Evolva Holding S.A.

Neil Goldsmith - CEO Oliver Walker - CFO Paul Verbraeken - Head of IR

Carla Baenziger - Vontobel

Thank you and good morning everyone and thank you for your time. I've to give an update on our 2016 report.

I have with me in the room myself and Oliver our CFO from December onwards; and Paul Verbraeken, Head of Investor Relations. So, I'm going to go shortly through the business section, hand over to Oliver for the financials and then as mentioned go to Q&A.

I assume that everyone has the Slide deck that was on our website and that's what I'm going to use for that discussion. So, with no further ado, if we go to the business section and the first slide, just to remind everyone Evolva's focus is to make ingredients that provides significant benefits in particular to consumers, but to end users in their daily life.

So I'll focus on three ingredients specifically Stevia, which allows you to reduce or remove sugar in your drinks or your food, Nootkatone that is component to great food, but it is particularly important because it's very good at killing and repelling a range of insects and related pets such as the ticks that gives you Lyme disease and Resveratrol that has been shown to have very significant benefits in the range of heath applications of relevance to both consumers and for example pets. So to turn to these three products in term, if you go to the next slide, EverSweet which is our joint product with Cargill and for Stevia, we see the fundamental markets driving for EverSweet remaining strong, continued pressure to reduce sugar and other caloric sweeteners from food and drink.

We know that EverSweet significantly improves and resolves the taste issues of the current Stevia products and that’s been validated now by many, many potential customers and we see the society introducing taxes and other penalties to try and encourage the adoption of zero calorie products. EverSweet is on track for 2018 launch, no change from January.

We've had -- in during course 2016, we had key patent growth in the EU and the USA and what our patent state is now up to 13 granted and 81 pending patents. So, we believe we’re building a very strong IP position around the products.

We got -- the Cargill got the FDA No-Objection Letter during the course of 2016. So, the product is clear for launch.

And our cost of goods as we've updated during the quarter of 2016 has continued to improve in that period and continues to do so. We see the addressable market of EverSweet is unchanged, is around $4 billion, assuming that it would create about half of the high fructose corn syrup and 10% of the sugar using beverages today and has no use in any other products such as chocolates or baked goods through additive course will be that it does have used that, but we've constructed that market assumption based on just looking at beverages.

And then I guess the one piece of news on EverSweets from January is that, we announced this morning that we expect to announce on our agreement with Cargill next week and we're not going to give further information on that now, but we will be organizing a conference call and similar when we have the announcement next week. So, if we go to the next product, Nootkatone, we know how it's selling into the flavor & fragrance market.

The main economic potential is in insect control for ticks, the mosquitoes, the bedbugs are wide range of obnoxious pests, and there are of course important threats such as Zika which remains an issue and you would expect to see resurgence of that in the United States as the summer develops. So, we’ve seen our first revenues, we have an attractive cost of goods, a position of many other products.

We have the EPA registration process is proceeding on track and we expect approval in 2018 and we've also commenced similar activities in number of other countries with a focus on East-Asia and South America. We have active support from the U.S.

Centers for Disease Control with the organization is initially sort of developed out for potential of Nootkatone against ticks and from NIH in various studies. We have in excess of 50 discussions with the potential customers for insect control of course we won’t see sales there until we start having the regulatory approvals.

We continue to see the revenue potential as in excess of a $100 million for the product as we see there are sort of unmet needs in many areas that Nootkatone we have shown addresses. Next the step of course will be the EPA approval in insect control.

If we turn to Resveratrol, as I am sure everyone knows on the call associated with the health benefits of red wine. I think it’s very encouraging that we continue to see more and more studies, showing the benefits of Resveratrol.

Two recent months for examples have shown that Resveratrol reduces the rate at which lungs age and hence potentially reduces damage in sort of that occur with as you ageing your lungs such as asthma and COPD. And also it's been shown that Resveratrol actually slows the ageing of synapses and in particular neuromuscular junctions.

