Arctic Bioscience — Regulatory Filings 2023

May 8, 2023

Arctic Bioscience - Q1 2023 Operational update - HeROPA clinical trial approved in all 5 countries and ongoing

Arctic Bioscience - Q1 2023 Operational update - HeROPA clinical trial approved in all 5 countries and ongoing

Highlights Q1 2023:

· The phase IIb HeROPA clinical trial approved in all the five European

countries where the trial will be conducted

· More than two-thirds of the planned clinical trial sites (clinics) in the

five countries activated

· Future opportunities in the microalgae segment through the acquisition of

Arctic Algae AS

· Growth in Nutra sales revenues of 39 % compared to Q1 2022

· Solid financial position with NOK 130,6 million in cash by end of Q1 2023

During the first quarter of 2023, the foundation was laid for exciting future

opportunities with new customers in the Nutra business. In addition, Arctic

Bioscience has continued to deliver on important milestones related to the

pharmaceutical development program. Approval of the HeROPA clinical trial by

Medicines Authorities in five European countries demonstrates international

endorsement and the high quality of our drug development plan. This has

considerably reduced the implementation risk for our pharmaceutical development

program.

"The first quarter of this year has been important and very positive for Arctic

Bioscience. The approvals we received from the Medicines Authorities in European

countries for our HeROPA study underpins the substantial and impressive work

conducted by the Arctic Bioscience team in Norway," says CEO Christer L.

Valderhaug.

Update on the HeROPA clinical trial - a phase IIb clinical trial for mild-to

-moderate psoriasis:

Until now, forty clinics are active in the five countries participating in the

HeROPA clinical trial. The first patient was included end of January 2023 in UK.

Recruitment is competitive between clinics and will be complete when 519

patients are included. More clinics are being activated on an ongoing basis.

Clinical Trial Application (CTA) processes and some aspects of global logistical

operations have taken longer than expected. Arctic Bioscience have implemented

additional measures to ensure timely recruitment of patients. More clinics have

shown interest in joining the trial, and these are being enlisted for

participation. The clinics are using their patient lists for recruitment, and

the larger sites in central European countries have thousands of patients with

psoriasis who may be eligible for inclusion. Recruitment is expected to proceed

at speed throughout summer and into the fall.

Update on our sustainable marine nutraceutical supplement business:

The nutraceutical business had a positive development in sales volume in the

quarter compared to the first quarter of last year. Several new B2B customers

with strong brands in their respective markets have launched products with

ROMEGA[â] in USA and Europe. In the Asian markets we continue to see strong

marketing efforts and increasing interest for our products. Currently there are

more than 40 nutra brands containing ROMEGA[â] being marketed and sold globally.

The acquisition of the company Arctic Algae, which was announced in February

this year, opens for future commercial opportunities in both the Nutra and

Pharma segments.

Financials

Key figures - Q1 2023:

· Revenues from sales: NOK 7,8 million

· Gross profit: NOK 1,2 million

· Gross margin: 15 %

· EBITDA: NOK -12,1 million

· Capex (gross): NOK 4,5 million

· Cash end period: NOK 130,6 million

Sales revenues amounted to NOK 7,8 million in Q1 2023, a growth of 39 % compared

to the same period in 2022. Of the total sales revenues, 56 % were related to

the B2B Europe ex. Norway segment, and 18 % to the Asian segment.

The gross margin in Q1 2023 was affected by the product mix of goods sold and

especially influenced by the development in exchange rates during the quarter.

The effect of a strongly weakened krone on the gross margin during the quarter

is calculated to approx. 10 percentage points. The negative gross margin effect

in Q1 is potentially a timing issue, as it may be offset by increased sales

volume in foreign currencies going forward, given a continued weak krone

situation.

EBITDA in the quarter amounted to NOK -12,1 million. The weak gross profit in

the quarter pulls the EBITDA down somewhat compared to the budgeted figures.

Salary expenses and other operating costs were lower than budgeted for this

quarter, which balances total EBITDA compared to the budget.

Gross capital expenditures (capex) amounted to NOK 4,5 million in the quarter,

mainly related to the pharmaceutical development program. During the quarter,

Arctic Bioscience has received NOK 4,8 million in public grants, which, in

accordance with the company's accounting principles, are netted in the balance

sheet upon payment. These public grants have thus made a positive contribution

to the total liquidity position throughout the quarter.

The acquisition of Arctic Algae AS in Q1 2023 was carried out without a

liquidity effect for the group. Final settlement between the parties takes place

by converting debt into equity. The transaction itself was formally completed on

March 29[th] 2023.

The liquidity position is still strong, with a total cash balance of NOK 130,6

million. The cash position also include the cash balance of Arctic Algae AS as

of end Q1 2023.

Subsequent events

On April 21[st] 2023, the annual general meeting adopted a capital increase as

part of the finalization of the acquisition of the company Arctic Algae AS from

Ronja Capital II AS. Debt incurred in connection with the acquisition of the

company was converted into shares in Arctic Bioscience AS. Total converted debt

amounted to NOK 16,3 million, which was converted into 943 833 shares at a price

of NOK 17,27 per share. After registration of the capital increase, Ronja

Capital II AS will own 12,17 % of Arctic Bioscience.

Outlook

To ensure effective and timely recruitment in the HeROPA clinical trial, Arctic

Bioscience is working on activating clinics according to plan. In addition,

several new clinics have shown interest in joining the trial, and these are also

being enlisted for participation. The company is working diligently on the

competitive recruitment of 519 patients. The first data read-out will be six

months after completion of recruitment (last patient first visit, LPFV).

The order intake in the Nutra business for 2023 is promising both from existing

customers (recurring business) and new customers. Our commercial partnership in

the Chinese market continues to develop positively and we experience continued

strong growth.

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

Mobile: +47 920 84 601

Email: christer@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.