Arctic Bioscience

Presentation of financial results; First half year 2024

August 29th 2024

Christer L. Valderhaug (CEO) Jone R. Slinning (CFO) Runhild Gammelsæter (Global Medical Director)

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Developing and commercializing pharmaceutical and nutraceutical products based on unique bioactive marine compounds, utilizing proprietary technology and methodology

Intro and H1-2024 operational highlights
-
H1-2024 consolidated Group financial review

H1-2024 operational review Business outlook Q&A

Agenda

Intro and H1-2024 operational highlights

Cellular studies project on Mode of Action of HRO350 published

Research shows positive data of antiinflammatory effects of phospholipid esters from herring roe in immune cells

ROMEGA® sales directly to consumers in Norway increased by 20% y/y

Kotler strategic partnership continues to develop well

The Chinese consumer market is challenging, but still strong sales growth of ROMEGA® products

Liquidity position according to development plans

NOK 49,8 million as of end H1-2024

More than 100% of 2023-sales already secured via sales and received purchase orders

Gross margin > 30%

Positive Micro algae development

Findings of a new microalgae species that may open up for new and exciting future commercial opportunities

H1-2024 highlights

Phase IIb clinical trial for HRO350, the HeROPA-study, fully recruited in January 2024 Development has proceeded as planned; 6-months primary end-point read-out expected ultimo September/early October 2024

Operational review Nutra

Nutra sales status

More than 100% of 2023-sales of Nutra-products are already secured via sales and received purchase orders
The total sales revenues from the nutraceutical business are slightly lower in 2024 compared to the same period in 2023, mainly driven by customers' delivery plans and slower than expected sales in some areas, such as the US market
Arctic Bioscience sells ROMEGA® directly to consumers in Norway. In H1 2024 B2C sales revenues increased by 20% y/y
The eCommerce sales in the Chinese market remains strong, despite weak consumer spending among Chinese consumers

Operational review Pharma

PASI: Psoriasis Area and Severity Index (0–72-point scale where < 10 is mild-moderate disease); RCT: Randomized Controlled Trial b.d. = twice daily; iii = three capsules; DDD = defined daily dose

HeROPA study is progressing according to plan Phase IIb study with HRO350 in mild-to-moderate psoriasis fully recruited and approaching read-out

Study currently ongoing in the UK, Germany, Poland, Finland and Norway
Study endpoints include PASI score and multiple secondary endpoints
Final patients are currently in process of completing their week 26 visit
Primary-endpoint readout expected ultimo September/early October 2024

HRO350 is a unique lipid matrix with biologically active phospholipids

API: PEHeRo (Phospholipid Esters from Herring Roe) IRIS Substance ID: 300000046327 EV Medicinal Product Code: PRD9919073

HRO350 is manufactured according to GMP and is planned marketed as a per oral prescription medicine

Herring roe lipids has a high phospholipid content rich in polyunsaturated fatty acids

Phospholipids esters have metabolites with immunomodulatory properties, and can function as both carriers and active molecules1

Mode-of-action data in psoriasis from cell studies2

Core structure of phospholipid esters from herring roe

Example phospholipid: PC(22:6n3/16:0)

API: Active Pharmaceutical Ingredient; GMP: Good Manufacturing Practice

References: 1) Cook CM, Hallaråker H, Sæbø PC, et al. Bioavailability of long chain omega-3 polyunsaturated fatty acids from phospholipid-rich herring roe oil in men and women with mildly elevated triacylglycerols. Prostaglandins Leukot Essent Fatty Acids. 2016;111:17-24. doi:10.1016/j.plefa.2016.01.007; 2) Forskningsradet (Research Council of Norway), Properties of phospholipids d Herring Roe in Psoriasis, available online

Properties of drug candidate HRO350

HRO350 is a first in class asset with marine phospholipid esters as the active substance (API)

Specialized pro-resolving mediators (SPMs) in psoriasis

Lipid mediators are elevated in lesional psoriatic skin3,4
SPMs' effects have been demonstrated in vitro5,6 e.g. Maresin-1 has been shown to suppress IL-17A production in a murine psoriasis model7

