CONSOLIDATED Q3 2020 REPORT (SUMMARY) - Selvita

1 Consolidated Quarterly Report (Summary) Q3 2020 Selvita Capital Group

CONSOLIDATED Q3 2020 REPORT

(SUMMARY)

SELVITA CAPITAL GROUP

2

Consolidated Report Q3 2020 Summary

1. Basic information on the capital group ...................................................................................................... 3

2. The management and supervisory board .................................................................................................. 4

3. Economic and financial highlights ............................................................................................................... 5

3.1 Consolidated financial data (pro forma) ...................................................................................... 6

3.2 Consolidated financial data .......................................................................................................... 8

4. Management Board’s comments on financial results ............................................................................ 10

4.1 Profit and loss ............................................................................................................................... 10

4.1.1. Consolidated data (pro forma) .................................................................................. 10

4.1.2 Contracted (Backlog) ................................................................................................... 12

4.1.3 Consolidated data ........................................................................................................ 12

4.2 Balance sheet ................................................................................................................................ 12

4.2.1 Consolidated data (pro forma) ................................................................................... 12

5. Current and projected financial conditions ............................................................................................. 14

6. Management Board’s comments on financial results of the transferred organized part of

enterprise ......................................................................................................................................................... 14

7. Information on the capital group’s activity in Q3 2020 .......................................................................... 16

8. Information on Shareholding Structure ................................................................................................... 22

TABLE OF CONTENTS

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1. BASIC INFORMATION ON THE CAPITAL GROUP

Structure of the Capital Group

Parent Entity

Affiliates

Business name of the Company Selvita Services spółka z ograniczoną odpowiedzialnością

Registered office ul. Bobrzyńskiego 14, 30-348 Kraków

Company ID (REGON) 122456205

Tax ID (NIP) 676-245-16-49

Legal form Limited Liability Company

Shareholders 100% shares held by Selvita S.A.

Business name of the Company Selvita Inc.

Registered office Boston, USA

Company File No. 5700516

Legal form Corporation


Business name of the Company Selvita Ltd.

Registered office Cambridge, Great Britain

Company No. 9553918

Legal form Limited Liability Company


Business name of the Company Ardigen Spółka Akcyjna

Registered office ul. Podole 76, 30-394 Kraków


Legal form Joint-Stock Company

Shareholders 46,67% % shares (giving the rights to 53,98% votes) held

by Selvita S.A.

Business name of the Company Selvita S.A.

Registered office ul. Bobrzyńskiego 14, 30-348 Kraków


Tax ID (NIP) 676-256-45-95

Legal form Joint-Stock Company

Website www.selvita.com

http://www.selvita.com/

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2. THE MANAGEMENT AND SUPERVISORY BOARD

The Management Board of Selvita S.A.:

1) Bogusław Sieczkowski – President of the Management Board

2) Miłosz Gruca – Vice President of the Management Board

3) Mirosława Zydroń – Management Board Member

4) Edyta Jaworska – Management Board Member

5) Dariusz Kurdas – Management Board Member

6) Dawid Radziszewski – Management Board Member

The Supervisory Board of Selvita S.A.:

1) Piotr Romanowski – Chairman of the Supervisory Board

2) Tadeusz Wesołowski – Vice Chairman of the Supervisory Board

3) Paweł Przewięźlikowski – Supervisory Board Member

4) Rafał Chwast – Supervisory Board Member

5) Wojciech Chabasiewicz – Supervisory Board Member

6) Jacek Osowski – Supervisory Board Member

5


3. ECONOMIC AND FINANCIAL HIGHLIGHTS

The Group started its operating activity on October 1, 2019, that is after the National Court Register of

Poland (“KRS”) had recognized the increase of the Company's share capital and change to the Company’s

name to Selvita S.A. (formerly Selvita CRO S.A.) in the Register of Entrepreneurs in connection with the

corporate split of Ryvu Therapeutics S.A. (formerly Selvita S.A.). As a result of the split of Ryvu Therapeutics

S.A., there was a transfer of the organized part of the enterprise of Ryvu Therapeutics S.A. to Selvita S.A.

(formerly Selvita CRO S.A.).

The organized part of the enterprise (Separated Activity) consisted of:

- the tangible and intangible assets dedicated to the provision of service activities in the field of

biotechnology, of the Contract Research Organization type;

- shares in the subsidiaries i.e.: Selvita Services Sp. z o.o., BioCentrum Sp. z o.o. (currently, the

company merged with Selvita Services sp. z o.o), Ardigen S.A., Selvita Ltd., and Selvita Inc.

In connection with the above, the data presented in the Management’s Report are as follows:

- comparative data of consolidated profit and loss accounts from March 22, 2019 to September 30,

2019 of Selvita S.A. Group

- comparative data of “pro forma” consolidated profit and loss accounts of Selvita S.A. Group

(Separated Activity) for the period January 1, 2019, to September 30, 2019. The comparative data

for 2019 presents the transformed data as if the split took place on January 1, 2018. It should be

noted that the comparative data is the company’s estimate, presented to facilitate the analysis and

comparison of the results.

