A world leader in allergy immunotherapy Investor Relations presentation June 2017 1 I Investor Relations presentation I June 2017
ALK: Towards redefining treatment of severe allergies The commercial leader and foremost innovator in Allergy Immunotherapy (AIT) ALK fundamentals AIT: A unique disease-modifying treatment for people with severe allergies Global reach Exclusivity via high-quality biological manufacturing processes including sourcing and standardisation of allergens 2,300 employees (+200 in 2016) Patient solutions in all areas of AIT SLIT-tablets Diagnostics, adrenaline 2016 Revenue DKK 3bn SCIT (injections) SLIT-drops Today ~80% Europe 99% allergy-related Niche ~1.5m patients Strategic drivers Globalisation of AIT Standardised, evidence-based products Prescriber expansion Asthma treatment and prevention Future Truly global Allergy & asthma Mainstream for people with severe allergies 2 I Investor Relations presentation I June 2017
Re-educating the immune system Allergy Immunotherapy (AIT) AIT Treatment with standardised doses of allergens (proteins) Disease modification: Treats the cause of allergy in addition to reducing symptoms and use of other medications Typically recommended for three years Common causes of allergic rhinitis with/without conjunctivitis Other allergy sources House dust mite Grass Tree pollen Ragweed Japanese cedar Insects Food Prevalence: 10-30% globally, most common chronic disease 30-60% of patients with allergic rhinitis develop allergic asthma 3 I Investor Relations presentation I June 2017
Global footprint Partnerships to leverage growth SLIT-tablets SLIT-tablets and SCIT Allergic rhinitis AIT industry sales 2016 ALK AIT sales 2016 EUR ~10 billion Global allergic rhinitis market North America; 18% International; 7% EUR ~0.9 billion Global AIT market Europe; 75% International; 2% North America; 13% EUR ~360 million Europe; 85% ACARIZAX SLIT-tablets ALK Partner markets AIT treatment is mainly distributed as finished products in Europe and recently also in the USA and International markets - in North America, also as bulk extracts to allergy specialists 4 I Investor Relations presentation I June 2017
Financial overview 2016 disruption profits to be reinvested in building growth and robustness DKK million 2014 2015 2016 2017E Base business 2,219 2,384 2,918 SLIT-tablet partnerships 2) 214 185 87 Revenue 2,433 2,569 3,005 2.8-3.0bn (Revenue in USDm) 363 383 448 - Gross margin 70% 67% 67% R&D 394 407 385 (% of revenue) 16% 16% 13% - S, M & A 994 1,033 1,091 EBITDA before special items and excl. milestones /royalties 273 331 659 - EBITDA 404 451 642 ~300 (in USDm) 60 67 105 - CAPEX 202 199 204 350-400 Free cash flow 101 18 201 > -500 Equity ratio 69% 63% 60% - Cash and marketable securities 289 608 840-2017 priorities US scale-up for repatriated SLITtablets ~+150 DKKm Market shaping in Europe and Int l markets ~+50 DKKm Capacity expansion and Product Supply robustness: +75 DKKm (COGS) ~+150-200 DKKm (CAPEX) 1) Growth in local currencies 2) Revenue from SLIT-tablet partnerships in North America and International markets. In years 2009-15, this mainly consists of milestones and service fees. 5 I Investor Relations presentation I June 2017
ALK s path to long-term growth 2017: Extra allocations of DKK ~275 million (OPEX) and DKK 150-200 million (CAPEX) to fund growth initiatives Extend market leadership in Europe North American build-up Expand reach in International markets Across regions ACARIZAX launches Explore adjacencies: in-license or acquire Jext in new markets Customer-centric approach Basis Expand capacity and robustness in Product Supply 6 I Investor Relations presentation I June 2017
Pipeline is key for ALK s global expansion GRAZAX Europe Adults and children Allergic rhinitis GRASTEK North America Adults and children Allergic rhinitis GRAZAX International markets* Adults and children Allergic rhinitis RAGWITEK North America Adults Allergic rhinitis Ragweed SLIT-tablet International markets* Adults Allergic rhinitis Ragweed SLIT-tablet Europe Adults Allergic rhinitis RAGWITEK SLIT-tablet North America Children Allergic rhinitis MITICURE Japan** Adults Allergic rhinitis ACARIZAX Europe Adults Allergic rhinitis and allergic asthma ACARIZAX International markets* Adults - Allergic rhinitis and allergic asthma HDM SLIT-tablet North America Adults Allergic rhinitis MITICURE Japan** Children Allergic rhinitis Japanese cedar SLIT-tablet Japan** Adults Allergic rhinitis Tree SLIT-tablet Europe Adults Allergic rhinitis Phase I Phase II Phase III Filing Marketed *) Licensed Abbott for Russia and South-East Asia and Seqirus for Australia/New Zealand **) Licensed to Torii for Japan *** Already marketed in selected markets 7 I Investor Relations presentation I June 2017 *** *** 2007 2014 2014 2015 2016
