"Dear investors,

Since this past summer, Cline has been in a state of constant change and adaptation. The global financial situation and internal changes have taken up our efforts and then some. That combined with my legal situation has made it somewhat difficult to communicate given the ongoing and unpredictable changes. Now, approaching the Christmas Holidays, the situation has stabilized, and we feel comfortable explaining a bit more in detail where we stand, how our projects actually have progressed, and how we intend to move them forward in 2024.

This year Victoria Bicknell moved back to her native Australia and is no longer a full-time employee of Cline. She continues to be involved with Cline in a consultancy role and is supporting Cline with communications. Victoria is a great asset, and a wonderful person, and we are glad to still have access to her skills.

As many of you know, the global financial situation is still very difficult for SMEs and we have yet to see the turn in willingness to invest and take the risk, which is essential for a functioning Life Science innovation community. Unfortunately, a number of great companies in our sector has already been forced to close down, however, Cline has managed to survive, and we are fully intent to continue to!

In this newsletter, we focus on our latest progress in both StemCART and CellRACE, and also some interesting global news that is of interest to Cline.

Lastly, on the subject of my own legal issues; I have, together with Cline's board, decided not to comment further until the case is definitively decided and reached its conclusion. I am still working full time at full speed for Cline as before, but it is a troubling time for me personally, as well as for my family. I therefore ask for your understanding in this matter and hope you can respect our stand for now.

Patrik Sundh, CEO"

StemCART

The ex vivo testing continued during the fall. We divided the work into three campaigns, each designed to provide the answers to questions including dose-response, quality validation and quality control. Since each part takes many weeks to complete, the campaigns have been complex and overlapping, and we are thankful for the ongoing collaboration with our partner clinics to receive cartilage at the right time throughout the project. Additionally, our long-term collaboration with Associate Professor Stina Simonsson continually contributes valuable insights and scientific support.

During these campaigns, we have found great value in our StemCART matrix that our cartilage cells are embedded within. The matrix both provides the cells with nutrients as well as fixating them in place. We are looking forward to further optimizing the formulation to make the combined product easy to implant during surgery. We are happy that we and our collaborator, Professor Anna Ström at Chalmers, have been granted support and funding by the Swedish Foundation for Strategic Research (SSF) to cover the cost of a PhD student dedicated to the further optimization of the matrix. The job advertisement is published and will be open for applications for some additional weeks.

The drive forward in Cline's cell lab is one of the things we are proud of. Cline has incorporated a strong mindset of sustainability in our way of working, where resources are used efficiently and, thanks to the strong capabilities of our cell lab manager, Manager Product Development Reza Mobini, high quality is constantly maintained.

As the laboratory work continues, so do our strategic collaborations as well as the search for partnerships of different types. As one of the few cell-therapy R&D companies in the region, Cline is especially happy to see that CCRM Nordic has been established within the Life Science Center, GoCo, in the Gothenburg area. CCRM Nordic is a not-for-profit organization funded by the Swedish Innovation Agency and an industry consortium. It was established to address bottlenecks in the translation and commercialization of advanced therapy medicinal products (ATMPs) in Sweden, the Nordics and Europe. According to CCRM Nordic, their goal is to take ATMPs from bench to bedside by treating and potentially curing some of the most devastating and costly diseases in the world today. We have started discussion with CCRM Nordic and will take part in some ways in the development of this initiative.

The area of ATMP therapy is continuing to mature and grow in value. We have just participated in the conference "ATMP Sweden 2023" in Uppsala, December 5th-6th, and can report that the area of cell and gene therapy is given more and more attention in Sweden as well as globally. As one of the initial companies active in this area of development Cline is continually involved in this initiative.

Globally, this area shows increasing activity, with larger companies get involved. Such investments and acquisitions taking place strengthens this trend.  A few notable examples are: Fujifilm announced a $200 million investment in iPSC and cell manufacturing (https://www.fiercepharma.com/pharma/high-flying-fujifilm-unveils-multi-unit-outlay-200m-beef-cell-therapy-cdmo-capacity) in the USA., and closer to home, Novo Nordisk Foundation announced a $136M investment into a new clinical cell therapy manufacturing facility in Denmark (https://www.fiercepharma.com/pharma/novo-nordisk-foundation-pumps-136m-new-cell-therapy-manufacturing-hub-denmark).

The search for a potential R&D partner is ongoing. We have found several different avenues to accomplish this goal that we will be exploring. Among them is an opportunity to use the assistance of Business Sweden which we approached to utilize their connections to target larger companies of interest. We believe that this can enable Cline to navigate this landscape, identify the ideal entry point, and establish a strong relationship with a large European partner for the StemCART project.

CellRACE
As we have communicated, CellRACE as a project has not received the same attention as StemCART during the past year, primarily due to the tight financial limits we operate under currently. We have, however, made progress in one critical area that will allow CellRACE to take a big leap forward in the near future. The AI-based analytical software that during the past year we have developed in collaboration with IFLAI, the start-up originating from GU, is now fully operational. This project has given us the ability to analyze tumor cell migration experiments in a matter of minutes instead of days. The team can also look at each experiment divided into several different factors, enabling a much-improved analysis of the full picture of how tumor cells behave and move during migration. This is a crucial component of the CellRACE project's aim: to quickly analyze the migratory patterns of tumor cells in order to detect tumor cells with the ability to move from a primary tumor into the bloodstream and potentially metastasize in other organs.

The team has been working to analyze all previous experimental data with this new powerful tool to guide the direction of upcoming development and new experimental designs. All experiments have been made using well-defined metastatic cell lines. Importantly, the next step involves carrying out experiments with a diverse set of tumor cells (both metastasizing and non-metastasizing) to validate the method's ability to differentiate truly metastatic cells from non-metastatic cells. With positive results, we will be able to begin testing with patient tumor biopsy material in the first half of 2024, which was originally planned but delayed due to the covid pandemic.

For CellRACE, we are also looking for a potential R&D partner in a similar manner as described for StemCART. The oncology market segment has seen some major success lately, showing proof of the excellent opportunity CellRACE offers to a potential collaborator and our investors. The use of AI techniques across oncology has been a very hot area of research. This has been in clinical trials, drug design and cancer diagnostics. Using analytical techniques not unlike the ones developed for CellRACE, a recent study outlines how researchers successfully can use deep learning to classify cancer cells as metastatic (https://publishing.aip.org/publications/latest-content/classifying-cancer-cells-to-predict-metastatic-potential/). More broadly, oncology continues to be an area of huge value, recently exemplified byAbbVie acquiring ImmunoGen for a staggering 10B USD (https://www.fiercepharma.com/pharma/abbvie-pays-10b-acquire-immunogen-doubling-down-red-hot-adc-cancer-field).

In summary, Cline is moving forward with the StemCART project in focus, with additional important progress being made in our CellRACE project. We have strong clinical support for our StemCART project and the ex vivo studies are continuing, and the cell therapy segment is rapidly growing with CCRM Nordic launching around the corner from us based on the successful Canadian model. The search for an R&D/commercial partner is under way. Both the Life Science segments where Cline is active show strong investments and great progress globally. We feel that Cline is very well positioned to capitalize on these developments to turn our projects into successes!

We at Cline wish you a Merry Christmas and a Happy New Year!

Sincerely,

Team Cline Scientific

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