SIGNIFICANT EVENTS DURING 1 APRIL - 30 JUNE 2024

The Chinese Patent Office has issued a Notice of Allowance for a patent application related to ICOres®, which means that Iconovo will receive patent protection for the inhaler in China until 2040 after a series of administrative steps. ICOres® is already protected by patents in Europe (EPO), Sweden, India, Japan and the USA.

In May, the Annual General Meeting decided, in accordance with the nomination committee's proposal, to re-elect Berndt Axelsson, Mats Johansson, Orest Lastow, Carl Lindgren, and Agneta Walhagen as board members and to elect Erik Ekman as a new board member. Carl Lindgren was elected as the new chairman of the board.

In May, Iconovo submitted a patent application for inhaled GLP-1 products. This is the first step in Iconovo's new initiative to develop more convenient, reliable, and cost-effective treatments for obesity. Based on their proprietary inhalers, the company aims to license selected products after achieving preclinical proof-of-concept. Inhaled GLP-1 targets a rapidly growing market expected to reach 90 billion USD by 2029.

The inhaled GLP-1 products will be developed using Iconovo's proprietary inhalers, primarily as a treatment for obesity, with the potential to include other metabolic diseases such as type 2 diabetes, fatty liver, cardiovascular disease, and sleep apnea. The investments required in the initial development phase are limited. Currently, there is an oral GLP-1 treatment on the market, with more under development. So far, bioavailability has been a significant challenge, with only about 1% of the active drug reaching its target. Iconovo estimates that inhaled GLP-1 would achieve effect levels comparable to injected treatments, making it potentially competitively advantageous compared to oral treatments.

KEY FIGURES FOR THE GROUP

CEO’s MESSAGE

STRATEGIC INITIATIVES IN THE SECOND QUARTER OF THE YEAR
The second quarter of the year has been marked by strategically important initiatives. Among these, we have taken the first step towards expanding our business with reformulated substances by submitting a patent application for inhalation treatments for obesity. This initiative has the potential to generate substantial revenue streams for the company in the long run.

INTENSE STAGE IN THE LICENSING PROCESS FOR ICOPRE®
The licensing process for ICOpre® is currently at a very intense stage with ongoing constructive negotiations. These negotiations have taken slightly longer than previously estimated, but we expect to finalize an agreement by the third quarter. The ambition is for the inhaler to become the first generic challenger to Ellipta in both the EU and the USA. The first launch opportunity in the ICOpre® portfolio is expected to be a generic version of the asthma medication Relvar in the EU in 2027.

FIRST STEP IN ICONOVO'S NEW OBESITY TREATMENT INITIATIVE
In mid-May, we submitted a broad patent application for inhaled GLP-1 receptor agonists, marking the first step in our initiative to develop more convenient and cost-effective alternatives to current obesity treatments using our proprietary inhalers. According to analysis firm Global Data, the current market for GLP-1 receptor antagonists amounts to USD 35 billion annually, with an expected yearly growth of 17 percent, reaching USD 90 billion by 2029. Our plan is to license selected products to medium-sized pharmaceutical companies for further development and commercialization after achieving preclinical proof-of-concept. Thanks to our proprietary inhalation platforms and solid formulation expertise, we can cost-effectively advance projects to the point where we can establish collaboration agreements expected to generate significant revenue from license fees and royalties.

This initiative is part of our strategic efforts to identify promising substances suitable for reformulation into inhalation medications, aiming to build a portfolio of substances with significant market potential that can be administered via dry powder inhalation. Reformulating both injectable and oral medications into inhalation drugs is a clear trend, with the market outside the traditional asthma and COPD indications projected to grow by 37 percent by 2027.

PROJECT WITH ENA RESPIRATORY NOT EXTENDED
In April 2023, Iconovo signed an agreement with ENA Respiratory to evaluate ICOone Nasal for the administration of INNA-051, a broad-acting immunomodulating treatment. The feasibility study conducted by Iconovo in 2023 showed very good results for the inhalation of the substance with ICOone Nasal. However, ENA Respiratory announced during the last quarter that they would not proceed with ICOone Nasal. Iconovo has received a total of MSEK 0.9 in development revenue from the project in 2023.

PROJECT SUCCESSES WITH AFFILOGIC PRESENTED AT RDD
The project with French company Affilogic has shown very good results from the feasibility study. Affilogic has an antiviral affinity protein, Nanofitin®, a kind of target-seeking antiviral substance. The study demonstrated that the substance can be excellently inhaled with ICOone. Iconovo and Affilogic jointly presented the positive results at the Respiratory Drug Delivery conference (RDD) held on May 5-9 in Tucson, Arizona. We look forward to the opportunity to continue working with Affilogic on their upcoming projects.


NEW PATENT FOR ICORES® IN CHINA STRENGTHENS COMPETITIVE PROTECTION
In early May, the Chinese patent office issued a Notice of Allowance for our patent application related to ICOres®. The preliminary decision means that Iconovo, after completing a number of administrative steps, will have a patent for the inhaler in China until 2040. This is a strategically important addition to our ICOres® patent portfolio, which is already protected in Europe (EPO), Sweden, India, Japan, and the USA.

