BioStock Analysis: Life Science Trends 2015-2016 by BioStock

2015-2016 Life Science trends in Sweden

Life Science is a constant race ... and every day our clients strive to win. As many of our Swedish clients are traded on AktieTorget and Nasdaq First North & Premier, we decided to perform an analysis of the financing and IPO trends between 2015 and 2016:Q1. If the shown interest from investors is an indicator of prosperous times, Swedish Life Science can be concluded to be thriving. Biotech investors were rewarded handsomely throughout 2015 and the sector seemed to have reached a peak in Sweden in the first quarter of 2016 â&#x20AC;&#x201D; almost 6 months after the Nasdaq Biotech Index peaked in the US. At the time of writing this introduction, the index of Swedish Life Science companies is again trending in a positive direction, after a period of some investor uncertainty during the second and third quarters of 2016. Life Science companies are in a constant race to deliver results, which is reflected by the theme of this report. Competition is fierce in a dynamic landscape of new technologies, regulatory complexity and pressured healthcare budgets. To be considered a plausible winner, companies are expected to have go-to market strategies enabling long exclusivity periods, premium priced products and unique positioning in untapped niches. True value for patients can only be achieved if the medical product agency decides to give its final nod. Expectations from investors are high and success is often judged by the managerial ability to strike deals and secure return on investment for shareholders. The combined efforts and the sheer energy that is poured into this work is impressive. It is also the reason why we continue to be inspired by our clients. We hope that this Life Science report will provide valuable insights for current investors and entice new investors to explore this exciting field.

Jonas SĂśderstrĂśm

Tobias Thornblad

Editor, CEO & Partner

CEO & Partner

BioStock

Monocl Strategy Services

Disclaimer This report has been prepared by Monocl Strategy Services AB (Monocl) for informational and illustrative purposes only. The report includes analyses of Life Science companies in early development stages and/or general analyses of the Life Science sector. These analyses may include opinions in the form of assessments of companies’ project portfolios from a technical and business perspective, as well as company valuations. The opinions included in the report are Monocl’s current opinions as of the date stated in the report, and are subject to change without notice. The information which constitutes the basis for the report has been collected from a variety of sources (public and non-public) which Monocl considers to be reliable, and has been assembled and assessed in accordance with Monocl’s internal standards. Monocl has made reasonable efforts to verify the information whenever feasible, but Moncol cannot and does not warrant that the information is accurate or complete. The conclusions of the analyses may be partly based on forward-looking statements which involve several risks and uncertainties, many of which are external and thus beyond the individual company’s control. These risks and uncertainties include, but are not limited to, industrial, political, economical, legal, regulatory and other factors. Furthermore, in case any of the assumptions made in the report would prove not to be true, then the conclusions are likely to be substantially affected. The report shall be considered as containing general information, and is not intended as investment advice, individual or otherwise. All investments in financial instruments are connected to risks, and even more so concerning small companies in an industry such as life science, which may lead to significant capital losses. If you are looking for investment advice, please contact a duly licensed actor. Monocl aspires to perform as objective analyses as possible. Neither Monocl nor our employees who have performed the analyses own any financial instruments issued by the companies which are included in the report. Monocl shall not have any responsibility for any direct or indirect damages that may be caused due to any decisions made in connection with this report. The report is not directed to legal or natural persons in jurisdictions where the provision of the report would be in breach of mandatory applicable law. By choosing to read this report, you understand and accept this disclaimer.

• Introduction to Swedish Life Science companies on AktieTorget,

Nasdaq First North, Nasdaq First North Premier ................................................. 4-7

• Financing and share issue trends: 2015-2016:Q1 ................................................. 8-11 • Initial public offerings trends: 2015-2016:Q1 ........................................................... 12-14 • About BioStock, Monocl Strategy Services and this report .......................... 15-17

Introduction | LIFE SCIENCE TRENDS IN SWEDEN

INTRODUCTION Life Science trends in Sweden Swedish Life Science is booming,

at least from the standpoint of attracting investments. Never before has this industry been able to engage such an interest from investors for small companies in early development stages. To capture this, we decided to analyze the Life Science trends on the marketplaces AktieTorget and Nasdaq First North (including First North Premier) where many of the innovators within therapeutic and medical technology in Sweden start their journeys as publicly traded companies. Our data shows that this may have been a bumpy ride for some investors but has to be considered a success, as a whole, for many of the companies that have experienced over-subscribed share issues and initial public offerings (IPOs) in recent years. While there have been some indications on a declining investment pace in the US, none of those trends were seen in the beginning of 2016 when this report was written. Some market uncertainty then followed as a result of macro factors (e.g. Brexit, US election) but neither lead to any lasting decline. The question is how long the positive trend will continue and to what extent the current investors will be able to financially support companies with early stage development candidates towards strategic partnerships.

