confidential NattoPharma ASA Our Science. Your Trust™
confidential Interim Report H1 2017 CEO Daniel H. Rosenbaum CFO Kjetil Ramsøy 16 August 2017 Our Science. Your Trust™
confidential Disclaimer 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 on 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 other 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 obligation, to update the forward-looking statements included in this presentation as of any date subsequent to the date hereof. 3 Our Science. Your Trust™
confidential confidential Financial highlights in H1 2017 • Sales growth of 19% vs prior year period Below full year expectations; o Approximately in line with budget timing and expected acceleration in H2 o Q2 was highest recorded quarterly revenue in history o • Gross margin of 46% (vs 50% in 2016 same period) impacted by synthetic capacity expansion o Expect improved margin in H2 as efficient capacity is better balanced with customer demand • Positive adjusted EBITDA of NOK 1,5 million for the supplement business o Reflects strengthening core supplement business and shift to increased resourcing of pharmaceutical initiative 4 Our Science. Your Trust™ Our Science. Your Trust™
confidential confidential Operational Highlights • Excellent progress in all three strategic areas MenaQ7 Vitamin K2 MK7 Portfolio Pharmaceutical Expansion Path 5 Our Science. Your Trust™ Our Science. Your Trust™
confidential confidential MenaQ7 Vitamin K2 MK7 Leading Industry in Building Segment, Consumer Awareness Media presence leads to new customers, launches, geographic expansions • NattoPharma Chief Medical Officer on national news (Australia) • Launch of first kid-specific MenaQ7 + omega- 3 product (Wiley’s Finest) wins award (UK, US) • Featured presenter at medical symposium with 500 practitioners (Brazil) • Conference in Czech Republic; NattoPharma research expert was a featured speaker • MenaQ7 featured in multiple articles and industry publications • Most successful trade show to date: May VitaFoods, Geneva Impact: • New customers (Brazil, US, China, … ) • New launches (UK, US, Brazil, Australia, … ) Accelerating Sales • Geographic expansion (Brazil, China, SE Asia, … ) 6 Our Science. Your Trust™ Our Science. Your Trust™
confidential confidential MenaQ7 Vitamin K2 MK7 Driving Innovation to maintain premium position • Added a strong proprietary element to our Advance Delivery Platform o Technology Licensing Agreement with ZümXR: exclusive access to NattoPharma for patented delivery technologies in the vitamin K space. • New study, presented at International Conference on Children’s Bone Health, correlates low K2 status with increased fracture risk in children; • NattoPharma named as partner in the award of a second Horizon 2020 research grant o Demonstrates increasing awareness and interest from medical community in vital health role of vitamin K2 7 Our Science. Your Trust™ Our Science. Your Trust™
confidential MenaQ7 Vitamin K2 MK7 Introduction of Six Pillars Framework ✓ EXPERTS : MenaQ7 most-researched vitamin K2 on the market. ✓ SCIENCE : MenaQ7 is validated by groundbreaking human clinical trials and ongoing clinical program ✓ QUALITY : Proprietary manufacturing process + R&D, regulatory, IP ✓ INNOVATION : clinical research, new enabling technologies (ADP) ✓ MARKETING : media, PR, awareness campaigns and communication in direct support of our MenaQ7 customers; ✓ SUPPORT SERVICES : consultative partnership model to help our customers be successful. 8 Our Science. Your Trust™ Our Science. Your Trust™
confidential Portfolio Expansion Vitamin K2 and new ingredients product offerings • The most comprehensive Vitamin K2 supplier ✓ Fermented (natural) non-soy ✓ Nature-identical synthetic ❖ Fermented (natural) soy – launched ❖ K2 multi-spectrum – Q4 • Pipeline of new ingredient candidates o Active development of and discussions on three promising ingredients o Expect definitive announcements on at least one new ingredient before end of 2017 o Now have a dedicated executive-level position driving this strategic initiative 9 Our Science. Your Trust™ Our Science. Your Trust™