ACARIZAX globalisation Commercial highlights Available in nine markets ~40,000 patients world-wide European sales tripled in Q1 Clinical highlights GINA asthma recommendation Approval by the FDA and Health Canada Adolescent use approved in EU Paediatric application in Japan Launched Approved Filed Preparations for filing * ACARIZAX is the trade name for ALK s HDM SLIT-tablet in Europe 8 I Investor Relations presentation I June 2017
Europe: Market disruptions affecting performance DKK 616 million revenue (681) 9% decrease vs. Q1-2016 disrupted markets 20% increase vs. Q1-2015 normal markets DKK 50-60 million global impact from temporary reductions of SCIT production capacity DKKm 700 560 420 280 140 0 Revenue and growth Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Revenue Reported growth 50% 30% 10% -10% Tablets: -13% SCIT/SLIT -9% Other: +2% 9 I Investor Relations presentation I June 2017
North America & Int l markets: A year of transition North America: DKK 152m revenue (151) 1% growth on a like-for-like basis Bulk extracts sales affected by SCIT upgrades Higher sales of diagnostics and other products Tablet revenue of DKK 17 million (39) DKKm 150 120 90 60 30 0 Revenue and growth Q1-16 Q2-16 Q3-16 Q4-16 Q1-16 Revenue Partner income Reported growth 50% 40% 30% 20% 10% 0% DKK 34m milestone payment in Q1-2016 Transfer of Biologics Licenses delayed Intl. markets: DKK 21m revenue (+35%) New distribution set-up in China Progress in Turkey and South-East Asia 10 I Investor Relations presentation I June 2017
Q1 2017 results DKK million Q1 2017 Q1 2016 Revenue 789 848 Gross profit 489 602 Capacity costs 393 353 EBITDA 140 277 Financials, net (8) (13) Tax 86 100 Net profit 2 123 62% DKK underlying 260m margin (70%) 98% effective tax rate (45%) DKK 260m DKK 11% 260m organic increase Free cash flow (206) 155 11 I Investor Relations presentation I June 2017
2017 outlook unchanged DKK 2016A 2017E Comments Revenue 3.0bn 2.8-3.0bn Lower revenue in EU; growth in North America and International markets Gross margin 67% Changes in product mix, increased fixed costs Capacity costs 1,476m Significant growth investments EBITDA 642m ~300m Earnings on 2015-level, excl. milestones CAPEX 204m Accelerated investments in capacity and robustness Free cash flow 201m Down to (500m) Growth investments, acquisitions, continued inventory build-up, relatively high tax payments 12 I Investor Relations presentation I June 2017
APPENDIX 13 I Investor Relations presentation I June 2017
Future pipeline events I Pivotal newsflow concerning all five SLIT-tablets GRAZAX Russia Australia Ragweed pollen Europe Russia Event Launch after regulatory approval Launch after regulatory approval Completion of regulatory review/approval Completion of regulatory review/approval Exp. timing 2017-18 2017-18 2018 2017 Tree pollen Europe Completion of Phase III trial and top-line results H2 2017 Japanese cedar Japan Approval of Japanese cedar SLIT-tablet 2017 14 I Investor Relations presentation I June 2017
Future pipeline events II Pivotal newsflow concerning all five SLIT-tablets ACARIZAX Event Exp. timing North America Canada USA Launch Launch ~2018 ~2018 Europe International markets South-East Asia, New Zealand, Turkey Russia China Japan Launches in seven remaining markets Initiation of paediatric development into asthma Approvals and launches Submission of regulatory filing Initiation of Phase I clinical trial Extension of label to include children 2017-18 2017-18 2017-18 2017-18 2017 2018 15 I Investor Relations presentation I June 2017
Forward-looking statements This presentation contains forward-looking statements, including forecasts of future revenue and operating profit, as well as expected business-related events. Such statements are subject to risks and uncertainties as various factors, some of which are beyond ALK s control, may cause actual results and performance to differ materially from the forecasts made in this presentation. Without being exhaustive, such factors include general economic and business-related conditions including legal issues, uncertainty relating to demand, pricing, reimbursement rules, partners plans and forecasts, fluctuations in exchange rates, reliance on suppliers, as well as changes to market structures. An additional factor would be the consequences of potential side effects from the use of ALK s products, as allergy immunotherapy may be associated with allergic reactions of differing extents, duration and severity. 16 I Investor Relations presentation I June 2017
Thank you for your attention Read more: www.alk.net Investor Relations: Per Plotnikof Head of Investor Relations Phone: +45 4574 7576 E-mail: ppidk@alk.net 17 I Investor Relations presentation I June 2017