Orphazyme A/S : Interim Report First Half 2021

Company announcement

No. 21/2021

Orphazyme A/S

Ole Maaløes Vej 3

DK-2200 Copenhagen N

CVR No.: 32266355

Interim Report First Half 2021

Copenhagen, Denmark, August 31, 2021 - Orphazyme A/S (ORPHA.CO; ORPH) ("the Company"), a late-stage biopharmaceutical company, today announces its Interim Report First Half 2021 for the period January 1 - June 30, 2021.

"We remain steadfast in our belief that arimoclomol holds significant potential for people living with NPC and we remain committed to pursuing a path to regulatory

approval in Europe and the United States," said Christophe Bourdon, Chief Executive Officer of Orphazyme. "While maintaining our patients on the Early Access Programs across key countries, we have executed on our restructuring plan, enabling significant cost savings to the company and are pursuing approval for arimoclomol. In the fourth quarter of 2021, we expect a CHMP opinion from EMA on arimoclomol and expect to provide further detail on our path forward in the US following the conclusion of a Type A meeting with the FDA. We are assessing different possibilities for obtaining additional funding to sustain operations in 2022 and beyond".

Pipeline Updates First Half 2021

• Announced top-line results from both the Phase 2/3 trial of arimoclomol in Inclusion Body Myositis and the Phase 3 trial of arimoclomol in Amyotrophic Lateral Sclerosis; neither trial met its primary endpoint and we have ceased further development of arimoclomol in these indications
• Received a Complete Response Letter from FDA following its review of the new drug application for arimoclomol in NPC; we are assessing the path forward with FDA
• Marketing authorization application for arimoclomol for NPC remains underway with the European Medicines Agency and a CHMP opinion is expected during Q4 2021
• Our Early Access Programs (EAP) for arimoclomol in the United States, Germany and France continued through the first half of 2021, with approx. 100 patients participating in the EAP as of June 30, 2021
• Presented 12-month and 24-month results from the open-label extension of the Phase 2/3 trial of arimoclomol in NPC at the 17th Annual WORLDSymposium Scientific meeting and the Parseghian Scientific Conference for NPC Research respectively. The results demonstrate that arimoclomol provided a sustained benefit to study participants through 36 months and are consistent with the previously reported safety profile

Financial and Business Highlights First Half 2021

• Appointed Christophe Bourdon as Chief Executive Officer, effective April 1, 2021
• Announced company restructuring that will result in a significant headcount reduction (~70 remaining FTEs expected by year-end), substantial cost savings, and a focus on activities to support potential approval of arimoclomol in Europe and in the US
• For the first six months of 2021, Orphazyme reported a net loss of DKK 463.8.0 million or DKK 13.27 per share (basic and diluted) compared to a net loss of DKK 251.4 million or DKK 9.77 per share (basic and diluted) for the same period in 2020
• Beginning in 2021 and for the six-month period ended June 30, 2021, Orphazyme recognized net revenue of DKK 13.2 million from the sale of arimoclomol for treatment of NPC under the ATU (remunerated early access program) in France

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• Research and development expenses for the period totaled DKK 264.7 million compared to DKK 167.0 million for the same period in 2020 mainly due to the increased activity in our development functions for most of the period before receipt of the Complete Response Letter from the FDA; and recognition of restructuring provisions for the close-out of the clinical trials for IBM and ALS and related impairment charges recognized following the negative trial results.
• General and administrative expenses for the period totaled DKK 214.2 million compared to DKK 78.6 million for the same period in 2020 due to the build-up of the commercial organization in preparation for commercial launch during most of the period, including expenses related to supporting functions, before receipt of the Complete Response Letter from the FDA. In addition, this amount includes a restructuring provision for the commercial and administrative employees who were made redundant
• As of June 30, 2021, Orphazyme held cash totaling DKK 334.2 million compared to DKK 610.4 million as of June 30, 2020 and DKK 726.9 million as of December 31, 2020

Subsequent Events

• Announced publication of 12-month data from the double-blind portion of the Phase 2/3 trial in NPC in the Journal of Inherited Metabolic Disease (JIMD). Arimoclomol was well-tolerated with a statistically significant and clinically meaningful effect on disease progression (mean treatment effect in favor of arimoclomol of -1.40 points on 5- domain NPCCSS (95% CI: −2.76, −0.03; p = 0.046))

Outlook

The company maintains its revised outlook for 2021, as published on June 18, 2021. Operating expenses are anticipated to be in the range of DKK 700 -720 million; net operating loss is anticipated to be in the range of DKK 670-700 million; and our cash position at year-end 2021 is anticipated to be approximately DKK 50 million. We anticipate reaching net revenues of between DKK 30 and DKK 40 million by year-end December 31, 2021.

