TRANSFORMING THE HEALTH & WELLNESS INDUSTRY October 2019 1 - - PowerPoint PPT Presentation

TRANSFORMING THE HEALTH & WELLNESS INDUSTRY

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NASDAQ/TSX: NEPT ▫ Headquartered in Laval, Quebec, Canada

October 2019

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

• perating 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.

CAUTION REGARDING NON-IFRS FINANCIAL MEASURES

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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

• r 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”.

CAUTIONARY NOTE AND FORWARD-LOOKING STATEMENT

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Plant-based solutions for the Health & Wellness industry One-stop-shop for extraction, purification, and formulation of cannabinoids in North America

NEPTUNE TODAY

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Health & Wellness Cannabis

CORE COMPETENCIES GROUNDED IN EXTRACTION AND FORMULATION…

5 Relationships with leaders in Retail, Vitamin, and Supplement industries Oil extraction expertise Highly automated Facility Proven cold ethanol extraction process Clinical research Global distribution Condition specific formulations Food grade GMP certified facility Strict processes and standards ensure quality control Forms and delivery system

…HAS ENABLED CANNABIS MARKET PENETRATION AND PROVIDED THE FOUNDATION FOR SIGNIFICANT HEALTH & WELLNESS EXPANSION

6 Apr 2017

Health Canada application

Jun 2018

Canopy Growth multi- year extraction deal

Aug 2017

Exits krill oil manufacturing

Jan 2019

Health Canada processing licence received

Jun 2019

TGOD multi- year extraction deal

Jul 2019

Michael Cammarata is named President & CEO

Mar 2019

Initiated commercial production and shipping

• f cannabis

Jun 2019

Tilray multi- year extraction deal

Jul 2019

Closed acquisition of SugarLeaf Labs

Aug 2019

Launch of Neptune Ventures

Sep 2019

Expanding U.S. customer base

Oct 2019

Collaboration with IFF

SIGNIFICANT NORTH AMERICAN CAPACITY TO ADDRESS DEMAND FOR PLANT-BASED PRODUCTS

1 Post expansion, construction expected to complete by end of CY2019;

Health Canada approval needed thereafter

2 Post expansion, construction expected to be complete by end of CY2019 3 Post expansion & once approvals are received

Fully-automated, modern, large scale extraction facility licensed to process Cannabis 1,500,000 kg capacity to process biomass using cold ethanol technology1 Good Manufacturing Practices (c-GMP) certified for nutrition products EU GMP certification underway (by 1H CY 2020) In-house quality control lab and R&D lab with full testing capabilities Newly acquired, modern, hemp processing facility located in North Carolina 1,500,000 kg capacity to process biomass using cold ethanol technology2 Sources hemp cultivated by licensed American growers conforming with federal and state regulations Hemp-based products have surpassed the Vitamin E category and are on track to overtake the Omega-3 category Hemp-based platform focused on Health and Wellness is a natural extension of what Neptune has specialized in for over 2 decades 7

3,000,000 kg capacity3 170,000 1,300,000 30,000 200,000 1,500,000 1,500,000 Phase I Phase II Phase IIIA (Q1 CY 2020E) US

COLD ETHANOL EXTRACTION DIFFERENTIATES NEPTUNE’S PROCESS

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

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COLD ETHANOL EXTRACTION PRODUCES NUTRIENT RICH, COMPLETE, FULL SPECTRUM EXTRACTS WHILE MAINTAINING A LOW CARBON FOOTPRINT

Cold Ethanol vs. CO2 Extraction

Greater recovery

• f cannabinoids

and terpenes >2x less energy consumption >5x faster winterized oil process

9 Multi-year deal signed June 2018 Supplement Canopy Growth’s extraction, refinement, and formulation capacity Represents an important milestone in Neptune’s transition Highlights Neptune’s capabilities to capture the growing cannabis market opportunity 3-year deal signed June 2019 Minimum volumes of 125,000 kg Extraction services to produce crude resin, winterized oil, and distillate extracts 3-year deal signed June 2019 Minimum volumes of 230,000 kg Extraction and purification of cannabinoids from cannabis and hemp biomass Formulation, manufacturing and packaging of several product forms: capsules, tinctures, sprays, topicals, vape pens, shots, teas Neptune to seek organic certification with TGOD assistance

