Martek Biosciences Investor Presentation ThinkEquity ThinkGreen Conference

Transcription

1 Martek Biosciences Investor Presentation ThinkEquity ThinkGreen Conference December

2 Forward Looking Statements Sections of this presentation contain forward-looking statements concerning, among other things, expectations regarding future revenue growth, product introductions, production expansion, capital expenditures and gross margins. These statements are based upon numerous assumptions that Martek cannot control and involve risks and uncertainties that could cause actual results to differ. These statements should be understood in light of the risk factors set forth in the Company's filings with the SEC. Martek will be reporting Q4 and FY 07 results on December 12, As such, financial results will not be discussed during this presentation. 2

3 Martek Biosciences Martek discovers, develops and manufactures proprietary innovative products that improve human health and well-being through nutrition. 3

4 Martek Biosciences Overview Producer of patented nutritional oils including DHA omega-3 and ARA omega-6 DHA + ARA important for brain and eye development in infants Martek is the global leader in providing DHA omega-3 and ARA omega-6 for use in infant formula DHA a long-chain omega-3 fatty acid = a good fat Expanding DHA use in additional large markets including perinatal products, supplements and food and beverages based on growing body of scientific data supporting DHA s lifetime health benefits Developing a new product pipeline for future growth 4

5 Why do we need DHA in our diets? Numerous clinical studies and scientific research confirm that DHA is an important nutrient for brain, eye and heart health throughout life DHA is 97% of the omega-3 fats in the brain DHA is 93% of the omega-3 fats in the retina DHA is a key component of the heart DHA helps maintain cardiovascular, visual and neural function throughout the lifespan Despite the benefits, daily DHA intake in the U.S. is low (~30-80 mg) relative to recommendations (~200mg) Current dietary sources of DHA are inadequate Processed foods common in the western diet lack DHA Flax is a source of ALA, not DHA Mixed consumer perceptions of fish and fish oil sources of DHA (oceanic/environmental contaminants, allergens, sustainability, taste) 5

6 Brain Science Demonstrating DHA s Benefits for Brain, Eye, and Heart Continues to Build In an Alzheimer's mouse model, supplementation with Martek s DHA oils reduced the accumulation of both amyloid-beta and tau, two indicators of Alzheimer s in humans (Journal of Neuroscience, April 2007) Martek's DHA and ARA supplementation of infants improved verbal IQ scores compared to controls in children at 4 yrs of age (Early Human Development, May 2007) DHA has anti-inflammatory and neuroprotective bioactivity important in the retina during oxidative stress and the brain during stroke and Alzheimer s disease (Curr Opin Clin Nutr Metab Care, March 2007) Heart Martek s DHA improves blood triglyceride lipid levels (American Journal of Clinical Nutrition, September 2007) Supplementation with Martek DHA reduced triglycerides, pulse rate and diastolic blood pressure in men and women taking statins for hypertriglyceridemia (American College of Cardiology Scientific Session, Mar 07) In subjects with coronary artery disease (most of whom were on statins), both Martek DHA and fish oil significantly lowered triglycerides, but only Martek s DHA increased HDL. The authors concluded that there was no added benefit provided by EPA for lowering triglycerides at levels used in the study, and that Martek s DHA was better tolerated than fish oil. (Journal of the American College of Nutrition, December 2006) Martek's DHA reduced diastolic blood pressure in men and women (Journal of Nutrition, April 2007) Higher tissue levels of DHA are consistently and significantly lower in patients who experience cardiovascular events (Artherosclerosis, May 2007) Eye The higher the intake of dietary DHA, the lower the severity of baseline age-related macular degeneration (Progress in Retinal and Eye Research, 2007) 6 DHA may prevent retinopathy in premature infants (Nature Medicine, April 2007) 6

7 Think Green with Martek s DHA life sdha a sustainable source of DHA Microalgae are the primary planetary producers of DHA No exposure to ocean-borne contaminants (PCBs, dioxins or mercury, et. al.), unlike fish sources of DHA Non-genetically modified Non-GMO life sdha circumvents the environmental challenges facing alternative sources of DHA such as fish and fish oil There is a growing international movement towards sustainable sourcing practices that protect and limit exploitation of world fisheries 7

8 FY 07 Focus Areas Increase use of DHA + ARA in international infant formula markets Expand use of DHA in markets beyond infant formula Improve gross margins New products for future growth 8

