aXichem AB (publ), Year End Report, January – December 2022

aXichem's development during periods 2022-01-01—2022-12-31

This interim report presents aXichem, which consists of aXichem AB (publ), Incendia Pharma AB and aXichem AS (Norway). Amounts in brackets refer to the corresponding period of the previous year.

aXichem's development 2022-01-01 – 2022-12-31

Turnover and results

Net sales amounted to SEK 5,007 thousand (SEK 4,362 thousand).

The operating profit amounted to SEK -14,545 thousand (SEK -15,070 thousand).

The loss for the period amounted to SEK -17,260 thousand (SEK -15,093 thousand).

Financial net SEK -2,690 thousand (SEK 12 thousand).

Cash and financial position

The group's cash and cash equivalents on 31 December 2023 amounted to SEK 6,549 thousand (SEK 9,454 thousand).

The equity ratio amounted to 66% (96%).

Investment

Investments in intangible, tangible or financial fixed assets amounted to SEK 2,608 thousand (SEK 4,728 thousand).

Depreciation

Depreciation of intangible and tangible fixed assets amounted to SEK 3,511 thousand (SEK 2,474 thousand).

Share data

Earnings per share, before and after dilution amounted to SEK -1.04 (SEK -0.92).

Equity per share at period end amounted to SEK 2.44 (SEK 3.40).

aXichem's development 2022-10-01 – 2022-12-31

Turnover and results

Net sales amounted to SEK 3,539 thousand (SEK 886 thousand).

The operating profit amounted to SEK -2,253 thousand (SEK -5,013 thousand).

The loss for the period amounted to SEK -3,247 thousand (SEK -5,034 thousand).

Financial net SEK -969 thousand (SEK 14 thousand).

Investments

Investments in intangible, tangible or financial fixed assets amounted to SEK 619 thousand (SEK 1,423 thousand).

Depreciation                                                                                                

Depreciation of intangible and tangible fixed assets amounted to SEK 912 thousand (SEK 665 thousand).

Share data

Earnings per share, before and after dilution amounted to SEK -0.20 (SEK -0.30).

Significant events during the period

• On February 10, it was announced that aXichem had signed a cooperation agreement with GCV Life Private Limited
  (GCV Life) in Mumbai, India . GCV Life will introduce aXichem's natural analogue capsaicin product, aXivite , and be an agent in the Indian dietary supplement market.

• On February 10, the company announced that during the beginning of the year it had received two orders for product development from the Polish distributor BART. Since the distributor agreement was signed in October 2021, they have placed three orders, a total of almost one hundred kilos.

• On February 22, aXichem announces that a patent application has been filed for the company's phenylcapsaicin as a bioenhancer for substrates of certain Cytochrome P450 isoforms, enzymes involved in the metabolism of several common drugs. Phenylcapsaicin has been tested as a bio - enhancer for Cytochrome P450 together with several active substances. Significant positive results were shown with a specific substrate of Cytochrome P450 which, among other things, regulates melatonin. Melatonin is a body-specific hormone produced by the pineal gland, which regulates sleep-wake cycles. Melatonin is also produced synthetically and is provided in over-the-counter drugs for the short-term treatment of sleep problems. Phenylcapsaicin inhibits only two of the Cytochrome P450 subgroups, which means that there is little risk of adverse effects on other active substances.

• On March 16, aXichem announces that it has received another order regarding aXivite , intended for product development, from its distributor in Poland, BART. The total value of BART's orders during the beginning of 2022 amounts to approximately SEK 500,000.

• On March 31, it is announced that the company is applying for approval according to Feed The Additive Directive in the EU for its unique and innovative feed ingredient aXiphen . Feed The Additive Directive, administered by European Food Safety Autohrity ( EFSA ) , regulates a common procedure for the approval of feed additives and lays down rules for how these products are made available on the market.

