MAYNE PHARMA GROUP LIMITED — Investor Presentation 2012

Dec 13, 2012

Mayne Pharma Group Limited Acquisition of Kapanol®

Important Notice and Disclaimer

The following notice and disclaimer applies to this presentation (Presentation) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contained in this Presentation. In accepting this Presentation, you agree to be bound by the following terms and conditions, including any modifications to them.

The information in this Presentation is not a prospectus. This Presentation provides information in summary form and general information regarding Mayne Pharma Group Limited (Mayne Pharma or the Company) and a proposed fully underwritten placement (the Offering). This Presentation is not complete, is intended only as an outline, and is designed to assist you in making a determination as to whether you wish to conduct a further evaluation of the proposed investment. The Offering is limited to specifically targeted potential investors who meet certain suitability requirements, including the ability to conduct their own evaluation of a prospective investment without the need for mandated disclosure requirements. The Offering is being conducted in a manner so as to not be subject to registration under the U.S. Securities Act of 1933 (the Securities Act) pursuant to Regulation S. This Presentation is subject to change.

By receiving this Presentation you acknowledge and agree that you are not located in the United States, are not a U.S. person (as defined by Rule 902(k) of Regulation S under the Securities Act) and are not acting for the account or benefit of a U.S person. If you are such an investor, please do not consider the contents of this Presentation. You also acknowledge and agree that you have not been solicited by any form of general solicitation or general advertising.

This Presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security or financial product and neither this Presentation nor anything contained in it shall form the basis of any contract or commitment. This Presentation and its contents are provided on the basis that recipients will not deal in the securities or financial products of Mayne Pharma in breach of applicable insider trading laws.

This Presentation has not been filed, registered or approved in any jurisdiction. The release, publication or distribution of this Presentation in jurisdictions other than Australia may be restricted by law. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This Presentation may not be copied by you, or distributed to any other person. No action has been taken or is proposed to be taken to register or qualify this document, the Offering or the shares that are subject to this Offering (the Shares) in any jurisdiction. The Shares have not been, and will not be, registered under the Securities Act or the securities laws of any state of the United States or any other jurisdiction.

Offers in Australia of the shares are only being made to persons who are “sophisticated investors” or “professional investors” (within the meaning of section 708(8) and section 708(11) of the Australian Corporations Act (ACA) respectively) or otherwise pursuant to one or more exemptions under Section 708 of the ACA so that it is lawful to offer the shares in Australia without disclosure to investors under Part 6D2 of the ACA.

This Presentation speaks only as of the date set forth on the cover page hereof. The information in this Presentation, therefore, remains subject to change. In addition, this Presentation contains statements which are either missing information or which assume completion of matters expected to be completed in the future. Mayne Pharma may in its absolute discretion, but without being under an obligation to do so, update or supplement this Presentation. Any further information will be provided subject to these terms and conditions. Without limiting the foregoing, the documents referred to in this Presentation may not have been executed and may change prior to execution. Certain parties named in this Presentation have not reviewed the references to them.

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Important Notice and Disclaimer (cont’d)

None of Mayne Pharma’s corporate or financial advisers nor any advisers, financiers or underwriters appointed (being Credit Suisse (Australia) Limited and UBS AG, Australia Branch) (or to be appointed) in respect of any potential offering referred to in this Presentation (“Advisers”) nor their respective related bodies corporate, affiliates, directors, employees or agents have authorized this Presentation nor are responsible for the issue or making of any statements or the contents of this Presentation.

No responsibility for any errors or omissions from this Presentation arising out of negligence or otherwise is accepted by Mayne Pharma or its Advisers. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of information and opinions expressed in this Presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the Presentation (“forward-looking statements”). Such forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of Mayne Pharma and its directors) which may cause the actual results or performance of Mayne Pharma to be materially different from any future results or performance expressed or implied by such forward-looking statements. The forward-looking statements should not be relied on as an indication of future value or for any other purpose. Mayne Pharma and its Advisers assume no responsibility for the accuracy of such information. Any market and industry data used in connection with this presentation was obtained from research, surveys or studies conducted by third parties, including industry or general publications. Neither Mayne Pharma nor its representatives have independently verified market or industry data provided by third parties or industry or general publications.

