Untitled

Infant Bacterial Therapeutics AB

Annual Report 2021

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

We aim to satisfy unmet medical needs in the

premature infant

SIGNIFICANT EVENTS 2021

Another primary endpoint, Sustained Feeding Tolerance (SFT), i.e. the period until good

digestion, has been validated in IBT’s phase lll-study. Reduced time until good digestion, reduces

risk for severe complications such as blood poisoning. This means that the study now has two

rather than one validated primary endpoint, to prevent NEC and to reduce the time to SFT.

Recruitment of patients in IBT’s phase lll-study has been strongly affected by the

pandemic. A likely scenario, assuming that the current recruitment level can be

maintained, is that the study can be concluded at the end of 2023. Should the pandemic

situation once again get worse, recruitment may require additional time. However, the

pandemic does not affect the quality in our data or the possibility to conclude the study.

Costs are primarily related to the number of patients in the trial, which means that IBT’s

liquidity is continuously deemed sufficient to conclude the study.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Infant Bacterial Therapeutics AB (publ)

Annual Report January 1 – December 31, 2021

Table of Contents

IBT IN BRIEF 3

IBT’S HISTORY 4

MESSAGE FROM THE CEO 6

IBT’S PIPELINE 8

DIRECTORS REPORT 15

OPERATIONS 15

SIGNIFICANT EVENTS DURING 2021 15

SIGNIFICANT EVENTS AFTER THE FISCAL YEAR 16

SELECTED FINANCIAL DATA 17

FINANCIAL DEVELOPMENT 17

RISKS AND UNCERTAINTIES 19

ENVIRONMENTAL RESPONSIBILITIES 22

SUSTAINABILITY 22

LEGAL PROCEEDINGS 22

CORPORATE GOVERNANCE 22

PUBLICATION 22

CALENDAR 22

ANNUAL GENERAL MEETING 23

BOARD OF DIRECTORS RECOMMENDATION OF APPROPRIATION OF PROFITS 23

INCOME STATEMENT 24

BALANCE SHEET 25

STATEMENT OF CHANGES IN EQUITY 26

STATEMENT OF CASH FLOWS 27

NOTES 28

DEDUCTION OF CERTAIN KEY FIGURES 44

FINANCIAL DEFINITIONS 45

BOARD’S ASSURANCE 46

AUDITOR’S REPORT 47

CORPORATE GOVERNANCE REPORT IBT AB 2021 52

SHARES 61

MANAGEMENT 63

BOARD OF DIRECTORS 64

The annual report is published on the company’s homepage, www.ibtherapeutics.com

and is distributed in printed form when ordered. Orders may be placed via

info@ibtherapeutics.com. The annual report is also published in Swedish.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

IBT IN BRIEF

Infant Bacterial Therapeutics AB (publ) is a pharmaceutical company with a product in clinical

development phase lll. The company’s vision is to develop drugs influencing the human infant

microbiome, and thereby prevent or treat rare diseases affecting premature infants. IBT is

currently developing its lead drug candidate IBP-9414. The ambition with IBP-9414 is become

the world’s first approved probiotic pharmaceutical with the goal to prevent lethal infant diseases

including NEC and sepsis and to induce sound gut and intestine development in premature

infants. IBP-9414 contains the active compound Lactobacillus reuteri, which is a human bacterial

strain naturally present in breast milk. IBT is further pursuing a second rare disease program

IBP-1016 for the treatment of an unmet medical need in gastroschisis, a severe disease in

infants. By developing these drugs, IBT has the potential to fulfill unmet needs for diseases where

there are currently no prevention or treatment therapies available.

Vision

Premature infants are the most vulnerable beings on the planet and for them to survive, grow

and thrive they need intensive and specialized care. Although advances in medical care and

handling over the last 30 years have improved survival and well-being of these sensitive infants,

both in the immediate post-natal period and in their subsequent lives, current drugs and therapies

are mostly designed for adults and are not adapted to this specific and vulnerable patient

population. Specific treatment and prophylactic therapy are thus underdeveloped and there is an

urgent demand for drugs designed for the unique needs of the premature baby. IBT:s vision is to

become an internationally recognized and leading company in the development of

pharmaceuticals to meet the needs of the premature infants.

Mission

IBT develops, and intends to market and sell safe and efficacious therapies well adapted to its

purpose that affects infants’ microbiome and thereby prevent or treat rare diseases that affects

premature infants. IBT seeks to remain close to the needs expressed by healthcare providers

and parents to provide satisfactory therapeutic solutions and continuously improve these

solutions.

Partners

Clinical trials are conducted through collaborations with CRO’s or leading academic research

groups chosen based on their experience and specialist knowledge in conducting clinical trials.

Suitable sites are selected in cooperation with IBT to conduct clinical trials and to initiate the

recruiting process for patients. IBT can monitor the clinical operations and pharmaceutical safety

internally, or delegate these activities to the chosen CRO.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

IBT’S HISTORY

2013

IBT is founded as a subsidiary to BioGaia and commences the development of a

preventive therapy (IBP-9414) against NEC using Lactobacillus reuteri

IBT is granted Orphan Drug Designation by the FDA for Lactobacillus reuteri for the

prevention of NEC in premature infants

FDA provides scientific input to IBT development plans

2014

Pharmaceutical development defining the manufacturing process of IBP-9414

EMA provides scientific input to IBT development plans

2015

IBT is granted Orphan Drug Designation by the European Commission for IBP-9414

including Lactobacillus reuteri for the prevention of NEC in premature infants

Production of drug candidate IBP-9414 according to all applicable pharmaceutical

chemistry-manufacture-control regulations for the safety and tolerability study

Active IND obtained from FDA for start of Safety and Tolerability clinical trial in 2016

IBT received approval from the MPA to conduct a clinical trial in Sweden

2016

Separation of IBT from BioGaia

Listing on Nasdaq First North

IBT receives Rare Pediatric Disease Designation from FDA for IBP-9414

IBT adds new indication for Gastroschisis IBP-1016

2017

IBT’s share of series B is traded on First North Premier

IBT completes IBP-9414 safety and tolerability trial and announces that top line data

demonstrate similar safety and tolerability profile in the active and placebo groups

EMA adopts a positive opinion on the Pediatric Investigational Plan proposed by IBT for

the development of IBP-9414 for the prevention of NEC

2018

The EGM on January 8 decided on a new share issue amounting to SEK 439.1m and as

of January 31the share issue was fully subscribed. The share issue in combination with

the directed share issue in November of 2017 generated approximately SEK 543.6m prior

to transaction costs

In June 2018, IBT contracted Premier Research International LLC, the company’s CRO

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

during the Phase II clinical trial, to also conduct the company’s Phase III clinical trial

IBT series B shares are from September 10 traded on Nasdaq Stockholm, Mid Cap

IBT has, resulting from discussions with the FDA chosen to modify its Phase III study for

the prevention of necrotizing enterocolitis (NEC) in premature infants. Following the

guidance from the FDA, IBT will improve the protocol which may allow additional claims

such as improvement of “feeding tolerance”, that could increase the chance of success

in the Company’s Phase III study and the market potential of the product

2019

IBT signed its first distribution agreement on March 5, 2019, for its product IBP-9414, with

MegaPharm Ltd. for the Israeli market and the Palestinian Authority’s territories

On May 19, 2019, it was announced that IBT had responded satisfactorily to the

comments that the FDA had regarding the study design to the companies planned Phase

III Study which led to the approval of IBTs IND (Investigational New Drug) application. As

a consequence of the FDA’s comments, an evaluation of the effects of IBP-9414 on the

digestive system, or so called “feeding tolerance” of premature infants in the ongoing

Phase III study is now included

During 2019 IBT’s application for clinical trial was also approved in the UK, France,

Hungary and Spain

IBT announced on July 4, 2019 that the first patient had been recruited in the company’s

pivotal clinical Phase III study, The Connection Study

2020

The COVID-19 pandemic affects the company’s development work, for example,

activation of hospitals, which has not occurred at the desired rate. As of the date of the

2020 annual report, more than half of the planned hospitals have been activated. IBT's

cash position is sufficient to carry out the ongoing Phase III study, even if recruitment in

the study currently does not take place at the desired rate

IBT’s clinical study application was approved in Israel in January, in Poland in October

and in Bulgaria in November

2021

Another primary endpoint, Sustained Feeding Tolerance (SFT), i.e. the period until good

digestion, is validated in IBT’s phase lll-study. Reduced time until good digestion, reduces

risk for severe complications such as blood poisoning. This means that the study now

has two rather than one validated primary endpoint, to prevent NEC and to reduce the

time to SFT.

Recruitment of patients in IBT’s phase lll-study is strongly affected by the pandemic. A

likely scenario, assuming that the current recruitment level can be maintained, is that the

study can be concluded at the end of 2023. Should the pandemic situation once again

get worse, recruitment may require additional time. However, the pandemic does not

affect the quality in our data or the possibility to conclude the study. Costs are primarily

related to the number of patients in the trial, which means that IBT’s liquidity is

continuously deemed sufficient to conclude the study.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

MESSAGE FROM THE CEO

As I reflect on the year that passed, I’m pleased to note that our team significantly progressed

several key deliverables for our drug candidate IBP-9414, including driving recruitment despite

the pandemic challenge, expanding our IP protection across several important key markets,

confirming Sustained Feeding Tolerance as a primary endpoint in addition to NEC, and

extending strategic insights into our value proposition as we prepare IBT for launch.

Confirmed Medical Needs – NEC and Sustained Feeding Tolerance (SFT)

IBP-9414 is now in its final Phase III development stage (“The Connection Study”). The

purpose of our study is to produce the data needed to demonstrate how IBP-9414 improves the

chances of premature infants' survival. Our active ingredient, Lactobacillus reuteri is a natural

strain of bacteria present in human breast milk. With the data in hand, we will launch the

world’s first pharmaceutical grade probiotic to prevent life threatening infant diseases including

NEC and sepsis by promoting a healthy gastrointestinal development. I would like to share a

few words regarding the importance of premature infants’ ability to be fed sustainably.

At birth, the umbilical cord is severed, and suddenly the baby needs nutrition from somewhere

else. A baby doubles its weight every three to four weeks during the final trimester of

pregnancy. A major challenge for medical staff caring for premature infants is to ensure they

grow and develop in a similar way as if they had remained inside their mother. It’s also critical

to avoid clinical complications such as sepsis. This requires the ability for the infant to

sustainably tolerate a significant amount of nutrition.

Infants receive nutrition in one of two ways; enteral or parenteral, i.e. orally or intravenously. A

complicating factor is that the gastrointestinal system in the premature infant has not sufficiently

developed to sustainably tolerate the necessary nutrition. It is furthermore well documented

that extended use of parenteral nutrition can cause serious complications e.g. sepsis. There

are also potential long-term implications associated with infant malnutrition including impaired

cognitive function.

With that background the neonatal staff is highly focused on shortening the time to Sustained

Feeding Tolerance to enable healthy gastrointestinal development. A blinded analysis of IBT’s

clinical phase III study demonstrated in 2021 that shortening of time to SFT significantly

reduces the risk of serious complications including sepsis. The validation of SFT as a clinical

endpoint was accomplished using a methodology agreed in advance with the FDA. The

validation conducted in 2021 of our development program importantly progressed in 2021 to

document the effect of IBP-9414 regarding two unique goals instead of one: the prevention of

NEC and to shorten the time to SFT, as the second now validated primary "endpoint".

Recruitment progress for the Phase III study

The recruitment of patients for the Connection Study has grown to 800 patients (Feb 2022).

The speed of recruitment has been favorably influenced by the increasing number of

participating centers across the US, Europe and Israel, as well as planned expanded

recruitment criteria covering infants between 500 gram to 1000 gram (from prior 750 gram to

1000 gram). On the other hand, the Covid pandemic has slowed us down. Several mitigating

actions were quickly put in place to facilitate the processing of patients including e-consent. It's

important to note that while the pandemic impacts the rate of recruitment, it does not impact the

quality of data or our confidence in completing the study.

Costs are primarily tied to the number of patients in the study, and we therefore remain

sufficiently funded through the full study.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Important initiatives during 2022

Our focus is to advance recruitment of The Connection Study towards conclusion. We are

currently averaging 50 patients per month, and at the same time recognize recruitment speed

and study conclusion is contingent on the pandemic. There are alternative scenarios. One likely

scenario is that we conclude recruitment in 2023. On the other hand, if the pandemic situation

worsens, patient recruitment may extend further.

While the study continues we will also make sure IBT stands ready to launch IBP-9414 under

the most expedited scenario. This means we are identifying the necessary production

requirements as well as the resources to prepare the product, the markets and the organization

for commercialization across key markets.

During 2021 we secured several additional patent approvals. The IP protection of IBP-9414 is

strong. We expect 12 years of exclusivity across critical markets such as Europe, the US,

Japan and China thanks to three layers of protection including data exclusivity from being a

biologics, patents as well as orphan drug status.

In conclusion, I would like to take this opportunity to thank all employees who, with great

commitment, progress the important work with a product that can play a major role in improving

the chances of survival for premature infants.

Stockholm March 30, 2022

Staffan Strömberg

CEO

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

IBT’S PIPELINE

IBP-9414

IBP-9414 contains the active substance Lactobacillus reuteri, which is a co-evolved human

bacterial strain naturally present in breast milk. Lactobacillus reuteri is a live bacteria known to

be anti-inflammatory, anti-pathogenic and beneficial to gut motility. IBP-9414 is specifically

formulated with the consideration of the extremely sensitive target population of premature

infants.

IBT was granted Orphan Drug Designation by the FDA for Lactobacillus reuteri for the prevention

of NEC in premature infants in 2013 and by the European Commission in 2015. IBT also received

Rare Pediatric Disease Designation from the FDA for IBP-9414 in 2016, meaning that IBT may

be awarded a priority review voucher following market approval.

In June 2016, IBT commenced a Safety and Tolerability study. At the end of 2017 the completed

study results demonstrated a similar safety and tolerability profile both in the active group and

placebo group.

IBT has, resulting from discussions with the FDA on November 20, 2018, chosen to modify its

Phase III study in premature infants for the prevention of necrotizing enterocolitis (NEC).