Conference Call

Orphazyme will host an investor call during which Management will present the Interim Report First Half 2021. The presentation will be followed by a Q&A session.

The call will be held on Tuesday, August 31, 2021 at 2.00 PM CEST/8.00 AM EDT.

Dial-in details:

• Denmark: [phone]
• United States: [phone]
• Standard International: [phone]
• United Kingdom: [phone]
• France: [phone]
• Netherlands: [phone]
• Sweden: [phone]

Event Title: Orphazyme Interim Report First Half 2021

Confirmation code: 4182747

The presentation will also be available via webcast: https://edge.media-server.com/mmc/p/vmsh6rph. After the call, the presentation will be available via the webcast link above.

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Condensed Consolidated Key Figures

DKK (000)	As of and for the	As of and for the	As of and for the
	six-months ended	six-months ended	year ended
	Jun 30, 2021	Jun 30, 2020	Dec 31, 2020
Statement of profit or loss and other
comprehensive income
Net revenue	13,152	-	-
Research and development expenses	(264,683)	(166,980)	(361,284)
General and administrative expenses	(214,167)	(78,575)	(247,250)
Operating loss	(465,698)	(245,555)	(608,534)
Net financial items	(400)	(7,841)	(26,627)
Loss before tax	(466,098)	(253,396)	(635,161)
Income tax benefit	2,318	1,981	1,915
Net loss for the period	(463,780)	(251,415)	(633,246)
Total comprehensive loss	(463,704)	(251,550)	(632,641)
Loss per share, basic and diluted (DKK)	(13.27)	(9.77)	(22.32)
Statement of financial position
Intangible assets	2,194	10,773	12,454
Right-of-use assets & Property, plant and equipment	13,928	19,789	19,546
Other non-current assets	8,214	7,608	6,829
Cash	334,184	610,448	726,929
Other current assets	69,511	27,742	56,735
Total assets	428,031	676,360	822,493
Share capital	34,952	27,045	34,698
Total equity	166,761	506,135	620,525
Non-current liabilities	37,610	48,419	35,341
Current liabilities	223,660	121,806	166,627
Cash flow statement
Net cash used in operating activities	(381,724)	(204,169)	(539,076)
Net cash used in investing activities	(806)	(1,760)	(5,101)
Net cash provided by (used in) financing activities	(15,527)	692,944	1,159,422
Other
Share price (DKK)	46.84	89.30	67.10
Total outstanding shares	34,952,241	27,044,929	34,697,703
Market capitalization (DKK million)1	1,637.2	2,415.1	2,328.2
Equity ratio2	39.0%	74.8%	75.4%
Equity per share (DKK)3	4.77	18.71	17.88
Purchase of property, plant and equipment (DKK 000)	-	1,170	2,365
Average number of employees	164	106	117
Number of full-time employees (FTEs), end of period	180	114	141

1. Market capitalization is calculated as the share price multiplied with the total outstanding shares as of the balance sheet date.
2. Equity ratio is calculated as the equity divided by total assets as of the balance sheet date.
3. Equity per share is calculated as the total equity divided by the total outstanding shares as of the balance sheet date.

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Outlook

In millions of DKK	2021 guidance	2020 actual
Operating expenses	700 - 720	609
Operating loss	670 - 700	609
Cash position at year-end	~50	727

Orphazyme is maintaining its revised outlook for 2021 as published on June 18, 2021.

We anticipate reaching net revenues of between DKK 30 and DKK 40 million by year-end December 31, 2021. The net revenue pertains to the ATU in France.

On June 18, 2021, Orphazyme announced that it received a Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA) following the FDA's review of the new drug application for arimoclomol, a heat shock protein amplifier intended for the treatment of Niemann-Pick disease type C (NPC). As a result of arimoclomol for NPC not being approved by the FDA, Orphazyme cannot start the commercialization of its drug product in the U.S., which would have contributed to revenue and to reduced operating loss. Furthermore, Orphazyme was not able to obtain a priority review voucher in 2021.

