Interim Report Q1 2020 Kjetil Ramsøy CEO Robert Schrama CFO May 6 th , 2020 Our Science. Your Trust™
Disclaimer This presentation includes forward-looking statements regarding NattoPharma ASA, including projections and expectations, which involve risk and uncertainty. Such statements are included without any guarantees to their future realization. Although NattoPharma ASA believes that the expectations regarding the Company reflected in such forward-looking statements are based on reasonable assumptions, no assurance can be given that such projections will be fulfilled. Any such forward-looking statement must be considered along with knowledge that actual events or results may vary materially from such predictions due to, among other things, political, economic, financial or legal changes in the markets in which NattoPharma ASA does business, and competitive developments or risks inherent to the Company’s business plans. Many of these factors are beyond NattoPharma ASA’s ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. The Company does not intend, and does not assume any obligation, to update the forward-looking statements included in this presentation as of any date subsequent to the date hereof. Our Science. Your Trust™
Agenda Operational Highlights • ▪ confidential Financial Highlights ▪ Q&A ▪ Our Science. Your Trust™
Operational Highlights Our Science. Your Trust™
Financial Highlights Another her quarter er with h reco cord d revenue enue Adj. EBITD TDA A contin inues ues to improve ove Q1’20: 56.3m m Q4’19: 38.5m m Q1’19: 27.8m Q1’20: 10.5m m Q4’19: 2.3m Q1’19: 1.9m Operating Revenue per Quarter 2016 - 2020 Adj. EBITDA per Quarter 2016 - 2020 Our Science. Your Trust™
COVID-19 NattoPharma has implemented measures to safeguard employees and their families during this period of global crisis ▪ Supply situation due to COVID-19 restrictions has not impacted Q1 ▪ As the lockdown in India has been extended, we see some risk of delays in supply of raw material during the second quarter ▪ After a short interruption international logistics are operating again, and flow of goods between the major regions is normalizing ▪ Outbound transportation to our customers have been operational the whole time ▪ Our Science. Your Trust™
Market and Product Mix COVID-19 impacts the quarter positively ▪ Strong demand for natural products which outgrows the synthetic products in the period ▪ Q1 2020 Shipped volume in March as single month is higher than any quarter before Q4’19 ▪ Re-balancing of product portfolio is enabling us to carry safety stock and meet customer ▪ demand more timely Bearing any unforeseen increase in COVID-19 restrictions we have ample access to ▪ product to meet expected demand in the coming period Q4’ 2019 Our Science. Your Trust™
Vitamin K2 importance emphasized by new COVID-19 study New study shows significant correlation between active levels of Matrix GLA Protein ▪ (MGP) and better outcomes of SARS-CoV-2-infected individuals MGP , a K-dependent protein that inhibits calcium from depositing in arteries and ▪ soft tissues, requires adequate Vitamin K2 to be activated NattoPharma has led Vitamin K2 research over nearly 16 years establishing the link ▪ between Vitamin K2 and MGP and improved cardiovascular health This new study further demonstrates Vitamin K2’s health benefits, including ▪ cardiovascular and tissue flexibility Vitamin K2 is not suggested as a treatment to COVID-19, but the data supports the ▪ thesis that Vitamin K2 supplementation supports overall health NattoPharma maintains its leadership role educating about K2 developments ▪ Our Science. Your Trust™
New Ingredient Our new Adaptogen en product offerin ferings Our 7-Pro rong nged ed Advantag antage in developing New Adaptogen Technologies: Both the studies for athletic performance and stress/mental acuity have been ▪ Appro roach ach: : Development of an Index of important actives, as well as ❑ stopped due to the COVID-19 situation Pharmacokinetic Testing Comp mposi siti tion: : Full-spectrum extract with multiple bioactive compounds ❑ achieved through a proprietary extraction method Another study in which researchers were looking at pharmacokinetic (PK) data, ▪ Conc ncentrati tration: n: Highly concentrated standardized extract of multiple ❑ standard actives in a proprietary composition blood samples have been collected; analysis will resume once workers allowed back to site Delivery ery: Proprietary delivery mechanisms and formulations designed to ❑ maximize benefit for mood and energy segments Scienc nce: Gold-standard clinical testing, including original human clinical ❑ trials The delay with the clinical trials will push back the new ingredient launch ▪ Claims: aims: Specific structure-function claims for delivery systems ❑ Brand nded Ingre redient nts: s: Fully developed Branding tying these technologies ❑ to the scientific validation and publications Our Science. Your Trust™