Following the guidance from the FDA, IBT amended the protocol to allow additional areas of

treatment such as reduced time to good digestion, called “Sustained Feeding Tolerance” (SFT).

The pivotal Phase III study, The Connection study, commenced in 2019 and the first patient was

recruited on July 4, 2019. A blinded evaluation presented in December 2021 showed that a

reduction of time to SFT correlates with fewer complications such as blood poisoning and

bronchopulmenary dysplasia, a chronic lungdisease affecting premature infants.

NEC

NEC is a leading cause of death among premature infants in neonatal intensive care units

(NICU). NEC annually kills approximately 3,700 and 1,500 infants in Europe and in the US,

respectively. NEC has an unpredictable, spontaneous, and acute onset and major surgery is

today the only available treatment. NEC is a serious inflammatory disease of the newborn bowel

in which portions of the bowel undergo tissue death (necrosis).

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

NEC primarily affects premature infants and the risk to contrive NEC increases the lower the birth

weight and lower gestational age. Gestational age is defined as the duration from the first day of

the last menstruation cycle until birth.

Occurrence of NEC by estimated gestational age is as set forth in Figure 1.

Figure 1. Occurrence of NEC by gestational age (Clark et al, 2012)

The disease has a higher rate of mortality in the younger and less mature infants. Mortality in

infants who had a diagnosis of NEC by estimated gestational age is as set forth in Figure 2.

Figure 2. Mortality in infants who had a diagnosis of NEC by estimated gestational age (Clark et al,

2012). The number listed outside parentheses in the table above is estimated gestational age in weeks.

The number listed within parentheses represents the number of patients with NEC within each

gestational age group.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

The long-term clinical consequences for infants who survive NEC are variable and include short

bowel syndrome, parenteral nutrition-associated cholestasis, abnormal growth, and adverse

neurodevelopmental outcomes, including cerebral palsy, cognitive impairment, visual

impairment, and hearing impairment.

Feeding tolerance

The first weeks of nutrition have important implications for the development of preterm infants.

The goal of achieving early and adequate enteral nutrition (tube feeding) in these infants is to

facilitate recovery or catch up growth, to achieve normal body composition, whilst minimizing

undesirable effects of nutritional imbalances (e.g. hyperglycemia, insulin resistance, etc.).

Evidence-based guidelines for nutrition of VLBW-infants (infants with a birthweight of under 1,500

grams) recommend starting parenteral nutrition (intravenous) within the first hours postnatally as

the immature gastrointestinal tract is not ready to accept full enteral feedings in these infants

directly after birth. However, prolonged parenteral nutrition is associated with complications

(intrahepatic cholestasis, increased risk of bronchopulmonary dysplasia, worsening of pulmonary

vascular resistance, IV line-mediated infections and sepsis.

The enteral route of nutrition is the most physiological and natural way of administering nutrients

to the neonate. The introduction of enteral feeding is therefore recommended as soon as

possible, and ideally on day 1 with the goal of reaching full enteral nutrition as quickly as possible.

This eliminates the need for parenteral nutrition and the associated risks of complications.

Establishing sustained enteral feeding, associated with the discontinuation of parenteral nutrition

is thus an important goal, especially in VLBW and ELBW-infants (extremely low birth weight

<1000g). Reducing the number of days to reach complete enteral nutrition is considered to be

clinically relevant and important in the treatment of the preterm infant.

L. reuteri

Lactobacillus reuteri is a co-evolved human bacterial strain naturally present in breast milk. L.

reuteri is a live bacteria known to be anti-inflammatory, anti-pathogenic and beneficial to gut

motility.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Clinical Experience

Since 2012, thirteen published clinical trials that have enrolled more than 4,000 infants have

indicated proof-of-concept of the clinical potential of Lactobacillus reuteri in the prevention of

NEC.

Since 2012, nine published clinical studies that have enrolled more than 3,100 infants have

indicated proof-of-concept of the clinical potential of Lactobacillus reuteri for the reduction in

episodes of feeding intolerance or reduction in time to full enteral feeding.

The table below shows a summary of studies using Lactobacillus reuteri showing clear clinical

signal for the reduction in NEC incidence and clear clinical signal for reduction in episodes of

feeding intolerance or reduction in time to full enteral feeding.

Development Plan

The development plan for IBP-9414 consists of two clinical trials: the completed safety and

tolerability study followed by the ongoing pivotal Phase III study, The Connection Study. The

safety and tolerability study, was been completed on time in Q4 2017. The Connection Study

was initiated in the second half of 2019 and is ongoing.

The first study was a randomized, double blind, parallel-group, dose escalation placebo-

controlled multicenter study to investigate the safety and tolerability of IBP-9414 in premature

infants (ClinicalTrials.gov identifier: NTC02472769). The study included 120 premature infants,

defined as a gestational age ≤ 32 weeks and birth-weight ranging from 500 to 2,000 grams,

recruited and randomized to receive either IBP-9414 or placebo. The first dose of study drug was

administered within 48 hours of birth and continued daily for a period of 14 days. Follow-up

assessments were occasionally made up to six months after the last dose of the study drug. The

primary outcome in this trial was safety and tolerability. This Safety and Tolerability study has

been completed on time in Q4 2017. The safety and tolerability study concluded that IBP-9414

was safe and well-tolerated in premature infants with birth weights between 500–2,000 grams,

with high compliance to treatment with the study drug and that there was no evidence of cross-

contamination with IBP-9414 in placebo treated infants.

The ongoing pivotal Phase III study is designed to demonstrate and document efficacy of IBP-

9414 over placebo in two primary “endpoints”, prevention of NEC and improvement of so called

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

“Sustained Feeding Tolerance” in premature infants with a birth weight ≤ 1,500 grams. This study

will also include safety evaluation.

Given the urgency to provide an effective preventative therapy to this unmet medical need, IBT

plans to utilize the available FDA and EMA expedited programs to reach the market as soon as

possible.

Medical Need and market

There has been little or no progress in recent years in improving outcomes for infants that are

affected by NEC once the disease is underway. Nor is there definitive treatment that modifies the

underlying risk factors for the disease. Approximately 20 to 40 percent of patients with NEC will

require surgery. Thus, NEC prevention strategies are vital and urgently needed but to date none

have been successful or generally adopted as the standard of care. Subsequently, a preventive

treatment against NEC remains an unmet medical need.

NEC patients require medical care and in many cases also surgical interventions that increase

hospital expenditures and prolong length of stay. The economic burden of NEC has been

evaluated to be almost 20 percent of the total cost of the initial care of all newborns in the US,

and represents approximately USD 5 billion spent annually on NEC. Moreover, those infants who

survive NEC may face serious lifelong sequelae, which eventually decrease their quality of life

and generate further costs to the patient and society. In the light of this, a preventive therapy for

NEC such as IBP-9414 would therefore be expected to both directly and indirectly reduce these

healthcare expenses. IBT intends to demonstrate these benefits to support reimbursement for

IBP-9414 in the prevention of NEC from caregivers, insurance companies and pharmaceutical

authorities, in order to gain compensation and reimbursement for IBP-9414 for prevention of NEC

and SFT.

In 2021 an independent consultant company, ClearView Healthcare Partners LLC (“ClearView”),

were commissioned by IBT to evaluate the market need for the preventative drug IBP-9414 for

NEC (the “ClearView Report”). ClearView completed 30 interviews with neonatologists and

hospital Pharmacy and Therapeutics (“P&T”) committee members in the US.

The Clearview report established that neonatologists perceive NEC to represent a key priority

despite its low incidence. In addition, the need to improve digestion (SFT) in premature infants is

of decisive importance. The neonatologists nearly unanimously stated a need for improved

prevention of NEC and SFT to relieve both the clinical and economic burdens.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Clearview also report increasing interest by neonatologists to prescribe food supplements to

prevent NEC and SFT but that the majority of neonatologists do not recommend food

supplements to any great extent due to their opinion that FDA-regulation is key to guarantee the

required quality control. The ClearView Report estimated that the number of premature infants

eligible to receive prophylaxis for NEC and SFT is over 56,000 infants per annum in the US.

A target product profile (“TPP”) was presented to interviewees in the interviews conducted by

Clearview. The TPP defined among other things the safety profile, method of administration, and

expected efficacy in the prevention of NEC of 33% and a statistically significant reduction in time

to SFT.

The ClearView Report has shown that when presented with the TPP of IBP-9414, neonatologists

reacted positively and expressed a strong willingness to use IBP-9414 in their clinical practice

(90 percent of Physician Preference Share), and according to a hospital template a majority of

P&T (Pharmacy and therapeutics) members expressed willingness to adopt the product. An

adapted price range was tested in the ClearView report, depending on gestation age. At a price

of USD 5,000 per week until the infant reaches 34 weeks PMA as base, ClearView estimate

sales amounting to USD 630m per annum in the USA. The analysis considered number of

addressable patients, physician preference scores, formulary inclusion and protocol access.

With the results from the analysis for the USA with IBP-9414:s two primary endpoints, ClearView

made an assessment of what the corresponding results would be for the European market and

the rest of the world (ROW), illustrated as follows in the table below. This shows that the potential

for Europe corresponds to what we see for the USA, and ROW is estimated at approximately

half of the USA, resulting in a “megabrand” potential of USD 1.5bn.

IBP-1016

Gastroschisis is a rare, life-threatening and debilitating birth abnormality in infants where the

infant is born with externalized intestines.

Megabrand Potential >$1.5B Peak Sales

* Clearview marknadsundersökning 2021. Rest Of World (ROW) uppskattat till 50% av EU

→ Tre former av IP skydd

1) Dataexklusivitet

2) Patent

3) Särlekemedel

→ >12 års exklusivitet på

kritiska marknader som

EU, USA, Japan och Kina

USA

EUROPE

ROW

TOTAL

Peak Sales USD M

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

After the initial surgical repair, gastroschisis represents an area of significant unmet medical need

with no definitive treatment available. Post-operative management of gastroschisis is largely

aimed at overcoming the significant morbidity related to the reduction in gut motility and

consequent feeding intolerance necessitating the prolonged requirement for parenteral nutrition.

Infants suffering from gastroschisis have a greatly increased risk of sepsis and liver cholestasis.

It is common for neonates born with gastroschisis to have typically an extended hospital stay of

1-5 months thereby causing significant burden to the healthcare system.

The active bacteria used in IBP-1016 is known to enhance gut motility and function in infants with

feeding intolerance.

Intellectual property

IBP-9414 is protected by already approved patents on Lactobacillus reuteri, held by BioGaia. IBT

has been granted from BioGaia an exclusive royalty-free license to use Lactobacillus reuteri in

IBT’s areas of interest. The license is valid for the duration of the patent term.

IBT has and intends to apply for patent protection for innovations for the purpose of securing a

sufficient and efficient protection of IBT’s current and future commercial position and interests.

Patent applications regularly cover the US, the EU, Japan and China, but also other markets

where it is commercially justified.

The patent protection granted in the US is valid until 2026 and in Europe, China and Japan until

2027. Thereafter patent term extensions are possible in certain areas of the world which could

provide additional patent protection of the innovation via patent term extensions.

IBT has filed for further patent protection for IBP-9414 which aims to protect patents until 2036.

On February 9 we announced that the Japan Patent Office has issued a decision to grant a

patent entitled: “A method of activating lactic acid bacteria”, which protects the formulation

of Lactobacillus reuteri including IBP-9414. The Japanese patent is valid until 2036.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

DIRECTORS REPORT

The Board of Directors and CEO of Infant Bacterial Therapeutics AB (publ) (”IBT”), reg. no.

556873-8586 hereby presents the Annual Report for the financial year January 1, 2020 to

December 31, 2021.

This financial report is prepared in accordance with RFR 2, Reporting for legal entities and

“Årsredovisningslagen”.

OPERATIONS

IBT is a clinical stage pharmaceutical company with a vision to develop drugs influencing the

infant microbiome, and thereby prevent or treat rare diseases affecting premature infants. IBT is

currently developing its drug candidate IBP-9414 to prevent necrotizing enterocolitis (NEC), and

improve so called “feeding tolerance” affecting premature infants. IBP-9414 contains the active

ingredient Lactobacillus reuteri, which is a human strain of bacteria found in breast milk.

The portfolio contains a second program, IBP-1016, for the treatment of gastroschisis, a rare and

severe disease in infants. By developing these drugs, IBT has the potential to fulfill medical needs

where there are currently no treatment therapies available.

The FDA and the European Commission have granted IBT Orphan Drug Designation, and the

FDA have granted “Rare Pediatric Disease” Designation for IBP-9414 for the prevention of NEC.

SIGNIFICANT EVENTS DURING 2021

• On February 9, IBT announced that the Japan Patent Office has issued a decision to

grant a patent entitled: “A method of activating lactic acid bacteria”, which protects the

formulation of Lactobacillus reuteri including IBP-9414. The Japanese patent is valid

until 2036 and IBP-9414 is intended for marketing in Japan upon market approval.

• On February 10, IBT reached the important milestone after recruitment of 300

premature infants to the ongoing clinical Phase III study of IBP-9414. A safety

assessment of the data was conducted and infants with very low birthweights

(Stratum A, birthweight of 500g-749gwas thereafter allowed to be recruited to the

study

• The ongoing phase lll study’s second primary endpoint called “sustained feeding

tolerance” was validated.

• On April 15, we announced that the Chinese Patent Office has issued a decision to

grant a patent entitled: “A method of activating lactic acid bacteria”, which protects the

formulation of Lactobacillus reuteri. The Chinese patent is valid until 2036 and IBP-

9414 is intended for marketing in China upon market approval.

• On April 29, we announced that inclusion criteria of The Connection Study have been

expanded to include 500 - 1000 g birthweight in premature infants (from earlier 750g

-1000 g) after the Data Monitoring Committees’ planned review of safety data and

performing futility-analysis regarding NEC.

