saniona

INTERIM REPORT FOR SANIONA AB (PUBL) 556962-5345 January - June 2021 Published August 26, 2021

Saniona Achieves Clinical Progress in Q2 2021 and Subsequent Period, with Orphan Status for Tesomet in HO and Start of Phase 1 for SAN711

Three Months Ended June 30, 2021 (2020)	Six Months Ended June 30, 2021 (2020)
Revenue was SEK 1.9 M (2.0 M)	Revenue was SEK 5.3 M (4.4 M)
Operating loss was SEK -103.6 M (-26.0 M)	Operating loss was SEK -197.7 M (-53.5 M)
Net loss was SEK -103.9 M (-23.9 M)	Net profit (loss) was SEK -187.3 M (19.3 M)
Basic loss per share was SEK -1.67 (-0.81)	Basic earnings (loss) per share was SEK -3.00 (0.65)
Diluted loss per share were SEK -1.67 (-0.81)	Diluted earnings (loss) per share were SEK -3.00 (0.65)

Business highlights in Q2 2021

Saniona achieved a key milestone with the initiation of a Phase 1 clinical trial of SAN711, an ion channel modulator that may be applicable in the treatment of rare neuropathic disorders. This is the first wholly-owned asset from Saniona's proprietary ion channel drug discovery engine to advance into a clinical trial. Data from the trial are expected in the first half of 2022.
Saniona provided multiple updates on its progress toward initiating Phase 2b clinical trials of Tesomet in hypothalamic obesity (HO) and Prader-Willi syndrome (PWS), announcing a partnership with the Foundation for Prader-Willi Research to increase clinical trial awareness and the receipt of manufacturing feedback from the U.S. Food and Drug Administration (FDA) on the transition from tablets to capsules. Both Phase 2b clinical trials are expected to start in the second half of 2021, with top-line data expected from the PWS clinical trial in the first half of 2023 and from the HO clinical trial in the second half of 2023.
Saniona presented preclinical data from its ion channel program SAN903 in a model of idiopathic pulmonary fibrosis at the American Society of Pharmacology and Experimental Therapeutics (ASPET) Annual Meeting. SAN903 is expected to enter Phase 1 in the second half of 2022. Saniona also presented SAN711 preclinical data in a model of facial neuropathic pain at the prestigious European Academy of Neurology (EAN) Congress.
Saniona hosted a Research and Development (R&D) day featuring presentations highlighting its ion channel drug discovery engine, including its IONBASE™ database now consisting of more than 20,000 proprietary molecules targeting various ion channels.
Saniona provided an update from its partner Medix that additional information requested by a Mexican regulatory committee may delay the anticipated final decision in Mexico regarding tesofensine for obesity into 2022.
Saniona successfully monetized its position in the 2017 spin-out Scandion Oncology, completing the sale of its remaining shares on the open market.
Saniona received a minority ownership stake in Cephagenix, as per the terms of the previously announced February 2020 collaboration agreement through which the company was formed to explore ion channel modulators for the treatment of migraine.

Significant events after the reporting period

Saniona achieved orphan drug designation from the FDA for Tesomet for the treatment of HO. Tesomet is the first and only investigational treatment for HO to receive orphan drug designation.
Saniona entered into a non-dilutive term loan agreement for SEK 87 million ($10 million) with Formue Nord Fokus A/S to support new activities aimed at accelerating clinical development programs.

Saniona AB (publ)

Smedeland 26B

DK-2600 Glostrup

Denmark

EMAIL [email protected]

WEB saniona.com

Saniona Inc.

500 Totten Pond Road, Suite 620

Waltham, MA 02451

USA

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

Comments from the CEO

"In the first half of 2021 and into the subsequent period, Saniona has made significant progress on the clinical and regulatory fronts, achieving orphan drug designations from the U.S. FDA for Tesomet in both hypothalamic obesity and Prader-Willi syndrome. These designations put us in a strong position as we prepare to initiate our Phase 2b trials of Tesomet in HO and PWS before the end of this year," said Rami Levin, President & Chief Executive Officer of Saniona. "Additionally, in Q2 we initiated a Phase 1 clinical trial of SAN711, our second wholly-owned proprietary pipeline asset to advance into clinical trials. SAN711 is our lead molecule from our ion channel drug discovery engine, which has already generated a number of additional discovery-stage and preclinical assets to fuel our pipeline well into the future."

For more information, please contact

Trista Morrison, Chief Communications Officer, Saniona. Office: + 1 (781) 810-9227. Email: [email protected]

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

Letter from the CEO

In the first half of 2021 and the following months, Saniona has made important progress executing on our strategy to discover, develop and commercialize innovative medicines for rare disease patients. Notable achievements so far this year include:

Tesomet in the treatment of hypothalamic obesity (HO) and Prader-Willi syndrome (PWS): We are now seeing the benefits of investments we made in building an experienced U.S. clinical and regulatory team. This year, we achieved orphan drug designations from the U.S. FDA for Tesomet in both HO and PWS – and the HO designation was notably the first ever granted by the FDA in this indication. I am proud of this truly pioneering work by our team. Importantly, these two orphan drug designations qualify Saniona for certain development benefits, including tax credits, elimination of certain FDA license application fees, and seven years of market exclusivity in the U.S. following approval. They put us in a strong position as we prepare to initiate a Phase 2b clinical trial of Tesomet in each of these two indications in the second half of this year. We expect top-line data from the PWS study in the first half of 2023 and from the HO study, which is a longer trial, in the second half of 2023.
Ion channel pipeline and drug discovery engine: This year Saniona has had the opportunity to give multiple presentations about the encouraging data we are seeing from our ion channel programs, including the ability of SAN711 to reduce pain in in-vivo models of neuropathic pain and the ability of SAN903 to reduce inflammation and fibrosis in in-vivo models of idiopathic pulmonary fibrosis. In Q2, we advanced SAN711 into a Phase 1 clinical trial, making it the first wholly-owned asset from our proprietary ion channel drug discovery engine to advance into clinical trials. We anticipate reporting top-line data on SAN711 in the first half of 2022 and initiating a Phase 1 clinical trial with SAN903 in the second half of 2022.
Partnerships: Saniona's strategy is to retain and develop our innovative molecules for rare diseases. We will continue to evaluate opportunities to leverage our expertise and portfolio in non-rare indications through business development activities that may provide non-dilutive funding. We also continue to monitor our existing programs that are advancing with partners. In the second quarter, our partner Medix reported that additional information requested by a Mexican regulatory committee may delay the anticipated final decision in Mexico regarding tesofensine for obesity into 2022. Medix is entirely responsible for this program including communications with Mexican regulators, and we will continue to update the market as we receive information.
Ensuring Saniona is well-funded: We view Tesomet, SAN711 and SAN903 – our wholly-owned, proprietary pipeline assets – as the primary value-drivers of our business. Thus, ensuring we have the funding and expertise to continue to advance these programs is a high priority. After the close of the second quarter, we entered into a non-dilutive term loan agreement for SEK 87 million (\$10 million) with Formue Nord Fokus A/S to support new activities aimed at accelerating clinical development programs. We also continue to evaluate listing our shares on the U.S. Nasdaq exchange, and will provide updates as appropriate.

Overall, I am proud of the clinical and regulatory milestones our team has achieved in the first half of 2021, and we look forward to achieving the very significant milestones of initiating our Phase 2b clinical trials with Tesomet in HO and PWS in the second half of this year. We appreciate the continued support of our shareholders on our journey to transform Saniona into a fully-integrated biopharmaceutical company with the ability to discover, develop and ultimately commercialize our own innovative treatments for rare disease patients around the world.

Rami Levin
President & CEO

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

About Saniona

Saniona is a clinical-stage biopharmaceutical company focused on discovering, developing, and commercializing innovative therapies for patients suffering from rare diseases for which there are a lack of available treatment options. The company's lead product candidate, Tesomet, is in mid-stage clinical trials for hypothalamic obesity and Prader-Willi syndrome, serious rare disorders characterized by severe weight gain, disturbances of metabolic function and uncontrollable hunger. Saniona has developed a proprietary ion channel drug discovery engine anchored by IONBASE, Saniona's database of more than 130,000 ion channel modulators, of which more than 20,000 are Saniona's proprietary compounds. Through its ion channel expertise, Saniona is advancing two wholly-owned ion channel modulators, SAN711 and SAN903. SAN711 is in a Phase 1 clinical trial and may be applicable in the treatment of rare neuropathic disorders, and SAN903 is in preclinical development for rare inflammatory, fibrotic and hematological disorders. Led by an experienced scientific and operational team, Saniona has an established research organization in the Copenhagen area, Denmark and a corporate office in the Boston, Massachusetts area, U.S. The company's shares are listed on Nasdaq Stockholm Small Cap (OMX: SANION). Read more at www.saniona.com.

Our vision

Improve the lives of rare disease patients around the world through scientific innovation.

Our mission

We leverage our ion channel targeting expertise to discover, develop and deliver innovative rare disease treatments.

Our values

Put People First
Treat all people with kindness, respect and equity. Support people on their journey and enable a sense of belonging.
Innovation With Impact
Push boundaries with courage. Embrace empowerment. And deliver excellence.
Integrity, Always
Maintain the highest ethical standards in all that we do as we deliver with urgency for patients in need.

Our Strategy

Our strategy is to discover, develop and commercialize innovative treatments for patients suffering from rare diseases around the world. We intend to achieve this initially by advancing our lead asset, Tesomet, for HO and PWS, and our ion channel modulators, SAN711 and SAN903, for rare neuropathic and rare inflammatory, fibrotic and hematological disorders, respectively. We also intend to utilize our ion channel drug discovery engine to identify additional novel assets for new indications, with a focus on rare diseases for which there are currently no FDA-approved treatment options or those for which there remains significant unmet medical need.

