2023-05-29

NOTICE OF ANNUAL GENERAL MEETING IN ILYA PHARMA AB (PUBL) June 26

The shareholders in Ilya Pharma AB (publ) corp. reg. no 559062-6015 (the “Company”) are hereby convened to an Annual General Meeting on Monday 26 June 2023, at 16.00 at the Company’s premises on Dag Hammarskjölds väg 30 in Uppsala.

Notice etc.

Shareholders who wish to participate in the Annual General Meeting must:

Such notification shall include the shareholder’s name, personal identification number or corporate registration number, address and telephone number, number of shares, details on advisors (no more than two), if any, and, where applicable, details of representatives or proxies.

Proxy

Shareholders represented by proxy must submit a dated power of attorney. If the power of attorney is executed by a legal person, a certified copy of the certificate of registration or equivalent must be attached. The original power of attorney and certificate of registration should be submitted to the Company by mail at the address mentioned above in due time prior to the general meeting. Alternatively, the original power of attorney and certificate of registration may be brought and presented at the general meeting. The Company provides a power of attorney form at request and on the Company’s website, www.ilyapharma.se.

Number of shares and votes

As of the date of this notice, there are a total of 13,471,200 shares and votes in the Company.

Proposed agenda

  1. 1. Opening of the general meeting and election of chairman of the general meeting
  2. 2. Preparation and approval of the voting list
  3. 3. Election of persons to verify the minutes
  4. 4. Determination as to whether the meeting has been duly convened
  5. 5. Approval of the agenda
  6. 6. Presentation of the annual report and the auditor’s report
  7. 7. Resolutions on:
  8. a. Adoption of the income statement and the balance sheet
  9. b. Allocation of the Company’s result according to the adopted balance sheet
  10. c. Discharge from liability for each of the members of the Board of Directors and the CEO
  11. 8. Determination of remuneration to the Board of Directors and the auditor
  12. 9. Election of members of the Board of Directors
  13. 10. Election of auditor
  14. 11. Resolution on nomination committee
  15. 12. Resolution on extension of the exercise period for options 2020/2023 and 2021/2025
  16. 13. Resolution on cancellation of warrants 2022/2033
  17. 14. Resolution on A) implementation of ESOP 2023/2033:1, B) a directed issue of warrants and C) approval of transfer
  18. 15. Resolution on A) implementation of ESOP 2023/2033:2, B) a directed issue of warrants and C) approval of transfer
  19. 16. Resolution on authorization to the Board of Directors
  20. 17. Resolution on restructuring
  21. 18. Closing of the general meeting

Proposals to resolutions

Item 1 – Election of chairman of the general meeting

The nomination committee, consisting of Evelina Vågesjö, Mia Phillipson and Per Mattson, proposes that Ingemar Kihlström, is elected as chairman of the general meeting or, in his absence, the person otherwise appointed by the Board of Directors.

Item 7b – Allocation of the Company’s results according to the adopted balance sheet

The Board of Directors proposes that no dividends shall be paid and that the Company’s result is carried forward to a new account.

Item 8 – Determination of remuneration to the Board of Directors and the auditor

The nomination committee proposes that the Annual General Meeting determines that remuneration shall be paid to the chairman with SEK 300,000 and to other members of the Board of Directors with SEK 150,000.

The nomination committee proposes that remuneration to the auditor is paid according to approved invoice.

Item 9 – Election of members of the Board of Directors

The nomination committee will present its proposal for election of members of the Board of Directors and deputy directors, if any, and the chairman of the Board of Directors. The nomination committee’s proposal will be sent to the shareholders by e-mail and will be available at the Company’s website.

Item 10 – Election of auditor

The nomination committee proposes that PriceWaterhouseCoopers AB is appointed as auditor of the Company, with Lars Kylberg as chief auditor.

Item 11 – Resolution on nomination committee

The Board of Directors proposes that the Annual General Meeting resolves to establish a nomination committee for the next Annual General Meeting, which is to be appointed according to the following principles, and that the Annual General Meeting adopts instructions for the work of the nomination committee as set out below. The principles and instructions are proposed to apply until further notice and until a new resolution on nomination committee is resolved by the Annual General Meeting.