COMPANY TYPES service/supply companies

other

8% diagnostic/imaging companies

15%

83 Life Science companies,

41% biotech/pharma companies

31%

on AktieTorget and First North (incl. Premier) at the end of Q1 of 2016, had their headquarters (HQ) in Sweden.

medical device companies

NUMBER OF EMPLOYEES 17

3rd

17 9

14 2014 data

2nd

1st 0

6-10

11-80

Most Life Science companies on AktieTorget and First North are located in the Lund/Malmö region. MONOCL STRATEGY SERVICES

1st

Lund/Malmö region

Aggregated sum of all market caps based on HQ location at the end of 2016:Q1

Introduction | LIFE SCIENCE TRENDS IN SWEDEN

At the time of writing this report*, 83 Life Science companies with Swedish headquarters were publicly traded on AktieTorget (63%) and Nasdaq First North (37%). The majority of these were therapeutic biotech/ pharma companies (41%), followed by medical device companies (31%), diagnostic and imaging companies (15%), service & supply companies (8%) and other companies (e.g. animal health, supplements). Most of these (79.5%) had been publically traded five years or less and almost a third (31%) had been on the stock exchange for less than a year. Not surprisingly, the majority of these companies were located in Sweden’s larger cities. What may come as a surprise for some is the fact that the Lund/Malmö region is the clear leader in the number of companies. In fact, 40% of these companies are located in these two cities, followed by the regions in Stockholm/Uppsala and Göteborg.

TOTAL YEARS AS PUBLIC COMPANY 26 18

MONOCL STRATEGY SERVICES

5 <1

6-16

of management teams and Board of Directors, and the results were promising. More than half of all companies (56%) wrote on their websites that both the people in their managements and on their Boards had previously been working in international Big Pharma or Big Device companies. An additional 30% of the companies had directors on their Boards with the same experience. Another type of competence that is necessary for these companies relate to their technologies and the medical needs that they are addressing. One way to measure this is to analyze the origin of how the company was created. It turned out that roughly half of all companies (45%) stated in the company descriptions on their websites that they originated from Swedish universities. Lund University was the one origin most frequently mentioned (20 companies) followed by the Karolinska Institute (5) and University of Gothenburg (4). In the Uppsala/ Stockholm region the Karolinska Institute (5), the Royal Institute of Technology (1) and the Swedish University of Agricultural Science (1) were the leading institutions, while companies in the Göteborg region originated ORIGIN FROM SWEDISH UNIVERSITY?from University of Gothenburg (4), Chalmers University of Technology (2) and Sahlgrenska University Hospital (1). We did not study furter how many of these companies that were created by individual researchers (e.g. using NO the teacher’s exemption) or YES spun-out through university holding companies and associated incubators, which may be an interesting follow-up analysis to do in a future report.

Small experienced teams with origins from TOTAL YEARS AS PUBLIC COMPANY Big Pharma, Big Device firms and leading 26 universities Life Science is18an industry characterized 17 by small

repurposed molecules

23%

BIOTECH LEAD PRODUCT TYPES

Karolinska Institute

NO 4

University of Gothenburg YES

MONOCL STRATEGY SERVICES

management teams and virtual organizations, an observation supported 8 by the fact that 63% of these 5 reported that they 4 had 50-5 employees on companies their payrolls in 2014. Clearly, this number does not <1 1 3 4 5 6-16 account for the2 numerous specialized consultants and university employed researchers who work for these BIOTECH LEAD PRODUCT TYPES companies. The complexity of the industry, and its technologies, demands experience and high competence Biosimilars from the people working in it. Few other industries has Cell therapies as many PhDs and former professors in leading positions Large Vaccines as Life Science. Moreover, most small companies molecules aim 14% products to large companies to outlicense or sell their with established marketing and sales 37%channels. This creates a need to understand a future partner. We 17% therefore decided to analyze the personal descriptions Rerformulated or

Lund FROM University ORIGIN SWEDISH UNIVERSITY?

Lund DEVELOPMENT University HIGHEST PHASE OF BIOTECH 20 LEAD PRODUCTS

Karolinska Institute

University of Gothenburg

9 4

Image source: iStockPhoto

A third of all companies have been publicly traded less than one year

HIGHEST DEVELOPMENT PHASE OF BIOTECH LEAD PRODUCTS

Discoverytarget, Preclinical Phase I therefore Phase IIbe aware Approved Clinical * It should be noted that describing an ongoing trend is comparable to capturing a moving readers should that this analysis is based on historic data with a cut-off end point on April 1, 2016. It should further be noted that the high number of compliance Small companies that had announced IPOmolecules dates or closed financing rounds after April 1, 2016, were manually excluded from the analysis. Biosimilars

Cell therapies

Vaccines

molecules

COMPANY TYPES service/supply companies

Introduction | LIFE SCIENCE TRENDS IN SWEDEN

8% diagnostic/imaging companies

at the end of Q1 of 2016,and had their Lund/Malmö, Stockholm/Uppsala Göteborg are headquarters (HQ) in Sweden. the leading Life Science regions based on the number of companies, fundraising and IPOs. At the end of Q1 in 2016, the 33 companies located in Lund and Malmö had a collective market cap of 4.6 billion SEK. Strong contributors to this2were the high valuations of nd Immunovia, WntResearch and Dignitana at the time of analysis. A subset analysis shows that 23 out of these 3rd 0.471 billion SEK, in the period 33 companies raised from 2015 to 2016:Q1. Most of these funds were raised, 1st and 7 IPOs, on AktieTorget through 17 share issues where 26 of these companies were publicly traded at the time. In contrast to the Lund/Malmö region - where most of the companies were listed on AktieTorget - the Most Life Science companies on AktieTorget and majority of the companies in Stockholm and Uppsala First North are located in the Lund/Malmö region. were instead publicly traded on Nasdaq First North.