WE ARE FOLLOWING OUR PLAN TO ACHIEVE PROFITABILITY
At the Carnegie Health Care Seminar in June, we provided a detailed description of Iconovo's strategy and future prospects. For shareholders who were unable to follow it live, I recommend the video recording available on our website or via this link.

In summary, the first half of 2024 has brought exciting advancements across several of our business areas. We continue to see strong demand for our inhaler platforms from the international pharmaceutical industry, both for the development of new original medications and for generic challengers to bestselling inhalers. We now look forward to an eventful autumn as we continue on the path to profitability, based on both business development in new indications and our generics collaborations, with several milestones in sight.

Johan Wäborg
CEO

This is ICONOVO
Iconovo is actively engaged in the development of new inhalation drugs through partnerships with international pharmaceutical companies, tapping into an expanding market. Inhalation medications offer substantial benefits over traditional forms of treatment like tablets or injections. However, their development demands specialized expertise across various domains, making it a complex yet rewarding endeavor.

Novel Pharmaceuticals
Iconovo has successfully formed several strategic partnerships with research-driven drug companies to pioneer the development of cutting-edge treatments, harnessing the potential of the company's patented inhalers to deliver enhanced value. The annual sales of medications and vaccines against diseases where inhalers offer significant benefits reaches nearly USD 100bn. The area of reformulated drugs is part of the original pharmaceuticals business area and represents another large and growing market, within which several collaborations already exist in the portfolio (Kiox, Monash).

Generic Pharmaceuticals
The market for inhaled medications targeting asthma and COPD is valued at around USD 28bn. As major inhaled drugs face patent expirations, substantial commercial opportunities arise for generic pharmaceutical companies. Iconovo's products show promising potential to replace medications currently delivered through inhalers such as Turbuhaler® and Ellipta®. Notably, in 2022 Symbicort Turbuhaler® achieved sales of USD 2.4bn, and Ellipta®-inhaled medications recorded impressive sales of USD 5.0bn.

Iconovo's model offers high commercial potential with low development risk
The revenue streams from Iconovo's customer collaborations consist of license income, which includes initial payments for access to the company's technology, development income and milestone-based payments during the development work, and royalties once the products are launched. For Novel Pharmaceutials, our royalty rates are usually low single-digit percentages and for Generic Pharmaceuticals, they are in the range of five to ten percent.

Inhalation platforms

Iconovo has four platforms that collectively address the market's various needs for effective and user-friendly inhalers, offering significant commercial opportunities both in the development of entirely new medicines and during patent expirations of branded drugs.

FINANCIAL COMMENTS 1 APRIL – 30 JUNE 2024

Turnover and result
Net sales in April-June 2024 were 249 (2,621) TSEK with contribution from two projects, whereas the net sales in January-June 2024 were 1,948 (2,929) TSEK with contribution from three projects.

* This revenue line includes income from customer assignments such as milestone payments, income from feasibility studies, work packages and ongoing compensation for completed work in customer assignments.

Other operating income for April-June 2024 was lower compared to the previous year at 449 (3,143) TSEK; the main difference is lower grant income during the second quarter of 2024 compared to the second quarter of 2023 when a larger grant income from the Bill & Melinda Gates Foundation was recorded. Other operating income for January-June 2024 was also lower compared to the same period last year for the same reason.

Capitalized development expenses amounted to 7,041 (5,622) TSEK in April-June 2024 and were made up by the development of the ICOpre and ICOcap platforms as well as related formulations. In January-June 2024, the capitalized development expenses were 11,656 (11,658) TSEK.

Expenses for raw materials and supplies fell to 2,232 (3,082) TSEK in April-June 2024, due to costs in the Bill & Melinda Gates Foundation project during the second quarter of 2023. These expenses were 3,004 (6,145) TSEK in January-June 2024. The expenses in the first half 2023 were largely made up of this project.

Other external expenses amounted to 4,730 (8,375) TSEK during April-June 204. The first quarter of 2023 included a provision for bad debts of 2,700 TSEK. During January-June 2024, other external expenses amounted to 8,625 (15,483) TSEK. The same period last year included a provision for bad debts of 5,400 TSEK. Excluding these reservations for bad debt, costs fell by approximately SEK 1,500 TSEK.

Personnel expenses fell to 7,802 (10,273) TSEK in April-June 2024 mainly reflecting the reversal of expenses for two long-term incentive programs (LTI 2021 and LTI 2022). For January-June 2024, personnel expenses decreased to 17,246 (19,533) TSEK also primarily due to this reversal.

The average number of full-time employees (FTE) in April-June 2024 was 29.0 of whom 13.9 women, 14.3 men and 0.8 non-binary (32.2 of whom 16.8 women, 14.4 men and 1.0 non-binary).

Net financials were 53 (12) TSEK in April-June 2024 and 76 (-52) for January-June 2024. Interest income increased significantly compared to the second quarter and the first half of 2023 due to higher interest rates.

