Half-yearly Report 2016

The operating subsidiary SynAct Pharma ApS started operations in 2012. SynAct Pharma AB was founded on 12th April 2016. Thus, the group relationship arose 12/04/2016. For this reason, no comparative periods relating to the group and the parent company can be presented. “SynAct Pharma AB” means the parent company SynAct Pharma AB with company registration number 559058-4826. “The Company” or “SynAct” refers to the group, that is, SynAct Pharma AB and its wholly-owned subsidiary SynAct Pharma ApS.

Summary of half-yearly report

12-04-2016 – 30-06-2016

• The group’s net sales amounted to SEK 0 Thousand.
• The group’s profit/loss after financial items was SEK-5 569 thousand.
• The group’s earnings per share amounted to SEK-0.82.
• The equity ratio was 93.5%.

Definitions

Earnings per share: Profit/loss for the period divided by the average number of shares. The average number of shares for the Second Quarter: 6 758 142 shares. The number of shares as per June 30, 2016 amounted to
12 260 021 shares.

Equity ratio: Equity divided by total capital.

Significant events during the Second Quarter 2016

• In May/June 2016 a share issue was carried out, which was subscribed to approximately 203%. The issue raised approximately SEK 32.3 million for the company before issue costs.
• On 30 May 2016 an Extraordinary General Meeting was held at SynAct, at which Lars Adlersson was elected as a board member. Bulletin from the Extraordinary General Meeting is available on the company’s (www.synactpharma.se) and Aktietorget (www.aktietorget.se) and websites respectively.

Significant events since the end of the period

• Trading in SynAct Pharma Ab’s shares and series TO 1 subscription options will commence on July 11, 2016.

CEO Jeppe Øvlesen has the word

Since 2012, SynAct has developed a new class of drug candidates based on a unique platform technology that targets acute deterioration in inflammatory diseases. Our focus is on the development of the candidate drug AP1189, with the aim of showing efficacy in psoriatic arthritis.

Psoriasis is a common skin disease that exists all over the world – about two to three percent of the population in the Western world suffers from the disease. About 30 percent of psoriasis-sufferers [1] develop psoriatic arthritis, a chronic inflammatory joint disease that causes pain, stiffness and, in its most serious form, can be debilitating. Despite significant advances in drug development in recent decades and despite the introduction of new therapies, a large proportion of patients do not respond to current treatments or suffer significant side effects. Synact’s candidate drug AP1189 has a number of unique immunomodulating effects. Unlike today’s anti-inflammatory treatment, AP1189 has been shown in various preclinical disease models to both limit the actual inflammation development and to accelerate healing by strengthening the body’s own cells to fight the flare in Inflammation. AP1189 is intended to be given in tablet form 1-2 times daily. We have already come a good way towards clinical studies in the development process. The preclinical safety studies have been completed and we are now working on compiling the documentation to be able to apply to regulatory authorities to initiate clinical studies before the end of the year. In parallel with this, intensive work is underway to produce AP1189 for the clinical program, as well as the establishment of clinical partners for the actual implementation. If everything goes according to plan, we will be able to report the results of the Phase I study during 2017. The Phase I results will also form the basis for planning and starting a Phase II study in psoriatic patients during the same year. The intention is that, after completion of the Phase II study, scheduled for 2018, we will find a strategic partner that acquires the project for further development and marketing.

During the Second Quarter, a share issue was held that raised approximately SEK 30 million for the company after issue costs. The issue was subscribed for SEK 66 million including subscription commitments, corresponding to a subscription ratio of approximately 203%. The proceeds provide us with the resources to carry out the Phase I study and start preparations for an upcoming Phase II clinical study. The latter is supposed to be financed with the capital that the company can raise through the outstanding series TO1 subscription options, whose subscription period falls in March 2017.

During the period we have complemented our Board of Directors with an additional experienced and competent member, Lars Adlersson. Lars has more than 25 years of experience in the life science industry, including as CEO of GlaxoSmithKline in Sweden and Austria, CEO of Medivir and Senior Analyst Healthcare at Handelsbanken Capital Markets. It feels reassuring to have complemented our already strong board with additional expertise and experience – something that will be important for the company’s continued development.

SynAct Pharma has now been listed for just over a month and a half. Our work is progressing according to plan and we are working towards our goal of both completing the Clinical Phase I study and starting the Phase II clinical trial with AP1189 during 2017.

