Oncopeptides

Quarterly Report • Feb 17, 2022

YEAR-END REPORT 2021

Confidence in our data leading the way forward

OCTOBER–DECEMBER

• New melflufen data was presented at the Annual American Society of Hematology Meeting ASH, December 10
• Jakob Lindberg was appointed CEO of Oncopeptides and Marty J Duvall left the company on November 15
• Annika Muskantor joined as interim CFO on November 8
• A compassionate use program was established in the US in consultation with the FDA
• A focused clinical development effort was announced on November 4, to increase cash runway
• Oncopeptides will refocus on R&D, close the commercial operations in US and Europe, and scale down the Sweden based organization
• Pepaxto was withdrawn from the US market on October 22
• Anders Martin-Löf, CFO, announced his resignation on October 15

EVENTS AFTER THE PERIOD

• A recission of the withdrawal of Pepaxto in the US was announced on January 21
• Phase 3 OCEAN study was published in the Lancet Haematology on January 13
• Year-end cash 2021 was announced on January 5

Pepaxto® (Melphalan flufenamide) is the US trade name. It is known as melflufen during clinical development.

S ignificant events Financial overview

OCTOBER-DECEMBER

• Net sales amounted to SEK -21.7 M (0.0)
• Operating profit was SEK -389.8 M (- 511.6)
• Net profit amounted to SEK -394.0 M (-513.0)
• Profit per share, before and after dilution, amounted to SEK -5.23 (-7.59)
• Cash balances at the end of the period amounted to SEK 362.2 M (840.3)

JANUARY-DECEMBER

• Net sales amounted to SEK 118.3 M (0.0)
• Operating profit was SEK -1,420.9 M (-1,591.3)
• Net profit amounted to SEK -1,430.3 (-1,594.7)
• Profit per share, before and after dilution, amounted to SEK -19.00 (-25.57)
• Cash balances at the end of the period amounted to SEK 362.2 M (840.3)

Selected Key Indicators

(SEK Thousand)	2021 Oct-Dec	2020 Oct-Dec	2021 Jan-Dec	2020 Jan-Dec
Net sales	-21 710	-	118 295	-
Gross profit	-40 088	-	65 174	-
Gross margin, %	Neg	N/A	55%	N/A
Operating profit	-389 836	-511 573	-1 420 917	-1 591 279
Profit after tax	-393 991	-512 966	-1 430 317	-1 594 693
Earnings per share before and after dilution (SEK)	-5,23	-7,59	-19,00	-25,57
Cash flow from operating activities	-446 455	-357 162	-1 516 391	-1 296 509
Cash at the end of the period	362 187	840 255	362 187	840 255
R & D expenses/operating expenses, %	53%	45%	46%	54%

¹ This publication is a translation of the original Swedish text. In the event of inconsistency or discrepancy between the Swedish version and this publication, the Swedish language version shall prevail.

Confidence in our data leading the way forward

On October 22, 2021, Oncopeptides voluntarily withdrew Pepaxto from the US market following in depth discussions with the FDA that made it evident that the agency were unwilling to view the OCEAN study as a confirmatory study. Consequently, we decided to refocus on R&D and dedicate our resources to further develop the next generation of drug candidates from the PDC platform. We closed the commercial operations in the US and Europe, scaled down the organization and discontinued most clinical studies.

CLOSED COMMERCIAL OPERATIONS

AND REFOCUSED CLINICAL PROGRAM Immediately after the US withdrawal we started to close the business operations in the US and Europe and scale down the organization. It has been a very challenging task, and I am impressed by all employees who have contributed relentlessly throughout this process, even though many of them were aware of, that ultimately, they would have to leave the company.

We have closed most clinical studies and focused the clinical program on studies that may support the regulatory interactions: OCEAN continues with long-term follow-up and documentation; patient recruitment has been completed in both PORT and BRIDGE and these studies are closed with relevant scientific data sets. ANCHOR has been closed without the last 10 previously planned patients in the bortezomib + melflufen study arm. ASCENT, COAST and LIGHTHOUSE have closed with incomplete number of patients. It will not be possible to draw any scientific conclusions from these studies.

All together, these measures led to a

2021 end-of-year cash position of SEK 362 M which according to our previous guidance, will take us through at least 2022, given that the restructuring proceeds according to plan. Our average monthly burn rate in 2021, of SEK 130 M, has been significantly reduced to an estimated base operational burn rate of SEK 12- 15 M as of end-of January 2022. The cash flow in 2022 will, in addition to the negative operational cash flow, be impacted by some remaining costs for discontinuation of clinical studies as well as expenses related to the ongoing filing with the European Medicines Agency, EMA. These costs will primarily impact H1 2022.

OCEAN DATA PUBLISHED IN THE LANCET HAEMATOLOGY

In December 2021 we presented updated data from the OCEAN study at the Annual American Society of Hematology Meeting, ASH. We are committed to share updated data on melflufen with the myeloma community.

On January 13, 2022, we reached an important milestone when the results from the OCEAN study were published in Lancet Hematology. We

hope that melflufen may become an important treatment option for patients with relapsed refractory multiple myeloma, RRMM, and that the comprehensive data further support the ongoing EMA review of melflufen.

