Innovative Bio-based Products for Pest Management and Plant Health Pam Marrone, CEO/Founder Jim Boyd, CFO August 2016

Transcription

1 Innovative Bio-based Products for Pest Management and Plant Health Pam Marrone, CEO/Founder Jim Boyd, CFO August 2016 Jefferies 2016 Global Industrials Conference

2 Disclaimer This presentation contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding strategy, future operations and plans, including assumptions underlying such statements, are forward-looking statements, and should not be relied upon as representing the Company s views as of any subsequent date. Such forwardlooking statements are based on information available to the Company as of the date of this presentation and involve a number of risks and uncertainties, some beyond the Company's control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including any difficulty in developing, manufacturing, marketing or selling the Company s products, any failure to maintain and further establish relationships with distributors, competition in the market for pest management products, lack of understanding of bio-based pest management products by customers and growers, adverse decisions by regulatory agencies, and the impact of negative publicity and perceptions around the company s financial restatement. Additional information that could lead to material changes in the Company s performance is contained in its filings with the SEC. The Company is under no obligation to, and expressly disclaims any responsibility to, update or alter forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise. This presentation references product shipments, a measure used by the Company that is not defined by, or presented in accordance with, generally accepted accounting principles ("GAAP"), to evaluate various aspects of its business. Product shipments is a non-gaap financial measure and should be considered in addition to, not as a substitute for, product revenues reported in accordance with GAAP. Product shipments as used in this presentation is defined as product revenues, plus related party product revenues, plus the incremental amount of deferred revenues accrued during the applicable period from product shipments. This calculation specifically excludes changes in deferred revenue related to license revenues and customer deposits, and is intended to approximate the total value of products sold and under contract for sale in a given period. Please refer to the Company s filings with the SEC, including its earnings releases, for a reconciliation of product shipments to product shipments and further discussion of this metric. Page 1

3 Highlights: Marrone Bio Innovations, Inc. 1 Only Pure-Play Public Biopesticide Company in this Disruptive, Technology- Driven Market 2 6 Existing Commercial Products With Significant Addressable Markets 3 Bio-based Agricultural Product Market is the Fastest Inputs Growth Segment 4 Expanding Internationally a Focused Growth Area for MBI 5 Focused R&D Supporting Existing Products and Select Pipeline of Near-term New Products that Meet Unmet Market Needs 6 Valuable Library of Patents and Intellectual Property Experienced Management Team with Successful Track Record Page 2

4 MBI Products Help on All the Key Drivers in Food Production Global Food Security Climate Change Environmental Pollution Sustainability Growing more from less Temperature, moisture, salinity, pest extremes Residues / leachates Ecosystem services

5 Biopesticides Can Help Meet the Challenges of Sustainable Agriculture Integrated Pest Management Biopesticides + Conventional Crop Protection Products Increased efficacy Higher yield Reduced chemical load Meeting the Challenges of Sustainable Agriculture Increase Productivity Promote Food Quality Minimize Impact Additional Benefits Resistance Management Harvest & Labor Management Residue Management Page 4

6 Our Mission and Vision MBI strives to lead the movement to a sustainable world through the discovery, development, production and promotion of effective and environmentally responsible biological products for pest management and plant health

7 Marrone Bio Innovations Overview Company Highlights Incorporated in June commercially available MBI products + 1 Isagro product; 2 add l EPA registered & 2 submitted for EPA registration 89 employees, 34 in R&D Library of 18,000+ proprietary microorganisms screened against multiple targets Wholly-owned, operational fermentation facility in Bangor, MI Commercial sales in North America, LATAM, parts of ME&A Listed on NASDAQ as MBII August 2, 2013 Commercial Products Partners / Distributors Robust Pipeline & IP Pipeline products: Bioherbicide, Downy mildew fungicide, Biofumigant, Antitranspirant Many more earlier stage candidates across all categories 30 issued U.S. and 99 issued foreign patents; 27 pending U.S. and 173 pending foreign patent applications Page 6

8 Our Management Team Executive Officers Pam Marrone, PhD CEO/Founder Jim Boyd Sr. VP & CFO Linda Moore Sr. VP & General Counsel 30+ years in agbiotech; 26 as President and/or CEO. CEO/Founder AgraQuest; Founding President Novo Nordisk Entotech; Head of Insect Biology at Monsanto. BS and PhD Entomology Cornell and NCSU 30+ years in Finance; 13 as a public co. CFO; CFO, ESS Technology and Silicon Storage Technology. JD, MBA GC and Chief Compliance Officer for Merix Corp., Phoenix Technologies, & Jabil Circuit; co-founder & principal of The Moore Group Page 7

