PCI Biotech Holding ASA

Good morning, and welcome to PCI Biotech's second half-year 2024 presentation, which also includes preliminary numbers for the entire year. My name is Ronny Skugedal, and I am the CEO and CFO of the company. With me today is Morten Lur, our newly established CSO. Please take our important notice and disclaimer. The agenda for today is the operational review that Morten will take us through regarding the bioprocess, a little about finance and outlook, and finally a question and answer round, where it will be possible to send in questions via the webcast console. Let's start early and on the way, so that we have the questions in hand when we get that far. Then I hand over the floor to Morten.

Good morning. PCI Biotech develops new technology with the aim of increasing productivity in the production of AAV gene therapy to make these treatments more accessible.

Good morning, and welcome to PCI Biotech's second half-year 2024 presentation, which also includes preliminary numbers for the entire year. My name is Ronny Skuggerdal, and I am the CEO and CFO of the company. With me today is Morten Lur, our newly established CSO. Please take our important notice and disclaimer. The agenda for today is the operational review that Morten will take us through regarding the bioprocess, a little about finance and outlook, and finally a question and answer round, where it will be possible to send in questions via the webcast console. Please start early and on the way, so that we have the questions in hand when we get that far. Then I give the floor to Morten.

Good morning. PCI Biotech develops new technology with the aim of increasing productivity in the production of AAV gene therapy to make these treatments more accessible. AAV gene therapy is based on an adeno-associated virus, shown in this picture, which has been modified to deliver genetic medicine to patients. In this context, the virus is called a viral vector. One example of such a treatment is Lyksturna. Duxturne brukes til å behandla en arvelig øyesykdom som gjør de fleste blinde innen 20 års alder. The disease is caused by a mutation in the RPE65 gene. Luxturna repairs this mutation by delivering a fresh RPE65 gene in the eye of these patients, which is packed into AAV. Patients who have received this treatment have shown significant improvements in sight. It is therefore talking about life-changing treatments. It is important to point out that the follow-up of these patients is still ongoing, and that we do not know the long-term effects. What is common for AAV gene therapy is that these medicines are only used in small patient groups. Bigger patient groups can benefit from AAV gene therapy, but it is not possible to provide large groups with such treatment due to ineffective production. Here you can see the process for the production of AAV gene therapy, where viral vectors are produced by living cells in bio-reactors. The production is divided into an upstream and a downstream process. In the upstream process, the viral vectors are produced and they are pumped up into the cells. In order to be able to separate the virus vectors from the production cells, the cells must be opened using a process called cellolysis. This opens the cells so that the virus vectors are released. Then follow the cleansing of the virus vectors, where 70% of the virus vectors are normal. Irradiation from the production cells is an important reason for this to happen. The industry standard cellulose is unselective and frees a lot of impurities from the production cells, as shown in the figure to the right. This creates problems in downstream cleaning, requires the use of expensive enzymes to remove impurities and the loss of sustainable virus vectors. We have developed a new lysis technology, photochemical lysis, short for PCL, which is selective and allows the release of virus vectors with fewer irregularities. This will contribute to a more efficient downstream cleaning process and increase the number of patient doses per batch. In addition, we have recently seen that under certain conditions, PCL can release more virus vectors than industry standards initially indicated. This increases the likelihood of increasing net emissions from production after cleaning. This can have a high value that we come back to. The goal is for PCL to be a broad, usable light technology that increases the output in the production of AAV. We have therefore worked with several serotypes of AAV, namely AAV 2, 5, 8 and 9, which are all clinically relevant. We have also made a large effort to show that PCL can be used with both adherent cells in small volumes and suspension cells in various larger volumes. Through file testing and the use of a CDMO, we have scaled from plates to 250 milliliters in small bioactors. These are representative of much larger bioactors used in commercial production. We are now starting to establish our own shake bottle suspension lab for the production of AAV. This makes us equipped to make internal development on a larger scale than before and to work with suspension cells hands-on. In addition, it would be an important contribution to support the escalation work that is done in BioAktor externally. In 2024, we made progress in the escalation of PCL to a small bioreactor, with preliminary results that indicated that our photosensitizer molecule can be removed in a standard downstream cleaning. The photosensitizer preserves the functionality of AAV gene therapy. and that PCL can match or increase the exchange rate of AAV in the upstream process with less irregularities. Let's take a closer look at the last point, which describes new data. In the column to the left, you see an increase in AAV yield in upstream production as a result of cellulosis with industry standard in black and PCL in pink. The increase in yield is significantly higher with PCL than industry standard cellulosis. In the column to the right, you see irregularities from the same tests. The units are higher with industry-standard lyses than with PCL. PCL obtained more AAV with less units than industry-standard lyses in the upstream process, with the best PCL condition that was tested. We therefore consider PCL to be scalable also for small bioreactors. When it comes to net increase in yield after downstream cleaning, these results were inconclusive due to high variability in recovery and technical problems experienced in the downstream process. We therefore plan new runs in small bioreactors with a view to reproduce the positive upstream results shown here, and then do downstream cleaning with a process with lower variability. We expect this to result in higher net exports of AAV in comparison with industry standard celluloses, and will mean that PCL will be ready for the research market. Let's take a step back and see where we are. We started the development of PCL with cells that grow in one single layer in small volumes in plates. Together with a partner, we scaled PCL to cells that grow in suspension, i.e. three-dimensionally, in shake bottles. Previous results show that PCL is compatible with a standard low-flow process. is scalable in the power supply process in small bioactors, it shows increased net output after cleaning. Scaling from plate to small bioactor means an increase in volume by 500 times. Liten BioAktor is developed to be representative of BioAktor, which is much larger and is used in large-scale production. The main challenge for further escalation is to achieve sufficient lighting in Stor BioAktor, which is also intended for the production of AAV gene therapy. We have identified a 50 liter BioAktor with built-in LED light, which is intended for this. The minimum volume of a bioreactor like this is 12.5 liters, and the upscaling from where we are today is an increase of 50 times. Since we have already scaled up 500 times, this is predominantly manageable and something that can be done within two years. 50 liter bioactor is highly relevant for clinical development. So if we succeed in scaling this bioactor, then PCL is suitable for commercial production. Thank you. You are welcome. Back to Ronny.

