Isofol Medical : Annual Report 2021 (English)

ANNUAL REPORT 2021

Isofol issue all its reports in Swedish language. This report is a direct un-authorized translation of the issued Swedish Annual report 2021.

A DRUG CANDIDATE

ARFOLITIXORINFOR TREATMENT

OF COLORECTAL CANCER

CONTENTS

Vision, business concept, objectives and strategies

The year in brief

CEO statement

Arfolitixorin

Patents

Pre-commercialization

Medical affairs

Market overview

Colorectal cancer

Organization and partners

Sustainable development

Isofol's history

The Isofol share

Directors' Report

Corporate Governance Report

Financial information

Notes

Certification

Audit Report

Glossary

Calendar

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ISOFOL IS DEVELOPING THE CAN- CER DRUG ARFOLITIXORIN

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Isofol Medical AB (publ) is a biotech company that is develop-ing a drug candidate, the cancer drug arfolitixorin, which is now in the pre-commercialization phase. Arfolitixorin is being developed for the treatment of colorectal cancer (CRC), which is the third most common form of cancer worldwide. There- fore, the need for more effective drugs to treat this disease is very high. Arfolitixorin, combined with the cytostatic 5-FU, has the potential to become a new standard treatment for pa-tients with advanced CRC for whom 5-FU-based treatment is currently the standard treatment. Arfolitixorin is the first and only direct-acting folate-based drug that enhances the cyto- toxic effect in combination with 5-FU, and thereby aims to im-prove the efficacy of 5-FU-based treatments by potentially achieving a more powerful anti-tumor effect without diminish-ing safety. Isofol's primary objective is to improve treatment outcomes for approximately 370,000 advanced/metastatic CRC patients in the US, Europe and Japan.

Arfolitixorin is being developed and commercialized through a global licensing agreement with Merck & Cie in Ger-many. The licensing agreement also grants Isofol access to the unique patented manufacturing process for arfolitixorin. Isofol's operations are based in Gothenburg, and the compa-ny's shares traded on Nasdaq Stockholm's main market in the Mid Cap segment.

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BUSINESS CONCEPT

Isofol is focused on making arfolitixorin available worldwide and thereby improving the quality of life for patients with cancer being treated with 5-FU- based therapies.

OBJECTIVES

• • Ensure the completion of the AGENT study for CRC

• • Ensure that we can apply for regulatory approval for arfolitixorin as soon as possible after the end of the study

• • Implement the company's commercializa-tion plan to enable the successful launch of arfolitixorin

STRATEGIES

Develop arfolitixorin in oncology

• • Assess strategic partnerships to maximize the potential and value of arfolitixorin

• • Investigate extended uses of arfolitixorin through life cycle activities

Isofol is a biotech company with the goal of bringing arfolitixorin to market. The drug is intended to reduce the tumor burden, improve the quality of life and extend the lives of CRC patients. The ongoing AGENT study is focused on the treatment of metastatic CRC (mCRC), where the medical need is high. With the current treatment options, only 10 percent of mCRC patients are alive five years after diagnosis. The company will also evaluate whether arfolitixorin can be effective for other forms of cancer and thus help more patients.

Organizational strategy

Isofol has built an organization with key expertise on staff, supplemented through partnerships that ensure the best possible access to the resources not provided by the organization's own employees.

Commercial strategy and business model

To ensure that arfolitixorin can be launched immediately after receiving regulatory approval, Isofol will develop a full commercialization strategy. This strategy is to be completed before sub-mitting an application for market approval to regulatory authorities. This approach is designed to prepare the company to commercialize arfolitixorin on its own as well as to strengthen its ne-gotiating position with future partners. Isofol continuously evaluates various strategic partner-ships, and if an agreement with a partner increases the value of arfolitixorin, we will consider it.

| THE YEAR IN BRIEF

THEYEARIN BRIEF

MSEK 379

JANUARY-MARCH■ Following an interim analysis, the indepen-dent Data Safety and Monitoring Board(iDSMB) recommended that Isofol should complete the global Phase III AGENT studywith440patients in accordance with the study protocol.

■ Isofol received a Clinical Use Patent for the drug candidate arfolitixorin in Europe.

■ Isofol presented a posterat the ASCO Gas-trointestinal Cancer Symposium (ASCO-GI)2021with the gene expression results from the completed Phase I/IIa ISO-CC-005 study. Theposter "confirmed" its gene expression hypoth- esis, with the AGENT study expected to confirmthe clinicalrelevance of the hypothesis.

APRIL-JUNE ■ Isofol carried out a successful financinground - a rightsissuecombined with a direct-ed issue - that raised a total of SEK 452 millionfor the company after transaction costs.

■ Isofol presented an abstract at the ASCO

Annual Meetingin June, in which new dataabout the regulation of 5-FU/folate-based

JULY-SEPTEMBER

■ On April 22, 2022 it was announced that

■ Intensive preparations for achange oflist-data analysis of theglobal pivotal Phase IIIing to Nasdaq Stockholm, and submission ofstudy AGENT had begun following a dialogueFast Track Designation applicationto the USwith theFDA regarding censoring rules andFood and Drug Administration (FDA).

the requirement for progression-free survival events tobegin datagathering and analysis.