The consolidated financial statements cover the period from January 1, 2020 to September 30, 2020 with

comparative date from March 22, 2019 to September 30, 2019. It should be noted that in the period from

March 22, 2019, to September 30, 2019, the Group did not conduct operating activities.

MAIN RESULTS ACHIEVED IN THE REPORTING PERIOD

On June 24, 2020, the Series C Shares were issued based on Resolution No. 4 of the Extraordinary General

Meeting of the Company of May 26, 2020 and were admitted to trading. June 26, 2020 was the first listing

date for the Series C Shares. The successful issue of the Series C Shares, in which all offered shares were

placed, made it possible to secure funds in the net amount of PLN 88,355 thousand. These funds will make

it possible to achieve the goals adopted in the Strategy of the Selvita S.A. Group for the years 2020-23. It

is worth emphasizing that the big interest in the issue, together with very good reported results, made it

possible to set the issue price at PLN 38 per share.

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3.1 Consolidated financial data (pro forma)

Selected items (more detailed data are presented in the point 6 below) of the revenues and costs incurred

by transferred part of the activities in the period from January 1, 2020 to September 30, 2020 are

presented below. At the same time, the comparative data for the corresponding period of 2019 are also

presented in the table below.


Selected pro forma income statement data are as follows:

Selvita S.A. Group Consolidated pro forma data in PLN thousand Consolidated pro forma data in EUR thousand

Item

From

01.01.2020

to 30.09.2020

From

01.01.2019

to 30.09.2019

From

01.07.2020

to 30.09.2020

From

01.07.2019

to 30.09.2019

From

01.01.2020

to 30.09.2020

From

01.01.2019

to 30.09.2019

From

01.07.2020

to 30.09.2020

From

01.07.2019

to 30.09.2019

Revenues from sales 101,375 67,686 36,226 25,072 22,822 15,710 8,152 5,764

Revenues from subsidies 3,375 4,931 1,090 1,782 760 1,144 245 410

Other operating revenues 375 616 135 250 84 143 30 57

Revenues on operating activities 105,125 73,233 37,451 27,104 23,666 16,997 8,428 6,231

Operating expenses -89,353 -64,908 -31,647 -23,620 -20,115 -15,065 -7,122 -5,430

Depreciation -9,481 -8,162 -3,621 -2,795 -2,134 -1,894 -815 -643

Depreciation (excl. IFRS 16 impact) -6,269 -5,319 -2,424 -1,727 -1,411 -1,258 -545 -397

Profit/loss on operating activities (EBIT) 15,772 8,325 5,804 3,485 3,551 1,932 1,306 801

Profit/loss before income tax 14,923 8,422 5,451 3,640 3,359 1,955 1,227 837

Net profit/loss 14,501 7,981 5,088 3,422 3,264 1,852 1,145 787

EBITDA 25,253 16,487 9,425 6,279 5,685 3,827 2,121 1,444

EBITDA (excl. IFRS 16 impact) 22,041 13,644 8,228 5,211 4,962 3,167 1,852 1,198

Number of shares (weighted average) 16,806,585 15,971,229 18,355,474 15,971,229 16,806,585 15,971,229 18,355,474 15,971,229

Profit (loss) per share (in PLN) 0.79 0.48 0.24 0.20 0.18 0.11 0.05 0.05

Diluted profit (loss) per share (in PLN) 0.79 0.48 0.24 0.20 0.18 0.11 0.05 0.05

Book value per share (in PLN) 8.49 2.37 7.77 2.37 1.87 0.54 1.72 0.54

Diluted book value per share (in PLN) 8.49 2.37 7.77 2.37 1.87 0.54 1.72 0.54

Declared or paid dividend per share

(in PLN) 0 0 0 0 0 0 0 0


3.2 Consolidated financial data

The table below presents the consolidated financial data of the Selvita S.A. Group (in accordance with the data presented in the consolidated financial

statements).

- concerning the consolidated profit and loss statement:

Selvita S.A. Group Consolidated pro forma data in PLN thousand Consolidated pro forma data in EUR thousand

Item

From

01.01.2020

to 30.09.2020

From

22.03.2019

to 30.09.2019

From

01.07.2020

to 30.09.2020

From

01.07.2019

to 30.09.2019

From

01.01.2020

to 30.09.2020

From

22.03.2019

to 30.09.2019

From

01.07.2020

to 30.09.2020

From

01.07.2019

to 30.09.2019

Revenues from sales 101,375 0 36,226 0 22,822 0 8,152 0

Revenues from subsidies 3,375 0 1,090 0 760 0 245 0

Other operating revenues 375 0 135 0 84 0 30 0

Revenues on operating activities 105,125 0 37,451 0 23,666 0 8,428 0

Operating expenses -89,353 -265 -31,647 -77 -20,115 -62 -7,122 -18

Depreciation -9,481 0 -3,621 0 -2,134 0 -815 0

Depreciation (excl. IFRS 16 impact) -6,269 0 -2,424 0 -1,411 0 -545 0

Profit/loss on operating activities (EBIT) 15,772 -265 5,804 -77 3,551 -62 1,306 -18