Principles for appointing the members of the nomination committee

The general meeting mandates the chairman of the Board of Directors to contact the four largest shareholders in terms of voting power according to the share register as per 1 September in the year that precedes the year of the next Annual General Meeting, whereupon each of them appoints a member of the nomination committee. In the event that any of the four largest shareholders does not wish to appoint a member of the nomination committee, the fifth largest shareholder shall be approached, and so forth, until the nomination committee consists of four members. The nomination committee appoints the chairman of the committee.

The term of office for members appointed to the nomination committee shall run until a new nomination committee has been appointed. If a member leaves the nomination committee before its work is completed and the nomination committee considers that there is a need to replace this member, the nomination committee shall appoint a new member in accordance with the principles described above, but based on the share register at a date occurring as soon as possible after the member left the nomination committee.

Duties of the nomination committee

The nomination committee shall consider the interests of all shareholders and is the general meeting’s preparatory body in election matters. The nomination committee shall further promote the evaluation of the Board of Directors’ work in the course of the past year, both in respect of function and in respect of achievements.

The nomination committee shall prepare and present proposals regarding the following items for the next Annual General Meeting.

  1. Election of the chairman at the general meeting.
  2. Resolution on the number of board members.
  3. Resolution on the fees and other remuneration to the Board of Directors, divided between the chairperson and other members.
  4. Resolution on the fees to the auditor.
  5. Election of members of the Board of Directors and chairperson.
  6. Election of auditors.
  7. Proposal for principles for the composition and instructions regarding work of the nomination committee in preparation for the next Annual General Meeting.

The work model of the nomination committee

The nomination committee shall meet as often as is necessary for the nomination committee to fulfil its duties, but at least once per year. Notices convening meetings are issued by the chairperson of the nomination committee. If a member requests that the nomination committee be convened, the request shall be complied with.

The nomination committee is quorate if at least three members are present. Resolutions of the nomination committee shall be adopted by a simple majority of the members present and, in the event of a tied vote, the chairperson shall have the casting vote.

Remuneration

No remuneration shall be paid to the members of the nomination committee. However, any necessary and reasonable expenses incurred in connection with the nomination committee's work shall be borne by the Company.

Item 12 – Resolution on extension of the exercise period for warrants 2020/2023 and 2021/2025

Warrants 2020/2023

It was noted that the Company on 21 June 2020 resolved to issue 2,000 warrants, with exercise period from 1 November 2022 up to and including 30 November 2022. These have been registered at the Swedish Companies Registration Office (item no number 391410/2020). The exercise period of the options was subsequently extended until 31 December 2023, which also was registered with the Swedish Companies Registration Office.

The Board of Directors proposes that the Annual General Meeting resolves to extend the exercise period of the options until 31 December 2024.

Warrants 2021/2025

Furthermore, it was noted that on 6 December 2021, the Company resolved to issue 1,500 warrants, with exercise period from registration with the Swedish Companies Registration Office up to and including 31 January 2025. These which have been registered at the Swedish Companies Registration Office (item no 60909/2022).

The Board of Directors proposes that the Annual General Meeting resolves to extend the exercise period of the options until 31 January 2026.

***

The background to the proposals above is that the current option programs shall have the intended effect, namely to retain and motivate employees who can be considered to be of great importance for the Company's continued operations.

The managing director, or any other person appointed by the Board of Directors, shall have the right to take those smaller measures that may be required in order to register the resolution with the Swedish Companies Registration Office.

Item 13 Resolution on cancellation of warrants 2022/2033

It was noted that the Company on April 20, 2022 resolved to introduce a long-term incentive program ("ESOP 2022/2033") for employees of the Company. ESOP 2022/2033 consisted of 30,000 qualified employee stock options with the right to acquire new shares in the Company. The resolution also included a resolution to issue 30,000 warrants to ensure delivery of shares in the program. These warrants have been registered at the Swedish Companies Registration Office (case number 228789/2022).

It was noted that 3,500 employee stock options in the ESOP 2022/2033 is granted and that 26,500 employee stock options remain unallocated.

