ArcticZymes Technologies — Investor Presentation 2017

Aug 17, 2017

Strategic update and CMD

Disclaimer

This presentation contains certain forward-looking information and statements. Such forward-looking information and statements are based on the current, estimates and projections of the Company or assumptions based on information currently available to the Company. Such forward-looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions. The Company cannot give assurance to the correctness of such information and statements. These forward-looking information and statements can generally be identified by the fact that they do not relate only to historical or current facts.

Forward-looking statements sometimes use terminology such as "targets", "believes", "expects", "aims", "assumes", "intends", "plans", "seeks", "will", "may", "anticipates", "would", "could", "continues", "estimate", "milestone or other words of similar meaning and similar expressions or the negatives thereof. By their nature, forward-looking information and statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements that may be expressed or implied by the forward-looking information and statements in this presentation. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove to be incorrect, the Company's actual financial condition or results of operations could differ materially from that or those described herein as anticipated, believed, estimated or expected.

Any forward-looking information or statements in this presentation speak only as at the date of this presentation. Except as required by the Oslo Stock Exchange rules or applicable law, the Company does not intend, and expressly disclaims any obligation or undertaking, to publicly update, correct or revise any of the information included in this presentation, including forward-looking information and statements, whether to reflect changes in the Company's expectations with regard thereto or as a result of new information, future events, changes in conditions or circumstances or otherwise on which any statement in this presentation is based.

Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements.

Time	Presentation	Presenter
0900 – 0910	Opening remarks	CEO Svein Lien
0910 – 0940	Enzymes – taking ArcticZymes to the next level	MD Jethro Holter
0940 – 0950	Q&A
0950 - 0955	Beta-glucan a versatile technology platform	CSO Rolf Engstad
0955 – 1020	Woulgan® - driving sales in key markets and next generation products	VP Marketing Stuart Devine
1020 - 1030	Q&A and coffee
1030 – 1110	Other beta-glucan initiatives: Animal Health – securing high volumes sales • Consumer health – competitive priced high quality • product Cancer – opportunity with untapped potential •	CEO Svein Lien CSO Rolf Engstad
1110 - 1120	Q&A
1120 - 1130	Execution on corporate strategy	CEO Svein Lien

Biotec in brief

A corporation of two independent versatile technology platforms

Beta-glucans

• A common unique immunomodulatory technology platform
• Strong scientific and commercial team with in-house production
• Focus on:
• Woulgan proven to reactivate wounds and with commercial progress in key markets
• Feed ingredient market leader with a lot of potential
• Cost efficient and well documented nutrition product

• Promising results as an adjuvant in Cancer

• Global leader within cold adapted enzymes

• Strong pipeline of new products
• Long and rewarding relationships with core industrial companies within molecular biology and research
• Strong and experienced scientific team with inhouse production

Biotec in brief

A corporation of two independent versatile technology platforms

Value proposition Betaglucans:

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

Value proposition Enzymes:

Evolving ArcticZymes business to the next level in strategically re-positioning itself as the leading commercial supplier of unique and high quality molecular enzyme technologies

ArcticZymes Taking ArcticZymes to the next level

Agenda: Taking ArcticZymes to the Next Level

Agenda: Taking ArcticZymes to the Next Level

ArcticZymes Business Today

• Strong brand position as a B2B supplier
• Reputation for robust and quality enzymes
• Broad commercial customer base
• Regular new product introductions
• Annual product sales growing >20%
• Positive EBITDA since 2015
• Market views ArcticZymes as a niche supplier of cold adapted enzymes

Today: take a glimpse at how ArcticZymes will strategically take the business to the next level beyond a niche supplier

Why Evolve ArcticZymes?

