Interim Report H1 2018 - NattoPharma · 2018-08-22 · Nutraceutical: Growing Vitamin K2 Market...
Transcript of Interim Report H1 2018 - NattoPharma · 2018-08-22 · Nutraceutical: Growing Vitamin K2 Market...
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Our Science. Your Trust™
Interim Report H1 201822 August 2018
Kjetil RamsøyChief Executive Officer
Christopher SpeedSVP Global Sales & Marketing
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DisclaimerThis 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.
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Financial Highlights H1 2018
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• Record revenue for the first half as well as for the second quarter 2018
• Continued revenue growth, with a 225% increase from the start of 2015 to date
• Positive EBITDA and Adj. EBITDA for the period
• Transformation from 2015 till 2018 is staggering and is a testament to the continued improvement process
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Sales development – Natural vs Pure
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• Growth in both product categories
• PharmaPURE growth impacted by production ramp-up
• Long term trend of continued growth
• Growth curve for both product categories show positive trend in 2018
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Supply of raw materials
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Commissioned Q2 2018, First delivery Q3/Q4 2018
In production 2016
Commissioned Q2 2018, First delivery Q4 2018
In production Q4 2017
Pro
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ctio
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ite
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Site
3Si
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Site
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Production Lines
✓ Building added capacity and de-risking dependency on critical production sites by securing:
➢ Multiple production lines➢ Additional manufacturing sites
✓ Several alternatives being reviewed and implemented in 2018
✓ Working on further yield and optimizations gains to reduce cost
Site
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Development work initiated, expected commissioning 2019
Samples under qualification
CommissionedQ1 2018
PlannedH2 2018
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Organization
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• Added new resources to prepare for the continued growth ahead
• Increased and improved focus on sales, by adding new global position for sales & marketing as well as more resources to the sales team
• New COO role created to professionalize the supply chain, to prepare for much larger volume in the coming years
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Portfolio expansion
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• Continued effort to identify the next
ingredient to bring into the portfolio
• Focused on
–Clinical validation
–Quality controlled
–Market potential
• Announcements will be made once we
have a new ingredient to launch
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Nasdaq First North
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• Application for delisting from Nasdaq First
North is sent
• Objective is to consolidate the trade on the
two stock exchanges in the attempt to
increase the volume and attract interest
for the share
• Last trading day to be announced once
more information is available from Nasdaq
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Kaydence Pharma
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Sales and Marketing
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SVP Global Sales & Marketing
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Global Vitamin K2 Sales & Outlook
Aggressive geographical expansion across the entire global market make increases in total
volume revenue entirely feasible.
Key indicators:
• The K2 industry has maintained impressive growth over the the past 5 years growing
from $20M 2014 to $45M in 2017
• In the U.S. natural channel, 2017 sales of Vitamin K2 finished products were strong,
ranking the 5th-growing ingredient
• Within the practitioner market, Vitamin K2 has been been identified as a Top 4
Nutrition Trend for 2018
• All signs show that volume growth will eventuate through all channels as Vitamin K2
sales are driven from health retail and internet to MLM, mass market, and functional
foods.
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Short- and Long-term Goals
How to capitalize on the Vitamin K2
industry’s bright future
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Short-Term Vitamin K2 Industry Goals
• Perpetuate full acceptance around Vitamin K2’s effect on human health
• Already recognized for bone and general health
• Enhance focus on cardiovascular health
• Signify as an essential nutrient for multivitamins (prenatal, kids, teen, adult)
• Increased buy-in value to all key stakeholders (shareholders, medical community, customers)
• Strong marketing presence and sales leadership coupled with swift geographical expansion
into the correct markets
• Dependable production/supply, underpinned by excellence throughout entire supply chain
and customer technical support
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Short-Term Vitamin K2 Industry Goals (cont.)
• Increased focus on quality and transparency
• Must recognize brands are increasingly building finished-product testing into
ingredient purchase agreements
• Collaborative spirit with market-shapers:
• Product innovators (i.e., encapsulators, ingredient engineers, etc.)
• Consumer influencers (i.e., practitioners, bloggers, experts, etc.)
• Direct brand-owner relationships
• Wise stewardship of all marketing and scientific assets (esp. patents and market expertise)
• Alignment with distributors/key regional marketing partners on corporate goals
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Long-Term Vitamin K2 Industry Goals
• Need to establish a Vitamin K2 Recommended Dietary Intake (RDI):
• Increase and evolve discussion to identifying regular vs. situational deficiency
• Innovation around encapsulation technologies and applications in a growing range of delivery
forms
• Emphasis on selling the correct balance of K2 forms
• Improved operating profit for the Vitamin K2 industry
• Launch a reputable K2 trade association
– A clear unified voice
– Product quality transparency via establishment of independent quality testing programs
of clinically validated K2 raw materials
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Long-Term Vitamin K2 Industry Goals (cont.)
NattoPharma consciously abstained from the current K2 trade association because its charter
does not emphasize K2 evidence and efficacy.
• Current trade association focuses strictly on testing finished products, which may already
contain raw materials that are:
• Sub-par / contaminated inactive cis-isomers
• Undemonstrated to be safe (i.e., not GRAS or TGA compliant, etc.)