• On April 5, it is announced that aXchem's board has decided to take out a convertible loan of SEK 20 million from Formue Nord Fokus A/S. The proceeds are intended to be used to ensure and accelerate the company's growth and business development in line with the goals communicated. The board's decision is subject to the approval of the general meeting. The nominal amount of the convertible loan amounts to SEK 20 million and carries an annual interest rate of 12 percent. The convertible loan is due for payment on October 31, 2023, unless the Convertibles are converted before then. The conversion rate amounts to SEK 20. If the convertible loan is converted in its entirety, the number of shares in the company will increase by 1,000,000 and the share capital by SEK 200,000.

• On 22 April, the extraordinary general meeting was held in aXichem. The meeting decided to approve the board's decision from 5 April 2022 to take out a convertible loan from Formue Nord Fokus A/S.

• On April 28, the company announces that aXivite is included in the mix in the premium product Fat Burn Acitve. The Fat Burn Active brand is owned by the exclusive e-commerce store Nuvialab, a well-known player in the dietary supplement industry. Fat Burn Active is produced and marketed in Europe by BART, aXichem's Polish distributor.

• On May 3, a call to the annual general meeting in aXichem was published and on May 10, the company's annual report 2021 was published. All documents for the annual general meeting, which will be held on May 31, 2022 at the office in Malmö, are available at www.axichem.com

• On May 13, the company announces that a patent approval has been obtained in Brazil for phenylcapsaicin as an ingredient in poultry feed, especially chicken feed. The patent approval fits very well at the time when aXichem has applied for registration as a feed additive with the Ministry of Agriculture, Livestock and Supply (MAPA) in Brazil. aXichem's goal is to obtain an approval in Brazil for the product, for use as an ingredient in animal feed, in 2022.

• On May 16, it is announced that aXivite will be evaluated in a study with elite athletes, to map the effect phenylcapsaicin has on physical performance. The study will take place in collaboration with the Spanish companies LIFEPro Nutrition and Indiex Sport Nutrition and will be conducted at the University of Pablo Olavide - High Performance Center (CIRFED), which is one of the most reputable universities in the world in the field of strength training.

• On 31 May, the annual general meeting was held in aXichem. The communique and minutes from the meeting are available on aXichem's website under Investor Relations.

• On June 16, it was announced that aXichem and Iovate Health Sciences International Inc. entered into an agreement to collaborate in the areas of research, development and commercialization of products containing aXichem's capsaicin analog product, aXivite. aXivite will be used under various brands in Iovate's portfolio. aXichem estimates the commercial value of the agreement with Iovate at approximately US$5 million spread over the next three years.

• On August 18, the company announced that a mini review, which presents the promising data generated in aXichem's first clinical study, conducted at the Center for Applied Health Sciences in Canfield, Ohio, USA, in 2021 was published in the International Journal of Clinical Skills (2022) 16 (7), The study was conducted to evaluate the effect of phenylcapsaicin in humans with leaky gut. The result suggests that a daily intake of phenylcapsaicin, in a low dose, is likely to have a positive impact on people with leaky gut.

• On September 1, aXichem communicated that the company had been granted a patent for phenylcapsaicin for the use in treatment of leaky gut.

• On September 29, aXichem announced indicative positive data from a clinical trial, regarding phenylcapcaisin’s effect on sports performance in athletes, carried out at University of Pablo Olavide, Spain. The trial is now finalized, and the first phase of data analysis is concluded. The initial results have a high scientific relevance for sport nutrition and sport performance, and the aim is to have them published in a high-impact journal of sport science.

• On October 18, the company announced that it had obtained a new order, at total value of 280 000 USD, from its U.S. distributor SEE Nutrition. In June this year aXichem entered into a collaboration with Iovate, a client of SEE Nutrition, in the areas of research, development and commercialization of products containing aXichem’s capsaicin analogue product, aXivite. aXichem then estimated a wholesale value of this agreement with Iovate to amount to about 5 million USD distributed over the next three years. The now obtained order is the first delivery to honor this agreement.

• On October 27, aXichem is granted a patent for phenylcapsaicin for use in the treatment of idiopathic pulmonary fibrosis.

