UK

2,442,496 4.50%

Abingworth Management Limited and Abingworth LLP

38, Jermyn Street London, SW1Y 6DN UK

2,632,150 4.80%

C.H. Boehringer Sohn AG & Co. KG Binger Strasse 173 55216, Ingelheim am Rhein Germany

2,142,857 3.90%

Perceptive Advisors 51, Astor Place 10th floor New York, NY 10003 USA

2,077,590 3.80%

Polar Capital Funds Plc (UK) 4, Matthew Parker Street London, SW1H9NP UK

1,654,827 3.00%

FMR LLC (US) 245, Summer Street Boston, MA 02210USA

2,753,606 5.00%

Taube Hodson Stonex Partners LLP (UK) Cassini House, 57-59, St. James’s StreetLondon, SW1A 1LDUK

2,410,681 4.40%

Oppenheimer Funds, Inc. (OFI) (US) 225, Liberty Street 11th Floor New York, NY 10281 USA

1,672,262 3.10 %

JP Morgan Asset Management Holdings Inc. 270, Park Avenue New York, NY 1007 USA

1,813,725 3.30%

Other 35,212,180 64.20%


1.6.4. BOARD OF DIRECTORS

1.6.4.1. COMPOSITION OF THE BOARD

The Board of Directors consists of eight members, one of whom is an executive Director, seven of whom are independent non-executive Directors.

From left to right: Dr Peter Fellner, Dr Edwin Moses, Dr Russell G. Greig, Dr Bo Jesper Hansen,

Dr William Jenkins, Mrs Catherine Moukheibir, Mr Remi Vermeiren, Prof Dr Lutgart Van den Berghe

Peter FellnerChairman of the Board

Dr Peter Fellner is Chairman of the Boards of the medical technology company Consort Medical plc, and the biotech companies Vernalis plc and Mereo BioPharma Group. He was also, until recently a member of the Novo A/S Advisory Group. He was Chairman of Optos plc until its acquisition by Nikon Corporation during 2015, and served as Vice Chairman of Astex Pharmaceuticals Inc. until its acquisition by Otsuka Pharmaceuticals in 2013. He was a Director of the global biopharmaceutical company UCB SA from 2005 to 2014. Dr Fellner previously served as Chairman of Acambis plc from 2006 until its acquisition by Sanofi in 2008, and of Premier Research Group plc from 2007 to 2008 when it was acquired by a private equity-backed group. He was Chairman of Celltech Group plc from 2003 to 2004, when it was acquired for €2.3 billion by UCB having been CEO from 1990 onwards. During this time he oversaw the company’sgrowth from a small research-based company into the UK’s largest biotech company. Before joining Celltech, he was CEO of Roche UK from 1986 to 1990. He was appointed as Chairman of the Board of Ablynx in November 2013.


Edwin MosesMember of the Board of Directors and Chief Executive Officer

After completing his post-doctoral research in Germany, Dr Edwin Moses began a successful commercial career at Amersham International, Enzymatix and Raggio-Italgene. From 1993-2001, first as CEO and later as Chairman, he was responsible for the growth of Oxford Asymmetry (OAI) through a series of venture rounds cumulating in a flotation (LSE) in 1998 at a value of £120 million. This was followed by a sale of the company to Evotec Biosystems in 2000 for £316 million. During this period, OAI grew from four people to over 250. Over the past fourteen years, Dr Moses has played an important role at Board level (primarily as Chairman) in over 15 European life science companies. During this time he has been involved in a number of financing rounds, a series of M&A transactions and four IPOs. He was Chairman of Ablynx from 2004 till 2013, and was appointed Chief Executive Officer of the Company in 2006.Apart from and in addition to his duties as CEO of the Company, Edwin Moses is the Chairman of the Board of Capricorn Health-tech Fund (Belgium). Furthermore, in addition to Ablynx, he has held Board memberships with the following companies: Clinphone Group plc (UK), Fusion IP plc (formerly Biofusion plc) (UK), Phoqus Pharmaceuticals Ltd (UK), Pharmaceutical Profiles Ltd (UK), Proimmune Ltd (UK), Paradigm Therapeutics Ltd (UK), Avantium Technologies (The Netherlands), Ionix Pharmaceuticals Ltd (UK), Evotec OAI AG (Germany), Bioimage A/S (Denmark), Inpharmatica Ltd (UK), Prolysis Ltd (UK), ProPharma Ltd (UK), Lectus Therapeutics Ltd. (UK) and European Biopharmaceutical Enterprises.

Russell G. GreigIndependent Director

Dr Russell Greig, permanent representative of Greig Biotechnology Global Consulting Inc. has more than 35 years’ experience in the pharmaceutical industry, with knowledge and expertise in research and development, business development and commercial operations. He spent the majority of his career at GlaxoSmithKline, where he held a number of positions including GSK’s President of Pharmaceuticals International from 2003 to 2008 and Senior Vice President Worldwide Business Development. From 2008 to 2010, Dr Greig was also President of SR One, GSK’s Corporate Venture Group. He is currently Chairman of AM Pharma (The Netherlands), Mint Solutions (The Netherlands), Bionor (Norway) and Sanifit (Spain), a Board Member of Onxeo (France), as well as a Director of Tigenix (Belgium). He also acts as Venture Partner to Kurma Life Sciences (France). He served as acting CEO at Genocea and Isconova for an interim period. He was a member of the Scottish Scientific Advisory Committee, reporting to the First Minister. He was also Chairman of Syntaxin (UK), which was acquired by Ipsen (France), Novagali (France) sold to Santen (Japan), and of Isconova (Sweden), acquired by Novavax (USA).


Remi VermeirenIndependent Director

Before Remi Vermeiren became an independent Director of Ablynx, he had a 43-year long career at Kredietbank nv, which in 1998 merged with Cera Bank and ABB Insurance into KBC Bank and Insurance Group. In the earlier years, he was mainly involved in Asset Management, Trading and Administration of Securities, Treasury and International and Investment banking. From 1989 on, he was a member of the Executive Committee responsible for the day-to-day management of the bank. From 1998 until 2003, he held the function of Chairman of the KBC Bank and Insurance Group and of KBC Bank. During this period, he was mainly involved in defining the strategy of the new group, integration of the banking and insurance activities, implementation of the merger of the two banks and the cost reduction going with it, and expansion of KBC into Central Europe where it became one of the most important Western European investors in the banking and insurance industry. Currently, Mr Vermeiren is also member of a number of non-quoted companies and of charitable organisations, such as Pro Vives, Vives and ‘Foundation RV’ set up and funded by himself. He is currently a member of the Board of ACP II SCA (Luxembourg) (Liquidator). In the past five years, he has held positions as a member of the Board or administrative, management or supervisory bodies of the following companies: Devgen nv (Belgium), Afinia Plastics nv (Belgium), IFB SPA (Italy), Cumerio nv (Belgium) and MCS nv. Remi Vermeiren holds a degree in Commercial and Financial Sciences.

Catherine MoukheibirIndependent Director

Catherine Moukheibir has been in C-level positions in several European biotech companies after an initial career in strategy consulting and investment banking in Boston and London. Her particular experience lies in aligning corporate and financial strategies appropriate to various stages of a biotech’s development, on the continuum from venture capital funding to public market or M&A. She is currently a non-executive Board member of Creabilis, a non-executive Board member at Zealand Pharma and Chair of the Audit Committee, non-executive Board member and member of the Audit Committee at Cerenis and Ablynx and Advisory Board member at the Imperial College Business School. She is also a member of the three-person management Board at Innate Pharma where she is responsible for financial and corporate strategy. Catherine Moukheibir holds an MBA from Yale University.

Bo Jesper HansenIndependent Director

Dr Bo Jesper Hansen, M.D., PhD, permanent representative of Orfacare Consulting, currently serves as executive Chairman of the Board of SOBI AB (Swedish Orphan Biovitrum AB). He is Chairman of Karolinska Development AB and is also non-executive


Director of a number of biotech and pharma companies including Orphazyme ApS, Newron Pharmaceuticals SpA, CMC AB, Genspera Inc. and Azanta A/S. Dr Hansen served as CEO and President and as Director to the Board of Swedish Orphan International AB until the merger with Biovitrum, forming Swedish Orphan Biovitrum AB (SOBI AB). He also was non-executive Director of Gambro until its acquisition by Baxter, and of Zymenex, until its acquisition by Chiesi. Dr Hansen was the Executive Chairman of Topotarget and in this role led the merger with BioAlliance forming OnXeo. He founded Scandinavian Medical Research during which he served as Medical Advisor for Synthélabo, Pfizer, Pharmacia and Yamanouchi Pharmaceutical.

William J. JenkinsIndependent Director

Dr William J. Jenkins, M.D., is Principal of William Jenkins Pharma Consulting and has been advising a wide range of pharma and biotech companies and investment and venture capital firms in the healthcare sector since 1999. Formerly, he was Head of Worldwide Clinical and Regulatory Affairs for Novartis Pharma and held a similar position with Glaxo Group Research Limited. He is currently Senior Independent Director of Consort Medical, a member of the Board of Allecra Therapeutics AG and of Allocyte Pharmaceuticals AG, and a member of the Strategic Advisory Board of Chiesi Farmaceutici. In addition, he is a member of the Scientific Advisory Boards of BB Biotech Ventures II and III funds.

Lutgart Van den BergheIndependent Director

Lutgart Van den Berghe is executive Director of GUBERNA (Belgian Governance Institute) and Extra-Ordinary Professor in Corporate Governance at the University of Ghent. She is a Partner of the Vlerick Business School where she served as Chairman of the Competence Center “Entrepreneurship, Governance and Strategy” for many years. She has an extensive governance experience gained as member of the Belgian Commission for Corporate Governance and non-executive Director in several companies, such as Proximus and Belfius. At EcoDA (European Confederation of Directors’ Association), she is a Member of the Board and chairman of its policy committee. Formerly she served as a non-executive Director of Electrabel (Belgium, 2003-2014), the ING Group (The Netherlands, 1991-2003), KLM (The Netherlands, 2001-2004), Solvay (Belgium, 2003-2007), CSM (The Netherlands, 1998 -2010), SHV (The Netherlands, 1997-2013), Capco nv (Belgium, 2000-2003), DVV (Belgium, 1995-1997), member of the Audit Committee of the Flemish Government (2000-2004) and Chairman of the Proximus Foundation (until 2005). She was also a Member of the Advisory Board of Lazard (Benelux, 2007-2010). Lutgart Van den Berghe is doctor in Business Economics of the University of Ghent.


(1) The term of the mandate of the Director will expire immediately after the Annual General Meeting of Shareholders held in the year indicated.

(2) First appointed as independent Director by the Extraordinary General Meeting of Shareholders held on 21 October 2004. He has been re-appointed as executive Director by the Extraordinary General Meeting of Shareholders held on

23 August 2006 and by the Annual General Meeting of Shareholders held on 30 April 2015. Dr Moses has taken up the position of CEO on 6 June 2006. Dr Moses was also Chairman of the Board until November 2013.

Name Year of Birth

Position Term(1) Board Committee Memberships

Dr Peter Fellner 1943 Independent Director and Chairman

2017

Dr Edwin Moses(2) 1954 Director and Chief Executive Officer

2019 Member of the Research and Development Committee

Remi Vermeiren 1940 Independent Director

2019 Chairman of the Audit Committee

Greig Biotechnology Global Consulting Inc. represented by its permanent representative, Dr Russell Greig

1952 Independent Director

2016 Chairman of the Nomination and Remuneration Committee Member of the Audit Committee

Catherine Moukheibir 1959 Independent Director

2017 Member of the Audit Committee

William Jenkins Pharma Consulting, represented by its principal Dr William J. Jenkins


2017 Chairman of the Research and Development Committee Member of the Nomination and Remuneration Committee

Orfacare Consulting GmbH represented by its permanent representative, Dr Bo Jesper Hansen


2017 Member of the Nomination and Remuneration CommitteeMember of the Research and Development Committee

Feadon nv represented by its permanent representative, Baroness Prof Dr Lutgart Van den Berghe


2019


1.6.4.2. ACTIVITY REPORT

In 2015, seventeen Board meetings have been held.

In four of these meetings, the strategy and/or the company results have been discussed. All members of the Board were present at these meetings.

All other Board meetings were related to the exercise of warrants, the issuance of the convertible bond and the preparation of General Assemblies.

1.6.4.3. PERFORMANCE EVALUATION OF THE BOARD

Under the lead of the Chairman, the Board regularly evaluates its performance to determine whether the Board and its Committees are functioning effectively. The evaluation process has the following objectives: assessing how the Board operates; verifying that important issues are adequately prepared and discussed; evaluating the actual composition of each Director’s work, the Director’s presence in the Board and Committee meetings and his/her constructive involvement in discussions and decision-making and verifying the Board’s current composition against the Board’s desired composition.

The non-executive Directors will assess their interactions with the Executive Committee. At least once a year, they meet in the absence of the CEO. No formal Board decision can be taken in such a meeting.

The Board has discussed its composition and performance on several occasions during 2015.

At the time of their re-election, the Directors’ commitments and contributions are evaluated within the Board, and the Board ensures that any appointment or re-election allows an appropriate balance of skills and experience to be maintained in the Board. The same applies at the time of the appointment or the re-election of the Chairman (of the Board and of the Board’s Committees). The Board shall act on the results of the performance evaluation by recognising its strengths and addressing its weaknesses. Where appropriate, this will involve proposing new members for appointment, proposing not to re-elect existing members or taking any measure deemed appropriate for the effective operation of the Board.


1.6.5. AUDIT COMMITTEE

As of 8 January 2009 (the date on which the Law of 17 December 2008 with regard to the incorporation of an Audit Committee in listed companies and financial companies entered into effect), “large” listed companies (as defined in Art. 526bis of the Belgian Companies Code) are legally obliged to establish an Audit Committee within their Boards of Directors.

The Board of Directors has set up an Audit Committee. In 2015 the Audit Committee was composed of three members, which are exclusively non-executive Directors. All of its members are independent Directors and two of its members have an expertise in the field of accounts and audit. The Chairman of the Audit Committee is not the Chairman of the Board of Directors.

1.6.5.1. COMPOSITION

The following Directors are members of the Audit Committee: Remi Vermeiren (Chairman), Dr Russell Greig, permanent representative of Greig Biotechnology Consulting Inc. and Catherine Moukheibir. Remi Vermeiren and Catherine Moukheibir have expertise in the field of accounts and audit and are both independent Directors.


The Audit Committee met four times in 2015. During these meetings the financial results, budgets, treasury, topics related to risk management and the financial press releases were discussed.

The attendance was as follows: Remi Vermeiren (100 %), Dr Russell Greig (100%) and Catherine Moukheibir (75%).

The Audit Committee is responsible for the financial reporting, the internal control and risk management, the internal audit and the external audit, and for the reporting and communication between the statutory auditor and the Board. More detailed information on the responsibilities can be found on Ablynx’ website in the Corporate Governance Charter and in the Terms of Reference of the Audit Committee.

1.6.6. NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee is appointed by the Board of Directors of Ablynx to advise the Board in its duties and responsibilities relating to the


Nomination and the Compensation and Benefit programmes of executive & non-executive Directors, the Chief Executive Officer and the Executive Committee including other terms of employment for the CEO and the Executive Committee. The Nomination and Remuneration Committee at the same time reviews possible warrant plans for employees.

The basic principle is that the level of remuneration should be sufficient to attract, retain and motivate on each level the most talented individuals for the job.


The Nomination and Remuneration Committee consists of three members: Greig Biotechnology Global Consulting Inc, represented by its permanent representative, Dr Russell Greig, William Jenkins Pharma Consulting, represented by its principal Dr William J. Jenkins, and Orfacare Consulting GmbH represented by its permanent representative Dr Bo Jesper Hansen.

These Directors are all members of Boards of other companies and as a result have broad knowledge of remuneration policies.

All members of the Nomination and Remuneration Committee are also a member of the Board of Directors.

All members are independent non-executive Directors. Each member of the Committee has appropriate knowledge and experience in compensation- and benefit-related matters, since they are associates of Boards of other companies and as a result have knowledge of remuneration policies across the world.

The CEO and the Vice President Human Resources are invited to attend the meetings of the Nomination and Remuneration Committee in an advisory and non-voting capacity on all matters. They do not attend discussions concerning their own remuneration.

The Chairman leads all meetings of the Committee, coordinates the evaluation of the performance of the CEO and acts as Secretary, although he can delegate this duty or parts thereof to the Vice President Human Resources.

The members of the Committee declare that they dedicate a significant amount of their time to the Committee’s activities.

The Remuneration & Nomination Committee of Ablynx advises the Board of Directors on all aspects of the Compensation and Benefit programmes for the executive and


non-executive Directors, the CEO and the Executive Committee and other terms of employment for the CEO and the Executive Committee. The Committee makes recommendations to the Board on appropriate Compensation and Benefit programmes (in respect of both amounts and composition) of:

• The CEO and the other members of the Executive Committee, upon proposal by

the CEO (except when it concerns his own remuneration), such as: (i) the principal

contractual terms and arrangements for the termination of employment; and (ii)

the principal components of the remuneration package (including, the relative

importance of each component, the performance criteria applying to the variable

elements, the benefits in kind, bonuses and long-term incentives, whether stock-

related or not, in the form of stock options or other financial instruments); as well

as Directors;

• Drawing up the policy regarding warrant plans and overseeing the general

policy for the granting of warrants to employees, executive and non-executive

Directors and members of the Executive Committee. The CEO shall propose the

identity of the beneficiaries and the number of warrants to be allocated to each

of them (individually in the case of members of the Executive Committee, and

individually or per category in the case of other Employees) to the Nomination

and Remuneration Committee. The Nomination and Remuneration Committee

shall evaluate such proposals. In the case of grants of warrants to the CEO, the

initial proposal shall be made by the Committee itself.

• Ensuring that remuneration levels take into account risks involved, demands and

time requirements of each role, and relevant industry benchmarks.

• Preparing the annual remuneration report.

• Explaining the remuneration report during the Statutory General Meeting.

As it is the Nomination and Remuneration Committee’s duty to oversee the search for appropriate candidates for appointment to the Executive Committee or non-executive Director membership to the Board of Directors, the Committee receives detailed and regular updates (while diligently respecting any confidentiality and conflict of interest issues) on the hiring of Executive Committee members from the CEO and is given the opportunity (or designated members) to interview the final candidate(s) before their appointment.

The Nomination & Remuneration Committee is, together with the Executive Committee, engaged in the Succession Planning of Executive Committee members, including the CEO. In the latter case the Nomination & Remuneration Committee coordinates closely with the Chairman any and all activities involved in planning for CEO succession.

Any recommendations made in respect of the recruitment or succession planning requires discussion and endorsement by the Board of Directors before becoming effective.


The Nomination & Remuneration Committee (or designated members) has the option to schedule exit interviews with departing members of the Executive Committee.

The Nomination & Remuneration Committee, with the input of the Executive Committee, annually reviews and presents the annual goals/objectives for the Board of Directors in order to finalise and approve the final goals and objectives by the Board of Directors.

The Nomination & Remuneration Committee also advises the Board of Directors on the accomplishment of the targets set earlier and consequently initiates a discussion on the Board which finally adjusts and/or approves the recommendations of the Nomination & Remuneration Committee.


In 2015 the Nomination & Remuneration Committee officially met three times to fulfill its functions. Meeting minutes circulated after the meeting among all members of the Board of Directors.

During the meetings, the goals of the Company, the performance against the goals of the Company and the goals of the Executive Committee, the warrant plans, the salary evolution, the minutes of the previous meetings, the benchmark of salaries in general and more specifically of the Executive Committee members and the independent Directors and the nomination of new members of the Board of Directors were discussed.

On top of these meetings, the Nomination & Remuneration Committee held several teleconferences to discuss ad hoc nomination and remuneration topics.

1.6.7. THE RESEARCH AND DEVELOPMENT COMMITTEE

The Research and Development Committee of the Board advises the Board on its duties and responsibilities related to the long term Research and Development strategy of the Company in general and the development of the Company’s Nanobody platform and programmes in particular.


The Research and Development Committee consists of three members: William Jenkins Pharma Consulting, represented by its principal Dr William J. Jenkins


(Chairman), Orfacare Consulting GmbH, represented by its permanent representative Dr Bo Jesper Hansen, and Dr Edwin Moses. Dr Jenkins and Dr Hansen are independent Directors. All the members of the Committee have relevant scientific, research, medical or other related expertise.


The Research and Development Committee officially met four times in 2015. During these meetings the projects in research and development were discussed in detail and strategic decisions were prepared to be discussed at the Board Meeting.

1.6.8. EXECUTIVE COMMITTEE


From left to right: Dr Edwin Moses, Dr Robert K. Zeldin, Dr Antonin de Fougerolles, Mr Johan Heylen, Mr Wim Ottevaere, Mr Guido Gielen, Mr Gerrit Franciscus Landolt

The Board of Directors has established an Executive Committee (“Directiecomité”) within the meaning of Art. 524bis of the Belgian Companies Code and Art. 24 of the Company’s Articles of Association.

The Executive Committee consists of eight members: the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), the Chief Scientific Officer (CSO), the Chief Medical Officer (CMO), the Chief Commercial Officer (CCO), the Chief Operations Officer (COO), the VP Human Resources and the VP IP and Legal.


The current members of the Executive Committee are listed in the table below.

