TRANSFORMING THE HEALTH & WELLNESS INDUSTRY - November 2019
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TRANSFORMING THE HEALTH
& WELLNESS INDUSTRY
November 2019
1
NASDAQ/TSX: NEPT ▫ Headquartered in Laval, Quebec, Canada
CAUTION REGARDING NON-IFRS FINANCIAL MEASURES
The Corporation uses two adjusted financial measures, Adjusted Segment Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted Segment EBITDA) and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) to assess its
operating performance. These non-IFRS financial measures are directly derived from the Corporation’s financial statements and are presented in a
consistent manner. The Corporation uses these measures for the purposes of evaluating its historical and prospective financial performance, as
well as its performance relative to competitors. These measures also help the Corporation to plan and forecast for future periods as well as to
make operational and strategic decisions. The Corporation believes that providing this information to investors, in addition to IFRS measures,
allows them to see the Corporation’s results through the eyes of management, and to better understand its historical and future financial
performance.
Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have
standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be
considered in isolation. The Corporation uses Adjusted Segment EBITDA and Adjusted EBITDA to measure its performance from one period to the
next without the variation caused by certain adjustments that could potentially distort the analysis of trends in our operating performance, and
because the Corporation believes it provides meaningful information on the Corporation’s financial condition and operating results. Neptune’s
method for calculating Adjusted Segment EBITDA and Adjusted EBITDA may differ from that used by other corporations.
Neptune obtains its Adjusted Segment EBITDA measurement by adding depreciation and amortization and stock-based compensation to segment
income (loss) from operating activities before corporate expenses. Neptune obtains its Adjusted EBITDA measurement by adding to net income
(loss), net finance costs and depreciation and amortization and by subtracting income tax recovery. Other items such as stock-based
compensation, litigation provisions, acquisition costs and severance and related costs that do not impact core operating performance of the
Corporation are also added back as they may vary significantly from one period to another. Adjusting for these items does not imply they are non-
recurring.
2
CAUTIONARY NOTE AND FORWARD-LOOKING STATEMENT
Statements in this presentation that are not statements of historical or current fact constitute ‟forward-looking statements” within the meaning of the
U.S. securities laws and Canadian securities laws. Such forward-looking statements involve known and unknown risks, uncertainties, and other
unknown factors that could cause the actual results of Neptune to be materially different from historical results or from any future results expressed
or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged
to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "will," "should," or "plans" to be uncertain and
forward-looking. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this
presentation. Forward-looking information in this presentation includes, but is not limited to, information or statements about our ability to
successfully develop, produce, supply, promote or generate revenues from the sale of cannabis-based and hemp-based products in the legal
market.
The forward-looking statements contained in this presentation are expressly qualified in their entirety by this cautionary statement and the
‟Cautionary Note Regarding Forward-Looking Information” section contained in Neptune’s latest Annual Information Form (the ‟AIF”), which also
forms part of Neptune’s latest annual report on Form 40-F, and which is available on SEDAR at www.sedar.com, on EDGAR at
www.sec.gov/edgar.shtml and on the Investors section of Neptune’s website at www.neptunecorp.com. All forward-looking statements in this
presentation are made as of the date of this presentation. Neptune does not undertake to update any such forward-looking statements whether as
a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also
subject generally to other risks and uncertainties that are described from time to time in Neptune public securities filings with the Securities and
Exchange Commission and the Canadian securities commissions. Additional information about these assumptions and risks and uncertainties is
contained in the AIF under ‟Risk Factors”.
3
NEPTUNE TODAY
Cannabis
One-stop-shop for
Plant-based solutions for the extraction, purification, and
Health & Wellness industry formulation of cannabinoids
in North America
Health &
Wellness
4
CORE COMPETENCIES GROUNDED IN
EXTRACTION AND FORMULATION…
Food grade GMP
Forms and delivery Clinical
certified facility Condition specific
system research
formulations
Highly automated Strict processes Global Proven cold ethanol
Facility and standards ensure distribution extraction process
quality control
Relationships with leaders
Oil extraction in Retail, Vitamin, and
expertise Supplement industries
5
…HAS ENABLED CANNABIS MARKET PENETRATION AND PROVIDED THE
FOUNDATION FOR SIGNIFICANT HEALTH & WELLNESS EXPANSION
Jul 2019 Sep 2019
Michael Expanding U.S.
