Interim Report Q1 2020 Kjetil Ramsy CEO Robert Schrama CFO May 6 - - PowerPoint PPT Presentation

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Interim Report Q1 2020

Kjetil Ramsøy CEO Robert Schrama CFO May 6th, 2020

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This presentation includes forward-looking statements regarding NattoPharma ASA, including projections and expectations, which involve risk and uncertainty. Such statements are included without any guarantees to their future realization. Although NattoPharma ASA believes that the expectations regarding the Company reflected in such forward-looking statements are based

• n reasonable assumptions, no assurance can be given that such projections will be fulfilled. Any such forward-looking statement

must be considered along with knowledge that actual events or results may vary materially from such predictions due to, among

• ther things, political, economic, financial or legal changes in the markets in which NattoPharma ASA does business, and

competitive developments or risks inherent to the Company’s business plans. Many of these factors are beyond NattoPharma ASA’s ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. The Company does not intend, and does not assume any

• bligation, to update the forward-looking statements included in this presentation as of any date subsequent to the date hereof.

Disclaimer

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• confidential

▪ Operational Highlights ▪ Financial Highlights ▪ Q&A

Agenda

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Operational Highlights

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• Adj. EBITD

TDA A contin inues ues to improve

• ve

Q1’20: 10.5m m Q4’19: 2.3m Q1’19: 1.9m Operating Revenue per Quarter 2016 - 2020

• Adj. EBITDA per Quarter 2016 - 2020

Another her quarter er with h reco cord d revenue enue

Q1’20: 56.3m m Q4’19: 38.5m m Q1’19: 27.8m

Financial Highlights

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COVID-19

▪ NattoPharma has implemented measures to safeguard employees and their families during this period of global crisis ▪ Supply situation due to COVID-19 restrictions has not impacted Q1 ▪ As the lockdown in India has been extended, we see some risk of delays in supply of raw material during the second quarter ▪ After a short interruption international logistics are operating again, and flow of goods between the major regions is normalizing ▪ Outbound transportation to our customers have been operational the whole time

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Market and Product Mix

Q1 2020 Q4’ 2019

▪ COVID-19 impacts the quarter positively ▪ Strong demand for natural products which outgrows the synthetic products in the period ▪ Shipped volume in March as single month is higher than any quarter before Q4’19 ▪ Re-balancing of product portfolio is enabling us to carry safety stock and meet customer demand more timely ▪ Bearing any unforeseen increase in COVID-19 restrictions we have ample access to product to meet expected demand in the coming period

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Vitamin K2 importance emphasized by new COVID-19 study

▪ New study shows significant correlation between active levels of Matrix GLA Protein (MGP) and better outcomes of SARS-CoV-2-infected individuals ▪ MGP , a K-dependent protein that inhibits calcium from depositing in arteries and soft tissues, requires adequate Vitamin K2 to be activated ▪ NattoPharma has led Vitamin K2 research over nearly 16 years establishing the link between Vitamin K2 and MGP and improved cardiovascular health ▪ This new study further demonstrates Vitamin K2’s health benefits, including cardiovascular and tissue flexibility ▪ Vitamin K2 is not suggested as a treatment to COVID-19, but the data supports the thesis that Vitamin K2 supplementation supports overall health ▪ NattoPharma maintains its leadership role educating about K2 developments

Our Science. Your Trust™ Our new Adaptogen en product offerin ferings

Our 7-Pro rong nged ed Advantag antage in developing New Adaptogen Technologies: ❑ Appro roach ach: : Development of an Index of important actives, as well as Pharmacokinetic Testing ❑ Comp mposi siti tion: : Full-spectrum extract with multiple bioactive compounds achieved through a proprietary extraction method ❑ Conc ncentrati tration: n: Highly concentrated standardized extract of multiple standard actives in a proprietary composition ❑ Delivery ery: Proprietary delivery mechanisms and formulations designed to maximize benefit for mood and energy segments ❑ Scienc nce: Gold-standard clinical testing, including original human clinical trials ❑ Claims: aims: Specific structure-function claims for delivery systems ❑ Brand nded Ingre redient nts: s: Fully developed Branding tying these technologies to the scientific validation and publications