Profit/loss before income tax 14,923 -255 5,451 -72 3,359 -59 1,227 -17

Net profit/loss 14,501 -255 5,088 -72 3,264 -59 1,145 -17

EBITDA 25,253 -265 9,425 -77 5,685 -62 2,121 -18

EBITDA (excl. IFRS 16 impact) 22,041 -265 8,228 -77 4,962 -62 1,852 -18

Net cash flows from operating activities 16,219 -83 7,521 -72 3,651 -19 1,693 -17

Net cash flows from investing activities -14,238 1 -11,043 1 -3,205 0 -2,485 0

Net cash flows from financing activities 81,758 2,989 -3,267 0 18,405 694 -735 0

Net cash flows from operating activities 83,739 2,907 -6,789 -71 18,851 675 -1,528 -16

Number of shares (weighted average) 16,806,585 - 18,355,474 - 16,806,585 - 18,355,474 -

Profit (loss) per share (in PLN) 0.79 n/a 0.24 n/a 0.18 n/a 0.05 n/a

Diluted profit (loss) per share (in PLN) 0.79 n/a 0.24 n/a 0.18 n/a 0.05 n/a

Book value per share (in PLN) 8.49 n/a 7.77 n/a 1.87 n/a 1.72 n/a

Diluted book value per share (in PLN) 8.49 n/a 7.77 n/a 1.87 n/a 1.72 n/a

Declared or paid dividend per share (in

PLN)

0 0 0 0 0 0 0 0


- concerning the consolidated balance sheet:

Selected financial data presented in the quarterly report were converted to Euro as follows:

Items relating to the profit and loss statement and the cash flow statement were converted using the

exchange rate constituting the arithmetic average of the exchange rates, applicable as of the last day of

every month in the given period, based on the information published by the National Bank of Poland

(NBP):

• for the period from 01/01/2020 to 30/09/2020: PLN 4.4420;

• for the period from 22/03/2019 to 30/09/2019: PLN 4.3086.

1. Balance sheet items were converted using the average exchange rate announced by the NBP

applicable as at the balance sheet date; which were:

• as of 30 September 2020: PLN 4.5268;

• as of 31 December 2019: PLN 4.2585.

Selvita S.A. Group Consolidated pro forma

data in PLN thousand

Consolidated pro forma

data in EUR thousand

Item 30.09.2020 31.12.2019 30.09.2020 31.12.2019

Total assets 214,122 90,887 47,301 21,342

Trade and other receivables 35,430 25,854 7,827 6,071

Cash and other monetary assets 97,407 13,668 21,518 3,210

Total liabilities 66,763 46,218 14,748 10,853

Long term liabilities 31,433 21,589 6,944 5,070

Short term liabilities 35,331 24,630 7,805 5,784

Equity 147,359 44,669 32,553 10,489

Share capital 14,684 12,877 3,244 3,024

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4. MANAGEMENT BOARD’S COMMENTS ON FINANCIAL RESULTS

4.1 Profit and loss

4.1.1. Consolidated data (pro forma)

Selvita S.A. Group

Data in PLN thousand From 01.01.2020

to 30.09.2020

From 01.01.2019

to 30.09.2019

From 01.07.2020

to 30.09.2020

From 01.07.2019

to 30.09.2019

Revenue 105,126 73,233 37,452 27,103

Services Segment 88,989 60,409 30,840 22,424

Bioinformatics Segment 12,602 7,442 5,456 2,699

Revenues from subsidies 3,375 4,931 1,090 1,782

Other operating revenue 375 616 135 250

Exclusions of revenues between segments -215 -165 -69 -52

EBIT 15,772 8,325 5,805 3,484

%EBIT 15% 11% 15% 13%

EBITDA (with IFRS16 impact) 25,253 16,487 9,427 6,280

%EBITDA (with IFRS16 impact) 24% 23% 25% 23%

EBITDA (IFRS16 impact excluded) 22,041 13,644 8,230 5,211

%EBITDA (IFRS16 impact excluded) 21% 19% 22% 19%

Net profit 14,501 7,981 5,088 3,422

%Net profit 14% 11% 14% 13%

In the first three quarters of 2020, Selvita S.A. Group recognised total operating revenue of PLN 105,126

thousand, which constitutes the increase of 44% compared to the corresponding period in 2019, when

total operating revenue amounted to PLN 73,233 thousand. The net revenue from sales (excluding

subsidies) amounted to PLN 101,376 thousand, which means an increase of 50% (by PLN 33,690 thousand)

comparing to the corresponding period in 2019 when it amounted to PLN 67,686 thousand. In the first

three quarters of 2020, revenues from subsidies decreased slightly by PLN 1,556 thousand compared to

the same period of the previous year - a decrease from PLN 4,931 thousand to PLN 3,375 thousand.

In the first three quarters of 2020, the Group reported a net profit as well as the profit on the operational

level. Net profit amounted to PLN 14,501 thousand and increased by 82% compared to the corresponding

period of 2019. Noteworthy is the significantly higher dynamics of net result growth than the dynamics of

revenue growth. The EBITDA ratio in the first three quarters of 2020 was 24% and increased by 1 pp

compared to the corresponding period of the previous year.

