ArcticZymes Technologies — Investor Presentation 2010

Mar 9, 2010

BIOTEC PHARMACON

BIOTEC PHARMACON

Immunity for Life™

4th Annual International Partnering Conference

BIO-EUROPE SPRING® 2010

MARCH 6-10, 2010
BARCELONA, SPAIN

CBD GROUP

Sven Rohmann, MD, PhD

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BIOTEC PHARMACON

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections, which generally are identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, general economic and industry conditions in markets which are expected to be major markets for Biotec Pharmacon ASA's products, as well as risks and uncertainties related to product development, regulatory approvals, commercial partnerships, the outcome of intellectual property rights litigation and the competitive situation.

Although Biotec Pharmacon ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Biotec Pharmacon ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Biotec Pharmacon ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use of the information contained herein.

This presentation was prepared for the 4th Annual International Partnering Conference Bio-Europe Spring in Barcelona, on March 8-10, 2009, and the information contained within will not be updated in this presentation. The following slides should be read and considered in connection with other information provided by the company.

No shares of Biotec Pharmacon ASA are being offered in connection with this presentation and no such shares have been registered under the U.S. Securities Act of 1933, as amended (the "Act"), and such shares may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Act.

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BIOTEC PHARMACON

What happened with SBG in Phase III?

>>> SBG failed to show activity in DU AND OM!

"We are not overly surprised by the results from the oral mucositis study, given the outcome of the diabetic ulcer studies in November last year. As with the diabetic ulcer studies, there was no statistically significant difference between the two treatment groups, although a marginal advantage of SBG over placebo was seen for the primary endpoint", says CEO Lars Viksmoen.

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BIOTEC PHARMACON

What happened with SBG in Phase III?

Re-analysis of study medication

(drug substance and drug product)

Substance	Storage place
Drug substance
(Active Product Ingredient)	Quality laboratorium Tromsø
Drug product
(Polyethylene-ampules)	Production factory Tromsø
(from Holopack)
Drug product
(Polyethylene-ampules)	Returned from study centers
(UK og Europa)

• Compared with samples of drug substance/product also from phase I and II, where available
• Basket of tests, with main focus on biological activity, both for SBG and placebo

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BIOTEC PHARMACON

What happened with SBG in Phase III?

Possible “root causes” and conclusions

Possible “root causes”:

• Study design flaws
• Technical study flaws
• Product flaws
• SBG
• Placebo

Conclusions:

• Systemic failure – no flaws found in manufacturing process or in study design and/or study conduct
• Early evidence of unexpected interaction between the polyethylene product container and SBG, rendering SBG inactive over time

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BIOTEC PHARMACON

No alteration in molecular structure

Molecular weight distribution (SEC-MALS-RI)

(drug substance vs drug product)

molar mass vs. time

[☑] — SBG 342-8 DS[Re-analyses_drug_prod_111209] [☑] — IK 107 Tromso[Re-analyses_drug_prod_111209]
[☑] — IK 107 rand 1158[Re-analyses_drug_prod_110110B] [☑] — IK 107 rand 1160[Re-analyses_drug_prod_110110B]
[☑] — IK 107 rand 2134[Re-analyses_drug_prod_040110]

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BIOTEC PHARMACON

Fragmentation of the gel structure

Re-analysis of study medication

(drug substance vs drug product)

Active Drug Substance Phase III batch

Inactive Drug Product Phase III batch

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BIOTEC PHARMACON

Consequences of fragmented gel structure

MoA depends on intact 3-D conformity

SBG binds to multiple receptors on macrophages

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BIOTEC PHARMACON

Reduction of biological activity

Re-analysis of study medication

Biological activity in Drug Substance vs Drug Product

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BIOTEC PHARMACON

The Polyethylene Issue

“Root cause” findings

3rd party assessment

“... It is highly likely that a ”root cause” for the current form of SBG failing has been identified ...

... Based on considerable experience the suspected inactivation of SBG in polyethylene ampoules would not have been normally expected as an issue during the selection of ampoules as the primary container for SBG”

Ashley Hankinson,
Global Compliance International

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BIOTEC PHARMACON

The Polyethylene Issue First Clinical Evidence in DU?

Sub-analysis of clinical data*- batch-to-batch performance

Product (DP) % healed		Comparator product % healed		p-value
SBG Nottingham 1st batch (N=46)	21.7%	Placebo (N=34)	32.4%	0.29
SBG Nottingham 2nd batch (N=21)	52.4%	Placebo (N=21)	33.3%	0.22
SBG Nottingham 1st batch (N=46)	21.7%	SBG Nottingham 2nd batch (N=21)	52.4%	0.013
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*Ad-hoc, non pre-specified analysis

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BIOTEC PHARMACON

The Polyethylene Issue:

“Unexpected interaction between SBG and polyethylene in the product container”

• Problem:

• Interaction with polyethylene of the product container destroys treatment efficacy of SBG during prolonged storage

• Solution:

