Report from the Supervisory Board

Dear shareholders,

In my role as Chairman of the Supervisory Board of BRAIN Biotech AG, I am pleased to report to you on the Supervisory Board’s activities during the 2023/24 financial year.

The Supervisory Board closely supported the Management Board over the course of the past financial year. Overall, BRAIN Biotech AG continued to develop successfully in the 2023/24 financial year despite the ongoing negative effects of the war in Ukraine as well as general economic and geopolitical challenges.

The company’s medium-term targets, which were first announced at the 2020 Capital Markets Day, remain unchanged: the aim is still to double revenue and achieve an EBITDA margin of 15 % (±5 PP). The company is consistently pursuing the expansion of its product business in the BioProducts segment through organic growth and value-enhancing acquisitions. The merger of the BioProducts business under Biocatalysts Ltd. was already completed at the start of the financial year under review. This step supports the realization of synergies and forms the basis for faster organic growth and a rising EBITDA margin. The company will continue to consider further value-enhancing acquisitions in the future, insofar as they can be realized within the financial framework of BRAIN Biotech AG.

By arranging a license monetization agreement with Royalty Pharma for future income from the license agreement with Pharvaris, the company has succeeded in leveraging a significant value contribution from the BioIncubator ahead of schedule. Moreover, shortly after the end of the reporting year, we succeeded in out-licensing G-dase E technology to Akribion Therapeutics GmbH for utilization in the pharmaceutical sector in return for a commitment to significant milestone payments and a share in future net revenues. The independent financing of Akribion Therapeutics GmbH paves the way for the further development of G-dase E technology for use in the pharmaceutical sector.

All other areas of utilization of the G-dase E technology and all further nucleases for gene editing remain with the company.

We are convinced that BRAIN Biotech AG enjoys a wide range of positive development and growth potentials with its dynamically growing products business, its successful market position in contract research, the expected income from the transaction with Royalty Pharma, the successful licensing of G-dase E technology and further product innovations from the BioIncubator.

For BRAIN Biotech AG as an industrial biotechnology company, sustainability has always played a central role – both as a basis of its business as well as in its corporate strategy and management. Accordingly, as part of its activities the Supervisory Board also deals with sustainability issues that are relevant to the company. The Supervisory Board continued to provide advice on the further development of such issues in the 2023/24 financial year and anchored the company’s ESG targets within the Management Board’s long-term compensation scheme.

The following report provides detailed information about the Supervisory Board’s work in the 2023/24 financial year, in other words, from 1 October 2023 until 30 September 2024. During this period, we fulfilled all of the tasks and duties incumbent upon us pursuant to the law, the company’s bylaws and the rules of business procedure for the Supervisory Board.

We continuously supervised the Management Board in its management of the business and consulted on all matters of importance for the company. In this context, the Supervisory Board was at all times convinced of the legality, propriety, appropriate nature and economic efficiency of the management of the company.

Collaboration between the Supervisory and Management boards

The Management Board informed the Supervisory Board regularly, promptly, and comprehensively in the form of detailed written and verbal reports on all matters relating to strategy, planning, business development, the risk position, risk trends and compliance that are of importance for the company and the Group, and consequently fully met its reporting duties to the Supervisory Board in the relevant period. The Supervisory Board and its committees were involved in all important business transactions and decisions of fundamental significance for the company. Collaboration with the Management Board was characterized in all aspects by responsible and purposeful action.

Personnel matters

No changes occurred to the composition of the Supervisory Board or within the Management Board during the reporting period.

Following the reporting year, Prof. Dr. Wiltrud Treffenfeldt stepped down from the Supervisory Board for personal reasons. I would like to thank her very much for her commitment to BRAIN Biotech AG and to wish her all the best and every success for her personal and professional future – including on behalf of my colleagues on the Supervisory Board and the Management Board.

The company supports new members of the Supervisory Board, especially by providing information and advice about the company, its structures, and processes, and offers support in the further training of Supervisory Board members as required, such as in the event of changes to the legislative framework.

Supervisory Board meetings

In the 2023/24 financial year, the Supervisory Board held a total of four face-to-face meetings and eleven video conferences. The committees held one face-to-face meeting and five video conferences. The Supervisory Board members always had sufficient time to engage critically with the information submitted by the Management Board, and to contribute its own views. As part of the meetings, the information was discussed in detail with the Management Board and examined as to its plausibility. The Supervisory Board also met without the Management Board. The Supervisory Board issued its approval of specific business transactions as required by law, the company’s bylaws, and the rules of business procedure for the Supervisory or Management boards.