Name FunctionYear of Birth Nationality

Edwin Moses Chief Executive Officer 1954 British

Johan Heylen Chief Commercial Officer 1967 Belgian

Wim Ottevaere(1) Chief Financial Officer 1956 Belgian

Antonin Rollet de Fougerolles

Chief Scientific Officer 1965 Canadian

Kim Simonsen(2) Chief Operations Officer 1957 Danish

Dominique Tersago (3) Chief Medical Officer 1962 Belgian

Robert K. Zeldin(4) Chief Medical Officer 1963 American

Guido Gielen VP Human Resources 1960 Belgian

Gerrit Franciscus Landolt VP IP and Legal 1964 Dutch

(1) Mr Ottevaere acts as the permanent representative of Woconsult BVBA

(2) Mr Simonsen left the company on 31 May 2015

(3) Dr Tersago has left the company on 31 March 2016

(4) Dr Zeldin is CMO from 1 December 2015


In principle, the Executive Committee meets at least once every month. Additional meetings may be called at any time by the CEO or at the request of two members. The Executive Committee shall constitute a quorum when all members have been invited and the majority of the members are present or represented at the meeting. The resolutions of the Executive Committee shall be passed unanimously. If unanimity cannot be reached, the matter shall be referred to the Board of Directors, which shall decide upon the matter in its next meeting.


1.6.9. REMUNERATION REPORT

1.6.9.1. DIRECTORS

Procedure applied in 2015 in order to create a remuneration policy and to determine

the individual remuneration

The Nomination and Remuneration Committee recommends the level of remuneration for Directors, including the Chairman of the Board, which is subject to approval by the Board and, subsequently, by the Annual Shareholders Meeting.

The Nomination and Remuneration Committee benchmarks the Directors’ compensation against peer companies to ensure competitiveness. Without prejudice to the powers granted by law to the Shareholders Meeting, the Board sets and revises at regular intervals the rules and the level of compensation for Directors executing a special mandate or having a seat in one of the committees, as well as the rules for reimbursement of the Directors’ business-related out-of-pocket expenses. Apart from the remuneration for independent Directors, all Directors will be entitled to a reimbursement of out-of-pocket expenses actually incurred as a result of their participation in meetings of the Board of Directors.

The remuneration of the Directors will be disclosed to the Company’s shareholders in accordance with the applicable laws and regulations.

The level of remuneration should be sufficient to attract, retain and motivate Directors who match the profile determined by the Board.

Only independent Directors received a fixed remuneration in consideration of their membership of the Board and the Committees of which they are members. They have not received, any performance-related remuneration, nor have any options or warrants been granted to them. Given the fact that the company acts in a highly competitive and international environment and is at the same time cost-conscious because it does not yet generate profits, the Board has — until the end of 2013 and upon advice of the Nomination and Remuneration Committee — proposed to the Shareholders Meeting to deviate from the latter principle and grant warrants in order to attract and retain highly qualified independent Directors.

The CEO as member of the Board did not receive any compensation for serving as member of the Board.


Executive Committee members receive no additional compensation when invited to the Board.

The Directors’ mandate may be terminated ad nutum (at any time) without any form of compensation.

There are no employment or service agreements that provide for notice periods or indemnities between the Company and the members of the Board of Directors who are not a member of the Executive Committee. In respect of the members of the Board of Directors who are a member of the Executive Committee, reference is made to the section Executive Committee below.

Remuneration policy applied during 2015

During 2015 Ablynx obtained salary market data for the members of the Board via its own research.

The fixed annual remuneration of the Chairman of the Board is €100,000. No additional remuneration is foreseen for membership of other Board committees.

The fixed annual remuneration of independent Directors as part of their membership of the Board of Directors is €30,000, and the additional fixed annual remuneration of the Chairman of the Nomination and Remuneration Committee, the Chairman of the Audit Committee and the Chairman of the Research and Development Committee is €10,000.

For other independent non-executive Directors the additional fixed remuneration related to the membership of the Nomination and Remuneration Committee, the Audit Committee or the Research and Development Committee remains at €5,000 per committee.


The total amount of the remunerations and the benefits to which the independent Directors (in such capacity) were entitled in 2015 was €327,500 (gross, excluding VAT), see table below.

Committee

Name Board R&D Audit Remuneration Total

Dr Peter Fellner 100,000 100,000

Remi Vermeiren 30,000 10,000 40,000

Greig Biotechnology Global Consulting Inc. represented by its permanent representative Dr Russell Greig

30,000 5,000 10,000 45,000

Catherine Moukheibir 30,000 5,000 35,000

William Jenkins Pharma Consulting represented by its Principal Dr William J. Jenkins

30,000 10,000 5,000 45,000

Orfacare Consulting represented by its permanent representative Dr Bo Jesper Hansen

30,000 5,000 5,000 40,000

Feadon nv represented by its permanent representative Prof Dr Lutgart Van den Berghe

22,500 22,500

272,500 15,000 20,000 20,000 327,500

There is no performance-related remuneration for non-executive Directors.


The table below provides an overview of the shares and warrants held by the members of the Board. This overview should be read together with the notes listed below.

Total shares and warrants(1) Shares Warrants(1)

Name Number %(3) Number %(3) Number %(3)

Dr Peter Fellner 50,000 0.08 50,000(2) 0.08

Dr Edwin Moses 682,936 1.05 184,200 0.28 498,736(5) 0.76

Remi Vermeiren 28,571 0.04 25,000(8) 0.04 3,571(6) 0.01

Catherine Moukheibir 5,028 0.01 5,028(2) 0.01

Greig Biotechnology Global Consulting Inc., represented by its permanent representative Dr Russell Greig

6,434 0.01 6,434(7) 0.01

William Jenkins Pharma Consulting represented by its Principal Dr William J. Jenkins

4,781 0.01 4,781(4) 0.01

Orfacare Consulting represented by its permanent representative Dr Bo Jesper Hansen

4,781 0.01 4,781(4) 0.01

(1) Reflecting the number of shares of the Company to which such warrants give right to subscription

2) Warrants granted in 2013 with an exercise price of €7.32

(3) Percentage on a fully diluted basis

(4) Warrants granted in 2013 with an exercise price of €7.32

(5) Warrants granted from 2006 onwards with an exercise price between €2 and €10.22



(8) of which 7,500 held by spouse

With respect to the following two years, Ablynx does not foresee changes in its remuneration policy.


1.6.9.2. EXECUTIVE COMMITTEE

Procedure applied in 2015 in order to create a remuneration policy and to determine

the individual remuneration

The remuneration of the members of the Executive Committee is determined by the Board of Directors upon recommendation of the Nomination and Remuneration Committee and subsequent to the CEO’s recommendation to this Committee (except for his own remuneration). Ablynx strives to be competitive in the European biotech market.

Remuneration policy applied during 2015

In the compensation strategy of Ablynx, the starting salary is primarily based on input from the market and the merit increase on individual performance. Via own research, Ablynx obtained mid 2015 salary market data for the members of the Executive Committee, in order to understand the compensation market. The data confirm the remuneration policy is in line with the market practice.

The level and structure of the remuneration of the members of the Executive Committee is such that qualified and expert professionals can be recruited, retained and motivated taking into account the nature and scope of their individual responsibilities.

An appropriate proportion of the remuneration package of a member of the Executive Committee shall be structured so as to link rewards to corporate and individual performances, thereby aligning on an annual basis the interests of a member of the Executive Committee with the interests of the Company and its shareholders.

Since any Short Term Compensation component should include a maximum award limit, an Executive Committee member can receive maximum 30% of the annual base remuneration as a performance-driven bonus. Given the competitive landscape, the CEO’s bonus will be maximum 50% of the annual base salary.

The Extraordinary General Meeting of 26 April 2012 has approved that the CEO’s variable remuneration, which is part of his yearly remuneration, will be spread over a period of one year. This means that the bonus is spread over a period that is shorter than the periods determined in Art. 520ter, second paragraph of the Belgian Companies Code. This deviation has been incorporated in Art. 25 bis of the Ablynx Articles of Association.

The corporate and individual goals are based on the operation performance of the Company as measured by a.o. financial indicators, progress in the pipeline, the


completion and/or extension of important collaborations and other measures.

More specifically the following areas, not disclosed in great level of detail because of the competitive nature of the business, are part of the corporate goals and subsequently part of the individual goals of the members of the Executive Committee:

• Control of the cash burn versus a predefined target;• Completion of new discovery deal(s) generating an upfront defined income;• Control of expenditure of internal development programs while delivering on

time and against earlier agreed standards;• Initiation of new internal discovery programmes and access to complementary

technologies.

The above goals and the criteria for the variable remuneration of the CEO and members of the Executive Committee are in advance and explicitly spelled out in a software system, which automates the performance management and appraisal process at Ablynx and binds the Company and the individuals. The variable remuneration will only be paid when the KPIs are effectively met. The Remuneration Committee evaluates the performance and makes a proposal to the Board.

Schemes under which members of the Executive Committee are remunerated in shares, warrants or any other rights to acquire shares, shall be subject to prior shareholder approval by way of a resolution taken by the General Meeting of Shareholders (except for warrants issued under the authorised capital). The approval shall relate to the scheme itself and not to the grant to individuals of share-based benefits under the scheme. As a rule, plans issued until September 2015 stated that 25% of the warrants granted vested after 1 year, 2.08% vested additionally after each full month, however, vested warrants would in principle not be exercisable within less than three full calendar years.

From September 2015 new plans state that as a rule, 28% of the warrants will vest after 1 year from the date of the offer, 9% vest additionally after each full quarter, however vested warrants shall in principle not be exercisable within less than three full calendar years.

In order to avoid a subjective and discretionary benefit, the grant of warrants to Executive Committee members (similar to the grant to certain levels of employees) is based on a formula. Whereas the Short Term Incentive (bonus) is based on contributing to the corporate goals, the Long Term Incentive plan is based on the performance against the key responsibilities in the job description of the individual or group of individuals as well as based on the observed attitude versus the values of the Company. The outcome of this yearly evaluation can vary between 2 (low) and 10 (high) points. Based on the ultimate performance score between 6 and 10 points, based on the share price and the yearly base salary of the individual, the exact number of


warrants is calculated (number of warrants= (yearly salary/grant price)*performance coefficient). A performance score below 6 does not qualify for a Long Term Incentive.

The CEO presents his proposal regarding performance against key responsibilities and values to the Nomination and Remuneration Committee, which submits a final proposal regarding the offering of warrants to members of the Executive Committee and the CEO to the Board of Directors which takes a final decision.

The remuneration policy for the Executive Committee shall at least include the main contractual terms including the main characteristics of pension schemes, termination arrangements and the key elements for determining the remuneration, including (i) the relative importance of each component of the remuneration, (ii) the performance criteria chosen for the variable elements and (iii) the fringe benefits.

In 2015 the total amount of remunerations and benefits paid to the CEO and the other members of the Executive Committee and to the persons they are represented by, amounted to €2,261,942.97 (gross, excluding VAT and share-related payments), of which a detailed breakdown is shown in the table below:

(1) paid in cash

(2) not including share based payments mentioned under point 8.15

Total of which CEO

Basic Salary 1,616,275.19 484,520.40

Variable Remuneration(1) 411,323.39 190,944.00

Group Insurance (pension, invalidity, life)

155,539.55 49,836.36

Other (car, cell phone, hospitalisation insurance)(2)

78,804.84 14,696.04

Total 2,261,942.97 739,996.80

The insurance plan, for which the above amounts have been paid, is a defined contribution plan for which 10 % of the base salary is contributed on a yearly basis. Given the nature of the contract of the Executive Committee members there is no liability for the Company regarding the defined interest rate or total benefit during or at the end of the collaboration.

With respect to the two financial years to come, Ablynx does not foresee changes in its remuneration policy regarding the Executive Committee.


The table below provides an overview of the shares and warrants held by the members of the Executive Committee, including the Executive Director.

Name Function Shares Warrants

Edwin Moses Chief Executive Officer 184,200 673,736 warrants giving the right to subscribe for 498,736 shares

Johan Heylen Chief Commercial Officer 175,000 warrants giving the right to subscribe for 175,000 shares

Wim Ottevaere/Woconsult BVBA Chief Financial Officer 21,605 393,952 warrants giving the right to subscribe for 288,952 shares

Antonin Rollet de Fougerolles Chief Scientific Officer 189,508 warrants giving the right to subscribe for 189,508 shares

Dominique Tersago Chief Medical Officer 46,416 warrants giving the right to subscribe for 46,416 shares

Gerrit Franciscus Landolt VP IP and Legal 134,558 warrants giving the right to subscribe for 134,558 shares

Guido Gielen VP Human Resources 131,475 warrants giving the right to subscribe for 131,475 shares

During 2015 Edwin Moses CEO exercised 575,000 warrants and sold 332,500 shares; Wim Ottevaere, permanent representative of Woconsult BVBA and CFO, exercised 18,750 warrants and sold 18,750 shares. Guido Gielen, VP HR, exercised 18,750 warrants and sold 18,750 shares and Frank Landolt, VP IP & Legal, exercised 50,000 warrants and sold 50,000 shares.

The most important characteristics of the warrants, which were allocated in 2015, are detailed below.

During the Extraordinary General Shareholders Meeting of 16 March 2015, the issuance of a maximum number of 850,000 warrants was approved and 541,499 warrants have subsequently been granted of which 442,801 have been accepted on 3 June 2015 and on 17 July 2015 (129,490 warrants at €9.5/warrant, 20,000 warrants at €10.13/warrant for employees and 293,311 warrants at €10.22/warrant for consultants).

Each warrant gives the beneficiary the right to subscribe to one share of the Company (equity-settled). The warrants are granted for free and have an exercise price equal to the lowest of the average closing rate of the share on Euronext Brussels during a period of thirty days before the Date of the Offer and the last closing rate prior to the Date of the Offer for employees and for consultants the highest of the following two values: (i) the average closing rate of the share on Euronext Brussels during the period of thirty days preceding the Date of the Decision, as mentioned in a letter to be


sent to the Selected Participants subsequently to the Date of the Decision, and (ii) the lowest of the following two values: (a) the average closing rate of the share on Euronext Brussels during a period of thirty days preceding the Date of the Offer, or (b) the last closing rate preceding the Date of the Offer. The warrants vest over 4 years: 25% of the warrants vest after one year; after that date the remaining 75% become vested on a monthly basis (2.083% per month).

The duration of the warrants is 7 years as of the issue date of the warrants. In order to focus on sustainable, long term growth and alignment with shareholders interest, the warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were granted (thus starting as of 1 January 2019 until 15 January 2022). In case of a normal termination of the consulting agreement, all the vested warrants need to be exercised during the current or if not yet exercisable during the first exercisable period. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed. All non-vested warrants become lapsed at the moment of termination of the agreement. Warrants that have not been exercised within 7 years of their creation become null and void.

During the Board Meeting of 14 September 2015, the issuance of a maximum number of 290,000 warrants was approved and 257,500 warrants have subsequently been granted of which 233,000 have been accepted on 7 December 2015 and on 18 January 2016 (68,000 warrants at €12.29/warrant, 15,000 warrants at €11.67/warrant for employees and 150,000 warrants at €12.10/warrant for consultants).


The duration of the warrants is 7 years form the date of the issue. In order to focus on sustainable, long term growth and alignment with shareholders interest, the warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were offered (thus starting as of 1 January 2019 until 15 January 2022). In the case of a normal termination of the employee contract or the consulting agreement, all the vested warrants need to be exercised during the first fifteen days of the quarter in which the end of the Employment Agreement, Consultant Agreement or Director’s Appointment falls, even if such Exercise Period precedes the beginning of the fourth year following the calendar year in which the Date of the Offer lies. The tax consequences of such


exercise will exclusively be borne by the relevant Warrant holder. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed. All non-vested warrants become lapsed at the moment of termination of the agreement. Warrants that have not been exercised within 7 years of their creation become null and void.

Severance payments

Currently, all members of the Executive Committee are employed on the basis of a service agreement, which can be terminated at any time provided that a previously determined term of notice is observed, which, at the Company’s discretion, can be replaced by a corresponding termination allowance. No other termination remunerations are foreseen. All service agreements contain non-competition clauses, as well as confidentiality obligations and obligations relating to the transfer of intellectual property. The Corporate Governance Charter requires that every contractual settlement agreed upon before or after 1 July 2009 concerning the remuneration of the CEO or any other member of the Executive Committee, clearly states that the amount of the exit remuneration, which is granted when the contract is prematurely terminated, should not exceed the basic and variable remuneration of twelve months. All existing contractual settlements reached with the CEO, or any other member of the Executive Committee, do not contain any exit remuneration higher than 12 months. Except for Dr Edwin Moses, who is entitled to an exit remuneration which is equal to one (1) time his fixed annual compensation, all other Executive Committee members (Mr Ottevaere, permanent representative of Woconsult BVBA, CFO; Dr Robert K Zeldin, CMO; Dr Antonin Rollet de Fougerolles; CSO; Mr Johan Heylen, CCO; Mr Gielen, VP HR and Mr Gerrit Franciscus Landolt, VP IP and Legal) are entitled to an exit remuneration of one quarter (1/4) of their fixed annual compensation.

Claw-back provisions

There are no provisions allowing the Company to reclaim any variable remuneration paid to the executive management based on incorrect financial information.

Miscellaneous

Furthermore the company has no intention to compensate in a subjective or discretionary manner.


1.6.10. MOST IMPORTANT CHARACTERISTICS OF THE COMPANY’S INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT

The Executive Committee should lead the Company within the framework of prudent and effective control, which enables to assess and manage risks. The Executive Committee should develop and maintain adequate internal control systems so as to offer a reasonable assurance concerning the realisation of the goals, the reliability of the financial information, the observance of applicable laws and regulations and to enable the execution of internal control procedures. The Audit Committee assists the Board of Directors in the execution of its task to control the Executive Committee.

The Company has opted for a “two-tier” governance structure. As a result, the principal governance structure of Ablynx is based on a distinction between:

• The management of Ablynx (including the daily management), a task conducted by the Executive Committee (“Directiecomité”) within the meaning of Art. 524bis of the Belgian Companies Code, within the framework of the general strategy defined by, and under the supervision of the Board; and

• The development of the general strategy of Ablynx, the supervision of the Executive Committee and the exercise of specific powers attributed by the Belgian Companies Code, the Articles of Association and the Corporate Governance Charter which fall within the powers of the Board.

Control Environment

The Executive Committee has organised the internal control environment, based upon “COSO’s internal Control-integrated Framework of 2013” which is monitored by the Audit Committee. The role of the Audit Committee is stipulated in the Corporate Governance Statement and in the terms of reference of the Audit Committee.

The Audit Committee decided not to create an internal audit role for the time being, since the scope of the business does not justify a full-time role.

The role of the Audit Committee shall be to assist the Board in fulfilling its monitoring responsibilities in respect of control in the broadest sense, including responsibilities for the financial reporting process, the system of internal control and risk management (including the Company’s process for monitoring compliance with laws and regulations) and the external audit process.

Risk analysis

During 2015, the management of the Company assessed its operational risks and challenged and compared these with the COSO 2013 risk intelligence framework. Following this exercise, appropriate actions will be proposed to the Executive Committee.


The Company is potentially subject to the following inherent risks:

• Nanobody-based drug candidates must undergo rigorous pre-clinical and clinical testing, the results of which are uncertain and could substantially delay or prevent the drug candidates from reaching the market.

• Delays in clinical trials are common and may have many causes. Such delays could result in increased costs and jeopardise or delay the Company’s ability to achieve regulatory approval and commence product sales as currently contemplated.

• The Company’s drug candidates may not obtain regulatory approval when expected, if at all, and even after obtaining approval; the drugs will be subject to ongoing regulation. To date, one of the Company’s drug candidates has reached the stage of submission or evaluation for regulatory approval.

• The Company has a history of operating losses and an accumulated deficit; the Company may never become profitable or may not be able to sustain profitability in subsequent periods.

• The Company is reliant on collaborative partners for the development and commercialisation of most of its existing and future drug candidates.

• The Company’s patents and other intellectual property rights may not adequately protect its products and drug candidates, which may impede the Company’s ability to compete effectively.

• The Company may infringe the patents or other intellectual property rights of others and may face patent or other intellectual property litigation, which may be costly and time consuming.

• The Company faces, and will continue to face, significant competition and rapid technological change, which could limit or eliminate the market opportunity for its products and drug candidates.

• The Company relies on outsourcing arrangements with third parties for some of its activities including manufacturing and clinical trials management.

• The Company may not have adequate insurance cover, particularly in connection with product liability risk.

• The commercial success of the Company will depend on attaining significant market acceptance of its drug candidates among physicians, patients, healthcare payers and the medical community. The Company has not yet commercialised any product.

• If the Company fails to attract and retain qualified personnel, it may be unable to successfully develop its technologies, conduct its clinical trials and commercialise drug candidates.

• The Company may need additional funding, which may not be available on acceptable terms when required, if at all.

• The revenue is generated by a limited number of clients.• Tax legislation in Belgium might change over time.• Fair value measurements that cannot be fully based on market parameters are

based on judgment and could potentially affect the fair value estimation, including the embedded derivative linked to the convertible bond issued in May 2015.


Our financial risk management consists of:

Liquidity risk management

The Company makes use of term accounts and treasury notes. The maturities of the term deposits are limited to a maximum of one year.

The Company has €1.6 million restricted cash related to a cash pledge.

On 27 May 2015, the Company raised €100 million through a private placement of €100 million senior unsecured bonds due 27 May 2020. The bonds will mature on 27 May 2020 (5 years) and will pay a coupon of 3.25% payable semi-annually.

The convertible bonds are convertible in Ablynx ordinary shares at the option of the holder. In case of conversion: a cash alternative election (at the option of the issuer) is available including a number of restrictions. Because the issuer has the cash alternative election, it has a choice over how the share conversion option will be settled (i.e. net in cash or by exchanging shares for cash). Therefore the share conversion option is a derivative at Fair Value Through Profit and Loss (“FVTPL”) according to IAS 39 and not an own equity instrument (cf. IAS 32.26).

Interest rate risk

As the Company has no other significant interest-bearing assets or liabilities, its income and operating cash flows are independent of changes in the market interest rates.

Credit risk

The credit risk arises from outstanding transactions with customers. It is the Company’s policy to deal with creditworthy partners to avoid significant risk exposure. The trade receivables relate to a limited number of high-ranked international customers for whom there is no recent history of default. The credit risk is highly concentrated around a limited number of customers.

The financial institutions have credit ratings varying from A+, over A to A-.

Available liquidities are placed with several banks.

