FIT Biotech Oy: FIT BIOTECH OY'S ANNUAL FINANCIAL

FIT Biotech Oy Company release March 10, 2017 at 15:00 EET

FIT BIOTECH OY'S ANNUAL FINANCIAL REPORT JANUARY 1- DECEMBER 31, 2016 (unaudited)

Research projects in gene therapy and the treatment of HIV have progressed according to the plans facilitated with the new financing.

Main events January-December 2016:

• GTU® technology chosen for clinical studies to be conducted by the research consortium European HIV Vaccine Alliance (EHVA) in January
• Profit forecast for the full year 2016 lowered in March
• Collaboration initiated with Ichor Medical Systems Inc. on gene-based electroporation drug delivery technology in April
• James Kuo, MD, MBA appointed as new CEO in May
• Operational directions updated by new management and Board of Directors in May
• Safety and tolerability reported from two human clinical studies of novel DNA-based HIV vaccine in June
• Manufacturing license for pharmaceuticals renewed in August
• Extraordinary General Meeting of FIT Biotech Oy on 15^th of September approved the financing transaction amounting to EUR 12,480,000 with Bracknor Investment and an intention to agree on a EUR 500,000 financing transaction with Sitra. The financing agreement with Bracknor, was entered into to ensure the continuity of the Company's business and the sufficiency of its working capital.
• Tekes approved in part the Company's request for rectification of financing the HIV-vaccine project in October
• In November, Tekes approved Company's grant application for drawing up "Business Plan for Manufacturing Biological Drugs"
• FIT Biotech and InnaVirVax started collaboration in December to develop and commercialize HIV-immunotherapy
• Equity including additions according to the Companies Act amounted to 630,413 euro negative  as of 31.12.2016. The Board of Directors has taken actions to improve the equity capital.  The Company released information on 10th of March, 2017 to convert the convertible bonds to convertible capital loans.

Key figures for January-December 2016:

• Revenue was 10,000 (20,000) euros.
• Profit for the period amounted to -3,651,186 (2,615,663) euros.
• Grants were 191,127 (6 539 272) euros.
• Earnings per share were -0,12 (0,09) euros.
• Equity including additions according to the Companies Act amount to 630,413 euro negative as of 31.12.2016.

Outlook for 2017

Pharmaceutical product development is characterized by a long-term approach with resulting large sales at high margins for a positive outcome. FIT Biotech seeks to license its drug candidates to business partners who are able to undertake their further clinical development, regulatory approval and commercialization. The company's revenue model is based on receiving signing fees and milestone payments of the targeted license agreements as well as royalty payments.

The company continues to implement its strategy, i.e. the aim to license the patented GTU® technology to partners for medical applications. The company primarily focuses on verifying the preclinical efficacy of its drug candidates (proof-of-concept) developed on the basis of the GTU® technology. FIT Biotech's development projects as outlined in its announcement on May 20, 2016, continue with a few exceptions. The grant application related to Innovative Medicines Initiative 2 (IMI2) did not result in a positive decision as announced on June 10, 2016. Furthermore, the pre-clinical results concerning the suitability of the GTU technology to gene-based treatments were delayed and are now expected in Q1/2017 as was announced on September 5, 2016.  A collaboration agreement between the Company and InnaVirVax to combine their respective immunotherapeutic vaccines was released on December 16. 2016. The different modes of action of the vaccines potentially have a favorable synergistic effect toward a functional HIV cure.  A functional HIV-cure is defined as a sustained remission of HIV-infection without continuous antiviral treatment and no disease progression. FIT Biotech is also manufacturing its therapeutic HIV vaccine for the European HIV Vaccine Alliance for multinational clinical studies directed towards a functional HIV cure. The Company does not anticipate generating any turnover in 2017.

Key financial figures for 2016

 (* Adjusted with the capital loan of 6,485,213 eur (** excluding the profit impact of capital loan which Tekes decided not to collect and the cost impact of financial advisors (*** financial figures are calculated by using adjusted profit / profit for the period

CEO James Kuo comments:

"FIT Biotech is a clinical-stage biotech company focused on developing innovative antibody therapies and gene vaccines for cancer immunotherapy as well as the treatment and prevention of infectious diseases.

