Photocure ASA

Earnings Release • Feb 27, 2019

PHOTOCURE ASA

RESULTS FOR FOURTH QUARTER AND FULL YEAR 2018

27 February 2019

Daniel Schneider, President and CEO Erik Dahl, CFO

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DELIVERING ON KEY 2018 OBJECTIVES

Significant growth of Cysview® in US TURBT market

• Q4 revenue growth in US\$ 76%, full year 53%, driven by in-market volume increase in Q4 of 69%, full year 45%
• 51% growth YOY in installed blue light enabled cystoscopes in market to 157 by end of year, including 8 Flex cystoscopes
• 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 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 28% YOY to NOK 46.3 million in Q4, highest ever. Full year growth of 19% (proforma)
• Total in-market unit sales increased 11% in Q4. Full year increase of 5% driven by US

STRATEGIC FOCUS ON TRANSFORMING BLADDER CANCER DETECTION AND MANAGEMENT

Profitable commercial franchise

Hexvix®/Cysview® ~\$35M global in-market sales* (FY'18) Over 500k patients treated with Hexvix® / Cysview® worldwide

Strong competitive position Unique and complex drug-device procedure Leading regulatory, manufacturing & commercial expertise

Significant growth prospects Grow in existing markets like the US & expand into new regions FLEX label extension accessing a larger market opportunity

Scalable for partnerships and in-licensing opportunities

* Total In Market Sales including US, Nordic and Partners

Hexvix/Cysview Update

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

50% disease recurrence 10% – 30% disease progression

\$3.7 Billion in direct medical costs/year¹

Picture: Mayo Clinic; Researchgate.net 1. 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

EXPANDING INTO FLEX IS ONE OF OUR BIG NEXT STEPS

The flexible surveillance market is approximately 3X bigger than the rigid TURBT market

HEXVIX® / CYSVIEW® IS A TRANSFORMATIVE SOLUTION TO IMPROVE THE LIVES OF PATIENTS WITH BLADDER CANCER

Additional tumors found in 1 out of 4 patients¹

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

Key feature Better visual contrast between benign and malignant cells

Key benefits Improve diagnostic accuracy Achieve optimal surgical results

Significant reduction of disease recurrence Reduction in disease progression Potential for reduction in cystectomies Improved and cost-effective health outcomes

50% INCREASE IN CUSTOMER FACING ROLES IN 2019 75% MSA COVERAGE

Commercial Role	2016	2017	2018	2019
Surgical Sales Executives	11	15	21	27
Corp Account Mgrs. (LUGPA and IDHN)	0	0	0	4
Total FTEs	11	15	21	31
Total Account Coverage	275	375	525	750+

INCREASING PATIENT AWARENESS & DEMAND NOV/DEC 2018 MEDIA PROGRAMS: HCP & PATIENT

USA Today Nov 29

PATIENTS WANT BLUE LIGHT CYSTOSCOPY AND CYSVIEW®

Jan. 2016 n=222, Jan. 2017 n=568, Jan. 2018 n=550, Jan. 2019 n=600

1. Survey of self-selected patients completed through the Bladder Cancer Advocacy Network (BCAN) sponsored by Photocure.

CYSVIEW® TO BECOME THE NEW STANDARD OF CARE FOR THE DETECTION AND MANAGEMENT OF BLADDER CANCER IN THE USA

Supportive environment

Strongly recommended by national guidelines and expert panels New reimbursement (Jan '19) for Medicare patients

High adoption rate in leading sites Established in >140 key cancer hospitals and leading institutions and the numbers are growing

in 74% NCCN centers

in 56% of NCI centers

in 74% of top 25 Best Hospitals

HEXVIX® TO BECOME THE NEW STANDARD OF CARE FOR THE DETECTION AND MANAGEMENT OF BLADDER CANCER IN EUROPE

Supportive environment

Strongly recommended by European and national guidelines as well as expert panels

25% to 70% penetration rate

Continued growth in the Nordics

9% revenue growth during full year 2018 Further leverage commercial infrastructure – Combat Medical

