ArcticZymes Technologies — Investor Presentation 2016

Mar 17, 2016

March 2016 Presentation

Svein W. F. Lien – CEO

• Biotec in brief
• Q4 Financials
• BetaGlucans
• Advanced wound care

• Enzymes

• Molecular testing
• Outlook

Biotec in brief

A corporation of two independent versatile technology platforms

Beta-Glucans:

• Proprietary Beta-Glucans
• Immuno-modulatory substance activating the immune system
• Building up international marketing and sales organization in wound care
• Bulk sales of products for Animal Health and Nutrition
• Strong and experienced scientific team with in-house production

Enzymes - ArcticZymes:

• Unique Cold-adapted Enzymes for the life science industry based on species from the Barents Sea
• International marketing and sales team
• Established relation with core industrial companies (B2B)
• Strong and experienced scientific team with in house production

Biotec in brief

A corporation of two independent versatile technology platforms

Value proposition Beta-Glucans:

To become a competitive supplier of advanced wound care products under the Woulgan® brand while continue to build the other business areas including cancer

Value proposition Enzymes:

To expand the business into key molecular biology platform technologies with a ground breaking strategic value

Biotec is emerging into a commercially driven company

Q4 financials

Financial highlights Q4

NOK million	Q4 2015	Q4 2014	12M 2015	12M 2014
Enzymes	3.3	4.3	23.5	16.2
BetaGlucans	9.8	5.7	29.7	16.8
Sales revenues	13.1	10.0	53.3	33.0
Enzymes	-3.8	-1.1	1.2	-3.8
BetaGlucans	-3.3	-4.7	-15.6	-17.4
EBITDA	-7.1	-5.8	-14.4	-21.2
EBIT	-8.0	-6.3	-17.3	-23.6

Cash flow and cash position

NOK million	Q4 2015	Q4 2014	12M 2015	12M 2014
Operating activities	2.3	1.3	-12.9	-22.0
Investing activities	-0.9	-0.5	-1.5	-1.9
Financing activities	0	0.8	4.4	77.7
Changes in cash and cash equivalent	1.4	1.6	-9.9	53.3
Cash and cash equivalents at the beginning of period	76.9	86.7	88.3	33.6
Cash and cash equivalents at the end of period	78.3	88.3	78.3	88.3

Advanced wound care

Beta-Glucan product portfolio

• Animal Health: Deliver feed ingredients to improve animal health in e.g. fish farming
• Nutrition: Deliver bulk ingredients for food supplements
• Cosmetic: Deliver bulk ingredients for cosmetic products
• Medicinal: Produces SBG for use in wound care (Woulgan®) and for clinical trials as adjuvant in cancer treatment

Active wound healing

• WOULGAN® is a CE-marked medical device, class III, rule 13, approved for a range of wound conditions including diabetic ulcers, leg ulcers, pressure ulcers, postoperative surgical wounds, 1st and 2nd degree burns, abrasions and lacerations
• WOULGAN® is a patent-protected, advanced gel containing soluble beta-glucan (SBG®), an ancillary medicinal substance proven to heal wounds faster
• SBG® is a proprietary platform technology that can be extended to other product formats and can be tailor-made for new application areas
• Woulgan® has a variety of strong primary and secondary claims, thus increasing the likelihood to demand higher prices. (Full set of approved claims are enclosed)
• The product is preferably positioned towards the advanced wound care market

Status Woulgan®

• Strategic decision to position the product towards "stalled wounds"
• Means it will utilize its ability to kick-start wounds that have stopped healing and health care professional can continue with existing treatment plans as 1st line therapy
• This also mean that the product will be targeted where its unique features are really needed
• Nothing in this strategy precludes the product from being used outside this target positioning

Stalled Wounds: A Growing, Global Issue

• US: DFU costs \$9-13 billion per annum*
• US: diabetic population to double to 44 million by 2034
• US: VLU incidence at 2.2% of population, costing \$14.9 billion**
• China: diabetes prevalence at 11.6% of population‡

Globally >5M stalled wounds‡‡ ( >60% of all chronic wounds):

Stalled Wounds by Market

Biotec Pharmacon ASA 12 *Rice JB1, Diabetes Care. 2014;37(3):651-8. **Rice JB1, J Med Econ. 2014 May;17(5):347-56 ‡Prof. Xiaobing Fu EWMA Journal 2015 vol 15 no 1 ‡‡BBG analysis:not responding after 4 weeks treatments with standard of care

