Vistin Pharma — Investor Presentation 2016

Oct 31, 2016

Vistin Pharma - Third Quarter 2016

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

31 October 2016

Vistin Pharma at a glance

Overview

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

Vistin Pharma business areas

Debt-free company (cash NOK 73m at 30 September 2016)

Revenue (pro forma)

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

2

Agenda

Highlights
Operational review
Financial review
Summary & outlook
Appendix

HIGHLIGHTS

Third quarter 2016 highlights

• Metformin: Strong underlying growth despite drop in revenue in Q3
• Revenue of NOK 39.3 million for the quarter vs. NOK 44.1 million last year. Year to date revenue up 5 percent.
• Production plant running at full capacity expansion project initiated
• Opioids: Stable volumes but lower prices
• Revenue of NOK 18.6 million for the quarter vs. NOK 20.2 million last year
• Challenging market conditions but increase in demand from certain key customers
• CMO: Improved profitability
• Revenue of NOK 30.5 million for the quarter vs. NOK 27.7 million last year
• Ongoing operational excellence program converted to increased capacity and material cost savings expected in 2017
• Financial performance
• Group EBITDA of NOK 7.3 million for the third quarter
• Cash balance at 30 September of NOK 73 million, no interestbearing debt

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

Historical metformin revenue1,2

1 Metformin revenue as reported by Weifa AS until end of May 2015 and by Vistin Pharma from June 2015 2 Includes sale of raw materials

Global manufacturing capacity – Metformin HCI

Continued strong demand for metformin, but with some quarterly fluctuations OPERATIONAL REVIEW – B2B - METFORMIN

• Revenue NOK 39.3 million, a decrease of 11% from Q3-15
• Lower sales volume in the quarter following a record sales volume in the previous quarter
• Revenue year-to-date NOK 140.8 million vs NOK 133.8 million last year
• Lower revenue and volume expected in H2 vs. H1 due to seasonality effects and different product mix, as previously reported
• The 3,000 MT capacity expansion project has been initiated
• Current production facility running at full capacity
• New production line expected to be fully operational from 2019
• In parallel, the Company is working on stretching the current capacity by approx. 500 MT (+16-17 percent) through an efficiency program

Sales volume metformin (API)

Metric tonnes per quarter

Diabetes - a global epidemic

Type 2 diabetes is one of the greatest challenges to healthcare systems around the world – and metformin is expected to maintain its position as the gold standard treatment in the foreseeable future

OPERATIONAL REVIEW – B2B - METFORMIN

Significant upside from additional capacity expansion

Vistin will capitalise on strong demand in its metformin business by doubling the capacity at its plant in Kragerø

Summary
Background	Significant long term growth in the metformin market and increased  demand from Vistin's customers – Forecast volumes expected to exceed future capacity in 2018 post the capacity increase programme (3,500 MT) – Vistin's target premium market is currently estimated to approx 13,000 MT and growing The addition of a new 3,000 MT line at Fikkjebakke (Kragerø) will  enable Vistin to meet this growth in demand
Actions taken to date	Detailed feasibility study conducted  Business case and investment proposal approved by Board 
Expected impact	The new production line is expected to become fully operational by  2019 Total capex estimated to be NOK 120m to be spent over 2017-18,  financed through existing cash, cash generation and loans Based on the forecasted capacity utilization, the project is expected  to provide a positive EBITDA contribution in its first year of operations
Current status	Detailed engineering and project start commenced in September 2016 

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 revenue¹

1 Opioids revenue as reported by Weifa AS until end of May 2015 and by Vistin Pharma from June 2015

Stable volumes – market improvements in sight

• Sale volumes for the quarter marginally higher compare to Q3-15
• Lower API sale off-set by higher volumes converted to codeine tablets
• Approx. 37% of revenue from sales of codeine tablets
• Increase in demand from key customers in selected markets going forward
• Prices down from Q3-15
• Lower total production of opioid raw materials expected in 2017, compared to 2015-2016, which should help stabilising the API prices in the mediumterm

Sales volume API (sold as API or tablets)

OPERATIONAL REVIEW – B2B - OPIOIDS

Opioids market overview

A protected market with high entry barriers

	Key features of the opioids market	 Strong growth in global opioids consumption
1  Protected market	Strong growth in global opioids consumption A protected business owing to tight controls by the  International Narcotics Control Board (INCB) and the practice of import quotas in several major markets – About half of the global markets are closed	14 12
	– Domestic monopolies mainly controlled by local players	10
2 High barriers to entry	High entry barriers due to tight controls / regulations  Difficult for low cost country competitors to enter the  regulated opioids API business Market dominated by producers located in Western  countries	D D D 8 Billions of S. 6
3 Increased market demand	Increasing wealth in emerging markets drives higher  expectations for medication, especially in China and India Most of the growth in opioid consumption comes from  emerging countries	4 2
4 Growth driven by developing countries	Ageing population and rising prevalence of diseases  – Defined Daily Doses have increased more than 3 times in 20 years (6.5% CAGR) North America dominates the global market for opioids  Asia expected to account for majority of future growth 	- 1994 1997 2004 1995 1996 1998 1999 2000 2001 2002 2003 2005 2006 S.DDD = Sold Defined Daily Doses

Source INCB, Narcotic Drugs 2014

Operational excellence program gaining momentum

• Operational excellence program to materially reduce costs in 2017 and onwards
• Production volume has increased by 15% to ~750 million tablets on an annualised basis, compared to last year
• Aim to be able to produce ~1.2 billion tablets annually
• Continued excellent delivery performance
• 100% service level (on time and in full) in the quarter
• Vistin Pharma's strategy is 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