FIT Biotech has been engaged in cutting-edge scientific research for over 20 years. Our competitive advantage is our patented GTU® technology, which potentially enables development of a multitude of safe, efficacious and cost-effective drug candidates. FIT Biotech mainly targets the early phases of drug development from discovery and technology development up to clinical phase II. The human monoclonal antibody therapies being developed are for most part already licensed for marketing. The genes that are the blueprints for these commercialized monoclonal antibody drugs are being delivered by FIT Biotech's GTU® technology, an alternative approach that will be substantially cheaper and more patient friendly.  The patient's own body manufactures their monoclonal antibody drug. FIT Biotech is an active participant in the paradigm shift taking place within the global biopharmaceutical industry from biological drugs into gene-based drugs.  We have already completed several clinical studies with our most advanced drug candidate, FIT-06, demonstrating encouraging clinical results as a HIV-immunotherapy.  No technology-related safety concerns have been identified to date.  

Additionally, we have established separate collaborations with EHVA, a leading European HIV research consortium, and a French company, InnaVirVax.  Both partnerships plan to initiate Phase II clinical studies with our vaccine candidate, FIT-06, during 2017.  Additionally we have substantially improved the company's financial position by entering into an over EUR 12 million financing agreement with Bracknor Investment Company.   The financing provides working capital and enables the Company to execute upon its growth plan.

One aspect of our competitive advantage stems from our in-house manufacturing of investigational gene medicine products for our clinical trials.  We are reimbursed for that manufacturing and core competency by the European HIV Vaccine Alliance.  We believe manufacturing capability that meets regulatory standards to be a key strategic advantage worthy of further investment. Manufacturing of test vaccines for the EHVA trials as well as for the collaborative study with InnaVirVax is currently underway. On behalf of FIT's board of directors and the management team, I want to thank you for your interest and support of our Company."  

REVIEW OF OPERATIONS JANUARY 1-DECEMBER 31, 2016

Business environment and strategic focus

The size of the global pharmaceutical market is estimated to grow significantly and in 2017 it is estimated to exceed EUR one trillion. The markets are showing that biological pharmaceuticals are strengthening their position in the treatment of various diseases. The pharmaceutical markets as a whole are expected to grow 4-7% per year, whereas the corresponding number for biological pharmaceuticals is 11% (BCC Research: Biologic Therapeutic Drugs: Technologies and Global Markets, January 2015). In addition to biological and chemical drugs, gene-based treatments are becoming more common within the pharmaceutical market. With gene-based treatments, the genes transported into cells by vectors induce the cell to produce a desired protein with a therapeutic effect on the target disease. Gene-based treatments are a rapidly growing market area, and many large pharmaceutical companies have recently entered into high value deals with biotechnology companies based on their early stage research results. These market developments further strengthen FIT Biotech's belief that its strategy of focusing on gene-based treatments is the right one, and that its future development projects should concentrate on this area.

In the reporting period, FIT Biotech continued focusing on licensing the patented GTU® technology to various partners for medical applications in line with the Company strategy. Primarily, the focus is on verifying the pre-clinical efficacy of its drug candidates (proof-of-concept) developed on the basis of the GTU® technology. Thereafter, the Company aims at licensing the drug candidate to pharmaceutical companies for further development and finally for sales. The Company's revenue model is based on signing and milestone fees of the targeted license agreements as well as royalty payments.

FIT Biotech started a research collaboration with an international research consortium (European HIV Vaccine Alliance, EHVA) where HIV vaccine candidate based on FIT Biotech's GTU® technology had been chosen for clinical studies. This project is funded by a European Commission grant of EUR 22 million. Out of this total amount, FIT Biotech has been allocated to receive approximately EUR 1 million for the purpose of covering its costs related to this particular project. This will have a cash-flow impact focusing on the beginning period of the project. The project is expected to run until 2021.