New Ingredient

▪ Both the studies for athletic performance and stress/mental acuity have been stopped due to the COVID-19 situation ▪ Another study in which researchers were looking at pharmacokinetic (PK) data, blood samples have been collected; analysis will resume once workers allowed back to site ▪ The delay with the clinical trials will push back the new ingredient launch

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Financial Highlights

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Revenue growth breakdown

Overall volumes (1000 ppm equivalent) went up with 84% compared to Q1-2019. The mix in products changes to 60/40 Natural vs. Synthetic (Q1-2019: 40/60). Overall prices development in line with expectations. In Q1-2020 the NOK has depreciated quite significantly against the USD and EUR which have resulted in a substantial impact to the first quarter revenue. During the first quarter as result of COVID-19 we have seen some hording from our customers which we have estimated to be around 30% of

• ur total growth in the first quarter.

Amounts in NOK 1000 % Change Total Organic FX COVID-19 Revenue Operating Revenue 56 265 27 771 103% 48% 24% 31%

56.3

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Income Statement Highlights

Change %

104%

Q1 Revenue 56.3m

27.5m

Gross ss Margin % 42.2

43.6

Q1 Gross Margin 23.7m

12.0m

%OpEx/Rev Reven enue 23.5

33.5

Q1 Q1 OpEx 13.2m

9.2m

EBITDA DA % 18.7 EBITDA 10.5m

1.9m

Highest growth in the APAC and EMEA, with strong positive trend in the Americas and remaining our largest market. Growth in all product categories. Gross Margin of 42.2% in the period. Down from 43.6% in the same period last year. The margin is in line with expectations based on product/customer mix. OpEx overall is impacted by the currency impact from the NOK depreciation against the USD and EUR in the first quarter. Further personnel costs are trending higher due to hiring of new senior personnel during Q1 2020 to support the growth. EBITDA is showing strong improvement in line with the revenue growth and returning a 18.7% EBITDA margin for Q1. It is another testament of that our operating model works where we scale our activities without increasing our resources.

2019

2020

6.8

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Increase in non-current assets mainly relates to capitalization of the synthetic process development project. No changes from 2019. The change in the loan balance to Kaydence Pharma AS impacted by recognized impairment at year end Trade receivables from the sale of products are NOK 38.3 million in the

• period. Strong effort in collecting receivables, and no current risk of loss
• n accounts receivables

Other receivables of NOK 13.3 million consist of accruals for SkatteFUNN, prepayments, VAT assets and other receivables Increased strong financial position, with an equity ratio of 71.8 %, compared to 63.2% as per December 31st, 2019 The increase in current liabilities consists largely of increased trade payables which amount to 18.3 million in the period.

Balance Sheet Highlights

Intangib ible le Asset ets 53.2m

43.7m

Financial ial Asset ets 31.9m

40.3m

Equity 128.1m

108.8m

LT Liabilit ilitie ies 15.9m

16.9m

Inven entory 27.9m

15.7m

Recei eivab ables les 51.6m

33.9m

ST Loans 6.1m

6.1m

Payables les 28.4m

19.6m 2019

2020

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In January the private placement was concluded and the remaining payment of NOK 9.2 million was received early January. Operational cashflow in the quarter is negative largely due to the spike in sales during March at the same time we are retaining our warehousing levels. Capital expenditure is limited in the first quarter in line with planning. NattoPharma USA, Inc. has been granted a COVID-19 US government sponsored loan this week under the Payment Protection Program of approximately USD 180K. The loan is to cover payroll and certain overhead expenses of our US

• perations. The Company may qualify for loan

forgiveness for a portion of the loan. The loan has an interest of 1% and a term of 2 years.

Cash Flow

Cash is sufficient for working capital purposes in the coming period.

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▪ We increase our guiding with an annual top line growth of 35 35 - 50% 50% ▪ We keep the expectation on gross margin to 42 - 47% ▪ EBITDA expected to be between 10 – 15% ▪ Careful tracking of OpEx with flexibility to adjust and monitor cost closely ensures a profitable growth.

Outlook

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Questions & Answers