• On August 25, IBT announced that recruitment of the smallest infants in the

Connection Study was paused. IBT started to recruit infants in Stratum A (birth weight

of 500g-749g) in The Connection Study on April 29, 2021. At that point in time, 68

infants had been recruited to the group. In accordance with the study protocol and

clinical observations, enrolment of infants to Stratum A was paused awaiting a safety

review by the Data Monitoring Committee (DMC). Infants that had already been

randomized were allowed to continue treatment as per protocol, and infants in

Stratum B (750g-1000g) were allowed to continue.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

• On September 10, IBT announced that the Mexican Patent Office has granted a

patent entitled: “A method of activating lactic acid bacteria”, which protects the

formulation of Lactobacillus reuteri including IBP-9414. IBT is currently developing its

drug candidate IBP-9414 in Phase III.

• On September 22, IBT announced that the company opened the study recruitment in

Stratum A (birthweight of 500 – 749 g) after the independent DMC had completed an

additional safety review, in which the DMC had no objections to continue the study.

• On September 30, IBT announced that the company has reached the next important

milestone after recruitment of 600 premature infants in the ongoing Clinical Phase III

study of IBP-9414. According to the study protocol, a safety and futility analysis will

now be performed during which the recruitment will continue.

• On December 6, an evaluation of IBT’s Connection Study presented by Professor

Josef Neu, University of Florida, at the 2021 Hot Topics in Neonatology®, that a

blinded evaluation of IBT’s Connection Study’s second primary endpoint, “Sustained

Feeding Tolerance” (SFT), correlates with clinical results. The evaluation reveals that

even a modest reduction in time to SFT correlates positively to several clinically

meaningful outcomes including Sepsis and Bronchopulmonary Dysplasia, a chronic

lung disease that affects premature newborns.

• On December 10, Michael Owens assumed the role as CFO

• On December 27, Infant Bacterial Therapeutics AB announced that the Patent Offices

of Brazil and Hong Kong have approved a patent of Lactobacillus reuteri covering

IBP-9414. IBT is currently developing its drug candidate IBP-9414 in Phase III for the

prevention of necrotizing colitis and improvement of feeding tolerance in preterm

infants.

SIGNIFICANT EVENTS AFTER THE FISCAL YEAR

• On January 10, IBT announced that the Australian Patent Office has granted a patent

entitled: “A method of activating lactic acid bacteria”.

• On January 19, IBT announced that The Connection Study contuinues after the Data

Monitoring Committee (DMC) had completed its pre-scheduled safety analysis

without any concerns. At the same time a futility analysis was performed. Based on

DMC recommendations and futility outcome, IBT is continuing the recruitment to the

study as planned.

• The Russian invasion of The Ukraine has negatively impacted the geopolitical safety

in the world and generated significant insecurity in the financial markets. IBT closely

monitors developments.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

SELECTED FINANCIAL DATA

ooo's

2021

Jan-Dec

2020

Jan-Dec

Net sales

Other income

312

Operating profit/loss

-44 578

-71 918

Result after tax

-44 991

-72 007

Total assets

408 478

450 318

Cash flow for the period

-55 532

-56 625

Cash flow per share for the period (SEK)

-4.95

-5.04

Cash

386 752

423 438

Earnings per share before and after dilution (SEK)

-1.44

-6.41

Equity per share (SEK)

35.21

39.21

Equity ratio (%)

97%

98%

FINANCIAL DEVELOPMENT

Amounts are reported in KSEK (SEK in thousands). Amounts in parenthesis refer to the same

period in the previous year unless stated otherwise.

Result

Operational result amounted to KSEK -44,578 (-71 980) and result after financial items

amounted to

KSEK -44,991 (-72,007).

Result after tax amounted to KSEK -44,991 (-72,007).

Result per share prior and after dilution amounted to SEK -4.01 (-6.41).

Costs

Costs for the ongoing IBP-9414 clinical trial are reported net of exchange rate effects on foreign

currency deposits. Exchange rate effects during the reporting period amounted to KSEK 18,846

(-15,125), (Note 1, 2).

Operational costs amounted to KSEK 63,518 (57,105) prior to exchange rate effects on foreign

currency deposits, and after exchange rate gains to KSEK 44,672 (72,230).

Costs for the ongoing IBP-9414 clinical trial amounted to KSEK 42,196 (32,910) prior to

exchange rate gains.

Personnel costs amounted to KSEK 15,695 (19,693).

Other external costs amounted to KSEK 5,627 (4,502).

Operational costs in total prior to exchange rate gains increased during the reporting period

compared to the previous year.

Costs for the ongoing clinical study increased regarding production of clinical trial material, trial

insurance coverage, patient recruitment and dosing in the ongoing phase III study which was

initiated in 2019.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Personnel costs are lower in the reporting period than during the equivalent period in the

previous year due to reduced staff and payment of bonus during the third quarter 2020 in the

amount of KSEK 2,849.

On a rolling twelve-month period, the company had 8 (10) full time equivalent employees. The

company had 8 (10) employees on the balance sheet date.

Other external costs during the reporting period increased compared to the equivalent period

during the previous year primarily as a result of consulting fees regarding market analysis.

Cash flow

Cash flow for the period amounted to KSEK -55,532 (-56,625). Cash flow per share amounted

SEK-4.95 (-5.04).

Financial position

Prepaid expenses amounted to approximately MSEK 9.1 (12.7) and mainly refer to contractual

milestone payments paid to the company’s CRO and CMC producers regarding yet unfulfilled

contractual obligations which are reported as a receivable in the balance sheet.

Accrued expenses amounted to approximately MSEK 7.6 (6.9) and mainly refer to research

and development and personnel costs.

The Company’s cash balance on December 31, 2021, amounted to KSEK 386,752 compared

to KSEK 423,438 on December 31, 2020.

The Company’s shareholder’s equity on December 31, 2021, amounted to KSEK 395,254

compared to KSEK 440,154 on December 31, 2020. Shareholder’s equity per share on

December 31, 2021, amounted to SEK 35.21 compared to SEK 39.21 on December 31, 2020.

The Company’s equity ratio on December 31, 2021, amounted to 97% compared to 98% on

December 31, 2020.

IBT has during November 2017 and 2018 generated approximately SEK 528m after transaction

costs in new share issues. IBT’s liquidity and captal is deemed sufficient to conduct the

ongoing Phase III clinical study, as well as to fund the company´s activities until application for

market approval.

Prospects for 2022

The development plan for IBP-9414 is comprised of a clinical program consisting of two clinical

trials: the completed safety and tolerability study and the ongoing pivotal Phase III study, “The

Connection Study”. The Safety and Tolerability Study was completed on schedule during the

fourth quarter of 2017. The following pivotal study, ”The Connection Study”, commenced on

July 4, 2019.

The primary goal in the first trial was to evaluate safety and tolerability. This study was

completed on time in Q4 2017 and concluded that IBP-9414 was safe and well-tolerated in

premature infants with birth weights between 500–2,000 grams, with high compliance to

treatment with the study drug and that there was no evidence of cross-contamination with IBP-

9414 in placebo treated infants.

The ongoing pivotal Phase III study is designed to demonstrate and document efficacy of IBP-

9414 over placebo in the prevention of NEC and the reduced time to Sustained Feeding

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Tolearance in premature infants with a birth weight ≤ 1,500 grams. This study will also include

safety evaluation. A blinded analysis of IBT:s clinical phase lll-study in 2021 showed that

reduced time to SFT significantly reduces the risk of serious complications such as blood

poisoning. The validation of SFT as an endpoint was based on a procedure agreed with the

FDA. The validation conducted in 2021 means that the effect of IBP-9414 is documented for

two goals rather than one: to prevent NEC and also to reduce the time until SFT. Thus, the

study has two validated endpoints.

As a consequence of the COVID-19 pandemic the study is delayed and is as previously

communicated currently expected to be concluded in 2023 or 2024 depending on the

pandemic.

RISKS AND UNCERTAINTIES

Risk management and control

The Company’s Board of Directors work continually and systematically with risk assessment to

identify risks and take the necessary actions to cope with them. The internal control

environment as described in the Company code of conduct report comprises mainly the

following components: control environment, risk assessment, control activities, information and

communication, as well as monitoring. For every identified significant risk, risk mitigation

actions are formulated.

Dependent on development of one product

The value of the Company is largely dependent on success in the Company’s development of

IBP-9414 and the successful completion of clinical trials and the grant of a marketing

authorization by the US Food and Drug Administration (“FDA”) and/or the European Medicines

Agency (“EMA”). IBT’s clinical development is at development stage and there is a risk that

IBP-9414 will not demonstrate the required effect. If the development on IBP-9414 is

unsuccessful, IBT may try to focus on other projects but there is a risk that such projects will

not be successful.

Patents and trademarks

BioGaia has been granted IBT an exclusive license to the BioGaia patent for use Lactobacillus

reuteri, DSM17938, in developing of a medicinal remedy for treatment of premature infants.

The patents have been granted in the USA, China and Japan are valid until 2026 and in

Europe until the end of 2027. Thereafter, the patents can be extended in certain parts of the

world, which may provide additional patent protection.

There are no royalties payable by IBT to BioGaia when commercializing IBT’s pharmaceutical

candidates.

The main patent protection for IBP-9414 is the product claim for the use of a specific strain of

Lactobacillus reuteri. This is a claim-type which is often referred to as “unlimited product

protection” similar to that used for new chemical entities in the relation to small-molecules

based products in the pharmaceutical industry. Patents including a product claim for the strain

are issued in most important markets. The patent protection granted in the USA, China and

Japan are valid until 2026 and in Europe until 2027. After those years patent term extensions

are possible in certain areas of the world which could provide additional patent protection of the

innovation.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

IBT has also applied for further patent protection relating to IBP-9414 which is currently

pending and aim to further protect IBP-9414 until 2036. On February 9 we announced that the

Japan Patent Office has issued a decision to grant a patent entitled: “A method of activating

lactic acid bacteria”, which protects the formulation of Lactobacillus reuteri including IBP-9414.

The Japanese patent is valid until 2036.

• On April 15, we announced that the Chinese Patent Office has issued a decision to

grant a patent entitled: “A method of activating lactic acid bacteria”, which protects the

formulation of Lactobacillus reuteri. The Chinese patent is valid until 2036 and IBP-9414

is intended for marketing in China upon market approval.

• On September 10, IBT announced that the Mexican Patent Office has granted a patent

entitled: “A method of activating lactic acid bacteria”, which protects the formulation of

Lactobacillus reuteri including IBP-9414. IBT is currently developing its drug candidate

IBP-9414 in Phase III.

• On January 10, 2022, IBT announced that the Australian Patent Office has granted a

patent entitled: “A method of activating lactic acid bacteria”.

There is an inherent risk within the type of business that IBT conducts that the company’s

licenses, patents, trademarks or other non-tangible assets do not provide sufficient protection for

the company, or the company’s rights may not be upheld. Furthermore, patent infringement may

occur which may involve costly litigation. Results from infringement cannot be guaranteed.

Negative outcome from litigation regarding non-tangible assets may cause the losing party to

lose protection, future use of said rights being prohibited, or the obligation to pay for damages.

The company has filed patent applications for products under development, which have not yet

been granted. There is no guarantee that such applications will be granted.

Regulatory risk

IBT develops medicinal products and is dependent on assessments and decisions by applicable

authorities. Such assessments are preceded by decisions, among other, regarding permission

to conduct clinical studies, permission to market and sell pharmaceuticals, prerequisites for

prescribing pharmaceuticals, pricing of pharmaceuticals subject to reimbursement systems, and

discounts on pharmaceuticals. It cannot be guaranteed that IBT will obtain the authoritative

decisions necessary to conduct clinical studies and receive market approval.

It cannot be excluded that national authorities may take a contrary view or act to stop the product

being sold in the applicable country, which could lead to delays or withdrawal of market approval.

To mitigate the regulatory risks IBT involves world-leading external expertise in relation to, for

example, regulatory matters or the design of clinical studies.

Production

IBT utilizes contract manufacturers for production of IBP-9414 which makes the Company

dependent on external deliveries meeting agreed requirements for example for quality, quantity

and time of delivery. There is no guarantee that IBT will not be impacted by delayed or failed

deliveries, which could impact the progress of the clinical studies. To minimize this risk, IBT has

evaluated a number of contract manufacturers that are able to produce IBP-9414.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Product liability and insurance

IBT conducts development of pharmaceutical products and conducts clinical studies which

causes risks related to product liability. To mitigate such risk, IBT carries insurance coverage for

products under development. There is however no guarantee that the insurance coverage

provides sufficient protection against claims for damages for eventual damages caused by the

company’s products or product candidates.

The Company’s insurance policies include coverage for patients who participate in clinical trials

and product liability insurance for products under development and in the market. The insurance

coverage is subject to continuous review. The Company deems that the Company’s insurance

coverage is appropriate for the current scope of the business.

Dependence on key persons

IBT is, to a high degree, dependent on a few key persons, both employees as well as directors.

The Company’s future earnings are affected by its ability to attract and retain qualified key

persons. In cases where one or more key persons leave the Company and the Company is not

successful in replacing such persons, this might have a negative effect on the Company’s

business, financial position and earnings.

Financial Risks

IBTs operations are capital intensive.

IBT has during November 2017 generated SEK 104.5m in a directed share issue to institutional

investors and SEK 439.1m in a preferred share issue in January 2018. Capital generated

amounted to approximately SEK 544m before share issue costs and approximately SEK 528m

after share issue costs, and is deemed sufficient to conduct the planned Phase III study.

A predominant share of IBT’s development costs are commitments in foreign currencies. Should

the SEK depreciate versus the specific currency, it could have a significant impact on the

Company’s financial position and results. The currency against which IBT has the greatest

exposure is USD.

IBT’s balance sheet item “cash and cash equivalents” in the balance sheet represents cash

deposits at Danske Bank and SEB. The Company’s assessment is that the counterpart risk at

Danske Bank and SEB is very low. See note 18 for further information about financial risks.

IBT has declared taxable losses which may be nullified should the company be subject to new

ownership controlling in excess of 50% of the votes of the company, or new owners who each

control in excess of 5 % of the votes and collectively control in excess of 50% of the votes of the

company. Nullification of these taxable losses would result in economic loss for IBT which may

have a negative impact on the company’s results and financial position.