• On November 30, aXichem communicated that the company has entered into an agreement with Västra Hamnen Corporate Finance AB regarding the position as Certified Adviser, starting on January 2, 2023.

Significant events after the end of the reporting period

• On January 3, aXichem announced that the company has received questions from the European Food and Safety Authority (EFSA), regarding its Feed Additive application. This is a normal and expected part of the process, and the questions will be responded to by aXichem’s team. In accordance with EFSA’s process this means that the legal maximal time for the approval currently is set to September 2023.
• On January 25, aXichem announced that Chr. Olesen has added aXiphen^® to their official product portfolio. The inclusion of aXiphen in the product line is the first step in a pre-launch marketing program and further confirms Chr. Olesen's commitment to providing innovative and high-quality feed solutions to the market.

• On February 1, aXichem announced that the product Muscletech Burn iQ^™, where aXivite^® is one of the active ingredients, is now available to the market through another strong sales channel, namely the world-leading American retailer GNC (General Nutrition Corporation). GNC is a leading global health and wellness brand that provides high-quality, science-based products and solutions.

• On February 7, aXichem announced that the company has entered into a production collaboration with the Swedish unit of an established, major manufacturer of chemical substances. The collaboration concerns the manufacture of aXichem's raw material phenylcapsaicin and secures further capacity for future sales of aXiphen to the feed market.  aXichem estimates that sales to a value of approximately SEK 60–80 million is possible during the first 12–18 months after market approvals in the EU and in Brazil.

• On February 7, the company announced that it expects significantly increased sales over the next twelve months from sales of the company's natural analogue product phenylcapsaicin in the area of ​​dietary supplements and nutraceuticals. aXivite as an active ingredient has been launched at leading retailers such as GNC (General Nutrition Corporation) and Amazon. The company therefore assesses that continued positive development for aXivite can result in revenues of approximately SEK 20-25 million over the next twelve months.

• On February 22, aXichem announced that aXivtie will be launched in three new products on the U.S. market under the best-selling brand Hydroxycut. The new products are a result of aXicem’s strategic partnership with Iovate, a market leader in nutrition and supplement products for fitness and weight control.

CEO Torsten Helsing comments

The result for the fiscal year 2022 amounts to SEK -14.545 thousand. Net sales amount to SEK 3.539 thousand in the fourth quarter and SEK 5.007 thousand for the year. The costs for the year amount to SEK -19.763 thousand and are in line with budget. Costs mainly relate to production, transport of produced goods, regulatory work and costs for sales and marketing of our approved ingredient aXivite.

Exciting year behind us – and ahead of us

It has been an exciting 2022 for aXichem and our phenylcapsaicin product. I’m proud to say that we have established aXivite as an innovative brand in the nutraceutical market. The most active market is the U.S., but we are also starting to see some good traction in Europe. New products with “aXivite inside” are continuously being launched and several more are in the planning. During the year aXivite has been evaluated in a high-quality study at University of Pablo Olavide, Spain, regarding sports performance in athletes. The top-line data that we received in the fourth quarter indicates high scientific relevance for sport nutrition and sport performance. We expect to see the final report with a complete presentation of the data in the coming months. Results like these will obviously add to the product’s credibility and give our distributors in this market segment a strong marketing and sales message.

Largest order so far for aXivite – 280 thousand USD

In October aXichem reached a new milestone and obtained our largest order so far. The order for aXivite amount to a total value of 280 000 USD and was placed by our U.S. distributor SEE Nutrition. In June 2022 aXichem entered into a collaboration with Iovate in the areas of research, development and commercialization of aXivite. The order in October last year is the first delivery related to this agreement. We are very pleased about the development of the collaboration with Iovate. The marketing activities promoting Muscletech Fat Burn iQ, the first consumer product containing aXivite under the collaboration, are very aggressive and well executed. Fat Burn iQ is an excellent display window for aXivite and its unique characteristics. The next step in the collaboration with Iovate was announced after the period’s end. During the second half of 2023 Iovate plan to launch three new products, under their world-leading brand Hydroxycut, containing aXivite. We expect that 2023 will be a great year for aXivite and we will continue to catch the opportunities that the growing interest in training, fitness and weight management brings, both in the U.S. and in Europe. As communicated in February this year, we believe that continued positive development for aXivite can result in revenues of approximately SEK 20-25 million over the next twelve months.

