ArcticZymes Technologies — Earnings Release 2013

Feb 14, 2014

Fourth Quarter and Full-Year 2013 14 February 2014

Svein W. F. Lien – CEO

Agenda

• Highlights
• Q4 and FY financials
• Beta-Glucans
• – advanced wound care
• Enzymes
• – molecular testing
• Summary and Outlook

Highlights

BetaGlucans

• UK healthcare authorities (MHRA) is finalizing the procedural review of Woulgan® Biogel as an advanced Class III, rule 13 medical device
• Market evaluation process with Smith & Nephew and a limited product launch starting upon CEmarking
• Considers re-entering the animal health market

• Increased shipments of the rSAP enzyme to key OEM partner

Enzymes

• Gaining traction with the Cod-UNG enzyme to diagnostic kit manufacturers
• Continued focus on large OEM accounts and working to increase regional distribution

Financials

• Highlights
• Q4 and FY financials
• Beta-Glucans
• – advanced wound care
• Enzymes
• – molecular testing
• Summary and Outlook

Financial Highlights

NOK million	Q4 2013	Q4 2012	2013	2012
Enzymes	4.0	4.3	15.8	12.8
Beta-Glucans	1.4	1.7	6.3	8.7
Sales revenues	5.3	6.0	22.1	21.5
Enzymes	-0.5	-1.3	-2.6	-7.8
Beta-Glucans	-5.8	-5.1	-18.9	-14.8
EBITDA	-6.3	-6.4	-21.5	-22.6
Profit before tax	-6.7	-6.9	-22.9	-24.3

Cash Flow and Cash Position

	Q4		12M
(Amounts in NOK 1.000)	2013	2012	2013	2012
Operating activities	-897	-3,719	-17,385	-24,583
Investing activities	-871	615	-1,561	-2,079
Financing activities	-36	0	43,223	-33
Changes in cash and cash equivalents	-1,804	-3,104	24,277	-26,695
Cash and cash equivalents at the beginning of period	35,460	12,484	9,379	36,075
Cash and cash equivalents at end of period	33,656	9,380	33,656	9,380

Biotec BetaGlucans

• Highlights
• Q4 and FY financials
• Beta-Glucans
• – advanced wound care
• Enzymes
• – molecular testing
• Summary and Outlook

Biotec BetaGlucans

Segment numbers

NOK million	Q4 2013	Q4 2012	2013	2012
Sales Revenue	1.4	1.7	6.3	8.7
Other income	0.2	-0.6	1.2	1.1
Operating expenses	-7.4	-6.2	-26.4	-24.6
EBITDA	-5.8	-5.1	-18.9	-14.8
Depreciation	-0.3	-0.3	-1.3	-1.1
EBIT	-6.1	-5.4	-20.2	-15.9

CE-marking of Woulgan expected in Q1

• • Received informal notice from the UK Medicines and Healthcare products Regulatory Authority (MHRA):
• All outstanding issues have been addressed satisfactory
• Application has been submitted for internal sign-off at MHRA
• ..but even though it is unlikely, it may still come questions or concerns
• If formal sign-off is conducted, the Decision Notification Report is expected to be forwarded to the Notified Body within short
• • Notified Body has informed us they have no further questions regarding this application
• = So giving the positive outcome of the formal procedure, an issuance of CE-mark could be expected soon

Advanced classification enables claiming of medical effects in labels and marketing

• Supported by article publication in 2014 Journal of Diabetes

"Macrophage stimulating agent soluble yeast b-1,3/1,6-glucan as a topical treatment of diabetic foot and leg ulcers: A randomized, double blind, placebo-controlled phase II study"

• Shows clear beneficial effect of SBG treatment in healing of diabetic foot ulcers
• Claims offer a unique opportunity for a gel in the wound market
• Significantly more efficacious wound healing than gels without SBG or occlusive secondary dressings alone
• Modulates the immunological system by activating macrophages and other phagocytic cells having specific cell receptors for SBG, and supports the natural wound healing process within the wound bed
• Exercises biological effects in terms of increased wound contraction, while allowing increased influx of phagocytic cells to the wound bed
• Attracting and stimulating phagocytic cells in the wound has potential for reducing risk of contamination and microbial infection in the wound bed