The individualized list of meeting attendances presented below provides additional information about the meetings of the Supervisory Board and its committees.

Overview of Supervisory Board meetings in the 2023/24 financial year

^{1 Plenum, based on relevant meetings during the respective mandate period
2 Committees, based on relevant meetings during the respective mandate period}

Moreover, outside the scope of meetings, the Supervisory Board members, and especially myself as Supervisory Board Chairman and Committee Chairman as well as the respective chairs of the committees, were in regular communication both with each other as well as with the Management Board. This particularly entailed consultations on questions relating to the company’s strategy, planning, business development, risk position, risk management, key sustainability topics, corporate governance and compliance, as well as capital market communications. The Supervisory Board members were informed about important information at the latest as of the following plenary or committee meetings.

No conflicts of interest arose within the Supervisory Board during the reporting period.

Focus consultation areas in the plenary Supervisory Board

During the 2023/24 financial year, we on the plenary Supervisory Board concerned ourselves especially with the following topics:

• Annual financial statements for the 2022/23 financial year
• The statement of conformity and the corporate governance declaration
• Reaching the corporate targets for the 2022/23 financial year relating to developing the BioIndustrial, BioScience, and BioIncubator operating segments
• Risk management and internal controlling systems
• Recommendation for the election of the auditor at the 2024 AGM
• Further development of the company’s strategy
• Planning and implementation of the Annual General Meeting on 12 March 2024
• Merger of AnalytiCon Discovery GmbH with BRAIN Biotech AG
• Assignment to Royalty Pharma of license income from the license agreement with Pharvaris
• Overseeing cost optimization measures
• ESG report and sustainability topics
• Evaluation of current and future research projects
• Strategic alliances and planned partnerships
• Budget planning for the 2024/25 financial year and long-term planning for the next five years
• Development of genome editing activities including exclusive licensing for the pharmaceutical sector
• Personnel changes at subsidiaries
• Share price performance and capital market communications

The Supervisory Board in all cases passed specific resolutions following intensive review and discussion.

In addition, the following topics and resolutions were submitted:

On 14 December 2023, the Supervisory Board approved the financial statements documents for the 2022/23 financial year and concurred with the Management Board’s proposal relating to the application of unappropriated profit, after having previously clarified and discussed in depth the financial statements at its face-to-face meetings.

Committees

The Supervisory Board has formed a total of three committees to efficiently perform its work: an Audit Committee, a Nomination Committee and a Personnel Committee. Based on the respective rules of business procedure for the committees, these committees prepare resolutions for the Supervisory Board, as well as topics to be handled by the plenary board. The Supervisory Board’s decision-making powers are also transferred to committees where legally permissible. In all cases, the committee chairs report on the committees’ work at the subsequent plenary meeting.

Audit Committee

The Audit Committee concerns itself especially with the supervising of financial accounting, the financial accounting process, the efficacy of the internal control system, the risk management system, the internal audit system, the audit of the financial statements, sustainability topics as well as compliance. The Audit Committee submits a substantiated recommendation for the election of the auditor to the Supervisory Board, which comprises at least two candidates if the audit mandate is to be put out to tender. The Audit Committee supervises the auditor’s independence and concerns itself with services to be rendered additionally by the auditor, the award of the audit mandate to the auditor, the setting of focus audit areas, as well as arranging the auditor’s fee. The Audit Committee regularly liaises with the auditor during the preparation and execution of the audit without the Management Board’s involvement.

Pursuant to the German Stock Corporation Act (Sections 107 (4), 100 (5) AktG), the audit committee must include at least one supervisory board member with expertise in the financial accounting area. The Audit Committee Chair, Christine Uekert, meets the statutory conditions pursuant to the German Stock Corporation Act (Sections 107 (4), 100 (5) AktG) and also possesses specialist knowledge in the area of financial auditing. In addition, she has many years of experience in the areas of finance and controlling and has held management positions, including at listed companies. A further member of the Audit Committee must also possess expertise in the area of auditing. Supervisory Board Chairman Dr. Michael Majerus, who is also a member of the Audit Committee, possesses expertise in the auditing area as a former head of accounting and CFO, including at three listed companies. His main areas of expertise are controlling and risk management, corporate finance, and capital markets, as well as financial accounting. Moreover, he commands a broad spectrum of knowledge in compliance topics as well as in the investor relations area. In addition to the Audit Committee Chair and the Supervisory Board Chairman, the Audit Committee includes Supervisory Board member Dr. Florian Schnabel.

