Virogates A/S

Management reviewIn briefViroGates at a glanceViroGates is an international in vitro diagnostics companyheadquartered in Denmark and listed on Nasdaq First NorthGrowth Market Copenhagen, ticker “VIRO”. ViroGates developsand sells prognostic products to the healthcare sector. ViroGateshas brought to market the proprietary biomarker suPARnostic®,used in hospital emergency services to support the clinicaldecision on hospitalization or discharge (triage) of acute patientsand to identify high-risk sepsis patients at an early stage. Theproducts are also used for the prognosis of lifestyle-relateddiseases such as cardiovascular disease, type 2 diabetes, andcancer, as well as for the assessment of longevity and biologicalage in a non-hospital setting. The suPARnostic® product linecovers four commercially available products, enabling themeasurement of suPAR as a point-of-care (POC) test, by anELISA assay as well as on several larger turbidimetric platforms.ViroGates’ suPARnostic® product range measures the suPAR(Soluble urokinase Plasminogen Activator Receptor) protein inthe bloodstream. An elevated suPAR level is associated with thepresence and severity of a broad range of acute and chronic healthissues and is associated with short term mortality. A low suPAR level isassociated with good prognosis and low risk of short term mortality.MissionViroGates´ mission is to develop biomarkersinto affordable solutions that serve toprevent and optimize treatment in order toimprove the lives of individuals and reducehealthcare costs.Virogates Equity StoryFollowing the 2023 rights issue inDecember, funds will be targeted primarilyat promoting new application areas in theacute care segment in Europe, entering theUS market, and approaching the healthand longevity segment. The board remainsaware of the capital resources and strivesto make the business generate a positivecash flow to benefit its shareholders.VisionViroGates envision suPAR transformingacute medicine, empowering clinicianswith life-saving insights for improvedtriage and revolutionizing sepsis diagnosis.Beyond hospitals, suPAR can play a pivotalrole in proactive medicine, identifyinginflammatory processe s f or enhancedhealth and longevity.Investment highlights~500 EURm17 recurring+950 peer-customersreviewed articlesAdressable market in Acute careIn clinical routine and researchPeer-reviewed articlesCurrent primary market is in acute care, where the17 customers across Europe, North America, and ROWClosing in on 1,000 published peer-reviewed articles in manyprognostic value of suPARnostic® is applied for pa-who have placed at least two orders in 2023 with aleading journals, e.g. Nature Medicine, New England Journal oftient triaging in emergency departments at hospi-minimum value of EUR 10,000Medicine and JAMA, and +100 new articles published in 2023tals, where fast decisions regarding high volumes ofpatients are required. The potential stated refers to+20 countriesEurope and North America and is assessed based onClinical routine evaluation and researchhospital datasuPARnostic® orders have been placed from morethan 20 countries in 2023+2 EURbnAdditional market potentialSignificant adressable market opportunities lies in thehealth and longevity segment regarding especiallyclinical laboratory services and non-hospital point-of-care diagnostics as well as in the use of suPARnos-tic® in guiding treatment across infectious, immunesystem, respiratory, digestive system, and heart dis-eases. The potential stated refers to Europe and NorthAmerica16 DKKmCash end-of-period16 DKKm in cash and cash equivalents as a result ofthe 2023 rights issue, primarily aimed at promotingnew application areas in the acute care segment,entering the US market as well as approaching thehealth and longevity segmentLetter from the Chairman and the CEO2023 was a challenging year for ViroGates. Our business had to adapt from a periodwhere our products were used primarily to help manage COVID-19 patients and back toour regular focus on managing patient triage in the emergency departments. That hasproven to be a challenging task, and we have adjusted our business accordingly and fo-cused increasingly on the utility of our products in the longevity and wellness segment. Wecontinue our work with Swedish medical company Sobi with the aim of getting suPARnos-tic® products approved by the US FDA for clinical promotion and use in the United States.During the year, we also witnessed the reporting of important clinical data on the use ofsuPARnostic® for the early identification of sepsis patients. This is a strong and concreteuse case that we will promote in 2024 along with our continued efforts to increase theadoption of suPARnostic® for general triage in emergency departments.Revenues were disappointingThe first quarter of 2023 saw revenues decline 67%compared to Q1 2022. Comparing the sales figures, welearned that we ended 2022 with a large part of ourrevenue stemming from COVID-19 customers, and