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Photocure ASA

Investor Presentation May 11, 2022

3714_rns_2022-05-11_7e7c3bb2-1cfb-41ab-b7be-fe769a841680.pdf

Investor Presentation

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Photocure ASA Results for 1st Quarter 2022

May 11, 2022

Dan Schneider, President and CEO

Erik Dahl, CFO

Disclaimer

By reading this company presentation (the "Presentation") or attending any meeting or oral presentation held in relation thereto, you (the "Recipient") agree to be bound by the following terms, conditions and limitations.

The Presentation has been produced by Photocure ASA (the "Company") for information purposes only and does not in itself constitute, and should not be construed as, an offer to sell or a solicitation of an offer to buy any securities of the Company in any jurisdiction. The distribution of this Presentation may be restricted by law in certain jurisdictions, and the Recipient should inform itself about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the laws of any such jurisdiction.

The Recipient acknowledges that it will be solely responsible for its own assessment of the Company, the market and the market position of the Company and that it will conduct its own analysis and be solely responsible for forming its own view of the potential future performance of the Company's business. The Company shall not have any liability whatsoever (in negligence or otherwise) arising directly or indirectly from the use of this Presentation or its contents, including but not limited to any liability for errors, inaccuracies, omissions or misleading statements in this Presentation, or violation of distribution restrictions.

The Presentation will be used during an oral presentation and is therefore not a complete summary of the presentation held. Further, it is not the intention to provide, and the Recipient may not rely on the Presentation as providing, a complete or comprehensive analysis of the Company's financial or trading position or prospects. Several factors could adversely affect the business, legal or financial position of the Company or the value of its securities. For a further description of other relevant risk factors, we refer to the Company's annual report for 2021. Should one or more of these or other risks and uncertainties materialize, actual results may vary significantly from those described in this Presentation.

This Presentation contains certain forward-looking statements relating to inter alia the business, financial performance and results of the Company and the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts. Any forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts and are subject to risks, uncertainties and other factors that may cause actual results and events to be materially different from those expected or implied by the forward-looking statements. The Company cannot provide any assurance that the assumptions underlying such forward-looking statements are free from errors nor do any of them accept any responsibility for the future accuracy of opinions expressed in this Presentation or the actual occurrence of forecasted developments.

This Presentation speaks as at the date set out on herein. Neither the delivery of this Presentation nor any further discussions of the Company shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not assume any obligation to update or revise the Presentation or disclose any changes or revisions to the information contained in the Presentation (including in relation to forward-looking statements).

This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts.

First Quarter 2022 Highlights: Omicron surge in early Q1 impacted performance

China: Asieris obtained approval to conduct real-world evidence study as part of Hainan pilot program to support Phase III trial (February 2022)

Segment Trends

North America and Europe markets

COVID-19 Update

Pandemic conditions worsened early Q1, improvement seen late in the quarter

U.S.

  • Nearly half of U.S. hospitals postponed surgeries
  • Eastern/Northern U.S. hit hardest (ex. MD, VA, OH) with statewide recommendations for surgery delays (NY, IL, and MA)*
  • Leveraged community urology practices (flex)
  • Hospitals working through staffing shortages
  • Normalized access and procedure volumes anticipated H2 2022

Europe

  • Limited access during Omicron wave in Q1
  • Unprecedented staffing shortages in clinics due to sick leave/quarantine of personnel during Q1
  • Hospital access (by appointment) anticipated to reach 100% during Q2 in Europe
  • Germany recovering, but slower due to significant Covid-19 surge in Q1

Outlook both regions

Expected procedure volume improvement in Q2 as Covid more manageable; staffing shortages still a challenge

Improving Trend in Both Regions Exiting Q1

Hexvix/Cysview Units in First Quarter 2021 and 2022

U.S. Europe

Q1 2022 Trends in North America

  • Continued business growth despite latest Covid-19 surge; Q1 U.S. Units up 5% YoY
  • Cysview uptake in the clinic remained a focus in Q1; flexible cystoscopy momentum continues to be strong in addition to high demand for rigid towers
  • Contracting continues to be a key growth driver with accounts taking advantage of volume-based programs
  • Procedure volumes softened in Q1 with improvement end of quarter
  • Cysview units continue to outpace TURBT procedure market based on Definitive Health data
  • Staffing shortages remain a challenge nationwide

U.S. continued blue light cystoscope placements

13 Towers installed in Q1 ahead of upgraded Karl Storz system launch

*2012 – 17 of the 23 installations were converted clinical sites upon Cysview approval

Q2 2021: 8 Installations (7 Rigid & 1 Flex) Q3 2021: 14 Installations (11 Rigid & 3 Flex) Q4 2021: 9 Installations (6 Rigid & 3 Flex) Q1 2022: 13 installations (8 Rigid & 5 Flex)

Annual New Installations Cumulative install base continues strong trend

Rigid Towers Flex Towers

The New Blue Light will "Elevate the Standard":

tumor margins better"