Jeppe Øvlesen

CEO – SynAct Pharma AB

SynAct Pharma AB

SynAct is a biotechnology company that conducts research and development in inflammatory diseases via the wholly owned Danish subsidiary SynAct Pharma ApS. The company is developing a new class of drug candidates based on a unique platform technology that targets acute deterioration in chronic inflammatory diseases, with the primary purpose of stimulating natural healing mechanisms. SynAct Pharma’s main focus is on the development of the candidate drug AP1189, which strengthens the body’s own cells and fights flares in inflammation by accelerating recovery and thereby reducing the risk of chronic inflammation deterioration.

SynAct has conducted preclinical toxicology and safety pharmacology and is now ready to submit an application to the regulatory authorities to initiate a Phase I clinical study. The Phase I study is scheduled to start in 2016 and the timeframe for implementation is approximately 9 months.

Business model

Synact’s business model is to run projects into clinical development in order to secure proof-of-concept, i,e support for clinical relevance. Based on clinical data produced, the company intends to identify a strategic partner that can acquire the project for further development.

Development plan – objectives and milestones

2016

• Produce medicines for use in the Phase I clinical study.
• Prepare and start clinical Phase I study with AP1189.
• Initiate research regarding other indications for AP1189.

2017

• Summary and final report of the clinical Phase I study with AP1189.
• Prepare and start clinical Phase II study with AP1189 in psoriatic arthritis.
• Initiate pre-clinical study of SynAct’s second indication.
• Extended planning for commercial business with AP1189.

2018

• Summary and final report of clinical Phase II study with AP1189.
• Conduct commercial business with AP1189.
• Potentially initiate clinical study of AP1189 in other indication(s).

Group relationship and shareholding

SynAct Pharma AB is the parent company of a group that includes the wholly owned subsidiary SynAct Pharma ApS. All operations are carried out by the subsidiary, thus SynAct Pharma AB’s only operational business is owning the subsidiary SynAct Pharma ApS. In addition to the above, SynAct has no further shareholdings in other companies.

Operational risks and uncertainty factors

In summary, the risks and uncertainties to which Synact’s activities are exposed are related to, drug development, competition, technology development, patents, government requirements, capital requirements, currencies and interest rates, among other things. No significant changes in the risk or uncertainty factors have occurred during the current period. For more detailed reporting of the risk and uncertainty factors, please refer to the previously published prospectus, published in May 2016.

Shares

Shares in SynAct were listed on Aktietorget on 11 July 2016. Aktietorget is a trading name for ATS Finans AB, which is a securities company supervised by Finansinspektionen (Swedish Financial Supervisory Authority). AktieTorget operates a Multilateral trading facility (MTF). As per 30 June 2016, the number of shares in SynAct was 12 260 021.

Subscription options

In connection with the company’s issue prior to listing on Aktietorget during 2016, there was a new issue (in addition to 5 050 000 shares) of 2 020 000 series TO 1 subscription options. The first trading day for the subscription options on Aktietorget was 11 July 2016. Possession of one (1) Series TO 1 subscription option warrant entitles the holder to subscribe to one (1) newly issued share at a rate of SEK 6.40. Subscription to shares with the support of series TO 1 subscription options may take place from 9 March 2017 until 23 March 2017. The subscription option’s ISIN code is SE0008320972. In the event that all series TO 1 subscription options are utilized, SynAct will raise approximately SEK 12.4 Million after the issue costs of approximately SEK 0.5 Million have been deducted.

List of owners

Below is a list of shareholders with an ownership interest in SynAct Pharma AB greater than five per cent, as of June 30, 2016.

Principles for the preparation of the half-year report

This half-yearly report has been prepared in accordance with the Swedish Annual Accounts Act and the General Council of Accounting Law BFNAR 2012:1 “K3”. For further information see the Company prospectus published in July 2016.

Review by the Company’s auditor

The Half-yearly report has not been subject to review by the company’s auditor.

Forthcoming financial statements

SynAct establishes and publishes a financial report at each Quarter-end. The following upcoming reports are planned :

• Interim report 3, 4 November 2016
• Year-end report for 2016, 9 February 2017

Submission of Half-yearly report

Lund, 31 August 2016

SynAct Pharma AB

Board

For further information

Jeppe Øvlesen

CEO, SynAct Pharma AB

Telephone: +45 28 44 75 67

E-mail: [email protected]

This is information that SynAct Pharma AB is obliged to make public pursuant to the EU market abuse regulation and the Securities Markets Act. The information was submitted by the above contact person for publication on 31 August 2016 at 12.00pm CET.

[1] Cowen Therapeutic Categories Outlook March 2016 and Novartis