Ascelia Pharma

Quarterly Report • May 11, 2022

INTERIM REPORT Q1 2022

January – March 2022

Strong Orviglance support from healthcare professionals

SIGNIFICANT EVENTS IN Q1 2022

• Market research from healthcare professionals provides strong Orviglance support
• Suspension of Russian clinical activities for Orviglance
• Last patient visit completed in Orviglance Hepatic Impairment Study
• Orviglance comparison study to gadolinium accepted for ESGAR conference
• Issue and repurchase of series C shares for share saving program

SIGNIFICANT EVENTS AFTER THE PERIOD

• New study positively shows that Orviglance MRI liver enhancement is not influenced by intake of a light meal
• CFO Kristian Borbos resigns; search for successor ongoing

In Q1, we presented results from an extensive market research showing strong support to Orviglance from healthcare professionals" "

KEY RATIOS GROUP

Q1 (Jan-Mar)
2022	2021
OPERATING RESULT (SEKm)
-32.6	-33.7
EARNINGS PER SHARE (SEK)
-0.84	-1.00
CASH FLOW FROM OPERATIONS (SEKm)
-31.4	-22.9
LIQUID ASSETS INCL. MARKETABLE SECURITIES (SEKm)
232.6	165.4

CEO COMMENTS

In the first quarter of 2022, we continued to make progress towards making Orviglance available to patients. Most importantly, we completed patient recruitment in the Hepatic Impairment Study and announced the results from an extensive market research showing very strong support among healthcare professionals for a new contrast agent with a profile as Orviglance. This strengthens my belief that we have an exciting year ahead of us.

Orviglance Phase 3 program. The consequences of Russia's invasion of Ukraine are both grave and concerning. Because of the escalating situation, we decided in early March to suspend all clinical activities in Russia, including patient enrollment.

Globally, we continue our efforts to support study investigators at all active hospitals to enroll patients, and our expectation is to complete patient enrollment for the SPARKLE study in 2022.

An important part of our pivotal clinical program with Orviglance are the two supportive studies – Hepatic Impairment Study and Food Effect Study – that have run in parallel with SPARKLE. In March, the last patient visit was completed for the Hepatic Impairment Study. It is encouraging to see preliminary results that Orviglance has been well tolerated by patients with different degrees of hepatic impairment. Final results from the study are expected in Q2/Q3-2022.

After the quarter, we reported results from the Food Effect Study. The results showed positively that intake of a light meal prior to Orviglance administration provides similar liver MRI enhancement compared to a fasting condition. In line with previous studies, the data also confirmed robust liver enhancement after Orviglance administration compared to an MRI image without a contrast agent.

Data from both the Hepatic Impairment Study and the Food Effect Study are a solid step forward in our preparations for regulatory submission and approval of Orviglance.

Market research shows very strong support for Orviglance. In parallel with our Orviglance development work, our team continues preparations for the planned market launch of Orviglance. In March, we announced the results of independent market research which alludes to the high level of unmet medical need that Orviglance addresses. Importantly, it showed that 84% of healthcare professionals will likely use Orviglance for MRI scans in patients with cancer in the liver and reduced kidney function.

The independently conducted survey asked 270 healthcare professionals in the US about their choices of imaging and contrast agents in patients with cancer. The primary driver of their MRI contrast agent decisions is patient safety, and in particular the need to minimize the risk of Nephrogenic Systemic Fibrosis (NSF), a side-effect associated with the currently available gadolinium agents in patients with reduced kidney function – the target population for Orviglance.

The positive reactions to Orviglance from the research participants are very encouraging. This convincing research confirms the clear unmet need for an effective alternative to unenhanced MRI and a safe alternative to gadolinium agents.

Oncoral – Postponing Phase 2 to focus on Orviglance. Our strong belief in our novel oral chemotherapy drug candidate Oncoral is unchanged. We gained study start approval from the FDA in December 2021 and have here in the first quarter reached the corresponding approval from the UK regulatory authority and after the quarter also from the Spanish regulatory authority. Our current top priority is, however, Orviglance. As our clinical development team is fully focused on SPARKLE, we will not de-focus them and hence postpone initiation of patient enrollment in the Oncoral Phase 2 study until we are able to do this without impacting SPARKLE. Patient enrollment in this study was previously planned for Q2/Q3 2022.