Cammarata is customer base
named
President &
Jun 2019 CEO
TGOD multi-
year
Mar 2019 extraction deal
Initiated
commercial
production Oct 2019
and shipping Collaboration
Jun 2018 of cannabis Aug 2019 with IFF
Canopy Launch of
Growth multi- Neptune
year Ventures
Apr 2017 extraction deal Jul 2019
Health Canada Closed
application acquisition of
Jun 2019 SugarLeaf Labs
Tilray multi-
year
Jan 2019 extraction deal
Health Canada
processing
licence
Aug 2017 received
Exits krill oil
manufacturing
6
SIGNIFICANT NORTH AMERICAN CAPACITY TO ADDRESS DEMAND FOR
PLANT-BASED PRODUCTS
Fully-automated, modern, large scale Newly acquired, modern, hemp processing facility
extraction facility licensed to process Cannabis located in North Carolina
1,500,000 kg capacity to process biomass using 1,500,000 kg capacity to process biomass using
cold ethanol technology1 cold ethanol technology2
Good Manufacturing Practices (c-GMP) 3,000,000 kg Sources hemp cultivated by licensed American
capacity3
certified for nutrition products growers conforming with federal and state
regulations
EU GMP certification underway 1,500,000 1,500,000
(by 1H CY 2020) Hemp-based products have surpassed the Vitamin
E category and are on track to overtake the
In-house quality control lab and R&D lab with 1,300,000
Omega-3 category
full testing capabilities 200,000
30,000
170,000 Hemp-based platform focused on Health and
Phase I Phase II Phase IIIA US Wellness is a natural extension of what Neptune
(Q1 CY 2020E) has specialized in for over 2 decades
1 Retrofit expected to complete before fiscal year end, March 30 2020; Health Canada approval needed thereafter
2 Post expansion, construction expected to be complete by end of CY2019
3 Post expansion & once approvals are received 7
COLD ETHANOL EXTRACTION DIFFERENTIATES NEPTUNE’S PROCESS
COLD ETHANOL EXTRACTION PRODUCES NUTRIENT RICH, COMPLETE, FULL SPECTRUM EXTRACTS
WHILE MAINTAINING A LOW CARBON FOOTPRINT
Ethanol extracts more plant substances than CO2, which misses valuable compounds such as some
phytocannabinoids and terpenes
Competitors turn to CO2 extraction because of the large start-up capital expenditures required for cold
ethanol equipment. However, Neptune has been executing this process for over a decade
>5x faster Cold Ethanol vs. CO2 Extraction
winterized oil
process
>2x less
energy
consumption
Greater recovery
of cannabinoids
and terpenes
8
EMERGING AS THE PREFERRED ONE-STOP-SHOP
SUPPLIER OF CANNABIS PRODUCTS
Multi-year deal signed June 2018 3-year deal signed June 2019 3-year deal signed June 2019
Supplement Canopy Growth’s Minimum volumes of 125,000 kg Minimum volumes of 230,000 kg
extraction, refinement, and
Extraction services to produce Extraction and purification of
formulation capacity
crude resin, winterized oil, and cannabinoids from cannabis and
Represents an important distillate extracts hemp biomass
milestone in Neptune’s transition
Formulation, manufacturing and
Highlights Neptune’s capabilities packaging of several product
to capture the growing cannabis forms: capsules, tinctures, sprays,
market opportunity topicals, vape pens, shots, teas
Neptune to seek organic
certification with TGOD assistance
9
GROWTH STRATEGY TO ACHIEVE VISION
VISION: Become a leading supplier of cannabinoid
extracts, ingredients, and finished products to the
Health & Wellness and CPG industries Increase Processing Capacity
in North America and Internationally
Expand Customer Base into Global CPG and
Health & Wellness
Innovate to Create New Product Forms
Acquire Unique Delivery Forms & Technology
Develop Strategic Partnerships through
Neptune Ventures
10INCREASE PROCESSING CAPACITY IN NORTH AMERICA
AND INTERNATIONALLY
Two modern, large scale extraction
+ 1.5 mm kg
Canada
facilities utilizing cold ethanol technology
Future Processing Capacity1
Sherbrooke, QC
1.5 mm kg
U.S.
