Substantial improvements in profitability and cash flow, positioned for strong growth

2024 has been a positive year for Polypeptide. We have improved operations and profitability and have remained focused on meeting the increasing demand of our customers by further expanding capacity.

We have also advanced our strategy of becoming the most innovative peptide CDMO, sharpening our value proposition through proprietary manufacturing technology, superior development capabilities and a modular approach for capacity expansion.

Our aim is to provide customers with more flexible options to support their supply chain and growth strategies through effective and sustainable ways of working.

We operate in a rapidly growing market

Based on 2023 market data, the global peptide therapeutics market is valued at around USD 45 billion with an expected compound annual growth rate (CAGR) of above 10% until 2030. We believe that the main growth driver is the increasing demand for peptide-based therapies for metabolic disorders, in particular for the treatment of diabetes, obesity, and other co-morbidities.

The advancement of hundreds of development projects across other therapeutic areas is expected to complement the growth beyond metabolic disorders. The observed trend to meet this demand through outsourcing to CDMO players such as PolyPeptide continues to be driven by the increasing chemical complexity and requirements for deep expertise in process and manufacturing technology.

PolyPeptide is well positioned in its market, competing with a solid track record of over one thousand distinct therapeutic peptides manufactured, customer proximity based on a global multi-site network, and a culture of agility and responsiveness.

These strengths are reflected in PolyPeptide’s rich pipeline of custom and commercial projects with large exposure to metabolic disorders and the large commercial agreements communicated in December 2022 and March 2024.

2024 performance highlights

As we review our performance and achievements in 2024, we are proud to highlight three key areas of success:

• PolyPeptide generated EUR 336.8 million in revenue, representing a 5.1% increase versus 2023. Between 2021 and 2024, our revenue (excluding revenue associated with the coronavirus pandemic) grew at a CAGR of 15.4%, driven by metabolic therapeutics, which grew at an impressive CAGR of 28.9%.
• EBITDA was EUR 25.4 million, with a margin of 7.5%. This was 9.4 percentage points higher than in 2023, reflecting an improvement of EUR 31.3 million, driven by operational performance and changes in product mix. The increased profitability and preparations for accelerated growth with customer support for capacity expansion contributed to a strong operating cash flow. Net cash flows from operating activities reached EUR 89.4 million in 2024 versus EUR 36.5 million in 2023.
• Capital expenditures (capex) reached EUR 87.8 million, or 26.1% of revenue. We started production with the large-scale solid-phase peptide synthesis (SPPS) capacity in Belgium and finalized the debottlenecking of upstream and downstream capacity at our site in Torrance, California. In addition, we advanced the construction work to double capacity in France, expected to come online by the end of 2025. Finally, we also launched the important construction work for doubling SPPS capacity at our site in Sweden. These investments support PolyPeptide’s ability to meet its 2028 target of doubling revenue reported for 2023.

We finished the year with a strong active custom projects pipeline, including 32 projects for phase III of clinical development. As we embrace a robust industrial manufacturing model, we continue to strengthen our organization. We also added industrial-scale capabilities with the targeted hiring of experts from within the industry and further developed our Group functions with an enhanced focus on operational and commercial excellence. To enhance scalability, we also started evaluating a new enterprise resource planning system (ERP) to bolster our control mechanisms.

Advancing our strategy and sustainability agenda

Our vision is to be the most innovative peptides CDMO, strengthening competitive advantages in 1) innovation focused on green chemistry and process intensification, 2) superior pipeline development capabilities, and 3) rapid and flexible capacity expansion leveraging the potential for modularity.

As part of our large-scale capacity expansion, we use proprietary manufacturing technology with an integrated engineering design, advanced automation and process control to ensure high productivity, safety, and sustainability. In 2024, our technical experts continued their research project to increase the throughput of the SPPS infrastructure by using proprietary resin formulations. In line with our green chemistry agenda, the team also advanced its research efforts for PFAS-free SPPS alternatives, identifying viable options for industrial applications in the future.

During 2024, PolyPeptide finalized its climate strategy and transition plan, including greenhouse gas reduction targets, which will be submitted for validation to the Science-based Targets Initiative in 2025. As part of our commitment, we continued to participate within the framework of CDP’s climate change program and improved our score to a “B” rating in 2024 from “B-” in 2023, marking progress for the third consecutive year.

Perspectives for 2025 and beyond

For 2025, our priority remains to meet the strong and increasing customer demand by delivering on our growth strategy. We expect strong growth and confirm our mid-term outlook, which includes the target to double revenue reported for 2023 by 2028.

For financing, we expect further improvements in profitability and cash flow, customer funding support for large capacity expansion projects, and the utilization of our credit facilities. With the attractive market outlook and evolving customer opportunities, the Board of Directors will propose two capital-related resolutions at the upcoming Annual General Meeting on 9 April 2025 (AGM 2025), i.e. the introduction of a capital band and the creation of conditional share capital for financing purposes and finance instruments.

We are committed to ensuring that our Board of Directors is comprised of individuals with the skills, experience and expertise necessary to guide our company into the future. To this end, we are pleased to announce the nomination of Joanna (Jo) LeCouilliard as a new independent member of the Board of Directors for election at the AGM 2025. Ms. LeCouilliard, a UK and Irish national, brings with her a financial and accounting background as well as deep global experience in healthcare management, including a successful career of nearly two decades with GlaxoSmithKline.

After serving for four years, Beat In-Albon has decided not to stand for re-election at the AGM 2025. The Board of Directors would like to extend its heart-felt thanks to Mr. In-Albon for his outstanding personal commitment and valuable contributions leading the Audit and Risk Committee between 2021 and 2023.

On behalf of the Board of Directors and the entire management team, we would like to thank our customers and shareholders for their continuous support, confidence, and trust as we progress on our growth journey. Importantly, we would also like to take this opportunity to thank all our employees around the world for their dedication, professionalism, and contributions to transform Polypeptide into the most innovative peptide-based CDMO. At PolyPeptide, we are truly excited about the journey ahead.

Baar, 10 March 2025

Sincerely,

Peter Wilden

Chairman of the Board of Directors

Juan-José González

Chief Executive Officer