In response to the COVID-19 pandemic and the coronavirus, IBT is closely monitoring

developments and is actively taking measures to minimize or limit affects thereof on the

company’s operations. IBT adheres to directives issued by Folkhälsomyndigheten, the WHO and

ECDC (European center for prevention and control of disease). The pandemic affects the

recruitment level in IBT’s pivotal study, “The Connection study”. The bulk of the costs for

conducting the study are generated in connection with recruitment of patients, and thus the

assessment is that IBT has sufficient funds to conclude the study although at a later point in time.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Further information on risks and uncertainties is available in IBT’s Rights Issue Prospectus dated

January 10, 2018 on the Company’s homepage www.ibtherapeutics.com.

ENVIRONMENTAL RESPONSIBILITIES

The Company’s operations do not have any specific environmental risks and is not subject to

notification obligations under the Swedish Environmental Code. The Board of Directors of the

Company is of the opinion that the Company is in compliance with applicable rules and

regulations and offers its employees a sound and safe working environment.

SUSTAINABILITY

IBT should be perceived as an innovative and creative Company that represents quality, health

and provides a function in society. It is important for IBT to work actively with sustainability

issues. Respect for human rights, environment and anti-corruption shall reflect the company’s

operations with regard to business strategies, financing, investments and purchasing processes.

The Company is not legally required to publish a sustainability report.

LEGAL PROCEEDINGS

IBT is not and has never been involved in any legal proceedings.

CORPORATE GOVERNANCE

The company’s Corporate Governance Report for 2019 is published on the Company’s

webpage www.ibtherapeutics.com

PUBLICATION

IBT strives to have good communication with the Company’s shareholders. The Company’s

publication of information should be correct, pertinent, and timely. The Company’s

communication will also be characterized by openness and the Company will publish periodic

interim reports and annual reports in Swedish and English. Events which are determined to have

potential impact on the share price will be distributed as press release.

CALENDAR

Interim report January – March 2022 May 4, 2022

Interim report January – June 2022 August 25, 2022

Interim report January – September 2022 November 10, 2022

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

ANNUAL GENERAL MEETING

The Annual General Meeting for IBT will be held on May 4, 2022. Due to COVID-19 the AGM

will be conducted by voting in advance in accordance with temporary laws. AGM with personal

attendance or by proxy will therefore not take place this year.

BOARD OF DIRECTORS RECOMMENDATION OF APPROPRIATION OF PROFITS

SEK

2021

Recommendation of appropriation of profits or loss

The Board of directors propose that the following surplus:

Income carried forward

-231 837 922

Surplus reserve

669 021 577

Result for the period

-44 990 998

Total

392 192 657

Be appropriated as follows:

Income carried forward

392 192 657

Total

392 192 657

The board of directors recommend that no dividend be paid for fiscal year 2021.

Regarding results and financial position in general please refer to the following income

statements and balance sheets with accompanying notes.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

INCOME STATEMENT

SEK 000 Note

2021

Jan-Dec

2020

Jan-Dec

Net sales

Other income

312

Research and development costs 2,3,4

-44 672

-72 230

Operating loss

-44 578

-71 918

Result from financial items

Interest income and similar profit/loss items

214

Interest expense and similar profit/loss items

-413

-303

Result after financial items

-44 991

-72 007

Result for the period*

-44 991

-72 007

Result per share

SEK

Result per share,

before and after dilution*

-4.91

-6.41

Number of shares, weighted average*

11 226 184

Number of shares at end of period **

11 226 184

* No dilution effects exist

**On December 31, 2021, allocation of emitted shares amounted to 377,736 A-shares carrying 10 votes

per share and 10,848,448 B-shares carrying 1 vote per share

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

BALANCE SHEET

SEK 000

Note

2021-12-31

2020-12-31

ASSETS

Non-current assets

Intangible non-current assets

Activated development costs

11 334

12 150

Shares in subsidiary

Total non-current assets

11 384

12 200

Current assets

Current receivables

Accounts receivable

Other receivables

1 202

1 856

Prepaid expenses and accrued income

9 140

12 725

Total current assets

10 342

14 680

Cash and cash equivalents

386 752

423 438

Total current assets

397 094

438 118

TOTAL ASSETS

408 478

450 318

EQUITY AND LIABILITIES

Equity

Restricted equity

Share capital

3 060

Unrestricted equity

Share premium reserve

669 022

668 931

Accumulated losses

-231 837

-159 830

Net loss for the year

-44 991

-72 007

Total equity

395 254

440 154

Liabilities

Current liabilities

Accounts payable

4 797

1 232

Other current liabilities

779

2 065

Accrued expenses and prepaid income 11

7 648

6 867

Total current liabilities

13 224

10 164

TOTAL EQUITY AND LIABILITIES

408 478

450 318

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

STATEMENT OF CHANGES IN EQUITY

SEK 000

Restricted equity

Unrestricted equity

Share capital

Share premium

reserve

Accumulated

losses incl.

loss for the

period

Total

equity

Opening equity on Jan 1,

2020

3 060

667 167

-159 830

510 397

Net loss for the year

-72 007

Total comprehensive income

-72 007

Shareholder transactions

Warrants

1 764

Closing equity on Dec 31,

2020

3 060

668 931

-231 837

440 154

Opening equity on Jan 1,

2021

3 060

668 931

-231 837

440 154

Net income for the period

-44 991

Total comprehensive income

-44 991

Shareholder transactions

Warrants

Closing equity on Dec 31,

2021

3 060

669 022

-276 828

395 254

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

STATEMENT OF CASH FLOWS

SEK 000

2021

Jan-Dec

2020

Jan-Dec

Operating activities

Operating profit/loss

-44 578

-71 918

Interest income received

214

Paid interest costs

-413

-303

Adjustment for non - cash flow affecting items:

Depreciation production process

816

Value variance currency accounts

-18 846

15 125

Cash flow from operating activities before changes in

working capital

-63 021

-56 066

Cash flow from changes in working capital

Increase (-)/Decrease (+) in operating receivables

4 338

-4 611

Increase (+)/Decrease (-) in operating liabilities

3 060

2 288

Cash flow from operating activities

-55 623

-58 389

Financing activities

Warrants

1 764

Cash flow from financing activities

1 764

Cash flow for the period

-55 532

-56 625

Unrealized exchange rate difference in cash

18 846

-15 125

Cash and cash equivalents at the beginning of the period

423 438

495 188

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

386 752

423 438

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

NOTES

Note 1 Accounting principles

This financial report is prepared in accordance with the Annual Accounts Act,

“Årsredovisningslagen” and as stipulated by RFR 2 Reporting for legal entities. Adoption of RFR

2 means that IBT applies all IFRS and statements as adopted by the EU to the extent possible

subject to the Annual Accounts Act, “Tryggandelagen” and considerations of the relation of

reporting and taxation. Preparation of financial reports in agreement with RFR 2 requires

application of some significant estimates regarding various evaluations and assessments of

principles of items for accounting purposes.

IBT has no transactions to report under total comprehensive income and a statement to that

effect is provided under the income statement.

The subsidiary, IBT Baby AB, was established in May 2017. During the second quarter of 2017

and third quarter of 2020 IBT Baby AB received warrants at no cost from the parent company,

which during the second quarter have been sold to personnel employed by IBT at market price.

Other transactions have not occurred. As the company was established with a share capital

amounting to 50 KSEK and only incurred marginal establishment costs, consolidated income

statement and balance sheet, in all material aspects, equal those of the parent company and

therefore no consolidation has been made, supported by the Annual Accounts act,

“Årsredovisningslagen 7 kap. 3a §”.

IFRS 16 Leases. In January 2016, the IASB published a new leasing standard that will replace

IAS 17 Leases and the related interpretations, IFRIC 4, SIC-15 and SIC-27. The standard

requires that assets and liabilities attributable to all leases, with a few exceptions, be recognized

in the balance sheet. This accounting treatment is based on the view that the lessee has a right

to use an asset during a specific period of time as well as an obligation to pay for this right. For

the lessor, the financial reporting will remain essentially unchanged. The standard is applicable

for financial years beginning on January 1, 2019 or later. Early application is permitted. IBT

presents financial reports for the corporate entity and has thus chosen not to adopt the leasing

standards according to IFRS 16. IBT presents in accordance with items 2-12 in RFR 2 and

leasing costs are reported as in the past, linear over the term of the lease.

Functional currency and reporting currency

IBTs functional currency is SEK. The financial statements are presented in SEK rounded to the

nearest thousand unless otherwise stated. Rounding to thousands may result in incorrect

amounts when summarized.

Recalculation from foreign currency

Transactions in foreign currencies are converted into the functional currency at the exchange

rates on the transaction date. Monetary assets and liabilities in foreign currencies are converted

into the functional currency at the exchange rates on the balance sheet date. Exchange rate

differences resulting from the conversion are reported in the financial items section in the income

statement. Non-monetary assets and liabilities are normally reported at historical cost and

converted to exchange rate at date of transaction.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Financial instruments, IFRS 9

Financial instruments are reported at cost. Financial assets are deleted from the balance sheet

when the right to receive cash flows from the instrument has ceased or been transferred and the

Company has transferred in principle all risks and benefits associated with possession. Financial

liabilities are deleted from the balance sheet when the liability in the agreement has been fulfilled

or otherwise revoked.

Classification and valuation

Financial assets are classifies based on the business model in which the asset is placed and the

cash flow character of the asset. If the financial asset is held within the framework of a business

model with the objective to collect contractual cash flows (hold to collect) and the contractual

terms relating to the financial asset at predetermined periods generates cash flows solely

comprised of capital and interest on the capital amount outstanding the asset will be reported at

accumulated cost.

If on the other hand the business model goal is met by both collecting contractual cash flows and

selling financial assets (hold to collect and sell), and the contractual terms of the financial asset

at determined periods generates cash flows solely comprised of payments of capital and interest

on the capital amount outstanding the asset will be reported at fair value under other

comprehensive income.

All other business models (other) where the purpose is speculation, carry for sale or where the

cash flow character eliminates other business models are consequently reported at fair value in

the income statement.

Financial assets are comprised of cash and derivatives. Cash is comprised of immediately

available cash held by Swedish banks. The company applies the business model hold to collect

regarding cash. Derivatives are valued at fair value in the income statement.

Financial liabilities are valued at fair value in the income statement provided they have a

determined price upon which IFRS 3 applies, carry for trade or if initially identified as liabilities at

fair value in the income statement. Other financial liabilities are valued at accumulated cost.

Write downs

The company reports loss reserves for expected credit losses on financial assets valued at

accumulated cost. On each balance sheet date the company reports changes in expected credit

losses since initial reporting in the result.

The company values the credit losses for all financial assets amounting to 12 months expected

losses. For financial assets with significant increase in risk since the initial reporting a reserve is

reported based on credit losses over the entire duration of the asset (the general model).

The company reports expected credit losses for the remaining duration of all financial instruments

with significant increase in risk since the initial reporting, either estimated individually or

collectively, considering all reasonable and verifiable information, including forward looking. The

company evaluates expected credit losses from financial instruments in such manner that reflects

objectively and by likelihood amounts ascertained by assessing an interval of possible outcomes,

discounted value of money and reasonable and verifiable information regarding present

conditions and forecasts regarding future economic conditions.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Cash is subject to the general model for write downs. The exemption for limited credit risk on the

balance sheet date applies to cash.

The company defines default as if it is deemed unlikely that the counterparty will meet its

obligations due to indications of financial difficulty and passed due payments. Default is

regardless deemed to be the case when payment is 90 days past due. The company will delete

a receivable when no further possible cash flows are deemed to exist.

Accounts payable

Accounts payable are commitments to pay for goods or services acquired in operations from

suppliers. Amounts are unhedged and normally payable within 30 days. Accounts payable are

classified as current liabilities when due within one year or sooner (or a normal cycle of operation

if longer). If not, they are reported as long-term debt. Liabilities are initially disclosed at Fair value

and thereafter at accrued cost applying the effective interest method.

Other liabilities

Expected duration for other liabilities is short, and therefore the liability is disclosed at nominal

amount without using the discounting method for accrued cost.

Accounts receivable and other receivables

Accounts receivable are reported at nominal value. Other receivables are reported at nominal

value. Fair value of accounts receivable and other receivables equals reported value as the

discounting effect is not material.

Non-current fixed assets

IBTs development of internally generated non-current fixed assets are separated in a research

phase and a development phase. All costs related to the research phase are reported as costs

as they are incurred. All costs related to development are reported as assets according to IAS

38 if all the following criteria are met:

• the technical and commercial feasibility of the product or process has been established

so it may be used or sold

• the Company intends and is able to complete the intangible asset and either use it or

sell it

• there are prevailing conditions to use or sell the intangible asset

• It should be probable that the future economic benefits attributable to the asset will flow

to the Company

• the Company has adequate recourses in accordance with its current finance plan to

complete development

• the cost of the asset can be reliably measured

Costs related to the project are charged to income in the development phase should the above

criteria not be met.

IBT’s assessment is that development of the production process for the pharmaceutical

candidate IBP-9414 meets the above criteria. Costs generated by the project have been activated

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

as of the point in time the criteria were met. The production process has been assessed as

completed for accounting purposes. The intangible asset “production process” is therefore

depreciated over its estimated time of use and has caused depreciation costs in 2016. Estimated

useful life is 20 years. Depreciation is reported in the R&D function in the income statement.

The currently ongoing development project, IBP-9414, is not deemed to meet the above criteria

in IAS 38 to be activated as development in the balance sheet. The development costs are

therefore charged to income as incurred.

Impairment of non-financial assets

Non-financial assets with uncertain periods of use or non-financial assets not ready for use, are

not depreciated but tested annually, or upon indication of impairment, for possible impairment.

Assets which are depreciated are evaluated regarding impairment any time events or changes

in circumstances indicate that the reported value may not be recovered. Write downs are made

by such amounts that reported value exceeds recoverable value. Recoverable value is the higher

of the assets Fair value reduced by sales costs and its useful value. Estimated impairment

requirements are grouped for assets at lowest possible levels where most significant

independent cash flow exists (cash generating groups). For assets (other than goodwill)

previously impaired a test is made at each balance sheet date if recovery should be made.