Investment rationale:

Tesomet: positive data from initial Phase 2 trials in two rare disorders
Hypothalamic obesity (HO)
Phase 2b trial expected to begin H2 2021; top-line data expected in H2 2023
Prader-Willi syndrome (PWS)
Phase 2b trial expected to begin H2 2021; top-line data expected in H1 2023
Proprietary ion-channel drug discovery engine driving pipeline
SAN711
For rare neuropathic disorders, Phase 1 data expected in H1 2022
SAN903
For rare inflammatory, fibrotic, and hematological disorders, expected to enter Phase 1 in H2 2022
IONBASE Database
20,000 proprietary ion channel modulators
Validation from multiple strategic partnerships
CAD-1883
for movement disorders
NOVARTIS
Novel target for schizophrenia
Theofensine for obesity
Bovbringer Iophorin
Well-funded to drive current operating plan into H2 2022
Well-funded into H2 2022
Strong institutional support
RA Capital, Pontifax Venture Capital, New Leaf Venture Partners

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Strategic priorities:

Completing the clinical development of, and seeking FDA approval for, Tesomet for the treatment of HO and PWS. We have completed initial Phase 2 clinical trials of Tesomet for HO and PWS. We are planning to initiate Phase 2b clinical trials for each of these indications in the second half of 2021. The FDA has confirmed that Tesomet may be advanced via the 505(b)(2) pathway for both indications and granted orphan drug designation status for Tesomet for the treatment of HO and PWS, respectively.
Advancing our earlier stage programs, SAN711 and SAN903, through clinical development in rare neuropathic disorders and rare inflammatory, fibrotic and hematological disorders, respectively. We have identified two ion channel modulator product candidates, SAN711 and SAN903, from our proprietary ion channel discovery engine. We dosed the first participant in our Phase 1 clinical trial of SAN711 in healthy volunteers in June 2021 in the United Kingdom and anticipate reporting top-line data in the first half of 2022. Additionally, we are continuing to progress SAN903 through preclinical studies and anticipate initiating a Phase 1 clinical trial in the second half of 2022.
Continuing to expand our pipeline and develop innovative therapies targeting underserved patient populations by leveraging our rare disease expertise and ion channel drug discovery engine. We have been pioneers in the field of ion channel modulation since our founding and believe that the market for this recognized drug class has significant, untapped potential across many disease areas. We believe that our proprietary drug discovery engine overcomes many of the significant limitations of historical ion channel drug development, as does our IONBASE database of more than 130,000 ion channel modulators targeting various subtypes of ion channels, of which more than 20,000 are our proprietary compounds. We expect to continue to leverage our drug discovery engine and IONBASE to expand our wholly-owned pipeline in rare diseases. Additionally, we are focused on expanding the breadth of our identified clinical programs through life cycle management beyond our initial target indications.
Commercializing Tesomet independently in the key major markets, if approved, and exploring other markets through strategic collaborations. We have worldwide development and commercialization rights for Tesomet. Due to the rare incidence and prevalence of HO and PWS, the market for these indications is concentrated around key opinion leaders (KOLs) and key centers of excellence. Since our founding, we have built and continue to expand our established relationships with leading KOLs, clinicians and patient advocacy groups to help inform our product development. We plan to build a targeted sales force, initially in North America. We may explore expanding into other select markets, notably the European Union, either alone or in collaboration with one or more global or regional partners in order to provide patients around the world with access to our therapies.
Maximizing the value of our ion channel engine and IONBASE by collaborating with global pharmaceutical and biotechnology companies as appropriate. Our expertise in the field of ion channel drug discovery has led to several out-licensing arrangements, spin-outs and collaborations with pharmaceutical companies globally, including Novartis and Boehringer Ingelheim, particularly for assets outside of our focus area of rare diseases. These transactions serve as a source of non-dilutive capital, in the form of upfront payments, milestone payments, royalties and/or equity stakes that we intend to reinvest in both our discovery engine and core development efforts to treat rare diseases. We intend to continue to strategically evaluate additional opportunities to license out or collaborate with leading industry partners in disease areas addressing larger patient populations.

Our Pipeline

Consistent with our goal of developing innovative therapies for underserved patient populations, our wholly-owned pipeline consists of four programs in clinical and preclinical development across multiple rare diseases. The following table summarizes our wholly-owned programs:

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Product Candidate	Indication	Upcoming Milestones
PROPRIETARY PIPELINE:
Tesomet
(tesofensine + metoprolol)	Hypothalamic obesity	• Phase 2b trial expected to begin in H2 2021
	Prader-Willi syndrome	• Phase 2b trial expected to begin in H2 2021
SAN711
(GABA_{A}α3 PAM)	Rare neuropathic disorders	• Phase 1 top-line data expected in H1 2022
SAN903
(K_{iα}3.1 channel inhibitor)	Rare inflammatory, fibrotic and hematological disorders	• Phase 1 trial expected to begin in H2 2022

Tesomet

Our lead product candidate, Tesomet, is a novel, potentially first-in-class, once-daily oral investigational therapy for the treatment of hypothalamic obesity (HO) and Prader-Willi syndrome (PWS).

Tesomet is a fixed-dose combination of two active ingredients: tesofensine and metoprolol. Tesofensine is a novel molecule developed in the labs of our founding scientists. It is a monoamine reuptake inhibitor that modulates brain activity by increasing the levels of three neurotransmitters – dopamine, serotonin and noradrenaline – which are each intimately involved in regulating appetite, food-seeking behavior and metabolism. Metoprolol is a cardio-selective β1 receptor blocker historically used to treat a number of cardiovascular conditions and which has been approved for use in the United States since 1978. We selected metoprolol not only for its pharmacological effects but also for its well-established safety profile since its approval. Following discussions with the FDA on the proposed regulatory path for Tesomet in HO and PWS, the FDA confirmed that Tesomet may be advanced via the 505(b)(2) pathway for the treatment of HO and PWS. The FDA has granted orphan drug designation to Tesomet for the treatment of HO and PWS, respectively. We hold exclusive worldwide rights to Tesomet.

HO is a rare neuroendocrine disorder most commonly caused by damage to the hypothalamus sustained during the removal of a craniopharyngioma (CP), a rare, noncancerous central nervous system tumor. The number of patients with HO is estimated to be as high as 25,000 in the United States and 40,000 in Europe. Currently, there are no FDA-approved treatments for HO and there is no cure for this disease. Standard of care is mainly palliative and fails to provide adequate management of weight or hyperphagia. The hypothalamus is a master regulator of metabolism and appetite that integrates both hormonal and nutritional signals from the peripheral and central nervous systems. Damage to the hypothalamus can cause severe dysregulation of energy homeostasis and, as a result, patients with HO often suffer rapid, excessive and intractable weight gain, uncontrollable hunger, memory impairment, attention deficits, excessive daytime sleepiness and lethargy, issues with impulse control and depression. Patients with HO are also at increased risk of developing obesity-related comorbid conditions such as Type 2 diabetes, hypertension, stroke and congestive heart failure. Ultimately, CP survivors with hypothalamic injury report a 20-year mortality rate at least three times higher than CP survivors without hypothalamic injury.

We have completed an initial Phase 2 clinical trial of Tesomet for the treatment of HO. This trial was a single-center, 24-week, randomized, double-blind, placebo-controlled trial with an optional 24-week Open Label Extension (OLE). A total of 21 adult patients, 13 of whom were randomized to Tesomet and eight to placebo, were included within the protocol-specified modified intent-to-treat analysis pertaining to the double-blind period (i.e., all randomized patients with measurement after at least one dose of study drug or placebo). All 18 patients who completed the double-blind portion of the trial also participated in and completed the OLE portion. Tesomet was generally well tolerated throughout the 48 weeks of this clinical trial. The majority of adverse events (AEs) were mild or moderate in severity.

The primary endpoint of the study was to establish the overall safety and tolerability of Tesomet in patients with HO, which was achieved. Several secondary endpoints relating to efficacy were also achieved. Patients treated with Tesomet for nearly one year (24-week double-blind followed by 24-week OLE) demonstrated statistically significant reductions in body weight

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

and improvements in waist circumference and glycemic control. Double-blind treatment with Tesomet for 24 weeks resulted in statistically significant placebo-adjusted weight loss of 6.28% (p<0.0169) and a mean reduction in waist circumference of 5.68 cm or 5.00%. In the 24-week OLE, Tesomet continued to demonstrate persistent improvements in body weight and waist circumference. Patients who received placebo in the double-blind period of the trial and were switched to Tesomet for the OLE also achieved a 4.95% and 3.04% reduction in body weight and waist circumference, respectively, after being switched to Tesomet. A key secondary endpoint of this trial was Tesomet's impact on glycemic control, as measured by HbA1c. HbA1c is a commonly referenced biomarker for insulin resistance in metabolic conditions, and HbA1c typically rapidly increases in HO patients. In non-diabetic patients treated with Tesomet, no notable changes in HbA1c were observed. In two patients with Type 2 diabetes, Tesomet lowered HbA1c by 48.80% at Week 24. The two patients with Type 2 diabetes continued to receive Tesomet and their reductions in HbA1c levels were sustained (an average of 46.17% reduction at Week 48).

PWS is a rare, genetic, complex, multisystem disorder that is the most common genetic cause of childhood obesity globally. The number of patients with PWS is estimated to be as high as 34,000 in the United States and 50,000 in Europe. The only FDA-approved treatment currently available for PWS is growth hormone therapy; however, studies have not shown that growth hormone therapy reduces the hyperphagia symptoms experienced by these patients. Typically, PWS patients are diagnosed during early infancy. Patients can suffer from a variety of symptoms, most notably hyperphagia, and may display abnormal food-seeking behavior, such as stealing food. Additional symptoms include abnormal growth and body composition, low muscle tone or hypotonia, and social, emotional or cognitive deficits. Complications of obesity, such as respiratory and cardiovascular failure, infection, choking, gastric rupture and pulmonary embolism, are major causes of morbidity and mortality among patients with PWS.

We completed an initial Phase 2 clinical trial of Tesomet for the treatment of PWS. This trial was a two-center, randomized, double-blind, placebo-controlled trial. Nine adults and nine adolescents were treated daily with Tesomet or placebo for three months for the double-blind portion of the trial, with two open-label three-month extensions, referred to as OLE1 and OLE2, for adolescent patients. The primary endpoint was change in body weight; secondary objectives included hyperphagia, body composition, lipids and other metabolic parameters. Adult patients receiving Tesomet achieved a reduction in body weight and a statistically significant reduction in hyperphagia. In adolescent patients in the double-blind and OLE1 periods, Tesomet appeared to be generally well tolerated at lower doses (0.125 mg/day and 0.25 mg/day); data from OLE2 suggested dose-dependent effects on weight and hyperphagia when the dose was increased to 0.25 mg/day.

The adult patients receiving Tesomet achieved a 5.4% reduction in body weight, which is notable in the small patient population, and a statistically significant 8.1 point reduction in hyperphagia as measured by the Hyperphagia Questionnaire for Clinical Trials (HQ-CT), a caregiver questionnaire that is the generally accepted standard for evaluating hyperphagia in patients with PWS. In adolescents, upon the dose increase of Tesomet from 0.125 mg to 0.25 mg during the OLE2 portion of the trial, Tesomet-treated patients experienced a decrease in body weight and a further reduction in hyperphagia as measured by the HQ-CT questionnaire.

During the second half of 2021, we intend to initiate a Phase 2b randomized, placebo-controlled, double-blind, multi-center supportive clinical trial to further evaluate Tesomet in each of the PWS and HO indications. Each clinical trial will enroll up to approximately 120 patients, and the external per patient costs of the third-party Clinical Research Organization (CRO) are expected to range between SEK 1,800,000 and SEK 2,200,000. We expect to report top-line data from the PWS clinical trial in the first half of 2023 and top-line data from the HO clinical trial in the second half of 2023.

