Immunity for Life TM Third Quarter 2007 CEO Lars Viksmoen CFO Finn Samuelsen 31 October 2007
Operational Highlights for Q3 2007 Clinical phase III study with SBG for treatment of diabetic ulcers; enrolment on plan Treatment of 6 patients in extended phase I/II study at MSKCC completed Strategic review of consumer health business completed; reinforcement of marketing and sales activities going forward Sales revenues and operating expenses as planned 2
Financial Highlights for Q3 2007 Sales revenues: NOK 20.2 million in Q3 07 versus NOK 17.0 million in Q3 06 Net operating expenses in line with expectations EBITDA negative with NOK 6.0 million in Q3 07 (12.1) Non-pharmaceuticals NOK +2.1 million (NOK -0.6) R&D NOK -5.2 million (NOK -5.9) Unallocated costs NOK -2.9 million (NOK -5.6) Net loss of NOK 3.7 million (8.4) (Figures in brackets refer to Q3 2006) 3
Clinical Development Highlights for Q3 2007 SBG Status report per Q3 2007 Diabetic ulcers First phase III study; 22 of 120 patients included CRO assessment for second phase III study Oral mucositis Preparing two phase III studies CRO assessment for both phase III studies Cancer Extended phase I/II study at MSKCC completed without reported safety issues Phase I/II study in breast cancer ongoing Phase I/II study in NHL initiated 4
Our pharmaceutical concept SBG stimulates the immune system SBG (Soluble Beta Glucan) a unique, highly bioactive, soluble beta-1,3/1,6-glucan from cell walls of yeast alien to the human body How it works: stimulates the innate immune system enhances the adaptive immune system addresses a wide range of diseases 5
The immune system SBG strengthens the joint forces of defense Infectious Agents (Pathogens) Bacteria Virus Paracites Fungus 1st line of defense Physical and biological barriers Skin, coughing, sneezing, vomiting, enzymes, etc 2nd line of defense Innate immune system Recognizes unfriendly intruders in a generic manner Reacts with inflammation White blood cells are the key players 3rd line of defense Adaptive immune system Improves response after initial attack (memory) Prepares the body for future attacks (antibodies) Tailored to act only on a specific intruder SBG stimulates both components of the immune system 6
Business segmentation 7
Addressing major unmet medical needs DIABETIC ULCERS ORAL MUCOSITIS IMMUNOTHERAPY OF CANCER Market opportunity: 3.5 million diabetics develop foot ulcers annually App. 400-600,000 incidents annually in the OECD Fastest growing segment of pharma industry Serious conditions: 100,000 amputations annually in the US Severe impact on curative cancer therapy The last resort of cancer therapy Therapies: No standard drug treatment has been established No standard drug treatment has been established mab + adjuvants: a new treatment paradigm? Documented effect: SBG reactivates immune cells in the skin and enhances the body s own wound healing capabilities SBG stimulates the immune system and enhances the body s own wound healing capabilities As an adjuvant to monoclonal antibodies, SBG renders the immune system more effective in killing cancer cells 8
Diabetic Ulcers Patients with complete healing (%) 60 50 SBG 40 30 20 Control 10 0 0 1 2 3 4 5 6 7 8 9 10 11 12 Duration of therapy (weeks) 9
Diabetic Ulcers Clinical development First phase III study ongoing in UK Inclusion on plan, 22 of a total of 120 patients enrolled 5 more centres starting inclusion, securing on-time study completion Blinded interim analysis after completion of 80 patients Results ready by year-end 2008 Contracting CRO to run the second phase III study Target filing of marketing authorisation in Europe by YE 2009 Clinical phase 2007 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Phase III, Nottingham, UK Phase III, second trial 10
Oral Mucositis Patients developing severe Oral Mucositis (%) 70 Placebo 60 50 40 SBG 30 20 10 0 1 15 21 23 30 36 40 Duration of therapy (days) n=14 11
Oral Mucositis Clinical development Initiating phase III study in North America in 2008 Detailed planning ongoing; aiming for 80-100 patients Preparing for a similar sized study in Europe Contracting CRO to run both phase III studies Target filing of marketing authorisation in Europe by YE 2009 Obtained orphan drug status Initiated Investigational New Drug (IND) process with FDA Clinical phase 2007 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Phase III, North-America Phase III, Europe 12
