Third Quarter Report 2013

CORTENDO REPORTS RESULTS AND ACTIVITIES FOR THE THIRD QUARTER AND NINE MONTHS OF 2013

THIRD QUARTER HIGHLIGHTS

• Successful Private Placement of NOK 75 (SEK 81.6) M and Strengthening of Institutional Ownership
• Crespine® in Hip Osteoarthritis - Clinical Outcomes presented at ICRS Conference
• Clearance of First European Clinical Trial Application for NormoCort™ in Cushing’s Syndrome from the MHRA in the UK
• The Net Loss was SEK 12.95m for the third quarter and SEK 22.40m for the first nine months of the year, compared with a Net Loss of SEK 5.49m and SEK 15.44m for the same periods in 2012
• The reported costs during Q3 reflect much higher G&A and other operating costs related to the September Private Placement and currency losses
• As of 30 September 2013, Liquid Assets amounted SEK 101.04m, compared to SEK 9.86m at the end of September 2012

KEY ACTIVITIES AND NEWS IN THE THIRD QUARTER
Cortendo’s main operational focus has been to advance its pipeline, in particular NormoCort fo Cushing’s Syndrome. In July, Cortendo received its first authorization from a European country (UK)
to initiate the Phase 3 trial, making progress towards the goal to initiate a single Phase 3 trial in the US, EU and other countries. Protocol modifications have been discussed and submitted to regulators. During Q3 Cortendo have made extensive evaluations of several Contract Research Organization (CRO) companies, and contracted with the selected CRO to conduct the Phase 3 trial. 

Efforts are currently focused on protocol refinements and activities needed to be in a position to start patient enrollment. Efforts are ongoing to define the development path for Crespine and BioPancreate that are expected to yield development guidance and regulatory clarifications. Cortendo’s goal is to be in a position to start a pivotal PMA trial for Crespine that could, if positive, form the basis for the potential approval of this product. BioPancreate Inc’s goal is to complete the preclinical development phase with a target to file an application to start Phase 1 clinical development by the end of 2014 for its novel diabetes project.

PRIVATE PLACEMENT OF NOK 75M AND STRENGTHENING OF INSTITUTIONAL OWNERSHIP
On September 5 Cortendo announced the successful closing of a private placement totaling approximately 20.3 million shares offered at NOK 3.70 (SEK 4.03) per share. The private placement raised approximately NOK 75 million (SEK 81.6 million or USD 12.3 million) in gross proceeds. Two thirds of the offering was subscribed by new investors that include several large institutions. With this financing, the institutional ownership of the company now exceeds 20%. The private placement was managed by Arctic Securities ASA and DNB Markets. In line with the existing board decision, Cortendo’s efforts have continued and also intensified to improve liquidity and prepare for a listing of the share on an official public exchange.

CLEARANCE OF FIRST EUROPEAN CLINICAL TRIAL APPLICATION (CTA) BY UK MHRA
Cortendo announced on July 30th that it received its first authorization to conduct a clinical study with NormoCort™ (COR-003) in the European Union (EU) from the MHRA in the UK. The authorization is conditional on minor changes to
the Phase 3 protocol that have been agreed on and will be implemented by Cortendo. 

CRESPINE® IN HIP OSTEOARTHRITIS - CLINICAL OUTCOMES PRESENTED AT ICRS CONFERENCE
Crespine Gel was the subject of an oral presentation by Dr. Göran Skog at the International Cartilage Repair Society (ICRS) conference held on September 17 in Izmir, Turkey. The presentation was entitled: Clinical outcomes of intra-articular injections of Crespine Gel in patients with Hip Osteoarthritis: A retrospective study. The abstract is available on the ICRS conference website and represents the first data published on the use of Crespine in Hip osteoarthritis (Hip OA).

Dr. Skog, a specialist in orthopedic medicine and invasive pain management, performed the study at NIMI, a Norwegian Sports Medicine Institute in Oslo. Overall, Dr. Skog has treated over 200 Hip
OA patients with Crespine Gel.

PROFIT AND LOSS
The following text references the Profit & Loss and Balance Sheet tables in the reporting currency SEK on page 4-5. In addition, a convenience translation into US Dollars of the Profit & Loss and Balance Sheet tables has been provided on page 6-7. 

Cortendo’s products are in the research and development phase and Cortendo does not currently have any product-based revenues. 

Revenue for the third quarter 2013 consisted of Other Operating Income of SEK 0.21m and SEK 0.26m for the first nine months of 2013, compared with SEK 0.15m in the third quarter 2012 and SEK 0.16m for the first nine months of 2012. Other Operating Income represents currency gains. 

