PRESS RELEASE

AB SCIENCE PRESENTS ITS FINANCIAL INFORMATION AS OF DECEMBER 31, 2022 AND THE KEY EVENTS OF THE PERIOD

• Financial information and other corporate information
  • Consolidated operating loss of €15.9 million as of 31 December 2022, compared with a loss of €13.8 million as of 31 December 2021, an increase of the operating loss of €2.1 million (15.4%)
  • Cash position of €7.3 million as of 31 December 2022, plus a cash contribution of €11.5 million as part of the capital increase completed in April 2023, plus the €7.1 million of 2020 and 2021 research tax credit and €6.0 million for drawdown in January 2023 of the second tranche under the financing agreement with the European Investment Bank
  • Capital increase for an amount of €15 million completed in April 2023, of which €11.5 million in cash and €3.5 million in debt compensation
  • Drawdown of the two tranches (December 2022 and January 2023) under the financing agreement with the European Investment Bank for a total amount of €12 million
  • Renewal of the Programme d’Augmentation de Capital à Terme concluded by AB Science with Alpha Blue Ocean

(Investors are invited to take note of the risks associated with this potentially dilutive transaction, which could create downward pressure on the AB Science share, as mentioned in sections 6.4.4 and 6.4.6 of the 2022 annual report).

• Clinical development
  • Focus of the development strategy on amyotrophic lateral sclerosis with the masitinib platform and on the second microtubule platform and seeking licensing agreements for non-rare disease indications of masitinib
  • Filing of a marketing authorization application for masitinib in the treatment of amyotrophic lateral sclerosis (ALS) in Canada, under the Notice of Compliance with Conditions (NOC/c) policy and response to the Notice of Deficiency (NOD)
  • Filing of a conditional marketing authorization application to the European Medicines Agency (EMA) for masitinib in the treatment of amyotrophic lateral sclerosis (ALS) and response to the Day 120 assessment of the procedure in April 2023
  • Approval of both confirmatory Phase 3 studies with masitinib in progressive forms of multiple sclerosis and Alzheimer's disease in Europe and in the US
  • First complete bone marrow response in an acute myeloid leukemia patient in its AB8939 Phase I/II clinical trial

Paris, 28 April 2023, 6.30pm CET

AB Science SA (Euronext - FR0010557264 - AB) today reports its revenues for the year 2022 and provides an update on its activities.

CLINICAL DEVELOPMENT KEY EVENTS DURING THE YEAR 2022 AND SINCE DECEMBER 31, 2022

Focus of the development strategy on amyotrophic lateral sclerosis with the masitinib platform and on the second microtubule platform and seeking licensing agreements for non-rare disease indications of masitinib

On 21 April 2023, AB Science announced its decision to focus its development strategy as follows:

• Allocation of current resources primarily to the development of masitinib for the treatment of amyotrophic lateral sclerosis and the development of the microtubule destabilizer agents (MDA) platform, with the clinical development of AB8939 in refractory acute myeloid leukemia and the initiation of regulatory preclinical development of a new oral molecule in the same microtubule class for sarcoma and solid tumors.
  
  

AB Science wants to focus the majority of our clinical resources on the development of rare diseases with masitinib, on the development of the microtubule platform with AB8939 and future molecules of the same family due to the very encouraging first results.

• Acceleration of the process of seeking a license for masitinib in non-rare disease indications, with priority given to progressive forms of multiple sclerosis and Alzheimer's disease.
  
  

This acceleration is possible now that the confirmatory Phase 3 studies have been approved by the FDA in the United States and the major European agencies. To this end, the Company has retained the services of a leading investment bank.

This license search is a priority in the Company's strategy, given the number of clinical studies already conducted and the maturity of the pipeline, and given the additional investments required to complete the clinical program, up to market authorizations. We want to highlight that the duration of this license search is not predictable and that the realization of a license is dependent on a number of factors and is not guaranteed. However, the milestones reached at this stage are essential factors that contribute to the feasibility of this strategy.