Cellular research on SPMs supports the anti-inflammatory mechanism of HRO3508 • HRO350 activates the production of SPMs that promote a shift towards a protective and possibly reparative phenotype of monocyte derived macrophages

Data supports the anti-inflammatory actions of API PEHeRo specifically, activating SPM pathways reported to be involved in tissue regeneration9

References: 1) Chiang N and Serhan CN. Specialized Pro-Resolving Mediator Network: An Update on Production and Actions. Essays Biochem. 2020;64(3):443-462; 2) Basil MC, Levy BD. Specialized pro-resolving mediators: endogenous regulators of infection and inflammation. Nat Rev Immunol. 2016;16(1):51-67; 3) Sorokin AV, Norris PC, English JT, et al. Identification of proresolving and inflammatory lipid mediators in human psoriasis. J Clin Lipidol. 2018;12(4):1047-1060; 4) Coras R, Kavanaugh A, Kluzniak A, et al. Differences in oxylipin profile in psoriasis vs psoriatic arthritis. 2021;23:200; 5) Xu J, Duan X, Hu F, et al. Resolvin D1 attenuates imiquimod-induced mice psoriasiform dermatitis through MAPKs and NF-κB pathways. J. Dermatol. Sci. 2018;89:127-135; 6) Sato M, Aoki-Saito H, Fukuda H, et al. Resolvin E3 attenuates allergic airway inflammation via the interleukin-23–interleukin-17A pathway FASEB J. 2019 33(11):12750-12759. 7) Saito-Sasaki N, Sawada Y, Mashima E, et al. Maresin-1 suppresses imiquimod-induced skin inflammation by regulating IL-23 receptor expression. Sci. Rep. 2018;8:5522; and figure) Ringheim-Bakka T, Mildenberger J, Dalli J, Saliani A, Petrucelli F, Busygina M, Mancinelli D, Gammelsæter R. Phospholipid Esters from Herring Roe promotes SPM biosynthesis in human monocyte-derived macrophages with implications for the treatment of psoriasis. Poster (37) at the 9th European Workshop on Lipid Mediators, June 26-28th, 2024. 9) Serhan C and Chiang N. Resolvins and Cysteinylcontaining Pro-Resolving Mediators Activate Resolution of Infectious Inflammation and Tissue Regeneration Prostaglandins Other Lipid Mediat. 2023 166:106718.

Resolution of inflammation through bioactive SPMs

Metabolic products of phospholipid esters from herring roe are proposed to play a role in inflammatory diseases, including psoriasis

Specialized pro-resolving mediators (SPMs) Endogenous bioactive lipid mediators that have been proven to promote resolution of inflammation1,2

Inflamed primary immune cells treated with HRO350 produced SPMs involved in resolution of inflammation and tissue regeneration in vitro⁸

Data support a promising treatment modality in inflammatory conditions including psoriasis

Specialized pro-resolving mediators (SPMs) are endogenous molecules that have been proven to promote resolution of inflammation

Most existing drugs are designed to reduce inflammation by inhibiting pro-inflammatory cytokines
Immunoresolution strategies seeks to correct lipid mediator and SPM imbalances to allow for self-limitation of inflammation and complete resolution
Push rather than pull: "push" the inflammation towards resolution rather than "pull" away downstream effects through inhibition of pro-inflammatory cytokines

HRO350 (API: PEHeRo) promotes SPM biosynthesis in immune cells

Immunoresolution: a therapeutic frontier

Fullerton, J., Gilroy, D. Resolution of inflammation: a new therapeutic frontier. Nat Rev Drug Discov 15, 551–567 (2016).https://doi.org/10.1038/nrd.2016.39 Park J, Langmead CJ, Riddy DM. New Advances in Targeting the Resolution of Inflammation: Implications for Specialized Pro-Resolving Mediator GPCR Drug Discovery ACS Pharmacol. Transl. Sci. 2020, 3, 1, 88–106; Serhan CN, Chiang N, Dalli J. The resolution code of acute inflammation: Novel pro-resolving lipid mediators in resolution. Seminars in Immunology. 2015 May;27(3):200-215. DOI: 10.1016/j.smim.2015.03.004. PMID: 25857211; PMCID: PMC4515371. Ringheim-Bakka T, Mildenberger J, Dalli J, Saliani A, Petrucelli F, Busygina M, Mancinelli D, Gammelsæter R. Phospholipid Esters from Herring Roe promotes SPM biosynthesis in human monocyte-derived macrophages with implications for the treatment of psoriasis. Poster (37) at the 9th European Workshop on Lipid Mediators, June 26-28th, 2024.

