12/04/2012

Enzyme: Innovationen und regulatorische Situation

Thomas Schäfer, PhD

Vice President, Innovation Office

Novozymes R&D

Tsch@novozymes.com

LUNA: 2012-07880-01

2

Safe Harbor Statement

This presentation and its related comments contain forward-looking statements, including financial expectations. Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations. The uncertainties may include unexpected developments in the international currency exchange and securities markets, market-driven price decreases for Novozymes’ products, and the introduction of competing products in Novozymes’ core areas.

3

• Largest market share of all players in Industrial Enzymes (47%)

• More than 60 years legacy in the business

• 2011 sales of DKK 10,510m (+8% in DKK, +10% in LCY, +7% organic)

• 20 years sales growth CAGR of 8%

• EBIT: DKK 2340m (+11 %)

• ~ 14% of sales spent on R&D

• + 6,300 granted and pending patents

• + 5,500 employees

• Global Organisation

• More than 700 products used in 130 countries in over 30 different industries

Novozymes – The World Leader in Bioinnovation

Global enzyme market 2009 value: DKK ~ 16bn

47% 21% 6% 16% 10%

0% 20% 40% 60% 80% 100%

Novozymes Danisco DSM Others Captive

*A+B shares April, 2011

Enzyme Business BioBusiness

Household Care

Food & Beverages

Bioenergy Feed &

other Tech. Micro-

organisms Biopharmaceutical

ingredients

Delivering solutions from nature: Enzymes Active microbial products Proteins & peptides Polymers Fermentation is central

Delivering Tomorrow’s Solutions Today

Helping companies become more efficient: energy efficiency saving raw materials reducing waste replacing petro-chemicals

This unique approach leads to: “more with less” combined with… higher quality lower costs better yields and a better environment

4

NOVOZYMES PRESENTATION 12/04/2012 5

Environmental impact of industrial enzymes and biosolutions – in partnership with customers

PAPER

UP TO 600 KG

LEATHER

40 KG

FOOD

200 KG

OIL & FATS

1,300 KG CEREAL

3,800 KG

TEXTILES

100 KG

BIOCATALYSIS

3,400 KG

BIOETHANOL

150 KG

DETERGENT

150 KG

ANIMAL FEED

30 KG

MINUS

CO2 COST PRODUCING 1 KG ENZYME:

PLUS 1-10 KG

CO2 REDUCTION USING 1 KG ENZYME IN DIFFERENT INDUSTRIES :

MINUS

Novozymes products contribute with a GHG emission reduction of ca. 28 Mio t CO2 equivalents

• In 2009, Novozymes helped customers save 27 million tons of CO2 – equal to half of Denmark’s annual CO2 emission

• 2011: 45 Mio tons of CO2

• Goal: 75 Mio tons saved in 2018

Reducing CO2 Emissions Together with Our Customers

Net CO2 saving using 1kg enzyme in different production processes

30 kg

ANIMAL FEED

40 kg

LEATHER

100 kg

TEXTILES

150 kg

BIOETHANOL

150 kg

DETERGENT

200 kg

FOOD

Up to 600 kg

PAPER

1300 kg

OILS & FATS

3400 kg

BIOCATALYSIS

3800 kg

CEREAL FOOD

6

Top 1% of Environmental Investment Organization carbon reporting

Best in Class Storebrand SRI

Member of Global100 by Innovest

Member of FTSE4 Good Global and Europe

Member of SB20 by SustainableBusiness.com

Member of Cleantech Index

Member of OMX GES Sustainability Index

Dow Jones Sustainbility index Biotechnology sector leader

7

Using Nature’s own Resources Enable Sustainable Solutions and Acknowledgement

NOVOZYMES PRESENTATION 8 12/04/2012

Current business composition

Business area

Main markets

Detergent Starch,

textile, fuel ethanol

Baking, brewing, food

specialities Animal feed

Microorganisms within cleaning, plants, waste

Biopharma-ceutical

ingredients

Market share

55-60% 50-55% 30-35% ~40% 30-40% Not disclosed

% of total NZ sales (2007)

30% 30% 23% 10% 4% 3%

New products, applications, markets to drive sales growth of 8-9%

The effect of Enzymes has been utilized in food production for more than a millenium Enzymes have been used in food applications for

yearthousands

And we can still innovate!

