Arctic Aurora LifeScience Capturing the value in Healthcare Innovation

Investor Presentation

May 2020

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Fund performance

How has the fund performed during the Pandemic crisis?

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Source: Arctic Fund Management April 30th 2020

The fund had a quick recovery after initial Corona volatility

-10%

0%

10%

20%

30%

40%

50%

05/16 09/16 01/17 05/17 09/17 01/18 05/18 09/18 01/19 05/19 09/19 01/20

Arctic Aurora LifeScience Class I USD (inception 25/5-16) Benchmark

12.5 %

-4.7 %

10.9 %

37.1 %

10.8 %

0.6 %

16.4 %

35.1 %

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Month YTD 12m Inception

Arctic Aurora LifeScience Class I USD (25/05-16) MSCI Pharma/Biotech/Life Science USD

AALS NOK YTD: +11.2%

AALS SEK YTD: -0.8%

AALS NOKh: -6.3%

Performance Arctic Aurora LifeScience USD

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AALS (USD) has held up vs global market YTD

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Performance drivers

What has been the value driver behind the performance?

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Both Pharma and Biotech have outperformed general markets

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Arctic Aurora LifeScience comprises Biotech and Large Pharma

50 %

14 %

9 %

20 %

7 %

AALS PORTFOLIO BY SUB SECTOR

Big Pharma Big Bio Developing Bio Emerging Bio Tools/Other

Top 5 Contribution to Return - YTD

Contri-

AAL Bench +/- AAL Bench +/- bution

ROCHE HOLDING AG-GENUSSCHEIN 7.49 6.49 1.00 28.36 28.36 0.00 1.99

JOHNSON & JOHNSON 7.11 10.49 -3.38 20.51 20.51 0.00 1.48

GILEAD SCIENCES INC 2.83 2.51 0.32 51.97 51.97 0.00 1.21

ELI LILLY & CO 3.49 3.54 -0.05 37.68 37.68 0.00 1.16

PFIZER INC 5.23 5.54 -0.31 15.14 15.14 0.00 0.93

Bottom 5 Contribution to Return - YTD

Contri-

AAL Bench +/- AAL Bench +/- bution

AMARIN CORP PLC -ADR 0.82 0.00 0.82 -67.97 0.00 -67.97 -1.15

ZOGENIX INC 1.12 0.00 1.12 -36.96 0.00 -36.96 -0.80

ESPERION THERAPEUTICS INC 1.51 0.00 1.51 -22.70 0.00 -22.70 -0.71

MORPHOSYS AG 1.22 0.00 1.22 -14.10 0.00 -14.10 -0.35

ROCKET PHARMACEUTICALS INC 0.39 0.00 0.39 -35.25 0.00 -35.25 -0.27

Total Return

% Average weight Total Return

% Average weight

Arctic Aurora LifeScience – Performance contribution YTD

Source: Arctic Fund Management 30.04.20

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Healthcare a safe haven

Is healthcare that defensive sector it is said to be?

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Biopharma’s defensive properties during the last 20y

Financial crisis

DRG outperformed S&P 500 in 7 out of the

last 20 years; BTK outperformed in 15 of

last 20 years

NYSE® Arca Biotechnology Index™ (BTK), Pharmaceutical Index (DRG)

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Safen Haven during the Pandemic 2020 YTD

Leerink, May 2, 2020

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Pharma: projected stable growth of 4-5%*

a

EUROPE

19%→ 30%

AFRICA

4%→ 23%

ASIA

9%→ 27%

S.AMERICA

9%→ 31%

N.AMERICA

17%→ 28%

OCEANIA

13%→ 25%

Projected portion of population

aged 65+ years 2020 to 2100 GLOBALLY 9% → 23%

DEMOGRAPHY LIFE STYLE

Tobacco, alcohol, unhealthy diet

and lack of physical activity

are among the main causes of cancer

The obesity epidemic has led to a strong global

increase in diabetes

New cases of cancer are expected to increase by

70% over the next two decades

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Spending on Drugs to Reach 1,5 trillion USD by 2023

*) IQVIA independent forecast

Clearer guidelines from government regulatory

agencies (FDA in the US) provide better

predictability and shorter review times for new

medicines

New product launches will increase from an

annual average of 46 to an average of 54

through 2023 (IQVIA)

An historic time: new, transforming treatments drives growth

REGULATORY

The human genetic material (genome) mapped in 2003

It has taken a long time from new knowledge to develop into new treatments

Standing in the beginning of a new era of innovative products that are changing how we treat diseases

INNOVATION

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Collaborating, focussing to fight COVID19!