Thank you, Morten. Let's take a look at the production market. In the first half of 2024, we carried out a market survey of the production market for AAV through an external actor. The outcome of this survey can be seen on the left of the slide, with the estimated total market for the production of AAV. This market is dependent on the development and success of the clinical development of AAV therapies. You can see the estimates here. This is of course in different phases. As a new technology, PCL applicable for all phases of development. But as a new technology, we foresee that we will get into the early phase projects, since the projects that come further out in clinical development will probably have a more fixed production process. How can we draw the potential value of PCL from this market? The purpose of PCL is to increase the exchange rate in production, i.e. more patient doses per production batch. This alone has great value. Furthermore, one might think that in some cases, this increased output will also mean that there will be reduced need for batches. Such increased production capacity is very much in demand by the industry, and of course has great value. An increased production capacity will also make it possible for gene therapies based on AAV to be administered to larger patient populations. The bottom figure illustrates the potential value of PCL in 2028, with an increase of up to 50% in the exchange rate using PCL. The early phase data we have today indicate that up to 50% increased exchange rate is possible with PCL. So who are the customers for us in the future? Some big pharma companies have in-house production and want to be a potential customer. But most big pharma and biotech companies rely on CDMOA, Commercial Development and Manufacturing Organizations, as their production partner. These CDMOs are a production hub for this market. They will be an important target for us. These CDMOs are interested in having the most relevant and updated technology available to their customers, so that they can provide the most effective production. Universities also have some early phase development, and they can be important for us in an early phase with regard to interaction with key opinion leaders. We are actively partnering and recruiting testers for PCL technology. We will have three conferences in May and June, all in the USA. The feedback so far from potential customers is that the smaller actors are willing to discuss and potentially test the technology based on the data we have today, while the larger actors are very concerned about a successful demonstration of PCL in small bioreactors, so that's why mini-BIMSTOP bioreactors have a high focus with us. Let's talk about the figures. We have had a stable cost base for the last two years. With 27 million in the bank by the end of the year, this gives us an estimated running track into Q4 2025. This gives us an opportunity to demonstrate Nedstrøm's advantage with PSL in small bioreactors. From the numbers, we can mention that we have an increased level of public grants in 2024 compared to last year. Through the file testing we did, we got a grant from Innovation Norway of up to 3.5 million for 2024. We will of course now work focused on expanding our running track beyond Q4 2025. And of course we do that through partnering activities, seeking public support and looking at other financing options. So, a little further on. We have completed the early phase testing that Morten presented earlier. We have presented data today that we have demonstrated the technology in a commercial representative model, Upstreams, and we are now working further with Nedstrøm's demonstration of the corresponding benefits. To translate the promised data from Upstreams to Nedstrøm's Net Yield. We will soon make an investor presentation and a one-pager available on our website. There will be no new sensitive information in these documents, but we encourage you to make yourself known with the material. That was what we were going to say, so now we will open up for questions and answers. Give me half a minute and I will get my PC to look at the questions. So we have a few questions here. And they go directly to the results and things like that. So I think I'll leave them to you, Morten, so you can just read the questions. Yes.