The Board of Directors proposes that the general meeting resolves to cancel the not yet allocated 26,500 warrants in Program 2022/2033 and to withdraw the associated 26,500 warrants (which in such case shall be deregistered from the Swedish Companies Registration Office).

The managing director, or any other person appointed by the Board of Directors, shall have the right to take those smaller measures that may be required in order to register the resolution with the Swedish Companies Registration Office.

Item 14 Resolution on A) implementation of ESOP 2023/2033:1, B) a directed issue of warrants and C) approval of transfer

The Board of Directors proposes that the Annual General Meeting resolves to (A) implement an Employee Stock Option Program with qualified employee stock options ("ESOP 2023/2033:1"), (B) directed issue of warrants to the Company to enable the Company's delivery of shares under the ESOP 2023/2033:1  and (C) on approval of transfer of warrants or shares in the Company to participants in the ESOP. Decisions under points A, B and C above shall be taken as one decision and are thus conditional on each other.

Background

The Board of Directors finds it important and in the interest of all shareholders that the persons who contribute to the Company's value development, who are considered important for the Company's continued development, have a long-term interest in a good value development of the share in the Company. A personal long-term ownership commitment can be expected to contribute to an increased interest in the Company's operations and earnings development and increase the participants' motivation and affinity with the Company and its shareholders. At the moment the markets are more unpredictable and volatile than the Company have experienced before and the Board think that the proposal compensates for this additional risk in a, for the Company, efficient way.  

This proposal has been prepared by the Board of Directors in consultation with external advisor.

  1. ESOP 2023/2033:1

The Board of Directors proposes that the general meeting resolves to implement ESOP 2023/2033:1 in accordance with the guidelines below.

  1. The program shall cover a total of 810,000 qualified employee stock option to, provided that the rules in Chapter 11a of the Income Tax Act are met, be granted the participants free of charge. Each employee may be offered a maximum of 200,000 employee stock options. However, the CEO may be offered a maximum of 400,000 employee stock options. Granting shall be made from and including the 5 October 2023 up until the end of 2023.
  2. Each employee stock option entitles the participant to purchase one (1) new share in the Company at an exercise price of SEK 0.04. The exercise price and the number of shares that each employee stock option entitles to may be subject to recalculation, whereby the terms in the complete warrant terms (see below) shall apply.
  3. Participation in the program is conditioned upon the participant signing an option agreement with the Company. Important terms of the option agreement include that (i) the employee stock options do not constitute securities and may not be transferred, pledged or otherwise disposed of by the holder, (ii) the employee stock options are linked to the participant’s employment and require a certain minimum work effort, and (iii) the employee stock options are vested after 36 months.
  4. The granting of qualified employee stock options shall also be conditional on the fulfillment of certain business objectives. The objectives shall be based on the goals and strategies established for the Company by the Board of Directors. The Board authorizes the Company’s CEO to distribute and resolve on the allocation of employee stock options to participants within the framework of the program.
  5. Participation in the program presupposes that such participation is legally possible, and that such participation can, according to the Company’s assessment, take place with reasonable administrative and financial efforts.
  6. The Board of Directors shall be responsible to the design and management of the program within the framework of these main conditions.
  7. Directed issue of warrants

To enable the Company’s delivery of shares under ESOP 2023/2033:1, the Board of Directors proposes that the General Meeting resolves to issue not more than 810,000 new warrants in accordance with the below conditions.