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Services Segment


to 30.09.2020

From 01.01.2019

to 30.09.2019

From 01.07.2020

to 30.09.2020

From 01.07.2019

to 30.09.2019

Revenue 90,230 63,574 31,245 23,511

Revenues from external customers 84,880 58,478 29,447 21,665

Internal revenue - between

segments (mainly to Ryvu) 4,108 1,932 1,393 760

Revenues from subsidies 906 2,562 283 852


EBIT 12,788 7,554 4,113 2,981

%EBIT 14% 12% 13% 13%

EBITDA (with IFRS16 impact) 21,535 15,215 7,488 5,568


EBITDA (IFRS16 impact excluded) 18,731 12,646 6,427 4,635


IFRS16 impact on EBITDA 2,804 2,570 1,061 934

The services segment in the first 9 months of 2020 remained, similarly to previous years, at very good

profitability levels while keeping a record growth dynamics at the same time. The revenue from the sales

of services to external customers increased by 45% and amounted to PLN 84,880 thousand compared to

PLN 58,478 thousand in the corresponding period of 2019. The operating profit (EBIT) of this segment in

the period ended September 30, 2020, amounted to PLN 12,788 thousand, compared to PLN 7,554

thousand in the same period in 2019, what is the increase of 69%. Profitability at the level of operating

profit (calculated as the ratio of the operating profit of the segment to its total sales revenue) amounted

to 14% in the first three quarter of 2020 (in corresponding period of 2019 it was 12%). Depreciation and

amortization increased by 14% from PLN 7,661 thousand in the first 9 months of 2019 to PLN 8,747

thousand in the first three quarter of 2020. The EBITDA ratio amounted to 24%, which is a similar value to

the previous year’s one, and increased in value from PLN 15,215 thousand in Q3YTD 2019 up to PLN 21,535

thousand in Q3YTD 2020.

Bioinformatics Segment


to 30.09.2020

From 01.01.2019

to 30.09.2019

From 01.07.2020

to 30.09.2020

From 01.07.2019

to 30.09.2019

Revenue 15,110 9,824 6,277 3,644

Revenues from external customers 12,602 7,442 5,456 2,699

Internal revenue - between

segments (mainly to Ryvu) 0 0 0 0

Revenues from subsidies 2,469 2,368 807 931


EBIT 2,984 771 1,693 504

%EBIT 20% 8% 27% 14%

EBITDA (with IFRS16 impact) 3,718 1,272 1,939 711


EBITDA (IFRS16 impact excluded) 3,311 998 1,803 576


IFRS16 impact on EBITDA 407 274 136 135

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In the first 9 months of 2020 bioinformatics segment’s revenue amounted to PLN 12,602 thousand, which

is an increase of 54% compared to the corresponding period in 2019, when revenues amounted to PLN

7,442 thousand. The Bioinformatics segment generated the operating profit of PLN 2,984 thousand in the

discussed period, compared to PLN 771 thousand in the comparative period of 2019 which is an increase

of approx. 4 times. The EBITDA ratio was 25% and increased significantly by 12 pp. compared to the same

period last year.

4.1.2 Contracted (Backlog)

The value of the 2020 contracts portfolio resulting from commercial contracts and grant agreements

signed as of November 10, 2020 (backlog) amounts to PLN 134,708 thousand and it has increased by 38%

compared to the 2019 backlog announced in October 2019. The bioinformatics backlog has increased by

78%.

4.1.3 Consolidated data

The consolidated results of the Group for the first three quarters of 2020 are the same as described above

in the section regarding consolidated pro forma results. When analyzing data for the comparable period

of 2019, it should be noted that the Group until October 1, 2019, (which is the day of the transfer of the

organized part of the enterprise dedicated to the provision of service activities in the field of biotechnology

of the Contract Research Organization type) did not generate revenues from operating activities.

4.2 Balance sheet

4.2.1 Consolidated data (pro forma)

As of September 30, 2020, the value of the Selvita Group’s assets was PLN 214,122 thousand. At the end

of September 2020, the most significant items of current assets are short-term receivables which

amounted to PLN 35,430 thousand and cash amounting PLN 97,407 thousand. The increase in short-term

receivables is the result of an increase in the scale of the Group's operations. The significant increase in

cash is mainly due to the proceeds from the issue of Series C Shares in the net amount of PLN 88,356

thousand. Fixed assets are mainly laboratory equipment, recognized assets due to the right to use and

deferred tax assets in the amount of PLN 11,227 thousand. The value of non-current assets increased in

comparison to December 31, 2019, by PLN 26,259 thousand mainly as a result of new purchases of fixed

Backlog

Item For 2020, from

November 10, 2020

For 2019, from

October 28, 2019 Change Change %

Services 110 760 81 285 29 475 36%

Bioinformatics 17 748 9 983 7 765 78%

Grants 6 200 6 110 90 1%

Total 134 708 97 378 37 330 38%

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assets (including the purchase of land for the construction of the Laboratory Services Center in the net

amount of PLN 10 million).