As a result of the focus strategy, AB Science has decided to adapt its organization, which should lead to a significant reduction in costs. AB Science has therefore filed a redundancy plan to the authorities, aiming to cut a maximum of 41 jobs (out of a total of 100 employees).

This strategic focus reinforces and sustains the existing agreement between certain shareholders of AB Science and Alain Moussy.

Filing of a marketing authorization application for masitinib in the treatment of amyotrophic lateral sclerosis (ALS) in Canada, under the Notice of Compliance with Conditions (NOC/c) policy

AB Science announced in February 2022 that Health Canada has granted authorization to file a New Drug Submission for masitinib in the treatment of amyotrophic lateral sclerosis (ALS) under the Notice of Compliance with Conditions (NOC/c) policy. AB Science subsequently announced on May 26, 2022 that Health Canada had issued a favorable opinion on the preliminary review of the dossier and that the review of the dossier had started.

This assessment was made based on a pre-submission package sent by AB Science including, efficacy data of study AB10015, long-term survival data (75 months average follow-up from diagnosis) of study AB10015, and safety data.

In December 2022, AB Science announced that it has received a Notice of Deficiency (“NOD”) from Health Canada. This NOD means that Health Canada has requested the provision of additional information related to masitinib New Drug Submission. Initially, AB Science had 90 days to respond to this NOD, but because EMA and Health Canada regulatory procedures were concurrent and in order to ensure the best quality of responses in both procedures, AB Science, in agreement with Health Canada, has extended the response period to Health Canada by 30 days. AB Science responded to this NOD.

If granted, an NOC/c is authorization to market a drug with conditions. Such conditions will be discussed with Health Canada during the procedure.

An estimated 3,000 Canadians are currently living with ALS. Each year approximately 1,000 Canadians die from ALS. A similar number of Canadians are diagnosed with ALS each year.

Filing of a conditional marketing authorization application to the European Medicines Agency (EMA) for masitinib in the treatment of amyotrophic lateral sclerosis (ALS)

AB Science announced in August 2022 that it has filed an application for conditional Marketing Authorization to the European Medicines Agency (EMA) for masitinib in the treatment of amyotrophic lateral sclerosis (ALS). The application is based on results from the phase 2/3 AB10015 study and its long-term survival follow-up. Study AB10015 was a randomized, double-blind, placebo-controlled trial over a 48-week treatment period, conducted with 394 ALS patients and evaluating Alsitek in combination with riluzole versus riluzole alone.

This application has been validated by EMA and review by the Committee for Medicinal Products for Human Use (CHMP) has begun. The CHMP has a target of 210 active evaluation days to review the application.

In April 2023, AB Science announced it has submitted its responses to the Day 120 assessment of the procedure.

Approval of confirmatory Phase 3 study with masitinib in progressive forms of multiple sclerosis

AB Science announced in January 2022 that it has been authorized by the French Medicine Agency, ANSM, to initiate a Phase III study (AB20009) evaluating masitinib in patients with Primary Progressive Multiple Sclerosis (PPMS) or non-active Secondary Progressive Multiple Sclerosis (nSPMS).

This study has also been approved by several European agencies as well as by the US Food and Drug Administration (FDA).

The study will enroll 800 patients from numerous study centers with Expanded Disability Status Scale (EDSS) score between 3.0 to 6.0 and absence of T1 Gadolinium-enhancing brain lesions as measured by magnetic resonance imaging (MRI).

The primary objective of the study will be to evaluate the effect of masitinib on time to confirmed disability progression, with progression defined as 1-point worsening when EDSS baseline score ≤5.5, or 0.5 if baseline score >5.5 from randomization to week 96.

This confirmatory study follows successful completion of a first Phase 2B/3 study (AB07002) in primary progressive (PPMS) and non-active secondary progressive (nSPMS) multiple sclerosis. This study met its primary analysis endpoint, demonstrating a statistically significant reduction in cumulative change on EDSS with masitinib 4.5 mg/kg/day (p=0.0256).