Regulatory work in EU for aXiphen progressing

In March 2022 we filed our EU Feed Additive application, to the European Food Safety Authority (EFSA), for phenylcapsaicin in poultry feed applications. The review process follows pre-defined steps and can be tracked on EFSA’s homepage. The review process includes a phase, the "risk assessment phase", where EFSA asks questions related to the application. During this phase EFSA has six months to review the applicant’s file. When EFSA asks the applicant a question, the review is paused during the time that the company works on providing an answer. This means that the actual time that an application can be in the "risk assessment phase" can vary extensively depending on the nature of the questions from EFSA and how long the applicant needs to answer the questions.

At the turn of the year aXichem received a number of questions from EFSA, which EFSA estimated would take us six months to answer. The company estimates that the questions can be answered relatively quickly, which means that EFSA should be able to resume the review already in the first quarter of 2023. Currently, EFSA has its own legal deadline for the application in September 2023, which is based on aXichem using six months for responding to the questions (responding in June) and EFSA using its remaining three moths review time (finalizing their work in September). The process is described on EFSA’s homepage, but I know it can be difficult to grasp all the details. We will follow up in our communication with status of the application as the process moves forward.

In the U.S. the regulatory process for approval of new feed ingredients, such as aXiphen, has undergone structural changes during the second half 2022. The changes include new requirements for documentation on effect and tolerance of the ingredient. The consequence for aXichem is that we are now preparing an updated file, with the requested data and continue the process. The approval process in Brazil is according to our contacts with the regulatory authorities proceeding. We have had no questions on the filed documentation. However our impression is that the regulatory authorities are affected by the political situation in Brazil and it is not possible to know exactly foresee the next step in our approval process.

Pre-launch activities for aXiphen

Together with our aXiphen distributor, CHR. Olesen, we are working with pre-launch activities in the EU, introducing the aXiphen to a selected group of poultry feed producers and are keeping them informed of the status of the approval process. The team is also working on production planning and logistics in order to minimize the production – delivery lead-time once the Feed Additive approval is in place.

After the period’s end, in February, we announced that aXichem has entered into a production collaboration with the Swedish unit of an established, major manufacturer of chemical substances, for the production of our raw material phenylcapsaicin. With the new collaboration we add yet another source for production of the raw material to support the planned demand for aXichem's product in the area of ​​poultry feed. The interest in aXiphen continues to be high and we expect that sales of approximately SEK 60–80 million are possible during the first 12–18 months after market approval in the EU and in Brazil.

Patent for phenylcapsaicin in treatment of IPF

aXichem is following its established patent strategy and continues to protect the rights for phenylcapsaicin for use in commercially interesting applications. In October we could add the patent for phenylcapsaicin in treatment of idiopathic pulmonary fibrosis (IPF). IPF is a chronic disease characterized by progressive fibrosis (scarring) of the lungs, which means that symptoms worsen over time. Phenylcapsaicin for IPF could, in the future, be further investigated in a pharmaceutical context in aXichem’s subsidiary Incendia Pharma.

Continue working for a successful 2023

Together with our team I will continue to build aXichem’s business, step by step, towards success. The date for aXichem’s Annual General Meeting is June 16, 2023. All shareholders are welcome to our office in Malmö. I hope to see you there.

Torsten Helsing, CEO

About aXichem AB (publ)

aXichem's business concept is to develop, patent and market nature-analog industrial compounds. aXichem's product is a natural analog substance called phenylcapsaicin, which is a synthetically produced and patented capsaicin. As phenylcapsaicin is synthetically produced and has a number of advantages compared to natural capsaicin, such as controllable quality and production process.

