TRANSFORMING THE HEALTH & WELLNESS INDUSTRY...Nutraceutical & Wellness Cannabis Industry Personal...
Transcript of TRANSFORMING THE HEALTH & WELLNESS INDUSTRY...Nutraceutical & Wellness Cannabis Industry Personal...
TRANSFORMING THE HEALTH & WELLNESS INDUSTRY
1NASDAQ/TSX: NEPT ▫ Headquartered in Laval, Quebec, Canada
October 2019
The Corporation uses two adjusted financial measures, Adjusted Segment Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted Segment EBITDA) and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) to assess its
operating performance. These non-IFRS financial measures are directly derived from the Corporation’s financial statements and are presented in a
consistent manner. The Corporation uses these measures for the purposes of evaluating its historical and prospective financial performance, as
well as its performance relative to competitors. These measures also help the Corporation to plan and forecast for future periods as well as to
make operational and strategic decisions. The Corporation believes that providing this information to investors, in addition to IFRS measures,
allows them to see the Corporation’s results through the eyes of management, and to better understand its historical and future financial
performance.
Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have
standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be
considered in isolation. The Corporation uses Adjusted Segment EBITDA and Adjusted EBITDA to measure its performance from one period to the
next without the variation caused by certain adjustments that could potentially distort the analysis of trends in our operating performance, and
because the Corporation believes it provides meaningful information on the Corporation’s financial condition and operating results. Neptune’s
method for calculating Adjusted Segment EBITDA and Adjusted EBITDA may differ from that used by other corporations.
Neptune obtains its Adjusted Segment EBITDA measurement by adding depreciation and amortization and stock-based compensation to segment
income (loss) from operating activities before corporate expenses. Neptune obtains its Adjusted EBITDA measurement by adding to net income
(loss), net finance costs and depreciation and amortization and by subtracting income tax recovery. Other items such as stock-based
compensation, litigation provisions, acquisition costs and severance and related costs that do not impact core operating performance of the
Corporation are also added back as they may vary significantly from one period to another. Adjusting for these items does not imply they are non-
recurring.
CAUTION REGARDING NON-IFRS FINANCIAL MEASURES
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Statements in this presentation that are not statements of historical or current fact constitute ‟forward-looking statements” within the meaning of the
U.S. securities laws and Canadian securities laws. Such forward-looking statements involve known and unknown risks, uncertainties, and other
unknown factors that could cause the actual results of Neptune to be materially different from historical results or from any future results expressed
or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged
to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "will," "should," or "plans" to be uncertain and
forward-looking. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this
presentation. Forward-looking information in this presentation includes, but is not limited to, information or statements about our ability to
successfully develop, produce, supply, promote or generate revenues from the sale of cannabis-based and hemp-based products in the legal
market.
The forward-looking statements contained in this presentation are expressly qualified in their entirety by this cautionary statement and the
‟Cautionary Note Regarding Forward-Looking Information” section contained in Neptune’s latest Annual Information Form (the ‟AIF”), which also
forms part of Neptune’s latest annual report on Form 40-F, and which is available on SEDAR at www.sedar.com, on EDGAR at
www.sec.gov/edgar.shtml and on the Investors section of Neptune’s website at www.neptunecorp.com. All forward-looking statements in this
presentation are made as of the date of this presentation. Neptune does not undertake to update any such forward-looking statements whether as
a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also
subject generally to other risks and uncertainties that are described from time to time in Neptune public securities filings with the Securities and
Exchange Commission and the Canadian securities commissions. Additional information about these assumptions and risks and uncertainties is
contained in the AIF under ‟Risk Factors”.
