Opportunities for

Novozymes’
Bi B i
BioBusiness
Carnegie
g p presentation

19/02/2009
2 18/02/2009 NOVOZYMES PRESENTATION

Our organization

Steen Riisgaard
President & CEO

Finance, IT & Legal Stakeholder Relations

Benny Loft Thomas Nagy
EVP EVP

E
Enzyme B
Business
i C
Corporate R&D Bi B i
BioBusiness
Peder Holk Nielsen Per Falholt Thomas Videbæk
EVP EVP EVP
3 2/18/2009 NOVOZYMES PRESENTATION

BioBusiness unifies non-enzyme activities

Microorganisms

Hyaluronic acid
BioBusiness is the
vehicle that
Biopolymers leverages
Enzyme Business
Novozymes’
Novozymes
Biopharmaceutical capabilities to build
ingredients new and significant
b siness o
business outside
tside
Business enzymes
development
4 18/02/2009 NOVOZYMES PRESENTATION

BioBusiness’ business platforms

5 18/02/2009 NOVOZYMES PRESENTATION

BioBusiness’ business areas

Microorganisms Biopharmaceutical Business

ingredients (BPI) Development &
Acquisitions
Microorganisms Biopharmaceutical Acquisition,
for industrial & products &
p integration
g work &
agricultural technologies, business
applications biopolymer …. development

Leveraging Novozymes’’ core capabilities

bl off
ƒ Molecular biology, bioinformatics and system biology
ƒ Screening
ƒ Industrial
I d t i l scale
l ffermentation
t ti
ƒ Delivering technology to market
6 18/02/2009 NOVOZYMES PRESENTATION

MICROORGANISMS
7 2/18/2009 NOVOZYMES PRESENTATION

Microorganisms
- our competencies and capabilities
ƒ Microbiology assay technology,
technology strain
collection and experience in isolation of
microorganisms
ƒ Bioinformatics and genome sequencing
ƒ Classical mutagenesis and robotic screening
ƒ Combination of microbial physiology and plant
physiology
h i l tto establish
t bli h new ground
d ffor using
i
microorganisms
ƒ Metabolic engineering for more efficient
production
ƒ Formulation technology
8 18/02/2009 NOVOZYMES PRESENTATION

Microorganisms
- Timeline

Acquisition of Philom Bios

Acquisition of EBS
Acquisition of Gamlen France
Agriculture market
Asia Pacific Expansion
Acquisition of Roots
Acquisition of Semco
A
Acquisition
i ii off Interbio
I bi
Acquisition of George A Jeffreys

2000 2001 2002 2003 2004 2005 2006 2007

9 18/02/2009 NOVOZYMES PRESENTATION

Microorganisms
– Products and markets

Novozymes Biological products

are p
primarily
y used within:
ƒ Institutional and household cleaning
ƒ Wastewater treatment
ƒ Agriculture
ƒ Aquaculture

B
Brands
d
ƒ Roots™, Bi-Chem™, BioScrub™, Actemia™,
Novo BioClean™, StandUp™, JumpStart®
and
d many more

Customers
• Industrial customers selling/or formulating
products for the end-user
10 18/02/2009 NOVOZYMES PRESENTATION

Microorganisms
- Bioagriculture (BioAg)

ƒ Bio-fertility
ƒ Products that help crops access and/or more efficiently use
macro nutrients (N, P, K)
ƒ Nitrogen-fixing inoculants for legume crops (N-Prove)
Microbial-based
ƒ Phosphate solubilizing inoculant (JumpStart®)
solutions help the
world’s farmers ƒ Nitrogen-fixing and phosphate solubilizing (TagTeam®)
produce more and
better output while ƒ Bio-pesticide
minimizing
i i i i th
the ƒ to replace traditional herbicides, fungicides, and insecticides
environmental
footprint ƒ for organic growers and rotational options for
sustainable/conventional growers
ƒ Taegro (biofungicide), Met52 (bioinsecticide)

