Flerie AB (publ)

Welcome to the Q2 report from FLIRI. I welcome you from all your different locations around the world and Sweden from your holiday locations. Thank you for joining. And for those of you who are Swedish speakers, perhaps you have the chance to see the interview with Dagens Industri Television this morning as well. So let us get right into it. We of course have the usual disclaimer that I hope you will all follow. And today we're talking about not only the Q2 report, but the fact that it is in fact an anniversary of our IPO. We have done a lot. We have much to show. It is the 27th of June was our one year anniversary exactly going on to the main market after the reverse merger that we did on earlier that month in June 2024 and there has been a lot of portfolio progress and also some financial innovation I think that we would like to share with you something quite unique that some of you have asked us about and we're happy to answer questions on any details you are curious about. let's go straight into the current net asset value and firepower i think we have not only held but actually strengthened our position as a top tier european investment company with very significant assets totaling 4.1 billion crowns that's a 52.78 sec per share net asset value per share We have 737 million SEC in cash and cash equivalents. I think we have managed to cash very, very well since our IPO a year ago. We still have 9.44 SEC per share out of the 52.78, which is cash. So we will invest that and continue to invest that in our exciting portfolio. And over time, as you will see on the following slides, to keep that diverse portfolio, we will also make new investments. This is our portfolio at the moment. There's been significant progress in the portfolio. And as you can see, actually 93%, if you look at the lowest row there, 93% of our fair value lies in the clinical and commercial stages. So again, I want to highlight that we are a mature investor with a mature portfolio when it comes to venture and early commercial growth investments. But before I go into some of the clinical stage and commercial, I want to point out Strike Pharma on the left, which is a preclinical company, because recently there have been big M&A's announced, AstraZeneca and AbbVie. They bought Ezo Biotech and Capstan for two and one billion US dollars in an area that actually Strike Pharma is active in. So even though we pride ourselves in having a mature portfolio, it is important to start early with companies like Strike Pharma to identify the correct areas where there is interest from global pharma, and to develop those companies over time. That is how you get the best return of investment in our view. Let's go over into the clinical stage, phase one. I'd like to highlight microbiotic and procarium. These are actually our two UK investments. They both happen to be microbial therapies, and they're actually the only two true microbial therapies in the portfolio, an area that was actually hyped a long time ago, especially microbiome. We never followed that hype in the sense that we exploited or went in during the hype of, for example, the microbiome investments. We actually focus on those companies that have very, very good science, have done things systematically, and microbiotic and prokaryotes are certainly two cases of that. Microbiotica was originally spun out of the Wellcome Sanger Institute in the UK. That's a very reputable institute where they did a very systematic approach to looking at how microbes and microbial therapy can influence oncology, but also ulcerative colitis. So we continue to trend of working on ulcerative colitis for those of you who have invested in that space before. And Procarium has also progressed and now dosed four cohorts in their bladder cancer study. So both companies in the oncology space and microbiology are also in the ulcerative colitis space, two hot areas where there's a lot of global pharma interest. And we continue to work with them and all of our other portfolio companies to have interactions with pharma. Let's also move over into phase two, and I want to highlight Epiendo, that actually is an Icelandic company with some team members in the UK as well. They have managed very well with their cash to actually do a phase two study without needing to raise further funding. Very proud of all of our companies in that regard, having actually done a lot with very little, and I think that's one of our strengths as a European entity, and many of our companies are European, all but three actually. And I also want to highlight Empros Pharma. That's our Swedish metabolics company, one of two Swedish metabolic companies that we have. And Empros has started their phase three preparatory study and done something quite unique. They have been very tough in their sort of clinical development, meaning they have set themselves high bars to reach compared to some of their competitors. And I think that's important in a small company because you want to get to a clear answer quickly. And what EMPROS is now doing is they're actually taking back some of the patients from the previous study that had side effects. And I want to remind everyone that the great majority of patients did not see these side effects, but EMPROS again is doing a tough