Solid financial position. We have a solid balance sheet and closed the first quarter with 233 MSEK in cash, which will take us into H2 2023. The liquidity position will primarily be used for Orviglance ongoing Phase 3 program and market launch preparations.

Looking ahead. Our prime focus in 2022 is, as mentioned, to complete the ongoing clinical Phase 3 program for Orviglance as well as continuing our commercial preparations for Orviglance. We work constantly to create shareholder value, and I look forward to updating you on the progress of Ascelia Pharma.

Magnus Corfitzen,

CEO

ADVANCING ORPHAN ONCOLOGY

OUR VISION

To be a leader in identifying, developing and commercializing novel drugs that address unmet needs of people with rare cancers.

OUR BASE

Our headquarter is in Malmö, Sweden, and our US base is in New Jersey. The shares in the company are listed on NASDAQ Stockholm (ticker: ACE).

OUR PIPELINE

ORVIGLANCE (Mangoral)

Diagnostic drug for liver MRI in ongoing Phase 3

Orviglance is our novel non-gadolinium diagnostic drug (contrast agent) to be used in MRI-scans of the liver. Orviglance is developed to improve the visualization of focal liver lesions (liver metastases and primary liver cancer) in patients with impaired kidneys at risk of severe side-effects from the gadolinium contrast agents currently on the market. Orviglance characteristics:

• Manganese-based diagnostic drug with Orphan Drug Designation (FDA)
• The only late-stage gadolinium-free agent
• \$500-600 million annual addressable market

ONCORAL

Tablet chemotherapy ready for Phase 2

Oncoral is our novel oral chemotherapy tablet developed initialy for the treatment of gastric cancer. Irinotecan chemotherapy has an established potent anti-tumor effect. Oncoral characteristics:

• Oral daily dosing of irinotecan chemotherapy
• Potential for better efficacy and safety by frequent low dosing
• Phase 2 in gastric cancer; potential to expand into other cancer forms

ORVIGLANCE (MANGORAL)

Liver MRI contrast agent in the final clinical Phase

Detecting liver metastases early is essential for survival

Ascelia Pharma's lead drug candidate, Orviglance, is a contrast agent used in Magnetic Resonance Imaging (MRI) to improve the visualization of focal liver lesions (liver metastases and primary tumors). The liver is the second most common organ for metastasis after the lymph nodes. Detecting liver metastases at an early stage is crucial for determining the right treatment method and the patient's chances of survival. Studies show that the five-year survival rate can increase from 6% to 46% if liver metastases can be removed surgically. An accurate MR scan using contrast agents is therefore critical to evaluate the possibility for surgical resection, but also for monitoring of treatment effect and surveillance for recurrence of the disease.

How Orviglance works

Orviglance is an orally administrated contrast agent used in MRI of the liver. It is based on the chemical element manganese, which is a natural trace element in the body. Orviglance also contains L-Alanine and Vitamin D3 to increase the absorption of manganese from the small intestine into the portal liver vein. From there the manganese is transported to the liver where it is taken up by and retained in the normal liver cells, also known as the hepatocytes. The high manganese uptake causes the liver parenchyma to appear bright on MR images. As liver metastases are not liver cells, they do not take up manganese and consequently metastases appear dark on MR images. With Orviglance, liver metastases are consequently easier to identify due to this contrast effect.

Latest development

In May 2022, results from the Food Effect Study was published. The results showed intake of a light meal prior to Orviglance administration provides similar liver MRI enhancement compared to a fasting condition.

In March 2022, last patient visit was completed in the Hepatic Impairment Study. Preliminary data indicate that Orviglance has been well tolerated in patients with liver impairment. Final results are expected in Q2/Q3 2022.

In March 2022, results from an independent market research with 270 healthcare professionals in the US was announced. The results showed, among other things, that 84% of healthcare professionals will likely use Orviglance for MRI scans of patients with cancer in the liver and reduced kidney function.

Patients referred for liver MRI scan

Addressable market of \$500-600 million

The target group for Orviglance is patients with severely impaired kidney function. This patient group is at risk of serious, and potentially fatal, side effects from using the currently available contrast agents. These contrast agents, which all are based on the heavy-metal gadolinium, carry Black Box warnings for patients with severely reduced kidney function.

