creating a footprint in underserved niches
TRANSCRIPT
Creating a footprint in underserved niches
Redeye Life Science Day, 21 November 2017Mark Beveridge, VP Finance
Moberg Pharma in brief
Commercial Operations and Innovation Engine
Focus going forward
Moberg Pharma - a leader in topical niche categories
3
Consumer Healthcare Business• Distribution in all major U.S. retailers
#1 in nail fungus #1 in liquid bandages#1 in pain relief sprays
• Distributor sales in 30+ markets#1-3 in several marketsPartners: Mylan, Menarini, Paladin, Perrigo
Distributor sales
• #1-3 in many markets• 3 Top-50 partners
Mylan, Menarini, Endo
Innovation Engine• MOB-015 – Topical terbinafine with
$250-500m estimated sales potential• BUPI – Bupivacaine lozenge with
$100-200m estimated sales potential• Targeting leadership in their
respective niches
4BRANDS
40+
PIPELINE ASSETS32 PHASE
4
Rapid growth
2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD Q3
8
56
112
157
200
286
334
439Net Sales, MSEK
342Note
Divestment of brands Balmex® and Fiber Choice®
5
Underlying EBITDA doubled over the last two years
CONFIDENTIAL
Long-term EBITDA margin target: 25%
– Note significant divestments and acquisitions 2016 - 2018
6
Commercial Operations – Concluding a record season
• Solid double-digit growth in retail sales, sustained leading positions for all main brands and strong momentum into the fourth quarter, including the smaller brand Kerasal® Intensive Foot Repair.
• Revenues for Current Portfolio grew by 16% YTD, mainly driven by direct sales of Kerasal Nail® (+25%). Note shift of volumes (5-10 MSEK) from Q3 to Q2, due to move to larger warehouse facility.
• Gross margin improved to 77% (71) as a result of the successful streamlining of the portfolio.
• Distributor sales in line with plan to stabilize full-year levels for 2018. New agreement with Mundipharma in MEA/South Africa and progress in Russia, open new growth markets for Emtrix®
Innovation engine – Key milestones achieved
• Completed enrollment for the North American phase 3-study. Strong momentum in European screening-process, expected to be finalized in the beginning of 2019
• Signed first license agreement for MOB-015 in Canada with Cipher Pharmaceuticals, confirming the market potential for our lead pipeline asset
• Shaw Sorooshian appointed Vice President and Chief Medical Officer
Strong momentum and pipeline progress
January – September 2018
7
Double-digit growth in sales and profitability
GROWTH IN LOCAL CURRENCY*342MSEKNET SALES
32%GROWTH**
70MSEKEBITDA EBITDA MARGIN
* Current portfolio only, Adjusted for acquisitions and divestments** Excluding capital gains
16%
20%
INVENTORY BUILD-UP
ADVERTISING STARTS
8
Promotion peaks in Q2-Q3, higher profitability in Q4
Q1 Q2 Q3 Q4
Q3 Q4 HIGH SEASON/SALES PEAK
HIGH ADVERTISING COSTS
Direct sales
• Many orders each month, advertising increases during high season (Q2-Q3)
Distributor sales
• 2-3 orders/year for each market
HIGH SALES
MID ADVERTISING COSTS
SALES BENEFITING FROM HIGH SEASON ADVERTISING
LOW ADVERTISING COSTS
STRONG CASH FLOW/EBITDA
The seasonality of our business
Note: Pie charts indicate seasonal variation of anticipated sales & marketing costs as share of revenue
P&L – Strong gross margin and EBITDAQ3 2018
91) Research and development expenses – existing product portfolio includes R&D expenses for new product variants under existing brands, regulatory work and quality.2) Research and development expenses - future products includes R&D expenses for new product candidates, for example MOB-015.