To the maximum extent permitted by law, none of Mayne Pharma, any Advisers or any of their related bodies corporate, affiliates, directors, employees or agents, nor any other person, accepts any responsibility or liability, including, without limitation, any liability arising from fault or negligence on the part of any person, for any direct or indirect loss arising from the use of this document or its contents or otherwise arising in connection with it.

The provision of this Presentation is not, and should not be considered as, the provision of legal, accounting, tax or financial product advice or a recommendation by Mayne Pharma, Credit Suisse (Australia) Limited or UBS AG, Australia Branch. This Presentation does not take into account your individual investment objectives, financial situation or particular needs. You must not act on the basis of any matter contained in this Presentation, but must make your own independent assessment of and seek your own professional advice in relation to Mayne Pharma and the Shares the subject of the Offering and conduct your own investigations and analyses.

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Transaction overview

• Mayne Pharma Group Limited (“Mayne Pharma”) to acquire Kapanol® and related assets in Australia from GlaxoSmithKline (“GSK”) for up to A$14.0m

• A$13.5m for trademark, marketing authorisations, product dossier and technical data; plus

• • Up to A$0.5m for product inventory

• Kapanol® is an oral opioid containing morphine sulphate and is used for the relief of chronic, moderate to severe pain

• Mayne Pharma currently manufactures Kapanol® using morphine sulphate supplied by GSK and has also licensed the product to GSK to sell in Australia and other international markets

• Consideration to be paid in two instalments:

• A$10.125m and up to $0.5m for inventory at completion on 1 February 2013; plus

• A$3.375m on 1 February 2014

• To support Kapanol® and its other domestic products, Mayne Pharma will invest in a sales force to promote these products to targeted prescribers and other select physician groups

• The acquisition price represents 2.5x gross Kapanol® revenue for the twelve months ended 31 October 2012

• EBITDA margins for Kapanol® including the sales force are expected to be above those of Mayne Pharma’s existing business

• Acquisition funded by A$18.0m underwritten equity placement to institutional and sophisticated investors (Placement) - Share Purchase Plan (SPP) to eligible Mayne Pharma shareholders to be conducted after the Placement

• After accounting for the investment in a sales force, the elimination of Mayne Pharma's existing earnings from manufacturing Kapanol® and the impact of the Placement, the acquisition is expected to be immediately additive to adjusted NPAT - Acquisition is expected to be EPS accretive in its first full financial year (FY2014)[1]

• (1) Adjusted NPAT and EPS excludes transaction costs and non-cash amortisation of intangibles recognised on acquisition. Acquisition accounting to be finalised.

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Market overview

Modified Release (“MR”) Oral Opioid Market[1]

Overview

By Volume (m counting units)

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CAGR
90 5.7%
80
70
60
50
40
30
20
10
0
FY10 FY11 FY12
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• Opioid analgesics are pain relievers that act on the central nervous system

• The opioid analgesic market is worth A$228m in Australia and has achieved a CAGR of 8.6% since FY10[1]

• This market is comprised of multiple delivery presentations with the MR Oral segment representing 23% of the market by volume and 39% by value[1]

By Value (A$m)

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CAGR
100
90 4.1%
80
70
60
50
40
30
20
10
0
FY10 FY11 FY12
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• The MR Oral Opioid market has been growing at a CAGR of over 5% (by volume) since FY10 and is driven by strong underlying fundamentals including:

• Ageing population

• Increasing incidence of cancer (malignant pain)

• Increased use in non-malignant chronic pain

The MR Oral Opioid market has attractive growth fundamentals

(1) Source: IMS Health

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Overview of Kapanol ®

• Kapanol® is an oral opioid containing morphine sulphate and is used for the relief of chronic, moderate to severe pain

• Mayne Pharma knows Kapanol® well as it originally developed the product in the 1990s and has manufactured it for GSK for almost 20 years

• Mayne Pharma currently licenses Kapanol® to GSK to sell in Australia and internationally

• Kapanol® represents approximately 6%[1] of the MR oral opioid analgesic market

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Kapanol 
Morphine sulphate
binder layer
Extended-release pH
dependent polymer Sugar
coated pellet technology sphere
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THERAPEUTIC CLASS:

Analgesia.

