SIMRIS GROUP YEAR-END REPORT JANUARY-DECEMBER 2023

Q4, OCTOBER-DECEMBER 2023

• Net revenue increased by 736% to SEK 2 657k (318k) based upon delivery of biomass to a major customer and sale of Omega-3 products to the new distributor based in the USA.
• Personnel & other external costs increased by 10% to SEK -6 082k (-5 506k) driven by investments in the production of ADCs for product development trials.
• EBITDA improved by 11% to SEK -5 403k (-6 064k).
• EBIT/ Operating result improved by 10% to SEK -8 683k (-9 631k).

JANUARY - DECEMBER 2023

• Net revenue increased by 7% to SEK 4 354k (4 080k).
• Personnel & other external costs increased by 41% to SEK -25 171k (-17 909k) largely driven by the full year impact with the new cost based following the acquisition of Cyano Biotech GmbH in August 2022.
• EBITDA declined by 24% to SEK -22 366k (-18 005k).
• EBIT/ Operating result declined by 49% to SEK -36 635k (-24 657k).

KEY EVENTS ANNOUNCED IN Q4

• On 29th October 2023, Simris announced the completion of a Directed Share Issue of approximately SEK 3M to strategic investors.
• On 7th November 2023, Simris announced the appointment of a distribution partner for its Omega-3 products in North America along with revenue of approximately €60k and annual cost savings of €200k.
• On 15th November 2023, Simris confirmed that its wholly owned subsidiary Simris Biologics GmbH based in Berlin, Germany, had won a tender to support Helmholtz-Zentrum Berlin für Materialien und Energie GmbH (HZB) as part of its project, “Enhanced cyanobacterial protein colourants for food industry, solar technology and scientific applications – PHYCOLOR”. HZB has awarded Simris Biologics €163,732 for its contribution to their project.
• On 1st December 2023, the Board of Simris proposed a Directed Share Issue of approximately SEK 1,55M and which was to be approved by an EGM.
• On 20th December 2023, Simris confirmed that its proposed Directed Share Issue of approximately SEK 1,55M was approved by the EGM.
• On 20th December 2023, Simris announced it had signed a Material Transfer Agreement with a pre-clinical Biotech company to develop Linker-Payloads.

KEY EVENTS AFTER Q4

• On 10th January 2023, Simris confirmed that it had signed a non-binding Heads of Terms (HOT) agreement with an existing customer. The parties are finalising negotiations for an offtake agreement under which Simris will provide its partner with fucoxanthin-rich biomass in each year between 2024 and 2026. Simris calculates the sales revenue generated from the offtake agreement to be in excess of €2m / SEK 22m.

CEO UPDATE
The long-term vision of Simris Group is to be a holding company that invests into science-based businesses across multiple industry sectors, each centred around microalgae and cyanobacteria. To execute on this vision, Simris first needs to ensure its venture within the Antibody Drug Conjugate (ADC) space is successful. With the average value of a license agreement forecast to be up to $150m*, and with the potential to make many such agreements, Simris’ ADC payload platform provides the opportunity to generate the profits required to realise the vision.
 
Solid progress has been made in recent months towards a first commercial success from our ADC platform; discussions are ongoing, with several partners interested in our microcystin payloads, and we hope to be able to bring more news on that in the coming months.
 
Shortly before Christmas we announced the signing of a Material Transfer Agreement (MTA) with a pre-clinical biotech holding a proprietary Linker technology. This was a significant milestone. A Linker is a molecule that bonds the payload to the antibody within an ADC. The antibody is designed to locate and attach to a target cancer cell, and in doing so the ADC is brought inside the cell. The payload is the active, cancer-killing element of the ADC. Once inside the cancer cell, the payload is released where it disrupts the metabolic process of the cancer cell leading to its eventual death.
 
Under the terms of the MTA, Simris and its partner will evaluate the synergies between their two separate technologies by producing ADCs and testing these on cell cultures in the laboratory (in-vitro testing). It is anticipated that this work will be completed in late March/ April. Assuming a positive outcome from the trials, the two companies are aligned to explore a deeper commercial collaboration.
 
After more than 20 years of development work, the market for ADCs really took off in 2023. In total there were 76 transactions (up from 26 in 2022) worth €107bn with approximately half of these being license agreements. As a result, ADCs are now widely viewed as one of the hottest fields within the pharma industry. Already in 2024, we have seen the FDA grant BioNTech and DualityBio’s ADC candidate Breakthrough Therapy designation; as well, Gilead has signed an agreement with Biocytogen Phamaceuticals for an undisclosed sum, and ProfoundBio, a clinical stage biotech with three ADC candidates in development, attracted $112m in an oversubscribed series B funding. In the last week we also heard that start-up Firefly Bio has raised $94m in venture funding to deliver toxins to cancer cells with a more selective and efficient payload in protein degraders, which they are calling Degrader Antibody Conjugates.
 
Whilst the majority of this industry activity has focussed on the antibodies and the linkers, we have noted a distinct change in attitude towards novel payloads, which is what we have. Simris is more or less unique in being able to offer a pipeline of novel, natural compounds as ADC payloads. With more than a third of the commercially available ADCs carrying a payload of cyanobacterial origin, albeit synthetically reproduced and modified, Simris is in a strong position to play a meaningful role in the future of targeted cancer therapeutics. It is clear that the opportunity for Simris within the ADC space is significant and will remain so for many years to come.
 
Beyond the world of ADCs, Simris Biologics is also progressing discussions with major players in the agrochemicals and cosmetics sectors to establish collaborative, paid research projects to discover and optimise new proprietary compounds with pesticide and anti-age applications respectively.
 
Finally, as communicated at the start of the year, we are currently finalising the terms of a 3-year €2m+ off-take agreement for the production of biomass at our algae farm in Hammenhög, Sweden, for one of the largest players in the European microalgae industry. Once again, here we hope to bring concrete news on this in the near future.
 
As always, we are a company owned by its Shareholders and I thank you for your loyalty and support.

The report is published on Simris Groups website: https://simrisgroup.com/financial-information/financial-reports/.

* License Agreement Model developed together with Alacrita Consulting, Industry-leading consultants with the full-range of specialist expertise needed to develop and commercialize drug products.