Sequana Medical N : Report of the Board of Directors

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SEQUANA MEDICAL

Limited Liability Company

Registered office: Kortrijksesteenweg 1112 (box 102), 9051 Ghent, Belgium

VAT BE 0707.821.866 Register of Legal Entities Ghent, section Ghent

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REPORT OF THE BOARD OF DIRECTORS

IN ACCORDANCE WITH ARTICLES 7:180, 7:191 AND 7:193

OF THE BELGIAN COMPANIES AND ASSOCIATIONS CODE

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1. INTRODUCTION

On 19 July 2022, Kreos Capital VII (UK) Limited granted a secured loan facility to Sequana Medical NV (the "Company") in the amount of up to EUR 10.0 million (which was fully drawn on 5 October 2022) (the "Loan Facility") pursuant to a loan agreement entered into on 19 July 2022 between the Company and Kreos Capital VII (UK) Limited (the "Kreos Loan Agreement").

In consideration of the willingness of Kreos Capital VII (UK) Limited to provide the Loan Facility within the framework of the Kreos Loan Agreement, the Company entered into a subscription rights agreement on 19 July 2022 with Kreos Capital VII Aggregator SCSp ("Kreos") pursuant to which it agreed to propose to the Company's extraordinary general meeting of shareholders (the "EGM") to issue a total of 875,000 new subscription rights for new shares in the Company (the "Kreos Subscription Rights") to the benefit of Kreos (and its permitted successors and assigns).

The aforementioned 875,000 Kreos Subscription Rights consist of (a) 650,000 Kreos Subscription Rights (giving the right to subscribe to new shares of the Company for an aggregate maximum issue price of EUR 650,000.00) exercisable at an exercise price per underlying new share of EUR 5.31, entitling Kreos to a total of 122,410 new shares (the "Initial Kreos Subscription Rights"), and (b) 225,000 Kreos Subscription Rights (giving the right to subscribe to new shares of the Company for an aggregate maximum issue price of EUR 225,000.00) exercisable at an exercise price per underlying new share of EUR 5.77, entitling Kreos to a total of 38,994 new shares (the "Subsequent Kreos Subscription Rights").

In this context, the board of directors will submit to the EGM the proposal to issue the 875,000 Kreos Subscription Rights, at the terms and conditions as further described below in this report, and to dis-apply, in the interest of the Company, the preferential subscription right of the existing shareholders of the Company and, as far as needed, of the holders of outstanding subscription rights (share options), to the benefit of Kreos (and its permitted successors and assigns) (the "Transaction").

Shareholders should note that the Transaction is complex, that the Kreos Subscription Rights are complex instruments, and that Kreos may benefit from a discount when exercising its Kreos Subscription Rights and subscribing for new shares in the Company, as described below.

This report has been prepared by the board of directors of the Company in accordance with Articles 7:180, 7:191 and 7:193 of the Belgian Companies and Associations Code (as defined below) for the purpose of the proposed issuance of the Kreos Subscription Rights, with cancellation of the preferential subscription right of the Company's existing shareholders, and

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in so far as required, of the Company's existing holders of subscription rights (share options), to the benefit of Kreos (and its permitted successors and assigns).

In accordance with Article 7:180 of the Belgian Companies and Associations Code, the board of directors provides in this report a justification of the proposed Transaction, with notably a justification of the proposed exercise prices of the Kreos Subscription Rights and a description of the consequences of the proposed Transaction for the financial and shareholder rights of the shareholders of the Company.

In accordance with Article 7:191 of the Belgian Companies and Associations Code, the board of directors also provides in this report a justification of the proposed dis-application of the statutory preferential subscription right of the existing shareholders and, in so far as required, of the existing holders of subscription rights (share options) to the benefit of Kreos (and its permitted successors and assigns), and a description of the consequences thereof for the financial and shareholder rights of the shareholders.

In accordance with Article 7:193 of the Belgian Companies and Associations Code, the justification of the proposed Transaction and the proposed exercise prices of the Kreos Subscription Rights takes into account in particular the financial situation of the Company, the identity of Kreos (and its affiliates), and the nature and importance of the contribution of Kreos (and its affiliates).

This report must be read together with the report prepared in accordance with Articles 7:180, 7:191 and 7:193 of the Belgian Companies and Associations Code by the Company's statutory auditor, PwC Bedrijfsrevisoren BV, a private company with limited liability organised and existing under the laws of Belgium, with registered office at Culliganlaan 5, 1831 Diegem, Belgium, represented by Mr. Peter D'hondt, auditor.

This report has been prepared in accordance with the Belgian Companies and Associations Code of 23 March 2019 (as amended) (the "Belgian Companies and Associations Code").

