Kuros Biosciences : Interim Results, 2021

Image: MagnetOs' unique submicron surface topography NeedleGripTM

Interim Report

as of June 30, 2021

Table of contents

KEY DEVELOPMENTS .......................................................................................................................	3
RESULTS OF OPERATIONS AND FINANCIAL PERFORMANCE (IFRS) ....................................................	4
ALTERNATIVE KEY PERFORMANCE MEASUREMENTS (APM) .............................................................	5
CONSOLIDATED INCOME STATEMENT ..............................................................................................	6
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME .............................................................	6
CONSOLIDATED BALANCE SHEET......................................................................................................	7
CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................................................	8
CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS' EQUITY..............................................	9
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS....................................	10
1.	GENERAL INFORMATION ............................................................................................................	10
1.1 BASIS OF PREPARATION..........................................................................................................................	10
1.2 UNCERTAINTIES AND ABILITY TO CONTINUE OPERATIONS .............................................................................	10
1.3 CHANGES IN ACCOUNTING POLICIES.........................................................................................................	12
2.	SIGNIFICANT DEVELOPMENTS DURING THE CURRENT REPORTING PERIOD - COVID-19 ............................	12
3.	REVENUES FROM CONTRACTS WITH CUSTOMERS .............................................................................	12
4.	SEGMENT REPORTING ...............................................................................................................	13
5.	COST OF GOODS SOLD ...............................................................................................................	14
6.	SHAREHOLDERS' EQUITY ............................................................................................................	14
7.	NET LOSS PER SHARE.................................................................................................................	14
8.	SHARE OPTION PLAN.................................................................................................................	14
9.	CASH, CASH EQUIVALENTS AND FINANCIAL ASSETS ...........................................................................	15
10.	TRADE RECEIVABLES..................................................................................................................	15
11.	PROPERTY AND EQUIPMENT .......................................................................................................	16
12.	INTANGIBLE ASSETS AND GOODWILL .............................................................................................	17
13.	IMPAIRMENT TEST ....................................................................................................................	18
14.	LEASES ..................................................................................................................................	18
15.	PENSION PLAN ........................................................................................................................	19
16.	NET FINANCIAL RESULT ..............................................................................................................	19
17.	EVENTS AFTER BALANCE SHEET DATE.............................................................................................	19
LEGAL DISCLAIMER........................................................................................................................	20

Kuros Biosciences, Interim Report June 30, 2021

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Condensed Interim Consolidated Financial Statements (unaudited)

as of June 30, 2021

Kuros Biosciences, Interim Report June 30, 2021

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Key developments

Kuros Biosciences announces MagnetOs sales and distribution agreements across Northern Europe

Kuros announced on March 2, 2021, that it has signed sales and distribution agreements for MagnetOs bone graft, covering the Netherlands, Switzerland, Austria, and Finland. These add to an existing agreement in the United Kingdom and Ireland.

Kuros received $2 million milestone payment from Checkmate Pharmaceuticals

Kuros announced on April 6, 2021, that it received a milestone payment of $2 million from Checkmate Pharmaceuticals, Inc. related to dosing of the first melanoma patient in a Phase 2 clinical trial with the licensed product candidate vidutolimod (CMP-001), formerly known as CYT003.

Kuros Biosciences announces treatment of first patient in Australia with MagnetOs for spine fusion

Kuros announced on April 8, 2021, that the first patient has been treated for spine fusion with MagnetOs bone graft in Australia, the first patient treated outside Europe and the U.S.

Kuros Biosciences treats first patient in clinical trial of MagnetOs Putty for posterolateral spine fusion

Kuros announced on April 13, 2021, that it has treated the first patient in a prospectively designed, randomized controlled trial in the U.S. named PROOF, comparing MagnetOs Putty to autograft for posterolateral spine fusion.

