Photocure ASA

Earnings Release • Aug 7, 2019

PHOTOCURE ASA

RESULTS FOR SECOND QUARTER AND FIRST HALF YEAR 2019

7 August 2019

Daniel Schneider, President and CEO Erik Dahl, CFO

DISCLAIMER

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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 2018. 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.

PHOTOCURE STRATEGY — FOUR STEPS TO BECOME A TRANSFORMATIVE, MULTI-PRODUCT, BLADDER CANCER COMPANY

ACQUIRE

Build pipeline partner/acquisitions

EXPAND

Expand portfolio of bladder cancer/bladder assets

ACCELERATE

Grow Cysview®/Hexvix®

Surveillance market New geographies

DELIVERING ON KEY 2019 OBJECTIVES

Significant growth of Cysview® in US TURBT market

Accelerate Cysview® in US flexible cystoscopy surveillance market

Increase Hexvix® / Cysview® global in-market unit sales

Create opportunities vis-à-vis our strategic partnerships

4

Q2 revenue growth in US\$ 41%, in-market volume increase in Q2 of 34%

45% growth YOY in installed blue light enabled cystoscopes in market > Total of 188 cystoscopes including 14 Flex cystoscopes

Total Hexvix®/Cysview® revenue increased 23% YOY to NOK 52.1 million > Highest quarter ever. 7 consecutive quarters with increases QOQ sales

Total in-market unit sales increased 6% YOY in Q2

ACCELERATED MOMENTUM 6 CONSECUTIVE QUARTERS OF RECORD REVENUES IN US

US (1000 NOK)

ACCELERATED MOMENTUM INSTALLED BASE OF CYSTOSCOPES IN THE US

THE INVESTMENT MADE WILL DELIVER RETURNS

Strategy – Target Key Hospitals in the 30 largest MSAs in the US

• 2018/19 We have built the Commercial Foundation
  • Sales team focused on top 700+ centers that influence bladder cancer care in their regions
  • Team is composed of 27 Surgical Sales Executives (sell to new accounts) and 4 Clinical Support Specialists (increase current account sales)
  • Average territory for sales rep at peak sales: \$1.5 2 million USD in revenues (20-25 active accounts)
  • Future investment would be predicated on gaining optimal account coverage with similar ROI

Hexvix®/Cysview® Positioning and Sales Process

NON-MUSCLE INVASIVE BLADDER CANCER IS ONE OF THE MOST COMMON CANCERS WITH SIGNIFICANT RECURRENCE RATE AND HIGH DISEASE BURDEN

~650K surgical procedures annually in USA and EU ~2.2M

surveillance cystoscopies annually in USA and EU

More than 60% disease recurrence at 1 year¹

10% – 30% disease progression

\$3.7 Billion in direct medical costs/year²

Picture: Mayo Clinic; Researchgate.net

1. Sylvester RJ et al. Eur Urol 2006; 49: 466-467

2. Direct medical costs in USA in 2001: The health economics of bladder cancer: a comprehensive review of the published literature. Botteman MF et al. Pharmacoeconomics 2003;21 (8), 1315-1330

HEXVIX®/CYSVIEW® ADDRESSES THE NEED FOR IMPROVED DETECTION AND MANAGEMENT OF BLADDER CANCER

BLUE LIGHT CYSTOSCOPY WITH HEXVIX®/CYSVIEW®? A TRANSFORMATIVE SOLUTION TO IMPROVE THE LIVES OF PATIENTS WITH BLADDER CANCER

Key benefits

• Improved Patient outcomes (diagnostic accuracy + surgical results)
• Significant reduction of disease recurrence
• Reduction in disease progression
• Improved cost-effective health outcomes

Additional tumors found in 1 out of 4 patients¹

35% of patients with CIS were only found with Cysview® 2

1. Burger et al. Eur. Urol. 2013 WLC: White Light Cystoscopy; BLC: Blue Light Cystoscopy + Cysview®

11 2. Daneshmand S et al. Efficacy and Safety of Blue Light Flexible Cystoscopy With Hexaminolevulinate (HAL) in the Surveillance of Bladder Cancer: A Phase III, Comparative, Multi-Center Study JofU online. 2017.

BLUE LIGHT CYSTOSCOPY WITH HEXVIX®/CYSVIEW®

Blue Light Cystoscopy (BLC™) with Hexvix/Cysview is a drug and device combination for better detection and management of NMIBC.

Hexvix/Cysview is a pharmaceutical product that is taken up selectively by cancer cells in the bladder making them glow bright pink when illuminated with Blue Light.

