Polarean Imaging : Interim Results for the six months ended 30 June 2023

7 September 2023

Polarean Imaging Plc

("Polarean" or the "Company")

Half-year Report

Polarean Imaging plc (AIM: POLX), a commercial-stage medical device leader in advanced magnetic resonance imaging ("MRI") of the lungs, announces its unaudited interim results for the six months ended 30 June 2023.

Highlights

• Secured the first order for a xenon gas blend cylinder for the production of XENOVIEW™ (xenon Xe 129 hyperpolarised) from Cincinnati Children's Hospital Medical Center leading to the first clinical scan in North
  America, representing a key milestone in the execution of the commercial plan
• Entered into a collaboration agreement with multinational medical imaging technology company Philips to advance the field of hyperpolarised Xenon MRI
• Submitted a post-marketing commitment plan to the US Food and Drug Administration ("FDA") to seek approval prior to 30 June 2024 to expand the minimum current age of XENOVIEW MRI in children from twelve to six years
• Granted New Chemical Entity designation for XENOVIEW by the FDA, with a five-year market exclusivity period
• Selected as one of the featured companies at the American Thoracic Society's 2023 Respiratory Innovation Summit
• Appointed Christopher von Jako, Ph.D. as new Chief Executive Officer and Board Director
• Net cash of US$9.9m as of 30 June 2023, which based on strategic decisions, is now expected to fund the Company until the end of Q2 2024

Post-period end

• Upgraded the University of Missouri Health Care polariser system to a clinical configuration accompanied by the sale of an initial xenon gas blend cylinder for the production of XENOVIEW
• Received 510(k) clearance from the FDA for the Company's specialised MRI chest coil to now include Philips 3.0T MRI scanners for the visualisation of Xenon 129 nuclei
• New reimbursement C-code (C9791) from the US Centers for Medicare & Medicaid Services ("CMS") for the XENOVIEW MRI technology which corresponds to a payment range of between US$1,201 to US$1,300
• Requested and granted a formal Type B meeting in October 2023 with the FDA's Center for Drug Evaluation and Research division to seek guidance on the clinical plan related to the XENOVIEW indication expansion, which includes both regional visualisation and quantitative assessment of gas exchange and microvascular haemodynamics for both pulmonary and cardio-pulmonary diseases

Christopher von Jako, Ph.D., CEO of Polarean, commented: "Today marks 80 days since I joined the dynamic Polarean team, and I am very excited about our life-altering imaging platform technology and how we can help individuals suffering from lung disease. Over the past two months, we began revisiting all our strategic business initiatives with the intent of creating increased focus on key business drivers. As a result, we have identified five specific growth initiatives, which include driving utilisation at our newly established clinical sites, expanding to our highest priority targeted clinical sites, developing key industry partnerships, establishing reimbursement coverage and payment, and expanding our current FDA indication to include the even higher value interstitial lung and pulmonary vascular diseases.

"I am also delighted that we received a final determination from CMS that our new C-code is linked to a new technology APC 1551, which corresponds to a payment range of between US$1,201 to US$1,300. This reimbursement code should be helpful as we market XENOVIEW for the evaluation of ventilation, which is highly useful in obstructive lung diseases like asthma, COPD, and cystic fibrosis.

"Our new focus will also result in reduced operating expenses going forward which allows us to extend our cash runway until the end of Q2 2024. All our initiatives are guided by our belief and desire to revolutionise pulmonary and cardio- pulmonary medicine."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014, as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.

Enquiries:
Polarean Imaging plc	www.polarean.com / www.polarean-ir.com
Christopher von Jako, Ph.D, Chief Executive Officer		Via Walbrook PR
Charles Osborne, Chief Financial Officer
Stifel Nicolaus Europe Limited (NOMAD and Sole Corporate Broker)	[phone]
Nicholas Moore / Samira Essebiyea / Kate Hanshaw (Healthcare Investment Banking)
Nick Adams / Nick Harland (Corporate Broking)
Walbrook PR	Tel: [phone] or [e-mail]
Anna Dunphy / Phillip Marriage	Mob: [phone]
About Polarean (www.polarean.com)

