Arctic Bioscience H1 2021 results: phase IIb study on track and revenue up 50% y/y

Arctic Bioscience AS (“Arctic Bioscience” or “the company”) today announces its results for the first half 2021.  

Highlights

• Successful private placement and IPO raising NOK 300 million, with first day of trading on Euronext Growth on 24 February 2021
• On track and on budget for phase IIb clinical study on HRO350 in mild-to-moderate psoriasis, planned start H1 2022
• Financial strength to execute on ongoing development programs, invest in new production facility and capacity to participate in new selected pre-clinical trials
• Revenue increased 50% y/y driven by increased B2B sales in Europe and the US
• EBITDA of NOK -19.9 million, impacted by NOK 8.8 million of non-recurring costs, mainly related to the IPO
• Completed basic design for new production facility confirming 150 metric tons of capacity for nutraceutical and pharmaceutical products to be available H2 2023.
• Announced collaboration with Smerud Medical Research International to develop new drug candidate for normal brain development in extremely premature infants

Financials

(NOK million)					1H 2021	1H 2020	2020
Revenues					12.0	8.0	20.6
Gross profit					3.4	2.8	6.1
Adjusted gross profit*					4.0	2.8	6.1
EBITDA					-19.9	-9.5	-20.5
Adjusted EBITDA**					-11.2	-9.5	-20.5
Net investing cash flow					-22.6	-1.2	-1.3
Cash holdings					258.7	11.5	12.6

* Adjustments to cost of sales are related to non-recurring costs associated with a change in distributor relationship in the USA.

** Adjustments to operating expenditures are made for costs associated with the listing on Euronext Growth
 

Review

Arctic Bioscience has two businesses, pharmaceutical and nutraceutical, which are built upon a single proprietary technology and knowledge platform.

Arctic Bioscience’s pharmaceutical business is in the process of developing a drug candidate (HRO350) – a novel oral treatment for mild-to-moderate psoriasis. There is significant unmet medical need for new treatment options for the mild-to-moderate category as well as a large market opportunity. Arctic Bioscience has shown promising results in a pilot clinical trial on HRO, and a large, randomized phase IIb study is scheduled to be initiated in H1 2022.

During the first half, the HRO350 development program continued on timeline and on budget. Site feasibility for the phase IIb study was initiated in Q2 and is due to be completed in Q4 2021. The company also received a grant of NOK 4.8 million from The Research Council of Norway to study the mechanism of action for HRO350. Additionally, the company announced a collaboration with Smerud Medical Research International to develop a new drug candidate for extremely premature infants based on the same technology platform. 

Arctic Bioscience’s nutraceuticals business sells premium Omega 3 products via B2B and B2C channels globally and B2B2C in China through a strategic sales partnership with Kotler Marketing Group.  The company experienced continued growth of 50% y/y in the first half 2021 compared with H1 2020, driven by an increase in B2B bulk oil sales to the Americas and Europe.  Adjusted gross profit was NOK 4.0 million. China is an important market for the company and the first half saw the foundation for market entry and efficient growth established, with three products (Romega Prenatal, Romega Eye Health and Romega Brain Health) deployed via multiple e-commerce platforms in China.

In February, Arctic Bioscience completed a private placement raising NOK 300 million. The proceeds from the transaction will be used to invest in the development of the Company’s novel treatment against mild-to-moderate psoriasis and to invest in a new state-of-the-art production and process facility. The proceeds will also contribute to strengthen the company’s financial capacity and ability to participate in new selected pre-clinical trials.

On a consolidated level, adjusted EBITDA margin improved from -120% in H1 2020 to -93% in H1 2021. Total cash flow from investments to further the company’s growth plan totaled negative NOK 22.6 million in the first half.  The company’s financial position at the end of the period was strong, with cash and cash equivalents amounting to NOK 259 million.

Commenting on developments, CEO Ole Arne Eiksund said:

“Operationally and financially, the first half year of 2021 has been an eventful one for Arctic Bioscience. The most important message is that the phase IIb study for our drug candidate HRO 350 targeting mild-to-moderate psoriasis remains on track. We are also well on our way with the state-of-the-art production facility in Ørsta, which we expect to significantly improve company gross margins and profitability. Revenues from our nutraceutical business were up strongly and we expect further growth in the second half of the year. Combined with financial support from our shareholders, we are in a good position to develop the company further.”

Outlook

Arctic Bioscience is progressing well in all business areas and remains positioned to capitalize on the unique properties of herring roe to deliver both pharmaceutical and nutraceutical products to the global population.

During the second half of 2021, the main priority for the pharma business is to continue feasibility and secure sites for the HRO350 phase IIb clinical trial, and to initiate the research collaboration for development of the novel drug candidate for extremely premature infants. The Nutra business will focus on entering new geographies, and the new product Romega Brain will be launched – which is expected to increase B2C revenue. In addition, the company will initiate construction work related to the building of the factory at the company’s premises in Ørsta.

Financially, the company aims for full year 2021 revenue growth of 40%+ and an EBITDA margin in the -95% to -70% range. Total investments related to the HRO 350 development for the full year is estimated to NOK 40 to 50 million.

Results Presentation

CEO Ole Arne Eiksund and CFO Danielle Glenn will present the H1 2021 results by webcast today, Thursday August 26th, at 08:30 CEST.

The presentation and subsequent Q&A will be held in English.

The presentation can be accessed with the following link:

https://streams.eventcdn.net/arcticbioscienceas/financial-results-first-half-2021/register