Dear Shareholders,
 
Over the past twelve months Simris has been going through a major transformation. Ahead of the recently announced capital raising, I would like to take this opportunity to update you about the status of this transformation with particular focus on our work within the field of cancer therapeutics.
 
At its inception in 2011, Simris was conceived to replace Omega-3 extracted from fish. The plan was to extract Omega-3 from microalgae grown on dry land, and to sell this as a food supplement in capsule form under the Simris brand. Unfortunately, the high cost of production and marketing, combined with regulatory issues, meant that when the new Board joined the company in 2021, (10 years later), the company was still not profitable. Clearly, a new approach was needed if the company were to be successful. My brief from the Board was to lead a transformation that would create significant value for shareholders whilst continuing as microalgae pioneers.
 
After a thorough review of historical performance of the business and its operations, it became clear to me that the business needed to change its approach to Omega-3 for it to be profitable, whilst simultaneously establishing a route into much high-margin sectors such as the pharmaceutical sector. The acquisition of Cyano Biotech (since renamed as Simris Biologics www.simrisbiologics.com) in August of last year provided Simris with the vehicle it needed, bringing the company a Research & Development (R&D) team, a technology platform well protected by patents, a pipeline of high-value compounds and an entrance into the field of Antibody Drug Conjugates (ADCs). An ADC is a drug that kills its cancer cell target whilst minimizing damage to healthy cells. Such drugs allow cancer patients to have a higher quality of life during their treatment, with minimal side effects relative to traditional chemotherapy, and a higher chance reaching remission.
 
The ADC sector is the most rapidly developing sector within cancer therapeutics. This is evidenced by the hundreds of new clinical trials initiated in the past year, acquisitions such as Pfizers $43bn offer for Seagen (which was quoted to be largely motivated by Seagens ADC pipeline), the recently announced $1bn collaboration between Bristol Myers Squibb and Tubulis, and Samsung Biologics confirming their plan to have a fifth manufacturing plant open by 2025 due to “the increased need for therapeutics and the continuous advance of monoclonal antibodies and ADCs”.
 
An ADC is made up of three elements: (1) an Antibody which attaches to a target on the surface of a cell; (2) a Drug (often referred to as a Payload), which is the molecule that delivers the effect, and; (3) a Linker that holds the Drug to the Antibody until delivered into the targeted cell. As of today, there are 15 ADCs approved for treating cancers. However, by the end of 2022* there were almost 1,400 clinical trials ongoing supporting the development of new ADCs. This clearly demonstrates the significant interest this ADC field holds for drug developers. 

To develop a cancer-ADC, a drug developer starts by identifying a target site (Antigen) that is only found on a cancer cell and not on healthy cells. One can think of this site as a door lock. They then design an Antibody which acts as the key that uniquely fits this lock. The job of the Antibody is therefore to locate the door lock (Antigen) and to trigger a process whereby the entire ADC is taken through the door and into the cancer cell. It is essential that the Antibody only binds to an Antigen on a cancer cell otherwise it may deliver its toxic payload (Drug) to a healthy cell and the patient will experience similar side effects experienced through traditional chemotherapy. The Linker part of the ADC can be thought of as the key chain which attaches to the key (Antibody) at one end and the active Drug at the other end. Once the ADC is inside the cancer cell, enzymes cause a break in the key chain (Linker) at the end where the Drug is held. Once released from the ADC the drug is free to interfere with the metabolism of the cell eventually resulting in its death. Simris’ role is to provide drug developers with novel drugs that are designed to kill cancer cells and not to damage healthy cells.

Simris holds a pipeline of drug molecules (toxins extracted from cyanobacteria), as well as a technology platform that enables us to modify these and produce thousands of variants of these toxins to optimize their safety and efficacy within each ADC. As the average value of an ADC license agreement is $150m*, the opportunities for Simris in this area are significant. We consider our position so promising, that this has become the primary focus of the business.
 
Since the acquisition we have continued to invest in R&D. This has resulted in the development of new molecules that have an even better safety profile towards healthy cells whilst being more toxic to cancer cells. We have recently created five new ADCs carrying these molecules and these ADCs are currently undergoing in-vitro testing with the support of a major contract research organisation. The results of the tests will provide more data to support business development activities, new patent applications and will also add value to license agreements.
 
Development of the commercial model for our ADC payloads has also advanced significantly since the acquisition. The signing of a collaboration agreement with Lonza (who produce the majority of commercially available ADCs globally), was a strong validation of our platform and gave access to drug developers interested in developing ADCs carrying novel payloads. Our subsequent engagement of Alacrita Consulting enabled us to develop an externally accredited payment model for ADC license agreements to be made from our platform. These partners are independent external experts, who, along with several others, understand the potential of our platform and are as committed as we are to its commercialisation and to improving, and lengthening, the lives of cancer patients.
 
As our understanding of the ADC market has deepened, we have concluded that investing in more data, to further prove the efficacy of our payloads, lowers the risk to the drug developer and thereby allows us to charge more for our first license agreements. For this reason, we have recently produced the five new ADCs currently undergoing in-vitro testing. Our plan is to take the best performing molecules from this test into a bigger pre-clinical trial that will generate the key data to further demonstrate the safety and efficacy of ADCs carrying our unique payloads. The results will supplement and support the discussions we are already engaged in with drug developers as well as with companies with novel linker technologies. Based upon the decision to conduct additional and bigger trials, I estimate that our first ADC license will be secured within the next 12-18 months. During this time I expect that we will conduct feasibility studies with several drug developers and that will eventually lead to our first full license agreements.

In light of the significant potential we believe resides within our ADC platform and the runway required to support the business until it secures its first license agreements, the Board has resolved to conduct the upcoming Rights Issue, followed by the Directed Issue. This will provide both the growth and working capital until the first license agreement is secured. If the Rights Issue is fully subscribed, then the directed placement will also be filled, and Simris will raise its targeted amount of SEK 51m (before transaction costs).
 
It is my hope that I have clearly communicated the scale of the progress we have made and the opportunities that lie ahead of us such that you will choose to continue to support the business through its transformation by taking up your rights in the upcoming rights issue.
 
Thank you as always for your loyalty and support.
Julian Read
CEO

* Beacon data from Hanson Wade (2023) https://beacon-intelligence.com
** Based upon disclosed FY2022 financial statements