The assets structure demonstrates the Group’s high financial liquidity, which is confirmed by the following

ratios:

30/09/2020 31/12/2019

Current ratio

current assets/current liabilities including short-term

provisions and deferred revenues (excl. accruals)

5.36 2.43

Quick ratio

(current assets-inventory)/current liabilities including short-

term provisions and deferred revenues

(excl. accruals)

5.31 2.37

The main item in the Selvita Group’s equity and liabilities is equity, which amounted to PLN 147,359

thousand as of September 30, 2020. Its significant increase to the end of 2019 is mainly due to the issue

of Series C Shares but also to the net result achieved in the first three quarters of 2020. Another largest

source of assets’ funding are long-term liabilities which amounted to PLN 31,433 thousand at the end of

September 2020. The most valuable items in the long-term liabilities are lease liabilities of PLN 26,347

thousand. The increase of PLN 7,901 thousand in lease liabilities compared to end of 2019 results from

newly concluded financing agreements for the purchase of laboratory equipment. Increase in short-term

liabilities from PLN 24,630 thousand at the end of 2019 to PLN 35,331 thousand at the end of September

2020 results from the increase in the scale of the Group's operations.

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5. CURRENT AND PROJECTED FINANCIAL CONDITIONS

The Group’s financial position as of the report date is very good. As of September 30, 2020, the value of

the Group’s cash amounted to PLN 97,407 thousand, and at the November 12, 2020, it was PLN 99,353

thousand.

The Group meets its obligations timely and maintains sustainable cash levels ensuring its financial

liquidity. Cash generated from operations allows the Company to execute its planned investments in the

expansion of laboratory infrastructure.

Significant off-balance sheet items are described in the Note 35 to the consolidated financial statements.

6. MANAGEMENT BOARD’S COMMENTS ON FINANCIAL RESULTS OF THE

TRANSFERRED ORGANIZED PART OF ENTERPRISE

As described above on October 1, 2019, the split of Ryvu Therapeutics S.A. (formerly Selvita S.A.) took

place, as a result of the transfer of the organized part of the enterprise (operating in the CRO) activities to

Selvita S.A. (formerly Selvita CRO S.A.).

The pro forma details of the revenues and costs incurred by the spin-off part of the activities in the period

beginning from 01.01.2020 to 30.09.2020 and in the corresponding period beginning from 01.01.2019 to

30.09.2019, are presented below. It should be noted that the corresponding data is the company’s

estimate, presented to facilitate the analysis and comparison of the results.

15


Pro Forma Consolidated Profit and Loss Statement (in PLN)

01/01/2020-30/09/2020 01/01/2019- 30/09/2019

Continued operations

Revenue from sales 101,375,370 67,686,476

Revenue from subsidies 3,374,652 4,930,618

Other operating revenues 375,296 616,030

Total operating revenue 105,125,318 73,233,124

Amortization and depreciation (9,481,133) (8,161,844)

Consumption of materials and energy (15,723,059) (11,900,179)

External services (13,639,341) (8,566,999)

Employee benefit expense (48,174,718) (33,061,039)

Taxes and charges (838,253) (635,927)

Other costs by type (1,461,253) (2,511,765)

Other operating costs (34,610) (70,102)

Total operating expenses (89,352,984) (64,907,855)

Profit (loss) on operating activities 15,772,333 8,325,269

Financial income 48,116 661,243

Financial expenses (897,282) (564,642)

Profit (loss) before income tax 14,923,167 8,421,870

Income tax expense (422,198) (440,828)

Net profit (loss) 14,500,969 7,981,042

Net profit loss attributed to:

Majority shareholders 13,204,726 7,588,069

Non-controlling shareholders 1,296,242 392,973

Other comprehensive income:

Foreign subsidiaries results translation

differences (166,458) (432,729)

Total other comprehensive income (loss) (166 458) (432,729)

Total comprehensive income (loss) 14,334,511 7,548,313

Total comprehensive income (loss) attributed to:

Majority shareholders 13,038,268 7,155,240

Non-controlling shareholders 1,296,242 392,973

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7. INFORMATION ON THE CAPITAL GROUP’S ACTIVITY IN Q3 2020

The core business of the capital group

The activities of the Capital Group cover two main business segments:

• CRO services – CRO (Contract Research Organization) services provided to external clients, in

particular to pharmaceutical and biotechnology industry,

• Ardigen S.A. (Bioinformatics) – bio-data science and complementary advanced software services

to support data-driven Life Science and Healthcare organizations.

DRUG DISCOVERY

Drug Discovery constitutes the largest area of Selvita’s activity. In Drug Discovery the services has been

gradually shifting from FFS (Fee For Service), through FTE (Full Time Equivalent) projects, devoted to one

element of the drug discovery process, to integrated projects, based on scientific collaboration between

chemistry, biochemistry, biology and analytics.

Selvita is constantly increasing the team of scientists working in this area, appreciating the education and

experience brought from the outside of the company, and supporting the continuous improvement of

qualifications of the employees. Our employees bring specialist experience in various therapeutic areas

and organic, medicinal, computational and analytical chemistry, biochemistry, molecular and cell biology,

and ADME / DMPK to the Selvita portfolio, which is necessary for providing high-quality services, required

by our clients.

