Sequana Medical N : Report of the Board of Directors on the annual accounts for the year ended 31 December 2023

SEQUANA MEDICAL

Limited Liability Company

Registered office: Kortrijksesteenweg 1112 box 102, 9051 Sint-Denijs-Westrem, Belgium

VAT BE 0707.821.866 legal entities register Ghent, division Gent

ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE STATUTORY FINANCIAL STATEMENTS PER 31 DECEMBER 2023

Dear shareholders,

We are pleased to present to you the statutory financial statements for the fiscal year ended December 31, 2023 of Sequana Medical NV (the "Company" or "Sequana Medical").

1 Overview

Sequana Medical NV is a pioneer in treating drug-resistant fluid overload, a serious and frequent clinical complication in patients with liver disease, heart failure and cancer. Fluid overload is a well-recognized problem in these growing diseases, causing severe problems for the large number of patients for whom current medicines are no longer effective. These patients can have up to 15 liters of extra fluid in their bodies, causing major medical issues including increased mortality, repeated hospitalizations, severe pain, difficult breathing and restricted mobility that severely impacts daily life.

alfapump® and DSR® are our proprietary platforms that work with the body to remove this excess fluid, delivering major clinical and quality of life benefits for patients and reducing costs for healthcare systems.

2 Discussion and analysis of the statutory financial statements

The annual accounts cover the accounting period from January 1, 2023 to December 31, 2023.

The annual accounts give a true and fair view of the course of affairs of the Company during the past fiscal year.

Balance sheet - assets

• The cash at bank and in hand amounts to 2,286,958 euro per 31 December 2023.
• The non-current assets represent an amount of 14,680,460 euro, representing mainly elements with respect to the IT equipment, as well as laboratory & production equipment and leasehold improvements. The remaining non-current assets mainly relate to the rent guarantees for the offices in Belgium and Switserland and the participation in Sequana Medical Gmbh. In 2023, an amount of 9,554,540 euro was capitalized on R&D.
• The current assets, excluding the cash at bank and in hand, amount to 5,206,347 euro. They mainly consist of inventories, trade and other receivables within one year, deferred charges and accrued income. A long-term receivable of 1,387,979 euro was recognized relating to the application of R&D tax credit.

Balance sheet - liabilities

• The issued capital of the Company amounts to 2,926,296 euro and the share premium accounts amounts to 185,644,420 euro;
• Accumulated losses reached 193,086,827 euro per 31 December 2023.
• The liabilities of 25,335,675 euro mainly consist of financial debts from subordinated loans (4,944,923 euro); financial debts from other loans (4,652,444 euro); short term financial debts (7,263,550 euro); trade payables (2,693,921 euro), customer advances (170,260 euro) , liabilities in respect of remuneration and social security obligations (2,212,200 euro) and accrued charges (3,398,378 euro).

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Results of the fiscal year

The operating income amounts to 10,839,227 euro and relates to revenues generated from the sale of the alfapump for an amount of 712,173 euro, the inventory movement of finished products (-56,754 euro) and other revenues for 629,268 euro. Since 2020, costs for research and development have been capitalized as intangible fixed assets resulting in produced fixed assets in 2023 amounting to 9,554,540 euro.

The operating charges of 38,747,738 euro mainly consist of:

• Cost of goods sold for an amount of 590,136 euro, higher than in 2022 (205,758 euro) mainly due to the decrease in revenue resulting in an inventory decrease.
• Services and other goods for an amount of 19,194,798 euro, lower than in 2022 (20,013,122 euro) mainly due to the decision to scale back European commercial activities and lower costs related to the North American pivotal POSEIDON study of the alfapump and the completion of the SAHARA DSR proof-of- concept study in 2022, partially compensated by pre-clinical and clinical development work required for the Company's IND filing for its proprietary DSR product and commencement of the MOJAVE study in the US.
• Total personnel costs of 9,085,246 euro, higher than in 2022 (8,408,911 euro) as a result of additional staffing for the preparation of the submissions for marketing approval of the alfapump in the US

Other revenues remained broadly unchanged from 530,174 euro in 2022 to 629,269 euro in 2023.

