Hi, my name is Christer Valderhaug. Welcome to this webcast presenting the first half year financial results of Arctic Bioscience. With me today, I have our CFO, Jone R. Slinning, and our Medical Director, Runhild Gammelsæter. We are a biotech company located on the northwest coast of Norway, close to sustainable fisheries and clean sea waters. We are utilizing byproducts from sustainably harvested marine resources to develop pharma and premium nutra products. Our methodology and technology has been developed over many years, and today we have a strong IP franchise covering key territories worldwide. Moving on to the half year highlights. First of all, the HeROPA study, our large Phase IIb clinical trial for mild-to-moderate psoriasis, is now ongoing, and patients and recruitment of patients is progressing well.
To date, we have recruited approximately one third of the needed patients, and going forward, we're expecting a strong increase in recruitment from September as European clinics are ramping up after summer holidays. Arctic Bioscience has a solid liquidity position at half year, with almost 114 million NOK in cash. We expect to be sufficiently funded through the Phase IIb readout. Our nutra business continues its strong development with a thirty-three percent year-on-year growth. We see growing business across all geographies, but especially in the APAC region. Several strong brands in the U.S. and Europe have launched products with Romega during the first half of 2023, and more are expected throughout the year. Today, more than 40 consumer brands globally contain Romega. In China, our Kotler strategic partnership is developing well, with extensive marketing efforts and increasing sales in the Chinese market.
The overall gross margin is improving, and our financial results are in line with budgets and expectations. Moving on to the nutra business. Arctic Bioscience sells Romega directly to consumers in Norway. In the first half of 2023, B2C sales increased by 12% year-on-year. The products are both available through the e-commerce subscription at romega.no, and over the counter at various supplement shops in Norway. Further on the nutra business, B2B, in general, had a strong growth through the first half of 2023. We saw revenue growth on existing customers, as well as gaining new B2B customers. Several strong consumer brands in the nutra business will launch new products based on Romega in the coming months. So far in 2023, Arctic Bioscience has experienced a continued positive development in China.
However, some negative macro signs may influence short to medium term development, such as decrease in consumer spending and a strong decrease in birth rates. The interest and demand from other large Asian markets are positive and may become key drivers going forward, including an interesting potential ROMEGA protein in Asia. Now, moving on to the status for the pharma business, I will hand it over to Runhild.
Thank you, Christer. I will provide a brief update on our Phase IIb clinical trial in mild to moderate psoriasis, our ongoing R&D project on mode of action of HRO350, as well as an update on our pipeline. The HeROPA clinical trial is largely on track, and recruitment of patients has not been a challenge. As Christer mentioned, one third of the total number of patients needed have now been recruited, and we have 50 clinics across five countries, and all of those five countries have recruited patients. We have had some delays in the start-up phase, and those include that regulatory timelines in different geographies took more time than expected. The U.K. was approved in January and other European countries in March. We have also had some logistical issues in the startup period, partly also to...
Due to the complexity of supply chain to EU and non-EU countries, but these challenges are now resolved. Despite the vacation period in July and August, patients have been recruited throughout all five countries, also in the summer months, and we are expecting recruitment to be higher in September. Feedback from investigator has been very positive, and they're eager to recruit patients and participate in the study. More sites have wanted to participate, so we may increase the site number to 74 during fall, depending on speed of the competitive recruitment. Six-month readout will be six months after last patient first visit. The HRO350 clinical development plan in mild-to-moderate psoriasis remains unchanged. We've now updated our timelines related to the phase IIb study, as I reviewed on the previous slide.
Long-term timelines may be affected by the longer than anticipated duration of conducting the phase IIb study. However, the time to marketing authorization depends greatly on the phase III clinical program, which we plan to conduct with a partner. Partnering processes are ongoing, and the protocol for phase III will be developed after the phase IIb six-month data readout, and we'll have better estimates of long-term timelines in 2024. An exciting project in the past two years is the cellular studies on mode of action of HRO350 in psoriasis, and we've amassed a lot of data, and the project is due to be completed end of this year. The data will be reviewed for patenting opportunities and thereafter published, and these data will be important for future marketing authorization application, as well as for commercial partnerships.
In parallel with the drug development program for HRO350, we're working on development of a novel drug candidate for brain development in extremely premature infants. The drug candidate, ABS302, is intended to be an orphan designation drug, and this is for infants born before 28 gestational weeks, and they are bereaved of the last three months in utero of a normal pregnancy. Their brains are not fully developed at birth, and they have a high risk of disability and complications. We've developed details of the plan for development of this drug candidate, which includes a quality target product profile, formulation development, and a plan for the preclinical program, where animal studies will be a requirement. The clinical development will be conducted in collaboration with Smerud Medical Research.
Arctic Bioscience retains our focus on research and development, and we are excited about our ambitious development program in mild to moderate psoriasis and our pipeline of novel drug candidates. So with this update, I will hand over to our CFO, Jone R. Slinning, for the financial review.
Thank you, Runhild. We start with a brief look at the key financial figures. We have a continuous and strong growth in the nutraceutical revenue. The year-over-year revenue growth was 33%, from NOK 14.4 million in first half of 2022, to NOK 19.1 million in first half of this year. We have seen a positive revenue growth in both quarters this half year, and the prospects for the last half of 2023 are positive. We deliver a gross margin first half of the year with 30%. This is up from 27.6% compared to the corresponding period last year. Based on experience, we know that the product mix is different between the different halves of the year, and we expect a larger part of finished goods, the second part of 2023.