During the reporting period, FIT Biotech achieved positive preclinical results concerning the suitability of its GTU® technology to gene-based treatments and continued respective extended preclinical studies with the goal of demonstrating proof-of-concept.

FIT Biotech announced a collaboration with InnaVirVax in HIV-treatment combining the Companies respective proprietary immunotherapeutic HIV-vaccines having different modes of action with a potentially synergistic effect towards a functional HIV-cure. Functional HIV-cure is defined as a sustained remission of HIV-infection without the need for continuous treatment with chemical drugs, and no disease progression. FIT Biotech and InnaVirVax plan to start a clinical trial in 2017 to evaluate the safety, tolerability, immunogenicity and clinical efficacy of FIT Biotech's DNA-based HIV-vaccine in combination with InnaVirVax's immunoprotective vaccine. InnaVirVax will conduct and fund the clinical study in return for co-ownership of the immunotherapy. Production

FIT Biotech's preparedness to operate its own GMP (Good Manufacturing Practice) level production facility is one of its strategic assets. The facility allows the company to produce DNA-based vaccines used in clinical trials. The facility meets all regulatory requirements for vaccine production, as well as enables flexible production of pure and safe DNA-based vaccines for research purposes. The production machinery and equipment have been selected to meet regulatory requirements and to enable sufficient vaccine production without compromising the purity and safety of the vaccine.

The Company's production was interrupted for financial reasons, which is why the GMP license, which is granted for a specified duration, expired for the production facility in the summer of 2015. In May 2016, FIT Biotech filed the application for reinstating the GMP license in order to restart the production of FIT-06 HIV vaccine.

The renewed license will allow FIT Biotech to manufacture its therapeutic HIV-vaccine for the EU Horizon 2020 EHVA-project where its effect will be tested in a novel treatment concept. The Company will also manufacture FIT's test vaccine for the planned collaborative clinical trial with InnaVirVax.

FINANCIAL REVIEW JANUARY 1-Deacmber 31, 2016

Revenue, profitability and financial performance

The Company's revenue for the review period amounted to 10,000 (20,000) euros. Due to the product development focus of the Company's business, revenue remained small. The revenue was generated through the sales of services related to the HIV vaccine.

The Company's result for the period amounted to -3,651,186 (2,615,663) euros. Earnings per share were -0.12 (0.09) euros. Currency exchange rate fluctuations had no significant effect on the profit.

Balance sheet, financing and capital expenditure

The balance sheet total on December 31, 2016, was 1,428,076 (2,693,711) euros. The Company's total equity was -12,404,482 (-9,274,745) euros.

At the end of the reporting period, the Company's share capital amounted to 8,282,473 euros and the total number of shares in the company was 43,022,718. Equity and subordinated loans totalled negative 630,413 euros in the aggregate. The Company has taken actions to improve the equity after the financial closing results were ready. See further information under the section Events after the review period.

The Company's patents are recognized in the balance sheet at their acquisition cost less depreciations. No product development investments were made during the review period.

Cash and cash equivalents at the end of the reporting period amounted to 486,916 (1,844,833) euros. At the end of the reporting period, the Company's short-term debt totalled 739,123 (194,387) euros, convertible bonds 1,270,000 euro and subordinated loans amounted to 11,774,070 (11,774,070) euros.

Short-term risks, going concern and sufficiency of funding The financial closing is prepared under the going concern assumption. To ensure going concern in the business the Company has to inter alia retain adequate liquidity. The management of the Company has prepared a cashflow estimate for the next twelve months, where expenses are on the same level as in 2016 and cash inflow is mainly based to Bracknor financing agreement and to the grant from the program admitted by the European Commission to HIV Vacine Alliance (EHVA). The Board and the Management of the Company believe that the financing of the Company is secured for the next twelve months.