The non-recurring operational charges amount to 678,215 euro and are broadly unchanged compared to 2022 (739,992 euro).

The financial charges of 1,674,652 euro in 2023 mainly relate to the debt related interest expenses. In 2022, the financial charges of 1,549,353 euro mainly relate to attributed interest charges on the subordinated loan agreements concluded at the end of July 2020 and amended in December 2021 and interest charges on the secured loan facility agreement with Kreos.

The losses before taxes amount in 2023 to 29,341,977 euro.

The Company has closed its annual accounts with respect to the financial year 2023 with a loss of 29,783,232 euro.

Statutory and non-distributable reserves

The Company has a share capital of 2,926,296 euro. The Company has 686,404 euro of non-distributable reserves. As the Company has closed its annual accounts with respect to the past financial year with a loss, the Company is not legally obliged to reserve additional amounts.

Result allocation

The Board of Directors proposes to carry forward the loss for the financial year to the next financial year.

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3 Principles of financial reporting and going concern

The Company is still in the development phase for its alfapump® and DSR® programs, including the execution of clinical trials and submission / review of applications in order to achieve regulatory marketing approvals for these products. This entails various risks and uncertainties, including but not limited to the uncertainty of the development and regulatory review process and the timing of achieving profitability. The Company's ability to continue operations also depends on its ability to raise additional capital and to refinance existing debt, in order to fund operations and assure the solvency of the Company until revenues reach a level to sustain positive cash flows.

The impact of macroeconomic conditions and geopolitical situation in Ukraine and the Middle East on the Company's ability to secure additional financing rounds or undertake capital market transactions remains unclear at this point in time and will remain under review by the Executive Management and the Board of Directors.

The above conditions indicate the existence of material uncertainties, which may also cast significant doubt about the Company's ability to continue as a going concern.

The Statement of Financial Position as at 31 December 2023 shows a negative equity in the amount of EUR 3.83 million and ending cash balance of EUR 2.3 million.

The Company will continue to require additional financing in the near future and in that respect already executed a EUR

3.0 million Investor Loan Agreement in February 2024 with Partners in Equity and Rosetta Capital and raised EUR 11.5 million gross proceeds in March 2024 in a private equity placement via an accelerated book-build offering disclosed in section 4 "Significant events after the Reporting Period" below. Together with existing cash resources, the net proceeds from these financing activities are expected to extend the current cash runway of the Company to the end of Q3 2024.

Based on the above condition, the Executive Management and the Board of Directors made an assessment of the Company's ability to continue as a going concern. Several measures have already been carried out in order to reduce expenditures, including:

• alfapump program: The Board of Directors strongly believes that pre-market approval ("PMA") approval of the alfapump is a key value inflection point for the Company and has decided to prioritize its resources on reaching this important milestone. A number of other alfapump-related activities have been delayed or halted, including termination of all commercial activities in Europe, which resulted in a significant reduction in personnel in all countries, and
• Heart Failure/DSR: Delaying the randomized phase of the MOJAVE clinical study until after the alfapump pre- market approval ("PMA") approval.

The Company is also assessing to what extent partnerships or licensing arrangements could be entered into regarding its alfapump and DSR programs in order to support development and commercialisation. While on the date hereof no concrete plans are on the table, the Company continuously engages with potential partners, which could also provide further funding to the Company's business.

The Board of Directors believes that a combination of one or more of the foregoing measures will help in addressing the Company's liquidity and funding structure. It also believes that these may further help in finding additional equity and/or debt financing from existing and/or new investors, as well as to renegotiate and/or refinance existing debt financing arrangements. Efforts in that respect are ongoing continuously. The Company has also control over its spending, and management can timely and adequately reduce budgeted expenditures should this be necessary in the context of the Company's going concern and/or should it be necessary to have more time to obtain additional financing.

The Executive Management and the Board of Directors remain confident about the strategic plan, which comprises additional financing measures including equity and/or other financing sources, and therefore consider the preparation of the present Consolidated Financial Statements on a going concern basis as appropriate.