10

Margarine produktion : healthier product

French fries: healthier food

Baking: better utilisation of raw materials in the flour

Mozarella production: higher cheese yields

Soy degumming: better utilisation of raw materials

Enzymes in food production today

Juice: better utilisation of raw materials

Brewing: better utilisation of raw materials

11

GMO is offers essential benefits

Quality: Higher purity enzyme product

Economics: Larger amounts can be produced

Innovation: Many more enzymes can be produced

Environment: Less waste, less energy, reduced CO2 footprint

Other benefits: healthy foods, better food value, better utilisation of raw materials

Acrylamide reduction with asparaginase Development of an enzyme for the treatment of heat-treated starchy foods

AcrylawayTM launched in Aug 07

Reports show that there are reasons to be concerned:

Acrylamide is carcinogenic in rats. Johnson et al. Toxicology and applied Pharmacology (1986) 85: 154-168. Friedman et al. Fundamental and Applied Toxicology (1995) 27:95-105

Effects in humans are not yet known. Estimated cancer risk from food exposure: 5-7 incidences of cancer/million people/ year Konings et al. Food and Chemical Toxicology (2003) 41:1569-1579

International Agency for Research on Cancer (IARC) classifies acrylamide as som “probably carcinogenic to humans” based on studies in rats and mice

Assessment

A lot of investigations are initiated but it will take many years before any final conclusions can be made.

Acrylamide: a potential carcinogen

Formation mechanism determined by several groups Mottram D.S. et al., and Stadtler R.H. et al. Nature (2002) 419, 3: 448-449.

Starts with a Maillard reaction between asparagine and reducing sugars

Maillard products resolve to form acrylamide

“Browned” starchy foods are high in acrylamide

Mechanism of acrylamide formation

H2O

O

OH

OHOH

OH

NH2

O

NCO2

glucose asparagine

NH2

O

acrylamide

O

O H

O H O H

O H

N H 2

N H 2

HOOC O

+ O H

O

O H

O H O H

O H

N N H 2

HOOC O

H

Acrylamide content of various foods Data compiled from several published studies

Toast

Tortilla and corn

chips

Cookies/Biscuits/Crackers

Crisp Breads

French Fries

Fabricated chips

All potato chips/crisps

0

1000

2000

3000

4000

5000

Acry

lam

ide,

ppb (

ug/k

g)

Pretzels

Average

Breakfast Cereals

A variety of solutions

Enzymatic reduction of acrylamide formation

NH2

NH2

CO2

O

NH2

OH

CO2

O

O NH2

CO2

O

NH3

H2O

NH3

H2O2

H2O

O2

asparaginase amino acid oxidase

glucose oxidase

O2

H2O2

H

O

OH

OHOH

OOH

OOH

OH

OH

OH

O

Asparaginase most effective in ‘Fabricated Chip’ Model

Enzymes oxidizing glucose

and other reducing sugars

• Glucose oxidase

• Carbohydrate oxidase

• Pyranose oxidase

… have also been evaluated, but with less efficient results. 0

1000

2000

3000

4000

Ac

ryla

mid

e µ

g/k

g

NOVOZYMES PRESENTATION 12/04/2012 19

AcrylawayTM for reduction of acrylamide in foods

AcrylawayTM has a high specificity for asparagine, meaning that all other amino acids are not affected

The Asp oryzae derived asparaginase has a broad pH optimum of 5-8 and works in a wide temperature range 25-60°C, well suited for e.g. biscuit

Asparaginase can substantially reduce acrylamide without changing the taste and appearance of the final product

Reduction Formation

H2O

CO2

glucose asparagine

NH2

O

acrylamide

O

O H

O H O H

O H

N H 2 N H 2

HOOC O

+ O H

N H 2 O H

HOOC O

H2O

NH3

O

OH

OHOH

OH

NH2

O

N

O

O H

O H O H

O H

N N H 2

HOOC O

H

aspartic acid

Acrylaway

0

100

200

300

400

500

600

700

800

900

1000

Acry

lam

ide (

pp

b)

French Fries

Potato crisps

Biscuits

Gingerbread

Crisp bread

Breakfast cereals

Coffee roasted

Acrylamide reduced in several food systems

Food product Acrylamide reduction (%)