And so, in principle has a potential to support your nervous system and maybe even your intellect as you go into later life. So, we’ve seen the first revenues as a nutritional supplement, we had bottleneck on production with one of our CMOs in the first part of 2016, but that now being removed.

We started to have web sales in the second half of 2016 and we see that will continue to grow and we see in general the commercial pipeline for the product building strongly. Again, we see the revenue potential as in excess of a 100 million.

As some of you know, we have a slight breakout potential on that because somewhat to our own surprise. The U.S.

Navy and the US Air Force have demonstrated the preliminary Resveratrol is extremely interesting composite material with very good far retardation and heat resistance properties, and we are working with them to further explore that and maybe if that comes through, we’ll provide significantly larger potential than the 100 million plus. Really, Resveratrol now is on the course of just, if you like to writing out additional applications as driving into the markets, pushing it forward in a commercial strategy.

One key part of that is we’ve now developed the Veri-te brand for Resveratrol, which we see as a distinctive brand that is in line with the focus of healthy ageing as the key characteristics for the molecule. So, if you move to the next slide, really this is just to summarize the two key things that we’re focused on commercially over the next year or so, which is to keep taking down our production costs as mentioned our strategy in general is to be launch, when we're breakeven on a sort of manufacturing level for the products and then continuingly improve the year, continued improve with the purification process as we go to improve margin.

And then the other focus is to keep developing new applications and new formulations of the product to drive new usages and to drive for value potential customers. And so for example is one -- example of that we’ve shown now that really quite low concentrations of Nootkatone kill the larvae of the Yellow fever mosquito and this is as we said important because larvae of mosquito is breathing in water is a major problem around the world.

And in fact the Nootkatone is a product that you can drink means adding it to water is something that would be very compatible with providing safety against mosquitoes, but also providing safety to the eventual drink of that water. So, that was a quick I would say summary of the key products -- products we have where they are up they are and where they're going.

With that, I’m going to hand over to the Oliver to talk through the financials.

Thank you, Neil. Good morning, everyone, on the phone let me give you some more flavor around our financials and look at the Company a little bit from an economic view point as well.

First to revenues, if you can see still the majority of our revenues are related to R&D project. There again to also highlighted the shift that has becomes in 2014 more towards project, which are financed on a 50-50 basis in order actually to preserve the upside in the long run.

And one big example and we have already mentioned it, announce in next week at TDR in this respect. If we vote for analytical purpose, take out the more let’s say bigger amount in the revenues on R&D related project in 2015 and 2016 then you will see that the underlying R&D project related revenue was pretty consistent.

In 2015, we have what it's shown on PowerPoint three some of the revenues of extraordinary in nature coming from some sale of some compounds. And in 2016, we have two big actually milestone payments from Takasago as we have already communicated the last communication early March 2017 on this project.

So that’s the consistent business going forward and in 2016 therefore was no big change actually over 2016. In terms of product revenues, you can see that there was sort of little ramp-ups becoming actually visible.

We will still call it certainly small over the potential that also especially Neil now before has just pointed out. So, it’s only the beginning what you actually are seeing reflected also in our financials 2016 and to perhaps put some additional life on this revenues is that in 2016 Nootkatone-Resveratrol was more or less balanced, but not giving any big indication in terms of the longer term at potential because we have actually just begun with both product Nootkatone and Resveratrol to really commercialize them.

One thing that was certainly limiting in 2016 preventing from perhaps lighter, faster ramp-up was that Resveratrol was supply limited because of the CMO switch that we have on the taken. In the meantime, operation is running smoothly again as there are no supply limitation to anymore in place.

So, sales actually and the bottlenecks there becomes a limiting factor again. Nootkatone, as we have already commented the whole reformulation takes, which we still call it now longer than expected.

I think we are just making inroads it’s also into this area of activity in the Company. The total regulatory activities getting approval, seeking approval of competent bodies on the government and in various countries and what we see certainly, this is not only important, but also quite the time consuming activity specially in the case of Nootkatone therefore it’s not so easy.