According to Bracknor agreement the Company may raise at least 2.0 million euro during the year 2017. According to EHVA decision the Company may receive about 0.6 million euro grant for the expenses paid related to the program in 2017. To the financing granted by the European Commission the main risk is the timing of the payment of the grant.

The Bracknor agreement enables the going concern principle and adequacy of net working capital at least for the year 2017. The programme does not limit FIT Biotech's possibilities to obtain other kind of equity or debt financing. The implementation of the transaction has several conditions which may affect the availability of financing if realized.

 Bracknor Investment has the right to terminate the programme if the Company breaches its covenants, its operations become subject to a material adverse effect, there has been a change of control in the Company or Sitra sells more than 40% of its K shares in the Company within three years from the signing. In case of an event of default by the Company, the notes may be declared immediately due and payable, and upon the occurrence of a major transaction or a liquidity event, the Company is obliged to redeem the outstanding notes issued under the programme for 115% of their principal amount. The shareholding of the Company's current shareholders will be diluted significantly. The repayment of the loans is though restricted by the articles of Companies Act related to subordinated loans.

The Board of Directors and the management of the Company aim to constantly enhance future financing opportunities to ensure the long term financing of the Company.

The Company may influence to the amount of capital needed by adjusting the expense structure according to the funding possibilities. The Management estimates and supervises equity and liquidity according to the amounts of equity and cash. These are reported to the Board on regular basis.

Strategic risks relate to technical success of research and development programs, new competing products availability in the market and the availability of funding. Any unfavourable change in R&D projects may endanger the property values and thus represent a remarkable risk for the company. This kind of unfavourable occasions may realize on short notice and are unpredictable.

Research and development

The Company outsources its current research and development services from Estonian Icosagen A/S and the respective expenses have been moderate.

Personnel

The number of personnel at the end of the review period was 15 (11). Part of the personnel was laid off during the review period.

Changes in company management during the reporting period

Dr. James Kuo, MD, MBA was appointed as the company's new CEO on May 16, 2016. The long time CEO, Dr. Kalevi Reijonen retired from the CEO position as of January 1, 2016 and continued as the Chief Medical Officer (CMO). During the recruitment process of the new CEO, Mr. Rabbe Slätis (Chairman of the Board) acted as CEO and Mr. Juha Vapaavuori acted as Chairman of the Board and continued in the position for the rest of the reporting period.

On January 21, 2016, the Company announced that Dr. Andres Männik, Ph.D., had been appointed as Chief Scientific Officer of the company, with Professor Mart Ustav continuing in the company as a member of the Scientific Advisory Board.

Members of the Management team on December 31, 2016 are:

James Kuo, Chief Executive Officer Kalevi Reijonen, Senior Vice President, Chief Medical Officer Liisa Laitinen, Senior Vice President and Chief Financial Officer Matti Lähde, Vice President, Production Jussi Seitsonen, Vice President, Quality Assurance and Quality Control Andres Männik, Vice President, Chief Scientific Officer

The members of the board of Directors from 1.1.2016 were: Juha Vapaavuori, Chairman from 20.1.2016, Erkki Pekkarinen, Rabbe Slätis and Dirk Teuwen.

Starting from 8.4.2016 the members of the Board of Directors have been: Juha Vapaavuori, Chairman, Rabbe Slätis, Erkki Pekkarinen and Chitra Barucha.

Resolutions of the Annual General Meeting 2016

The Annual General Meeting of FIT Biotech was held in Helsinki on April 8, 2016.

1. Annual Accounts, Board of Directors and Auditors

The Annual General Meeting approved the annual accounts of the Company and discharged the members and the vice members of the Board of Directors and the CEO from liability for the financial period of 2015.

The Annual General Meeting confirmed, according to the proposal of the Board of Directors, the number of the members of the Board of Directors as five (5) and that Juha Vapaavuori, Erkki Pekkarinen and Rabbe Slätis be re-elected to the Board and that Chitra Bharucha and Mart Ustav be elected as new members for the term expiring at the end of the next Annual General Meeting following the election.