Lund/Malmö region

30%

medical device companies

traded on First North (incl. Premier)

15%

traded on AktieTorget

diagnostic/imaging companies

biotech/pharma companies

average market cap per company in Lund/Malmö in 2016:Q1

783 MSEK Lund

Malmö

Aggregated sum of all market caps based on HQ location at the end of 2016:Q1 traded on First North (incl. Premier)

31%

medical device companies

3963 MSEK

471 MSEK total money raised by all companies in Lund/Malmö between 2015-2016:Q1

traded on AktieTorget

diagnostic/imaging companies

168 MSEK average market cap per company in Stockholm/Uppsala in 2016:Q1

15%

733 MSEK Stockholm

Uppsala

508 MSEK total money raised by all companies in Stockholm/Uppsala between 2015-2016:Q1

Göteborg region Aggregated sum of all market caps based on HQ location at the end of 2016:Q1

42%

biotech/pharma companies

25%

diagnostic/imaging companies

17%

medical device companies

139 MSEK

Stockholm/Uppsala region

38%

3rd

3810 MSEK

traded on First North (incl. Premier)

3 9

3602 MSEK

300 MSEK average market cap per company in Göteborg in 2016:Q1

167 MSEK

traded on AktieTorget Göteborg

total money raised by all companies in Göteborg between 2015-2016:Q1

MONOCL STRATEGY SERVICES

2nd

MONOCL STRATEGY SERVICES

7 26

41%

While the aggregated market cap was at a similar biotech/pharma level for the 28 companies in the capital region, these companies 31% companies raised more capital (0.508 billion SEK) in medical device the same analytical companies period. While PledPharma, DexTech Medical and Bringwell drove a significant amount of the total market cap in the Stockholm/Uppsala region, the two companies Scibase and Xbrane accounted for more NUMBER OF EMPLOYEES than half of the raised capital. At the time of analysis, Göteborg was home to only 12 of the companies in the 17 17 analyzed set — almost a third compared with the 14 leading Lund/Malmö region. Considerably less funds had been 9 8 region 7 (0.167 raised by companies in this billion SEK), 6 5 compared with the other two regions, but a very similar total market cap valuation was observed (3.6 billion SEK). 0 1 2 for driving 3 4up the 5 average 6-10 11-80 Largely responsible market cap of companies in the Göteborg region were the four companies Xvivo Perfusion, RLS Global, Immunicum and Ortoma.

Aggregated sum of all market caps based on HQ location at the end of 2016:Q1

48%

biotech/pharma companies

15%

2014 data

Lund/Malmö, Stockholm/Uppsala and Göteborg stand out as leading 83 Life Science companies,Life Science regions in Sweden on AktieTorget and First North (incl. Premier)

1st

other

University of Gothenburg

Introduction | LIFE SCIENCE TRENDS IN SWEDEN

BIOTECH LEAD PRODUCT TYPES

HIGHEST DEVELOPMENT PHASE OF BIOTECH LEAD PRODUCTS

Biosimilars Cell therapies Large molecules

14%

9 4

37%

17% Rerformulated or repurposed molecules

23% Discovery

Preclinical

Phase I

Phase II

Approved

Small molecules

INDICATION FOCUS OF BIOTECH LEAD PRODUCTS

ORPHAN POTENTIAL OF BIOTECH LEAD PRODUCT?

Oncology

CNS Cardiovascular

Immunology & inflammation

Respiratory

Women’s health

Genitourinary

Other

Clinical compliance

YES

LEAD MEDICAL DEVICES AND DIAGNOSTIC TOOLS

6 MONOCL STRATEGY SERVICES

The Swedish biotech landscape is characterized by early assets, large molecules and orphan drugs

Surgical equipment

Hospital supplies

Monitoring equipment

Drug delivery devices

Diagnostics/ imaging

Lab tech. supplies

Physical devices

Neurology devices

Other

A dominating Biotech focus on oncology, followed by CNS

To understand the biotech landscape, we analyzed the lead candidates in the pipelines of each of the identified companies. About two-thirds (60%) of all of these drug candidates were in clinical phase I or earlier. Only four companies had products on the market, one (biosimilar) was in late clinical compliance phase and no company had products in a clinical phase III trial. Approved products were marketed within indications such as caries & periodontitis, common cold, intermittent claudication and malignant brain cancer. Most of the therapeutic companies are developing large molecules (37%) followed by those developing small molecules (23%) and companies reformulation/repurposing already known molecules (17%). The global industry trend to target rare diseases to enjoy government incentives (including market exclusivity) is also evident among Swedish companies. In fact, 40% of all these biotech companies have communicated the potential of its drug to achieve orphan protection. The majority, however, are far away from orphan protection and a market approval as 9 out of these 14 companies still are in early discovery or preclinical phase.