The conducted clinical trials show that Orviglance is a safe and effective contrast agent and offers a significantly better alternative than unenhanced MRI (i.e. MRI without contrast agent),. Consequently, Orviglance fills a significant unmet medical need to improve the diagnosis, and subsequently, the treatment of liver metastases and primary liver cancer.

The immediate addressable market for Orviglance is estimated at \$500-600 million yearly and Orviglance is expected to be the only gadolinium-free product on the market for this patient segment.

Orviglance has Orphan Drug Designation

Orviglance has received Orphan Drug Designation from the FDA. One major advantage of orphan drug status is, among other things, that orphan drugs can obtain market exclusivity for a number of years after market approval (seven years in the US and ten years in the EU/EEA). For orphan drugs in general, the time to approval is also usually shorter and the proportion of orphan drugs that are approved is higher than for non-orphan drugs.

ONGOING PHASE 3 STUDY (SPARKLE)

The ongoing pivotal Phase 3 study SPARKLE is a global multicentre study in up to 200 patients. The strong results in the Phase 1 and Phase 2, both in terms of safety and efficacy, studies provide a solid foundation for the ongoing Phase 3 program. This is underpinned by the high degree of similarity between the primary endpoints in Phase 2 and Phase 3, and since the Phase 3 study comparator for Orviglance is MRI with no contrast agent. In addition, the follow-up time is less than a week, compared to months or years for the typical Phase 3 oncology study.

Orviglance's clinical Phase 3 study (based on Phase 3 protocol meeting with FDA and EMA)

NUMBER OF PATIENTS	Global ongoing study in up to 200 patients
ENDPOINT	Lesion visualisation • Lesions border delineation (border sharpness of lesions) • Conspicuity (lesion contrast compared to liver background)
COMPARATOR	Unenhanced MRI + Orviglance MRI vs. Unenhanced MRI
EVALUATION	Centralised evaluation by 3 radiologists
RANDOMISATION	No – each patient at his/her own control
FOLLOW-UP	Less than a week

Strong support to Phase 3 endpoints from completed studies

The completed Phase 1 and Phase 2 studies have shown strong efficacy results regarding the endpoints that will be evaluated in the Phase 3 study. The completed studies, involving 178 persons in total1, have showed a highly significant improvement compared to unenhanced MRI in:

• Delineation: p-value <0.0001
• Conspicuity: p-value <0.0001

Results from both variables underpin that Orviglance significantly improves MRI performance.

¹ The above mentioned results stem from of a blinded-read study, which comprised all imaging data including Phase 1 and Phase 2 data. The blinded-read results have been presented at major radiology conferences

ADDRESSABLE MARKET OF \$500-600 MILLION

\$500-600M annual addresable market in US, EU and Japan

Market estimate based on:

Upsides

■ Other markets, e.g., China ■ Annual growth of 4-5%

• Patients with primary liver cancer or liver metastases and severe kidney impairment (~4%)
• Actual imaging procedures (real-world data)1
• Payer and expert input (+75 stakeholders)2

Value maximizing go-to-market

Strong footprint in the US Building an Ascelia Pharma US team

• SPARKLE Phase 3 Study at leading US sites 1 4
• Hepatic Impairment Study at Texas liver institute 2 5
• Ascelia Pharma Inc. Office in New Jersey 3

Manufacturing at Cambrex (partner), NJ

Imaging experts RadMD, NY

4

3 2 5

1

Clinics/ Hospitals

Around 40 FTEs at launch US team

Around 400 clinics and hospitals serve 75% of the target patient population¹

Sources:

1: Ascelia Pharma market research with Decision Resources Group, 2020

2: Ascelia Pharma market research and analyses with Revenue Reimbursement Solutions and Charles River Associates, 2020

ONCORAL – IRINOTECAN CHEMOTHERAPY AS TABLET

Oncoral is a novel daily irinotecan chemotherapy in development. Irinotecan chemotherapy has an established potent anti-tumor effect. Oncoral is a daily irinotecan tablet with the potential to offer better efficacy with improved safety following the daily dosing at home compared to intravenous high-dose infusions at the hospital.

Proven anti-cancer effect

The active pharmaceutical ingredient (API) in Oncoral is irinotecan, which has an established and proven effect in killing cancer cells. Irinotecan is so-called antineoplastic agent that after metabolic activation inhibits the enzyme topoisomerase 1, thereby inducing cancer cell death via the prevention of their DNA replication. Irinotecan is converted by carboxylesterases, primarily in the liver, to the active metabolite SN-38 which is 100–1,000 more potent than irinotecan in killing tumor cells.