No cash credit lines were available.

Foreign exchange risk

The Company has sales transactions from research and collaboration agreements denominated in USD and purchase transactions denominated in AUD, CAD, CHF, DKK, GBP, JPY, MXN, RUB, SEK and USD. The Company did not enter into any currency hedging arrangements in order to cover this risk.


Control activities

The Board of Directors yearly approves the strategy and the goals. Each year, a business plan is elaborated for the next three years, as well as a detailed budget for the next year, which is submitted to the Board of Directors for approval. The budget is systematically followed up at each Audit Committee and Board of Directors meeting, and regularly adjusted to changing prospects.

A process is in place which enables the finance department to prepare financial statements on a quarterly basis.

ERP support systems have been implemented generating consistent financial and operational information.

Systems are in place in order to verify the accuracy of the reporting figures and are compared with the previous year, budgets and forecasts.

Supervision and monitoring

Supervision and monitoring activities are performed by the senior management on a daily basis.

1.6.11. STATUTORY AUDITOR

Deloitte Bedrijfsrevisoren BV o.v.v.e. CVBA/SC s.f.d. SCRL, a civil company having the form of a co-operative company with limited liability (“burgerlijke vennootschap onder de vorm van een coöperatieve vennootschap met beperkte aansprakelijkheid”) and existing under the laws of Belgium, with registered offices at Berkenlaan 8b, 1831 Diegem, Belgium, represented by Gert Vanhees, was reappointed as Statutory Auditor of Ablynx on 24 April 2014 for a term of three years ending immediately after the Shareholders Meeting to be held in 2017.

1.6.12. STATEMENTS REQUIRED BY ART. 34 OF THE ROYAL DECREE OF 14 NOVEMBER 2007

All shares are ordinary shares and represent the entire capital. There are no preference shares.

Some of the important agreements that Ablynx has entered into may be amended or terminated in the event of a change of control over Ablynx.


1.6.12.1. BOEHRINGER INGELHEIM AGREEMENTS

The Boehringer Ingelheim Alzheimer’s disease agreement signed in January 2007 states that in the event of a change of control over Ablynx, Boehringer Ingelheim is entitled to terminate the research (as a result of which each party is released from paying any research license fees and Ablynx is no longer entitled to the research license from Boehringer Ingelheim), and is no longer held to participate in joint committees or to share its development and commercialisation plans. This clause was approved by the Company’s Annual Shareholders Meeting held on 29 April 2010 in accordance with Art. 556 of the Belgian Company Code.

However, this clause is no longer applicable as the Company announced on 28 August 2014 that, following the termination of the Phase I study with BI 1034020 in Alzheimer’s disease, and after a full review of the programme, Boehringer Ingelheim (BI) decided not to move forward with the development of this anti-Abeta Nanobody, thereby ending the collaboration in Alzheimer’s disease that both companies entered into in January 2007.

Under the Boehringer Ingelheim Strategic Alliance agreement signed in September 2007, it is stated that in the event of a change of control over Ablynx, Boehringer Ingelheim is also entitled to terminate the research (without being released from the obligation to pay royalties on licensed products, if any) and is no longer held to participate in joint committees, to share its development and commercialisation plans or to start new programmes. However, Boehringer Ingelheim is entitled to continue the research independently, and Ablynx’ option to co-promotion rights expires. This clause was approved by the Extraordinary Shareholders Meeting of 12 October 2007 in accordance with Art. 556 of the Belgian Company Code. The Agreement was extended with two years in March 2012 and the same change of control clause was approved by the Company’s Annual Shareholders Meeting of 26 April 2012. On 21 August 2014 the agreement was extended one last time until 31 December 2014, being the end of the Discovery Term of this Agreement.

1.6.12.2. MERCK KGaA AGREEMENTS

The Merck KGaA agreement signed in September 2008 states that a change of control may result automatically, in the case of early joint research and development programmes, in a full opt-out by Ablynx. In the event of further advanced joint research and development programmes, Merck KGaA may at its sole discretion invite the controlling shareholder of Ablynx to continue to contribute to such joint research and development programme. If Merck KGaA does not extend such invitation or if Ablynx's controlling shareholder does not accept such invitation, the change of control results in a full opt-out by Ablynx. This clause was approved by the Company’s Annual


Shareholders Meeting held on 29 April 2010 in accordance with Art. 556 of the Belgian Company Code.

The Merck KGaA agreement signed in October 2010 states that (i) in the event of a change of control over Ablynx during the research term, Merck KGaA is entitled to terminate the programmes and to assume sole responsibility for further discovery, development and commercialisation; and (ii) in the event of a change of control over Ablynx (a) in respect of early programmes, Ablynx will be deemed to have exercised its opt-out right in full (if the first opt-out point had been reached; if the first opt-out point had not yet been reached, as of the time that the first opt-out point will have been reached); and (b) in respect of further advanced programmes, Ablynx will be deemed to have exercised its opt-out right under the agreement in full, provided that Merck KGaA, at its sole discretion, invites the new controlling shareholder of Ablynx to continue to contribute to such programme. If Merck KGaA does not extend such invitation or if Ablynx's new controlling shareholder does not accept such invitation, the change of control results in an opt-out in full by Ablynx (in which case, however, the entitlement to royalties will be replaced by an entitlement to a share of net income calculated according to the percentage of resources provided by Ablynx to a programme until the first commercial sale). The clauses under (ii) cease to have effect, on a programme-by-programme basis, as of the first commercial sale of a product resulting from a programme. This clause was approved by the Company’s Extraordinary General Meeting of Shareholders of 11 January 2011 in accordance with Art. 556 of the Belgian Company Code.

In November 2011, a third agreement with Merck KGaA was signed with the same change of control clause as mentioned above. This clause was approved by the Company’s Annual Shareholders Meeting held on 26 April 2012 in accordance with Art. 556 of the Belgian Company Code.

The Merck KGaA collaboration agreement which was signed in September 2013 states that in certain cases of change of control of the Company Merck KGaA is entitled at their option either to (i) proceed with the relevant collaboration, it being understood that Merck KGaA shall have the right to unilaterally decide upon the composition and the continued existence of the joint committees in respect of this collaboration agreement, or (ii) terminate the collaboration agreement and to oblige the Company to transfer all or parts of the ongoing programmes under this collaboration agreement, in which case the Company and Merck KGaA shall enter into separate agreements in respect of these programmes and Merck KGaA shall be exempted from further payments (without any right, however, to reimbursement by the Company). This clause was approved by the Company’s Extraordinary General Shareholders Meeting on 7 November 2013 in accordance with Art. 556 of the Belgian Company Code.


1.6.12.3. MERCK & CO., INC. AGREEMENTS

The agreement Ablynx entered into in 2012 with Merck & Co., Inc. (known as MSD outside the United States and Canada), through a subsidiary of Merck, states that in the event of a change of control over Ablynx, Merck is entitled to elect any one or more of the following options: (i) to immediately discontinue any or all then-ongoing research programmes under the agreement; (ii) terminate Ablynx's involvement on any joint committees; (iii) limit Merck’s reporting obligations such that Merck is only required to provide reports relating to Merck’s obligation to pay royalties; and/or (iv) if such change of control involves a company that has initiated an IND enabling study for a competing product (i.e. a compound or molecule directed against the same target), to terminate the agreement. The clause was approved during the Extraordinary General Meeting of Shareholders of 5 August 2013 in accordance with Art. 556 of the Belgian Company Code.

The agreement Ablynx entered into in February 2014 with Merck & Co., Inc. (known as MSD outside the United States and Canada), through a subsidiary of Merck, states that in the event of a change of control over Ablynx, Merck is entitled to elect any one or more of the following options: (i) to immediately discontinue any or all then-ongoing research programmes under the agreement; (ii) terminate Ablynx's involvement on any joint committees; (iii) limit Merck’s reporting obligations such that Merck is only required to provide reports relating to Merck’s obligation to pay royalties; and/or (iv) if such change of control involves a company that has initiated an IND enabling study for a competing product (i.e. a compound or molecule directed against the same target or combination of targets), to terminate the agreement. The clause was approved during the Extraordinary General Meeting of Shareholders of 4 April 2014 in accordance with Art. 556 of the Belgian Company Code.

In July 2015, Ablynx significantly expanded its immuno-oncology partnership with Merck & Co., Inc. which was originally signed in February 2014, to include a total of up to 17 programmes with a focus on multi-specific Nanobodies.


1.6.12.4. ABBVIE AGREEMENT

The agreement with AbbVie which was signed in September 2013, states that in certain cases of a change of control over the Company, and depending on the stage of the research of the programmes under this collaboration agreement AbbVie is entitled to:

• terminate the joint committees in respect of these programmes and assume their tasks;

• oblige the Company to take the appropriate measures to avoid the disclosure of confidential information;

• terminate co-promotion rights;• decide to either (i) assume or (ii) allow the Company to continue, the initial

development activities in respect of the programme;• oblige the Company to either transfer or terminate the ongoing clinical trials.

This clause was approved by the Company’s Extraordinary General Meeting of Shareholders on 7 November 2013 in accordance with Art. 556 of the Belgian Company Code.

1.6.12.5. ISSUANCE OF A 3.25% CONVERTIBLE BOND

The Terms and Conditions of the 3.25% Convertible Bond issued by the Company on 27 May 2015 and maturing on 27 May 2020 (ISIN BE 6278650344) state that in case of a change of control over the Company:

• the conversion price will be adjusted in proportion to the already elapsed time since the issue date (ie 27 May 2015) and

• the bondholders may request the early redemption of their bonds at the redemption price plus accrued interest.

This clause was approved by the Company’s Special General Shareholders Meeting on 10 July 2015 in accordance with Art. 556 of the Belgian Company Code.

1.6.12.6. NOVO NORDISK AGREEMENT

The agreement with Novo Nordisk signed on 25 November 2015 states that during the research programme, Novo Nordisk will have the right to terminate the agreement in full or on a programme-by-programme basis in the event of a change of control of Ablynx.

This clause will be submitted for approval to the shareholders during the General Meeting of 28 April 2016 in accordance with Art. 556 of the Belgian Company Code.


1.7. TRANSACTIONS WITHIN THE AUTHORISED CAPITAL

In 2015, two transactions have occurred within the framework of the authorised capital that are required to be reported in accordance with Art. 608 of the Belgian Companies Code.

In May 2015, Ablynx completed the placement of €100 million senior unsecured convertible bonds due 27 May 2020, with a 3.25% coupon rate and a conversion price of €12.93, representing a 26.5% premium above reference price of €10.2219 being the VWAP (“Volume Weighted Average price”) of Ablynx’ Ordinary Shares on the Brussels Stock Exchange on 20 May 2015. At the initial conversion price, the Convertible Bonds will be convertible into 7,733,952 fully paid up Ordinary Shares of Ablynx.

During the Board Meeting of 14 September 2015, the issuance of a maximum number of 290,000 warrants was approved and 257,500 warrants have subsequently been granted of which 233,000 have been accepted on 7 December 2015 and on 18 January 2016 (68,000 warrants at €12.29/warrant, 15,000 warrants at €11.67/warrant for employees and 150,000 warrants at €12.10/warrant for consultants).


The duration of the warrants is 7 years as of the issue date of the warrants. The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were offered (thus starting as from 1 January 2019 until 15 January 2022). In the case of a normal termination of the Employee Contract or the Consulting Agreement, all the vested warrants need to be exercised during the first fifteen days of the quarter in which the end of the Employment Agreement, Consultant Agreement or Director’s Appointment falls, even if such exercise period precedes the beginning of the fourth year following the calendar year in which the Date of the Offer lies. The tax consequences of such exercise will exclusively be borne by the relevant warrant holder. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed. All non-vested warrants become lapsed at the moment of termination of the agreement. Warrants that have not been exercised within 7 years of their creation become null and void.


1.8. ACQUISITION OF OWN SECURITIES

Neither Ablynx nv nor any direct affiliate or any nominee acting in his own name but on behalf of the Company or of any direct affiliate, have acquired any of the Company’s shares. Ablynx nv has not issued profit-sharing certificates or any other certificates.

1.9. USE OF FINANCIAL INSTRUMENTS BY THE COMPANY

In May 2015, Ablynx raised gross €100 million through the placement of 1000 senior unsecured convertible bonds due May 2020, with a 3.25% coupon rate and a conversion price of €12.93, representing a 26.5% premium above the reference price of €10.2219 being the VWAP (“Volume Weighted Average price”) of Ablynx’ Ordinary Shares on the Brussels Stock Exchange on 20 May 2015. At the initial conversion price, the Convertible Bonds will be convertible into 7,733,952 fully paid up Ordinary Shares of Ablynx.

1.10. CIRCUMSTANCES THAT COULD CONSIDERABLY AFFECT THE DEVELOPMENT OF THE COMPANY

No special events have occurred that could considerably affect the development of the Company.

1.11. RESEARCH AND DEVELOPMENT

The Company is committed to fully exploiting its technology platform to develop a diverse and broad portfolio of therapeutic Nanobodies, and to exploring next generation Nanobody-based technologies. It will continue to leverage the advantages of the Company’s Nanobody technology in view of identifying potential drug candidates across a range of therapeutic areas and exploring and developing the potential of Nanobodies in areas where they have specific advantages. It will invest in further advancing the technology platform in terms of performance, applicability and scale.

The Company expects that research and development expenditures for the discovery, development and commercialisation of drug candidates will continue to increase as the Company progresses its clinical and pre-clinical programmes into the next phase. In addition, Ablynx intends to initiate new discovery programmes and is committed to seek to maintain and expand its proprietary Nanobody technology and intellectual property position.


1.12. CONFLICTING INTERESTS OF DIRECTORS (ART. 523 OF THE BELGIAN COMPANIES CODE)

The Directors report that since the last General Meeting three decisions have been taken which fall within the provisions of Art. 523 of the Belgian Companies Code.

As required by Art. 523 of the Belgian Companies Code, the full minutes of said meeting of the Board of Directors relating to such conflict of interests are to be reproduced hereunder:

Meeting of the Board of Directors of 26 March 2015

Mr Moses did not participate in the deliberations and resolution of the Board with

respect to this item on the agenda.

Prior to the deliberation on this item, the other members of the Board acknowledge

that they have been informed, in accordance with Art. 523 of the Belgian Companies

Code, by e-mail dated 20 March 2015, of the declaration by Edwin Moses in respect of

his conflict of interest in relation to this item on the agenda, as follows:

“In accordance with Art. 523 of the Belgian Company Code, I wish to report that I

am faced with a conflict of interest of a financial nature in respect of the proposed

decision of the Board of Directors to grant discharge to the members of the Executive

Committee.

The decision to grant discharge to the members of the Executive Committee entails

in principle a lapse of the right of the Company to submit a liability claim against (the

members of) the Executive Committee in respect of the actions or decisions (in their

capacity as members) of the Executive Committee during the 2014 fiscal year.

As I am a member of the Executive Committee, the decision to grant discharge to the

members of the Executive Committee entails a conflict of interest of a financial nature

between the Company and myself: as a result of such decision, I will no longer be

subject to such liability claims in respect of my function as a member of the Executive

Committee in the 2014 fiscal year, while the Company loses the opportunity to claim

against me and the other members of the Executive Committee, which may lead to

potential negative financial consequences for the Company.

The exact amount of the financial impact on the Company of this decision cannot be

determined at this time, as it cannot be known, at this time, whether the Company

would wish, in the future, to assert any liability claim vis-à-vis myself or the Executive

Committee and, if so, in what amount. The financial impact on the Company consists of

the loss of this particular possibility.


However, I believe that the decision to grant discharge to the members of the

Executive Committee is in the interest of the Company. Through such decision, the

Company expresses its confidence in the members of the Executive Committee and

offers such members a measure of security, which will allow the Company to attract

and retain capable managers within the Company, as well as keep the current

members of the Executive Committee motivated, committed and focused on their

tasks.

The Company’s statutory auditor has been copied on this e-mail, thereby notifying him

of this conflict of interest.”

The Board confirmed that the financial impact on the Company of the decision to grant

discharge to the members of the Executive Committee cannot be determined at this

time, but consists in the lapse of the right of the Company to submit a liability claim

against the (members of the) Executive Committee.

The Board was of the opinion that the decision to grant discharge to the members of

the Executive Committee is in the interest of the Company, because it expresses the

confidence in the members of the Executive Committee, which will allow the Company

to attract and retain capable managers.

The Board of Directors considered that the decision to grant discharge is in the interest

of the Company, because it keeps the current members of the Executive Committee

motivated, committed and focused on their tasks.

In that perspective, the Board declared that it believes that the decision to grant

discharge to the members of the Executive Committee is in the interest of the

Company.

After deliberation on the basis of the draft of the annual accounts and the annual

report of the fiscal year 2014, which counts as “Annual Activity Report” as described in

the Charter of the Executive Committee, the Board of Directors unanimously granted

discharge to the members of the Executive Committee for 2014.

Meeting of the Board of Directors of 24 February 2016






Code, by e-mail dated 22 February 2016, of the declaration by Edwin Moses in respect

of his conflict of interest in relation to this item on the agenda, as follows:

"Dear Mr. Vanhees and Board members,

I write to you in my capacity as member of the Board of Directors (the “Board”) of

Ablynx nv (the “Company”).

I refer to the meeting of the Board scheduled for 24 February 2016, which will resolve

on the issue of warrants for the benefit of certain employees and consultants of the

Company (the “Stock Option Plan”).

In accordance with Article 523 of the Belgian Company Code, I would like to report

that I have a financial conflict of interest in respect of this agenda item. In my capacity

of member of the Executive Committee of the Company, I am selected as one of the

beneficiaries of the Stock Option Plan and will accordingly be offered a certain number

of warrants.

However, I believe that the approval by the Board of the Stock Option Plan is in the

interest of the Company, given the limited financial consequences for the Company (as

the issue of the warrants shall have no immediate financial impact on the Company),

as well as the purpose thereof.

The purpose of this Stock Option Plan is (i) to create a long-term incentive for the

selected employees and consultants who are able to contribute substantially to the

success and growth of the Company; (ii) to provide the Company with the necessary

means to recruit and retain competent and experienced staff members; and (iii) to

create a common interest between the selected participants on the one hand and the

shareholders of the Company on the other, aimed at an increase in the value of the

Company’s shares.

The consequences of the Stock Option Plan for the existing shareholders and warrant

holders, and more in particular the dilution that would result from the exercise of all

offered warrants, are clearly indicated in the special report of the Board in accordance

with Article 583 of the Belgian Company Code."

Meeting of the Board of Directors of 25 March 2016






Code, by e-mail dated 20 March 2016, of the declaration by Edwin Moses in respect of

his conflict of interest in relation to this item on the agenda, as follows:

“In accordance with Art. 523 of the Belgian Company Code, I wish to report that I

am faced with a conflict of interest of a financial nature in respect of the proposed

decision of the Board of Directors to grant discharge to the members of the Executive

Committee.

The decision to grant discharge to the members of the Executive Committee entails

in principle a lapse of the right of the Company to submit a liability claim against (the

members of) the Executive Committee in respect of the actions or decisions (in their

capacity as members) of the Executive Committee during the 2015 fiscal year.

As I am a member of the Executive Committee, the decision to grant discharge to the

members of the Executive Committee entails a conflict of interest of a financial nature

between the Company and myself: as a result of such decision, I will no longer be

subject to such liability claims in respect of my function as a member of the Executive

Committee in the 2015 fiscal year, while the Company loses the opportunity to claim

against me and the other members of the Executive Committee, which may lead to

potential negative financial consequences for the Company.

The exact amount of the financial impact on the Company of this decision cannot be

determined at this time, as it cannot be known, at this time, whether the Company

would wish, in the future, to assert any liability claim vis-à-vis myself or the Executive

Committee and, if so, in what amount. The financial impact on the Company consists of

the loss of this particular possibility.

However, I believe that the decision to grant discharge to the members of the

Executive Committee is in the interest of the Company. Through such decision, the

Company expresses its confidence in the members of the Executive Committee and

offers such members a measure of security, which will allow the Company to attract

and retain capable managers within the Company, as well as keep the current

members of the Executive Committee motivated, committed and focused on their

tasks.

The Company’s statutory auditor has been copied on this e-mail, thereby notifying him

of this conflict of interest.”

The Board confirmed that the financial impact on the Company of the decision to grant

discharge to the members of the Executive Committee cannot be determined at this

time, but consists in the lapse of the right of the Company to submit a liability claim


against the (members of the) Executive Committee.

The Board was of the opinion that the decision to grant discharge to the members of

the Executive Committee is in the interest of the Company, because it expresses the

confidence in the members of the Executive Committee, which will allow the Company

to attract and retain capable managers.

The Board of Directors considered that the decision to grant discharge is in the interest

of the Company, because it keeps the current members of the Executive Committee

motivated, committed and focused on their tasks.

In that perspective, the Board declared that it believes that the decision to grant

discharge to the members of the Executive Committee is in the interest of the

Company.

After deliberation on the basis of the draft of the annual accounts and the annual

report of the fiscal year 2015, which counts as “Annual Activity Report” as described in

the Charter of the Executive Committee, the Board of Directors unanimously granted

discharge to the members of the Executive Committee for 2015.

1.13. INDEPENDENCE AND EXPERTISE OF AT LEAST ONE MEMBER OF THE AUDIT COMMITTEE

Remi Vermeiren

Remi Vermeiren is an independent Director of Ablynx. He is Chairman of the Audit Committee and holds a degree in Commercial and Financial Sciences. Before he became an independent Director of Ablynx, he had a 43-year long career at Kredietbank nv, which in 1998 merged with Cera Bank and ABB Insurance into KBC Bank and Insurance Company. Currently, Mr Vermeiren is also member of a number of non-quoted companies and of charitable organisations, such as Pro Vives, Vives and ‘Foundation RV’ set up and funded by himself. He is currently a member of the Board or supervisory bodies of ACP II SCA (Luxembourg) (Liquidator). In the past five years, he has held positions as a member of the Board or administrative, management or supervisory bodies of the following companies: Devgen nv (Belgium), Afinia Plastics nv (Belgium), IFB SPA (Italy), Cumerio nv (Belgium) and MCS nv.