confidential Pharmaceutical Path Significant ramp-up of pharmaceutical activites in H1 • Highly relevant patent filing in area of cardiovascular disease and chronic kidney disease; • New MenaQ7 study published in BMC Nephrology showing benefit for hemodialysis patients; • Additional clinical research ongoing in support of patent filings and expanded clinical application; • In advanced discussions with pharmaceutical industry partners; focus on scale and market access in EU and US • Have formally engaged regulatory consultants for anticipated submissions: focus on US/FDA and EU/EMA • Pharma dedicated legal entity timing: Q1’18 10 Our Science. Your Trust™ Our Science. Your Trust™
confidential confidential Continued Progress on Operational Excellence • Operating expenses reduced on core Supplement business • NP first ever global, cloud-based enterprise resource planning and financial system now fully implemented • Added highly experienced supplement industry veteran to team as VP of Sales, Americas • Dedicated executive-level focus on portfolio expansion • Increasing use of grant funding focused on clinical research initiatives • Expect to hold a second investor session mid-Q4 11 Our Science. Your Trust™ Our Science. Your Trust™
confidential confidential Financial Update Our Science. Your Trust™ Our Science. Your Trust™
confidential Sales Development • Sales continue to increase in all regions • Brazil and China represent new markets with large potential • Growth from Q1’14 to Q2’17 of almost 350% • Q1 partly impacted by ramp up of the new supply line for PURE • Q2 revenue is setting a new all time high for one single Quarter • The trend of growing 12 months rolling revenue is expected to continue also in the coming period • Expect to see higher growth in H2’17 as new capacity is being finalized for supply of PURE 13 Our Science. Your Trust™ Our Science. Your Trust™
confidential Income Statement YTD June - Supplement • P&L split into two business areas as of 2017 Supplement business shows growth in revenue with a healthy margin Margin in the period slightly impacted by higher than expected cost related to new supply line for synthetic product Adj OpEx reduced with almost NOK 3 million Adj EBITDA improved with NOK 3,9 million compared to previous year, ending at NOK 1,5 million for the period Including non-cash cost related to Options, EBITDA for the supplement business is positive with NOK 0,2 million 14 Our Science. Your Trust™ Our Science. Your Trust™
confidential Income Statement YTD June - Total • Income Statement 30.06 (unaudited) Pharma now reported as Supplement Pharma Act'17 Act'16 (Numbers in 1 000 NOK) Comparison separate Business Area Total Revenue 30 611 0 30 611 25 803 4 808 18,6 % Cost of Sales -16 601 0 -16 601 -12 829 -3 772 • Cost in H1’17 is NOK 3,9 Gross Profit 14 010 0 14 010 12 974 1 036 8,0 % million with no revenue Gross Margin in % of revenue 45,8 % 0,0 % 45,8 % 50,3 % recorded in the period Personnel Cost -8 331 -1 435 -9 766 -8 157 -1 609 Other Operating Expenses (excl. Option cost) -4 224 -2 429 -6 653 -7 253 600 • EBITDA for Pharma business Adj Total Operating Expenses -12 555 -3 864 -16 419 -15 410 -1 009 6,5 % Adj EBITDA 1 455 -3 864 -2 409 -2 436 27 -1,1 % area for the period is thus Adj. EBITDA in % of revenue 4,8 % 0,0 % -7,9 % -9,4 % negative NOK -3,9 million Option Cost (Non-Cash) -1 293 0 -1 293 -912 EBITDA 162 -3 864 -3 702 -3 348 -354 10,6 % EBITDA in % of revenue 0,5 % 0,0 % -12,1 % -13,0 % • Total adjusted EBITDA for the period is negative NOK -2,4 million (2016 : NOK -2,4 million) • Total EBITDA for the period is negative NOK -3,7 million (2016 : NOK -3,3 million) 15 Our Science. Your Trust™ Our Science. Your Trust™
confidential Balance Sheet - 30.06.2017 • Trade and other receivables slightly increased from end of 2016, consists of - Accounts Receivables : 16,4 million - Prepayments : 1,6 million - SkatteFunn : 4,4 million - Other Receivables : 2,8 million • Cash balance is 11,2 million • No long term liabilities except from deferred tax liability • Equity is 72,6 million (80,5% of total assets) 16 Our Science. Your Trust™ Our Science. Your Trust™
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