Improve penetration in Rest of Europe

Well established in Germany with 30% penetration rate Opportunity to increase penetration in rest of Europe

Financials

SEGMENT PERFORMANCE - PROFORMA FOURTH QUARTER 2018

Amounts in NOK million	Q4 '18	Prof Q4 '17	Change	FY '18	Prof FY '17	Change
Commercial Franchise
Nordic revenue	13.5	12.9	5%	47.0	43.3	9%
US revenue	18.4	10.2	81%	63.7	42.4	50%
Partner revenue	14.4	13.2	9%	62.2	59.9	4%
Total Hexvix/Cysview	46.3	36.3	28%	172.9	145.6	19%
Other revenue	3.5	0.8		8.6	5.3
Total revenue	49.9	37.1	34%	181.5	150.9	20%
Operating expenses	-43.6	-35.0	24%	156.0	128.5	21%
EBITDA recurring	1.3	-1.3		8.4	10.4
Development Portfolio
Operating expenses	-5.4	-11.8	-54%	-18.9	-39.5	-52%
EBITDA recurring	-5.4	-11.8		-18.9	-39.5
TOTAL
EBITDA recurring	-4.1	-13.1		-10.5	-29.1

The statement is prepared on the proforma basis as if the accounting principles IFRS 15 and IFRS 9 had been adopted 1 Jan '17

Commercial Franchise

• Strong revenue growth in US, fourth quarter revenue growth in US\$ 76%, full year 53%
• Installed base of BLC year end at 157, increased 51% for the full year
• Continued growth in Nordic, 5% in Q4
• Partner revenue Q4 growth 9%, driven by Canada (BioSyent) and Germany (Ipsen)
• Increased operating expenses driven by commercial investments in US

Development Portfolio

• Significant cost reduction – activity level and capacity reductions

CONSOLIDATED INCOME STATEMENT - PROFORMA FOURTH QUARTER 2018

Amounts in NOK million	Q4 '18	Prof Q4 '17	Change	FY '18	Prof FY '17	Change
Hexvix/Cysview revenue	46.3	36.3	28%	172.9	145.6	19%
Other revenue	3.5	0.8		8.6	5.3
Total revenue	49.9	37.1	34%	181.5	150.9	20%
Gross profit	44.9	33.7	33%	164.4	138.9	18%
Operating expenses	-49.0	-46.8	5%	-174.9	-168.0	4%
EBITDA recurring	-4.1	-13.1		-10.5	-29.1
Depreciation & Amort.	-3.4	-3.6		-13.2	-13.1
Restructuring expenses	-1.1			-14.2
One-off items					-4.0
EBIT	-8.6	-16.6		-37.9	46.2
Net financial items	1.2	1.0		1.2	3.6
Earnings before tax	-7.3	-15.7		-36.7	-42.6
Tax expenses	-4.6	0.2		0.0	6.9
Net earnings	-12.0	-15.5		-36.7	-35.7

• Recurring EBITDA significantly improved from last year. Improvement is revenue driven while expense growth is limited
• Increased Hexvix/Cysview revenue driven by US
• Increased sales & marketing expenses, partly offset by decline in R&D and other operating expenses, net growth 4%
• Depreciation and amortization driven by amortization of Cysview phase 3 investments
• Restructuring expenses NOK 14.2 million, headcount reductions and organizational changes in second quarter

The statement is prepared on the proforma basis as if the accounting principles IFRS 15 and IFRS 9 had been adopted 1 Jan '17

CASH FLOW FOURTH QUARTER 2018

Amounts in NOK million	Q4 '18	Prof Q4 '17	FY '18	Prof FY '17
Operations cash flow	11.2	7.5	-24.1	-23.6
EBITDA, recurring	-4.1	-10.8	-10.5	-29.1
Working capital	11.9	17.1	1.4	6.4
Other	3.3	1.2	-15.0	-0.9
Investments cash flow	-0.4	-1.2	-1.1	-16.3
Development exp.	-	-0.8	-0.6	-17.5
Other	-0.4	-0.4	-0.5	1.3
Financing cash flow	3.2	-	2.7	-
Share capital	6.3	-	6.3	-
Other	-3.1	-	-3.7	-
Net change in cash	14.0	6.3	-22.5	-39.9
Ending cash balance	106.8	129.4	106.8	129.4

