Interim report January – September 2012
Acquisition of Alterna LLC
Moberg Derma AB (publ)
October 25, 2012
Peter Wolpert, CEO and Founder
Disclaimer
Statements included herein that are not historical facts are forward-looking statements.
Such forward-looking statements involve a number of risks and uncertainties and are
subject to change at any time. In the event such risks or uncertainties materialize, Moberg
Derma’s results could be materially affected.
The risks and uncertainties include, but are not limited to, risks associated with the
inherent uncertainty of pharmaceutical research and product development, manufacturing
and commercialization, the impact of competitive products, patents, legal challenges,
government regulation and approval, Moberg Derma’s ability to secure new products for
commercialization and/or development and other risks and uncertainties detailed from time
to time in Moberg Derma AB’s interim or annual reports, prospectuses or press releases.
1
1
Continued strong growth driven by launches
July - Sep
2012
July - Sep
2011
Jan - Sep
2012
Jan - Sep
2011
26.7
21.9
82.3
35.4
Operating profit
4.0
4.9
13.3
-11.4
EBT
4.5
5.4
14.7
-10.8
Earnings after Tax
2.8
5.4
42.1
-10.8
Earnings per Share (SEK)
0.31
0.60
4.64
-1.47
Cash position Sep 30
85.7
(MSEK)
Revenues
Significant events during and after Q3, 2012
 Kerasal ® Nail™ towards leading position in the U.S. – Walmart more than doubles distribution
 Strong start for European launch – all milestones expected in 2012
- Milestones received Q3: 2.5 MSEK (13 MSEK)
 Recruitment completed for Limtop phase II study
 Moberg Derma acquires its US distributor Alterna
2
2
Strong revenue growth under profitability
Operating profit, rolling 12 months, MSEK
Revenues rolling 12 months, MSEK
120
98
103
100
30
15
81
18
17
80
7
0
56
60
41
-8
-15
40
21
20
9
13
-30
0
-45
Q4
2010
-20
-30
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
-32
-34
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
3
3
Continued growth in Nalox™/Emtrix® product sales
4
4
Medical device/cosmetic
Pharmaceutical
Product portfolio
Product
Indication
Formulation
Clinical Phase
Market
Partners
On the market
NaloxTM
Nail diseases
10 partners, 50 markets
Kaprolac®
Skin
1 partner, 1 market
In development
Limtop
Actinic
Keratosis
Phase II data H113
MOB-015
Nail fungus
Phase II data Q412
 Pipeline with over 500 MUSD in market potential
5
5
Kerasal® Nail™ – Rapidly gaining market share
 Launched Fall 2011 at CVS, Rite Aid and Walmart
 Walgreens launch March 2012
 Already #2 brand in Drug class of trade and growing(1)
 Walmart expanded stores in August: 1,325 –> 3,570 stores
6
(1) Retail sales of fungal nail SKUs in drug class of trade over the last 20 weeks as reported by IRI
6
Rapid growth in Kerasal® Nail™ sales
7
Source: RSI reporting
7
Kerasal® Nail™ is already the #2 Brand in Drugstores
12 Week Ending Sep 9, 2012
TOTAL U.S. - DRUG
Dollar Sales
FUNGI NAIL CLEAR NAIL CARE ITEM NAIL TREATMENT 0.06OZ 5307617120
FUNGI NAIL CLEAR NAIL CARE ITEM NAIL TREATMENT 1OZ 5307610326
KERASAL NAIL CLEAR NAIL CARE ITEM NAIL TREATMENT 0.33OZ 5707400161
FUNGI CURE CLEAR NAIL CARE ITEM NAIL TREATMENT 1OZ 7295961030
PRO CLEARZ CLEAR NAIL CARE ITEM NAIL TREATMENT 1OZ 8037601549
DR BLAINES TINEACIDE NAIL CARE ITEM NAIL TREATMENT ANTI FUNGAL 1.25OZ 1672805000
DR PAULS PIGGY PASTE CLEAR NAIL CARE ITEM NAIL TREATMENT 0.8OZ 5915700200
XENNA NONYX CLEAR NAIL CARE ITEM NAIL TREATMENT 4OZ 1263400101
FUNGI NAIL CLEAR NAIL CARE ITEM NAIL TREATMENT 0.7OZ 5307617450
MYCOCIDE NS CLEAR NAIL CARE ITEM NAIL TREATMENT 1.33OZ 8315425001
PRO CLEARZ CLEAR NAIL CARE ITEM NAIL TREATMENT 0.11OZ 8037601579
RECLEAR AF NAL ANTMCRBL ANTFNGL FOOT TREATMENT SOLUTION 1OZ 5235300024
MIRANEL NATURAL ANTI FUNGAL FOOT TREATMENT CREAM 1OZ 0395013191
DR SCHOLL FUNGAL NAIL CLEAR NAIL CARE ITEM NAIL TREATMENT 1OZ 1101740562
RECLEAR AF CLEAR NAIL CARE ITEM NAIL TREATMENT 1.5OZ 5235300023
FUNGI NAIL CLEAR NAIL CARE ITEM NAIL TREATMENT 0.06OZ 5307616720
8
Source: IRI
8
$1,852,602
$1,760,860
$1,181,685
$699,244
$654,485
$635,906
$599,015
$584,982
$502,441
$377,159
$349,481
$205,617
$123,469
$54,877
$49,295
$12,529
Dollar
Sales %
Chg YAgo
18.48
0.68
(2.92)
51.91
1.96
140.82
(18.78)
(56.61)
(1.91)
70.15
(26.23)
(17.46)
(82.37)
(58.36)
Unit Sale
166,
113,
51,
62,
71,
33,
19,
27,
36,
27,
49,
13,
5,
5,
7,
1,
The Alterna acquisition
Strong performance enables investment in direct U.S.