Most existing treatments for psoriasis work by reducing inflammation, commonly by inhibiting specific signaling substances from immune cells which affect skin cells (i.e., IL17, IL23).

A key symptom of psoriatic skin is over-proliferation of keratinocytes, leading to psoriatic plaques with scaling.

Data will be presented at upcoming scientific conferences; multiple peer-reviewed publications estimated Q3-4

These data will be important in the future Marketing Authorization Application for HRO350

Project information: Forskningsradet (Research Council of Norway), Properties of phospholipids d Herring Roe in Psoriasis, available online Figures: Histopathology of psoriasiform epidermal hyperplasia: licensed under the Creative Commons Attribution 4.0 International. References: 1) Basil MC, Levy BD. Specialized pro-resolving mediators: endogenous regulators of infection and inflammation. Nat Rev Immunol. 2016;16(1):51-67; 2) Chiurchiù V, Leuti A, Maccarrone M. Bioactive Lipids and Chronic Inflammation: Managing the Fire Within. Front Immunol. 2018;9:38. Published 2018 Jan 29; 3) O' Serhan CN, Levy BD. Resolvins in inflammation: emergence of the pro-resolving superfamily of mediators. J Clin Invest. 2018;128(7):2657-2669; 3) Sorokin AV, Norris PC, English JT, et al. Identification of proresolving and inflammatory lipid mediators in human psoriasis. J Clin Lipidol. 2018;12(4):1047-1060;

Upcoming data on HRO350 Mechanism-of-Action in psoriasis

"Properties of phospholipids from Herring Roe in Psoriasis" supported by the Research Council of Norway

MAA: Marketing Authorization Application; MoA: Mode of Action; IMPD: Investigational Medicinal Product Dossier; CTA: Clinical Trial Application

* PIP agreed with the EMA Pediatric Committee*in Q1 2022. The Paediatric Committee of the EMA provides opinions on the quality, safety and efficacy of a medicine for use in the paediatric population Sources: EMA PDCO meeting report of opinions on paediatric investigations plans and other activities, 21 January 2022, available online

HRO350 clinical program

H1-2024 consolidated group financial review

Key financial figures

GROSS MARGIN AVAILABLE LIQUIDITY

Sales revenues down MNOK 2,4 y/y, mainly affected by lower YTD sales than expected in some regions

• But; more than 100 % of total 2023-reveneus already secured via sales and received purchase orders

• Continued positive development in B2C-segment in line with expectations, with a y/y revenue growth above 20 %

• Expected strong development in sales to the Chinese market in

-

H2-2024

Stable gross margin development

• H1-2024 gross margin 1,6 percentage points above 2023 gross

Arctic Algae AS fully incorporated in the consolidated figures from

TNOK	H1-2024	H1-2023	Income statement
Sales revenue Other income	16 746 458	19 081 -	Sales revenues down MNOK 2,4 y/y, mainly affected by lower YTD sales than expected in some regions
Cost of goods sold	11 616	13 350	But; more than 100 % of total 2023-reveneus already secured via •
Gross profit	5 130	5 730	sales and received purchase orders
Gross margin %	30,6 %	30,0 %
Employee benefits expenses	12 944	11 011	Continued positive development in B2C-segment in line with • expectations, with a y/y revenue growth above 20 %
Depreciation and amortisation expenses	2 578	2 552	• Expected strong development in sales to the Chinese market in
Other expenses	14 251	14 752	H2-2024
Operating profit (loss)	-24 184	-22 585	Stable gross margin development
Finance income	1 955	2 373	• H1-2024 gross margin 1,6 percentage points above 2023 gross margin in total
Finance expenses	1 287	452
Net financial items	668	1 921	Operating costs in line with total budget for period
Net profit (loss) for the period	-23 516	-20 664
EBITDA	-21 606	-20 033	Arctic Algae AS fully incorporated in the consolidated figures from Q2-2023
Adj. EBITDA	-20 922	-18 293

