EQL Pharma : Nterim report April-September 2021

Interim Report

April - December 2021

(SEK million)	Oct - Dec 2021	Oct - Dec 2020	April - Dec 2021	April - Dec 2020	April-March 2021
Net sales	117,61	29,61	206,73	153,34	179,14
Sales growth %	297	41	35	188	149
Gross margin %	28	35	31	28	28
EBIT	18,00	2,38	26,97	17,39	11,52
Profit for the period	17,20	2,17	25,04	16,61	10,37

A historically strong quarter driven by sales of home tests

	October - December		April - December
	• Consolidated sales during the third quarter, October to		• Consolidated sales during the period April-December
	December amounted to SEK 117.6 (29.6) million. Adjusted for		amounted to SEK 209.7 (153.3) million. Adjusted for non-
	non-recurring sales the revenue amounted to 33.1 (23.4)		recurring sales the revenue amounted to 99.2 (70.0) MSEK, an
	MSEK, an increase of 41.4%.		increase of 41.7%.
	• Gross profit amounted to SEK 32.5 (10.5) million for the		• Gross profit for the same period amounted to SEK 64.2 (43.3)
	quarter, an increase of 209.2%.		million, an increase of 48.2%.
	• EBIT for the quarter was SEK 18.0 (2.4) million.		• EBIT for April-December amounted to SEK 27.0 (17.4) million.
	• Earnings per share were SEK 0:59 (0:07) for the quarter.		• Earnings per share were SEK 0:86 (0:57) for the period.
	• Cash flow from operating activities amounted to SEK 12.4		• Cash flow from operating activities amounted to SEK -6.1
	(-5.7) million for the quarter.		(3.7) million during April-September.
	• Cash and cash equivalents were SEK 20.5 (14.0) million at the		• Cash and cash equivalents were SEK 20.5 (14.0) million at the
	end of the quarter.		end of December.

CEO's comments

Third quarter in summary

The third quarter of 2021/22 was a historically strong quarter driven by the company's home tests for Covid-19. During the last two weeks of December, home tests were sold for close to SEK 40 million, and when the work of closing the quarter began in the second week of January, it was clear that sales had become very high. As a result, after the seventh business day of the new year, the company issued a reverse profit warning. Sales landed at SEK

117.6 (29.6) million and profit to SEK 18.0

(2.4) million. Sales, adjusted for non- recurring sales, were SEK 33.1 (23.4) million, an increase of 41%.

Products and market

The continued spread of the omicron variant of the SARS-CoV-2 virus during January has led to continued extensive sales of home tests during the fourth quarter. As part of the reverse profit warning, the company writes that total sales during the fourth quarter are

estimated to be greater than SEK 175 million.

On the pharma front, the company has been very active during the quarter, in discussions with licensees in Europe for several products and markets where we do not intend to launch on our own.

Furthermore, during the quarter, the drug Latanoprost EQL Pharma eye drops 50 micrograms / ml has been approved for sale in Sweden, Denmark and Norway.

Finally, product development for our drugs is still in an intensive phase and we hope to launch 9 products during the next financial year.

CEO change

During the third quarter, I informed the Board that I intend to step down as CEO at the Annual General Sharholder Meeting. My plan is to remain a main owner of EQL Pharma for the foreseeable future, and to

be active from a board horizon and as an investor. The board has appointed Axel Schörling, COO and EVP of the company, as successor, and I feel confident and convinced that this means that we have a continued long and profitable growth journey ahead of us.

Other

During the quarter, the organization was strengthened in several places, which is necessary to cope with the rapid growth we are experiencing in a sustainable way.

Christer Fåhraeus

VD

2 | INTERIM REPORT APRIL 2021 - DECEMBER 2021

Significant events

During the quarter

Latanoprost EQL Pharma Approved

The pharmaceutical Latanoprost EQL Pharma, eye drops 50 micrograms/ml, has been approved for sale in Sweden, Denmark and Norway.

Latanoprost EQL Pharma has a planned launch date in the company's first financial quarter (April-June) 2022. The Scandinavian market for Latanoprost currently has sales of approximately SEK 50m and has between two and five active competitors per country.

EQL Pharma will change CEO during 2022

Christer Fåhraeus, founder and CEO, has announced to the board of EQL Pharma AB that he wishes to continue his work for the company in a pure board capacity after the next Annual General Meeting of the company, scheduled for August 15, 2022. The board has therefore agreed with Axel Schörling, deputy CEO, that he will take over the position as CEO for EQL Pharma AB starting after the next Annual General Meeting.

Extraordinary general meeting

The meeting resolved in accordance with the proposal from the board of directors to implement a long-term incentive program for the company's Chief Operating Officer and Executive Vice President, as well as CEO-designate, based on issue of warrants.

In case all warrants issued in connection with the incentive program are exercised for subscription of new shares, a total of 400,000 new shares will be issued, which corresponds to a dilution of approximately 1.36 per cent of the company's share capital and votes after full dilution, calculated on the number of shares that will be added upon full utilization of all warrants issued under the incentive program.

3 | INTERIM REPORT APRIL 2021 - DECEMBER 2021

During the quarter, cont.

