Arctic Bioscience — Interim / Quarterly Report 2021

May 31, 2021

Arctic Bioscience Q1 Company Update

Arctic Bioscience Q1 Company Update

Highlights

· Raised NOK 300 million to fund pharmaceutical development program and new

production facility

· Listed at Euronext Growth on February 24[th]

· Signed 3-year agreement with Smerud Medical Research International for phase

II study of mild to moderate psoriasis drug candidate

· HRO350 pharmaceutical project developing according to plan

· Initiated research collaboration for development of new drug candidate for

extremely premature infants

· Maintain full year revenue growth target of 40%+, mainly driven by H2 sales

"The year this far has been an eventful one for Arctic Bioscience. We continued

our ambitious plan for pharmaceutical development of the investigational

medicinal product HRO350 and announced a new development project for extremely

premature infants. The nutraceutical business has experienced revenue growth vs

2020, with interesting opportunities in the pipeline.  In addition, we are well

on our way with the state-of-the-art production facility in Ørsta, which will

support both the pharmaceutical and nutraceutical businesses when finalized.

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

to develop the company further", says CEO Ole Arne Eiksund in Arctic Bioscience.

Operations

Arctic Bioscience is a biotech company with a clinical phase pharmaceutical

business unit and a commercial nutraceutical business unit. The company is built

upon expertise in bioactive herring roe compounds and proprietary platform

technology.

During the first quarter of 2021, 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 be used to strengthen the company's

financial capacity, to investigate new pharmaceutical indications, and conduct

other selected pre-clinical trials.

The company is in the process of developing a pharmaceutical drug candidate

(HRO350) based on herring roe - a novel oral treatment for mild-to-moderate

psoriasis. Psoriasis prevalence rates range from 2% to 6% of the

population in western countries, and approximately 90% of patients suffering

from mild-to-moderate

disease. This corresponds to around 21 million psoriasis patients based in the

USA and the EU-5 alone and an annual revenue opportunity of more than $1

billion.  A large, randomized Phase IIb study scheduled to start in 2022. The

company plans to manufacture HRO350 at the company's new facility in Ørsta.

On March 3[rd], Arctic Bioscience signed a 3-year agreement worth NOK 75 million

with Smerud Medical Research International to conduct a phase IIb clinical study

on psoriasis. The purpose of the study is to investigate the efficacy and safety

of HRO350 and to establish the optimal dose. The study will include more than

500 patients and is planned to be conducted in seven countries, including

Norway. Recruitment of patients will start in H1 2022, with a planned 6-month

inclusion time and 6-month data read-out in mid-2023.

Nutraceuticals from Arctic Bioscience are sold worldwide as bulk ingredients to

companies making dietary supplements and as finished goods under the ROMEGAT

brand.  Arctic Bioscience's go-to-market strategy for nutraceutical products is

multi-dimensional including: 1) B2C sales of premium branded ROMEGA products on

a subscription basis, 2) B2B sales of finished goods and bulk ingredients

globally and 3) B2B2C strategic partnerships where all sales, marketing and

distribution is outsourced to a partner with specific geographic capabilities.

Through its strategic partnership with Kotler Marketing Group, Arctic Bioscience

has developed a strong relationship for efficient market entry and sales growth

in China.

Financials

(NOK million) Q1 2021

Revenues 5.01

Gross profit 1.97

EBITDA -14.77

Adjustments * 8.47

Adjusted EBITDA -6.30

CAPEX 4.72

Cash holdings 282.41

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

listing on Euronext Growth.

Sales revenues during the first quarter amounted to NOK 5.01 million. This is in

line with expectations and full year forecast, with a significant part of

revenues skewed towards the second half of the year.

Adjusted EBITDA during the quarter amounted to NOK -6.30 million which is again

in line with quarterly and full year expectations.

Total capital expenditures (CAPEX) amounted to NOK 4.72 million during the

period, including the start of clinical material preparation for the HRO350

project and the basic design phase of the factory. CAPEX is expected to increase

in line with plans from Q2 onwards for the Phase IIb development program and the

construction of the factory.

Following the capital raise in February, the company has a solid financial

position with liquidity to fund planned and ongoing projects through 2023. At

the end of Q1, the company's cash and cash equivalents amounted to NOK 282.41

million.

Subsequent events

On May 25th, Arctic Bioscience and Smerud Medical Research International

announced the initiation of a collaboration to develop a new drug candidate for

extremely premature infants based on phospholipid esters from herring roe.

Docosahexaenoic acid (DHA) is important for normal development of brain and

vision in the fetus. Herring roe is a natural source of the omega-3 fatty acid

DHA. Thus, there is a sound scientific rationale for a drug candidate based on

phospholipid esters from this raw material. Based on patented technology, Arctic

Bioscience will develop a new liquid drug formulation with a high content of

phospholipid bound DHA which can be administered through feeding tubes.

Outlook

Arctic Bioscience will continue to pursue commercialization of its

pharmaceutical business as well as revenue growth and profitability within its

nutraceutical business. The company maintains its annual revenue growth target

of 40%+, with the majority of revenue in the second half of the year as

expected.

Based on successful completion of the Phase IIb study, the company currently

expects to run a Phase III clinical trial in collaboration with a commercial

partner between 2024 to 2026, with plans to have results reviewed by the

European Medicines Agency (EMA) and the Food & Drug Administration (FDA) for

marketing authorization application thereafter.

For more information, please contact

Danielle Glenn

CFO Arctic Bioscience

Email: danielle@arctic-bioscience.com

Phone: +47 909 98 201

Ole Arne Eiksund

CEO Arctic Bioscience

Email: olearne@arctic-bioscience.com

Phone: +47 908 43 944

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.