Active Biotech — Interim / Quarterly Report 2012

Nov 9, 2012

Interim report January - September 2012

• Laquinimod ― Teva to initiate a new Phase III study in the US at year-end ― milestone payment of USD 5 M received following a submitted application for regulatory approval in Europe
• ― Crohn's Phase II data presented at the UEGW conference
• TASQ ― biomarker data presented at the ESMO conference ― Ipsen to initiate two new clinical Phase II studies: maintenance therapy for prostate cancer and a study of other types of cancer
• ANYARA ― Phase III study results to be presented Q1 2013
• 57-57 ― clinical trial of systemic sclerosis/scleroderma is in progress
• ISI ― project proceeding as planned
• Net sales: SEK 136.4 M (231.3)
• Operating loss: SEK 168.7 M (loss 6.2)
• Loss after tax: SEK 175.1 M (loss: 1.3)
• Loss per share for the period: SEK 2.54 (loss: 0.02)

For further information, please contact:

Tomas Leanderson President and CEO Tel: +46 (0)46 19 20 95

Hans Kolam Active Biotech AB

CFO (Corp. Reg. No. 556223-9227) Tel: +46 (0)46 19 20 44 Box 724, SE-220 07 Lund Tel: +46 (0)46 19 20 00

This report is also available at www.activebiotech.com Fax: +46 (0)46 19 11 00

Laquinimod – a novel oral immunomodulatory compound for the treatment of autoimmune diseases

Laquinimod is a quinoline compound under development for the treatment of such diseases as multiple sclerosis (MS). Active Biotech has an agreement with the Israeli company Teva Pharmaceutical Industries Ltd (June 2004) covering the development and commercialization of laquinimod. New data was presented in September 2009 showing that laquinimod has both neuroprotective and anti-inflammatory properties. In December 2010, positive results from the Phase III ALLEGRO study were presented. Laquinimod met the primary endpoint of reducing the annualized relapse rate and significantly slowed progression of disability. On August 1, 2011, the initial results were announced from the second Phase III BRAVO study. The BRAVO findings support the direct effect of laquinimod in the central nervous system (CNS) and are in line with the results of the first laquinimod Phase III trial, ALLEGRO. In November 2011, Teva announced that, following discussions with the FDA, it had decided to carry out one additional further clinical study prior to filing an NDA in the US.

– On July 17, Active Biotech announced that its partner Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) had submitted a marketing authorization application (MAA) for laquinimod for the treatment of multiple sclerosis (MS) to the European Medicines Agency (EMA). Submission of the application triggered a milestone payment of USD 5 M from Teva to Active Biotech. If the application is successful, laquinimod could be approved by year-end 2013.

– On August 8, Active Biotech and Teva announced that, following a written agreement reached with the U.S. Food and Drug Administration (FDA) on a Special Protocol Assessment (SPA), a third Phase III study of laquinimod in MS patients will be initiated. The third Phase III laquinimod trial CONCERTO will evaluate two doses of the investigational product (0.6mg and 1.2mg) in approximately 1,800 patients for up to 24 months. The primary outcome measure will be confirmed disability progression as measured by the Expanded Disability Status Scale (EDSS).

– The clinical Phase II trials for the treatment of Lupus nephritis and Lupus arthritis are proceeding as planned and are fully enrolled.

TASQ – an immunomodulatory, anti-metastatic substance for the treatment of prostate cancer

The development of TASQ (tasquinimod) is principally focused on the treatment of prostate cancer. Tasquinimod is an immunomodulatory, anti-metastatic substance that attacks the tumor's growth through, for example, inhibiting the formation of blood vessels in the tumor. It was announced in December 2009 that the primary endpoint of the Phase II study, to show a higher fraction of patients with no disease progression during the six-month period of treatment using tasquinimod, had been attained. In April 2011, Active Biotech and Ipsen (Euronext: IPN; ADR: IPSEY) entered a broad partnership for the co-development and commercialization of Active Biotech's compound, TASQ. Under the terms of the agreement, Active Biotech granted Ipsen exclusive rights to commercialize TASQ worldwide, except for North and South America and Japan, where Active Biotech retains all commercial and marketing rights. Both companies will co-develop TASQ for the treatment of castrate-resistant prostate cancer (CRPC), with the possibility of developing TASQ in other cancer indications.