Potential to be the first oral irinotecan

Oncoral is a new patented oral tablet formulation of irinotecan. Oncoral enables a secure and efficient release and absorption of irinotecan from the gastro-intestinal tract after oral administration with a high conversion rate of irinotecan to the active metabolite SN-38, which has a high anti-tumor activity. Oncoral has the potential to be combined with other chemotherapies and targeted cancer drugs and enable an all oral chemo combination.

Latest development

In Q1 2022, the UK regulatory authority approved the study start of Phase 2 and after the quarter approval was obtained from the Spanish regulatory authority. For the US, the corresponding approval (IND) was obtained in December 2021.

Oncoral - a novel formulation of irinotecan TODAY – Intravenous bolus infusions

Infrequent high-dose IV irinotecan

• Gastrointestinal and haematological side effects
• Side-effects: 30% severe or life-threatening (grade 3 or 4)

TOMORROW – Oncoral oral daily dosing

Potential – Frequent low-dose irinotecan

• Improved efficacy driven by pharmacokinetic/ dynamic profile
• Improved tolerability due to lower peak exposure with less severe side effects and manageable toxicity with flexible dosing

ONCORAL PHASE 2 STUDY DESIGN

Following an initial dose-finding part, the Phase 2 study will be a randomized controlled multicenter study. In the study, Oncoral will be added to LONSURF (trifluridine and tipiracil) film-coated tablets for oral use compared to LONSURF alone. The objectives of the planned Phase 2 study are several. First of all, to establish a clinical proof of concept in metastatic gastric cancer. There is a potential for Orphan Drug Designation in gastric cancer and also the clinical guidelines and clinical data support efficacy of irinotecan in gastric cancer. Then there is potential for subsequent label expansion into other solid tumor indications. Another objective is to generate, compelling Phase 2 data for further development and design a Phase 3 study.

Phase 2 study design (an all-oral combination study)

TYPE OF STUDY	Randomized controlled, multicentre, multinational study: Oncoral + LONSURF vs. LONSURF
ENDPOINTS	Primary: Progression Free Survival Secondary: Response rate, PK, Safety and Overall Survival data in a follow up analysis
NUMBER OF PATIENTS	Approximately 100 patients

FINANCIAL OVERVIEW: Q1-2022 (JAN–MAR 2022)

EARNINGS AND PROFITABILITY

Net sales and other operating income

The Group's net sales in Q1 (Jan-Mar 2022) amounted to SEK 0 (SEK 0). Ascelia Pharma does not expect to recognize revenue before products have been launched on the market. Other operating income totaled SEK 135 thousand (SEK 27 thousand).

Research and development costs (R&D)

R&D costs for the Group in Q1 were SEK 24.4 million (SEK 29.3 million). The cost decrease of SEK 5.0 million primarily reflects timing of milestone payments for Orviglance Phase 3 study, which caused higher cost recognition in first quarter last year compared to the first quarter this year.

Commercial preparation costs

During the first quarter, costs related to commercial preparations amounted to SEK 4.2 million (SEK 0.9 million). The cost increase compared with Q1 2021 reflects preparations towards launching of Orviglance to the market.

Administration costs

Administration costs for the Group in Q1 amounted to SEK 4.1 million (SEK 3.1 million). The cost increase in the current quarter compared with Q1-2021 reflects higher running costs.

Operating results (EBIT)

The operating result in Q1 amounted to SEK -32.6 million (SEK -33.7 million). The reduced loss reflects the timing effect with lower R&D costs in Q1-2022, which was partly counterbalanced by higher commercial preparation costs.

Net Profit/Loss for the period

The Group's net loss in Q1 amounted to SEK -29.1 million (SEK -28.8 million). In the current quarter, net financial income of SEK 2.6 million was recognized due to primarily strengthening of USD against SEK, which translated into an increase in the value of bank deposits (a significant part of bank deposit is held in USD to match upcoming cash outflow in these currencies).

