Arctic Bioscience – HeROPA study recruitment progressing well and strong nutra revenue growth
Highlights H1 2023:
- The phase IIb HeROPA clinical trial for treatment of patients with mild-to-moderate psoriasis approved by Medicines Authorities in all the five European countries and recruiting is progressing well. Read-out expected in H1 2024
- Solid financial position with available liquidity totaling NOK 113,8 million by end of H1 2023. Current financing sufficient throughout read-out for the HeROPA clinical trial
- Solid growth in the Nutra-segment with an increase of total revenues by 33 % y/y to NOK 19,1 million (NOK 14,4 million) in H1 2023. Revenue prospects for H2 2023 is very positive
- Positive gross margin development in H1 2023 with a gross margin of 30,0 % (27,6 %). Adjusted EBITDA of NOK -18,3 million (NOK -14,4 million)
- The Group in position to explore future commercial opportunities in the microalgae segment through the acquisition of Arctic Algae AS in Q1 2023
Significant milestones in the pharmaceutical development program were achieved during the first half year of 2023 with approval of the HeROPA trial by Medicines Authorities and first patient being included. At the same time Arctic Bioscience had a positive and continuing growth in the nutra business segment, with effects both from established recurring income and from new customers. The acquisition of Arctic Algae also opens for future commercial opportunities.
“I am very pleased with the development I have seen in the company this year. Despite some delays during the start of the trial, we are well underway with the recruitment of patients into the HeROPA-study. Our nutra sales team have at the same time contributed with great efforts to further build on the positive sales development we saw throughout last year”, says CEO Christer L. Valderhaug.
Clinical trial sites are activated in all five European countries where the HeROPA-study will be conducted. The regulatory approval process from the Medicines Authorities for the trial took more time than anticipated. The patient recruitment start-up period has taken more time than expected due to some logistical challenges, and recruitment during the summer holiday months has also been somewhat lower than our initial assumptions. As of August, 1/3 of the total 519 patients needed are recruited into the clinical trial. We are expecting a strong increase in the recruitment from September.
Revenue development for the nutraceutical products during the first six months of 2023 was strong. Action taken in 2022, like strengthening the Nutra sales & marketing team, have given positive effects in 2023. Revenue growth is experienced both in the B2C and B2B segments. The strategic partnership with Kotler in the Chinese market continues to develop well with extensive marketing efforts and increasing sales.
Financials
Key figures – H1 2023:
- Revenues from sales: NOK 19,1 million (NOK 14,4 million)
- Gross profit: NOK 5,7 million (NOK 4,0 million)
- Gross margin: 30,0 % (27,6 %)
- Adj. EBITDA: NOK -18,3 million (NOK -14,4 million)
- Cash end period: NOK 113,8 million (NOK 177,8 million)
Comparable figures for H1 2022 in brackets. H1 2023 consolidated figures include effects from the acquired company Arctic Algae AS from Q2 2023.
Sales revenues for the first six months amounted to NOK 19,1 million, a growth of 33 % compared to the same period in 2022. The European market ex. Norway had the largest market share of 42,5 %, and the APAC market had the second largest market share with 22,7 %.
Gross profit in the period was NOK 5,7 million, corresponding to a gross margin of 30,0 %. This is an increase of NOK 1,7 million and 2,4 percentage point compared to same period in 2022.
Adjusted EBITDA is in line with expectations with NOK -18,3 million. Personnel expenses have risen compared to the same period last year due to a larger number of headcounts in 2023. Other operating expenses in first half of 2023 are below the budget for this period. One quarter operation from Arctic Algae has also affected the consolidated numbers in 2023 compared to the same period in 2022.
At the end of first half year 2023 Arctic Bioscience has a solid financial position, including an available liquidity of NOK 113,8 million. To support the nutra business growth potential a credit facility of NOK 30 million was established in July. This credit facility was effective from 1st of August 2023. The credit facility is not included in reported available liquidity as of June 30th 2023.
Outlook
Based on received order intake for the second half of 2023 and general order outlook with new sales prospects Arctic Bioscience aims for a total year over year revenue growth in 2023 of 30-35 %. Gross margin development will continue to be influenced by the development in the currency situation, and some delay in roll-over of higher costs from suppliers to customer prices is expected due to agreed sales contracts. It is expected that the operating costs will be in line with the total budget for the year. Including effects also from Arctic Algae, the expected full year EBITDA will be in the range of negative NOK 37-42 million.
Arctic Bioscience’s main strategic focus is to finalize the HeROPA study for HRO350. Recruitment of the total 519 patients is not considered to be a challenge. The last patient in the study is expected during the autumn 2023. First data readout is expected six months after last patient is included in the trial.
Results presentation
Arctic Bioscience will host a webcast and Q&A session to present the results today at 12:00 CET. The presentation can be accessed through the Company’s website, or with the following link:
https://channel.royalcast.com/hegnarmedia/#!/hegnarmedia/20230829_3
Participants will be required to register to view the webcast and participate in the Q&A.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