Biscuits & cookies 50-90

Crackers 75-85

Crisp bread & toasted bread 50-90

Fabricated potato chips 80-98

French fries 80 vs. a control

50-60 vs. a blank

Prevalence in foods

Reduction by AcrylawayTM

Finding a microbial asparaginase

Extra-cellular asparaginases from bacteria (E. coli, Erwinia chrysanthemi) are commercially available, but expensive

A sequence was available for one fungal extra-celluar asparaginase:

This sequence was used to search our in house sequence databases

AoASP, an asparaginase II homolog from Aspergillus oryzae

from NZ genome project

1 70

Aspergillus (1) MGVNFKVLALSALATISHASPLLYPRATDSNVTYVFTNPNGLNFTQMNTTLPNVTIFATGGTIAGSSADN

S. cerevisiae II (1) -MRSLNTLLLSLFVAMSSGAPLLKIRE------------------EKNSSLPSIKIFGTGGTIASKGSTS

Consensus (1) L LS IS AAPLL R NSSLP I IFATGGTIA A

71 140

Aspergillus (71) TATTGYKAGAVGIQTLIDAVPEMLNVANVAGVQVTNVGSPDITSDILLRLSKQINEVVCNDPTMAGAVVT

S. cerevisiae II (52) ATTAGYSVGLT-VNDLIEAVPSLAEKANLDYLQVSNVGSNSLNYTHLIPLYHGISEALASD-DYAGAVVT

Consensus (71) T GY G IN LIDAVP L ANL LQVSNVGS I LI L I E L D AGAVVT

141 210

Aspergillus (141) HGTDTLEESAFFLDATVNCRKPVVIVGAMRPSTAISADGPLNLLQSVTVAASPKARDRGALIVMNDRIVS

S. cerevisiae II (120) HGTDTMEETAFFLDLTINSEKPVCIAGAMRPATATSADGPMNLYQAVSIAASEKSLGRGTMITLNDRIAS

Consensus (141) HGTDTLEESAFFLD TIN KPV I GAMRPATA SADGPLNL QAVSIAAS KA RG LI LNDRI S

211 280

Aspergillus (211) AFYASKTNANTVDTFKAIEMGNLGEVVSNKPYFFYPPVKPTGKTEVDIRNITS---IPRVDILYSYEDMH

S. cerevisiae II (190) GFWTTKMNANSLDTFRADEQGYLGYFSNDDVEFYYPPVKPNGWQFFDISNLTDPSEIPEVIILYSYQGLN

Consensus (211) AFW SK NANSLDTFKA E G LG FFYPPVKP G DI NIT IP V ILYSY L

281 350

Aspergillus (278) NDTLYSAIDN-GAKGIVIAGSGSGSVSTPFSAAMEDITTKHNIPIVASTRTGNGEVP-SSAESSQIASGY

S. cerevisiae II (260) PELIVKAVKDLGAKGIVLAGSGAGSWTATGSIVNEQLYEEYGIPIVHSRRTADGTVPPDDAPEYAIGSGY

Consensus (281) D I AI GAKGIVIAGSGAGS S S E I H IPIV S RTA G VP A IASGY

351 383

Aspergillus (346) LNPAKSRVLLGLLLAQGKSIEEMRAVFERIGVA

S. cerevisiae II (330) LNPQKSRILLQLCLYSGYGMDQIRSVFSGVYGG

Consensus (351) LNP KSRILL L L G ID IRAVF I A

44% identical

Finding a microbial asparaginase

Cloning and recombinant expression

Method:

• The AoASP was cloned as cDNA from our prefered fungal host, Aspergillus oryzae.

• The AoASP gene was identified and moved to an Aspergillus expression vector by using PCR to place specific restriction sites at the ends of the gene

• The vector contains a very strong artificial promoter develop by Novozymes and a strong terminator as well.

• The vector was then transformed into a strain of Aspergillus oryzae develop for high level expression and with low level of protease and amylase side activities .