SAN711

SAN711 is designed as a positive allosteric modulator (PAM) of GABAA α3. GABA is a neurotransmitter, or chemical messenger, that inhibits signals between nerve cells in the brain. Inhibiting these signals can result in outcomes such as sedation, pain relief, itch relief or seizure inhibition. We have specifically designed SAN711 to activate the α3 subunit of GABAA with high selectivity. By selectively activating α3 GABAA receptors, we believe SAN711 has the potential to restore spinal inhibitory tone and prevent abnormal pain signaling to the brain. Preclinical studies have indicated that because SAN711 only activates α3 GABAA receptors, this selectivity may allow SAN711 to provide pain relief and other benefits in the central nervous system while avoiding the typical adverse effects associated with non-selective GABAA activation such as sedation, motor instability, cognitive impairment, abuse liability and physical dependence. We initiated our Phase 1 clinical trial of SAN711 in June 2021 and anticipate reporting top-line data in the first half of 2022.

sasiona

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

SAN903

SAN903 is designed as an inhibitor of the calcium-activated potassium channel, KCa3.1. KCa3.1 is important for activation of immune cells in the brain (microglia) and other tissues (T-cells, macrophages), and it is also involved in the abnormal production of connective tissue that can lead to fibrosis in chronic diseases. SAN903 has demonstrated proof of concept in standard preclinical animal models of inflammatory diseases, such as idiopathic pulmonary fibrosis. We intend to initiate a Phase 1 clinical trial of SAN903 in the second half of 2022.

Ion channel drug discovery engine

Our earlier stage discovery and development efforts are focused on the validated drug class of ion channels, which have been implicated in the pathophysiology of many disease settings and include many successful drugs such as Norvasc (amlodipine), Xylocaine (lidocaine) and Valium (diazepam). Our ion channel drug discovery engine combines in-house expertise in chemistry, precision biology, in vivo stability/distribution, target engagement, in vivo pharmacology, and artificial intelligence to accelerate the discovery of highly selective, subtype-specific, and state-dependent ion channel modulators. The core of this engine is Saniona's proprietary IONBASE database, which contains structure-activity data for more than 130,000 compounds. Of these, more than 20,000 are our proprietary compounds, generated over 20 years and enriched for properties conferring optimal ion channel modulation. As a result of our ion channel drug discovery engine, we have generated a robust pipeline of orally available, potent, highly selective and differentiated ion channel modulators, including SAN711 and SAN903.

Partnerships and Spinouts

Leveraging our expertise in the field of ion channel drug discovery and the robustness of our existing database, we are continuously advancing our research programs in order to identify and advance additional selective ion channel clinical candidates in a range of therapeutic areas, including rare genetic and neurological disorders. Our priority is to develop molecules internally focused on rare diseases, and we will retain the optionality to pursue select partnerships or outlicensing arrangements outside our core focus areas. Our industry-leading research has formed the basis of many successful spinouts, partnerships, and licensing agreements with global pharmaceutical companies, such as Boehringer Ingelheim, Ataxion Therapeutics (later known as Cadent Therapeutics, acquired by Novartis AG), Cephagenix, Initiator Pharma, Scandion Oncology and Medix.

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

Financial review

General

During 2020, we became aware of certain errors in our previously issued consolidated financial statements as of and for the year ended December 31, 2019, and the quarterly reporting periods in 2019 and 2020. Accordingly, we restated these prior period financial statements. These restatements have also resulted in a restatement of certain of the amounts presented in the Financial review section for the three and six months ended June 30, 2020. Refer to Note 12 to our Condensed Consolidated Interim Financial Statements below for more details.

Alternative Performance Measures

Saniona presents certain financial measures in the interim report that are not defined according to International Financial Reporting Standards (IFRS), so called alternative performance measures. These have been noted with an “*” in the tables below. The company believes that these measures provide valuable supplementary information for investors and company management as they enable an assessment of relevant trends of the company's performance. These financial measures should not be regarded as substitutes for measures defined per IFRS. Since not all companies calculate financial measures in the same way, these are not always comparable to measures used by other companies.

The definition and relevance of key figures not calculated according to IFRS are listed in the table below.

Key figure	Definition	Relevance
Operating profit/loss	Profit/loss before financial items and tax.	The operating profit/loss is used to measure the profit/loss generated by the operating activities.
Operating margin	Operating profit/loss as a proportion of revenue.	The operating margin shows the proportion of revenue that remains as profit before financial items and taxes and has been included to allow investors to get an impression of the company's profitability.
Liquidity ratio	Current assets divided by current liabilities.	Liquidity ratio has been included to show the Company's short-term payment ability.
Equity ratio	Shareholders' equity as a proportion of total assets.	The equity ratio shows the proportion of total assets covered by equity and provides an indication of the company's financial stability and ability to survive in the long term.
Equity per share	Equity divided by the shares outstanding at the end of the period.	Equity per share has been included to provide investors with information about the equity reported in the balance sheet as represented by one share.
Cash flow per share	Cash flow for the period divided by the average shares outstanding for the period.	Cash flow per share has been included to provide investors with information about the cash flow represented by one share during the period.

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Results of Operations

Comparison of the Three Months Ended June 30, 2021 and 2020

| KSEK | | 2021-04-01
2021-06-30 | 2020-04-01
2020-06-30
(Restated) | Increase
(Decrease) |
| --- | --- | --- | --- | --- |
| Revenue | | 1,895 | 1,991 | -96 |
| Total operating expenses | | -105,464 | -28,039 | -77,425 |
| Operating loss | * | -103,569 | -26,048 | -77,521 |

= Alternative performance measures

| Key figures | | 2021-04-01
2021-06-30 | 2020-04-01
2020-06-30
(Restated) |
| --- | --- | --- | --- |
| Operating margin, % | * | -5,465% | -1,308% |
| Basic earnings per share, SEK | | -1.67 | -0.81 |
| Diluted earnings per share, SEK | | -1.67 | -0.81 |
| Cash flow per share, SEK | * | -1.13 | 1.33 |

= Alternative performance measures

Alternative performance measures are derived as follows:

| | 2021-04-01
2021-06-30 | 2020-04-01
2020-06-30
(Restated) |
| --- | --- | --- |
| Operating loss, KSEK | -103,569 | -26,048 |
| Revenue, KSEK | 1,895 | 1,991 |
| Operating margin, % | -5,465% | -1,308% |
| Cash flow for the period, KSEK | -70,186 | 39,240 |
| Average shares outstanding | 62,381,442 | 29,496,259 |
| Cash flow per share, SEK | -1.13 | 1.33 |

Revenue

Revenue decreased by SEK 0.1 million from SEK 2.0 million for the three months ended June 30, 2020 to SEK 1.9 million for the three months ended June 30, 2021.

Operating expenses

Operating expenses increased by SEK 77.4 million from SEK 28.0 million for the three months ended June 30, 2020 to SEK 105.5 million for the three months ended June 30, 2021.

Within operating expenses, external expenses increased by SEK 42.6 million from SEK 17.2 million for the three months ended June 30, 2020 to SEK 59.8 million for the three months ended June 30, 2021. The main components of our external expenses are external research and development expenses, which are primarily attributable to contract research organizations and contract manufacturing organizations for our clinical trials. External research and development expenses for the three months ended June 30, 2021 comprised primarily of development costs of Tesomet, including costs for the preparation of our upcoming Phase 2b trials of Tesomet in HO and PWS, and development costs of SAN711 which we advanced into a Phase 1 clinical trial during the second quarter of 2021. For the three months ended June 30, 2020,

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

external expenses comprised primarily of development costs of Tesomet followed by preclinical development costs of SAN711 and research and development costs of the SAN903 program.

The average number of employees of Saniona increased by 24.17 from 24.67 for the three months ended June 30, 2020 to 48.83 for the three months ended June 30, 2021, corresponding to the hiring of the executive team and other employees in general and administrative functions primarily in the United States, and the increase in headcount related to the U.S.-based clinical development team. As a result, personnel costs, which includes salaries, variable compensation, social security, and other employee benefits, increased by SEK 32.6 million from SEK 9.8 million for the three months ended June 30, 2020 to SEK 42.4 million for the three months ended June 30, 2021. Non-cash share-based compensation expense is included in personnel costs and increased by SEK 11.3 million from SEK 1.3 million for the three months ended June 30, 2020 to SEK 12.6 million for the three months ended June 30, 2021.

Compared to the three months ended June 30, 2020, the average exchange rate of 1 SEK against the DKK and the USD for the three months ended June 30, 2021 has appreciated by approximately 5% and 12%, respectively. The vast majority of the company's operating expenses are denominated in DKK or USD, resulting in a positive effect on the company's operating expenses since the Group's reporting currency is the SEK.

Financial items

Net financial expenses increased by SEK 0.1 million from SEK 0.3 million for the three months ended June 30, 2020 to SEK 0.4 million for the three months ended June 30, 2021.

Tax Benefit

The tax benefit on net loss has decreased by SEK 2.5 million from SEK 2.5 million for the three months ended June 30, 2020 to SEK 0.0 million for the three months ended June 30, 2021. The benefit in the three months ended June 30, 2020 resulted from tax credits claimed under a Tax Credit Scheme in Denmark. For 2021, the entire benefit to Saniona resulting from this Tax Credit Scheme was recorded in the three months ended March 31, 2021 as qualified research and development expenses were incurred.

Cash flow

For the three months ended June 30, 2021, net cash used in operating activities was SEK 74.1 million, primarily attributable to our operating loss of SEK 88.8 million (net of non-cash operating expenses for share-based payments of SEK 12.6 million and for depreciation of SEK 2.2 million). Increases in working capital resulted in an additional net cash adjustment of SEK 8.7 million. For the three months ended June 30, 2021, net cash provided by financing activities includes SEK 5.6 million related to the sale of shares of Scandion Oncology.

Parent Company

Operating expenses increased by SEK 1.4 million from SEK 5.0 million for the three months ended June 30, 2020 to SEK 6.4 million for the three months ended June 30, 2021. The main component of the Parent Company's operating expenses are general and administrative expenses.

Profit decreased by SEK 31.1 million from SEK 32.8 million for the three months ended June 30, 2020 to SEK 1.8 million for the three months ended June 30, 2021.