Receiving the CRL from the FDA and the resulting consequences for our cash position introduces a going concern risk and consequently, Management has made an assessment of Orphazyme's ability to continue as a going concern for the twelve-month period following the balance sheet date of June 30, 2021. In connection with this assessment, several uncertainties have been identified and, as a result, mitigating actions have been initiated.

The following significant uncertainties were identified as of June 30, 2021:

• Path forward with the FDA: Following the receipt of the CRL from the FDA, Orphazyme will request a Type-A meeting with the FDA to assess a path forward for arimoclomol for NPC in the U.S. There is no guarantee that Orphazyme will ultimately obtain an approval for arimoclomol for NPC in the U.S.
• Outcome of CHMP assessment and subsequent regulatory approval by EMA: Orphazyme expects to receive an opinion from the European Committee for Medicinal Products for Human Use (CHMP) in Q4 2021. The CHMP is conducting an initial assessment of our application for EU-wide marketing authorizations for arimoclomol for NPC. Whereas a positive response from CHMP does not automatically result in an approval from the European Medicines Agency (EMA), a positive response increases the likelihood of receiving approval from EMA. Orphazyme expects to receive feedback on potential approval from EMA in the first quarter of 2022. There is no guarantee that Orphazyme will obtain positive feedback from CHMP or approval from EMA.
• Cash usage: With the current cash position and the current estimated outlook, Orphazyme expects to have approximately DKK 50 million in cash at the end of December 2021. Following our restructuring and close-out of clinical trials, we anticipate to significantly reduce our monthly cash usage to sustain our reduced organization and activities. Any significant deviation in our cash usage can materially impact our anticipated cash position at year-end 2021. There is no guarantee that the estimated cash usage will materialize as expected.
• Additional funding: The current expectation for future cash requirements indicates that Orphazyme will need to raise additional funding. The Group is therefore currently assessing different possibilities for obtaining additional funding. However, if further funding is not obtained, Orphazyme will not have sufficient cash to fund its activities and meet its obligations.

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In response to these uncertainties, the following mitigating actions have been taken:

• Restructuring program: Following receipt of the CRL from the FDA, a restructuring program reducing the global workforce by approximately two thirds was initiated and finally concluded by July 31, 2021. The company terminated certain employees in the Group's subsidiaries and in headquarters, who were not deemed to be essential. Following our restructuring, we have strategically maintained medical and commercial personnel to strengthen our footprint in areas with the most significant market potential for NPC. We have maintained a core team in the U.S. to effectively act on any actions agreed with the FDA; and we have maintained a core team in Europe and the UK to continue to support our early access programs and establish our commercial presence in those respective territories.
• Termination of contracts and agreements: Management has initiated termination of contracts and agreements not deemed essential in the continued pursuit of regulatory approval in Europe and assessing a path forward in the U.S. This includes initiating the close-out of all clinical trial activities for IBM, ALS and Gaucher.
• Additional funding: Management continuously assesses options to ensure sufficient funding is in place to support its corporate priorities. We are currently evaluating a number of strategic options including (i) debt and/or equity financing; (ii) new potential commercial relationships, and (iii) monetization of non-core assets.

With the uncertainties listed above, there can be no assurance that Orphazyme will achieve or sustain profitability or positive cash flows from operations. If the Group is unable to attract additional funding, future operations will need to be significantly scaled back or discontinued. These conditions raise substantial doubt about the Group's ability to continue as a going concern. These interim condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Based on the mitigating actions described above, Management is of the view that a going concern assumption is appropriate as of June 30, 2021.

COVID-19

At this time, there is no material impact directly related to COVID-19 on the Group's consolidated financial statements, including the judgements and estimates applied. Specifically, Orphazyme is not currently conducting any clinical trials and is in the process of closing out the existing trial extensions following the disappointing results of the Phase 2/3 clinical trial related to IBM and the Phase 3 clinical trial related to ALS. However, as Orphazyme is assessing a potential path forward with the FDA following receiving a complete response letter from the FDA on arimoclomol for the treatment of NPC and is actively pursuing the European regulatory approval, other parts of the business and operations may be adversely impacted by the effects of COVID-19, for example: our third-party manufacturers and other third parties; the productivity of our staff; ability to attract, integrate, manage and retain qualified personnel or key employees; our global supply chains and relationships with vendors and other parties; significant disruption of global financial markets; and reduced ability to secure additional funding. We will continue to monitor the COVID-19 pandemic and its potential impact on our business and financials.

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