Poxel : 2021 Half Year Financial Report

INTERIM FINANCIAL REPORT

AT 30 JUNE 2021

Société anonyme (joint stock company) with capital of €573,407.16

Registered office: 259/261 Avenue Jean Jaurès - Immeuble le Sunway - 69007 Lyon, France

510 970 817 Lyon Trade & Companies Register

CONTENTS

1.	CERTIFICATION BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT	.......... 3
2.	ACTIVITY REPORT AT 30 JUNE 2021 ....................................................................................	4
3.	INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2021...............	9
4.	STATUTORY AUDITORS' REVIEW REPORT ON THE HALF-YEARLY FINANCIAL
	INFORMATION .................................................................................................................	35

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1. CERTIFICATION BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT

1.1 Person responsible for the interim financial report

1. Thomas Kuhn, Chief Executive Officer of Poxel.

1.2 Certification by the person responsible

(Article 222-4 - 3° of the AMF General Regulations)

"I certify, to the best of my knowledge, that the condensed financial statements for the previous half- year have been prepared in accordance with the applicable accounting standards, and give a true and fair view of the assets, financial position and earnings of the Company, and that the appended interim activity report gives a fair view of significant events occurring during the first half-year, their impact on the interim financial statements, the main transactions between related parties and a description of the main risks and uncertainties for the remaining half-year".

Lyon, 23 September 2021

Thomas Kuhn, Chief Executive Officer of Poxel.

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2. ACTIVITY REPORT AT 30 JUNE 2021

2.1 Highlights of the first half-year of 2021

Marketing approval of TWYMEEG® (Imeglimin) for the Treatment of Type 2 Diabetes in Japan

On June 23, 2021, the Group and Sumitomo Dainippon Pharma announced that a new drug application for TWYMEEG® Tablets 500mg (International Nonproprietary Name (INN): Imeglimin hydrochloride), for the treatment of type 2 diabetes, was approved in Japan. Japan is the first country in the world to approve Imeglimin.

The approval in Japan triggered a JPY 1.75 billion (approximately €13.2 million) milestone payment to Poxel from Sumitomo Dainippon Pharma that was fully recognized as revenue at June 30, 2021 and paid in July 2021.

Rare metabolic diseases

In rare diseases, the Group is pursuing non-clinical studies to explore new potential indications for PXL065 and PXL770 with encouraging results in ALD with the most common form of disease (adrenomyeloneuropathy - AMN).

IPF Financing

In November 2019, the Group entered into a Subscription Agreement with IPF Partners to secure additional funding in the form of three separate bond tranches up to a total borrowing amount of €30 million and related warrants to purchase up to €4.5 million of its ordinary shares. In November 2019 and March 2020, the Group borrowed €6.5 million under the first tranche and €10.0 million under the second tranche respectively.

In June 2021, following the Marketing approval of Imeglimin in Japan, the Group borrowed €13.5 million under the third and final tranche of IPF Venture Loan and issued warrants to purchase 156,250 ordinary shares with an exercise price of €6.72.

Roivant partnership with Imeglimin

As part of the decision by Roivant not to advance Imeglimin into a Phase 3 program for strategic reasons, the Group's partnership agreement with Roivant has been terminated, effective January 31, 2021. Roivant has returned all rights to Imeglimin to Poxel, as well as all data, materials, and information, including FDA regulatory filings, related to the program. Roivant is not entitled to any payment from Poxel as part of the return of the program.

Arbitration with Merck Serono

As part of the application of the agreement with Merck Serono to the partnership agreement signed with Roivant in February 2018, the Company and Merck Serono had a different interpretation of Poxel's revenue base to be subject to royalties. In April 2019, the Company was notified that Merck Santé had initiated an arbitral proceeding in order to resolve this difference in interpretation. On 18 February 2021, an Arbitral Tribunal rendered a "Final Award" concluding the ICC arbitration

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between the Company and Merck Santé. The tribunal's decision is final and the litigation has been closed following a payment to Merck Serono for a total amount of €2.4 million (excl. VAT).

Composition of the Board of directors

In the course of the six-months period ended June 30, 2021, the composition of the Board of Directors changed as follows:

• Dr. John Kozarich was appointed to the Board of Directors during the June 23, 2021 general assembly meeting, and also became the chair of the scientific committee of the Board.
• The mandate of M. Richard Kender was renewed for a 3-year term during the June 23, 2021 general assembly meeting.
• Bpifrance Participations transitioned off as a Board observer, effective July 9, 2021.

Covid-19 outbreak

As of the date of this report, and based on publicly available information, the Group has not identified the occurrence of any material negative effects on its business due to the COVID-19 pandemic that remains unresolved. However, the Group anticipates that the COVID-19 pandemic could have further material negative impact on its business operations. The worldwide impact of COVID-19 may notably affect the Group's internal organization and efficiency, particularly in countries where it operates and where confinement measures are implemented by the authorities. In addition, COVID-19 may impact market conditions and the Group's ability to seek additional funding or enter into partnerships. Particularly, delays in the supply of drug substance or drug products, in the initiation or the timing of results of preclinical and/or clinical trials, as well as delays linked to the responsiveness of regulatory authorities could occur, which could potentially have an impact on the Group's development programs and partnered programs. The Group will continue to proactively monitor the situation.

2.2 Activity and results of the Group

Partnership activity

Sumitomo

The Company continued to work closely with Sumitomo Dainippon Pharma during the first half of 2021. Marketing approval of Imeglimin in Japan for type 2 diabetes was obtained on June 23, 2021. The approval in Japan triggered a JPY 1.75 billion (approximately €13.2 million) milestone payment to Poxel from Sumitomo Dainippon Pharma that was fully recognized as revenue at June 30, 2021 and paid in July 2021.

Roivant Sciences

As part of the decision by Roivant not to advance Imeglimin into a Phase 3 program for strategic reasons, its partnership agreement with Roivant has been terminated, effective January 31, 2021. Roivant has returned all rights to Imeglimin to Poxel, as well as all data, materials, and information,

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