• Change the product container away from polyethylene (e.g. to carboethylene)
• Initiate accelerated stability studies - as part of a follow-up program

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BIOTEC PHARMACON

Proof of Concept – Clinical phase II

SBG in treatment of diabetic foot ulcers

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BIOTEC PHARMACON

Proof of Concept – clinical phase II

SBG for prevention and treatment of oral mucositis

Source: Sook Bin Woo, eMedicine, Chemotherapy-induced Oral Mucositis

Patients developing severe Oral Mucositis (%)
Duration of therapy (days)
n=36

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• SBG

BIOTEC PHARMACON

Proof of concept – Cancer

SBG and monoclonal antibodies in cancer

• Significant (p<0.05) effect of mAb+SBG versus mAb alone
• Methodology:
• Inoculation of mice with human neuroblastoma cancer cells, leading to development of tumors
• Treatment with the mAb 3F8 in active and control group
• SBG in addition to mAb (3F8) in the active group
• Primary end point: Tumor size (% increase)

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• SBG

BIOTEC PHARMACON

Clinical Proof of Concept – Phase Ib/IIa

Clinical phase	2008				2009				2010
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Phase I/II, Sloan Kettering

Blue area = periods of patient inclusion, black areas = periods of study completion and reporting

Patient populations
- First study; n=45
- Patient enrolment completed

Primary endpoint
- Assess the clinical toxicity of SBG in combination with anti-GD2 antibody 3F8 in stage 4 juvenile neuroblastoma patients.

Secondary endpoints
- Assess the biologic effects of SBG in combination with anti-CD2 antibody 3F8

Before

After

Marked decrease in neuroblastoma disease burden

JANTERIOR L

L POSTERIOR R

123I-MIBG scan of patient treated with one cycle of 3F8+SBG (80mg/kg/day)

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BIOTEC PHARMACON

Proof of concept – IBD

SBG in the treatment of ulcerative colitis

SBG protects against DSS-induced colitis, and has effect on epithelial proliferation and intestinal restitution

Oral SBG treatment stimulates expansion of Peyer’s patches and mesenteric lymph nodes (not shown)

$^{}\mathsf{P} < 0.05$ $^{}\mathrm{P} < 0.01$ $^{*}\mathrm{P} < 0.001$ 2-way ANOVA

Sandvik et al. 2008 submitted

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BIOTEC PHARMACON

SBG – Partnering Opportunities

• Open for partnering discussions with both global and regional partners
• Open for partnering opportunities for SBG for all disease indications

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BIOTEC PHARMACON

Summary

• Disappointing phase III results – SBG did not show superiority over placebo in diabetic foot ulcer and oral mucositis
• Interaction with polyethylene in product containers may have rendered SBG clinically inactive
• Phase III failures asks for re-alignments of R&D activities; cost base and workforce match the new activity level
• Maintained and continuing discussions with potential partners and investment groups
• Continued strong growth in Biotec Marine Biochemicals AS
• Divested Immunocorp Consumer Health AS for 31.5 M NOK.

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BIOTEC PHARMACON

Contact:

Sven Rohmann, MD, PhD
Mobile: +41 79 577 8895
E-mail: sven.rohmann@biotec.no

Biotec Pharmacon ASA,
Strandgata 3
N-9008 Tromso, Norway,

or

Biotec Pharmacon ASA,
Drammensveien 149
N-0277 Oslo, Norway

www.biotec.no

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Back-up's & Financials

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BIOTEC PHARMACON

Financial Highlights

(NOKm)	Q409	Q408	2009	2008
Marine Biochemicals	5.4	4.3	17.6	12.0
Pharmaceutical development	1.6	2.5	6.5	8.8
Revenues	7.0	6.7	24.1	20.8
Marine Biochemicals	2.0	3.3	8.4	5.3
Pharmaceutical development	-19.9	-36.7	-71.1	-68.9
Corporate and unallocated	-3.4	-1.4	-19.4	-11.4
EBITDA	-21.3	-34.8	-82.1	-75.1
Profit before tax	-21.6	-32.7	-81.2	-69.2
Net profit, continued business	-52.4	-32.7	-111.9	-65.1
Net profit consumer health, discontinued	15.3	-4.6	8.1	-13.8
Net profit animal health, discontinued	-	-0.6	-	26.6
Net profit	-37.1	-37.9	-103.9	-52.2

Split into new segments and restated for the divestments of Animal Health in 2008 and Consumer Health in 2009

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BIOTEC PHARMACON

Marine Biochemicals

• 2009 revenue at NOK 17.6 million, well above the 15 MNOK target
• Q4'09 revenue increase of 28% and 47% for the full year 2009
• Strong full year growth for both SAP (+34%) and Cod-UNG (+107 %)
• Strong positive contribution; EBITDA-margin of 36% in Q4'09 and 47% for the full year
• Remains committed to longer-term target to double revenue over the next three years