– The study is a global, randomized, double-blind, placebo-controlled Phase III study of tasquinimod in patients with metastatic CRPC (mCRPC). The aim of the Phase III study is to confirm TASQ's efficacy on the disease, with radiological progression-free survival (PFS) as the primary endpoint and overall survival (OS) as secondary endpoint. The study will include about 1,200 patients in more than 250 centers. Recruitment is proceeding according to plan and is expected to be concluded before the end of 2012.

ANYARA – fusion protein for immunological treatment of renal cell cancer

ANYARA is a TTS (Tumor Targeting Superantigen) compound that makes the treatment of cancer tumor-specific. The development of ANYARA is mainly focused on renal cell cancer. Positive data was reported in connection with the interim analysis in Phase II/III and from clinical Phase I trials in lung cancer, renal cell cancer and pancreatic cancer. In July 2009, the results from two Phase I studies of ANYARA were published in the Journal of Clinical Oncology, where ANYARA was studied both as a single agent (monotherapy) and in combination with an established tumor therapy – docetaxel (Taxotere®) – in patients with advanced cancer. The results showed that ANYARA was well tolerated both as monotherapy and in combination with docetaxel. A pivotal Phase III trial in patients with advanced renal cell cancer is currently under way. The Phase III trial has been fully enrolled since June 2009 and includes a total of approximately 500 patients at about 50 clinics in Europe. ANYARA has been granted orphan-drug status by the EMA for the indication renal cell cancer. Information concerning the ongoing clinical trial is available at www.activebiotech.com and www.clinicaltrials.gov.

– The ongoing Phase III study is evaluating the effect of ANYARA in combination with interferon-alpha, compared with interferon-alpha alone, in patients with advanced renal cell cancer. The primary endpoint is survival and will be read after 384 registered events (deaths). The results will be presented during first quarter 2013.

57-57 – novel oral immunomodulatory compound for the treatment of systemic sclerosis/scleroderma

57-57 is a quinoline compound primarily intended for the treatment of systemic sclerosis/ scleroderma. This rare disease is classified as an "orphan-drug indication." In February 2011, the 57-57 project was granted orphan medicinal product status in Europe for the indication Systemic Sclerosis. The EMA's "Orphan Medicinal Product Designation" is implemented to promote the development of drugs that may provide significant benefit to patients suffering from rare diseases identified as life-threatening or chronically debilitating. Under EMA guidelines, Orphan Medicinal Product Designation provides ten years of potential market exclusivity if the product candidate is approved for marketing in the European Union.

– An explorative clinical study in systemic sclerosis/scleroderma has been initiated and will include about ten patients. The primary endpoint of the study is safety, with the secondary endpoints including the effect on selected biomarkers.

ISI (Inhibition of S100 interactions) – preclinical project based on the mode of action of quinoline compounds

Active Biotech is conducting a research project aimed at utilizing the company's own preclinical results that were generated with respect to a target molecule for the quinoline (Q) compounds and their biological mode of action. The results of a target molecule for the Q compounds were published in PLoS Biology (Volume 7, Issue 4, pp. 800- 812) in April 2009. The study shows that Q compounds bind to a molecule called S100A9, which is expressed in white blood cells involved in the regulation of immune responses. Furthermore, it is shown that S100A9 interacts with two known pro-inflammatory receptors (Toll-like receptor 4 (TLR4) and Receptor of Advanced Glycation End products (RAGE)) and that this interaction is inhibited by Q compounds. The project aims at producing new, patentable chemical substances that interact with the target molecule of the Q compounds.

– The project is proceeding according to plan. Efforts are centered on building up a strong patent portfolio around the compounds that interact with S100 proteins. When this goal has been achieved, a decision will be taken on a clinical development strategy and selection of the first candidate drug is planned for 2014.

RhuDex® – a novel oral compound for the treatment of rheumatoid arthritis

In the project covering Active Biotech's patented CD80 antagonists, the RhuDex candidate drug is under development for the treatment of rheumatoid arthritis (RA). In April 2002, Active Biotech entered a licensing agreement with Avidex Ltd, now a wholly owned subsidiary of the German biotechnology company MediGene AG, according to which MediGene has the exclusive rights to develop CD80 antagonists and market products in which these compounds are included. Two Phase I trials have already been successfully concluded in which the RhuDex candidate drug was studied with respect to its safety, tolerability and pharmacokinetic properties in healthy volunteers.

– For more information and the latest news about RhuDex, see www.medigene.com.