market access
Swedish pharmaceutical company with strong growth in the global market
 Growth during eight consecutive quarters, positive cash flow and profit ahead of
plan
 Sales in 19 countries
 Close co-operation with distributors and partners provide local market expertise,
faster market penetration and limits capital need
Delivering on our strategy – growth organically and through acquisitions
 Strong performance enables investments in additional products and own
distribution in selected markets
 EBITDA margin target of ≥ 25 percent in three to five years under continued
growth
10
10
The Alterna acquisition:
A logical step in Moberg Derma's long term growth strategy
A proven marketing and distribution organization
 Channels include the largest U.S. food and drug chains
 Network of international distributors
 Strong track record from recent successful launches (e.g. Kerasal Nail™)
Positive impact from day one
 Topline to benefit from rapidly growing sales of Alterna products
 Adds established brands with high potential to our portfolio
 Provides direct relationship with end-customers.
 Enables future U.S. launches under own management
11
11
Alterna in brief
 Founded 2005 with acquisition of Taro Pharmaceutical’s consumer healthcare
products division
 Focus on building effective niche consumer healthcare brands
 Customers include major retailers, e.g. CVS, Walgreens, Rite Aid and Walmart
 Principal brands:
- Kerasal® (foot care)
- JointFlex® (arthritis pain)
 Owned by Altaris Capital Partners
 Headquarters Cedar Knolls, NJ
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12
The transaction in brief
Purchase price
 133 MSEK (MUSD 20), of which 33 MSEK (MUSD 5) through issue in kind of
825,652 shares, and 100 MSEK (MUSD 15) in cash
 33 MSEK (MUSD 5) in additional consideration based on sales for the period
1 Jan 2012 - 30 June 2014 (2 x MUSD 2.5)
 The consideration corresponds to a multiple of 1.8 times Alterna’s revenue for the
past 12 months (Sep 30, 2012), approximately 72 MSEK (MUSD 11)
Financing of cash part
 32 MSEK through directed issue to Swedish institutions, including AP3 and
Rhenman & Partners
 40 MSEK through bank financing from Swedbank
 28 MSEK with own funds (Cash Reserves Sep 30: 86 MSEK)
Timetable
 EGM: November 19, 2012
 Closing: Before November 30, 2012
 Estimated registration of non-cash issue: Beginning of December, 2012
13
13
Highly Effective Supply Chain & Distribution Model
14
14
Alterna’s brands
®
CONFIDENTIAL
15
15
U.S. & Canada Retail Customers*
16
* Not an all inclusive list. Kerasal is well distributed among smaller chains and independents,
commissaries, and some hospital pharmacies.
