SIMRIS ALG AQUIRES CYANO BIOTECH IN ACCRETIVE DEAL

Simris Alg AB (publ), today announced the successful completion of its acquisition of Cyano Biotech GmbH, a profitable, privately held Berlin-based biotech company. The transaction is comprised of an initial cash purchase price of €2.0m, an allocation of Simris shares to the value of €240k, and complemented by future performance-based earn-outs capped at a further €8.0m. The immediate financing of the transaction has been secured through a flexible funding facility.

Cyano Biotech brings to Simris one of the world’s largest libraries of cyanobacteria, an in-house R&D facility, plus a strong and well protected technology platform that takes Simris into the BioPharma space – in particular the field of ADC’s and cancer treatment.

Cyano Biotech GmbH. hold what we believe to be one of the world's largest libraries of cyanobacteria, comprised of more than 1,100 producer strains. To date, Cyano's research has identified more than 5,000 novel, natural, compounds including hundreds of hits and leads within the fields of BioPharma, BioAgro, Cosmetics and Human & Animal Nutrition. The acquisition of Cyano Biotech GmbH, which is an accretive deal for Simris shareholders, fits perfectly with Simris’ long-term objective to accelerate revenue generation by selling high value, high margin products across these industry sectors.

“Both microalgae and cyanobacteria offer a novel, natural, and sustainable platform to provide many of the compounds modern science needs to improve the quality of life on earth. This acquisition will elevate the level at which Simris operates, leverages the strengths of both companies, and delivers many synergies for cost efficiency. I expect the deal will generate significant value for Simris shareholders as we further develop our business into high-margin sectors” said Julian Read, CEO Simris Alg AB.

Simris Chairman, Steven Schapera, added that “Cyano Biotech has been profitable since 2020, meaning the acquisition is immediately accretive to Simris Alg AB. Considering the strength of their patents and advanced discussions with ADC and Pharma companies, there is good reason to be optimistic about our potential to rapidly accelerate revenue generation in the coming years.”

Cyano Biotech has over 17 years of experience in drug discovery, lead optimisation and strain development. They have developed and patented a platform technology for the generation and production of novel Antibody Drug Conjugate (ADC) payloads. ADC payloads from cyanobacteria are powerful toxins that, when attached to a specific antibody, can be delivered into a cancer cell where they are released, killing the cancer cell and without harming healthy cells.

From its vast library, Cyano Biotech has identified multiple toxins with applications as ADC cancer therapeutics. The first, and most advanced of these is the Microcystins class of toxins, which Cyano has patent protected as novel, next-generation, ADC payloads.

“Cyanobacteria are a prolific, yet so far overlooked, source of bioactive natural products. Whilst the science around ADCs as a cancer treatment is the most advanced, we are equally excited to explore leads for new antibiotics, compounds with cosmetic potential and even within the treatment of Alzheimer’s disease. This platform enables us to map out a pipeline of product innovation and revenue generation from the near to the long term.” continued Julian Read.

Many cyanobacteria are best grown in horizontal, glass-tube photobioreactors, the method used by Simris to grow their microalgae since inception. In addition to this compelling production synergy, the acquisition of Cyano Biotech GmbH provides Simris Alg AB with its own internal R&D capability, removing the need for costly external R&D support. It is therefore anticipated that this acquisition will both broaden revenue generation opportunities, accelerate infrastructure development and capability, and bring substantial operational cost savings to both operations.

Transactional and Financial Details

Under the terms of the deal, Simris will pay an initial, phased, purchase price of €2.24m plus earn-out’s on Cyano Biotech’s non-ADC operations. A cash payment of €1.0m and an allocation of shares in Simris Alg AB equivalent to a value of €120k will be made upon closing the deal. A further cash payment of €1.0m and an allocation of shares in Simris Alg AB equivalent to a value of €120k will be twelve months later. All subsequent payments are purely performance-based and will be triggered (1) upon milestone sales from Cyano Biotech’s patented technology platforms up to a maximum total payment of €10.24m, including the initial purchase price, contract research projects, milestone and royalty payments, and (2) an allocation of shares in Simris Alg AB equivalent to a value of 10% of revenue from Cyano Biotech’s non-ADC operations until end 2025. Cyano Biotech is expected to deliver an EBITDA in the region of €100k in 2022.

As part of the transaction, and to cement alignment of interest, Cyano Biotech founders Dr Dan Enke and Dr Heike Enke will become shareholders in Simris. They will remain contractually engaged with the merged business, and will continue to direct all research and development work; they will do this from Cyano Biotech's laboratories in Berlin. All Business Development, and the GMP-certified production of ADC payloads, will be driven by Simris Alg from their existing facilities in Sweden.

The Brand Laboratories FZ, a company associated with Simris Chairman, Steven Schapera, is providing the business with a flexible €1.0m funding facility to be drawn down as and when required. The loan is to be paid back within twelve months and will accumulate interest at 1.0% per month. This ensures that Simris can make this acquisition without impacting the runway created through the recent capital raise, 50% of which was flagged for investment into improving the production facility. This allows Simris to make the improvements necessary to ensure GMP certification, and ensure the consistent product quality required when producing BioPharma products, as planned.

For more information contact:
Julian Read
CEO Simris Alg AB
Email: julian@simris.com
Phone: +46767888212

www.simrisalg.se

This information is information that Simris Alg AB is obliged to make public according to the EU's market abuse regulation. This information was provided by the above contact person for publication on 2022-08-25 at 13:15 AM CEST

ABOUT SIMRIS ALG AB (PUBL):
Simris Alg is a biotechnology company identifying high value, natural, biologically active compounds found in microalgae and cyanobacteria to extract for applications in skincare, nutrition, and biopharmaceuticals. The company sustainably grows microalgae and cyanobacteria at industrial scale within its photobioreactor facility whereby conditions are optimized for production of these high-value compounds.

Simris Alg's shares are traded on the Nasdaq First North Growth Market with the short name SIMRIS and ISIN code SE0008091664. Certified Adviser is Amudova AB, telephone: 08-546 017 58, email: info@amudova.se.