thing. They're actually bringing back those patients that had side effects, meaning the patients that had the worst time on the previous clinical trial. And that's a feat in itself to attract those, to convince those patients, please come back, do the same thing again. This time we're going to remove your side effects. And that is the data that we hope to get later in the autumn. So EMPROS is also in an exciting phase. We will talk a little about Expray later. We'll also talk about some of the other companies in the following slides. But the commercial growth, I want to point out that Nanologica has had several orders, mostly from Asian customers, but also customers from other areas. We'll talk a little bit about SimCell. in the slides to come. And last but not least, Frontier. That's our collaboration with KKR. I'm sure many of you have heard of KKR. That's one of the biggest private equity houses in the world. And we're looking at several interesting opportunities where our partner, Mark Quick, and our chairman, Thomas Eldred, are involved in looking at interesting opportunities to invest. But let's first talk about Tolerantia. That's actually a financial innovation that I'm very proud of. The team has done a good job doing this in a very methodical way, but also a very innovative way. In May, Fleury and Tolerantia shareholders approved a merger plan between the two companies. and innovation in itself so if you look at the right hand side this is a share for share merger tolerancia shareholders receive one newly issued share for every 88 tolerancia shares and there are zero transaction fees here normally when you do an m a you will have to pay some cash you will have to pay banks and so on we've actually been able to do an innovative very effective way of taking tolerancia from the public market, so delisting Tolerancia in what I call a take private maneuver. And that take private maneuver is something that many people speak about, but few people actually do, because there are companies that really shouldn't be on the public markets because they're too small. They don't get onto the radar of the big public market investors. And that was the issue with Tolerancia. to be able to raise funding for their clinical trial. That's what they now will hopefully be able to do. We think they have a much better chance of doing so. So again, to the left-hand side, we value the company at 136 million. That was 50 cent premium on the pre-announcement trading price. We will have it all done by the 19th of august so that's when the shareholders of tolerancia will become fleary shareholders and then tolerancia will be a wholly owned fleary subsidiary and be able to raise money in a private manner and we know that there are investors who are interested in tolerancia but who did not were not able to invest in tolerancia as a public or uh yeah public entity it's very exciting also to announce and this is written in our quarterly report released this morning, of course, is that current and new investors were able to essentially invest in Fleary and will become Fleary investors on the 19th of August. And we were able to sell both during the quarter and shortly after the quarter, a total of over 65 million Swedish crowns of our holdings in Tolerancia. So this has been a very effective, cost-effective way of raising money And we actually raised 65 million when our deployment into the portfolio was 58, or our deployment in total during the quarter was around 65. So overall, a neutral cash position for the quarter. Again, a testament to our ability to manage our cash in an innovative way. So let's look at the core of what we do. The significant R&D events during the quarter were Atrogi, Carr and Liepen, but there are many more. So just choosing three here to highlight. Atrogi's research was published in Cell. Cell and Nature are basically the two top ranking scientific journals in the world. Usually these are reserved and well, not reserved, but usually it's the top tier academics that that are able to publish in those journals. And here you have a company, a relatively small company in Sweden, that has something so innovative that they were able to publish in that journal. And that is, of course, their muscle targeted therapy platform for treating metabolic diseases. So it's an exciting time for Atrogi. It's a new mechanism of action, and that's why it's gaining so much attention. So keep your eyes peeled for Atrogi. CAR is our company in the Middle East and in Israel to be particular. And they have announced positive phase two results for DSP107. That's the name for their colorectal cancer therapy. And they presented at the prestigious ASCO conference. Again, a conference where you rarely get presentation abilities unless you are really cutting edge. And last but not least on the slide, Lepum completed a phase one trial. This is a Swedish company, a listed Swedish company in rheumatoid arthritis. They're actually also continuing their mechanism action studies with the Karolinska Institute. For those of you who are dialing in internationally, I'm sure you've heard of the Karolinska Institute. So, Lipum is a not so well-known publicly listed company in Sweden doing very exciting research and now standing in front of basically a phase two development program.