Russell Greig

Greig Biotechnology Global Consulting Inc., represented by its permanent representative, Dr Russell Greig has been appointed as independent Director of Ablynx in 2012 and joined the Audit Committee in February 2013. Dr Greig has more than 35 years experience in the pharmaceutical industry, with knowledge and expertise in research and development, business development and commercial operations. He spent the majority of his career at GlaxoSmithKline, where he held a


number of positions including GSK’s President of Pharmaceuticals International from 2003 to 2008 and Senior Vice President Worldwide Business Development. From 2008 to 2010, Dr. Greig was also President of SR One, GSK’s Corporate Venture Group. He is currently Chairman of AM Pharma (The Netherlands), Mint Solutions (The Netherlands), Bionor (Norway), and Sanifit (Spain), a Board Member of Onxeo (France), as well as a Director of Tigenix (Belgium). He also acts as Venture Partner to Kurma Life Sciences (France). He served as acting CEO at Genocea and Isconova for an interim period. He was a member of the Scottish Scientific Advisory Committee, reporting to the First Minister. He was also Chairman of Syntaxin (UK), which was acquired by Ipsen (France), Novagali (France) sold to Santen (Japan), and of Isconova (Sweden), acquired by Novavax (USA).

Catherine Moukheibir

Catherine Moukheibir has been appointed as independent Director of Ablynx on 2 September 2013 and joined the Audit Committee on 12 November 2013. She has been in C-level positions in several European biotech companies after an initial career in strategy consulting and investment banking in Boston and London. Her particular experience lies in aligning corporate and financial strategy appropriate to various stages of a biotech’s development, on the continuum from venture capital funding to public market or M&A. She is currently a non-executive Board member of Creabilis, non-executive Board member at Zealand Pharma and Chair of the Audit Committee, non-executive Board member and member of the Audit Committee at Cerenis and Ablynx and Advisory Board member at the Imperial College Business School. She is also a member of the three-person management Board at Innate Pharma where she is responsible for financial and corporate strategy. Catherine Moukheibir holds an MBA from Yale University.

1.14. JUSTIFICATION OF THE VALUATION RULES

Ablynx, established in 2001, is a biotechnology company. For the further successful expansion of the research and development activities, the Company is, among others, dependent on sufficient financial funding, the results obtained from research and the Company’s capacity to obtain and maintain adequate protection of its intellectual property.

In addition, several clinical tests are planned in the next years, which will increase the operational costs. On the other hand, major commercial deals were closed which have already generated and which will generate important revenues as milestones have been achieved. In view of the above, the Company initiated an IPO on Euronext in November 2007 and raised €85.2 million and initiated an SPO on Euronext in March 2010 and raised €50 million.


On 28 February 2013 the Company raised an additional €31.5 million through a private placement of new shares via an ABO (accelerated bookbuilding procedure).

In June 2014 the Company raised another €41.7 million through a private placement of new shares via an accelerated bookbuilding procedure.

In May 2015, Ablynx raised €100 million gross through the placement of 1,000 senior unsecured convertible bonds due 27 May 2020, with a 3.25% coupon rate and a conversion price of € 12.93, representing a 26.5% premium above reference price of €10.2219 being the VWAP (“Volume Weighted Average price”) of Ablynx's Ordinary Shares on the Brussels Stock Exchange on 20 May 2015. At the initial conversion price, the Convertible Bonds will be convertible into 7,733,952 fully paid up Ordinary Shares of Ablynx.

The cash position at 31 December 2015 of €236.2 million, which includes cash, other short-term investments, restricted cash and cash equivalents, will allow the Company to keep up with the financial obligations for at least the following 12 months. Consequently, the annual accounts have been prepared on the assumption that the Company is a going concern.

The Company’s equity under IFRS amounted to €27.9 million at 31 December 2015. Based on the projected cash burn for 2016 and the volatility of the share price which impacts the fair value of the embedded derivate of the convertible bond, the equity could substantially change. On the other hand the Company’s equity could be positively impacted by the licensing fee that would be paid by AbbVie if they decide to exercise their option to license ALX-0061 in RA, as well as the conversion of the bonds into equity.

1.15. APPROPRIATION OF RESULTS

Ablynx nv ended the financial year 2015 with a net loss of €13,447,008.39.

The Board of Directors proposed to appropriate the loss of the year of €13,447,008.39 to retained losses, the latter amounting to €111,534,698.34.

This brings the total amount of retained losses to €124,981,706.73.

1.16. IMPORTANT EVENTS SUBSEQUENT TO THE ACCOUNTING REFERENCE DATE

On 21 January 2016, Ablynx announced the issuance of an additional 288,170 common shares in exchange for €1,192,292.70 as the result of the exercise of warrants by some

http://hugin.info/137912/R/1888339/668228.pdf


employees and consultants of the Company.

On 29 January 2016, Ablynx announced that Boehringer Ingelheim had administered the first dose in a Phase I dose escalation study with the half-life extended bi-specific anti-VEGF/Ang2 Nanobody in adult patients with advanced solid tumours, which triggered a €8 million milestone payment to Ablynx. The aim of the study is to evaluate the safety profile and dosing schedule for this Nanobody.

On 23 February 2016, Ablynx announced the issuance of an additional 7,521 common shares in exchange for €34,726.41 as the result of the exercise of warrants.

During the Board Meeting of 24 February 2016, the issuance of a maximum number of 590,000 warrants for the benefit of certain employees and consultants was approved. The duration of the warrants is 7 years as of the issue date of the warrants. The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were offered.

On 22 March 2016, Ablynx announced the issuance of an additional 210,741 common shares in exchange for € 740,375.82 as the result of the exercise of warrants. As a result of this transaction, Ablynx now has 55,318,806 shares outstanding.

1.17. GRANT OF DISCHARGE TO THE DIRECTORS AND THE STATUTORY AUDITOR

You are requested, for Ablynx nv, in accordance with the law and the Articles of Association, to grant discharge to the Directors and the Statutory Auditor for the duties carried out by them during the financial year ending 31 December 2015.

This report will be deposited according to the legal requirements and can be consulted at the Company’s address.

Ghent, 25 March 2016

For the Board of Directors,

Dr Peter Fellner

Chairman


We hereby certify that, to the best of our knowledge, the financial statements as of 31 December 2015, prepared in accordance with the International Financial Reporting Standards, as adopted by the European Union, and the legal requirements applicable in Belgium, give a true and fair view of the assets, liabilities, financial position and loss of the Company and that the management report includes a fair review of the development and the performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.

On behalf of the Board of Directors,

Ghent, 25 March 2016

Dr Peter Fellner Woconsult BVBA represented by

Chairman Wim Ottevaere, CFO

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Statutory Auditor's Report to the Shareholders' Meeting on the Financial Statements for the year ended 31 December 2015

To the Shareholders,

As required by law, we report to you in the context of our appointment as the Company’s statutory auditor. This report includes our report on the financial statements together with our report on other legal and regulatory requirements. These financial statements comprise the balance sheet as at 31 December 2015, the statement of comprehensive income, the statement of changes in shareholders’ equity and the cash flow statement for the year then ended, as well as the summary of significant accounting policies and other explanatory notes.

Report on the financial statements – Unqualified opinion

We have audited the financial statements of Ablynx nv (“the Company”), prepared in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. The balance sheet shows total assets of 265,272 (000) EUR and the statement of comprehensive income shows a loss for the year then ended of 54,547 (000) EUR.

Board of Directors’ responsibility for the preparation of the

financial statements

The Board of Directors is responsible for the preparation and fair presentation of financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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Statutory auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the statutory auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the Company’s preparation and fair presentation of financial statements 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the financial statements. We have obtained from the Company’s officials and the Board of Directors the explanations and information necessary for performing our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Unqualified opinion

In our opinion, the financial statements of Ablynx nv give a true and fair view of the Company’s net equity and financial position as of 31 December 2015, and of its results and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.


Report on other legal and regulatory requirements

The Board of Directors is responsible for the preparation and the content of the directors’ report on the financial statements.

As part of our mandate and in accordance with the Belgian standard complementary to the International Standards on Auditing applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we make the following additional statement, which does not modify the scope of our opinion on the financial statements:

• The Directors’ report on the financial statements includes the information required by law, is consistent with the financial statements and is free from material inconsistencies with the information that we became aware of during the performance of our mandate.

Diegem, 25 March 2016 The statutory auditor

DELOITTE Bedrijfsrevisoren / Reviseurs d’Entreprises

BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by Gert Vanhees


The notes from point 8.1 to point 8.31 are an integral part of these financial statements.

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(€'000) 2015 2014

Non-current assets 19,124 16,550

Intangible fixed assets 339 439 (Note 8.6)

Property, plant and equipment 2,620 2,301 (Note 8.7)

Restricted cash 1,648 1,980 (Note 8.8)

R&D tax credit receivable 14,517 11,830 (Note 8.9)

Current assets 246,148 206,796

Trade receivables 6,782 19 (Note 8.10)

Other current assets 1,976 571 (Note 8.10)

Tax receivables 1,766 454 (Note 8.10)

Accrued income and deferred charges 1,030 1,549 (Note 8.10)

Other short-term financial investments 230,992 192,542 (Note 8.11)

Cash and cash equivalents 3,602 11,661 (Note 8.12)

Total assets 265,272 223,346

Equity attributable to equity holders 27,909 75,474

Share capital 96,287 91,975

Share premium account 187,316 183,645

Share-based payment reserve 6,610 7,615

Retained earnings (262,304) (207,761)

Non-current liabilities 134,828 0

Borrowings 134,828 0 (Note 8.16)

Current liabilities 102,535 147,872

Borrowings 0 141 (Note 8.16)

Trade payables 11,656 10,408 (Note 8.17)

Other current liabilities 4,756 4,826 (Note 8.17)

Deferred income 86,123 132,497 (Note 8.17)

Total liabilities 237,363 147,872

Total equity and liabilities 265,272 223,346



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(€ '000) 2015 2014

Revenue:

Research and development 76,761 47,710 (Note 8.20)

Grants 779 1,587

Total revenue and grant income 77,540 49,297

Research and development expenses (83,084) (54,488) (Note 8.21)

General and administrative expenses (11,405) (11,052) (Note 8.22)

Total operating expenses (94,489) (65,540)

Other operating income 0 14 (Note 8.23)

Other operating expenses (6) (9) (Note 8.23)

Operating result (16,955) (16,238)

Financial result (net) (37,592) 3,508

Finance income 1,768 4,294 (Note 8.26)

Finance cost (39,360) (786) (Note 8.26)

Loss before taxes (54,547) (12,730)

Loss for the year (54,547) (12,730)

Total comprehensive income for the period (54,547) (12,730)

Loss attributable to equity holders (54,547) (12,730)

Total comprehensive loss attributable to equity holders

(54,547) (12,730)

Basic and diluted loss per share (1.00) (0.25) (Note 8.28)


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Year ended 31 December

(€'000) 2015 2014

Cash flows from operating activities

Loss before income tax (54,547) (12,730)

Adjustments for:

Amortisation 201 183 (Note 8.6)

Depreciation 1,140 1,354 (Note 8.7)

Share-based payment expense 1,821 1,540

Net financial income (1,100) (1,534) (Note 8.26)

Net loss arising on the convertible bond designated as at fair value through profit and loss

34,646

Finance expense recognised in respect of the convertible bond

4,623

Net movement in trade and other receivables (11,648) (3,955)

Net movement in trade and other payables (45,197) (18,730)

Cash used in/provided by operations (70,061) (33,872)

Interest paid (1) (88) (Note 8.26)

Interest received 1,101 1,622 (Note 8.26)

Net cash (used in)/provided by operating activities (68,961) (32,338)

Cash flows from investing activities

Purchases of property, plant and equipment (1,459) (1,261) (Note 8.7)

Purchases of intangible assets (101) (294) (Note 8.6)

Sale / (Purchase) of short-term financial investments (38,118) (4,683) (Note 8.11)

Net cash (used in)/provided by investing activities (39,678) (6,238)

Cash flows from financing activities

Proceeds from issuance of ordinary shares 39,926

Proceeds from exercise of warrants 5,160 566

Proceed from issue of convertible bond (net of issue costs)

97,185

Interest paid convertible bond (1,625)

Repayments of borrowings (141) (786)

Net cash generated from financing activities 100,579 39,706

Net (decrease)/increase in cash and cash equivalents (8,060) 1,130

Cash and cash equivalents at beginning of the period 11,661 10,531

Cash and cash equivalents at end of the period 3,601 11,661



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capitalShare

premiumShare- based

payments

Retained loss

Total Equity

Balance at 31 December 2013 84,004 150,747 6,736 (195,314) 46,173

Loss of the period (12,730)

Warrant plans

Share-based payments 1,257 283

Transactions with owners

Capital increase 9,178 32,542

Issuance costs (1,795)

Exercise of warrants 588 356 (378)


Loss of the period (54,547)

Warrant plans

Share-based payments 1,817 4

Transactions with owners

Exercise of warrants 4,311 3,671 (2,821)



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TS 8.1. GENERAL INFORMATION

Ablynx is a biopharmaceutical company engaged in the development of Nanobodies, proprietary therapeutic proteins based on single-domain antibody fragments, which combine the advantages of conventional antibody drugs with some of the features of small-molecule drugs. Ablynx is dedicated to creating new medicines which will make a real difference to society. Today, the Company has more than 40 proprietary and partnered programmes in development in various therapeutic areas including inflammation, haematology, immuno-oncology, oncology and respiratory disease.

The Company was incorporated on 4 July 2001 under the name “MatchX”. It changed its name to “Ablynx” on 12 June 2002. Ablynx is a public limited liability company (“naamloze vennootschap” or “nv”) organised and existing under the laws of Belgium with registered offices at Technologiepark 21, 9052 Zwijnaarde, Belgium (company number 0475.295.446 (RPR Ghent). At 31 December 2015, the Company employed 344 people at its headquarters in Zwijnaarde.

The Company has on-going collaborations with various pharmaceutical companies including AbbVie, Boehringer Ingelheim, Eddingpharm, Merck & Co., Inc., Merck KGaA (Merck Serono), Novartis, Genzyme, Taisho Pharmaceuticals and Novo Nordisk, which today have generated over €380 million in non-dilutive cash to the Company.

To date, the Company has raised €71.5 million in private equity, including the exercise of warrants, raised an additional €85.2 million as a result of its IPO on Euronext in November 2007, and raised €50.0 million resulting from its SPO on Euronext in March 2010.

On 28 February 2013 the Company raised an additional €31.5 million through a private placement of new shares via an ABO (accelerated bookbuilding procedure).

On 30 June 2014 the Company again raised €41.7 million through a private placement of new shares via an ABO (accelerated bookbuilding procedure).

In May 2015, Ablynx raised gross €100 million through the placement of 1,000 senior unsecured convertible bonds due 27 May 2020, with a 3.25% coupon rate and a conversion price of €12.93, representing a 26.5% premium above reference price of €10.2219.

8.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.


8.2.1. BASIS OF PREPARATION

The financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC Interpretations and Belgian legal requirements applicable to the Company. The financial statements are presented in thousands of euro (unless stated otherwise). The financial statements for the financial year ended 31 December 2015 have been approved for issue by the Board of Directors on 25 March 2016.

The financial statements have been prepared under the assumption that the Company is a going concern and under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS, as adopted by the EU, requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 8.4.

Changes in accounting policy and disclosures without impact for the company:

Standards and interpretations applicable for the annual period beginning on 1 January

2015

• Improvements to IFRS (2011-2013) (applicable for annual periods beginning on or after 1 January 2015)

• IFRIC 21 Levies (applicable for annual periods beginning on or after 17 June 2014)

Standards and interpretations published, but not yet applicable for the annual period

beginning on 1 January 2015

• IFRS 9 Financial Instruments and subsequent amendments (applicable for annual periods beginning on or after 1 January 2018, but not yet endorsed in the EU)

• IFRS 15 Revenue from Contracts with Customers (applicable for annual periods beginning on or after 1 January 2018, but not yet endorsed in EU)

• IFRS 16 Leases (applicable for annual periods beginning on or after 1 January 2019, but not yet endorsed in EU)

• Improvements to IFRS (2010-2012) (applicable for annual periods beginning on or after 1 February 2015)

• Improvements to IFRS (2012-2014) (applicable for annual periods beginning on or after 1 January 2016)


• Amendments to IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception (applicable for annual periods beginning on or after 1 January 2016, but not yet endorsed in EU)

• Amendments to IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (the effective date has been deferred indefinitely, but not yet endorsed in the EU)

• Amendments to IAS 1 Presentation of Financial Statements – Disclosure Initiative (applicable for annual periods beginning on or after 1 January 2016)

• Amendments to IAS 16 and IAS 38 Property, Plant and Equipment and Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortisation (applicable for annual periods beginning on or after 1 January 2016)

• Amendments to IAS 19 Employee Benefits - Employee Contributions (applicable for annual periods beginning on or after 1 February 2015)

Standards and interpretations published, but not yet applicable for the annual period beginning on 1 January 2015, and mainly new IFRS 15 Revenue from contracts with customers (applicable for annual periods beginning on or after 1 January 2018, but not yet endorsed by EU), and IFRS 16 Leases (applicable for annual periods beginning on or after 1 January 2019, but not yet endorsed by EU), could have an impact on our future financials. The evaluation of this impact is currently under assessment.

8.2.2. CONSOLIDATION SCOPE

Ablynx controlled a sole 100%-owned subsidiary (Ablynx SA with registered offices in Rua do Campo Alegre 1021, 4150-180 Porto, Portugal) up until February 2014, the date on which the liquidation of the subsidiary was closed.

The financial statements of Ablynx nv are presented in euro and rounded to the nearest thousand.

8.2.3. SEGMENT REPORTING

The Company operates as a single operating segment.

8.2.4. FOREIGN CURRENCY TRANSLATION

Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (functional currency). The financial statements are presented in euro, which is the functional and presentation currency of the Company.


Transactions and balances

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 recognised in the income statement.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in the carrying amount are recognised in other comprehensive income (OCI).

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.

The following foreign exchange rates have been used for the preparation of the accounts:

1 Euro = X foreign currency

Closing rate Average rate

2015 2014 2015 2014

US Dollar 1.087 1.211 1.113 1.335

GB Pound 0.736 0.777 0.727 0.808

8.2.5. REVENUE RECOGNITION

The Company generates revenue from research collaboration agreements and from government grants.

The Company recognises revenue when the amount of revenue can be reliably measured, when it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Company’s activities as described below. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Research collaboration agreements

These research agreements typically contain license fees, non-refundable upfront access fees, research and development service fees and milestone payments. The revenue recognition policy for research projects can be summarised as follows:


• License fees are recognised when the Company has fulfilled all conditions and obligations. The license fee will not be recognised if the amount cannot be reasonably estimated and if the payment is doubtful. As the Company has a continuing involvement during the license period, license fees are recognised rateably over the term of the agreement.

• Non-refundable upfront fees for access to prior research results and databases are recognised when earned, if the Company has no continuing performance obligations and all conditions and obligations are fulfilled (this means after the delivery of the required information). If the Company has continuing performance obligations towards the client, the fee will be recognised pro rata the costs incurred (with adjustment to the actual performance period at the end of the contract or at the actual termination date).

• Research and development service fees are recognised as revenue over the life of the research agreement as the required services are provided and costs are incurred. These services are usually in the form of a defined number of full-time equivalents (FTE) at a specified rate per FTE.

• Commercial collaborations resulting in a reimbursement of research and development (R&D) costs are recognised as revenue as the related costs are incurred. The corresponding research and development expenses are included in research and development expenses in the consolidated financial statements.

• Milestone payments are recognised as revenue upon the achievement of the milestone, when all conditions attached have been fulfilled.

Deferred revenue represents amounts received prior to revenue being earned.

8.2.6.

As at 31 December

(€'000) 2015 2014

Upfront fees 58,559 33,772

R&D Service fees 14,403 13,784

Milestone payments 3,500

License fees 100 100

Grants 780 1,587

Royalties 198 54

Total 77,540 49,297

GOVERNMENT GRANTS

Grants related to research projects received from governmental agencies are recognised at their fair value over the period necessary to match them with the costs


that they are intended to compensate, and when there is reasonable assurance the Company will comply with the conditions attached to the grants, but not prior to the formal grant approval. These grants are separately presented in the income statement as and included in the operating income.

8.2.7. INTANGIBLE FIXED ASSETS

Internally generated intangible assets

Research expenses are charged to the profit and loss statement as incurred.

Development costs are only capitalised if the following conditions are met:

• the internally developed intangible asset is identifiable and controlled by the

entity;

• the asset will generate future economic benefits;

• the development costs can be reliably measured.

At present, the current stage of development activities does not allow any capitalisation of intangible assets. The existing regulatory and clinical risks constitute an important uncertainty with respect to the capitalisation of development costs. In contrast to Belgian GAAP, the R&D expenses are not capitalised because the criteria under IFRS are not met.

As no internally generated assets are recognised, all costs with respect to the protection of intellectual property are expensed as R&D expenses.

Purchased intangible assets

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised on a straight-line basis over their estimated useful lives of maximum three years.

Acquired knowledge in the form of licenses and patents is recorded at cost less accumulated amortisation and impairment. It is amortised on a straight-line basis over the shorter of the term of the license agreement and its estimated useful life.

The Company does not have intangible fixed assets with an indefinite useful life.

8.2.8. PROPERTY, PLANT AND EQUIPMENT

An item of property, plant and equipment is carried at historical cost less accumulated depreciation and impairment. Costs relating to the day-to-day servicing of the item are recognised in the income statement as incurred. Gains and losses on the disposal of


property, plant and equipment are recognised in other income or expense.

