Moberg Pharma AB Year-end report 2016

EBITDA TRIPLED IN THE FOURTH QUARTER

 PERIOD (FULL YEAR 2016) *

• Net sales SEK 334.3 million (285.6)
• EBITDA SEK 77.9 million (46.4)
• EBITDA for Commercial Operations SEK 93.5 million (68.5)
• Earnings before interest and taxes (EBIT) SEK 62.2 million (35.2)
• Net profit after tax SEK 32.7 million (25.5)
• Earnings per share SEK 2.25 (1.77)
• Operating cash flow per share SEK -1.24 (2.12)
• The Board of Directors proposes that no dividend be paid for the 2016 financial year

FOURTH QUARTER (OCT-DEC 2016)

• Net sales SEK 89.4 million (53.7)
• EBITDA SEK 12.0 million (4.0)
• EBITDA for Commercial Operations SEK 17.5 million (8.6)
• Earnings before interest and taxes (EBIT) SEK 7.1 million (1.1)
• Net profit after tax SEK -2.5 million (0.4)**
• Loss per share SEK -0.17 (0.03)
• Operating cash flow per share SEK 0.36 (0.16)

*The results include a capital gain of SEK 41.1 million in the second quarter from the divestment of the Jointflex®, Fergon® and Vanquish® brands
** Earnings before tax was positive. Additional tax bookings related to transactions resulted in a negative net profit after tax in Q4. However, please note that the company has deferred tax assets and corporate tax paid therefore is insignificant.

SIGNIFICANT EVENTS DURING THE FOURTH QUARTER

• The acquisition of Dermoplast® from Prestige Brands in the U.S. was completed on December 30, 2016. The purchase price was USD 47.6 million (SEK 433.2 million), plus inventory value, and the brand is expected to become the company’s second-largest product. The acquisition was financed through directed new share issues worth a total of SEK 148 million, a bond issue of SEK 215 million and available cash and cash equivalents.
• Divestment of PediaCare® to Strides Arcolab International Limited, UK for a total consideration of USD 5.6 million, USD 0.6 million of which comprised inventory value.
• European patent granted for BUPI. The patent is expected to remain in force until 2031.
• Redemptions of stock option schemes increased the number of shares and votes by 279,150, while the new issues implemented in conjunction with the acquisition of Dermoplast® increased the number of shares and votes by 2,843,504, to a total of 17,411,842 shares.

SIGNIFICANT EVENTS AFTER THE END OF THE QUARTER
Additional distribution secured for New Skin® Spray through Walmart and Walgreens.

CEO COMMENTARY

The acquisition of Dermoplast® in December finalized a transformative year for Moberg Pharma. Acquisitions totalled USD 88 million and significantly strengthened our brand portfolio. Furthermore, we increased the market share for our lead brand Kerasal Nail® to record-levels in the U.S. and progressed MOB-015 to gain regulatory approval to start Phase 3 as well as initiated patient enrolment. As for Q4, we delivered strong growth in sales and tripled EBITDA fueled by recent acquisitions.

Recent acquisitions ensured continued profitable growth
In the fourth quarter, the company continued to deliver profitable growth with significant contribution from recently acquired brands, in particular New Skin®, increasing net sales by 67% to SEK 89 million with EBITDA tripling to SEK 12 million. In the U.S., Kerasal Nail grew market share in Q4 compared to last year, despite limited advertising during the low-season, and the market share for the full year grew to 27%, an increase with 4% compared to last year. We also secured important new distribution on New Skin® Spray in Walmart and Walgreens. These gains provide momentum as we head into 2017.

Distributor sales, excluding divested brands, were up in volume in 2016 but down 6% in value due to volume discounts in key markets. The Asia-Pacific region represents a long-term growth opportunity and several of our markets have already performed very well. However, there are other markets in the region that need more time and will require refined strategies.

Transformative acquisitions strengthened the brand portfolio
We completed successful acquisitions totaling USD 88 million in 2016 in line with our buy-and-build strategy for the commercial portfolio. Since the acquisitions were primarily debt-financed, the dilution to shareholders was limited. Dermoplast® is expected to become our second largest brand, contributing to sales and profitability from day one through our current sales channels in the U.S. Moreover, in addition to enabling further economies of scale, Dermoplast® offers an interesting direct sales channel to hospitals for us to develop. We were also pleased to complete the divestment of PediaCare®, releasing cash and resources for our core brands. The integration of New Skin and Fiber Choice® was finalized in Q4 and according to plan.

Advancing our Phase 3 assets
We are entering the year with two high potential pipeline assets in Phase 3. MOB-015 and BUPI both have the potential to become market leaders in their respective niches, taking Moberg Pharma to a whole new level. Following feedback from the FDA, we will include additional patients into the MOB-015 trial in North America. In total, our Phase 3 program is planned to include 750-800 patients. The increased sample size and a diligent screening process will reduce the risk of the Phase 3 program and, according to our revised timeline, we expect enrollment to be finalized during the second half of 2017. As for BUPI, we received patent approval in the EU and have been granted Scientific Advice meetings with two EU Health Authorities in March. The progress of both pipeline assets enables us to initiate discussions with potential commercialization partners. We expect the total investments in our Phase 3 assets to remain in line with previous estimates, approximately USD 20 million during 2016-2018.

A significantly stronger company
One year ago, we set high goals for 2016 and announced a plan of significant investments. I am proud to report that we delivered on these goals and that the results to date of these investments are meeting or exceeding our expectations. We start the New Year as a significantly stronger company than one year ago and I am excited about our prospects to create value. The transformative and immediately accretive acquisitions completed last year will more than double our U.S. sales, while the pipeline assets are progressing in line with our long-term growth strategy.

Peter Wolpert, CEO Moberg Pharma

TELEPHONE CONFERENCE
CEO Peter Wolpert will present the report in a conference call at 3 p.m. today,
February 14, 2017. Phone +46 (0)8 566 426 95

ABOUT THIS INFORMATION
Moberg Pharma discloses the information provided herein pursuant to the Securities markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication at 8:00 am (CET) on February 14th, 2017.

FOR MORE INFORMATION, PLEASE CONTACT
Peter Wolpert, CEO, tel. +46 (0)8-522 307 00, peter.wolpert@mobergpharma.se
Anna Ljung, CFO, tel. +46 (0)8-522 307 01, anna.ljung@mobergpharma.se

For more information about Moberg Pharma´s operations, please visit the company´s website at www.mobergpharma.com

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