9 Infant Formula Market Approximately ~70% of worldwide market under license (~100% of U.S. market) Sales mix approximately 60% U.S., 40% International Greatest growth opportunity is now in the international markets primarily Asia and EU recent growth trends have been encouraging Mead Johnson full conversion to DHA/ARA formulas in the U.S. YTD 2007 (through Q3) IF revenue up 7% Y/Y; international markets growing faster than U.S. Market Opportunity Sales opportunity to Martek at selected penetration rates 90% 100% U.S. $175 - $200 $158 $175 Current Estimated Penetration Range 9 Sales opportunity to Martek at selected penetration rates 30% 40% 50% 75% 100% International $300 - $325 $95 $126 $158 $236 $315 Total Opportunity $475-$525

10 Broadening the Use of DHA Beyond Infant Formula: Prenatal vitamins and supplements Supplements for the general population Food and beverage products Initial target markets expected to be moms and their children, baby boomers and other health conscious consumers 10

11 11 Food, Beverage and Supplement Products Containing life sdha Launched in 2007

12 Perinatal Products and Supplements Perinatal Products for pregnant and nursing moms Prescription prenatal vitamins Citracal Prenatal + DHA Mission Pharmacal OTC supplements Expecta Lipil (Mead Johnson) Life Fitness life sdha (CVS) Food products Supplements for all consumers Working to achieve mainstream retail distribution partner Neuromins sold through distributor network, primarily in natural foods channel Flax / DHA oil blends Other co-branded supplements 12

13 Food and Beverage Market Development Strategy Replicate the successful infant formula market development strategy Establish long-term partnerships with the market leaders Use of Martek logo on product packaging Utilize the branding and marketing expertise of partners to: Develop the life sdha brand Educate consumers / build awareness of the benefits of life sdha Martek as exclusive DHA supplier 13

14 Food and Beverage Market Update Current Market Drivers DHA and omega-3 publicity Growing body of science Consumer concept testing Health and wellness movement Benchmarks for Success Long-term Supply Agreements Dean Foods/WhiteWave General Mills Kellogg s Breyers Yogurt Stremicks Heritage Foods Working on others Product launches 26 product launches announced in FY 07 More to come in FY 08 Follow-on product launches and launches by competitors in the same market segment 14

15 FY 07 Activity in the Yogurt Category Sprintissimo (Italy) Breyers (U.S.) Rachel s (Dean Foods, U.S.) Asturiana (Spain) Mente Viva (Italy) Yoplait Kids yogurt and yogurt drink (General Mills, U.S.) Danone Danonino (Spain) Parmalat (Australia) 15

16 Martek Customer Follow-On Products Company Initial Product Follow-On Product(s) Coca-Cola Company Dean Foods 10 Flavors 3 Varieties General Mills 3 Flavors Parmalat Vaalia Adult yogurt (3 flavors) Vaalia Toddler yogurt (2 flavors) 16

17 17 Partner Promotional Efforts Print, TV and Internet Raising DHA Awareness

18 Consumer Messaging on Packaging Helps Support Brain & Eye Health Help Nourish Your Brain Promotes brain, eye and heart benefits of DHA Promotes DHA for children s brain, eye and nerve development 18

19 Why Martek s life sdha? Higher price than fish oil, but: Sustainability Vegetarian Source (Universal Appeal) Relative Ease of Formulation Real and Perceived Risks of Fish Oil High Quality And Martek s comprehensive array of resources made available to partners in support of developing and marketing products fortified with life sdha 19

20 Perinatal Messaging Example Martek logo on back of box 20

21 Production Capabilities Two Manufacturing Sites Kingstree, SC and Winchester, KY Dual-plant production capacity Capable of both DHA and ARA production Both plants rated Superior by AIB DSM ARA production partner Plants in Capua, Italy and Belvidere, NJ Multinational fine chemical / fermentation company Infrastructure in place to support approximately $500+ million in annualized sales 21

22 New Products In Development Lower cost delivery forms of DHA DHA food and beverage applications DHA in plants Anti-inflammatory compounds Algal-based protein production system Other high-value products 22

23 Financial Overview Total sales >$300 million in FY 07 Gross margins have improved in recent quarters and this trend is expected to continue Sales into non-infant formula markets near double FY 06 sales of $12 million 23

24 Summary The global leader in DHA and ARA for infant formula Science in support of lifetime health benefits of DHA continues to grow DHA gaining traction in food and beverage, perinatal products and supplements markets Existing assets/infrastructure capable of supporting future growth Developing new products to address consumer demand for health and wellness throughout the lifecycle 24