Vistin Pharma Corporate Presentation October 2016 Content - - PowerPoint PPT Presentation

Vistin Pharma – Corporate Presentation

October 2016

Content

Introduction to Vistin Pharma Operational and financial update Summary & outlook Appendix

Snapshot

Summary Presence in c.40 countries

Vistin at a glance



Established in June 2015, when the company was spun off from Weifa and listed on the Oslo Axess stock exchange



Leading producer of active ingredients (API) and finished products for diabetes medicine (metformin) and

• piates for use in pain relief and cough medicine

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Significant contract manufacturer (CMO) of solid dosage form (tablets) products

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Established client portfolio comprising mix of Big Pharma and leading generics players

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Long and successful track record with production of codeine API since 1950 and production of metformin since 1969

Overview Business areas

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Metformin (B2B): The company manufactures about 8% of the global consumption of metformin API, the active ingredient in the first-line treatment of diabetes



Opioids (B2B): two key products, codeine phosphate (used in analgesics and cough syrup) and pholcodine (used in cough syrup)

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CMO: Agreement with Weifa, the largest OTC player in Norway, for the production of Weifa’s key pain relief brands

Manufacturing



Two manufacturing facilities in Kragerø, Norway

−

Dedicated metformin plant approved by all significant international bodies including the U.S. Food and Drug Administration (FDA)

−

Finished Dose Forms (FDF) and opioids APIs manufacturing site approved by the European Medicines Agency (EMA)

Employees



c.155

Headquarters



Oslo, Norway

Financials (YTD Q2’16)

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Revenue: NOK 213m

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EBITDA: NOK 24m

Sales by product type (2015A)2,3 Sales by geography (2015A)1

Headquarters Norway Japan

Key geographies

Notes 1 Revenue figures for 2015 consist of B2B segment for Weifa to 31 May, B2B segment for Vistin from 1 June, and annualised revenue for CMO segment 2 Includes Weifa contract. 3. Excludes sale of raw materials

Vietnam Singapore Philippines

Norway 31% Algeria 17% Swizterland 11% Germany 11% UK 10% Japan 5% Other 15% Metformin API 44% Opioids API 17% FDF 39%

Vistin’s key milestones

Long and successful track record of producing high quality APIs and FDFs

Vistin’s evolution

2015 2016 1940 - 2014 1940: Weiders Farmasoytiske A/S founded by Olaf Weider

Weifa

1950: Production start of codeine API 1952: First production facility opened in Kragerø (Gruveveien) 1960: Production start of Paralgin Forte 1969: Launch of metformin API 2014: Weifa AS acquired by Aqualis ASA 2014: Codeine tablets added to the product portfolio 2002: New FDA-approved metformin facility

• pened in Kragero

(Fikkjebakke) 1977: Production start of Paracet 1986: Production start of Ibux 2015: Vistin Pharma established as a separate company

Vistin Pharma

2016: Announcement of significant expansion in capacity at metformin plant in Kragerø

Content

Introduction to Vistin Pharma Operational and financial update Summary & outlook Appendix

108 116 149 156 176 102 2011 2012 2013 2014 2015 6M 2016

Vistin – a leading producer of high quality metformin

First line treatment for type 2 diabetes

Fully integrated metformin supplier One of the few European manufacturers of metformin HCl Strong track record of growth1,2 Producer of three different types of metformin products:



Metformin HCl (bulk API, “fine, dry powder”)



Metformin DC (“directly compressible”, a granulated pretablet form)



Metformin tablets (FDF, ready for consumption) Vertically integrated manufacturer active throughout the entire value chain across API and FDF Long and established history having been involved in the production of metformin API since 1969 Positioned as a premium producer in a low cost competitive market



Sales to leading international pharmaceutical companies

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Attractive contract model based on long-term strategic partnerships with key customers

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State-of-the-art plant in Kragerø with expansion potential

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Certified by all significant international regulatory bodies

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Currently the only company with a listed metformin Drug Master File (DMF) in the USA and Japan Strategically positioned with close proximity to key customers

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Excellent customer support with short lead times

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Delivery time less than 24 hours

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Competitive edge over Asian producers

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Provision of customised products and services

Revenue, NOKm Global manufacturing capacity (MT) 2011-2015 CAGR 13% Leading independent producer globally with 4th largest capacity One of only two Western European manufacturers of metformin HCl and the only one

• f metformin DC

Vistin Pharma 8% ~40,000MT

10

Notes 1 Revenue figures for 2011 – 2014 and for 2015 to 31 May are for Weifa 2 Includes sale of raw materials