ƒ Bio-yield enhancement
ƒ that stimulates various underlying biochemical pathways
related to enhancing the growth and yield of crops
11 18/02/2009 NOVOZYMES PRESENTATION

BIOPHARMA-
CEUTICAL
INGREDIENTS
12 2/18/2009 NOVOZYMES PRESENTATION

Biopharmaceutical ingredients
- our competencies and capabilities

• Screening
S i
• Expression technology
• Industrial scale
fermentation
• Delivering technology to
market
13 18/02/2009 NOVOZYMES PRESENTATION

An example - Plectasin

How it started:
ƒ Fungus
g P.nigrella
g found in Northern European
p pine forests and
p
routinely screened for novel fungal-secretory proteins
ƒ Resulted in identification of Plectasin wt, potential anti-bacterial
drug candidate

How it progressed:
• NZ2114 (improved potency) isolated by screening of
>600,000 variants generated by protein engineering
• Expressed in Aspergillus Oryzae

Where it is going:
ƒ Collaboration with
ƒ Joint work to develop and implement commercial-scale manufacturing
of Plectasin NZ2114-building
14 18/02/2009 NOVOZYMES PRESENTATION

Biopharmaceuticals
- Timeline

Agreement with Sanofi-Aventis

Agreement with ConjuChem

Strategic alliance with Milipore

Global sales office in Cambridge MA

Acquisition of GroPep Ltd

Acquisition of Delta Biotechnology

Agreement with Solvay

Acquisition of CMO
CMO-capabilities
capabilities from Biogaia

2000 2001 2002 2003 2004 2005 2006 2007

15 2/18/2009 NOVOZYMES PRESENTATION

Biopharmaceuticals
– Products and markets

Novozymes Biopharma’s products

are primarily used:
ƒ as excipiens
ƒ in medical devices
ƒ in industrial cell culture

ƒ AMP
ƒ Albufuse
ƒ Yeast expression
ƒ Partner development (e.g.
(e g Solvay)
ƒ cGMP contract manufacturing

Customers
ƒ Pharmaceutical companies
ƒ Biotech companies
16 18/02/2009 NOVOZYMES PRESENTATION

CONVERSION OF
RENEWABLES
17 2/18/2009 NOVOZYMES PRESENTATION

Novozymes vision is to deliver bioinnovations

Novozymes’
in the coming biobased society
18 2/18/2009 NOVOZYMES PRESENTATION

1
Beyond fuel ethanol We can modify the
fermentation
process

Bioenergy,
transport
…

Starch Enzyme
e.g. corn process Biomaterials,
plastic
plastic,
polymers
Ferment-
…
able
sugars
Commodity/
Waste Cellulose Enzyme specialty
biomass process chemicals, …

New
2 biomaterials
Biomass
technology
gy has
platform character
19 18/02/2009 NOVOZYMES PRESENTATION

Potential advantages are many

ƒ Independence of volatility of crude oil and its

derivatives (energy still needed)
ƒ Cost competitiveness (depends on crude oil
prices and processes)
ƒ Capex reduction
ƒ Improved carbon footprints through
production and post-consumer value chain
incl. reduced GHG emissions and recycling
potentials
ƒ Exploit waste biomass
ƒ Branding of “green products” into the value
chain
h i
ƒ Novel molecules unattainable from
petrochemical sources
20 18/02/2009 NOVOZYMES PRESENTATION

And the potential is attractive

Chemical products sold by region
Total 2003 value: USD 1.24 trillion
(Excl. pharma and consumer products)

Commodity Chemical Market Size

Japan (2005): ca. 360 Billion USD
RoW
• Virtually all bulk chemicals are produced
from oil and gas today
• Technological advances and sustained
Asia high oil prices suggest that it is possible
Western to substitute many bulk chemicals at a
Europe lower and less volatile cost using a
biological route
USA

