The good fat company Introduction - Hugin Onlinereports.huginonline.com/784083.pdf · The good fat company Introduction • Natural ASA is a Nutritech company with a unique position

The good fat company

Introduction• Natural ASA is a Nutritech company with a unique position

in high value bio-active lipids (CLA) for use in:– Animal Feed & F(x)Food, (Pharma and Cosmetics)

• CLA (Conjugated Linoleic Acid) is:– a natural substance– with multiple bio-active isomers,

• CLA has a range of use areas within very large commercialmarkets in feed and food:

• Animal feed potential ranges $250 mill. - $1+ bill./yr• Functional food potential ranges $350 mill. - $2 bill./yr


Natural Business Model

Universitiesand

Research environments

Markets:• Dietary suppl. • Functional food• Cosmetics• Animal feed• Pharmacy

R&DCommer-sialization

Natural ASA

Natural converts an extensive knowledge base to valuableproducts ready for commercial end-user markets

Ø Identifying market needs and demand structureØMaximizing knowledge value through the generation of

a strong patent portfolioØMinimizing capital binding


Naturals two Markets

• Dietary Supplements– PLC 3-5 years– Global Market Size $15-20 bn

• Many products• Vitamins & Minerals ~60%

– Growth 10-20%– Natural focus is Products

• Feed and F(x)Food– PLC 5-15 years– Global Market Size Ingredients

• Nutrition/Food : $65 billion• Anim.feed : $13 billion

– Growth (Ingr./F(x)food) 15%-25%– Natural focus is Technology/IPR

5 years

BlockbusterBlockbuster$100 mill.$100 mill.

15 years+

BlockbusterBlockbuster$1-2 billion$1-2 billion

Products Technology & IPR


Natural Strategic Position

Universities,ResearchInstitutes &Organizations,Foundations,andOthers

AnimalFeed

FeedManufacturer

Grown FeedBIOTECHCrop/Feed

BIOTECHMedicine

IngredientSupplier(s)

Pharmaceutical

FunctionalFoods

FoodManufacturer

Dietary supplementsand OTC

IngredientSupplier(s)

Natural

PATENTS ------------ REGULATORY --------------- MARKET POSITION

The good fat companyNatural ASAStrategic Focusing 1999

Patents (USA)- 2 Composition- 1 Process- 1 Application

M&S Agreements- USP (Sweden/[Europe])- Loders Croklaan (S.Africa)- PharmaNord SpA (Europe)- Amway & Natural Health (USA)- Lifeguide AB (WWW)

Re-Organized NATURAL* Finalized NBI Sales* Re-established Natural Inc.* Take-over PharmaNutrients -> Natural Inc* Take-over minority in ConLinco -> Natural ASA

1999 2000

Natural Ltd ASA

100% heleidNatural Inc.

- M&S- Distribusjonsavtaler

100% heleidNatural Ltd ASA

- Teknologi & Patenter- Allianse/Lisensavtaler

Agreement withBASF AG forAnimal Feed- 16 years- Royalty


Structure & Organisation

Natural gain from alean organisation

Finance & AdministrationV.P. FinanceNils B. Vogt

Animal Feed DevelopmentCarl Skarie

(Daria Jerome)

TechnologyV.P. TechnologyTrond Hubertz

M&S (Natural Inc.)V.P. Marketing & Sales

Didrik Herlofsen

Natural Ltd ASAPres. & CEO

H.P. Danielsen

Natural Ltd. ASA

Natural ASA (Norway) R&D / Production

Natural Inc (USA) Marketing/Sales

Recently restructured tocreate a strong and

focusedorganisation


Financials – P&L Q1’00• Reorganising and

restructuring andcost cutting in 1999after weak 1998

• Q1 00 generated asmall profit ofNOK 0,8 m afterstrong sales in theperiod

• Seasonaility isstrong

RESULTATOPPSTILLING 31.03.00 31.03.99

DriftsinntekterSalgsinntekter 19 752 14 916Varekostnader 7 257 7 159Bruttofortjeneste 12 495 7 757

