Vistin Pharma — Interim / Quarterly Report 2016

Apr 28, 2016

Vistin Pharma - First Quarter 2016

Kjell-Erik Nordby (CEO) and Gunnar Manum (CFO)

28 April 2016

Vistin Pharma at a glance

Overview

• Vistin is a spin-off from Weifa
• Leading producer of active ingredients used in medications for treating diabetes (metformin), as well as opiates for use in pain relief and cough medications
• Significant contract manufacturer (CMO) of solid dosage form (tablets) products
• Production of codeine API dating back to 1950, and metformin since 1969
• Headquartered in Oslo with two production plants in Kragerø, Norway
• ~150 highly qualified people employed
• Debt-free company

Revenue (pro forma)

* Note: Includes the revenue for the B2B segment as reported by Weifa ASA and Weifa AS prior to 1 June 2015

Agenda

Highlights
Operational review
Financial review
Summary & outlook
Appendix

HIGHLIGHTS

First quarter 2016 highlights

• Metformin: All time high revenue, 100% of 2016 production capacity contracted
• Expansion feasibility study progressing according to plan
• Quality issue uncovered in Q1. Likely root cause identified and corrective measures being implemented.
• Opioids: Spike in revenues despite continued challenging market conditions
• Higher Opioids tablet sales contributed to overall revenue increase of 46%
• Lower API prices compensated by favourable exchange rates
• CMO tablet manufacturing: Steady, profitable performer
• High sales volume, manufacturing costs on budget
• Significant EBITDA contributor
• Strong financial performance
• Revenue: 103 MNOK
• EBITDA: 11 MNOK

HIGHLIGHTS

Key quarterly figures for Vistin Pharma

(pro-forma B2B segment as reported in Weifa shown prior to Q3 2015)

Undelying EBITDA One-off items

* One-off items relating to a cash settlement of NOK 11.2 million received from the sellers of Weifa AS and a NOK 2.5 million write-off of sundry assets acquired from Weifa AS ** These figures are provided for information purposes and presents the key financial figures for the B2B segment, as reported by Vistin Pharma ASA (for June 2015), Weifa ASA (before 1 June 2015), Weifa AS (before 15 August 2014).

Agenda

Highlights
Operational review
Financial review
Summary & outlook
Appendix

Vistin – A leading global, fully integrated supplier

Vistin Pharma metformin overview

• Producer of three different metformin API products
• Metformin HCl (bulk API, "fine, dry powder")
• Metformin DC ("directly compressible", a granulated pretablet form)
• Metformin tablets (FDF, ready for consumption)
• Positioned as a premium producer in a low cost competitive market
• Sales to reputable international pharmaceutical companies
• State-of-the-art plant in Kragerø with expansion potential
• Certified by all significant international regulatory bodies
• New permanent emission permit received in April
• Strategically positioned with close proximity to key customers
• Delivery time less than 24 hours
• Competitive edge over Asian producers
• Highly valued by customers

Global manufacturing capacity – Metformin HCI

Historical metformin revenues

Note: Metformin revenue as reported by Weifa AS until end of May 2015 and by Vistin Pharma for June 2015

Continued strong demand for metformin in Q1

• Revenue NOK 47.1 million, an increase of 8.5% from Q1-15
• All-time high quarterly revenue
• Lower sales volume (-6%) offset by higher EUR prices (+4%) and higher EUR/NOK (+9%)
• Lower sales volume mainly a result of returned batches from two customers
• Likely root cause to quality issue identified and corrective measures being implemented
• Continued strong demand from new and existing customers
• Contracts for 100% of production capacity for 2016 secured
• Capacity expansion feasibility study expected to be completed by Q2

Sales volume metformin (API)

Metric tonnes per quarter

Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016

Diabetes - a global epidemic

• 387 million people live with diabetes
• Type 2 diabetes represents about 90%
• Estimate that 46% are undiagnosed
• Global healthcare costs related to treating diabetes amounted to USD \$612 billion in 2014
• Represented 11% of total healthcare costs worldwide in 2014
• Projected to exceed USD \$627 billion by 2035
• Diabetes was the cause of death of 4.9 million people in 2014
• Prevalence of diabetes is estimated to increase by 53% from 2014 to 2035
• Largest growth in developing economies, where Africa and the Middle East are expected to almost double by 2035

Estimated global growth in diabetes

Metformin – First-line treatment for type 2 diabetes

• Metformin is used for lowering glucose levels (blood sugar)
• Reduce the liver's production of glucose
• Delay and reduce absorption of glucose from the intestine
• Increase insulin sensitivity, leading to improved uptake of glucose in the body
• Comes in tablet form and can be combined with insulin or other glucose-reducing medicines
• Plain metformin is standard first-line treatment
• Metformin combined with other APIs are second- and third-line treatment, and often higher priced patented products
• Fixed dose combination products containing metformin represent ~10% of metformin volume