The Company and its wholly owned subsidiary, Polarean, Inc. (together the "Group") are revenue-generating, medical imaging technology companies operating in the high-resolution medical imaging space. Polarean aspires to revolutionise pulmonary medicine by bringing the power and safety of MRI to the respiratory healthcare community in need of new solutions to evaluate lung ventilation, diagnose disease, characterise disease progression, and monitor response to treatment. By researching, developing, and commercialising novel imaging solutions with a non-invasive and radiation-free functional imaging platform. Polarean's vision is to help address the global unmet medical needs of more than 500 million patients worldwide suffering with chronic respiratory disease. Polarean is a leader in the field of hyperpolarisation science and has successfully developed the first and only hyperpolarised MRI contrast agent to be approved in the United States. The Company also commercialises systems (such as the HPX hyperpolarisation system), accessories (such as Xe-specific chest coils and phantoms), and FDA-clearedpost-processing software (to support ventilation defect analysis), to support fully integrated modern respiratory imaging operations.

XENOVIEW IMPORTANT SAFETY INFORMATION

Indication

XENOVIEW™, prepared from the Xenon Xe 129 Gas Blend, is a hyperpolarized contrast agent indicated for use with magnetic resonance imaging (MRI) for evaluation of lung ventilation in adults and pediatric patients aged 12 years and older.

Limitations of Use

XENOVIEW has not been evaluated for use with lung perfusion imaging.

CONTRAINDICATIONS

None.

Warnings and Precautions

Risk of Decreased Image Quality from Supplemental Oxygen: Supplemental oxygen administered simultaneously with XENOVIEW inhalation can cause degradation of image quality. For patients on supplemental oxygen, withhold oxygen inhalation for two breaths prior to XENOVIEW inhalation, and resume oxygen inhalation immediately following the imaging breath hold.

Risk of Transient Hypoxia: Inhalation of an anoxic gas such as XENOVIEW may cause transient hypoxemia in susceptible patients. Monitor all patients for oxygen desaturation and symptoms of hypoxemia and treat as clinically indicated.

Adverse Reactions

Adverse Reactions in Adult Patients: The adverse reactions (> one patient) in efficacy trials were oropharyngeal pain,

headache, and dizziness. Adverse Reactions in Pediatric and Adolescent Patients: In published literature in pediatric

patients aged 6 to 18, transient adverse reactions were reported: blood oxygen desaturation, heart rate elevation, numbness, tingling, dizziness, and euphoria. In at least one published study of pediatric patients aged 6 to 18 years, transient decrease in SpO2% and transient increase in heart rate was reported following hyperpolarized xenon Xe 129 administration. XENOVIEW is not approved for use in pediatric patients less than 12 years of age.

Please see full prescribing information at www.xenoview.net

CEO Statement

Introduction

I am excited to have recently joined Polarean, and was initially attracted to the Company's promising functional imaging technology, the large clinical unmet need that it addresses, and the business model. I am confident that our technology will be clinically useful for the pulmonary diseases covered by the current FDA approval in ventilation, including asthma, COPD, and cystic fibrosis. In addition, it has even greater potential as we expand into the high- value areas of interstitial lung and pulmonary vascular disease. The XENOVIEW MRI technology has the potential to transform the visualisation and measurement of pulmonary and cardio-pulmonary disease.

I have spent the last two months working with the team to understand the technology and the commercial opportunities. I am very encouraged by the scientific and medical community's appreciation for the large unmet medical need in the pulmonary functional imaging space, and we are in the process of refining our commercialisation strategy to deploy XENOVIEW. My long tenure in the medical device industry, particularly focused on large capital products, will be very valuable as we look to ramp up commercial sales.

Results overview

Polarean received FDA approval in December 2022, which enabled the Company to start selling its products to the clinical market. As per US regulations, we could not start to market the system and services until we received FDA approval. Our efforts during the first half of 2023 were mainly focused on preparing our legacy research sites for the conversion to clinical scanning, obtaining the required state drug licenses, and beginning the commercial launch process. Whilst we have been encouraged by the successful clinical conversion of two of our prominent research sites, and the highly positive response from physicians in both existing and prospective new sites, the process has gone more slowly than the Company had originally hoped. The slower-than-expected early commercial sales are primarily due to the hospital contracting process, which we continue to actively address. From my perspective, the early results from this type of first-in-class medical imaging technology launch are not different than in my past experiences.