RESICISSON OF WITHDRAWAL OF PEPAXTO IN THE US

Even though we made a voluntary withdrawal of Pepaxto from the US market, we have continued to have a strong belief in our data. The overall assessment of data from the OCEAN study and other relevant trials have convinced us to reconsider our withdrawal. That is why we on January 21, communicated the rescission of our October 22 letter to FDA requesting a withdrawal of Pepaxto from the US market.

We will not re-introduce or market Pepaxto in the US before the new data has been discussed and assessed together with the FDA. At this point it is premature to talk about if, when and how patients in the US would be able to get access to Pepaxto again, but we are confident that we have a drug that helps patients. This is also the reason why

we made this decision.

LOOKING BACK AT 2021

When I look back at 2021, this has by far has been the most transformative year in Oncopeptides' history. Pepaxto met the primary end-point and showed superior progression free survival, PFS, in the OCEAN study, but with a highly heterogenous overall survival result in comparison with pomalidomide. This caused a huge regulatory setback with the FDA.

Based on the large unmet medical need for patients with RRMM, we continue our dialogue with the FDA and EMA and hope to be able to reach a positive conclusion on how to interpret the highly heterogenous overall survival result in the OCEAN study.

The safety warning from the FDA in July 2021, led to a withdrawal in the US market and a refocus and significant dismantling of the organization. This has been the largest setback in my career.

"When I look back at 2021, this has by far been the most transformative year ever in Oncopeptides history."

Jakob Lindberg CEO

CEO statement CEO statement

MOVING INTO 2022

Even though 2021 took a direction that we did not expect, I have confidence in our data and study results.

We are looking forward to a continued dialogue with FDA and EMA during 2022. A successful interaction with the regulatory authorities will be critical for the future development of Oncopeptides.

While there is no fixed time -line for our FDA interactions, we look forward to receive the opinion from CHMP, the scientific committee of EMA, around mid -year 2022.

Currently, almost 70 patients are treated with melflufen through the Early Access Program in Europe which highlights the large unmet medical need for patients with RRMM.

2021 was indeed a challenging year, but it is with increasing confidence we now move into 2022. I would like to thank all employees for your dedicated contributions during this tough year, and all shareholders for your continued belief in Oncopeptides. ■

Stockholm, February 17, 2022

Jakob Lindberg CEO

REVENUE

Net sales in the quarter were negative, amounting to SEK -21.7 M (0.0), and SEK 118.3 M (0.0) for the full year. Net sales were negative during the quarter since actual returns and provisions for returns exceeded sales as a result of the withdrawal of Pepaxto from the US market.

The provision for returns that, contractually, can be remitted in Q2 2022 amounted to SEK 48.6 M.

Cost of goods sold for the quarter amounted to SEK 18.4 M (0.0) and to SEK 53.1 M (0.0) for the full year.

Gross profit for the quarter amounted to SEK -40.1 M (-) and SEK 65.2 M (-) for the full year.

The gross margin for the quarter has been affected by returns, and accruals for anticipated returns, and can not be deemed relevant.

OPERATING EXPENSES

Operating expenses, excluding cost of goods sold, for the quarter amounted to SEK 349.7 M (511.6) and to SEK 1,486.1 M (1,591.3) for the full year. Accruals relating to closing of clinical studies and staff redundancies, driven by the communicated restructuring, amounted to SEK 41.1 M for the quarter and for the year. In addition, the withdrawal of Pepaxto has driven the need for a nonrecurring write-down of assets in the amount of SEK 16.6 M for the Group, of which

• Inventory; SEK 9.0 M
• Right to use assets; SEK 2.2 M
• Other fixed assets; SEK 4.1 M
• Group receivables; SEK 19.4 M

RESEARCH AND DEVELOPMENT EXPENSES

Expenses relating to research and development amounted to SEK 184.3 M (231.4) for the quarter and SEK 679.9 M (866.2) for the full year. Accruals relating to already communicated close of studies amounted to SEK 37.6 M for the quarter and year.

Reduced expenses in clinical studies, as well as the decision to rapidly close ongoing studies, were key drivers behind the cost reduction.

MARKETING AND SALES EXPENSES

Marketing and sales related expenses amounted to SEK 167.8 M (173.6) for the quarter and SEK 698.3 M (456.5) for the year. Year end accruals, relating to the closing of commercial operations, amounted to SEK 3.0 M.

The rapid downsizing of marketing and sales activities relating to Pepaxto in the US are the key drivers behind the reduction.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses amounted to SEK 33.6 M (60.7) during the quarter, and SEK 175.5 (197.7) for the year. Year end accruals, relating to the downsizing of the administrative functions, amounted to SEK 0.5 M.

EXPENSES FOR SHARE BASED INCENTIVE PROGRAMS

Expenses relating to provisions for social security costs vary each quarter with changes in the underlying share price. Given that

the share price has declined during the year, the taxable benefit and related social security charges have decreased. Such provisions are reported under long- and shortterm liabilities.

