NattoPharma ASA Our Science. Your Trust confidential Interim - - PowerPoint PPT Presentation

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NattoPharma ASA

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Interim Report H1 2017 CEO Daniel H. Rosenbaum CFO Kjetil Ramsøy 16 August 2017

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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

• f any date subsequent to the date hereof.

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• Sales growth of 19% vs prior year period
• Below full year expectations;
• Approximately in line with budget timing and expected acceleration in H2
• Q2 was highest recorded quarterly revenue in history
• Gross margin of 46% (vs 50% in 2016 same period) impacted by synthetic

capacity expansion

• 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
• Reflects strengthening core supplement business and shift to increased

resourcing of pharmaceutical initiative

Financial highlights in H1 2017

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Operational Highlights

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• Excellent progress in all three strategic areas

MenaQ7 Vitamin K2 MK7 Pharmaceutical Path Portfolio Expansion

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• 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,…)
• Geographic expansion (Brazil, China, SE Asia,…)

MenaQ7 Vitamin K2 MK7

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Leading Industry in Building Segment, Consumer Awareness

Accelerating Sales Media presence leads to new customers, launches, geographic expansions

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• Added a strong proprietary element

to our Advance Delivery Platform

• 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

• Demonstrates increasing awareness and interest from medical community in

vital health role of vitamin K2

MenaQ7 Vitamin K2 MK7

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Driving Innovation to maintain premium position

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MenaQ7 Vitamin K2 MK7

✓ 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.

Introduction of Six Pillars Framework

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• 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
• Active development of and discussions on three promising ingredients
• Expect definitive announcements on at least one new ingredient before

end of 2017

• Now have a dedicated executive-level position driving this strategic

initiative

Portfolio Expansion

Vitamin K2 and new ingredients product offerings

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• 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

Pharmaceutical Path

Significant ramp-up of pharmaceutical activites in H1

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Continued Progress on Operational Excellence

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• 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

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Financial Update

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Sales Development

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• 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

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Income Statement YTD June - Supplement

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• 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

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Income Statement YTD June - Total

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• 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)
• Pharma now reported as

separate Business Area

• Cost in H1’17 is NOK 3,9

million with no revenue recorded in the period

• EBITDA for Pharma business

area for the period is thus negative NOK -3,9 million

Income Statement

(Numbers in 1 000 NOK)

Supplement Pharma Act'17 Act'16 Total Revenue 30 611 30 611 25 803 4 808 18,6 % Cost of Sales

• 16 601
• 16 601
• 12 829
• 3 772

Gross Profit 14 010 14 010 12 974 1 036 8,0 % Gross Margin in % of revenue 45,8 % 0,0 % 45,8 % 50,3 % 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 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 %

• Adj. EBITDA in % of revenue

4,8 % 0,0 %

• 7,9 %
• 9,4 %

Option Cost (Non-Cash)

• 1 293
• 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 %

Comparison 30.06 (unaudited)

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Balance Sheet - 30.06.2017

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• Trade and other receivables slightly increased from end
• f 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)

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Cash

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• Main reason for the cash reduction is

 EBITDA loss related to Pharma strategy  Investment in working capital

• Operating cash from supplement business expected

to continue to improve as business grows

• Barring any unforeseen events, the cash balance is

expected to be sufficient for the expected growth in the supplement business in the coming period

• Pharma strategy development will continue to

require cash  separate financing is part of strategy discussion

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Questions

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