Now let's go into financing events, two that I want to highlight.

SimCell raised 80 million crowns. We invested 18 out of those 80. This is an example of how our syndication, our networking abilities actually really pay off. So I remind everyone that we have managed well to support our companies, not only with our own cash, but also by us working within our network to attract both money from internals in the case of SimCell, but also in many companies, we have attracted new investors. And that was the case with Northix Biologics. In fact, there we attracted the New York-based Signet Healthcare Partners. They're active within Pharma Services. And not only did we not invest more cash or new cash ourselves, but actually this was an up round in a very tough fundraising climate, as you know. So a testament to the team at NorthX Biologics and to the board members who are working from Fleury's side on NorthX. So staying with NorthX, it's one of the three that has had the most change in value. So NorthX in an ascending order here, 13 million, mendes 19 million and x-pray a whopping 134 million up during the quarter uh back to north x this is now a fair value of 202 million that's 6.5 percent of our fair value or portfolio value and mendes is 92 million fair value three percent of our of our fair value in total and x-pray is now one of us it's actually the second largest company in our portfolio now with 326 and a share of fair value of 10.5 percent so now i'll leave it to cecilia to go into some more details on the numbers please cecilia yes thank you ted

So I will take you through the financial development in the quarter. And those of you who already read the report, you know that the quarter is characterized by positive share price development for almost all our listed companies. And also, as Ted just mentioned, an increased valuation for a private portfolio company. But let's look at the numbers. Thank you. So our net asset value was 4.121 billion at the end of Q2 and 3.947 billion end of Q1. That's an increase by 174 million in the quarter. And again, mainly a result of the share price development for the listed portfolio companies. NAV per share was 52.78 sec as compared to 50.56 end of the last quarter. So that's an increase by 2.22 sec per share. And as you can see in the chart to the far right, the portfolio value going from 2.9 billion in Q1 to 3.1 end of Q2 almost, an increase by 220 million. And the increase is explained by firstly a positive change in fair value of 175 million. That of course increases the portfolio value. We also had divestments that Ted mentioned that decreases the portfolio value by 20 million in the quarter. And we've also made investments in the portfolio of a total of 65 million into the three segments. So with that, let's look at the segments more in detail. So in the boxes, we highlight the key numbers for the three segments, product development, commercial growth and limited partnerships. The total fair value of the product development or PD segment at the end of the quarter was 2.453 billion as compared to 2.270 at the beginning. That's an increase of 182 million. The change in fair value in the segment was positive, 163 million. The changes come from our listed companies, where we could see positive development for all six listed companies in the segment, with the largest increase, as we already saw, from Exprey and Mendes, for which the value increased by 134 and 19 million, respectively. We've also made investments into the segment in the quarter. The most significant ones were in Etrogi, 21 million, and 10 million in Anacardio. And then we've had divestments of Tolerancia shares that decreased the portfolio value of 20 million. Continuing into the commercial growth or CG segment, we see a total fair value at the end of Q2 of 545 million as compared to 518 at the beginning of the quarter. an increase of 27 million. So we saw positive value changes in the quarter, 8 million in total for the segment. And this was primarily related to, as we heard, the higher valuation for the private company, Northex Biologics, following their share issue in May, which was an up round. And that increased our fair value of the company by 13 million. Meanwhile, the share price development for NanoLogica listed company was slightly negative, decreasing the segment fair value by 5 million. We also made investment into this segment in the quarter, mainly in SimCell by 19 million. Then finally, we have the limited partnership segment, the smallest one, 3% in terms of fair value. So end of the quarter, the fair value was 96 million. made investments into our funds by 7 million in the quarter, and the fair value increase was 4 million. So that rounds up the financial performance in the quarter, so we can continue with a few words on our redemption programme, for which we've now had the first conversion period. So as you most probably know, since last year, we provide a share redemption scheme where up to 5% of all the shares can be redeemed annually at the value of the latest NAV per share. So at the end of June, we had the first conversion period and the outcome showed a participation rate of 4.73%. So below the maximum, but showing a strong interest from shareholders. So with the participation rate of more than 5%, we would have had to reduce the number of shares to be redeemed, therefore not allowing the shareholders to redeem all their submitted shares. And we are glad that that was not the case. We can see and saw the outcome that many smaller shareholders participated in the redemption. We know that we inherited many smaller shareholders from the reverse merger with index. So on the process, in the beginning of July, the board of Fleury resolved to convert all the submitted shares to C-shares. And earlier today, the Fleury board also resolved to redeem all C-shares. So therefore, all C-share holders will now receive a payment equivalent to the reported NAV per share at Q2. That is 52.78 SEK per share. And as you can see, that was 16% above the share price at the same date. And with that, the process is therefore almost completed. The record date for the redemption has been set to 13th of August, and the redemption proceeds will be started to be paid out on the 18th of August from that date. Thank you. So basically, this redemption scheme was created to provide for our shareholders the annual opportunity for liquidity. And this is the first time we implemented the program, and the high participation shows that the opportunity was really well received. So that wraps up the financial section, and I hand over back to you, Ted.