Hexvix/Cysview is used with a blue light enabled cystoscope, from Karl Storz, Wolf or Olympus.

Better visual contrast between benign and malignant cells

LONG SALES CYCLE: COMPLEX SALES TO COMPLEX ORGANIZATIONS

Positioned for growth

SUPPORTIVE ENVIRONMENT & INCREASING AWARENESS FOR BECOMING THE STANDARD OF CARE FOR THE DETECTION AND MANAGEMENT OF BLADDER CANCER

• Inclusion in Bladder Cancer treatment guidelines

BLC™ with Hexvix® /Cysview® is strongly recommended by US, European and national guidelines as well as expert panels.

• High adoption rate in top Cancer centers Established in >170 key US cancer hospitals and leading institutions. 25% to 70% penetration rate in the Nordics
• Patient preference growing awareness and active preference as shown in recent BCAN survey
• Favorable and Permanent US Reimbursement 2019 for BLC™ with Cysview® on all settings of care
• Activating awareness in the healthcare community through major congress presence and media campaign
• Partnering with prominent Patient Associations especially BCAN in the US and the new World Bladder Cancer Patient Coalition

AN EXPERT PANEL NEW CONSENSUS RECOMMENDATIONS FOR USE OF HEXVIX®/CYSVIEW® ‒ FOCUS ON SURVEILLANCE

	TURBT (OR)	Initial surveillance @ 3 months	Regularly in surveillance first 2 years	Biopsy and Fulguration
High risk patients
Intermediate risk patients				*
Low risk patients

surveillance to be determined

16 References:

• Daneshmand S, Schuckman A, Bochner B, et al. Nat Rev Urol. 2014.
• Lotan Y, Bivalaqua T, Downs T, et al. Nat Rev Urol. 2019.

HEXVIX®/CYSVIEW® – KEY ENABLERS IN PLACE AND READY FOR GROWTH

Cevira® License Agreement

CEVIRA®: LICENSE AGREEMENT WITH ASIERIS

ASIERIS MEDITECH CO., Ltd.

• Asieris is a subsidiary of the China-based Jiangsu Yahong Meditech Co., Ltd., a specialty pharma company fully committed to research, development and commercialization of innovative new medical treatments through their own IP and in-licensing efforts.
• CEO of Asieris: Kevin Pan
• Its leading drug candidate, an oral drug for treating non-muscle invasive bladder cancer, is in a registrational clinical trial in China and Phase Ib trial in the US.
• Asieris has built strong development capabilities in the genitourinary diseases (GU) area in China and is rapidly expanding its global capability.

CEVIRA® – CERVICAL CANCER

• Potential to fill high unmet need for nonsurgical treatment of HPV/CIN populations
• Breakthrough, single use, integrated drugdevice technology
• Potential to treat high grade cervical dysplasia independent of HPV genotype
• Easy and convenient for provider and patient

CEVIRA®: TERMS OF LICENSE AGREEMENT WITH ASIERIS

TERMS OF THE LICENSING AGREEMENT*

• Under the License Agreement, Photocure will receive a total signing fee of USD 5 million within 6 months after signing.
• Approval of the initial indication will result in USD 18 million in China and USD 36 million in US/EU
• A second indication in China, the US and the EU would result in payments of up to USD 14 million.
• Sales royalties and milestones will apply in all markets.

Financials

SEGMENT PERFORMANCE SECOND QUARTER 2019

Amounts in NOK million	Q2 '19	Q2 '18	Change	YTD '19	YTD '18	Change
Commercial Franchise
Nordic revenue	10.7	10.8	-1%	23.8	22.9	4%
US revenue	24.5	16.1	52%	45.6	28.8	59%
Partner revenue	16.9	15.6	8%	33.9	31.4	8%
Total Hexvix/Cysview	52.1	42.4	23%	103.3	83.1	24%
Other revenue	0.9	3.2		1.9	4.1
Total revenue	53.0	45.7	16%	105.2	87.2	21%
Operating expenses	-46.9	-36.1	30%	-92.0	-73.4	25%
EBITDA recurring	1.5	4.8		3.2	5.7
Development Portfolio
Operating expenses	-4.1	-4.1	-1%	-7.3	-9.1	-20%
EBITDA recurring	-4.1	-4.1		-7.3	-9.1
TOTAL
EBITDA recurring	-2.6	0.7		-4.1	-3.4

Commercial Franchise

• US: Strong revenue growth, Q2 41% and YTD 46% in USD
  • Installed base of rigid and flex BLC 188 at quarter end, increased 45% YOY
• Nordic: Q2 revenue at level with last year, YTD growth 4%, strong development in Sweden and Finland
• Partner: Q2 and YTD revenue growth 8%, driven by Germany, France (Ipsen) and Canada (BioSyent)
• Increased operating expenses, Q2 at 30% YOY, commercial investments in US