Japan Asia USA Western Europe RoW

Source: modified from “Value Creation”, chapter 1

Ed.Budde, Felcht, Frankemölle, 2006,
21 18/02/2009 NOVOZYMES PRESENTATION

But challenges exist

ƒ New value chain needs to be assembled
ƒ Today´s chemicals have been optimized for years
ƒ =>
> Low cost and high performance
ƒ Yield & productivity for biotech routes must be in top
ƒ Capex must be affordable
ƒ Novel downstream processes are needed
ƒ Bio-refineries still need to be built
ƒ and become competitive with existing large scale refineries
ƒ Entry time for new chemicals is traditionally long
ƒ “Green” alone currently does not sell
ƒ Industry is focused on price/performance
22 2/18/2009 NOVOZYMES PRESENTATION

It can be done – even with new molecules

1.3-propanediol

PLA (Polylactic acid)

Poly-hydroxy-
butyrate (PHB)
23 2/18/2009 NOVOZYMES PRESENTATION

Novozymes core capabilities applied to

Novozymes’
Conversion of Renewables
ƒ Enzymes
E screening
i and
d
engineering
ƒ Metabolic pathway
engineering
ƒ Large scale fermentation
24 18/02/2009 NOVOZYMES PRESENTATION

Novozymes and Cargill have joined forces to

develop commercial solutions for Bio-Acrylic Acid

Current petro-route for production of Acrylic Acid:

Propylene Acrylic Acid

Propylene 2000: 430 USD/metric ton
Propylene 2008: 1450 USD/metric ton

New fermentation enabled route to Acrylic Acid

Starch, 3-Hydroxy- Bio-Acrylic

Biomass Glucose Acid
propionic
acid

NZ Chemical
NZ technology:
Enzymatic downstream
Optimized pathways
Process process
25 18/02/2009 NOVOZYMES PRESENTATION

Acrylic acid is used in a variety of existing markets

and applications: market size of USD 11b

• 3.1 million tons production in 2005

• Serving high end industries such as diapers,
diapers
hygiene products, flocculants, coatings,
dispersions and adhesives
• A myriad of applications
• Growth 4 %
• Mainly in SEA
Superabsorbers

Fibers
3-HPA Acrylic Acid
Coatings,
Coatings
Adhesives

Polymers
26 18/02/2009 NOVOZYMES PRESENTATION

Bio-route for Acrylic acid is competitive with

current propylene-based production processes
Regional
g Bio-
Bio-Acrylic
y Acid Cost Competitiveness,
p ,
160,000 tonnes per year
1400

1200

1000
onne
$US per to

800

600
$

400

200

0
US LED Glacial US Bio-Glacial BZ Bio-Glacial CH Bio-Glacial

Net Raw Materials Utilities Direct Fixed Costs

Allocated Fixed Costs Source: Nexant
Depreciation
(1)LED= Leader Technology, propylene based. Costing year: 2006, Crude oil price: 65 USD/bbl
Glucose price assumptions: US (14c/lb); BZ (sucrose 7 c/lb); China (11c/lb)
Source: Nexant
27 18/02/2009 NOVOZYMES PRESENTATION

RECAP OF
BIOBUSINESS
OPPORTUNITIES
AND CHALLENGES
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BioBusiness’ opportunity and focus areas

Focus areas going forward

• Microorganisms:
• Finalize streamlining
• Build momentum in new areas
BioBusiness
Bi B i is
i the
th vehicle
hi l that
th t
• Biopharmaceuticals:
leverages Novozymes’ capabilities to
build new and significant business • Commercialize broadly existing
outside enzymes products and p
p pipeline
p
• Molecular biology, bioinformatics • Deepen partnering-reach to push
and system biology existing technologies
• Screening • Build HA facility and business
• Industrial scale fermentation • CoRe:
• Delivering technology to market • Prove the business case technically
and
d commercially
i ll
29