"Wow. There is clear visibility"

"The new camera head feels good in your hand"

Positive feedback from early user experiences

"In Blue Light, I can see Key Features and Benefits

Feature Benefit
High Definition Enabling
precision Blue Light and razor-sharp
quality in all visualization modes
New LED Light
Source with
30,000-Hour Life
Providing more consistent light which won't
degrade over time
New Fiber Light
Cable
Giving HCPs convenient autoclave (sterilization)
options
CHROMA Red
Contrast
Enhancement
Allowing more visualization of vascularity
Ergonomic
Integrated Camera
Head
Enabling "Blue Light Intensity Control" with an
easy toggle between visualization modes and
blue light output

Key Initiatives to Drive Growth in North America

NEW BLUE LIGHT SYSTEM LAUNCH

National roll out of Karl Storz high-definition Blue Light Powered by Saphira towers anticipated Q2 2022

CONTRACTING

Ongoing contracting with key health systems and community-based Urology Groups

VETERANS AFFAIRS

Recent tower installations, pipeline building interest and demand with key VAs in the United States

PEER-TO-PEER

Virtual and on-site programs have increased access and surge of interest in Blue Light

PATIENT DEMAND

Cysview website locator map serving as a useful tool to get physicians to notice patients are looking for BLC locally

NON-PERSONAL PROMOTION

Expanding brand awareness, opening doors for sales reps through advertisements, mailers etc.

Q1 2022 Trends in Europe

  • First Quarter units +1% vs. Q1 2021; Despite heavy Omicron wave, Germany remained stable & turn in trends continued in priority growth markets (France, U.K., Italy)
  • Photocure European KOL Faculty preparing for physician education programs during 2022. First in a series of country BLC advisory boards in Europe was conducted in Denmark in Q1
  • Close cooperation between Photocure and equipment suppliers in process for new BLC system launches
  • Photocure testing a new system from Richard Wolf for remote OR access/training in France, with potential to expand to all of Europe
  • Photocure Bladder Cancer Bus Tour Events Scheduled; Denmark in May and at the European Association of Urology (EAU) Congress in July

Large Untapped Potential in European Market

Established Hexvix Markets

Nordics: ~40% penetration

Active Hexvix Markets

DACH region: ~30% penetration France: ~10% penetration Benelux: ~10% penetration

Untapped Large EU Markets

UK, Italy, Spain, Poland ~0% penetration

Untapped Small EU Markets

Baltics, Czech Rep, Hungary, Ireland, Greece, Portugal ~0% penetration

Change of Trend* in large European Priority Growth Markets continues despite Covid

*In-Market Units Sales Photocure – Presentation of Q1 2022 Results

Key Initiatives to Drive Growth in Europe

ESTABLISH ADVOCACY

Identify the strongest advocates for BLC among European top experts and leverage their experience

HEXVIX (RE)LAUNCH CAMPAIGN

Impactful campaign to clarify potential misconceptions about Hexvix in formerly neglected/new territories

BLC EQUIPMENT SUPPLIERS

Leverage cooperation opportunities with Equipment Suppliers realizing common business interests

KEY OPINION LEADER FACULTY

Group of experts to educate about BLC supported by developing Centers of Excellence across Europe

ORGANIZATION

Consistently meet opportunity with the right resource and competence level as the commercial situation develops in Europe

BUILD CUSTOMER INSIGHT

Build a strong customer data base in new territories identifying the hot spots for growth and execute

Q1 2022 Financials

Segment Performance First Quarter 2022

North America Segment

Amounts
in
NOK
million
Q1 '22 Q1 '21 Change FY '21
Total revenues 30.5 27.3 12% 125.2
Gross profit 29.3 26.6 10% 121.3
%
of
revenue
96% 98% 97%
Direct costs -38.0 -30.2 26% -128.6
Contribution (1) -8.6 -3.6 -7.3
EBITDA -17.5 -8.8 -35.2
%
of
revenue
-58% -32% -28%
  • Q1 revenue growth 12%. FX impact Q1 4%
  • In market unit sales increase Q1 for U.S. 5%
  • Q1 direct costs growth as planned
  • Includes NOK 0.9 million in expenses related to launch of Canadian operations

Europe Segment

million
Amounts
in
NOK
Q1 '22 Q '21 Change FY '21
Total revenues 50.4 54.3 -7% 225.8
Gross profit 45.7 50.0 -8% 207.3
of
%
revenue
91% 92% 92%
Direct costs -21.5 -16.1 33% -88.7
Contribution (1) 24.2 33.8 118.6
EBITDA 8.2 23.0 63.8
%
of
revenue
16% 42% 28%
  • Q1 revenue decline 7%. FX impact Q1 -3%
  • In-market unit sales increase Q1 1%. Main contributors France and Italy
  • Headcount and costs increase as access to care improves
  • Expenses declined compared to Q4 2021 related to pandemic interruptions