Thank you, Cecilia. I'm sorry I moved that slide a little too early on you. Thank you for the walkthrough of the redemption scheme. We will soon get to the Q&A that will be led by our investment manager, Carl Elmquist. But let me just finish on this slide and tell you about our share price development compared to two indices. So here on the slide, you can see in blue, the Fleary line, in dark orange, the NASDAQ biotechnology index, and then in the more sort of a lighter brown, sandy colored, the Swedish Investment Company Index called IB Index. And just to explain a little bit, obviously you can see here that we have outperformed both of these indices. The NBI actually includes biotech and pharma companies engaged in R&D as well as commercialization and is often used by investors around the globe to track the overall biotech sector performance based on US NASDAQ listed companies. So I'm very happy to say that from the 27th of June when we start this this comparison to the end of June of this year. So 27th of June 2024 to 30th of June 2025, we have outperformed the National Biotech Index. in the US. We have also outperformed the Swedish Investment Company Index, EB Index. Now that is a different comparison because this compares investment companies across very different fields. So these are not only life science investment companies, and actually they are larger, slightly larger than us, certainly on average, but also the minimum amount to be able to be included in the index itself is 5.5 billion net asset value. Some investment companies there are actually smaller than 5.5, but they're included in the index because they were above 5.5 in a previous time when they were included in the index. But overall, I could say that I'm very proud of this. I think it's been a difficult year for very many, especially in this time where in this macroeconomic time when the interest rates are high, that usually impacts biotechnology negatively because investors tend to shy away from more risky assets during high interest times. But I'm again proud to say that we've actually outperformed both of these indices over the year and This really completes our coming out of the cradle, having been a listed company for one year. I think we are now very happy in everything we do as a listed company. Let's go over to Q&A, and we will let Carl explain how you can get the microphone switched on.

Thank you, Ted, and welcome to today's Q&A session. If you have a question, then please click on the raise your hand icon in the toolbar, and I will then activate your microphone so that you can ask your question.

So we'll start off with a question from Linus Sigurdsson. Let me just activate your microphone.

Yes, thank you. I hope you can hear me all right. I just wanted to ask firstly on the second half of the year and sort of you could talk about the visibility that you have on your own investments, but also investments from your co-investors. And if you sort of see it as a higher or maybe lower rate of investments as compared to the first half of the year. Thank you.

OK, Cecilia, do you want to just comment on our investment rate and then and then I'll fill in on the sort of overall outlook?

And certainly. We said many times, or at least through the year historically, that we aim to deploy around 10% of NAV. That's what we have been doing. This is over time. We can see now for the last 12 months that we have a deployment rate of around 8% of NAV. And this is something that we are managing and looking at all the time, but currently it's a bit lower.

And as you could see in the last quarter, we invested 65 million, or particularly 58 million, into the portfolio other than the LP segment. And we, during the quarter and shortly after the quarter, sold Tolerancia shares worth 65 million. So when it comes to the actual quarter, this is kind of our, in the sense of deployment, it's our most neutral quarter ever. uh we certainly have that within our toolbox uh leaners to to manage our cash in that way uh we do see that there are good opportunities to invest in our companies uh in in general what we do is we invest um our pro rata and then when when it is a down round and we generally invest less than our pro rata if it is an up round That's a simple mechanics of how we want to function. We invest early in companies. We stay with the companies as long as we provide value in terms of our board engagement and helping the companies to have conversations with global pharma and so on. so and then we get out of the company when they're you know we've done our job uh they've reached a major inflection point so i think key new deployments into a lot of new companies uh will happen when we have uh an exit out of our companies but having said that right at the beginning of our um show slideshow today i mentioned that we have this collaboration with kkr we are actively looking at opportunities to invest with kkr into more of the sort of private equity, pharma services type of investments. So yes, we do continue to make new investments as well. Does that answer your question?