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Comparison of the Six Months Ended June 30, 2021 and 2020

KSEK		2021-01-01	2020-01-01	Increase (Decrease)
		2021-06-30	2020-06-30 (Restated)
Revenue		5,333	4,421	912
Total operating expenses		-203,038	-57,891	-145,147
Operating loss	*	-197,705	-53,470	-144,235

= Alternative performance measures

Key figures		2021-01-01	2020-01-01
		2021-06-30	2020-06-30 (Restated)
Operating margin, %	*	-3,707%	-1,209%
Basic earnings per share, SEK		-3.00	0.65
Diluted earnings per share, SEK		-3.00	0.65
Cash flow per share, SEK	*	-2.80	1.16

= Alternative performance measures

Alternative performance measures are derived as follows:

	2021-01-01	2020-01-01
	2021-06-30	2020-06-30 (Restated)
Operating loss, KSEK	-197,705	-53,470
Revenue, KSEK	5,333	4,421
Operating margin, %	-3,707%	-1,209%
Cash flow for the period, KSEK	-174,802	34,553
Average shares outstanding	62,377,160	29,689,890
Cash flow per share, SEK	-2.80	1.16

Revenue

Revenue increased by SEK 0.9 million from SEK 4.4 million for the six months ended June 30, 2020 to SEK 5.3 million for the six months ended June 30, 2021. The increase was primarily attributable to an increase in annual licenses payments from Medix.

Operating expenses

Operating expenses increased by SEK 145.1 million from SEK 57.9 million for the six months ended June 30, 2020 to SEK 203.0 million for the six months ended June 30, 2021.

Within operating expenses, external expenses increased by SEK 76.8 million from SEK 37.2 million for the six months ended June 30, 2020 to SEK 114.0 million for the six months ended June 30, 2021. The main components of our external expenses are external research and development expenses, which are primarily attributable to contract research organizations and contract manufacturing organizations for our clinical trials. External research and development expenses for the six months ended June 30, 2021 comprised primarily of development costs of Tesomet, including costs for the preparation of our upcoming Phase 2b trials of Tesomet in HO and PWS, and development costs of SAN711 which we advanced into a Phase 1 clinical trial during second quarter of 2021. For the six months ended June 30, 2020, external

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

expenses comprised primarily of development costs of Tesomet followed by preclinical development costs of SAN711 and research and development costs of the SAN903 program.

The average number of employees of Saniona increased by 21.75 from 24.83 for the six months ended June 30, 2020 to 46.58 for the six months ended June 30, 2021, corresponding to the hiring of the executive team and other employees in general and administrative functions primarily in the United States, and the increase in headcount related to the U.S.-based clinical development team. As a result, personnel costs, which includes salaries, variable compensation, social security, and other employee benefits, increased by SEK 64.2 million from SEK 18.7 million for the six months ended June 30, 2020 to SEK 82.9 million for the six months ended June 30, 2021. Non-cash share-based compensation expense is included in personnel costs and increased by SEK 22.4 million from SEK 2.2 million for the six months ended June 30, 2020 to SEK 24.6 million for the six months ended June 30, 2021.

Compared to the six months ended June 30, 2020, the average exchange rate of 1 SEK against the DKK and the USD for the six months ended June 30, 2021 has appreciated by approximately 5% and 14%, respectively. The vast majority of the company's operating expenses are denominated in DKK or USD, resulting in a positive effect on the company's operating expenses since the Group's reporting currency is the SEK.

Financial items

Net financial gains decreased by SEK 62.0 million from SEK 64.9 million for the six months ended June 30, 2020 to SEK 2.9 million for the six months ended June 30, 2021. Net financial gains for the six months ended June 30, 2020 included a gain from losing significant influence over Scandion Oncology as of March 31, 2020 of SEK 53.3 million and a gain of SEK 13.5 million related to the fair value measurement of warrants.

Tax Benefit

The tax benefit on net loss recognized with regard to a Tax Credit Scheme in Denmark decreased by SEK 0.4 million from SEK 7.9 million for the six months ended June 30, 2020 to SEK 7.5 million for the six months ended June 30, 2021 because of exchange rate fluctuations.

Cash flow

For the six months ended June 30, 2021, net cash used in operating activities was SEK 190.7 million, primarily attributable to our operating loss of SEK 168.8 million (net of non-cash operating expenses for share-based payments of SEK 24.6 million and for depreciation of SEK 4.3 million).

Parent Company

Operating expenses increased by SEK 3.9 million from SEK 7.6 million for the six months ended June 30, 2020 to SEK 11.5 million for the six months ended June 30, 2021. The main component of the Parent Company's operating expenses are general and administrative expenses.

Profit decreased by SEK 28.5 million from SEK 43.1 million for the six months ended June 30, 2020 to SEK 14.6 million for the six months ended June 30, 2021.

Financial position

Balance sheet, KSEK	2021-06-30	2020-06-30	2020-12-31
Cash and cash equivalent, KSEK	420,783	68,604	573,866
Equity, KSEK	461,868	179,699	603,458
Total equity and liabilities, KSEK	529,631	240,450	692,181

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Key figures		2021-06-30	2020-06-30 (Restated)	2020-12-31 (Restated)
Liquidity ratio, %	*	893%	152%	846%
Equity ratio, %	*	87%	75%	87%
Equity per share, SEK	*	7.40	5.91	9.67

= Alternative performance measures

Alternative performance measures were derived as follows:

	2021-06-30	2020-06-30 (Restated)	2020-12-31
Current assets, KSEK	472,939	87,759	595,812
Current liabilities, KSEK	52,958	57,801	70,416
Liquidity ratio, %	893%	152%	846%
Equity, KSEK	461,868	179,699	603,458
Total assets, KSEK	529,631	240,450	692,181
Equity ratio, %	87%	75%	87%
Equity, KSEK	461,868	179,699	603,458
Shares outstanding at the end of the period	62,398,523	30,383,316	62,398,523
Equity per share, SEK	7.40	5.91	9.67

The share, share capital and ownership structure

Share data, #	2021-04-01	2020-04-01	2021-01-01	2020-01-01
	2021-06-30	2020-06-30	2021-06-30	2020-06-30
Average shares outstanding	62,381,442	29,496,259	62,377,160	29,689,890
Diluted average shares outstanding	62,475,797	29,513,193	62,477,008	29,705,828
Shares outstanding at the end of the period	62,398,523	30,383,316	62,398,523	30,383,316

On June 30, 2021 and 2020, the company had 8,804 (6,272) shareholders excluding holdings in life insurance and foreign custody account holders.

Personnel

As of June 30, 2021, Saniona had 50 employees including 13 employees with Ph.D. degrees. Of these employees, 35 were engaged in research and clinical development activities and 15 were engaged in general and administrative activities. Of the 50 employees, 26 (52%) were women. At the VP level, we had 13 employees, of which 6 (46%) were women. At the Executive Committee level, exclusive of the CEO, we had 7 FTEs, of which 3 (43%) were women.

Risk factors and risk management

All business operations involve risk. Managed risk-taking is necessary to maintain operations. Risk may be due to events in the external environment and may affect a certain industry or market. Risk may also be company specific.

Saniona is exposed to various kinds of risks that may impact the Group's results and financial position. The risks can be divided into operational risks and financial risks. The main risks and uncertainties which Saniona is exposed to are related to drug development, the company's collaboration agreements, competition, technology development, patents, regulatory requirements, capital requirements and currencies.

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

A detailed description of the Group's risk factors and risk management is included in Saniona's 2020 Annual Report. There are no major changes in the Group's risk factors and risk management in 2021.

Risk related to COVID-19

As of the date of this Interim Report, our clinical trials have not been significantly impacted by the ongoing COVID-19 pandemic. We have licensed some of our technologies to third parties, and their development efforts have been and may continue to be impacted by the ongoing COVID-19 pandemic. There are still uncertainties with regard to the continued spread of COVID-19, including the identification of new variants of the virus and its implications, and we will continue to assess the situation and seek to put in place relevant mitigating measures where necessary.

Although we believe we have implemented strategies to potentially minimize the impact of the COVID-19 pandemic to our business, including following local recommendations regarding COVID-19 safety, we may experience delays with respect to the initiation of certain additional trials or receipt of any governmental or regulatory approvals. The extent to which the COVID-19 pandemic impacts the timing of these matters will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the identification of new variants of the virus, the duration of the pandemic, any restrictions on the ability of hospitals and trial sites to conduct trials that are not designed to address the COVID-19 pandemic and the perceived effectiveness of actions taken in the United States and other countries to contain and treat the disease. We will continue to evaluate the impact of the COVID-19 pandemic to our business.

Audit review

This Interim Report has not been subject to review by the company's auditors.

Financial calendar

Interim Report Q3
Year-End Report 2021
November 18, 2021 at 8:00 CET
February 24, 2022 at 8:00 CET

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

The Board of Directors and the CEO of Saniona AB (publ) provide their assurance that the interim report provides a fair and true overview of the Parent Company's and the Group's operations, financial position and results, and describes material risks and uncertainties faced by the Parent Company and the companies in the Group.

Glostrup, August 26, 2021
Saniona AB

J. Donald deBethizy – Chairman
Rami Levin, President and CEO
Jørgen Drejer – Board member
Anna Ljung – Board member
Carl Johan Sundberg – Board member
Edward Saltzman – Board member

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

THE GROUP'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Group's condensed consolidated financial statements have been prepared based on the accounting policies described in Note 2 Basis of Accounting and Significant Accounting Policies. Certain comparative amounts have been restated, reclassified or re-presented, as a result of a correction of prior-period errors (refer to Note 12 Restatements).