2. CONTEXT OF THE TRANSACTION

1. General
   On 19 July 2022, the Company entered into the Kreos Loan Agreement with Kreos Capital VII (UK) Limited, as well as into the related subscription rights agreement with Kreos Capital VII Aggregator SCSp.
   Kreos Capital VII (UK) Limited is an affiliate of Kreos Capital. Kreos Capital is a Luxembourg based private lender and is a leading growth debt provider in Europe and Israel, backing high- growth companies through every stage of their life cycle. Kreos Capital targets investments in all areas of the Technology and Healthcare sectors and, to date, has committed in excess of EUR 4 billion in more than 700 portfolio company transactions, across 17 countries.
   Kreos Capital VII (UK) Limited (and its affiliates) are not related to the Company and its management (notwithstanding the board observer rights set out below), neither at the date of this report, nor when it granted the Loan Facility and entered into the Kreos Loan Agreement (and related subscription rights agreement).
2. Summary of the main features of the Kreos Loan Agreement
   The main terms of the Kreos Loan Agreement can, for information purposes, be summarized as follows:
3. 1. Term: The Loan Facility, which was available for drawdown until 30 September 2022 in minimum amounts of EUR 1.5 million, matures on 30 September 2025. During the

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initial period of six months from the first drawdown (extendable by mutual agreement), the Company shall only pay interest, with the loans amortising thereafter in equal monthly instalments of principal and interest until maturity. On 5 October 2022, the Company made a first drawdown in the amount of EUR 10.0 million. The Kreos Loan Agreement allows the Company to request on an uncommitted basis additional loans of up to EUR 10.0 million at a later date.

1. Use of Proceeds: Proceeds from the Loan Facility are used by the Company to finance general working capital requirements.
2. Interest: The loans under the Loan Facility accrue interest at a fixed rate of 9.75% per annum.
3. Fees: Certain fees will be payable to Kreos Capital VII (UK) Limited, principally consisting of (i) a transaction fee equal to 1.25% of the total Loan Facility amount, and (ii) an end of loan payment, payable upon final repayment of the loan, corresponding to 1.25% of the amount drawn.
4. Board observer: Kreos Capital VII (UK) Limited is entitled to appoint a board observer to attend meetings of the Company's board of directors in a non-voting capacity. In December 2022, Maurizio Petitbon has been appointed as board observer.
5. Collateral: The Loan Facility is secured by the Company's bank accounts, receivables and movable assets, including IP rights.
6. Change of control: The Kreos Loan Agreement contains a change of control clause and requires such clause to be approved by the general shareholders' meeting of the Company (at the latest by the date of the annual shareholders' meeting of the Company to be held in 2023). The aforementioned change of control clause will be submitted for approval to the EGM.
7. Contractual restrictions: The Kreos Loan Agreement does not contain financial covenants, but does contain other customary restrictions on the business of the Company and its subsidiaries (such as limitations on future disposals, limitations on the incurrence of financial indebtedness, security and acquisitions, subject to certain carve- outs and limitations) and on the ability of the Company to distribute dividends as long as loans are outstanding.
8. Consideration: The Company and Kreos Capital VII (UK) Limited agreed that the issuance of the Kreos Subscription Rights to the benefit of Kreos (and its permitted successors and assigns) was a condition for Kreos Capital VII (UK) Limited, an affiliate of Kreos, for providing the Loan Facility on 19 July 2022.

The terms of the Kreos Loan Agreement (of which the proposed issuance of the Kreos Subscription Rights forms a part) have been determined during at arm's length negotiations between the Company and Kreos Capital VII (UK) Limited. The negotiation process was conducted in an objective and independent manner. Kreos Capital VII (UK) Limited (including any of its affiliates) is a third party to the Company and is not related to the Company and its management.

3. PROPOSED TRANSACTION

3.1. Terms and conditions of the Kreos Subscription Rights

In accordance with what was agreed between the Company and Kreos (in consideration of the willingness of Kreos Capital VII (UK) Limited to provide the Loan Facility), the board of

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directors of the Company proposes to the EGM to approve the issuance of the Kreos Subscription Rights, and to dis-apply, in the interest of the Company, the preferential subscription right of the existing shareholders of the Company and, as far as needed, of the holders of outstanding subscription rights of the Company, to the benefit of Kreos (and its permitted successors and assigns).

