Message from the CEO

Dear shareholder, Dear reader,

At the release of this quarterly report, we are pleased to conclude achievement of three important goals – two during the quarter and one post end of quarter.

• In Q2: Admission for trading on Nasdaq Stockholm’s main market
• In Q2: Diversification and strengthening of Nuevolution’s shareholder base
• Post Q2: Amgen uses its right to Opt-In to the first program

Following focused efforts and an intense process that was initiated some 12 months ago, and in line with the goals we announced in September 2017, we were pleased to see that Nasdaq Stockholm’s listing committee approved admission of Nuevolution’s shares (ticker: NUE) for trading on Nasdaq Stockholm’s main market. The first day of trading was Monday June 25th, representing the achievement of a major goal for the company. The listing on the main market follows only after a significant scrutiny of the company’s operations, evaluation of the company’s fitness and assessment of skills and experience of board and management. Being allowed for trading on the main market is an honor, and it represents a quality stamp, that will support our ambitious intentions for further growth and value creation, and as a main market company, now with a better reach towards larger institutional and international investors also. A prospectus was prepared in connection with the listing and approved and registered by the Swedish Financial Supervisory Authority. The prospectus is available on Nuevolution’s website, www.nuevolution.com.

By end of May, Nuevolution announced the completion of a directed share issue with the gross proceeds of SEK 110 million. Through the directed issue, Nuevolution achieved a first step of one of its other key goals being the diversification and strengthening of its shareholder base with new investors joining the current owners. It is the intention to use the proceeds from the directed share issue for the continued expansion of the pipeline, allowing more programs to be advanced, to advance specific programs towards becoming clinical development ready and to overall further strengthen the Company’s deal making ability. We welcome our new investors and thank the existing owners for their continued confidence.

Post end of quarter and on July 18th, we announced that Amgen had exercised its Opt-In right to a program that is part of its multiple target research collaboration with Nuevolution. Amgen will now cover all further research and development costs in this specific program as incurred by both parties. Amgen’s decision to Opt-In follows the demonstration of proof-of-concept in animal disease models, a milestone that ends the early research phase in accordance with the agreement, and the parties have now jointly commenced the late-stage research phase with the mutual goal of nominating a clinical development candidate. Subject to further successful development, and upon Amgen’s discretionary decision to exercise its future option to license, Nuevolution will be eligible to receive a licensing fee of at least USD 10 million depending on the development stage of the program at licensing. During the potential further development and commercialization of the program, Nuevolution will also be eligible to receive success-based milestone payments. These combined payments could amount to up to USD 410 million. Besides this, Nuevolution is also entitled to receive royalties on future sales.

Nuevolution’s challenging “cytokine X” inhibitor program has now reached a stage of development, where target identity disclosure will support the start of the external promotion of our program. The target is Interleukin-17A (IL-17A). Blockade of IL-17A is a medically and market wise very well validated approach for treatment of an increasing number of autoimmune diseases, which currently includes approved use for psoriasis, psoriatic arthritis and ankylosing spondylitis. In 2017, the total IL-17A antibody market value was approximately USD 2.6 billion. IL-17A is extremely difficult target to tackle drug discovery wise and has until now only been possible to address with antibodies, i.e. expensive injectable treatment, where safer shorter acting, orally and topical, and lower-cost treatment would be better and very attractive to the physician, the patient and the payer. In this quarterly report, we summarize the data from our Lead program, which aims to offer and may show the first promise for such a potentially improved treatment option in the future.

In line with the three major goals of our Grand Plan announced in September 2017, we focus on progressing and expanding our partnered and own pipeline towards clinical development, while we also seek to realize further high value lead programs such as just mentioned above for IL-17A. During the quarter our R&D programs have progressed well in support of our business activities, and we continue to aim for closing of the next deal during 2018.

Stockholm, 22 August 2018

Alex Haahr Gouliaev, CEO
Nuevolution AB (publ)