Arctic Bioscience — Earnings Release 2022

Aug 25, 2022

Arctic Bioscience - Revenue growth and HRO350 Phase IIb clinical trial on track

Arctic Bioscience - Revenue growth and HRO350 Phase IIb clinical trial on track

Highlights H1 2022 results:

· HRO350 development on track with further projects in pipeline

· First patient expected to be enrolled in Q4 2022

· Total revenue increased 20 % y/y to NOK 14,4 million in H1 2022, from NOK 12

million in H1 2021

· EBITDA of NOK -14,4 million in H1 2022 (NOK -19,9 million), with a gross

margin of 27,6 % (26,0 %)

· Solid financial position with NOK 177,8 million in cash by 30 June

· Positive revenue prospects for H2 2022, including increased order intake

from the Chinese market

· Strong Management team in place, including new CEO, new CFO and new SVP

Sales & Marketing.  Strengthened the QA focus with the hire of a new Quality

Manager

Arctic Bioscience performance during the first half year was good, with strong

sales growth for the nutraceutical business, and the clinical program for

HRO350, an oral drug candidate for mild to-moderate psoriasis, developing

according to plan. During the period, the company also obtained a positive

opinion on its Paediatric Investigational Plan, outlining the development of the

oral drug candidate for children with psoriasis.

"The entire organization has worked hard to stay on track with the development

plan for HRO350, and we are now in a position to take the next steps in this

development plan. This, together with the other projects in our pipeline, give

us some exciting next few months. The financial situation has developed as

expected during the period. Given new sales prospects and order intake for the

second half of 2022, we expect a positive development in revenues for the

remaining of the year", says CEO Christer L. Valderhaug.

Arctic Bioscience' revenues for the first half year of 2022 totaled NOK 14,4

million, an increase of 20 % compared to 2021. All revenues stem from the

nutraceutical activities. Gross margin was 27,6 %, up 1,6 %-points from H1 2021.

EBITDA was negative NOK 14,4 million, compared to negative NOK 19,9 million in

first half year 2021. The liquidity position for the Group is strong, ending at

NOK 177,8 million by end of June 2022.

Order intake for the Nutra business was strong during the period, especially

from the Chinese market. In June, Arctic Bioscience signed a new and extended

strategic partnership agreement with Kotler Marketing Group China. The expansion

of the partnership opens for access to a larger part of the Chinese market for

Romega products. It further includes a potential collaboration within the Pharma

space in China.

The company has experienced some cost increases from suppliers. This may impact

gross margin the second half of 2022 due to lag in price increases to address

the higher costs.

The time schedule for manufacturing of clinical materials has been somewhat

delayed, mainly due to sourcing issues impacted by the pandemic and current

geopolitical conditions. The issues were successfully resolved, and production

of HRO350 for clinical testing is ongoing, including compiling regulatory

documentation for its Clinical Trial Application (CTA), allowing the first

patients to be enrolled to the clinical trial in Q4 2022. The CTA is expected to

be submitted in Q3 2022. Sites are secured in five European countries, and a

sufficient number of patients to complete the study is secured.

During the period the company made major changes to the organization. In January

Christer L. Valderhaug was appointed new CEO, and he started in his position 1

March. Jone R. Slinning took place as new CFO in April. In addition, the sales

and marketing organization was strengthened with a new senior vice president for

Sales & Marketing, and a Quality Manager was appointed which further strengthen

the QA focus. In September, the Nutra team will be extended with a new EVP Nutra

Sales B2B.

Outlook

The Clinical Trial Application is expected to be submitted in Q3 2022, allowing

first patients to be enrolled to the clinical trial in Q4 2022. With a 6-month

inclusion period, it is expected that the 6-months data read out will be

available in second half of 2023. Concurrently to the clinical trial, a process

regarding pursuing a commercial partner for HRO350 will start in the second half

of 2022.

Arctic Bioscience has several drug-development projects in pipeline, including a

novel drug candidate for support of brain development in extremely premature

infants. An ongoing research project with Møreforsking and Nofima is

investigating underlying mechanisms of action for HRO350. This research may be

relevant for the treatment of other inflammatory diseases.

Based on new sales prospects and received order intake for the remaining of the

year, Arctic Bioscience expects a positive development in revenues during the

second half of 2022, forecasting a 60-70 % y/y revenue growth in 2022.

The company's liquidity situation at the end of the year is expected to be

strong, and sufficient to handle the pharmaceutical phase IIb clinical trial.

Results presentation

Arctic Bioscience will host a webcast and Q&A session to present the results

today at 10:00 CET. The presentation can be accessed through the Company's

website, or with the following link:

https://channel.royalcast.com/landingpage/hegnarmedia/20220825_11/

This information is subject to the disclosure requirements pursuant to section 5

-12 of the Norwegian Securities Trading Act.

For further information, please contact:

Christer L. Valderhaug

CEO of Arctic Bioscience AS

Mobile: +47 920 84 601

Email: christer@arctic-bioscience.com

Jone R. Slinning

CFO of Arctic Bioscience AS

Mobile: +47 948 75 469

Email: jone@arctic-bioscience.com

About Arctic Bioscience

Arctic Bioscience is a biotech company developing and commercializing

pharmaceutical and nutraceutical products based on unique bioactive marine

compounds.

The company is developing HRO350 - a novel oral drug candidate. HRO350 is being

developed for treatment of patients with mild-to-moderate psoriasis. This is a

large patient group in need of new effective medicines with beneficial safety

profile.

Nutraceuticals from Arctic Bioscience are sold globally as bulk ingredients as

well as finished goods under the ROMEGA® brand.

Arctic Bioscience is led by a team of highly competent people with experience in

developing marine oils and experience from global pharmaceutical companies.