The product has benefits that makes it commercially interesting in several application areas, for example as ingredient in animal feed, as ingredient in dietary supplements, as a bio-enhancer and as a bio-repellent in marine applications. aXichem is currently marketing the product under different brands in two prioritized areas: aXivite^® for dietary supplements and aXiphen^® for poultry feed. aXiphen^® has shown properties as a growth promoter and anti-salmonella ingredient in studies made in commercial poultry production settings. In the neutraceutical - and sports nutrition market segment aXivite^® is today included in several products for weight control, improved metabolism and gut health.

aXichem aims to become a global supplier of industrial natural analogue chemicals to players in the chemical industry who manufacture products containing aXichem's raw materials. The company’s share is listed on NASDAQ First North since 2013.

Future prospects

aXichem's commercialization of phenylcapsaicin under the brands aXiphen^® , in the animal feed market, and aXivite^®, in dietary supplements market continues. The production capabilities  and logistics through subcontractors are in place as well as a production process optimized for commercial volumes.

The pace of development in the establishment of the products is determined by obtaining market approvals in the strategically important countries or regions, starting with EU, U.S., Brazil and India.

aXichem cooperates with specialized distributors, who either have their own production or collaborate with innovative leading producers.

The company has market approval for aXivite in the EU and in North America. A continued positive development for aXivite can result in revenues of approximately SEK 20-25 million in the next twelve months.

aXiphen is not yet approved for the animal feed market, but is expected to obtain approval in EU, U.S. and Brasil during 2023. The interest in aXiphen continues to be high and the company expect that sales of approximately SEK 60–80 million are possible during the first 12–18 months after market approval in the EU and in Brazil.

Financing

The board of aXichem decided on April 5, 2022, subject to the general meeting's approval, which was obtained at the extraordinary general meeting on April 22, 2022, to take out a convertible loan of SEK 20 million from Formue Nord Fokus A/S. The proceeds are intended to be used to ensure the company's growth and business development in line with the objectives that have been communicated. The nominal amount of the convertible loan amounts to SEK 20 million and carries an annual interest rate of 12 percent and is due for payment on October 31, 2023, unless the convertibles have been converted before then. The conversion rate amounts to SEK 20. If the convertible loan is converted in its entirety, the number of shares in the company will increase by 1,000,000 and the share capital by SEK 200,000. aXichem's board works continuously to ensure the company's long-term financing.

Certified Adviser

Redeye has been the company's Certified Adviser during 2022. From January 2, 2023 Västra Hamnen Corporate Finance is aXichems Certified Adviser.

Ownership structure

For information about the company's owners and insiders, see the company's website www.axichem.com. For information on insider trading, see the Financial Supervisory Authority's register.

Financial calendar

Q1 report Jan – March, 2023        2023-05-24

Annual Report                               2023-05-26

Annual General Meeting               2023-06-16

Q2 report Jan – June, 2023          2023-08-23                                                                                                                                       

Q3 report Jan – Sept, 2023          2023-11-22

Year-end report 2023                   2024-02-21

The board and managing director assure that the interim report provides a fair overview of the company's operations, position and results and describes the significant risks and uncertainty factors that the company is facing.

Lund, 23 February, 2023
The board of aXichem AB (publ)

The information was submitted, through the contact person below, for publication on February 23, 2023, at 07:30 AM CET. The report is published on the company's website under Investor Relations. Direct link to the report: https://www.axichem.com/investors-relations/#financial-reports

Torsten Helsing, VD i aXichem, +46 70 686 33 55. E-post: torsten.helsing@axichem.se

aXichems affärsidé är att utveckla, patentera och marknadsföra naturanaloga industrikemikalier. Bolaget arbetar framför allt med fenylcapsaicin, en naturanalog syntetisk capsaicin med breda tillämpningar inom en mängd olika områden, såsom kosttillskott, ingrediens i djurfoder, marina tillämpningar samt enskilda farmaceutiska områden. aXichems aktie är listad på NASDAQ First North Growth Market med kortnamnet AXIC A. Certified Adviser: Certified Adviser: Västra Hamnen Corporate Finance www.vhcorp.se. Mer information om aXichem finns påwww.axichem.se