Photocure ASA

Earnings Release • Nov 8, 2018

PHOTOCURE ASA

RESULTS FOR THIRD QUARTER AND THE FIRST NINE MONTHS 2018

8 November 2018

Daniel Schneider, President and CEO Ambaw Bellete, President, Photocure Inc. and Head, US Cancer Commercial Operations Erik Dahl, CFO

DISCLAIMER

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The Presentation has been produced by Photocure (the "Company") for information purposes only and does not in itself constitute, and should not be construed as, an offer to sell or a solicitation of an offer to buy any securities of the Company in any jurisdiction. The distribution of this Presentation may be restricted by law in certain jurisdictions, and the Recipient should inform itself about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the laws of any such jurisdiction.

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An investment in the Company involves significant risk, and several factors could adversely affect the business, legal or financial position of the Company or the value of its securities. For a description of relevant risk factors we refer to the Company's annual report for 2017. Should one or more of these or other risks and uncertainties materialize, actual results may vary significantly from those described in this Presentation. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment.

This Presentation contains certain forward-looking statements relating to inter alia the business, financial performance and results of the Company and the industry in which it operates. Any forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts and are subject to risks, uncertainties and other factors that may cause actual results and events to be materially different from those expected or implied by the forward-looking statements. The Company cannot provide any assurance that the assumptions underlying such forward-looking statements are free from errors nor do any of them accept any responsibility for the future accuracy of opinions expressed in this Presentation or the actual occurrence of forecasted developments.

This Presentation speaks as at the date set out on herein. Neither the delivery of this Presentation nor any further discussions of the Company shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not assume any obligation to update or revise the Presentation or disclose any changes or revisions to the information contained in the Presentation (including in relation to forward-looking statements).

This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts.

DELIVERING ON KEY 2018 OBJECTIVES

• Q3 US sales revenue up 42% in US\$ YOY, driven by in-market volume increase in Q3 of 35%. YTD revenue growth 45% in US\$ • 43% growth YOY in installed blue light enabled cystoscopes in market to 137 by end of Q3 • Improved reimbursement has positively impacted sales development including new account install base
• Our launch priority is focused on the accounts that participated in the BL Flex trial, current existing targeted accounts and the top large Urology groups in the US • Our pipeline of potential new accounts continues to grow driven by customer and patient demand
• Total Hexvix/Cysview revenue increased 26% YOY to NOK 43.5 million in Q3, highest ever. YTD growth of 16% (proforma) • Total in-market unit sales increased 8% in Q3. YTD increase of 2% driven by US

STRATEGIC FOCUS ON TRANSFORMING BLADDER CANCER MANAGEMENT

Strategic focus on bladder cancer detection & management core products, including potential new, complementary products

NON-CORE PIPELINE PRODUCTS:

Visonac® (Acne treatment)

Cevira® (Cervical disease treatment)

Partner out

Assess partnering opportunities Expansion and strategic alternatives

Strategy built on leveraging our unique know-how and capabilities

Hexvix/Cysview Update

CYSVIEW CONTINUED STRONG MOMENTUM IN US

• 42% increase in U.S. Cysview sales revenue driven by in market volume growth from both current and new accounts.
• Year to date U.S. revenues increased 45% and unit growth of 38%
• 43% YoY increase in permanent Blue Light Cystoscope placements finishing with 137 installed Blue Light scopes including 6 Blue Light flex scopes
• Positive reimbursement for BLC with Cysview continues to drive sales volume and install base for BLC with Cysview in multiple settings of care
• In November CMS announced a permanent A Code for Cysview for use in the physician office and clinic starting in January 1st 2019 and an additional \$1,187 / case reimbursement for certain BLC with Cysview procedures
• Increasing awareness on BLC with Cysview coming from new clinical publications, CME symposium and podium presentations at multiple international, national and regional medical meetings.
• US strategic investment plan is on track with additional sales resources that are positively impacting productivity