Financials key ratios for the Group	Q1 (January-March)
	2022	2021
Operating result (SEK 000')	-32,570	-33,740
Net result (SEK 000')	-29,075	-28,815
Earnings per share (SEK)	-0.84	-1.00
Weighted avg. number of shares	34,576,448	28,759,073
R&D costs/operating costs (%)	74%	87%
Cash flow used in operating activities (SEK 000')	-31,366	-22,948
Equity (SEK 000')	280,394	399,409
Liquid assets incl. marketable securities (SEK 000')	232,603	165,422

The net loss corresponds to a loss per share, before and after dilution, of SEK -0.84 (SEK -1.0).

CASH FLOW

Cash flow from operating activities before changes in working capital in Q1 amounted to SEK -31.8 million (SEK -33.2 million). The decreased outflow y/y primarily reflects the reduced operating loss. Changes in working capital in the current quarter totaled an inflow of SEK 482 thousand (inflow of SEK 10.2 million). The inflow in the current quarter primarily reflects the increase in accrued expenses.

Cash flow from investing activities in Q1 totaled an outflow of SEK -64 thousand (SEK 0), which reflects the loss in divestment of a leasing car. Cash flow from financing activities amounted to an outflow of SEK 0.3 million (outflow of SEK 0.8 million), which mainly reflects amortization of lease liabilities.

FINANCIAL POSITION

On the closing date, equity amounted to SEK 280.4 million, compared with SEK 307.8 million per 31 December 2021 and SEK 399.4 million per 31 March 2021. The decrease since 31 December 2021 and 31 March 2021 reflects the net losses incurred.

Liquid assets on the closing date amounted to SEK 232.6 million, compared to SEK 261.6 million per 31 December 2021 and SEK 165.4 million per 31 March 2021. The decrease since 31 December 2021 reflects the net losses incurred. The increase since 31 March 2021 reflects the net proceeds from the capital raise (SEK 187 million), which was received in April 2021, that outweighed the net losses incurred.

Other information

Incentive programs

Ascelia Pharma has one outstanding employee option program that includes members of the management team and share-saving programs for employees. If the terms of the option program are met at the time for utilization, the management team has the right to purchase shares at a pre-determined price. For the share-saving program, employees are entitled to receive matching and performance shares according to terms of the program.

The Group recognizes share-based remuneration, which personnel may receive. A personnel cost is recognized, together with a corresponding increase in equity, distributed over the vesting period. Social security costs are revalued at fair value. Further information about the incentive programs can be found in the Annual Report 2021 on pages 67-68.

In case all outstanding incentive programs per 31 March 2022 are exercised in full, a total of 1.8 million common shares will be issued (including hedge for future payment of social security charges). This corresponds to an aggregate dilution of approximately 5.1% of Ascelia Pharma's share capital after full dilution (calculated on the number of common shares that will be added upon full exercise of all outstanding incentive programs).

After the end of the accounting period, the Annual General Meeting resolved on implementing a new share-saving program for employees (LTI 2022). The maximum number of shares that may be issued under LTI 2022 is 973,677. The maximum dilution for the outstanding incentive programs per 31 March 2022 plus LTI 2022 amounts to in total 7.7%.

Information about risks and uncertainties for the Group and the parent company

Ascelia Pharma's activities and markets are exposed to a number of risks and uncertainties which impact, or could impact, the company's business, financial position and result. The risks and uncertainties, which Ascelia Pharma considers to have the largest impact on its results are clinical drug development, regulatory conditions, commercialization and licensing, intellectual property rights and other forms of protection, financing conditions, macroeconomic conditions including impact from pandemics, geopolitical effects and and foreign exchange exposure.

The Group's overall strategy for risk management is to limit undesirable impact on its result and financial position, to the extent it is possible. The Group's risks and uncertainties are described in more detail in the Annual Report 2021 on pages 34-36.

Siginificant events after the end of the reporting period

On 1 April 2022, CFO at Ascelia Pharma Kristian Borbos resigned. He will continue as CFO during the resignation period. Search process for new CFO has been initiated.

On 10 May 2022, results from Orviglance Food Effect Study was annonced. The results positively showed that that intake of a light meal prior to Orviglance administration provides similar liver MRI enhancement compared to a fasting condition.

Auditor's review

This interim report has not been reviewed by the company's auditor.

This interim report has been prepared in both Swedish and English versions. In the event of any differences between the translations and the Swedish original, the Swedish version shall prevail.