16
Moberg Derma going forward
17
A stronger Moberg Derma
 Continued focus on growth and profitability
 Bring unique patented products to the U.S. Market
 Under own management market niche brands in the U.S. / Canada and other
select markets
 Sell through distributors in other markets
 Expand the product portfolio through acquisitions and / or inlicensing
 Inlicense from EU to U.S. and vice versa
18
18
Medical device/cosmetic
Pharmaceutical
Combined product portfolio
Product
Indication
Formulation
Clinical Phase
Market
Partners
On the market
Nalox™
Nail
diseases
10 partners, 50 markets
Kaprolac®
Skin
1 partner, 1 market
Kerasal®
Dry cracked
feet
US: Direct Sales
Several int. distributors
Kerasal
Nail™
Nail
appearance
US: Direct Sales
JointFlex®
Arthritis
pain
US: Direct Sales
Several int. distributors
In development
Limtop
Actinic
Keratosis
Phase II data H113
MOB-015
Nail fungus
Phase II data Q412
19
19
Ongoing launch on 50 markets –
Alterna brings a well-proven U.S. marketing organization as
well as complementary distributor network
20
20
Financial Overview
21
Combining two growth companies
2012
Jan – Sep
2011
Jan - Sep
Growth
2011
Revenues
82.3
35.4
132%
55.9
EBITDA
13.3
-11.4
-7.6
Earnings after Tax
42.1
-10.8
-6.4
2012
Jan - Sep
2011
Jan - Sep
Growth
2011
68.3
42.7
60%
54.1
EBITDA
4.7
2.9
60%
2.1
Earnings after Tax
1.5
-0.4
(MSEK)
(MSEK)
Revenues
22
Note: Stand-alone P&Ls, Pro forma figures will include adjustments for Kerasal Nail Sales and marketing costs
22
-2.0
Summary
23
The Alterna acquisition:
A major step in Moberg Derma’s growth strategy
Delivery on strategic
and financial targets
Operational and
financial strength
secured
Attractive financing
structure in place
DIRECT MARKET ACCESS IN THE U.S.
THROUGH FORWARD INTEGRATION
REVENUE GROWTH THROUGH
ACQUISITION OF PRODUCTS
Target company’s
performance and
corporate culture
well known
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Appendix
25
Kerasal®
•
Highly efficacious line of topical solutions for treating difficult foot care issues
− Dry feet, cracked heels, callus build-up
− Toe nails damaged by fungus and psoriasis
− Foot pain, aching feet
•
Brand acquired in 2005 in North America (from Taro Pharmaceuticals)
•
Expanded rights in 2010 to 80+ other countries (from Spirig Pharma AG)
•
2011 Net Sales Approximately $3.1MM
•
#1 podiatrist-recommended OTC brand for softening feet
•
Launching this year in major Canadian chains including Shoppers Drug Mart, Walmart, and Rexall
•
Significant opportunities to leverage brand into new products and distribution points
26
26
Kerasal Foot Ointment
• Clinically proven effective to
• Exfoliate and moisturize in one step
• Soften severely cracked heels and rough, dry feet
• Patented technology / manufacturing process
• Salicylic Acid 5%, a beta-hydroxy acid - a highly efficient
keratolytic and exfoliant. It helps soften keratin and controls the
buildup of hard, thick, rough skin.
• Urea 10% - hydrates the skin and helps retain moisture in the
new cell layers.
• Works fast, with initial results seen in just a few days
• Last 52 weeks: +3.5% in Food, Drug, Mass (excluding Walmart)(1)
• #2 Foot Moisturizer(2) in the foot care category
(1) Combined retail sales of both 15g and 30g sizes in Food, Drug, Mass
excluding Walmart, 52 weeks end September 9, 2012 as reported by IRI
(2) Excludes “as seen on TV” SKU Heeltastic®.
27
Clinically Proven Effective
•
Manufactured w/ patented process that combines 5% salicylic acid with 10% urea in petrolatum base
•
Regulatory classification is cosmetic (versus OTC)
•
The following clinical studies were published
Clinical Study
Conclusions
Title: Comparison of Salicylic Acid and Urea versus
Ammonium Lactate for the Treatment of Foot Xerosis.
A Randomized, Double-blind, Clinical Study.
By: Jennings, Alfieri, Ward, Lesczczynski;
Published in: Journal of American Podiatric Medical
Association 1998.
• Kerasal is an effective agent in the treatment to
xerosis (extreme dehydration of the skin).
• No significant difference in the effectiveness of
Kerasal vs prescription product Lac-Hydrin.
Title: Percutaneous Absorption of Salicylic Acid in Man
after Topical Administration of Three Different
Formulations.
By: Schwarb, Gabard, Rufli, Surber.
Published in: Dermatology 1999.
• Kerasal delivered more salicylic to the stratum
corneum (outer most layer of skin) which is the target
organ for keratolytic activity (softening and shedding of
dead skin cells)
• Kerasal has a lower potential for excessive drug
delivery to the body vs other 2 formulations.
Title: In vivo measurement of keratolytic effect of
salicylic acid in three ointment formulations.
By: Nook.
Published in: British Journal of Dermatology 1987.
• Salicylic acid is widely used keratolytic agent. This
study shows synergistic pharmacological effect of
salicylic acid with urea at levels used in Kerasal vs.
other ointment formulations.