Events after the end of the period

Laquinimod

In October, Active Biotech's partner Teva presented data on laquinimod at the ECTRIMS conference. The results from the extension of the Phase III ALLEGRO study, where patients were treated with laquinimod for three years, confirm the positive effects of disability progression previously demonstrated by laquinimod.

On October 22, Phase IIa clinical data for the candidate drug laquinimod in moderate to severe Crohn's disease was presented. The findings demonstrated that treatment with orally administered laquinimod 0.5 mg/day resulted in a robust, early and consistent effect on remission (48.3 percent vs. 15.9 percent of patients, respectively) and response rates (62.1 percent vs. 34.9 percent of patients, respectively) in patients with moderate-to-severe disease versus placebo. The data were reported in an oral presentation at the 20th United European Gastroenterology (UEG) Week conference.

TASQ

On October 1, a new set of data on biomarkers was presented from the previously concluded tasquinimod Phase II study in patients with mCRPC who were not treated with chemotherapy. The results from the analysis support an effect of tasquinimod on both immunomodulation and angiogenesis, which positions tasquinimod as a potentially unique therapeutic approach with a mechanism of action that does not target the androgen receptor pathway.

On October 3, it was announced that a new Phase II, proof-of-concept clinical trial would be initiated to evaluate the activity of tasquinimod in advanced metastatic castrate-resistant prostate cancer patients. The study aims at establishing the clinical efficacy of tasquinimod used as maintenance therapy in patients with metastatic castrateresistant prostate cancer (mCRPC) who have not progressed after a first-line docetaxel based chemotherapy.

On October 19, Active Biotech's partner Ipsen announced that it will initiate a new Phase II, proof-of-concept clinical trial with tasquinimod in a so-called umbrella study evaluating the compound in four different tumor types. The study will evaluate the safety and efficacy of tasquinimod in advanced or metastatic hepato-cellular, ovarian, renal cell and gastric carcinomas in patients who have progressed after standard therapies.

In October 2012, the independent Data and Safety Monitoring Board (DSMB), which is monitoring the ongoing Phase III trial, recommended that the study continue in accordance with the protocol since no safety-related issues were noted.

Financial information

Comments on the Group's results for the period January-September 2012

Net sales for the period amounted to SEK 136.4 M (231.3), including milestone payments from Ipsen Pharma (SEK 91.6 M in the second quarter when 50 percent of the patients in the phase III study with tasquinimod for the treatment of prostate cancer were recruited) and Teva Pharmaceutical Industries (SEK 35.1 M in the third quarter when the marketing authorization application (MAA) for laquinimod for the treatment of multiple sclerosis (MS) was submitted to the European Medicines Agency (EMA)) and service and rental revenues totaling SEK 9.8 M (8.1). The year-earlier period included a payment of SEK 223.2 M from Ipsen Pharma in conjunction with the signing of the development and partnership agreement for tasquinimod.

The operation's research and administration expenses amounted to SEK 305.2 M (237.6), of which research expenses amounted to SEK 294.0 M (224.6). The increase in expenses was entirely attributable to the cost for the ongoing Phase III trials of tasquinimod. The ongoing clinical Phase III trial with tasquinimod, which is scheduled to be fully enrolled before year-end 2012, will include approximately 1,200 patients in more than 250 clinics in 40 countries. According to the partnership agreement with Ipsen Pharma, Active Biotech will receive clinical, regulatory and commercial milestone payments on fulfillment of defined goals. Provided that these milestones are met, the Phase III trial will be financed in full by Ipsen. The other research projects – the Phase III trial for the ANYARA renal cell cancer project, the explorative study for the 57-57 project and the preclinical research project ISI – only had a marginal impact on the cost increase between the years. The out-licensed projects, laquinimod and RhuDex, are financed by the relevant partners.

The operating loss for the period amounted to SEK 168.7 M (loss: 6.2). The decline in earnings compared with the year-earlier period was attributable to lower income in the current year and increased costs for the ongoing clinical Phase III study for TASQ as the number of clinics and patients in the study has increased. Administration expenses totaled SEK 11.2 M (12.9). The net financial expense for the period amounted to SEK 8.3 M (income: 3.1) and the loss after tax was SEK 175.1 M (loss: 1.3).

Cash flow, liquidity and financial position

Cash and cash equivalents at the end of the period amounted to SEK 308.8 M, compared with SEK 465.2 M at the end of 2011.