Hello again. Okay, so if we start at the top, there is a question about... I think I'll just read the question right away. can you say something about how many fold increase upstream yield increases, and how the irregularities decrease in relation to standard analysis? And if we look at the best results, we have seen up to a three-fold increase in upstream yield. When it comes to irregularities in the best conditions, it is a bit complicated to explain. There are two ways to create value. One is to increase upstream yield. The other is to match upstream yield with fewer irregularities. It depends on what results you look at, but potentially three times the yield in relation to Standard Lysis and a 50% reduction in urine. I must also point out that this varies a lot from batch to batch variation, so you should rather see this over time before you make a percentage improvement. Next question. We have previously shown an escalation figure where we have an intermediate step from a small bioactor to a large bioactor. The step goes through a 10 liter bioactor. Why have we removed this and only have a 50 to 200 liter bioactor instead? This is precisely due to the fact that the 50 liters bioactor that we mentioned earlier in the presentation makes it possible to start at 12.5 liters, so it is not much higher than the 10 liters bioactor that we mentioned earlier. We have up to now scaled up 500 times, and further upscaling to 12.5 liters volume is 50 times upscaling. So we think it should be possible, given the experience we have. So we look forward to jumping over the between-upscaling stream at 1 to 10 liters bioreactor. Next question. How sensitive is it to have the right light dose and photosensitizer dose? In other words, is it easy to use these bioreactors? First of all, the bioactor itself is of very high quality. It is made to be used for the production of both gene therapy, but also for other things such as algae production, which is the reason why this light has come into these products. It is not straightforward to do PCL in this scale. You have to do some pre-work, and we have a plan for that. So what you have to get control of is how the light behaves in these larger volumes. Based on the data they have in small bioactors, we have seen that now we can free up virus vectors in this volume, so we just have to find out what settings this corresponds to in this larger volume. So it's not straight forward, but we think it should be possible. And then a last question about results. When do we expect to have the new downstream results ready? And that is the next report. And then there is one last question that goes more on the commercial, which I wonder if you will take, Ronny. It's a more strategic priority than a technical one. Yes.

The question is, are you ready for the research market in the second half of 2025? Does this mean that you can start selling this solution to the preclinical market at the end of 2025? In principle, yes. We'll see if we succeed with that. The condition is that we have succeeded with a downstream demonstration of the benefits of PSL, as we have mentioned earlier today. And then we are basically ready for this smaller research market, as we mentioned earlier, for these earlier phase projects. We thank you for many detailed questions. Have a good day.