Risk Management
Description of the main elements of Pharma Equity Group’s internal control and risk management systems in connection with the financial reporting process, according to section 107 b of the Danish Financial Statements Act. The statement is part of the management report in the company’s annual (latest) report for the fiscal year 2025.
The Company’s policy is to identify and mitigate risks deriving from the Company’s operations and to establish appropriate level of internal controls and reporting processes, and to establish sufficient insurance coverage where possible and as deemed necessary in the circumstances.
The Board of Directors is responsible for the risk management strategy and the overall risk management framework and policies. The Board, advised by the Audit Committee as appropriate, manages risks and reviews the effectiveness of the risk management and internal control and financial reporting systems and processes. Management believes that all significant elements of risk have been identified and addressed.
At least once a year, the Audit Committee evaluates the risks connected with the financial reporting process, including the presence of internal controls, policies and guidelines. The Committee assesses the Group’s organizational structure, including the risk of fraud and the measures to be taken to reduce and/or eliminate such risks. In that regard, any incentive or motive from the Executive Management to manipulate earnings or perform any other fraudulent action is discussed.
The Group’s internal controls and guidelines provide a reasonable but not absolute certainty that unlawful use of assets, loss and/or significant errors or deficiencies in relation to the financial reporting process can be avoided. The Board of Directors has decided not to institute an internal audit function at Pharma Equity Group, based on its assessment that the Company’s size and complexity does not necessitate such a function.
Pharma Equity Group is considering the establishment of a whistleblower scheme, which gives employees and other stakeholders the opportunity to report serious wrongdoing or suspicions thereof in an appropriate and confidential manner, and with a secure procedure for handling any whistleblower cases.
Pharma Equity Group’s value chain consists primarily of IP-rights and research and development. By the nature of our business, we are exposed to a variety of risks along the value chain.
Pharma Equity Group has a thorough risk management and mitigation process, whereby Pharma Equity Group is managing the risks through risk identification, risk monitoring and risk mitigation. The Audit Committee, which includes Finance and Risk areas, will own and overseas the risk management process and will closely monitor the risks on a quarterly basis, including selected deep dives on specific risks. The Board of Directors will receive regular risk updates from The Audit Committee which will be taken into consideration in the Board’s overall decisions about the company strategy.
The formal process ensures both bottom-up and top-down identification and handling of risks. In this process key risks are first identified through a bottom-up process including description of the risks and mitigating actions taken to reduce either the likelihood of occurrence or the potential impact. Residual risk after agreed mitigating actions is further mitigated by insurance where this is relevant and possible. All risks will have assigned risk owners, normally at the Executive level, and assigned risk-responsible employees who monitor and mitigate the risks closely.
The table below summarizes some of the key risks that are important to Pharma Equity Group’s business, including examples of mitigating actions.
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Risk Area |
Risks |
Mitigating Actions |
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Risks relating to the business and industries in which PEG and its subsidiary company Reponex operate
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Clinical development risk. Results from early clinical trials may not be replicated in larger trials. Trials may not demonstrate an acceptable risk‑benefit profile or sufficient clinical benefit to support partnering, commercialisation or regulatory approvals. Trial outcomes may be inconclusive and require additional studies.
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Reponex designs clinical programmes to maximise robustness and reproducibility, based on literature review and input from key opinion leaders. Reponex engages early and continuously with regulatory authorities to align on endpoints, methodology and expectations, and it adapts programmes as new evidence emerges. |
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Risks relating to the business and industries in which PEG and its subsidiary company Reponex operate |
Development cost and timing risk. Delays or unsatisfactory outcomes in clinical trials may increase development costs and cash burn compared to estimates. |
PEG and Reponex apply active financial planning and scenario analysis. Budgets include contingencies, and supplier/CRO payment structures are, where feasible, linked to activity levels. Protocol development and outcome measures are designed to maximise the likelihood of generating decision‑grade data. |
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Risks relating to the business and industries in which PEG and its subsidiary company Reponex operate |
Repositioning risk. Reponex may not succeed with any product candidate and therefore may not create a marketable product. |
Reponex focuses on repurposing and reformulating established active pharmaceutical ingredients with known clinical use, which can reduce early development uncertainty. Candidates are advanced only if the safety and efficacy package supports further development. Reponex’ partnering and out‑licensing approach aims to identify partners ahead of late‑stage development where appropriate. |
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Risks relating to the business and industries in which Pharma Equity Group and its subsidiary company Reponex operate
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Commercialisation and market risk. If projections of addressable markets and commercial potential for product candidates are not accurate, the commercial value of candidates may be reduced. |
Reponex maintains ongoing dialogue with relevant stakeholders and uses external market data where available. Market assumptions are revisited as clinical evidence, competitor activity and pricing/reimbursement dynamics evolve. |
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Risks relating to the business and industries in which Pharma Equity Group and its subsidiary company Reponex operate |
Reponex maintains ongoing dialogue with relevant stakeholders and uses external market data where available. Market assumptions are revisited as clinical evidence, competitor activity and pricing/reimbursement dynamics evolve. |
PEG continues to pursue repayment through legal proceedings while also running parallel negotiations to resolve the matter outside arbitration. Multiple hearings were held in 2025. Following a decision by the Danish Business Authority (Erhvervsstyrelsen), PEG wrote down the receivable in 2025 using the ECL method. The accounting write‑down does not change the underlying risk as to whether the receivable will be collected. |
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Risks relating to the financial position of Pharma Equity Group and Reponex Pharmaceuticals: |
Risks related to financing needs and capital for Reponex Pharmaceuticals if delays in clinical trials or product development results in delayed revenues and increased costs, negatively affecting future expected cash flows. |
Pharma Equity Group has not observed delays in the clinical programs in relation to the announced expectations in the prospectus of February 27, 2023, regarding revenue streams in 2025 and beyond. We have recogniced revenue streames in the outlook for 2025 in late Q3 and Q4 |
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Risks relating to the financial position of Pharma Equity Group and Reponex Pharmaceuticals:
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Risks related to the financial situation of Pharma Equity Group if the Portinho S.A receivable is not paid in full or on time.
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PEG continues to pursue repayment through legal proceedings while also running parallel negotiations to resolve the matter outside arbitration. Multiple hearings were held in 2025. Following a decision by the Danish Business Authority (Erhvervsstyrelsen), PEG wrote down the receivable in 2025 using the ECL method. The accounting write‑down does not change the underlying risk as to whether the receivable will be collected. |
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Risks relating to the financial position of PEG and Reponex |
Financing and capital needs. If clinical timelines shift or product development is delayed, costs may increase and expected cash flows may be deferred, which could increase PEG’s financing needs. |
Reponex’ development plan experienced minor timing shifts in 2025 that are assessed to be within what can be expected in pharmaceutical development; the development risk is therefore considered to remain at the level inherent to drug development. PEG updates forecasts and cash runway assessments continuously and aligns financing planning with clinical milestones and corporate priorities under Board oversight.
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Risks relating to the financial position of PEG and Reponex |
Liquidity and working capital. If the Portinho receivable is not paid in full or on time, PEG’s liquidity position may be adversely affected. |
PEG has continued to secure working capital support through successive loans and has reduced administrative costs in 2025 compared to 2024. Liquidity is monitored closely, and the Board evaluates mitigating actions on an ongoing basis, including prioritisation of activities and financing alternatives.
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