Hi, my name is Christer Valderhaug , CEO of Arctic Bioscience. Welcome to this webcast presenting the 2022 financial results of Arctic Bioscience. Arctic Bioscience is a biotech company based on the northwest coast of Norway, close to sustainable fisheries and clean sea waters. We are dedicated to improve quality of life for people with inflammatory diseases. We're utilizing byproducts from sustainable harvested marine resources to develop pharma and premium nutra products. Our methodology and technology platform is developed over many years. Today, we have a strong IP franchise covering key territories worldwide. Today, the agenda is to have a operational review of 2022 as well as group financial review. We will continue with a short business outlook before we close with a Q&A session. Arctic Bioscience is a company with a clinical stage novel oral drug candidate for mild to moderate psoriasis, the HRO350.
We also have a pipeline of drug candidates. We have a cash generating and growing global nutra business. Our technology and IP platform with multiple opportunities. The company has a robust ESG footprint. We are listed at the Euronext Growth in Oslo. Let's move to the 2022 highlights. Our phase IIb clinical trial on HRO350, named the HeRoPA study, has started with first patient included in the trial. With a six month inclusion period for all 519 patients, we expect a data readout in Q1 2024. Our nutra business grew strongly in 2022 with more than 60% annual revenue growth. Our financial results are in line with expectations and guidance, with a gross margin of 34%.
We finished the year with a strong liquidity position with a cash balance of more than NOK 144 million. During the year, we received a positive opinion from EMA on Paediatric Investigation Plan for our HRO350 asset. This just underlines the market potential in this indication and adds on to the adult potential. During the year, we also renewed and extended our strategic partnership agreement with Kotler Marketing Group in China for the Chinese market. This will imply a broader distribution in other regions of China. Early this year, we moved into the Arctic Algae space with the acquisition of Arctic Algae AS in January 2023. Our key nutra brand is Romega, a unique product portfolio of phospholipid omega-3 products, especially rich in DHA.
The portfolio is based on extracts from the caviar of wild-caught North Atlantic herring. Basically fish eggs full of nutrition. Our nutra business is global with distribution in Europe, Americas, and the APAC region. Asia is currently our fastest-growing market, and we have a multichannel strategy depending on the various regions. Moving on to the nutra business in Norway. We are selling our Romega brand to consumers in Norway through a subscription model. In 2022, sales in Norway accounted for about 14% of Arctic Bioscience total revenues. In addition to the subscription, Romega, the Romega product is also sold at Farmasiet, Sunkost, Life, Arnica, and Kinsarvik. Our nutra B2B business had a strong development in 2022. We entered new geographies, including South America and further access to APAC regions.
Most significantly, we gained new, significant B2B customers. Naomi Whittel and Carlson in the US, both very strong brands with a broad distribution. We also entered into a customer relationship with Primal Harvest for the European region, with potential also for the US market. Last but not least, we also gained a new customer in the APAC region called Blackmores, one of the largest players with nutraceutical products in that region. In the US, we also changed our distributor to Barrington Nutritionals, which we see as a huge step up and with a large market potential. Late 2022, Naomi Whittel and Primal Harvest presented the new products in the market in the US. In addition, Carlson launched two products in March 2023, which we see as a huge potential for that market.
Moving on to Asia, Arctic Bioscience experienced strong sales growth in the Asian market in 2022 with China as the key driver. We also signed a new and extended partner agreement with the Kotler team. We see a large potential, a huge potential in the China market going forward. The following products are sold in the Chinese market. It's prenatal, eye health, and brain products. Moving on to operational review for the pharma department, and by that, I will present Runhild Gammelsæter. Please.
Thank you, Christer. I will now talk about our asset HRO350 on strategic positioning and also give an overview of the psoriasis market. Psoriasis is a chronic inflammatory disease, and it's quite common, affecting 2% to 6% of the population. Psoriasis is split by severity, and majority of patients have mild to moderate disease. This is often scored by the PASI score, Psoriasis Area and Severity Index, and only patients having a PASI of 10 or more are considered to have moderate to severe and severe disease. In clinical trials, these are based on regulatory definitions of psoriatic severity, and we are investigating mild to moderate psoriasis, which is about 90% of the full psoriatic population.