Oncology is a leading indication across the industry, which is also clear among these companies. These oncology products are indicated for a large variety of tumours including those affecting the brain, prostate, breast, kidney and the gastrointestinal tract. Central nervous system (CNS) diseases is the second biggest indication, following cancer. Key indications for this category include Alzheimer’s, epilepsy, migraine and anti psychotic syndromes.

A heterogenous medical device industry

In similarity with the biotech companies, the majority of the 39 medical device and diagnostic/imaging companies are focused on oncology. In contrast, the intended use of products is much broader (prevention of hair loss, radiation treatment, detecting skin cancer, etc.). Oncology is followed by cardiovascular applications (e.g. organ transplantation, ex vivo lung perfusion, heart pump). Based on the leading device types, surgical and monitoring equipment are the most common. Among these we find a wealth of different products to achieve medical cooling, local tumor destruction with laser, stroke status detection & monitoring and much more.

Image source: iStockPhoto

Vaccines

FINANCING | LIFE SCIENCE TRENDS IN SWEDEN

FINANCING Life Science trends in Sweden

The period between 2015 and the first quarter of 2016 was a good time to raise capital, considering the fact that 69% of the investment rounds were over subscribed. Close to 1.5 billion SEK was raised by 55 public Life Science companies on AktieTorget and First North (including Premier) and most of these experienced a high investment interest. Therapeutic companies generated investments of 782.5 MSEK (52% of the raised money in this period), while medical technology companies raised 658.4 MSEK (44%). 8

300

127.7 MSEK

103.8 MSEK

100 0

FINANCING | LIFE SCIENCE TRENDS IN SWEDEN

2015:Q1

2015:Q2

IPO rights issues

2015:Q3

2015:Q4

2016:Q1

MONOCL STRATEGY SERVICES

200

Direct investments or exclusive rights issues

Preferential or non-preferential share issues, or exercise of warrants

1495 MSEK raised by all Life Science companies, on AktieTorget and First North between 2015-2016:Q1

610.2 MSEK

600

MSEK 600

343.9 MSEK

400

127.7 MSEK

200

400

309.5 MSEK

300

2015:Q1

200

103.8 MSEK 2015:Q2

2015:Q3

2015:Q4

2016:Q1

AktieTorget

AktieTorget and First North between 2015 127.7 MSEK 103.8 MSEK and 2016:Q1

200

An analysis of the raised funds based on different MSEK company types across the Nordics, between An impressive one and a half billion SEK was raised First782.5 North, Premier &2015Nordic 0 2016:Q1, revealed that the lion’s share (0.783 BSEK) was between 2015 and the end of the first quarter in 2016 2015:Q1 2015:Q2 2015:Q3 2015:Q4 2016:Q1 invested in biotech/pharma followed by diagnostics/ on AktieTorget and Nasdaq First North and First North 54% IPO corresponding rights issues Directnumber investments or rights issues 10 diagnostic/imaging co 385.2 MSEK imaging (0.385 BSEK), medical devices (0.273 BSEK) Premier. The forexclusive the companies Preferential or non-preferential share1.175 issues,BSEK or exercisewith of warrants and service/supply companies (0.054 BSEK). The largest with Swedish headquarters was the fundraising was done by the Scandinavian oncology and three cities Lund (0.345 BSEK), BSEK) 2015:Q1 2015:Q2 2015:Q3 Stockholm 2015:Q4 (0.3832016:Q1 273.2 MSEK chronic inflammatory disease company, Nuevolution.14 medical device companies and Göteborg1175 (0.167 BSEK) in the lead. About half of this MSEK raised by Swedish Life Science companies, Stockholm-Uppsala region With the help of its financial advisor, Västra Hamnen capitalSkåne wasregion raised in initial public offerings (53%) while on AktieTorget and First North between 2015-2016:Q1 MSEK Corporate Finance, the company managed to raise 250 the restGöteborg was divided between share issues (preferential Other locations in Sweden 4 service/supply companies 54.2 MSEK 600 MSEK in its IPO. Among the companies with Swedish & non-preferential) (44%) and direct investments (3%). 500 headquarters, the malignant melanoma focused medical The last quarter of 2015 was by far the most investment company Scibase was the clear leader with intensive as more than a third of all money was raised ina total oftechnology 400 Across all Nordic players, between 2015-2016:Q1, 27 therapeutic companies 190 MSEK that was this period (0.610 BSEK). Most of the companies in the 300 raised 782.5 MSEK while 24 medical device and diagnostic companies raised 658.4 MSEKraised in its IPO with the support from Pareto Securities, followed by the 100 MSEK that Life Science category on these stock exchanges are in 200 AVERAGE OVER was raised in Xbrane Biopharma’s IPO through Vator growth mode and research & development are cost100 SUBSCRIPTION % biotech/pharma 782.5be MSEK Securities. Collectively,27these threecompanies companies thus intensive activities. This can confirmed by the fact 0 2015:Q1 2015:Q2 2015:Q3 2015:Q4 2016:Q1 raised 540 MSEK. that a total of 60% of all these companies raised money 274% in the observed period, with a slightly higher percentage 69% of all rights Skåne region Stockholm-Uppsala 10 diagnostic/imaging companies 385.2 MSEK region on AktieTorget. issues were over 100

$$$$$$$$$$ $$$$$$$$$$

Göteborg

Other locations in Sweden

273.2 MSEK

14 medical device companies

subscribed, in 2015-2016:Q1

207%

Across all Nordic players, between 2015-2016:Q1, a total of 27 therapeutic companies raised 782.5 MSEK while 24 medical device and diagnostic companies raised 658.4 MSEK