CAUTIONARY NOTE AND FORWARD-LOOKING STATEMENT
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Plant-based solutions for the Health & Wellness industry
One-stop-shop for extraction, purification, and formulation of cannabinoids in North America
NEPTUNE TODAY
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Health & Wellness
Cannabis
CORE COMPETENCIES GROUNDED INEXTRACTION AND FORMULATION…
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Relationships with leaders in Retail, Vitamin, and Supplement industries
Oil extraction expertise
Highly automated Facility
Proven cold ethanol extraction process
Clinicalresearch
Global distribution
Condition specific formulations
Food grade GMP certified facility
Strict processesand standards ensure
quality control
Forms and delivery system
…HAS ENABLED CANNABIS MARKET PENETRATION AND PROVIDED THE FOUNDATION FOR SIGNIFICANT HEALTH & WELLNESS EXPANSION
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Apr 2017Health Canada
application
Jun 2018Canopy
Growth multi-year
extraction deal
Aug 2017Exits krill oil
manufacturing
Jan 2019Health Canada
processinglicence
received
Jun 2019TGOD multi-
yearextraction deal
Jul 2019Michael
Cammarata isnamed
President & CEO
Mar 2019Initiated
commercial production
and shipping of cannabis
Jun 2019Tilray multi-
yearextraction deal
Jul 2019Closed
acquisition of SugarLeaf Labs
Aug 2019Launch of Neptune Ventures
Sep 2019Expanding U.S. customer base
Oct 2019Collaboration
with IFF
SIGNIFICANT NORTH AMERICAN CAPACITY TO ADDRESS DEMAND FOR PLANT-BASED PRODUCTS
1 Post expansion, construction expected to complete by end of CY2019; Health Canada approval needed thereafter 2 Post expansion, construction expected to be complete by end of CY2019 3 Post expansion & once approvals are received
Fully-automated, modern, large scale
extraction facility licensed to process Cannabis
1,500,000 kg capacity to process biomass using
cold ethanol technology1
Good Manufacturing Practices (c-GMP)
certified for nutrition products
EU GMP certification underway
(by 1H CY 2020)
In-house quality control lab and R&D lab with
full testing capabilities
Newly acquired, modern, hemp processing facility
located in North Carolina
1,500,000 kg capacity to process biomass using
cold ethanol technology2
Sources hemp cultivated by licensed American
growers conforming with federal and state
regulations
Hemp-based products have surpassed the Vitamin
E category and are on track to overtake the
Omega-3 category
Hemp-based platform focused on Health and
Wellness is a natural extension of what Neptune
has specialized in for over 2 decades
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3,000,000 kg capacity3
170,000
1,300,000
30,000200,000
1,500,000 1,500,000
Phase I Phase II Phase IIIA(Q1 CY 2020E)
US
COLD ETHANOL EXTRACTION DIFFERENTIATES NEPTUNE’S PROCESS
Ethanol extracts more plant substances than CO2, which misses valuable compounds such as some phytocannabinoids and terpenes
Competitors turn to CO2 extraction because of the large start-up capital expenditures required for cold ethanol equipment. However, Neptune has been executing this process for over a decade
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COLD ETHANOL EXTRACTION PRODUCES NUTRIENT RICH, COMPLETE, FULL SPECTRUM EXTRACTS WHILE MAINTAINING A LOW CARBON FOOTPRINT
Cold Ethanol vs. CO2 Extraction
Greater recovery of cannabinoids
and terpenes
>2x less energy
consumption
>5x faster winterized oil
process
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Multi-year deal signed June 2018
Supplement Canopy Growth’s
extraction, refinement, and
formulation capacity
Represents an important
milestone in Neptune’s transition
Highlights Neptune’s capabilities
to capture the growing cannabis
market opportunity
3-year deal signed June 2019
Minimum volumes of 125,000 kg
Extraction services to produce
crude resin, winterized oil, and
distillate extracts
3-year deal signed June 2019
Minimum volumes of 230,000 kg
Extraction and purification of
cannabinoids from cannabis and
hemp biomass
Formulation, manufacturing and
packaging of several product
forms: capsules, tinctures, sprays,
topicals, vape pens, shots, teas
Neptune to seek organic
certification with TGOD assistance
EMERGING AS THE PREFERRED ONE-STOP-SHOP SUPPLIER OF CANNABIS PRODUCTS
GROWTH STRATEGY TO ACHIEVE VISION
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Increase Processing Capacityin North America and Internationally
Expand Customer Base into Global CPG and Health & Wellness
Acquire Unique Delivery Forms & Technology
Innovate to Create New Product Forms
Develop Strategic Partnerships through Neptune Ventures
VISION: Become a leading supplier of cannabinoid extracts, ingredients, and finished products to the Health & Wellness and CPG industries
Charlotte, NC
Sherbrooke, QC
INCREASE PROCESSING CAPACITY IN NORTH AMERICA AND INTERNATIONALLY
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Two modern, large scale extraction facilities utilizing cold ethanol technology
Future Processing Capacity1
Future Processing Capacity1
+ 1.5 mm kg
1.5 mm kg
1,200 / hour2 1,200 / hour2 200 mm / year2
1 Construction expected to be complete by end of CY2019; Health Canada approval needed thereafter2 Production expected to commence in Q4 CY2019
Can
ada
U.S
.
