investor presentation l… · key facts & figures 5 global presence in over 30 countries 12...
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Investor Presentation
June 2017
Safe Harbor StatementThis presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the safe harbor provisions of the
U.S. Private Securities Litigation Reform Act of 1995, that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include all statements that are not
historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions that convey
uncertainty of future events or outcomes and the negatives of those terms. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive
position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Such statements involve a number of known and unknown risks and uncertainties that could cause our future
results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Some of the important factors that could cause or contribute to such
differences include the following: a high proportion of the sales of the INFAT® product is to our customers who then use it in their infant formula products sold to end users in China and therefore our revenues are subject to the effects of
Chinese market trends and competition from locally produced products that are not subject to import taxes; we are subject to a degree of customer concentration and our customers do not enter into long-term purchase commitments
with us; new Chinese regulations relating to infant formula came into force on October 2016 and others are constantly evaluated, affecting the ability of our customers to market infant nutrition products containing INFAT®, which could
adversely affect our revenues and results of operations; we rely on our Swedish joint venture partner to manufacture INFAT®; growth in the Chinese economy has moderated and this slowdown and related volatility could adversely impact
demand for our products in China; the demand for products based on omega-3, and, in particular, premium products such as krill oil, has declined in the past and may continue to decline, which, together with a significant increase in
capacity by competing manufacturers, may continue to cause intense competition and price pressures; Chinese regulations relating to infant formula are under re-examination, and any regulatory changes affecting the ability of our
customers to market infant nutrition products containing INFAT® could adversely affect our business; our inventories include sensitive compounds which may face spoilage or obsolescence; our inability to manage our inventory levels, in
particular our high level of inventory relative to sales of our products, may have an adverse effect on our profitability; a significant portion of the sales of our INFAT® product is to a small number of customers and if such customers were to
suffer financially or reduce its use of INFAT® our business could be materially adversely affected; the demand for premium products based on omega-3, and, in particular, krill oil, has declined in the past and may decline in the future, which
may result in intense competition and price pressure; variations in the cost of raw materials for the production of our products may have a material adverse effect on our business, financial condition and results of operations; our offering
of products as "medical foods" may be challenged by regulatory authorities; the outcome of the Company's discussions with the FDA relating to the Import Alert; our product development cycle is lengthy and uncertain, and our
development or commercialization efforts for our products may be unsuccessful; we are dependent on a single facility that houses the majority of our operations, and disruptions at this facility could negatively affect our business, financial
condition and operations; we depend on third parties to obtain raw materials, in particular krill, necessary for the production of our products and if we cannot secure sufficient supply sources at competitive prices or need to utilize a
greater percentage of frozen krill than anticipated with current inventory levels, our gross profits from the sale of krill oil will be adversely affected; we anticipate that the markets in which we participate will become more competitive due
in part to business combinations among existing competitors, the arrival of new competitors and technological developments; our results are subject to quarterly fluctuations; we may have to pay royalties with respect to sales of our krill oil
products in the United States or Australia, and any infringement of intellectual property of others could require us to pay royalties; unfavorable publicity or consumer perception of our products, such as krill oil, the supplements that
contain them as ingredients and any similar products distributed by other companies could have a material adverse effect on our reputation, the demand for our products and our ability to generate revenues; we are generally reliant upon
third parties for the distribution or commercialization of our products; we may not be able to maintain or increase market acceptance for our products; we are subject to risks relating to the operation and expansion of our production or
processing facilities and capabilities; our ability to obtain krill may be affected by conservation regulation or initiatives; disruption to our IT system could adversely affect our reputation and have a material adverse impact on our business
and results of operations; we are not able to predict the results of clinical trials, which may prove unsuccessful or be delayed by certain factors; if we are unable to maintain manufacturing efficiency and quality and meet our customers’
needs, our financial performance could be adversely affected; we could be subject to product liability lawsuits, which could result in costly and time-consuming litigation and significant liabilities; our dependence on international sales,
which expose us to risks associated with the business environment in those countries; and other factors discussed under the heading "Risk Factors" in our annual report on Form 20-F for the year ended December 31, 2016 filed with the
Securities and Exchange Commission on March 16, 2017.