Magnus Corfitzen

CEO

Malmö, 11 May 2022 Ascelia Pharma AB (publ)

Consolidated Income Statement

	Q1 (Jan-Mar)
SEK in thousands (unless otherwise stated)*	2022	2021
Net sales	–	–
Gross profit/loss	–	–
Administrative costs	-4,123	-3,144
Research and development costs	-24,353	-29,344
Commercial preparation costs	-4,229	-935
Other operating income	135	27
Other operating costs	–	-344
Operating result	-32,570	-33,740
Finance income	2,557	4,442
Finance costs	-15	-18
Net financial items	2,542	4,424
Loss before tax	-30,028	-29,316
Tax	953	501
Loss for the period	-29,075	-28,815
Attributable to:
Owners of the Parent Company	-29,075	-28,815
Non-controlling interest	–	–
Earnings per share
Before and after dilution (SEK)	-0.84	-1.00

Consolidated Statement of Comprehensive Income

	Q1 (Jan-Mar)
SEK in thousands (unless otherwise stated)*	2022	2021
Profit/loss for the period	-29,075	-28,815
Other comprehensive income
Currency translation of subsidiaries**	168	21
Other comprehensive income for the period	168	21
Total comprehensive income for the period	-28,907	-28,794

* Some figures are rounded, so amounts might not always appear to match when added up.

** Will be classified to profit and loss when specific conditions are met

Consolidated Balance Sheet

	31 Mar	31 Mar	31 Dec
SEK in thousands*	2022	2021	2021
ASSETS
Non-current assets
Intangible assets	57,065	57,064	57,063
Tangible assets - Equipment	219	272	238
Right-of-use assets	1,078	1,504	1,581
Total non-current assets	58,362	58,840	58,882
Current assets
Advance payments to suppliers	7,382	5,689	6,175
Current receivables
Income tax receivables	5,599	2,449	4,395
Receivables from shareholders	–	200,000	–
Other receivables	1,171	4,849	1,165
Prepaid expenses and accrued income	2,384	784	1,277
Cash and bank balances	232,603	165,422	261,599
Total current assets	249,139	379,193	274,611
Total assets	307,501	438,033	333,493
EQUITY
Share capital	34,871	29,179	34,576
Other paid-in capital	678,759	684,011	678,831
Reserve of exchange differences on translation	422	140	254
Loss brought forward (incl. net profit/loss for the period)	-433,658	-313,921	-405,827
Equity attributable to Parent Company shareholders	280,394	399,409	307,834
Total equity	280,394	399,409	307,834
LIABILITIES
Long-term liabilities
Leasing	268	753	553
Total long-term liabilities	268	753	553
Current liabilities
Accounts payable	4,894	6,963	6,147
Tax payable	–	–	5
Other liabilities	2,815	6,390	1,509
Current lease liabilities	871	832	1,102
Accrued expenses and deferred income	18,259	23,686	16,343
Total current liabilities	26,839	37,871	25,106
Total liabilities	27,107	38,624	25,659
Total equity and liabilities	307,501	438,033	333,493

Consolidated Statements of Changes in Equity

	Q1 (Jan-Mar)		FY (Jan-Dec)
SEK in thousands*	2022	2021	2021
Equity at start of the period	307,834	236,056	236,056
Comprehensive income
Profit/loss for the period	-29,075	-28,815	-125,903
Other comprehensive income	168	21	135
Total comprehensive income	-28,907	-28,794	-125,768
Transactions with shareholders
New issue of C-shares	295	–	398
Repurchase of own shares C-shares	-295	–	-398
New issue of common shares	–	203,853	200,000
Issuance expenses	-72	-13,091	-13,271
Redemption of warrants	–	–	3,853
Share based remuneration to employees	1,539	1,385	6,964
Total transactions with shareholders	1,467	192,147	197,546
Equity at end of the period	280,394	399,409	307,834