The Annual General Meeting resolved that the members of the Board be paid the following remuneration for the term ending at the end of the 2017 Annual General Meeting:

• Chairperson of the Board EUR 2,000 per month.
• Other members of the Board (including deputy chairperson) will be paid a meeting compensation of EUR 800 for each physical meeting in which the Board member is personally in attendance throughout the duration of the Board meeting.
• The members of the Board who reside abroad will be paid a meeting compensation of EUR 500 also for meetings which they attend by telephone, provided that the member is in attendance via telephone throughout the duration of the Board meeting and that the Board meeting would otherwise be considered a physical meeting.
• In addition, the chairperson of the Board and other Board members will be paid for their reasonable travelling expenses to Board meetings.

The Annual General Meeting resolved that audit firm PricewaterhouseCoopers Oy is to be re-elected as the auditor, Janne Rajalahti, APA as the responsible auditor, for the term ending at the end of the next Annual General Meeting. The auditors shall be reimbursed in accordance with the auditors' reasonable invoice approved by the company.

2. Use of the profit shown on the balance sheet

The Annual General Meeting resolved that no dividends will be distributed for the 2015 financial period and that the profit of EUR 2,615,663.08 for the financial period will be transferred to the profit/loss account.

This book profit was mainly due to the Tekes decision, upon the Company's application (April 20, 2015), not to collect an amount of approximately EUR 6.5 million from the principal amount of the Company's capital loans.

3. Authorizing the Board of Directors to decide on the issuance of shares as well as the granting of options and other special rights entitling to shares

The Annual General Meeting authorized the Board of Directors to decide on the issuance of shares and on the granting of options and other special rights entitling to shares as referred to in Chapter 10, section 1 of the Limited Liability Companies Act. The authorization also allows the Board to decide upon a directed issue in deviation from the shareholders' pre-emptive subscription right and to grant special rights provided that the requirements set forth by law are met.

A maximum of 5,300,000 new K shares or K shares held by the Company may be issued under the authorization.

The Board of Directors can use the authorization in one or more tranches, for example, to strengthen the Company's capital structure, for the purposes of management or personnel incentive schemes or for other purposes it decides.

The Board of Directors was authorized to decide on the other terms of issuing shares and granting of option rights and special rights. The authorization is valid until June 30, 2017. This authorization will not revoke any earlier authorizations to decide on share issues or granting of option rights and other special rights entitling to shares.

4. Board's assembly meeting

In its assembly meeting right after the Annual General Meeting, the Board of Directors elected Juha Vapaavuori as the Chairperson.

Shares and share capital

The Company's shares are divided into three series, A, D and K, of which only the K series shares are traded on the First North list. The company has a total of 43,022,718 shares, which are divided in share series as follows: A: 5,229 shares, D: 65,235 shares and K: 42,952,254 shares. No shares in series B have been issued so far. The main differences between different share series relate to proportional distribution upon placing the Company in liquidation or upon dissolving the company and to the conversion of shares between the share series. The articles of association of the Company contain a more detailed description of the different rights pertaining to different share series and on the conversion of shares.

The Company directed to itself a share issue without payment of 10,000,000 new K shares in order to ensure that the Company has K shares to be transferred upon the conversion of the Convertible Notes and the exercise of the Warrants.

The Company has in it's possession shares of K-series totaling to 10,000,000 shares and 23.24 % of the Company's shares and voting rights. By virtue of the authorization of General Meeting on April 8, 2016, FIT Biotech issued 213,763 new K-shares as a directed share issue. The Company carried out the directed share issue to Translink Corporate Finance Oy as a reward for Translink's provided services as per the advisor agreement that was in force between Company and Translink. The subscription price is paid fully with receivable of EUR 41,450 of Translink from the Company. There were weighty financial reasons for the share issue since the purpose of the issue is to strengthen the Company's capital structure and cash funds.

During the financial period Bracknor converted 360,000 euros and Sitra 120,000 euros of the convertible loans into equity capital. Along with the conversion of the convertible loans the company issued 3,258,466 K-shares to Bracknor and 1,610,208 K-shares to Sitra. Bracknor has 2,745,151 and Sitra has 1,532,479 outstanding warrants related to the convertible loans.