E. coli marker

asparaginase

amdS,

Aspergillus selectable marker

Promoter

ColE1 origin

amg terminator

Asparaginase expression construct

Aspergillus oryzae

The performance in fabricated potato chips has been confirmed in partners lab. model

Control

Treated with AoASP

72

0

1000

2000

3000

Control Enzyme

Acryla

mid

e u

g/

Kg

3038 Potato flakes

Finished Potato Chip

Potato flakes treated with

AoASP

Acrylamide reduction in Bakery products: semi-sweet biscuits

control

Enzyme treated biscuit

0

50

100

150

200

250

300

350

0 25 50 100 250

Asparaginase U/kg flour

Ac

ryla

mid

e [

pp

b]

Effect of asparaginase in French fries

1700

660

2000

200

400

600

800

1000

1200

1400

1600

1800

Control Blank + Enzyme

pp

b a

cry

lam

ide

Lipases: replacement of chemical emulsifiers in baking Enzyme induced emulsification by in situ building blocks (phospholipids)

• For maximum dough stability, bakers had no other alternative than to use chemical emulsifiers such as DATEM, SSL or CSL

• Due to stricter regulatory guidelines, there will be very few new emulsifiers developed

• Idea: Enzyme can generate natural emulsifiers during baking from natural lipids in the dough

Background

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Modification of flour lipids to improve emulsification

C

O CH

CH

COOH

O

C

O

O

CH 2

CHOH

CH 2

O

O

C

O CH 3

CH 3

O

Emulsifiers Flour based substrates

O

O

O

O

COO- N

a+

Datem

SSL

Modified flour substrates

O

OO

O

O

P

O

O-

O

N+

DGDG

Lecithin

OO

O

O

OH

OH

OH

OHOH

OH

OH

O

OH

ODGMG

LPC

0.4% DATEM

Reference 20ppm LIPASE

40ppm LIPASE

0.4% DATEM Reference 40ppm LIPASE

European flour Xylanase/Amylase included

LIPASE baking trials:

Hearth bread & rolls, straight dough process

Straight Dough 20 - 40 ppm

High Speed Mixing, 30 - 70 ppm

with/without vacuum

Extended/overnight 2 - 10 ppm

fermentation (>15°C)

Sponge Dough 5 - 40 ppm

Note: In the high speed production processes that are typically used in North America, a 50-75% emulsifier replacement may be the most realistic expectation, regardless of the type of emulsifier used.

DOSAGE RANGES are in ppm

A new lipase with a broad substrate specificity towards polar and non-polar lipids

Unlocks the dough strengthening potential of natural lipids in flour

Replaces 50-100% of DATEM, SSL and CSL

Offers bread improver manufacturers and bakeries a competitive edge

Offers process and taste advantages over today’s commonly used emulsifiers

The PRODUCT: Lipopan F, Lipopan Xtra

• Cost Savings

• Lower cost of ingredients

• Lower quantity of emulsifiers

• Reduced material, transportation and storage costs

• Better taste

• No acid smell

• No bitter taste

• No caking

• Easier to handle during production

• Better stability during transportation and storage

• Performance

• equal to or better than traditional emulsifiers

Level of emulsifiers can be reduced by 50-100%

1 kg Lipopan F can replace between 100 to 1000 kg of chemical emulsifier

Without any negative side effects

Lipopan Xtra: no off flavor in high fat recipes

The PRODUCT: Lipopan F, Lipopan Xtra

• Cost Savings

• Lower cost of ingredients

• Lower quantity of emulsifiers

• Reduced material, transportation and storage costs

• Better taste

• No acid smell

• No bitter taste

• No caking

• Easier to handle during production

• Better stability during transportation and storage

• Performance

• equal to or better than traditional emulsifiers

Yieldmax: a Phospho-Lipase to increase Pizza cheese yields

12/04/2012 35

MOZARELLA PRODUCTION with Enzymes

• YieldMAX is a phospholipase which transforms phospholipids to lyso-phospholipids and free fatty acids

• Lyso-phospholipids are better emulsifiers than phospholipids

• YieldMAX can increase yield in e.g. Mozzarella production.

• Improved use of raw material

• Reduced CO2 emission

O

C R2 O CH

CH2O P O X

O-

H2C O C R1

O

Phospholipid

H2C OH C R1

O

C H

CH2

O

P O X

O-

Lysophospholipid

R2 O C

O

O

O

Fatty acid

-O +

H2O

P-Lipase

NOVOZYMES PRESENTATION

YieldMAXTM PL increases yield in pizza cheese production:

Industrial validations (>200 full scale cheese vats):

Yield increase of 1,9% 0,5%.