DESCRIPTION:

Sustained-release oral formulation of morphine used in the management of moderate to severe chronic pain.

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• In the twelve months to 31 October 2012 Kapanol® achieved gross revenue of A$5.5m

• With sustained promotion and investment, Kapanol® is well placed to take a greater market share, given its known strengths relative to competing products

• GSK will provide several transitional services including continued supply of morphine sulphate, packaging, storage and distribution

• GSK will retain the licence to distribute Kapanol® in various territories outside Australia

(1) Source: IMS Health

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Compelling strategic rationale

• Strong underlying growth fundamentals in the MR Oral Opioid market driven by Australia’s

• 1 Attractive market fundamentals ageing population, increasing incidence of chronic diseases like cancer and the increased use in managing non-malignant chronic pain

• Sustained promotion and investment is expected to drive an increase in sales of Kapanol® as

• 2 Significant ability to grow Kapanol ® sales the product has not been marketed and promoted for several years  Kapanol® has known advantages over competing products  Acquisition of Kapanol® provides a strong foundation for Mayne Pharma to invest in

• 3 National sales force will boost establishing a sales force servicing specialty physician networks

• the marketing efforts for a number of other products  Sales force will also promote the other products in the Mayne Pharma portfolio (Astrix®, Doryx®, Eryc®, Magnoplasm®) as well as any future products

• The acquisition and sales force investment will position Mayne Pharma as an even more

• 4 More attractive in-licensing attractive partner of choice for international specialty pharmaceutical companies looking to

• partner in Australian market licence their products in Australia

• Provides a strong platform from which Mayne Pharma can accelerate building a specialty

• 5 Enhanced access to product franchise in Australia

• complementary products − Metrics’ analgesic products

• − Targeted in-licensing / product acquisitions

• 6 Strong knowledge of Kapanol ®  Mayne Pharma knows Kapanol® well as it developed the product and has manufactured it for aids a successful acquisition almost 20 years  Provides Mayne Pharma with confidence about its expectations for Kapanol® under its ownership

Significant opportunities to capture further value from Kapanol® investment

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Acquisition funding and conditions

Placement

• Acquisition will be funded via an A$18.0m underwritten placement to institutional and sophisticated investors

• 61.0 million shares issued at a placement price of A$0.295 per share

• 7.8% discount to last close price of Mayne Pharma shares

• 8.5% discount to 5-day VWAP

Sources	A$m	Uses	A$m
Underwritten Placement	18.0	Acquisition of Kapanol® assets	13.5
		Acquisition of inventory	0.5
		Acquisition and funding costs	1.3
		Acceleration of other growth initiatives	2.7
Total	18.0		18.0

• Acquisition is subject to customary closing conditions including completion of the placement

• Completion of the transaction will be on 1 February 2013

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Share Purchase Plan

Share Purchase Plan

• In addition, eligible Mayne Pharma shareholders will be given the opportunity to apply for new shares up to a maximum value of $10,000 via a Share Purchase Plan

• SPP shares will be issued at the Placement price

• Total funds raised via the SPP are to be capped at A$5.0 million

• Offered to eligible shareholders resident in Australia or New Zealand on the register at 7.00pm (Melbourne time) on Thursday 13 December 2012

• Further details on the SPP will be provided to eligible shareholders after completion of the Placement

• Additional capital raised through the SPP will be applied to accelerate the development, registration and marketing of Mayne Pharma’s existing product pipeline

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Placement timetable[1]