A pro rata straight-line depreciation method is used to reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the entity. However, land is not depreciated. The residual value and the useful life of an asset is reviewed each financial year-end for possible impairment. Depreciation is charged to the income statement on the following basis:

Buildings 10 year

Equipment 3 year

Hardware 3 year

Furniture 5 year

Equipment under leasing The shorter of the useful life or the minimum leasing term

Leasehold improvements The shorter of the useful life or the minimum leasing term

Property, plant and equipment under construction are not depreciated.

8.2.9. IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for 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 and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

8.2.10. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

The Company has no derivative financial instruments, in all material respect, to hedge interest rates and foreign currency risks.


8.2.11. R&D TAX CREDITS INCENTIVES

As a company that carries extensive research and development activities, the Company benefits from various grants and R&D incentives from certain governmental agencies. These grants and R&D incentives generally aim to partly reimburse approved expenditures incurred in research and development efforts of the Company and are credited to the income statement, in minus of the related R&D expenses, when the relevant expenditure has been incurred and there is reasonable assurance that the grants or R&D incentives are receivable.

Research and development incentives receivables

Non-current research and development incentives receivables are discounted over the period until maturity date according to the appropriate discount rates.

8.2.12. TRADE RECEIVABLES

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.

8.2.13. OTHER SHORT-TERM INVESTMENTS

Term deposits with an initial term of more than three months are held to maturity and measured at amortised cost.

8.2.14. CASH AND CASH EQUIVALENTS

The cash and cash equivalents heading consists of cash, deposits held at call with banks and short-term deposits with an initial term not exceeding three months.

8.2.15. EQUITY INSTRUMENTS

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issuance costs.


8.2.16. TRADE PAYABLES

Payables after and within one year are measured at amortised cost, i.e. at the net present value of the payable amount. Unless the impact of discounting is material, the nominal value is taken.

8.2.17. CONVERTIBLE BONDS

The convertible bond is considered as a financial liability with an embedded derivative liability consistent with IAS 32 based on the net share settlement, accounted for as follows:

• Debt component recognised at amortised cost;

• Embedded derivative accounted for at fair value.

The fair value of the conversion feature needs to be determined at each reporting date and the fair value changes are recognised in profit or loss. As the fair value of the convertible bond as a whole can reliably be estimated, as well as the fair value of the host debt, the fair value of the embedded derivative is calculated as the difference between these two elements.

The fair value of the convertible bond is obtained from public sources (e.g. Bloomberg) which are deemed sufficiently representative of prices for actual market transactions.

The fair value of the host debt is determined by discounting the contractual cash flows using a market benchmark rate plus a market credit spread for a corresponding plain vanilla bond issued by Ablynx with same cash flows and same remaining term to maturity.

8.2.17.1. FAIR VALUE MEASUREMENT

IFRS 7 requires disclosure of fair value measurements by level of the following hierarchy:

• Level 1: Quoted (unadjusted) prices in active markets for identical assets or

liabilities;

• Level 2: Other techniques for which all inputs which have a significant effect on

the recorded fair value are observable, either directly or indirectly;

• Level 3: Techniques which use inputs which have a significant effect on the

recorded fair value that are not based on observable market data.


The characteristics of the convertible bond issued in May 2015 are such that, in accordance with “IAS 39, Financial Instruments: Recognition and Measurement”, it is broken down into two components in the balance sheet: (1) the host contract or plain vanilla debt (i.e. without the conversion option), which is measured at amortised cost and (2) the embedded derivative, i.e. the conversion option, which is measured at fair value through profit or loss. The fair value of the host contract is determined by discounting the contractual cash flows with the reference swap rate plus the appropriate credit spread and the transaction costs allocated to the host debt component. This fair value at inception is also the initial amortised cost of the plain vanilla debt. The fair value of the embedded derivative (i.e. the conversion option) is determined as the difference between the fair value of the total convertible debt and the fair value of the plain vanilla debt.

8.2.17.2. ADDITIONAL INFORMATION WITH REGARD TO FAIR VALUE OF THE FINANCIAL INSTRUMENTS

The table below lists the different classes of financial assets and liabilities with their carrying amounts in the balance sheet and their respective fair value and analysed by their measurement category in accordance with “IAS 39, Financial Instruments”.

Cash and cash equivalents, short-term deposits, trade and other receivables, loans and receivables primarily have short terms to maturity; hence, their carrying amounts at the reporting date approximate the fair values. Trade and other payables also generally have short times to maturity and, hence, their carrying amounts also approximate their fair values.

The following categories and abbreviations are used in the table below:

Abbreviation Category in accordance with IAS 39

FLMaAC Financial Liabilities Measured at Amortised Cost

FLFVTPL Financial Liabilities at Fair Value Through Profit or Loss

FVTPL Fair Value Through Profit or Loss


Carrying amount

Amounts recognised in balance sheet

Fair value

(€'000) Amortised cost FVTPL

At 31 December 2015

Financial liabilities

Convertible bond

Host debt FLMaAC 80,682 80,682 84,798

Embedded derivative FLFVTPL 54,146 54,146 54,146

Trade payables FLMaAC 11,664 11,664 11,664

Other current liabilities FLMaAC 4,756 4,756 4,756

Aggregated by category in accordance with IAS 39

Financial liabilities measured at amortised cost

FLMaAC 97,102 97,102 97,102

Financial liabilities at fair value through profit or loss

FLFVTPL 54,146 54,146 54,146

At 31 December 2014

Financial liabilities

Convertible bond

Borrowings FLMaAC 141 141 141

Trade payables FLMaAC 10,408 10,408 10,408

Other current liabilities FLMaAC 4,826 4,826 4,826

Aggregated by category in accordance with IAS 39

Financial liabilities measured at amortised cost

FLMaAC 15,375 15,375 15,375


8.2.17.3. OVERVIEW MUTATIONS OF LEVEL 3 FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE IN THE BALANCE SHEET

At the balance sheet date, the quotation of the convertible bond on Bloomberg was deemed reliable as a fair value measurement. The loss in fair value of the embedded derivative amounted to €34.6 million.

8.2.17.4. DERIVATIVE LIABILITY W.R.T. THE CONVERSION OPTION (€’000)

At issue of the convertible bond 19,500 (Gain)/loss in fair value 34,646 At 31 December 2015 54,146

8.2.18. INCOME TAXES

Income taxes are accrued for in the same period as the related revenues and expenses. The taxable result can differ from the net profit or loss, because of revenues and expenses which are taxable in another fiscal year or that will never be taxable or deductible.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

As such, a deferred tax asset for the carry forward of unused tax losses will be recognised to the extent that it is probable that future taxable profit will be available.


8.2.19. EMPLOYEE BENEFITS

The Company offers several post-employment, death, disability and healthcare benefit schemes. All employees have access to these schemes. The death, disability and healthcare benefits granted to employees of the Company are covered by external insurance companies, where premiums are paid annually and charged to the income statement as they were incurred.

The post-employment pension plans granted to employees of the Company are based on defined contributions for which the insurance company guarantees a defined interest until retirement (type 'branche 21/tak21').

As a consequence of the law of 18 December 2015, minimum returns are guaranteed by the employer as follows:

• for the contributions paid as from 1 January 2016, a new variable minimum return based on OLO rates, with a minimum of 1.75% and a maximum of 3.75%. In view of the low rates of the OLO in the last years, the return has been initially set to 1.75;

• for the contributions paid until end December 2015, the previously applicable legal returns (3.25% and 3.75% respectively on the employer and employee contributions) continue to apply until retirement date of the participants.

In view of the minimum returns guarantees, those plans qualify as Defined Benefit plans.

In 2014, under the previous legal framework, the application of the PUC method was considered problematic, and there was uncertainty with respect to the future evolution of the minimum guaranteed rates of return. As a consequence, the Group adopted a retrospective approach whereby the net liability recognised in the statement of financial position was based on the sum of the positive differences, determined by individual plan participant, between the minimum guaranteed reserves and the accumulated contributions based on the actual rates of return at the closing date.

Based on the limited difference of €2,944, the Company has concluded that the application of the PUC method would have an immaterial impact.

In 2015, the sum of the positive differences per plan participant between the minimum guaranteed reserves (€6,256,832.58) and the accumulated reserves (€6,243,661.6) as of 31 December 2015 is €13,170.98. As a consequence, in view of the immaterial difference between the accumulated reserves and the minimum reserves as of 31 December 2015, no provision has been recognised.


8.2.20. PROVISIONS

A provision is recognised only when: the Company has a present obligation to transfer economic benefits as a result of past events; it is probable (more likely than not) that such a transfer will be required to settle the obligation; and a reliable estimate of the amount of the obligation can be made.

When the impact is likely to be material (for long-term provisions), the amount recognised as a provision is estimated on a net present value basis (discount factor). The increase in provision due to the passage of time is recognised as an interest expense.

A present obligation arises from an obligating event and may take the form of either a legal obligation or a constructive obligation (a constructive obligation exists when the Company has an established pattern of past practice that indicates to other parties that it will accept certain responsibilities and as a result has created a valid expectation on the part of those other parties that it will discharge those responsibilities). An obligating event leaves the Company no realistic alternative to settling the obligation, independently of its future actions.

Provisions for decommissioning costs and restoring sites are recorded as appropriate in application of the above.

Provisions for future operating losses are strictly prohibited.

If the Company has onerous contracts (the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it), the present obligations under the contract are recognised as a provision.

A provision for restructuring is only recorded if the Company demonstrates a constructive obligation to restructure at the balance sheet date. The constructive obligation should be demonstrated by: (a) a detailed formal plan identifying the main features of the restructuring; and (b) raising a valid expectation to those affected that it will carry out the restructuring by starting to implement the plan or by announcing its main features to those affected.

8.2.21. LEASES

A financial lease is a lease that substantially transfers all the risks and rewards incident to ownership of an asset.

The cost of assets acquired by way of a finance lease is measured at the lower of the fair value of the leased asset and the present value of the minimum lease payments,


using the interest rate implicit in the lease as the discount rate, both determined at the inception of the lease. Initially incurred costs, directly attributable to the arrangement of the finance lease, are added to the amount recognised as an asset.

Assets acquired under financial leases are depreciated over the shorter of the lease term and their estimated useful life, if it is not reasonably certain that the entity will obtain ownership of the asset by the end of the lease term.

Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

8.2.22. SHARE-BASED PAYMENT TRANSACTIONS

The Company has offered equity-settled, share-based compensation plans to its employees, executive management and consultants. The cost with respect to the employee services received in compensation for the grant of these warrants is recognised as an expense.

The total amount of the expense is recognised over the vesting period and determined on the basis of the fair value of the warrants at grant date. The fair value of each warrant is estimated on the date of grant using the Black-Scholes model. The total cost is initially estimated on the basis of the number warrants that will become exercisable. At each balance date, the Company revises its estimates of the number of warrants that will become exercisable. The impact of the revision is recognised in the income statement over the remaining vesting period with a corresponding adjustment to equity.

8.2.23. EARNINGS PER SHARE

Basic net profit/(loss) per share is computed on the basis of the weighted average number of ordinary shares outstanding during the period, excluding treasury shares.

Diluted net profit/(loss) per share is computed based on the weighted-average number of ordinary shares outstanding including the dilutive effect of warrants and bonds. Warrants and bonds should be treated as dilutive, when and only when their conversion to ordinary shares would decrease the net profit per share from continuing operations.


8.3. FINANCIAL RISK MANAGEMENT

8.3.1. FINANCIAL RISK FACTORS

Liquidity risk management

The Company makes use of term accounts and treasury notes. The maturities of the term deposits are limited to a maximum of one year.

The Company has €1.6 million restricted cash related to a cash pledge.

On 27 May 2015, the company raised €100 million through a private placement of €100 million senior unsecured bonds due 27 May 2020. The bonds will mature on 27 May 2020 (5 years) and will pay a coupon of 3.25% semi-annually. The convertible bonds are convertible in Ablynx ordinary shares at the option of the holder. In case of conversion: a cash alternative election (at the option of the issuer) is available including a number of restrictions. Because the issuer has the cash alternative election, it has a choice over how the share conversion option will be settled (i.e. net in cash or by exchanging shares for cash). Therefore the share conversion option is a derivative at Fair Value Through Profit and Loss (“FVTPL”) according to IAS 39, not an own equity instrument (cf. IAS 32.26).

Interest rate risk

The Company has a significant interest-bearing liability related to the private placement of €100 million senior unsecured bonds with a 3.25% coupon rate and a conversion price of €12.93. However, operating cash flows are independent of changes in market interest rates.

Credit risk

The credit risk arises from outstanding transactions with customers. It is the Company’s policy to deal with creditworthy partners to avoid significant risk exposure. The trade receivables relate to a limited number of high-ranked international customers for whom there is no recent history of default. The credit risk is highly concentrated around a limited number of customers.

Available liquidities are placed with several financial institutions.

The financial institutions have credit ratings varying from A+, over A to A-.

No cash credit lines were available.


Credit quality of financial assets

(€’000) Rating(1) 2015 2014

Cash and cash equivalents

A+ 3,522 11,345

A 38 143

A- 41 173

Total 3,601 11,661

Short-term investments

A+ 56,026 50,870

A 73,500 84,000

A- 101,469 57,672

Total 230,995 192,542

(1) source at 11 February 2016: Standard & Poor’s.

Foreign exchange risk

The Company has sales transactions from research and collaboration agreements denominated in USD and purchase transactions denominated in AUD, CAD, CHF, DKK, GBP, JPY, MXN, RUB, SEK and USD. The Company did not enter into any currency hedging arrangements in order to cover this risk.

As per 31 December 2015, if the EUR had weakened 10% against the GBP and strengthened 10% against the USD with all other variables held constant, the loss of the period would have been €196,385 (2014: €610,456) higher. Conversely, if the EUR had strengthened 10% against the GBP and weakened 10% against the USD with all other variables held constant, the loss of the period would have been €191,835 (2014: €662,848) lower.


The table below provides an indication of the Company’s open net foreign currency position as per year end:

8.3.2.

(€’000) 2015 2014

Liabilities denominated in USD 142 0

Liabilities denominated in GBP 76 59

Assets denominated in USD 2,678 6,687

CAPITAL RISK MANAGEMENT

The Company manages its capital to ensure that it will be able to continue as a going concern. The capital structure of the Company consists of limited financial debt, cash and cash equivalents, restricted cash and short-term investments and equity attributed to the holders of equity instruments of the Company, such as capital, reserves and results carried forward as mentioned in the statements of changes in equity. The Company makes the necessary adjustments in the light of changes in the economic circumstances, risks associated to the different assets and the projected cash needs of the current and projected research activities. The current cash situation and the anticipated cash generation are the most important parameters in assessing the capital structure. The Company objective is to maintain the capital structure at a level to be able to finance its activities for at least twelve months. Cash income from existing and new partnerships is taken into account and, if needed and possible, the Company can issue new shares or enter into financing agreements.

8.4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

At each reporting date, the Company makes assumptions and estimates with respect to the impact of past events on the future resulting in a number of accounting estimates, which at present have a limited impact.

8.4.1. CONVERTIBLE BOND

On 27 May 2015 Ablynx issued Senior Unsecured Convertible Bonds due May 2020 for an amount of €100.000.000 at an issue price of 100%. The convertible bonds are convertible in Ablynx ordinary shares at the option of the holder.

In case of conversion, a cash alternative election is available at the option of the issuer including a number of restrictions. Because the issuer has the cash alternative election,


it has a choice over how the share conversion option will be settled (i.e. net in cash or by exchanging shares for cash). Therefore the share conversion option is a derivative at Fair Value Through Profit and Loss (“FVTPL”) according to IAS 39 and not an own equity instrument (cf. IAS 32.26).

An estimate of the value for the convertible bond is available on Bloomberg, the embedded derivative has been valued as the difference between the value of the convertible bond and the value of the bond floor.

The fair value is based on indicative (i.e. non-executable) quotes provided by 9 market participants resulting in indicative prices. The number of participants (and thus the Bloomberg reliability score) may still fluctuate overtime and impact the level of subjectivity of this method.

As long as no observable data (and grades) are available, a credit spread provided by Ablynx’ bank (i.e. JP Morgan –“JPM”) is being applied. This spread is to be updated for every valuation date.

As of the issue date, JPM uses a spread of 700bp for Ablynx. JPM bases the spread of 700bp on observations of debt issued by a number of comparable companies but considerable judgement remains.

8.4.2. TAX CREDIT

The Company has accounted for a total tax receivable of €15.7 million following an R&D incentive scheme in Belgium under which the tax can be refunded after five years if not offset against taxable basis over that period. The R&D incentives are recorded net against the relating R&D expenses in the statement of comprehensive income. We expect to receive this amount progressively over 5 years, starting as from accounting year 2016 onwards. Beginning of 2016 €1.2 million has been refunded. The remaining amount of €14.5 million is expected in the following years.

(€’000)

Fiscal year Year amount can be claimed

Year amount should be reimbursed

Amount

2011 2016 2017 1,879

2012 2017 2018 2,450

2013 2018 2019 2,940

2014 2019 2020 3,340

2015 2020 2021 3,859

Total 14,468


The collection of the outstanding non-current R&D tax credit receivable remains dependent upon the completeness of the necessary formalities and the quality of the documentation available to support tax credit claimed.

8.4.3. DEFERRED TAXES

The total temporary differences amount to €337.0 million which may result in a potential deferred tax asset of €115.0 million.

Based upon the tax planning this deferred tax asset was not recognised as the midterm planning demonstrated significant uncertainty to realise taxable profits in the foreseeable future.

8.4.4. SHARE-BASED COMPENSATION

The Company used the Black & Scholes model for share-based payment calculation purposes and based the volatility parameter on the volatility of the Ablynx share. Rotation of employees as a parameter for share-based payment calculations is considered to be limited.

8.4.5. GOING CONCERN

For the further successful expansion of the research and development activities, Ablynx is, among others, dependent on sufficient financial funding, the results obtained from research and Ablynx capacity to obtain and maintain adequate protection of its intellectual property. In addition, further progress of the clinical tests is planned in the next years, which will increase the operational costs.

On the other hand, commercial deals were closed which have already generated and which will generate important revenues as milestones are earned.

Going concern is assured as no liquidity problems are expected because the convertible bonds are convertible in Ablynx ordinary shares at the option of the issuer. In case of conversion, a cash alternative election is available at the option of the issuer, including a number of restrictions. Because the issuer has the cash alternative election, it has a choice over how the share conversion option will be settled (i.e. net in cash or by exchanging shares for cash).

The Company has not identified at reporting date any sources of estimation uncertainty, which involve a significant risk of material adjustment to the financial statements in the following year.


The current cash position of €236.2 million including cash, other investments, restricted cash and deposits will allow the Company to keep up with the financial obligations for at least the following 12 months.

Consequently, the annual accounts have been prepared on the assumption that the Company is a going concern.

8.5. SEGMENT INFORMATION

The Company does not distinguish different operating segments.

The income stems from nine pharmaceutical partners, namely Boehringer Ingelheim, Merck KGaA, Merck & Co., Inc., Novartis, AbbVie, Eddingpharm, Genzyme, Taisho Pharmaceuticals and Novo Nordisk. Moreover, in 2015, more than 90% of the income originated from 3 parties, one party was responsible for more than 50% of the income, two other parties represented between 15% and 25% each.

In 2014, 1 party represented more than 40% of the revenues, two other parties represented between 20% and 25% each.


8.6. INTANGIBLE FIXED ASSET

(€’000) Patents Software Total

Year ended 31 December 2014

Opening net book amount 101 227 328

Additions 294 294

Amortisation charge (7) (176) (183)

Closing net book amount 94 345 439

As at 31 December 2014

Cost 2,174 2,473 4,647

Accumulated amortisation and impairment (2,080) (2,128) (4,208)

Net book amount 94 345 439


Opening net book amount 94 345 439

Additions 101 101

Amortisation charge (7) (193) (200)

Closing net book amount 87 253 340


Additions 2,174 2,574 4,748

Accumulated amortisation and impairment (2,087) (2,321) (4,408)

Net book amount 87 253 340

The intangible fixed assets mainly consist of a portfolio of acquired patents and software licences.


8.7. PROPERTY, PLANT AND EQUIPMENT

(€’000) Land and Buildings

Equipment Furniture Equipment under

leasing

Leasehold improve-

ments

PPE under construction

Total


Opening net book amount

709 208 1,396 81 2,394

Additions 2,350 323 64 2,737

Disposals - acquisition value

(3,331) (1,476) (675) (5,482)

Disposals - accumulated depreciation and impairment

3,331 1,474 675 5,480

Depreciation charge (1,848) (363) (601) (16) (2,828)

Transfer costs (188) 275 (87)

Transfer Depreciations

22 (72) 50

Closing net book amount

1,045 371 793 92 2,301


Cost 11,418 2,049 2,181 847 16,495

Accumulated depreciation and impairment

(10,373) (1,678) (1,388) (755) (14,194)

Net book amount 1,045 371 793 92 2,301


Opening net book amount

1,045 371 793 92 2,301

Additions 413 960 50 36 1,459

Depreciation charge (24) (642) (223) (230) (23) (1,142)

Closing net book amount

389 1,363 198 563 105 2,618


Cost 413 12,378 2,099 2,181 883 17,954

Accumulated depreciation and impairment

(24) (11,015) (1,901) (1,618) (778) (15,336)

Net book amount 389 1,363 198 563 105 2,618


8.8. RESTRICTED CASH

Restricted cash is related to a cash pledge the Company has provided in respect of the service agreement with nv Bio-Versneller (see point 8.30.3).

8.9.

As at 31 December

(€’000) 2015 2014

Restricted cash 1,648 1,980

NON-CURRENT R&D TAX INCENTIVE RECEIVABLES

As at 31 December

(€’000) 2015 2014

Tax credit related to research expenditure capitalised under BE GAAP (>1 year)

14,468 11,830

The Company has accounted for an R&D tax credit receivable of €15.7 million following an R&D incentive scheme in Belgium under which the tax incentive can be refunded after five years if not offset against taxable basis over that period. The R&D incentives are recorded net against the relating R&D expenses in the statement of comprehensive income. We expect to receive this amount progressively over 5 years, starting as from accounting year 2016 onwards.