Kuros received $4 million milestone payment from Checkmate Pharmaceuticals

Kuros Biosciences announced on May 17, 2021, that it received a milestone payment of $4 million from Checkmate Pharmaceuticals, Inc. related to dosing of the first patient in a Phase 2 trial of vidutolimod (CMP-001) in combination with nivolumab for the treatment of patients with anti-PD-1 refractory advanced melanoma, under a license agreement between the companies. Checkmate recently initiated a Phase 2 trial evaluating vidutolimod in combination with nivolumab in patients with first-line metastatic or unresectable melanoma. Together, the data from these trials are intended to support a biologics license application seeking accelerated approval in the U.S. for the treatment of patients with anti-PD-1 refractory advanced melanoma.

Kuros to receive $7 million up front and potentially $166.5 million in future revenues under a royalty purchase agreement with XOMA related to Kuros' license agreement with Checkmate Pharmaceuticals

Kuros announced on July 15, 2021, that it has entered into a royalty purchase agreement with XOMA Corporation (NASDAQ: XOMA) under which XOMA has purchased a proportion of the potential future pre-commercial milestone payments and all the potential royalties due under the existing license agreement between Kuros and Checkmate Pharmaceuticals related to one of Kuros's assets outside of the bone graft field. Kuros will receive an initial payment of $7 million from XOMA. In addition, Kuros retains the potential to receive up to $24 million in pre-commercial milestones from Checkmate and is eligible to receive up to $142.5 million in sales milestones from Xoma.

Kuros Biosciences, Interim Report June 30, 2021

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Results of operations and financial performance (IFRS)

Revenues - Revenues from product sales accelerated by 279% for a growth of 178% to CHF 3.6 million

In the first half 2021, total Revenue amounted to CHF 9.1 million (first half 2020: CHF 1.3 million). Revenue from product

sales increased by 279% to CHF 3.6 million (first half 2020: CHF 1.3 million) despite some headwind from COVID-19 (e.g. limitations due to elective surgeries) during the beginning of the year. Revenue from collaborations amounted CHF 5.5 million (first half 2020: CHF 0 million) and resulted from milestone payments of the Checkmate licensing agreement.

Gross profit

Cost of goods sold amounted to CHF 1.9 million for the first half of 2021 (first half 2020: CHF 1.2 million). Cost of goods sold

included costs of amortization of capitalized intangible assets of CHF 1.1 million (first half 2020: CHF 0.8 million) and other

costs of CHF 0.8 million (first half 2020: CHF 0.4 million) directly attributable to the production. The gross profit increased by

CHF 7.1 million to CHF 7.2 million (first half 2020: CHF 0.1 million).

Operating costs

Operating costs amounted to CHF 8.6 million (first half 2020: CHF 6.5 million) and have increased due to the marketing activities for MagnetOs and the clinical development of Fibrin-PTH(KUR-113). Costs for research and development increased to CHF 2.5 million (first half 2020: CHF 2.1 million) which contained costs for the Phase II study (spine indication) of Fibrin PTH, personnel expenses, and other expenses for research and development activities. General and administrative costs increased to CHF 2.8 million (first half 2020: CHF 2.4 million) mainly due to other administrative and personnel costs. General and administrative costs included personnel expenses, depreciation for fixed assets and other expenses for administration. Sales and marketing costs increased to CHF 3.5 million (first half 2020: CHF 2.1 million). The increase is mainly due to the hiring of additional sales personnel in the US and an increase of marketing efforts for MagnetOs. Sales and Marketing costs includes both personnel costs and other marketing costs. Other income amounted to CHF 0.1 million (first half 2020: CHF 0.1 million).

Net loss

The net loss for the six months ended June 30, 2021, amounted to CHF 0.1 million (first half 2020: CHF 5.8 million)

Financial positions and other assets

Funds available for financing the operations as of June 30, 2021, amounted to CHF 29.4 million (December 31, 2020: CHF

29.8 million), which included cash and cash equivalents, trade, and other receivables. Available funds remained unchanged compared to December 31, 2020, mainly because of increased revenues from collaboration agreements.

As of June 30, 2021, total intangible assets amounted to CHF 25.0 million (December 31, 2020: CHF 23.7 million) and

goodwill amounts to CHF 34.0 million (December 31, 2020: CHF 33.8 million).

Kuros Biosciences, Interim Report June 30, 2021

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