The biotechnology company XP Chemistries ("the Company") announces that it has responded to all questions from EFSA (European Food Safety Authority) regarding the Company's application for the approval of its capsaicin in animal feed. This means that the RFI (request for information) issued by the Company on May 29, 2024, has now been addressed.

EFSA will now continue the validation step known as the completeness check, which is expected to be completed by mid-July 2024, as previously communicated. The Company hopes that EFSA will complete this step earlier since the RFI was answered well before the deadline. If not, EFSA's Scientific Opinion is expected in January 2025, as previously communicated. Upon approval, XP Chemistries' capsaicin can be used in animal feed for the breeding of all animals within the EU. Approval will also allow the Company to obtain a Certificate of Free Sale, enabling the export of the product to several countries outside the EU.

XP Chemistries submitted the application for regulatory approval of its capsaicin for the animal feed market on February 29, 2024. On April 11, 2024, the Company announced that the first formal review had been cleared without comment and that the more in-depth validation step, known as the completeness check, had started. On May 29, 2024, the Company announced that EFSA had issued an RFI regarding the structure of the dossier's annex and certification of the start dates for three of the studies included in the dossier. The Company has now responded to all of EFSA's questions regarding the approval application for its capsaicin in animal feed. This means that the previously announced RFI has now been addressed.

Erik Nelsson, CEO, comments:

"We have now responded to the RFI from EFSA, approximately three weeks before the deadline. I now hope that EFSA will process our application promptly and that we will be notified that the application has passed the completeness check phase before the expected mid-July 2024 deadline. We are hopeful and look forward to a continued smooth process with EFSA for the approval of our capsaicin in animal feed in the European market."

The Company expects that EFSA may issue a Scientific Opinion in January 2025. EFSA's Scientific Opinion is the most critical point in the application process and provides advice to the European Commission (EC) on whether to approve or reject the application. The EC will then make a decision within 90 days after EFSA's Scientific Opinion is published, after which the approval will come into effect. Once the approval is effective, XP Chemistries' capsaicin can be used in animal feed for breeding all animals within the EU. Approval will also allow the Company to obtain a Certificate of Free Sale, enabling the export of the product to several countries outside the EU.

It is not possible to provide an exact timeline for EFSA's processing of the Company's application. Despite all necessary studies being conducted according to EFSA's regulations, it is possible that EFSA may request additional information. In such a case, EFSA's processing time will be paused during the time the Company needs to provide these additional details.

The biotechnology company XP Chemistries ("the Company") announces that EFSA (European Food Safety Authority) has provided feedback on the Company's application for the approval of capsaicin in animal feed. EFSA has issued an RFI (request for information) to the Company regarding the structure of the dossier's annex and has requested the Company to certify the start dates for three of the studies included in the dossier. The Company's deadline to respond is June 27, 2024, and the Company estimates that the response can be submitted approximately 2-3 weeks before the deadline. After the Company submits its response, EFSA will continue the validation step known as the completeness check, which is expected to be completed by mid-July 2024. The Company notes that the RFI from EFSA is not extensive and does not require additional data to be generated through studies.

The RFI from EFSA shifts the application process timeline by about a month, meaning that the Scientific Opinion from EFSA, which was previously expected by the end of 2024, is now expected in January 2025. Upon approval, XP Chemistries' capsaicin can be used in animal feed for the breeding of all animals within the EU. Approval will also allow the Company to obtain a Certificate of Free Sale, enabling the export of the product to several countries outside the EU.

XP Chemistries submitted the application for regulatory approval of its capsaicin for the animal feed market on February 29, 2024. On April 11, 2024, the Company announced that the first formal review had been cleared without comment and that the more in-depth validation step, known as the completeness check, had started. EFSA has now issued an RFI (request for information) to the Company which includes the following:

**Dossier's annex:** The dossier is divided into five sections, and it has been common practice to include the same annex in each section where the annex is referenced. This has facilitated EFSA's risk assessment since the different sections are reviewed by different experts at EFSA, eliminating the need for them to search for annexes outside the section they are reviewing. EFSA has now unexpectedly changed this routine and requests that the duplicate annexes in the dossier be removed, which the Company intends to do.

**Certification of study start dates:** EFSA has requested that the Company provides certification of the start dates for three of the studies in the dossier. The Company has these documents and will send them to EFSA.

Erik Nelsson, CEO, comments:

"It is reassuring that EFSA is responding to our application within the time they specified at the start of the completeness check phase. EFSA now asking for small adjustments to the structure of the dossier's annex and three certifications of start dates should be seen as a minimal RFI, and I feel very confident that we can provide EFSA with answers well before our deadline. Although the RFI from EFSA slightly shifts our timeline, we now have confirmation that the dossier is almost complete and that we do not face any unexpected surprises in the current phase. We hope for and look forward to a continued smooth process with EFSA for the approval of our capsaicin in animal feed in the European market."

The RFI from EFSA shifts the timeline for the application process by about a month. This means that the Company's previously communicated hope that EFSA could issue a Scientific Opinion by the end of 2024 is now expected to occur in January 2025. EFSA's Scientific Opinion is the most critical point in the application process and provides advice to the European Commission (EC) on whether to approve or reject the application. The EC will then make a decision within 90 days after EFSA's Scientific Opinion is published, after which the approval will take effect. Once the approval is effective, XP Chemistries' capsaicin can be used in animal feed for breeding all animals within the EU. Approval will also allow the Company to obtain a Certificate of Free Sale, enabling the export of the product to several countries outside the EU.

It is not possible to provide an exact timeline for EFSA's processing of the Company's application. Despite all necessary studies being conducted according to EFSA's regulations, it is possible that EFSA may still request additional information. In such a case, EFSA's processing time would be paused during the time the Company needs to provide these additional details.

The capsaicin producer XP Chemistries' EU application to EFSA (European Food Safety Authority) underwent the first formal review without any remarks. The application pertains to the use of XP Chemistries' capsaicin in animal breeding. An ongoing "completeness check" is expected to be completed by the end of May 2024 and could act as a trigger for the company given a positive opinion. XP Chemistries is thus on track, and a scientific opinion should be issued by the end of 2024. We estimate that XP Chemistries will be able to grow faster than previously assumed as we expect it to receive EU approval before its nearest competitor, Axichem.

The first quarter was marked by modest revenues with decreasing costs. Personnel costs decreased to 0.7 (0.9) million SEK during the first quarter of 2024, corresponding to a reduction of 29 percent. Concurrently, other costs decreased by 1 percent. Mangold assesses that personnel costs will decrease more than expected in 2024, leading to a lower cost forecast. XP Chemistries' net cash amounted to 5.4 million SEK at the end of the quarter. The warrants (TO2 & TO3) can generate 15.1 million SEK before issuance costs. Given a favorable outcome, we see that XP Chemistries can achieve profitability without additional capital infusions. Mangold is the financial advisor in the transactions. Mangold also sees that XP Chemistries is valued lower compared to Axichem.

Mangold values XP Chemistries using a DCF model. The target price is raised to 0.20 (0.11) SEK per share, corresponding to an upside of over 20 percent. Mangold accounts for full dilution in the valuation.