6

US LAUNCH OF CYSVIEW IN SURVEILLANCE OF BLADDER CANCER PATIENTS PRESENTS A LARGE MARKET OPPORTUNITY

• BLC with Cysview for surveillance launch strategy is focused on the accounts that participated in the BL Flex trial, current existing BL enabled accounts and the top large Urology groups in the US in the top MSA's
• Building on the positive clinical data published in Urologic Oncology Journal and British Journal of International Urology
• Continually assess the opportunities within flex and appropriately align our resources against those targets.
• Market opportunity is ~4 times the size of the TURBT market
• BLC with Cysview with flexible cystoscopes current install base of six centers

⁷ accounts

– Customer and Patient demand has resulted in a robust pipeline of potential flex accounts and rapidly working to close those

BLUE LIGHT CYSTOSCOPY WITH CYSVIEW FOR SURVEILLANCE

Video clip from UT Southwestern in Dallas, TX

2018 MEDIA PROGRAMS

NEW POSITIVE 2019 REIMBURSEMENT CODING, COVERAGE AND PAYMENT

		Medicare	Private payer
Coding, Coverage and Payment	Cystoscopy	• Procedure fee for cystoscopy • Cysview paid at ASP +6% in clinic or Physician Office setting with the new A Code for Cysview – A9589	• Procedure fee for cystoscopy • Cysview paid at contracted rate (ASP +6 to 15%)
	TURBT	• Hospital Outpatient Depts. Will receive an additional \$1,187 to cover the complexity of using Cysview® and Blue Light Cystoscopy procedure for the following codes: 52204 & 52224 • Bundled into ambulatory payment classification (APC – varies by TURBT type) * For the following procedure codes 52214, 52234, 52235 and 52240 • Add in code for Cysview – A9589	• Procedure fee for TURBT – varies by type • Cysview paid at (Average Selling Price -ASP +6 to 15%)

New Medicare reimbursement accounts for ~50% of TURBT Medicare market and 100% of the Physician Office / Clinic use

CYSVIEW SIGNIFICANT GROWTH OPPORTUNITY WITH NEW US LABEL

BLC with Cysview Market segment	Total Number of Cystoscopy Procedures	Number of Procedures in top 25 MSA*	Market potential in top 25 MSAs*
TURBT	324,094	130 000	130 MUSD
Surveillance Cystoscopy	1.2 - 1.4 million	540 000	540 MUSD

• Our focus is to establish and build BLC with Cysview business in the top 25 TURBT and Surveillance markets utilizing the MSA Strategy
• BLC with Cysview has achieved significant market penetration in In the top 10 MSA's: New York , Los Angeles, Houston, Chicago and Washington DC in the last 18 months
• Large install base in TURBT segment has set a great stage for the surveillance BLC with Cysview opportunity
• Focused investment of commercial and medical resources is driving our growth

BLUE LIGHT CYSTOSCOPY WITH CYSVIEW

New Standard of Care for Bladder Cancer

hospitals and institutions 130 and counting! Over

BLC with Cysview – A New Standard of Care in 74% of NCCN Designated Cancer Centers

BLC with Cysview is in 39 of the NCI Designated Cancer Centers

A New Standard of Care in 74% of the top 25 of Best Hospitals in Adult Urology as per US News and World Report

CYSVIEW PUSH & PULL STRATEGIES

Drive continued growth in the US in the TURBT segment and successfully launch in the surveillance market

HEXVIX NORDIC UPDATE

• Third quarter revenue increased 19% YoY. The increase was driven by higher billing compared to last year as distributors third quarter last year reduced their inventory
• Impact of inventory reduction in the third quarter 2017 approx. NOK 0.5 million
• YTD revenue increased 10% to NOK 33.5 million (NOK 30.4 million). In constant currencies, the increase was 9%
• In-market unit sales declined 3% YTD, partly due to large deliveries to hospitals at the end of the fourth quarter 2017. Third quarter in-market unit sales was at level with last year
• In August we signed an exclusive distribution agreement for Combat Medical's HIVEC for the Nordic region leveraging our existing Hexvix infrastructure
• Commercial sales to commence in the first quarter of 2019.