Trading, market capitalization and shareholders

Shares on Nasdaq Helsinki

Option and incentive programs

The Annual General Meeting of April 8, 2016 authorized the Board of Directors to decide upon granting option and other special rights. Upon authorization, total maximum of 5,300,000 new shares or Company's own K-shares can be granted. The authorization is valid until June 30, 2017. During the review period, the Board of Directors did not execute the authorization.

The extraordinary general meeting of February 24, 2015 authorized the Board of Directors to decide upon granting option rights to key personnel of the company. The Board of Directors, in its meeting on May 18, 2015, approved the 2015 option rights. Option rights were issued for a total maximum number of 1,910,000, and they entitle their holders to subscribe for no more than 1,910,000 new series K shares in or possessed by the company. Of the share options, 1,004,330 are marked with the symbol 2015A; 301,890 with the symbol 2015B; 301,890 with the symbol 2015C, and 301,890 with the symbol 2015D. The option rights were to key personnel without consideration. Each option right entitles its holder to subscribe for one (1) new share in the Company or existing share held by the Company. The share subscription period for share options 2015A is July 1, 2016-December 31, 2021, for share options 2015B January 1, 2018-December 31, 2021, for share options 2015C January 1, 2019-December 31, 2021 and for share options 2015D January 1, 2020-December 31, 2021. The share subscription price with option right 2015A is 1.25 euros, i.e. twenty per cent (20%) less than the subscription price in the initial public offering, with option right 2015B 1.56 euros, i.e. the same as the subscription price in the initial public offering, with option right 2015C 1.56 euros, i.e. the same as the subscription price in the initial public offering, and with option right 2015D 1.56 euros, i.e. the same as the subscription price in the initial public offering. The subscription price of a share subscribed for with an option right may be set lower in special cases. Notwithstanding this, the subscription price of the share is always a minimum of 0.01 euros per share.

Main risks and uncertainties

The Company's business is at a development stage and is based on research and product development projects, and there is no guarantee that the business will develop favorably. The Company's future profitability and prospects and even the continuity of its operations will materially depend on the Company's ability to enter into potential license and collaboration agreements relating to the GTU® technology developed by the company and, in particular, on the Company's success of demonstrating the proof-of-concept of its gtGTU technology.

The Company's operating profit depends on the fees under new agreements, in particular those aimed to be made in the field of gene-based treatments, as well as the fees based on the heads of agreements already signed by the Company being fulfilled as planned. Typically to pharmaceutical industry, research results and the amount of fees possibly received based on the agreements potentially ensuing from the results is difficult to anticipate accurately due to various uncertainties. Of the advance fees of collaboration agreements targeted by the Company, particularly milestone fees and, subsequently, sales-linked royalties of potential license agreements depend on how risky product development advances and whether a sales permit for the pharmaceutical developed based on the Company's technology is obtained.

The Company's development projects may progress slower than planned. Collaboration projects and plans are not always realized in the expected manner, and they include substantial uncertainties. Development projects always involve a technology risk, which is typical for the field. However, the risk decreases as the studies proceed to the clinical phase.

The Company is financing it's research and development activities by grants and loans. These grants, which local, national and EU - level institutions offer to improve development in the area have been remarkable for the Company. The availability of the grants on mid or long term are not secured and thus may be a risk for the Company in the future. FIT Biotech may acquire additional financing by issuing shares, using own shares as methods of payment and by negotiating with new financers. If the Company is unable to acquire financing it's business is in endangered.

If the product development of the drug candidates based on the Company's GTU® technology proceeds faster than expected or if the product development costs do not stay within the limits of the company's budget, the Company may need to acquire equity or debt financing earlier or more than assessed. If product development progresses slower than estimated, the product development costs and the resulting need for funding may be postponed correspondingly. If the commercialization of the research results takes place earlier, the need for additional financing will be decreased correspondingly.