  1. The right to subscribe for the warrants shall, with deviation from the shareholders’ pre-emption rights, belong to the Company.
  2. The reasons for deviation from the shareholders’ pre-emption rights are that the issue is part of the implementation of ESOP 2023/2033:1, which is proposed to promote the retention of employees and to motivate employees to create value for the shareholders. The Board’s assessment is that these purposes are in the interest of all shareholders.
  3. The warrants shall be subscribed for no later than the 31 of August 2023 on a separate subscription list. The Board of Directors shall be entitled to extend the subscription period.
  4. The warrants are issued to the Company at no cost.
  5. Each warrant shall entitle to subscription of one (1) new share in the Company at a subscription price of SEK 0.04 (however, never less that the quota value). If a share is subscribed for with a premium, the premium shall be allocated to the unrestricted premium reserve.
  6. Subscription of shares with the support of the warrants shall be possible, taking into account the insider legislation applicable at any given time, in accordance with the terms of the warrants during the period from and including the date on which the warrants were registered with the Swedish Companies Registration Office up until 31st of December 2033. Warrants that have not been transferred to participants in accordance with item C may be cancelled by the Company. Cancellation must be reported to the Swedish Companies Registration Office for registration.
  7. If all warrants are exercised for share subscription, the Company's registered share capital will increase by SEK 32,400 (considering the current quota value and provided that no recalculation takes place according to the option terms).
  8. A new share that has been issued by virtue of a warrant entitles to dividends for the first time on the first payment date for dividend that take place after the subscription of new shares has been registered with the Swedish Companies Registration Office and been recorded in the share register.
  9. The complete terms and conditions for the warrants are set out in full terms and conditions for warrants of series 2023/2033:1 in the Board's complete proposal (the "Option Terms"). As stated in the Option Terms, the subscription price as well as the number of shares that each warrant entitles to subscribe for may be recalculated in connection with a bonus issue, consolidation or split (split), new issue, issue of warrants and convertibles, and in certain other cases. Furthermore, the date for the exercise of the warrants may be brought forward and postponed in certain cases.

The managing director, or any other person appointed by the Board of Directors, shall have the right to take those smaller measures that may be required in order to register the resolution with the Swedish Companies Registration Office.

  1. Approval of transfer of warrants or shares in the Company

The Board of Directors proposes that the Annual General Meeting resolves to approve that the Company may transfer no more than 810,000 warrants or shares in the Company to participants in the ESOP 2023/2033:1, or otherwise dispose of the warrants to secure the Company's commitments in connection with ESOP 2023/2033:1 in connection with the participants in ESOP 2023/2033:1 being able to exercise their employee stock options for subscription of new shares.

Item 15 – Resolution on A) implementation of ESOP 2023/2033:2, B) a directed issue of warrants and C) approval of transfer

Evelina Vågesjö and Mia Phillipson, (the “Shareholders”) which together represents 26.92 percent of the shares and votes in the Company proposes that the Annual General Meeting resolves to (A) implement an Employee Stock Option Program with qualified employee stock options to the Board of Directors ("ESOP 2023/2033:2"), (B) directed issue of warrants to the Company to enable the Company's delivery of shares under the ESOP 2023/2033:2  and (C) on approval of transfer of warrants or shares in the Company to participants in the ESOP. Decisions under points A, B and C above shall be taken as one decision and are thus conditional on each other.

Background

The Shareholders’ finds it important and in the interest of all shareholders that the Board of Directors, who contribute to the Company's value development, who are considered important for the Company's continued development, have a long-term interest in a good value development of the share in the Company. A personal long-term ownership commitment can be expected to contribute to an increased interest in the Company's operations and earnings development and increase the participants' motivation and affinity with the Company and its shareholders. At the moment the markets are more unpredictable and volatile than the Company have experienced before and the Shareholders think that the proposal compensates for this additional risk in a, for the company, efficient way. 

This proposal has been prepared by the Shareholders in consultation with external advisor.

  1. ESOP 2023/2033:2

The Shareholders proposes that the General Meeting resolves to implement ESOP 2023/2033:2 in accordance with the guidelines below.

  1. The program shall cover a total of 300,000 qualified employee stock option to, provided that the rules in Chapter 11a of the Income Tax Act are met, be granted the participants free of charge. Each board member may be offered a maximum of 50,000 employee stock options and granting shall be made during the period the 5 October 2023 up until the end of 2023.
  2. Each employee stock option entitles the participant to purchase one (1) new share in the Company at an exercise price of SEK 0.04. The exercise price and the number of shares that each employee stock option entitles to may be subject to recalculation, whereby the terms in the complete warrant terms (see below) shall apply.
  3. Participation in the program is conditioned upon the participant signing an option agreement with the Company. Important terms of the option agreement include that (i) the employee stock options do not constitute securities and may not be transferred, pledged or otherwise disposed of by the holder, (ii) the employee stock options are linked to the participant’s assignment as board member of the Company, and (iii) the employee stock options are vested after 36 months.
  4. Participation in the program presupposes that such participation is legally possible, and that such participation can, according to the Company’s assessment, take place with reasonable administrative and financial efforts.
  5. The Board of Directors shall be responsible to the design and management of the program within the framework of these main conditions.
  6. Directed issue of warrants

To enable the Company’s delivery of shares under ESOP 2023/2033:2, the Shareholders proposes that the General Meeting resolves to issue not more than 300,000 new warrants in accordance with the below conditions.