54.2 MSEK

782.5 MSEK 385.2 MSEK

69% of all rights issues were over subscribed, in 2015-2016:Q1

273.2 MSEK 54.2 MSEK

286%

4 service/supply companies

MONOCL STRATEGY SERVICES 27 biotech/pharma companies

AVERAGE OVER companies 10 diagnostic/imaging SUBSCRIPTION % IN IPOs 14 medical device companies 274%

4 service/supply companies 207%

156%

IN SHARE ISSUES

342%

211%

259%

196%

Image source: iStockPhoto

100

$$$$$$$$$$ $$$$$$$$$$ diagnostic companies

MONOCL STRATEGY SERVICES

200

Other locations in Sweden

1175 MSEK raised by Swedish Life Science companies, Great interest from investors the Nordic Close to 0.8 65% BSEK raised by therapeutic 400 on AktieTorget First North betweenas 2015-2016:Q1 343. 9and MSEK Across all Nordic players, between 2015-2016:Q1, a total of 27 therap 309.5 MSEK companies and Life Science industry raised 1.5 BSEK on 0.7 BSEK &medical device and diagnostic companie 300 raised by 782.5device MSEK while 24

MONOCL STRATEGY SERVICES

300

2016:Q1

MONOCL STRATEGY SERVICES

400

$$$$$$$$$$ $$$$$$$$$$

Göteborg

500

First North, Premier & Nordic 2015:Q2 2015:Q3 2015:Q4

2015:Q1

60% out of 91 Life Science companies raised money, 54% Skåne region Stockholm-Uppsala region on AktieTorget and First North, between 2015-2016:Q1

MONOCL STRATEGY SERVICES

610.2 MSEK

Preferential or non-preferential share issues, or exercise of warrants

600

$$$$$$$$$$ $$$$$$$$$$

100

1495 MSEK raised by all Life Science companies, IPO rights issues Direct investments or exclusive rights issues on AktieTorget and First North between 2015-2016:Q1

MSEK

65%

300

100

MSEK

AktieTorget

500

MONOCL STRATEGY SERVICES

MSEK

raised by Swedish Life Science companies, 60% out of 1175 91 MSEK Life Science companies raised money, on and AktieTorget First North between 2015-2016:Q1 on AktieTorget Firstand North, between 2015-2016:Q1

MONOCL STRATEGY SERVICES

286% AVERAGE OVER SUBSCRIPTION % 156%

500% N/AIN IPOs

103% IN156% SHARE ISSUES

21%

9% 14%

RedEye

MSEK in FINANCING | LIFE698 SCIENCE TRENDS IN SWEDEN 35 rights issues

Sedermera Fondkommission

Corpura

797 MSEK in

Leading certified advisors and IPO support, 2015-2016:Q1

16 IPOs

RedEye Corpura

High amount of over-subscribed share issues

Sedermera Fondkommission

31%

Clear dominance by a few

MONOCL STRATEGY SERVICES

ABG Sundal Collier

Västra Hamnen Corporate Finance & Avanza advisors financial

3 IPOs, 2015-2016:Q1 Many of the Top public companies raised money in the To understand which financial advisors were the most 20%we analyzed press releases following 1. Nuevolution MSEK, Västra investor Hamnen CF interest & Avanza) was observed evaluated period(250 and a high active in this space, 24% SciBase (190 Pareto in the2.majority ofMSEK, these. OnSecurities) AktieTorget, 65% of the Life theVator completion of all mapped financing Securities Paretorounds. Securities Across 3. Xbrane BioPharma raised (100 MSEK, Vator Securities) Science companies money, whereas the same the 35 different rights issues in this period - collectively statistics for First North (incl. Premier) was 54%. This representing 698 MSEK of raised capital - Sedermera Source: Press releases high interest resulted in more subscriptions than there Fondkommission (149 MSEK), Corpura (96 MSEK) and were shares available in the most popular financing RedEye (65 MSEK) helped raise the most capital in 15 rounds. Among those 35 companies that performed rights share issues. On average, each issue brought in roughly 20 issues between 2015-2016:Q1, a total of 20 companies with Vigmed (raising 57 MSEK with the help of ABG Biotech lead products on AktieTorget and Nasdaq First NorthMSEK (incl. Premier), (57%) reported that their rounds were over-subscribed. Sundal Collier), AroCell (52 MSEK, RedEye and Corpura) between 2015-2016:Q1 Almost double the amount of shares, as compared to and Saniona (49 MSEK, advisor was not disclosed) in the what was offered, were subscribed lead. See the diagram below for more information. LEAD PRODUCT TYPES on average (196% HIGHEST DEVELOPMENT PHASE subscription) for those that reported over-subscription. Biosimilars The highest average subscription rates were seen in 10 Cell therapies 9 the biotech/pharma (223%) and medical device (196%)9 Large Vaccineswhere oncology company categories, Kancera (526%) molecules 14% company Vivoline Medical (285%), and transplantation 4 37%subscription rates in each respectively, had the highest 17% category. 2 Rerformulated or repurposed molecules