9 Our Management Team - Functional Brian Ahrens VP Sales Nancy Hood VP Marketing Amit Vasavada, PhD VP R&D Keith Pitts Sr. VP, Chief Sustainability Officer Tim Johnson, PhD VP Field Development & Technical Services Julie Versman, MBA Sr. Director International Business Development 20 year ag industry veteran, most recently at ADAMA in marketing & sales management. Previous: BASF, Bayer, Aventis & Rhone-Poulenc 20+ years leading & developing marketing and communications for both biological (Valent Bio) & conventional crop protection, seed, forestry and related cos. From 6 th generation farm/ranch family 30 years industrial biotech. General Atomics, Vical Inc., Diversa, Monsanto (CP Kelco), Chiron Corp. PhD Applied Microbiology UC Davis 30 years gov t-related positions. Special Assistant to 2 Ag Secretaries, Staff to House Ag Committee; Nat l Academy of Science Board on Ag; Pew Charitable Trusts - Ag Specialist. Early MBI employee 30+ years biopesticide industry. Product Development Mgr, Plato Industries; Multiple senior roles R&D & PD, Ecogen. PhD Entomology Purdue, BS, MS Entomology Iowa State. Early MBI employee 25+ years biopesticide industry. Brand mgt Kraft, Quaker; VP Marketing two natural food cos. and insect phermomone co.; Led marketing at AgraQuest. Early MBI employee

10 MBI s primary Core Strength is Biopesticides Biopesticides Crop Protection Biostimulants Crop Enhancement Biofertilizers Crop Nutrition Many, many companies are going into biostimulants, but fewer venture into biopesticides because of the higher technical and regulatory barriers to entry MBI s competitive advantage is discovering and rapidly commercializing registered biopesticides, many of which also have biostimulant properties

11 What are Biopesticides? Microbials Biochemicals Fungi, Bacteria, Viruses, and Protozoa Plant Extracts, Pheromones, Soaps, and Fatty Acids A 70 year history of safe use of biopesticides Faster and less expensive EPA registration than synthetic chemicals Page 10

12 Value in Programs Driving Biopesticide Growth Higher yields & quality in programs Biopesticides Ag Chemicals No residues, good for export markets Manage/delay pest resistance Worker safety and production flexibility (short field re-entry) Favorable environmental footprint Lower development cost (<$10 mil USD vs. $280 mil for chemicals) Can be used in organic production CAGR +13% (2) $ Billions CAGR +2.6% (1) (2) Source: Blended numbers and CAGRs from BCC Research, marketsandmarkets, Agropages and Phillips McDougall (source: BCC Research)

13 Corporate Strategy Rapidly Develop Multiple Products in Parallel Employ MBI Sales to Commercialize Products in US Specialty Crops Provide biosolutions across full range of customers needs (insects, diseases, nematodes, weeds). Diversify to reduce geographic, commodity and weather risk. Push Distribution through traditional chemical retail partners. Pull Demand creation at grower level. Onfarm demos and controlled launches with key grower customers. Integrate Products into Pest Management Programs for Organic and Conventional Use Partners ex-us and in Non-specialty Crop Markets Control Manufacturing Capabilities Tank mixes and rotations with chemicals or other organic solutions. Page 12 Ex-US Regional, National Distributors. Seed treatment, row crops, Turf, Animal & Public Health, Home & Garden Purchase and build MBI facility. Scale faster, control IP, and improve margins.

14 Focusing on Three Areas For Growth HAVEN (MBI-505) antitranspirant MBI-601 biofumigant MBI-010 bioherbicide MBI-110 biofungicide Rapidly set up regional distributors Focus first on countries with faster regulatory process and export residue (MRL) issues Slide 13

15 Pipeline MBI s Products and Pipeline MBI s current R&D is primarily focused on supporting existing commercial products Near-term Pipeline Commercial Page 14 MBI 601 MBI 110 MBI 010 MBI 507/8 MBI-304 MBI-005 MBI 011 MBI 302 MBI 303 MBI 506 Discovery Insecticide/miticide Insecticide Pre-Development Development Regulatory Nat l Launch Fungicide (powdery mildew/broad spectrum / plant health) 2011 Aquatic molluscicide for invasive mussels Nematicide/insecticide Anti-transpirant Biofumigant Fungicide (downy mildew/white mold) Herbicide (burndown) Nematicide State registrations only Herbicide Submit to EPA 2016 Biostimulant (yield and stress) Nematicide Herbicide (pre- and post emergence) Nematicide Biostimulant (yield and stress) Pending EPA approval Market-ready; State registrations only EPA package largely developed Pending EPA approval EPA approved EPA approved (needs cost EPA reduction) approved EPA approved (needs mfg partner) Internal Development Seeking development & marketing partners

16 Marrone Michigan Manufacturing (M 3 ) Potential to Control IP Flexible, Faster Scale-up Better Margins, Cost Controls, ROI Bought facility in Bangor, MI for $1.5 million Phase 1 (3 X 20,000 liter tanks): Capital spend of $15 million ($10 mil USDA loan guarantee) Inoculum/media prep & QC lab Centrifugation Rapidly scalable with demand; ample acreage for drying & warehousing Regalia, Grandevo and Zequanox in production at M 3