We also refer to section 4 Significant events after the reporting period below.

Application of article 7:228 of the Belgian Companies and Associations Code

The Board of Directors notes that at the occasion of the preparation of the statutory (non-consolidated) financial statements of the Company for the financial year ended 31 December 2023, it determined that the Company's (non-

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consolidated) accounting net assets (as defined in the Belgian Companies and Associations Code) were still below the thresholds of the articles 7:228 and 7:229 of the Belgian Companies and Associations Code.

On 30 June 2023 the Company's (non-consolidated) accounting net assets had already fallen below the thresholds of the Articles 7:228 and 7:229 of the Belgian Companies and Associations Code.

Based on the foregoing, the procedure set out in the article 7:228 of the Belgian Companies and Associations Code has been initiated with the extraordinary general shareholders' meeting of 10 November 2023

Consequently, the extraordinary general shareholders' meeting of the Company held on 10 November 2023 approved the proposal set out in the report prepared by the board of directors at the time in accordance with Article 7:228 of the Belgian Companies and Associations Code.

Even with the March 2024 capital increase, the (non-consolidated) accounting net assets of the Company remain below the thresholds of Articles 7:228 and 7:229 of the Belgian Companies and Associations Code.

For more information on the measures the Board of Directors has taken and proposes to take to redress the financial situation of the Company, and its proposal to continue the operations of the Company, reference is made to the relevant report of the Board of Directors submitted to the extraordinary general shareholders' meeting of 10 November 2023. Further measures were announced in a press release on 8 February 2024.

4 Significant events after the reporting period

Restructuring program

In February 2024, several additional measures have been carried out in order to reduce expenditures, including:

• alfapump program: The Board of Directors strongly believes that pre-market approval ("PMA") approval of the alfapump is a key value inflection point for the Company and has decided to prioritize its resources on reaching this important milestone. A number of other alfapump-related activities have been delayed or halted, including termination of all commercial activities in Europe, which resulted in a significant reduction in personnel in all countries, and
• Heart Failure/DSR: Delaying the randomized phase of the MOJAVE clinical study until after the alfapump pre- market approval ("PMA") approval.

Additional secured investor financing of EUR 3.0 million

In February 2024, the Company has obtained a Convertible Loan provided by major shareholders Partners in Equity and Rosetta Capital (each a "Lender") and is for an aggregate principal amount of EUR 3.0 million. The maturity date of the Convertible Loan is 30 September 2024. The principal amount and interest of the Convertible Loan can be converted by the Lenders for new shares of the Company at any time prior to the maturity date, at a conversion price equal to the lower of (i) arithmetic average of the daily volume weighted average trading price per share of the Company's shares traded on Euronext Brussels during the period of twenty (20) consecutive trading days ending on (and including) the third trading day before the date on which the Company has received the optional conversion exercise notice, minus a discount of 45%, and (ii) the issue price of the new shares issued by the Company at the occasion of the most recent future equity financing before receipt of the optional conversion exercise notice, minus a discount of 45%. The principal amount and interest of the Convertible Loans are mandatorily converted in the event of a future equity financing transaction by the Company for at least EUR 7.0 million. In case of a mandatory conversion, the conversion occurs at a conversion price equal to the issue price of the new shares in equity financing transaction, minus a discount of 45%. If the Company enters into a new convertible loan for a value of at least EUR 7.0 million and such new convertible loan includes conversion rights equivalent to the mandatory and optional equity conversion rights in the Convertible Loan (but with a discount of at least 25% instead of 45%), all amounts outstanding under the Convertible Loan, plus a conversion fee of 33% of all amounts owed under the Convertible Loan, will be converted into the new convertible loan. In the event that the conditions for conversion for shares or for a new convertible loan have not been fulfilled by the maturity date, the loans will be repayable in cash (subject to certain subordination provisions). The loans bear interest of 15% per annum, which shall be compounded on a monthly basis. In case of conversion, the minimum amount to be converted for new shares or a new convertible loan will in any event be EUR 300,000. The proceeds from the loan will be used to finance general working capital requirements.

