Simris Alg interim report January – December 2020

Growth in sales and improved operating result 2020; focus on three business areas; beauty industry veteran Steven Schapera nominated as new chairman of the board

Simris Alg AB (publ) (FNSE:SIMRIS) has published its financial results for January – December 2020.

• Net sales grew to 0.545 MSEK (0.236) during the fourth quarter and in total 2.166 MSEK (1.743) during the year. Net sales in the USA grew to 0.341 MSEK (0.045) during the fourth quarter and a total of 1.011 MSEK (0.133) during the year.

• The operating result was -7.166 MSEK (-6.125) during the fourth quarter and a total of -23.694 MSEK (-24.626) during the first half year.
• The company received an additional 12.7 MSEK before transaction costs during the fourth quarter, as the full amount of warrants were exercised that had been issued as part of an oversubscribed 29.1 MSEK rights issue of units in July 2020.

Significant events after the reporting period     

• The company presents three dedicated business areas: cosmetics and pharmaceuticals within SIMRIS BIOMIMETICS, new food ingredients under SIMRIS NOVEL FOODS, and omega-3-supplements under the SIMRIS consumer brand. The company will increasingly focus on research & development and strategic collaborations from 2021.
• To support the company’s strategic development the nomination committee presents Steven Schapera as the new chairman of the board from the general meeting in May 2021. Steven Schapera has more than 30 years’ experience founding and building businesses and is regarded as one of the leading experts in the global cosmetics industry, having co-founded BECCA Cosmetics in 2001 and exited to Estée Lauder in 2016. Schapera serves as Chairman of ASX/FWB-listed Crowd Media Holdings and furthermore serves on a number of other boards in the health/beauty/wellness space.
• New e-commerce platforms are released on simris.com for the US-market and eu.simris.com for Sweden and the EU.                     

COMMENT FROM THE BOARD OF DIRECTORS
In connection with the publishing of the company’s numbers for Q4 and the entirety of 2020 the board of directors want to clarify the company’s strategy and way forward.

Simris Alg’s core business is to develop and commercialize algae based substances. This is done under the own brand of Simris, but increasingly together with partners. Going forward, the business will be constituted of the following areas.

SIMRIS BIOMIMETICS
SIMRIS BIOMIMETICS is the business area within cosmeceuticals/pharmaceuticals. The intent is to build on the unique biochemical pathways provided by microalgae and their capacity for post-translational modifications. The latter are of great importance for the development and manufacturing of so-called second generation bio-based pharmaceuticals. This business area is focused on B2B (business to business) and the company’s research and development capabilities paired with its unique production method, provide a strong offering to prospective partners. The first identified areas are enzymes with skin-protecting properties, anti-inflammatory and prebiotic polysaccharides, and substances for treatment of atopic dermatitis. The first products are expected to reach the market in 2022.

It can be noted that Simris’ uniquely gentle production method is of essence, since sensitive protein- and peptide-based biomolecules are not degenerated in the production process, something that can be the case with other production methods and which is one of the reasons why promising research projects within the algae industry are problematic to scale industrially.

The research and development within SIMRIS BIOMIMETICS takes place in near collaboration with partners and leading scientists within areas such as skin function and bioprocess technology.

SIMRIS NOVEL FOODS
The activities within novel foods/alternative proteins will be gathered under the business area SIMRIS NOVEL FOODS. Algae are the very basis of the marine food chain and are a given part of the discussion regarding a new food system, based on health and sustainability. The production process for Omega-3 already provides two additional products:

• Algae Flourish, an algae powder with a very high protein content (above 55%), all essential amino acids and rich in minerals and vitamins.

• Algae Ganache, a fresh algae crème with a unique and very attractive taste profile and texture.

Algae Flourish is currently under development for food purposes together with a multinational corporation that we unfortunately are prevented from disclosing. Algae Ganache has been described as the vegan wedding between beluga caviar and foie gras and has for instance been served by the famous Swedish chef Paul Svensson of the Fotografiska restaurant.

These two novel food opportunities are of course only the beginning. Algae are one of the key answers to the protein shift and we expect Simris’ development and production capabilities to result in further collaborations.

It can further be noted that even though the processes for regulatory approval of novel foods are time-consuming within the European Union, the situation is substantially more beneficial in countries including the US, Singapore and the UK post Brexit. Simris’ omega-3 products are still pending approval in the EU and the process is estimated to require further investments in additional studies. The company is therefore reevaluating its regulatory strategies to reach its target markets within reasonable costs and time frames.

SIMRIS
The direct to consumer business area within Omega-3 – what most people associate with the company today – will be concentrated to the USA-based subsidiary Simris Inc. The company will search for a partner to this subsidiary, for parts of or the entirety of the business, in order to leverage the full potential inherent in the company’s Omega-3 products. The sales results so far have of course not yet reached our expectations, but at the same time the quality of the products have been verified through partnerships with industry leaders such as Goop. The latest in a row of positive mentions can be found in the February edition of Vogue USA, where Simris’ Omega-3 products were featured under the “latest obsessions” theme. Until the right partner has been identified, the company will focus its efforts to digital channels and new version of the website was released the other week as a part of this effort. We expect this business are to generate good sales growth over time.

*

In order to support the company’s strategic development the nomination committee has been tasked with a review of the composition of the board. On behalf of the nomination committee, we are therefore very happy to inform that Steven Schapera has accepted to be nominated as new Chairman of the Board at the annual general meeting this spring.

Steven Schapera has more than 30 years’ experience founding and building businesses across agricultural, wine, and cosmetics industries. Having studied both mechanical engineering and winemaking, Steven possesses a rare mix of technical and bio-technical skills. These are combined with an excellent understanding of supply chain, branding and positioning. He is regarded as an expert in the global cosmetics industry, having co-founded BECCA Cosmetics in 2001 and exited to Estée Lauder in 2016. He continues to serve as Chairman of BECCA Holdings, the original investment entity. He also serves as Chairman of Crowd Media Holdings Ltd, listed on the Frankfurt and Australian stock exchanges. He furthermore serves on a number of other Boards in the health/beauty/wellness space. Steven Schapera was one of the participants in the rights issue during 2020 and is today the second largest shareholder in Simris Alg AB.

Steven Schapera’s profile on LinkedIn can be reached at:  https://www.linkedin.com/in/steven-schapera-0a889b51/

On behalf of the board of Simris Alg AB (publ)
Johan Jörgensen, chairman of the board

The full version of the report is available in Swedish from https://www.simrisalg.se/investerare

FOR MORE INFORMATION, PLEASE CONTACT:
Fredrika Gullfot, CEO Simris
Tel: +46 761 345 474, email: gullfot@simris.com

ABOUT SIMRIS ALG AB (PUBL)
Simris Alg is a multi-awarded pioneer business developing bioactive substances from algae. The company's purpose and business is to save endagered marine habitats by producing raw materials from microalgae, instead of fish and other marine animals. Simris operates in three business areas: SIMRIS BIOMIMETICS (skincare and pharmaceuticals), SIMRIS NOVEL FOODS (new dietary ingredients), and the SIMRIS consumer brand targeted to the global lifestyle, beauty and wellness markets. Simris Alg's shares are traded on the Nasdaq First North Growth Market with ticker SIMRIS and ISIN SE0008091664. Certified Adviser is Mangold Fondkommission AB, phone +46 (0)8-503 015 50 and email ca@mangold.se.