Exercisable instruments, held by the employees made redundant in the restructuring, will be revoked. The costs for share based related incentive programs was thereby reduced during the year and amounted to SEK -12.1 M (29.9) for the quarter, and SEK -34.2 M (68.2) for the year; of which provisions and payments for social security related expenses amounted to SEK -48.4 M (29.5), and expenses relating to share-based remuneration amounted to SEK 14.2 M (38.7). The expenses have no cash impact. The company has, in line with authorization given by the relevant AGMs, issued warrants to cover

social security contribution expenses exceeding the paid premiums that could arise when employees exercise granted stock options. See note 9.

EFFECTS OF COVID-19

The effects of Covid-19 were reduced as restrictions eased in the countries where the Company operates. The pandemic is therefore not deemed to have any material effects on the financial statements.

TAX AND EARNINGS

Earnings before taxes amounted to SEK -389.5 M (-511.8) for the quarter and to SEK -1,421.4 M (-1,592.4) for the year. Up until the withdrawal of the

product from the US market in October 2021, a deferred tax asset arose as a consequence of temporary differences in sales of intra-group stock items. The internal profit was reversed in its entirety as inventory was returned to the Parent Company. The temporary deferred tax benefit has thus been fully reversed by year end, without any cash impact. See note 7.

Net profit amounted to SEK -394.0 M (-513.0) for the quarter and to SEK -1,430.3 M (-1,594.7) for the year; corresponding to a loss per share, before and after dilution, of SEK -5.23 (-7.59) for the quarter and to a loss per share of SEK -19.00 (-25.57) for the year.

CASH FLOW, INVESTMENTS AND FINANCIAL POSITION

Cash flow from operating activities amounted to SEK -446.5 M (-357.2) for the quarter and SEK -1,516.4 M (-1,296.5) for the year.

The negative cash flow was primarily driven by the Company's efforts to build a sales and marketing organization, as well as by the downsizing of the same after the withdrawal from the US market.

Cash flow from investment activities amounted to SEK 0.0 M (-4.5) for the quarter and SEK -0.3 M (-20.1) for the year.

Cash flow from financing activities amounted to -4.0 (3.7) MSEK for the quarter and SEK 1,034.0 M (-1,323.5) for the year. Cash-flow for the quarter amounted to SEK -450.4 M (-358.0) and to SEK -482.7 M (6.8) for the year.

Cash balances at the end of the

period amounted to SEK 362.2 M (840.3).

The Company has an unutilized loan facility of EUR 40 M with EIB. The terms enabling draw down of the facility are to be renegotiated. Equity amounted to SEK 210.9 M (576.9) at the end of the period.

FINANCING AND GOING CONCERN

The Company decided, in dialogue with the FDA, to voluntarily withdraw Pepaxto from the US market on October 22, 2021. As a consequence, the Board decided to immediately change the direction of the company and revert to an R&D based company focusing on developing the patent protected PDC-platform including the next generation drug candidates OPD5 and OPDC3 alongside seeking approval for Melflufen with the EMA. The rescindment of the voluntary withdrawal in January of 2022, has not altered the strategy. The rescinding of the voluntary withdrawal from the US market, as published on January 21, 2022, will not lead to marketing of Pepaxto in the US until the new data has been discussed and assessed together with the FDA. Thus, no revenue from the US has been included in the assessment of going concern in the next 12 months.

The swift and decisive reduction of operational costs will improve Group revenues in line with previously published assumptions. Closing costs related to the down-sizing (staff reductions and closing of clinical studies) as well as specific costs relating to the EMA application, will burden the first half of 2022.

However, the underlying operational burn-rate has been radically reduced already from the start of the year.

The Board and the Managing Direction continuously assess the Groups financial viability and access to cash.

This report is issued based on the assumption of going concern for at least 12 months.

As Oncopeptides reverts to an R&D based company with limited revenue generation prior to a potential approval by the relevant medical agencies, the Company is unlikely to generate positive cash flows from running operations. During the R&D phase, and until the company has a commercially launched product, the Company does not have a revenue source and can require additional cash contributions.

Provided that the restructuring proceeds as planned, it is the assessment of the Board and the CEO that the Group has the necessary funds to continue operations during at least the coming twelve months. Would the above conditions not be fulfilled, for example if the company's restructuring becomes costlier than expected, the Group's continued operations are at risk.

In aggregate, the above indicates that there are considerations that could raise to significant doubt as to the Company's continued ability to continue operations. ■

Other information Signatures

EMPLOYEES

At the end of the year the Company had 162 (280) coworkers.

PARENT COMPANY

Parent company operations are aligned with those of the Group, why the comments for the Group are also relevant for the Parent company.

ONCOPEPTIDES SHARE

The number of registered shares at the end of the reporting period amounted to 75,291,841.

EVENTS AFTER THE PERIOD

• Voluntary withdrawal of Pepaxto in the US was rescinded on January 21
• Phase 3 OCEAN study was published in the Lancet Haematology on January 13
• Year-end cash 2021 was announced on January 5

DIVIDEND

In accordance with the dividend policy adopted by the board, no dividend is proposed for the year 2021.

AUDIT

This report has not been reviewed by the company's auditor.

The Board and the CEO confirm that the interim report provides a true and fair overview of the Group's and the Parent Company's operations, position and earnings and describes the material risks and uncertainty factors faced by the Parent Company and the companies within the Group.