Breakdown of Nutra revenue

REVENUE BY BUSINESS LINE REVENUE BY REGION

B2C B2B

TNOK	H1-2024	H1-2023
			Cash flow statement
Profit/loss before tax	-23 516	-20 664
Ordinary depreciation	2 578	2 552	Available liquidity end of period of MNOK 49,8
Change in inventory	2 168	89
Change in accounts receivable	-1 802	-3 104
Change in accounts payable	890	-4 298	Cash flow from operations MNOK -25,6 mainly driven by negative
Change in other accrual items	-5 919	-2 294	operating result
Net cash flow from operating activities	-25 602	-27 719
Investments in tangible and intangible assets	-33 940	-23 611	Cash flow from investments MNOK -33,9, mainly all related to the HRO350 phase IIb study
Net cash flow from investment activities	-33 940	-23 611
Net new long-term liabilities	-282	4 193
Proceeds from equity	53	16 792	Cash flow from financing activities MNOK -0,2, where this relates
Net cash flow from financing activities	-229	20 985	mainly to payment of financial leasing liabilities
Net change in cash	-59 771	-30 345
Cash at the start of the period (1.1)	79 602	144 152
Cash at the end of the period (30.6)	19 831	113 807
			By end of H1-2024 Arctic Bioscience has an unused credit facility of
Unused credit facility	30 000	0	MNOK 30
Available liquidity at the end of the period (30.6)	49 831	113 807

Strong financial position at end of period

Total assets MNOK 273,2

• Fixed assets of MNOK 198,4 mainly comprised of intangible assets related to pharma development

• Current assets of MNOK 74,8 mainly comprised of MNOK 30,6 in inventory and MNOK 19,8 in cash

• Additional MNOK 30 in available liquidity due to unused credit facility as of end H1-2024

Total equity MNOK 235,1, corresponding to an equity ratio

of 86%

Long term liabilities relates to financial leasing agreements

Financial position

-

TNOK		30.06.2024	31.12.2023
ASSETS
	Non-current assets:
	Intangible assets	172 847	140 659
	Property, plant and equipment	25 612	26 438
	Total non-current assets	198 459	167 097
	Current assets:
	Inventories	30 626	32 794
	Accounts receivable	11 373	9 571
	Other current assets	12 921	11 188
	Cash	19 831	79 602
	Total current assets	74 751	133 155
	TOTAL ASSETS	273 210	300 252

EQUITY & LIABILITIES
	Equity:
	Share capital	2 537	2 537
	Share premium reserve	232 557	256 020
	Total equity	235 094	258 557
	Liabilities
	Liabilities to financial institutions	1 766	2 049
	Total liabilities	1 766	2 049
	Current liabilities
	Accounts payable	19 266	18 376
	Public duty payables	2 840	2 253
	Other current liabilities	14 244	19 017
	Total current liabilities	36 350	39 646
	TOTAL EQUITY & LIABILITIES	273 210	300 252

Business outlook

Outlook H2-2024

Focus on finalizing and securing the HeROPA study for HRO350

6-months primary endpoint read-out expected ultimo September/early October 2024

HeROPA study main strategic focus

Various financing alternatives will be considered to secure funding post 6 months data read-out

Process of pursuing commercial partnership for HRO350 will continue

Liquidity situation closely monitored

Positive sales prospects and received order intake for H2-2024 indicates a y/y revenue growth for 2024 in the range of 20 – 30 %

Continuing y/y revenue growth

Contact

CEO - Christer L. Valderhaug: [email protected]

CFO - Jone R. Slinning [email protected]

Medical Director - Runhild Gammelsæter: [email protected]