Arctic Bioscience - Study de-risked by all needed patients passed 6 months, read-out expected in 4-6 weeks

Highlights H1 2024:

• The HeROPA clinical trial fully recruited in January 2024 and proceeding as planned, de-risked by sufficient number of patients has passed the 6 months milestone
• 6-months primary end-point read-out is expected ultimo September/early October
• Recently published mode-of-action research showed positive effects on cells related to resolution of inflammation of phospholipid esters from HRO350
• Nutra revenues in H1 2024 totalling NOK 16,7 million (NOK 19,1 million). Revenue prospects for H2 2024 are positive
• Booked sales and received purchase orders at end of the first half of 2024 secures total sales revenues above total sales in 2023
• Stable gross margin development in H1 2024 at 30,6 % (30,0 %)
• Arctic Algae discovery of new microalgae species opens up for new and exciting future commercial opportunities and IP

In January 2024, the HeROPA clinical trial successfully completed recruitment, enrolling a total of 521 patients. Since then, the trial has progressed as planned across all five participating European countries. Once all patients have completed their 26-week follow-up visit, the data will undergo cleaning and analysis. The results for the primary endpoint will be announced thereafter, with the primary endpoint read-out expected ultimo September/early October.

“The crucial milestone we've worked toward over the past few years is now within reach. We eagerly anticipate the results of this primary endpoint readout and look forward to continuing this exciting journey of development as we move toward the potential commercialization of a blockbuster drug”, says Christer L. Valderhaug, CEO of Arctic Bioscience.

In June 2024, Arctic Bioscience presented novel data from the mode-of-action research project on the effects of HRO350 on human immune cells. These findings are significant as they elucidate a potential mode-of-action of HRO350, which is currently under investigation in a phase IIb trial for mild-to-moderate psoriasis. The cutting-edge lipidomic research was conducted in collaboration with a leading international research group in the field. Additional data on the cellular effect of HRO350 related to psoriasis are scheduled to be presented in the fall of 2024.

Nutra sales revenues in H1 2024 were NOK 16,7 million, compared to NOK 19,1 million in the same quarters in 2023. The slightly lower revenues were mainly driven by customers’ delivery plans and slower than expected sales in some areas. Despite this, booked sales and received purchase orders at end of the first half of 2024 secures total sales revenues above total sales in 2023. The B2C segment is showing a continued positive development compared to last year, with more than 20 % year-on-year growth.

“We are working diligently to strengthen our foundation for an expanded presence in existing markets while exploring new opportunities in emerging ones. We remain optimistic about the rest of the year and are confident that the efforts of our nutraceutical sales team will yield long-term results”, says Valderhaug.

The acquisition of Arctic Algae has contributed to positive effects by combining the expertise and R&D-environments in the two companies, with new research projects sprung out of the collaboration. During 2024 the research team has discovered a new microalgae species on the coast outside Ørsta, which has not been described before.

“The algae finding is very exciting. We have filed patent on the microalgae, thus securing protection of further development and utilization of it. Our goal is to secure new commercial opportunities and intellectual property, aligning with the strategic rationale behind the acquisition of Arctic Algae”, ends Christer L. Valderhaug. 

Financials

Key figures – H1 2024:

• Revenues from sales: NOK 16,7 million (NOK 19,1 million)
• Gross profit: NOK 5,1 million (NOK 5,7 million)
• Gross margin: 30,6 % (30,0 %)
• Adjusted EBITDA: NOK -20,9 million (NOK -18,3 million)
• Available liquidity end of period: NOK 49,8 million (NOK 113,8 million)

Comparable figures for H1 2023 in brackets.

Sales revenues for the first six months amounted to NOK 16,7 million. This is a decline of NOK 2,4 million compared to the same period in 2023, mainly driven by lower sales in some key geographical regions and changes in customers delivery plans. The European market ex. Norway had the largest market share of 38 %. The B2C segment has had a continued positive development, with a year-on-year growth above 20 %. At end of first half year 2024 more than 100 % of the total 2023-revenues are secured via sales and received purchase orders.

Gross profit for the period was NOK 5,1 million, corresponding to a gross margin of 30,6 %. The gross margin has remained stable and increased compared to 2023. Compared to total gross margin for 2023, the first six months of 2024 shows a gross margin 1,6 percentage points above this level.

Adjusted EBITDA ended at NOK -20,9 million in H1 2024, compared to NOK -18,3 million in H1 2023. Operating costs have been in line with the budget for the period. Operating costs year to date in 2024 are higher than the same period in 2023 mainly due to larger headcount and full cost effects in the consolidated figures from the acquired Arctic Algae. At the start of 2024 the marketing costs were somewhat higher than normal due to strategic marketing decisions. These costs will be reduced the coming periods compared to the start of the year.

Available liquidity at the end of H1 2024 amounts to NOK 49,8 million, which includes an unused credit facility of NOK 30 million.

Outlook

Arctic Bioscience’s main strategic focuses are to finalize the HeROPA study for HRO350 and continue the market expansion of the company’s nutraceutical product line. The primary end-point read-out (6 months) from the study is expected ultimo September/early October. Results from this study will lay the foundation for a future phase III study and a following commercialization.

The liquidity situation is closely monitored. Various financing alternatives will be considered to secure the future funding of the company’s activities post the primary data readout. In addition, the process of pursuing potential commercial partnerships for HRO350 as part of funding a future phase III will continue.

Based on received purchase orders for the second half of 2024 and general order outlook with new sales prospects, the company expects increased revenue development compared to the start of the year. Arctic Bioscience aims for a total year-on-year revenue growth in 2024 of 20-30 %.

Webcast

Arctic Bioscience will host a webcast and Q&A session to present the results today at 11:00 CET. The presentation can be accessed through the company’s website, or with the following link:

https://channel.royalcast.com/landingpage/hegnarmedia/20240829_6/

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