The cash position remains strong by end of first half 2023. The cash burn the last six months have been net NOK 30 million, including the acquisition of Arctic Algae. Looking more into some of the details from the income statement, as commented, we had a positive development in top line revenue. The positive development was especially driven by strong growth in the European and Asian markets. Both the B2C and B2B market in total have shown positive growth in line with our sales budgets, with a 12.2% year-over-year growth in the B2C segment, and a total of 35.4% year-over-year growth in the B2B segment. As already commented, the total gross margin the first six months is good. We have seen fluctuations between the months, affected by products mix of goods sold and development in exchange rates during the period.
The acquisition of Arctic Algae was finalized late first quarter of 2023. This company is therefore fully incorporated in the consolidated group figures from the second quarter of 2023. The operating expenses has been in line with our total budget for this fiscal year. The increase in personnel expenses this year is mainly explained with a larger number of headcounts in 2023, and one quarter effects of the consolidated figures from Arctic Algae. Our adjusted EBITDA ended at -NOK 18.3 million, in line with our expectations and budgets. We have a 90-10 distribution between B2B segment versus B2C segment. That distribution has been stable the last years. As mentioned earlier, we have seen a strong development in the European and Asian markets. This has been based on both the recurring income from established customers and new customers gained in these markets.
It is expected that the proportion of revenue from the APAC market will increase in the second half of 2023. In this market, we see increased interest for our products, also for our protein products. This product segment has a large potential for future growth. Our liquidity position at end of June 2023 is still strong, with a total liquidity of NOK 113.8 million. The last 12 months, the liquidity has been reduced with net NOK 64 million. The cash burn is, of course, affected by the progress in our pharmaceutical development programs. In Q1 2023, we finalized the acquisition of Arctic Algae. The purchase price was NOK 16.3 million. This, as an acquisition, did not have a liquidity effect for Arctic Bioscience, as the transaction ultimately was settled through a debt conversion into shares in Arctic Bioscience.
The effect of the acquisition is shown gross in a group cash state flow statement, for example, in investment in tangible and intangible assets, new long-term liabilities, and proceeds from equity. Of the total liquidity of NOK 113.8 million at the end of first half, approximately NOK 4 million is related to Arctic Algae. To support the Nutra business growth potential in the group, a credit facility of NOK 30 million has been established. This has effect from first of August this year. The facility was entered into ordinary market terms, and has a duration of one year with annual renewal. This facility will contribute to a satisfying and appropriate working capital financing related to our nutraceutical business. I am ending with this slide with some comments on our total financial position.
At end of first half 2023, we have a strong financial position. We have total assets amounting to NOK 322 million, of which non-current assets amounts to NOK 150 million kroner and a cash position of NOK 114 million. The long-term liabilities relates to a financial leasing agreements originated as part of the Arctic Algae transaction. Arctic Bioscience has a solid equity ratio of 88% by end of June 2023. With this, I will give the word back to Christer, who will comment some more on our business outlook.
Over the next few months, the HeROPA study will be a key strategic focus. The recruitment of 519 patients is not considered to be a challenge. Last patient in is expected late autumn this year, with a six-month readout following last patient in late first half 2024. As Jone mentioned, our liquidity position is strong and is expected to be good at year-end. For the Nutra business, we expect a continued strong development with a forecasted year-on-year growth for 2023 of 30%-35%. That rounds up our presentation, and we will move on to a Q&A session shortly. Thank you.
Then we welcome you all to the Q&A session. We have received some questions during the presentation, which we will try to answer the best we can. We start out with the first question, and, Christer, you can answer this one. Could you give us some color on the development of the GM over the first half? For Q1 2023, you reported total sales of NOK 7.8 million, but in Q2, this number was NOK 11.3 million. To what extent is this increase due to higher prices, and how do you see your gross margin moving forward in H2 2023?
Yes. The increase in sales from Q1 to Q2, and also the gross margin improvement, is partly due to product mix and fluctuations in exchange rates. To a small degree, also, a price increase to the customers. Looking forward for the second half, based on, order book forecast, we do expect a continued increase in sales, and we expect, probably a slight increase also in gross margin going forward. However, always question marks on the fluctuations on the exchange rates.
Yes. The second question we have received, I believe this could be to you, Runhild. Regarding your trial recruitment, how confident are you to complete recruitment in 2024? You have to recruit 346 patients in 3 months. With the current number of activated sites, is this doable, or do you expect you will need to activate further sites to be able to complete this before December?
Looking at the numbers we've achieved now, I believe this is going well. And what we are seeing is that, in particular, the large sites in Germany and Poland, for example, are really delivering on the larger number of patients that they wanted to take. Also want to mention that we do have a competitive recruitment schedule, meaning that if some sites are working well, they could take more patients. And as also reported, we've prepared for adding more sites later this fall, if that is required.
Yeah.
Mm-hmm.
The last question we have received is, also for you, Runhild , I think: How is the development of a children formulation ongoing?
Mm-hmm. So I assume you're meaning the children formulation for HRO350 in the-
Mm
... pediatric program.
Mm-hmm.
So that is ongoing in parallel with the adult program, and naturally, we will complete the phase two in adults prior to formulating further details on the clinical trial, and particularly in for the need of the safety data from adults.
Great.
Yes.
That was all the questions we had received. Any final remarks, Christer?
No, I think it's a good walkthrough, good questions, and thank you all for listening in.
Mm. Thank you.