Commercial pipeline building, Neil already mentioned that, for you, it’s not yet that visible that’s the commercial pipeline is building, not materializing yet in revenues. We have salesforce.com, the tool that we are using, we have very how to say differentiate detailed sales funnel to sales process establish in salesforce.com, and we can actually see that we have increasing numbers of customers traveling through this pipeline.

It will still take time as you can see out of our guidance also for 2017, unless bigger revenues are being -- how to say sort of visible on the revenue line. On the top-line, if you think of all the let’s say process steps to around through, we have this all regulatory before you have to do some application development then the regulatory then you have actually the first space of contacting customers.

It takes some time until you have conversion you end up with regular reorders and then still it will take some time until the full commercial potential in a single customer account sort of reached. And this is mid-year actually that we talk about and now again going back to when Nootkatone and Resveratrol have been launched, Resveratrol first sales in 2015.

So we are sort of good 1.5 years in the market, and with Nootkatone actually it was August 2015, so also good 1.5 years, let’s say in the market and therefore it’s always very natural potential sets that we see the pipeline building, but it still takes some time until actually revenues are starting to ramp up in the fact of pace. Let’s switch over to operating expenses.

There, I think if you would look into details and what is clear quite prominent in 2016 were all the efforts around Stevia. All the activities around Stevia, but also these regulatory activities around Nootkatone, some late-stage R&D activities around Nootkatone as well as Resveratrol are becoming actually more and more important.

What you cannot find in the slide deck by the way is sort of a profit analysis for obvious reasons. Yes, we're not yet how to say having reached critical math, but one thing which is becoming quite nicely clear is that gross profit margin was based on current ASPs, revenues and also manufacturing costs, we have hit the breakeven point and we are starting to build actually positive margin there, so expanding our profit margin.

When we go into the different functions then I think action day why is there an increase especially because of commercial tax that has increased. It's clear that in order to really make sure that we can build this commercial pipeline, you need people that are active and in constant contact with our customers.

There're many customers, so we need also enough people hit on the street, but also some support staff around these people on the street supporting them in all the customer activities. Nootkatone regulatory activities, as I mentioned an important one and also one of the bigger elements actually of this action day, expenses in 2016.

Manufacturing costs, this is quite clear why they're increasing I mean we have increasing volumes, so therefore also increasing cost of sales. And on the other hand what we can say and this is chiming into the earlier comment of gross profit margin, we are clawing forward making actually further progress in lowering costs per kilogram and this journey will also not end for quite some time.

I think in this industry, this is anyway a constant effort that you are undertaking many times for many years still to optimize cost per kilogram. R&D expenses, I already mentioned Stevia being quite prominent.

In the other end, it is such that in 2015 actually we have this non-recurring charge of 2.9 million. So, if you take that out, we have pretty how to say consistent running expenses 2016 over 2015, and only a very modest increase on it.

Let's switch over to cash flow. Cash flow is simple reconciliation of how starting cash was translating eventually into end cash of 47 million.

The different elements also quite obvious, financing is related to lease agreements but the bigger part of the 1 million is actually amortization payments in it. The CapEx is related to lab equipment and the operations very up is the 50 cash flow that we have generated on the P&L.

So together with the SEDAR, financing facility that we announced also just recently, we feel that we have a very sound spaces getting actually into 2017. Let's move over to stock information, I think what we can record with some satisfaction is that the liquidity around our stock actually has been good over the full year of 2016 and continuous to be good.

On a positive note and other positive note is that our main shareholders Aviva and Pictet have increased their stake over or through 2016. But if you look at the share price evolution, certainly this is heavily impacted by all the news around Syria and I think also on this call we don’t want to actually miss the opportunity to emphasize that various Resveratrol and Nootkatone as well, and given that we're seeing commercial pipeline actually filling more and more.

I think this should become also of a bigger emphasis when looking at our company. That was it to the financials now summary report 2017 respectively an outlook, not a very lengthy explanation on that one.

You can attach certainly right all the different bullet points also the press release. The first one Cargill agreement expected to announce next week, that’s what we want to say today at this.