In clinical trials with biologics or systemic drugs for psoriasis in the moderate to severe or severe population, the inclusion criteria there are often around PASI 20. We are investigating the milder population from a PASI 3 to a PASI 10. Regardless of medication, the treatment goal for psoriasis will always be to have no disease left on the skin, and often this is called a PASI of two or less, which would also be the same as a PASI 90 score. The treatment options for psoriasis today are improving for the moderate to severe population who have various treatment options, while the mild to moderate segment still have an unmet medical need. Those patients are primarily treated with topical corticosteroids. There's also light treatment available to them, and some of the systemic medications are also used for the more moderate patients.
However, most of the systemic medications available today, including Apremilast, the JAK and TYK2 inhibitors, are approved for moderate to severe disease with a PASI of over 10, and that also goes for the biologic medications. HRO350 will have the benefit for the patients in the mild to moderate segment, who are the ones that we include in our study and is our future target indication. Our drug candidate, HRO350, contains the active product ingredient PeHeRo. These are phospholipid esters from herring roe. Herring roe is the natural raw material from which this API is extracted. Phospholipid esters and their metabolites have been shown to have immunomodulatory properties. The exact mode of action of HRO350 is currently being investigated in cellular studies with Norwegian R&D institutions. The HRO350 clinical development program started with a pilot clinical trial. This was a randomized double-blind and placebo-controlled trial.
It was single center with 64 patients with mild to moderate psoriasis. The primary endpoint was at week 26, and that was mean change in PASI. The special thing about this clinical trial and the significance, which was pointed out by the journal publishing the data, was that it is looking for treatment advances in the mild to moderate patient population where there are very few clinical trials ongoing. The data after 26 weeks showed a statistically significant improvement in the group being treated with HRO, which is the dark blue line, versus placebo, which is the orange line. We saw an even greater improvement in a population with a PASI between 5.5 and 10. The study had an open label extension period from week 26 until 65, where all the patients were offered to take HRO.
In this case, we see that the patients who have switched from placebo achieved a similar result as the group who have been treated throughout. Furthermore, that effect seemed to be sustained and possibly improving further over time. A number of secondary endpoints were also explored. The Dermatology Life Quality Index, being one of the most important ones, showed the same trend of improvement. After 65 weeks, we saw a 55% reduction in DLQI in the patients. As you see in the pictures here as well, for some patients participating in this trial, this was very meaningful for them. Our phase II clinical trial HeRoPA has now started, and this is a very large clinical trial which will include 519 patients in five countries.
It's approved in the UK, Norway, Finland, Germany, and Poland, and we are currently including patients. The study has three arms investigating two doses of HRO350 versus placebo. Primary endpoint will be at week 26. The placebo control period lasts for one year, and then there is a follow-up period of eight weeks. The full clinical program for HRO350 is designed based on scientific advice from the EMA. In addition to this Phase IIb clinical trial, which is ongoing, and the cellular studies that we are doing to investigate the mode of action, we are planning to do a small pharmacokinetic study, as well as a Phase III clinical trial. Additionally, we have agreed with the EMA on a Paediatric Investigation Plan, where we will develop a formulation for children.
This Paediatric Investigation Plan is part of our pipeline, and there is a high unmet medical need in this population. About 1% of children under the age of 18 have psoriasis, and they should not be using corticosteroids. We believe that this could be a future opportunity for HRO350 as well. We're also working on a novel product for brain development in extremely premature infants, and this is a collaboration with Smerud Medical Research International, who have expertise in running such clinical trial. In this market, there is also a high unmet medical need for the 5% of children who are born extremely premature. With that, I'll hand over to Jone R. Slinning, our CFO, for the financial review.