Condensed consolidated statement of comprehensive income – Group

| KSEK | Note | 2021-04-01
2021-06-30 | 2020-04-01
2020-06-30
(Restated) | 2021-01-01
2021-06-30 | 2020-01-01
2020-06-30
(Restated) |
| --- | --- | --- | --- | --- | --- |
| Revenue | 4 | 1,895 | 1,991 | 5,333 | 4,421 |
| Total operating income | | 1,895 | 1,991 | 5,333 | 4,421 |
| Raw materials and consumables | | -1,112 | -840 | -1,855 | -1,560 |
| Other external costs | | -59,831 | -17,207 | -114,005 | -37,200 |
| Personnel costs | 5 | -42,363 | -9,788 | -82,883 | -18,717 |
| Depreciation and write-downs | | -2,158 | -204 | -4,295 | -414 |
| Total operating expenses | | -105,464 | -28,039 | -203,038 | -57,891 |
| Operating loss | | -103,569 | -26,048 | -197,705 | -53,470 |
| Share of result of associates | 10 | — | — | — | -433 |
| Financial income | | 68 | 344 | 1,622 | 344 |
| Financial expenses | | -1,850 | -1,390 | -3,522 | -1,888 |
| Net gains on financial items | | 1,405 | 731 | 4,793 | 66,905 |
| Total financial items | | -377 | -315 | 2,893 | 64,928 |
| Profit (loss) before tax | | -103,946 | -26,363 | -194,812 | 11,458 |
| Tax benefit on net profit (loss) | 6 | — | 2,483 | 7,482 | 7,852 |
| Profit (loss) for the period | | -103,946 | -23,880 | -187,330 | 19,310 |
| Other comprehensive income (loss) for the period | | | | | |
| Item that may be reclassified to profit and loss | | | | | |
| Translation differences | | -13,344 | -1,922 | 15,831 | 1,058 |
| Items that will not be reclassified to profit and loss | | | | | |
| Equity instruments at FVOCI – net change fair value | | 5,770 | 84,582 | 5,063 | 84,582 |
| Total other comprehensive income (loss) for the period, net after tax | | -7,574 | 82,660 | 20,894 | 85,640 |
| Total comprehensive income (loss) for the period | | -111,520 | 58,780 | -166,436 | 104,950 |
| Earnings (loss) per share, SEK | | -1.67 | -0.81 | -3.00 | 0.65 |
| Diluted earnings (loss) per share, SEK | | -1.67 | -0.81 | -3.00 | 0.65 |

sasiona

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

Condensed consolidated statement of financial position – Group

| KSEK | Note | 2021-06-30 | 2020-06-30
(Restated) | 2020-12-31 |
| --- | --- | --- | --- | --- |
| ASSETS | | | | |
| Intangible assets | | 6,127 | 7,735 | 6,072 |
| Property and equipment | | 5,092 | 994 | 5,089 |
| Right of use assets | | 19,915 | 2,075 | 23,035 |
| Investment in associate | 10 | 966 | — | — |
| Other financial assets | 7,9 | 16,760 | 134,084 | 61,660 |
| Other assets | | 343 | — | 513 |
| Tax assets | 6 | 7,489 | 7,735 | — |
| Deferred tax | | — | 68 | — |
| Non-current assets | | 56,692 | 152,691 | 96,369 |
| Trade receivables | | 3,052 | 5,694 | 5,043 |
| Current tax assets | 6 | 7,489 | 7,735 | 7,421 |
| Other assets | | 41,615 | 5,726 | 9,482 |
| Cash and cash equivalent | | 420,783 | 68,604 | 573,866 |
| Current assets | | 472,939 | 87,759 | 595,812 |
| Total assets | | 529,631 | 240,450 | 692,181 |

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

Condensed consolidated statement of financial position – Group (continued)

| KSEK | Note | 2021-06-30 | 2020-06-30
(Restated) | 2020-12-31 |
| --- | --- | --- | --- | --- |
| EQUITY AND LIABILITIES | | | | |
| Share capital | | 3,119 | 1,519 | 3,119 |
| Additional paid-in capital | | 808,847 | 258,163 | 808,607 |
| Reserves | | 57,802 | 82,344 | 36,908 |
| Accumulated deficit | | -407,900 | -162,327 | -245,176 |
| Equity | | 461,868 | 179,699 | 603,458 |
| Other financial liabilities | 8,9 | 12,699 | 1,096 | 16,228 |
| Other liabilities | | 2,106 | 1,854 | 2,079 |
| Non-current liabilities | | 14,805 | 2,950 | 18,307 |
| Trade payables | | 29,911 | 10,390 | 18,875 |
| Other financial liabilities | 9 | 7,536 | 39,878 | 40,623 |
| Other liabilities | | 15,511 | 7,533 | 10,918 |
| Current liabilities | | 52,958 | 57,801 | 70,416 |
| Total liabilities | | 67,763 | 60,751 | 88,723 |
| Total equity and liabilities | | 529,631 | 240,450 | 692,181 |

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Condensed consolidated statement of changes in equity – Group

	Share capital	Additional paid-in capital (Restated)	Translation reserves (Restated)	Fair value reserve (Restated)	Accumulated deficit (Restated)	Shareholders’ equity (Restated)
January 1, 2020 (previously reported)	1,421	239,592	-964	10,657	-192,268	58,437
Restatements	—	—	-2,332	-10,657	8,435	-4,553
January 1, 2020 (restated)	1,421	239,592	-3,296	—	-183,833	53,884
Comprehensive income
Profit for the period	—	—	—	—	19,310	19,310
Other comprehensive income:
Fair value reserve	—	—	—	84,582	—	84,582
Translation differences	—	—	1,058	—	—	1,058
Total comprehensive income	—	—	1,058	84,582	19,310	104,950
Transactions with owners
Shares issued for cash	98	49,171	—	—	—	49,269
Expenses related to capital increase	—	-2,808	—	—	—	-2,808
Issuance of Investor Warrants	—	-27,792	—	—	—	-27,792
Share-based compensation expenses	—	—	—	—	2,196	2,196
Total transactions with owners	98	18,571	—	—	2,196	20,865
June 30, 2020	1,519	258,163	-2,238	84,582	-162,327	179,699
January 1, 2021	3,119	808,607	-31,558	68,466	-245,176	603,458
Comprehensive income
Loss for the year	—	—	—	—	-187,330	-187,330
Other comprehensive income:
Fair value reserve	—	—	—	5,063	—	5,063
Translation differences	—	—	15,831	—	—	15,831
Total comprehensive income	—	—	15,831	5,063	-187,330	-166,436
Transactions with owners
Shares issued for cash	—	321	—	—	—	321
Expenses related to capital increase	—	-81	—	—	—	-81
Share-based compensation expenses	—	—	—	—	24,606	24,606
Total transactions with owners	—	240	—	—	24,606	24,846
June 30, 2021	3,119	808,847	-15,727	73,529	-407,900	461,868

sasiona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Condensed consolidated statement of cash flows – Group

| KSEK | Note | 2021-04-01
2021-06-30 | 2020-04-01
2020-06-30
(Restated) | 2021-01-01
2021-06-30 | 2020-01-01
2020-06-30
(Restated) |
| --- | --- | --- | --- | --- | --- |
| Profit (loss) before tax | | -103,946 | -26,363 | -194,812 | 11,458 |
| Adjustments for non-cash transactions | | 21,509 | -7,414 | 40,402 | -70,944 |
| Changes in working capital | | 8,736 | 10,972 | -31,823 | -13,728 |
| Cash flow from operating activities before financial items and tax | | -73,701 | -22,805 | -186,233 | -73,214 |
| Interest income received | | 67 | 309 | 177 | 309 |
| Interest expenses paid | | -489 | -257 | -4,599 | -739 |
| Cash flow from operating activities | | -74,123 | -22,753 | -190,655 | -73,644 |
| Investing activities | | | | | |
| Investment in tangible assets | | -214 | -34 | -762 | -1,507 |
| Sale of financial assets | | 5,646 | 38,243 | 44,646 | 38,243 |
| Cash flow from investing activities | | 5,432 | 38,209 | 43,884 | 36,736 |
| Financing activities | | | | | |
| Proceeds from issuance (repayment) of loan | | — | — | -25,000 | 25,000 |
| Proceeds from issuance of new shares | | 321 | 24,221 | 321 | 49,269 |
| Costs related to issuance of new shares | | -81 | -437 | -81 | -2,808 |
| Payment of lease liabilities | | -1,735 | — | -3,271 | — |
| Cash flow from financing activities | | -1,495 | 23,784 | -28,031 | 71,461 |
| Net increase (decrease) in cash and cash equivalents | | -70,186 | 39,240 | -174,802 | 34,553 |
| Cash and cash equivalents at beginning of period | | 497,397 | 37,356 | 573,866 | 40,248 |
| Exchange rate adjustments | | -6,428 | -7,992 | 21,719 | -6,197 |
| Cash and cash equivalents at end of period | | 420,783 | 68,604 | 420,783 | 68,604 |

sasiona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

PARENT COMPANY'S FINANCIAL STATEMENTS

The Parent Company's financial statements have been prepared based on the accounting policies described in Note 2 Basis of Accounting and Significant Accounting Policies. Certain comparative amounts in the statement of comprehensive income and the statement of financial position have been restated, reclassified or re-presented, as a result of a correction of prior-period errors.

Statement of income – Parent Company

KSEK		2021-04-01	2020-04-01	2021-01-01	2020-01-01
		2021-06-30	2020-06-30	2021-06-30	2020-06-30
	Note	(Restated)			(Restated)
	1,2,3
Other operating income		1,437	—	2,612	—
Total operating income		1,437	0	2,612	0
Raw materials and consumables		-3	-8	-5	-15
Other external costs		-2,679	-2,511	-4,147	-4,214
Personnel costs	5	-3,754	-2,480	-7,344	-3,376
Total operating expenses		-6,436	-4,999	-11,496	-7,605
Operating loss		-4,999	-4,999	-8,884	-7,605
Share of result of associates		—	—	—	-433
Financial income		134	1	335	95
Financial expenses		-17	-9	-413	-45
Net gains on financial items		6,655	37,843	23,571	51,077
Total financial items		6,772	37,835	23,493	50,694
Profit before tax		1,773	32,836	14,609	43,089
Tax on net profit		—	—	—	—
Profit for the period		1,773	32,836	14,609	43,089

sasiona

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

Balance Sheet – Parent Company

| KSEK | Note | 2021-06-30 | 2020-06-30
(Restated) | 2020-12-31 |
| --- | --- | --- | --- | --- |
| ASSETS | | | | |
| Investment in subsidiaries | | 953,154 | 207,397 | 929,244 |
| Other financial assets | 7,9 | — | 3,719 | 1,746 |
| Financial assets | | 953,154 | 211,116 | 930,990 |
| Non-current assets | | 953,154 | 211,116 | 930,990 |
| Receivables from group companies | | — | 74,614 | 5,721 |
| Other assets | | 10,735 | 1,844 | 3,388 |
| Current receivables | | 10,735 | 76,458 | 9,109 |
| Cash and cash equivalent | | 31,337 | 38,113 | 45,733 |
| Current assets | | 42,072 | 114,571 | 54,842 |
| Total assets | | 995,226 | 325,687 | 985,832 |
| EQUITY AND LIABILITIES | | | | |
| Restricted equity | | | | |
| Share capital | | 3,119 | 1,519 | 3,119 |
| Unrestricted equity | | | | |
| Share premium reserve | | 808,847 | 258,163 | 808,607 |
| Retained earnings | | 165,103 | -17,678 | -7,804 |
| Profit/loss for the period | | 14,609 | 43,089 | 148,180 |
| Equity | | 991,678 | 285,093 | 952,102 |
| Trade payables | | 1,913 | 20,059 | 754 |
| Payables to group companies | | 1,472 | — | — |
| Other financial liabilities | 8 | — | 20,421 | 32,861 |
| Other liabilities | | 163 | 114 | 114 |
| Current liabilities | | 3,548 | 40,594 | 33,729 |
| Total liabilities | | 3,548 | 40,594 | 33,729 |
| Total equity and liabilities | | 995,226 | 325,687 | 985,832 |

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Notes

Note 1 General Information

Saniona AB (publ), (the 'Parent Company'), Corporate Registration Number 556962-5345, is a limited liability company registered in the municipality of Malmö in the county of Skåne, Sweden. These condensed consolidated financial statements comprise the Parent Company and its subsidiaries (collectively the 'Group' or 'Saniona'). The Group is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for patients suffering from rare diseases for which there are a lack of available treatment options. The legal address of the head office and the research facility is Smedeland 26B, DK-2600 Glostrup, Denmark. The majority of Saniona's executive team members are based in Saniona's United States offices, located at 500 Totten Pond Road, Waltham, MA 02451. The Parent Company is listed on Nasdaq Stockholm Small Cap, and its shares are traded under the ticker SANION and the ISIN code SE0005794617.