thatthese customers during Q1 had largely disappearedalong with the pandemic. Furthermore, our previous tri-age customers seemed to re-think all their diagnosticuse patterns and ways of handling patients, which neg-atively affected our sales. The negative trend continuedinto Q2, albeit at a less significant level. We had to ad-just our guidance to reflect the lower revenue expecta-tions. Additionally, we revisited our way of reporting onroutine customers to reflect sustainable revenue levelsmore accurately. Q3 finally showed growth rates of 40%compared with last year’s figures, but overall, our reve-nues were still 39% behind last year’s figures for Q1-Q3.We continued efforts to mitigate the shortcomings inrevenues from traditional hospital and emergency depart-ment customers by addressing new customer segments.In Q4, we again had to adjust our revenue guidance down-wards for the full year. The full year ended with revenues ofDKKm 5.6, corresponding to 55% of revenue in 2022.Revamping of definitions of recurring customersWe realized that our traditional way of reporting recurringcustomers did not correlate well enough with the impacton revenue. In connection with our half-year report, weredefined our definitions of routine customers to includboth research and clinical customers, but contingent onthe customer having placed at least two purchase orderswithin the last 12 months and with a minimum value of EUR10,000. This reduced the number of reported routine cus-tomers. We believe this way of reporting is a more valuableproxy for assessing ViroGates’ annual recurring revenue.Note: Recurring customers are customers who have placed atleast two orders over the last 12 months with an accumulatedvalue of > 10,000 EUR.Targeting the longevity marketFor many years, ViroGates has worked to collect datanot only from diseased populations, but also fromhealthy individuals. The scope of this work was to pro-vide a tool for individuals to assess and potentiallytrack development in chronic inflammation. In 2023, welaunched an interactive tool for the assessment of thebiological age of individuals based on a large datasetfrom a blood bank. We are excited to start working inthe longevity field since we see a higher degree of con-vergence between individuals’ assessment of their ownhealth and the public healthcare systems. We expectthat the sales cycles will be shorter in the longevity seg-ment since the clinics and labs desire to offer their cus-tomers novel products.Collaboration with Sobi for a US FDA approval ofsuPARnostic®In June, we announced the collaboration agreementwith the Swedish pharmaceutical company Sobi, aim-ing at bringing suPARnostic® to the US market. Theagreement is based on the post-authorization com-mitment for Sobi’s anakinra-based drug Kineret®, whichwas granted an authorization for use in COVID-19 pa-tients in the US. The commitment is to facilitate the useof suPARnostic® in the US market, and Sobi will initiallyfund the development efforts for making suPARnostic®available. Development costs will be repaid based ona royalty model on subsequent sales in the US. We willcommunicate more firm development timelines oncewe have had a pre-submission meeting with the FDA.suPARnostic® POC+ launchIn 2023, we made the commercial launch of our mostrecent product application, the suPARnostic® POC+which measures suPAR in fingerprick blood. The productwas rolled out to selected customers to gain customerfeedback from a clinical perspective. Throughout thisprocess and based on initial customer feedback, werealized that we needed additional development workto be conducted by our instrument partner, GenspeedBiotech, in Austria. This development work is ongoingand we want to ensure that the product meets all re-quirements from a customer perspective before we ini-tiate a broader roll-out.High-impact clinical data in sepsisThis year’s most important clinical milestone forViroGates was the presentation of data from the ran-domized controlled study SUPERIOR at the EuropeanShock Society in Vienna, September 21-23. The results ofthe study show that patients with an expected sepsisinfection and a high suPAR value, despite being placedin a low-risk group as per traditional classification, re-quire immediate antibiotic treatment to prevent dis-ease progression. The data from the SUPERIOR study willbe submitted for publication in a medical journal. Thedata are particularly important since they point to aconcrete use case for suPARnostic® that is aligned withhow clinicians in hospitals traditionally use biomarkers.We expect to see effects from this study on the use ofour products in the hospital segment during 2024 whenthe data are published in a peer-reviewed journal.Securing additional financial runwayViroGates’ revenue in 2023 were disappointing, and weneeded a stronger cash position to maintain operations.During autumn, a rights issue was planned and pre-subscriptions for shares were collected from the threelargest shareholders and several management andboard members. The gross proceeds from the rights is-sue were DKKm 13.9, which was considered satisfactorygiven the constraints in the capital markets.Prospectives for 2024Despite facing challenges in 2023, we remain optimisticthat we can help healthcare professionals make betterdecisions for patients as well as inform individuals whowish to track measures taken to avoid chronic ailments.With this, we also thank colleagues, partners, sharehold-ers, and customers for their support during the year, andwe look forward to continuing our work in 2024.