The value of ongoing or future development plans may be affected by competitors, who may find novel efficient treatments for diseases that are also targeted by FIT Biotech.

The Company's current or future business partners may not necessarily succeed in commercializing drug candidates based on the GTU® technology. The future development of the Company's business largely depends on the Company's and its business partners' ability to succeed in bringing the development of its current and future drug candidates to a stage in which it is possible to conclude collaboration agreements with third parties under terms that are feasible for the Company.

The Company's success, growth and the profitability of its business depend materially on the expertise of the Company's management and other key persons and the Company's ability to retain the current management and other key persons and to recruit new, experienced personnel with industry expertise also in the future.

There is more information on financing risks under section Short-term risks, going concern and liquidity.

Events after the review period

The Extraordinary General Meeting of January 26, 2017 appointed Eero Rautalahti as the Member of the Board.

The financing agreed with Bracknor and Sitra in 2016 are converted to capital loans according to agreement signed on March 10, 2017.

The Company informed on March 10, 2017 that the equity including additions according to Companies Act was negative December 31, 2016. The Board of the Company has taken actions to improve the equity and informed on March 10, 2017 to convert the convertible loans to convertible capital loans.  The equity including additions according to Companies Act as of February 28, 2017 was -633,439 euros before conversions to the convertible capital loans. The total amount of such convertible loans was as of December 31, 2016 1,270,000 euros.

Board of director's proposal to the general meeting for the distribution of profit

The Company's profit for the financial period 2016 amounted to -3,651,186 euros. As at December 31, 2016, the Company did not distribute funds.

The Company's board of directors proposes to the annual general meeting that no dividend be paid for the financial period of January 1-December 12, 2016.

Publishing of the Financial Statements Bulletin 2016

FIT Biotech's half-year financial report 2017 will be published on September 15, 2017.

FINANCIAL TABLES:

Accounting principles

This Annual Financial Report has been prepared observing good accounting practice and Finnish legislation. The financial information presented in this Annual Financial Report is not audited. The scope of the information follows section 4.4 (e) of the First North rules. The numbers have been rounded to the accuracy of the euro.

*) Has been converted to capital loans as of   10.3.2017

Shareholders' equity

(* Adjusted with the capital loan of 6,485 213 eur (** excluding the profit impact of capital loan which Tekes decided not to collect and the cost impact of financial advisors (*** financial figures are calculated by using adjusted profit / profit for the period

Formulas for key financial figures

Return on equity (ROE), % = Profit (loss) before non-recurring items - taxes x 100 / total equity + capital loans

Equity ratio, % = Total equity + capital loans x 100 / total assets - advances received

Return on investment (ROI), % = Profit (loss) + financial expences x 100 / total equity + capital loans + interest bearing liabilities

General statement

Some statements in this report are estimates based on the management's best knowledge at the time they were made. Therefore, they contain a certain amount of risks and uncertainty. The estimates may change in the event of significant changes in the general economic or industry conditions.

FIT BIOTECH OY

Board of Directors

Further information:

Chairman of the Board Juha Vapaavuori Email: juha.vapaavuori@fitbiotech.com Tel: +358 50 372 0824

Certified Advisor: Aalto Capital Partners Oy, telephone +358 40 5877000

FIT Biotech in brief

FIT Biotech Oy is a biotechnology company established in 1995 that develops and licenses its patented GTU® (Gene Transport Unit) vector technology for new-generation medical treatments. GTU® is a gene transport technology that meets an important medical challenge in the usability of gene therapy and DNA vaccines.

FIT Biotech applies its GTU® technology in its development projects, which at the time include gene-based treatments, genetic vaccines and research collaboration. Application areas include cancer (gene therapy) and infectious diseases such as HIV and tuberculosis, as well as animal vaccines.

FIT Biotech series K shares are listed on the First North Finland market maintained by Nasdaq Helsinki Ltd.

DISTRIBUTION:

Nasdaq Helsinki Principal media www.fitbiotech.com