Liquid assets

Liquid assets in the balance sheet are comprised of cash and bank deposits.

Employee compensation

Employee compensation in the form of salaries, bonuses, paid vacation, paid sick leave, and

pension benefits are reported as earned. No pension commitments exist in the Company in

addition to pension premiums paid annually. All pension plans are fee based.

Cash flow statement

The cash flow is prepared according to the so called indirect method.

Income

Income is reported at Fair value received or to be received. The company had no income as of

the balance sheet date.

Leasing

Leasing where a significant part of risk and benefits with ownership are retained by the seller are

classified as operational leasing. Payments made during the term of lease are charged to income

in the income statement on a linear basis over the term of lease.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Segment reporting

Operational segments are reported in a method consistent with internal reporting provided to the

highest executive decision maker. The Board of Directors are the Company’s highest executive

decision maker. The Company’s operations are comprised of only one branch of operation – to

develop pharmaceutical products. The Company’s report of total comprehensive income and

financial position is solely one operating segment.

Taxes

The Company’s reported tax costs or tax income refers to current tax and changes in deferred

taxes. Current tax is calculated based on taxable income for the period in accordance with

prevailing tax laws. Current tax also includes adjustments from prior years.

IBTs taxable losses amount to approximately 305 (260) MSEK. Deferred taxes are reported for

all temporary differences generated between the taxable value of assets and liabilities and their

reported values. Deferred tax receivables are reported to the extent that it is likely that future

taxable profits will be available, against which temporary differences may be offset. Deferred tax

receivables in the company’s financial statements will be activated only when it is certain that

taxable income will occur. No deferred tax receivable is reported in the company’s financial

statements.

Significant assessments and estimates

Assessments and estimates are appraised continuously and are based on historical experience

and other factors, including expectations of future events considered to be reasonable under

current circumstances. The Company makes assessments and estimates regarding the future.

The resulting estimates for accounting purposes will, by definition, seldom equal the actual

results. Assessments are also made regarding the Company’s accounting principles.

The currently ongoing development project, IBP-9414, is not deemed to meet the above criteria

in IAS 38 to be activated as development in the balance sheet. The development costs are

therefore charged to income as incurred.

Amounts are reported in KSEK (SEK in thousands). Amounts in parenthesis refer to the same

period in the previous year unless stated otherwise.

Note 2 Financial instruments

Fair value of other receivables, cash, accounts payable and other liabilities are estimated to equal

book value (accumulated cost) due to the short duration. Financial assets and liabilities valued

at fair value hierarchy 1 in the income statement. Profit and loss effects are reported in R&D

function in the income statement. All derivatives are valued at hierarchy level 2.

Note 3 Leasing

IBT carries no financial leasing agreements. Leasing costs related to operational leasing are

charged at cost over the leasing period. No non-terminable leases exist after a duration of five

years.

Total future leasing costs regarding leasing agreements on the balance sheet date are as follows:

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Operational leasing

2021-12-31

2020-12-31

000's

Due for payment within one year

986

1 056

Due for payment within one and five years

1 763

2 462

Total

2 749

3 518

Operational leasing costs during the year

2021

2020

000's

Rent

816

899

Parking

Automobiles

237

146

Total

1 115

1 136

Note 4 Personnel

Average number of employees

2021

Actual on

Dec. 31

2020

Actual on

Dec. 31

Female

Male

Total

Female

Male

Total

Sweden

Total

2021

2020

Female

Male

Total

Female

Male

Total

Board of

Directors

Other

management

Total

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Total salaries, pension- and social costs, 000's

2021

2020

Salaries and other compensation

11 491

14 370

Pensions

1 720

1 983

Social costs

2 201

3 222

Other costs

283

118

Total

15 695

19 693

Variable compensation to management amounted to SEK 953 (1 955)k.

Board of Directors and committees

Fees are paid in accordance with the decision taken at the annual general meeting.

Chief executive officer

Base salary for the CEO, Mr. Staffan Strömberg, during 2021 amounted to SEK 2 739k plus SEK

878k in variable compensation.

The CEO has fee based pension compensation and the company has therefore no other pension

commitments other than stated here. Pension premiums in 2021 amounted to 30.0 % of base

salary.

The CEO and the company have a mutual notice period of six months. In addition, the company

has a commitment of severance pay equal to nine months salary upon termination by the

company.

Other management

Compensation to other management is comprised of base salary, performance compensation,

other compensation and pension premiums. Other management in the company refers to four

persons who along with the CEO comprise the management group (Note 7).

The management group was in 2021 comprised of CEO Mr. Staffan Strömberg, COO Mr. Anders

Kronström, CSO, CMO Mr. Jonas Rastad and CFO, Mr. Michael Owens.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Management compensation 2021

000's

Base

salaries/

fees

Variable

compensation

Other

benefits

Pension

costs

Total

Peter Rothschild, Chairman of the Board

670*

670

Margareta Hagman, Board member

125

Eva Idén, Board member

125

Anthon Jahreskog, Board member

165

Robert Molander, Board member

125

Kristina Sjöblom Nygren, Board member

125

Staffan Strömberg, CEO

2 739

878

166

823

4 606

Other management (4)

3 415

672

4 197

Total

7 489

953

202

1 495

10 139

*Of which 400k as working Chairman

The management group was in 2020 comprised of CEO Mr. Staffan Strömberg, COO

Mr. Anders Kronström, CSO Mr. Eamonn Connolly, CMO Mr. Jonas Rastad and CFO, Mr.

Daniel Mackey.

Management compensation

2020

Base

salaries/fees

Performance

compensation

Other

benefits

Pension

costs

Total

000's

Peter Rothschild, Chairman of the

Board

645*

645

Margareta Hagman, Board

member

113

Anthon Jahreskog, Board member

113

Eva Idén, Board member

113

Robert Molander, Board member

113

Kristina Sjöblom Nygren, Board

member

113

Staffan Strömberg, CEO

2 355

336

159

765

3 616

Other management (4)

4 783

1 619

112

856

7 370

Total

8 358

1 955

272

1 621

12 206

*Of which 400k as working Chairman

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Note 5 Audit fees

Deloitte AB, 000's

2021

2020

Auditing

353

230

Totalt

353

230

Auditing refers to compensation for review of the company’s internal controls, accounting, annual

report and administration by the Board of Directors and CEO.

Note 6 Intangible non-current assets

Activated development costs, 000's

2021

Opening accumulated costs

16 225

Activated costs

Total cost

16 225

Opening accumulated depreciation

-4 075

-3 259

Depreciation

-816

Total accumulated depreciation

-4 891

-4 075

Carrying amount at end of the period

11 334

12 150

Activated development costs refer to the production process of the pharmaceutical candidate

IBP-9414. Period of use is based on the underlying useful life of the patent of 20 years.

Depreciation is linear from 2016 and is reported in the R&D-function in the income statement

Impairment test

The criteria according to IAS 38 and IAS 36, respectively, require testing the immaterial fixed

assets for impairment whenever events or changed circumstances indicate that the reported

value may not be recovered.

Activated costs referring to the production process have been assessed. The company has at

the time of disclosure of this financial report utilized the pharmaceutical candidate produced by

the production process in a clinical Phase II study in which 120 patients were dosed.

Technology transfer possibility of the manufacturing method has been verified by third parties.

The production process will be applied in the production of the drug upon potential market

approval.

Two independent companies, Apex Healthcare Consulting Ltd., and Clearview Healthcare

Partners have evaluated the market potential in 2014 and 2016, respectively, for IBP-9414 in the

USA.

Their assessment of the market potential amounted to an interval of 200 MUSD to 360 MUSD

per annum.

The total assessment is that the criteria in IAS 38 are met.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Note 7 Shares in subsidiary

Name

Reg. No.

Domicile,

country

No.

Ownership

Book value

2021

Book value

2020

IBT Baby AB

559110-7353

Stockholm,

Sweden

50 000

100%

50 000

Total, SEK

50 000

IBT Baby AB manages incentive programs for key personnel employed by IBT AB.

IBT issues warrants which are sold by IBT Baby AB to employees of IBT AB eligible to participate

in the parent company’s incentive program as follows:

Share based incentive programs

WARRANTS 2017/2022

On May 4, 2017, the Annual General Meeting decided on an incentive program by designated

issue of warrants to a subsidiary established for this purpose. The maximum number of warrants

to be issued are 280 000.

The warrants were allotted in June 2017 at market terms at a price determined by calculating

market price at the time of issue using the Black & Scholes method of valuation.

The holder of warrants may during the period from April 3, 2022 through May 3, 2022, for each

warrant subscribe for one point one (1.1) new share in the company at a subscription price per

share amounting to SEK 272.41 recalculated due to share issues in November 2017 and January

2018.

During 2017 a total of 200 000 warrants were issued and allotted. On January 1, 2020, 200 000

(200 000) warrants had been issued. The remaining 80 000 warrants were reserved for future

employees.

The warrants are subject to first right of refusal stipulating that the warrants shall be sold back to

IBT Baby AB should the employee, from the date of signing, terminate employment within one

year by 100%, within two years by 75%, within three years by 50%, and within 4 years by 25%.

The warrants carry no dividend rights.

The warrants are issued at market value and have thus have not resulted in any benefits which

require accruals for social costs in the parent company.

The subscription price per share exceeds the market price of IBT’s share on the balance sheet

date which means that the warrants do not cause any dilution when calculating result per share.

Total market value for the 200 000 issued warrants during the second quarter 2017 amounted to

884 KSEK.

During the second quarter 2020 a total of 50 000 warrants allotted. Total market price for the

allotted 50 000 warrants during the second quarter 2020 amounted to 17 KSEK.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

During the fourth quarter 2020 a total of 10 000 warrants allotted. Total market price for the

allotted 10 000 warrants during the fourth quarter 2020 amounted to 27 KSEK.

On the balance sheet date December 31, 2021, a total of 260 000 (260 000) warrants had been

allotted. The remaining 20 000 warrants are reserved for future employees.

Based on the existing number of shares the dilution resulting from the adopted incentive program,

provided that all warrants are utilized for subscription of class B-shares, amounts to

approximately 2.26 percent of shares, and 1.75 percent of votes.

Ownership of

warrants 2017/2022

Number allotted

2021-12-31

Number issued

2021-12-31

Number allotted

2020-12-31

Number issued

2020-12-31

Staffan Strömberg,

CEO

70 000

Anders Kronström,

COO

50 000

Other

140 000

Total

260 000

WARRANTS 2020/2024

On June 16, 2020, the Annual General Meeting decided on an incentive program by designated

issue of warrants to the subsidiary IBT Baby AB. The maximum number of warrants to be issued

are 375 000.

In September 2020, 185 027 warrants were allotted at market terms at a price determined by

calculating market price at the time of issue using the Black & Scholes method of valuation.

During the first quarter of 2021, 49 046 warrants were allotted. Total market price for the allotted

49 046 warrants during the first quarter of 2021 amounted to 88 KSEK.

During the third quarter of 2021, 10 000 warrants were allotted. Total market price for the allotted

10 000 warrants during the third quarter of 2021 amounted to 3 KSEK.

The holder of warrants may during the period from July 1, 2024 through September 20, 2024, for

each warrant subscribe for one point one (1) new class B share in the company at a subscription

price per share amounting to SEK 400. On the balance sheet date December 31, 2021, a total

of 244 073 (185 027) warrants had been allotted. The remaining 130 927 warrants are reserved

for future employees.

The warrants are subject to first right of refusal stipulating that the warrants shall be sold back to

IBT Baby AB should the employee, from the date of signing, terminate employment within one

year by 100%, within two years by 75%, within three years by 50%.

The warrants carry no dividend rights. The warrants are issued at market value and have thus

have not resulted in any benefits which require accruals for social costs in the parent company.

The subscription price per share exceeds the market price of IBT’s share on the balance sheet

date which means that the warrants do not cause any dilution when calculating result per share.

Based on the existing number of shares the dilution resulting from the adopted incentive program,

provided that all warrants are utilized for subscription of class B-shares, amounts to

approximately 2.13 percent of shares, and 1.69 percent of votes.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Ownership of warrants

2020/2024

Number allotted

2021-12-31

Number issued

2021-12-31

Number allotted

2020-12-31

Number issued

2020-12-31

Staffan Strömberg, CEO

50 000

Anders Kronström, COO

40 000

Other

154 073

95 027

Total

244 073

185 027

Total number of allotted warrants in existing incentive programs

Allotted warrants,

year

Issued

warrants

Strike

price*

Value per

allotted

warrant

Volatility,

%**

Risk-free

interest, %

Value

per

Expiry,

year

2017 (2017/2022)

200 000

272*

4.42

-0,2

2022

2020 (2017/2022)

50 000

272*

0.35

-0,3

2022

2020 (2017/2022)

10 000

272*

2.66

-0,3

127

2022

2020 (2020/2024)

87 543

400

14.24

-0,3

170

2024

2020 (2020/2024)

97 484

400

4.86

-0,3

125

2024

2021 (2020/2024)

49 096

400

1.78

-0,3

105

2024

2021 (2020/2024)

10 000

400

0.29

-0,3

2024

Total

504 073

*Recomputed from SEK 300 after directed share issue in November 2017. Upon expiry without

subscription by May 3, 2022, warrants 2020-2024 will have an average strike price of SEK 400 when due

on September 30, 2024

**Expected future volatility is ascertained by comparison of historical average and median values for

comparable listed companies in the same sector as IBT based on analysis in S&P Capital IQ.

Note 8 Other receivables

000's

2021

2020

Taxes

831

1 464

Other receivables

371

392

Total cost

1 202

1 856

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Note 9 Prepaid expenses and accrued income

000's

2021

2020

Prepaid rent

165

Prepaid insurance clinical trial

294

250

Prepaid CRO costs*

8 599

12 211

Other prepaid expenses

210

Total cost

9 140

12 725

*Contractual milestone payments paid to the company’s CRO regarding unfulfilled commitments. The

maximum credit risk exposure on the balance sheet date equals reported value.