Immunotherapy of Cancer SBG as adjuvant to established monoclonal antibodies in cancer therapy Awaiting final results from clinical phase I/II neuroblastoma study in Q4 2007 Received positive safety data and positive preliminary effect data in Q2 Dose escalation extension in 6 patients without reported safety issues Investigator request; 3 additional dose levels to identify MTD Slow patient recruitment in the two Norwegian studies SBG plus Herceptin in breast cancer patients (4/12) SBG plus Rituxan for non-hodgkins lymphoma (0/12) Measures taken to accelerate patient inclusion Clinical phase 2007 2008 2009 Ph. I/II, Sloan-Kettering Ph. I/II, Ullevaal Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ph. I/II, Radiumhospitalet 13
The non-pharmaceutical business 14
Non-pharmaceuticals Consumer Health, Animal Health and Marine Biochemicals Consumer Health Q3 2007 Strategic review completed; reinforcement of marketing and sales activities going forward Animal Health Q3 2007 Higher sales to the aquaculture industry Higher sales to livestock industry Marine Biochemicals Q3 2007 In talks with leading international diagnostic and life science companies regarding supply contracts for Cod UNG 15
Financial Figures Third Quarter and First Nine Months 2007
Summary of P&L Third Quarter 2007 versus Third Quarter 2006 Q3 2007 (NOK 000) Group Non-pharma R&D Non-allocated Sales 20 188 20 188 - - Net operating expenses -26 194-18 087-5 214-2 893 EBITDA -6 007 2 101-5 214-2 893 Depreciation -824-495 -329 - EBIT -6 831 1 606-5 543-2 893 Q3 2006 (NOK 000) Group Non-pharma R&D Non-allocated Sales 16 951 16 951 - - Net operating expenses -29 037-17 537-5 938-5 562 EBITDA -12 085-585 -5 938-5 562 Depreciation -899-549 -350 - EBIT -12 985-1 134-6 288-5 562 17
Summary of P&L First 9M 2007 versus First 9M 2006 R&D 9M 2007 (NOK 000) Group Nonpharma Nonallocated Sales 56 745 56 745 - - Net operating expenses -76 817-51 550-16 316-8 951 EBITDA -20 071 5 196-16 316-8 951 Depreciation -2 681-1 694-987 - EBIT -22 752 3 502-17 303-8 951 R&D 9M 2006 (NOK 000) Group Nonpharma Nonallocated Sales 53 544 53 544 - - Net operating expenses -73 335-47 250-17 835-8 251 EBITDA -19 792 6 293-17 835-8 251 Depreciation -2 677-1 636-1 041 - EBIT -22 469 4 658-18 876-8 251 18
Revenues (non-pharmaceutical) By Quarter By Product Group NOK ( 000) NOK ( 000) 21 000 25 000 20 000 20 000 2306 19 000 18 000 15 000 10 000 3874 3720 9073 17 000 5 000 9154 8486 16 000 0 Q3 06 Q3 07 15 000 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Consumer Health Marine Biochemicals Animal Health Other 19
Summary of P&L Non-Pharmaceutical (NOK 000) Q3 2007 Q3 2006 9M 2007 9M 2006 2006 Sales 20 188 16 951 56 745 53 544 72 973 Cost of goods sold -4 124-4 000-13 039-10 470-14 694 Gross profit 16 064 12 951 43 706 43 074 58 279 Gross margin 79.6% 76.4% 77.0% 80.4% 79.9% Other OPEX (net) -13 963-13 536-38 511-36 780-50 594 EBITDA 2 101-585 5 196 6 293 7 685 EBITDA margin 10.4% -3.5% 9.2% 11.8% 10.5% Depreciation -495-549 -1 694-1 636-2 331 EBIT 1 606-1 134 3 502 4 658 5 354 EBIT margin 8.0% -6.7% 6.2% 8.7% 7.3% 20
Quarterly Cost Development R&D and unallocated costs R&D Costs (incl. depreciation) in NOK 12 000 10 000 8 000 6 000 4 000 2 000 Unallocated Costs in NOK 9000 8000 7000 6000 5000 4000 3000 2000 Legal expenses in line with expectations No news in the patents dispute with Biothera during the first 9M 2007 1000 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 0 Q106 Q206 Q306 Q406 Q107 Q207 Q307 21
Consolidated Balance Sheet Condensed figures (NOK 000) 30 Sept 2007 30 June 2007 31 Dec 2006 30 Sept 2006 Non-current assets 45 791 45 513 41 119 35 809 Cash and cash equivalents 160 576 163 397 63 969 61 510 Other current assets 17 570 19 456 18 659 24 156 Total current assets 178 146 182 853 82 628 85 666 Total Assets 223 937 228 336 123 746 121 476 Equity 210 079 213 284 105 711 110 748 Liabilities 13 858 15 083 18 035 10 728 Total Equity and Liabilities 223 937 228 366 123 746 121 476 Cash Flow (in reporting period) -2 821 107 528 2 459-16 099 Equity Ratio 94% 93% 85% 91% 22
Outlook Q4 2007 Final results from the phase I/II MSKCC study Initiation of 3 to 4 additional centres in the Nottingham phase III diabetic ulcers study; securing on time study completion Selection of CRO for the remaining phase III programs, followed by intensified study preparations in line with previously communicated timelines Supply contracts for Cod UNG with leading international diagnostic and life science companies Reinforced marketing and sales activities in the Consumer Health area 23
Summary SBG works Proven and documented to stimulate/modulate the immune system Addressing major unsolved medical needs; representing major market opportunities Should attract strong commercial partners Well advanced clinical program Close to market; in phase III on diabetic ulcers and oral mucositis Strong financial position Phase III studies for diabetic ulcers and oral mucositis fully funded 24