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Hofseth Biocare ASA: THIRD QUARTER 2022 FINANCIAL REPORT

Hofseth Biocare ASA
Hofseth Biocare ASA

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

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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