Diabetes - a global epidemic

Type 2 diabetes is one of the greatest challenges to healthcare systems around the world – and metformin is expected to maintain its position as the gold standard treatment in the foreseeable future



387 million people live with diabetes – Type 2 diabetes represents c.90% – Estimate that 46% are undiagnosed

Estimated global growth in diabetes

Number of people living with diabetes Source International Diabetes Federation, IDF Diabetes Atlas, sixth edition, 2014

82% 86% 65% 51% 47% 28% 33% 53%



Global healthcare costs related to treating diabetes amounted to $612bn in 2014 – Represented 11% of total healthcare costs worldwide – Projected to exceed $627 billion by 2035



Cause of death of c.5m people in 2014

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Estimated to increase by 53% from 2014 to 2035 – Largest growth in developing economies – Africa and the Middle East are expected to almost double by 2035 Growth 23 37 74 25 137 39 52 387 42 68 123 38 202 50 69 592 Africa Middle East &

• N. Africa

SEA Sounth and Central America Western Pacific

• N. America &

Caribbean Europe World

2014 2035

Significant upside from additional capacity expansion

Vistin plans to capitalise on strong demand in its metformin business by doubling the capacity at its plant in Kragerø

Background Action taken to date Expected impact Current status



Significant long term growth in the metformin market and increased demand from Vistin’s customers – Forecast volumes expected to exceed future capacity in 2018 post the capacity increase programme (3,500MT) – Vistin’s target premium market is currently estimated to approx 13,000MT and growing



The addition of a new 3,000 MT line at Fikkjebakke (Kragerø) will enable Vistin to meet this growth in demand

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Detailed feasibility study conducted

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Business case and investment proposal approved by Board

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The new production line is expected to become fully operational by 2019

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Total capex estimated to be NOK 120m to be spent over 2017-18, financed through existing cash, cash generation and loans

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Based on the forecasted capacity utilization, the project is expected to provide a positive EBITDA contribution in its first year of operations

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Detailed engineering and project start commenced in September 2016

Summary

58 75 71 82 81 50 2011 2012 2013 2014 2015 6M 2016

Vistin – a major opioids “powder-to-pill” supplier

The company supplies c.6% of the global market for codeine API, a very commonly used medicinal opioid

Overview Leading independent manufacturer of opioids Vistin produces two APIs in the opioid sector – Codeine (used in analgesics and cough syrup) – Pholcodine (used in cough syrup) Vistin is the world’s largest independent manufacturer of codeine phosphate API Only independent API supplier producing FDF for third parties



One third of opioid APIs produced are converted to tablets

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First commercial sales in 2014

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Annual volume of c.270m tablets Swift licence procedures and established relationships with regulators ensure Vistin is able to deliver short lead times to its clients – Typically receives export licences within 24 hours Attractive collaborator for raw material companies



The company has successfully negotiated a long-term strategic collaboration with a leading Narcotic Raw Material (NRM) supplier at attractive terms Codeine market Pholcodine market

Revenue, NOKm 2011-2015 CAGR 9% Vistin Pharma ~17%

~12MT

Vistin Pharma ~6%

~400MT

20

Notes 1 Revenue figures for 2011 – 2014 and for 2015 to 31 May are for Weifa

Track record of revenue growtht1

Opioids market overview

Key features of the opioids market

Strong growth in global opioids consumption Strong growth in global opioids consumption

A protected market with high entry barriers

S.DDD = Sold Defined Daily Doses Source INCB, Narcotic Drugs 2014

Protected market



A protected business owing to tight controls by the International Narcotics Control Board (INCB) and the practice of import quotas in several major markets – About half of the global markets are closed – Domestic monopolies mainly controlled by local players Increased market demand

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Increasing wealth in emerging markets drives higher expectations for medication, especially in China and India

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Most of the growth in opioid consumption comes from emerging countries Growth driven by developing countries

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Ageing population and rising prevalence of diseases – Defined Daily Doses have increased more than 3 times in 20 years (6.5% CAGR)

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North America dominates the global market for opioids

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Asia expected to account for majority of future growth

• 2

4 6 8 10 12 14 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Billions of S.DDD Opiates Synthetic opioids Opioids

1 3 4 High barriers to entry

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High entry barriers due to tight controls / regulations

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Difficult for low cost country competitors to enter the regulated opioids API business

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Market dominated by producers located in Western countries 2

Vistin – A leading CMO tablet manufacturer

Current annual production of c.750 million tablets with potential to expand capacity

Significant tablet manufacturer Summary of Weifa contract

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Manufacture of tablets relating to opioids and metformin business and reported as part of B2B segment