  1. The right to subscribe for the warrants shall, with deviation from the shareholders’ pre-emption rights, belong to the Company.
  2. The reasons for deviation from the shareholders’ pre-emption rights are that the issue is part of the implementation of ESOP 2023/2033:2, which is proposed to promote the retention of board members and to motivate them to create value for the shareholders. The Shareholders´ assessment is that these purposes are in the interest of all shareholders.
  3. The warrants shall be subscribed for no later than the 31 of August 2023 on a separate subscription list. The Board of Directors shall be entitled to extend the subscription period.
  4. The warrants are issued to the Company at no cost.
  5. Each warrant shall entitle to subscription of one (1) new share in the Company at a subscription price of SEK 0.04 (however, never less that the quota value). If a share is subscribed for with a premium, the premium shall be allocated to the unrestricted premium reserve.
  6. Subscription of shares with the support of the warrants shall be possible, taking into account the insider legislation applicable at any given time, in accordance with the terms of the warrants during the period from and including the date on which the warrants were registered with the Swedish Companies Registration Office up until 31st of December 2033. Warrants that have not been transferred to participants in accordance with item C may be cancelled by the Company. Cancellation must be reported to the Swedish Companies Registration Office for registration.
  7. If all warrants are exercised for share subscription, the Company's registered share capital will increase by SEK 12,000 (considering the current quota value and provided that no recalculation takes place according to the option terms).
  8. A new share that has been issued by virtue of a warrant entitles to dividends for the first time on the first payment date for dividend that take place after the subscription of new shares has been registered with the Swedish Companies Registration Office and been recorded in the share register.
  9. The complete terms and conditions for the warrants are set out in full terms and conditions for warrants of series 2023/2033:2 in the Board's complete proposal (the "Option Terms"). As stated in the Option Terms, the subscription price as well as the number of shares that each warrant entitles to subscribe for may be recalculated in connection with a bonus issue, consolidation or split (split), new issue, issue of warrants and convertibles, and in certain other cases. Furthermore, the date for the exercise of the warrants may be brought forward and postponed in certain cases.

The managing director, or any other person appointed by the Board of Directors, shall have the right to take those smaller measures that may be required in order to register the resolution with the Swedish Companies Registration Office.

  1. Approval of transfer of warrants or shares in the Company

The Shareholders proposes that the Annual General Meeting resolves to approve that the Company may transfer no more than 300,000 warrants or shares in the Company to participants in the ESOP 2023/2033:2, or otherwise dispose of the warrants to secure the Company's commitments in connection with ESOP 2023/2033:2 in connection with the participants in ESOP 2023/2033:2 being able to exercise their employee stock options for subscription of new shares.

Item 16 – Resolution on authorization to the Board of Directors

The Board of Directors of proposes that the General Meeting resolves to authorize the Board of Directors for the period up to the next annual meeting of shareholders to resolve, whether on one or several occasions, on issues of new shares, warrants and/or convertible instruments. The Board of Directors shall be authorized to adopt decisions on an issue of said securities with deviation from the shareholders’ pre-emption rights (a directed issue) and/or an issue in kind or an issue by way of set-off or otherwise on terms pursuant to the Swedish Companies Act. However, the Board of Directors shall not be authorized to adopt decisions that entail that the Company’s share capital increases with more than 30 percent in relation to the share capital at the time when this authorization is first exercised.