Cash flow for the period was a negative SEK 156.4 M (pos: 398.9), of which cash flow from operating activities accounted for a negative SEK 150.3 (pos: 15.8). Cash flow from financing activities totaled a negative SEK 6.1 M (pos: 383.6). In the year-earlier period, the combination of a private placement and the exercise of employee stock options generated proceeds totaling SEK 389.6 M.

Investments

Investments in tangible fixed assets amounted to SEK 0.0 M (0.4).

Comments on the Parent Company's results and financial position

Net sales for the period amounted to SEK 142.8 M (238.9) and operating expenses to SEK 328.8 M (263.4). The Parent Company's operating loss for the period was SEK 186.1 M (loss: 24.4).

Net financial expense amounted to SEK 0.1 M (income: 14.8) and the loss after financial items was SEK 186.2 M (loss: 9.7). Cash and cash equivalents including short-term investments totaled SEK 300.9 M at the end of the period, compared with SEK 456.6 M on January 1, 2012.

Shareholders equity

Consolidated shareholder's equity at the end of the period amounted to SEK 332.4 M, compared with SEK 502.0 M at year-end 2011. The number of shares outstanding at the end of the period totaled 68,923,582.

At the end of the period, the equity/assets ratio for the Group was 47.4 percent, compared with 58.5 percent at yearend 2011. The corresponding figures for the Parent Company, Active Biotech AB, were 76.0 percent and 84.7 percent, respectively.

Organization

The average number of employees was 77 (80), of which the number of employees in the research and development organization accounted for 62 (64). At the end of the period, the Group had 74 employees, compared with 79 at year-end 2011. Following implementation of the announced workforce reduction during the second quarter, the number of employees will be about 60.

Outlook, including significant risks and uncertainties

A vital factor for Active Biotech's long-term financial strength and stability is the company's ability to develop pharmaceutical projects to the point at which partnership agreements can be entered into and the partner can assume responsibility for future development and commercialization of the project. During this development phase, the value of projects is expected to increase. The development of partnership agreements already signed and the addition of new agreements are assumed to have a significant impact on future revenues and cash balances. The Board of Directors is of the opinion that existing cash and cash equivalents, as well as income from already signed and expected partnership agreements, will safeguard financing under current plans.

A research company such as Active Biotech is characterized by a high operational and financial risk, since the projects in which the company is involved are at the clinical phase, where a number of factors have an impact on the likelihood of commercial success. In brief, the operation is associated with risks related to such factors as pharmaceutical development, competition, advances in technology, patents, regulatory requirements, capital requirements, currencies and interest rates. Since no significant changes took place with regard to risks and uncertainties during the period, refer to the detailed account of these factors presented in the Directors' Report in the 2011 Annual Report. The Groups operations are primarily conducted in the parent company why risks and uncertainties refer to both the Group and the parent company.

Consolidated profit and loss	July - Sept.		Jan. - Sept.	Full year
SEK M	2012	2011	2012	2011	2011
Net sales	39.8	2.6	136.4	231.3	234.6
Administrative expenses	-3.2	-3.2	-11.2	-12.9	-16.9
Research and development costs	-84.8	-76.2	-294.0	-224.6	-318.6
Operating profit/loss	-48.2	-76.8	-168.7	-6.2	-100.9
Net financial items	-4.1	-2.8	-8.3	3.1	-2.6
Profit/loss before tax	-52.3	-79.6	-177.0	-3.1	-103.5
Tax	0.6	0.6	1.9	1.8	9.0
Net profit/loss for the period	-51.6	-79.0	-175.1	-1.3	-94.5
Comprehensive loss attributable to:
Parent Company shareholders	-51.6	-79.0	-175.1	-1.3	-94.5
Non-controlling interests	–	–	– –		–
Net profit/loss for the period	-51.6	-79.0	-175.1	-1.3	-94.5
Comprehensive profit/loss per share before dilution (SEK)	-0.75	-1.15	-2.54	-0.02	-1.38
Comprehensive profit/loss per share after dilution (SEK)	-0.75	-1.15	-2.54	-0.02	-1.38
Statement of consolidated comprehensive income
Net profit/loss for the period	-51.6	-79.0	-175.1	-1.3	-94.5
Other comprehensive income
Change in revaluation reserve	1.8	1.8	5.4	5.4	32.2
Taxes attributable to other comprehensive income	-0.5	-0.5	-1.4	-1.4	-8.5
Total comprehensive profit/loss for the period	-50.3	-77.7	-171.1	2.7	-70.8
Total other comprehensive profit/loss for the period attributable to:
Parent Company shareholders	-50.3	-77.7	-171.1	2.7	-70.8
Non-controlling interests	–	–	– –		–
Total comprehensive profit/loss for the period	-50.3	-77.7	-171.1	2.7	-70.8
Depreciation/amortization included in the amount of	3.2	3.0	9.6	9.0	12.0
Investments in tangible fixed assets	–	0.1	0.0	0.4	0.5
Weighted number of outstanding common shares before dilution (000s)	68 924	68 924	68 924	68 487	68 597
Weighted number of outstanding common shares after dilution (000s)	68 924	68 924	68 924	68 487	68 597
Number of shares at close of the period (000s)	68 924	68 924	68 924	68 924	68 924

