AROA BIOSURGERY LIMITED — Investor Presentation 2021

May 24, 2021

ASX ANNOUNCEMENT/MEDIA RELEASE 25 MAY 2021

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F Y 2 1 F U L L Y E A R R E S U L T S P R E SE N T A T I O N

Soft tissue regeneration company Aroa Biosurgery Limited (ASX:ARX, ‘Aroa’ or the ‘Company’) is pleased to release the attached FY21 full year results presentation that will be presented to investors at today’s Investor Webinar by CEO, Brian Ward and CFO, James Agnew as previously announced on 21 May 2021. The Webinar will be held today, Tuesday 25 May 2021 at 11:00am AEST, to discuss the Company’s full year results for the period ending 31 March 2021.

Investors can register for the webinar via the following link: https://us02web.zoom.us/webinar/register/WN_Zz7P61uSRHmoXhFE1bb5iA

Investors can submit questions prior to the webinar to shinsley@aroabio.com or do so via the Q&A function on Zoom.

< ENDS >

Authorised on behalf of the Aroa Biosurgery Board of Directors by Brian Ward, CEO.

About Aroa Biosurgery:

Aroa Biosurgery is a soft-tissue regeneration company committed to ‘unlocking regenerative healing for everybody’. We develop, manufacture, sell and distribute medical and surgical products to improve healing in complex wounds and soft tissue reconstruction. Our products are developed from a proprietary AROA ECM™ technology platform, a novel extracellular matrix biomaterial derived from ovine (sheep) forestomach. Aroa’s products have been used in more than four million procedures to date, with distribution into our key market of the United States via our direct sales force and our partner TELA Bio. Founded in 2008, AROA is headquartered in Auckland, New Zealand and is listed on the Australian Securities Exchange (ASX:ARX). www.aroabio.com/

Contacts

Investor Simon Hinsley Investor Relations shinsley@aroabio.com + 61 401 809 653

Media Australia New Zealand Matthew Wright Piet De Jong matt@nwrcommunications.com.au piet.dejong@baldwinboyle.com +61 451 896 420 +64 21 812 766

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AROA BIOSURGERY LIMITED 64 Richard Pearse Drive, Mangere, Auckland 2022, New Zealand AROABIO.COM

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AROA BIOSURGERY

IMPORTANT NOTICE AND DISCLAIMER

This presentation ( Presentation ) is dated 25 May 2021 and has been prepared by Aroa Biosurgery Ltd, New Zealand company number 1980577, ARBN 638 867 473 ( Aroa or the Company ).

Information in this Presentation

The information in this Presentation is of a general background nature, is in summary form and does not purport to be complete. It does not contain all information relevant or necessary for an investment decision or that would be required to be included in a prospectus or other disclosure document under the Corporations Act for an offer of securities in Australia or in any other jurisdiction. The content of this Presentation is provided as at the date of this Presentation (unless otherwise stated). Except as required by applicable law, Aroa does not plan to publicly update or revise any information contained in, or provided with, this Presentation whether as a result of any new information, future events, changed circumstances or otherwise.

Not a prospectus or an offer of securities

This Presentation is not a prospectus or any other offering document under Australian law (and will not be lodged with the Australian Securities Investments Commission ( ASIC ) or with ASX Limited ( ASX ) as such) or under the law of any other jurisdiction in which an offer of securities may be received. Nothing in this Presentation should be construed as an invitation, offer or recommendation of securities in Aroa (or any of its subsidiaries) for subscription, purchase or sale in any jurisdiction.

Future performance

The Presentation contains certain “forward-looking statements”. The words “forecast”, "expect", "anticipate", "estimate", "intend", "believe", "guidance", "should", "could", "may", "will", "predict", "plan" and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. As with any projection or forecast, forward-looking statements in this Presentation are inherently uncertain and susceptible to changes in circumstances. Opinions may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. Actual results, performance or achievements may differ materially from those expressed or implied in forward looking statements and statements of opinion. In particular, while the Company has no reason to believe that the markets to which the data relates will not return to the operating levels experienced before COVID-19, the impact of COVID-19 (if any) on the market data that is referenced is not possible to currently predict with any certainty and investors are cautioned against placing undue reliance on such data.