Stockholm, Februari 17, 2022

Per Wold-Olsen Chairman

Jenifer Jackson Board member

Per Samuelsson Board member

Cecilia Daun-Wennborg Board member

Jarl Ulf Jungnelius Board member

Jakob Lindberg CEO

Brian Stuglik Board member

Condensed consolidated statement of comprehensive income Condensed consolidated statement of financial position

	2021	2020	2021	2020
SEK thousand Note	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Net sales 5	-21 710	-	118 295	-
Cost of Goods Sold	-18 378	-	-53 121	-
Gross profit	-40 088	-	65 174	-
Research and development expenses	-184 294	-231 416	-679 926	-866 214
Marketing and distribution expenses	-167 832	-173 611	-698 346	-456 529
Administrative expenses	-33 632	-60 697	-175 459	-197 662
Other operating income/expenses1)	36 010	-45 849	67 640	-70 874
Total operating expenses	-349 748	-511 573	-1 486 091	-1 591 279
EBIT; Operating profit/loss	-389 836	-511 573	-1 420 917	-1 591 279
Net financial items	344	-216	-455	-1 163
EBT; Earnings before taxes	-389 492	-511 789	-1 421 372	-1 592 442
Tax 7	-4 499	-1 177	-8 946	-2 251
Net profit	-393 991	-512 966	-1 430 317	-1 594 693
Other comprehensive income
Items to be reclassified as profit or loss
Translation variances	173	-1 426	624	-1 544
Other comprehensive income after tax	173	-1 426	624	-1 544
Total comprehensive income2)	-393 818	-514 392	-1 429 693	-1 596 237
Earnings per share before and after dilution (SEK)	-5,23	-7,59	-19,00	-25,57

1) Exchange rate differences on assets and liabilities in operational activities. 2) Losses for the period are in total attributable to parent company shareholders.

SEK thousand Note	2021-12-31	2020-12-31
ASSETS
Non-current assets
Intangible assets	1 408	1 830
Property, plant and equipment	10 348	17 273
Right-of-use assets	14 396	21 057
Financial non-current assets	851	3 622
Deferred tax assets	-	8 175
Total non-current assets	27 003	51 957
Current assets
Inventory	-	8 665
Accounts receivable	11 910	-
Other current receivables	26 0871)	23 229
Prepaid expenses	12 189	22 650
Cash and cash equivalents	362 187	840 255
Total current assets	412 373	894 799
TOTAL ASSETS	439 376	946 756
EQUITY AND LIABILITIES
Share capital	8 366	7 549
Additional paid-in capital	4 981 883	3 919 036
Reserves	-918	-1 542
Retained earnings (including net profit/loss for the period)	-4 778 463	-3 348 146
Total Equity	210 868	576 897
Long-term liabilities Provisions for social security contributions, incentive programs	13	8 530
Other long-term liabilities	3 206	6 929
Total long-term liabilities	3 219	15 459
Current liabilities
Provisions for social security contributions, incentive programs	45	47 202
Trade payables	35 702	136 135
Other current liabilities	18 057	35 045
Accrued expenses and deferred income	171 485	136 018
Total current liabilities	225 288	354 400
TOTAL EQUITY AND LIABILITIES	439 376	946 756

1) 3.1 MSEK pertains to credited accounts payable.

Condensed consolidated statement of changes in equity Condensed consolidated statement of cash flow

	2021	2020	2021	2020
SEK thousand Note	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Opening Balance	612 068	1 071 471	576 897	797 013
Net profit	-393 991	-512 966	-1 430 317	-1 594 693
Other comprehensive income	173	-1 426	624	-1 544
Total comprehensive income	-393 818	-514 392	-1 429 693	-1 596 237
Transactions with owners
New issue	-	-	1 106 000	1 413 925
Costs related to new issues	-	-3	-67 053	-85 231
Share based compensation	-7 383	12 618	14 229	38 398
Exercised warrants	-	7 203	10 488	9 029
Total transactions with owners	-7 383	19 818	1 063 664	1 376 121
Ending balance	210 868	576 897	210 868	576 897

	2021	2020	2021	2020
SEK thousand Note	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Operating activities
Operating profit/loss	-389 836	-511 573	-1 420 917	-1 591 279
Adjustment for non-cash items	-184 523	77 528	-44 325	160 906
Interest recieved	91	120	96	322
Interest paid	-235	-336	-948	-1 485
Taxes paid	-146	-3 771	-12 216	-7 243
Cash-flow from operating activitites before change in working capital	-574 648	-438 032	-1 478 309	-1 438 779
Change in working capital	128 194	80 870	-38 082	142 270
Cash-flow from operating activities	-446 455	-357 162	-1 516 391	-1 296 509
Cash-flow from investment activities	-	-4 496	-339	-20 127
Cash-flow from financing activities	-3 984	3 671	1 034 030	1 323 461
Cash-flow for the period	-450 438	-357 987	-482 701	6 825
Cash at the beginning of the period	671 269	1 251 629	840 255	926 186
Change in cash	-450 438	-357 987	-482 701	6 825
Effect of exchange rate changes on cash	141 356	-53 387	4 633	-92 756
Cash at the end of the period	362 187	840 255	362 187	840 255

1) Pertains mainly to changes in share-based remuneration programs including social security contributions and exchange rate differences as well as depreciation and impairment.