The largest contracts in Q3 2020 in the area of Drug Discovery are projects carried out by the Chemistry

Department based on providing synthetic support to research projects aimed at developing new

therapies. The main task of Chemistry teams is the synthesis of a series of chemical compound libraries

showing potential biological activity, their purification and qualitative analysis to support the client's

research and development projects. Collaboration in this area is most often based on long-term

relationships with customers and contracts signed in previous years, which we treat as an expression of

trust in us and the appreciation of high quality services we provide. This group of contracts includes, for

example, the contract reported in Q3 2020 – Current Report no 25/2020 of 07/06/2020, the value of which

was EUR 523,789 under a framework agreement, which was signed on February 1, 2018 and published

before the corporate split by Ryvu Therapeutics SA. The signed Order increased the value of the

Agreement for 2020 by 27% and amounts in total EUR 2,276,309. The fact of extending the collaboration

with the client remains important from the point of view of the further development of the Company's

operations.

In Q3 2020, Selvita also continued and started new integrated Drug Discovery projects (mainly for

European clients), while building the necessary resources in the area of medicinal chemistry, where apart

17


from knowledge and experience in the field of typical organic chemistry and computational chemistry, the

ability to interpret biological data from in vitro pharmacological tests, ADME parameters and the stability

of compounds in animal and human organisms are essential. Selvita scientists worked on improving the

physicochemical properties and activity of new compounds with pharmacological potential. One of the

main tasks of our medicinal chemists was to design new structures - molecular cores and small libraries

of compounds around them in order to validate the hypotheses that will take the projects to the next stage

of development. Medicinal chemists were responsible for researching the structure-activity relationship

(SAR) and designing an appropriate synthetic strategy to obtain the appropriate biological activity of target

compounds.

Organic chemists focused on cost-effective and time-efficient synthesis of a series of libraries of

compounds with potential activity against molecular targets, and the team of analytical chemists purified

and characterized substances that were then subjected to ADME testing, pharmacological in vitro testing,

and stability studies in animals. Test results were then submitted to the team of computational and

medicinal chemists to iteratively optimize the structures following the project strategy.

The role of scientists from the Department of Molecular and Cell Biology in integrated projects was based

on providing the data for SAR (Structure-Activity Relationship) analysis. The tasks focused on the

development of biochemical and cellular tests characterizing the activity and mechanism of action of new

molecules of potential therapeutic importance. Then, as part of subsequent iterations, cellular and

molecular biologists conducted routine analyzes of the activity of drug candidates using the previously

developed panel of complex biochemical and cellular tests. Thus, department's scientists worked on FTE

projects involving the development of new biologically active substances for biotechnology and

pharmaceutical companies from Europe and the US.

Collaboration in integrated projects with the clients from previous years continued in the area of ADME /

DMPK (partially expanded by including additional analyses). In the field of bioanalytical research,

cooperation with a large chemical client continued, which, after the stage of method validation and

stability studies, entered the stage of routine testing using the developed LCMS methods. The next stage

of works planned for Q4 2020 and the first half of 2021 will be the implementation of new biological

matrices into the analysis package. In the third quarter, the first projects related to the proteomics offer

were completed and new orders were obtained for implementation in the fourth quarter.

The support for integrated projects by computational chemists consisted of analyzing the data available

in the public domain, following the structure-activity relationships (SAR) for the duration of the project,

designing next-generation structures and using virtual techniques based on the protein structure, such as

virtual screening or focused docking, to identify key ligand-protein interactions.

Very good coordination of the work of medical chemists, synthetic chemists and analysts, computational

chemists, the ADME team and in vitro pharmacology by the integrated projects managers, the visible

intellectual contribution of Selvita scientists, as well as good communication with the client allowed us to

achieve the target project goals by generating high-quality data.

In addition to chemistry and integrated projects, in Q3 2020, a large part of the Drug Discovery area

revenues came from the production and purification of recombinant proteins and the structural analysis

of protein-ligand complexes, in which the Biochemistry Department specializes. High-quality recombinant

proteins have been produced using both bacterial and eukaryotic expression systems, which enable the

production of a wide variety of proteins, including those hard to prepare.

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The purification of recombinant proteins constituted the main part of the revenues of the Biochemistry

Laboratory in Q3 2020. Also during this period, a number of projects related to the crystallographic

analysis of protein-ligand complexes (the so-called "from gene to structure" studies) were carried out.

Macromolecule structural analysis projects are highly technologically advanced and constitute an

important part of revenues. It should be noted that the Biochemistry Laboratory has the necessary

resources to perform crystallographic projects, i.e. a team of highly experienced scientists, as well as high-

class equipment. Moreover, the Biochemistry Laboratory is continuing a three-year project co-financed by

the Małopolskie Center for Entrepreneurship. The project aims to further expand the experience of

crystallography and structural analysis of proteins by developing and implementing methods for the

production and crystallization of various classes of proteins as molecular targets that may be of great

importance in the development of new drugs. These research projects were carried out for European and

US clients representing global pharmaceutical and biotechnology companies, as well as smaller

companies involved in the development of new drugs. The continuing increased number of projects at the

Biochemistry Laboratory in Q3 2020 is undoubtedly associated with the growing recognition of the service

offer and the strengthening of the Biochemistry services brand. This, in turn, allows for the dynamic

development of the Biochemistry Laboratory, which is manifested in the increase in employment of high-

class scientists and the continuous improvement of laboratory infrastructure.