23% Discovery Preclinical Small molecules

Phase I

MONOCL STRATEGY SERVICES

Raised capital on AktieTorget and Nasdaq First North (incl. Premier) by Life Science companies, between 2015-2016:Q1

Phase II

Approved

Source: Press releases

Leading certified advisors and support in rights issues, 2015-2016:Q1 Remium

Not disclosed in press release

Partner Fondkommission ABG Sundal Collier

35 rights issues

797 MSEK in 16 IPOs

21%

9% 14%

Sedermera Fondkommission MONOCL STRATEGY SERVICES

698 MSEK in

RedEye

Corpura

Leading certified advisors and IPO support, 2015-2016:Q1 RedEye Corpura Sedermera Fondkommission

31%

Top 3 IPOs, 2015-2016:Q1 20%

1. Nuevolution (250 MSEK, Västra Hamnen CF & Avanza) 2. SciBase (190 MSEK, Pareto Securities) 3. Xbrane BioPharma (100 MSEK, Vator Securities)

Vator Securities

24%

Västra Hamnen Corporate Finance & Avanza

Pareto Securities Source: Press releases

87.9 MSEK

88.4 MSEK

60.6 MSEK 38.3 MSEK

IPO

FINANCING | LIFE SCIENCE TRENDS IN SWEDEN 2016:Q1

IPO

service/supply companies

2016:Q1

IPO

diagnostic/imaging companies

2016:Q1

IPO

biotech/pharma companies

2016:Q1

medical device companies

16 issues

2 8 9 10

MSEK raised

10 issues

15 16 17 18 20 22 14 23

35 rights issues performed between 2015-2016:Q1, with raised capital ranging from 2 MSEK to 57 MSEK

5 issues

Raised capital: Average issue:

4 issues

2-10 MSEK 7.3 MSEK

11-20 MSEK 14.9 MSEK

21-30 MSEK 23.4 MSEK

31-57 MSEK 47.4 MSEK

28.7%

25.6%

29.2%

22.9%

3.9-11.7%

1.3-9.2%

5.6-11%

N/A - 7.3%

8.4%

5.5%

7.3%

Average dilution: Cost range:

49 52 57 27 31 25 24

Average cost:

MONOCL STRATEGY SERVICES

Most rights issues were performed in the 11-20 MSEK range with an average dilution of 25.6% 7 8

5 issues 4 issues 3 issues 2 issues

2 issues

11-20 MSEK

21-30 MSEK

31-60 MSEK

100+ MSEK

17.1 MSEK 26.7%

23.3 MSEK 36.8%

47.5 MSEK 25.4%

180.1 MSEK 42.9%

5.8-15.4%

N/A-6.2%

N/A - 10.0%

1.4 - 7.6%

9.8%

6.2%

10.0%

4.5%

The clear MSEKmajority raised 9 of the analyzed share issues were 1 (16 total issues) or the 21-30 in either the 11-20 MSEK MSEK (10 total issues) range. Based on a calculation of the amount of registered new shares divided by the total 16amount IPOs performed of shares (before each share issue) an average capital: dilution rate was calculated. The highest average Raised dilution 2-10 MSEK between 2015-2016:Q1, was observed in the 21-30 MSEK range, followed by with raised capital ranging Average issue: 7.5 MSEK the 5 share issues that were done in the 2-10 MSEK from range. 7 MSEK By to 250 MSEK Average dilution: 26.4% analyzing the costs associated with the share issues — when these were reported in press releases Cost range: 8.9-24.3% — the cost of raising capital could be determined as a Average cost: 15.2% percentage of the amount of raised capital. These costs varied greatly with the lowest rate reported as low as 1.3% (by Ortoma) and the highest rate at 11.7% (reported by Biotech IgG). The average cost of raising capital was determined to be 8.4% in the 2-10 MSEK range, 5.5% MONOCL STRATEGY SERVICES in the 11-20 MSEK and 7.3% in both of the two higher AktieTorget - IPOs ranges.