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28
Strong Distribution & Growth in Retail Sales
• Another strong season of growth
over summer 2011
• Highly successful marketing plan
• Ointment sales grew 9.0%
+21.1%
+14.7 %
+9.0%
Source: RSI POS data; IRI; dollar sales ending 12/31/11
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29
• Recently launched to Canada
with distribution in major chains
Kerasal® Nail Launch
• Already in distribution at the top 4 chains
• Walmart, CVS, & Rite Aid in 4Q 2011
• Walgreens in March 2012
• Clinical study published; received APMA seal of approval
• Advertising campaign underway and ramping up
• #1 or #2 Selling SKU in retail dollar sales during ad weeks
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Kerasal® Brand Growth Opportunities
Short-Term Opportunities
•
Advertising for continued organic growth
•
Expand U.S. retail distribution (e.g., Target, Kroger, more Walmart stores)
•
Grow international sales to new markets
•
Kerasal Fungal Nail Renewal Treatment (launching)
Long-Term Opportunities
•
New products / line extensions in foot care category
– Wart removal, foot odor
•
Leverage Kerasal brand and technology to expand into skin care
– Anti-aging, anti-wrinkle, moisturizers, scar removal
•
Add-on complementary products and technologies
•
Expand professional distribution channels
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31
JointFlex® Pain Relieving Cream
•
JointFlex Pain relieving cream provides unique benefits
•
Clinical Benefit: published study on this formula concluded improving
pain relief with continued daily use(1). /(1/3 of subjects’ pain was
completely eliminated).
•
Delivery System: Proprietary FUSOME® dermal delivery system for
improved penetration of ingredients
•
Unique Formula: Only cream containing camphor, chondroitin sulfate
and glucosamine
•
Ranks in top 4% of External Analgesics category(2)
•
Growing: Last 12 weeks cream retail sales approximately +6.1%(2)
•
Highly profitable for retailers
– Advertising drives traffic to stores
– Premium priced product that generates high profit per turn
– JointFlex consumer’s market basket typically 54% higher
than purchasers of other external analgesics(2)
(1)
Cohen, Wolfe, Trudy, and Lewis. “A Randomized, Double Blind, Placebo Controlled Trial of a Topical Cream Containing
Glucosamine Sulfate, Chondroitin Sulfate, and Camphor for Osteoarthritis of the Knee.” Journal of Rheumatology 2003; 30:3.
(2)
Based on IRI and data for 12 week period ending 5/13/12.
(3)
Internal study of Rite Aide shoppers. Data on file.
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Clinical Study Results
Study: Cohen, Wolfe, Trudy, and Lewis. “A Randomized, Double Blind, Placebo Controlled Trial of a
Topical Cream Containing Glucosamine Sulfate, Chondroitin Sulfate, and Camphor for Osteoarthritis
of the Knee.” Journal of Rheumatology 2003; 30:3.
Results:
• Pain reduction (VAS) was twice that of the placebo.
• Pain relief continued to improve throughout the entire eight week study.
• Study substantiated advertising claim that “JointFlex offers significant, fast-acting pain relief PLUS
gradually and continually improving pain relief with continued use.”
• Study validates FUSOME® Dermal Delivery Technology. (While the exact mechanism was not
determined in this trial, the study strongly suggest transdermal delivery and subsequent
bioavailability of the nutrients).
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Clinical Study Results (cont.)
Osteoarthritis of the Thumb
(Open label by Dr. Daniel Lewis)
Results:
•
Subjects rated JointFlex significantly more effective than placebo.
•
Assessment of disease severity was significantly lower for the JointFlex group.
•
Pain reduction was significantly greater for the JointFlex group.
•
JointFlex group experienced significantly less morning pain and stiffness.
34
34
JointFlex® Growth
Source: IRI, Retail sales ending Sept 9,, 2012. Data excludes Walmart.
