ArcticZymes Technologies — Investor Presentation 2014

Sep 23, 2014

Arctic Securities' Biotech Seminar,

Oslo, 23 September 2014

CEO Svein W. F. Lien

This is Biotec Pharmacon

• Developing immune modulatory products for human health and cold adapted marine enzymes used in molecular biology
• Spearheading research on immunomodulatory beta-glucan products
• Provide new and effective solutions within wound care, cancer therapies and other immune related disease areas
• Ambitions to be a leading supplier of novel and effective enzymes for diagnostics and genetic research

Creating value through profitable commercialization of specialized bioactive products in the international market

Two businesses built on strong IP

advanced wound healing

BetaGlucans	Enzymes
•	•
20 years of history in proprietary	Unique Marine Enzymes business,
Beta-Glucans	supplying the life science industry
•	•
Immuno-modulatory substance	Developed and commercialized
activating the immune system	Shrimp Alkaline Phosphatase (SAP)
• Promising pharmaceutical results	– a leading enzyme in DNA/RNA sequencing
•	•
Current focus on WOULGAN®	Broadening portfolio of arctic, cold
BIOGEL, a medical device for	adapted enzymes, including Cod

UNG and DNases

Financial Highlights

(NOK million)	Q2 14	Q2 13	H1 14	H1 13	2013
Enzymes*	5.4	2.7	8.7	7.2	15.8
Beta-Glucans*	3.9	1.8	4.7	3.2	6.3
Sales revenues	9.3	4.6	13.4	10.5	22.1
Enzymes*	1.0	-1.0	-0.5	-2.0	-2.6
Beta-Glucans*	-3.4	-3.7	-8.9	-8.8	-18.9
EBITDA	-2.3	-4.7	-9.4	-10.8	-21.5
Profit before tax	-2.5	-4.9	-10.0	-11.5	-22.9

* Segment figures reflect that all costs are allocated to the two operating units

Cash Flow and Cash Position

(NOK million)	Q2 14	Q2 13	H1 14	H1 13	2013
Operating activities	-7.7	-2.4	-18.3	-9.7	-17.4
Investing activities	-0.3	-0.3	-2.2	-0.6	-1.6
Financing activities	75.2	0.1	75.9	43.3	43.2
Changes in cash and cash equivalents	67.2	-2.6	55.3	32.9	24.3
Cash and cash equivalents at the beginning of period	21.8	44.9	33.7	9.4	9.4
Cash and cash equivalents at end of period	89.0	42.3	89.0	42.3	33.7

Strengthened cash balance through share issue raising gross proceeds of NOK 78 million at NOK 20 per share in April

Woulgan® Biogel

Broad indication area -large wound healing market opportunity

• The European market counts ~9 million wounds in the initial indication areas

Diabetic ulcers, leg ulcers, pressure ulcers, burns

• Approved also for other major wound areas
• Post-surgery wounds
• Trauma wounds
• Lacerations
• Abrasions

Europe represents ~1/3 of the total available global wound market

Woulgan® Biogel market approach

Studies show clear beneficial effects of SBG in Woulgan® Biogel

• The positive effect of SBG in healing of diabetic foot ulcers was covered in the 2014 Journal of Diabetes Investigation
• Classification as advanced medical device opens unique opportunities for Woulgan® versus other gels in the wound market

Zykova et al 2014;

«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.»

Male patient with venous leg ulcers. Treatment with Woulgan Biogel for 3 times a week for 1, 5 months. The patient refused wearing compression and healing haltered after initial response. He continued with Woulgan any way and ulcers continued to improve over the next 4,5 months

"I have tried Woulgan Biogel on eczema on my hand. Visible improvement after one week, the eczema is gone, only some small wounds left." Nurse

"I have struggled with chronic wounds on the palm of my hand and fingers for 2 years. After one week treatment this has greatly improved. Fantastic. This is a product that's becoming a "must have" for me."

"I have tried Woulgan Biogel on dry skin/rash on my leg. Improvement was observed after 2-3 days"

Woulgan® choices and plan going forward

• The Evaluation Agreement with Smith & Nephew outlines a process in which the product is to be tested in the market and where the parties subsequently will meet and discuss the potential for a long term agreement
• This process should be clarified around year-end

Most importantly:

It is no doubt this product is working very well and that it has a wide area of use – meaning we should ensure it becomes a commercial success

• The threat is if it becomes locked in by exclusive agreement with a wrong partner!

Woulgan® choices and plan going forward cont….

Remember the history:

• 2010: Do we have a technology?
• 2011: Yes, we have a technology!
• 2012: We have a product!
• 2014: We have an approved product that works very well!

2015 - :We will make Woulgan to a commercial success

How?....

• Plan A: We are committed to the S&N process making a partner agreement in a large part of the world

…but if it doesn't make sense……

• Plan B: Launch in limited areas and in parallel work with alternative partners globally and regionally

There are a number of alternatives!

Remember: Process will benefit from increasing commercial references and experience in selected markets!

Awarded US beta-glucan cancer patent

• US patent issued to Memorial Sloan-Kettering Cancer Center (MSKCC)
• Covers inventive treatment of several types of cancer using combinations of monoclonal antibodies and (1,3) beta-glucan
• Result of ongoing co-operation between MSKCC and Biotec BetaGlucans

Supply agreement with Skretting

• Started deliveries of beta-glucans for fish and shrimp feed to leading aquaculture company Skretting AS
• Marks a re-entry into the animal health market
• Expected to support revenues and operating profits in the second half of the year

Broadening the distribution

• Broadened the base of OEM customers with agreements with global leaders like GE Healthcare Life Sciences, New England Biolabs and Amresco (VWR) over the past years
• Continuing to add regional distribution partners
• Signed agreements with several new partners in H1'14, including:
• Q-Bio, Kem-En-Tec, Elisabeth Pharma, Nippon Genetics, Blossom Biotech, Techtum, etc.
• Participating in Analytica Shanghai in September

Revenue development

• Deliveries to main OEM partners increasing significantly
• Increasing end-user awareness and steady growth in end-user sales
• Fluctuating rSAP sales to key OEM – high volumes in Q214
• Revenues more than doubled from Q2'13 to Q2 14
• Positive operating profit

Revenues

R&D update

• Working to broaden the product offering of marine enzymes
• Participating in the NextZyme project starting in the third quarter 2014
• Received NOK 4 million grant from the Norwegian Research Council
• Own R&D focusing on new ready-touse enzyme kits and functionalized enzymes

Outlook

• Market evaluation for Woulgan® Biogel will determine commercial strategy – expected to be finalized during the second half of the year
• Continue to expand operation both in beta-glucans and enzymes
• Expect overall revenue growth going forward

Thank you for your attention

CEO Svein W. F. Lien Mobile: +47 922 89 323 E-mail: sl@biotec.no www.biotec.no