Filing by the Company of notification to NCBiR regarding potential irregularities in settlement of eligible costs in EU projects

Current Report No. 5/2022

Date of preparation: 26 January 2022

Title: Filing by the Company of notification to NCBiR regarding potential irregularities in settlement of eligible costs in EU projects

Legal basis: Article 17.1 MAR

The Management Board of Captor Therapeutics S.A. with its seat in Wroclaw, Poland, (“Company”) informs that it has become aware that there is a risk of potential irregularities in the settlement of eligible costs incurred by the Company, in the implementation of EU projects, under agreements concluded by the Company with the National Centre for Research and Development (“NCBiR”, “Projects”). The above potential past irregularities relate to historical activities of the Company and do not impact the results of the Company’s research and development activities.

Taking into account that the Company became aware of proceedings conducted by state authorities with regard to potential irregularities in contract award procedures as part of EU projects, the Company has engaged reputable third-party financial and legal advisors to carry out an audit (“Audit”). In order to protect its legal interests, the Company will consider applying for the status of an aggrieved party in this matter and if the Audit confirms that such irregularities took place, the Company will undertake appropriate steps in order to assert its rights.

At this preliminary stage of the Audit, the detailed extent of the potential irregularities has not yet been determined. However, the findings of the Audit to date indicate, that given the potential irregularities, it cannot be excluded that there is a risk that involves accounting for the eligible costs, between the Company and NCBiR, incurred in the implementation of the Projects. In the light of the above, the Company, in compliance with the provisions of the agreements for implementation of the Projects it has concluded, decided to notify NCBiR of the above potential irregularities. The Company will seek to work out a procedure with NCBiR to be followed in the event that the irregularities are confirmed as part of the Audit. In the opinion of the Management Board, this should enable the Projects to continue and help eliminate the gravest risk of having to return part of the subsidy granted to the Company (however, at the current preliminary stage of the Audit, this risk cannot be completely excluded).

For the avoidance of any doubt, the Management Board points out that the potential irregularities do not involve the merits or quality of the Projects under implementation, the progress made or the details disclosed in periodic reports and current reports no. 3/2022, 27/2021, in which the Company informed about the progress of research and development efforts undertaken under the Projects, remain valid.

The Company will inform about further steps in this matter in its relevant current reports, in accordance with the applicable legal regulations.