Inhalation Sciences AB (publ) releases Year-End Report 2022

(Stockholm, Sweden, 28 February 2023) Inhalation Sciences AB announces that its Year-End Report for 2022 is now available on the company’s website. To read the whole report (in Swedish), visit: http://inhalation.se/investors/finansiella-rapporter/

Summary of Year-End Report

• Net revenue for the full year 2022 increased by 29% compared to 2021
• Sales for the full year 2022 increased by 74% compared to 2021
• Sales for Q4 2022 increased by 23% compared to the same period in 2021
• The company had an order backlog of SEK 9.1M in December 2022 compared to SEK 5M in the same period last year
• The company had outstanding offers of SEK 35.2M in December 2022 compared to SEK 25.7M in the same period last year
• Profit after tax for the full year landed at SEK -12.1M compared to SEK -16.6M for 2021

Fourth Quarter (Oct – Dec) 2022

Net Revenue kSEK 4,110 (4,160)

Operating profit kSEK -1,127 (-3,055)

Earnings per share before dilution SEK -0.10 (-0.27)

Earnings per share after dilution SEK -0.10 (-0.27)

Sales* during the period kSEK 8,982 (7,305)

Order backlog** at the end of the period kSEK 9,122 (5,040)

Reporting period (Jan – Dec) 2022

Net Revenue kSEK 12,194 (9,422)

Operating profit kSEK -12,026 (-16,571)

Earnings per share before dilution SEK -1.07 (-1.46)

Earnings per share after dilution SEK -1.07 (-1.46)

*Sales is the value of products and services sold during the current period, i.e. sales and not to be confused with net turnover. This includes the FDA project of USD 408,329.

**Order backlog is signed customer contracts for both products and services not yet invoiced to customers, where work is still in progress and delivery has not yet been made to the customer. This includes the FDA project of USD 408,329.

CEO comments

In 2022, we repositioned our corporate strategy to focus more on our inhalation research services (IRS). The change in strategy during the year has resulted in significantly shorter sales cycles, the ability to reach a broader customer segment, increased sales and improved margins on customer projects.

The strategy has yielded the desired results, with approximately 85% of our order intake in 2022 being generated by our IRS services. Net revenue for 2022 increased by 29%, the increase in our sales was 74% for the full year and 23% for quarter 4. Our order backlog in December 2022 increased by SEK 4.1M and the value of our outstanding quotes increased by SEK 10M compared to the same period in 2021.

Given the large number of new IRS assignments, the company has not needed to lift the previously communicated credit line in 2022. Available credit line for the company as of December was SEK 4M and we chose to lift a subset of this in January 2023 with an amount of SEK 1.8M.

We participated in two international conferences, the MVIC symposium in Lund in October and the DDL meeting in Edinburgh in December. During the DDL, we presented for the first time the outcome of our Phase I clinical trial with positive data which was received with great enthusiasm by the participants. In addition, AstraZeneca presented results from their study using PreciseInhale with successful results.

The study collaboration with the US FDA, which started during the year and includes DissolvIt, is progressing according to plan. We expect to complete the study by the end of 2024. The company has also updated its Quality Management System in accordance with ISO 13485.

To continue to deliver accurate and reliable data and continuously improve our unique platform technology, we have been continuously maintaining our product portfolio. Due to the increasing growth of our IRS assignments, we have also expanded the capacity of our laboratory in terms of more instruments.

One of our key objectives for the coming year is to continue to build on our positive sales momentum, maintain the quality and delivery reliability of our customer projects and achieve positive cash flow by the end of the year. In parallel, management and the Board are evaluating further growth opportunities.

We look forward with confidence to 2023 and continuing to deliver on our strategy, together with our dedicated staff, management and Board, creating value for our customers and shareholders.