P&L Summary§ Jul-Sep Jan-Sep Full-year
(MSEK) 2018 2017 2018 2017 2017Revenue 109 108 342 349 439Gross profit 84 77 262 249 314% 77% 71% 77% 71% 71%
SG & A -57 -52 -183 -184 -214R&D - existing product portfolio1) -2 -1 -6 -4 -6Other operating income/operating expenses * 3 16 13 14 13* Of which are capital gains - 13 5 13 13EBITDA Commercial Operations 28 40 86 75 106% 26% 37% 25% 22% 24%
R&D & BD - future products2) -5 -4 -16 -13 -17EBITDA 23 36 70 62 89% 21% 33% 20% 18% 20%
EBITDA Excluding Capital Gains 23 23 65 49 76% 21% 21% 19% 14% 17%
10
16% organic growth YTD for Current Portfolio
CONFIDENTIAL
* Fiber Choice® divested Aug 28, 2017 and Balmex® divested April 27, 2018
Net revenue by product Jul-Sep Jan-SepPercentage changes Percentage changes
(SEK thousand) 2018 2017Fixed Rate
FX effect
Total 2018 2017Fixed Rate
FXeffect
Total
Kerasal Nail® 41,638 36,061 3 12 15 140,495 122,010 14 1 15
- of which direct sales 32,630 28,460 0 15 15 111,023 89,210 24 0 24
- of which to distributors 9,008 7,601 14 5 19 29,472 32,800 -13 3 -10
Dermoplast® 31,543 24,893 16 11 27 86,404 72,176 20 0 20
New Skin® 21,634 23,770 -17 8 -9 70,697 65,618 8 0 8
Other products 13,778 8,469 43 20 63 35,999 27,319 31 1 32
CURRENT PORTFOLIO 108,592 93,193 5 12 17 333,594 287,123 16 0 16
Divested products - 15,093 N/A N/A N/A 8,382 61,785 -86 0 -86
TOTAL NET REVENUE 108,592 108,286 -10 10 0 341,976 348,908 -2 0 -2
11
Balance Sheet – Cash reserves and operative cash flow finances MOB-015 Phase 3 investments
(MSEK) 2018.09.30 2017.09.30 2017.12.31
AssetsIntangible assets 1 019 957 980Property, plant and equipment 1 1 1Deferred tax asset 7 10 9Total non-current assets 1 027 968 990
Inventories 22 26 27Trade receivables and other receivables 77 80 87Cash and cash equivalents 121 121 119Total current assets 220 227 233
TOTAL ASSETS 1 247 1 195 1 223
Equity 580 539 552Non-current interest-bearing liabilities 594 591 592Deferred tax liability 8 8 5Current non-interest-bearing liabilities 65 57 74
TOTAL EQUITY AND LIABILITIES 1 247 1 195 1 223
Moberg Pharma in brief
Commercial Operations and Innovation Engine
Focus going forward
Commercial operations - Focus on key brands
Direct sales – driving organic growth for key brands
Main growth drivers are Kerasal Nail®, New Skin®, and Dermoplast®, accounting for 90% of net sales and an even higher share of profitability
• Kerasal Nail® delivered outstanding sales performance over the past three years and continues to strengthen its #1 position. Consumption growth YTD was +20.3%
• Both Dermoplast® and New Skin® continue to expand their market leading positions, following successful campaigns and enhanced digital marketing including social media
• Continued strong response to Kerasal Intensive Foot Repair re-launch in May. Growth of 37.2% in retail sales (L12W) driven by continued promotion program.
Distributor sales – leading position in Nordics and other prioritized markets
• Focus to stabilize revenues in 2018 pending commercialization of MOB-015, new potential growth markets in Russia and MEA from 2019
13
®
14
Kerasal Nail®: Strong consumption and net revenue growth
76% 94%
VISIBLE IMPROVEMENT AFTER 1 WEEKS
*Source: Symphony IRI, MULO, through September 9, 2018.
VISIBLE IMPROVEMENT AFTER 8 WEEKS
#1 Brand in the Fungal Nail category in the U.S.
• Continuing to outperform key competitors across the Nail Fungal Segment.
• YTD, consumption grew by +20%* and net revenue grew by +24%, driven by a successful and more efficient marketing program
• Kerasal Nail Psoriasis test launch in late May on Amazon only. Good learnings but small volumes so far
• Distributor sales in line with strategy to stabilize sales levels for full year, +14% in Q3 vs 2017
• New growth opportunities for Emtrix® in 2019 following new distribution agreement with Mundipharma in three markets in MEA, and the progress towards a registration in Russia.
15
New Skin®: continuing to outpace prior year
Please note that there is about a one-month lag before increased consumer sales produce an effect on net sales. *Source: Symphony IRI, MULO, through September 9, 2018
The #1 OTC liquid bandage brand in the U.S.