EQL Pharma appoints permanent CFO

EQL Pharma AB (publ) appoints Anna Jönsson as permanent Chief Financial Officer (CFO). Emanuel Eriksson has been acting CFO since last spring until a long-term solution was in place and he will continue work with investments.

EQL Pharma receives SEK 23 million order for covid self-test

The company has now received a major individual order for an antigen self-test with a sales value of approximately SEK 23 million. Revenue is expected to fall during EQL Pharma's fourth financial quarter (January-March).

After the quarter

EQL Pharma AB preliminarily announces very strong outcome for the third quarter and reports continued strongly increasing order intake

The preliminary summary for the third quarter (period October - December 2021) shows that net sales amounted to approximately SEK 117 million (SEK 29.61 million) and that EBIT amounted to approximately SEK 18 million (SEK 2.35 million). The increase in sales is explained by a very strong demand for the Company's self-tests for Covid-19, which account for approximately 70 percent of net sales during the quarter. Most of the self-tests have been sold during the last weeks of December.

Market

EQL Pharma has an aggressive growth strategy driven by the launch of new products in combination with expansion into new markets. Our products are mainly generics to originals that have been marketed in Sweden and the Nordic countries for a very long time.

This means that the markets we come to are generally mature, but also that there are few, if any, generic competitors to our products and that it is unlikely that new ones will emerge.

Marketed products

The definition of "product" is a unique substance and / or formulation. So PenV tablets and oral suspension count as two products, not one. A product can be launched in several countries at the same time with different pack sizes but is still only counted as one product.

During the quarter, no new products were launched.

Geographic markets

Today, we operate directly under our own brand in Sweden, Denmark and Norway.

In the United Kingdom and the rest of the Nordic region, including Iceland, our products are sold indirectly through partners.

During 2021/2022 and onwards, we will expand our geographical presence in Europe. Depending on the market, this is done through a direct or indirect sales model.

Segment

Today, we only develop and sell prescription drugs in our core business. In that category,

4 | INTERIM REPORT APRIL 2021 - DECEMBER 2021

there are a few interesting segments. So far, we have mostly invested in (a) the substitutable generics segment in outpatient care. The intention is to broaden the portfolio to include more (b) injection products for inpatient care and (c) unique products / formulations for outpatient care.. The injection products are generally sold through public procurement, while the unique products achieve sales only through specific prescription of our product.

Segments (b) and (c) are new to the company. But they are not new to the company's staff, who have many years of experience in these particular market segments from previous employers.

31%

25												22	22	21	21
20
					14	14	15	15	16	16	16
15
		13
10
5
0
			Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
2018/19		2019/20			2020/21			2021/22

Figure 1. The company's product portfolio, i.e. marketed products, per quarter from fiscal year 2017/18 through the reporting period for the current fiscal year. The Y axis is the number of products marketed..

Product development

Pipeline

EQL Pharma's reporting of the pipeline takes place at a general level and does not include, with the exception of launch phase products, the names of individual products or the products' current or expected market potential. Our goal is to provide better guidance to shareholders without disclosing information to competitors and without our pipeline being interpreted as a financial prospect. The information is updated in connection with the quarterly reports.

Total pipeline 35

Products under development 13

Review phase 13

Launch phase		9

Figure 2. Total pipeline of products and how many products are in Review phase and Launch phase respectively.

Products in the Development phase

Development phase is used here as a general term. In this term all products we actually develop together with partners in, for example, India or the EU are included. But in addition to these products, the term also includes all products on which we have signed licensing or distribution agreements for one or more geographical markets,

5 | INTERIM REPORT APRIL 2021 - DECEMBER 2021

although we do not develop the product ourselves.

When a product is fully developed, the application is submitted to the Medicines Agency in the markets where we intend to sell the product. The Agency's then initiate an audit, which generally takes about one year from application to approval. We call this step Review phase. At the end of the quarter, we had 13 products in the review phase.

After approval, when we know that the product is approved, we can place orders for manufacturing and delivery. In parallel with this, we apply for government reimbursement and tenders to the extent that they are available. We call this step the launch phase and usually it takes about six to nine months from approval until the first package is delivered to pharmacies.

Products in the Launch phase

We currently have nine products in the launch phase. Colecalciferol EQL Pharma tablets and Phenoxymethylpenicillin EQL oral suspension are expected to be launched in Q1 2022/23. Latanoprost EQL eye drops, Ondansetron EQL tablets and Loperamide EQL Pharma tablets are expected to be launched in Q2 2022/23. Palonosetron Qilu solution for injection and Ketorolac EQL Pharma solution for injection are expected to be launched in Q4 2022/23. The release date for Glucosparc (metformin) prolonged-release tablets and Gefitinib Qilu

tablets has not yet been determined.

14

13

7

0

2021/22

2022/23

2023/24

2024/25

Expected launches

Figure 3. The company's product launches for the current fiscal year and expected product launches up to and including fiscal year 2024/25.

At all stages from the development phase to the launch phase, situations can arise that risk delaying a launch or even making it impossible. Both we at EQL and our well- selected partners do everything we can to prevent these situations from occurring, but there are always risk factors beyond our control. To offset these risks, we have chosen from this report to add a "buffer" in our launch estimate. This means that launches can take place both earlier and later than estimated in the table above, but the assessment is that it will generally give a more balanced picture.