BBS-Bioactive Bone Substitutes

This is a summary of BBS-Bioactive Bone Substitutes Plc’s Half-Year Financial Report for January-June 2024. The entire report is attached to this Company Announcement as a pdf file. The report is also available on BBS-Bioactive Bone Substitutes Plc’s website at https://www.bbs-artebone.fi/.

The work for obtaining the CE marking and for the commercial phase continues

JANUARY – JUNE (H1)

• During the first half of 2024, BBS-Bioactive Bone Substitutes Plc (BBS) continued the CE marking process for the Company’s first product (ARTEBONE® Paste).
• On May 5, 2024, the Company reported that the CE marking process will not be completed as previously estimated by the second quarter in 2024.
• On June 4, 2024, the Company reported that it had improved patent protection in the USA related to the ARTEBONE® product and its use in treatment methods.
• On June 18, 2024, the Company announced plans to organize a financing round to strengthen its equity.
• In January, Kimmo Tyni started as the new Production Director of the Company, and in May, Annastiina Kauppinen started as Financial Manager. The focus of the recruitments was the Company’s transformation from a product development Company to an industrial and commercial operator.
• In the first half of the year, the Company decided on the focus areas and countries from which the construction of the sales and distribution network will begin in the first phase of commercialization.
• The Company generated no revenue during the review period.
• The financial result in the review period was EUR -1.71 (-1.64) million.
• Cash flow from operations was EUR -1.58 (-1.43) million.
• Cash and cash equivalents on June 30, 2024, were EUR 0.85 (1.67) million.

The figures in the review are rounded, so the sum of the individual figures may differ from the total presented. BBS's accounting period is a calendar year. Figures in parentheses refer to the corresponding period of the previous year, unless otherwise stated. The information in the review is unaudited.

OUTLOOK

Guidance for 2024

BBS estimates that it will receive the decision of the Notified Body on the approval of its first product’s CE marking application soon, once the Notified Body has completed its work. The Company does not give a precise estimate of the schedule, as the Notified Body takes its time and does not provide related schedule forecasts. Commercialization actions have been initiated, and the Company is ready to start sales once the final CE marking is approved.

Background Assumptions for the Outlook

ARTEBONE® has been complex and challenging in its approval process. It is a new and innovative bone substitute, which is always considered risky from the authorities’ perspective, and proving its functionality is also more demanding than for a simpler product. ARTEBONE® includes all three levels of product approval difficulty; it is new and innovative, contains an animal-derived component, and includes a medicinal substance component. Therefore, the approval process is significantly more challenging and time-consuming than for a straightforward medical product.

Based on the available information, the Company estimates that there is no product risk associated with the remaining technical stages of the licensing process, as the Company has met the product-related requirements. According to the Management, the main challenge is predicting the time it will take to complete the final stages of the regulatory process, which the Company cannot fully influence.

The Company has initiated preliminary commercialization measures for ARTEBONE® Paste and decided on the sales focus areas in countries where negotiations with sales and distribution channels have already begun. Sales are expected to be modest at the start and to grow gradually.

Ensuring the adequacy of the Company’s financing to implement the plans following the expected approval of the CE marking requires actions. The Company continues discussions for additional funding to ensure the approval of the CE marking application and to advance the start of commercial operations.

KEY FIGURES

1) Equity ratio = Equity / (Balance sheet total – Advances received)
2) EPS = Profit (Loss) / Average number of outstanding shares in the period
3) Equity / Total number of outstanding shares at the end of the period

JULIUSZ RAKOWSKI, CEO:

“During the first half of 2024, the Company continued with required actions in the CE marking process with the Notified Body (BSI) regarding the assessment of technical documents.

As part of the transition from a product development Company to industrial production, new investments have been planned for the Reisjärvi Production Site, and three new process workers have been hired. The Company now has sufficient production capacity resources to prepare for the start and gradual growth of sales.

In the discussions held during the spring, both commercial and scientific, it has again become clear that ARTEBONE® Paste is not a simple and easy product to register, which the authorities also acknowledge. Despite this, scientific experts and doctors have stated in various discussions that the markets need a new generation of bone implant that combines bone minerals and bone growth factors – in this respect, our product is unique. Although in June, the Company had to inform that its previous estimate of the registration process ending by the end of June 2024 will not be realized, we believe that after all the stages already passed, the final CE marking will be achieved soon.

The Company organized a rights issue in December 2023, where a total of approximately EUR 1.87 million in gross funds were raised. These funds were estimated to last about 6 months, after which the Company would have to take actions to cover the financing. The actions taken in the first half of 2024 to prolong the sufficiency of funds have helped, but nevertheless, the Company must make plans to arrange financing until the CE mark is obtained.

As we have stated before, product approval processes for medical devices are typically lengthy, and the unfortunately slow progress of the regulatory process has required patience from everyone. This patience is still required.”

FINANCIAL CALENDAR FOR 2025

• Financial Statements Release for the year 2024 will be published on February 21, 2025.

The Company's previously published reports can be found on the Company’s website: https://www.bbs-artebone.fi/investors/report-archive/.

August 9, 2024
BBS-Bioactive Bone Substitutes Plc
Board of Directors