NattoPharma Market Update

Q3 revenue increases by more than 60% on a Q by Q comparison

Oslo, Norway (19 November 2018) NattoPharma reports operating revenues for the third quarter of 2018 of NOK 24,6 million, adjusted for non-product related revenue NOK 23,6 million. This represents growth of 61% compared to the third quarter of 2017. During the same period gross margin has developed positively to 45%, up from 42% in Q2, resulting in a year to date gross margin of 43%.

all numbers in NOK million Q3 YTD

2018 2017 2018 2017
Product Revenue 23,6 14,7 70,8 45,1
Adjusted EBITDA 1,1 -0,3 3,6 1,2
Pre-Tax Profit -0,1 -3,5 -2,0 -7,0

Operational Development

We are pleased that our sales continue to accelerate ahead of our previous guiding and also by presenting the 8th consecutive quarter with positive adjusted EBITDA in the supplement business. Based on this we are confident that our performance in the final quarter will enable us to meet the anticipated annual growth of 40% to 50%. At the same time we are seeing a positive development in the gross margin, as the efforts initiated earlier in the year to expand our production capacity starts to yield results. We are continuing to focus and invest in this area to ensure that we can achieve the improvements necessary to meet longer term growth and profitability targets, but for the 2018 financial year we maintain our guidance of 40% to 45%. The focus for the final quarter of the year will be on sales, execution of order fulfilment and careful cost management.

Our continued effort to develop our supply chain, especially related to the synthetic product line, is continuing in the second half of the year. Good progress has been made, and we are now in a better position to meet all customer demands with a competitively priced product. To further improve our position in the market, we have during the second half of the year initiated a non-recurring development process to secure a more efficient production process for next year and forward. Current estimates from the project indicate a strong cost optimization on future volumes enabling us to stay price competitive in a growing market with increased price pressure.

Overall, 2018 has been a transitional year for NattoPharma after the carve-out of Kaydence Pharma at the end of 2017, resulting in a new focus and new priorities, an on-going supply-chain ramp up and the addition of many new faces to the team. We have staffed up with senior personnel in all the vital areas and a few additional low and mid-level positions will be added in the next year to the most important functions; sales and supply chain, to support our growth ambitions. As a result, we expect to continue our growth and have a positive development in EBITDA over the coming year.

Market Development

We continue to see forward momentum within the K2 market and are benefiting from our position of offering the only researched and clinically validated vitamin K2 ingredient, MenaQ7®. On this note we are proud to be collaborating with visionary partner, STADA, who have launched EUNOVA® DuoProtect D3+K2, featuring MenaQ7® Vitamin K2, across Germany and the UK. STADA, a leading health and wellness manufacturer serving Europe for 120 years, has selected NattoPharma’s MenaQ7® PharmaPure K2 for its supplement line, as our product is the highest quality material available and thus aligned with their philosophy and mission statement ‘ALL THE BEST’. We are extremely excited about another innovative product being introduced to the global market featuring MenaQ7® as part of STADA’s extraordinary line, with its demonstrated years of excellence providing only the best ingredients available.

In the United States, NattoPharma partner Weider Global Nutrition has earned placement in Costco to sell its innovative cardiovascular product, Artery Health. Weider is an active nutrition company that has been developing innovative dietary supplements for more than 80 years, providing products and services to over 120 countries. Artery Health was launched in January 2018, and quickly earned the attention of Costco, the United States’ largest membership-only warehouse club, with almost 500 warehouses nationwide. Artery Health will be available for purchase on Costco store shelves nationwide and NattoPharma anticipates significant volumes sold through this channel. The nationwide roll-out will commence in Q1 of ‘19 and be staged over the course of the calendar year.

We see now more than ever that brand owners appreciate that MenaQ7® is the only Vitamin K2 clinically shown to be pure, safe, and bioeffective/bioavailable, with the most comprehensive IP portfolio. Our excellent sales and marketing performance can be attributed to the fact that the MenaQ7® trials we have funded are very compelling and involve adults and children, as well as healthy patient populations.

As an organisation we continue our ongoing commitment to promote science-based K2 education both with consumers and the industry as a whole. In October we were a key sponsor in a symposium held by the University of Maastricht in the Netherlands, where presentations were given examining the role of arterial calcification and the impact of Vitamin K2. The most recent research has demonstrated the cardiovascular implications of vitamin K2 as a mitigator of the disastrous role of arterial and soft tissue calcification. After the symposium, Prof. Dr. Leon Schurgers, Professor of Biochemistry of Vascular Calcification, Department of Biochemistry, University of Maastricht, gave his inaugural lecture “Vascular calcification: hard disease in the heart”. Prof. Schurgers has a long-standing scientific collaboration with NattoPharma, having two PhD students working on joint projects and financed by the Norwegian Research Council. Additionally, NattoPharma is partner in two Marie Slodowska-Curie Horizon2020 consortium grants from the European Union.

New Ingredients

We continue to develop new ingredient candidates to add to our commercial portfolio. The process of qualifying continues, and the selection of a new ingredient is imminent. The leading ingredient candidate, provided a decision is made to move forward, is a well-documented ingredient in a high growth market-segment. Due to the continued validation being done to the product, significant revenue is not likely until late 2019, or first part of 2020.

Kaydence Pharma Capital Placement

Kaydence Pharma has closed the initial phase of the ongoing share issue, achieving approximately 50% of the upper-end gross proceeds target based on participation from several of the major shareholders and executive management. This group, which includes Pro AS, Synergia Life Sciences Pvt Ltd and TG Montgomery AS, contributed approximately NOK 10 million in cash. NattoPharma ASA will convert a similar amount of the outstanding seller’s credit to maintain the ownership at current level, i.e. at approx. 46%. In accordance with the loan agreement, Kaydence Pharma will use a portion of the cash proceeds for reduction of outstanding debt held by NattoPharma. This cash will be received by NattoPharma in the 4th quarter.

Kaydence continues to make excellent progress on its pharmaceutical development, with an ultimate goal of full drug registration. The company is on track to achieve its initial set of milestones focused on regulatory submissions and non-clinical studies. Preparation for upcoming clinical development trials are also underway.

Investor Relations

Starting from the first quarter 2019, we will return to quarterly reporting to the market. We are also looking into setting up coverage from one or more analysts. We aim to have something in place during the first half of 2019. These are some of the measures we take and will continue to work on to increase the interest in the NattoPharma share and maximize shareholder value going forward.


For more information, please contact:

Kjetil Ramsøy, NattoPharma Chef Executive Officer


*) Use of Alternative Performance Measures (APM)

Product Revenue: NattoPharma’s main revenue stream is sale of products. Other Revenues as reported in the Profit and Loss Statement are related to re-charges of payroll and other operating expenses to Kaydence Pharma. Product Revenues are therefore the most reliable performance measure for Revenues in NattoPharma.

Adjusted EBITDA: NattoPharma use EBITDA as the main APM for profitability. The reason for this is that EBITDA is the closest APM to cash flow in the company. The company has no long-term debt or other financial instruments significantly impacting net cash flow. In the current stage of significant revenue growth, cash generation is pivotal to support future growth. The company adjusts EBITDA by subtracting non-cash cost for options and shares. Otherwise no adjustments are being made to EBITDA. 



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