EMERGING AS THE PREFERRED ONE-STOP-SHOP SUPPLIER OF CANNABIS PRODUCTS

GROWTH STRATEGY TO ACHIEVE VISION

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Increase Processing Capacity in North America and Internationally Expand Customer Base into Global CPG and Health & Wellness Acquire Unique Delivery Forms & Technology Innovate to Create New Product Forms Develop Strategic Partnerships through Neptune Ventures

VISION: Become a leading supplier of cannabinoid extracts, ingredients, and finished products to the Health & Wellness and CPG industries

Charlotte, NC Sherbrooke, QC

INCREASE PROCESSING CAPACITY IN NORTH AMERICA AND INTERNATIONALLY

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Two modern, large scale extraction facilities utilizing cold ethanol technology

Future Processing Capacity1 Future Processing Capacity1

+ 1.5 mm kg 1.5 mm kg

1,200 / hour2 1,200 / hour2 200 mm / year2

1 Construction expected to be complete by end of CY2019; Health Canada approval needed thereafter 2 Production expected to commence in Q4 CY2019

Canada U.S.

EXPAND CUSTOMER BASE INTO GLOBAL CPG AND HEALTH & WELLNESS

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Nutraceutical & Wellness Cannabis Industry Personal & Home Care Cosmetics Pharma Food & Beverages

$6 bn1 +$5 bn2 $5 bn1 $2 bn1 $4 bn1 $3 bn1

1Brightfield Research Group, 2018 U.S. CBD Market Size 2Company estimates of US CBD market and Canadian THC market

INNOVATE TO CREATE NEW PRODUCT FORMS

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“Neptune’s extraction expertise and pharmaceutical and biotech background positions us to transform the cannabis ecosystem and identify new uses for the whole cannabis plant.” – Michael Cammarata Moving Closer to the Customer Identify New Uses for Cannabis Aligned with Consumer Demand Create New Product Forms Leverage in-house & 3rd Party R&D Capabilities

Edibles Topicals Vapor Products Home Care Personal Care Beverages

Licaps Capsule Technology White Label Offering Formulation & Manufacturing expertise Cutting Edge Extraction Technology

Today

Licaps Capsule Technology White Label Offering Formulation & Manufacturing Expertise Cutting Edge Extraction Technology Consumer Facing Brands Absorption Technology New Delivery Forms Water Soluble Technology

Tomorrow

ACQUIRE UNIQUE DELIVERY FORMS & TECHNOLOGY

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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

   

DEVELOP STRATEGIC PARTNERSHIPS THROUGH NEPTUNE VENTURES

Q1 FY2020¹ Nutraceutical Cannabis Corporate Consolidated Revenues $4,293 $38 $30 $4,361 Adjusted EBITDA 530 (1,623) (2,490) (3,583) Net income (loss)

• (6,452)

SUMMARY FINANCIAL PERFORMANCE

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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.

Income Statement

(in thousands of CAD $)

Q1 FY2019¹ Nutraceutical Cannabis Corporate Consolidated Revenues $5,168

• $5,168

Adjusted EBITDA 633 $(1,302) $(1,588) (2,257) Net income (loss)

• (4,100)

Income Statement

(in thousands of CAD $)

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LIQUIDITY PROFILE

June 30, 2019 March 30, 2019 Cash, cash equivalents and short-term investments $5,375 $9,867 Total debt 4,567 3,467 Net proceeds from the private placement 51,600

• Initial cash consideration for SugarLeaf ¹

(18,000)