Approval of confirmatory Phase 3 study with masitinib in Alzheimer's disease

AB Science announced in October 2022 that the first authorizations have been received to initiate its phase 3 confirmatory study (AB21004) evaluating masitinib in patients with mild to moderate Alzheimer's Disease (AD) from the French Medicine Agency (ANSM) together with AEMPS (Spain agency) and EOF (Greece agency).

This study has also been approved by the US Food and Drug Administration (FDA).

Study AB21004 is a randomized, double-blind phase 3 study to evaluate the safety and efficacy of masitinib in patients with mild to moderate Alzheimer's disease, as an add-on therapy to standard of care, cholinesterase inhibitors and/or memantine. The study will enroll 600 patients with confirmed clinical diagnosis of mild and moderate Alzheimer's disease, corresponding to an Activities of Daily Living (ADCS-ADL) score of less than 73 and a Mini Mental State Examination (MMSE) score of between 14 to 25, inclusive.

The objective of study AB21004 is to confirm treatment effect with masitinib 4.5 mg/kg/day as an adjunct to cholinesterase inhibitor and/or memantine in patients with mild-to-moderate Alzheimer's disease. The primary endpoint of the study will be to evaluate the effect of masitinib on absolute change from baseline in ADCS-ADL score and in ADAS-Cog-11.

This confirmatory study follows a first positive Phase 2B/3 study (AB09004) which showed that masitinib can generate a significant treatment effect relative to placebo in the primary endpoint of change from baseline in ADAS-Cog, an instrument that measures the effect on cognition and memory.

First complete bone marrow response in an acute myeloid leukemia patient in its AB8939 Phase I/II clinical trial

AB Science announced in March 2023 a case report from the initial stage of its Phase I/II study (AB18001) evaluating AB8939, a microtubule destabilizer, in patients with refractory and relapsed acute myeloid leukemia (AML).

The AML patient in question was in failure to prior treatment with azacitidine and presented with a MECOM gene rearrangement, which is a biomarker for resistance to standard chemotherapies that is associated with a high-risk of disease progression and inferior prognosis.

One month after the first treatment cycle (i.e., three consecutive days of AB8939 treatment) there was a drastic reduction in bone marrow blast cells (i.e., leukemia cells), from a pretreatment level of 55% to 5% (i.e., a morphologic leukemia free state). Remarkably, this response was achieved at a very low dose of AB8939, corresponding to the second step of dose increment (out of 13 potential steps) in phase I. The patient also showed excellent tolerance to AB8939, having experienced no treatment-related toxicities. At the request of the investigator, AB Science has authorized further treatment cycles of AB8939 to this patient. One month after the second treatment cycle of three consecutive days at this dose, a good response has been maintained with bone marrow blasts being at 10% (corresponding to a 5-fold reduction relative to baseline). A third treatment cycle for this patient has been initiated.

Considering the overall study to date, there have been no signs of moderate, severe or serious toxicity and approximately 50% of patients have requested further treatment cycles of AB8939 after the first cycle of treatment and a measurement at day 28.

CONSOLIDATED FINANCIAL INFORMATION FOR THE YEAR 2022

The operating result at 31 December 2022 was a loss of €15,937k, compared with a loss of €13,808k as of 31 December 2021, an increase in the operating loss of €2,129k (15.4%).

• Operating income, exclusively made up of revenues related to the operation of a drug in veterinary medicine, amounted to €958k as of 31 December 2022, compared to €1,607k a year earlier.
• Operating expenses amounted to €16,896k as of 31 December 2022, compared to €15,415k as of 31 December 2021, an increase of 9.6%.
• Marketing expenses were stable compared to 31 December 2021, rising from €493k at 31 December 2021 to €480k as of 31 December 2022.
• Administrative expenses decreased by 15% from €3,578k as of 31 December 2021 to €3,040k as of 31 December 2022.
• Research and development costs increased by €2,112k, or 18.8%, from €11,233k as of 31 December 2021 to €13,345k as of 31 December 2022.
  