Beginning of 2016 €1.2 million has been refunded. The remaining amount of €14.5 million is expected in the following years.


8.10. TRADE RECEIVABLES AND OTHER CURRENT ASSETS

As at 31 December

(€'000) 2015 2014

Trade receivables

Trade receivables 6,762 0

Invoices to be made 20 19

Total 6,782 19

Other current assets

VAT receivables 626 553

Other receivables 1,350 18

Total 1,976 571

Tax receivables

Witholding taxes on interest income 576 454

R&D tax credit receivable (< 1 year) 1,238

Total 1,814 454

Accrued income and deferred expenses

Accrued income 568 1,070

Deferred expenses 461 479

Total 1,029 1,549

Trade receivables consist of amounts due from research collaboration partners. The nominal amount of both trade and other receivables approximates the fair value.

Other current assets and tax receivables mainly consist of taxes to be recovered and prepayments for ordered tangible assets.

Trade receivables that were past due are not impaired. The trade receivables relate to a limited number of high-ranked international customers for whom there is no recent history of default. Currently there are no past due trade receivables.


All carrying amounts of the Company’s trade and other receivables are denominated in euro.

Accrued income consists mainly of earned income from government grants for which no payments have been received but for which the relating expenditures have been incurred.

8.11. OTHER SHORT-TERM INVESTMENTS

As at 31 December

(€'000) 2015 2014

Term deposits in Euro 230,992 185,936

Term deposits in foreign currency 6,606

Term deposits > 3 months 230,992 192,542

These are term deposits with banks with an initial term between 3 and 12 months.

8.12. CASH AND CASH EQUIVALENTS

As at 31 December

(€'000) 2015 2014

Cash at bank and on hand 3,604 11,661

Cash at bank and on hand in Euro 924 11,579

Cash at bank and on hand in foreign currency

2,680 82

Total 3,604 11,661

The cash and cash equivalents heading consists of cash, deposits held at call with banks and short-term deposits with an initial term not exceeding three months.


8.13. FINANCIAL INSTRUMENTS BY CATEGORY

(€ '000) 2015 Loans and Receivables

Total


Trade receivables - other current assets 25,040 25,040

Other short-term deposits 230,992 230,992

Cash and cash equivalents 3,604 3,604

Trade payables 11,656 11,656

(€ '000) 2014 Loans and Receivables

Total


Trade receivables - other current assets 12,874 12,874

Other short-term deposits 192,542 192,542

Cash and cash equivalents 11,661 11,661

Trade payables (10,408) (10,408)

8.14. SHARE CAPITAL

8.14.1. CAPITAL TRANSACTIONS DURING THE YEAR

The following capital increases took place in 2015:

On 19 January 2015, the Company issued 115,946 new shares in exchange for €909,426.07 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €216,819.02 and €692,607.05 respectively.

On 16 March 2015, the Company issued 174,302 new shares in exchange for €1,292,682.18 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €325,944.74 and €966,737.44 respectively.

On 17 April 2015, the Company issued 20,165 new shares in exchange for €112,425.70 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €37,603.55 and €74,822.15 respectively.


On 27 May 2015, the Company raised €100 million through a private placement of €100 million senior unsecured bonds due 27 May 2020. The bonds were placed through an accelerated book building placement with qualified investors outside the United States, in accordance with Regulation S under the Securities Act. The bonds will mature on 27 May 2020 (5 years), are in dematerialised form in the denomination of €100,000 each, are issued at par and will be redeemed at par at maturity. The bonds will pay a coupon of 3.25% per annum, payable semi-annually in arrears on 27 November and 27 May of each year, beginning on 27 November 2015. The initial price for the conversion of the bonds into ordinary shares of the issuer is €12.93, representing approximately a 26.5% premium above the reference price of €10.2219, being the VWAP of the ordinary shares on Euronext Brussels on 20 May 2015. At the initial conversion price, the convertible bonds will be convertible into 7,733,952 fully paid-up ordinary shares of the issuer. Conversion of the convertible bonds in Ablynx ordinary shares is at the option of the holder. In case of conversion: a cash alternative election (at the option of the issuer) is available including a number of restrictions. As the issuer has the cash alternative election, it has a choice over how the share conversion option will be settled (i.e. net in cash or by exchanging shares for cash). Therefore the share conversion option is a derivative at Fair Value Through Profit and Loss (“FVTPL”) according to IAS 39 and not an own equity instrument (cf. IAS 32.26).

On 3 June 2015, the Company issued 83,000 new shares in exchange for €410,955 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €155,210 and €255,745 respectively.



On 19 October 2015, the Company issued 5,200 new shares in exchange for €41,249 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €9,724 and €31,525 respectively.


On 7 December 2015, the Company issued 7,250 new shares in exchange for €61,390 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €13,557.50 and €47,832.50 respectively.

On 15 December 2015, the Company issued 287,500 new shares in exchange for €1,532,750 as a result of the exercise of warrants by some employees and consultants of the Company. The par value and share premium amounted to €535,000 and €997,750 respectively.

The share capital consists of shares, which are fully paid up, with a par value of €1.87 per share.

• Number of shares on 31 December 2014 54,014,159• Number of new shares (exercise of warrants) 798,215 • Number of shares on 31 December 2015 54,812,374


8.14.2.

Shareholder Address Voting rights % of voting rights

Aviva Investors Global Services Limited No 1, Poultry London, EC2R 8EJ UK

2,442,496 4.50%

Abingworth Management Limited and Abingworth LLP

38, Jermyn Street London, SW1Y 6DN UK

2,632,150 4.80%

C.H. Boehringer Sohn AG & Co. KG Binger Strasse 173 55216, Ingelheim am Rhein Germany

2,142,857 3.90%

Perceptive Advisors 51, Astor Place 10th floor New York, NY 10003 USA

2,077,590 3.80%

Polar Capital Funds Plc (UK) 4, Matthew Parker Street London, SW1H9NP UK

1,654,827 3.00%

FMR LLC (US) 245, Summer Street Boston, MA 02210USA

2,753,606 5.00%

Taube Hodson Stonex Partners LLP (UK) Cassini House, 57-59, St. James’s StreetLondon, SW1A 1LDUK

2,410,681 4.40%

Oppenheimer Funds, Inc. (OFI) (US) 225, Liberty Street 11th Floor New York, NY 10281 USA

1,672,262 3.10 %

JP Morgan Asset Management Holdings Inc. 270, Park Avenue New York, NY 1007 USA

1,813,725 3.30%

Other 35,212,180 64.20%

AUTHORISED CAPITAL

In January 2013, the Board of Directors issued a new warrant plan with a total number of 467,500 warrants and 391,330 were granted at an exercise price of €6.43 and €6.44 per warrant.

In February 2013, the Company raised €31.5 million through a private placement of new shares via an accelerated bookbuilding procedure.

The Extraordinary General Meeting of Shareholders of 18 July 2013, authorised the


Board of Directors to increase the share capital, including by way of the issue of warrants and convertible bonds, in one or more transactions with a total amount equal to the total share capital of the company, i.e., ninety million six hundred ninety-five thousand four hundred and six euro, twelve cents (€90,695,406.12).

In June 2014, the Company raised again €41.7 million through a private placement of new shares via an accelerated bookbuilding procedure.

In May 2015, Ablynx completed the placement of €100 million senior unsecured convertible bonds due May 2020, with a 3.25% coupon rate and a conversion price of €12.93, representing a 26.5% premium above reference price of €10.2219 being the VWAP (“Volume Weighted Average price”) of Ablynx’ ordinary shares on the Brussels Stock Exchange on 20 May 2015. At the initial conversion price, the convertible bonds will be convertible into 7,733,952 fully paid up ordinary shares of Ablynx.



The duration of the warrants is 7 years as of the issue date of the warrants. The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were offered (thus starting as of 1 January 2019 until 15 January 2022). In the case of a normal termination of the employee contract or the consulting agreement, all the vested warrants need to be exercised during the first fifteen days of the quarter in which the end of the Employment Agreement, Consultant Agreement or Director’s Appointment falls, even if such exercise Ppriod precedes the beginning of the fourth year following the calendar year in which the Date of the Offer lies. The tax consequences of such exercise will exclusively be borne by the relevant warrant holder. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed. All non-vested warrants become lapsed at the moment of termination of the agreement. Warrants that have not been exercised within 7 years of


their creation become null and void.

As per 31 December 2015, the authorised capital amounts to €66,520,042.13

8.14.3.

AUTHORISED CAPITAL ABLYNX nv

in € Shares Par Value

Authorised capital 31/12/2012 79,695,739.59

Issue of January 2013 (874,225) 467,500 1.87

78,821,514.59

ABO of February 2013 (8,186,709) 4,377,919 1.87

70,634,806.06

Renewal

E.O. General Assembly of 18/7/2013 90,695,406.12 for five years from 8/8/2013 till 07/8/2018

publication in BS 8/8/2013

ABO of July 2014 (9,178,581) 4,908,332 1.87

Authorised capital 31/12/2014 81,516,825.28

Convertible bond May 2015 (14,454,772) 7,733,952 1.87

Issue of September 2015 (542,012) 290,000 1.87

Authorised Capital 31/12/2015 66,520,042.13

VOTING RIGHTS

Each share gives right to one vote. If the share is encumbered by usufruct, the voting rights attached to the share shall be exercised by the usufructuary. The voting rights attached to pledged shares shall be exercised by the owner-pledgor.


8.14.4. DIVIDENDS AND MINIMUM SHARE CAPITAL

The Company has never distributed any dividends to its shareholders. According to Belgian company law, the Company is required to deduct at least 5% from its profit to constitute the legal reserve until it reaches one-tenth of the Company’s statutory share capital. As of 31 December 2015, no profits were available for distribution. In accordance with Belgian company law, the minimum share capital of a public limited liability company is €61,500.

8.15. SHARE-BASED PAYMENTS

8.15.1. WARRANTS ISSUED ON 24 APRIL 2014 FOR CERTAIN EMPLOYEES AND CONSULTANTS

During the Extraordinary General Shareholders Meeting of 24 April 2014, the issuance of a maximum number of 725,000 warrants was approved and 327,224 warrants have subsequently been issued on 17 July 2014 and on 28 October 2014 (133,556 warrants at €8.85/warrant, 28,000 warrants at €9.18/warrant and 12,500 warrants at €8.25/warrant for employees and 153,168 warrants at €9.09/warrant for consultants).

Each warrant gives the beneficiary the right to subscribe to one share of the Company (equity-settled). The warrants are granted for free and have an exercise price equal to the lowest of the average closing rate of the share on Euronext Brussels during a period of thirty days before the Date of the Offer and the last closing rate prior to the Date of the Offer for employees and for consultants the highest of the following two values: (i) the average closing rate of the share on Euronext Brussels during the period of thirty days preceding the Date of the Decision, as mentioned in a letter to be sent to the Selected Participants subsequently to the Date of the Decision, and (ii) the lowest of the following two values: (a) the average closing rate of the share on Euronext Brussels during a period of thirty days preceding the Date of the Offer, or (b) the last closing rate preceding the Date of the Offer. The warrants vest over 4 years: 25% of the warrants vest after one year; after that date the remaining 75% become vested on a monthly basis (2.083% per month).

The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were granted (thus starting as of 1 January 2018 until 15 January 2019 for consultants and as from 1 January 2018 until 15 January 2021 for employees). In the case of a normal termination of the employee contract or the consulting agreement, all the vested warrants need to be exercised during the current or if not yet exercisable during the first exercisable period. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed.


All non-vested warrants become lapsed at the moment of termination of the agreement. The duration of the warrants is 5 years for consultants and 7 years for employees as of the issue date of the warrants. Warrants that have not been exercised within 5 or 7 years of their creation become null and void.

8.15.2. WARRANTS ISSUED ON 16 MARCH 2015 FOR CERTAIN EMPLOYEES AND CONSULTANTS

During the Extraordinary General Shareholders Meeting of 16 March 2015, the issuance of a maximum number of 850,000 warrants was approved and 541,499 warrants have subsequently been granted of which 442,801 have been accepted on 3 June 2015 and on 17 July 2015 (129,490 warrants at €9.5/warrant, 20,000 warrants at €10.13/warrant for employees and 293,311 warrants at €10.22/warrant for consultants).

Each warrant gives the beneficiary the right to subscribe to one share of the Company (equity-settled). The warrants are granted for free and have an exercise price equal to the lowest of the average closing rate of the share on Euronext Brussels during a period of thirty days before the Date of the Offer and the last closing rate prior to the Date of the Offer for employees and for consultants the highest of the following two values: (i) the average closing rate of the share on Euronext Brussels during the period of thirty days preceding the Date of the Decision, as mentioned in a letter to be sent to the Selected Participants subsequently to the Date of the Decision, and (ii) the lowest of the following two values: (a) the average closing rate of the share on Euronext Brussels during a period of thirty days preceding the Date of the Offer, or (b) the last closing rate preceding the Date of the Offer. The warrants vest over 4 years: 25% of the warrants vest after one year; after that date the remaining 75% become vested on a monthly basis (2.083% per month).

The duration of the warrants is 7 years as of the issue date of the warrants. The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were granted (thus starting as of 1 January 2019 until 15 January 2022). In the case of a normal termination of the employee contract or the consulting agreement, all the vested warrants need to be exercised during the current or if not yet exercisable during the first exercisable period. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed. All non-vested warrants become lapsed at the moment of termination of the agreement. Warrants that have not been exercised within 7 years of their creation become null and void.


8.15.3. WARRANTS ISSUED ON 14 SEPTEMBER 2015 FOR CERTAIN EMPLOYEES AND CONSULTANTS



The duration of the warrants is 7 years as of the issue date of the warrants. The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were granted (thus starting as of 1 January 2019 until 15 January 2022). In the case of a normal termination of the employee contract or the consulting agreement, all the vested warrants need to be exercised during the first fifteen days of the quarter in which the end of the Employment Agreement, Consultant Agreement or Director’s Appointment falls, even if such Exercise Period precedes the beginning of the fourth year following the calendar year in which the Date of the Offer lies. The tax consequences of such exercise will exclusively be borne by the relevant Warrant holder. Vested warrants which have not been exercised in the foreseen period cannot be transferred to future exercise periods and become lapsed. All non-vested warrants become lapsed at the moment of termination of the agreement. Warrants that have not been exercised within 7 years of their creation become null and void.


8.15.4. EXTENSION OF CERTAIN WARRANT PLANS

The General Shareholders Meeting of 30 April 2009 and the Board of Directors meeting of 22 June 2009 approved the five-year extension of certain warrant plans in accordance with Art. 583 of the Belgian Company Code and in accordance with Art. 21 of the “Economische Herstelwet”.

Because of this extension, the fair value of the warrants has changed. The incremental fair value was calculated as the difference between the fair value with and without extension at the date of extension.


The weighted average price at the date of exercise for warrants exercised during 2014 was €6.02 per share and for warrants exercised during 2015 was €7.51 per share

Warrants 2008 2009 2009 2009 2009 2010 2010 2011 2012 2012 2012 2013 2013 2014 2014 2015 2015 Total number

Average Exercise price (in

Euro)

At 31 December 2013

Outstanding 200,833 54,314 68,500 85,000 249,973 80,500 333,892 627,661 46,875 11,434 312,330 302,778 2,374,090 5.99

Non-vested 14,925 19,500 95,833 523,845 8,337 312,330 302,778 1,277,548 5.41

Exercisable 200,833 54,314 68,500 85,000 235,048 61,000 238,059 103,816 46,875 3,097 1,096,542 6.68

Granted 22,062 50,000 327,224 399,286 8.51

Forfeited 44 2,084 4,511 18,047 7,231 31,917 5.05

Exercised 32,916 19,000 17,750 15,578 85,244 6.02

Expired 72,892 10,416 83,308 7.67

At 31 December 2014

Outstanding 167,917 35,314 50,750 85,000 161,459 68,000 329,381 609,614 46,875 11,434 305,099 324,840 50,000 327,224 2,572,907 6.34

Non-vested 21,800 157,296 5,497 157,203 216,560 31,944 327,224 917,524 6.89

Exercisable 167,917 35,314 50,750 85,000 161,459 68,000 307,581 452,318 46,875 5,937 147,896 108,280 18,056 1,655,383 6.03

Granted 442,801 83,000 525,801 10.34

Forfeited 1,660 4,960 44,897 16,052 67,569 7.16

Exercised 93,167 35,314 43,300 75,000 161,377 32,250 207,307 647,715 7.51

Expired 82 882 964 8.59

At 31 December 2015

Outstanding 74,750 7,450 10,000 35,750 121,192 607,954 46,875 11,434 300,139 279,943 50,000 311,172 442,801 83,000 2,382,460 6.88

Non-vested 21,808 2,620 77,954 102,017 15,278 177,711 442,801 83,000 923,189 9.10

Exercisable 74,750 7,450 10,000 35,750 121,192 586,146 46,875 8,814 222,185 177,926 34,722 133,461 1,459,271 5.48




Euro)

At 31 December 2013

Outstanding 200,833 54,314 68,500 85,000 249,973 80,500 333,892 627,661 46,875 11,434 312,330 302,778 2,374,090 5.99

Non-vested 14,925 19,500 95,833 523,845 8,337 312,330 302,778 1,277,548 5.41

Exercisable 200,833 54,314 68,500 85,000 235,048 61,000 238,059 103,816 46,875 3,097 1,096,542 6.68

Granted 22,062 50,000 327,224 399,286 8.51

Forfeited 44 2,084 4,511 18,047 7,231 31,917 5.05

Exercised 32,916 19,000 17,750 15,578 85,244 6.02

Expired 72,892 10,416 83,308 7.67

At 31 December 2014

Outstanding 167,917 35,314 50,750 85,000 161,459 68,000 329,381 609,614 46,875 11,434 305,099 324,840 50,000 327,224 2,572,907 6.34

Non-vested 21,800 157,296 5,497 157,203 216,560 31,944 327,224 917,524 6.89

Exercisable 167,917 35,314 50,750 85,000 161,459 68,000 307,581 452,318 46,875 5,937 147,896 108,280 18,056 1,655,383 6.03

Granted 442,801 83,000 525,801 10.34

Forfeited 1,660 4,960 44,897 16,052 67,569 7.16

Exercised 93,167 35,314 43,300 75,000 161,377 32,250 207,307 647,715 7.51

Expired 82 882 964 8.59

At 31 December 2015

Outstanding 74,750 7,450 10,000 35,750 121,192 607,954 46,875 11,434 300,139 279,943 50,000 311,172 442,801 83,000 2,382,460 6.88

Non-vested 21,808 2,620 77,954 102,017 15,278 177,711 442,801 83,000 923,189 9.10

Exercisable 74,750 7,450 10,000 35,750 121,192 586,146 46,875 8,814 222,185 177,926 34,722 133,461 1,459,271 5.48


(1) Equals the fair market value of the underlying shares on the grant date.

Warrants 2012 2012 2012 2013 2013 2013 2014 2015 2015

Number of warrants granted 748,750 162,500 17,868 391,330 302,778 50,000 327,224 442,801 83,000

Number of warrants not vested at 31/12/2015 21,808 0 2,620 77,954 102,017 15,278 177,711 442,801 83,000

Exercise price (in €)(1) 3.21 3.23 5.44 6.46 6.79 7.27 8.81 9.98 12.29

Expected dividend yield 0 0 0 0 0 0 0 0 0

Expected stock price volatility 55% 55% 49%-56% 53.4% - 54.0% 52.7%-53.8% 52.7%-53.8% 40.9% 40.6% 40.9%

Risk-free interest rate 2.35%-2.84% 2.83-3.65% 1.09%-1.78 1.54% - 1.88% 1.56%-2.08% 1.56%-2.08% 0.91%-1.50% 0.22% 0.57%

Expected duration 5.00-7.00 5.00-7.00 5.00-7.00 6.60-7.00 6.70-7.00 6.70-7.00 5.00-7.00 7.00 7.00

Fair value (in €) at grant date 1.38-1.64 1.47-1.74 2.15-2.89 3.18-4.04 3.86-4.07 3.86-4.07 3.06-3.80 3.71-3.92 5.20


Warrants 2012 2012 2012 2013 2013 2013 2014 2015 2015










8.16. BORROWINGS

As at 31 December

(€’000) 2015 2014

Non-current

Secured 0 0

Non-secured 134,828

Total 134,828 0

Current

Secured 0 141

Non-secured

Total 0 141

Borrowings relate to the senior unsecured bonds due on 27 May 2020 with a principal value of €100 million. The financial leasing amounts were fully paid back in the course of 2015.

8.16.1. MATURITY TABLE

The maturity of non-current borrowings (including financial lease) is as follows:

As at 31 December

(€’000) 2015 2014

Borrowings

Between 1 and 2 years 0 141

Between 2 and 5 years 134,828 0

Over 5 years

Total 134,828 141

On 27 May 2015, the Company raised €100 million through a private placement of €100 million senior unsecured bonds due 27 May 2020. The bonds will mature on 27 May 2020 (5 years) and will pay a coupon of 3.25% semi-annually.


The convertible bonds are convertible in Ablynx ordinary shares at the option of the holder. In case of conversion: a cash alternative election (at the option of the issuer) is available including a number of restrictions. Because the issuer has the cash alternative election, it has a choice over how the share conversion option will be settled (i.e. net in cash or by exchanging shares for cash). Therefore the share conversion option is a derivative at Fair Value Through Profit and Loss (“FVTPL”) according to IAS 39 and not an own equity instrument (cf. IAS 32.26).