Condensed Parent Company income statement

	2021	2020	2021	2020
Not SEK thousand	okt-dec	okt-dec	jan-dec	jan-dec
Net sales1)	-62 762	-	97 577	-
Cost of Goods Sold	8 097	-	-12 182	-
Gross profit	-54 665	-	85 395	-
Research and development expenses	-183 491	-231 432	-676 375	-866 509
Marketing and distribution expenses	-170 815	-174 599	-728 382	-460 860
Administrative expenses	-22 005	-63 029	-161 814	-201 751
Other operating income/expenses1)	40 062	-45 849	71 362	-70 874
Total operating expenses	-336 249	-514 909	-1 495 209	-1 599 994
EBIT; Operating profit/loss	-390 914	-514 909	-1 409 814	-1 599 994
Net financial items	125 403	146	-18 725	375
EBT; Earnings before taxes	-265 511	-514 764	-1 428 539	-1 599 620
Tax	-	-	-	-
EBT; Earnings before taxes	-265 511	-514 764	-1 428 539	-1 599 620

Condensed Parent Company statement of comprehensive income

	2021	2020	2021	2020
Not SEK thousand	okt-dec	okt-dec	jan-dec	jan-dec
EBT; Earnings before taxes	-265 511	-514 764	-1 428 539	-1 599 620
Other comprehensive income	-	-	-	-
Other comprehensive income after tax	-	-	-	-
Net Profit	-265 511	-514 764	-1 428 539	-1 599 620

ONCOPEPTIDES | YEAR END REPORT 2021 8

Parent Company balance sheet

	2021	2020
SEK thousand	Dec 31	Dec 31
ASSETS
Non-current assets
Intangible assets	1 408	1 830
Property, plant and equipment	10 348	12 097
Financial non-current assets	1 155	8 664
Total non-current assets	12 910	22 591
Current assets
Inventory	-	8 665
Other current receivables	14 5021)	10 668
Prepaid expenses	14 250	17 057
Cash and cash equivalents	321 832	785 972
Total current assets	350 584	822 362
TOTAL ASSETS	363 495	844 953
EQUITY AND LIABILITIES
Restricted equity
Share capital	8 366	7 549
Reserve fund	10 209	10 209
Total restricted capital1)	18 575	17 758
Non-restricted equity
Share premium reserve	4 871 586	3 822 968
Retained earnings	-3 256 968	-1 671 578
Net profit for the period	-1 428 539	-1 599 620
Total non-restricted capital	204 653	569 528
Long-term liabilities
Provisions for social security contributions, incentive programs	13	8 404
Total long-term liabilities	13	8 404
Current liabilities
Provisions for social security contributions, incentive programs	45	46 997
Trade payables	34 875	115 574
Other current liabilities	7 322	31 003
Accrued expenses and deferred income	116 586	73 447
Total current liabilities	158 829	267 021
TOTAL EQUITY AND LIABILITIES	363 494	844 953

1) 3.1 MSEK pertains to credited accounts payable.

Note 1 General Information

This report covers the Swedish parent company Oncopeptides AB (publ), Swedish corporate identity no. 556596-6438 and its subsidiary Oncopeptides Incentive AB, Oncopeptides GmbH and Oncopeptides Inc, USA. The parent company is a Swedish public limited company registered in and with its registered office in Stockholm. Numbers in parentheses in the report refer to the figures for the corresponding period the previous year. The interim report Jan-Dec 2021 was approved for publication on February 17, 2022.

Note 2 Accounting Principles

The interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting. The parent company applies the Swedish Financial Reporting Board recommendation RFR2 Accounting for legal entities. Oncopeptides applies, except as described below, the same accounting principles as in the last Annual Report. Relevant accounting and valuation principles could be found on pages 60-63 of the Annual Report for 2020.

Revenue is reported at the transaction price of goods sold with deductions for VAT, discounts and returns, see further Note 5. When inventory items are sold, the value of these items are, in accordance with IAS 2, reported as a cost in the same period as the corresponding income. In addition, any impairment of goods in stock and losses relating to goods in stock are reported as an expense in the period in which the impairment is made, or the loss is incurred. Any reversal of impairment related to goods in stock, due to increased net sales value, is reported as a reduction of cost of goods sold in the income statement in the same period as the reversal.

No new or amended standards that became effective January 1, 2021, have had a significant impact on the company's financial reporting.

Oncopeptides applies ESMA's (European Securities and Markets Authority) guidelines on alternative performance measures.

Note 3 Risks and uncertainties

Operational risks

Research and drug development is, up until an approved registration, subject to considerable risk – and is a capital-intensive process. The majority of all initiated projects will never reach market registration due to technological risks such as insufficient efficacy, intolerable side effects, or manufacturing problems. If competing pharmaceuticals capture market share or reach the market faster, or if competing research projects achieve better product profiles, the future value of the product portfolio may be lower than expected.