Group revenues for the first half were US$0.1m (H1 2022: US$0.8m), based on sales of xenon gas blend cylinders and parts and service for polarisers installed at our customer locations. Operating expenses for H1 2023 (US$7.7m) increased from H1 2022 (US$7.0m), as we incurred commercialisation costs to launch our products. In H1 2023, the Company recognised finance income of US$0.2m (H1 2022: US$nil), due to interest earned on our bank deposits. Other gains / (losses) of US$0.1m (H1 2022: US$(0.2m)) were due to the strengthening of the British pound during the 2023 period versus a weakening of the British pound during the 2022 period. The overall loss before tax increased to US$7.4m in H1 2023 (H1 2022: US$6.9m), due to higher operating expenses, partially offset by the interest income and foreign exchange gain described above. As of 30 June 2022, the Company held US$9.9m in net cash or cash equivalents.

Commercialisation plans

We are in the market development phase of our novel functional imaging technology. In order for hospital administrators to embrace our technology, we need to focus on the most compelling clinical use cases that lead to meaningful outcomes for patients. We are working with our experienced research user-base to continue generating case studies, while also equipping them to utilise the technology in their clinical practice setting. In addition, we are in conversations with our highest-priority early adopter sites for new placements, and exploring ways for them to acquire polariser systems that they can use for both research and clinical uses of our technology. The recent reimbursement code issuance should aid the market adoption of the polariser systems.

An important part of our strategy will be to seek industry partners, which includes pharmaceutical and medical device companies as well as specific disease advocacy organisations to expand the uses of our technology and

provide potential sources of resources and funding. In June 2023, we announced that we had entered into a collaboration with Philips, a global leader in health technology. The collaboration was featured at the 2023 International Society for Magnetic Resonance in Medicine Annual Meeting in Toronto, and facilitates the sharing of technical data and marketing materials to jointly advance the field of Xenon MRI into the clinical realm. The collaboration was shortly followed by Polarean receiving an additional 510(k) from the FDA for our specialised MRI chest coil to now include Philips 3.0T MRI scanners. This was an important milestone, not only highlighting the value that Philips sees in the XENOVIEW MRI technology in furthering pulmonary imaging but also in growing the number of healthcare systems that are able to utilise XENOVIEW MRI.

Outlook

As I approach my three-month mark as CEO, I strongly believe that the novel Polarean imaging platform holds the potential to bring significant benefits to both patients and clinicians. The technology will revolutionise the landscape of diagnosis and longitudinal monitoring in the fields of pulmonary and cardio-pulmonary medicine. The recent milestone approval of a new C-code, which is linked with a new technology APC code featuring a payment range of US$1,201 to US$1,300, represents another significant achievement by our Company. This accomplishment establishes a solid foundation for our reimbursement endeavors within our two targeted fields.

In my 30-year career in high-tech medical devices, I have seen the early days of several minimally invasive disruptive technologies that have since changed the course of medicine in their respective fields. Each experience has taught me the importance of focus and cash efficiency while continuing to build value. In my experience of selling large capital equipment, I have found that early sales are often irregular and difficult to forecast whilst the commercialisation process is still evolving. Therefore, while I am confident in the demand for our product and its ability to gain commercial traction, we feel it is sensible to withdraw the previously stated commercial targets at this time. We will, however, be providing renewed guidance at a suitable time.

We are focusing our efforts and expenditures on activities that we believe can deliver important milestones within our current cash runway. These activities have led to the identification of specific growth initiatives, which include:

1. Driving utilisation at our newly established clinical sites;
2. Expanding to our highest-priority targeted clinical sites;
3. Establishing reimbursement coverage and payment;
4. Developing key industry partnerships; and
5. Planning for the expansion of our current FDA labeling to include visualisation and measurement of gas exchange

The Company is funded until the end of Q2 2024, and the continued progress on the above initiatives will help support future financing at the appropriate time.

I look forward to leading Polarean through this exciting journey and developing this large potential market for our employees and investors. Together, we are committed to successfully increasing access to the XENOVIEW MRI technology because so many people are counting on this technology to improve patients' lives.

Christopher von Jako, Ph.D.

Chief Executive Officer

7 September 2023