Dynamic Shift in the Business as Company Matures

• About building strong brand and deep rooted commercial customer base

• Reputation as a niche supplier of cold-adapted enzymes

• About building out product range and offerings

• Why?
• Customers demand more innovations from AZ
  • Unique enzymes with other properties
  • Broader enzyme range and supportive products

Agenda: Taking ArcticZymes to the next level

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Evolving ArcticZymes Business

Doing more than just cold adapted molecular enzymes

Todays Offering Unique cold adapted enzymes

Expand Offering Other unique enzymes Sourcing Beyond Tromsø Obtaining enzymes from other sources

Evolving ArcticZymes Enzyme Offerings

Innovating other unique enzymes beyond cold adapted enzymes

All these properties are highly desirable to Molecular Diagnostic and Molecular Research companies

Sourcing: Gaining Access to Other Novel Enzymes

New novel enzymes will be obtained from different sources

Academic Sourcing:

• Todays model with UiT

• Complement beyond UiT's libraries

• New approach for AZ

• License-in prototypes

Commercial Sourcing:

Leverage external developments

Commercialised Enzymes • Existing Products (other companies)

• New approach for AZ
• Exploring with other companies

Sourcing: Ramp Commercial Potential Through R&D Investment

in product sales

2020: At least 38 unique & diverse enzymes commercialised

How?

• Incremental investment in R&D personnel needed to drive "Sourcing" initiatives

Commercial Benefits

• 2018 and onwards double capacity in commercialising unique enzymes
• Accelerate commercial traction sooner via a wider product range

Agenda: Taking ArcticZymes to the Next Level

Contract Discovery & Research in Tromsø

External Competences (Today) AZ Competences (Today)

Custom screening of libraries Re-engineering/optimisation of customers OWN enzymes

ArcticZymes Services

• Partnership is key in being able to provide such services

Custom polymerase's likely to trigger our 1st projects

Custom Development and Manufacturing of Kits

ArcticZymes could take more of the value chain by offering:

• Contract Research Services: custom kit development around customers own biomarkers
• Contract Manufacturing Services: exclusively manufacturing kits or custom bulk components

What ArcticZymes needs to do in being able to offer such services?

Strategic Acquisition & Joint Ventures

Strategically strengthen our commercial position and capabilities that would be unattainable alone

Agenda: Taking ArcticZymes to the Next Level

Summary: Commercial Impact from Evolve Offerings

Other initiatives not included. Business cases will be developed further as business matures.

Outlook: Towards and Beyond 2020

2020

Evolve business towards other kinds of unique enzymes (38+ enzymes)

Diversify and leverage synergistic technologies beyond Tromsø

Leading B2B supplier for unique and quality molecular enzymes

Vision

Mature towards next level in being a solution and broader content supplier

Ambition

Become Nordic's largest molecular company

Beta-glucan technology and products with exciting commercial potentials

Time	Presentation	Presenter
0900 – 0910	Opening remarks	CEO Svein Lien
0910 – 0940	Enzymes – taking ArcticZymes to the next level	MD Jethro Holter
0940 – 0950	Q&A
0950 - 0955	Beta-glucan a versatile technology platform	CSO Rolf Engstad
0955 – 1020	Woulgan® - driving sales in key markets and next generation products	VP Marketing Stuart Devine
1020 - 1030	Q&A and coffee
1030 – 1110	Other beta-glucan initiatives: Animal Health – securing high volumes sales • Consumer health – competitive priced high quality • product Cancer – opportunity with untapped potential •	CEO Svein Lien CSO Rolf Engstad
1110 - 1120	Q&A
1120 - 1130	Execution on corporate strategy	CEO Svein Lien

Biotec versatile beta-glucan technology platform - trigger of basic immune functions

	Innate immunity	Adaptive immunity
Main function	Prevent microorganisms (bacterial, fungal and viral pathogens) to invade the host & eliminate «non-self»
How are pathogens recognised	By fixed structures on pathogen groups	Learn to recognise any structure on pathogens
Response time	Immediate Need days/weeks
Cells involved	Neutrophils, NK-cells Macrophages	T- and B-cells (antibodies) assisted by Macrophages

• Macrophages are found throughout the whole animal kingdom
• Macrophages are known as Metchnikoffs soldiers killing pathogens & instructing the immune system
• Beta-glucans stimulates macrophages to become more active «pathogen-like structure»

la lutte des cellules de l'organisme contre l'invasion des microbes- On fighting cells of the body against invading microbes. Ann. Inst. Pasteur 1: 32

Woulgan Driving sales in key markets and next generation products

Woulgan® status and mid-term* objectives

European** sales
	New products
		New markets, esp. U.S.