20 21

25 3 5

100

Sedermera Fondkommission Corpura Vellenova Not disclosed

No. of IPOs

Raised capital

6 1 1 1 9

95.2 MSEK 11.0 MSEK 7.0 MSEK 6.5 MSEK 119.7 MSEK

Image source: iStockPhoto

Financial advisor

50 190 2

IPO TRENDS | LIFE SCIENCE TRENDS IN SWEDEN

IPO TRENDS Life Science trends in Sweden

Last year marked a record year in the number of initial public offerings on the two Swedish marketplaces - AktieTorget and Nasdaq First North - among Life Science companies. Compared with the market cap valuations upon their IPOs, a majority of the companies listed since 2010 saw their market caps increase substantially until our analysis at the end of the first quarter of 2016. More than half of these companies were therapeutic biotech/pharma followed by medical devices, diagnostics and industry suppliers. 12

IPO TRENDS | LIFE SCIENCE TRENDS IN SWEDEN

Increasing IPO trend among Life Science companies on Swedish stock exchanges

No. of IPOs

MONOCL STRATEGY SERVICES

30 25

First North Nordic

First North

First North Premier

AktieTorget

15 10 5 2000

2005

2006

2007

2008

2009

2010

2011

More than half of the 2010-2016 IPOs were on AktieTorget 44 companies (58%)

4 companies (5%)

Average market caps increased substantially, between 2010-2016

166% 236.0 MSEK

411% 149.6 MSEK

141.8 MSEK

36.4 MSEK IPO

2016:Q1

IPO

AktieTorget

2013

2014

2015

2016:Q1

76 life science companies went public on AktieTorget and First North, 2010-2016:Q1 25 companies (33%)

3 companies (4%)

2012

2016:Q1

First North

The number of companies within Life Science which became publicly traded between 2005 and 2010 was rather low and constant. A substantially increasing trend in the number of IPOs can then be observed. Our research shows that out of 89 Life Science companies, 76 performed IPOs in the period between 2010 and the first quarter of 2016 â&#x20AC;&#x201D; 69 of these headquartered in Sweden. More than half (58%) of these 76 IPOs were made on AktieTorget. The number of IPOs in the first quarter of 2016 alone, outnumbers the amount of IPOs between 2000-2005.

Dramatic increase in market cap valuations

When comparing the average market cap valuation at the IPO stage with the average market cap of all companies in 2016, a dramatic increase is observed. The average market cap at the IPO stage of all 76 companies in the 2010-2016 period was 88.6 MSEK and the corresponding average market cap of the same companies at the end of the first quarter this year was 192.3 MSEK, resulting in a total increase of 217%. When the same calculation is done for the companies listed on AktieTorget and First North (excluding Premier), we see market cap increases of 411%, and 166%, respectively. Although the market caps of some of these companies may have increased through issuing new shares without an increased share price, the data indicates that the past five years have been favorable years for Life Science companies on these marketplaces.

Therapeutic biotech/pharma companies represented 51% of all IPOs in the 2010-2016 period

51%

biotech/pharma companies

29%

medical device companies

14%

diagnostic/imaging companies

service/supply companies

Image source: iStockPhoto

MONOCL STRATEGY SERVICES

15 16 17 18 20 2 2 14 23

0 2 2 2 3

from 2 MSEK to 57 MSEK

35 rights issues performed IPO TRENDS | LIFE2015-2016:Q1, SCIENCE TRENDS IN SWEDEN between with raised capital ranging from 2 MSEK to 57 MSEK

49 52 57 27 31 25 24 MONOCL STRATEGY SERVICES

28.7%

25.6%

5 issues

29.2%

22.9%

3.9-11.7%

1.3-9.2%

5.6-11%

N/A - 7.3%

8.4%capital: Raised

5.5% 2-10 MSEK 7.3 MSEK

7.3%MSEK 11-20 14.9 MSEK

7.3%MSEK 21-30 23.4 MSEK

31-57 MSE 47.4 MSE

28.7%

25.6%

29.2%

22.9%

3.9-11.7%

1.3-9.2%

5.6-11%

N/A - 7.3%

8.4%

5.5%

7.3%

Average dilution: Cost range: Average cost:

Average issue: Average dilution: Cost range:

49 52 57 27 31 25 24

Average cost:

4 issues

MONOCL STRATEGY SERVICES

5 issues 4 issues

MSEK raise d

3 issues

2 issues

5 issues 4 issues

20 21

16 IPOs performed between 2015-2016:Q1, 7 8 9 MSEK raise d with raised capital ranging 1 from 7 MSEK to 250 MSEK

2-10 MSEK

11-20 MSEK

21-30 MSEK

31-60 MSEK

100+ MSEK

Average issue: Average dilution:

7.5 MSEK 26.4%

17.1 MSEK 26.7%

23.3 MSEK 36.8%

47.52 issues MSEK 25.4%

180.2 1issues MSEK 42.9%

Cost range:

8.9-24.3%

5.8-15.4%

N/A-6.2%

N/A - 10.0%

1.4 - 7.6%

Raised 15.2%capital:

2-10 MSEK 9.8%

11-20 6.2%MSEK

21-30 MSEK 10.0%

31-60 MSEK 4.5%

100+ MS

Average issue: Average dilution:

7.5 MSEK 26.4%

17.1 MSEK 26.7%

23.3 MSEK 36.8%

47.5 MSEK 25.4%

180.1 MSE 42.9%

Cost range:

8.9-24.3%

5.8-15.4%

N/A-6.2%

N/A - 10.0%

1.4 - 7.6%

15.2%

9.8%

6.2%

10.0%

4.5%

25 3 5

Raised capital:

17 20 21

Average cost:

