Arctic Bioscience — Earnings Release 2021

Aug 26, 2021

Arctic Bioscience H1 2021 results: phase IIb study on track and revenue up 50% y/y

Arctic Bioscience H1 2021 results: phase IIb study on track and revenue up 50% y/y

Arctic Bioscience AS ("Arctic Bioscience" or "the company") today announces its

results for the first half 2021.

Highlights

· Successful private placement and IPO raising NOK 300 million, with first day

of trading on Euronext Growth on 24 February 2021

· On track and on budget for phase IIb clinical study on HRO350 in mild-to

-moderate psoriasis, planned start H1 2022

· Financial strength to execute on ongoing development programs, invest in new

production facility and capacity to participate in new selected pre-clinical

trials

· Revenue increased 50% y/y driven by increased B2B sales in Europe and the US

· EBITDA of NOK -19.9 million, impacted by NOK 8.8 million of non-recurring

costs, mainly related to the IPO

· Completed basic design for new production facility confirming 150 metric

tons of capacity for nutraceutical and pharmaceutical products to be available

H2 2023.

· Announced collaboration with Smerud Medical Research International to

develop new drug candidate for normal brain development in extremely premature

infants

Financials

(NOK million) 1H 2021 1H 2020 2020

Revenues 12.0 8.0 20.6

Gross profit 3.4 2.8 6.1

Adjusted gross profit* 4.0 2.8 6.1

EBITDA -19.9 -9.5 -20.5

Adjusted EBITDA** -11.2 -9.5 -20.5

Net investing cash flow -22.6 -1.2 -1.3

Cash holdings 258.7 11.5 12.6

* Adjustments to cost of sales are related to non-recurring costs associated

with a change in distributor relationship in the USA.

** Adjustments to operating expenditures are made for costs associated with the

listing on Euronext Growth

Review

Arctic Bioscience has two businesses, pharmaceutical and nutraceutical, which

are built upon a single proprietary technology and knowledge platform.

Arctic Bioscience's pharmaceutical business is in the process of developing a

drug candidate (HRO350) - a novel oral treatment for mild-to-moderate psoriasis.

There is significant unmet medical need for new treatment options for the mild

-to-moderate category as well as a large market opportunity. Arctic Bioscience

has shown promising results in a pilot clinical trial on HRO, and a large,

randomized phase IIb study is scheduled to be initiated in H1 2022.

During the first half, the HRO350 development program continued on timeline and

on budget. Site feasibility for the phase IIb study was initiated in Q2 and is

due to be completed in Q4 2021. The company also received a grant of NOK 4.8

million from The Research Council of Norway to study the mechanism of action for

HRO350. Additionally, the company announced a collaboration with Smerud Medical

Research International to develop a new drug candidate for extremely premature

infants based on the same technology platform.

Arctic Bioscience's nutraceuticals business sells premium Omega 3 products via

B2B and B2C channels globally and B2B2C in China through a strategic sales

partnership with Kotler Marketing Group.  The company experienced continued

growth of 50% y/y in the first half 2021 compared with H1 2020, driven by an

increase in B2B bulk oil sales to the Americas and Europe.  Adjusted gross

profit was NOK 4.0 million. China is an important market for the company and the

first half saw the foundation for market entry and efficient growth established,

with three products (Romega Prenatal, Romega Eye Health and Romega Brain Health)

deployed via multiple e-commerce platforms in China.

In February, Arctic Bioscience completed a private placement raising NOK 300

million. The proceeds from the transaction will be used to invest in the

development of the Company's novel treatment against mild-to-moderate psoriasis

and to invest in a new state-of-the-art production and process facility. The

proceeds will also contribute to strengthen the company's financial capacity and

ability to participate in new selected pre-clinical trials.

On a consolidated level, adjusted EBITDA margin improved from -120% in H1 2020

to -93% in H1 2021. Total cash flow from investments to further the company's

growth plan totaled negative NOK 22.6 million in the first half.  The company's

financial position at the end of the period was strong, with cash and cash

equivalents amounting to NOK 259 million.

Commenting on developments, CEO Ole Arne Eiksund said:

"Operationally and financially, the first half year of 2021 has been an eventful

one for Arctic Bioscience. The most important message is that the phase IIb

study for our drug candidate HRO 350 targeting mild-to-moderate psoriasis

remains on track. We are also well on our way with the state-of-the-art

production facility in Ørsta, which we expect to significantly improve company

gross margins and profitability. Revenues from our nutraceutical business were

up strongly and we expect further growth in the second half of the year.

Combined with financial support from our shareholders, we are in a good position

to develop the company further."

Outlook

Arctic Bioscience is progressing well in all business areas and remains

positioned to capitalize on the unique properties of herring roe to deliver both

pharmaceutical and nutraceutical products to the global population.

During the second half of 2021, the main priority for the pharma business is to

continue feasibility and secure sites for the HRO350 phase IIb clinical trial,

and to initiate the research collaboration for development of the novel drug

candidate for extremely premature infants. The Nutra business will focus on

entering new geographies, and the new product Romega Brain will be launched -

which is expected to increase B2C revenue. In addition, the company will

initiate construction work related to the building of the factory at the

company's premises in Ørsta.

Financially, the company aims for full year 2021 revenue growth of 40%+ and an

EBITDA margin in the -95% to -70% range. Total investments related to the HRO

350 development for the full year is estimated to NOK 40 to 50 million.

Results Presentation

CEO Ole Arne Eiksund and CFO Danielle Glenn will present the H1 2021 results by

webcast today, Thursday August 26th, at 08:30 CEST.

The presentation and subsequent Q&A will be held in English.

The presentation can be accessed with the following link:

https://streams.eventcdn.net/arcticbioscienceas/financial-results-first-half

-2021/register

For more information, please contact

Ole Arne Eiksund

CEO Arctic Bioscience

Phone: +47 908 43 944

Danielle Glenn

CFO Arctic Bioscience

Phone: +47 909 98 201

About Arctic Bioscience

Arctic Bioscience is a biotech company developing pharmaceutical and

nutraceutical products based on the unique properties of herring roe oil,

composed of complex bioactive marine compounds, including lipids essential to

maintaining cell membranes. The nutraceutical products contain lipids which

contribute to the normal functioning of brain, heart and vision.

The company is developing a novel drug candidate (HRO350) for mild-to-moderate

psoriasis, a large global patient population where there is substantial need for

effective, convenient and cost-effective new medicines with beneficial safety

profiles. Nutraceuticals from Arctic Bioscience are sold worldwide as bulk

ingredients to other companies making dietary supplements (B2B) and as finished

goods under the ROMEGAT brand (B2C), with significant expansion potential all

channels and regions.

To support its long-term growth strategy, Arctic Bioscience is planning a state

-of-the-art manufacturing facility in Ørsta. Easy access to the raw material and

proprietary production processes will increase control of the value chain,

improve margins and enable large-scale, high-quality manufacturing.

Arctic Bioscience is led by a highly competent team with significant expertise

developing marine oils and extensive experience from some of the world's leading

pharmaceutical, technology and financial services companies.