Products revenues maintained growth dynamic, this change in to my comments earlier that’s why the commercial pipeline is actually filling more and more, it takes time until actually fast the ramp of sales will become visible. So therefore, we expect 2017 to be in terms of dynamic more or less broadly around 2016.

Operating cash outflow, you should expect that it remains pretty much on the current levels. And an additional comment on the commercialization, certainly we will enter into more and more commercial agreement on Nootkatone and Resveratrol in various markets and geographies to build actually our market for those.

We expect in 2017 two to three new R&D partnerships in course of the year being able to enter into, that’d to how to say ongoing efforts of our company to keep up actually also base activity. And the last but not least I think just in terms of looking at our company, what is our company as we're marching more and more towards commercialization activities, certainly also the elements within our total cost is shifting more and more to let's say more late-stage R&D effort.

And on the other hand certainly the whole commercial efforts which are related to sales and marking, and one big element in this certainly remains as well to constantly optimize our cost of goods sold, so the manufacturing cost is especially per kilo gram. Now with this, I'll hand it back to Neil.

Thank you Oliver and I don’t have much to add to the outlook, really just to say that its I guess whole part of this shift we're going through from what was a couple of years ago really just an R&D company, to a company that now has its own manufacturing and its own sales and is becoming much more focused on providing sort of attractive products with a quick margin to new customers. And so with that, I think we finish sort of presentation part.

And we will hand back to the operator and to you for questions.

Hi good morning gentleman and I have several ones, the first one just to check whether I understood you correctly. So you said that the safe place between Resveratrol and Nootkatone was about 50/50?

Is that correct?

Yes, more or less balanced. I mean it’s not exactly 50/50.

No, no but roughly. And then would you expect growth in 2017 to be a bit faster for Resveratrol and Nootkatone.

Is that also a correct assumption?

No disclosure on that end and it's also actually if you look at our how to say continuing effort building the pipeline, one could be faster than the other, but it could be by first as well.

Okay, and do you expect any regulatory approval of Nootkatone in certain geography in 2017 already? Or is the first approval that you expect the one in the U.S.?

I think there was a possibility of some approvals in 2017, but if they do occur, I don’t think it's going to be in countries where that would then result in a significant sales driver. So, I think the real focus should be seeing this 2018.

Okay. And then maybe the last question on looking at your largest customer, it seems that basically there is three customers cover all the project revenues.

Is that a correct assumption or are there some other contributors there?

There were other contributors but of course as you can see from the analysis there were three companies that are significant.

What I would like to know is you said that with Nootkatone and Resveratrol sales it's lower in 2016 also due to problems with customers and their demand. So, how did you manage to change the opinion to increase demand to make -- to increase interest of customers?

And then do you expect that to I mean this development of picking up to continue in 2017? Thank you.

I need to correct the misunderstanding there. I mean we don’t see any problems with customer demand rather the opposite.

It is much more about the rate at which we can move customers through which you like the holding valuation and purchasing process. Takes quite some time and depending on the product they have to not only evaluate the product and make sure it works in the hands but then they of course need to check all the supply chain documentation that we have, so that they are comfortable only with the risk elements and quality elements on that.

Then they will need to look at potentially reformulating some of the existing products to use ingredients than they will have an existing supply chain that they may need to rundown before they start to use our products. So, it's not, again I stressed the country, we see the underlying demand is very strong.

But working with a customer through all that process takes some considerable time.

The next question is from Michael [indiscernible]. Please go ahead.

Just one question according to the Cargill [indiscernible] [0:27:41.1] perhaps can you say once again where do have or had to negotiate with Cargill, I do know are there any?

So, it is really being about getting to agreements on the commercial structure, on EverSweet and how we share the returns and the costs. And then as mentioned in January, we’ve been looking at the opportunities to use the collaboration with causing on Cargill on EverSweet to also potential others to have production up for other products to make them to take cost out and to provide a strong scalable production location for our products.

So, it’s really been discussing those two things with Cargill that we’ve been spending the time on.

Okay. Thank you, everyone and I guess we may see some of you next week and but in the meantime, thank you for time and goodbye for now.

Goodbye.