Huddinge, 28 February 2023

Manoush Masarrat

CEO

Selected financial data in summary

	2022Oct-Dec	2021Oct-Dec	2022Jan-Dec	2021Jan-Dec
Net revenue kSEK	4,110	4,160	12,194	9,422
Operating profit kSEK	-1,127	-3,055	-12,026	-16,571
Profit after tax kSEK	-1,150	-3,084	-12,125	-16,609
Balance sheet total kSEK	12 985	26 111	12 985	26 111
Cash flow for period, kSEK	-1,575	-4,074	-12,556	6,348
Cash flow for period per share (SEK)	-0.14	-0.36	-1.10	0.63
Cash and cash equivalents kSEK	1,839	14,395	1,839	14,395
Earnings per share before dilution kSEK	-0.10	-0.27	-1.07	-1.46
Earnings per share after dilution kSEK	-0.10	-0.27	-1.07	-1.46
Equity, kSEK	7,553	19,678	7,553	19,678
Equity per share (SEK)	0.66	1.73	0.66	1.73
Equity ratio, %	58.17%	75.36%	58.17%	75.36%
R&D costs/operating costs	40.19%	45.45%	40.80%	45.59%
Number of shares	11,375,734	11,375,734	11,375,734	11,375,734

Significant events during the fourth quarter (Oct-Dec) 2022

• On 28 October, the company announced an IRS (Inhalation Research Services) order from a major generics company with a value of SEK 1,017,000.
• On November 14, the company announced the start of the planned study with the FDA through a joint start-up meeting. The FDA will co-fund the project for the full two-year period with a total of USD 408 329.
• The company participated in the annual DDL (Drug Delivery to the Lungs) meeting in December, where it presented positive results from the Phase I clinical trial and a poster on ISAB's dissolution module DissolvIt. In addition, AstraZeneca presented its study results using PreciseInhale with positive results.
• On 23 December, the company announced IRS assignments from two different customers with a total value of SEK 2,157,000.

Significant events during the reporting period (Jan-Dec) 2022

• On 18 January, the company announced that it had submitted a DissolvIt study application to the US FDA with the aim of obtaining approval for DissolvIt as a recommended dissolution method in inhalation studies.
• On 14 February, the company announced that it is upgrading its Quality Management System (QMS)
• On May 24, the company announced that it has received a line of credit from a consortium of lenders of up to SEK 10 million, creating the capacity to fund the company's operations and growth over the next 12-14 months. The company has not had to lift the previously announced credit line due to the new contracts received in the third quarter. The credit facility is also not expected to be lifted during the remainder of 2022 and in consultation with the lenders, the term of the agreement has been extended from June 2023 to December 2023 and the maximum loan amount has been lowered to SEK 4M.

Significant events after the reporting period

• On 16 January, the company raised a portion of the loan facility in the amount of SEK 1,800,000.
• On 31 January, the company announced an IRS (Inhalation Research Services) order from a new US pharmaceutical company with a value of SEK 914,000.
• On 7 February, the company announced a pre-booking order of EUR 50,000 for an upcoming IRS project later in the spring.

Corporate events

On 5 September 2022, an Extraordinary General Meeting was held and, in accordance with the Nomination Committee's proposal, Jan Hellqvist was elected as a new member of the Company's Board of Directors. The decision means that the Company's Board of Directors will consist of Daniel Spasic (chairman), Per Gerde, Sonja Gerde, Mårten Winge and Jan Hellqvist. As previously communicated, Klaus Gottwald has at his own request chosen to resign as a member of the Board of Directors of the Company.

The Board's recorded meetings during the financial year totalled 9, of which 3 were physical meetings and 6 via video link.

Multi-year overview

kSEK	2022	2021	2020	2019	2018	2017	2016
Net revenue	12,194	9,422	10,137	8,949	5,441	8,022	7,216
Profit after net financial terms	-12,125	-16,609	9,875	-4,345	-11,883	-6,358	-5,365
Balance sheet total	12,985	26,111	18,488	23,198	19,653	23,313	10,427
Equity ratio, %	58	75	57	22	55	68	40
Average no. of employees	9	9	8	7	6	5	5

To read full report (in Swedish) go HERE.