Hofseth Biocare ASA: THIRD QUARTER 2022 FINANCIAL REPORT

11 Nov 2022 08:00 CET

Highlights in the third quarter

- HBC grew revenue by 105 % year-on-year shows strength of our business in
uncertain times and during the third quarter, HBC signed contracts with new
salmon processors to ensure increased access to salmon off-cut for our
production process.
- In July, HBC successfully placed a private placement of 35,490,000 new shares
at a subscription price of NOK 4.00 per share and raised gross proceeds of NOK
141 million.
- In August, Mr. Jon Olav Ødegård was appointed CEO by the Board of Directors.
Mr. Roger Hofseth was elected director to the Board after the general meeting on
August 30.
- Record organic revenue and profits delivered in Q3 within Consumer and Pet
health segment with over a fourfold improvement year on year.

Financial update

HBC had gross operating revenues of NOK 30.2m (13.7m) in the third quarter. For
the first nine months of 2022 HBC had revenues of NOK 86.8m (61.5m). Cost of
sales (CoGS) amounted to NOK 24.5m (13.6m) in the quarter. Opex is reduced
throughout the year and also in this quarter from NOK 20m in Q1 2022 to NOK 16m
in the third quarter. Operating profit (EBITDA) for the quarter was NOK -25.4m
(-29.2m) and Operating loss (EBIT) amounted to NOK 33.1m (36.8m) in the third
quarter 2022.

Cash and cash equivalents increased by NOK 40.5m during the quarter, leaving
total holding of cash and cash equivalents at NOK 46.2m by the end of the
period, compared to NOK 85.5m by the end of the third quarter 2021. Including
credit facilities, HBC had NOK 83.2m in free liquidity by the end of the third
quarter 2022.

Commercial update

Q3 saw a normalisation in the price of salmon as expected and this resulted a
progressive recovery in processing volumes and access to salmon off-cuts with
steady improvements HBC production volumes, even in July with the usual shutdown
period. During Q3 we signed contracts with new salmon processors to ensure
increased access to salmon off-cut raw material for our production process.

Our key regions of the UK and US delivered record growth in the quarter driven
by major customer performance, with a focus on e-commerce as a volume lever and
customer marketing tool through use of detailed data analytics and reviews.
Across Europe and Asia the development of landmark private partnership
agreements with major customers and distributors continues apace, with a focus
on these delivering strong margins to support volume growth elsewhere.

R&D update

In the third quarter of 2022, HBC R&D team delivered:

- Following the completion of the preclinical profiling of SPH in protecting the
gut from intestinal inflammatory damage with our collaborators at Stanford
University the work has been published in Biomolecules titled "Soluble Protein
Hydrolysate Ameliorates Gastrointestinal Inflammation and Injury in 2,4,6-
Trinitobenzene Sulfonic Acid-induced Colitis in Mice". Planning for clinical
trial work is ongoing and will be led by Stanford University.

- We have successfully completed our preclinical assay work with the eight
individual FTH1 peptides in prostate cancer cell lines in combination with
standard of care androgen deprivation therapy (ADT). This work has identified
two lead candidates to take forward into in vivo testing. The two individual
peptides showed markedly greater cancer cell kill rates compared to the whole
mix of SPH bioactive peptides. This confirms the mode of action to be via FTH1
and the disruption of iron metabolism within the cancer cell.

- We have been given an oral presentation slot at the Pharma R&D meeting in
February 2023 for our work in prostate cancer. The presentation will entail all
the preclinical assay work of the bioactive peptides in SPH in combination with
androgen deprivation therapy, bicalutamide and enzalutamide (Xtandi), in drug-
sensitive and drug-resistant prostate cancer cell lines. Other keynote speakers
include those from major pharmaceutical and biotech companies.

- Preclinical work in restless legs syndrome (RLS / Willis-Ekbom disease)
continues following the successfully completion of the first assay in human
skeletal muscle cells with a positive effect on FTH1 gene expression. Similar to
the prostate cancer work, we plan to identify a lead candidate FTH1 peptide for
RLS.

- Results from our study of OmeGo® in the management of hospitalised patients
with Covid will be available during Q4 2022. This will provide a raft of data on
the impact of OmeGo® in supporting and improving immune health.

- The final House Dust Mite (HDM) allergy preclinical trial with orally
administered OmeGo® confirms the differentiated and broad anti-inflammatory
profile of OmeGo®, an important property for optimising health. The results will
be published in a peer review journal in Q4 2022.

- Manufacturing optimisation of the lead eosinophilia modulating lipopeptide MA-
022 has been successfully completed. Preclinical trial work with MA-022 as a
drug lead in eosinophilic esophagitis is planned. Discussions have commenced
with CDMOs (Contract Drug Manufacturing Organisations) for CMC (chemistry,
manufacturing and control) dossier development.

- Our clinical trials of CalGo® in bone and joint health are ongoing with data
expected from the joint health trial during H1 2023. Data from the bone health
trial is expected during 2024.

- Our asthma study, delineating the immune system benefits from OmeGo, has
commenced recruitment and we have seen considerable interest from the local
adult population to participate in the study


Please find the HBC Q3 2022 Financial report attached.

For further information, please contact:
Jon Olav Ødegård, CEO of Hofseth BioCare ASA
Phone: +47 936 32 966
E-mail: joo@hofsethbiocare.no (mailto:joo@hofsethbiocare.no)

About Hofseth BioCare ASA:
HBC is a Norwegian consumer and pet health ingredient supplier and an incubator
for new pharmaceutical drug leads. Research is ongoing to identify the
individual elements within its ingredients that modulate inflammation and the
immune response with pre-clinical studies ongoing in multiple clinics and
university research labs. Lead clinical and pre-clinical candidates are focused
on developing an oral treatment for inflammatory disease driven by eosinophils
(a type of white blood cell). Clinical trial work with the oil is ongoing to
ameliorate lung inflammation in eosinophilic asthma and COPD ("smokers lung") as
well as in COVID. Other leads are focused on the protection of the Gastro-
Intestinal (GI) system against inflammation (including ulcerative colitis and
the orphan condition necrotising enterocolitis) and using peptide fractions of
salmon protein hydrolysate (SPH also known as 'ProGo') as a Medical Food to help
treat age-related Sarcopenia, and as a treatment for Iron Deficiency Anemia.

The company is founded on the core values of sustainability, optimal utilization
of natural resources and full traceability. Through an innovative hydrolysis
technology, HBC can preserve the quality of the lipids, proteins and calcium
from fresh salmon off-cuts. Hofseth BioCare's headquarters are in Ålesund,
Norway with branches in Oslo, London, Zürich, Ningbo, New Jersey and Palo Alto.

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

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575482_HBC Q3 2022 Financial Report.pdf