  

The gain of €2,326k at 31 December 2022 is mainly related to the recognition of the change in fair value between 31 December 2022 and 31 December 2021 of the preference shares resulting from the conversion of the bonds in December 2016 (class C), i.e. a financial gain of €2,557k with no impact on cash for the period.

The consolidated net loss at 31 December 2022 is €13,615k compared to a loss of €14,463k as of 31 December 2021, a decrease of 5.9%.

The following table summarizes the consolidated financial statements for the year 2022 prepared in accordance with IFRS, and comparative information with the year 2021:

OTHER CORPORATE INFORMATION FOR YEAR 2022 AND SINCE DECEMBER 31, 2022

Capital increase for an amount of 15 million euros

AB Science announced on April 24, 2023 the success of its capital increase through the issuance of new ordinary shares with attached warrants, with a waiver of preferential subscription rights.

The Capital Increase consisted of a private placement pursuant to Articles L. 225-136 of the French Commercial Code and L. 411-2 1° of the French Monetary and Financial Code and has been carried out with a waiver of preferential subscription rights, pursuant to the delegation of authority granted to the Board of Directors under the 20^th resolution of the Combined General Shareholders’ Meeting of June 29, 2022. The Capital Increase has taken the form of the issuance of 2,608,686 actions new ordinary shares (the “New Shares”) to each of which are attached a share subscription warrant (the “Warrants”).

The Capital Increase was made through a cash contribution of approximately EUR 11.5 million and by offsetting existing receivables, i.e. approximately EUR 3.0 million (receivables related to the pre-financing of the research tax credit for the 2020 financial year and maturing in 2023, as well as approximately EUR 500,000 in interest accrued to date on the convertible bonds issued in February 2022).

Two warrants giving the right to subscribe to one ordinary share, all of the 2,608,686 New Shares and all of the 1,304,343 new shares that would be issued upon exercise of the warrants, i.e. a total of 3,913,029 shares in the Company, represent 7.36% of the Company's current share capital.

The issue price of the New Shares has been set at 5.75 euros (0.01 euro par value and 5.74 euros issue premium) and the exercise price of the Warrants at 8.625 euros, representing a total fundraising of approximately EUR 15.0 million (taking into account the exercise of the warrants, the maximum amount of the Capital Increase could be increased by an amount of 26.3 million euros).

The Warrants may be exercised from January 1st, 2025 to December 31, 2030.

Drawdown of the first two tranches for a total amount of €12 million under its financing agreement with the European Investment Bank

AB Science announced in December 2022 that it has received payment of €6.0 million as the first tranche of a €15 million loan from the European Investment Bank (EIB).

AB Science announced in January 2023 that it has received payment of €6.0 million as the second tranche of the EIB loan.

The agreement signed with the EIB provides a financing in two tranches of EUR 6.0 million and a third tranche of EUR 3.0 million, each subject to the fulfillment of certain conditions precedent, which have been satisfied for the first two tranches. Each tranche is accompanied by the issue of warrants, the number of which is calculated in relation to a reference price of 14 euros according to the following formula : Number of warrants = Amount of the tranche / (14 x m) with m = 3.4 for tranche 1 and 3.7 for tranche 2.

The first tranche has a maturity of six years and is therefore repayable in December 2028. It carries a capitalized annual interest rate of 9.0% and the issuance of 126,050 warrants, each giving the right to subscribe to one ordinary share of AB Science at 8.61 euros for 15 years. These warrants represent 0.24% of the current capital of the Company (if they were to be exercised in their entirety).

The second tranche, also of EUR 6.0 million, has a maturity of five years and is therefore repayable in January 2028. It carries a capitalized annual interest rate of 7.0% and the issuance of 115,830 warrants, each giving the right to subscribe to one ordinary share of AB Science at 14.0 euros for 15 years. These warrants represent 0.22% of the current capital of the Company (if they were to be exercised in their entirety).

