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Hofseth Biocare ASA: SECOND QUARTER 2021 FINANCIAL REPORT

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

Hofseth BioCare ASA (“HBC”) had net sales revenues of NOK 31.0m (19.9m) in the second quarter and gross operating revenues of NOK 30.0m (20.1m). For the first half of 2021 HBC had revenues of NOK 47.9m (38.6). Gross revenues in first quarter 2020 included NOK 8.2m in an insurance claim settlement. Revenues in the second quarter increased by 51 % compared to the same quarter in 2020. Adjusted for the settlement, HBC had 36% increased revenues in first half of 2021, compared to 2020.

Cost of Goods Sold (CoGS) amounted to NOK 21.6m (12.5m) in the quarter and NOK 29.9m (18.7m) for the first half of 2021. Operational profit (EBITDA) for the second quarter was NOK -14.6m (-12.3m) and NOK -33.4m (22.5m) for the first half of 2021.

Gross margin was 31 % in the second quarter, down from 38 % in the second quarter 2020, due to higher sales volumes to feed and pet food customers, even though also higher sales to human nutrition customers compared to the same period last year. We expect increased gross margin in the second half and next year. Including credit facilities, HBC had NOK 149.6m in free liquidity by the end of the second quarter 2021.

Highlights in the second quarter:

  • Extended the exclusive distribution agreement with leading speciality chemicals and ingredients distributor IMCD, to include most of Europe.

  • Following the granting of Qualified Health Claims from Health Canada, asserting the maintenance of healthy levels of ferritin and hemoglobin, we have now successfully identified the peptides responsible for this effect. This will enable us to develop a capsule format to target the treatment of iron deficiency anaemia.

  • Synthesis of a novel compound for the treatment of eosinophilic (allergic) inflammation such as asthma. A patent has been filed and the process will be completed before year end.

  • Successful oral dosing of the peptides in a proprietary animal model of inflammatory bowel disease run at Stanford University School of Medicine. Further preclinical work will start imminently with the aim to commence clinical trial work in 2022.

In the second quarter of 2021, HBC R&D delivered the following:

  • The identification of the bioactive peptides in SPH that up-regulate the FTH1 gene, which encodes the heavy chain of ferritin and increases the storage capacity for iron., This results in an increase in haemoglobin to correct iron deficiency anaemia (IDA). We have completed the identification of 8 related peptides and the structures are being assessed for their novelty to enable a new patent application to be filed in the Q3/Q4. We will complete process optimization to manufacture a FTH1-enhanced SPH in the second half of 2021, which will increase the concentration of these peptides by 2x to 4x. We will also begin trials for a capsule-based product to treat anaemia soon after.

  • Completion of the entire QSAR (quantitative structure-activity relationship) program of synthesis and invitro assays of 24 novel analog compounds based on the MICR-001 lead structure for asthma/COPD treatment via eosinophilia control. The lead analog has shown significantly superior activity to the original molecule (MICR-001) and we are now preparing to carry out pre-clinical trial work. A new PCT patent (US 63/211,972 06/17/2021) has been filed.

  • The final House Dust Mite allergy preclinical trial to modulate eosinophilia with orally administered OmeGo at two ranging doses (high/low) will be initiated in Q3.

  • Together with Stanford University School of Medicine, we successfully completed our first pre-clinical (mouse) experiment for determining the effectiveness of SPH on reducing intestinal injuries in an inflammatory bowel disease (IBD) model. A pilot experiment showed that SPH protects the GI tract from (TNBS-induced) IBD at a 1% concentration. Our collaborators at Stanford University will next run a statistically significant assay with negative control peptides along with mode of action gene and biomarker assays on serum and tissue samples.

  • Successfully completed work to identify the molecular weight range of the peptides in SPH driving the reduction in IBD based on HO1 (heme-oxygenase) gene regulation activity in SPH. Further narrowing and structural elucidation work will be performed in the second half of 2021.

  • Multiple assays and formulation development have been successfully carried out to significantly expand the Brilliant™ Pet Health, daily supplementation product portfolio.

For further information, please contact:

Jon Olav Ødegård, Chief Financial Officer of Hofseth BioCare ASA
Phone: +47 936 32 966
E-mail: joo@hofsethbiocare.no

James Berger, Chief Commercial Officer of Hofseth BioCare ASA
Phone: +41 79 950 10 34
E-mail: jb@hofsethbiocare.no


About Hofseth BioCare ASA:
HBC is a Norwegian biotech company that develops high-value ingredients and finished products currently targeting the consumer health market. Research is ongoing to identify the individual elements within the products that modulate inflammation and the immune response with pre-clinical studies in multiple clinics and university research labs in several countries. Lead clinical and pre-clinical candidates are in development for the protection of the Gastro-Intestinal (GI) system against inflammation, including ulcerative colitis and the orphan condition necrotising enterocolitis, as a Medical Food to help treat age-related Sarcopenia, and as a treatment for Iron Deficiency Anemia, all using peptide fractions of Salmon Protein Hydrolysate. Preclinical trial work with the oil is ongoing to ameliorate lung inflammation in eosinophilic asthma and COPD ("smoker's lung") as well as clinical work in COVID.

The company is founded on the core values of sustainability and optimal utilization of natural resources. Through an innovative hydrolysis technology, HBC can preserve the quality of lipids, proteins and calcium from fresh salmon off-cuts.

Hofseth BioCare's headquarters are in Ålesund, Norway with branches in Oslo, London, Zürich, Chicago, Mumbai, Palo Alto and Tokyo.

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

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