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CEO Letter

CEO

2021 was an intense and eventful year. It is gratifying that we achieved several important milestones during the year on our exciting journey with a focus on chronic inflammation.

The Alnitak program was able to present the first data showing good efficacy in a rheumatoid arthritis model. The results from the preclinical study show that treatment with Aqilion’s TAK1 inhibitor provides extremely clear and significant effects on disease markers compared with both untreated controls and a well-proven medication that is currently available in the market. External interest in Alnitak has intensified during the year as we have presented results, and we have received substantial positive feedback.

During the last quarter of the year, we completed the acquisition of the Regulus program from Leo Pharma. It is extremely satisfying that through this deal, we achieved one of our most important goals in 2021. In addition, the Regulus program meets all of the strategically important criteria we set when we began searching for a program within our focus area. In turn, this means that our organization is well equipped to advance the program into the clinical phase. We are inspired by the opportunity to continue to run a program that is as high-quality, innovative and exciting as Regulus.

The acquisition of Regulus requires Aqilion to make an upfront payment consisting of a combination of cash payment and shares, after which LEO Pharma becomes a shareholder in Aqilion. Moreover, Aqilion will make additional payments, but only when we generate revenue from the program, either from product sales or through revenue from outlicensing. The business structure itself is an important factor for us to be able to run a clinical development program in a resource-efficient manner, without being forced to finance given development-related milestone payments.

In order to further focus the business on inflammatory diseases and prioritize our resources, at the end of the year we decided to close Alhena, an early research project in oncology. Regulus considerably strengthens our pipeline with a program ready for clinical trials. With Regulus, along with the Alnitak program, the recently initiated Alnitak CNS project and the Polaris program, we have now established a clear focus in chronic inflammation. The programs follow a well-defined strategy on both biological and medical grounds, as well as patient needs. With a well-planned and differentiated pipeline, we have achieved the important milestone of positioning Aqilion as a biotech company.

In December, Oncorena, a former project company in which Aqilion has a shareholding, raised capital through a funding round through a venture capital consortium. Aqilion converted the bridge loan that we provided to Oncorena in 2021 into shares in the recently completed funding round, but we did not subscribe to any additional shares. In early February 2022, Oncorena announced that a Phase I-II clinical trial of orellanine, the first substance in its class, in patients with advanced renal cancer undergoing dialysis, has been initiated.

Taken together, we can conclude that the strategy change we made in 2019 has begun to yield results and we have received positive confirmation of our efforts. We are now looking forward to completing our plan in 2022 by starting a Phase 1 clinical study in Regulus, which is planned to be initiated after the summer. For Alnitak, the goal is to initiate the preclinical development that prepares the project for clinical studies.

I am proud of our team, whose individual members – each and every one – have taken us this far with great loyalty, knowledge and drive. I would like to close by thanking the team, the Board of Directors and the shareholders for a successful year at Aqilion.

Sarah Fredriksson, PhD

CEO and President, AQILION AB