**European and also EU-similar markets

European sales - priorities

*European and also EU-similar markets

European sales- status

	Clinicians prescribed Woulgan for over 1,350 patients (1,000 patients from January to June)
Clinical practice: Key opinion leader engagement & support	Attended 28 congresses and presented 30 posters, organized 2 clinician led symposia, 6 multi-media campaigns
	Woulgan featured in 5 journal publications & 2 KOL-led webinars with over 1,500 unique viewers
	Germany: Woulgan reimbursed by payers (Sick Funds)
Market access: Ensure tender and reimbursement listing	Nordics: tenders slower to renew but making progress to establish "beta glucan gel" as a specific category
	UK: producing evidence for 2nd application if needed. Q3 decision to potentially re-open 1st application
	2.1 MNOK sales ex-Biotec (1.3 MNOK from January to June)
Go-to-market: Sales generation, sales & marketing	Q2 in-market sales (consumption) more than trebled from Q1 and sales pipeline looks good
organization	Continue building effective sales & marketing organization

Clinical practice

Clinicians rely mostly on personal experience* to decide on wound care treatments

Further develop KOL endorsements for faster, smoother adoption

• In time KOL support potentially leads into national guideline

Continue selling evaluations as key step in sales process

• Personal experience is essential stage in treatment choice

Market access

Go-to-market - sales outlook

• Sales outlook is very positive
• 2017 sales growth according to expectations
• Germany ahead
• Nordic/UK behind
• Sales outlook 2018-2019
• Expect to achieve sales growth and demonstrate sufficient traction to open opportunities for commercial partnerships in new markets

Woulgan opportunity

• Stalled wounds are a growing global problem
• 1-2% of population experience chronic wound during lifetime

• 60% chronic wounds become stalled

• 6 million stalled wounds accessible globally*

• Pricing varies significantly by market
• U.S. pricing potentially multiple of EU

Woulgan opportunity - example UK market

Examples of wounds treated by equivalent* brands

• Conservative estimate of 200K UK stalled wounds- €32m potential sales
• 2 nd line Brand #1 reaches approx. 12% of stalled market

Management estimates from IMS data

Wound healing in DFU

Why Woulgan competes in the market on efficacy

• Strong feedback from multiple clinicians & Key Opinion Leaders

• Repeating customer orders shows positive user experience

• Strong clinical evidence in Diabetic Foot Ulcer (DFU)

Source: Whalley et al 2002; Veves et al 2002; Zykova et al 2014

*Proxy brands selected for being new market entrants or commonly used as 2nd line

New products

New products
Broader offering
Substantial additional market potential
Existing, attractive reimbursement

New products

• Woulgan positioning by wound characteristics Market research for new product formats
• Woulgan dry layer will address 60% of stalled wounds not available to gel product
• Proof of concept established
• Reimbursement for dry dressing more widespread & more attractive
• Pilot production plant is being built

Woulgan dry layer development path

(Dry layer and gel have the same principle composition and ingredients)

• Currently exploring production technologies to make cost-effective, competitive dry layer, with the desired qualities as defined by wound care expert panel

New markets, esp. U.S.