Cheese vat

Milk YieldMAX

phospholipase

Rennet &

cultures Washing,

Stretching

Cheese (+2%)

Whey and

Lipid losses reduced

Lecitase Ultra: a Phospho-Lipase A1 for degumming of soy bean oils

Enzymatic Interesterification a trouble-free Process for trans-free fats

Healthy Food:

• Fibre Production in situ

• Calcium fortification

Novozymes Ondea Pro

Producing a great tasting beer from barley with current brewing equipment.

Providing improved productivity and bring new beverage branding possibilities.

Reducing the carbon foot print and use local raw materials.

Make great tasting beer from barley – and save money

NOVOZYMES PRESENTATION 41 4/12/2012

Increasing productivity Lower profitability

Leveraged acquisitions

Unpredictable malt cost

CAPEX in growing markets

Improving social responsibility Reduce carbon foot print

Support local communities

Enhancing Branding Pressure from other

beverage options

New consumers expect new experiences

Go directly from barley to beer without passing through the malt house

Save money A 1 million hl brewery will

save up to 15 MDKK/y going from malt to barley

Save the environment A 1 million hl brewery will

save up to 3,000 t CO2/y

Branding opportunities Simple process and platform

for new beverages

LAUNCHED AT DRINKTEC

SEPTEMBER 14TH, 2009

Barley

Malthouse

Brewery

Beer

12/04/2012

FIAP Food Improvement Agents Package A new EU regulation

Novozymes A/S

Overall principles

Food enzymes may not be of any risk problem for the health of the users

There should be significant technological need for the application of food enzymes

Use of enzymes may not mislead/misinform the user

NOVOZYMES PRESENTATION 12/04/2012 43

What is FIAP?

FIAP, the European “Food Improvement Agents Package” is a set of four regulations covering:

Food Enzymes (on concentrate level)

Food Additives

Flavorings

Common authorization procedure

FIAP has been in force since 2009

However details for implementation incl. guidelines are being developed gradually and challenged

Important uncertainties still exist!

44

Before FIAP

No harmonized regulation in EU for enzymes used in the manufacture of foods

• The only food enzymes that are regulated at EU level:

– Invertase & Lysozyme (approved additives)

– Enzymes used in Juice & Wine

• National regulations of food enzymes used as processing aids:

– Specific approvals required in Denmark and France

– Rest of EU: general food law (self determined safe use)

45

27 Countries 493 Mill. citizens 4.325.897 km2

NOVOZYMES PRESENTATION 12/04/2012

FIAP - a harmonized EU enzyme regulation

With FIAP

One harmonized regulation for food enzymes in EU

Until the first positive list is published (expected by earliest 2019), national rules apply, i.e. approvals needed in DK and FR and safe use in rest of EU

Which enzymes must be approved in EU?

All food enzymes (on conc. Level) sold and used in EU – also when imported

Enzyme treated final food products sold in EU must be produced

only with approved enzymes – also when imported

46

FIAP should provide transparancy and harmonization

Towards consumers – ”safe use” and ”consumers right to know”

Towards companies - ”harmonization, free movement & fair competition”

Why FIAP?

47

“provision should be made to ensure that the switchover to a Community list of food enzymes takes place smoothly and does not disturb the existing food enzyme market” [Regulation (EC) 1332/2008, Recital 13]

”Differences between national laws, regulations and administrative provisions concerning the assessment and authorisation of food enzymes may hinder their free movement, creating conditions for unequal and unfair competition. [Regulation (EC) 1332/2008, Recital 3]

” Food enzymes must be safe when used, there must be a technological need for their use and their use must not mislead the consumer” [Regulation (EC) 1332/2008, Recital 6]

FIAP implementation timeframe

Key messages

Novozymes intends to file re-evaluation dossiers covering our complete range of existing food enzymes

Novozymes intends to implement all requirements of FIAP as they come into force ensuring compliance with the regulations

Novozymes is very confident indeed that our food enzymes will be approved in EU

49 NOVOZYMES PRESENTATION 12/04/2012