The Audit Committee will decide concerning the approval of non-audit services by the auditing company appointed on 12 March 2024, Baker Tilly GmbH & Co. KG Wirtschaftsprüfungsgesellschaft, Düsseldorf (“Baker Tilly”), in relation to the maintenance of independence for the audit mandate.

In the 2023/24 financial year, the Audit Committee dealt, in particular, with the recommendation to the Supervisory Board concerning the election of the auditor.

The Audit Committee held one face-to-face meeting and four video conferences in the 2023/24 financial year.

Nomination Committee

The Nomination Committee has the task of seeking suitable candidates for the Supervisory Board. As a consequence, the committee’s functions include the identification, evaluation, and nomination of individuals qualified for this office. This includes guaranteeing diversity, expertise, and independence on the Supervisory Board in order to ensure that its work is effective.

The Nomination Committee held no video conferences and no face-to-face meetings in the 2023/24 financial year. The committee is chaired by Dr. Anna C. Eichhorn and includes Supervisory Board Chairman Dr. Michael Majerus.

Personnel Committee

The Personnel Committee prepares personnel decisions for the Supervisory Board, especially the selection, appointment and recall from office of Management Board members, the conclusion and amendment of service contracts and pension arrangements, the compensation scheme including its implementation as part of the service contracts, target setting for variable compensation, setting and reviewing appropriate total compensation for each Management Board member, and approving the annual compensation report. In addition, the Personnel Committee passes resolutions concerning the representation of the company vis-à-vis Management Board members pursuant to Section 112 AktG, the approval of Management Board members’ other business activities pursuant to Section 88 AktG (prohibition of competition), and other ancillary activities, especially assuming supervisory board posts or positions on comparable controlling bodies outside the BRAIN Biotech Group. The Personnel Committee is chaired by Dr. Michael Majerus. Besides the Personnel Committee Chair, Dr. Michael Majerus, the committee also includes the Supervisory Board members Stephen Catling and Prof. Dr. Wiltrud Treffenfeldt.

The Personnel Committee held one video conference during the 2023/24 financial year.

Corporate governance and the statement of conformity

At its meetings, the Supervisory Board consulted on several occasions concerning the company’s corporate governance, including requirements deriving from the German Corporate Governance Code (DCGK).

The Supervisory Board approved the current statement of conformity in December 2024, after the end of the 2023/24 financial year. The Code’s recommendations were, and are, complied with, apart from the exceptions explained in the statement of conformity. The full text of the statement of conformity as well as the corporate governance declaration by the Management and Supervisory boards of BRAIN Biotech AG Zwingenberg are published on the company’s website at www.brain-biotech-group.com/en/investors/corporate-governance/.

Regarding the provisions of Section 111 (5) AktG, the Supervisory Board has set itself the target of taking women into appropriate consideration in its future composition.

At its meeting on 23 September 2016, the Supervisory Board of BRAIN Biotech AG resolved that the Supervisory Board should include one woman, corresponding to a 17 % ratio. The implementation deadline for this was set at 30 June 2017. This objective was implemented on 9 March 2017 when Dr. Anna C. Eichhorn was elected to the Supervisory Board of BRAIN Biotech AG. The retention of this objective for the period until 30 June 2022 was confirmed at the meeting on 28 September 2017.

With the re-election of Dr. Anna C. Eichhorn and the election of Prof. Dr. Wiltrud Treffenfeldt, the set ratio was exceeded on 10 March 2021.

Also on 28 September 2017, the Supervisory Board passed a resolution to leave the target ratio for women on the Management Board of BRAIN Biotech AG unchanged at 0 % until 30 June 2022.

On 15 December 2022, the Supervisory Board raised the target for the composition of the Supervisory Board to 33 %, with an implementation deadline of 30 June 2027. With the election of Christine Uekert at the Annual General Meeting on 8 March 2023, the ratio in the 2023/24 financial year stands at 50.0 %.

On 15 December 2022, the target for the composition of the Management Board was retained at 0 %, with an implementation deadline of 30 June 2027. This target was maintained on the basis that the medium to long-term planning for the Management Board assumes that the Management Board members currently in office are each scheduled for an extension when the ratio is set. Setting a different ratio would stand at variance with this medium- to long-term planning. In the event of an increase in the number of members of the Management Board, this objective would require review, as would be the case if the Management Board members in office in the 2022/23 financial year did not renew their service contracts.