The proposed terms and conditions of the Kreos Subscription Rights (the "Conditions") are set out in Annex Ato this report. The main Conditions can, for information purposes, be summarised as follows:

1. Issuer: The Company (Sequana Medical NV).
2. Number of subscription rights issued: An aggregate number of 875,000 Kreos Subscription Rights, consisting of the 650,000 Initial Kreos Subscription Rights, and the 225,000 Subsequent Kreos Subscription Rights.
3. Subscription right for ordinary shares: The Kreos Subscription Rights give Kreos the right to subscribe for the following number of new ordinary shares of the Company:
4. 1. The 650,000 Initial Kreos Subscription Rights (giving the right to subscribe to new shares of the Company for an aggregate maximum issue price of EUR 650,000.00 at an exercise price per underlying share of EUR 5.31) entitle Kreos to 122,410 new shares of the Company;
   2. The 225,000 Subsequent Kreos Subscription Rights (giving the right to subscribe to new shares of the Company for an aggregate maximum issue price of EUR 225,000.00 at an exercise price per underlying share of EUR 5.77) entitle Kreos in aggregate to 38,994 new shares of the Company.

The abovementioned Kreos Subscription Rights may be exercised in whole or in part, it being understood that Kreos Subscription Rights cannot be exercised with respect to fractions of shares. In the event a fraction of a share were to be issued upon the exercise of one or more Kreos Subscription Rights, the relevant number of shares issuable upon such exercise shall be rounded down to the nearest whole number of shares, without further compensation for the fraction of a share that cannot be so issued.

This number of shares to be issued upon exercise of the Kreos Subscription Rights is subject to certain adjustments in case of any sub-division (or stock split) or consolidation (or reverse stock split) of shares of the Company as set out in the Conditions. In any event, it has been agreed that the Company may proceed with all actions that it deems appropriate in relation to its capital, its articles of association, its financial condition, even if such actions lead to a reduction of the benefits allocated to the Kreos Subscription Rights, including but not limited to, mergers or acquisitions, capital increases or reductions (including those subject to conditions precedent), the incorporation of reserves into the capital with or without the issue of new shares, the issue of dividends or other distributions, the issue of other equity securities and the amendment of arrangements or provisions relating to the distribution of profits or liquidation proceeds, provided, however, that the shares issued or issuable under the Kreos Subscription Rights shall not be treated differently (had they already been issued at that time) than other shares already issued.

On one occasion only, in lieu of the payment in cash of the relevant aggregate exercise price for each of the relevant shares issuable, Kreos may in respect of all of the shares that would otherwise be issuable elect to receive a reduced number of shares, to be issued to Kreos as fully paid up, which reduced number of shares shall be determined in accordance with the following formula included in Condition 6.3.3:

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X = Y (A-B)/A

whereby:

X = the reduced number of new shares to be issued.

Y = the number of underlying shares with respect to which the Kreos Subscription Rights are being exercised.

A = the "fair market value" per share (i.e., at any given time this is to be determined, a price per share that is equal to the arithmetic average of the daily volume weighted average price of the Company's shares traded on the regulated market of Euronext Brussels during the period of five consecutive days ending on (and including) the third day before the date on which such price is to be determined).

B = the applicable exercise price of the Kreos Subscription Rights.

The relevant shares will then be issued against an issue price equal to the fractional value of the Company's shares at that time (currently rounded EUR 0.1036 per share). The aforementioned exercise mechanism is referred to hereinafter as the "Net Issuance Exercise".

1. Exercise price: The Kreos Subscription Rights can be exercised by Kreos against the payment in cash of the following exercise prices:
2. 1. The 650,000 Initial Kreos Subscription Rights (giving the right to subscribe to new shares of the Company for an aggregate maximum issue price of EUR 650,000.00) can be exercised against an exercise price of EUR 5.31 per underlying new share to be issued;
   2. The 225,000 Subsequent Kreos Subscription Rights (giving the right to subscribe to new shares of the Company for an aggregate maximum issue price of EUR 225,000.00) can be exercised against an exercise price of EUR 5.77 per underlying new share to be issued.

The abovementioned exercise prices of the Kreos Subscription Rights are subject to certain adjustments in case of any sub-division (or stock split) or consolidation (or reverse stock split), as set out in the Conditions.

If Kreos would decide, on one occasion only, to receive a reduced number of shares in lieu of payment in cash of the aggregate exercise price by opting for the aforementioned Net Issuance Exercise mechanism, the relevant shares will be issuable against an issue price equal to the fractional value of the Company's shares at that time (currently rounded EUR 0.1036 per share).

The Conditions also provide that in circumstances where an exercise of the Kreos Subscription Right is specifically in anticipation of, and conditional upon, the occurrence of (i) a public takeover bid with respect to the Company's shares and other outstanding voting securities of the Company or securities granting access to voting rights, or (ii) a sale of the entire issued share capital of the Company to a bona fide third party on arm's length terms for cash consideration (a "Share Sale"), the exercise price of the Kreos Subscription Rights can be satisfied and paid in cash by the relevant purchaser (on behalf of Kreos)

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