NOKm	Q4 09	Q4 08	2009	2008
Revenue	5.4	4.2	17.6	12.0
Other operating expenses (net)	-3.4	-0.9	-9.2	-6.7
EBITDA	2.0	3.3	8.4	5.3
Depreciation	0	0	0	0
EBIT	1.9	3.3	8.3	5.3

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BIOTEC PHARMACON

Pharmaceutical Development

• Overall costs in line with full-year guiding
• Not fully comparable after restating and new segment reporting structure
• Clinical development costs amounted to NOK 35.2 million in 2009 (NOK 34.6)
• Significantly lower in 2010, although with some costs related to phase III wrap-up in Q1'10
• Lower in-house costs
• From 35 to 14 employees in the parent company

NOKm	Q4 09	Q4 08	2009	2008
Revenue	1.6	2.5	6.5	8.8
Other operating expenses (net)	-21.5	-39.2	-77.6	-77.8
EBITDA	-19.9	-36.7	-71.1	-68.9
Depreciation	-0.7	-0.9	-2.7	-3.0
EBIT	-20.6	-37.6	-73.8	-72.0

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BIOTEC PHARMACON

Cash Flow

NOK ('000)	Q4 09	Q4 08	2009	2008
Cash Flow from operating activities	-28 4622	-28 256	-84 704	-65 657
Cash Flow from investing activities	10 077	210	13 292	36 491
Cash Flow from financing activities	-53	-	-53	-45
Cash flow in the period	-18 439	-28 046	-71 466	-29 211

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BIOTEC PHARMACON

Consolidated Balance Sheet

Condensed figures

(NOK '000)	31.12.09	31.12.08
Non-current assets	11 448	47 818
Cash and cash eq.	49 647	124 589
Other current assets	31 270	15 359
Total current assets	80 917	139 938
Assets	92 365	187 766
Equity	60 198	159 273
Liabilities	32 167	28 493
Equity & Liabilities	92 365	187 766
Equity Ratio	65%	85%

• Non-current assets reduced by NOK 30.7 million due to valuation allowance of deferred tax after failed phase III studies
• Equity reduction to NOK 60.2 million (65%) reflects losses in the period
• Cash position of NOK 50 million, including approximately NOK 20 million from divestment of Immunocorp Consumer Health
• Payment of remaining sales price of NOK 31.5 million due in Q1 2010

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BIOTEC PHARMACON

Summary (I)

Priority action plan for Pharma Development

• Confirm “root cause” behind disappointing phase III results
• Address reasons and make sure that SBG will not fail again
• Re-establish the pharmaceutical strategy platform
• Sufficient funding for planned activities – no need for further asset sales
• High cash burn in Q1’10 due to wrap up clinical studies
• Significantly lower cost base from Q2’10
• Decide on level of partner and/or industrial investor involvement and collaboration alternatives and ensure funding for future R&D activities
• Full-year cash burn depending on program/project activity, strategic choices and partnering activity

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BIOTEC PHARMACON

Summary (II)

Growing the Marine Biochemicals business

• Continuing expansion in the molecular biology and diagnostics markets
• Grow:
• Existing products
• Existing customers
• Expand:
• Customer base
• Use in new applications
• Product portfolio with new products
• Profitable doubling of revenue expected over the next 3 years (mainly from existing products)

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BIOTEC PHARMACON

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Non-pharmaceutical business

Biotec Marine Biochemicals

Immunocorp Consumer Health

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BIOTEC PHARMACON

Biotec Marine Biochemicals

Enzymes for R&D and diagnostics markets

• Strong revenue growth - exceeded the 2009 revenue target
• Strong growth for both SAP and Cod-UNG
• New product pipe line
• High margin business
• Longer-term target to double revenue over the next three years
• Strengthening staff –

Molecular structure of cod Uracil-DNA N-glycosylase (Leiros, et al. 2003)

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BIOTEC PHARMACON

Biotec Marine Biochemicals

Market development

• Market growth:

• >10% CAGR

• Increased customer focus:

• New customer focused organization in place

• Customer input into product development

• New applications/use:

• New PCR kits from major research & diagnostic kit companies w/BMB enzymes
• BMB enzymes entering the High

Typical presentation of qPCR data (own data)

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BIOTEC PHARMACON

Biotec Marine Biochemicals

R&D and product development

• New enzyme products:
• HL-dsDNase and SAN in extensive trials - very well received by key opinion leaders

• New products in pipeline

• R&D:

• Bio-prospecting activities in Tromsø (Sfi-MABCENT)
• Increasing customer needs input into R&D process
• In house molecular engineering expertise
• Specialty; cold adapted/heat labile

Proteins in SDS-PAGE gel (own data)

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BIOTEC PHARMACON

Immunocorp Consumer Health

Non-core business - divested at the end of Q4

• Good strategic match with the buyer Sana Pharma AS
• 5-year supply agreement
• Sales price NOK 31.5 million
• Cash effect of ~NOK 20 million in 2009, with the remainder due in Q1 2010
• Strengthening the focus and financial platform for the BP core businesses - allowing ICH to pursue growth opportunities