25 3 5

16 IPOs performed between 2015-2016:Q1, with raised capital ranging from 7 MSEK to 250 MSEK 100

50 190 2 MONOCL STRATEGY SERVICES

AktieTorget - IPOs

Average cost:

100

50 190 2

High amount of over-subscribed IPOs Financial advisor

No. of IPOs

Raised capital

6 Sedermera Fondkommission In similarity to the share issues, in the analyzed period, a high level of investor interest was also seen in IPOs. Corpura 1 MONOCL STRATEGY SERVICES Over- subscription rates were reported in 11 out of the Vellenova 1 AktieTorget - IPOs 16 IPOs in the period. The average subscription rate among these 11 was an impressive 348%. Subscription Not disclosed 1 Financial advisor rates in the pharma/biotech category averaged 351% 9 Sedermera Fondkommission with RhoVac (565%), Toleranzia (520%) and CombiGene (493%) in the lead. In the medical device and diagnostic/ Corpura imaging categories the three leaders - Immunovia, Nasdaq First North, Premier & Nordic - IPOs Vellenova Invent Medic Sweden and Redsense Medical reported subscription rates of 500%, 308% and 210%, Financial advisor Not disclosed No. of IPOs respectively. Västra Hamnen Corp Finance 1

95.2 MSEK 11.0 MSEK 7.0 MSEK 6.5 MSEK No. of IPOs 6119.7 MSEK 1 1 1 capital Raised 9250.0 MSEK

Raised capital

95.2 MSEK 11.0 MSEK 7.0 MSEK 6.5 MSEK 119.7 MSEK

1 190.0 MSEK Several large IPOs were completed in Pareto the Securities Nasdaq First North, Premier & Nordic IPOs analyzed period Vator Securities 2 160.3 MSEK To understand which financial advisors that supported Corpura most of these IPOs, an analysis of press releases was performed. Across the 797 MSEK that was raised in RedEye these 16 IPOs, the largest amounts were raised by Not disclosed the help of Västra Hamnen Corporate Finance (250 MSEK), Pareto Securities (190 MSEK) and Vator Securities (160 MSEK) across 4 IPOs. While the calculated average IPO raised roughly 50 MSEK, the three largest IPOs clearly stood out. Most cash was raised in Nuevolution’s record amount (250 MSEK, Västra Hamnen Corporate Finance and Avanza), followed by SciBase (190 MSEK, Pareto Securities) and Xbrane Biopharma (100 MSEK, Vator Securities). 14

1 Västra Hamnen Corp Finance 1 Pareto Securities 1 Vator Securities 7 Financial advisor

Corpura RedEye Not disclosed

35.0 MSEK No. of IPOs

Raised capital

125.5 MSEK 250.0 MSEK 1 16.7 MSEK 190.0 MSEK 2 MSEK 160.3 MSEK 677.5 1 35.0 MSEK 1 25.5 MSEK 1 16.7 MSEK 7 677.5 MSEK

3 issues

IPO TRENDS | LIFE SCIENCE TRENDS IN SWEDEN

ABOUT THIS REPORT This report was launched in 2016 to highlight recent financing and IPO trends among small public Life Science companies in Sweden. A large study was thus performed by Monocl Strategy Services AB comprising all Life Science companies in the Nordics that were publically traded on AktieTorget or Nasdaq First North and Nasdaq First North Premier between: Jan 1, 2015 to Apr 1, 2016. Extensive analysis was done based on press releases, prospectus documents, share price trends, corporate websites, proprietary databases, client records and much more. BioStock AB acted responsible editor and publishing entity of this report, while Monocl Strategy Services was responsible for the analysis, presented content and design of this report.

KEY REFERENCES

Image source: iStockPhoto

••AktieTorget website. ••Nasdaq website. ••News and press release archives. ••Corporate websites of described companies, products and development candidates. ••Monocl Strategy Services’ internal database over public Life Science companies. 15

IPO TRENDS | LIFE SCIENCE TRENDS IN SWEDEN

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IPO TRENDS | LIFE SCIENCE TRENDS IN SWEDEN

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TOBIAS THORNBLAD CEO & PARTNER MONOCL STRATEGY SERVICES DIRECTOR OF ANALYTICS & PARTNER BIOSTOCK tobias.thornblad@monocl.com

BioStock AB is responsible editor and publishing entity of this report, and Monocl Strategy Services AB was responsible for performing the analysis, writing this report and creating the design.

BioStock is a news and analysis service focused on the Nordic Life Science sector and caters to individuals, organizations and companies. Content published by BioStock may be shared but the source must always be stated. Official information about companies mentioned by BioStock can be found on the respectiv company’s website. BioStock is based in Lund, Sweden.

Monocl Strategy Services is a strategy consulting firm specialized on the Life Science industry. Our core business is to support management and company board decisions by creating tailored solutions to challenging business issues and by crafting strategies to drive business development. Whether it is strategy execution, asset valuation or communication, we partner with small and medium sized biotech companies to provide a competitive edge with a lasting business impact. Monocl Strategy Services is part of the Monocl group, a Life Science strategy consulting and intelligence analytics group improving decisionmaking for executives and professionals.

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Image source: iStockPhoto

Life Science trends in Sweden