Consolidated statement of financial position		Sept. 30
SEK M	2012	2011	2011
Tangible fixed assets	382.0	357.7	382.7
Long-term receivables	0.0	0.0	0.0
Total fixed assets	382.0	357.7	382.7
Current receivables	10.5	13.3	10.7
Cash and cash equivalents	308.8	530.1	465.2
Total current assets	319.3	543.4	475.9
Total assets	701.3	901.1	858.5
Shareholders equity	332.4	575.1	502.0
Long-term liabilities	230.1	236.3	234.8
Current liabilities	138.9	89.6	121.7
Total shareholders equity and liabilities	701.3	901.1	858.5

Consolidated statement of changes in shareholders equity	Sept. 30	Dec. 31
SEK M	2012	2011	2011
Opening balance	502.0	181.8	181.8
Transfer from revaluation reserve	1.5	1.1	1.5
New share issue	–	389.6	389.6
Net loss for the period	-171.1	2.7	-70.8
Balance at close of period	332.4	575.1	502.0

Condensed consolidated cash-flow statement		Jan. - Sept.
SEK M	2012	2011	Full Year 2011
Loss after financial items	-177.0	-3.1	-103.5
Adjustment for non-cash items, etc.	9.6	9.0	12.0
Cash flow from operating activities
before changes in working capital	-167.4	5.8	-91.6
Changes in working capital	17.1	9.9	44.6
Cash flow from operating activities	-150.3	15.8	-47.0
Investments in tangible fixed assets	0.0	-0.4	-0.5
Cash flow from investing activities	0.0	-0.4	-0.5
New share issue	–	389.6	389.6
Loans raised/amortization of loan liabilities	-6.1	-6.0	-8.1
Cash flow from financing activities	-6.1	383.6	381.5
Cash flow for the period	-156.4	398.9	334.0
Opening cash and cash equivalents	465.2	131.1	131.1
Closing cash and cash equivalents	308.8	530.1	465.2

		Sept. 30	Dec. 31
Key figures	2012	2011	2011
Shareholders equity, SEK M	332.4	575.1	502.0
Equity per share, SEK	4.82	8.34	7.28
Equity/assets ratio in the Parent Company	76.0%	90.5%	84.7%
Equity/assets ratio in the Group	47.4%	63.8%	58.5%
Average number of annual employees	77	80	80

Consolidated profit and loss by quarter
		2010				2011				2012
SEK M	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Net sales	2.8	3.4	2.3	2.9	2.7	226.1	2.6	3.3	2.6	94.0	39.8
Administrative expenses	-4.6	-7.1	-4.0	-7.3	-5.3	-4.4	-3.2	-4.0	-3.8	-4.2	-3.2
Research and development costs	-49.1	-47.6	-45.6	-74.9	-68.3	-80.1	-76.2	-93.9	-99.4	-109.7	-84.8
Operating profit/loss	-51.0	-51.4	-47.3	-79.3	-70.9	141.5	-76.8	-94.7	-100.7	-19.9	-48.2
Net financial items	-2.5	-3.3	-1.2	2.4	1.6	4.3	-2.8	-5.7	1.0	-5.3	-4.1
Profit/loss before tax	-53.5	-54.8	-48.5	-76.8	-69.3	145.8	-79.6	-100.4	-99.6	-25.1	-52.3
Tax	-	-	-	12.6	-	1.2	0.6	7.2	0.6	0.6	0.6
Net profit/loss for the period	-53.5	-54.8	-48.5	-64.3	-69.3	147.0	-79.0	-93.2	-99.0	-24.5	-51.6