The operations may also be impacted negatively by regulatory decisions,

such as approvals and price changes. External factors such as COVID-19 may also impact the company negatively by hampering the company's opportunity to conduct clinical trials, attain necessary regulatory approvals or conduct sales related activities. A more detailed description of the company's risk exposure and risk management can be found in the Annual Report for 2020 on page 53.

Financial risks

Oncopeptides' financial policy, governing the management of financial risks, has been drafted by the Board of Directors and covers guidelines, rules, risk profiles and limits for financial operations. Foreign exchange variances constitute the primary financial operational risk since development costs are mainly paid in USD and EUR. In accordance with the company's policy for financial risk management, expected foreign currency hedging is aligned with signed contracts and obligations. For further information, see note 3 in the 2020 Annual Report.

As declared in the section "Financing and going concern", there are conditions that can give rise to significant doubts regarding the Company's ability to continue operations.

Credit risks

Oncopeptides' credit risk is managed at Group level and arises through credit exposure in the form of outstanding receivables from customers. Accounts receivable arise when an item has been delivered and invoiced and accounted with the amount that is expected be received. The need for impairment of accounts receivable are continuously evaluated as they approach the due date and are considered in this financial statement to the amount of SEK 1.2 M per December 31.

Note 4 Estimates and considerations

This report includes forward looking statements. Actual outcomes may deviate from what has been stated. Internal factors such as successful management of research projects, and intellectual property rights may affect future financial outcomes. There are also external conditions, e.g., the economic climate, political changes and competing research projects that may affect Oncopeptides net profit and cash.

As a result of the company's restructuring, balance sheet items that are not considered to generate future positive cash flows have been revaluated.

Impairments, write-downs, accruals and provisions

Net sales are reported including expected returns resulting from the withdrawal of Pepaxto from the US market. The estimated provision for returns amounts to SEK 48.6 million and corresponds to expected returns of product sold and not consumed during the last two quarters

• of the year. Until finally confirmed, the outcome may vary from the assumptions in this financial statement. The Parent Company has not reported any accruals for returns as inventory balances, held by the subsidiary prior to the withdrawal, have been fully reversed. As a consequence of the withdrawal, a one-time write-down of assets to the amount of SEK 16.6 M for the Group affected the quarter, of which
• Inventory; SEK 9.0 M, where of SEK 8.2 million in the Parent Company
• Right to use assets; SEK 2.2 M in the Group, 0 in the Parent Company
• Other fixed assets; SEK 4.1 M, 0 in the Parent Company
• Group receivables; SEK 19.4 M in the Parent Company

All write-downs are of a non-recurring nature, directly connected to the downsizing of the business as previously communicated.

Note 5 Revenue recognition

Revenue is reported at the transaction value of goods sold excluding VAT, discounts and returns. At the time of delivery, when the ownership of the goods passes to the customer, the revenue is reported in full. Customers are defined as the retailers, who act as middlemen and in turn sell the goods to the end user.

As the final price is related to the discount granted the patients' insurance company, the transaction price is not known upon delivery. An estimated discount deduction accrual, based on calculation models considering statistical sales data and relevant discount programs, is therefore made.

In addition, the Company has, as previously discussed, a provision for additional return related to the withdrawal of Pepaxto from the US market. It is stated in the consolidated balance sheet under Accrued expenses and deferred income and amounted to SEK 48.6 million at year end.

The Company has no further performance commitments.

GROUP REVENUE	2021	2020	2021	2020
SEK thousand	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Net sales; customer contracts
Goods1)	-21 710	-	118 295	-
Total net revenue	-21 710	-	118 295	-
Geographic market
North America2)	-21 710	-	118 295	-

1) PEPAXTO (melphalan flufenamide, also known as melflufen), in combination with dexamethasone, is used for the treatment of adult patients with relapsed or refractory multiple myeloma.

2) Approval was only obtained in the United States, which explains why all revenue refers to one market.

PARENT COMPANY REVENUE	2021	2020	2021	2020
SEK thousand	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Net sales; customer contracts
Goods	-62 7621)	-	97 577	-
Total net revenue	-62 762	-	97 577	-
Geographic market
North America2)	-62 762	-	97 577	-

1) Refers to reversed intra-group sales of inventories.

2) Refers to intra-group sales to the subsidiary in the USA.

Note 6 Segment reporting

The financial information reported to the chief operating decision maker and used as a basis for the distribution of resources and the assessment of the Group's results, is not split across operating segment. Hence, the Group is reported as one single operating segment.

Note 7 Deferred tax

	2021	2020	2021	2020
SEK thousand	Oct-Dec	Oct-Dec	Jan-Dec	Jan Dec
Tax for the period Current tax		6 056 -7 460	-339	-9 247
Deferred tax on intra-group sales of goods	-	-	-	-
Other deferred tax	-10 554	6 283	-8 607	6 996
Reported tax	-4 499	-1 177	-8 945	-2 251

Other deferred tax is, in its entirety, attributable to staff related costs in the subsidiary and will be utilized.

Note 8 Related party transactions

Remuneration to senior management has been paid in accordance with current policies. No other transactions with related parties occurred during the period.