Future Processing Capacity1
1,200 / hour2 1,200 / hour2 200 mm / year2
Charlotte, NC
1 Retrofit expected to be complete before fiscal year end, March 31, 2020; Health Canada approval needed thereafter
2 Production of finished product forms in Canada expected to commence in Q4 CY2019 11EXPAND CUSTOMER BASE INTO GLOBAL CPG AND HEALTH & WELLNESS
$6 bn1 +$5 bn2 $5 bn1 $2 bn1 $4 bn1 $3 bn1
Nutraceutical Cannabis Personal & Cosmetics Pharma Food &
& Wellness Industry Home Care Beverages
1BrightfieldResearch Group, 2018 U.S. CBD Market Size
2Company estimates of US CBD market and Canadian THC market
12INNOVATE TO CREATE NEW PRODUCT FORMS
Create New Edibles Home Care Topicals
Product Forms
Leverage in-house & 3rd Party
R&D Capabilities
Beverages Personal Care Vapor Products
Identify New Uses for Cannabis Aligned with “Neptune’s extraction expertise and
Consumer Demand pharmaceutical and biotech background
positions us to transform the cannabis
ecosystem and identify new uses for the whole
cannabis plant.”
Moving Closer to the Customer
– Michael Cammarata
13ACQUIRE UNIQUE DELIVERY FORMS & TECHNOLOGY
Tomorrow
Cutting Edge Extraction
Technology
Formulation &
Manufacturing Expertise
White Label Offering
Licaps Capsule
Technology
Today Water Soluble
Cutting Edge Extraction Technology
Technology
Formulation & New Delivery Forms
Manufacturing expertise
White Label Offering Absorption Technology
Licaps Capsule Technology Consumer Facing Brands
14DEVELOP STRATEGIC PARTNERSHIPS THROUGH NEPTUNE VENTURES
Strategic Partners
Stimulates innovation and partnerships in the Health & Wellness industry
Allows for investments alongside customers in new products and technology to offer additional value
Develop advanced intellectual property and creative solutions
Create turnkey solutions to expand brands down the road
15SUMMARY FINANCIAL PERFORMANCE
Q2 FY2020¹
Income Statement
(in thousands of CAD $) Nutraceutical Cannabis Corporate Consolidated
Revenues 5,149 1,220 143 6,512
Adjusted EBITDA 684 (1,740) (3,525) (4,581)
Net income (loss) - (20,775)
Income Statement Q2 FY2019¹
(in thousands of CAD $)
Nutraceutical Cannabis Corporate Consolidated
Revenues 7,071 - - 7,071
Adjusted EBITDA 1,465 (1,318) (1,375) (1,228)
Net income (loss) - (3,050)
Note: 1 CAD : 0.76 USD
¹ Nutraceutical and Cannabis are two segments of Neptune. The corporate column represents unallocated costs which are corporate G&A expenses, net finance costs
and income taxes. 16LIQUIDITY PROFILE
Financial Position September 30, 2019 June 30, 2019
(in thousands of CAD $) ¹ ² ³
Cash, cash equivalents and short-term investments 24,399 5,375
Total debt - 4,567
Net cash position 24,399 808
Note: 1 CAD : 0.76 USD
1 On November 6, Neptune closed a revolving line of credit for an amount of $5 million
2 Neptune owns 2,964,695 common shares of Acasti (ACST – TSXV) valued at $5,870 as of November 7, 2019
3 As at March 31st 2019, Neptune has tax losses carried forward of $56,342 and R&D tax credits amounting to $27,690
17NEW LEADERSHIP WITH EXTENSIVE