Metformin volume expected to grow 7-8% annually

Growth potential

• Actual metformin consumption in 2013 corresponded to ~50% of diagnosed population and ~25% of total people with diabetes
• Global metformin market estimated to be ~35 000 MT in 2014
• Metformin volume is expected to grow by 2 000 – 3 000 MT annually going forward
• Number of diagnosed and treated cases are expected to increase

Key features of the metformin industry

Metformin HCI API "Fine, dry powder"	 ~25 manufacturers with regulatory approvals in EU and US  ~65% of total volume manufactured in India  Global volume ~35 000 MT pa  Sufficient capacity to absorb volume growth as many Metformin API plants are multi-purpose
Metformin DC Directly compressible	 Manufactured by converting API to granulate  Global volume ~6 000 -7 000 MT pa  Higher price per kg than API, more expensive and labour-intensive to produce depending on customer requirements
Metformin FDF Finished dose formulations / plain metformin tablets	 Commodity generics – produced by many global/ regional generics companies  Some plain metformin tablets are sold as branded generics, giving a higher end-user price umbrella  Combination tablets, especially where the other API is still on patent, are manufactured for innovator companies, giving very high end-user price umbrella

Vistin – A major opioids "powder-to-pill" supplier

Vistin Pharma opioids overview

• Vistin Pharma produces two APIs in the opioid sector
• Codeine (analgesics and cough syrup)
• Pholcodine (cough syrup)
• Also produces tablets containing codeine (FDF)
• First commercial sales of codeine tablets in Q4 2014
• Expected annual volume of 250 mill tablets
• Production in Kragerø
• Customer base consists of leading pharmaceutical companies worldwide
• Vistin Pharma is, as the only independent API supplier, producing FDF for third parties
• Attractive collaborator for raw material companies
• Vistin Pharma is biggest independent codeine producer

Global manufacturing capacity

Historical opioid revenues

12

Solid codeine tablet volume gives positive revenue growth

• Revenue for the quarter increased by 46% compare to Q1-15
• Lower API volume off-set by higher sales of codeine tablets and favourable exchange rates
• Approx. 42% of revenue from sales of codeine tablets
• Prices marginally down from Q4-15
• Continued price pressure reduces API sales volumes
• Global production of opiate raw materials in 2015 and 2016 exceeds current demand, resulting in high inventory levels by the NRM manufacturers

Sales volume API (sold as API or tablets)

API volume sold as tablets (kg)

A protected market with high entry barriers

Overview

• Drugs delivered from opium and their chemically related derivatives
• Opioids is a group of natural and synthetic drugs with morphine-like properties
• Key features opioids industry
• Very high entry barriers due to tight controls and regulations
• Domestic monopolies mainly controlled by local players
• Few narcotic raw material (NRM) producers control supply and make the high raw material prices difficult to influence
• NRM producers seek to increase margins through vertical integration
• Growth in market demand
• Increasing wealth in emerging markets drives higher expectations for pain medication
• Most of the growth in opioid consumption comes from emerging countries

Availability of opioids for pain management

Consumption in defined daily doses for statistical purposes )S-DDD) per million inhabitants per day.

• Well-established opioids markets
• Established opioids markets
• Expected growth markets for opioids consumption

NRM producers are in a strong controlling position vis-a-vis sponsoring poppy farming licences and supplying NRM to API producers

Strong EBITDA result for CMO operation in the quarter

• Steady, profitable performer
• High sales volume, manufacturing costs on budget
• Significant EBITDA contributor (NOK 2.7m)
• Delivery performance in accordance with customer requirements
• 99% service level (on time and in full) in the quarter
• Operational excellence program will increase capacity significantly
• Minimum 50% production capacity increase from the current ~650m million tablets, without material cost increases or investments is expected
• Vistin Pharma's strategy to forward integrate in the value chain and expand tablet business

Production facility

• Tablet manufacturing plant at Kragerø, Norway
• GMP/GDP Certificate and Manufacturing License authorized by Norwegian Medicines Agency with the latest inspection in August 2015
• Current annual production ~650 million tablets, with potential to expand capacity

Solid underlying growth in the CMO tablet market

• Global market estimated to reach USD 40.7 billion by 2015*
• CMO market expected to grow at a CAGR of 10-11% by 2017
• Growth driven by players in emerging markets
• Consolidation among western CMO companies
• Key industry drivers
• Change in regulatory frameworks
• Margin pressure
• High level of outsourcing from biopharma companies
• Outsourcing trend creates growth opportunities for high-quality producers

Agenda

Highlights
Operational review
Financial review
Summary & outlook

FINANCIAL REVIEW

Key quarterly figures for Vistin Pharma

(pro-forma B2B segment as reported in Weifa shown prior to Q3 2015)

* Including one-off items relating to a cash settlement of NOK 11.2 million received from the sellers of Weifa AS and a NOK 2.5 million write-off of sundry assets acquired from Weifa AS ** These figures are provided for information purposes and presents the key financial figures for the B2B segment, as reported by Vistin Pharma ASA (for June 2015), Weifa ASA (before 1 June 2015), Weifa AS (before 15 August 2014).