Royaltyinntekter 1 145 0Kostnader knyttet til royaltyinntekter 333 0Netto royaltyinntekt 812 0

DriftskostnaderDriftskostnader eksklusive fou og restrukturering 7 017 9 877Resultat før fou og restrukturering 6 290 -2 120

Forskning og utvikling 4 068 3 100Resultat etter forskning og utvikling 2 222 -5 220

Restrukturering og avskrivning goodwill 2 047 821Ekstraordinær inntekt ved salg av datterselskap 1 093Resultat etter restrukturering 175 -4 948

Netto finansposter 610 520

Kvartalsresultat 785 -4 428


Financials - BS Q1’00

• Capital increaseautumn 99improved balancesheet

• Strong R&Dfocus might makeother cashinjectionsnecessary

BALANSE 31.03.00 31.03.99

Anleggsmidler 18 828 23 136Omløpsmidler 51 991 36 028Sum eiendeler 70 819 59 164

Egenkapital 54 329 36 292Langsiktig gjeld 3 169 7 758Kortsiktig gjeld 13 321 15 114Sum gjeld 16 490 22 872Sum gjeld og egenkapital 70 819 59 164

Brutto royaltyinntekter 1 145 0Salg CLA-produkter 19 240 8 242


FinancialsQ2 - preliminary sales

Salg fra Natural April+Mai 2000 Q1.00Royalty 142 1 145En-gangs Royalty 4 019 0Dyrefòr 1 984 1 205DS Salg 12 422 18 774SALG/INNTEKTER NASA 18 566 21 124


CLAPublished Results IncreasingPatent Situation ImprovedBioActivity Documented


CLA Development• During the 1980 - 1990’s extensive research has been made

both within animal nutrition and towards human models.– Currently > 300 publications documenting the effect(s) of CLA

– Wisconsin University (a wide range of animal models and basic studies)

– Cornell University (Dairy cows - dramatically reduced milk fat)

– Purdue and Uppsala Universities (Positive effects on diabetes type II)

– Victorian Inst. Of Animal Nutrition, Australia (Increase of lean tissue in pigs)

– Purdue University (Effects on feed efficiency of striped bass)

– Univ. of California, School of medicine, Davis (Reduction of mammary tumor metastasis)

– Univ. Francois-Rabelais, Tours, France (Breast cancer and CLA)

– University of Kumamoto (et al.) (increased immune stimulation by CLA)

– Wistar Institute, Philadelphia (CLA inhibits cholesterol induced atherosclerosis)

# Publications

1990 1999

References on CLA

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

9 0

1 0 0

1 9 8 8 1 9 9 0 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 0 0 0

No. of papersSource: www.wisc.edu/clarefs/fri.html


CLA Patent & License Status• A total app. 120+ patents for CLA

– Industrial applications/Polymerization 1950-1980’s– Feed/Food/Cosmetics/Pharmaceutical 1980-2000

• Approx. 37+ patents relevant for Feed,Food, Cosmetics and Pharmaceuticalapplications

– Natural possesses 7 patents, of which 2 are use, 1 isprocess and 2 are composition patents

– Natural has another 8-10 patents pending– WARF has 16 patents (Natural license)– Fourteen (14) patents are mainly use patents spread

among different Universities

Natural, with basis in lipid research on synthesis, isolation and purification has developed a patent portfolio to combine tailoredCLA compositions for specific purposes in feed and food.

7

16

14Natural/ConlincoWARFOthers

Source: www.espacenet.com, Europeanpatent database, search june 8, 2000.


