lotus“plan”, “predict”, or the negative or other variations of statements reflect...

Page I 1

LOTUSBUILDING A PAN-REGIONAL LEADER

May 2016

Page I 2

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this presentation are forward

looking statements that are subject to risks and uncertainties that could cause actual results to differ

materially. These forward looking statements are not based on historical facts but rather on

management’s expectations regarding future growth, results of operations, performance, future capital

and other expenditures, competitive advantages, business prospects and opportunities. Statements in

this presentation about our future plans and intentions, results, level of activities, performance, goals or

achievements or other future events constitute forward looking statements. Wherever possible, words

such as “anticipate”, “believe”, “expect”, “may”, “could”, “will”, “potential”, “intend”, “estimate”, “should”,

“plan”, “predict”, or the negative or other variations of statements reflect management’s current beliefs

and assumptions and are based on the information currently available to our management. Investors

are cautioned not to place undue reliance on these forward looking statements, which are made

as of the date of this presentation and we assume no obligation to update or revise any forward

looking statements.

Page I 2

Page I 3Page I 3

COMPANY OVERVIEW

Page I 3

Page I 4

RECAP OF 2015 ACHIEVEMENTS

Page I 4

Recap of FY2015

• Successful integration by the combined efforts

Strategies of synergizing portfolio across countries have been carried out with two Lotus’ key products

submitted in Korea

• MAs of two Lotus’ oncology products applied by Alvogen Korea were granted in February and

November respectively

Kunwha and Dream Pharma in Korea have officially merged into one legal entity and renamed as

Alvogen Korea effective June 1st

• The combined entity successfully launched Sarpogrelate XR and gained significant market share in

Korea and further enhanced its product portfolio by successfully launching Seroquel (Quetiapine) to

establish a solid foothold in Korean CNS market

• Further expand Lotus’ export business by launching more products in the US

ANDA of Levonorgestrel has been officially approved by US FDA in June

• Officially launched with the first shipment to the US market in September

Tentative approval for ANDA of Paricalcitol Capsules from US FDA was granted in July

• Final approval was received in February 2016; to be launched in the near future

• Achieve solid profit and positive EPS

Page I 5

PROGRESS IN ‘16YTD

Page I 5

Progress in ‘16YTD

• Product portfolio continues to strengthen

ANDA of Temozolomide Capsules for brain cancer has been officially approved by US FDA in Apr’16

• Lotus’ first cancer drug approved by US FDA and its comprehensive product offering with all dosage

5mg, 20mg, 100mg, 140mg, 180mg, and 250mg creates a competitive edge for better market

awareness in the US

Rosuvastatin/Ezetimibe has been successfully launched in Mar’16

• Sales for the first month already become one of the Company’s top 15 products

• Profitability continues to improve

Operating margin expanded to double digit with a second record high EPS of NT$0.27 in Q1’16

Page I 6

COMPANY OVERVIEW

• A fast growing, pan-regional, generic and specialty

pharma company with access to advanced markets

through industry leading pipeline

• 63.4% owned by Alvogen, a specialty pharmaceutical

company with global presence

• 1 US FDA, EU EMA, and Japan PMDA approved

manufacturing facility, 2 KGMP approved

manufacturing facilities and R&D centers

• #1 in Korea in terms of sales from anti-obesity drug,

and strong presence in Taiwan for oncology and CNS

drugs

Key Highlights

• Robust international pipeline:

– 4 products approved and 8 products in pipeline / filed ANDA for US

– 7 products/CDMO projects for Japan in pipeline

– 7 products filed and 1 product approved in China

– 4+ products for EU Asia scope in pipeline

– Distribution rights of 2 biosimilars under development by Alvotech

Strong Pipeline

Market Leader in the Highly Attractive Asia Pacific Generic Pharmaceutical Industry with Access to Other Advanced Markets

Page I 61 Cash EPS = Cash flows from operating activities / number of outstanding shares

Strong Growth and Margin

Gross Profit

Net Profit

Gross Margin

Revenue

Q2’15

760

125

56.8%

1,337

Q1’15

EPS (NT$) 0.37

Unit: NT$mn

Operating Income 91

Q3’15

873

17

61.6%

1,417

0.06

162

745

(21)

57.5%

1,294

(0.13)

70

Cash EPS1 (NT$) 0.87 1.460.43

6.8% 11.4%5.4%Operating Margin

Q4’15

850

41

57.7%

1,473

0.12

126

1.76

8.5%

Q1’16

779

91

54.7%

1,425

0.27

148

1.07

10.4%

Page I 7

COMPANY OVERVIEW

Shareholding Structure

Note: as of March 31, 2016 Page I 7

Alvogen Asia Pacific

Holdings Ltd.