As at 31 December

(€’000) 2015 2014

Finance lease obligations

Future lease payments

Within one year 0 142

In the second to the fifth year 0 0

After five years

Total 0 142

Less future finance charges 0 (1)

Present value of lease obligations

0 141


8.17. TRADE PAYABLES AND OTHER CURRENT LIABILITIES

Trade payables As at 31 December

(€'000) 2015 2014

Trade payables 4,263 3,004

Accruals for invoices to be received 7,393 7,404

Total 11,656 10,408

Other current liabilities As at 31 December

(€'000) 2015 2014

Social security 561 1,106

Payroll accruals 4,194 3,615

Other liabilities 1 105

Total 4,756 4,826

Deferred income As at 31 December

(€'000) 2015 2014

Deferred income 86,123 132,308

Within one year 55,738 68,188

In the second to the fifth year 30,385 64,120

Accrued expenses 189

Total 86,123 132,497

Deferred income mainly relates to cash received from research collaboration agreements prior to completion of the earnings process.


8.18. DEFERRED INCOME TAX

Sources of temporary differences (assets)/liabilities

As at 31 December

(€’000) 2015 2014

Tax loss carried forward (162,691) (144,768)

Notional interest deduction(1) (15,371) (21,319)

Other temporary differences 5,631 7,439

Net book value of capitalised R&D assets (165,061) (129,786)

Depreciation of tangible assets 0 (1)

Total temporary differences (337,492) (288,435)

Unrecognised deferred tax asset (33,99%) (114,714) (98,039)

(1) The application of Notional Interest Deduction is restricted as it has an expiry term of 7 years

The Company has unused tax losses carry forward, without expiry date. This, combined with the other temporary differences, results in a net deferred tax asset position.

The Company has accounted for a total R&D tax credit receivable of €15.7 million following an R&D incentive scheme in Belgium under which the tax incentive can be refunded after five years if not offset against taxable basis over that period. The R&D incentives are recorded net against the relating R&D expenses in the statement of comprehensive income. We expect to receive this amount progressively over 5 years, starting as from accounting year 2016 onwards.

Due to the uncertainty surrounding the Company’s ability to realise taxable profits in the near future, the Company did not recognise any deferred tax assets.

8.19. RETIREMENT BENEFIT OBLIGATIONS

The Company offers several post-employment, death, disability and healthcare benefit schemes. All employees have access to these schemes. The death, disability and healthcare benefits granted to employees of the Company are covered by external insurance companies, where premiums are paid annually and charged to the income statement as they were incurred.


The post-employment pension plans granted to employees of the Company are based on defined contributions for which the insurance company guarantees a defined interest until retirement (type 'branche 21/tak21').

As a consequence of the law of 18 December 2015, minimum returns are guaranteed by the employer as follows:

• for the contributions paid as from 1 January 2016, a new variable minimum return based on OLO rates, with a minimum of 1.75% and a maximum of 3.75%. In view of the low rates of the OLO in the last years, the return has been initially set to 1.75;

• for the contributions paid until end December 2015, the previously applicable legal returns (3.25% and 3.75% respectively on the employer and employee contributions) continue to apply until retirement date of the participants.

In view of the minimum returns guarantees, those plans qualify as Defined Benefit plans.

In 2014, under the previous legal framework, the application of the PUC method was considered problematic, and there was uncertainty with respect to the future evolution of the minimum guaranteed rates of return. As a consequence, the Group adopted a retrospective approach whereby the net liability recognized in the statement of financial position was based on the sum of the positive differences, determined by individual plan participant, between the minimum guaranteed reserves and the accumulated contributions based on the actual rates of return at the closing date.

Based on the limited difference of €2,944, the Company has concluded that the application of the PUC method would have an immaterial impact.

In 2015, the sum of the positive differences per plan participant between the minimum guaranteed reserves (€6,256,832.58) and the accumulated reserves (€6,243,661.6) as of 31 December 2015 is €13,170.98.

As a consequence, in view of the immaterial difference between the accumulated reserves and the minimum reserves as of 31 December 2015, no provision has been recognised.


8.20. REVENUE RECOGNITION

As at 31 December

(€’000) 2015 2014

Upfront fees 58,559 33,772

R&D service fees 14,403 13,784

Milestone payments 3,500

License fees & other 298 154

Total 76,760 47,710

In 2015, revenues increased to €76.8 million (2014: €47.7 million), mainly driven by higher recognised income from the upfront payments received from AbbVie and Merck & Co., Inc.

8.21. RESEARCH AND DEVELOPMENT EXPENSES


(€'000) 2015 2014

Consumables 4,448 4,022

Outsourcing 53,897 26,289

Patent costs 2,177 1,655

Personnel costs 22,799 22,131

Share-based payments 751 428

Other operating expenses 5,281 5,302

Withholding tax (Reduction Tax Scientist) (3,381) (3,133)

R&D tax credit (3,873) (3,336)

Subtotal 82,099 53,358

Depreciation and amortisation 985 1,130

Total research and development expenses 83,084 54,488

The increase in outsourcing is largely related to clinical trials expenditure for caplacizumab, ALX-0061 and ALX-0171.


8.22. GENERAL AND ADMINISTRATIVE EXPENSES

Period ended 31 December

(€’000) 2015 2014

Personnel costs 3,091 2,802

Share-based payments 1,069 1,112

Executive Committee(1) compensation 3,341 3,419

Consultancy 1,870 1,464

Other operating expenses 1,881 1,609

Reduction withholding tax scientist / Retribution(2)

(204) 239

Subtotal 11,048 10,645

Depreciation and amortisation 357 407

Total general and administrative expenses 11,405 11,052

(1) The Executive Committee consists of key management members and entities controlled by them

(2) In 2014 the Company had to reimburse €505,828.32 of Reduction Tax Scientist over the previous years

8.23. OTHER INCOME AND EXPENSES


(€’000) 2015 2014

Other operating income 0 14

Other operating expenses 6 9

Total (6) 5

Other operating expenses mainly consist of expenses related to non-deductible VAT and county taxes. Other operating income mainly consists of recuperation of non-deductible VAT of previous years.


8.24. EMPLOYEE BENEFIT EXPENSE


(€’000) 2015 2014

Salaries, wages and bonuses 18,233 16,644

Social security 4,779 5,180

Group and hospitalisation insurance cost(1) 881 1,047


Other employment costs 1,997 2,061

Executive Committee compensation(2) 3,341 3,813

Withholding tax (Reduction Tax Scientist) (3,585) (3,287)

Total 27,466 26,998

Headcount

Executive Committee(2) 8 8

R&D personnel 301 280

General and administrative staff 43 41

Average FTE 325 317

(1) Post-employment benefits

(2) The Executive Committee consists of key management members and the entities controlled by them.


8.25. OPERATING LEASES

As at 31 December

(€’000) 2015 2014

Current lease payments 3,310 3,225

Future lease payments

Within one year 3,277 3,208

In the second to the fifth year 4,750 7,100

After five years 0 0

The majority of the lease arrangements concerns the leasing of company cars and office facilities.

8.26. FINANCE INCOME AND EXPENSES


(€’000) 2015 2014

Interest income on financial assets 1,101 1,622

Other finance income 667 2,672

Total 1,768 4,294

Finance expenses

Interest charges on financial liabilities 1 88

Finance cost convertible bond:

Changes fair value derivative 34,646

Interest amortisation 4,074

Financing charges 549

Other finance expenses 90 698

Total 39,360 786


In 2015, the line ‘Finance cost convertible bond’ mainly includes non-cash expenditure resulting from the fair value calculation and amortisation of the convertible bond components (as a result of the higher share price at year-end compared to the share price at the time of the convertible bonds issuance), and the semi-annual interest paid on the convertible bonds of €1.6 million.

In 2015, the line ‘Other finance expenses’ includes realised exchange losses of €100,687 (2014: €683,791).

In 2015, the line ‘Other finance income’ includes unrealised foreign exchange gains of €428,820 (2014: €681,940 unrealised foreign exchange losses) and realised foreign exchange gains of €1,063,941 (2014: €1,525,455).

8.27. INCOME TAX EXPENSE


(€’000) 2015 2014

Current income taxes 0 0

Total 0 0

Loss of the year (54,547) (12,730)

Stock issuance costs 0 1,795


Other permanent differences 3,733 4,595

Expected income tax credit (16,675) (13,804)

Impact unrecognised deferred tax asset (16,675) (13,804)

Effective income taxes 0 0


8.28. LOSS PER SHARE


(€’000) 2015 2014

Loss of the year (54,547) (12,730)

Weighted average number of shares outstanding

54,382,147 51,105,884

Basic and diluted loss per share after reverse split (in €)

(1.00) (0.25)

Earnings/losses per share are calculated by dividing the net result attributable to shareholders by the weighted average numbers of shares during the year.

As the Company is suffering operating losses, warrants have an anti-dilutive effect. As such, there is no difference between basic and diluted earnings per share.

8.29. CONTINGENCIES AND ARBITRATIONS

At present there are no contingencies and arbitrations.

8.30. COMMITMENTS

8.30.1. COLLABORATIVE RESEARCH AGREEMENTS AND CLINICAL RESEARCH AGREEMENTS

8.30.1.1. BOEHRINGER INGELHEIM (B.I.)

• On 8 January 2007, B.I. and Ablynx agreed to collaborate to identify Nanobodies in a specific biological target believed to be relevant in Alzheimer’s disease and B.I. received an exclusive worldwide license to develop and commercialise such Nanobodies. In return, Ablynx received an upfront payment and would receive milestone payments, FTE payments and royalties as Nanobody drug candidates would proceed through development and potentially reach the market. Ablynx would also participate in the relevant steering committees. On 28 August 2014 it was announced that following the termination of the Phase I study with BI 1034020 (anti-Abeta Nanobody) in Alzheimer’s disease, and after a full review of the programme, Boehringer Ingelheim (BI) decided not to move forward with the


development of this anti-Abeta Nanobody, thereby ending the collaboration in Alzheimer’s disease that both companies entered into in January 2007.

• On 7 September 2007, B.I. and Ablynx announced a major Global Strategic Alliance to discover, develop and commercialise up to 10 different Nanobody programmes. In return, Ablynx is entitled to receive an upfront payment and received research license payments, milestones and royalties. Additionally, Boehringer Ingelheim subscribed for €15 million in the IPO in November 2007. Ablynx has certain co-promotion rights in Europe. On 21 August 2008, the research funding was extended until 2009. The agreement was extended with two years in March 2012 and on 21 August 2014 it was extended a last time until 31 December 2014, being the end of the Discovery Term of this Agreement. In November 2015, Boehringer Ingelheim presented compelling pre-clinical proof-of-concept data with the bi-specific anti-VEGF/Ang2 Nanobody in multiple in

vivo cancer models. A Phase Ib study with this anti-VEGF/Ang2 Nanobody in patients with solid tumours was initiated by Boehringer Ingelheim in January 2016, triggering a €8 million milestone payment to Ablynx.

8.30.1.2. NOVARTIS AGREEMENT

• The agreement with Novartis was signed in December 2005. Under this agreement, Ablynx will discover Nanobodies against a number of targets nominated by Novartis in a collaborative research programme. The deal includes R&D payments, FTE payments, license fees, milestones and royalties. On 10 December 2007, the alliance was extended for another year and on 5 February 2009, it was extended again for another year. On 8 July 2010, two license, development and commercialisation agreements were signed for two targets. The first partnered programme with Novartis, TAS266 (anti-DR5), entered Phase I clinical development in cancer patients in 2012 but was terminated later the same year.

8.30.1.3. MERCK KGaA AGREEMENTS

Agreement signed in 2008

• On 4 September 2008, Ablynx and Merck KGaA announced a co-discovery and co-development collaboration. They will collaborate to research and develop Nanobody-based therapeutics against two disease targets, one oncology and one immunology exploiting some of the key benefits Nanobodies have over conventional antibodies and other fragments.


Under the terms of the agreement, both companies will equally share all research and development costs. Should Ablynx contribute equally to each programme, it will be eligible to receive fifty percent of the resulting profits.

• In addition, Ablynx has an option to opt-out partly or fully during the research and development programmes, in which case Ablynx would be eligible to receive either a reduced profit share, in the case of a partial opt-out, or milestones and royalties on potential sales in the case of a full opt-out. The agreement includes an upfront cash payment to Ablynx of €10 million.

• In June 2013, Ablynx announced that it had exercised its opt-out option for the co-development project with Merck KGaA on ALX-0761 in inflammation. At the same time, Merck KGaA initiated a Phase I study with ALX-0761, triggering a €2.5 million milestone to Ablynx. In August 2014, Ablynx announced that Merck KGaA further advanced ALX-0761 and initiated a Phase Ib study in patients with psoriasis, which completed recruitment at the end of 2015. The study is expected to read out in the first half of 2016.

• In August 2014, Ablynx announced that it had exercised its opt-out option for the co-development project with Merck KGaA on ALX-0751 in oncology (the second of the two targets as part of the 2008 agreement between Merck KGaA and Ablynx).

• In February 2015 Merck KGaA returned all assets and rights for the pre-clinical oncology programme to Ablynx.


• On 11 October 2010, Ablynx and Merck KGaA announced that they have expanded their relationship and entered into a second agreement to co-discover and co-develop Nanobodies against an inflammatory disease target.

• Under the terms of the agreement, Ablynx has received an upfront payment of €10 million in 2010 and is responsible for all activities and costs, excluding manufacturing costs, up to the delivery of a pre-clinical package that will form the basis for the filing of an IND or IND-equivalent. Upon acceptance of the package by Merck KGaA, Ablynx will be eligible for a €15 million milestone payment. Ablynx has the option to continue with Merck KGaA up to a 50:50 co-development basis and share the resulting profits, or to convert this collaboration into an exclusive, worldwide licensing deal with milestone payments and tiered royalties.



• On 9 November 2011, Ablynx and Merck KGaA announced that they have expanded their relationship and entered into a third agreement to co-discover and co-develop Nanobodies against two targets in osteoarthritis.

• Under the terms of the agreement, Ablynx received an upfront payment of €12 million in 2011 and €8 million in January 2012 and is responsible for all activities and costs, excluding manufacturing costs, up to the delivery of a pre-clinical package that will form the basis for the filing of an IND or IND-equivalent. Upon acceptance of the package by Merck KGaA, Ablynx will be eligible for a €30 million milestone payment. Ablynx has the option to continue with Merck KGaA up to a 50:50 co-development basis and share the resulting profits, or to convert this collaboration into an exclusive, worldwide licensing deal with milestone payments and tiered royalties.


• On 26 September 2013, Ablynx and Merck KGaA announced that they had signed a multi-year research alliance that could lead to at least four co-discovery and co-development collaborations. Under the terms of the agreement, Merck KGaA will fund a dedicated discovery group at Ablynx. Both partners will jointly select disease targets against which this group will develop Nanobodies, up to in vivo proof-of-principle. The dedicated group will focus on the discovery and development of Nanobodies against a number of targets across multiple disease areas. The collaboration will span all of Merck KGaA core research and development fields, including oncology, immuno-oncology, immunology and neurology.

• In February 2015, Ablynx announced that Merck KGaA had informed Ablynx that it wishes to revisit the Strategic Collaboration Agreement between the Companies announced in September 2013, under which €11.5 million, representing nearly 50% of the agreed upon research funding (which was scheduled to be provided over a four-year term) had already been provided by Merck KGaA.

• In May 2015, both parties agreed to amend this 2013 alliance and to focus on two particular bi-specific Nanobody programmes going forward. Ablynx regained, at no cost, full ownership of three other promising pre-clinical programmes which have been generated under this 2013 agreement. Merck KGaA has provided full financial support and Ablynx is eligible to receive future milestone payments and royalties related to the two specific programmes being pursued.


8.30.1.4. MERCK & CO., INC. AGREEMENTS

• On 2 October 2012 Ablynx announced a collaboration with a subsidiary of Merck & Co., Inc. known outside the US and Canada as MSD, to develop and commercialise Nanobody candidates directed towards a voltage gated ion channel with the option to develop and commercialise a Nanobody to a second target. Under the terms of the agreement, Merck gains exclusive global rights to Nanobodies against the selected target, with an option for similar rights to a second target. Upon signing, Merck paid Ablynx a €6.5 million upfront payment and a €2 million fee for research funding. In addition, Ablynx will be eligible to receive up to €448 million in research, regulatory and commercial milestone payments associated with the progress of multiple candidates as well as tiered royalties on any products derived from the collaboration. Ablynx will be responsible for the discovery of Nanobody candidates and Merck will be responsible for the research, development, manufacturing and commercialisation of any Nanobody product resulting from the collaboration. In March 2015 Ablynx announced an extension of this initial two-year research collaboration with Merck & Co., Inc. whereby Merck & Co., Inc. extended their funding of the research collaboration with Ablynx to the end of September 2016.

• On 3 February 2014, Ablynx announced that they had entered into a second research collaboration and licensing agreement with a subsidiary of Merck & Co., Inc. This new exclusive collaboration and licensing agreement is focused on the discovery and development of several predefined Nanobody candidates (including bi- and tri-specifics) directed toward so called ‘immune checkpoint modulators’, proteins believed to provide potential targets for the development of cancer immunotherapies, a rapidly emerging approach to the treatment of a wide range of cancer types. Under the terms of the agreement, Ablynx received an upfront payment of €20 million and up to €10.7 million in research funding during the initial three year research term of the collaboration. In addition, Ablynx is eligible to receive development, regulatory and commercial milestone payments on achieved sales thresholds for a number of products with ultimate potential to accrue as much as €1.7 billion plus tiered royalties. Merck will be responsible for the development, manufacturing and commercialisation of any products resulting from the collaboration.

• On 22 July 2015 Ablynx announced an expansion of this immuno-oncology collaboration with Merck & Co., Inc. to address an increased number of immune checkpoint modulator targets. As part of this expansion agreement, Ablynx will be responsible for the discovery and development of up to 12 additional Nanobody programmes against individual protein targets and target combinations (mono-specific and multi-specific Nanobodies) through to the in vivo pre-clinical proof-


of-concept stage, after which Merck will have the option to advance specified lead candidates. Under the terms of this four year expansion, Ablynx received a €13 million upfront payment comprising exclusivity fees and FTE payments as well as further research funding over the term of the collaboration. In addition, Ablynx will be eligible to receive additional exclusivity fees, depending on the number of programmes for which Merck decides to exercise its licensing option, plus development, regulatory and commercial milestone payments of up to €340 million per programme, as well as tiered royalties on annual net sales upon commercialisation of any Nanobody products. Merck will be responsible for clinical development, manufacturing and commercialisation of any products resulting from the collaboration.

8.30.1.5. ABBVIE AGREEMENT

• In September 2013, Ablynx and AbbVie entered into a global license agreement to develop and commercialise the anti-IL-6R Nanobody, ALX-0061, to treat inflammatory diseases. ALX-0061 was discovered and developed by Ablynx and it successfully completed a Phase IIa study in February 2013, reporting compelling efficacy and safety data in patients with moderately to severely active rheumatoid arthritis (RA) on a stable background of methotrexate. Under the terms of the agreement, Ablynx is responsible for completing Phase II clinical development in both RA and systemic lupus erythematosus (SLE). Upon the achievement of pre-defined success criteria, AbbVie will exercise its right to in-license ALX-0061 and be responsible for subsequent Phase III clinical development and commercialisation. Ablynx has retained an option for co-promotion rights in Belgium, The Netherlands and Luxembourg. Ablynx has received an upfront payment of US$175 million which is partly being used to fund the next phases of clinical development of ALX-0061 and is thus recognised a rato of the R&D costs incurred in relation with the program. Upon achievement of certain development, regulatory, commercial and sales-based milestones, Ablynx will be eligible to receive additional milestone payments totaling up to US$665 million as well as double-digit tiered royalties on net sales upon commercialisation.

• In March 2015, Ablynx initiated a Phase IIb study of the anti-IL-6R Nanobody (ALX-0061), in combination with methotrexate, in patients with rheumatoid arthritis (RA). Recruitment of 345 patients was completed on schedule by year-end.

• In April 2015, Ablynx initiated a Phase IIb monotherapy study of ALX-0061 in RA patients. Recruitment of 251 patients was completed in February 2016, also on schedule.


• In July 2015, the first eligible patients from the Phase IIb RA studies with ALX-0061 rolled-over into the open-label extension study.

• In August 2015, a Phase II study with ALX-0061 was initiated in patients with systemic lupus erythematosus (SLE). The Company plans to recruit 300 patients in this study by 2017.

8.30.1.6. EDDINGPHARM AGREEMENTS

• On 18 October 2013 Ablynx granted an exclusive, royalty-bearing license to Eddingpharm, to develop and commercialise its anti-RANKL Nanobody, ALX-0141, in the Mainland of the People’s Republic of China, the Hong Kong and Macao Special Administrative Regions, and Taiwan, for all indications, including osteoporosis and bone metastases. Under the terms of the agreement, Eddingpharm will be responsible for the clinical development, registration and commercialisation in Greater China of anti-RANKL Nanobody therapeutics. Ablynx will have access to the data generated by Eddingpharm to support potential licensing discussions in other geographic regions. Ablynx has received a €2 million upfront payment from Eddingpharm and is entitled to receive commercial milestone payments plus tiered, double-digit royalties of up to 20%, based on annual net sales of ALX-0141 generated by Eddingpharm in Greater China.

• On 1 September 2014 Ablynx announced that it had expanded its relationship with Eddingpharm, by granting Eddingpharm an exclusive, royalty-bearing license to develop and commercialise Ablynx’ anti-TNFα Nanobody, ozoralizumab (ATN-103), in the Mainland of the People’s Republic of China, the Hong Kong and Macao Special Administrative Regions, and Taiwan, for all indications, including rheumatoid arthritis (RA). Under the terms of the agreement, Eddingpharm will be responsible for the clinical development, registration and commercialisation in Greater China of anti-TNFα Nanobody therapeutics. Ablynx will have access to the clinical data generated by Eddingpharm to support potential licensing discussions in other geographic regions. Ablynx has received an upfront payment of €2 million, and is entitled to receive development and commercial milestone payments plus tiered, double-digit royalties of up to 20%, based on annual net sales of ozoralizumab generated by Eddingpharm in Greater China. Ablynx received an undisclosed exclusivity payment.