“2023 was a challenging year for ViroGates,but we learned valuable lessons and devisedstrategies for more successful years ahead.With the positive outcome of the capitalraise at the end of the year, we are ready toleverage these funds to drive growth in 2024in both longevity and hospital segments ofthe market”Jakob KnudsenPatrik DahlenChief Executive OfficerChairman of the BoardKey events in 2023FebruaryAprilMayJuneSeptemberOctoberNovemberDecemberViroGates appoints JosephineViroGates hosts its Annual GeneralViroGates grants warrants toViroGates announces an agree-ViroGates announces positiveViroGates announces the pub-ViroGates announces an of-ViroGates announces theBaum Jørgensen as its newMeeting at Banevænget 13Denmark’s Export and Invest-ment with Sobi for the develop-results from a randomizedlication of a new study thatfering of new shares withcompletion of its rights issueChief Financial Officerment Fund (EIFO) as the finalment of suPARnostic® for commer-controlled clinical trial onshows suPAR causes cardio-pre-emptive rights for existingand the registration of the DKKstep in fulfilling the require-cial use in the US in combinationsuPAR-guided antibioticvascular diseaseshareholdersm 13.9 capital raise and issueViroGates announces the CE-ments to obtain debt financ-with Sobi’s Kineret® treatment fortreatment in sepsis presentedof 3,097,047 new sharesIVD approval of suPARnostic®ingCOVID-19-related pneumoniatoday at the European ShockTurbiLatex on the Roche Diag-Conference in Vienna, Austrianostics cobas® Pure and Proinstrument platformsViroGates announces thecommercial launch of itssuPARnostic® POC+ productBusiness and performancesuPAR as prognostic toolWhat is suPAR?suPAR is the biomarker detected by ViroGates’ suPAR-nostic® products and is a protein found in humanplasma. The suPAR molecule was first described in1993 and in 2000 it was found to be predictive ofoutcome in HIV infection.Following this discovery, and based on extensivefurther scientific research, it became clear thatsuPAR is also elevated and has a high predictivevalue of outcomes in a wide array of other diseases,for example• Cardiovascular diseases• Kidney diseases• Cancer• Diabetes• Liver diseases• Infectious diseases• Respiratory diseases• Rheumatic diseasesToday, suPAR is considered a general risk statusbiomarker measuring the level of chronicinflammation in the body. A high level of chronicinflammation in the body indicates• Disease development• Disease presence (acute, chronic, infectious, andnon-communicable)• Disease severity & progression• Organ damage• Mortality riskIn essence, the higher the level of chronicinflammation (the higher the level of suPAR), the worsethe prognosis. suPAR is thus indicative of the “overallstate” of the body and its success rate in dealing withthe various health challenges that it is faced with.The suPAR level is stable, meaning that it is notaffected by circadian changes (day-to-daychanges) or mild temporary illnesses (e.g. influenza).Compared to ordinary triage, suPARnostic® reveals significantly more low-risk patients and slightly more high-risk patients, providing valuableinformation for clinicians and for more efficient use of hospital ressourcesBased on the level of suPAR in the bloodstream,ViroGates´ suPARnostic® products determine thepresence and severity of disease as well as the prognosis.While suPARnostic® can not diagnose a patient witha specific disease, it can provide the physician withan objective view of the patient and the patient’sprognosis to assist in making decisions regardingadmission for further examination or discharge.Thus, suPARnostic® can help physicians improvepatient care and reduce healthcare costs. UsingsuPARnostic® in clinical routine practice contributesto avoiding unnecessary hospitalization of low-riskpatients, shortening hospital stays, and ensuringthat important underlying diseases are notoverlooked before discharging high-risk patients.Furthermore, suPARnostic® empowers clinical staffwithwith information to make more confident clinicaldecisions.An acute care study showed that hospital length-of-stay per patient could be shortened by 6% (equivalentto 6.5 hours per hospital stay) by using suPARnostic®.Another study found that 34% more patients could beclassified into the low-risk group supporting discharge.Thus, using suPARnostic® to complement currentstandard of triage could lead to