A Substantial Burden: UK† Example

• UK NHS managed 600K chronic wounds
• £3.0 billion annual cost of treating unhealed wounds (all types)
• Time to heal is main driver of cost in wound care

35 Million Visits to Care for Chronic Wounds in UK

Vision: "Building a >USD100M Wound Care Company"

Bioactive Beta-Glucan technology demonstrated ability to kick-start "stalled wounds" where healing slowed or stopped:

Positioning for stalled wounds allows Woulgan to show:

• more healing benefit versus standard of care
• stronger, positive clinician experiences

Clear, clean and credible message on when to use and when to not use Woulgan across multiple wound types

Woulgan® Improves Outcomes AND Reduces Costs

• 2.3 times more patients healed at 8 weeks* (44% vs. 17% in control)

% Patients with Complete Healing

Duration of Therapy/(Weeks)

• Woulgan® heals faster, saving 44% costs**

• Appointed H&R Healthcare in UK and Navamedic in Nordic Countries
• Drug Tariff Application sent in December 2015 expect approval mid 2016
• Used health economic data to support application
• KOL contacts for evaluation studies ongoing
• A number of marketing activities in process
• Aim for commercial launch in the Nordic and UK this year

Woulgan® in Spray and Dressing Proof of concept obtained – diabetic mice model

Spray format Dressing format

Activities outside Woulgan®

• Signed a one-year non-exclusive agreement with NutraQ (Sana Pharma )for supply and delivery of beta-glucans to the nutrition segment
• Biotec and Sana Pharma will enter into arbitration relating understanding of an IP agreement that was entered into in 2009
• Nutrition is not a key focus area for Biotec
• Biotec will await any further strategic initiatives for the nutrition segment until arbitration is settled

Activities outside Woulgan® cont…

• Increasing interest for Biotec's M-Glucan® within the animal health segment
• This week signed additional agreement of NOK 20M over 2 years
• Continue to document the M-glucan® effect as a feed ingredient
• R&D projects ongoing
• Promising preliminary results

Commercialising the Arctic's Uniqueness

Leveraging Uniqueness

Arctic Bioprospecting

• Driven by University of Tromsø (UiT)
• Large biobank of novel enzymes

Discovery

• Identifying commercially attractive & novel enzymes
• Engineering & formulation to enhance desired features

Product Development & Manufacturing

• Cost efficient manufacturing
• Scalability & customisation

Commercialisation

• B2B product offering => Early access
• Support for application development (integration into customer workflows)

Molecular Diagnostics (MDx)

Large platforms Points Of Care Specialised/Lab Developed Test

• DNA or genetic tests used to diagnose, and prevent disease as well as guides treatment:
• Infectious Disease (HIV, HCV, Influenza)
• Cancer (colorectal, prostate)
• Prenatal care (Down Syndrome, Turners, Edwards)
• Dominated by instrument platforms running integrated workflows
• Highly regulated FDA/EU regulatory authorities
• Enzymes are very essential components. Unique features are often demanded
• Market Size: \$6,5 Bil (8,5% CAGR) in 2016

Molecular Research

Qiagen kit Isolate DNA

Thermo kit Amplification (PCR)

Affymetrix kit Clean up

• Advancing our understanding and knowledge about DNA and other genetic material
• Kits are used in sequential fashion in performing workflows
• Large diversity of kits on the market which can be combined to achieve the desired workflow
• Majority of kits are driven by enzymes. Leading technologies demand novel enzymes
• Market size: \$8,9 Bil (6% CAGR) in 2016

Molecular Enzymes - \$1,5 Bil today (8,3% CAGR)

ArcticZymes Unique Value Proposition

Arctic Access

Direct access to unique bioprospecting libraries via University of Tromsø

Commercial Capability

Internal capabilities to translate into high value & novel enzyme products

B2B Approach

Commercial Partnering - collaborate and provide our solutions to global players in Molecular Research & Diagnostics

Molecular Enzyme Market \$1.5 Bil (2016)

Adapted from Molecular Biology Enzymes and Kits & Reagents market – Global Forecast to 2018; MarketsandMarkets 2014. Data excludes restriction enzymes.

OUTLOOK 2016

• Enter into distribution agreement(s) for Woulgan® in Germany
• Finalize the UK reimbursement process in the high-end category of the market
• Full launch and growing revenues in UK and Scandinavia
• Grow business further in Animal Health and Nutrition
• Achieve important milestones in the development of the ArcticZymes business and in the new enzyme development projects