• Completely lacking in-vitro, in-vivo and human clinical evidence of efficacy
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Driving the MenaQ7® K2 Message
Marketing Support Examples
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NattoPharma Begins to Promote: Again
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Nat
ura
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An award-winning, nature-identical synthetic Vitamin K2, MenaQ7® PharmPure is the only all-trans synthetic available that is free of cis-isomers.
Naturally derived Vitamin K2 as MK-7 uses a fermentation medium with chickpea protein and Bacillus licheniformis. The result is a MenaQ7® variety free from all known allergens including soy. A proprietary multi-step process of purification, condensation, and crystallization produces a product that is more than 96% pure, natural, all-trans MK-7.
A natural soy based MenaQ7® Vitamin K2 product offering to ensure the increasingly diversified market is supplied with an ingredient matching their K2 needs.
Thanks to a proprietary technological breakthrough, MenaQ7® Full Spectrum provides the vital menaquinone isomers MK-6, 7, and 9 for optimal and maximal delivery of Vitamin K2 with respect to absorption, half-life and biological activity.
We are the ONLY K2-MK7 Player to offer a full-range of
multiple K2 technologies to address market needs
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MenaQ7® is the Expert Brand
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MenaQ7 Full Spectrum
CryoCap
MenaQ7 Soy
Joint Health
Digestive Health
Mental Acuity
MenaQ7 Full Spectrum – opens doors
MenaQ7 Soy – China
CryoCap – Solving Problems
Sales Growth Strategy
Existing Sales Up 30%
Increase Global Markets
Expanding CV Claims
Multivitamins
Create New Customers
Introduce New Products Develop New Ingredients
Increase Existing Base
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Nutraceutical: Growing Vitamin K2 Market Enormous
Potential Future Volume
• From Health Specialty ⥤Mass Market supplement ⥤ Functional Food
• Additional applications
• Cardiovascular
• Multivitamins
• Geographic expansion
• Asia
• Brazil
• R.O.W.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Volume Growth
Health Retail
Internet
Food
Mass Market
MLM
TODAY
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Increase Global Markets & Offerings
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How will NattoPharma Rise to the Challenge?
• NattoPharma will continue to establish its competitive advantage by maintaining a strong
marketing presence, education initiatives and leadership examples through:
• Controlling the K2 conversation
• Emphasizing that NattoPharma has sponsored all research confirming Vitamin K2 is safe,
efficacious, and provides true health benefits.
• MenaQ7® trials include adult and child populations; healthy and patient populations
(19 published trials with more underway)
• Highlighting NattoPharma’s robust IP portfolio, proving that MenaQ7® is the only K2 clinically
shown to be pure, safe, and bio-effective / bioavailable, with the most comprehensive
portfolio.
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Comments to the Financial Statement
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Sales Development 2014 – H1 2018
• The rolling 12-months revenue continues on
a positive trend
• Record revenue in Q2’18 as first ever
quarter with more than NOK 25m in product
revenue
• Maintaining guiding of annual growth
between 40% and 50% for 2018 full year
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Income Statement H1’2018
• H1’18 revenue growth of 54% compared to
same period last year
• Margin in first 6 months impacted by delay in
delivery from one production site
• Operating Expenses increase driven by
investment in personnel
• Growth in cost is according to expectations,
and well below continued growth in revenue
• Supplement business now has 7 consecutive
quarters of profit on Adjusted EBITDA level
Income Statement
(Numbers in 1 000 NOK) Act H1'18 Act H1'17
Product Revenue 47 193 30 611 16 582 54,2 %
Cost of Sa les -27 529 -16 601 -10 928
Gross Profit 19 664 14 010 5 654 40,4 %
Gross Margin in % of revenue 41,7 % 45,8 %
Personnel Cost * -10 344 -7 038 -3 306
Other Operating Expenses (excl. Option cost) -6 819 -5 517 -1 303
Adj Total Operating Expenses -17 164 -12 555 -4 609 36,7 %
Adj EBITDA 2 500 1 456 1 045 71,8 %
Adj. EBITDA in % of revenue 5,3 % 4,8 %
Option Cost (Non-Cash) -1 563 -1 293
EBITDA 937 163 775 476,8 %
EBITDA in % of revenue 2,0 % 0,5 %
* adjusted for cost reinvoiced Kaydence Pharma
Comparison
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Balance Sheet - 30.06.2018
• Trade and other receivables consists of
o Accounts Receivables : NOK 21,2 million
o Other Receivables : NOK 7,6 million
• Cash balance is NOK 14 million
• Long Term Loan is all related to the sellers
credit provided to Kaydence Pharma AS
– Reduction in loan balance from end of 2017
is related to implementation of IFRS 9 and
related recognition of impairment risk
• Equity is NOK 104,6 million –> 71,9% of total
assets, or 84,7% adjust for the deferred gain
on the Pharma transaction
– Reduction in EQ includes recognized
impairment related to IFRS 9
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Cash
• Cash balance has been stable in the first 6 months
• Continued investment in working capital has been
offset by good cash management and collection of
customer receivables
• Positive EBITDA contributes to offset negative cash
impact from working capital investment
• Short term operating loan agreement entered into
in July to finance delivery of more product from
new supply line
• Barring any unforeseen events, cash balance is
expected to be sufficient for expected growth in the
coming period
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Kjetil Ramsøy
Chief Executive Officer
Q & A Session
Christopher Speed
SVP Global Sales & Marketing