An issue in accordance with this authorization shall be on market conditions. The Board of Directors shall be authorized to decide on the terms and conditions regarding issues under this authorization and what persons shall be entitled to subscribe for the shares, warrants and/or convertible instruments. The reason that the Board of Directors shall be authorized to resolve on an issue with deviation from the shareholders’ pre-emption rights and that the Board shall be authorized to decide on an issue in kind or an issue by way of set-off is to provide the Board of Directors flexibility in its work to ensure that the Company can be provided with capital in an appropriate manner for financing of the Company’s business and to enable continued expansion both organically and through acquisitions, and to be able to expand the group of shareholders with one or more owners of strategic importance to the Company.

If the Shares are subscripted with a premium, the share premium shall be transferred to the unrestricted premium reserve.

It is proposed that the managing director is authorized to make such minor adjustments to this resolution that may be necessary in connection with the registration with the Swedish Companies Registration Office.

Item 17 – Resolution on restructuring

In order to simplify the Company's two business areas regarding the drug candidate ILP100, Evelina Vågesjö and Mia Phillipson, which together represents 26.92 percent of the shares and votes in the Company,proposes that the General Meeting authorize the Board of Directors to form two new subsidiaries and to implement necessary measures to carry through said structure. One subsidiary is proposed to develop the topical use of ILP100 for indications in the skin. The other subsidiary is proposed to develop ILP100 for the indication colitis in cancer patients caused by checkpoint inhibitors. The Board assess that such reorganization would benefit the shareholders by strengthening the Company's ability to attract investors.

The Shareholders trusts that such a restructuring would benefit shareholders by strengthening the ability to attract investors. Provided that the general meeting is positive to the Shareholder's proposal, the Board intends to carry out the above restructuring, which in such case will take place in dialogue with the Company's legal advisors and auditors.

The validity of the decision is conditioned by that such a reorganization legally can take place and that the Company's financial situation is not adversely affected.

More information and background will be presented in the Board's complete proposal.

Dilution

The maximum dilution effect of the employee stock option program 2023/2033:1 and the employee stock option program 2023/2033:2 is estimated to amount to approximately 7.6 percent of the share capital and votes in the Company (calculated based on the number of existing shares in the Company at the time of notice), provided that full exercise of all employee stock options and warrants takes place. The dilution effect regarding the shares and votes of the Company due to new shares subscribed for upon exercise of the warrants has been calculated by dividing the total number of shares that the warrants entitle to subscribe for with the total number of shares after the warrants have been used for subscription of new shares.

Previous incentive programs in the Company

At the 2022 Annual General Meeting, the Company adopted the Employee Stock Option Program 2022/2033 consisting of a total of 30,000 warrants, of which 3,500 have been subscribed for. The remaining 26,500 warrants will be cancelled by the Company.

In addition to the above, there are a total of 695,200 warrants issued by the Company.

Upon full exercise of all warrants in earlier issued incentive programs in the Company, excluding cancelled options, there may be (subject to any recalculations in accordance with the customary conversion terms that apply to the warrants) a maximum of 698,700 new shares and the dilution effect amount to approximately 4.9 percent.

Majority requirements

Resolution in accordance with A, B and C in item 14 above shall be made as one decision and is therefore conditional upon each other.

Resolution in accordance with A, B and C in item 15 above shall be made as one decision and is therefore conditional upon each other.

Resolutions in accordance with items 14 and 15 above requires, for its validity, a minimum of nine tenths (9/10) of both the votes cast and the shares represented at the General Meeting.

Resolution in accordance with item 16 above requires, for its validity, a minimum of two thirds of both the votes cast and the shares represented at the General Meeting.

The shareholders’ right to information at the General Meeting

The Board of Directors and the managing director shall, upon the request by a shareholder, and where the Board of Directors believes that such may take place without significant harm to the Company, provide information in respect of any circumstances which may affect the assessment of a matter on the agenda or the Company’s financial position. Shareholders can submit questions in advance to the Company, to the address Dag Hammarskjölds väg 30, Uppsala or through e-mail to evelina.vagesjo@ilyapharma.se.

Documents

Documentation in accordance with the Swedish Companies Act will be held available at the Company and at the Company’s website, www.ilyapharma.se, no later than three weeks before the meeting, i.e., 5 June 2023. The documents will also be sent, without charge, to shareholders who so request and inform the Company of their postal address.

 

Uppsala in May 2023

Ilya Pharma AB (publ)

The Board of Directors