Renewal of the Programme d’Augmentation de Capital à Terme (PACT) concluded with Alpha Blue Ocean

Alpha Blue Ocean is committed to subscribe, from the date of publication of the 2022 annual report, to newly issued shares of AB Science (in tranches comprised of a number of shares between 500,000 and 1 million) over a period of 24 months, up to a maximum of 4.0 million shares in total (or 7.2% of the company’s share capital on the basis of the capital after the capital increase announced on 24 April 2023). Such subscriptions for new shares shall be carried out using the 28^th resolution of the Shareholder’s Meeting of June 29, 2022 (as renewed or otherwise amended, if applicable).

By way of example, based on the April 27, 2023 closing price of AB Science’s shares, i.e 6.27 euros, on Euronext Paris, it is estimated that AB Science could raise approximately 25 million euros through this equity financing facility.

For each tranche, the issuance price of new shares of AB Science, subscribed by Alpha Blue Ocean, shall be equal to 100% of the volume-weighted average price of the shares of AB Science traded on Euronext Paris over the three trading days preceding a tranche drawdown request.

For each tranche, and after the settlement-delivery of the new shares of AB Science following the relevant capital increase, 80% of the proceeds of the tranche shall be secured in an escrow account with a third-party escrow agent. The remaining balance shall be kept by AB Science.

Following predefined trading rules for each tranche, Alpha Blue Ocean shall manage the orderly sale, on or off the market, of the AB Science shares subscribed to. 95% of the proceeds shall be distributed to AB Science on a monthly basis (minus a structuration fee), directly from Alpha Blue Ocean or by way of a release from the escrow account.

AB Science has no obligations to draw down on the PACT and shall utilise this innovative financing solution only if necessary and if the market conditions are favourable to the interests of AB Science and its shareholders.

For each drawdown, the number of shares issued with respect to this agreement and admitted to trading will be reported in an Euronext notice and in a specific communication on AB Science’s website.

Investors are invited to take note of the risks associated with this transaction, potentially dilutive of 7.2% of the company’s share capital on the basis of the capital after the capital increase announced on 24 April 2023, which could create downward pressure on the AB Science share, as mentioned in sections 6.4.4 and 6.4.6 of the 2022 annual report. Investors are also invited to be vigilant before taking the decision to invest in a company that carries out such operations, particularly when they are carried out successively. AB Science recalls that the present dilutive financing operation is not the first one it has put in place.

Restructuring of convertible bonds issued in February 2022 and Class C preferred shares

AB Science announced on 21 April 2023 the negotiation of a framework agreement under which the terms and conditions of the bond issue agreement (entered into with the holders of the US$8.5 million convertible bonds issued in February 2022 and to which 50,000 warrants were attached with an exercise price of 000 warrants with an exercise price of EUR 12.65) would be amended to provide, on 15 July 2023 and automatically, for the conversion of all the convertible bonds into ordinary shares of AB Science on the basis of a price per share of EUR 5.75 (i.e. the subscription price of the New Shares).

A framework agreement has also been negotiated with the holders of Class C preferred shares (the “C Preferred”). The C Preferred still in circulation would be repurchased by AB Science for one symbolic euro (and subsequently cancelled). 520,786 share warrants (each warrant entitling the holder to subscribe for one ordinary share of AB Science at par value for a period of 12 months) will be issued in substitution of the C Preferred. In addition, still in substitution of the C Preferred, a new class of preferred shares would be created, benefiting from priority dividend rights (equal to 1.25% of the net sales of masitinib or of any licensing royalties, up to a limit of 9.0 million euros) and convertible into 750,000 ordinary shares of AB Science if the share price of AB Science exceeds a threshold of 30 euros for more than 90 consecutive days.

These agreements will be submitted to AB Science shareholders for approval at the next annual general shareholders meeting, Alain Moussy having declared that he was in favour of the planned restructuring.

Finally, it will be proposed to the shareholders to extend the term of certain lines of warrants already issued, to adapt to the evolution of AB Science’s strategy and of its clinical pipeline.