Audit of the separate and consolidated annual financial statements

Auditor

The AGM on 12 March 2024 appointed Baker Tilly GmbH &Co. KG Wirtschaftsprüfungsgesellschaft, Düsseldorf (“Baker Tilly”), as auditors for the financial year ending 30 September 2024. This engagement also includes engaging the auditor for the consolidated financial statements for the financial year ending 30 September 2024. Mr. Andreas Weissinger, Diplom-Kaufmann, Wirtschaftsprüfer, has signed as the auditor responsible for the audit since the 2021/22 financial year, and Ms. Marina Stumpp, M. Sc., Wirtschaftsprüferin, has signed as the auditor responsible for the audit since the 2022/23 financial year. Baker Tilly audited the separate annual financial statements for the financial year from 1 October 2023 to 30 September 2024, prepared by the Management Board in accordance with the financial accounting regulations of the German Commercial Code (HGB), the management report of BRAIN Biotech AG, and the compensation report in accordance with Section 162 AktG. The auditor Baker Tilly awarded an unqualified audit certificate. Pursuant to Section 315e HGB, the consolidated financial statements of BRAIN Biotech AG for the financial year from 1 October 2023 to 30 September 2024 and the Group management report were prepared on the basis of International Financial Reporting Standards (IFRS), as applicable in the European Union. Both the consolidated financial statements and the Group management report also received unqualified audit opinions. The compensation report received an unqualified audit opinion for its formal audit. Moreover, the auditor found that the Management Board has established an appropriate information and supervision system that is suitable in its design and utilization to identify developments at an early juncture that jeopardize the company as a going concern.

Review by the Supervisory Board

The documents for the financial statements and the audit reports were discussed extensively at the Audit Committee meetings on 17 December 2024 and on 7 January 2025 and at the Supervisory Board meeting on 14 January 2025. The auditors Baker Tilly reported on the main findings of their audit. It also provided information about its findings on internal control and risk management in relation to the financial accounting process and was available to respond to additional queries as well as to provide further information. The review of the separate and consolidated financial statements by the Audit Committee was reported upon in detail by the Supervisory Board Chairman at the plenary meeting. Following in-depth review and discussion of the separate financial statements, the consolidated financial statements and the management report, the Supervisory Board raised no objections against the submitted documents. The Supervisory Board consequently concurred with the Audit Committee’s recommendation and approved the result of the audit by the auditor. By way of resolution on 14 January 2025, the Supervisory Board then approved the separate and consolidated annual financial statements of BRAIN Biotech AG for the 2023/24 financial year. The separate annual financial statements of BRAIN AG have been adopted as a consequence.

Report on the review of the dependent companies report pursuant to Section 314 AktG

Furthermore, the Supervisory Board reviewed the report prepared by the Management Board on relationships with affiliates pursuant to Section 312 (1) AktG for the period of dependency between 1 October 2023 and 30 September 2024 (“dependent companies report”) and discussed it extensively with the Management Board as well as with the auditor which additionally audits the dependent companies report.

The auditor reported in detail on the main points of its audit. In this context, the Supervisory Board concerned itself in depth with the report by the auditor on the audit of the dependent companies report. The discussion led to no grounds for reservations.

The auditor issued the following audit opinion relating to the dependent companies report:

“In accordance with the audit and appraisal incumbent upon us, we confirm that

• the actual disclosures presented in the report are correct,
• for the legal transactions listed in the report, the consideration rendered by the company was not inappropriately high,
• in the measures listed in the report no circumstances exist that indicate a significantly different assessment than that of the Management Board.”

Following the conclusive result of the extensive review of the dependent companies report by the Supervisory Board, the Supervisory Board states that no reservations are to be expressed (Section 314 (3) AktG) against the Management Board statement which follows the report concerning relationships with affiliates (concluding statement pursuant to Section 312 (3) Clause 1 AktG).

Thank you from the Supervisory Board

Both personally as well as on behalf of the Supervisory Board, we would like to thank the members of the Management Board as well as all employees of the BRAIN Biotech Group for their further commitment and outstanding personal contribution during the 2023/24 financial year. We look forward to working with you as we continue on our path of profitable growth.

Zwingenberg, 14 January 2025

BRAIN Biotech AG

The Supervisory Board

Dr. Michael Majerus
Supervisory Board Chairman