Thank you, Runhild. I will now present the key figures for the consolidated financial figures for 2022, and also go more into details on some key areas. We start with a brief look at the key financial figures. As you know, the group's revenues comes from the nutraceutical business with sales of our Romega products both to B2C and B2B customers. In 2022, we had a very positive development in the total sales revenues, with an annual growth compared to 2021 of 60% from NOK 21.5 million in 2021 to NOK 34.3 million in 2022. This annual growth ended in line with what we guided on during 2022. Especially, the second half of 2022 was positive for Arctic Bioscience, where we contributed on the large order intake from the first half of the year.
The gross margin development in 2022 was positive, with an increase compared to 2021 of 10 percentage points. A strong focus on gross margin development, along with increased product prices, have offset some of the experienced cost increases related to input factors during the year. At end of the year, we have a strong liquidity position with a bank balance of NOK 144 million, and the cash burn during 2022 has been in line with expectations at approximately net NOK 83 million. Looking more into some of the details from the income statement, as commented earlier, we had a strong development in top line revenue in 2022. This was driven by good order intake from all of our geographically markets, but especially from the Asian market, as Christer mentioned.
As noted in previous financial presentations, we expected that the revenues from the Asian market would go up during the last half year of 2022. This has materialized. I will comment a little bit more on that on the following slides. In the B2C's market, we see a stable revenue development in line with expectations. The B2B segment, excluding the Asian market, has also a positive development, but not in the same growth rate as in the APAC segment. For these areas, we have positive prospects going forward. I mentioned the gross margin development earlier. We see that our increased cost focus on this key figure has given result. The gross margin increased with 10 percentage points compared to the 2021 figures. During 2022, we implemented a stronger operational cost focus, which has given positive outcome. Other expenses ended well below the budgeted figures for 2022.
During last year, we had a positive currency contribution and interest income from our financial assets, which gave a net financial result of NOK 3.4 million. Our EBITDA ended at negative NOK 33.7 million, in line with earlier full year guiding. Adjusted for some non-recurring personal expenses, the adjusted EBITDA ended at negative NOK 31 million. I will now give some comments on breakdown on the Nutra revenues. As you can see on this slide, this underlines the positive development we have seen in the Asian market. In 2022, the Asian market amounted to 38% of the group's total revenues compared to just 3% in 2021. The main driving factor is the positive impact from the extended strategic partnership agreement we entered with Kotler Marketing Group during 2022 in China.
In 2022, we also delivered our first ever nutraceutical products to the Japanese market, which underscores our long-term commitment and focus on sales. We have a positive outlook on this market going forward. We believe we have a good and diversified customer base with a strong international presence all around the world. Given that the society has gradually reopened post-COVID, this also gives us the opportunity to again participate in trade fairs and again meet customers face-to-face, which we are certain will give positive effects. Our liquidity position at year-end is still strong, with a total liquidity of NOK 144 million. The last 12 months, the liquidity has been reduced with NOK 83 million. This is in line with our expectations and according to the progress plan related to the pharmaceutical development projects. Compared to 2021, we have lower negative cash flow from operating activities.
Some of the buildup of accounts receivable are linked to increased sales volumes in the last part of 2022, and some of the changes in accounts payable are related to increased activity in the company's development programs. Net cash flow from investment is mainly related to the pharmaceutical development program, which corresponds to NOK 51 million. During 2022, we have also received payments from different public grants connected to our development programs, which are noted in these figures here. This has thus, given a positive liquidity effect. In 2021, we had equity increase related to the listing process. In 2022, the change is related to an exercise of share options in February 2022. I am ending with this slide with some comments on our total financial position. At end of 2022, we have a strong financial position.
We have total assets amounting to NOK 328 million, of which fixed assets amount to NOK 129 million and a cash position of NOK 144 million. Arctic Bioscience has no long-term debt and a solid equity ratio of 88%. With this, I will give the word back to Christer, who will comment some more on the business outlook. Thank you for your attention.