Not 9 Share based incentive programs

The purpose of share-based incentive programs is to promote the company's long-term interests by motivating and rewarding the company's senior management, founders, and other co-workers in line with the interest of the shareholders. Oncopeptides has currently nine active programs that include the management team, certain board members, founders and employees.

Program

• 2016; "Employee option program 2016/2023".
• 2017; "Co-worker LTIP 2017".
• 2018; "Co-worker LTIP 2018" and "Board LTIP 2018", of which the latter expired during the second quarter of 2021. At the Extraordinary General Meeting held in December of 2018, it was resolved to introduce "Board LTIP 2018.2".
• 2019; "Co-worker LTIP 2019" and "Board LTIP 2019"
• 2020; "Board LTIP 2020" and "US Co-worker LTIP 2020"
• 2021; "Board LTIP 2021" and "Co-worker LTIP 2021"

For more information on the programs see Agendas and Minutes from the relevant Annual General Meetings on the company's website www.oncopeptides.com. Full utilization of granted options and share awards at the end of the period, corresponding to 2,254,457 shares, would result in a dilution for shareholders of 2.9 percent. Full utilization of all options and share awards, corresponding to 4,397,484 shares (i.e., including non-granted employee options and warrants set off as hedge for social security contributions), would result in a dilution of 5.5 percent.

Below follows a summary of the changes in existing incentive programs during the reporting year, and the total number of shares that granted employee stock options and share awards may entitle to as of the end of the reporting period.

CHANGES IN EXISITING INCENTIVE PROGRAMS DURING JAN-DEC 2021

Total change	-1 151 597
Board LTIP 2018	-30 451
Expired instruments
Co-worker LTIP 2021	-77 592
US Co-worker LTIP 2020	-680 381
Co-worker LTIP 2019	-808 217
Co-worker LTIP 2018	-143 458
Co-worker LTIP 2017	-6 000
Revoked instruments
Co-worker LTIP 2017	-119 351
Employee option program 2016/2023	-180 900
Exercised instruments
Board LTIP 2021	35 000
US Co-worker LTIP 2021	92 090
US Co-worker LTIP 2020	41 371
Co-worker LTIP 2019	726 301
Granted instruments
Number of shares

NUMBER OF SHARES POTENTIALLY AVAILABLE PER DEC 31, 2021

Employee option program 2016/2023	65 700
Co-worker LTIP 2017	1 228 582
Co-worker LTIP 2018	185 191
Co-worker LTIP 2019	672 903
Number of shares employee stock options may entitle to	2 152 376
US Co-worker LTIP 2020	0
US Co-worker LTIP 2021	14 489
Board LTIP 2018.2	2 170
Board LTIP 2019	23 491
Board LTIP 2020	26 931
Board LTIP 2021	35 000
Total number of shares allocated share awards may entitle to	102 081
Total number of shares employee stock options and
share awards may entitle to	2 254 457

Key performance measures

In this report, certain key performance measures are presented, including measures that are not defined under IFRS, • Research and development / operating expenses, %, • Gross margin, MSEK, %. The company believes that these measurements provides valuable additional information when evaluating the company's

economic trends. These financial performance measures should not be viewed in isolation, nor be considered in replacement of performance indicators that are prepared in accordance with IFRS. Further, such performance measures, as the company has defined them, should not be compared with other performance measures with similar names used

by other companies since definitions and calculation methods may vary between companies.

	2021	2020	2021	2020
SEK thousand	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Net revenue	-21 710	-	118 295	-
Gross profit1)	-40 088	-	65 174	-
Gross margin2)	-	-	55%	-
Total registered shares at the end of the period			75 291 841 67 770 683 67 939 715 55 413 417
No of registered shares at the beginning of the period			75 291 841 67 939 715 75 291 841 67 939 715
No of shares that the outstanding employee options entitle to		2 254 457 3 406 054 2 254 457		3 406 054
Share capital at the end of period	8 366	7 549	8 366	7 549
Equity at the end of period	210 868	576 897	210 868	576 897
Earnings per share before and after dilution, SEK3)	-5,23	-7,59	-19,00	-25,57
Operating loss	-389 836	-511 573	-1 420 917	-1 591 279
Research and development expenses	-184 294	-231 416	-679 926	-866 214
Research and development expenses/operating expenses, %4)	53%	45%	46%	54%

1) Defined by subtracting cost of goods sold from total sales. The key figure shows the gross profitability of cost of goods sold in absolute numbers.

2) Defined by dividing the sum of the company's gross profit by total sales. The key figure aims to clarify the relative profitability of goods sold.

3) Earnings per share before dilution are calculated by dividing earnings attributable to shareholders of the Parent Company by a weighted average number of

outstanding shares during the period. There is no dilution effect driven by the employee stock option program, as earnings for the periods have been negative. 4) Defined by dividing the research and development costs with total operating expenses. The key performance measure provides an indication of the proportion of expenses that are attributable to the company's core business.

AE Adverse events.

Alkylator A broad spectrum cytotoxic chemotherapy.

Aminopeptidases Enzymes that hydrolyze peptides. These are overrepresented in cancer cells.

Anti-CD38 A monoclonal antibody targeted to CD 38.

Autologous Stem cell transplant

Stem cells are taken from the patient when the disease is in a calm stage, so-called remission. They are given back to the patient after, for example, chemotherapy.