63.4%

Lotus Pharmaceutical

Co., Ltd.

(Taiwan)

Alvogen Taiwan

(Taiwan)

100.0% 100.0%

100.0%

100.0%

Lotus Lab, Ltd

(UK)

Lotus Pharmaceutical,

HK Inc.

(HK)

美喬生技有限公司

(Taiwan)

100.0%

Alvogen Korea

Holdings Ltd.

(Korea)

Alvogen Korea Co.,

Ltd.

(Korea)

82.5% 100.0%

98.0%

Alvogen Pharma India

Pvt Ltd.

(India)

Norwich Clinical

Services Pvt Ltd.

(India)

100.0%

100.0%

樂特仕生物科技諮詢

(上海)有限公司

(China)

Lotus International Pte.

Ltd.

(Singapore)

Merger between Kunwha

and Dream Pharma has

been completed on June

1, 2015

Page I 8

FINANCIAL HIGHLIGHTS

Robust Growth Momentum with Consecutive QoQ Growth

Page I 8

663

1,294 1,337

1,417 1,473

1,425

Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Unit: NT$mn

More than doubled from Q4’14 to Q1’16

1,743

1,965

Jan - Apr'15 Jan - Apr'16

+12.8%

Page I 9


Improving Profitability Quarter over Quarter...

Page I 9

43%

58% 57%

62%

58%55%

Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Unit: %

Gross Magin Operating Margin

• Improved significantly from 43.4% as of Q4’14 to

over 55% throughout 2015 and maintained

-48.0%

5.4% 6.8%11.4%

8.5% 10.4%

Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Unit: %

• Turned positive immediately after the completion of

Dream Pharma merger in Q1 and further

expanded to double digit in Q1’16

Page I 10


EPS v.s. Cash EPS

Page I 10

EPS (NT$) Cash EPS (NT$)

• EPS = Net Income / # of Outstanding Shares • Cash EPS = Cash flows from operating activities / # of

Outstanding Shares

• Better indicator as it represents real cash earned from

daily operations

• More cash EPS also illustrates a better financial shape

for further expansion

(1.08)

(0.13)

0.37

0.06 0.12

0.27

Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

(0.69)

0.43

0.87

1.46

1.76

1.07

Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Net cash generated from operating

activities in Q1’16 = NT$255 million

Page I 11


Results of Q1’16 – Income Statement

Page I 11

Unit: NT$mn unless otherwise stated

Net revenues 1,425 100% 1,294 100% 131 10%

Cost of goods sold 646 45% 550 42% 96 18%

Gross profit 779 55% 745 58% 34 5%

Operating expenses:

Selling and marketing 426 30% 466 36% (40) -9%

General and administrative 142 10% 160 12% (18) -11%

Research and development 59 4% 48 4% 11 22%

Impairment charges 4 0% - 0% 4 0%

Total operating expenses 631 44% 675 52% (43) -6%

Operating income (loss) 148 10% 70 5% 78 111%

Non-operating income (expenses)

Other income 32 2% 50 4% (19) -37%

Other gains (losses) 7 0% 0 0% 7 2399%

Finance costs (69) -5% (99) -8% 30 -30%

Share of profit (loss) in associate (0) 0% (0) 0% 0 -8%

Total non-operating income (expenses) (30) -2% (49) -4% 18 -37%

Income (loss) before income tax 118 8% 22 2% 96 441%

Income tax expense (benefits) 27 2% 43 3% (16) -37%

Net income (loss) 91 6% (21) -2% 112 -528%

Net income (loss) attributable to:

Ow ner of the Company 64 4% (30) -2% 94 -311%

Non-controlling interests 27 2% 9 1% 18 193%

Basic EPS (In NT$) 0.27 -0.13

16Q1 15Q1 Change

Page I 12


Results of Q1’16 – Balance Sheet

Page I 12

Unit: NT$mn

ASSETS

Current Assets

Cash and cash equivalents 1,843 12% 1,578 10% 265 17%

Notes and trade receivables (incl. RP) 1,405 9% 1,462 9% (57) -4%

Other receivables from RP 144 1% 143 1% 1 1%

Inventories 908 6% 904 6% 3 0%

Other current assets 115 1% 169 1% (54) -32%

4,415 28% 4,257 27% 158 4%

Non-current Assets

PP&E 2,050 13% 2,075 13% (25) -1%

Goodw ill and other intangible assets 8,089 52% 8,031 52% 58 1%

Other non-current Assets 1,036 7% 1,139 7% (103) -9%

11,175 72% 11,245 73% (70) -1%

TOTAL ASSETS 15,589 100% 15,502 100% 88 1%

LIABILITIES AND EQUITY

Current Liabilities

Loans and borrow ings 481 3% 442 3% 39 9%

Notes and trade payables (incl. RP) 349 2% 397 3% (48) -12%

Other payables to RP 346 2% 335 2% 11 3%

Other current liabilities 603 4% 589 4% 14 2%

1,779 11% 1,763 11% 16 1%

Non-current Liabilities

Loans and borrow ings 4,097 26% 4,112 27% (14) 0%

Other non-current liabilities 879 6% 896 6% (17) -2%

4,976 32% 5,008 32% (32) -1%

Total liabilities 6,756 43% 6,771 44% (16) 0%

Equity

Equity attributable to ow ners 7,877 51% 7,803 50% 74 1%

Non-controlling interests 957 6% 927 6% 29 3%

Total equity 8,834 57% 8,731 56% 103 1%

TOTAL LIABILITIES AND EQUITY 15,589 100% 15,502 100% 88 1%

31-Mar-16 31-Dec-15 Change

Page I 13Page I 13

21

37

27

37

2014 2015

With Strong Pipeline Support and Product Launches

Number of MA Received Number of Product Launches (By SKU)

48

74

Lotus + Alvogen TW Alvogen Korea

52

59

Lotus + Alvogen TW Alvogen Korea

1612

36 47

2014 2015

Page I 14Page I 14

PRODUCTS & PIPELINE UPDATES

Page I 14

Page I 15


Top Products – Q1’16

Page I 15

Product Q1’16 Sales (NT$mn) v.s. Q4’15 (%) v.s. Q1’15 (%)

1 Quetiapine fumarate 96.2 +13.2% - (launched in Oct’15)

2 Calcium Polystyrene Sulfonate 86.8 -6.2% +11.6%

3 Phentermine 85.9 -5.2% +1.4%

4 Sarpogrelate 83.6 +47.6% +344.2%

5 Phendimetrazine 63.1 -3.0% -6.5%

6 Orlistat 62.8 -9.9% -13.1%

7 Topiramate 32.2 -4.6% +0.3%

8 Rosuvastatin Calcium 28.0 +0.2% -10.0%

9 Ephendrine/Acetaminophen/Caffeine 22.4 -0.1% +3.9%

10 Diltiazem 21.1 +6.5% +50.5%

11 EPO 20.8 -28.7% -38.5%

12 Rosuvastatin/Ezetimibe 20.5 - (launched in Mar’16) - (launched in Mar’16)

13 Methylprednisolone 19.9 -1.0% +24.0%

14 Amlodipine/Valsartan 19.4 -1.7% -11.7%

15 Benzonatate 18.7 +39.4% +7.8%

Page I 16


Broad Pipeline that Delivers Sustainable Growth

Page I 16

Data as of May 2016

Note: Target market numbers are latest 12 months sales as of Sep’15 from IMS data

For US market

Generic Name Indication

Target

Market

(US$mn)

For-

mulation

Clinical/

BE Study

Sub-

mission Approval Launch Remarks

Paricalcitol Nephrology 44 Final approval received in Feb 2016

Temozolomide Brain cancer 220 Approval received in Apr 2016

Budesonide

ER

Gastro

intestinal 140

PIV; filing acceptance received Jan 2015; sued on only 3 out of

the 6 patents listed in Orange Book

Calcium

acetate Nephrology 50

PIV; sued while the case has dismissed and settled on

confidential terms

Not Disclosed CNS 700 PIV; formulation for different strength also initiated

Not Disclosed CNS 500PIV; 500mg approved while other strength waiting for approval

with no outstanding regulatory issues

Buprenorphine/

NaloxoneAddiction 2,000 PIV; filing acceptance received Apr 2015; sued

Not Disclosed Cancer 1,000 Few competitors expected

Not Disclosed Autoimmune 300 No BE No patent in Orange Book

Not Disclosed Cancer 550 No patent in Orange Book

Page I 17


Broad Pipeline that Delivers Sustainable Growth (cont’d)

