CEO Comments Annual reports 2021

In 2021, IRLAB reached an important milestone: thanks to our successful business development, we reported a profit and positive cash flow. This is an important signal that our business model is viable, and that the organization delivers on our goals. It also creates the conditions we need to elevate our portfolio tothe next level.

Without a doubt, the single most important event in 2021 was the major license transaction we entered into in the summer with the global pharmaceutical company Ipsen. The transaction
gave us a strong position that we have been able to leverage to accelerate the development in our preclinical projects and, in parallel, we have expanded our organization with new talent.

We have taken giant leaps, both with regard to the growth of the company and in our clinical development projects, where the most important event was the regulatory approval for our
Phase IIb study with pirepemat. We achieved this during a year when the entire biotech and pharmaceutical sector was particularly challenged by the effects of the Covid-19 pandemic and the
turbulence in the financial markets. Over the year, we also experienced strong and growing interest in our development programs and drug candidates from potential new partners, new
investors and the media.

One of the de largest transactions ever in Swedish biotech

IRLAB is continuously engaged in purposeful conversations with a large group of pharmaceutical companies. This summer, after competitive negotiations, Ipsen became the first major pharmaceutical company with which we entered into a commercial license agreement. The transaction involving mesdopetam, one of our most advanced drug candidates, is one of the largest ever made within Swedish biotech, and we are very proud of it. The agreement places IRLAB in a strong position and contributes the cash we need to vigorously develop the company towards our vision – to be a world-leading developer of innovative drugs for the treatment of Parkinson’s and other disorders of the brain.

We are acting in the international arena, with increased visibility and capacity. The mesdopetam transaction has brought us valuable attention and opportunities for additional partnerships. The license negotiation and the new collaboration also subjected us to thorough scrutiny as a research company, which allows us to state with certainty that we have effective internal processes, controlled risk management and high operational quality.

We have a highly effective discovery operation through our ISP research platform, which forms an important element in IRLAB’s competitiveness. In conjunction with the company’s broad and profound knowledge of disorders of the brain and their causes, the ISP can effectively generate new projects and drug candidates with major commercial potential. The agreement with Ipsen has made it possible to accelerate the development in the preclinical P001 and P003 programs, which entail several exciting opportunities for new and improved drugs.

New drug candidates on the way to clinical development

The P001 project, which represents an entirely new class of drug candidates with major therapeutic and commercial potential, includes two strong development candidates: IRL942, for the treatment of cognitive impairment, and the newly selected IRL757, for the treatment of apathy in neurological diseases. Today, some 12 percent of all people over the age of 65 suffer from cognitive impairment. Apathy is one of the most common, and currently untreated, complications in Parkinson’s, Alzheimer’s and other dementia-related illnesses. Between 20 and 80 percent of all those with neurological ill-health suffer from apathy. IRL942 and IRL757 have been tailored to treat these symptoms. There is no approved treatment for apathy at present – which makes IRLAB a pioneer in this area as well.

In the P003 project, we are working on a potentially revolutionary principle for the treatment of the hallmark symptoms of Parkinson’s disease. Our vision in this project is to develop a drug that may replace levodopa altogether. Over the year, we have laid the foundation for this goal by forming connections with experts in this field, incorporating new experimental models in our ISP platform and discovering chemical leads that may result in the best drug candidates in this area.

Continued efforts to become a world-leading developer

Covid-19 affected the pharmaceutical sector severely last year. However, IRLAB’s research organization was able to do its work, and we were able to adapt quickly to the new conditions imposed on us by increasing the digitalization of our work processes. We are also pleased that the mesdopetam study could proceed, even though people with Parkinson’s belong to the risk group who were particularly vulnerable, even if the incredibly rapid spread of the omicron variant that hit us at the end of the year generally caused a significant reduction in the recruitment to clinical trials. We also experienced delays caused by the pandemic when entering into agreements with hospitals.

In light of the situation in 2021, we were therefore very pleased to receive regulatory approval for our Phase IIb study with pirepemat in the fourth quarter, with the aim of improving balance, thus reducing injuries from falls in people with Parkinson’s. We believe we have an opportunity to get patient recruitment off to a good start this spring.

Over the year, we strengthened our organization with cutting-edge talents, with a focus on important roles in strategy, research, artificial intelligence and communication. In parallel with the scaling up of the business, the development of IRL747 and IRL942 and the progression of P003 towards a Phase I clinical trial, our top priorities include finalizing the Phase IIb/III study with mesdopetam, ensuring that we have the best possible conditions for the Phase IIb study with pirepemat and increasing our visibility to investors and industry peers.

The next period, 2022 to 2024, will therefore be highly eventful, with topline results from the ongoing Phase IIb studies and the start of the clinical development of several of our new drug candidates. In this period, the most important thing will be the start of the Phase III studies with our drug candidates, in collaboration with Ipsen, and the transactions that will provide us with the resources required to keep progressing towards our vision and IRLAB’s future – to be a world-leading developer of innovative drugs for the treatment of Parkinson’s and other disorders of the brain.

Nicholas Waters, CEO, IRLAB