CLA effectsBio activity of CLA

Biochemical Effect on lipase metabolism Effect on Prostaglandin mechanism Effect on cell membranes Effect on IgE bio-synthesis

Observed Fat/Muscle balance Immune promotereffect(s) Diabetes type II Anti-cancer effect

Reduces LDL/TG & Cholesterol Protective agent Allergies

Fat/Energymetabolism

Immunestimulation

Feed/Food efficiencyGrowth & Muscle developmentHealth & Immune development

Potential asFeed & FoodAdditive

CLA C10:12 isomer CLA C9:11 isomer


DIETARYSUPPLEMENTS


DS Market size and structure

• U.S dietary supplementsindustry doubled since1994 and is estimated atabout USD 16 bn in 2000(Source: Nutrition Business Journal, No.6,1999)

• Largest product group areVitamins andHerbs/Botanicals

Vitamins32 %

Herbs/Botanicals25 %

Minerals7 %

Sport nutrition24 %

Speciality/Other8 %Meal supplements

4 %

86109820

1118012640

1386014940

15970

02000400060008000

1000012000140001600018000

1994 1995 1996 1997 1998 1999 2000


Natural in DS Market• Natural distribution as bulk and capsules with differing

distribution channels in various regional markets. Sold asTonalin® in most markets, but to a large extent also sub-labeling.– USA (both to wholesalers and chains as well as MLM’s)

• Natrol Inc., Richardson labs, Leiner Health products Inc., Naturallife Inc.,• Presence in large health food chains such as Walgreen’s, Wal Mart Inc., Target Inc. and so

called General Nutrition Centers (20-30.000 stores nationwide)

– Norway• Midelfart

– Rest of Europe• USP (Sweden), Pharmalife (Italy), Novartis (Spain), SEAH (Belgium and France), Pharma Nord

(Denmark) and Lawson (UK)

– RoW• Maypro (Japan)

• Loders Crocklan B.V. has a non-exclusive worldwide right to sell and distributeCLA to the health market


FEED & FOODINGREDIENTS

TrendsIndustries

CLA


Animal Feed Ingredient MarketSize

• Global animal feedingredient/additivemarket estimated atabout USD 13 bn in1998, with salesaggregating USD 16 bnby 2003

• Largest markets in USA,Europe and Asia-Pacific

USA25 %

Canada10 %

Japan14 %

Europe22 %

Latin America5 %Middle East

3 %Asia-Pacific

21 %

World

02000

400060008000

10000

1200014000

1600018000

1997 1998 1999 2000 2001 2002 2003


Feed Ingredient(s)• CLA can classify as other feed additive,

with a total market for such additives ofapprox. $ 1.8 bn in 1997 - but may alsofinally be used as Medicinal or Anti-bioticadditive

• Other feed additives include feedphosphates and antioxidants as well asenzymes, oils and fats and meals.

• Largest market is the US, expected tocontribute around 25%, followed byAsia-Pacific with approx. 19% of worldmarket by 2003

• Leading players in the animal feedadditives industry are Roche, Rhone-Poulenc Animal Nutrition, Degussa andBASF

ü Market caracterised by large globalindustrial players and a largenumber of small regional nicheactors

WW Animal Health & Nutrition Market

Nutritional feed additives

27 %

Parasitacides19 %Vaccines

15 %

Antibiotics14 %

Medicinal feed additives

14 %

Pharmaceutical11 %


The BASF agreement• Natural has signed a 16 year contract for production and sale

of CLA as an ingredient in animal feed• BASF is given an exlcusive right to produce and market CLA

to the global market for animal feed• Natural will recieve licence fees based upon sold volumes of

CLA• Natural will keep ownership of patents and rigths connected

to CLA

ü Significanceü The agreement with BASF has proved that Natual:

– Is leading within the field of R&D on CLA substances– Has substantial production know-how– Is the technology leader within the field of CLA production as a feed/food supplement

ü Natural has obtained production capacity and world-wide distribution for CLA as a feedsupplement

ü The agreement is a key factor in opening other segments of the animal feed market


Global food market

•Market value of the food industry is estimated to $1.5 trillion

•Growth rate slightly above inflation (approx. 3%)

Global food industry

Source: “World Watch Institute report”World Watch Institute report, January 2000, P.32.