• Five-year supply agreement for codeine tablets for UK customer resulting in

volumes of approximately 270m tablets per annum

• Manufacture of metformin tablets

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Tablet manufacturing plant at Kragerø, Norway

• GMP/GDP Certificate and Manufacturing License authorized by Norwegian

Medicines Agency with the latest inspection in August 2015

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5 year agreement with Weifa for the production of its key pain relief brands

Overview

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CMO agreement with Weifa for the production of:

• All tablets produced by Weifa’s Consumer segment

(including key pain relief brands)

• Certain 3rd party products to which Weifa has the

exclusive right to sell in certain territories

Duration



First term duration of five years



Option to extend for another two years at the discretion of Weifa

Key products Financials

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2016B revenues: c.NOK 119m

Production

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2016B: c.450m tablets

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Production at the company’s plant in Gruveveien, Kragerø

Evolution of long-term customer partnership model in FDFs 2016 - 2017 2018 - 2020 2020 - 2025 Preferred CMO Long term contract to manufacture the FDF Fee-for-service CDMO Preferred CMO with higher customer switching costs Partnered CDMO Exclusive CMO contract + profit share Co-development alliance Captures 50% of the value through fees and milestones

State of the art manufacturing facilities

Well invested plants with potential for further expansion

Gruveveien produces Solid Dosage Forms (SDF) and opioids API's

Fikkjebakke manufacturing site Gruveveien manufacturing site

Operation since 1950 Site area (m2) 10,979 Staff (May 2016) 89 Capacity FDF (m tablets) Opioids APIs (MT) 750 32 Approvals cGMP Main dosage form Codeine phosphate API Pholcodine API Tablets Operation since 2002 Site area (m2) 12,253 Staff (May 2016) 44 Capacity (MT) 3,100 Approvals cGMP FDA Main dosage form Metformin HCl API Metformin DC Granulate

Key initiatives Key initiatives

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Capacity increase program to stretch current capacity to 3,500MT with limited investment required based on Seven Step Creep Programme

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New production line - metformin production capacity to be doubled (+3,000MT) by 2019 – Feasibility study completed and final investment case approved by the Board

Fikkjebakke is dedicated to the production of metformin HCl and metformin DC

Tablet capacity increase through increasing efficiency & ongoing programme of operational excellence



Production capacity increased in 1H 2016 by 15% to c.750m tablets

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Plan to increase capacity by another 50% without material cost increases (to c.1,200m tablets) Opioids API



Capacity increase program - opioids API capacity expansion from 32MT to 45MT with limited investment required

2 1 3 1 2

Financial overview

Strong financial growth profile with significant potential upside through capacity expansion

Revenue evolution (2011–1H2016 NOKm)1

Notes 1 Revenue figures for 2011 – 2014 are for B2B segment for Weifa, and for 2015 consist of B2B segment for Weifa to 31 May, B2B segment for Vistin from 1 June, and annualised revenue for CMO segment

170 199

229

242 258 152

118 61 2011 2012 2013 2014 2015 6M 2016

B2B CMO

170 229 242 376 199 213

Content

Introduction to Vistin Pharma Operational and financial update Summary & outlook Appendix

Key investment highlights

Leading producer of high quality APIs and Solid Dosage Forms

High Quality Reputation: Leading reputation as producer of high quality APIs with strong track record of customer delivery Attractive Market Dynamics: Established position in growing metformin market and highly regulated opioid market Sustained Revenue Growth: Strong growth profile with double digit revenue growth in the last 5 years Strong Leadership: Experienced management team with a strong track record Diverse Client Portfolio: Established client base comprising mix of Big Pharma and leading generics players Advanced Manufacturing Facilities: State of the art and dedicated manufacturing facilities with potential for further expansion

2 3 5 4 6 7

Leading Producer: Amongst Top 5 producers of metformin HCl globally and largest independent producer of Codeine Phosphate

1

Metformin: Strong performance and bright outlook

 Continued strong growth expected  Doubled capacity from 2019  NOK 120 million investment to be financed through existing

cash reserves, cash flow generation and debt

Opioids: Long-term drivers indicating attractive future growth potential

 Price pressure due to oversupply of raw material in the

market

 Market improvements expected in 2017

CMO: Stable development

 Efficiency program expected to result in minimum 50%

additional capacity available (with limited investments)

 Focus on future cost reductions to grow tablet volumes in a

competitive market

Summary & outlook

Vistin Pharma well positioned for continued profitable growth

Content

Introduction to Vistin Pharma Operational and financial update Summary & outlook Appendix

Consolidated income statement as of 30 June 20161

Note: 1. Vistin Pharma ASA was established in February 2015, and the Group had no operating activities prior to Vistin Pharma AS’ acquisition of the B2B business and tablet production assets from Weifa AS on 1 June 2015. Hence, most of the figures presented in the consolidated financial statements for the full year 2015 represent the financial result of the B2B and CMO business acquired from 1 June 2015. There are no comparable historical numbers.