-2.0%
35
35
External Analgesic Creams
Latest 52 Weeks Ending Sep 9, 2012
•
•
•
TOTAL U.S. - F/D/Mx
Dollar Sales
Dollar
Sales %
Chg YAgo
Unit Sales
Unit Sales
% Chg
YAgo
CATEGORY - EXTERNAL ANALGESIC RUBS
$306,904,192
2.0
47,443,168
3.6
ASPERCREME ARTHRTS&MUSCLE&JOINT CREAM EXTERNAL ANALGESIC 3OZ 4116705703
$11,966,504
2.6
1,939,903
3.6
BENGAY BACK&ARTHR&MUSCL&JNT GREASELESS CREAM EXTERNAL ANALGESIC 4OZ 7430000536
$7,692,161
1.5
965,851
1.8
ICY HOT BACK&ARTHRITIS&MUSCL CREAM EXTERNAL ANALGESIC 3OZ 4116700891
$6,686,166
13.1
914,932
12.3
BENGAY BACK&ARTHR&MUSCL&JNT GREASELESS CREAM EXTERNAL ANALGESIC 2OZ 7430000535
$6,575,965
-23.9
1,135,047
-24.6
ICY HOT BACK&ARTHRITIS&MUSCL CREAM EXTERNAL ANALGESIC 1.25OZ 4116700885
$5,521,449
-13.8
1,321,220
-13.3
PRECISE MUSCLE AND JOINT GREASELESS CREAM EXTERNAL ANALGESIC 2.5OZ 0045059702
$4,937,703
-30.0
704,619
-33.1
CAPZASIN HP ARTHRITIS CREME EXTERNAL ANALGESIC 1.5OZ 4116775142
$4,432,177
-1.6
320,507
-4.0
AUSTRALIAN DREAM ARTHRITIS CREAM EXTERNAL ANALGESIC 4OZ 9460300335
$3,841,652
40.6
134,825
45.1
JOINTFLEX OUT PAIN ARTHRITIS GREASELESS CREAM EXTERNAL ANALGESIC 4OZ 5707400138
$3,586,149
4.7
203,676
5.9
BIKINI ZONE SKIN CREAM PAIN RELIEF RUB 1OZ 1851501601
$3,534,492
-2.2
468,386
-2.5
BLUE EMU MULTI PURPOSE EXTERNAL ANALGESIC 4OZ 4561100204
$3,398,472
4.5
221,965
6.9
BENGAY BACK&ARTHR&MUSCL&JNT GREASELESS CREAM EXTERNAL ANALGESIC 2OZ 7430000530
$2,999,120
31.1
533,409
27.1
ASPERCREME ARTHRTS&MUSCLE&JOINT GEL EXTERNAL ANALGESIC 2.5OZ 4116705740
$2,927,859
2.5
454,106
0.8
SPORTSCREME ATRMSCBCKLGCRMBRSSPR CREAM EXTERNAL ANALGESIC 3OZ 4116773003
$2,130,662
15.7
331,537
14.9
ZOSTRIX ARTHRITIS CREAM EXTERNAL ANALGESIC 2OZ 6056944302
$2,024,197
-2.3
113,976
-3.5
ASPERCREME BACK&ARTHR&MUSCL&JNT CREME EXTERNAL ANALGESIC 5OZ 4116705705
$1,928,952
9.3
195,117
8.6
PRIVATE LABEL BRAND MUSCLE GREASELESS CREAM EXTERNAL ANALGESIC 4OZ 9999804646
$1,762,408
46.7
248,725
34.7
MYOFLEX BACK&ARTHRITIS&MUSCL GREASELESS CREAM EXTERNAL ANALGESIC 4OZ 0235117004
$1,496,307
-45.3
127,782
-45.9
PRIVATE LABEL BRAND ARTHRTS&MUSCLE&JOINT CREAM EXTERNAL ANALGESIC 3OZ 9999804672
$1,377,126
13.8
259,054
9.3
THERA GESIC BACK&ARTHRITIS&MUSCL CREAM EXTERNAL ANALGESIC 3OZ 0178032003
$1,362,579
-5.0
314,743
-2.1
JointFlex is the #9 external analgesic cream
JointFlex ranks in the Top 4% of the external analgesic category overall
Ranks behind top brands IcyHot, BenGay, Aspercreme
Source: IRI, Retail sales 52 weeks ending September 9, 2012. Data excludes Walmart.
36
NEW! JointFlex® ICE
• JointFlex ICE provides powerful cooling pain relief AND mobility and flexibility
support with highly desired natural ingredients
• Addresses a younger target market than that of JointFlex Cream
• Successfully tested in 400 Publix stores (and by physicians over 3 years)
Key Benefits / Unique Selling Points
• Unique dual-action formula
1. Penetrating cooling pain relief
2. Mobility and flexibility support
• Unique combination of natural ingredients
 Natural Menthol
 Arnica
 Boswellia
 ILEX
 MSM
 Peppermint Oil
37
CONFIDENTIAL
37
JointFlex® Growth Opportunities
Short-term Opportunities
•
Improve and enhance marketing with updated advertising
•
International (existing and new markets)
•
JointFlex ICE line extension
Long-term Opportunities
•
Introduce New SKUs
•
Perform additional clinical studies
• Expand marketing claims
• Support NDA submission
•
Expand distribution to professional channels with new professional offerings
•
Dietary supplements for joint health
38
38