Development Portfolio

• Operating expenses Q2 and YTD include oneoff costs related to agreement with Asieris

CONSOLIDATED INCOME STATEMENT SECOND QUARTER 2019

Amounts in NOK million	Q2 '19	Q2 '18	Change	YTD '19	YTD '18	Change
Hexvix/Cysview revenue	52.1	42.4	23%	103.3	83.1	24%
Other revenue	0.9	3.2	-72%	1.9	4.1	-54%
Total revenue	53.0	45.7	16%	105.2	87.2	21%
Gross profit	48.5	40.9	18%	95.2	79.1	20%
Operating expenses	-51.0	-40.2	27%	-99.3	-82.5	20%
EBITDA recurring	-2.6	0.7		-4.1	-3.4
Depreciation & Amort.	-4.2	-3.3		-8.5	-6.5
Restructuring expenses		-13.1			-13.1
EBIT	-6.8	-15.7		-12.6	23.0
Net financial items	0.1	0.1		-0.1	-0.1
Earnings before tax	-6.7	-15.6		-12.6	-23.1
Tax expenses	1.5	-1.4		2.6	3.1
Net earnings	-5.2	-17.0		-10.1	-20.0

• Operating expenses, increase driven by
  • Planned investments in US commercial operations (sales & marketing)
• Business development expenses particularly related to Cevira (other operating expenses)
• Operating expenses, significant FX impact
  • Growth in constant currencies; Q2 20% and YTD 14%

CASH FLOW SECOND QUARTER 2019

Amounts in NOK million	Q2 '19	Q2 '18	YTD '19	YTD '18
Operations cash flow	-4.0	-11.5	-19.7	-30.0
Earnings before tax	-6.7	-15.6	-12.6	-23.1
Working capital	0.6	0.0	-12.0	-11.0
Other	2.1	4.1	4.9	4.0
Investments cash flow	0.1	-0.8	0.7	-0.9
Development exp.	-	-0.2	-	-0.6
Other	0.1	-0.6	0.7	-0.3
Financing cash flow	-0.9	-0.6	-1.1	-0.6
Share capital	-	-	0.6	-
Other	-0.9	-0.6	-1.8	-0.6
Net change in cash	-4.7	-12.8	-20.2	-31.4
Ending cash balance	86.7	97.9	86.7	97.9

• Cash flow from operations Q2 NOK -4.0 million, improvement of NOK 7.5 million from Q2 last year. YTD improvement of NOK 10.3 million to NOK -19.7 million
  • 2018 cash flow impacted by restructuring at the end of Q2
• Cash flow from financing includes payment of lease liability totaling NOK 0.9 million in Q2 and NOK 1.8 million YTD
• Net change in cash improved NOK 8.1 million in Q2 and NOK 11.2 million YTD compared to last year
• Quarter end cash balance at NOK 86.7 million

BALANCE SHEET 30 JUNE 2019

Amounts in NOK million	30.06 2019	31.12 2018
Non current assets	82.4	77.8
Investments	18.6	24.6
Tax asset	55.0	52.4
Other	8.8	0.7
Inventory & receivables	51.9	46.6
Cash & equivalents	86.7	106.8
Total assets	221.0	231.2
Shareholders equity	166.7	176.3
Long term liabilities	11.3	2.5
Current liabilities	43.0	52.3
Total equity & liabilities	221.0	231.2
Equity ratio	75%	76%

• Non current assets
  • Investments of NOK 18.6 million in tangible and intangible assets is driven by investments in Cysview phase 3 project
  • Deferred tax asset of NOK 55.0 million
  • Other items includes impact from adoption of IFRS 16 (Leases) from 1 January 2019
• Inventory & receivables driven by revenue increase
• Long term liabilities include impact from adoption of IFRS 16 (Leases) from 1 January 2019
• No interest bearing debt
• Shareholder's equity of NOK 166.7 million. Equity ratio of 75%

Summary and Outlook

PHOTOCURE STRATEGY — FOUR STEPS TO BECOME A TRANSFORMATIVE, MULTI-PRODUCT, BLADDER CANCER COMPANY

ACQUIRE

Build pipeline partner/acquisitions

EXPAND

Surveillance market

New geographies

Expand portfolio of bladder cancer/bladder assets

ACCELERATE

2020 revenue outlook of 20-25M\$ in the US Grow Cysview®/Hexvix®