OCTOBER-DECEMBER ■ On October 21, Isofol'sshares were listed onCOVID-19 HADA LIMITED IMPACT ONTHE

Nasdaq Stockholm.

COMPANY

■ Isofol wasgranted Fast Track DesignationThe spread of Covid-19 during 2021 continuedby the FDA for arfolitixorin for the treatment of advancedCRC.This designation allows for a prioritized review process and can result into have a major negative impact on society, healthcare, the economyand people's lives. The AGENT study was fully enrolled in De-

the expedited processing ofan application,cember 2020 and the risk of delaysdue tomore frequent meetings with the FDA and on-patient enrolment was therefore reduced.

going evaluation, provided that relevant crite-However,thereremained a risk that hospitalsria are met.

could close or that the collection of data could

■ Isofol announced thatthe FDA denied a re-become more difficult dueto future waves ofquest from the company to adjust the censor-Covid-19, which could delay the compilation ofing rules forthe ongoing AGENT study's sec-data ahead of thestudy's top-lineresults.

ondary endpoint after more patients thanCovid-19 had a relatively limited impact onexpected proceeded to othertreatmentsbe-Isofol and its operations in 2021. This is be-fore they reached progression-free survivalcause Isofol continually adapted its opera-(PFS). The study's primary endpoint,objectivetions and took precautionarymeasures in

response rate (ORR), was not affected. An

2021 to ensure that its employees, consultantstreatmentof CRC was presented. Thestudyagreement for a new cut-off point for top-lineand study participants would stay safe andshows that the activation of the cancer-con-tributing oncogene MYC appears to impact the efficacy of treatment with 5-FU/folate.

Thiscorrelationopens the door for exploringfurther potential biomarker candidates asfactors in 5-FU/arfolitixorin efficacy as well ascombinations (including MYC inhibitors).

■ Patient enrolment inthe AGENTstudyin Ja-pan was completed according to plan in May.

results is expected in spring 2022.

EVENTS AFTER THE END OF THE YEAR ■ Jenny Sundqvistassumed her role as ChiefCommercial Officer on January 1, 2022.

■ The company's nomination committee pro-poses that Jan Törnell is elected Chair of the Boardof Directorsof the company in connec-tion with the 2022 AGM.

that the study is based on high-quality data.

| CEO STATEMENT

"NOW WE ARE ON THE VERGE OF ONE OF THE MOST CRITICAL EVENTS IN THE COMPANY'S HISTORY"

In 2021, Isofol developed from a purely clinical company into a company in the pre-commercial phase that is preparing to ensure a successful commercial launch of arfolitixorin in the US as early as 2023. The most important milestones on the way are the presentation of study results, submission of an application for market approval, the FDA's subsequent response to the application and ensuring inclusion in US national guidelines (NCCN guidelines). At the same time, we are continuing our commercial preparations and keeping potential licensees and partners in-formed to enable future licensing deals.

Sometimes it's important to take a step back and lift one's gaze. The fundamental reason we developed arfolitixorin is the high medical need for new drugs to treat cancer. CRC, which we have chosen to focus on for the present, is the third most common cancer di-agnosis today and the second deadliest. Meanwhile, no new cancer medications have been developed for these patients in nearly 20 years. Aside from arfolitixorin, there are no new drugs in pivotal studies that we view as potential competitors for this patient group.

The disease is leading to great suffering and cutting many lives short.

Critical events

Now we are on the verge of the most critical event in the company's history, as we will be able to receive the results of the AGENT study in 2022. The outlook in terms of meeting the regulatory results appears promising basedon previous study results on arfolitixorin and the fact that the regulatory authorities see a high need for new treatments. Arfolitixorin has the potential to achieve a more powerful anti-tumor effect, thereby improving treat-ment outcomes for a large group of CRC pa- tients. Arfolitixorin is the first and only di-rect-acting folate-based drug that enhances the cytotoxic effect in combination with 5-FU.

This combination therefore has the potential to become a new standard treatment for pa-tients with advanced CRC, while being rela-tively straightforward to incorporate into cur-rent treatment regimes.

From a clinical perspective, we passed two important milestones in 2021 on our way to completing the study. The first milestone was the interim analysis performed by the iDSMB, after which they recommended that the AGENT study be completed according to the study plan with 440 patients. The secondmilestone was when the enrolment of Japa-nese patients was completed according to plan in May.

Fast Track Designation enhances the company's prospects for an effective application process

In addition, in the autumn we were granted Fast Track Designation by the FDA, which en-tails more frequent dialogue with the agency and a more rapid application process for market approval. This is an extremely positive development and important external valida-tion of arfolitixorin's potential. I interpret it as confirmation of the considerable need for better treatments for CRC.

After more patients than expected were censored in autumn 2021 since they had been moved to other treatments before reaching the secondary endpoint of PFS, we were forced to adjust the cut-off point for begin-