Note 10 Cash and bank deposits

000's

2021

2020

Bank deposits at Danske Bank and SEB

386 752

423 438

Total cost

386 752

423 438

The Company’s liquidity consists solely of cash deposits held at Danske Bank and SEB. Total

liquidity on the balance sheet date December 31, 2021, amounted to SEK 386.8 (423.4m) of

which USD amounted to SEK 200.4m (82.0m) and EUR amounted to SEK 45.2m (54.2m).

Liquidity in SEK is charged with Deposit Fees.

Note 11 Accrued expenses and prepaid income

000's

2021

2020

R&D costs

4 700

2 966

Social costs and special salary taxes

1 153

937

Vacation pay

1 427

1 297

Salaries

Board fees

Other accrued expenses

209

240

Total

7 648

6 867

All accrued expenses are due for payment within twelve months.

Note 12 Significant events after the reporting period

• On January 10, IBT announced that the Australian Patent Office has granted a patent

entitled: “A method of activating lactic acid bacteria”.

• On January 19, IBT announced that The Connection Study contuinues after the Data

Monitoring Committee (DMC) had completed its pre-scheduled safety analysis without

any concerns. At the same time a futility analysis was performed. Based on DMC

recommendations and futility outcome, IBT is continuing the recruitment to the study as

planned.

• The Russian invasion of The Ukraine has negatively impacted the geopolitical safety in

the world and generated significant insecurity in the financial markets. IBT closely

monitors developments.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Note 13 Board of Directors recommendation of appropriation of profits

SEK

2021

Recommendation of appropriation of profits or loss

The Board of directors propose that the following surplus:

Income carried forward

-231 837 922

Surplus reserve

669 021 577

Result for the period

-44 990 998

Total

392 192 657

Be appropriated as follows:

Income carried forward

392 192 657

Total

392 192 657

The board of directors recommend that no dividend be paid for fiscal year 2021.

Note 14 Related party transactions

Compensation to the Board of directors are paid in accordance with the annual general

meeting.

The Chairman of the Board, Mr. Peter Rothschild, receives Board fees amounting to KSEK 250

per annum, and KSEK 400 annually as operational Chairman.

Bonuses were paid during the second quarter to Staffan Strömberg amounting to KSEK 100

and to Anders Kronström KSEK 75 related to the achieved milestone of 300 dosed patients.

Bonus was paid during the fourth quarter to Staffan Strömberg amounting to KSEK 779 as

variable bonus as a percentage of gross salary.

Board member Mr. Robert Molander invoiced consulting fees amounting to KSEK 955.

Consulting fees refer mainly to commercialization of IBP-9414.

No other significant related party transactions have occurred.

Note 15 Pledged assets and contingent liabilities

2021

2020

Pledged assets and contingent liabilities

None

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Note 16 Result per share

Calculations are in accordance with IAS 33 Earnings per share. Earnings per share are

calculated by dividing result for the period with the weighted average number of outstanding

shares during the period.

Result per share, SEK

2021

2020

Result for the period, 000's

-44 991

-72 007

Weighted average number of shares before and after dilution*

11 226 184

Result per share before and after dilution

-4.0

-6.41

Note 17 Share capital development (SEK)

Period

Transaction

Change

Series A

Series B

capital

Quota

value

Subscription

price

Total

Invested

2011-11-22

Founding

50 000

1,00

50 000

2015-09-15

Share issue

40 000

90 000

1,00

1 320,00

52 800 000

2015-09-15

Bonus issue

90 000

500 000

5,56

52 850 000

2016-02-12

Split/reclass

-90 000

74 066

1 760 480

500 000

0,27

52 850 000

2016-05-30

Share issue

148 132

3 520 960

1 500 000

0,27

27,30

153 016 212

2017-11-30

Share issue

1 100 000

300 000

0,27

95,00

257 516 212

2018-02-05

Share issue

155 538

4 435 663

3 051 120

0,27

693 680 307

2018-02-13

Share issue

31 345

3 059 663

0,27

696 658 082

Totalt

377 736

10 848 448

3 059 663

0,27

696 658 082

Note 18 Financial risk management

General

The financial risks related to the Company’s operations are mainly liquidity, currency, and

counterparty risks.

Liquidity risks

Liquidity risks are such risks as not having access to liquidity to meets the Company’s operational

requirements. The Company has no financial liabilities with agreed duration. Other liabilities are

commitments to pay for goods or services obtained during operations from suppliers. The

amounts are unhedged and normally payable within 30 days. Capital needs are monitored by

budget review.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Financing strategy

The Company’s capital requirements have previously been met by capital injections from its

former parent company, BioGaia and share issue in connection with listing the Company on

Nasdaq First North in March 2016. To date, IBT has received 82 MSEK from BioGaia and 100

MSEK from other shareholders in connection with the May 2016 share issue.

IBT has during November 2017 generated SEK 104.5m in a directed share issue to institutional

investors and in January 2018, a preferred share issue generated SEK 439.1m. Capital

generated amounting to approximately SEK 543.6m prior to transaction costs and approximately

SEK 528m post transaction costs is deemed sufficient to conduct the planned pivotal Phase III

clinical study.

As the Company’s pharmaceutical candidate IBP-9414 reaches important milestones in its

pharmaceutical development, additional financing possibilities are available. As a listed company

in Sweden the Company can issue new shares with preemptive rights for its shareholders. Other

possible financing methods are licensing specific rights to the pharmaceutical to pharmaceutical

company partners and a share issue to new investors, conditional upon being possible on terms

acceptable to current shareholders.

Obtaining loans for financing is not deemed suitable other than as a temporary solution before

the Company reaches profitability and has positive cash flow. The company has only financial

liabilities with short duration which are due for payment within 12 months.

Access to capital may be limited at times when needed by the Company.

Counter party risks

The Company allows only investments in interest bearing instruments which carry low risk and

high liquidity. The Company cooperates with established and credit worthy counterparties and

evaluates receivables on an ongoing basis in order to achieve low exposure to bad debts. To

mitigate this risk, IBT deposits its surplus liquidity in liquid accounts at Danske Bank and SEB.

The Company had no short-term deposits on the balance sheet date.

Currency risk

Currency risk is the risk of fluctuating values in assets or liabilities resulting from variations in

exchange rates. The majority of IBTs development costs are commitments in foreign currencies.

Should the SEK be reduced in value versus foreign currencies, it may have considerable impact

on the Company’s financial position and results. As of the balance sheet date, the Company has

no currency hedges. The currencies against which IBT has the greatest exposure are USD and

EUR.

A variance in the SEK versus USD and EUR of 5 percent, based on total research-and

development costs, all else being equal, would have affected 2021 results by approximately SEK

2.1m.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

DEDUCTION OF CERTAIN KEY FIGURES

2021

Jan-Dec

2020

Jan-Dec

Cash flow per share

Cash flow for the period, 000's

-55 532

-56 625

Average number of shares

11 226 184

Cash flow per share (SEK)

-4.95

-5.04

Equity per share

Equity, 000's

395 254

440 154

Number of shares at end of period

11 226 184

Equity per share (SEK)

35.21

39.21

Equity ratio

Equity, 000's

395 254

440 154

Total equity and liabilities, 000's

408 478

450 318

Equity ratio %

97%

98%

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

FINANCIAL DEFINITIONS

Key ratios

Definition

Motive

Average number

of shares

Average number of shares during the

year

Relevant in calculating income and

cash flow per share

Net sales

Sales for the year

Sales of services

Reporting period

January 1 - December 31, 2021

Defines time period comprised by

this financial report

Result per share

Result for the year divided by average

number of shares

Result allocated per share

Cash flow per

share*

Cash flow for the year divided by

average number of shares

Measure to describe cash flow

allocated to one share during the

year

Number of

shares*

Number of shares at the end of the

year

Relevant for calculating

shareholders’ equity allocated to one

Total assets

Total assets at the end of the year

Relevant for calculating

shareholder’s equity

Shareholders

equity/share*

Total shareholders’ equity divided by

the number of shares at the end of the

year

Measure to describe shareholder’s

equity per share

Equity ratio*

Total shareholders’ equity as a

percentage of total assets

Measure to evaluate the company’s

ability to meet its financial obligations

*The Company presents certain financial measures in the Year-end report not defined by IFRS. The

Company deems that these measures provide valuable additional information for investors and

management of the Company as they enable evaluation and benchmarking of the Company’s

performance. As all companies do not calculate financial measures the same way, these measures are

not always comparable to those used by other companies. These financial measures shall therefore not

be viewed as replacements for those defined by IFRS. The financial definitions are not defined by IFRS

unless otherwise stated.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

BOARD’S ASSURANCE

The Board of Directors and CEO hereby certify that this report gives a true and fair

presentation of the Company’s operations, financial position and result of operations, and

describes material risks and uncertainties facing the Company.

The Annual Report was approved for issuance by the Board of Directors on March 30, 2022

and will be subject to approval at the annual general meeting on May 4, 2022.

Stockholm, March 30, 2022

Peter Rothschild

Chairman

Eva Idén

Director

Margareta Hagman

Director

Kristina Sjöblom Nygren

Director

Anthon Jahreskog

Director

Robert Molander

Director

Staffan Strömberg

CEO

Nb: This is a translation of the Swedish annual report. If any discrepancies exist, the Swedish

version shall prevail.

Our Auditor’s Report was submitted on March 30, 2022

Deloitte AB

Birgitta Lööf

Authorized public accountant

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Auditor’s report

To the general meeting of the shareholders of Infant Bacterial Therapeutics AB (publ)

corporate identity number 556873-8586

Report on the annual accounts and consolidated accounts

Opinions

We have audited the annual accounts and consolidated accounts of Infant Bacterial

Therapeutics AB (publ) for the financial year 2021-01-01 - 2021-12-31. The annual accounts

and consolidated accounts of the company are included on pages 16-47 in this document.

In our opinion, the annual accounts have been prepared in accordance with the Annual

Accounts Act and present fairly, in all material respects, the financial position of the parent

company as of 31 December 2021 and its financial performance and cash flow for the year

then ended in accordance with the Annual Accounts Act. The consolidated accounts have been

prepared in accordance with the Annual Accounts Act and present fairly, in all material

respects, the financial position of the group as of 31 December 2021 and their financial

performance and cash flow for the year then ended in accordance with International Financial

Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. The

statutory administration report is consistent with the other parts of the annual accounts and

consolidated accounts.

We therefore recommend that the general meeting of shareholders adopts the income

statement and balance sheet for the parent company and the group.

Our opinions in this report on the annual accounts and consolidated accounts are consistent

with the content of the additional report that has been submitted to the parent company's audit

committee in accordance with the Audit Regulation (537/2014) Article 11.

Basis for Opinions

We conducted our audit in accordance with International Standards on Auditing (ISA) and

generally accepted auditing standards in Sweden. Our responsibilities under those standards

are further described in the Auditor’s Responsibilities section. We are independent of the

parent company and the group in accordance with professional ethics for accountants in

Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these

requirements. This includes that, based on the best of our knowledge and belief, no prohibited

services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the

audited company or, where applicable, its parent company or its controlled companies within

the EU.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our opinions.

Key Audit Matters

Key audit matters of the audit are those matters that, in our professional judgment, were of

most significance in our audit of the annual accounts and consolidated accounts of the current

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

period. These matters were addressed in the context of our audit of, and in forming our opinion

thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a

separate opinion on these matters.

Research and development costs

The company’s costs for research and development as of December 31, 2020 amount to TSEK

44 672 after exchange rate gains on foreign currency forward contracts and currency deposits

and is a significant amount in the income statement. It is management’s assessment that the

entire amount should be expensed instead of being capitalized as intangible assets since the

criteria in IAS 38 regarding capitalization are not deemed to be fulfilled. The company

describes its positions in the accounting principles on page 29. Our audit procedures included,

but were not limited to:

•

Examination of a number of transactions to ensure correct classification

•

Examination of the company’s analysis and assumptions that form the basis of the

company's written position for the question

•

Examination that the required disclosures are provided in the annual accounts

Other information than the annual accounts and consolidated accounts

This document also contains other information than the annual accounts and consolidated

accounts and is found on pages 1-15. The Board of Directors and the Managing Director are

responsible for this other information.

Our opinion on the annual accounts and consolidated accounts does not cover this other

information and we do not express any form of assurance conclusion regarding this other

information.

In connection with our audit of the annual accounts and consolidated accounts, our

responsibility is to read the information identified above and consider whether the information is

materially inconsistent with the annual accounts and consolidated accounts. In this procedure

we also take into account our knowledge otherwise obtained in the audit and assess whether

the information otherwise appears to be materially misstated.

If we, based on the work performed concerning this information, conclude that there is a

material misstatement of this other information, we are required to report that fact. We have

nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the

annual accounts and consolidated accounts and that they give a fair presentation in

accordance with the Annual Accounts Act and, concerning the consolidated accounts, in

accordance with IFRS as adopted by the EU. The Board of Directors and the Managing

Director are also responsible for such internal control as they determine is necessary to enable

the preparation of annual accounts and consolidated accounts that are free from material

misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the

Managing Director are responsible for the assessment of the company’s and the group’s ability

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

to continue as a going concern. They disclose, as applicable, matters related to going concern

and using the going concern basis of accounting. The going concern basis of accounting is

however not applied if the Board of Directors and the Managing Director intends to liquidate the

company, to cease operations, or has no realistic alternative but to do so.

The Audit Committee shall, without prejudice to the Board of Director’s responsibilities and

tasks in general, among other things oversee the company’s financial reporting process.

Auditor’s responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and

consolidated accounts as a whole are free from material misstatement, whether due to fraud or

error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs

and generally accepted auditing standards in Sweden will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these annual accounts and consolidated

accounts.

A further description of our responsibilities for the audit of the annual accounts and

consolidated accounts is located at the Swedish Inspectorate of Auditors website:

www.revisorsinspektionen.se/revisornsansvar This description forms part of the auditor´s report

Report on other legal and regulatory requirements

Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also

audited the administration of the Board of Directors and the Managing Director of Infant

Bacterial Therapeutics AB (publ) for the financial year 2021-01-01 - 2021-12-31 and the

proposed appropriations of the company’s profit or loss.