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Impact of the Corona crisis

What’s the impact of this crisis? What can we expect this time?

Strong Q1 earnings. In many cases better than expectations

COVID 19 related stock piling of pharmaceuticals and increased prescriptions during the start of the pandemic, but even adjusted for that, the group showed strength and resilience

Supply chains are largely intact due to multicenter manufacturing

Already started clinical trials largely on track. Delays in planned, but expected manageable impact

Guidance for 2020 was broadly maintained, with the exception of Merck where a large part of the product portfolio is derived from in office-administered drugs.

Q2 is expected to be negatively impacted both from the reversal of the stock piling in Q1 as well as disruptions in physicians visits impacting prescriptions and clinical trials

Underlying demand not significantly impacted and is expected to stabilize as society reopens

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Large pharma 1st quarter strong and guidance confirmed

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Overall Rx development two last years in detail

Source: IQVIA, MorganStanley

Oncology is impacted by less hospital visits

Stock piling early in the crisis, falling off

Less acute care slowing slightly

Areas like pain not impacted

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Stable demand for medicines, through recession/pandemics

Source: Morgan Stanley, IQVIA

Historically, US prescription trends have been recession/ pandemic resistant

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Biotech is non cyclical risk and reward

Is biotech different?

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Big Bio lifted by Corona focus, SMID biotech strong after initial sell off

• Gilead and Regeneron have attracted interest in COVID related projects, lifting Big

Biotech segment

• SMID biotech heavily sold down due to perceived funding risk, then heavily bought back

for strong innovation

• Innovation is valued – Innovative companies that bring true value to patients and

society is attractive. Positive stock price reactions on clinical data.

• AALS SMID biotechs are well funded

Axsome has delivered consecutive successful late-stage clinical trial readouts in mood disorders, pain and other neurological diseases

Developed a platform to improve and combine neuro-active compounds

Announced first successful Phase 3 results in major depressive disorder in many years

Drug candidate underway towards regulatory filing in migraine

In April 2020, Axsome announced positive results from a Phase 3 trial in Alzheimer’s agitation Common symptom in patients with Alzheimer’s Large impact on quality of life of patients and caregivers

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Axsome – Answering to unmet needs in neurology

Source: Bloomberg, Axsome Therapeutics

0

20

40

60

80

100

120

AXSM PR ICE S INCE 1ST I NVESTM E N T

Market value: USD 3.4bn

Area: Neurology

Diseases: Depression,

migraine, Alzheimer’s

agitation, narcolepsy

Efficacy on

Alzheimer’s agitation

during Axsome’s clinical

trial of AXS-05 during 5 weeks

Exelixis develops drugs that interferes with cancer cell’s internal growth and survival mechanisms

The company’s lead drug Cabometyx was approved in 2016 for the treatment of advances renal cancer patients

Since the, the company is working towards expanding the use of Cabometyx into other cancer indications and is also approved in liver cancer

In April 2020, results emerged from a clinical trial in which Cabometyx was combined with an immune checkpoint inhibitor, a new backbone of many cancer treatment as first line treatmet – the Cabometyx combination significantly improved survival versus existing first line renal cancer treatment

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Exelixis – Key component in effective cancer treatment

Source: Bloomberg, Axsome Therapeutics

Market value: USD 7.8bn

Area: Oncology

Diseases: Renal cancer,

liver cancer, bladder cancer,

colorectal cancer and others

5

10

15

20

25

30

35

EXEL PR ICE S INCE 1ST I NVESTM E N T

37

192

453

854 968 979

1179

1498

1968

2247

2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E

Exelixis historical revenues and consensus estimates (USD millions)

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Portfolio construction in light of recession and uncertainty

How is the fund positioned in light of current economic crisis?