• An antiseptic which kills germs and dries rapidly to form a clear protective cover
• Liquid and Spray available
• Distribution for Spray expanded in 2017 to Walmart and Walgreens
Continuing to outpace prior year
• Continues to outpace prior year (+11.5% YTD*)
• YTD revenues grew by +8% , Q3 sales (-17%) were affected by the warehouse move and the optimization of marketing spend
• Marketing mix refined in 2018 with larger share of digital and social and optimized timing of the spend
16
Dermoplast®: positive response to growth plan and stronger distribution
The #1 pain relieving spray in U.S. retail
• Contains maximum strength Benzocaine
• No touch application, available with and without an antibacterial
• 60% of sales to Hospitals and 40% in Retail. Used for skin-related pain and itch problems
• Acquired Jan 1, 2017. Distribution expanded at Walmart and CVS
Net revenue grew by 20% YTD responding well to our growth plan
• Dermoplast® maintained double-digit consumption growth (+15.2% YTD*)
• YTD revenues grew by +20% , Q3 sales grew by 16%
• Strong growth in response to growth plan, including a larger share of digital/social campaigns
Please note that IRI only track retail sales and ca 60% of the sales for Dermoplast are in Hospitals. *Source: Symphony IRI, MULO, through September 9, 2018
MOB-015 – targeting leadership in onychomycosis
17Source: Moberg Pharma analysis and estimate
Target profile: Better cure rates, fast visible improvement and shorter treatment• Topical delivering high concentrations of terbinafine through the nail• Efficacy and safety demonstrated in Phase 2, including terbinafine levels in nail and nail bed.
Two Phase-3 studies ongoing in North America and Europe (n = 750 - 800)• In September, the enrollment to the North American phase 3-study was completed, including
365 patients. Recruitment in Europe is expected to be completed by the beginning of 2019
Patent protection until 2032, granted in US, EU, and Japan
Estimated annual sales potential: USD 250 - 500 million – attractive first agreement signed• 5 million TRx in the U.S., assuming ca $1,700 for 10 ml unit and standard gross-to-net discounts• Strong preference by prescribers for MOB-015 meeting Phase 3 targets, shortening treatment
time in post-marketing studies would further strengthen profile• Attractive first license agreement signed for Canada: TDV $14.6 million + high double-digit
royalties
X
MYCOLOGICAL CURE AT 60 W
54%
100%NEGATIVE CULTURE AT 60 W
>40XMORE TERBINAFINE IN NAIL BED
VS ORAL THERAPY
18
MOB-015 – Attractive license agreement signed in Q3
Milestone confirming the significant market potential for our key pipeline asset
• In mid-September, an exclusive license agreement was signed with Cipher Pharmaceuticals in Canada
• Cipher will commercialize MOB-015 in Canada upon completed clinical studies and registration of the product, with responsibility for marketing, distribution and sales
• Moberg Pharma will receive development and regulatory milestones totalling USD 4.6 million, whereof USD 0.5 million is an up-front fee at the time of signing
• Pending commercial targets, Moberg Pharma is entitled to further milestone payments of USD 10 million as well as royalties and supply fees for delivered products, enabling an industry standard gross margin for Cipher
• The Canadian market for onychomycosis prescription drugs amounted to CDN 58 million in 2017, 72% of which were topical drugs, growing steady at 18.3% in 2017 and at a CAGR of 25.4% for the period 2014-2017
Moberg Pharma in brief
Commercial Operations and Innovation Engine
Focus going forward
Continued focus to drive growth and deliver pipeline value
We focus on maximizing the potential in our portfolio; through organic growth as well as realizing the substantial value of our pipeline.
Commercial operations
• The streamlining of our portfolio has resulted in sustained growth as well as consistent improvements in profitability, as reflected in our EBITDA margin more than doubling from 10% to 22% over the last two years, excluding capital gains.
• We currently focus on the 2019 growth planning, maintaining the strong momentum for all key brands
Pipeline assets
• Our pipeline has progressed significantly in 2018
• We continue to progress our phase 3-studies and commercialization plans for MOB-015 as well as broadening dialogues with current and new partners
20
Creating shareholder value – investment case
21
Commercial niche player
Growing and profitable business
Late-stage pipeline
Strong team and track record
TMTM
TM
Moberg Pharma AB (Publ)Gustavslundsvägen 42, 5 tr.
167 51 Brommamobergpharma.se