HEXVIX/CYSVIEW PARTNER UPDATE

• Partner in-market unit sales increased 6% YoY in the third quarter. YTD decline of 1%
• Germany at level with last year.
• Decline in France caused by loss of very favorable reimbursement since Q2'17; decline counteracted by strong guideline recommendation
• Other countries in total at level with last year
• Revenue decline (proforma) YTD of 2% in constant currencies

In-market unit sales (by Q)

Financials

SEGMENT PERFORMANCE - PROFORMA THIRD QUARTER 2018

Commercial Franchise

• Strong revenue growth in US, third quarter revenue growth in US\$ 42%, YTD 45%
• Continued progress in Nordic, third quarter revenue growth 19%, impacted by inventory decreases last year. YTD growth 9% in constant currencies
• Ipsen improvements in third quarter, rebound driven mainly by Germany and France. YTD revenue decline 2% in constant currencies (proforma) driven by unit sales
• Increased operating expenses in quarter and full year driven by commercial organization in US

Development Portfolio

• Significant cost reduction YOY driven by activity level and capacity reductions

MNOK	Q3 '18	ProF Q3 '17	YTD '18	ProF YTD '17
Commercial Franchise
Nordic revenues	10.6	9.0	33.5	30.4
US revenues	16.5	11.3	45.3	32.3
Partner revenues	16.4	14.3	47.8	46.7
Hexvix / Cysview	43.5	34.6	126.6	109.3
Other revenues	0.9	1.0	5.1	4.4
Total revenues	44.4	35.6	131.6	113.8
Operating expenses	-39.0	-32.7	-112.4	-93.5
EBITDA recurring	1.3	-0.2	7.1	11.7
Development Portfolio
Operating expenses	-4.4	-9.4	-13.5	-27.7
EBITDA recurring	-4.4	-9.4	-13.5	-27.7
Total
EBITDA recurring	-3.1	-9.6	-6.4	-16.1

CONSOLIDATED INCOME STATEMENT - PROFORMA THIRD QUARTER 2018

• Recurring EBITDA significantly improved from third quarter and YTD last year
• Increased revenue driven by US
• Increased sales & marketing expenses, partly offset by decline in R&D and other operating expenses
• Depreciation and amortization driven by amortization of Cysview phase 3 investments and IFRS 15 adjustments
• Restructuring expenses NOK 13.1 million, headcount reductions and organizational changes in second quarter

MNOK	Q3 '18	ProF Q3 '17	YTD '18	ProF YTD '17
Hexvix / Cysview revenues Other revenues Total revenues	43.5 0.9 44.4	34.6 1.0 35.6	126.6 5.1 131.6	109.3 4.4 113.8
Operating expenses	-43.4	-42.2	-125.9	-121.2
EBITDA recurring	-3.1	-9.6	-6.4	-16.1
Depreciation & amortization Restructuring expenses One-Off items	-3.3 - -	-4.5 - -	-9.8 -13.1 -	-9.5 - -4.0
EBIT	-6.4	-14.2	-29.3	-29.6
Net financial items Profit/loss(-) before tax Tax expenses	0.0 -6.3 1.5	0.4 -13.8 3.5	-0.0 -29.4 4.6	2.7 -26.9 6.7
Net earnings	-4.8	-10.3	-24.7	-20.2

CASH FLOW THIRD QUARTER 2018

• Cash flow from operations third quarter at NOK -5.3 million, an improvement from first and second quarter 2018
• NOK -2 million related to Q2 restructuring
• Cash flow from investments third quarter NOK +0.2 million, an improvement of NOK 10.8 million from same period 2017
• Decline driven by investments in development projects as Cysview phase 3 project is finalized
• Quarter end cash balance at NOK 92.8 million