	New markets, esp. U.S.
	Commercial traction
	Compelling plan for US
	reimbursement
	Partner opportunities

US market

• Largest wound care market \$3.1B in 2017
• US system has an established referral path to specialised clinics for non-healing wounds
• This leads to a greater use of active healing products (Actives), benefiting from substantially higher product reimbursement
• Currently validating how Woulgan would qualify as an "Active"

Animal Health M-Glucan®

Status and opportunity in animal health

Status

• Biotec is the market leader in supply of betaglucans to the salmon feed industry in the North Sea market
• Current supply is in excess of 150 tons
• This product is a similar substance to what is further refined into Consumer Health, Wound care and Cancer in Biotec's own factory
• It is thus a clear synergy between these substances even though the market segments are different

The opportunity going forward

• Until recently, Biotec has sold most of the production capacity available at supplier
• However, supplier are now further expanding production capacity which enable the development of additional customers and new animals segments
• This increases the opportunity for Biotec
• There are a lot of opportunities in new territories and for use in additional animals

The competitive advantage

• Biotec has a good name, a lot of contacts and good documentation, in particular for Atlantic salmon feed
• The sale of M-Glucan® products has much of the same characteristics as the consumer health segment = ingredient sales
• The product helps the animal to fight diseases with their own immune defence – reduce need for drugs

Why is M-Glucan® important for animals?

The inflammatory cytokine TNF is upregulated with M-Glucan®

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What is the cost of M-Glucan®?

Pigs

• Regular feed €1400 / ton
• Dose 250g / ton feed
• Price M-Glucan approx. € 22 / kg
• Increased cost €5.5 per ton feed = 0,4%

Salmon

• Regular feed €1500 2000 / ton
• Dose 1 kg / ton feed (health feed)
• Price M-Glucan approx. € 22 / kg
• Increased cost € 22 per ton feed = 1.2%

Total feed market

Feed Market 1,026 Mtons (2016)

Atlantic Salmon 83% of Salmonids = 3.7 Mtons

Supply the majority of the Atlantic Salmon Feed market in Norway

Salmonid Feed Regions

• Atlantic Salmon 3.7 Mtons * 46% Norway = 1.7 Mtons Atlantic Salmon Feed Norway
• Health Feed approx. 10% of market = 170,000 tons
• Beta-glucans 1% mix in health feed = 170 tons M-Glucan®
• This means we currently have the majority of this market in Norway

Opportunities and risks

Opportunities

• Strong and profitable business with a clear synergy to the other business segments
• Strengthen the animals own immune system:
• Increased focus on animal wellbeing
• Reduce the use of antibiotics
• Increased production capacity enables Biotec to work on new businesses:
• Alternative territories
• Other animals

Risks:

• If one of the few large customers leaves, lost volume will be hard to compensate short term
• Documentation to support arguments in additional animals are the key differentiator in each animal segment
• New market development should be done carefully as certain sectors may not have a culture for such products even though compelling clinical evidence may be obtained

Consumer Health M-Gard®

Status of consumer health

• Biotec re-entered consumer health market in late 2016 after arbitration with NutraQ was concluded
• Currently high level of activities with a number of leads and processes
• Biotec has a purpose built factory in Tromsø to produce M-Gard® products with a current capacity of 20Mtons that easily can be increased when needed
• Due to high fixed cost of factory, sale of M-Gard® products represents a substantial contribution to Biotec
• Thus to get this business up and running is an important focus area for the Company ⁵⁰

Value proposition consumer health

• M-Gard® is a naturally occurring complex polysaccharide found in the cell walls of baker's yeast
• M-Gard® is an immunomodulator that enhances the body's vital defense mechanisms against pathogens such as bacteria, virus, fungus etc
• M-Gard® represents an excellent immune enhancing compound for human use

Product characteristics and applications

• M-Gard® can be obtained in a variety of different concentrations and formats
• M-Gard® is odour-free and easy to blend into existing formulas.
• M-Gard® is a stable ingredient with a shelf life of 5 years

Utility of M -Gard®

• Typical applications for these ingredients are capsules, gummy candy like gummy bears, liquid shots, syrups, bars, post -work out recovery products, chewing gums and functional food
• Nutritional applications are those relating to a compromised immune system like e.g. prevention of viral and bacterial infections, improving overall physical health, protecting in periods of exceeded stress and support of respiratory health, prevention of allergies