Global nutraceutical industry

•Market value of the nutraceutical industry is estimated to $65billion

•Growth rate 25%


Diet & Health ConcernsInfluence of Various Disease Conditionson Functional Foods Development inThe Next Five Years (2000 - 2005).

Very Influential %Heart disease 49Obesity 37Cancer 37Osteoporosis 27Gut Health 21Immune system 17Bowel function 11Arthritis 3Mood/cognitive perform 7

(Source: http://www.nutraceuticalsworld.com/janfeb002.htm)

CLA isomer activities include:- Body composition- Cancer protection (breast, skin, prostate)- Atherosclerosis- Immune-system modulation (asthma)- Glucose-sensitivity (diabetes)- Few side-effects as a “Health Promotor”

(Source: D.Dorscheider, MD/Ph.D, Review.)

“Obesity—no longer restricted to highly developedcountries—is also skyrocketing. Global sales of weightcontrol products and services will jump from $64 to $77billion by 2002” (Source: Marketdata Enterprises, 1998).


Companies in Nutraceuticals (from

SCRIP Report BS1017)

• “BASF Health and Nutrition is the worlds second largest supplier ofvitamins, carotenoids, long-chain polyunsaturated fatty acids andpremixed nutrients to the pharmaceutical and food industries.”(Source: SCRIP Report BS1017)

Boehringer Ingelheim Nabisco Food GroupAmerican Home Products Procter & GambleBayer Corporation Kraft General FoodsWarner-Lambert Campbell FoodsSmith-Kline Beecham LiptonNovartis Kellogs


Growth drivers

• Social and demographic trends– Increasing number of elderly (longer life expectancy)– Reduced physical activity (life style and work)– Increased health consciousness in all income segments

• Health care costs– National health budgets in developed countries suffers from increased spending on life style

oriented diseases– Increased focus on preventive food by public health authorities

• Consumer knowledge– A higher level of nutritional knowledge and demand for natural food

• Preventive medicine– Wholesome and healthy high quality natural products as a replacement for pharmaceuticals

and artificial/synthetic additives

Functional food is the leading growth segment in the global food industry


CLA Targets F(x)Food

• Cereal products• Breads/Biscuits• Formulas

– Hospital formulas– Infant formulas

• Fortified products– Vegetable oils– Ingredient mixes– Salad dressings

As a natural lipid component CLA can combine andsubstitute in all foods where fats/lipids are ingredients.

• Dairy products– Yoghurt– Cheeses– Butter– Spreads

• Confectionery products– Energy/Chocolate Bars– Ice cream– Shakes


SUMMARYNatural

CLA & BAPUFAStrategy


StrategyNatural will:

• Explore lipid technologies Bioactive Lipids• Expand the business model New Functional ingredients• Sell technology licenses to Feed and Food

the ingredient industries

• Short term (2000 - 2002)– Further research on CLA/Isomer applications & continued patenting– Further development of CLA for food through R&D and distribution

alliances

• Medium term (2001 - 2004)– BAPUFA/NBAL: Proof of concept(s) in targeted markets

• Long term (2002 - 2007)– Extend business model and MO through alliances and/or acquisitions


Summary• Natural ASA is a Nutritech company with a unique

position in high value (IPR protected) bio-active lipids(CLA) for use in:– Animal Feed & Food, (Pharma and Cosmetics)

• CLA is a natural substance with multiple bio-activeisomers that can:– be tailored in chemical composition– to have a range of very relevant use areas (indications)– within very large commercial market areas in feed and food.

• Animal feed potential ranges $250 mill. - $1+ bill./yr• Functional food potential ranges $350 mill. -> $2 bill./yr

Documents

The good fat company Introduction - Hugin Onlinereports.huginonline.com/784083.pdf · The good fat company Introduction • Natural ASA is a Nutritech company with a unique position