MNOK	Q3 '18	Q3 '17	YTD '18	YTD '17
Cash flow from:
- Operations	-5.3	-3.4	-35.3	-31.1
- Investments	0.2	-10.6	-0.7	-15.1
- Financing	-	-	-0.6	-
Net change in cash	-5.1	-13.9	-36.5	-46.1
Ending cash balance	92.8	123.1	92.8	123.1

BALANCE SHEET 30 SEPTEMBER 2018

• Non current assets include NOK 27.2 million in investments in tangible and intangible assets and deferred tax asset of NOK 57.5 million
• No interest bearing debt
• Shareholder's equity of NOK 182.6 million. Equity ratio of 80%

MNOK	30.09	31.12	30.09
	2018	2017	2017
Non-current assets	85.8	87.5	78.9
Inventory & receivables	49.9	46.2	47.4
Cash & equivalents	92.8	129.4	123.1
Total assets	228.5	263.1	259.6
Shareholders equity	182.6	218.1	230.7
Long term liabilities	5.2	4.8	4.5
Current liabilities	40.7	40.3	24.3
Total equity & liabilities	228.5	263.1	259.6
Equity ratio	80 %	83 %	89 %

Summary and Outlook

DELIVERING ON KEY 2018 OBJECTIVES

Significant growth of Cysview® in US TURBT market	• Q3 US sales revenue up 42% in US\$ YOY, driven by in-market volume increase in Q3 of 35%. YTD revenue growth 45% in US\$ • 43% growth YOY in installed blue light enabled cystoscopes in market to 137 by end of Q3 • Improved reimbursement has positively impacted sales development including new account install base
Launch Cysview® in US flexible cystoscopy surveillance market	• Our launch priority is focused on the accounts that participated in the BL Flex trial, current existing targeted accounts and the top large Urology groups in the US
	• Our pipeline of potential new accounts continues to grow driven by customer and patient demand
Increase Hexvix® / Cysview® global in-market unit sales	• Total Hexvix/Cysview revenue increased 26% YOY to NOK 43.5 million in Q3, highest ever. YTD growth of 16% (proforma)
	• Total in-market unit sales increased 8% in Q3. YTD increase of 2% driven by US

Attachments

INCOME STATEMENT THIRD QUARTER REPORTED

MNOK	Q3 '18	Q3 '17	YTD '18	YTD '17
Commercial Franchise
Nordic revenues US revenues Partner revenues Hexvix / Cysview Other revenues Total revenues	10.6 16.5 16.4 43.5 0.9 44.4	9.0 11.3 15.2 35.5 0.2 35.6	33.5 45.3 47.8 126.6 5.1 131.6	30.4 32.3 47.0 109.6 1.9 111.5
Operating expenses EBITDA recurring	-39.0 1.3	-32.8 -0.2	-112.4 7.1	-93.5 9.4
EBITDA %	3 %	-1 %	5 %	8 %
Development Portfolio Operating expenses	-4.4	-9.4	-13.5	-27.7
EBITDA recurring	-4.4	-9.4	-13.5	-27.7
Total

EBITDA recurring -3.1 -9.6 -6.4 -18.3

Income Statement - Segment Income Statement - Consolidated

MNOK	Q3 '18	Q3 '17	YTD '18	YTD '17
Hexvix / Cysview revenues Other revenues Total revenues	43.5 0.9 44.4	35.5 0.2 35.6	126.6 5.1 131.6	109.6 1.9 111.5
Operating expenses	-43.4	-42.2	-125.9	-121.2
EBITDA recurring	-3.1	-9.6	-6.4	-18.3
Depreciation & amortization Restructuring expenses One-Off items	-3.3 - -	-4.3 - -	-9.8 -13.1 -	-8.8 - -4.0
EBIT	-6.4	-13.9	-29.3	-31.1
Net financial items Earnings before tax Tax expenses	0.0 -6.3 1.5	0.4 -13.5 3.5	-0.0 -29.4 4.6	2.7 -28.4 6.7
Net earnings	-4.8	-10.1	-24.7	-21.7