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timing of achievement of milestones and receipt of any milestone or royalty payments under these agreements.
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Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance
future cash needs primarily through a combination of public or private equity offerings, debt financings, strategic collaborations, and grant funding. If sufficient funds on acceptable terms are not available when needed, or at all, we could be
forced to significantly reduce operating expenses and delay, scale back or eliminate one or more of our development programs or our business operations or even go bankrupt.
Raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to our
intellectual property or future revenue streams.
Until such time, if ever, as we can generate substantial product revenue, we
expect to finance our cash needs through a combination of equity offerings, debt financings, grants and licenses and development agreements in connection with any collaborations. We do not have any committed external source of funds. In the event we
need to seek additional funds, we may raise additional capital through the sale of equity or convertible debt securities. In such an event, our shareholders ownership interests will be diluted, and the terms of these new securities may include
liquidation or other preferences that adversely affect our shareholders rights as holders of our common shares. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or declaring dividends.
On November 30, 2016, our subsidiary
Affimed GmbH entered into a loan agreement with Silicon Valley Bank, a California corporation, or SVB, as lender, which we fully guarantee. The loan agreement provides us with a senior secured term loan facility for originally up to
10.0 million, which agreement was amended in May 2017 to provide that such amount would be available in three tranches. On December 8, 2016, we fully drew down the initial tranche of 5.0 million, and on May 31, 2017
we drew down the second tranche of 2.5 million; the availability of the third tranche expired in September 2017 with such amount remaining undrawn. In connection with such drawdowns, we issued SVB warrants to purchase 219,692 of our
common shares, at a weighted-average exercise price of $2.07 per common share.
If we raise additional funds through collaborations,
strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, product candidates, intellectual property or future revenue streams. If we are unable to
raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to
develop and market ourselves.
We have broad discretion in the use of our cash on hand and may not use it effectively.
As of June 30, 2019, we had 87.7 million in cash and cash equivalents and current financial assets. Our management will have
broad discretion in the use of such funds and could spend them in ways that do not improve our results of operations or enhance the value of our common shares. The failure by our management to apply these funds effectively could result in financial
losses that could have a material adverse effect on our business, cause the price of our common shares to decline and delay the development of our product candidates. Pending their use, we may invest our cash and cash equivalents in a manner that
does not produce income or that loses value.
Our ability to use our net operating loss carry forwards and other tax attributes may
be limited.
Our ability to utilize our net operating losses, or NOLs, is currently limited, and may be limited further, under
Section 8c of the Körperschaftsteuergesetz (the German Corporation Income Tax Act) and Section 10a of
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