Xintela : Newsletter December 2020

Dear shareholders,

It has been an unusual year that was dominated by COVID-19 and we have had to adapt our business to the prevailing pandemic. Thanks to the fantastic effort by our team and strict procedures, we have nonetheless been able continue our operations safely and can now say that 2020 was a very successful year for Xintela. Below, I will describe some key events that occurred towards the end of the year and which will be of major significance for our development projects going forward.

In mid-December, we announced that we had - according to plan - submitted our application to the Swedish Medical Products Agency for a license to produce cell therapy products, also known as Advanced Therapy Medicinal Products (ATMPs), at our own GMP (Good Manufacturing Practise) facility. The GMP facility itself has been complete and in use for our development work for some time now. Recently, we have been focusing on the validation and quality program to select, produce, formulate and store our XSTEM® stem cell product. We are now well prepared for an inspection by the Medical Products Agency, that will ensure that Xintela's GMP facility, production process and cell therapy product meet the requirements for Good Manufacturing Practise and that there is compliance with the documentation requirements for the development of an ATMP. This is a large and very important step forward for Xintela and a fantastic effort by our team. When we have the permit in place, we can begin producing stem cells for our clinical trials. We plan to start our first trial with the XSTEM-OA product on osteoarthritis patients in 2021 and to test our stem cells for the treatment of other diseases going forward.

A new potential indication for XSTEM is Acute Respiratory Distress Syndrome (ARDS), a life-threatening lung complication for which there is no effective treatment today and that could affect, for example, patients who are severely ill with COVID-19. In an ongoing preclinical study that we are conducting together with the cardiothoracic surgery clinic in Lund, Sweden, we are evaluating XSTEM in an animal model for ARDS and can see that animals treated using XSTEM have a distinct improvement in lung function.

Another very important step is that the patent application that protects our XSTEM stem cell product has received preliminary approval ('Intention to grant') from the European Patent Office (EPO) and we expect to receive formal approval shortly. Accordingly, Xintela will have patent protection in Europe for its stem cell product XSTEM and for the broad application of the product, including for the prevention and treatment of degenerative joint diseases such as osteoarthritis and degenerative disc disease (DDD), as well as traumatic cartilage and bone injuries. The patent protection of XSTEM, combined with our own GMP classified production facility, will ensure the development and commercialisation of treatments from our stem cell platform for many years to come.

We also announced important progress regarding patents in our oncology program, in which we are developing targeted antibodies for various cancer therapies. The EPO has now granted one of our patents, which protects the treatment of the highly aggressive brain tumour glioblastoma and other CNS tumours with antibodies that are directed against our target molecule integrin α10β1. During the year, we communicated that our antibodies significantly reduce tumour growth of both glioblastoma and triple-negative breast cancer in animal models and that we are also evaluating our antibodies for other aggressive forms of cancer. The successes in our oncology project ensure the development and commercialisation of our antibodies for cancer treatments and bring us closer to clinical trials and potential partnerships.

The work to prepare a spin-out of the subsidiary Targinta, which is pursuing our oncology project, proceeded as planned, with the objective that Targinta will become an independent, self-financing company in 2021. In December, we recruited Jeffrey Abbey as Senior Management Advisor to have a central role in the work to develop and finance Targinta. Jeffrey Abbey has more than 20 years' experience of biologics and has spent much of his career focusing on the development of innovative cancer therapies, and we are delighted to have recruited Jeffrey to Targinta.

Recently, we also announced two valuable new recruitments to our Board of Directors. Lars Hedbys and Maarten de Château will be proposed as new Board members of Xintela at the next Annual General Meeting and will, in the meantime, be co-opted to upcoming Board meetings. We very much look forward to having Lars and Maarten on our Board. Their knowledge and experience of the life science industry will be of great value as we approach clinical trials, partnerships and commercialisation.

Finally, I want to thank you, our shareholders, for your confidence and your contribution to Xintela's exciting journey. We conducted two successful financing rounds during the year, partly in the form of a new share issue in July, which generated MSEK 40.5 before issuance costs and a subscription ratio of 291%. In the subsequent round, approximately 98% of the warrants were exercised, which generated a further MSEK 37.4 for Xintela. With the help of these proceeds, we were able to implement our plans and take key steps forward.

From us at Xintela to all of you, enjoy the remainder of the Christmas holiday and have a very happy new year!

Evy Lundgren-Åkerlund, CEO

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