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AROA AT A GLANCE

Well established high-growth soft tissue regeneration company

NZ$23.1m product sales FY21 on constant currency basis

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68% Gross Margin FY21, impacted by lower sales and FX

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4 million+ Procedures with Aroa’s products

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5 patented Regulatory products Approvals selling in United States in 44 countries

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Aroa ECM™platform Provides new products and line extensions year on year

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>20 Peer Reviewed Publications

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>US$2.5[1] b TAM for existing products

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>150 personnel[2]

1. SmartTRAK BiomedGPS data 2020; DRG Millennium Research data; Hernia Repair Devices, 2020, Aroa management estimates; DRG Millennium Research, Breast Implants & Reconstructive devices, 2018 Market data was prepared before the onset of COVID-19, the economic effect of which is currently not possible to predict with any certainty. Consequently, while the Company has no reason to believe that the market data does not remain accurate based on the relevant markets operating normally, the impact of COVID-19 on the market data that is referenced is not possible to currently predict with any certainty and investors are cautioned against placing undue reliance on such data.

2. Aroa NZ & US employees.

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Financial

Product sales

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Product sales (Reported)
FY20: $21.9m FY21: $21.6m
up 6% YoY
$12.6m
$11.9m
$10.0m down 10% YoY
$9.0m
H1 FY20 H2 FY20 H1 FY21 H2 FY21
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Product sales (Constant Currency [1] )
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FY20: $21.9m FY21: $23.1m
up 17% YoY
$13.9m
$11.9m
$10.0m down 8% YoY
$9.2m
H1 FY20 H2 FY20 H1 FY21 H2 FY21
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• Product sales for H1 FY21 of $9.0m down 10% on H1 FY20, reflecting the impact of the COVID-19 pandemic.

• Despite NZD/USD exchange headwinds, product sales recovered strongly in H2 FY21, increasing 6% on H2FY20 (17% in constant currency).

• Full year product sales of $21.6m decreased 2% on FY20, however increased 5% on a constant currency basis.

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1. The NZD/USD exchange rate of $0.64 has been used in the constant currency analysis, representing the average rate for FY2020 .

Financial Results

Normalised Profit or Loss[1]

Product sales Other revenue Total revenue Gross profit Product gross margin % Other income Normalised selling and administrative expenses3 Research and development expenses Total normalised operating expenses Normalised EBIT Add back: Depreciation & amortisation Normalised EBITDA Net finance expenses Normalised loss before income tax	Reported 2021 NZ$000 21,575 767 22,342 15,524 68% 2,682 (18,142) (6,425) (24,567) (6,361) 1,863 (4,498) (1,111) (7,472)	Reported 2020 NZ$000 21,924 3,152 25,076 18,737 71% 1,137 (15,401) (5,042) (20,443) (569) 1,535 966 (3,317) (3,886)	Reported YoY % (2) (76) (11) (17) (3) bps 136 18 27 20 1,018 21 (566) 67 92	CC2 2021 NZ$000 23,123 822 23,945 17,127 71% 2,722 (18,900) (6,425) (25,325) (5,476) 1,863 (3,613) (1,753) (7,229)	CC2 YOY % 5
					(74)
					(5)
					(9)
					0 bps
					139
					23
					27
					24
					862
					21
					(474)
					47
					86

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Commentary

• Product gross margin was impacted in H1 FY21 as a result of lower product sales, but improved significantly in H2 FY21.

• Reduction in Other revenues represent one-off license fees in FY20.

• Normalised selling and administration expenses increased $2.7m or $3.5m in constant currency, reflecting increased investment in the US sales operations and increasing expenses from becoming a publicly listed entity.

• Research and development expenses increased $1.4m reflecting the increase in staffing on pipeline products.

• Normalised EBITDA loss of $4.5m.

1 The normalised profit or loss is non-conforming financial information, as defined by the NZ Financial Markets Authority. It has been provided to assist users of financial information to better understand and assess the Group’s comparative financial performance without any distortion from NZ GAAP accounting treatment specific to one-off, non-cash fair value adjustment of pre-offer shares issued in February and May 2020, and the one-off transaction costs associated with Aroa’s successful initial public offering on the ASX in July 2020 (the IPO ). The impact of non-cash share-based payments expense has also been removed from the profit or loss. This approach is used by management and the Board to assess the Group’s comparative financial performance.

2 Constant currency ( CC ) removes the impact of exchange rate movements. This approach is used to assess the Group’s underlying comparative financial performance without any distortion from changes in foreign exchange rates, specifically the USD. The NZD/USD exchange rate of 0.64 has been used in the constant currency analysis, representing the average rate for FY2020.