Decision of the Enforcement Committee of the French market regulator (AMF) following the investigation relating to the financial information and the market for AB Science shares, opened in September 2017

On March 24, 2022, the AMF Enforcement Committee ruled that there was no privileged information, neither at the time of the two capital increases carried out by AB Science on March 24 and 27, 2017, nor at the time Alain Moussy sold a part of his shares on March 31, 2017. The AMF Enforcement Committee therefore completely exonerated Alain Moussy, prosecuted for insider trading, and found that AB Science had not failed to comply with its disclosure obligations at the time of these capital increases in March 2017.

The AMF Enforcement Committee nevertheless considered that AB Science should have communicated as early as April 7, 2017 the high probability of a negative opinion from the European Medicine Agency (EMA) on the marketing authorization application for masitinib for the treatment of mastocytosis and ordered AB Science to pay the sum of one million euros.

In application of its internal procedures, AB Science had nevertheless put in place a deferral of privileged information from this date of April 7, 2017, considering that the delay in communication was in the interest of the Company and in line with industry practices of not communicating before the final vote of the CHMP, or else withdrawing the registration dossier, which AB Science had no intention to do.

Given this difference in assessment concerning a technical point relating to one of the criteria for the deferred communication of privileged information, as well as the amount of penalty, AB Science has decided to appeal to the Paris Court of Appeal. The President of AMF also appealed against the Enforcement Committee's decision. It concerns in particular the exoneration of Alain Moussy.

Other events

• Autres opérations sur les valeurs mobilières
  
  

During the year 2022, the following were granted:

• 183,040 share warrants, of which 50,000 were granted to a historical investor, 126,050 to the European Investment Bank as part of the financing agreement and 6,990 to directors
• 5,000 stock-options to an employee

• PEA-PME eligibility
  
  

AB Science confirms its eligibility for PEA-PME (a share savings plan aimed at providing finance to SMEs) in accordance with decree no. 2014-283 of 4 March 2014 taken for the application of article 70 of law no. 2013-1278 of 29 December 2013 of finance for 2014 fixing the eligibility of companies for PEA-PME, i.e. less than 5,000 employees on the one hand, an annual turnover of less than 1.5 billion euros or a balance sheet total of less than 2 billion euros, on the other hand.

About AB Science
Founded in 2001, AB Science is a pharmaceutical company specializing in the research, development and commercialization of protein kinase inhibitors (PKIs), a class of targeted proteins whose action are key in signaling pathways within cells. Our programs target only diseases with high unmet medical needs, often lethal with short term survival or rare or refractory to previous line of treatment.
AB Science has developed a proprietary portfolio of molecules and the Company’s lead compound, masitinib, has already been registered for veterinary medicine and is developed in human medicine in oncology, neurological diseases, inflammatory diseases and viral diseases. The company is headquartered in Paris, France, and listed on Euronext Paris (ticker: AB).

Further information is available on AB Science’s website:
www.ab-science.com.

Forward-looking Statements - AB Science
This press release contains forward-looking statements. These statements are not historical facts. These statements include projections and estimates as well as the assumptions on which they are based, statements based on projects, objectives, intentions and expectations regarding financial results, events, operations, future services, product development and their potential or future performance.

These forward-looking statements can often be identified by the words "expect", "anticipate", "believe", "intend", "estimate" or "plan" as well as other similar terms. While AB Science believes these forward-looking statements are reasonable, investors are cautioned that these forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict and generally beyond the control of AB Science and which may imply that results and actual events significantly differ from those expressed, induced or anticipated in the forward-looking information and statements. These risks and uncertainties include the uncertainties related to product development of the Company which may not be successful or to the marketing authorizations granted by competent authorities or, more generally, any factors that may affect marketing capacity of the products developed by AB Science, as well as those developed or identified in the public documents published by AB Science. AB Science disclaims any obligation or undertaking to update the forward-looking information and statements, subject to the applicable regulations, in particular articles 223-1 et seq. of the AMF General Regulations.

For additional information, please contact:

AB Science
Financial Communication & Media Relations
investors@ab-science.com

Attachment

• AB SCIENCE Resultats 2022 VENG VF