Thank you, Jone. We will now have a short business outlook for Arctic Bioscience 2023. A key focus for the company on the pharma side will be the ongoing recruiting of patients for the HeRoPA clinical trial. In addition to that, we'll continue pursuing commercial and development partnerships for the HRO350. For the extremely premature project, we'll have strong focus on advancing the novel drug candidate for brain development in extremely premature infants. On the Nutra side, continuing to developing current B2B partnerships and extend partnerships in various geographies worldwide. On the financial side, we'll continue to have a strong focus on the liquidity position of the company. Finally, entering the microalgae space to build green and scalable capacity. We touch short upon the Arctic Algae bioreactor program. This is a tool for producing targeted biomass with high yield on membrane lipids.
It's a scalable alternative, and the production of in-house raw material with significantly lower cost of goods. We also have access to full scale production plant with deep seawater with pumping technology. Arctic Algae also will utilize Arctic Bioscience extensive extraction competency within membrane lipid technology. The strategy is to broaden the product portfolio of Arctic Bioscience with combination products from existing product portfolio, servicing a growing Asian markets create new membrane lipid products, strengthening customization and our IP. On the pharma side, we're also looking to enhance pharmaceutical pipeline in the autoimmune space. That concludes our presentation for Arctic Bioscience today. We are moving on to the Q&A session.
Yes. Welcome to the Q&A session of this presentation. We have received some questions during the presentation that we will try to answer. For example, myself, Christer, or Runhild. The first question we have received is as follows. Could you speculate on the potential mechanism of action of HRO350? There are a few studies showing the potential of n-3 PUFA-derived SPMs in psoriasis. Is this something you are currently considering, and if so, is there any other pathway that you are currently exploring? I believe Runhild is the best one to answer this one.
Yeah. Thank you for this question. I don't speculate, but we do have some hypothesis, and we do have ongoing cellular studies. We have a grant from the Norwegian Research Council for those. SPMs would naturally be something we would look at. This data will be forthcoming, I think end of year, so we're very excited about that, and we'll share them when we have them.
Good. We have received another question. Could you give us some color on the plans forward with Arctic Algae? What are the benefits over your current systems, and what type of products are you planning to produce with the new infrastructure? Christer.
Good question. Short to near term, we are running two work streams. One work stream is to test out the scalability of the microalgae based on current known algaes. The second stream is to seek and find new strains of algaes that we will test out and also look at scalability on building our own IP portfolio. Further, what we are looking for is to, you know, as mentioned in the presentation, new products within the nutraceutical side with membrane lipids and phospholipids, high on DHA, typically combinations, as well as going forward, also seek the potential within pharma. And yeah, just a second on the question again. There's one more thing.
The...
Yes. What are the benefits of our current systems?
Mm.
We can utilize our full methods and technology platform on extraction technology also from our microalgae. It's a very strong fit with our current methods and technology and lab R&D.
Good answer. Another question has just come in. How often will HeRoPA phase IIb clinical trial, the HRO350 data availability be communicated? Maybe you can say something about that.
Yeah.
Runhild
Comment on that. The trial is ongoing. We have the sites ready for recruiting the full patient population, and I'm not sure if the question was about the data themselves or recruitment plan.
I think maybe both.
Yep.
So Recruiting, and we will be reporting on a milestone basis for that. When the last patient has been recruited, it will be six months for the primary endpoint read out.
Good. I believe we have one last question which has come in. What about other new drugs in psoriasis? For example, the newly approved psoriasis drug from BMS.
Yes, the TYK2 inhibitor. This is also an oral product, but that is for moderate to severe psoriasis, for patients with a PASI 10 or higher, as I mentioned in my presentation.
Okay. Okay, this seems to be all the questions we have received. Maybe you, Christer, have some closing remarks.
Yes. I would simply like to thank the audience for attending this webcast, and welcome back on the second half reporting. Thank you.
Thank you.