Consolidated income statement*

(figures for FY 2015 reflect Vistin Pharma's business operations from 1 June 2015)

(NOK 1 000)	Q1 2016	Q1 2015	FY 2015
Total revenue and income	103 226	-	227 892
EBITDA	11 030	-	27 883
Depreciation, amortisation and impairment	(891)	-	(1 568)
Net finance income/(expense)	(1 337)	-	(100)
Profit/(loss) before tax	8 802	-	26 215
Profit/(loss)	6 601	-	19 122

• Group EBITDA was NOK 11.0 million for the first quarter
• After provision of NOK 3.0 million for expected customer returns
• 100% of EUR exposure for 2016 hedged at an average EUR/NOK 9.45
• Financial expenses mainly reflect unrealised foreign exchange losses
• Net profit for the period equal to NOK 0.39 earnings per share

^* Note: Vistin Pharma ASA was established in February 2015, and the Group had no operating activities prior to Vistin Pharma AS' acquisition of the B2B business and tablet production assets from Weifa AS on 1 June 2015. Hence, most of the figures presented in the consolidated financial statements for the full year 2015 represent the financial result of the B2B and CMO business acquired from 1 June 2015. There are no comparable historical numbers.

Financial position

(NOK 1 000) 31.03.2016	31.03.2015	31.12.2015
Property, plant & equipment 45 123	-	41 331
Inventory 94 088	-	92 712
Trade receivables 49 285	-	54 760
Cash & cash equivalents 67 621	-	61 989
Other 8 214	-	8 216
Total Assets 264 331	-	259 008
Total equity 190 525	-	183 924
Total liabilities 73 806	-	75 084
Total Equity and Liabilities 264 331	-	259 008

Net interest bearing debt - - -

• Cash of NOK 67.6m
• No interest-bearing debt

Agenda

Highlights
Operational review
Financial review
Summary & outlook
Appendix

Summary & outlook

• Solid performance within all three business areas
• All time high metformin revenue
• Significant revenue growth within opioids
• Stable, profitable CMO performance
• Exciting growth opportunities ahead
• Strong underlying growth supporting all business segments
• Feasibility study for a doubling of metformin capacity in progress
• CMO operational excellence program expected to result in minimum 50% additional capacity available (with limited investments)

Vistin Pharma well positioned for continued profitable growth

Agenda

Highlights
Operational review
Financial review
Summary & outlook
Appendix

Top 20 shareholders as of 19 April 2016

NAME	SHAREHOLDING	% SHARE
EUROCLEAR BANK S.A.	2 548 810	14,9%
STRATA MARINE & OFFSHORE	1 965 943	11,5%
STOREBRAND VEKST	1 060 106	6,2%
MP PENSJON	877 870	5,1%
SOLAN CAPITAL AS	787 482	4,6%
SKANDINAVISKE ENSKILDA	779 376	4,6%
FERNCLIFF LISTED DAI	582 282	3,4%
HOLBERG NORGE	573 349	3,4%
PENSJONSORDNINGEN FOR APOTEKVIRKSOMHET	500 000	2,9%
PORTIA AS	450 000	2,6%
CIPRIANO AS	375 538	2,2%
DUKAT AS	375 000	2,2%
SPETALEN ØYSTEIN STRAY	323 650	1,9%
TVENGE TORSTEIN INGVALD	300 000	1,8%
SVENSKA HANDELSBANKEN	215 000	1,3%
STOREBRAND NORGE I	203 964	1,2%
NORDBY KJELL ERIK	200 000	1,2%
BORGEN INVEST	196 078	1,1%
GRANT INVEST AS	184 407	1,1%
VPF KLP AKSJENORGE	178 627	1,0%
Total 20 largest shareholders	12 677 482	74,3%
Other shareholders	4 377 453	25,7%
Total number of shares	17 054 935	100,0%

APPENDIX

Experienced management

Kjell-Erik Nordby Chief Executive Officer

Mr Nordby has been CEO of Weifa since February 2009, and as of June 2015 CEO of Vistin Pharma. He was VP Business Development at Photocure, a Norwegian biotech company. Previous experience includes several years in top management positions at Alpharma, a leading international generic pharmaceutical company listed on NYSE. Nordby holds a Master's degree in Pharmacy and Master's degree in Business Administration.