(NOK 1 000) Q2 2016 Q2 2015 YTD2016 YTD2015 FY 2015 Total revenue and income 109 667 31 370 212 893 31 370 227 892 EBITDA 12 608 2 862 23 639 2 862 27 883 Depreciation, amortisation and impairment (1 000) (181) (1 891) (181) (1 568) Net finance income/(expense) 1 490 225 153 225 (100) Profit/(loss) before tax 13 098 2 906 21 900 2 906 26 215 Profit/(loss) 9 824 2 122 16 425 2 122 19 122

(figures for 2015 reflect Vistin Pharma’s business operations from 1 June 2015)

Financial position as of 30 June 2016

(NOK 1 000) 30.06.2016 30.06.2015 31.12.2015 Property, plant & equipment 46 275 33 275 41 331 Inventory 86 156 91 015 92 712 Trade receivables 64 240 33 197 54 760 Cash & cash equivalents 55 710 44 558 61 989 Other 7 630 19 372 8 216 Total Assets 260 011 221 417 259 008 Total equity 190 116 167 004 183 924 Total liabilities 69 895 54 413 75 084 Total Equity and Liabilities 260 011 221 417 259 008 Net interest bearing debt

Experienced management team

Highly experienced management team with a strong industry track record

Role Experience Name



Previous experience includes several years in top management positions at Alpharma, a leading international generic pharmaceutical company



Holds a Master's degree in Pharmacy and Master's degree in Business Administration Chief Executive Officer Kjell-Erik Nordby

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Previously SVP Operations, Tech. and Supply chain at REC Solar ASA and prior to that held several senior management positions at Elkem, where he was employed for almost 20 years



Holds a Master of Management from BI Norwegian Business School VP Operations Erik Løkke Øwre



Previously CFO at Aqualis for 7 years, and prior to that he worked 8 years as a senior advisor at Handelsbanken Corporate Finance



Holds a MCom in Finance and Accounting from the University of New South Wales, Sydney Chief Financial Officer Gunnar Manum



Previously spent 20 years at Pronova BioPharma, where she held several management positions within Quality Assurance

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Holds a Master of Science in Chemistry and a Master of Management VP QA Hilde Merete Næss

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Experienced executive manager within the biotechnology and pharmaceutical industry

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Holds a BA in Biomedical Laboratory Science and an Executive Master in Business & Administration VP Sales & Marketing Valborg Godal Vold

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Previous experience includes 5 years at Jordan, 9 years at Hydro and 4 years at Volvo Car Corporation

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Holds a BSc in Human Resource Development and Labour Relations VP HR & Organisation Liesl Hellstrand

7

Top 20 shareholders as of 30 September 2016

NAME SHAREHOLDING % SHARE EUROCLEAR BANK S.A. 2 548 810 14,9% STRATA MARINE & OFFSHORE* 1 965 943 11,5% STOREBRAND VEKST 1 395 460 8,2% MP PENSJON PK 877 870 5,1% SOLAN CAPITAL AS 787 482 4,6% SKANDINAVISKE ENSKILDA 779 352 4,6% FERNCLIFF LISTED DAI* 582 282 3,4% HOLBERG NORGE 573 349 3,4% PENSJONSORDNINGEN FOR APOTEKVIRKSOMHET 500 000 2,9% DUKAT AS 455 000 2,7% CIPRIANO AS* 375 538 2,2% SPETALEN ØYSTEIN STRAY* 323 650 1,9% TVENGE TORSTEIN INGVALD 300 000 1,8% SVENSKA HANDELSBANKEN 240 000 1,4% NORDBY KJELL ERIK** 200 000 1,2% BORGEN INVESTMENT GRUPPEN 196 078 1,1% PORTIA AS 185 000 1,1% GRANT INVEST AS 184 407 1,1% STATOIL PENSJON 166 138 1,0% MALISE AS 151 750 0,9% Total 20 largest shareholders 12 960 156 76,0% Other shareholders 4 094 779 24,0% Total number of shares 17 054 935 100,0%

* Board members of Vistin Pharma, or companies controlled by Board members ** Executive management

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