We recommend to the general meeting of shareholders that the profit to be appropriated in

accordance with the proposal in the statutory administration report and that the members of the

Board of Directors and the Managing Director be discharged from liability for the financial year.

Basis for Opinions

We conducted the audit in accordance with generally accepted auditing standards in Sweden.

Our responsibilities under those standards are further described in the Auditor’s

Responsibilities section. We are independent of the parent company and the group in

accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our

ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our opinions.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company’s profit

or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is

justifiable considering the requirements which the company's and the group’s type of

operations, size and risks place on the size of the parent company's and the group’s equity,

consolidation requirements, liquidity and position in general.

The Board of Directors is responsible for the company’s organization and the administration of

the company’s affairs. This includes among other things continuous assessment of the

company’s and the group’s financial situation and ensuring that the company's organization is

designed so that the accounting, management of assets and the company’s financial affairs

otherwise are controlled in a reassuring manner. The Managing Director shall manage the

ongoing administration according to the Board of Directors’ guidelines and instructions and

among other matters take measures that are necessary to fulfill the company’s accounting in

accordance with law and handle the management of assets in a reassuring manner.

Auditor’s responsibility

Our objective concerning the audit of the administration, and thereby our opinion about

discharge from liability, is to obtain audit evidence to assess with a reasonable degree of

assurance whether any member of the Board of Directors or the Managing Director in any

material respect:

• has undertaken any action or been guilty of any omission which can give rise to liability to

the company, or

• in any other way has acted in contravention of the Companies Act, the Annual Accounts

Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriations of the company’s profit or

loss, and thereby our opinion about this, is to assess with reasonable degree of assurance

whether the proposal is in accordance with the Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with generally accepted auditing standards in Sweden will always

detect actions or omissions that can give rise to liability to the company, or that the proposed

appropriations of the company’s profit or loss are not in accordance with the Companies Act.

A further description of our responsibilities for the audit of the management’s administration is

located at the Swedish Inspectorate of Auditors website:

www.revisorsinspektionen.se/rn/showdocument/documents/rev_dok/revisors_ansvar.pdf. This

description forms part of the auditor´s report.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Deloitte AB, was appointed auditor of Infant Bacterial Therapeutics AB by the general meeting

of the shareholders on the 2021-05-04 and has been the company’s auditor since 2015-03-29.

Stockholm March 30, 2022

Deloitte AB

Birgitta Lööf

Authorized public accountant

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

CORPORATE GOVERNANCE REPORT IBT AB 2021

Corporate governance at IBT

IBT is a Swedish limited company whose B shares are listed on Nasdaq Stockholm. The

company is governed by the AGM, the Board of Directors, the President and the executive

management in accordance with the Companies Act, the Articles of Association, rules of

procedure for the Board and the CEO's instructions and the Swedish Code of Corporate

Governance. The Board is responsible for evaluating established goals and continuously

evaluating IBT's financial position and earnings and evaluating the operational management.

The share capital consists of 377,736 Class A shares with 10 voting rights per share and

10,848,448 Class B shares with one voting right per share.

Compliance with the Swedish Code of Corporate Governance (Svensk Kod för

Bolagsstyrning), common stock market code and applicable stock market rules

The purpose of the Code is to strengthen confidence in Swedish listed companies by promoting

a positive development of the company's corporate governance. The code is based on the

principle of "comply or explain" which means that a company can make deviations from the code

but these must then be explained.

IBT has not deviated from any of the rules specified in the Code.

Environment and responsibility

IBT's operations do not pose any specific environmental risks and do not require any specific

environmental permits or decisions from authorities. The Board of Directors believes that the

company conducts its operations in accordance with applicable health and safety rules and offers

its employees a safe and healthy working environment.

Diversity and gender equality

IBT should be a workplace where diversity and gender equality are natural parts of the business.

A workplace characterized by diversity and gender equality is necessary for IBT to be an

attractive workplace and to achieve set goals. Recruitment shall be based on competence

requirements, diversity and gender equality.

Sustainability

IBT is to be perceived as an innovative and creative company, which stands for quality and health

and plays a role in society. It is important for IBT to work with sustainability. Respect for human

rights, the environment and anti-corruption must characterize our everyday lives through

business strategies, financing processes, investments and purchases.

According to the Swedish Annual Accounts Act (Årsredovisningslagen), there is no requirement

that the Company prepare a Sustainability Report.

Articles of Association

In accordance with IBT's articles of association, the Company will develop, manufacture, market

and sell pharmaceuticals directly or through subsidiaries or other forms of part-ownership or

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

partnerships and conduct related operations. The seat of the Board is Stockholm. The Articles of

Association can be found on IBT's website under the heading Investors / Corporate Governance.

Annual General Meeting

In accordance with the Swedish Companies Act, the Annual General Meeting is IBT's highest

decision-making body and at the Annual General Meeting the shareholders exercise their voting

rights on key issues, for example establishing a report on comprehensive income and financial

position, disposition of IBT's results, granting discharge from the Board of Directors and the

Board of Directors, election of the Board of Directors and the CEO. and remuneration to the

Board of Directors and auditors. In addition to the AGM, an Extraordinary General Meeting can

be called. In accordance with the Articles of Association, notice of the Annual General Meeting

and Extraordinary General Meeting are published in Post- och Inrikes Tidningar and on IBT's

website.

Annwall & Rothschild Investment AB, owns 7.02 percent of the capital and 28.63 percent of the

votes in the company.

Annual General Meeting 2021

At IBT's Annual General Meeting on May 4, 2021, shareholders represented 60.1 percent of the

total number of votes in the company. Due to the Corona pandemic, the AGM was held by mail

voting, with no physical presence by shareholders or others present.

The Annual General Meeting resolved, inter alia, the following:

• adoption of the income statement and balance sheet

• granted discharge for Board members and the CEO

• that no dividend is paid

• that the board shall consist of six members without deputies

• re-election of board members Margareta Hagman, Eva Idén, Anthon Jahreskog,

Kristina Sjöblom Nygren, Peter Rothschild and Robert Molander

• re-election of Peter Rothschild as Chairman

• re-election of the registered accounting firm Deloitte AB

• that remuneration to be paid to the Chairman of the Board of SEK 250,000 and an

additional remuneration for the work of Chairman of the Board of SEK 400,000 and

to other members not employed by the company by SEK 125,000 each

• that audit fees should be paid according to approved invoice

• on the nomination committee in accordance with the nomination committee's proposal

• on approval of the Board’s remuneration report

• on authorization for the Board to decide on issue of class B-shares in accordance with

the Board’s proposal

The Annual General Meeting 2022

The 2022 Annual General Meeting will be held on May 4, 2022. Due to the Corona pandemic,

the AGM will be held by mail voting, with no physical presence by shareholders or others present.

Notice of Annual General Meeting

Notice of Annual General Meeting shall be made through advertising in Post- och Inrikes

Tidningar and on the company's website. That notice should be announced in Svenska

Dagbladet and on the company's website.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Nomination Committee

The Annual General Meeting 2021 resolved that a Nomination Committee should be appointed

as follows: “The Chairman of the Board shall convene the three largest shareholders in the

company, who each nominate a representative to be a member of the Nomination Committee

together with the Chairman of the Board. At the composition of the nomination committee, the

ownership conditions as of June 30, 2021 will determine which are the largest shareholders in

terms of the number of votes. The representative of the largest shareholder in the nomination

committee at this time shall be the chairman of the nomination committee. If one of the three

largest shareholders waives their right to appoint a member to the nomination committee, the

next shareholder in size shall be given the opportunity to appoint a member to the nomination

committee. The names of the three members shall be published when appointed, however, latest

six months prior to the 2022 AGM. The period of mandate of the nomination committee lasts until

such time a new nomination committee has been appointed.”

The Nomination Committee has been formed in accordance with the decision of the Annual

General Meeting and consists of, in addition to the Chairman of the Board of Directors, Peter

Rothschild, Per-Erik Andersson, representative of the company's largest shareholder Annwall &

Rothschild Investments AB, Sebastian Jahreskog, who via Six Sis AG’s ownership is the

company's second largest shareholder, and Jannis Kitsakis, representative of the company's

third largest shareholder, Fjärde AP-Fonden. All members of the nomination committee, except

Peter Rothschild, are independent in relation to the company and company management. Per-

Erik Andersson is chairman of the nomination committee.

The Nomination Committee shall prepare proposals on the following issues to be submitted to

the Annual General Meeting 2022 for resolution:

a) proposal for election of the Chairman of the Meeting

b) proposals of Board members

c) proposal for election of the Chairman of the Board

f) proposal for Board fees

e) proposals for election of the auditor

g) proposal for audit fees

h) proposals regarding nomination committee for the 2023 Annual General Meeting.

All shareholders have had the opportunity to contact the Nomination Committee with proposals

for members to the Board for further evaluation within the framework of its work. No comments

or suggestions have been received by the Nomination Committee to date.

The Nomination Committee submits a written motivation to the Board to the Annual General

Meeting. In its justification, the Nomination Committee takes into account the diversity and

breadth of the Board and strives for an even gender distribution.

Mandate

The 2021 AGM decided on a mandate for the Board to, at one or more instances during the

period until the next AGM, decide to issue class B-shares. The Board may decide to issue

shares deviating from shareholders pre-emptive rights. Shares may be issued with or without

stipulation of contribution in kind, offset, or other conditions in accordance with 13 chapter 5 §

first section 6 of aktiebolagslagen.

Regarding share issue deviating from shareholders pre-emptive rights (directed share issues),

the Board may not make any decisions increasing the share capital in excess of twenty percent

of the share capital at the point in time the mandate first is exercised for a directed share issue.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Share issue in accordance with the mandate shall be at market price. The Board may decide

on other terms for share issues based on the mandate including who shall have the right to

subscribe for the shares. The objective of the mandate is to provide flexibility for the Board in

order to ensure adequate financing of the company to finance the company’s continued clinical

operations as well as to broaden the company’s ownership base.

The Board

According to IBT's Articles of Association, the Board shall consist of a minimum of three and a

maximum of ten members and no deputies. The Board is elected annually at the AGM for the

period until the end of the next AGM. The Board of Directors has since the Annual General

Meeting 2021 consisted of six members elected by the AGM without deputies. Peter Rothschild

is indirect shareholder in IBT through Annwall & Rothschild Investment AB. Other members are

independent in relation to the company and company management.

The CEO is not a member of the Board but is adjunct to all Board meetings. Other officers in the

company participate in Board meetings as rapporteur. The Board of Directors has adopted a

rules of procedure, including the division of work between the Board and the CEO and the

structure of the Board's work during the year. In addition to the responsibilities of the Swedish

Companies Act and the Articles of Association is regulated following the Board's rules:

- Hold at least 4 board meetings, in addition to the statutory meeting

- Determine the overall objectives of the company's operations and decide on the

company's strategy and evaluate the operational management and risk assessment in

the company.

- Approve budget and corresponding long-term plans including investment budget

- Process matters relating to investments and the like in the amount of five hundred

thousand (500,000 SEK) or other commitments for the company, which entails a cost to

the company exceeding five hundred thousand (500,000 SEK)

- Decide on the purchase and sale of real estate, shares or acquisitions of another

company's operations in excess of five hundred thousand (500,000 SEK)

- Determine the annual report, the directors' report and the interim reports

- Borrowing

- Enter into an agreement with a term of more than three years

- Initial processes of large scope and settlement of disputes of significant importance

- Other issues of significant economic or other importance

The Board of Directors is responsible for monitoring the Company's financial position, for

monitoring the efficiency of the Company's internal control, internal audit and risk management,

being informed of the audit of the 2021 financial statements and for reviewing and monitoring the

auditor's impartiality and independence.

In addition, the Board of Directors has adopted the CEO's instruction, certificate instruction

including instructions regarding liquidity management and currency management policy. The

work order, CEO instruction and attestation instruction are tested at least once a year.

The Board of Directors presence in 2021

Independent in relation to

Name

Position

Member

since

Company and

senior

management

Major

shareholders

Attendance

2020

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Peter Rothschild

Chairman of the

Board

2011

7/7

Margareta

Hagman

Board member

2015

Yes

7/7

Eva Idén

Board member

2017

Yes

7/7

Anthon Jahreskog

Board member

2017

Yes

7/7

Robert Molander

Board member

2020

Yes

7/7

Kristina Sjöblom

Nygren

Board member

2018

Yes

7/7

In his role as working chairman, Peter Rothschild is not considered independent in relation to company.

Peter Rothschild is a partner in Annwall & Rothschild Investments AB, the Company's largest shareholder.

Member in Remuneration Committee. The Remuneration Committee has, besides ongoing contact, had

twp meetings during 2020 with full attendance.

If a member has not been able to attend a board meeting, this member has had the opportunity

to present his / her views to the chairman before the meeting.

Board meeting agenda is as follows where appropriate:

- Business Plans

- Business follow-up

- Investments

- Strategy

- Performance reports

- Significant agreement

- Budget

- Financial statements

The Board continuously evaluates its work through open discussions and annually performs a

written evaluation of its work. The Nomination Committee is informed of the results of the

evaluation.

Remuneration of the Board

The 2021 Annual General Meeting resolved on Board fees of SEK 250,000 to the Chairman and

SEK 125,000 to other members. In addition, a decision was made on an additional fee of SEK

400,000 to the chairman in his assignment to be working chairman of the board.

Chairman of the Board

The Chairman of the Board is responsible for leading the work of the Board and for the Board to

fulfill its obligations in accordance with the Companies Act and the Board's rules of procedure.

Through continuous contacts with the CEO, the Chairman of the Board shall monitor the

company's development and ensure that the Board receives the information required for the

Board to fulfill its commitment. In addition, the Chairman, as a working Chairman of the Board,

actively participates in financing issues, licensing issues and presentations to the market and

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

assists company management in business development. Peter Rothschild has been Chairman

of the Board since 2011.