Note 2 Basis of Accounting and Significant Accounting Policies

A. Basis of Accounting

These condensed consolidated interim financial statements for the three and six months ended June 30, 2021 have been prepared in accordance with IAS 34 Interim Financial Reporting, the Annual Accounts Act, and the Financial Reporting Board's recommendation RFR 1, Supplementary Accounting Rules for Groups. The interim financial statements for the Parent Company are prepared under the requirements of chapter 9 of the Swedish Accounting Act (1995:1554). These interim financial statements should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended December 31, 2020 ('last annual financial statements'). They do not include all of the information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

These condensed consolidated financial statements were authorized for issue by the Parent Company's Board of Directors (the 'Board') on August 26, 2021.

B. Significant Accounting Policies

The Group has consistently applied the accounting policies described in the last annual financial statements to all periods presented in these interim condensed consolidated financial statements. Certain comparative amounts in the statement of comprehensive income and the statement of financial position have been restated, reclassified or re-presented, as a result of a correction of prior-period errors (refer to Note 12 Restatements).

i. Segment reporting

The Group is organized as a single business unit, focused on discovering, developing, and commercializing innovative treatments for rare disease patients. Consistent with its organizational structure, the Group's President and Chief Executive Officer ('CEO'), who is also the chief operating decision maker, views and manages the Group's operations and business as a single operating segment. Our intangible and tangible non-current assets are located predominantly in Denmark.

ii. Fair value measurement

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

sasiona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

When one is available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as 'active' if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The Group regularly reviews significant unobservable inputs and valuation adjustments. Significant valuation issues are reported to the group audit committee.

iii. Adoption of new or revised standards

A number of amendments to standards are effective for annual periods beginning on or after January 1, 2021, and earlier application is permitted. The amendments had no material impact on the Group's financial position or results of operations for the three and six months ended June 30, 2021.

Note 3 Critical accounting judgments and key sources of estimation uncertainty

In preparing these consolidated financial statements, management has made judgements, assumptions, and estimates that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.

Note 4 Revenue

The Group's revenue generating activities are those described in the last annual financial statements. In the three and six months ended June 30, 2021 and 2020, revenue for the Group by category was as follows:

KSEK	2021-04-01	2020-04-01	2021-01-01	2020-01-01
	2021-06-30	2020-06-30	2021-06-30	2020-06-30
		(Restated)		(Restated)
License agreements (other event-based payments)	—	—	2,504	1,971
Research and collaboration agreements (bundle, over time)	1,652	1,302	1,917	1,302
Research and development services (standalone)	243	689	912	1,148
Total	1,895	1,991	5,333	4,421

In the three and six months ended June 30, 2021 and 2020, revenue for the Group by major customers was as follows:

KSEK	2021-04-01	2020-04-01	2021-01-01	2020-01-01
	2021-06-30	2020-06-30	2021-06-30	2020-06-30
		(Restated)		(Restated)
Customer #1	—	—	2,504	1,971
Customer #2	243	689	912	1,148
Customer #3	1,652	1,302	1,917	1,302
Total	1,895	1,991	5,333	4,421

sasiona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

In the three and six months ended June 30, 2021 and 2020, revenue for the Group by primary geographical market was as follows:

KSEK	2021-04-01	2020-04-01	2021-01-01	2020-01-01
	2021-06-30	2020-06-30	2021-06-30	2020-06-30
		(Restated)		(Restated)
Sweden	—	—	—	—
Other European countries	1,895	1,991	2,829	2,450
The Americas	—	—	2,504	1,971
Total	1,895	1,991	5,333	4,421

Note 5 Share-based payments

A. Description of share-based payment arrangements

A detailed description of the Group's share-based payment arrangements as of December 31, 2020 is provided in the last annual financial statements. During the three and six months ended June 30, 2021, the Group made the following additional grants under the Option Program 2020:

2021:1 A total of 902,000 options were allotted at various points in time in the first quarter of 2021.

2021:2 A total of 148,350 options were allotted at various points in time in the second quarter of 2021.

Each option entitles the holder a right to acquire one new share in Saniona for a subscription price equal to the closing price of our common stock on the day before the allotment. The options are subject to a service condition, 25% vest on the 12-month anniversary, and the remaining 75% vest gradually on a quarterly basis at a rate of 6.25% over the following 36 months, resulting in a total vesting period of 48 months. The holder can exercise vested options from the time of vesting until the date that falls 10 years after the allotment date. However, for a participant that ceases to be employed or in a service relationship in the Group, vested options have to be exercised within 90 days from the date when the participant ceased to be employed or in a service relationship in the Group (or, in the case such cessation is due to the participant's death or disability, 12 months from such date).

B. Measurement of fair values and compensation expense

Share-based compensation expenses for the three months ended June 30, 2021 and 2020 totaled SEK 12.6 million and SEK 1.3 million, respectively. Share-based compensation expenses for the six months ended June 30, 2021 and 2020 totaled SEK 24.6 million and SEK 2.2 million, respectively. The fair value of the service that entitles an employee and board member to allotment of options under Saniona's option programs is recognized as a personnel cost with a corresponding increase in equity. Such compensation expenses represent the fair market values of warrants granted and do not represent actual cash expenditures.

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INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

The inputs used in the measurement of the fair values at grant date based on the Black-Scholes formula and the reconciliation of options outstanding are as follows.

Incentive program	2017	2018:1	2018:2	2018:3	2019:1	2019:2
Options outstanding at January 1	38,292	286,003	32,792	10,513	34,500	15,770
Granted during the year	—	—	—	—	—	—
Forfeited during the year	—	—	—	—	—	—
Options outstanding at June 30	38,292	286,003	32,792	10,513	34,500	15,770
Grant Date Fair Value* (SEK)	27.94	12.06	17.38	12.89	7.23	6.00
Share Price at Grant Date* (SEK)	49.60	26.95	33.85	33.85	17.76	17.76
Exercise Price* (SEK)	41.13	33.60	30.08	30.08	17.86	17.86
Expected volatility*	73.41%	69.24%	67.77%	53.67%	57.29%	53.67%
Estimated life*	3.75 years	3.88 years	3.73 years	2.8 years	3.67 years	2.8 years
Expected dividends*	0	0	0	0	0	0
Risk-free rate*	-0.2602%	-0.1092%	-0.2773%	-0.4218%	-0.6903%	-0.6709%
Remaining contractual life*	1.50 years	3.00 years	2.46 years	0.98 years	3.50 years	2.25 years
Incentive program	2020:1	2020:2	2020:3	2021:1	2021:2	Total
---	---	---	---	---	---	---
Options outstanding at January 1	710,313	5,915,648	308,000	—	—	7,351,831
Granted during the year	—	—	—	902,000	148,350	1,050,350
Forfeited during the year	—	—	—	—	—	—
Options outstanding at June 30	710,313	5,915,648	308,000	902,000	148,350	8,402,181
Grant Date Fair Value* (SEK)	12.26	13.13	7.98	10.75	10.18
Share Price at Grant Date* (SEK)	28.10	23.50	23.55	19.31	18.88
Exercise Price*(SEK)	29.42	24.12	25.40	19.38	19.26
Expected volatility*	58.66%	63.64%	57.00%	62.56%	61.32%
Estimated life*	4.2 years	6.11 years	2.8 years	6.11 years	6.11 years
Expected dividends*	0	0	0	0	0
Risk-free rate*	-0.2280%	-0.2772%	-0.3602%	-0.2046%	-0.5200%
Remaining contractual life	4.50 years	9.36 years	3.42 years	9.61 years	9.92 years

Weighted average

Note 6 Income tax

In the three months ended June 30, 2021 and 2020, the Group recognized a current tax benefit of SEK nil million and SEK 2.5 million, respectively, related to the Danish 'Skattekreditordningen' (the 'Tax Credit Scheme'). In the six months ended June 30, 2021 and 2020, the Group recognized a current tax benefit of SEK 7.5 million and SEK 7.9 million, respectively, related to the Tax Credit Scheme. Under the Tax Credit Scheme, loss-making companies can claim payment of the tax base of the portion of their loss which is attributable to certain research and development ('R&D') activities. Companies may obtain payment of the tax base of losses originating from R&D expenses of up to DKK 25.0 million (approx. SEK 34.0 million). The Group's Danish subsidiary Saniona A/S has reached that threshold during first quarter of 2021, and as it is

sainiona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

expected that Saniona A/S will have a full year 2021 tax loss in excess of that threshold, the Group has recorded the full amount of the benefit.

Note 7 Other financial assets

A. Composition

Other financial assets were comprised of the following:

| KSEK | 2021-06-30 | 2020-06-30
(Restated) | 2020-12-31 |
| --- | --- | --- | --- |
| Contingent consideration receivable | 14,089 | — | — |
| Investment in equity instruments - privately-held | — | 25,230 | 37,319 |
| Investment in equity instruments - publicly traded | — | 106,440 | 22,241 |
| Long-term deposits for property lease agreements | 2,671 | 2,414 | 2,100 |
| Total non-current other financial assets | 16,760 | 134,084 | 61,660 |

B. Investment in equity instruments - privately-held and Contingent consideration receivable

Through January 2021, Saniona A/S, a wholly-owned subsidiary of the Parent Company, owned approximately 3% of the share capital of Cadent Therapeutics, Inc. ('Cadent Therapeutics'), a private company based in Cambridge, MA, United States. In January 2021, Novartis AG closed its acquisition of Cadent Therapeutics that was announced in December 2020, upon the occurrence of the closing of the acquisition, the Group exchanged its investment in equity instruments – privately-held for a receivable for an upfront payment in the amount of SEK 24.2 million, and a contingent consideration receivable that had a carrying amount of SEK 14.1 million as of June 30, 2021. The upfront payment was received in January 2021.

C. Investment in equity instruments – publicly traded

The asset as of June 30, 2020 and December 31, 2020 represents the fair value of the Group's investment in Scandion Oncology A/S ('Scandion Oncology'). As of June 30, 2021, Saniona has sold of all its shares in Scandion Oncology in the open market.