Consolidated Cash Flow Statement

	Q1 (Jan-Mar)
SEK in thousands*	2022	2021
Operating activities
Operating result	-32,570	-33,740
Expensed share based remuneration	634	530
Adjustment for items not included in cash flow	332	216
Interest received	–	–
Interest paid	-15	-17
Income tax paid/received	-229	-170
Cash flow from operating activities before changes in working capital	-31,848	-33,181
Cash flow from changes in working capital
Increase (-)/Decrease (+) of advance payments	-1,214	2,590
Increase (-)/Decrease (+) of operating receivables	-1,168	-975
Increase (+)/Decrease (-) of accounts payable	-1,258	3,072
Increase (+)/Decrease (-) of other liabilities	4,122	5,546
Change in working capital	482	10,233
Cash flow used in operating activities	-31,366	-22,948
Investing activities
Divestment of right-of-use assets	-64	–
Cash flow from investing activities	-64	–
Financing activities
Issuance proceeds	–	–
Issuance costs	-72	-591
Amortisation of loan (leasing)	-271	-196
Cash flow from financing activities	-343	-787
Cash flow for the period	-31,773	-23,735
Cash flow for the period	-31,773	-23,735
Cash and cash equivalents at start of period	261,599	184,686
Exchange rate differences in cash and cash equivalents	2,777	4,471
Cash and cash equivalents at end of period	232,603	165,422

Parent Company – Income Statement

	Q1 (Jan-Mar)
SEK in thousands*	2022	2021
Net sales	672	811
Gross profit/loss	672	811
Administrative costs	-4,094	-3,150
Research and development costs	-20,713	-27,739
Commercial preparation costs	-4,236	-944
Other operating income	57	–
Other operating costs	–	-344
Operating result	-28,314	-31,366
Finance income	2,440	4,442
Finance costs	–	–
Result from other long-term receivables	701	559
Net financial costs	3,141	5,001
Loss before tax	-25,173	-26,365
Group contribution	–	–
Tax	–	–
Loss for the period	-25,173	-26,365

Parent Company – Statement of Comprehensive Income

	Q1 (Jan-Mar)
SEK in thousands*	2022	2021
Loss for the period	-25,173	-26,365
Other comprehensive income	–	–
Other comprehensive income for the period	–	–
Total comprehensive income for the period	-25,173	-26,365

Parent Company – Balance Sheet

	31 Mar	31 Mar	31 Dec
SEK in thousands*	2022	2021	2021
ASSETS
Non-current assets
Tangible assets
Equipment	219	272	238
Financial assets
Shares in affiliated companies	58,068	58,068	58,068
Other long-term receivables from group companies	37,320	10,009	36,620
Total non-current assets	95,607	68,349	94,926
Current assets
Advance payments to suppliers	5,267	5,689	5,323
Current receivables
Receivables from group companies	7,696	2,157	6,971
Income tax receivables	962	792	739
Receivables from shareholders	–	200,000	–
Other receivables	1,089	4,511	656
Prepaid expenses and accrued income	2,284	784	1,183
Cash and bank balances	221,457	164,408	246,311
Total current assets	238,755	378,341	261,183
Total assets	334,362	446,690	356,109
EQUITY
Restricted equity
Share capital	34,871	29,179	34,576
Non-restricted equity
Other paid-in capital	678,759	684,011	678,831
Loss brought forward	-379,340	-276,477	-271,295
Loss for the period	-25,173	-26,365	-109,288
Total equity	309,117	410,348	332,824
LIABILITIES
Current liabilities
Accounts payable	4,432	6,420	5,700
Other liabilities	2,814	6,390	1,509
Accrued expenses and deferred income	17,999	23,532	16,076
Total current liabilities	25,245	36,342	23,285
Total equity and liabilities	334,362	446,690	356,109

Notes

General information

This interim report for the Group has been prepared according to IAS 34 Interim Financial Reporting and applicable rules in the Swedish Annual Accounts Act (ÅRL). The interim report for the parent company has been prepared according to the Swedish Annual Accounts Act chapter 9, Interim Reporting. For the Group and the parent company, the same accounting principles and basis for calculations have been applied as in the recent Annual Report.

Fair value of financial instruments

The recognized value for other receivables, cash and cash equivalents, trade payables and other liabilities constitutes a reasonable approximation of fair value.

Related parties Purchases from related parties

Oncoral Pharma ApS has an agreement with Solural Pharma ApS according to which, Solural Pharma ApS provides development and manufacturing of clinical study material. The owners of Solural Pharma ApS are the founders of Oncoral Pharma ApS and are, after the sale of Oncoral Pharma ApS to Ascelia Pharma AB in 2017, shareholders in Ascelia Pharma AB. Per 31 March 2022, the owners of Solural ApS collectively owned 1.9% of the shares in Ascelia Pharma AB. In addition to payment for services performed, Solural Pharma ApS has the right to receive a bonus of maximum SEK 10 million if commercialization occurs through a sale or a outlicensing and SEK 12 million if commercialization is carried out by Oncoral Pharma ApS or Ascelia Pharma AB itself.