The CEO

The CEO is responsible for the company's business development and manages and coordinates

day-to-day operations. The CEO has an instruction decided by the Board of Directors, which

regulates, among other things, his work with management and development of the company as

well as continuous reporting and decision-making to the Board. The Managing Director prepares

the necessary information and decision-making documentation such as reports regarding,

among other things, the company's finances, order situation, significant business and strategic

issues before Board meetings, and is a rapporteur and submits motivated proposals for

decisions. In addition, the President keeps the Chairman of the Board regularly informed about

the company's operations.

The Managing Director is solely responsible for external communication.

The Board annually evaluates the CEO's work. In this evaluation, no one from the company

management is present.

Management

The management of IBT consists of four people.

The management team is led by the CEO and is responsible for planning, directing and

monitoring the day-to-day operations. Minuted meetings are held every week. The powers and

responsibilities of the CEO, in addition to being regulated by the Companies Act, are defined in

the CEO instructions adopted by the Board. The powers and responsibilities of company

management are defined in job descriptions and attestation instructions.

Remuneration Committee

The Board has appointed a Remuneration Committee consisting of Chairman of the Board Peter

Rothschild and Board member Anthon Jahreskog. Anthon Jahreskog is Chairman of the

Remuneration Committee.

The Remuneration Committee shall prepare questions regarding remuneration and other terms

of employment for the CEO and other senior executives who together form the company

management. The Remuneration Committee has held four meetings. Peter Rothschild and

Anthon Jahreskog were present at all four meetings.

Principles for remuneration to senior executives are set at the Annual General Meeting. The

remuneration committee's task is to prepare proposals for senior executives in accordance with

these principles.

Auditors

IBT's auditors are normally elected for a period of one year at the AGM. At the 2021 Annual

General Meeting, re-election of Deloitte AB was resolved for the period up to the end of the

Annual General Meeting that will be held in 2022. The Auditing Company has appointed Birgitta

Lööf as the designated Auditor. Remuneration to the auditors is paid, in accordance with the

decision of the Meeting, on an ongoing basis.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

The auditors review the Board of Directors and the CEO's management of the company and the

quality of the company's financial reporting. The auditors also carry out, on behalf of the Board,

an audit of the financial statements, an audit of the annual report, and a review of a quarterly

report.

The auditor’s report their audit to the shareholders through the audit report, which is presented

at the AGM. In addition, written and oral reports are submitted to the company management and

the board. At the board meeting in connection with the review of the third quarter, the auditor

participates in the reporting of comments from the ongoing review during the financial year

regarding the company's internal control and preparation for the annual accounts.

The auditors also submit an audit opinion on the corporate governance report and a report on

the review of remuneration to senior executives.

For information on remuneration to the auditors, see note 5 in the annual report.

The Board of Directors has decided that independent members of the Board possess accounting

expertise as well as the Board's ongoing review of the financial reporting and with regard to the

company's limited size and scope of transactions, to appoint no Audit Committee. Furthermore,

the entire Board meets with the auditor at least once a year without the presence of the

company's CEO or another of the company management.

The Board's description of internal control regarding the financial reporting

for the financial year 2021

Introduction

According to the Swedish Companies Act, the Swedish Annual Accounts Act and the Swedish

Code of Corporate Governance, the Board is responsible for the internal control. This description

has been prepared in accordance with these provisions and thus limited to internal control over

the financial reporting.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Internal control over financial reporting

The Board of Directors is responsible for ensuring that the company's organization is designed

so that the accounting, asset management and the company's financial conditions are otherwise

controlled in a satisfactory manner.

The Board of Directors adopts annually rules of procedure for the work of the Board and

instructions for the division of work between the Board and the CEO. The rules of procedure

specify which matters require the approval or confirmation of the board. At the board meetings,

the CEO prefers matters that require the board's treatment.

The Managing Director shall ensure that the Board receives a factual, detailed and relevant

information base for the Board to be able to make well-informed decisions and that the Board is

kept regularly informed of the development of the company's operations and financial position.

Within IBT, internal control of financial reporting is focused, for example, on ensuring efficient

and reliable management and accounting of purchases and sales, other income accounting and

accounting of the company's financing. The internal control environment mainly comprises the

following five components: control environment, risk assessment, control activities, information

and communication and follow-up.

Control environment

In addition to the rules of procedure between the Board and the CEO, IBT's control structure is

based on the company's organization and ways of conducting operations where the roles and

responsibilities are defined and communicated in the organization. Employee awareness of

maintaining good control over financial reporting is satisfactory and analysis and follow-up of

financial progress is done monthly. Financial reports and compilations are made by IBT's finance

department and reported to the Board on a quarterly basis and to company management on a

monthly basis.

Risk assessment

The company works continuously with risk assessment and risk management to ensure that the

risks to which the company is exposed are managed within the framework that is ultimately

determined by the Board of Directors. The company management annually analyzes the

business processes of the business with regard to efficiency and risks. This work includes

identifying significant risks of errors in financial reporting and ensuring that there are appropriate

processes and controls within the business to manage these risks. Processes that are considered

to be of particular importance to IBT are research and development. A more detailed description

of the risk exposure can be found in the annual report.

Control activities

The risks identified in financial reporting are managed through a number of control measures in

the business processes. Processes, policies and controls are reviewed and updated annually.

The purpose is to detect, prevent and correct errors and deviations. The control structure also

includes, among other things, established powers (eg attestation), division of work, IT risks and

the management's monthly review of financial information. The company controls the

subcontractor's fulfillment of current services in accordance with agreements, including quality

aspects.

Information and communication

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

IBT has information and communication pathways aimed at promoting completeness and

accuracy in financial reporting. Certificate arrangements and communication policies are

distributed to all employees and kept available on the company's intranet. The entire company's

staff meet approx. once a month to increase knowledge of processes and objectives and to

exchange information and experience.

Evaluation

The company management annually evaluates internal control. The company's elected auditors,

Deloitte AB, also annually review a selection of IBT's routines and internal controls. The Board

then evaluates the information and ensures that measures are taken regarding the deficiencies

and proposals that have emerged.

The company has no special internal audit function (internal audit). The Board has made the

assessment that, given the company's size and scope of transactions, as well as the expertise

in the area that the Board possesses and the Board's meeting with the auditor, there is no reason

to establish a formal internal audit department.

The auditor’s examination of the corporate governance statement

The Board of Directors is responsible for that the corporate governance statement on pages xx

has been prepared in accordance with the Annual Accounts Act.

Our examination of the corporate governance statement is conducted in accordance with

FAR´s standard Rev 16 The auditor´s examination of the corporate governance statement. This

means that our examination of the corporate governance statement is different and

substantially less in scope than an audit conducted in accordance with International Standards

on Auditing and generally accepted auditing standards in Sweden. We believe that the

examination has provided us with sufficient basis for our opinions.

A corporate governance statement has been prepared. Disclosures in accordance with chapter

6 section 6 the second paragraph points 2-6 of the Annual Accounts Act and chapter 7 section

31 the second paragraph the same law are consistent with the other parts of the annual

accounts and consolidated accounts and are in accordance with the Annual Accounts Act.

Stockholm March 30, 2022

Deloitte AB

Birgitta Lööf

Authorized public accountant

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

On January 1, 2021 and December 31, 2021, respectively, the total number of shares amounted

to 11 226 184 of which 377 736 class A-shares carrying ten votes and 10 848 448 class B-shares

carrying one vote.

IBT’s class B share was listed on Nasdaq Stockholm, Mid Cap, on September 10, 2018. The

number of shareholders amounted to 5 790 on December 31, 2021 according to Euroclear

Sweden compared to 5 898 on December 31, 2020.

Share price development

IBTs share price decreased from 112 SEK to 66.80 SEK during 2021. Market value as of

December 31, 2021 amounted to 725 MSEK.

Analysts covering IBT:

SEB: Christopher W. Uhde, PhD, Carl Mellerby, Mattias Vadsten

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Ownership December 31, 2021

Name

Class

A-shares

Class

B-shares

capital %

Votes

ANNWALL & ROTHSCHILD INVESTMENT AB

377,736

410,478

7.02

28.63

SIX SIS AG, W8IMY

1,172,087

8.01

FJÄRDE AP-FONDEN

1,120,000

9.98

7.66

SWEDBANK ROBUR NY TEKNIK BTI

579,172

5.16

3.96

AMF FÖRSÄKRING OCH FONDER

501,585

4.47

3.43

TREDJE AP-FONDEN

501,579

4.47

3.43

CBNY-NORGES BANK

396,620

2.94

2.25

UNIONEN

322,196

2.87

2.20

DANGOOR, DAVID

306,421

2.73

2.10

ÅLANDSBANKEN ABP (FINLAND) SWEDISH BRANCH

305,495

2.72

2.09

Total 10 largest shareholders

377,736

5,548,633

50.36

63.76

Other shareholders

5,299,815

49.64

36.24

Total

377,736

10,848,448

100.00

Source: Euroclear Sweden

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

MANAGEMENT

Staffan Strömberg

CEO since 2013. Born 1967.

M.Sc. in chemical engineering and Ph.D. in organic chemistry from the Royal Institute of

Technology in Stockholm.

Staffan Strmberg has more than 20 years of experience in the pharmaceutical industry.

Besides his roles at Billerud Tenova Bioplastics and at the Swedish Medical Products Agency,

he has also been Vice President of NIcOx France, had various project management positions

in AstraZeneca and been Head of R&D of Swedish Orphan.

Member of the Board of Directors of Eteboxagu AB and BioGaia Pharma AB.

Former CEO of Billerud Tenova Bioplastics AB and Head of Medical Devices at the Swedish

Medical Products Agency.

Shareholding in the Company: 43 228 series B shares and 45,864 series B shares through the

wholly owned company Eteboxagu AB and 70,000 warrants 2017/2022 och 50 000 warrants

2020/2024.

Anders Kronström

COO since 2018. Born 1967.

M.Sc., M.B.A.

Anders Kronström has over 20 years of experience working in the pharmaceutical industry. His

experience spans across all stages of drug development in different disease segments. During

his career at AstraZeneca he has had senior leadership positions within Project Management

and Business Development. More recently, he was a CEO of Biosergen AS, a Norwegian

biotechnology company.

Shareholding in the Company: 8 170 shares of series B and 50 000 warrants 2017/2022 and

40 000 warrants 2020/2024.

Michael Owens

CFO since 2021. Born 1956.

Bachelor of Science and Business Administration.

Michael has background as Authorized Public Accountant and CFO in management positions

from several companies in pharmaceutical development.

Shareholding in the company: 10 000 warrants 2017/2024.

Professor Jonas Rastad, MD, Ph.D.

Chief Medical Officer since 2019. Born 1950.

Jonas has in excess of 20 years of experience as academic surgeon and has published 250

articles in peer review-magazines. He has held several leading positions at AstraZeneca in

Sweden, Japan, The UK and USA. In addition, he has 13 years of experience of public

leadership positions, among other head of the Kalmar regional hospital, Västerbottens county

council and CEO of Region Skåne.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Shareholding in the Company: None

BOARD OF DIRECTORS

IBT’s Board of Directors consists of six (five) ordinary members, including the chairman of the

board, with no deputy board members, all of whom are elected for the period up until the end of

the annual shareholders’ meeting 2021.

Peter Rothschild

Chairman of the Board since 2011. Born 1950.

Master of Business Administration from Stockholm School of Economics.

Founder and Chairman of the Board of Directors of BioGaia AB, BioGaia Pharma AB and

MetaboGen AB, and Annwall & Rothschild Investments AB. Board member of Allbright.

Previously CEO of BioGaia (publ) and member of the Board of Directors of Moberg Pharma AB

(publ).

Shareholding in the Company: 377,736 series A shares and 410,478 series B shares through

Annwall & Rothschild Investments AB, a company co-owned with Jan Annwall.

Margareta Hagman

Board member since 2015. Born 1966.

Master of Business Administration, rebro University.

Advisor and consultant in business, accounting and finance. Member of the Board of

Tagmaster AB.

Previous positions: Deputy CEO and CFO of BioGaia AB (publ).

Shareholding in the Company: 3,570 series B shares.

Eva Idén

Board member since 2017. Born 1966.

Civil engineer in chemistry, Chalmers tekniska hgskola.

Chairman of the board of Better & Beyond AB.

Previously held management positions at AstraZeneca AB.

Shareholding in the company: 51 series B shares.

Anthon Jahreskog

Board member since 2017. Born 1980.

Candidate degree in Management and systems, City University, London. Bachelor of business

administration, Master of science in financial management at University of Cape Town.

Board member of BioGaia AB (publ) and Fast Track Holdings Ltd.

Until July, 2015 Chief Operating Officer, Fund Linked Products, Credit Suisse Investment bank,

London. Anthon is a business strategy consultant in several industries.

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Shareholding in the company: 2 200 series B shares.

Kristina Sjöblom Nygren

Board member since 2018. Born1961.

Kristina has received a Doctor of Medical Sciences from Karolinska Institutet and is a licensed

physician.

She is Chief Medical Officer, Head of Clinical Development, since May 2021 at Egetis

Therapeutics AB (publ) in Stockholm. Kristina Sjöblom Nygren has extensive experience from

the pharmaceutical industry, where she has held among other positions Chief Medical Officer,

Head Development at Santhera Pharmaceuticals in Basel and Head of Clinical Development at

SOBI in Stockholm.

Shareholding in the company: 100 series B shares

Robert Molander

Board member since 2020. Born 1965.

Robert Molander has an MBA from Washington University in Marketing and Finance and two

Bachelors degrees from Miami University in Economics and International Studies.

Robert is active as an advisor and consultant in commercial strategy, launch preparation,

marketing and sales in the pharmaceutical industry. Previously sales and marking Director at

Trialbee AB. Robert has 25 years of experience in marketing and sales in the USA from

pharmaceutical companies, among other Novartis, Pfizer and Pharmacia.

Shareholding in the company: 10 000 series B shares

Infant Bacterial Therapeutics AB (publ) Annual Report 2021

Contact Persons

Staffan Strömberg, CEO

Michael Owens, CFO

Contact Information

Infant Bacterial Therapeutics AB (Reg. no. 556873-8586) Bryggargatan 10

111 21 Stockholm, Sweden

Email: info@ibtherapeutics.com