In the three and six months ended June 30, 2021, the Group recognized a net gain in other comprehensive income resulting from changes in Scandion Oncology's share price of SEK 5.8 million and SEK 5.1 million, respectively. In the three and six months ended June 30, 2020, the Group recognized a net gain in other comprehensive income resulting from an increase in Scandion Oncology's share price of SEK 84.6 million and SEK 84.6 million, respectively.

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INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Note 8 Other financial liabilities

A. Composition

Other financial liabilities were comprised of the following:

| KSEK | 2021-06-30 | 2020-06-30
(Restated) | 2020-12-31 |
| --- | --- | --- | --- |
| Lease liabilities | 12,699 | 1,096 | 16,228 |
| Warrants | — | | — |
| Total non-current other financial liabilities | 12,699 | 1,096 | 16,228 |
| Lease liabilities | 7,536 | 664 | 6,937 |
| Formue Nord Loan | — | 20,421 | 24,346 |
| Warrants | — | 18,793 | 4,794 |
| Other | — | — | 4,546 |
| Total non-current other financial liabilities | 7,536 | 39,878 | 40,623 |

B. Formue Nord Loan

On January 10, 2020, the Group entered into a fixed-rate loan facility agreement with Formue Nord entitling the Group to draw loans in an aggregate amount of SEK 25.0 million. In March 2020 Saniona drew loans of SEK 25.0 million under the loan facility agreement. The loans were subject to market interest rates and matured on February 7, 2021. They were repaid on February 5, 2021.

C. Warrants

As of June 30, 2020, all warrants of the series TO2 and TO3 as part of the Unit Rights Issue 2020 were outstanding. All warrants of the series TO2 were exercised or forfeited in the third quarter of 2020. As of December 31, 2020, only warrants of the series TO3 were outstanding. In April 2021, a total of 12,846 series TO3 warrants were exercised, the remaining 1,466,896 series TO3 warrants were forfeited. The Group received proceeds of SEK 0.3 million from this exercise.

Note 9 Financial instruments – fair values

A. Accounting classifications and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

June 30, 2021	Note	Financial assets at amortized cost	Mandatorily at FVTPL - others	Carrying amount			Fair value
				FVOCI - equity instruments	Other financial liabilities	Total	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Contingent consideration receivable	7	—	14,089	—	—	14,089	—	—	14,089	14,089
		—	14,089	—	—	14,089	—	—	14,089	14,089
Financial assets not measured at fair value
Trade receivables		3,052	—	—	—	3,052	—	—	—	—
Other non-current financial assets	7	2,671	—	—	—	2,671	—	—	—	—
Cash and cash equivalents		420,783	—	—	—	420,783	—	—	—	—
		426,506	—	—	—	426,506	—	—	—	—
Financial liabilities not measured at fair value
Trade payables		—	—	—	-29,911	-29,911	—	—	—	—
Other financial liabilities	8	—	—	—	—	—	—	—	—	—
Lease liabilities	8	—	—	—	-20,235	-20,235	—	—	—	—
		—	—	—	-50,146	-50,146	—	—	—	—

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

December 31, 2020		Note	Financial assets at amortized cost	Mandatorily at FVTPL - others	Carrying amount			Fair value
					FVOCI - equity instruments	Other financial liabilities	Total	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Investment in equity instruments - publicly traded	7	—	—	106,440			106,440	106,440	—	—	106,440
Investment in equity instruments - privately-held	7	—	25,230	—	—	—	25,230	—	—	25,230	25,230
		—	25,230	106,440	—	—	131,670	106,440	—	—	131,670
Financial assets not measured at fair value
Trade receivables		5,694	—	—	—	—	5,694	—	—	—	—
Other non-current financial assets	7	2,414	—	—	—	—	2,414	—	—	—	—
Cash and cash equivalents		420,783	—	—	—	—	420,783	—	—	—	—
		428,891	—	—	—	—	428,891	—	—	—	—
Financial liabilities measured at fair value
Warrants	8	—	-18,793	—	—	—	-18,793	-18,793	—	—	-18,793
		—	-18,793	—	—	—	-18,793	-18,793	—	—	-18,793
Financial liabilities not measured at fair value
Trade payables		—	—	—	-10,390	—	-10,390	—	—	—	—
Loan	8	—	—	—	-20,421	—	-20,421	—	—	—	—
Other financial liabilities	7	—	—	—	—	—	—	—	—	—	—
Lease liabilities	8	—	—	—	-1,760	—	-1,760	—	—	—	—
		—	—	—	-32,571	—	-32,571	—	—	—	—

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

B. Measurement of fair values

i. Valuation techniques and significant unobservable inputs

The investment in Scandion Oncology has been measured using Scandion Oncology's closing share price at the Spotlight Stock Exchange on June 30, 2020 and December 30, 2020, respectively. The series TO2 and TO3 warrants have been measured at their respective trading prices on Nasdaq Stockholm on June 30, 2020 and December 30, 2020, respectively.

The contingent consideration receivable as of June 30, 2021 and December 31, 2020 and has been measured using a probability-weighted discounted cash flow valuation technique, which considers the present value of expected payments, discounted using a risk-adjusted discount rate. Significant inputs to the valuation are as follows:

Undiscounted expected cash flows range from SEK 23 million to SEK 137 million.
Undiscounted expected cash flows resulting from development and regulatory-milestone based contingent consideration have been adjusted for estimated probabilities that underlying milestones are achieved (9% - 34%).
The probability-weighted cash flows have been discounted using a risk-adjusted discount rate was 11.5%.

The estimated fair value would increase (decrease) if the expected cash flows were higher (lower); or the probability of achieving milestones increases (decreases); or the risk-adjusted discount rate were lower (higher). Reasonably possible changes at the reporting date to one of the significant unobservable inputs, holding other inputs constant, would have the following effects.

KSEK	Profit or loss
	increase	Decrease
June 30, 2021
Risk-neutral expected payments to the Group (+/- 1,000bps)	1,048	-1,048
June 30, 2020
Discount rate (+/- 75bps)	-2,669	2,669

The investment in Cadent Therapeutics as of June 30, 2020 has been measured using a combination of a Contingent Claims Analysis valuation technique, which determines the value of equity in a company based on the principles of option pricing theory, and a probability-weighted discounted cash flow valuation technique, which considers the present value of expected payments, discounted using a risk-adjusted discount rate.

ii. Transfers

During the three and six months ended June 30, 2021 and 2020, there were no transfers of financial instruments between the different valuation hierarchy categories.

iii. Reconciliation of Level 3 fair values

The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.

KSEK	Investment in equity instruments – privately held	Contingent consideration
Balance on January 1, 2021	37,319	—
Cash received	-23,390	—
Exchange	-14,244	14,244
Foreign currency (included in ‘net gains/losses on financial items’)	315	-155
Balance on June 30, 2021	0	14,089

Note 10 Related parties

In May 2021, Saniona became a minority shareholder of Cephagenix ApS ('Cephagenix'), a private Denmark-based company formed to explore ion channel modulators for the treatment of migraine. As of June 30, 2021, the Group held an ownership percentage of 21.4% of Cephagenix, and accounts for this holding as an investment in associate under the

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

equity-method of accounting. Saniona has an existing research services agreement with Cephagenix which was entered into in January 2020. Saniona recognized gross revenue of SEK 0.2 million from this agreement after Cephagenix became an associate, of that SEK 0.1 million, which represents Saniona's share of this revenue and Saniona's share of the loss of Cephagenix for the period, were eliminated.

During 2021 and 2020, the Group had a business advisor agreement with one of its Directors, Edward Saltzman, for the provision of advisory services regarding the general business development of the Group. As of June 30, 2021 and December 31, 2020, balances of SEK 0.4 million and SEK 0.4 million, respectively, were outstanding.

During the three and six months ended June 30, 2021, a total of 0 and 511,000 options, respectively, were granted to key management personnel under the Option Program 2020, refer to Note 5 Share-based payments.

Note 11 Commitments and contingencies

The Parent Company has provided a guarantee to the subsidiary Saniona A/S to ensure that Saniona A/S will be able to pay its creditors as the obligations fall due for the period until June 30, 2022. Saniona A/S had no external net debt as of June 30, 2021.

Note 12 Restatements

A. General

The condensed consolidated interim financial statements for the Group that were previously issued for the three and six months ended June 30, 2020 (the 'Previously Issued Consolidated Financial Statements') have been restated for the correction of certain errors with respect to certain items within the condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, statement of changes in equity and condensed consolidated statement of cash flows in accordance with the requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

B. Nature and impact of restatements

The nature and impact of each restatement is described below.

(a) Cadent Therapeutics (Investment in equity instruments - privately-held): In our Previously Issued Consolidated Financial Statements, we had concluded that the fair value of our investment in Cadent Therapeutics could not be determined reliably and we had recorded the investment at zero cost. We have determined that the fair value of our investment in Cadent Therapeutics was SEK 25.2 million as of June 30, 2020. In the three and six months ended June 30, 2020, we recorded gains (losses) of SEK -1.4 million and SEK 0.2 million, respectively, for the effect of foreign currency translation in other comprehensive income.

(b) Investment in associate: In 2019, we inappropriately discontinued accounting for our investment in Scandion Oncology as an investment in associate under the equity-method of accounting. As a result of this conclusion, we accounted for our investment in Scandion Oncology as a financial asset, measured at fair value through other comprehensive income, in the three months ended March 31, 2020. We subsequently determined that we did in fact continue to have significant influence through March 31, 2020 and therefore should have continued to account for our investment in Scandion Oncology under the equity-method of accounting through March 31, 2020. As a result, the other comprehensive income of SEK 20.9 million that was previously recognized during the first quarter of 2020 has been reversed. Instead, we recorded Saniona's share of Scandion Oncology's profit and loss for the first quarter of 2020 (SEK 0.4 million), and a gain from losing significant influence as of March 31, 2020 of SEK 53.3 million.

(c) Intangible assets: In our Previously Issued Consolidated Financial Statements, we had recorded a payment related to the purchase of certain intellectual property from NeuroSearch as a prepaid asset and presented it within current prepayments and accrued income. We should have accounted for this payment as a separate acquisition of an intangible assets that are not yet available for use. During the three and six months ended June 30, 2020, we had recorded SEK 0.5 million and SEK 1.5 million, respectively, of depreciation regarding this asset. This depreciation has been reversed.

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INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

(d) Revenue Medix: In February 2019 and 2020, Saniona became entitled to annual license payments of SEK 0.9 million and SEK 2.0 million, respectively. In our Previously Issued Consolidated Financial Statements, we had not recognized revenues and receivables for these.