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As a consequence of the equity placement on 25 March 2024 (see below for more details), the aggregate principal amounts and interests under this loan agreement will be mandatorily converted at the date of the annual shareholders' meeting into new shares (through a contribution in kind of payables) at a conversion price per share equal to the issue price in said equity financing transaction, minus a discount of 45%.

Amendments to the existing loan agreements

The Company's lenders have also agreed to a number of measures to support the goal of obtaining PMA approval through enabling the focus of the Company's cash resources on alfapump PMA approval instead of debt service payments. These measures include the postponement of all repayments under the existing loan agreements and a new conversion feature for 30% of the outstanding loans of funds and accounts managed by BlackRock, Inc. and its affiliates ("BlackRock").

Amendment to the senior debt agreements with Kreos Capital VII (UK) Limited

In February 2024, the Company also entered into an agreement in relation to the amendment of certain repayment and other terms of the EUR 10,000,000 loan with Kreos Capital VII (UK) Limited (together with its affiliates "Kreos", and the "Kreos Loan").1

Subject to finalization of definitive agreements, the main amendments to the Kreos Loan can be summarized as follows:

• Payment holiday: Suspension of the repayment of any principal or interest amounts under the Kreos Loan until the earlier of (i) three months following the date on which the Company has obtained a PMA decision for the alfapump by the US FDA (irrespective whether such decision is positive or otherwise), (ii) date on which the Company has obtained a PMA approval for the alfapump by the US FDA and has completed an equity raise of at least EUR 20.0 million, and (iii) 31 December 2024.
• Maturity date extension: If the Company (i) completes an equity raise resulting in additional cash proceeds of
  the higher of: (x) EUR 30.0 million, and; (y) such amount as required to provide the Company with cash runway until 31 March 2026 determined by reference to a budget approved by the board at the time of such equity raise, and (ii) receives a PMA approval for alfapump before the payment resumption date, the maturity date of the Kreos Loan would be extended from 30 September 2025 to March 2026.
• Interest rate increase: The applicable interest rate of the Kreos Loan would increase from 9.75% per annum to 11.5% per annum (counting as of 1 February 2024).
• New restructuring fee: Kreos will be entitled to a certain restructuring fee equal to 1.5% of the principal amount outstanding as at 1 February 2024 and accrued interest outstanding as at 31 January 2024, which shall accrue interest of 11.5% per annum until payment.
• Increase of the end of loan fee: The applicable end of loan fee due at expiration of the Kreos Loan would increase from 1.75% to 2.25% of the total principal amount of the Kreos Loan or, if earlier, on prepayment in full of the relevant amount.
• Convertibility feature: 30% of the principal amounts outstanding under the Kreos Loan as at 31 January 2024 will be convertible into new shares of the Company (through a contribution in kind of receivables) at the option of Kreos against a conversion price equal to the lower of (i) the applicable loan conversion price under the Convertible Loan agreement with Partners in Equity and Rosetta Capital, and (ii) the issue price in any other future equity or equity linked investment in the Company completed prior to the conversion of the Kreos Loan.
• Kreos warrants amendment: The Company agreed to submit a proposal to amend the exercise price of the subscription rights (warrants) issued by the Company's extraordinary shareholders' meeting to the benefit of Kreos on 10 February 2023. The amended exercise price would be equal to the lower of (i) the applicable loan conversion price under the Convertible Loan agreement with Partners in Equity and Rosetta Capital, and (ii) the issue price in any other future equity or equity linked investment in the Company completed prior to the exercise of the relevant warrants.
• Contractual restrictions: The amendments set out in the agreement with Kreos are conditional upon, among other things, the Company's plans to focus on the alfapump business and to pause the DSR product.

Amendment to the subordinated debt agreements with PMV/z-leningen (currently known as PMV-Standaardleningen), Belfius Insurance and Sensinnovat NV

The Company also entered into amendments in relation to (i) the EUR 4,300,000 partially convertible loan with PMV Standaardleningen NV (formerly known as PMV/z Leningen NV) (the "PMV Loan"), (ii) the EUR 2,000,000 loan with Belfius Insurance NV (the "Belfius Loan"), and (iii) the EUR 400,000 loan with Sensinnovat BV (the "Sensinnovat Loan").