3 These items have been normalised by the amounts outlined within the ‘Reconciliation to NZ GAAP Profit or Loss’.

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Cash flows

	Cash flows from operating activities Cash receipts from sales revenue Cash receipts from license fees, project fees, and grant income Cash paid to suppliers and employees Net interest paid Income tax received (paid)	2021 $000 21,044 2,552 (28,115) (719) 231	2020 $000 22,373 3,865 (24,239) (178) (161)
	Net cash(outflow)/inflow from operating activities	(5,007)	1,660
	Ch fl f iti tiiti
	as ows rom nvesng acves Purchase ofproperty, plant and equipment	(1,265)	(1,691)
	Purchase of intangible assets	(235)	(179)
	Term deposits	(20,000)	-
	Net cash (outflow) from investing activities Cash flows from financing activities	(21,500)	(1,870)
	Netproceeds from issue of equityand convertible debt securities Net repayment of borrowings/deferred consideration	50,426 (12,596)	5,995 (7,730)
	Lease liability – Principal and interest Net cash inflow/(outflow) from financing activities Net increase/(decrease) in cash and cash equivalents Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at beginning of year	(731) 37,099 10,592 939 3,850	(546) (384) (594) (13) 4,457
	Cash and cash equivalents at end ofyear Add: Term Deposits TOTAL CASH ON HAND	15,381 20,000 35,381	3,850 - 3,850

Commentary

• Net cash outflow from operating activities of $5.0 million for FY21 compared to a net cash inflow from operating activities of $1.7 million in FY20, reflecting the increased investment in operating expenses.

• Purchases of property, plant and equipment remained modest.

• Net proceeds from pre-IPO and IPO placements of $50.4m.

• Repayment of borrowings of $12.6m.

• Cash (including short term deposits) on hand of $35.4m.

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Products & Sales

AROA ECM™ PLATFORM TECHNOLOGY

All Aroa’s products utilise its proprietary Aroa ECM™platform, which is a unique Extracellular Matrix (ECM) derived from sheep forestomach

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Laminin Collagen IV Elastin Vascular channels

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Collagen I & III

GAG’s, hyaluronic acid, heparin sulphate

Fibronectin

Aroa ECM Technology (Structural and Biological Building Block)

Source

• Aroa ECM (purified Ovine Forestomach Matrix) provides unique ECM with a native porous structure, vascular channels, signals and substrates to help to short-cut healing (basement membrane components, ECM structure, more than 150 secondary molecules known to be important in healing). Clinically this translates to ready-to-use structure and biological features which direct regenerative healing.

• Extraordinary thick porous ECM with basement membrane and an unusually dense network of vascular channels

• Constantly renewing and growing

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Products

• All products with Aroa ECM provide a short-cut to growing new tissue and an associated blood supply. Each product is engineered for the challenges of a specific use case.

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UNLOCKING REGENERATIVE HEALING FOR EVERYBODY

Aroa ECM technology offers leading regenerative performance at a significantly lower cost than other biologics enabling more patients to have access to the benefits of regenerative healing

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Price
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Biologics
‘Regenerative but weak’
Aroa
Synthetics Products
‘Durable & Strong’ Regenerative, cost
effective, +/- strength as
required
Healing impairment & complexity
Note: Aroa Management compilation based on peer reviewed publications.
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Existing Commercial Products	Endoform™ Natural & Antimicrobial	Stalled complex wounds		$78m1	Aroa	FY’13
	Ovitex	Hernia		$845m2	TELA Bio	FY’17
	Myriad	Dermal & implantable Reconstruction		$200m3	Aroa	FY’20
	Ovitex PRS Licensed to TELA Bio solely for Breast Surgery $463m4 TELA Bio FY’20
	Symphony™ Complex wounds & Limb salvage $1.15b5 Aroa FY’216
New Pipeline	TBC	Dead Space Management		TBD	Aroa	FY’23/246

Sources: 1 and 5 SmartTRAK BiomedGPS data 2020, 2. DRG Millennium Research data, Hernia Repair Devices, 2020, 3 Aroa management estimates , 4. DRG Millennium Research, Breast Implants & Reconstructive devices, 2018. 6. Based on current project timeline but remains subject to changes in circumstances and regulatory clearances.