Financial Highlights Our Science. Your Trust™
Revenue growth breakdown Overall volumes (1000 ppm equivalent) went up with 84% compared to Q1-2019. 56.3 The mix in products changes to 60/40 Natural vs. Synthetic (Q1-2019: 40/60). Overall prices development in line with expectations. In Q1-2020 the NOK has depreciated quite significantly against the USD and EUR which have resulted in a substantial impact to the first quarter revenue. During the first quarter as result of COVID-19 we Amounts in NOK 1000 % Change have seen some hording from our customers Total Organic FX COVID-19 which we have estimated to be around 30% of Revenue our total growth in the first quarter. Operating Revenue 56 265 27 771 103% 48% 24% 31% Our Science. Your Trust™
Income Statement Highlights Q1 Revenue Change % Highest growth in the APAC and EMEA, with strong positive trend in 2020 56.3m the Americas and remaining our largest market. Growth in all 104% product categories. 27.5m 2019 Q1 Gross Margin Gross ss Margin % Gross Margin of 42.2% in the period. Down from 43.6% in the same period last year. The margin is in line with expectations based on 23.7m 42.2 product/customer mix. 12.0m 43.6 Q1 Q1 OpEx %OpEx/Rev Reven enue OpEx overall is impacted by the currency impact from the NOK depreciation against the USD and EUR in the first quarter. Further 13.2m 23.5 personnel costs are trending higher due to hiring of new senior personnel during Q1 2020 to support the growth. 9.2m 33.5 EBITDA EBITDA DA % EBITDA is showing strong improvement in line with the revenue 10.5m 18.7 growth and returning a 18.7% EBITDA margin for Q1. It is another testament of that our operating model works where we scale our 1.9m 6.8 activities without increasing our resources. Our Science. Your Trust™
Balance Sheet Highlights Increase in non-current assets mainly relates to capitalization of the Intangib ible le Asset ets Inven entory synthetic process development project. No changes from 2019. 2020 53.2m 27.9m The change in the loan balance to Kaydence Pharma AS impacted by 43.7m 15.7m 2019 recognized impairment at year end Financial ial Asset ets Recei eivab ables les Trade receivables from the sale of products are NOK 38.3 million in the 31.9m 51.6m period. Strong effort in collecting receivables, and no current risk of loss 40.3m 33.9m on accounts receivables Equity ST Loans Other receivables of NOK 13.3 million consist of accruals for 128.1m 6.1m SkatteFUNN, prepayments, VAT assets and other receivables 108.8m 6.1m Increased strong financial position, with an equity ratio of 71.8 %, LT Liabilit ilitie ies Payables les compared to 63.2% as per December 31 st , 2019 15.9m 28.4m 16.9m 19.6m The increase in current liabilities consists largely of increased trade payables which amount to 18.3 million in the period. Our Science. Your Trust™
Cash Flow In January the private placement was concluded and the remaining payment of NOK 9.2 million was received early January. Operational cashflow in the quarter is negative largely due to the spike in sales during March at the same time we are retaining our warehousing levels. Capital expenditure is limited in the first quarter in line with planning. NattoPharma USA, Inc. has been granted a COVID-19 US government sponsored loan this week under the Payment Protection Program of approximately USD 180K. The loan is to cover payroll and certain overhead expenses of our US Cash is sufficient for working capital purposes in the coming period. operations. The Company may qualify for loan forgiveness for a portion of the loan. The loan has an interest of 1% and a term of 2 years. Our Science. Your Trust™
Outlook We increase our guiding with an annual top line growth of 35 35 - 50% 50% ▪ We keep the expectation on gross margin to 42 - 47% ▪ EBITDA expected to be between 10 – 15% ▪ Careful tracking of OpEx with flexibility to adjust and monitor ▪ cost closely ensures a profitable growth. Our Science. Your Trust™
Questions & Answers Our Science. Your Trust™
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