• BlackRock Inc. announced the completion of its acquisition of Kreos, a leading provider of growth and venture debt financing to companies in the technology and healthcare industries, on 2 August 2023.

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The main amendments to the PMV Loans, the Belfius Loan and the Sensinnovat Loan consist of (a) an extension of the final maturity date to 31 December 2025, (b) a rescheduling of the principal repayments under the relevant loan agreements so that the principal amount outstanding under the loans thereunder will be repaid in four equal monthly instalments starting on 30 September 2025, and (c) an increase of the applicable interest rates under each of the relevant loan agreements with 0.5% per annum.

Equity placement

The Company successfully raised an amount of EUR 11.5 million in gross proceeds by means of a private placement of new shares via an accelerated bookbuild offering of 7,666,667 new shares (being approximately 27.15% of the Company's current outstanding shares) at an issue price of EUR 1.50 per new share (the "Offering").

As a consequence, the Company's share capital has increased on 25 March 2024 from EUR 2,926,295.90 to EUR 3,720,562.60 and the number of issued and outstanding shares has increased from 28,242,753 to 35,909,420 shares, through the issuance of a total of 7,666,667 new shares.

Partners in Equity V B.V. ("Partners in Equity"), Rosetta Capital VII, LP ("Rosetta Capital"), LSP HEF Sequana Holding B.V. ("EQT"), Marc Nolet's family through its investment company ("Nolet"), as well as certain other investors (together, the "Pre-Committing Investors"), pre-committed to submit subscription orders for new shares in the Offering for an aggregate amount of approximately EUR 8.5 million.

2,000,789 of the new shares (representing ca. 7.08% of the currently outstanding shares of the Company already admitted to listing and trading on the regulated market of Euronext Brussels) were immediately admitted to listing and trading on the regulated market of Euronext Brussels. The Pre-Committing Investors received new shares that were not immediately admitted to listing and trading upon their issuance. The Company has undertaken to apply to the regulated market of Euronext Brussels for the admission to trading and listing of those unlisted new shares, as soon as practicable after their issuance, which will be subject to the preparation of a listing prospectus.

The new shares issued have the same rights and benefits as, and rank pari passu in all respects, including as to entitlement to dividends and other distributions, with, the existing and outstanding shares of Sequana Medical at the moment of their issuance, and are entitled to dividends and other distributions in respect of which the relevant record date or due date falls on or after the date of issue of the new shares.

5 Circumstances that could impact the Company's further development

We refer to section 3 Principles of financial reporting and going concern.

6 Major Risks and Uncertainties

Sequana Medical is subject to numerous risks, in addition to other risks that are mentioned elsewhere in this report, such as:

Risks relating to global events

• The ongoing conflicts in Eastern Europe and the Middle East could have a destabilising impact on Sequana Medical's operations, both directly as a result of potential impacts on Sequana Medical's supply chain and indirectly due to the impact on global macroeconomic conditions.

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Risks relating to Sequana Medical's financial situation

• Sequana Medical has incurred operating losses, negative operating cash flows and an accumulated deficit since inception and may not be able to achieve or subsequently maintain profitability.
• Sequana Medical does not have sufficient working capital to meet its present requirements and cover the working capital needs for a period of at least 12 months as of the date of this Board Report and will require additional funds beyond this period in order to meet its capital and expenditure needs.
• Changes in currency exchange rates could have a material negative impact on the profitability of Sequana Medical.

Risks relating to clinical development

• Sequana Medical is required to conduct clinical studies for regulatory approvals and other purposes. Clinical studies require approvals, carry substantial risks and may be costly and time consuming, with uncertain results.
• If Sequana Medical experiences delays or difficulties in the recruitment of Investigators, obtaining necessary approvals from study sites or the enrolment of subjects in clinical studies, or study sites failure to adhere to trial protocols and good clinical practices (GCP) regulations or similar regulations its receipt of necessary regulatory approvals could be delayed or prevented.
• If Sequana Medical is unable to enter into a partnership or strategic alliance for the further development and commercialisation of the DSR® product, when relevant, it may incur additional costs and/or the development of these products might be delayed.
• Adverse events may result in delays to the completion of clinical studies regarding the alfapump® or the DSR® product or may prevent completion.