Main focus is direct sale of bulk ingredient

Regulatory processes

Food safety status

• GRAS in the US (2008)
• Regarded as safe (Novel Food approved) by EFSA in 2012

Health claim status

• No claims in the US, but this is weaker enforced by the FDA/industry
• No claims in the EU (EFSA) strongly enforced in Europe
• Oat derived beta glucans have a claim in Europe (cholesterol lowering effect) – not relevant for M-Gard®

Market Yeast Beta-Glucans Consumer Health

• Total market for yeast beta-glucans is estimated to USD 120M (2017) with a CAGR of 6.9%
• However, a large proportion of this market is supplied with low quality / low cost products
• Biotec internal analysis estimates the total available market (TAM) for high quality yeast based nutrition grade beta-glucan to be around USD 40M with a volume of around 200 Mtons

Key success factors Short/Medium term

Opportunities and risks

Opportunities and outlook:

• The product(s) are developed and documented and are entering into a developed market
• Biotec has an existing purpose built factory to produce these products
• This means Biotec can provide existing products into an existing market from an existing factory
• Limited sales expected this year with ramp up from 2018

Risks

• Only one existing customer. Last sale in Q1 2016
• To develop B2B relations takes time
• Documentation needs renewal and updating

SBG® in immunotherapy of cancer

August 2017 Rolf E Engstad

Clinical studies within cancer – ongoing and discontinued

Indication	Therapy	Preclinical	Phase I	Phase II	Phase III
High–risk Neuroblastoma	(m)mAb 3F8 (i.v.) + increasing doses of SBG (oral)			Discontinued, frequent	HAMA titer
High-risk Neuroblastoma	Bivalent vaccine (s.c.) + fixed dose of SBG (oral)				Ongoing
Breast cancer	mAb Herceptin (i.v.) + increasing doses of SBG (oral)			Discontinued
Non-Hodgkin lymphoma	mAb Rituximab (i.v.) + increasing doses of SBG (oral)			Discontinued

Excellent safety profile established for all tested combinations of SBG + monoclonal antibody or vaccine

SBG® - Mode of Action – basic «effector» role

• Potentiating the cytotoxicty of leukocytes – macrophages, neutrophils and NK-cells through interaction with Dectin-1 and iCR3.
• Immune-mediated tumour cell killing can be carried out by the induction of phagocytosis; complement activation; antibody-dependent cellular cytotoxicity (ADCC)
• Macrophages & Dendritic cells can induce immunity to tumor antigens ("natural vaccination")

SBG® in cancer therapy: pre-clinical w/controls

• Adjuvant effect in combination with antineuroblastoma (mouse)mAb

Mice were treated with a combination of anti-cancer antibody 3F8 (200 ug per day) i.v. twice weekly x 5 doses, and oral β-glucan (SBG) at 400 mg per day given per oral for a total of 18 days.

• Adjuvant effect in combination with antineuroblastoma vaccine

Survival of mice after footpad challenge (day -28), amputation (day 0), GD2-KLH conjugate plus QS-21 vaccinations (days -4, 0, 3 and 16) and oral beta-glucan (days 1-20).

Neuroblastoma: Prevalence and risk groups

• Neuroblastoma is one of the most frequent cancers in children, but still very rare (prevalence 1 of 7000 live births).
• Neuroblastoma is categorised according to risk: low-, intermediate- and high-risk.
• Low-risk group & Intermediate-risk group: : Children in the low-risk group have a 5-year survival rate that is higher than 95% and above 90% for the intermediate-risk group.
• High-risk group: The 5-year survival rate in children in the high-risk group is around 30% to 50%.
• High-risk neuroblastoma account for about 50% of all neuroblastoma cases, equals about 750 patients per year in US and Europe in total.