• Pro forma net cash position

34,408 6,400 Financial Position

(in thousands of CAD $)² ³ Note: 1 CAD : 0.76 USD

1 Includes transaction costs 2 Neptune owns 2,964,695 common shares of Acasti (ACST – TSXV) valued at $6,315 as of October 10, 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

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NEW LEADERSHIP WITH EXTENSIVE CONSUMER PRODUCT INNOVATION EXPERIENCE

Successful entrepreneur and innovator in the Wellness industry Previous CEO and Co-founder of Schmidt’s Natural, one

• f the world’s fastest growing wellness brands,

acquired by Unilever in 2017 Extensive knowledge of the CBD space with the launch

• f Schmidt Natural CBD & hemp deodorants in 2019

Michael Cammarata joins Neptune as President and CEO

EXECUTIVE TEAM

Michael Cammarata

President , CEO & Board Member

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Jackie Khayat

Vice President, Bus. Development

• 15 years in nutrition & healthcare sales
• Executive MBA at Concordia University
• Formally of 3M Canada

Michel Timperio

President of Cannabis Business

• Responsible of BD for last 16 years

for Neptune

Jean-Daniel Bélanger

Vice President, Legal & Corporate Affairs

• Former securities law firm partner
• Member of Quebec Bar since 2006

François-Karl Brouillette

Vice President, Science & Innovation Nutrition Business

• Masters degree - Organic Chemistry
• + 15 years in nutrition

Graham Wood

Chief Scientific Officer

• Former Chief R&D Officer at

Altasciences

• Former CEO at Manna Research

Martin Landry

Chief of Corporate Development & Strategy

• 20 years in capital markets and

accounting

• Former Managing Director with

GMP Securities

Marc Vaugeois

Vice President, Sales Nutrition Business

• + 25 years in health &

nutrition industry

• CEO of Schmidt’s Naturals acquired

by Unilever in 2017

• Founder of Random Occurrence, a

venture capital and private equity firm.

Mario Paradis, CPA, CA

VP & Chief Financial Officer

• CFO Atrium Innovation acquired

by Nestlé for $2.3B

• Senior Director

PricewaterhouseCoopers

BOARD OF DIRECTORS

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Moretz Marketing

John Moretz

Chairman of the Board

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Hélène F. Fortin

Director

Philippe Trudeau

Director

• Dr. Ronald Denis

Director

Rick Schottenfeld

Director

Schottenfeld Group LLC

Michael Cammarata

President , CEO & Board Member

APPENDIX

MARKET DATA

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APPENDIX

MARKET DATA

EXTRACTS DOMINATE MANY DEVELOPED CANNABIS MARKETS

FLOWER

Smoked

EXTRACTS

Cannabinoids are extracted from the plant and then used in a wide range of products

60%¹ 40%*

Gel capsules Vape pens Edibles Topicals Beverages

¹ BDS –U.S.Market data (California) June 29th, 2018

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5% 5% 6% 7% 7% 8% 9% 9% 13% 16% 17% 22% 38%

Spray Dog Treat Other Adding to a Beverage (such as coffee) None of these Powder Beverage Tea Salve or Lotion Tincture Chocolate/Candy Capsule or Pill Edible Oil

n=332

THE CURRENT U.S. MARKETPLACE

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TYPES OF PRODUCTS AND CONSUMER PURCHASE BEHAVIOR

Examples of Hemp/CBD Consumer Products¹

Balms/Lotions Softgels Tinctures Gummies Chocolates Vapes Water Dog Treats

Cosmetics Dietary Supplements Food and Beverages Inhalables Pet Supplements

What Format of Hemp/CBD Products are Consumers Purchasing?

Source: Informa, 2019. Purchase Behaviour Among Consumers Who Have Purchased CBD, The Hemp & CBD Guide. Nutrition Business Journal

Extraction vital to hemp/CBD segment!

LEVERAGING OUR EXTRACTION & FORMULATION EXPERTISE TO TRANSFORM THE HEALTH & WELLNESS INDUSTRY

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