Publication in «Sår 2013»

Targeting a mass market in wounds

• Partner Smith & Nephew shares the vision of potentially making Woulgan® Biogel a mass product
• Large market in need of new and cost-effective wound healing solutions

• First indications; Diabetic ulcers, leg ulcers, pressure ulcer and burns

Our goal is to make Woulgan® Biogel a cost effective and high volume advanced wound care product

collaboration

• Market evaluation trials commencing upon receipt of the CE-mark
• Evaluation in limited number of centres across Europe
• Seeking to establish end-user efficacy in routine clinical setting
• Obtaining planning tools and parameters for commercial strategy
• Clarifying the basis for a long-term relationship with Smith & Nephew, who hold exclusive, non-transferable technology rights until end of trials
• Biotec BetaGlucans are also actively contacting opinion leaders and the professional wound healing market in general
• Promoting the product and obtaining information about the competitiveness and market potential
• Web-shop ready to launch immediately upon CE-mark

Considers re-entry into animal health

• Working to secure key customers for use of our unique beta-glucans in animal feed
• Extensive experience from the animal health market before divestment of the business area in 2008

• Utilizing supply capabilities

• Highlights

• Q4 and FY financials
• Beta-Glucans
• – advanced wound care
• Enzymes
• – molecular testing

Summary and Outlook

ArcticZymes Segment numbers

NOK million	Q4 2013	Q4 2012	2013	2012
Sales Revenue	4.0	4.3	15.8	12.8
Other income	1.3	1.0	5.1	4.4
Operating expenses	-5.7	-6.6	-23.5	-24.9
EBITDA	-0.5	-1.3	-2.6	-7.8
Depreciation	-0.3	-0.2	-1.1	-1.1
EBIT	-0.8	-1.5	-3.7	-8.9

Revenue development

• In general high activity level and much interest for the company's products
• Higher sales of rSAP to key OEM customer
• Beginning to see adoption of Cod-UNG in diagnostic kits
• Strong dynamics in the relevant markets
• Research market maturing
• PCR based diagnostic market still low, but rapidly growing

Continued focus on multi-national companies and building more regional distribution

• 1. Tier 1 Key Accounts; Large multinational companies with scope and scale to integrate ArcticZymes products and key components in branded kits
• In dialogue with most of Tier 1 companies
• Started shipment to several of these global players, also OEM discussions
• 2. Tier 2 Accounts; Direct sales towards clients with geographical strength and/or channel ownership
• Will appoint several new distributors of own labelled products
• 3. End-user segment execution; primarily a low-cost pull strategy serving to develop brand
• Online web-shop, user-focused web site, Google Ads, e-mail blasts

¹⁸ Tri-Con San Fransisco this week

R&D

• Received NOK 4 million grants from the Norwegian Research Council for "NextZyme – enabling new concepts for marine enzymes in Next Gen- and Single-Cell Sequencing"
• R&D efforts to continue to focus on readyto-use enzyme kits
• PCR decontamination kit
• Heat&Run® gDNA removal kit

• Demand from both commercial customers and researchers ensure market oriented product development

• Highlights

• Q4 and FY financials
• Beta-Glucans
• – advanced wound care
• Enzymes
• – molecular testing
• Summary and Outlook

Outlook

Biotec BetaGlucans:

• If sign-off successfully concluded, expect CE-mark for Woulgan® Biogel soon
• Market evaluation process with Smith & Nephew and a limited product launch to start upon CE-marking
• Addressing large markets with high unmet medical needs within diabetic ulcers, leg ulcers, pressure ulcer and burns
• Considering re-entry into the animal health market

ArcticZymes:

• Establishing commercial relations with most of the larger players in the molecular diagnostics and research market. Appointing a limited number of regional distributors for sale of ArcticZymes label products
• Continuing development of novel user-friendly enzyme kits

Questions?

Svein W. F. Lien Mob: +4792289323 Email: sl@biotec.no www.biotec.no