(e) Operating expenses: We have adjusted for the allocation of certain costs between prior reporting periods. In addition, we have performed new grant-date valuations of existing share-based payment grants.

(f) Measurement of financial liabilities: Upon issuance of the Warrants during the Unit Rights Issue 2020, and prior to the underlying financial instruments being publicly traded, we had estimated the total fair value of the Warrants to be SEK 2.5 million and recorded that amount as a reduction in equity and a corresponding increase in financial liabilities. IFRS 13 Fair Value Measurement, which defines fair value as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date (exit price), requires the use of valuation techniques when an exit price for an identical asset is not observable. Using an appropriate valuation technique, we have determined that the fair value of the Lender Warrants was SEK 7.2 million at the issuance date. In accordance with IFRS 9 Financial Instruments, this amount should have been recorded as a reduction of the loan balance as transaction costs and should have been amortized over the term of the loan based on the effective interest method. We have determined that the fair value of the Investor Warrants at the issuance date was SEK 27.8 million, based on the trading price of the underlying listed financial instrument on Nasdaq Nordic. We should have recorded that amount as a reduction of equity at the issuance date. Subsequent changes to the fair value of the Warrants, based on the trading price of the underlying listed instruments, were recorded through profit or loss.

(g) Other restatements: In accordance with presentation requirements under IAS 1, as well as other applicable recognition and measurement principles codified in other IFRS, the Company has made certain other adjustments and reclassifications which affect the consolidated statement of comprehensive income, consolidated statement of financial position, statement of changes in equity and consolidated statement of cash flows. Individually, such other restatements did not have a material impact on our consolidated financial statements.

C. Impact of restatements

The total impact of restatements on the three and six months ended June 30, 2020 is presented in the tables below:

saniona

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Reconciliation of the condensed statement of comprehensive income for the three months ended June 30, 2020

KSEK	2020-04-01	Adjustments	2020-04-01
	2020-06-30		2020-06-30
	(Restated)		(Previously Reported)
Revenue	1,991	—	1,991
Total operating income	1,991	—	1,991
Raw materials and consumables	-840	—	-840
Other external costs	-17,207	504 (e)	-17,711
Personnel costs	-9,788	-1,060 (e)	-8,728
Depreciation and write-downs	-204	—	-204
Total operating expenses	-28,039	-556	-27,483
Operating profit/loss	-26,048	-556	-25,492
Share of result of associates	—	—	—
Financial income	344	34 (g)	310
Financial expenses	-1,390	-1,134 (g)	-256
Net gains on financial items	731	14,200 (f),(g)	-13,469
Total financial items	-315	13,100	-13,415
Profit/loss after financial items	-26,363	12,544	-38,907
Tax on net profit/loss	2,483	—	2,483
Profit/loss for the period	-23,880	12,544	-36,424
Other comprehensive income
Item that may be reclassified to profit and loss
Translation differences	-1,922	-1,978	56
Items that will not be reclassified to profit and losses
Fair value financial assets	84,582	-1,694 (b)	86,276
Total Other comprehensive income	82,660	-3,672	86,332
Total comprehensive income	58,780	8,872	49,908

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Reconciliation of the condensed statement of comprehensive income for the six months ended June 30, 2020

| KSEK | 2020-01-01
2020-06-30
(Restated) | | Adjustments | 2020-01-01
2020-06-30
(Previously Reported) |
| --- | --- | --- | --- | --- |
| Revenue | 4,421 | 1,970 | (d) | 2,451 |
| Total operating income | 4,421 | 1,970 | | 2,451 |
| Raw materials and consumables | -1,560 | -1 | | -1,559 |
| Other external costs | -37,200 | 1,596 | (c),(e) | -38,796 |
| Personnel costs | -18,717 | -938 | (e) | -17,779 |
| Depreciation and write-downs | -414 | — | | -414 |
| Total operating expenses | -57,891 | 657 | | -58,548 |
| Operating loss | -53,470 | 2,627 | | -56,097 |
| Share of result of associate | -433 | -433 | (b) | — |
| Financial income | 344 | 35 | (g) | 309 |
| Financial expenses | -1,888 | -1,151 | (g) | -737 |
| Net gains on financial items | 66,905 | 82,838 | (b),(f),(g) | -15,933 |
| Total financial items | 64,928 | 81,289 | | -16,361 |
| Profit (loss) before tax | 11,458 | 83,916 | | -72,458 |
| Tax benefit on net profit (loss) | 7,852 | -1 | | 7,853 |
| Profit (loss) for the period | 19,310 | 83,915 | | -64,605 |
| Other comprehensive income | | | | |
| Item that may be reclassified to profit and loss | | | | |
| Translation differences | 1,058 | -144 | | 1,202 |
| Items that will not be reclassified to profit and losses | | | | |
| Fair value financial assets | 84,582 | -22,605 | (b) | 107,187 |
| Total other comprehensive income for the period, net after tax | 85,640 | -22,749 | | 108,389 |
| Total comprehensive income for the period | 104,950 | 61,166 | | 43,784 |

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Reconciliation of the condensed consolidated statement of financial position as of June 30, 2020

| KSEK | 2020-06-30
(Restated) | Adjustments | 2020-06-30
(Previously Reported) |
| --- | --- | --- | --- |
| ASSETS | | | |
| Intangible assets | 7,735 | 7,735 (c) | — |
| Property and equipment | 994 | -14,431 (g) | 15,425 |
| Right of use assets | 2,075 | 2,075 (g) | — |
| Other financial assets | 134,084 | 27,643 (a) | 106,441 |
| Tax assets | 7,735 | — | 7,735 |
| Deferred tax | 68 | — | 68 |
| Other long-term receivables | — | -2,414 (g) | 2,414 |
| Non-current assets | 152,691 | 20,608 | 132,083 |
| Trade receivables | 5,694 | 2,801 (d) | 2,893 |
| Current tax assets | 7,735 | — | 7,735 |
| Other assets | 5,726 | 5,726 (e),(g) | — |
| Cash and cash equivalent | 68,604 | — | 68,604 |
| Other receivables | — | -4,753 (g) | 4,753 |
| Prepayments and accrued income | — | -2,907 (e),(g) | 2,907 |
| Current assets | 87,759 | 867 | 86,892 |
| Total assets | 240,450 | 21,475 | 218,975 |

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)

January – June 2021

Reconciliation of the condensed consolidated statement of financial position as of June 30, 2020 (continued)

| KSEK | 2020-06-30
(Restated) | Adjustments | 2020-06-30
(Previously Reported) |
| --- | --- | --- | --- |

EQUITY AND LIABILITIES

Share capital	1,519	—	1,519
Additional paid-in capital	258,163	-25,435 (e),(f)	283,598
Reserves	82,344	-5,861 (g)	88,205
Accumulated deficit	-162,327	65,034 (a),(b),(c),(d),(e),(f)	-227,361
Equity	179,699	33,738	145,961
Other financial liabilities	1,096	1,096	—
Other liabilities	1,854	1,854	—
Lease liabilities	—	-10,053 (g)	10,053
Other payables	—	-1,854 (g)	1,854
Non-current liabilities	2,950	-8,957	11,907
Trade payables	10,390	4,176 (g)	6,214
Other financial liabilities	39,878	39,878 (f),(g)	—
Other liabilities	7,533	7,533 (g)	—
Loan	—	-25,000 (g)	25,000
Other payables	—	-1,545 (g)	1,545
TO2 & TO3 warrants	—	-18,290 (g)	18,290
Accrued expenses and deferred income	—	-10,058 (g)	10,058
Current liabilities	57,801	-3,306	61,107
Total liabilities	60,751	-12,263	73,014
Total equity and liabilities	240,450	21,475	218,975

s Banana

INTERIM REPORT FOR SANIONA AB (PUBL)
January – June 2021

Note 13 Subsequent Events to the Balance Sheet Date

In July 2021, the Group announced that it has entered into a non-dilutive USD-denominated term loan agreement for SEK 87.0 million (USD 10.0 million) with Formue Nord Fokus A/S. A 6% commitment fee will be paid to Formue Nord Fokus A/S, resulting in SEK 81.8 million in net proceeds to the Group. The loan will accrue interest at a rate of 1% on the gross amount of the loan for each 30-day period until the loan is repaid and settled. The loan matures in June 2023.

This information is such information as Saniona AB (publ) 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 person set out above, at 08:00 CEST on August 26, 2021.

Saniona AB
Smedeland 26B
DK-2600 Glostrup
Denmark
www.saniona.com

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Saniona — Interim / Quarterly Report 2021

3195_ir_2021-08-26_516c5488-a795-45a7-ab83-c0c2d839a04f.pdf

Saniona Achieves Clinical Progress in Q2 2021 and Subsequent Period, with Orphan Status for Tesomet in HO and Start of Phase 1 for SAN711

Business highlights in Q2 2021

Significant events after the reporting period

Comments from the CEO

For more information, please contact

Letter from the CEO

About Saniona

Our vision

Our mission

Our values

Our Strategy

Investment rationale:

Strategic priorities:

Our Pipeline

Tesomet

SAN711

SAN903

Ion channel drug discovery engine

Partnerships and Spinouts

Financial review

General

Alternative Performance Measures

Results of Operations

Revenue

Operating expenses

Financial items

Tax Benefit

Cash flow

Parent Company

Revenue

Operating expenses

Financial items

Tax Benefit

Cash flow

Parent Company

Financial position

The share, share capital and ownership structure

Personnel

Risk factors and risk management

Risk related to COVID-19

Audit review

Financial calendar

THE GROUP'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed consolidated statement of financial position – Group

Condensed consolidated statement of financial position – Group (continued)

Condensed consolidated statement of changes in equity – Group

Condensed consolidated statement of cash flows – Group

PARENT COMPANY'S FINANCIAL STATEMENTS

Notes

Note 1 General Information

Note 2 Basis of Accounting and Significant Accounting Policies

A. Basis of Accounting

B. Significant Accounting Policies

i. Segment reporting

ii. Fair value measurement

iii. Adoption of new or revised standards

Note 3 Critical accounting judgments and key sources of estimation uncertainty

Note 4 Revenue

Note 5 Share-based payments

A. Description of share-based payment arrangements

B. Measurement of fair values and compensation expense

Note 6 Income tax

Note 7 Other financial assets

A. Composition

B. Investment in equity instruments - privately-held and Contingent consideration receivable

C. Investment in equity instruments – publicly traded

Note 8 Other financial liabilities

A. Composition

B. Formue Nord Loan

C. Warrants

Note 9 Financial instruments – fair values

A. Accounting classifications and fair values

Note 11 Commitments and contingencies

Note 12 Restatements

A. General

B. Nature and impact of restatements

EQUITY AND LIABILITIES

Saniona Interim / Quarterly Report 2021