EXPAND CUSTOMER BASE INTO GLOBAL CPG AND HEALTH & WELLNESS
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Nutraceutical & Wellness
Cannabis Industry
Personal & Home Care
Cosmetics Pharma Food & Beverages
$6 bn1 +$5 bn2 $5 bn1 $2 bn1 $4 bn1 $3 bn1
1Brightfield Research Group, 2018 U.S. CBD Market Size2Company estimates of US CBD market and Canadian THC market
INNOVATE TO CREATE NEW PRODUCT FORMS
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“Neptune’s extraction expertise and pharmaceutical and biotech background positions us to transform the cannabis ecosystem and identify new uses for the whole cannabis plant.”
– Michael CammarataMoving Closer to the Customer
Identify New Uses for Cannabis Aligned with Consumer Demand
Create New Product Forms
Leverage in-house & 3rd Party R&D Capabilities
Edibles Topicals
Vapor Products
Home Care
Personal CareBeverages
Licaps Capsule Technology
White Label Offering
Formulation & Manufacturing expertise
Cutting Edge Extraction Technology
Today
Licaps Capsule Technology
White Label Offering
Formulation & Manufacturing Expertise
Cutting Edge Extraction Technology
Consumer Facing Brands
Absorption Technology
New Delivery Forms
Water Soluble Technology
Tomorrow
ACQUIRE UNIQUE DELIVERY FORMS & TECHNOLOGY
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Strategic Partners
Stimulates innovation and partnerships in the Health & Wellness industry
Allows for investments alongside customers in new products and technology to offer additional value
Develop advanced intellectual property and creative solutions
Create turnkey solutions to expand brands down the road
DEVELOP STRATEGIC PARTNERSHIPS THROUGH NEPTUNE VENTURES
Q1 FY2020¹
Nutraceutical Cannabis Corporate Consolidated
Revenues $4,293 $38 $30 $4,361
Adjusted EBITDA 530 (1,623) (2,490) (3,583)
Net income (loss) - (6,452)
SUMMARY FINANCIAL PERFORMANCE
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Note: 1 CAD : 0.76 USD
¹ Nutraceutical and Cannabis are two segments of Neptune. The corporate column represents unallocated costs which are corporate G&A expenses, net finance costs and income taxes.