Page I 17


Target

Market

(US$mn)

For-

mulation

Clinical/

BE Study

Sub-


Not Disclosed Allergy 340

Not Disclosed Hormone 100

Not Disclosed Brain cancer 80

Not Disclosed Steroid 45

GefitinibNon-small-cell

lung cancer130

Capecitabine Colon cancer 100

For Japan market

• For Japan market, we strategically work on CDMO projects for partners to further penetrate into the local market

Data as of May 2016


Page I 18



Page I 18

Data as of May 2016

Note: Target market numbers are FY2015 sales from IMS data


Target

Market

(US$mn)

For-

mulation

Clinical/

BE Study

Sub-


DP-R211 Anti-obesity 14 Korea IMD

Rosuvastatin/

Candesartan

Dyslipidemia &

Hypertension146 Korea IMD

DP-R213 Osteoporosis 20 Korea IMD

DP-R212

CV

(Dyslipidemia

& Hypertension)

235 Korea IMD

For Korea market

• Korea IMD (“Incrementally Modified Drug”) procedure is similar to US 505(b)2, which requires phase I and phase III study while

enjoying premium on NHI price; it usually takes 6 to 12 months for regulatory approval

Page I 19



Page I 19

Generic Name Indication Scope

Target

Market

(US$mn)

For-

mulation

Clinical/

BE Study

Sub-


Temozolomide Brain cancerEU

APAC430 Already launched in Taiwan; approved in EU

Gimeracil/

Oteracil/

Tegafur (TS-1)

Colon cancer APAC 270 Already launched in Japan; filed in Taiwan/Korea

Vinorelbine Breast cancerEU

APAC130

Gefitinib Lung cancer EU

APAC350

5 ALA Cancer EU

APAC- No BE Complimentary to other oncology portfolio

For other markets

• More projects under evaluation and discussion – we are always assessing the market potentials of launching our existing

products/projects to different markets in the world and will decide on a most competitive strategy to maximize the value of pipeline

Data as of May 2016


Page I 20



Page I 20


Target

Market

(US$mn)

CTP1 sub-

mission

Clinical/

BE Study

IDL2 sub-

mission Launch Remarks

Levonorgestrel Contraception 13 CTP submitted in Q2’10

Divalproex sodium Anti-epilepsy 100 CTP submitted in Q4’08

Lidocaine Local analgesic 50 CTP submitted in Q1’10

Acarbose Antidiabetic 400 CTP submitted in Q4’11

Levetiracetam Anti-epilepsy 45 CTP submitted in Q4’12

Temozolomide Brain cancer 100 CTP submitted in Q1’13

Memantine Anti-dementia 18 CTP submitted in Q2’13

For China market

• All the filings in China are the approved products in Taiwan, so no duplicate formulation is required

• For all the imported products, there are two applications needed – Clinical Trial Permit (“CTP”) submission goes first and then Imported

Drug License (“IDL”) submission is required once clinical/BE study is done

Data as of May 2016


Page I 21



Page I 21

Biosimilars

• Alvogen/Alvotech aims to create a leading presence in

biosimilars

• US$500 million is being invested in a new state-of-the-

art biotech plant and pipeline

• Lotus and Alvogen/Alvotech signed distribution

agreements for two key biosimilars currently under

development by Alvotech

• Lotus will market and distribute these biosimilars in the

following APAC markets: Taiwan, China, Vietnam, South

Korea, Thailand, Hong Kong, Philippines, Malaysia,

Indonesia, Singapore and Myanmar

Molecule Indication Target

Market (US$)

Expected

launch timing

Not Disclosed Oncology 154mn 2021

Not Disclosed Rheumatoid

arthritis;

Psoriasis

90mn 2021

Data as of May 2016

Note: Target market numbers are FY2014 market sales from IMS data

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