ArcticZymes Technologies — Investor Presentation 2019

Aug 15, 2019

Q2 2019 Presentation

15.08.2019, Oslo

Agenda

• Highlights
  • Q2
• ArcticZymes
• BetaGlucans
  • Woulgan®
  • Other BetaGlucans segments
• Q2 Financials
• Outlook for 2019

Biotec Pharmacon

• Focused on specialized, novel enzyme and immunomodulating beta-glucan technology.
• Two divisions, driving revenues and cash generation across USA, Europe and Asia:
  • ArcticZymes develops, manufactures and commercializes novel recombinant enzymes for use in molecular research, In Vitro Diagnostics (IVD) and therapeutics.
  • BetaGlucans develops immunomodulating beta-glucan products, primarily Soluble BetaGlucan (SBG®) with focus on commercializing an active wound healing dressing (Woulgan®) setting a new standard in treatments of wounds.

Highlights Q2 2019

• Strong growth in sales and gross profit compared to Q2 2018.
• EBITDA of MNOK -0,5 compared to MNOK -3.5 Q2 2018, driven by higher sales.
• ArcticZymes had its historically best Q2.
• Continued sales growth for Woulgan®
  • like Q1 especially in Germany.

ArcticZymes

ArcticZymes Updates

• Commercial achievements

• During the quarter the customer base expanded which makes ArcticZymes less vulnerable to major customers purchase pattern.
• Sales of Salt Active Nuclease has continued the positive development from Q1 and is now one of top products in ArcticZymes.

Innovation & strategic initiatives

Innovation:

• ArcticZymes launched 2 new Tritron free products in Q2 (COD UNG and HL dsDNase). This is another step towards establishing an EU-Reach compliant portfolio. Furthermore the COD UNG formulation is also glycerol free, which makes it suitable for freeze drying.

Strategic Initiatives:

• ArcticZymes is continuously engaged in non-organic growth initiatives. Exploratory discussions are ongoing with several European based companies.

BetaGlucans

Woulgan®, Adjuvant, Consumer Health, Animal Health

Woulgan Updates

• Commercial achievemtents

• Sales continued to increase in Q2 driven by progress in Germany.
• First half year sales in 2019 almost at the same level as full-year 2018 sales .
• The UK and Nordic markets continue to be a challenge.
• Germany is the core market, structured around 8-10 larger homecare companies directly serviced by BBG
• Sales focus is on succeeding with Woulgan® through a broader network of distributors in European markets that accepts innovative premium products. ⁹

Woulgan Updates

• Marketing and legislation:

• Participated in Deutscher Wundkongress (71 participants in symposium) in May and EWMA in June – both with nice attention to Woulgan.
• New definition of reimbursable dressings finally decided in Law on Security in Medical Supplies (GSAV) in Germany. Woulgan will no longer be a "dressing", but fit into an "Other" woundcare category. Clinical requirements not set, and grace period set to be one year from a date still being discussed. We believe to have all necessary clinical documentation on file

Other BetaGlucans segments

Adjuvant study with MSKCC in New York:

• The study is continuing to recruit patients at a good pace, where more than 230 of the planned 260 patients are included.
• The study is aimed at being finished in May 2020.

Consumer Health:

• Good progress from customers especially in Asia and Europe.

Animal Health:

• Sales in the 1H on the level of last year, despite difficult comparison (loss in a price auction).
• Biotec experiences interest from more pet-food manufactures.

Q2 Financials

Cash Flow explained by changes in working capital

Net Cash position

Second quarter changes in cash of -6.8 MNOK:

• 17.3 (13.5) MNOK in short-term receivables.
• 9.0 (10.6) MNOK in short-term payables.
• Cash Flow from operations -5.7 MNOK (-5.2 MNOK).

Cash balance of 21.4 MNOK end of Q2 2019.

Sales for Q2 significantly improved

Segment	Q2 Sales
ArcticZymes	MNOK 9.0 (5.7)
Animal & Consumer Health	MNOK 6.4 (4.6)
Woulgan®	MNOK 1.4 (0.5)
Group	MNOK 16.9 (10.8)

Biotec revenues per segment

EBITDA improvement on a quaterly basis

Note: For comparison purposes, 2018 figures has been adjusted for IFRS 16

ArcticZymes performance

Enzymes		Q2		YTD
(Amounts in NOK 1.000)	2019	2018	2019	2018
Sales revenues	9 002	5 701	16 871	12 038
Operating expenses	-7 658	-5 597	-16 543	-13 222
EBITDA	1 701	936	1 458	556

Sales per quarter

• Sales are up by 3.3 MNOK compared to same quarter last year.
• Sales YTD have increased by almost 5 MNOK
• Operating expenses increased due to personnel and external expenses.
• EBITDA is improved even though expenses and activities are increased significantly.

BetaGlucans performance

BetaGlucans		Q2		YTD
(Amounts in NOK 1.000)	2019	2018	2019	2018
Sales revenues	7 851	5 170	14 798	13 075
Gross profit	3 315	2 616	7 467	6 249
Operating expenses	-5 140	-6 227	-11 660	-14 162
EBITDA	-737	-3 211	-2 846	-6 914

Sales per quarter

• Woulgan continues to generate growth on the sales side, 1.4 MNOK vs 0.5 MNOK .
• Reduced operating expenses due to savings and reallocation of resources to ArcticZymes.
• EBITDA continuous to be improved due to favourable product mix and cost control.

Outlook

Outlook 2019

• Management expect revenue growth in the two focus areas – ArcticZymes and Woulgan® to be strongest in H2 – whilst reducing cash consumption.
• ArcticZymes objectives are to grow business organically, launching new products, whilst seeking inorganic growth opportunities.
• Woulgan® focus on increasing sales in existing and new territories by identifying new partners.