ANNOUNCEMENT OF PROPOSAL TO CONCLUDE A PRIVATE PLACEMENT AND A MARKET UPDATE
New strategic shareholder
Synergia Life Sciences Pvt. Ltd, based in India, a long-time partner and supplier of NattoPharma, has expressed interest to become a significant shareholder in NattoPharma, by investing MNOK 7,0 directly in the company.
Through discussions with the Board, the negotiated share price for a transaction is NOK 12,50. After the completion of a private placement of 560 000 new shares, Synergia will be a 3,1% shareholder and the 7th largest. To facilitate and execute this transaction, the board will invite the shareholders to an extraordinary general assembly, since existing Board authorization does not fully cover a private placement against external investors. Main shareholders representing more than 40% of the shares are consulted and will vote for this transaction. The invitation to the extraordinary general assembly will be communicated in a separate release.
Synergia and NattoPharma have a long-term relationship and Synergia is an important and valuable partner for NattoPharma, and this investment will continue to build on that strong relationship.
“We are very happy to now bring Synergia with us as a significant shareholder. The commitment behind this investment signals that a major player in our industry recognizes our effort to build a global business on the basis of vitamin K2”, says CEO Dan Rosenbaum.
Market update
The demand for vitamin K2 and the interest in NattoPharma’s products are growing in all major markets. On an overall basis, there are multiple new customers and new upcoming product launches creating many ongoing opportunities in the market place for NattoPharma.
“Even more important, we are pleased to see our existing customers increasing their purchase levels. NattoPharma Group therefore continue to grow the revenues in 2nd Half of 2017”, says Rosenbaum.
We are now producing in the new facility for synthethic vitamin K2.
The completion of the facility has taken longer than initially expected. Delay of incoming componets were the main cause behind this. That will affect the total revenues in 2nd half of 2017. It is still too early to see where the 2nd half revenues will end, but continued efforts to reduce the impact of this delay is ongoing. We expect revenues to be in the range of MNOK 30-40. When the additional synthetic production capacity is fully up and running, next year’s growth rates year on year is expected to be in the area of 40-50%.
“Due to external factors our aggressive growth scenario has been temporarily delayed by a couple of months. But when you see the enormous demand growth potential linked to mass-market adoption of K2, our future looks very bright” says Rosenbaum.
The supplement business continues to operate with positive EBITDA. The delay in the synthetic production facility changes the product composition between natural and synthetic, whereas the margins are expected to be lower than earlier communicated in the 2nd Half of 2017. The long-term demand for vitamin K2 is expected to drive volumes in the synthetic product range, where NattoPharma plan to take a cost leader position. The margins are expected to get back on 50%+ when the synthetic production line is fully operating. While the demand for natural products is expected to continue strong growth and to be significant part of the product offering, it is also expected that greater economies of scale can be achieved within the synthetic product range, accompanied by attractive margins.
The work to build shareholder values within the pharmaceutical path continues. The plan is still to have a dedicated legal entity in place at the latest in 1st Quarter 2018. When this is in place it will be easier to evaluate both the supplement and the pharmaceutical business, with their respective potential.
Investment in working capital in the supplement business is continuing as the company continue its growth. Current cash balance is however still considered to be sufficient for the coming period to finance the activity in this segment. As previously announced, a continued investment in the pharma strategy will require separate funding, and the management will come back with more information related to this process in due course.
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About NattoPharma and MenaQ7®
NattoPharma ASA, based in Norway, is the world’s leader in vitamin K2 research and development. NattoPharma is the exclusive international supplier of MenaQ7® Vitamin K2 as MK-7, the best documented, vitamin K2 as menaquinone-7 (MK-7) with guaranteed actives and stability, clinical substantiation, and
international patents granted and pending. The company has a multi-year research and development program to substantiate and discover the health benefits of vitamin K2 for applications in the marketplace for functional food and dietary supplements. With a global presence, the company established its North American subsidiary, NattoPharma USA, Inc., in Metuchen, NJ, and NattoPharma R&D Ltd. in Cyprus. For more information, visit www.nattopharma.com or www.menaq7.com.
For more information, please contact:
Daniel H Rosenbaum, Kjetil Ramsøy,
CEO CFO
e-mail: daniel.rosenbaum@nattopharma.com e-mail: kjetil.ramsoy@nattopharma.com
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