Arctic Bioscience – Q3 2023 Operational update – More than 50% recruited in the phase IIb HeROPA clinical trial

Highlights Q3 2023:

• Good progress in patient recruitment for the phase IIb HeROPA clinical trial, more than 50% recruited
• New findings on the positive effects of Herring Roe Oil on psoriasis published in September
• A good financial situation with a total available liquidity position of NOK 126,5 million at the end of the quarter, the establishment of a credit facility has improved available liquidity
• Revenues from nutraceutical products was a bit slow compared to Q3 last year – with some deliveries being pushed into Q4 and possibly postponed to 2024
• Positive gross margin development, with a gross margin year to date of 33,9 % (29,1 %). Year to date adjusted EBITDA of NOK -28,7 millions (NOK -22,2 millions)

The most advanced asset in Pharma is a novel, oral drug candidate (HRO350) for the treatment of mild-to-moderate psoriasis in the multibillion USD global psoriasis market. The phase IIb clinical trial of HRO350 (the HeROPA study) is ongoing in 5 countries in Europe: UK, Germany, Poland, Finland and Norway. Recruitment is progressing at an increasing rate and more clinics are being activated after the summer holidays. A total of 519 patients are to be included in the study, with more than 50% of the needed patients recruited.

"The HeROPA study is an ambitious and large scale phase IIb stage clinical trial with a considerable number of clinics and over half-a-thousand patients in five countries. I’m impressed with the way our internal organization together with our partners are working towards the deliverables in this comprehensive, international study. Recruitment is developing in a satisfactory way, and we are aiming for a data read-out mid 2024" says CEO Christer L. Valderhaug.

New findings on the positive effects of Herring Roe Oil are published in an international scientific journal:

The international scientific journal “Frontiers in Immunology” recently published our research on how Herring Roe Oil influences inflammatory markers in psoriasis. This research was conducted in association with Haukeland University Hospital as an extension of the pilot study on psoriasis, and demonstrates that Arctic Bioscience continue to be committed to scientific research in inflammatory diseases. Authors’ conclusions: These finding support the beneficial effect of herring roe oil supplementation.

The scientific publication can be found here:

https://doi.org/10.3389/fimmu.2023.1128986

Revenues from the nutraceutical business were slower during Q3 2023 compared to Q3 2022, with some B2B-deliveries being pushed into Q4 and potentially into 2024. The B2C segment in Norway has shown a positive development through 2023 with a revenue growth of 16% higher compared to the same period last year. A continued positive growth rate is expected for this segment for the rest of the year.

Financials

Key figures – Q3 2023:

• Revenues from sales: NOK 4,8 million (NOK 9,3 million)
• Gross profit: NOK 2,4 million (NOK 2,9 million)
• Gross margin: 49,4 % (31,5 %)
• Adj. EBITDA: NOK -10,4 million (NOK -7,8 million)

Comparable figures for Q3 2022 in brackets. The consolidated figures for Q3 2023 includes effects from the acquired company Arctic Algae AS.

Key figures as of end Q3 2023:

• Revenues from sales: NOK 23,9 million (NOK 23,7 million)
• Gross profit: NOK 8,1 million (NOK 6,9 million)
• Gross margin: 33,9 % (29,1 %)
• Adj. EBITDA: NOK -28,7 million (NOK -22,2 million)
• Available liquidity incl. credit facility: NOK 126,5 million (NOK 171,0 million)

Comparable figures as of the end of Q3 2022 in brackets. The consolidated figures as of end Q3 2023 includes effects from Arctic Algae AS from Q2 2023.  

Sales revenue in the quarter amounted to NOK 4,8 million. Year to date, sales revenue amounts to NOK 23,9 million, the same level as in 2022. The European market ex. Norway represented the largest market share in the first three quarters with 42,7 %. The American market had the second largest market share with 20,2 %.

The gross margin has shown an improvement compared to last year. So far this year, the gross margin amounts to 33,9 %, compared to 29,1 % in 2022. In NOK amounts, the gross profit year to date has increased to NOK 8,1 million, from NOK 6,9 million for the same period in 2022.

Year to date adjusted EBITDA is in line with expectations with NOK -28,7 million. The increase compared to last year is mainly due to a larger number of employees, as well as effects on consolidated figures from the acquired company Arctic Algae AS.

At the end of the 3rd quarter 2023, Arctic Bioscience has a good financial position. With effect from 1st of August 2023, a credit facility of NOK 30 million was established to support the growth potential in the nutra business. Including this credit facility, available liquidity amounts to NOK 126,5 million at the end of the quarter.

Outlook

On the pharma side, the main strategic focus for Arctic Bioscience is to complete the HeROPA study on HRO350. The recruitment of patients is advancing well, however somewhat delayed compared with the guiding given by the Company early 2023. Based on current status, the first data read-out is expected mid 2024.

The nutra business is developing well with a steady growth in the B2C segment in Norway. For the B2B business internationally, we see both a positive development with existing customers as well as launching of several new customers over the next few months. In China, the ROMEGA products have performed well with a high 2-digit sales growth despite a general slowdown in the Chinese market. However, the sales growth will not be reflected in the 2023-figures of Arctic Bioscience due to stock changes at the Chinese partner. Overall, for the Company we are reducing the expected revenue growth for the full year from 30-35% to 15-20%.

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.