Income Statement(in thousands of CAD $)
Q1 FY2019¹
Nutraceutical Cannabis Corporate Consolidated
Revenues $5,168 - - $5,168
Adjusted EBITDA 633 $(1,302) $(1,588) (2,257)
Net income (loss) - (4,100)
Income Statement(in thousands of CAD $)
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LIQUIDITY PROFILE
June 30, 2019 March 30, 2019
Cash, cash equivalents and short-term investments $5,375 $9,867
Total debt 4,567 3,467
Net proceeds from the private placement 51,600 -
Initial cash consideration for SugarLeaf ¹ (18,000) -
Pro forma net cash position 34,408 6,400
Financial Position(in thousands of CAD $)² ³
Note: 1 CAD : 0.76 USD
1 Includes transaction costs
2 Neptune owns 2,964,695 common shares of Acasti (ACST – TSXV) valued at $6,315 as of October 10, 2019
3 As at March 31st 2019, Neptune has tax losses carried forward of $56,342 and R&D tax credits amounting to $27,690
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NEW LEADERSHIP WITH EXTENSIVE CONSUMER PRODUCT INNOVATION EXPERIENCE
Successful entrepreneur and innovator in the Wellness industryPrevious CEO and Co-founder of Schmidt’s Natural, one of the world’s fastest growing wellness brands,acquired by Unilever in 2017Extensive knowledge of the CBD space with the launch of Schmidt Natural CBD & hemp deodorants in 2019
Michael Cammarata joins Neptune as President and CEO
EXECUTIVE TEAM
Michael Cammarata
President , CEO & Board Member
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Jackie Khayat
Vice President, Bus. Development
• 15 years in nutrition & healthcare sales
• Executive MBA at Concordia University
• Formally of 3M Canada
Michel TimperioPresident of Cannabis Business
• Responsible of BD for last 16 years for Neptune
Jean-Daniel Bélanger
Vice President, Legal & Corporate Affairs
• Former securities law firm partner
• Member of Quebec Bar since 2006
François-Karl Brouillette
Vice President, Science & InnovationNutrition Business
• Masters degree - Organic Chemistry
• + 15 years in nutrition
Graham Wood
Chief Scientific Officer
• Former Chief R&D Officer at Altasciences
• Former CEO at Manna Research
Martin Landry
Chief of Corporate Development & Strategy
• 20 years in capital markets and accounting
• Former Managing Director with GMP Securities
Marc VaugeoisVice President, Sales Nutrition Business
• + 25 years in health & nutrition industry
• CEO of Schmidt’s Naturals acquired by Unilever in 2017
• Founder of Random Occurrence, a venture capital and private equity firm.
Mario Paradis, CPA, CA
VP & Chief Financial Officer
• CFO Atrium Innovation acquiredby Nestlé for $2.3B
• Senior Director PricewaterhouseCoopers
BOARD OF DIRECTORS
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Moretz
Marketing
John Moretz
Chairman of the Board
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Hélène F. Fortin
Director
Philippe Trudeau
Director
Dr. Ronald Denis
Director
Rick Schottenfeld
Director
Schottenfeld Group LLC
Michael Cammarata
President , CEO & Board Member
APPENDIXMARKET DATA
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APPENDIXMARKET DATA
EXTRACTS DOMINATE MANY DEVELOPED CANNABIS MARKETS
FLOWER Smoked
EXTRACTSCannabinoids are extracted from the plant and then used in a wide range of products
60%¹40%*
Gel capsules
Vape pens
Edibles
Topicals
Beverages
¹ BDS –U.S.Market data (California) June 29th, 201822
5%
5%
6%
7%
7%
8%
9%
9%
13%
16%
17%
22%
38%
Spray
Dog Treat
Other
Adding to a Beverage (such as coffee)
None of these
Powder
Beverage
Tea
Salve or Lotion
Tincture
Chocolate/Candy
Capsule or Pill
Edible Oil
n=332
THE CURRENT U.S. MARKETPLACE
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TYPES OF PRODUCTS AND CONSUMER PURCHASE BEHAVIOR
Examples of
Hemp/CBD
Consumer
Products¹Balms/LotionsSoftgelsTinctures Gummies ChocolatesVapes Water Dog Treats
CosmeticsDietary Supplements Food and BeveragesInhalables Pet Supplements
What Format of
Hemp/CBD
Products are
Consumers
Purchasing?
Source: Informa, 2019. Purchase Behaviour
Among Consumers Who Have Purchased CBD,
The Hemp & CBD Guide. Nutrition Business
Journal
Extraction vital to hemp/CBD segment!
LEVERAGING OUR EXTRACTION & FORMULATION EXPERTISE TO TRANSFORM THE HEALTH & WELLNESS INDUSTRY
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