Interim report January - March 1998

Interim report January - March 1998 - A net loss of MSEK 16.0 was posted for the period. - BioPhausia was listed on the Stockholm Stock Exchange O-List. - New share issue implemented in April generates proceeds of MSEK 57. - An application to register RescueFlow® was filed with the Swedish Medical Products Agency. - The FDA ruled that further studies will be necessary before final approval is - given to RescueFlow® in the United States. Cooperation and license discussions regarding marketing in North America and Europe are in progress. - An interim analysis of the clinical studies with Krillase® supports assumptions already made regarding clinical effects. License discussions are in progress. Research and development BioPhausia is now exclusively a research and development company and the investments made in this area are decisive to the company's development. Research and development costs during the first quarter amounted to MSEK 10.7, an increase of 34% compared with the corresponding period in the preceding year. This increase was attributable to the Phase III studies for Krillase®, which are progressing with a favorable patient recruitment rate. As at June 1, a 172 patients out of a total of 180 had been included in the studies, which are expected to be concluded, analyzed and reported before the end of September. Supplementary pre-clinical studies were also conducted during the period. Discussions regarding the licensing of Krillase® are in progress with several companies. The registration application made for RescueFlow® was filed with the Swedish Medical Products Agency in January. The mutual recognition registration procedure selected by BioPhausia means that when approved the Swedish valuation can be used when applying for registration in other EU countries. Earlier assessments, that the product could be registered in Europe during 1998, stand firm. In the United States, the American Food and Drug Administration (FDA) has decided that a further clinical study will be required before final approval is given to RescueFlow® for the treatment of trauma. Discussions regarding licensing and financing are in progress with leading companies in this area. During the first quarter, BioPhausia also carried out a study to show RescueFlow®'s performance during elective surgery. The results are expected to be reported within the near future. The two preclinical projects, BP-04 for facilitating the cytotoxic treatment of solid tumors, and the hyaluronidase project for the treatment of traumatic swelling, are proceeding according to plan. Personnel Inger Uhlin has been appointed new registration manager, effective in August this year. Previously, Inger Uhlin has worked for various departments of Pharmacia & Upjohn, most recently within the ophthalmology group. On March 30, 1998, BioPhausia had 22 employees (23), of whom 2 (3) work in the U.S. subsidiary. Sales In the United States, BioPhausia is handling the sales of dextran substance and solutions for an interim period on behalf of Cooper Surgical and Pharmalink Basläkemedel, which acquired these operations during 1997. The sales shown in this interim report are wholly attributable to these activities. New share issue The new issue of 4,410,400 shares at a price of SEK 13, with preferential rights for shareholders, was fully subscribed. After deduction of the related expenses, the new issue generated proceeds of MSEK 54 for the company. Financial position and investments Excluding unutilized lines of credit in an amount of MSEK 4, the Group's liquid fund totaled MSEK 9.0 (30.2) at the end of the period. The equity ratio was 33.6% (57.1). Following the new share issue at the beginning of April, the company's liquidity and equity ratio improved to 60.6%. Investments in fixed assets during the period totaled MSEK 0.1 (0). Due to the BioPhausia Group's limited period of responsibility for the sales of dextran substances and products on behalf of Cooper Surgical and Pharmalink Basläkemedel, accounts receivable, inventories and accounts payable are included for this in the accounts for the quarter. BioPhausia will publish reports on its operations for the remaining quarters of the year on August 31 and November 11, 1998. Summary of Consolidated Income Statement (SEK 000´s) Jan-March 1998 Jan-March 1997 Net sales 2 991 18 970 Cost of goods sold -2 445 -13 085 Gross profit 546 5 885 Selling expenses -841 -5 306 Administrative expenses -3 641 -1 609 Research and development -10 745 -7 990 costs Exchange rate gains 303 2 089 Exchange rate losses -1 172 -601 Operating loss -15 550 -7 532 Interest income and similar 259 226 revenues Interest expenditure and -729 -736 similar costs Loss after financial items -16 020 -8 042 Taxes -15 -131 Minority share - 23 Net loss for the year -16 035 -8 150 Summary of Consolidated Balance Sheet (SEK 000´s) March 31, 1998 March 31, 1997 Fixed assets 47 567 89 780 Other current assets 4 892 7 684 Inventories 990 18 662 Acounts receivable 16 425 22 129 Liquid funds 8 953 30 228 Total assets 78 827 168 483 Equity 26 481 96 144 Minority share - 75 Deferred tax - 4 346 liability Interest-bearing 20 000 35 500 liabilities Operating liability 32 346 32 418 Total equity and 78 827 168 483 liabilities Key ratios March 31, March 1998 31,1997 Equity per share, SEK* 6.0 21.8 Net debt, MSEK -11.0 -5.3 Equity ratio, % 33.6 57.1 Equity ratio after new share issue, 60.6 - April 1998, % *1997 figures adjusted for redemption of options in December 1997 Uppsala June 11, 1998 Stellan Lind President This interim report has not been subject to examination by the company's auditors.

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