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

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 2015 reflect Vistin Pharma's business operations from 1 June 2015)

(NOK 1 000)	Q3 2016	Q3 2015	YTD2016	YTD2015	FY 2015
Total revenue and income	88 237	91 986	301 130	123 356	227 892
EBITDA	7 318	11 974	30 956	14 836	27 883
Depreciation, amortisation and impairment	(1 052)		(686) (2 943)	(867)	(1 568)
Net finance income/(expense)	(573)	1 042	(419)	1 267	(100)
Profit/(loss) before tax	5 693	12 330	27 594	15 236	26 215
Profit/(loss)	4 270	9 001	20 695	11 123	19 122

• Group EBITDA was NOK 7.3 million for the third quarter
• Net profit for the period equal to NOK 0.25 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)	30.09.2016	30.09.2015	31.12.2015
Property, plant & equipment	46 202	36 698	41 331
Inventory	86 711	100 561	92 712
Trade receivables	57 005	66 710	54 760
Cash & cash equivalents	72 709	18 107	61 989
Other	8 416	24 857	8 216
Total Assets	271 043	246 933	259 008
Total equity	194 386	175 924	183 924
Total liabilities	76 658	71 009	75 084
Total Equity and Liabilities	271 044	246 933	259 008

Cash of NOK 72.7m

• Strong cash position and future cash flow generation has eliminated any financing risk for the NOK 120m metformin expansion project
• Continued focus on optimisation of inventory levels
• No interest-bearing debt

Agenda

Highlights
Operational review
Financial review
Summary & outlook
Appendix

Summary & outlook

• Metformin: Strong performance and bright outlook
• Current production facility running at full capacity
• New 3,000 MT production line to be fully operational and profitable from 2019
• Initiatives underway to increase capacity in the short term
• Opioids: Market improvements expected in 2017
• Stable underlying growth in demand
• Reduced supply expected to improve market balance from 2017 and onwards
• CMO: Higher volumes and lower costs to improve profitability
• Operational excellence program expected to result in minimum 50% additional capacity (with limited investments)
• Program in place to materially reduce costs in 2017 and onwards

Sales volumes will continue to fluctuate on a quarterly basis, however the longterm growth projections are favorable in all three business segments

Agenda

Appendix
Summary & outlook
Financial review
Operational review
Highlights

Top 20 shareholders as of 21 October 2016

NAME	SHAREHOLDING	% SHARE
STRATA MARINE & OFFSHORE*	1 965 943	11,53 %
QVT FUND V	1 869 797	10,96 %
STOREBRAND VEKST	1 403 960	8,23 %
MP PENSJON PK	877 870	5,15 %
SOLAN CAPITAL AS	787 482	4,62 %
SKANDINAVISKE ENSKILDA	779 352	4,57 %
FERNCLIFF LISTED DAI*	582 282	3,41 %
HOLBERG NORGE	573 349	3,36 %
PENSJONSORDNINGEN FOR APOTEKVIRKSOMHET	500 000	2,93 %
DUKAT AS	472 500	2,77 %
QVT FUND IV	436 273	2,56 %
CIPRIANO AS*	375 538	2,20 %
SPETALEN ØYSTEIN STRAY*	323 650	1,90 %
TVENGE TORSTEIN INGVALD	300 000	1,76 %
QUINTESSENCE FUND	242 740	1,42 %
SVENSKA HANDELSBANKEN	240 000	1,41 %
NORDBY KJELL ERIK**	200 000	1,17 %
BORGEN INVESTMENT GRUPPEN	185 736	1,09 %
GRANT INVEST AS	184 407	1,08 %
STATOIL PENSJON	166 138	0,97 %
Total 20 largest shareholders	12 467 017	73,1%
Other shareholders	4 587 918	26,9%
Total number of shares	17 054 935	100,0%

* Board members of Vistin Pharma, or companies controlled by Board members

** Executive management

Experienced management team

Name		Role	Experience
	Kjell-Erik Nordby	Chief Executive Officer	Previous experience includes several years in top management positions at Alpharma,  a leading international generic pharmaceutical company Holds a Master's degree in Pharmacy and Master's degree in Business Administration 
	Gunnar Manum	Chief Financial Officer	Previously CFO at Aqualis for 7 years, and prior to that he worked 8 years as a  senior advisor at Handelsbanken Corporate Finance Holds a MCom in Finance and Accounting from the University of New South Wales, Sydney 
	Erik Løkke Øwre	VP Operations	Previously SVP Operations, Tech. and Supply chain at REC Solar ASA and prior to that held  several senior management positions at Elkem, where he was employed for almost 20 years Holds a Master of Management from BI Norwegian Business School 
	Hilde Merete Næss	VP QA	Previously spent 20 years at Pronova BioPharma, where she held several  management positions within Quality Assurance Holds a Master of Science in Chemistry and a Master of Management 
	Valborg Godal Vold	VP Sales & Marketing	Experienced executive manager within the biotechnology and pharmaceutical industry  Holds a BA in Biomedical Laboratory Science and an Executive Master in Business  & Administration
	Liesl Hellstrand	VP HR & Organisation	Previous experience includes 5 years at Jordan, 9 years at Hydro and 4 years at  Volvo Car Corporation Holds a BSc in Human Resource Development and Labour Relations 

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.

Thank you for your attention!

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