significant healthcarecost savings without negatively affecting readmissionsor mortality.The value of suPARnostic® inclinical routine useImproveReduceEmpowerpatient carehealthcare costsclinical staff34%More patients classified into low-risk,discharge category and with lowermortality¹6%reduction in hospitallength-of-stay per patient²€100-380savings per admission depending onmedical specialty and geography³¹ Schultz et al. Scandinavian Journal of Trauma, Resuscitation and Emergency Medicine, 2019, 27:43² Schultz et al. Disease Markers, 2019, 10;1-8³ Stallknecht et al, Incentive health economic assessment, 2017suPARnostic® in guiding treatmentsuPAR in COVID-19Following the SAVE-MORE study, the European Med-icines Agency (EMA) recommended the approval forsuPAR-guided treatment of COVID-19 with anakinra.The European Commission granted the extension on17 December 2021, and, in November 2022, the UnitedStates Food and Drug Administration (FDA) grantedan Emergency Use Authorisation (EUA) for the use ofSobi®’s medicine Kineret (anakinra) for the treatmentof COVID-19 in hospitalized adults with pneumonia re-quiring supplemental oxygen (low- or high-flow oxy-gen) who are at risk of progressing to severe respira-tory failure.Commercial potentialThe revenue effect of the COVID-19 application of suPAR-nostic® in the acute care segment has not materializedin 2023 due to the pandemic wearing off. However, theuse case of pairing suPARnostic® with a specific medicaltreatment continues to have high commercial potentialin relation to entering the US market.In 2023, ViroGates announced an agreement with Sobifor the development of suPARnostic® for commercialuse in the US in combination with Sobi’s Kineret® treat-ment. The collaboration on an FDA filing is ongoing.suPAR in sepsisIn September 2023, ViroGates received positive resultsfrom the SUPERIOR study on suPAR-guided antibiotictreatment in sepsis.In the study, 1,650 patients were screened for their suPARlevel in the ED using suPARnostic®, and 91 patients with aqSOFA score of 1 and suPAR equal to or above 12 ng/mlwere randomized to receive either one dose of mero-penem, an antibiotic treatment (44 patients), or onedose of placebo (47 patients).The study met its primary endpoint: Meropenem treat-ment guided by suPARnostic® was accompanied bysignificantly lower odds for progression into sepsis com-pared to placebo (OR: 0·28, 95% CI 0·10 – 0·76, p = 0·012).An additional significant benefit for patients treated ear-ly with meropenem was a relative decrease in their SOFAscore on day 2 and a significantly faster recovery fromthe infection.Commercial potentialSepsis is a deadly disease that is estimated to accountfor around 11 million deaths annually. The recent resultsshow that suPARnostic® can play an important role in theearly detection of sepsis patients requiring treatment,ultimately providing better patient outcomes.The results of the SUPERIOR study are of great value toViroGates, and this new application of the suPARnostic®products will be promoted to both existing and new cus-tomers in acute care.New results: suPAR-guided antibiotic treatment in sepsis• Randomized controlled study (SUPERIOR)• Prevention of patient worsening by initiating early treatment• Shorter time to infection resolution• Validating the prognostic performance of qSOFA + suPARPatients with a suspected sepsis infection and qSOFA = 1<12 ng/ml≥12 ng/mlStandard of careMeropenem treatmentObserving potential+ Standard of careincrease in SOFA-scoreBenefit fromearlytreatment with antibioticsKyriazopoulou, E., Poulakou, G., Milionis, H. et al. Nat Med 27, 1752–1760 (2021). https://doi.org/10.1038/s41591-021-01499-zsuPARnostic® in prevention and longevityA molecular crystal ballAs a biomarker of systemic chronic inflammation thatis highly predictive of individuals’ health prognosis,suPAR is a form of “molecular crystal ball”, answeringthe questionIs everything OK or should something be changed?A high level of chronic inflammation (a high suPARlevel), entails a high-risk health condition associat-ed with accelerated brain and facial aging as well asfunctional decline due to either underlying diseaseor inflammatory processes in your body, making youmore prone to develop disease over the next 10 years(such as cancer, diabetes, organ failure, or cardiovas-cular disease). A low suPAR level, on the other hand, is alow-risk health condition, suggesting that “everythingis OK” and that you are leading a sustainable lifestylefor your body.suPAR will thus provide unique and precise informationin both ends of the “healthiness” scale, enabling theearly discovery of health challenges or preconditionsof disease, but also informing otherwise healthy indi-viduals of how to optimize for a longer healthy lifespan.By monitoring suPAR levels over time, individuals andhealthcare providers can assess the effectiveness ofinterventions and treatments aimed at reducing thelevel of chronic inflammation and increasing the prog-nosis towards a