8.30.1.7. GENZYME AGREEMENT

• On 18 May 2015 Ablynx announced that it had entered into an exclusive option and research agreement with Genzyme, a Sanofi company, to investigate Nanobodies against a target that plays an important role in multiple sclerosis (MS) and specifically aligns with Genzyme’s early-stage MS research programmes involving neuroprotection and CNS repair. Ablynx received an undisclosed exclusivity payment.

8.30.1.8. TAISHO PHARMACEUTICALS AGREEMENT

• On 30 June 2015 Ablynx announced that it had entered into an exclusive license agreement with Taisho Pharmaceutical Co., Ltd. (“Taisho”) for the development and commercialisation of Ablynx's anti-TNFα Nanobody, ozoralizumab, in Japan, for the treatment of RA.

• Under the terms of the agreement, Taisho will be responsible for development, registration and commercialisation of anti-TNFα Nanobody therapeutics in Japan. Ablynx received an upfront payment of US$3 million and is entitled to receive development and commercial milestone payments plus royalties based on annual net sales of anti-TNFα Nanobody therapeutics generated in Japan.

8.30.1.9. NOVO NORDISK AGREEMENT

• On 25 November 2015, Ablynx announced that it had entered into a global exclusive collaboration and licensing agreement with Novo Nordisk to discover and develop novel multi-specific Nanobody drug candidates for use in an undisclosed disease area, with an option to expand the agreement to include a second Nanobody programme.

• Under the terms of the agreement, Ablynx received an upfront license fee of €5 million and will receive up to €4 million in research funding during the initial three year research term of the collaboration. If Novo Nordisk decides to exercise the option to the second programme, the Company will pay Ablynx an exercise fee of €4 million. In addition, Ablynx is eligible to receive potential development, regulatory and commercial milestone payments of up to €182 million per programme plus tiered royalties on the annual net sales on any products resulting from the collaboration. Novo Nordisk will be responsible for the development, manufacturing and commercialisation of any products resulting from this agreement.


8.30.1.10. OTHER COLLABORATIVE RESEARCH AGREEMENTS

• Ablynx has entered into numerous agreements with universities, medical centers and external researchers for research and development work and for the validation of the Company’s technology and products. These agreements typically have durations of one to three years. Ablynx must pay fixed and variable fees to the collaborators and in exchange receives access and rights to the results of the work.

8.30.1.11. CONVERTIBLE BOND

On 27 May 2015, the Company raised €100 million through a private placement of €100 million senior unsecured bonds due 27 May 2020. The bonds will mature on 27 May 2020 (5 years) and will pay a coupon of 3.25% semi-annually.

In accordance with “IFRS 13, Fair Value Measurement”, Ablynx presents information on fair value measurement of financial assets and liabilities in its financial statements as follows:

(€‘000) Level 1 Level 2 Level 3 Total

Financial Liabilities Measured at Amortised Cost

Convertible Bond - Host Debt 80,682 80,682

Financial Liabilities at Fair Value Through Profit or Loss

Convertible Bond - Embedded derivative

54,146 54,146

Total liabilities 80,682 54,146 134,828

The level-3 input with the most significant effect on the fair value calculation of the embedded derivative of the convertible bond is the applied credit spread of Ablynx. The potential effect of using reasonable assumptions to the most significant level 3 inputs is as follows:


Assumptions at 31 December 2015

Credit spread Fair Value Convertible Bond

(€’000)

700 bps 138,944

Sensitivity analysis

Credit spread

+200 bps 900 bps 136,341

-200 bps 500 bps 142,073

An increase (decrease) in fair value of the convertible bond will result in a loss (profit). There will be no impact in other comprehensive income.

8.30.2. PRINCIPAL GOVERNMENT GRANTS AND INCENTIVES

8.30.2.1. GRANTS

Grant Assigned Received at 31/12/2015

Recognised as income

2014


2015

Still to receive

IWT 15 157,773 157,773 157,773 18,991

IWT 16 747,648 747,648 747,648 151,648

IWT 17 1,680,765 1,581,768 1,581,768 432,759

IWT 18 885,597 885,597 708,000 167,489 177,597

IWT 19 2,093,845 2,093,845 1,116,000 583,970 484,356 977,845

IWT 20 445,027 445,027 267,000 192,428 74,572 178,027

IWT 21 460,181 460,181 276,000 39,723 220,486 184,181

Altogether, the Company received a fixed percentage of the expenses incurred in the following R&D projects:


1) IWT 15: Centibody Project

Grantor: IWT

Start date: 1 May 2012

End date: 30 April 2014

Amount approved: €157,773

Amount recognised: €157,773

Amount received: €157,773

2) IWT 16: Development of anti-IgE Nanobody in combination with a novel serum

albumin binder for the treatment of allergic asthma

Grantor: IWT

Start date: 1 April 2012

End date: 31 March 2014




3) IWT 17: Efficacy, safety and pharmacokinetic behavior of ALX-0171, an inhaled

Nanobody for the treatment of RSV infection in infants

Grantor: IWT

Start date: 1 June 2013

End date: 31 May 2014

Amount approved: €1,680,765

Amount recognised: €1,581,768

Amount received: €1,581,768

4) IWT 18: T cell recruiting Nanobodies for targeted delivery

Grantor: IWT






5) IWT 19: Development of a novel Nanobody-based therapeutic platform for

treatment of ocular diseases

Grantor: IWT

Start date: 1 April 2014

End date: 31 March 2017

Amount approved: €2,093,845

Amount recognised: €1,068,326

Amount received: €1,116,000


6) IWT 20: Bispecific Nanobodies with enhanced specificity

Grantor: IWT






7) IWT 21: Development of Nanobody-based immunotoxins

Grantor: IWT






8.30.3. PRINCIPAL LEASE AND BORROWINGS CONTRACTS

Ablynx has signed contracts with nv Bio-Versneller, who provides the Company with 8,000 m2 of laboratory facilities within the Technologiepark as from June 2010, with an initial term of eight years which can be extended.

Ablynx was granted by KBC Bank nv a credit commitment of €3.2 million for the guarantee clause, which is mentioned in the nv Bio-Versneller contract and of which end 2010 €1.3 million was withdrawn. For this same amount, a pledge was granted to KBC Bank nv and is constituted as restricted cash. The pledge and the restricted cash of €1.3 million can be increased to a maximum of €3.2 million in relation to the cash position of the Company.

nv Bio-Versneller was granted a pledge of €1.6 million in the framework of additional investments which nv Bio-Versneller made in the Bio-Versneller building at the request of Ablynx. The pledge is being reduced every year over a period of five years as from January 2012 and per 31 December 2015 an amount of €0.35 million was still outstanding. The amount of the pledge is considered as restricted cash.


Ablynx rented 25,322 m2 of land from BVBA Rootom in Belgium. The Company developed facilities on this land for the housing of llamas. The rental agreement gave the Company the option to purchase the land and the facilities at a nominal value of €375,000 from the first day of the sixth year of the contract. The company decided to exercise this option at the end of January 2015 and owns the facility from 5 May 2015.

Ablynx has signed a contract with Devgen nv, who provides the Company with 970.68 m2 of laboratory facilities within the Technologiepark 30 as from May 2016, with an initial term of five years which can be extended.

8.31. RELATED PARTY TRANSACTIONS

8.31.1. REMUNERATION KEY MANAGEMENT AND NON-EXECUTIVE DIRECTORS

Key management consists of the members of the Executive Committee and the non-executive Directors and the entities controlled by any of them.


Remuneration key management:

As at 31 December

(€'000) 2015 2014

Number of management members 8 8

Short-term employee benefits (salaries, social security bonuses, lunch vouchers)

2,295 2,519

Post-employment benefits (group insurance) 166 157

Share-based compensation 834 926

Other employee costs 124 144

Management fees 451 334

Retribution(1) (31) 394

Total 3,839 4,474

Number of warrants granted (in units) 293,311 153,168

Cumulative outstanding warrants (in units) 1,744,645 1,814,418

Shares owned (in units) 205,805 100,805

(1) In 2014 the Company had to reimburse €505,828.32 of Retribution over the previous years

Transactions with non-executive Directors:

As at 31 December

(€'000) 2015 2014

Share-based compensation 41 0

Management fees 305 140

Total benefits 346 140

Number of warrants offered or granted (in units) 0 0

Cumulative outstanding warrants (in units) 74,595 74,595

Non-vested warrants 22,831 44,756

Shares owned (in units) 25,000 25,000


8.32. EVENTS AFTER THE BALANCE SHEET DATE

On 21 January 2016, Ablynx announced the issuance of an additional 288,170 common shares in exchange for €1,192,292.70 as the result of the exercise of warrants by some employees and consultants of the Company.

On 29 January 2016, Ablynx announced that Boehringer Ingelheim started with the Phase I dose escalation study with the half-life extended bi-specific anti-VEGF/Ang2 Nanobody in adult patients with advanced solid tumors, triggering an €8 million milestone payment to Ablynx. The aim of the study is to evaluate the safety profile and dosing schedule for this Nanobody.

On 23 February 2016, Ablynx announced the issuance of an additional 7,521 common shares in exchange for €34,726.41 as the result of the exercise of warrants.

During the Board Meeting of 24 February 2016, the issuance of a maximum number of 590,000 warrants for the benefit of certain employees and consultants was approved. The duration of the warrants is 7 years as of the issue date of the warrants. The warrants can only be exercised when vested and as from the beginning of the fourth calendar year following the year in which the warrants were offered.

On 22 March 2016, Ablynx announced the issuance of an additional 210,741 common shares in exchange for €740,375.82 as the result of the exercise of warrants.As a result of this transaction, Ablynx now has 55,318,806 shares outstanding.

http://hugin.info/137912/R/1888339/668228.pdf


€

Auditor’s fees 53,190

Legal missions (pre-emptive rights, warrant exercise, training convertible bond, ...)

37,118

Other assurance services 7,700

Total non-audit fees Deloitte and related parties (direct and indirect tax compliance, global employer services)

28,521

09.

DIS

CLO

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IT F

EES


As of, and for the Year ended 31 December 2015

In accordance with Art. 105 of the Belgian Companies’ Code, the condensed statutory standalone financial statements of Ablynx are presented. These condensed statements have been drawn up using the same accounting principles for preparing the complete set of statutory financial statements of Ablynx at and for the year ending 31 December 2015 in Belgian GAAP.

The management report, the statutory financial statements of Ablynx and the report of the statutory auditor will be filed with the appropriate authorities and are available at the Company’s registered offices.

The statutory auditor has issued an unqualified report on the statutory financial statements of Ablynx. The complete set of the statutory financial statements of Ablynx is also available on the Company’s website www.ablynx.com.

10.

CO

ND

ENS

ED S

TATU

TOR

Y

FIN

AN

CIA

L ST

ATE

MEN

TS O

F A

BLY

NX


SUMMARY BALANCE SHEET OF ABLYNX nv

Assets as at

(€’000) 2015 2014

Fixed assets 167,932 132,434

Intangible fixed assets 165,314 130,133

Tangible fixed assets 2,618 2,301

Current assets 262,321 220,606

Amounts receivable 25,048 12,874

Current investments 232,643 194,535

Cash at bank and in hand 3,601 11,648

Deferred charges and accrued income 1,029 1,549

Total Assets 430,253 353,040

Liabilities as at

(€’000) 2015 2014

Equity 164,776 173,062

Capital 102,442 100,952

Share premium account 187,316 183,645

Accumulated profits (losses) (124,982) (111,535)

Amounts payable after more than one year 100,000 0

Current liabilities 165,477 179,978

Amounts payable within one year 16,420 15,375

Deferred charges and accrued income 149,057 164,603

Total Liabilities 430,253 353,040

Current investments include €1,647,541,38 restricted Cash in 2015 (€1,980,000 in 2014).


SUMMARY INCOME STATEMENT OF ABLYNX nv

(€’000) 2015 2014

Operating Income 144,740 92,507

Turnover 45,161 23,490

Own construction capitalised 89,405 60,528

Other operating income 10,174 8,489

Operating charges 155,243 116,580

Services and other goods 72,410 42,377

Remuneration, social security costs and pensions 27,361 26,528

Depreciation of and amounts written off formation expenses, intangible and tangible fixed assets

55,466 47,666

Other operating charges 6 9

Operating Profit (10,503) (24,073)

Financial result (2,935) 1,713

Financial income 2,196 4,298

Financial charges (5,131) (2,585)

Gain (loss) on ordinary activities before taxes (13,438) (22,360)

Extraordinary result 0 (62)

Extraordinary cost 0 (86)

Extraordinary income 0 24

Profit (loss) for the year before taxes (13,438) (22,422)

Taxes (9) (19)

Profit (loss) for the period available for appropriation (13,447) (22,441)


APPROPRIATION ACCOUNT

(€’000) 2015 2014

Profit (loss) to be appropriated (124,982) (111,535)


Profit (loss) to be carried forward (111,535) (89,094)



CAPITAL STATEMENT (position as at 31 December 2015)

(€’000) Amounts Number of shares

A. Capital

1. Issued capital

- At the end of the previous year 100,952

- Changes during the year 1,490

- At the end of this year 102,442

2. Capital representation 54,812,374

2.1. Shares without par value

- Bearer and dematerialised 54,812,374

B. Own shares held by 0

C. Commitments to issue shares(1) 0

D. Autorised capital not issued 66,520

(1) See chapter 11, Additional information, the number of outstanding warrants amounts to 2,675,031.


11.1. PRINCIPLES

The valuation rules have been prepared in agreement with the requirements of the Royal Decree of 30 January 2001 concerning the enforcement of the Commercial Code.

11.2. SPECIFIC RULES

Company Formation Expenses

Formation expenses are charged directly to the profit and loss account.

Intangible Fixed Assets

Concessions, patents, licenses, know-how, trademarks.

Software licenses and implementation costs are capitalised at their acquisition prices, and amortised straight-line at a ratio of 33.33 % per year. Other licenses are valued at their acquisition prices and depreciated straight-line over the economic life of the patent to which they relate. The maximum depreciation period for other licenses is five years.

Research and Development

Research costs have also been capitalised at cost price, insofar as the cost price does not exceed the value in use or the future return of these assets for the Company. They are amortised straight-line over five years.

Other intangible fixed assets Other intangible fixed assets are capitalised at their cost price and to their probable useful life for the company. These other intangible fixed assets include contributed technology. The contribution value of this technology is depreciated linearly over five years.

Tangible Fixed Assets

Tangible fixed assets are capitalised at their acquisition price, including all subsequent direct costs required to make such assets operational.

11.

SUM

MA

RY

OF

VA

LUA

TIO

N R

ULE

S

AN

D A

DD

ITIO

NA

L IN

FOR

MA

TIO

N


The following depreciation percentages are used:

Asset Method Basis Depreciation %

L-D-O NR-R Principle costs (min-max)

Subsequent costs (min-max)

1 Formation cost

2 Intangible fixed assets L NR 20-33.3%

3 Buildings L NR 10%

4 Installations, machinery and equipment

L NR 33.3%

5 Office equipment and furniture L NR 20%

6 Other tangible fixed assets L NR 33.3%

7 Leasehold improvements : the shorter of the useful life or the minimum leasing term

L =linear, D = degressive, O = other, NR = not revalued, R = revalued

Financial Fixed Assets

Guarantees are measured at their acquisition price.

Amounts receivable of more than one year

The receivables are measured at their nominal value, no discount factor has been taken into account.

Amounts Receivable within one Year

The receivables are measured at their nominal value. Each receivable is individually valued. Devaluation of receivables is recorded, if the actual value is lower than their nominal value.

Cash

Cash is measured at its nominal value.

Grants, Government Incentives, upfront payments and FTE income

Grants and government incentives are recognised in the income statement when all the conditions of the grants and government incentives are fulfilled and costs are incurred.


Grants, government incentives, upfront payments and FTE income (as from 2009) related to capitalised research cost are recognised in the income statement in accordance with the depreciation rhythm of the asset to which they relate.

In accordance with the CBN recommendation issued in 2010, the reduction in withholding tax has been directly recorded in other operating income.

Amounts Payable after One Year

In accordance with the CBN recommendation issued in 1995, a convertible bond, convertible at the discretion of the bondholder, is valued at issue price. Related interest expenses are included in P&L over the respective periods.

Amounts Payable within One Year

Amounts payable are measured at their nominal value.

Foreign Currencies

Transactions in foreign currencies during the year are booked at the current exchange rate. All outstanding payables and receivables at year end are recorded at the exchange rate on the balance sheet date. Exchange rate gains and losses are recognised in the results under the heading ‘Other Financial Charges and Income’.

Turnover

Turnover from research contracts is recognised over the duration of the contract in accordance with the progress of the work and contractual terms.


Additional Information

Warrants



Euro)

At 31 December 2013

Outstanding 200,833 54,314 68,500 85,000 249,973 80,500 333,892 627,661 46,875 11,434 312,330 302,778 2,374,090 5.99

Non-vested 14,925 19,500 95,833 523,845 8,337 312,330 302,778 1,277,548 5.41

Exercisable 200,833 54,314 68,500 85,000 235,048 61,000 238,059 103,816 46,875 3,097 1,096,542 6.68

Granted 22,062 50,000 327,224 399,286 8.51

Forfeited 44 2,084 4,511 18,047 7,231 31,917 5.05

Exercised 32,916 19,000 17,750 15,578 85,244 6.02

Expired 72,892 10,416 83,308 7.67

At 31 December 2014

Outstanding 167,917 35,314 50,750 85,000 161,459 68,000 329,381 609,614 46,875 11,434 305,099 324,840 50,000 327,224 2,572,907 6.34

Non-vested 21,800 157,296 5,497 157,203 216,560 31,944 327,224 917,524 6.89

Exercisable 167,917 35,314 50,750 85,000 161,459 68,000 307,581 452,318 46,875 5,937 147,896 108,280 18,056 1,655,383 6.03

Granted 442,801 83,000 525,801 10.34

Forfeited 1,660 4,960 44,897 16,052 67,569 7.16

Exercised 93,167 35,314 43,300 75,000 161,377 32,250 207,307 647,715 7.51

Expired 82 882 964 8.59

At 31 December 2015

Outstanding 74,750 7,450 10,000 35,750 121,192 607,954 46,875 11,434 300,139 279,943 50,000 311,172 442,801 83,000 2,382,460 6.88

Non-vested 21,808 2,620 77,954 102,017 15,278 177,711 442,801 83,000 923,189 9.10

Exercisable 74,750 7,450 10,000 35,750 121,192 586,146 46,875 8,814 222,185 177,926 34,722 133,461 1,459,271 5.48



Additional Information

Warrants



Euro)

At 31 December 2013

Outstanding 200,833 54,314 68,500 85,000 249,973 80,500 333,892 627,661 46,875 11,434 312,330 302,778 2,374,090 5.99

Non-vested 14,925 19,500 95,833 523,845 8,337 312,330 302,778 1,277,548 5.41

Exercisable 200,833 54,314 68,500 85,000 235,048 61,000 238,059 103,816 46,875 3,097 1,096,542 6.68

Granted 22,062 50,000 327,224 399,286 8.51

Forfeited 44 2,084 4,511 18,047 7,231 31,917 5.05

Exercised 32,916 19,000 17,750 15,578 85,244 6.02

Expired 72,892 10,416 83,308 7.67

At 31 December 2014

Outstanding 167,917 35,314 50,750 85,000 161,459 68,000 329,381 609,614 46,875 11,434 305,099 324,840 50,000 327,224 2,572,907 6.34

Non-vested 21,800 157,296 5,497 157,203 216,560 31,944 327,224 917,524 6.89

Exercisable 167,917 35,314 50,750 85,000 161,459 68,000 307,581 452,318 46,875 5,937 147,896 108,280 18,056 1,655,383 6.03

Granted 442,801 83,000 525,801 10.34

Forfeited 1,660 4,960 44,897 16,052 67,569 7.16

Exercised 93,167 35,314 43,300 75,000 161,377 32,250 207,307 647,715 7.51

Expired 82 882 964 8.59

At 31 December 2015

Outstanding 74,750 7,450 10,000 35,750 121,192 607,954 46,875 11,434 300,139 279,943 50,000 311,172 442,801 83,000 2,382,460 6.88

Non-vested 21,808 2,620 77,954 102,017 15,278 177,711 442,801 83,000 923,189 9.10

Exercisable 74,750 7,450 10,000 35,750 121,192 586,146 46,875 8,814 222,185 177,926 34,722 133,461 1,459,271 5.48



Warrants 2012 2012 2012 2013 2013 2013 2014 2015 2015











Warrants 2012 2012 2012 2013 2013 2013 2014 2015 2015











Grants

Grant Assigned Received at 31/12/2015


2014


2015

Still to receive

IWT 15 157,773 157,773 157,773 18,991

IWT 16 747,648 747,648 747,648 151,648

IWT 17 1,680,765 1,581,768 1,581,768 432,759

IWT 18 885,597 885,597 708,000 167,489 177,597

IWT 19 2,093,845 2,093,845 1,116,000 583,970 484,356 977,845

IWT 20 445,027 445,027 267,000 192,428 74,572 178,027

IWT 21 460,181 460,181 276,000 39,723 220,486 184,181

Appropriation account

APPROPRIATION ACCOUNT

(€’000) 2015 2014






ADRESSES

Ablynx’s registered office

ABLYNX nv Technologiepark 21 9052 Zwijnaarde Belgium T. +32 (0)9 262 00 00 F. +32 (0)9 262 00 01

[email protected] [email protected] [email protected]

www.ablynx.com

Independent registered public accounting firm

DELOITTE BEDRIJFSREVISOREN | REVISEURS D’ENTREPRISES Berkenlaan 8b 1831 Diegem Belgium T. +32 2 800 20 00 F. +32 2 800 20 01

www.deloitte.com

Documents

2015 ANNUAL REPORT - Ablynx...ANNUAL REPORT 2015 / ABLYNX 3. INDEX CORPORATE OVERVIEW 5 1. INTRODUCTION 7 Ablynx at a glance 9 2015 achievements 10 Letter to our stakeholders 12 Company