Regardless the commercialization method, Oncoral Pharma ApS has the right to, at any time, finally settle Solural Pharma ApS right for remuneration by payment of SEK 10 million. In Q1 2022, services for a value of around SEK 180 thousand were acquired from Solural Pharma ApS.

Use of non-international financial reporting standards (IFRS) performance measures

Reference is made in this interim report to alternative performance measures that are not defined according to IFRS. Ascelia Pharma considers these performance measures to be an important complement since they enable a better evaluation of the company´s economic trends. The company believes that these alternative performance measures give a better understanding of the company´s financial development and that such key performance measures contain additional information to the investors to those performance measures already defined by IFRS. Furthermore, the key performance measures are widely used by the management in order to assess the financial development of the company. These financial key performance measures should not be viewed in isolation or be considered to substitute the key performance measures prepared by IFRS.

Furthermore, such key performance measures should not be compared to other key performance measures with similar names used by other companies. This is due to the fact that the above-mentioned key performance measures are not always defined identically by other companies. These alternative performance measures are described below.

Important estimations and judgements

Valuation of intangible assets

The recognized research and development project in progress is subject for management's impairment test. The most critical assumption, subject to evaluation by management, is whether the recognized intangible asset will generate future economic benefits that at a minimum correspond to the intangible asset's carrying amount. Management's assessment is that the expected future cash flows will be sufficient to cover the intangible asset's carrying amount and accordingly no impairment loss has been recognized.

Capitalization of development expenses

In Q1 2022, the criteria for classifying R&D costs as an asset according to IAS 38 has not been met (capitalization of development expenses is normally done in connection with final regulatory approval). Hence, all R&D costs related to the development of the product candidates have been expensed.

Share-based incentive programs Employee option programs

Ascelia Pharma has implemented two employee option programs with individual terms and conditions. The parameter, which have the largest impact on the value of the options, is the publicly traded share price.

In 2021, one program reached its exercise period and all options related to this program, 481,573 in total, were exercised into common shares.

For the outstanding option program, a gain of SEK 0.4 million including social security charges was recognized in Q1 2022. The gain reflects the decline is Ascelia Pharma's share price during the quarter resulting in a lower liability for social security charges. The recognized gain related to social security charges outweighed the recognized personnel costs in the quarter.

Share saving programs

Ascelia Pharma has implemented three long-term incentive programs for employees in the form of performance-based share saving programs. The parameter, which have the largest impact on the value of the programs, is the publicly traded share price.

The total recognized costs for the share saving programs including social security charges in Q1 2022 were SEK 1.0 million.

Notes

Definitions of alternative performance measures

Alternative performance measures	Definition	Aim
Operating results (TSEK)	Profit before financial items and tax.	The performance measure shows the company´s operational performance.
Research and development costs/Operating costs (%)	The research and development expenses in relation to total operating costs (consisting of the sum of administrative expenses, R&D, costs for commercial prepara tions and other operating expenses).	The performance measure is useful in order to understand how much of the operating costs that are related to research and development expenses.

Reconciliation table for alternative performance measures for the Group

	Q1 (Jan-Mar)
SEK in thousands*	2022	2021
R&D costs	-24,353	-29,344
Administration costs	-4,123	-3,144
Commercial preparation costs	-4,229	-935
Other operating costs	–	-344
Total operating costs	-32,705	-33,767
R&D costs/Operating costs (%)	74%	87%

Financial calendar

Half-year report H1 2022 (Jan-Jun): 18 August 2022 Interim report 9M 2022 (Jan-Sep): 4 November 2022 Full-year report 2022 (Jan-Dec): 10 February 2023

Contact

Magnus Corfitzen, CEO moc@ascelia.com | +46 735 179 118

Kristian Borbos, CFO kb@ascelia.com | +46 735 179 113

Mikael Widell, Head of IR & Communications mw@ascelia.com | +46 703 119 960

ASCELIA PHARMA AB (publ) Hyllie Boulevard 34 SE-215 32 Malmö, Sweden

ascelia.com