CONSUMER PRODUCT INNOVATION
EXPERIENCE
Michael Cammarata joins Neptune as President and CEO
Successful entrepreneur and innovator in the Wellness
industry
Previous CEO and Co-founder of Schmidt’s Natural, one
of the world’s fastest growing wellness brands,
acquired by Unilever in 2017
Extensive knowledge of the CBD space with the launch
of Schmidt Natural CBD & hemp deodorants in 2019
18EXECUTIVE TEAM
Michael Cammarata Jean-Daniel Bélanger Martin Landry
President , CEO & Board Member Vice President, Legal & Corporate Affairs Chief of Corporate Development &
Strategy
• CEO of Schmidt’s Naturals acquired • Former securities law firm partner
• 20 years in capital markets and
by Unilever in 2017
• Member of Quebec Bar since 2006 accounting
• Founder of Random Occurrence, a
• Former Managing Director with
venture capital and private equity
GMP Securities
firm.
Claudie Lauzon, CPA, CA François-Karl Brouillette Marc Vaugeois
Interim Chief Financial Officer Vice President, Science & Innovation Vice President, Sales Nutrition
Nutrition Business Business
• Corporate Controller, Neptune
• Masters degree - Organic Chemistry • + 25 years in health &
• Manager, KPMG nutrition industry
• + 15 years in nutrition
Michel Timperio Jackie Khayat Graham Wood
Chief of Global Business Development
Vice President, Bus. Development Chief Scientific Officer
• Responsible of BD for last 16 years
for Neptune • 15 years in nutrition & healthcare sales • Former Chief R&D Officer at
Altasciences
• Executive MBA at Concordia University
• Former CEO at Manna Research
• Formally of 3M Canada
19BOARD OF DIRECTORS
John Moretz Michael Cammarata Hélène F. Fortin
Chairman of the Board President , CEO & Board Member Director
Moretz
Marketing
Rick Schottenfeld Philippe Trudeau Dr. Ronald Denis
Director Director Director
Schottenfeld Group LLC
20 20APPENDIX
APPENDIX
MARKET
MARKETDATA
DATA
21EXTRACTS DOMINATE MANY DEVELOPED CANNABIS MARKETS
Gel capsules
40%* 60%¹ Beverages
Topicals
EXTRACTS
Cannabinoids are extracted from
the plant and then used in a wide
Vape pens
range of products
FLOWER
Smoked
Edibles
¹ BDS –U.S.Market data (California) June 29th, 2018
22THE CURRENT U.S. MARKETPLACE
TYPES OF PRODUCTS AND CONSUMER PURCHASE BEHAVIOR
Examples of
Hemp/CBD
Consumer
Products¹
Tinctures Softgels Balms/Lotions Vapes Gummies Water Chocolates Dog Treats
Dietary Supplements Cosmetics Inhalables Food and Beverages Pet Supplements
Edible Oil 38%
Capsule or Pill 22%
What Format of Chocolate/Candy 17%
Hemp/CBD Tincture 16%
Salve or Lotion 13%
Products are Tea Extraction vital to
9%
Consumers
Purchasing?
Beverage
Powder 8%
9%
hemp/CBD segment!
None of these 7%
Source: Informa, 2019. Purchase Behaviour
Among Consumers Who Have Purchased CBD, Adding to a Beverage (such as coffee) 7%
The Hemp & CBD Guide. Nutrition Business
Journal
Other 6%
Dog Treat 5%
Spray 5%
23
n=332LEVERAGING OUR
EXTRACTION &
FORMULATION EXPERTISE
TO TRANSFORM THE HEALTH
& WELLNESS INDUSTRY
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