Active Biotech Parent Company - Income Statement, condensed		July - Sept.	Jan. - Sept.	Full year
SEK M	2012	2011	2012	2011	2011
Net sales	41.5	5.0	142.8	238.9	244.3
Administration expenses	-7.5	-7.8	-24.1	-17.3	-25.8
Research and development costs	-88.5	-81.4	-304.7	-246.1	-343.6
Operating profit/loss	-54.5	-84.2	-186.1	-24.4	-125.1
Profit/loss from financial items:
Interest income and similar income-statement items	1.7	6.4	5.6	17.1	11.8
Interest expense and similar income-statement items	-1.5	-1.0	-5.7	-2.3	0.0
Profit/loss after financial items	-54.3	-78.8	-186.2	-9.7	-113.3
Tax	–	–	–	–	–
Net profit/loss for the period	-54.3	-78.8	-186.2	-9.7	-113.3
Statement of comprehensive income parent company
Net profit/loss for the period	-54.3	-78.8	-186.2	-9.7	-113.3
Other comprehensive income	–	–	–	–	–
Total comprehensive profit/loss for the period	-54.3	-78.8	-186.2	-9.7	-113.3
Active Biotech Parent Company - Balance sheet, condensed				Sept. 30	Dec. 31
SEK M			2012	2011	2011
Goodwill			133.2	– 149.4	145.3

Tangible fixed assets	0.9	1.2	1.3
Financial fixed assets	40.6	40.6	40.6
Total fixed assets	174.6	191.2	187.2
Current receivables	22.0	21.3	22.6
Short-term investments	198.5	341.7	313.7
Cash and bank balances	102.4	184.0	142.9
Total current assets	322.9	547.0	479.2
Total assets	497.6	738.2	666.4
Shareholders equity	378.1	667.9	564.3
Current liabilities	119.4	70.2	102.0
Total equity and liabilities	497.6	738.2	666.4

Any errors in additions are attributable to rounding of figures

Accounting policies

This interim report has been prepared in accordance with IAS 34, Interim Financial Reporting and applicable parts of the Annual Accounts Act. The interim report of the Parent Company has been prepared in accordance with Chapter 9 of the Annual Accounts Act. For the Group and the Parent Company, the same accounting policies and accounting estimates and assumptions were applied to this interim report as were used in the preparation of the most recent annual report.

Legal disclaimer

This financial report includes statements that are forward-looking and actual results may differ materially from those anticipated. In addition to the factors discussed, other factors that can affect results are developments in research programs, including clinical trials, the impact of competing research programs, the effect of economic conditions, the effectiveness of the company's intellectual patent protection, obstacles due to technological development, exchange-rate and interest-rate fluctuations, and political risks.

Financial calendar

Year-end report 2012: February 14, 2013 Interim reports 2013: April 25, August 7 and November 7 Year-end report 2013: February 13, 2014

The reports will be available from these dates at www.activebiotech.com.

Lund, November 9, 2012 Active Biotech AB (publ)

Tomas Leanderson President & CEO

Review report

Introduction

We have reviewed the interim report of Active Biotech AB (Corporate Registration Number 556223-9227) as of September 30, 2012 and the nine-month period ending on this date. The Board of Directors and the President are responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Focus and scope of the review

We conducted our review in accordance with the Standard on Review Engagements (SÖG) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different direction and is substantially more limited in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the opinion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that, in all material respects, the accompanying interim report for the Group has not been prepared in accordance with IAS 34 and the Annual Accounts Act and the interim report for the Parent Company has not been prepared in accordance with the Annual Accounts Act.

Malmö, November 9, 2012 KPMG AB David Olow Authorized Public Accountant

Active Biotech AB (NASDAQ OMX NORDIC: ACTI) is a biotechnology company with focus on autoimmune/inflammatory diseases and cancer. Projects in pivotal phase are laquinimod, an orally administered small molecule with unique immunomodulatory properties for the treatment of multiple sclerosis, TASQ for prostate cancer and ANYARA primarily for the treatment of renal cell cancer. In addition, laquinimod is in Phase II development for Crohn's and Lupus. The company also has one additional project in clinical development, the orally administered compound 57-57 for Systemic Sclerosis. Please visit www.activebiotech.com for more information.

Active Biotech is obligated to publish the information contained in this interim report in accordance with the Swedish Securities Market Act. This information was provided to the media for publication on November 9, 2012 at 8:30 a.m.