• Cash flow from operations fourth quarter at NOK 11.2 million, full year NOK -24.1 million
• Working capital positive in the quarter, main drivers are funds from Skattefunn (tax incentive scheme) and increased payables.
• Cash flow from investments fourth quarter NOK -0.4 million, full year NOK -1.1 million
• Full year improvement of NOK 15.2 million from 2017. Decline driven by investments in development projects as Cysview phase 3 project is finalized
• Year end cash balance at NOK 106.8 million

BALANCE SHEET 31 DECEMBER 2018

Amounts in NOK million	31.12 2018	31.12. 2017
Non current assets	77.8	87.5
Investments	24.6	34.6
Tax asset	52.4	52.9
Other	0.7	-
Inventory & receivables	46.6	46.2
Cash & equivalents	106.8	129.4
Total assets	231.2	263.1
Shareholders equity	176.3	218.1
Long term liabilities	2.5	4.8
Current liabilities	52.3	40.3
Total equity & liabilities	231.2	263.1
Equity ratio	76%	83%

• Investments of NOK 24.6 million in tangible and intangible assets is driven by investments in Cysview phase 3 project
• Deferred tax asset of NOK 52.4 million at level with YE 2017, tax rate reduced from 23% to 22%
• No interest bearing debt
• Shareholder's equity of NOK 176.3 million. Equity ratio of 76%

Summary and Outlook

OUTLOOK

Growth drivers USA

• 50% Larger customer facing commercial team
• Target 700 largest reference center hospitals and LUGPAs
• BLC Recommended in AUA & NCCN bladder cancer treatment guidelines
• Improved permanent favorable reimbursement
• Accelerated penetration into large untapped surveillance market

Growth drivers Europe

• Strongly recommended by European and national guidelines
• Strengthened customer facing commercial team in Nordic
• Penetration into European surveillance market

Financial guidance

• 2020 revenue outlook (U.S.) will remain \$20-25 million
• Significant continued revenue growth and profit opportunities in the U.S. market beyond 2020

Attachments

INCOME STATEMENT FOURTH QUARTER REPORTED

MNOK	Q4 '18	Q4 '17	FY '18	FY '17
Commercial Franchise
Nordic revenues US revenues	13.5 18.4	12.9 10.2	47.0 63.7	43.3 42.4
Partner revenues	14.4	16.3	62.2	63.3
Hexvix / Cysview Other revenues Total revenues Operating expenses	46.3 3.5 49.9 -43.6	39.4 - 39.4 -35.1	172.9 8.6 181.5 -156.0	149.0 1.9 150.9 -128.5
EBITDA recurring	1.3	0.9	8.4	10.4
Development Portfolio Operating expenses	-5.4	-11.8	-18.9	-39.5
EBITDA recurring	-5.4	-11.8	-18.9	-39.5
Total
EBITDA recurring	-4.1	-10.8	-10.5	-29.1

Income Statement - Segment Income Statement - Consolidated

MNOK	Q4 '18	Q4 '17	FY '18	FY '17
Hexvix / Cysview revenues	46.3	39.4	172.9	149.0
Other revenues	3.5	0.0	8.6	1.9
Total revenues	49.9	39.4	181.5	150.9
Gross profit	44.9	36.0	164.4	138.9
Operating expenses	-49.0	-46.8	-174.9	-168.0
EBITDA recurring	-4.1	-10.8	-10.5	-29.1
Depreciation & amortization	-3.4	-3.3	-13.2	-12.1
Restructuring expenses	-1.1	-	-14.2	-
One-Off items	-	-	-	-4.0
EBIT	-8.6	-14.1	-37.9	-45.2
Net financial items	1.2	1.0	1.2	3.6
Earnings before tax	-7.3	-13.2	-36.7	-41.6
Tax expenses	-4.6	0.2	0.0	6.9
Net earnings	-12.0	-13.0	-36.7	-34.7