Legal and regulatory risks

• Seeking and obtaining regulatory approval for medical devices and drugs can be a long, expensive and uncertain process. Strict or changing regulatory regimes, government policies and legislation in any of Sequana Medical's target markets may delay, prohibit or reduce potential sales.
• Once pre-market approval ("PMA") of the alfapump has been granted by the US FDA, Sequana Medical intends to further develop a proprietary DSR product, which will require approval as a drug by the FDA and likely by regulatory authorities in other jurisdictions where Sequana Medical intends to market the DSR® product.
• Sequana Medical is and will be subject to certain post-approval regulatory obligations in relation to the alfapump® and, when relevant, the DSR® product.
• Sequana Medical's manufacturing facility and those of its third party suppliers are subject to significant regulations and approvals. If Sequana Medical or its third-party manufacturers or suppliers fail to comply with these regulations or maintain these approvals, Sequana Medical's business will be materially harmed.
• Sequana Medical is subject to the risk of product liability claims or claims of defectiveness, which could result in uninsured losses for Sequana Medical or recalls of the relevant product.
• Compliance with regulations and standards for quality systems for medical device and drug companies is complex, time consuming and costly. Sequana Medical may be found to be non-compliant, for example as a result of future changes in or interpretation of the regulations regarding quality systems in certain jurisdictions.
• The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about medical devices and drugs. If Sequana Medical is found to have made false or misleading claims about the

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alfapump® the DSR® product and/or any future products, or otherwise have violated promotion or advertising restrictions, it may become subject to significant fines and/or other liabilities.

• Sequana Medical is subject to healthcare fraud and abuse and other laws applicable to Sequana Medical's business activities. If Sequana Medical is unable to comply with such laws, it could face substantial penalties.
• Sequana Medical faces risks related to environmental matters and animal testing activities.

Risks relating to the Sequana Medical's dependence on third parties as well as retention and hiring of key personnel

• Sequana Medical depends on third party suppliers for services, components and pharmaceutical ingredients used in the production and operation of the alfapump® and, when relevant, DSR® product and some of those services, components and pharmaceutical ingredients are supplied from a single source. Disruption of the supply chain, unavailability of third party services required for the production of the alfapump® and, when relevant, DSR® product, component modifications or failure to achieve economies of scale could have a material adverse effect on Sequana Medical.
• Sequana Medical relies on third parties to conduct its clinical studies, perform data collection and analysis, and provide regulatory advice and other services that are crucial to its business.
• Sequana Medical relies on retaining its key personnel as well as the hiring of additional personnel to conduct its planned activities, including scale up of US commercial and manufacturing.

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Risks relating to commercialisation and reimbursement

• Sequana Medical's success is largely contingent on third party payment from government providers, healthcare insurance providers or other public or private sources and it could fail to achieve or maintain reimbursement levels sufficient to support commercialisation on a large scale.
• Sequana Medical's future financial performance will depend on the commercial acceptance of the alfapump®, when relevant, the DSR® product, and/or any future products in target markets.
• The success of the alfapump®, when relevant, the DSR® product, and/or any future products depends on their acceptance and adoption by physicians.
• Sequana Medical may not be able to manufacture or outsource manufacturing of the alfapump®, when relevant, the DSR® product and/or any future products in sufficient quantities, in a timely manner or at a cost that is economically attractive.
• If Sequana Medical is unable to expand its sales, marketing and distribution capabilities for the alfapump®, when relevant, the DSR® product, and/or any future products, whether it be with internal infrastructure or an arrangement with a commercial partner, Sequana Medical may not be successful in commercialising the alfapump®, DSR® product and/or any future products in its target markets, if and when they are approved.