Consolidated Income Statement First Quarter 2022

million
Amounts
in
NOK
Q1 '22 Q1 '21 Change FY '21
Hexvix/Cysview Revenue 81.4 81.6 -% 351.4
Other Revenue 0.3 6.6 9.2
Total Revenue 81.6 88.2 -7% 360.5
Gross Profit 75.6 83.1 -9% 336.5
Operating Expenses -89.5 -65.0 38% -318.2
EBITDA -13.8 18.1 18.3
Depreciation & Amortization -6.0 -5.9 -24.1
EBIT -19.9 12.3 -5.8
Net Financial Items -7.4 8.1 -25.8
Earnings before Tax -27.3 20.3 -31.7
Tax Expenses 5.3 -5.2 0.8
Net earnings -22.0 15.2 -30.9

Revenue

  • Q1 Hexvix/Cysview revenue level with last year due to Omicron wave. FX neutral at consolidated level
  • Total revenue 7% below last year. Driven by sign-on fee from Asieris of NOK 6.4 million Q1 2021

Operating Expenses

  • Q1 operating expenses increased YoY mainly due to investment in the European commercial operation and increased activity level in North America including start up of the Canadian operation
  • Q1 operating expenses mostly level compared to Q4 2021 (down 3%)

EBITDA

Decline in Q1 EBITDA driven by higher operating costs as well as decline in other revenue. Limited FX impact

Net financial items

Q1 for both years driven mainly by the Ipsen earnout payment. 2021 net financial income driven by unrealized currency gain of NOK 14 million

Cash Flow & Balance Sheet First Quarter 2022

in
NOK
million
Amounts
Q1 '22 Q1 '21 FY '21
Operations Cash Flow -22.1 -1.9 23.9
Earnings before tax -27.3 20.3 -31.7
Depreciation & amortization 6.0 5.9 24.1
Adjustment earnout liability - - 17.2
Working capital -8.5 -20.5 -3.2
Other 7.7 -7.6 17.4
Investments Cash Flow 0.5 -0.3 -1.9
Financing Cash Flow -15.8 -3.3 -34.0
Net Change in Cash -37.4 -5.5 -12.0
in
NOK
million
Amounts
31.03.22 31.03.21 31.12.21
Non-current assets 375.9 353.9 376.5
Inventory & receivables 76.7 83.6 90.3
Cash & short-term deposits 285.5 329.4 322.9
Equity 481.0 530.0 502.6
Long-term liabilities 176.8 165.0 185.0
Current liabilities 80.3 71.8 102.0
Total balance 738.1 766.9 789.6

Cash Flow

  • Net cash flow from operations in Q1 NOK -22.1 million, driven by EBITDA NOK -13.8 million and working capital NOK -8.5 million
  • Net cash flow from financing in Q1 NOK -15.8 million includes loan repayment of NOK 6.3 million and earnout payments of NOK 7.6 million. The loan will be fully repaid in 2023
  • Net cash flow Q1 NOK -37.4 million, cash end of Q1 2022 NOK 285.5 million

Financial position

  • Non-current assets includes intangibles and goodwill from Ipsen transaction totaling NOK 285.7 million
  • Long-term liabilities includes deferred Ipsen earnout (NOK 138.9 million) and long-term portion of bank term loan (NOK 6.3 million)

Strategy for Shareholder Value Creation

Hexvix®/Cysview® – ambition to become standard of care in a \$1.9 billion total addressable market**

KEY SUCCESS FACTORS

*AUA, EAU, SUO, AFU, NICE, DGU guidelines **TAM = estimation of total addressable market U.S. and EU5 ¹Source: Photocure internal patient-based model built on Globocan 2019 EU5 data.

Anticipated Milestones & Corporate Priorities

  • Regain prior sales momentum once Covid-19 is consistently in decline
  • Launch of Karl Storz's upgraded Blue Light system in U.S.; continue expanding base of BLC capital equipment in North America
  • Further execute on contracting with GPOs and large Hospital/Health Systems in the U.S.
  • Continue geographic expansion by penetrating untapped European and Canadian markets, and through additional Hexvix licensing agreements ROW
  • Present/publish additional clinical data on the use of BLC® with Hexvix®/Cysview®
  • Report on the progress of partnered companies and license agreements
  • Continue evaluating strategic product or business opportunities

Summary

Continuing to execute despite recent Covid-19 surge & pending Karl Storz system launch

  • Delivered Hexvix/Cysview unit growth in Q1 2021 despite significant Covid-19 pressures
  • Strong new account pipeline; customers anticipating new Karl Storz Blue Light system
  • 13 new towers placed in the U.S. during Q1; including 5 flexible tower installations
  • New Karl Storz system FDA-approved in February; National launch expected second quarter 2022
  • Continuing to drive key initiatives in both commercial regions and with licensing partners
  • Photocure is well-positioned for strong post-pandemic growth

Leading change in bladder cancer

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