Yes, I appreciate those comments. And then my second question was, I thought it was interesting, what you said in the report around Strike Pharma, the acquisitions that you highlight in the market. Could you just expand a bit on sort of how similar or dissimilar the potential is there to those acquisitions that you mentioned? Thank you.

Yeah, sure. With pleasure. So they're both in the sort of cell biology, cell therapy and biologics space. And Strike Pharma is an Uppsala-based company that's also changed their labs to to the south of Sweden, they're doing a lot of work in the space of, and they have a new platform, you could say that's similar to an antibody platform, but actually an improved, what's called an ADAC platform. And what they're able to do is actually to deliver various things. For example, they could deliver nanoparticles, uh for rna delivery they can deliver peptides they have actually a platform ability to deliver things which is not that different from this kind of uh silencing irna si rna that's being delivered uh by uh capstan and and iso biotech is also in a similar space so it is I would say like this, I think antibodies have obviously come into a mature field. Antibody investments are now sort of a run-of-the-mill investment. There are a lot of people who will just invent another antibody for a similar target, and there might be actually a space for that in the new in a new therapy area. But what is really, really exciting is the delivery ability of things that are otherwise not easy to be delivered. So in the case of Capstan, they fetched such a big price because they were able to do intracellular delivery. So for those of you who are not biologists in the audience, You know, you can deliver drugs into the body and it circulates, but actually delivering a drug that enters into an individual cell is quite a hot area at the moment. And actually being able to even change then the cells that you go into. So you're essentially modifying the very cells. So you're getting a cell therapy, but without having to you know, take the cells out of the human body and then put them back in, which is very expensive and very cumbersome. So that's a very hot area, and Strike Pharma is able to act within that area. And that's why we think it's just a case in point that we're investing in the future areas that are of interest to global pharma.

Okay, thank you very much. Those were all my questions. Thank you, Dennis. Do we have any other questions?

while we while we wait um on on the other questions i think we could uh cecilia we could maybe say something about uh nanologica it's something we haven't commented that much on but there has been there have been some questions about uh the the bid that we've made on analogica do you want to explain to the audience while they're waiting absolutely yeah sure so in april um

We bought a few extra shares in Nonologica, and thereby we triggered a mandatory bid. Fleury previously had an exemption from the mandatory bid. That could arise from participation in a rights issue of Unis that Nonologica carried out back in 2024. Just by buying these extra shares, this exemption lapsed, and we had to submit a mandatory bid, which we did in May. of one SEC per share. And the offer period, it ended after the quarter ends. It ended in mid-July and it resulted in less than 300,000 shares being submitted for purchase. So in July, we have paid 300,000 for those extra shares and we are very pleased with the outcome. So the move of buying shares and triggering this mandatory bid was entirely made for us to obtain more flexibility. So we did not intend to increase our share, our holdings in Analogica, but we wanted to be more flexible as a shareholder going forward. So we'll still remain positive about the company and look forward to following them on the journey to the growth and profitability.

And that's precisely it. We think that Nanologica has a bright future and sometimes we are prevented, if we are large shareholders in a company, to act in any way possible to join a future round and so on. And I think we've done this before. I know we've done this before, so I just want to mention we've done it in Litbum, we've done it in Scintilla, we've done it in Tolerancia even. This is actually a mechanistic way of, of course, following the rules, but essentially trying to correct what we think makes a large and active shareholder like us unable to act in the best interest of the company because of the rules preventing us from having to do a mandatory bid. So if this happens again, I think you will see that we are acting in the best interest of the company when we do this kind of thing. And we're very happy, as Cecilia said, that it worked out the way it did for Nanologica and for FLIRI.

Any other questions in the audience?

Otherwise, I think that we're actually at the end of the time. I thank you very much for your questions and wish you continued pleasant summer. Thank you.