Trading halt in Mayne Pharma shares (before market open)	Friday 14thDecember 2012
Bookbuild opens	10:00am Friday 14thDecember 2012
Bookbuild closes	3:00pm, Friday 14 December 2012
Mayne Pharma shares recommence trading	Monday 17thDecember 2012
Settlement of the Placement	Thursday 20thDecember 2012
Allotment and commencement of trading of new shares issued under the Placement	Friday 21stDecember 2012

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(1) Indicative, subject to change

Mayne Pharma business update

• Mayne Pharma has now owned the business for 29 days and sales tracking to plan

Metrics performing to plan

• Integration has commenced with project teams across the key identified revenue generating projects and functional areas

• Management focused on accelerating the commercialisation of the combined product portfolios

• SUBACAP® nearing completion of the decentralised procedure in Europe with Germany, Spain and Sweden now concurring with the UK that the dossier is approvable

SUBACAP ® regulatory update

• Decentralised procedure expected to be completed pre - Christmas

• Marketing Authorisations in UK, Germany, Spain and Sweden expected early 2013

• In the US, Mayne Pharma is pursuing an alternative pathway to market that is expected to lead to filing of a New Drug Application for SUBACAP® during FY14

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Foreign Selling Restrictions

International Offer Restrictions

This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. New Shares may not be offered or sold in any country outside Australia except to the extent permitted below.

New Zealand

This document does not constitute a prospectus or investment statement and has not been registered, filed with or approved by any New Zealand regulatory authority under or in connection with the Securities Act 1978 (New Zealand).

This document is being distributed in New Zealand only to:

(a) persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money;

(b) persons who are each required to pay a minimum subscription price of at least $500,000 for the New Shares before the allotment of those securities;

(c) persons who have each previously paid a minimum subscription price of at least $500,000 for the Company’s shares (the initial securities) in a single transaction before the allotment of the initial securities, provided that:

• the offer of the New Shares is made by the issuer of the initial securities; and

• the offer of the New Shares is made within 18 months of the date of the first allotment of the initial securities; or

(d) persons to whom securities may be offered in New Zealand pursuant to the Securities Act (Overseas Companies) Exemption Notice 2002.

The New Shares are not being offered to any other person in New Zealand. Any investor who acquires New Shares must not, in the future, sell those securities in a manner that will, or that is likely to, result in the sale of the securities being subject to the New Zealand Securities Act 1978 or that may result in the Company or its directors incurring any liability whatsoever.

Hong Kong

WARNING: This document has not been, and will not be, registered as a prospectus under the Companies Ordinance (Cap. 32) of Hong Kong (the "Companies Ordinance"), nor has it been authorised by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the "SFO"). No action has been taken in Hong Kong to authorise or register this document or to permit the distribution of this document or any documents issued in connection with it. Accordingly, the New Shares have not been and will not be offered or sold in Hong Kong other than to "professional investors" (as defined in the SFO).

No advertisement, invitation or document relating to the New Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to New Shares that are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors (as defined in the SFO and any rules made under that ordinance). No person allotted New Shares may sell, or offer to sell, such securities in circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such securities.

The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional advice.

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Foreign Selling Restrictions (cont’d)

Singapore

This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in connection with the offer or sale, or invitation for subscription or purchase, of New Shares, may not be issued, circulated or distributed, nor may the New Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in accordance with exemptions in Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA.

This document has been given to you on the basis that you are (i) an existing holder of the Company’s shares, (ii) an "institutional investor" (as defined in the SFA) or (iii) a "relevant person" (as defined in section 275(2) of the SFA). In the event that you are not an investor falling within any of the categories set out above, please return this document immediately. You may not forward or circulate this document to any other person in Singapore.

Any offer is not made to you with a view to the New Shares being subsequently offered for sale to any other party. There are on-sale restrictions in Singapore that may be applicable to investors who acquire New Shares. As such, investors are advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.

United States

This document may not be released or distributed in the United States. This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. Any securities described in this document have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.

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