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Note: Symphony requires a new reimbursement code, whereas all other products fall under existing reimbursement codes.

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AROA PRODUCT PORTFOLIO

UNLOCKING REGENERATIVE HEALING ACROSS THE CONTINUUM OF CARE

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SALES CHANNELS

THREE SALES CHANNELS TO MAXIMIZE AROA’S OPERATING LEVERAGE

Channel Description Products Target Specialties Call point Sales force (FTE)	Channel Description Products Target Specialties Call point Sales force (FTE)
US Commercial operations based in San Diego, with sales professionals across US Endoform Myriad Symphony Physicians, WOCN’s/ RN’s Podiatric, Plastic, Trauma & Orthopaedic surgeons Outpatient Wound Centres & Inpatient Operating Rooms 20 field, 8 Inside & 20 Independent Sales Representatives
NASDAQ listed ~US$233 Market Cap exclusively sells Aroa licensed products Ovitex® Ovitex PRSTM (US and European Rights) General Surgeons Plastic Surgeons Operating Room 46 sales territories as at 31 March 2021
International (Ex-USA)	• Aroa is appointing distributors for the countries outside the US in which it has received regulatory approvals. • Aroa has the rights for Ovitex and Ovitex PRS outside of US and Europe

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Future

CATALYSTS

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Post-COVID

Vaccinations expected to improve throughout CY2021

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Clinical Data

Endoform, Myriad & Symphony

Aroa Direct Sales

Fully dedicated field sales team. Myriad expected to drive growth.

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Reimbursement

Potential for changes in the reimbursement of cell and tissue products (Symphony) in outpatient wound centres

TELA Bio

Momentum

Clinical outcomes & cost savings driving increasing adoption

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Pipeline Products

From Aroa ECM platform & new single-use dead space management platform

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Product Synergies

Complementary products for every phase of healing & continuum of care

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Global Expansion Regulatory approval in more than 40 countries

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AROA FY22 OUTLOOK

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NZ$30-$33m product sales FY22 39-53% higher than FY21

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GM improvement

• AROA is well placed for FY22 following an improved second half of FY21 and sales transition.

• Focused on building our US commercial operations over next 24 months to drive revenue growth to take advantage of the opportunities presented by our expanded product portfolio.

• TELA Bio sales expected to deliver strong growth based on their revenue guidance of 48% to 65% growth in CY21 compared to CY20.

• EBITDA will be negative (as previously forecasted) as a result of increased investment into its sales force (announced in February 2021).

• Guidance subject to no resurgence of COVID-19 in the US, continued improvement in US medical procedure numbers & TELA Bio sales performance. It assumes an average $NZD-$USD exchange rate of US$0.72.

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Q&A

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CONTACTS

Simon Hinsley Matt Wright Investor Relations Media m +61 401 809 653 m +61 451 896 420 shinsley@aroabio.com matt@nwrcommunications.com.au

64 Richard Pearse Drive, PO Box 107111, Auckland Airport, Auckland 2022, New Zealand Auckland 2150, New Zealand

AROABIO.COM

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APPENDIX

Reconciliation of Normalised Profit or Loss to NZ GAAP Profit or Loss

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	Reported	Reported
	2021	2020
	NZ$000	NZ$000
Normalised loss before income tax	(7,472)	(3,886)
Share basedpayments	(2,010)	(418)
Transaction costs	(1,607)	(850)
Other losses	(8,013)	(1,006)
Loss before income tax (NZ GAAP)	(19,102)	(6,160)

Share Based Payments

Share based payments of approx. $2.0 million relate to the vesting of the share options issued to Directors and employees of the Company on IPO and certain employees in September 2020.

Transaction Costs

Transaction costs of $1.6 million relate to the costs associated with the IPO, including lead manager fees, legal fees, accounting and audit fees, ASX listing fees and road show expenses. Out of the total costs of $3.2 million incurred during the year ended 31 March 2021, $1.6 million was recognised against share capital, with the remaining $1.6 million recorded within operating expenses.

Other Losses

Other losses of $8.0 million are a non-cash, one-off expense attributable to the fair value adjustment of pre-offer shares issued in February and May 2020, which were classified as financial liabilities as opposed to equity in accordance with NZ IAS 32. During the reporting period, these financial liabilities at fair value through profit or loss were fully reclassified as equity, following the IPO.

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