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Arctic Aurora LifeScience portfolio

50 %

14 %

9 %

20 %

7 %

AALS PORTFOLIO BY SUB SECTOR

Big Pharma Big Bio Developing Bio Emerging Bio Tools/Other

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Non cyclical demand driven by demography

Good earnings visiblity!!!

Strong cash flows

Substantial Dividend Yield!

Improved political standing

Historically outperformed in bad times

Attractive valuation

The sub portfolio Pharma’s Defensive Qualities

50 %

14 %

9 %

20 %

7 %

AALS SUB SECTOR PHARMA

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Based on new, modern knowledge of biology, the development of medicines are now transforming. Targeted therapies, cell therapy, gene therapy all part of new and next generation medicines

Transformational innovation creates value. A medicine treating a devastating disease has a very attractive commercial potential.

Data from clinical studies drives stock prices

M&A theme provides investment leverage, bid premiums significant

AALS clear focus on reaching excess return by succesful analysis and selection of investments in biotech companies that develops superior products to serve unmet medical needs, thereby providing the best commerical opportunities and maximising the return.

The Biotech sub portfolio path to excess returns

50 %

14 %

9 %

20 %

7 %

AALS BIOTECH SUB SECTOR

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Valuation

Is valuation still attractive?

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Discount compared to S&P 20y

Source: Thomson Reuters, Morgan Stanley

P/E (next 12m):

US Major Pharma 13.7X

US Biotech 16.6x

EU Major Pharma 16.3x

S&P500 18.9x

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Major pharma P/E trades at a discount relative to S&P and to its 10y avg

Source: Morganstanley, Thomson Reuters

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Outlook

What will drive return and value of the fund going forward?

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Attractive mix of defensives and opportunities

Focus on Corona related research will continue as long as the medical need

exist

Companies in the portfolio engaged in treatments and vaccines in the field

will attract special focus

Large Pharma attractive with good earnings visibility in light of recession

SMID biotechs are expected to deliver clinical data, strong news flow

Potential for M&A or deals

Fund portfolio mix should benefit from both subsegment

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Areas of high interest – potential take out candidate ideas

ONCOLOGY New targets again cancer growth drivers

Harnessing the immune system

Cell therapies

RNA THERAPEUTICS Flexible platform to address many diseases

Precise and safe treatments

Impressive therapeutic effect on difficult diseases

GENE THERAPY First products launched – many to follow

Success in previously untreatable diseases

Moving from rare diseases to larger patients populations

NEUROLOGY Steady progress in neurodegenerative diseases

Finally breakthroughs in mood disorders

Harnessing new technology to apply in CNS

CARDIOVASCULAR New genetic understanding to disease causes

Large pharma franchises looking for new drugs

New therapy technologies entering the field

LIVER DISEASE Breakthroughs in rare congenital diseases

New treatment alternatives affecting millions

Exciting drug target discoveries

Arctic Aurora LifeScience has positions in leading companies in all areas

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Investing in Arctic Aurora Life Science

• Defensive earnings – Non-cyclical demand and long-term underlying growth based on demography and

life style

• Strong cash flows and good earnings visibility – sector outperforms in bad times

• Large values created in the biotech sector -new medicines based on strong innovation are transforming

treatments

• Innovation is valued – Innovative companies that bring true value to patients and society are attractive.

M&A source of excess returns, demonstrated by the number of take-outs the last few years.

• Improved political standing – political rhetoric pressuring pharma stocks have silenced

• Compelling Valuations – Big cap pharma and big cap bio are trading at discounts to the overall market.

Significant opportunities within the SMID companies creates.

Norway

Arctic Fund Management AS

P.O. Box 1833 Vika

NO-0123 Oslo

Haakon VIIs gt 5, NO-0161 Oslo

Tel +47 21 01 31 00

www.arctic.com/afm

facebook.com/arcticfunds

@arcticfunds

Arctic Fund Management

Sweden

Arctic Fund Management AS,

Stockholm Filial

Regeringsgatan 38

SE-111 56 Stockholm

Tel +46 8 446 86107