longer healthy lifespan.suPAR and biological ageA suPAR level can be translated into a biological ageusing the suPAR Biological Age Calculator on ViroGates’website. The calculator allows healthcare professionalsusing suPARnostic® products to interpret, calibrate andtranslate clients’ suPAR level into a biological age.Commercial potentialThe longevity segment has high commercial poten-tial, and we already experience interest in suPARnostic®from longevity players, spanning from health clinicscovering information medicine, wellness, physiothera-py, exercise, diet, etc. to private laboratories specializ-ing in blood analyses. The potential for suPARnostic® inlongevity builds upon a number of general trends withinhealthcare• Health span – a strive to raise the quality of life andthe number of “healthy years”• Prevention – an increasing interest in and attentionto discovering early signs• Curiosity – a drive to monitor, track, and compete onhealth performance indicators• Personalization – a demand for a more personalizedtreatment and desire to be testedBiological age calculatorInputOutputFemaleBiological age = 46Chronological age = 48Pace of ageing = 0.95suPAR level = 2.3Prediction of mortality over time using suPARRecreated from Eugen-Olsen, J., Andersen, O. et al. (2010)Individual in theIndividual in thelowest suPARhighest suPARquartilequartile(suPAR in the lowest 25%)(suPAR in the highest 25%)The difference between people with the 25% lowest and 25%highest levels of suPAR is an increased life expectancy of15 years

Financial review“It is dissatisfying not delivering onour revenue targets for 2023 dueto lower-than-expected sales toclinical routine customers. We lookforward to rebuilding this sale in2024, and also to increasing ourstronghold with health clinics,where suPAR has a special appealand our sales cycles are shorter.”Thomas KrarupUnless otherwise stated, financials are 2023 numbers.Comparative figures for the corresponding period of2022 are shown in brackets.Income statementThe net loss was TDKK -12,096 (TDKK -9,646). The neg-ative net result in 2023 is a consequence of lower rev-enue levels along with continued investments in com-mercial and R&D activities to regain traction within bothexisting and newer customer segments.RevenueRevenue decreased to TDKK 5,582 (TDKK 10,151). Theshortfall of revenue in 2023 stems from a lack ofCOVID-19 use of suPARnostic® due to lower infectionrates and less severe variants combined with the dif-ficult conversion of the previous COVID-19 customersinto customers applying suPARnostic® in general triage.'Other IncomeOther Income TDKK 1,405 (TDKK 5,046) consists of grantsand contributions received for development projects.ViroGates received funding from an Innobooster grantas well as from Swedish Orphan Biovitrum A/S as part ofthe project of making suPARnostic® commercially avail-able in the US.ExpensesTotal operating expenses amounted to TDKK -18,370(TDKK -23,501). The operating expenses decreased dueto fewer sponsored R&D projects as well as overall low-er employee costs in sales & marketing and researchand development. The cost base is geared toward fu-ture revenue growth and is not expected to grow sig-nificantly going forward. The investments have beenmade in expectation of increased future revenue.Profit & lossOperating loss came to TDKK -12,565 (TDKK -10,845).Net financial items amounted to TDKK -525 (TDKK -30).Loss before tax was TDKK -13,090 (TDKK -10,876). Net lossamounted to -12,096 TDKK (TDKK -9,646). Earnings pershare (EPS) diluted was DKK -3.28 against an EPS dilutedof DKK -2.77 in 2022.Cash flow and investmentsNet cash flow amounted to TDKK 6,149 (TDKK -4,981).Cash flow from operating activities amounted to TDKK-12,179 (TDKK -14,276). The increase from 2022 to 2023 isa result of lower operating costs. Investments in equip-ment amounted to TDKK 0 (TDKK 0).Cash flow from financing activities amounted to TDKK18,315 (TDKK 9,308) due to the rights issue and the loanagreement with EIFO (previously Vækstfonden).Equity and net cashAs of 31 December 2023, equity was TDKK 17,007 (TDKK16,088). On 31 December 2023 net cash amounted toTDKK 16,027 (TDKK 9,878). The relative increase is a resultof financing activities along continued investments incommercialisation and R&D activities. Due to the un-certainty surrounding sales and entering into new seg-ments, ViroGates has paused its guidance to the mar-ket on becoming cash flow positive.Numbers of sharesOn 31 December 2023, the total number of shares inViroGates was 6.447.554 (3,350,507).Auditor’s feeFrom 2023, ViroGates is obliged to disclose the feecharged for the fiscal year by the company’s auditor,BDO Statsaurotiseret revisionsaktieselskab. The auditservices related to the annual financial statementsamounted to TDKK -134 (TDKK -137) and other audit ser-vices amounted to TDKK -29 (TDKK -66).Events after the reporting periodNo events have occurred after the balance sheet dateof importance to the financial statements.