In addition, in the described period, scientists from the Department of Molecular and Cell Biology have

worked on two projects co-financed by the Center of Entrepreneurship for Małopolska Region and the

National Center for Research and Development.

As part of the first one, entitled 'Development of an in vitro research platform for biosimilar therapeutic

antibodies', the research team has been developing a series of biophysical, biochemical and cellular in

vitro tests to compare the affinity and activity of monoclonal antibodies from the group of TNFα and VEGF

inhibitors. The above platform will be similar in nature to the platform for comparative research of

biosimilar insulins and their analogues, which was developed by the team in previous years.

In the second project: "HiScAI - Development of a phenotypic research platform, based on high-content

screening technology, with analysis using artificial intelligence algorithms for the discovery of new drugs

in neuroinflammatory and fibrotic diseases", carried out together with scientists from Ardigen, the

development of experimental protocols enabling multi-parameter analysis of phenotypic changes in cells

using HCS technology and artificial intelligence algorithms. At this stage of the project, scientists from the

Department of Molecular and Cell Biology are focusing on optimizing tests aimed at analyzing the activity

of drugs in neuroinflammatory diseases.

The implementation of both of the above projects will allow to expand the portfolio of services offered by

the CMBD department and thus accelerate the process of discovery of new drugs.

Thanks to the extended and new collaborations with clients, ADME and bioanalysis specialists have

conducted work in integrated projects (IDD) related to drug discovery. In the field of bioanalytical research,

the next phase of the project for a large chemical customer was completed in terms of the validation of

analytical methods using LCMS equipment. The project has reached the stage of routine testing and will

continue as such in the next quarter.

In the following quarters / years, in addition to strengthening the team by employing highly qualified staff

with diversified therapeutic and technological experience, as well as by investing in equipment,

technologies and laboratories necessary for the further harmonious functioning of the growing

organization, the company will focus on increasing the efficiency of operation. This will be done by

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implementation of automation of the processes of synthesis, purification and testing of chemical

compounds or wider use of artificial intelligence tools in the processes of data analysis, model

development, prediction of new generation active compounds in integrated Drug Discovery projects and

analysis of the obtained results, e.g. using the aforementioned HCS technology.

Taking into account the current contracts and ongoing business talks, a further upward trend should be

maintained in the coming quarters / years, strengthening the market position and increasing the scale of

operations in the Drug Discovery Selvity area.

REGULATORY STUDIES

In the area of regulatory studies certification of active substances and finished products was carried out

for over a dozen companies, including one of the world's pharmaceutical companies with release studies

for several small molecule products and several biological ones. Due to the growing scale of regulatory

research in the third quarter a decision was also made to assign a team dedicated only to quality control

work. Regulatory research was also conducted for several permanent agrochemical companies. They

mainly included method validation, certification of active compounds and impurities, 5Batch tests and the

analysis of dioxins and furans in the GLP system. A new large agrochemical client was also acquired,

interested in the entire package of services provided in the laboratory. The first projects for this client

concerned metals analysis using the ICP technique.

In the area of research CMC analytical support for a global pharmaceutical company was extended. In the

third quarter it included optimization of additional analytical methods to support the synthesis of

compounds, stability studies and work on the new molecules. Pilot projects of method’s transfer were

launched for the same client, which are ultimately aimed at releasing several small-molecule

pharmaceutical products to the market. In addition, for this client and several new clients, projects were

launched in the field of pharmaceutical product analyses for the presence of genotoxic nitrosamines. In

the area of research on biological products, transfers of analytical methods and release testing continued

for several pharmaceutical companies. Further projects analysing biological products are planned for the

fourth quarter and subsequent years.

Cell and Molecular Biology laboratory performed transfers of bioanalytical methods and batch release

testing of several biosimilar drugs from various classes for European and US clients. These analyzes were

carried out in the Good Manufacturing Practice (GMP) standard. It should be emphasized that in Q3 2020

CMBD has started the execution of several new projects concerning the development and transfer

biological assays for biological and biosimilar drugs.

In the project, entitled 'Development of an in vitro research platform for biosimilar therapeutic antibodies',

the research team has been developing a series of biophysical, biochemical and cellular in vitro tests to

compare the affinity and activity of monoclonal antibodies from the group of TNFα and VEGF inhibitors.

The above platform will be similar in nature to the platform for comparative research of biosimilar insulins

and their analogues, which was developed by the team in previous years.

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R&D

In addition to the Drug Discovery and Regulatory areas, some revenues from the Services came from the

R&D projects.

The main type of projects in this area are typically synthetic projects for the biotechnology and

pharmaceutical industry, development of new and cost-effective and environmentally safe synthetic

processes / alternative technologies for obtaining chemical substances, scaling-up chemical processes for

production purposes, optimization and parameterization of technologies for the registration purposes.

In Q3 2020, Selvita scientists have also worked on contract synthesis of pharmaceutical and chemical

compounds on a mg to kg scale – providing customers with active substances, impurities or degradation

products.