Neuroblastoma: High-risk group treatment

• Current treatment regime typically consist of either (or sequences of) chemotherapy, surgery, myeloablative therapy and stem cell transplant (SCT), and radiation therapy.
• From 2015 the anti-GD2 mAb Unituxin, markedet United Therapeutics Corporation, has been approved in for treating high-risk neuroblastoma (62 mUSD sales in 2016).
• Introduction of Unituxin increased the 5 year Overall Survival rate from below 40% to just above 50%.
• From 2017 Unituxin has a black box warning due to a number of serious adverse events in the US and is withdrawn from Europe.

SBG® in current neuroblastoma vaccine trial

• SBG® administered orally (p.o.) in combination with antineuroblastoma vaccine given as subcutaneous (s.c.) injection
• Vaccine given s.c. at week 1, 2, 3, 8, 20, 32 and 52.
• A fixed dose of oral β-glucan (40 mg/kg/day) is started at week 6 or 7 (to allow time for generation of antibodies), and continued for 2 weeks on, 2 weeks off, up to 1 cycle after the last vaccination. SBG is given as a 2% aqueous solution.

• January 2014 (15 patients): 93% overall survival (>25 months) Kushner et al 2014 Clin Canc Res 20:1375

• In 2015 the study was expanded to include patients in 1st remission – a total of 185 patients to be recruited (currently almost 140 patients recruited)

• April 2017 : overall survival rate still very promising

Regulatory & IP status in cancer therapy

• Biotec BetaGlucans holds a drug manufacturing lisence from The Norwegian Medicines Agency for production of SBG® for clinical trials
• Biotec BetaGlucans holds a manufacturing lisence for product release of SBG® as final drug product to use in patients
• SBG's common technical document (CTD 3.2.S.1-S.7) has been reviewed and approved by MHRA (part of class III rule 13 approval process).
• SBG® is likely to be classified as a natural product of herbal origin (botanical) in the US
• SBG® as a 2% gel like solution has IP-protection until 2031

Outlook SBG® in cancer therapy

Neuroblastoma

• Small but high impact indication in children
• Will serve as a proof of concept for use of SBG® in immunotherapy of cancer
• The treatment regime has a possibility of becoming approved without a regular phase III trial
• Biotec is in discussion with MSKCC on alternative ways to commercialise the combined treatment. MSKCC has licenced the rights to the vaccine to a US company, but is producing themselves for the trial

Other cancer areas

• A number of immunotherapeutic treatment regimes are still lacking full efficacy
• Combination therapies to enhance the efficacy of the primary antibody/vaccine is desirable
• Biotec has initiated discussions with other companies having products in early phase development
• Publication of positive results from the neuroblastoma trial will boost the interest for SBG® as an adjuvant in immunotherapy of cancer and in general support the Biotec business

Execution on Corporate Strategy

Biotec investment proposition

Credible and reliable!

Outlook presented at previous CMD Feb 2016!

2016 outlook

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

2018 outlook presented is still our ambition

• Full commercialization of Woulgan® in key markets
• NOK100M in Group Revenues
• A cash positive and fully funded operation
• A strong product pipeline
• Enhance the value creation of ArcticZymes through organic growth, partnerships and strategic opportunities in the fast growing market for molecular enzymes

Short term potential achievements

Product launch and sales relating to SAN Elisa kit

2020 Ambitions

Revenues : MNOK 150-200+

ArcticZymes

Sales: MNOK 75 -100+ M-Gard M-Glucan Woulgan

Sales MNOK 75 – 100+

2020 Ambitions

Biotec will continue to generate sales over the next few years with an ambition of NOK 150-200 mill in revenues by 2020. Focus on partnerships and value creating activities will be key priorities

The following are key factors for obtaining our ambition:

• Expand sales and product portfolio in ArcticZymes through partnerships, joint ventures and/or strategic initiatives
• Recurring and growing Woulgan® revenues in key markets
• Product expansion and market access to the US for Woulgan®
• Securing long-term and committed supply agreements for our unique ingredients M-Glucan® and M-Gard®
• Establish commercial initiatives within cancer adjuvants ⁷³

Thank you!