17 Continuous Margin Enhancement Achieved Yield Increases 18 g/l 90 g/l 18 g/l Potency Improvements Same protection with ½ the product. Same Per Acre Price 3 g/l 32 g/l 6 g/l Greater Scale Overhead Volume Yields Manufacturing Methods Optimal balance of CMOs and our own sites Optimize downstream processing i.e. spray drying Logistical cost reduction: consolidation of packaging and downstream processing Continuous production process improvement

18 Our Ag Sales, Marketing & Distribution Strategy North America International Current Strategy Distributor/Retailer Regional/National Distributor/Retailer Branded Manufacturer In process with several local/regional cos. for all world regions Distributor/Retailer Grower Grower Grower Page 17

19 Long-Term Growth Strategy + Launch of New Products + New Market Segments + Additional Geographies + Additional Crops + New Customers + Pocket Share Targeting 4 Specialty Crops Ornamentals 18 Specialty Crops Ornamentals Turf In-Pipe Water Treatments 22 Specialty Crops Ornamentals Turf Row Crops In-Pipe Water Treatments 40+ Specialty Crops Ornamentals & Turf Row Crops, Seed treatments Home & Garden In-Pipe Water Treatments Open Water Treatments 2015 & Beyond Page 18

20 First Half 2016 Highlights Three quarters of significant revenue and product shipment growth (Q4, Q1, Q2); Q2 improved gross margins and cash usage Launch of new REGALIA formulation (+broad US patent on Regalia formulations) First commercial sales of MAJESTENE nematicide The submission of MBI-110 biofungicide to the EPA (+patent issued on this microbe) The addition of Isagro s Bio-Tam 2.0 soil biofungicide to our portfolio The expansion of our staff of sales and technical service professionals (FL, MI, PNW) With Evogene, successful validation of insecticidal proteins from MBI s bacteria strains EPA grant funding approved for Zequanox open water treatment as part of Great Lakes Restoration Initiative 19

21 Additional Progress, Quarter Two The launch of our improved GRANDEVO WDG granule formulation Partnership with Groundwork BioAg to develop and commercialize an all-biological seed-treatment, funded in part by BIRD Foundation Distribution deal with Koch Agronomic Services for Regalia Rx/Maxx for USA and Canada Distribution deal with Albaugh, LLC for seed treatment of a nematicide/insecticide for USA and Canada Venerate and Grandevo bioinsecticides approved in Mexico Canada approval of Regalia Rx for wheat and soybean and Regalia for home and garden USPTO Patent on the chemistry and uses of Majestene and Venerate 20

22 Our Products Are Used Across All Production Systems and IPM Programs 1) Organic Rotated with a limited # of bioinsecticides & to each other 2) No Residues For Export Early sprays and last spray before harvest 3) Conventional In the tank with chemicals to enhance control, reduce resistance For organic production 21

23 Potato Demos (Majestene + Regalia) Competitor= Lower Yield, lower grades 22 No Cs, fewer Bs and more As

24 Onion Maggot Demo in the Pacific Northwest Lorsban Majestene Lorsban vs Majestene - Plant Vigor

25 Squash and Strawberry Demos, FL 2 GPA Untreated Untreated 24

26 Turf Golf Course Demo Against Sting Nematodes - Florida Majestene applications dramatically dropped nematode populations Driving range Tee 1 Tee 2 25

27 Haven (MBI-505) Increased Citrus Growth on Navel and Valencia Oranges in Florida

28 Herbicide Work in Progress (MBI-010) MBI-010 controls the herbicide-resistant palmer amaranth Examples of herbicidal activity of various formulations on Palmer Amaranth Water Liquid WDG Technical 27

29 28 Financial Overview

30 Income Statement Comparison ($, in Ms) 2Q16 1Q16 4Q15 Income Statement Product $ 5.0 $ 2.6 $ 1.8 License & Other Total Revenue Cost of Goods Gross Profit (0.0) R&D + Patent SG&A Income (Loss) From Operations (4.9) (7.5) (9.2) Other Income (Expense) (1.9) (1.8) (1.8) Taxes Net Income (Loss) $ (6.8) $ (9.3) $ (11.0) Shipment Data Product Shipments $ 4.2 $ 3.9 $ 2.6

31 GAAP Revenues Year over Year by Quarter

32 Product Shipments Year over Year by Quarter

33 Gross Margins Over the Past Three Quarters Gross Margins 7 Plant Underutilzation & Inventory Writedowns as a Percent of Revenues Q4 Q1 Q2

34 Biologicals: The Third Leg of the Crop Production Stool Synthetic Chemicals Improved Crops Biologicals Biologicals are the emerging technology to help feed the world more sustainably Page 33

35 Highlights: Marrone Bio Innovations, Inc. 1 Only Pure-Play Public Biopesticide Company in this Disruptive, Technology- Driven Market 2 6 Existing Commercial Products With Significant Addressable Markets 3 Bio-based Agricultural Product Market is the Fastest Inputs Growth Segment 4 Expanding Internationally a focused growth area for MBI 5 Focused R&D Supporting Existing Products and Select Pipeline of Near-term New Products that Meet Unmet Market Needs 6 Valuable Library of Patents and Intellectual Property Experienced Management Team with Successful Track Record Page 34