Liesl Hellstrand VP HR & Organisation

Ms Hellstrand joined Weifa as Vice President HR in January 2014, and as of June 2015 as VP HR & Organisation, Vistin Pharma. Prior to this, she held the position as VP HR of Jordan for five years, she spent nine years in Hydro as VP HR in Oslo, and four years as Director HR at Volvo Car Corporation in Gothenburg, Sweden. Hellstrand holds a BSc in Human Resource Development and Labour Relations, specializing in Organization, from Uppsala University, Sweden.

Gunnar Manum Chief Financial Officer

Mr Manum joined Weifa as CFO in August 2014, and as of June 2015 as CFO of Vistin Pharma. He was CFO at Aqualis for 7 years, and prior to that he worked 8 years as a senior advisor at Handelsbanken Capital Markets, Corporate Finance. Manum has a broad experience from managerial positions within finance and accounting at Stolt Sea Farm and PWC, Australia. He holds a MCom in Finance and Accounting from the University of New South Wales, Sydney.

Hilde Merete Næss VP QA

Ms Næss joined Weifa in March 2015 as VP QA, and as of June 2015 as VP QA Vistin Pharma. She previously held the position as Head of Quality & Regulatory Affairs Global Omega-3 at Pronova BioPharma, where she has held several management positions within QA during her 20 years with the company. Næss holds a Master of Science in Chemistry from the University of Oslo and a Master of Management from the Norwegian School of Management.

Valborg Godal Vold VP Sales & Marketing

Ms Godal Vold joined Weifa in October 2012 as Vice President B2B Sales & Marketing, and as of June 2015 as VP Sales & Marketing, Vistin Pharma. She is an experienced executive manager within the biotechnology and pharmaceutical industry. Godal Vold holds a BA in Biomedical Laboratory Science (BLS) and an Executive Master in Business & Administration from BI Norwegian Business School /ESCP-EAP Paris.

Gitte Jensen Wegge VP Operations

Ms Wegge joined Weifa as VP Operations in April 2015, and as of June 2015 as VP Operations Vistin Pharma. She previously held the position as Head of Operations at Bergen Engines AS (Rolls-Royce Power Systems) for three years, and prior to that held several management positions at Elkem, where she was employed for more than 20 years. Wegge holds a Master of Science from the Norwegian Institute of Technology.

Board of Directors*

Ole Enger

Chairman

Mr Enger has extensive industrial experience and is currently the Chairman of the Board of REC Solar ASA. Enger was previously the CEO of REC ASA, a position held from April 2009. Prior to REC ASA, Enger was the president & CEO of SAPA AB, and he has also held the position as president & CEO of Elkem AS and Executive Vice President of Elkem AS. In addition, he has lead Norsk Hydro's Bio-division, including the development of Omega 3 products for both pharmaceutical and food applications, and has been the Chariman of the Board of Borregaard, a producer of fine chemicals for the global pharmaceutical market. Enger holds a degree from the Norwegian University of Life Sciences and a business degree from the Norwegian School of Economics. Enger is a Norwegian citizen, and resides in Norway.

Kathrine Gamborg Andreassen

Ms Andreassen is the CEO of Weifa ASA. She joined Weifa in August 2012, as Vice President of Weifa's Consumer Health business area, and was appointed CEO from June 2015.. She is an experienced marketing professional and she has held several top management positions within the FMCG, food and health business (Orkla, Bakers). Ms Andreassen holds a M.Sc. in Business Strategy & Marketing from the University of Wisconsin.

Einar J. Greve

Mr Greve works as a strategic advisor at Cipriano AS. Greve has previously worked as head of the legal department of Oslo Børs ASA, as partner at Wikborg Rein & Co and as Partner of Arctic Securities ASA. He has held various positions in Norwegian listed and unlisted companies. Greve holds a degree in law (cand.jur) from the University of Oslo.

Ingrid Elvira Leisner

Ms Leisner has previously worked as Head of Portfolio Management for Electric Power in Statoil Norge AS. She also has a background as a trader of different oil and gas products in her 15 years in Statoil ASA. Ms Leisner holds a Bachelor of Business degree (Siviløkonom) with honors from the University of Texas at Austin. She has served on the board of several companies listed on the Oslo Stock Exchange

Øystein Stray Spetalen

Mr Spetalen is Chairman and owner of investment firm Ferncliff TIH AS. He is an independent investor. He has worked in the Kistefos Group as an investment manager, as corporate advisor in different investment banks and as a portfolio manager in Gjensidige Forsikring. Spetalen is achartered petroleum's engineer from NTNU. Spetalen is a Norwegian citizen and resides in Oslo, Norway.

*Shareholder elected

Thank you for your attention!

www.vistin.com