You should not put undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity,
performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to
update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
2
Enzymotec: At-A-Glance
• Listed on the NASDAQ: ENZY
• Leader in lipids technology with potential to collaborate with
complementary technologies to expand product offering
• Fully integrated platform from R&D to manufacturing
• Recently appointed CEO developing growth strategy with
$73.8 million net cash on balance sheet
• Large market opportunity within multiple high value
applications
• Significant geographic expansion opportunities leveraging
existing worldwide footprint
3
Fully Integrated Platform
4
Manufacturing
Process Development
Lipid TechnologyEnzymatic Technology
Research and Development
B2B2C
IPClinical
Support
Regulatory
Expertise
Key Facts & Figures
5
Globalpresence in over
30countries
12Successfully completed
randomized pivotal controlled clinical trials
26Peer-reviewed
articles
Provenregulatory
track record
Diversesuite of
15products
Robust IPportfolio of over
200patents & patent
applications
220Employees
State-of-the-art
GMP-compliant facility in Israel
The Biological Importance of Lipids
04
03
02
01
Major structural components of all
cell membranes - key to important
biological functions, including cell
to cell communication
~60,000 different types in the
human body and ~60% of the
brain's dry mass consists of lipids -
Play an essential role in nerve cell
development, survival and proper
function
Deficiencies or imbalances in lipid
levels are associated with a wide
array of diseases and disorders
Only limited research in the field of
lipids despite crucial role in tissue
physiology, cell signaling, and
associated disorders
Unique
Process
High Value
Applications Consumer Health
and Wellness
Products
Natural
ResourcesRaw krill, Fish,
Vegetable
sources, Bovine
milk, Others
6
High Value Applications
Enzymotec’s
Lipid
TechnologyBioactive
Ingredients
VAYA
PHARMA
Infant
Nutrition
Premium infant formula
ingredients that resemble
composition and properties of
human breast milk fat
Revenues: $10.1M**
Value-added ingredients for
nutritional supplement
companies
Revenues: $4.2M*
Lipid-based, branded medical
foods for dietary management of
cardiovascular and neurological
conditions sold primarily in the
U.S. under physician supervision
Revenues: $2.7M*
7
Nu
tritio
n D
ivis
ion
* 1Q 2017
** Proportionate Consolidation Method
Large and Growing Infant Formula Market
China, 18814
Indonesia, 2270
USA, 4913
Thailand, 729
France, 724
Vietnam, 1187
UK, 665
Spain, 304
Hong Kong, 2571
Russia, 555
Argentina, 254
Mexico, 838
Brazil, 450
Germany, 391
Malaysia, 386
Turkey, 212
Saudi Arabia, 690India, 260
Italy, 272Canada, 285
Japan, 523
S.Africa, 213
Australia, 372
S. Korea, 368
-15
-10
-5
0
5
10
15
20
25
30
35
40
Source: Euro monitor 2015
* Average CAGR 2010-2015
135 million infants born annually
$41 billion retail value
45% from China
Average Global CAGR*: 10.02%
China’s CAGR: 19.02%
SEA CAGR: 12.8%
USA CAGR: 2.72%
8
INFAT: Marketed by Advanced Lipids*
9
Infant Formula Oils Market
Volume (MT)
Other
Oils
(>90%)
sn-2
palmitate
(<10%)
Enzymatic Process
OP
O
P
P
O
Vegetable OilINFAT
sn-2 palmitate
Human Breast Milk Fat
One Step Closer to Human
Breast Milk
P O Oleic AcidPalmitic Acid
* Advanced Lipids is a joint venture of Enzymotec and AarhusKarlshamn (AAK)
Ireland Dairy Milk BeingMateFEIHE Biostime Yashili
1.6M
Unmet Need in U.S. - Medical Food for CNS
Adolescent ADHD
Pediatric ADHD
3.1M
Mild Cognitive Impairment
8.3M
Autism
800K
Adult ADHD
10.2M
Category of Regulation Defined by FDA
Intended for use under a physician's
supervision
Nutritional deficiency correlated with
diseases
Unavailable via regular diet
• Specially formulated
• Based on recognized scientific
principles
• Produced under current Good
Manufacturing Practices (cGMP)
Contains ingredients that are Generally
Recognized As Safe (GRAS)
10
VAYA’s Growth Towards Profitability
• Increase productivity of sales representatives
• Continue to improve refill and compliance rates through online pharmacy and call center
• Develop patient support groups to further engage customers and their dietary programs
• Expand clinical indications with additional clinical trials
• Develop strategic partnerships outside the U.S.
• Increase awareness of clinical advantages among US healthcare professionals
• Leverage connections with physicians to generate new ideas
11
Global Supplement Market
25%
9%
7%
10%17%
32%
Specialty/Other Meal supplements
Minerals Sports supplements
Herbs/Botanicals Vitamins
• $35 billion* Global Dietary Supplements
Market (raw materials)
• $8.75 billion Specialty/Other Market share -(Enzymotec current domain)
• Added value ingrediencies (Specialty, Meal
Supplements, Minerals and Sport Supplements) is 50%of total market
Global Ingredient Value
$80M*Global Ingredient Value
$65M*
* Estimate
12
BioActive Growth Opportunities
13
Recapture Market Share
New Product Launches
Consolidation Opportunities
New Contracts
Variety of Grades
New Target Markets
New Product Launches
New Partnerships
Enzymotec’s Growth Opportunities
New product
launches
New strategic partnershipsNew regulatory
environment in China
Geographic
expansionNew applications for
lipids technology
Grow patient/
customer base
Bioactive
Ingredients
VAYA
PHARMA
Infant
Nutrition
14
Key Financials
15
*Proportionate Consolidation Method
$61.5 $62.6 $60.9
$17.1
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
FY 2014 FY 2015 FY 2016 1Q17
$ in
mil
lio
ns
Net Revenues*
Margins
$14.0 $13.9 $12.5
$4.0
$11.4 $10.7
$4.2
$1.5
$0
$5
$10
$15
2014 2015 2016 1Q17
25% 19% 26% 17% 25% 7%
Adjusted EBITDA
Nutrition
Consolidated
Quarterly
28% 9%
Solid Financials
16
Generated
$1.5 million
in adjusted
EBITDA in
1Q 2017
Strong net
cash position
of $73.8
million*
No Debt
Significant
conversion
of EBITDA to
net income
Tax
exempt in
Israel
until 2022
Reduced
capital
expenditures
and D&A
Crafting a New Strategy
17
Strengthen Foundation
Leverage Opportunities
Drive Growth
• Market Expansions • Product Expansions
• Leverage Salesforce • $73.8M net cash
• Enhance capabilities in Sales & Marketing,
Operations and Finance
• Reinforce science
• Expand branding
• Add new, innovative products
• Optimize VAYA
• Organically
• Inorganically
New Leadership
THANK
YOU
www.enzymotec.com