Operating expenses for the third quarter 2013 amounted to SEK 13.37m and SEK 22.93m for the first nine months of the year, compared with SEK 5.64m in the third quarter 2012 and SEK 15.60m for the first nine months 2012. Adjusted for certain items affecting comparability, i.e. costs in Q3 for financings (SEK 4.0m) and currency losses (SEK 2.7m), the development of actual costs was broadly in line with planning assumptions and moderately higher than the previous period of Q3 2012. 

R&D project costs including patent costs) and Payroll & Related Costs constitute the key underlying cost drivers. For the third quarter of 2013 R&D project costs (including patent costs) constituted 3.71m (28%) of operating expenses. Payroll & Related Costs (and G&A costs) constituted 6.95m (52%) of operating expenses. Reported G&A costs were heavily influenced by costs relating to the private placement in Q3’2013, and not reflective of underlying cost trends, that was actually slightly lower than in the period last year. For the third quarter of 2012 R&D project costs (including patent costs) and Payroll & Related costs (and G&A costs) constituted 3.40m (60%) and 1.73m (31%) of operating expenses, respectively. For the first nine months of 2013 R&D project costs (including patent costs) constituted SEK 8.41m (37%) of operating expenses. Payroll & Related costs (and G&A costs) constituted SEK 11.16m (49%) of operating expenses. For the first nine months of 2012 R&D project costs (including patent costs) and Payroll & Related costs (and G&A costs) constituted SEK 9.84m (63%) and SEK 4.93m (32%) of operating expenses, respectively. 

The Net Loss was SEK 12.95m for the third quarter and SEK 22.40m for the first nine months of 2013, compared with a Net Loss of SEK 5.49m and SEK 15.44m for the same periods in 2012.

CASH FLOW AND BALANCE SHEET
As of 30 September 2013, Liquid Assets amounted to SEK 101.04m compared to SEK 9.86m at the end of September 2012. As of 30 September 2013 liabilities totaled SEK 1.88m, compared with SEK 1.33m at the end of September 2012.

The total number of outstanding shares as of 30 September 2013 was 82.138.363. The total number of outstanding share options is 6.365.000. The strike prices are between SEK 1.00-6.00 per share, with an average of SEK 2.39 per share.

CALENDAR 2013
Cortendo plans to present financial results for on the following date:
4Q 2013: 20 February 2014

For further information, please contact:
Alexander Lindström
Chief Financial Officer
Office : +1 610 254 9200
Mobile : +1 917 349 7210
E-mail : alindstrom@cortendo.com

Risk and uncertainty
The development of pharmaceuticals carries significant risk. Failure may occur at any stage during development and commercialization due to safety or clinical efficacy issues. Delays may occur due to requirements from regulatory authorities not anticipated by the company.

About Cortendo
Cortendo AB is a biopharmaceutical company headquartered in Göteborg, Sweden. Its stock is publicly traded on the NOTC-A-list (OTC) in Norway. Cortendo is a pioneer in the field of cortisol inhibition and has completed early clinical trials in patients with Type 2 diabetes. The lead drug candidate NormoCort, the 2S,4R-enantiomer of ketoconazole, has been re-focused to Cushing’s Syndrome, and is expected to enter Phase 3 development. The company’s strategy is to focus its resources to opportunities where the path to commercialization or partnership is clear and relatively near-term. Strategically, Cortendo’s business model is to commercialize relevant opportunities in the United States while partnering its assets ex-US. Backed by a highly experienced leadership team Cortendo has plans to continue to implement its pipeline expansion efforts in osteoarthritis and diabetes, as well as other near term revenue opportunities.

Cortendo Forward-looking Statements
This press release contains forward-looking statements concerning Cortendo that involve a number of risks and uncertainties. All statements other than statements of historical facts included in this press release, including, without limitation, statements regarding the Company’s future financial position, strategy, anticipated investments, costs and results, plans, projects to enhance efficiency, outcomes of products development, future capital expenditures, liquidity requirements and objectives of management for future operations, may be deemed to be forward looking statements. These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements or industry results to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward looking statements. Given these risks and uncertainties, investors should not place any undue reliance on forward looking statements as a prediction of actual results. None of these forward looking statements constitutes a guarantee of the future occurrence of such facts and data or of actual results. These statements are based on data, assumptions and estimates that the Company believes are reasonable. The forward looking statements contained in this document are made only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates of any forward-looking statements contained in this press release to reflect any change in its actual results, assumptions, expectations or any change in events, factors, conditions or circumstances on which any forward looking statement contained in this press release is based.