Risks relating to intellectual property

• Any inability to fully protect and exploit Sequana Medical's intellectual property may adversely impact Sequana Medical's financial performance and prospects.
  Sequana Medical could become subject to intellectual property litigation that could be costly, result in the diversion of management's time and efforts, require Sequana Medical to pay damages, prevent Sequana Medical from marketing the alfapump®, when relevant, the DSR® product, and/or any future products, and/or reduce the margins for the alfapump®, when relevant, the DSR® product and/or any future products.
• Intellectual property rights do not necessarily address all potential threats to Sequana Medical's competitive advantage.

Risks relating to business activities

• Security breaches and other disruptions could compromise Sequana Medical's information and expose Sequana Medical to liability, which would cause Sequana Medical's business and reputation to suffer.
• Information technology forms a key support requirement within Sequana Medical's business. Any failure of Sequana Medical's IT systems could present a substantial risk to its business continuity.

Risks relating to surgical procedures

• Active implantable medical devices such as the alfapump® carry risks associated with the surgical procedure for implant or removal of the device, use of the device, or the therapy delivered by the device.

Risks relating to the market in which Sequana Medical operates

• Competition from medical device companies, pharmaceutical and biotechnology companies, and medical device subsidiaries of large healthcare and pharmaceutical companies is intense and expected to increase.

Risks relating to the Company's shares and the stock market

• An active market for the Company's shares may not be sustained.
• The market price of the Company's shares may fluctuate widely in response to various factors and the market price of the shares may be adversely affected by such factors. Future sales of substantial amounts of the

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Company's shares, or the perception that such sales could occur, could adversely affect the market value of the Company's shares.

• The Company will likely not be in a position to pay dividends in the near future and intends to retain all earnings.
• Certain significant shareholders of the Company may have different interests from the Company and may be able to control the Company, including the outcome of shareholder votes.
• Any future capital increases by the Company could have a negative impact on the price of the Company's shares and could dilute the interests of existing shareholders.

7 Research and Development

The following R&D programs have been undertaken in the course of 2023 with the objective to further develop the alfapump and the DSR® product:

North American alfapump liver program

• POSEIDON - one-yearfollow-up data from successful pivotal study in patients with recurrent or refractory ascites due to liver cirrhosis, confirms strong clinical profile of alfapump

• • Virtual elimination of needle paracentesis
  • Robust safety profile despite disease progression
  • Clinically meaningful improvement in patients' quality of life maintained
  • Survival probability of 70% at 12 and 18 months post-implant
• Patient preference study indicates that US patients have a strong preference for the alfapump vs large volume paracentesis2
• Matched interim analysis of patients from NACSELD3 registry indicates that alfapump safety profile is comparable to standard of care4
• PMA application submitted to the US FDA in December 2023

DSR heart failure program

• Successful completion of IND5-enablingpre-clinical and Phase 1 studies of second-generation DSR product (DSR 2.0)

• • Data from GLP6 studies in mice and sheep showed there was no difference in systemic and local toxic effects in animals treated repeatedly with DSR 2.0 compared to animals in the control group, concluding that DSR 2.0 had consistent safety with the standard peritoneal dialysis solution used in the control group
  • Data from the Phase 1 CHIHUAHUA study in stable peritoneal dialysis patients demonstrated that a single dose of DSR 2.0 was safe and well-tolerated and indicated a compelling dosing profile
• MOJAVE - all three patients from the non-randomized cohort in the US Phase 1/2a study of DSR 2.0 for treatment of congestive heart failure successfully treated with DSR 2.0, confirming the strong clinical outcomes seen in the RED DESERT and SAHARA proof-of-concept studies

2 Patient preference study using discrete-choice experiment methodology to elicit patient preference for attributes of an implantable pump as a novel interventional treatment for ascites, N=125 US patients with comparable patient profile to pivotal cohort in POSEIDON study

• NACSELD: North American Consortium for the Study of End stage Liver Disease

• Comparing outcomes in terms of death, hospitalization rate and liver transplant of POSEIDON pivotal cohort (6 months post-implant) to matched patient group from NACSELD registry with POSEIDON
  5 IND: Investigational New Drug
  6 GLP: Good Laboratory Practice

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