The Analytical Laboratory carried out research and development projects based on a wide range of

chemical, bioanalytical and proteomic analyses for clients with whom cooperation had been established

in previous years, as well as with new clients acquired thanks to the constantly expanding research

package.

The R&D area is of interest to both large and medium-sized pharmaceutical and biotechnology companies,

agrochemical and chemical industries, as well as CRO / CMO companies. In this group of projects, the

company cooperates based on the FFS and FTE models. We work on such projects with clients from

Europe, Israel and the United States.

Selvita systematically expands the portfolio of available technologies, e.g. in the area of photochemistry,

electrochemistry, flow synthesis, high pressure synthesis and the available analytical tests package, in line

with the expectations of our clients, which allows to assume continuing growth trends also in the area of

R&D / Research and Development.

ARDIGEN S.A.

Good financial results of the third quarter demonstrate that the Company successfully passed the first

stage of the pandemic. The Company’s internal organization and culture is conducive to remote work,

which will probably also prove during the fall reappearance of the pandemic.

The third quarter was very intensive in terms of the conducted sales activities. It was the time of

implementation of the fully based on digital media marketing strategy developed in the previous quarter.

It was also noticed that customers were more eager to expand cooperation with the existing partners and

were much more willing to rely on recommendations when establishing new cooperation activities. Due

to Ardigen’s large customer base and very good reputation of the Company in the market, the sales is not

threatened despite difficult personal contacts.

AREA OF IMMUNOLOGY

In the third quarter of 2020 the Company signed a contract with NCBiR for financing the project for the

development of an AI platform called TCRact which enables the production of unique and unavailable by

means of standard laboratory methods TCR receptors, opening the door to new cell therapies. The project

team was expanded and strengthened in terms of research and management.

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The Company representatives promoted the Ardigen’s offer within the scope of Immunology and were

gaining knowledge at CAR-TCR Digital Week, 20th SACHS Annual Biotech in Europe Forum and World

Vaccine Congress conferences. Also, talks with potential scientific and business partners were underway.

The Ardigen team submitted a scientific publication describing the work on the selection of epitopes for

the SARS-COV-2 virus vaccine. The works were performed with the use of their own AI platform -

ArdimmuneVax. The publication was developed in cooperation with Prof. Krzysztof Pyrć and Prof. Marian

Szczepanik from Jagiellonian University. The publication is currently being peer reviewed in one of the

journals from the Philadelphia List. It is also already available to the world of science on the bioRxiv

preprint server.

MICROBIOME AREA

In the third quarter the Company cooperated with two French companies in commercial projects using

the Ardigen Microbiome Translational Platform. The first project’s aim was the analysis of the antibiotic

profile of microbiota of patients receiving fecal microbiota transplantations (FMT) as treatment supportive

to bone marrow transplantation. The second project involved pilot studies on the determination of

phenotypic characteristics of bacteria based on metagenomic data.

The Company signed a contract with a US company to conduct joint research on the identification of

diagnostic biomarkers for Parkinson’s disease. Ardigen’s role is to develop hypotheses using the AI

platform - Ardigen Microbiome Translational Platform. Subsequently, these hypotheses will undergo

laboratory validation conducted by the partner.

The Company implemented a project on the use of the potential of environmental microbiome in

forensics. The works are conducted in a consortium with the Central Forensic Laboratory of the Police and

Jagiellonian University.

Intensive sales activities aiming at the acquisition of new customers were also carried out in the past

quarter, just like talks held with further potential scientific and business partners.

AREA OF SERVICES

Despite the difficulties related to the pandemic, the third quarter recorded an acquisition of new

customers and expansion of the scope of works for key customers from the largest pharmaceutical

companies segment.

The Company successfully implemented the first stage of works carried out for a pharmaceutical company

being among the top ten largest ones in the world, by applying its own Computer Vision technology in the

process of discovering small molecule drugs. As a consequence, the Company signed a contract to

continue the project in the area of virtual screening of small molecules based on images coming from

High-Content phenotypic screening.

The Company signed a contract with a US biotechnology company extending, for another year, the license

for its own PRISM technology used in the works on a breakthrough therapy based on a biopharmaceutical.

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8. INFORMATION ON SHAREHOLDING STRUCTURE

As of the date of publication of the Report, the shareholder structure of Selvita S.A. including shareholders

holding at least 5 % of votes at the Meeting of Shareholders, is as follows:

Shareholder Shares % of shares Votes % of votes

Paweł Przewięźlikowski 4 990 880 27.19% 8 490 880 37.9%

Bogusław Sieczkowski 924 384 5.04% 1 474 384 6.58%

Tadeusz Wesołowski

(with Augebit FIZ)* 1 132 713 6.17% 1 132 713 5.06%

Nationale Nederlanden OFE 1 900 000 10.35% 1 900 000 8.48%

*The beneficiary of Augebit FIZ is Tadeusz Wesołowski – Vice Chairman of Selvita Supervisory Board

Total shares: 18 355 474

Total votes: 22 405 474

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CONTACT

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MEDIA RELATIONS

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Documents

CONSOLIDATED Q3 2020 REPORT (SUMMARY) - Selvita