The result for the period April-June 2024 was -9,607 (-13,069) TSEK and for January-June 2024 -19,157 (-26,018) TSEK.
Investments and depreciations
Investments in tangible assets during April-June 2024 decreased to 0 (216) TSEK and during January-June 2024 to 0 (345) TSEK. Investments in intangible assets during April-June 2024 increased to 7,314 (5,686) TSEK and during January-June 2024 to 12,201 (11,986) TSEK. The investment in these assets is primarily attributable to investments in the ICOpre and ICOcap platforms as well as related formulations.

The total cost of depreciation of tangible and intangible assets during April-June 2024 amounted to 2,623 (2,488) TSEK and in January-June 2024 reached 5,222 (4,974) TSEK.

Cash, cash flow and net debt
At the end of the period, the group's cash and cash equivalents amounted to 23,870 (27,950) TSEK. There are no interest-bearing liabilities in the company.

The cash flow from operating activities during April-June 2024 amounted to -7,014 (-10,296) TSEK and during January-June 2024 to -13,660 (-23,392) TSEK. The cash flow from investment activities amounted to -7,314 (-5,686) TSEK in April-June 2024 and during January-June 2024 to -12,101 (-12,331) TSEK. The cash flow from financing activities during April-June 2024 amounted to -887 (-581) TSEK and in January-June 2024 to 31,152 (50,228) TSEK. Thus, the total cash flow for April-June 2024 amounted to -15,215 (-16,780) TSEK and for January-June 2024 it was 5,390 (14,505) TSEK.

In February 2024, the company secured gross proceeds from a directed issue of new shares of 33.3 MSEK. It is the assessment of the Board and management, taking into account liquidity needs and the presented budget, that there is nothing indicating that the Group's liquid assets would not be able to finance the company's plans for the next 12 months. The out-licensing ICOpre is a significant part of the budget and cash flow for the fiscal year 2024. However, even if this were to be excluded for any reason, the Board and management assess that the company's alternative plans are sufficient for continued operations and development for the next 12 months, albeit with a slightly shorter perspective before the need for additional financing may arise compared to the original plan.

Shareholders’ equity
As of 30 June 2024, shareholders’ equity totaled 122,810 (114,958) TSEK. Total assets amounted to 143,257 (137,949) TSEK at the end of the second quarter 2024.

PARENT COMPANY

Turnover and result
Net sales in April-June 2024 were 249 (2,621) TSEK with contribution from two projects. The result for the period April-June 2024 was -9,558 (-12,055) TSEK.

Shareholders’ equity
As of 30 June 2024, the shareholders’ equity amounted to 128,170 (120,211) TSEK.

Contact information and calendar

Johan Wäborg, CEO
Tel.: +46 707 78 51 71, johan.waborg@iconovo.se

Carl Lindgren, Chairman of the Board of Directors
carllindgren@live.com

Iconovo AB (publ)
Ideon Science Park, Ideongatan 3B, SE-223 70 LUND
Tel +46 46 275 6777, info@iconovo.se, www.iconovo.se
Registration number Iconovo AB: 556938 - 0156

Certified Adviser
Carnegie Investment Bank AB (publ), Regeringsgatan 56, SE-103 38 Stockholm,
telephone: +46 73 856 42 65, email: certifiedadviser@carnergie.se

Financial Calendar
Q2 report (Jan. – June 2024) 12 July 2024
Q3 report (Jan. – Sep. 2024) 24 Oct. 2024
Q4 report (Jan. – Dec. 2024) 27 Feb. 2025

The annual report 2023 (in Swedish only) is available on the company’s homepage.
Iconovo’s shares are listed on Nasdaq First North Growth Market, Ticker: ICO, ISIN code: SE0010868943.

Key ratio definitions
EBITDA (Earnings before interest, taxes, depreciation and amortization). Operating result before depreciation and amortization.
Adjusted EBITDA. EBITDA adjusted for the provision for bad debts.

Board of Directors’ affirmation
The Board of Directors and the CEO hereby affirm that the Quarterly Report constitutes a faithful representation of the company’s operations, financial position and profit/loss and that it describes the significant risks and uncertainty factors facing the company.

This report has not been subject to the auditor’s review.

Lund, 12 July 2024,
Board of Directors, Iconovo AB


Consolidated statement of income and comprehensive income, summary

Consolidated balance sheet statement, summary

Consolidated cash flow statement, summary

Consolidated statement of changes in equity, summary

Parent company income statement, summary

Parent company balance sheet statement, summary

Notes
Accounting principles Iconovo prepares its consolidated accounts in accordance with IFRS, International Financial Reporting Standards, as endorsed by the EU. Furthermore, the Group also applies the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 1 (Supplementary accounting rules for groups). The Group uses historical cost for the valuation of balance sheet items unless otherwise stated. The interim report has been prepared in accordance with IAS 34. IFRS is constantly evolving, with new standards and interpretations being published continuously. No new or amended standards coming into effect from 2024 are expected to impact the group's accounting. The complete accounting principles applied by the Group can be found in the 2023 annual report on pages 63-70.

Key figures for the group

In case of any discrepancies between the Swedish text and the English translation, the Swedish text shall prevail.