CBR Clinical benefit rate, measures the number of patients with multi- ple myeloma who have lost 25 per- cent or more of their tumor mass.

CDMO Contract development and manufacturing organization.

CHMP Committee for Medicinal Products for Human Use. European Medicines Agency's (EMA) committee responsible for human medicines.

Clinical studies Studies to define doses and evaluate safety and efficacy on healthy volunteers and patients.

CR Complete tumor response.

CRO Contract research organization.

Dexamethasone A powerful steroid used in cancer treatment.

DOR Duration of response refers to the period from an initial tumor reduction until it begins to grow.

Double-refractory Resistant to two drugs.

EHA European Hematology Association

EMA European Medicines Agency.

Entrapped How a hydrophilic alkylator payload stays inside a cell.

FDA US Food and Drug Administration.

Hazard ratio A measure of the relative risk of an event at each time point during follow-up when receiving melflufen in relation to pomalidomide. A value below 1 indicates a better treatment effect for melflufen, and a value above 1 indicates a better treatment effect for pomalidomide.

Hematology The science of blood, blood-forming organs, and blood diseases. It includes the treatment of blood disorders and malignancies, including hemophilia, leukemia, lymphoma, and sicklecell anemia.

IMiDs Immunomodulatory imide drugs, used in the treatment of

multiple myeloma.

Interim results Partial results in ongoing trials IND-submission Application to enable clinical development of a drug candidate.

INN International non-proprietary Name.

ITT Intention To Treat population.

Late- stage RRMM Late- stage relapsed refractory multiple myeloma.

Lines of therapy After a cancer diagnosis and decision to treat the patient, the first treatment attempt is known as the first line of therapy, followed by a second line of therapy, etc.

Lipophilicity is a key parameter that determines cell uptake of small molecules.

MAA Marketing Authorization Application.

Melflufen A first-in-class anti-cancer peptide drug conjugate targeting aminopeptidases and releases alkylating agents into tumor cells.

M elphalan flufenamide INN (see above) name for melflufen.

MM Multiple myeloma, a rare blood cancer that forms in plasma cells. Cancerous plasma cells accumulate in the bone marrow and crowd out healthy blood cells.

M onoclonal antibodies

Laboratory- produced molecules engineered to serve as substitute antibodies that restore, enhance, or mimic the immune system's attacks on cancer cells.

MR Minimal response refers to a 2 5–5 0 percent tumor reduction Multi-refractory Resistant to several different drugs

M ultiple myeloma A rare bloodbased cancer.

NDA New Drug Application. OPD5 The second drug candidate coming out of the peptide drug conjugate platform.

Orphan drug A drug used to treat a rare disease, life threatening diseases or diseases in very small patient populations

ORR Overall response rate, the number of patients who have lost 50 percent or more of their tumor mass.

OS Overall survival, the length of time a patient survives from the start of the treatment.

Payload Highly active molecules that are too toxic to be administered in untargeted forms at therapeutic doses.

PD Progressive disease, where the tumor mass has grown by at least 25 percent PDC Peptide-drug conjugate. The class of agents that includes melflufen and OPD5.

Peptidases Enzymes that break down peptides.

Peptide A molecule comprising a chain of amino acids. A key attribute of melflufen. PFS Progression-free survival, measures the length of time from the start of a patient's treatment until the tumor has grown by at least 25 percent

Pharmacokinetics Data that describe how a drug is distributed and metabolized in the body.

Phase 1,2,3 (studies) Various

phases of clinical development.

Phase 1 A clinical study to identify appropriate doses of a drug candi- date and evaluate safety in healthy volunteers.

Phase 2 A clinical study to evaluate efficacy and safety of a drug candidate in patients ahead of phase 3.

Phase 3 A clinical study that repeats phase 2 processes in larger patient groups and compares drug candidates with other treatments.

Chemotherapy Cancer treatment involving one or more drug to kill cancer cells.

ONCOPEPTIDES | YEAR END REPORT 2021 12

Telephone conference

The Year End report for 2021 and an operational update will be presented by CEO Jakob Lindberg and members of Oncopeptides Leadership team, Thursday February 17, 2022, at 15:00 (CET).

The conference call will be streamed via a link on the website: www.oncopeptides.com.

Participant phone numbers:

Sweden: +46 8 505 583 58

Europe: +44 333 300 9270

USA: +1 833 526 8384

Calendar

Report	Datum
Annual report, 2021	21 April, 2022
Interim report Q1, 2022	4 May, 2022
AGM 2022	19 May, 2022
Interim report Q2, 2022	11 August, 2022
Interim report Q3, 2022	9 November, 2022
Year End report, 2022	16 February, 2023

Contact

Oncopeptides AB

Luntmakargatan 46, 111 37 Stockholm Säte: Västra Trädgårdsgatan 15, 111 53 Stockholm, Sweden

Phone: +46 (0)8 615 20 40 E-post: info@oncopeptides.com

Webb: oncopeptides.com

This information is information that Oncopeptides is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 08:00 CET on February 17, 2022. O NCO PEPTIDE S | Y E A R E N D R E P O R T 2021 13