B R A I N Biotechnology Research and Information Network : BRAIN - Investor Presentation

BRAIN Group

Pioneering Bioproducts

Investor Presentation

Zwingenberg, September 15th, 2020

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

1

Safe Harbor Statement

This document may contain forward-looking statements. These forward-looking statements are subject to risks and uncertainties, as they relate to future events and are based on current assumptions of the Company, which may not occur at all in the future or may not occur as assumed. They do not represent a guarantee for future results or performance of the Company, and the development of economic and legal conditions may materially differ from the information expressed or implied in the forward-looking statements.

The Company assumes no obligation to update or revise any forward-looking statement contained herein or to adapt them to future events or developments. The information contained in this document has not been independently verified. No representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinion contained herein. The Company or any of its shareholders, affiliates, advisors, employees or representatives shall have no liability whatsoever (in negligence or otherwise) for any loss arising from any use of this document or its content or otherwise arising in connection with this document.

By accepting this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsibility for forming your own view of the potential future performance of the Company's business.

This presentation speaks as of September 15th, 2020. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The term "BRAIN", as used in this presentation means B.R.A.I.N. Biotechnology Research and Information Network AG and its affiliates, if not otherwise specified.

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

2

Brain at a Glance

~ €39m

'18/'19 Revenues

> 27

Years of Experience

~ 300

Employees

> 100

Specialty B2B Products

> 100

Industrial Partnerships

2016

Listed, Frankfurt Prime Standard

Creating Breakthrough Bioproducts & Solutions for Nutrition, Health and Environment

Industrial Biotech	Three
(white)	Product Platforms
	Enzymes
	Microorganisms
	Bioactive
	Natural
	Compounds

From the Lab to Production

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

3

Mission & Vision

"Mission is what an organization is or does. Vision is what an organization desires to become"

Mission

Creating Breakthrough Bioproducts and Solutions for Nutrition, Health and the Environment

Vision

We will be the Industrial/White Biotech Specialists in finding and exploring high-value niches in our products business and novel solutions in our Science business. We will be much more agile than others and will always look to produce products in-house or with partners

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

4

This is Brain

Brain AG

BioScienceBioIndustrial

		Solutions & Services	Products
Breakthroughs	Stable Service Business with Upside	Innovation & Optimization

Own and Partnered NBD TMS BioActive Compound Libraries Enzymes Microorganisms Bioactives

~ €5m-€7m Annual	~ €12m Annual Revenues*	~ €26m Annual Revenues
Cost-plus Contract research,
Investment	>10% EBITDA Margin*
Milestones, Technology & License Fees

*FY '18/'19

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

5

Why Invest in BRAIN

1. Our products address the big societal topics - nutrition, health & the environment
2. Big upsides in breakthrough inventions
3. BRAIN is very well positioned to capture high-growth and high-margin niches in its products businesses
4. Re-shapeour BioIndustrial business: move from a purchase for resale model to an own production model, this creates significant value upside
5. Strong target markets: solid target markets CAGR with high EBITDA margin levels drives healthy sales and margin growth
6. Space for bolt-on acquisition to accelerate growth with the possibility for transformational growth through larger M&A
7. We operate at the heart of the UN Sustainable Development Goals
8. Ability to fund research with partners and from governmental grants to de-risks R&D effort

Multiple Triggers for strong Revenue and Margin Growth

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

6

BRAIN: At the Heart of UN Sustainable Development Goals

Our Products and Solutions address at least six Goals directly

Sugar Replacement

Sugar Taste Enhancer

Salt Replacement

Salt Taste Enhancer

Natural Aromas

Anti-Microbials Wound Treatment

Natural Preservatives Bioactive Plant Cosmetics

Green Mining

Phosphate Recycling

Green Mining Microbial CO2 Usage	Biological Production
Urban Mining	Improving Production Efficiencies
		Fermented Food from Sidestreams
Pioneering Bioproducts.	© BRAIN Aktiengesellschaft Zwingenberg Germany	www.brain-biotech.com [phone]		7

Our Targets

This FY

• Significant organic growth despite Covid-19
• Improvement of our EBITDA
• Prepare the organization for future growth and profitability 
• Strengthen financial flexibility 
• Present new strategy and pipeline update to the capital market on Sept. 15th 

Next FY

• BioScience on a very high base in '19/'20; some larger contracts end '20/'21
• Overall growth likely to be below the mid-term average

Mid-Term(4-5 years)

• Double group revenue from base '18/19
• • Double digit topline product CAGR
  • Accretive M&A
  • Contract research "TMS" proportionally reduced (excl. milestones)
• Group adj. EBITDA margin 15% (+/- 5PP)
• • Double digit fermentation production volume of customized novel enzymes
  • Mid single digit annual productivity improvements
• Proportion of new product sales: ~30% of total revenues
• • Continuous innovation pipeline management

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

8

5 Strategic Initiatives centered Around our Core Values

5	Continuous Corp. Culture Development		1
5
	• Can do and high ethics culture
	• Talent management
	• Innovation is our passion		Collaboration
	• Teamwork is our basis	Sustainability	Safety
			Brain	2
			Core
		Integrity and	Values Accountability
		Respect
		4
			Creativity and
			Innovation
4	Accretive M&A

3

• Profitable Top Line Growth
• • Excel in specialty niches with high margins
  • Selectively grow outside of Europe
  • Always look for ways to produce ourselves

2 Innovation Pipeline Management

• Successful track record of integrating acquired entities
• Further build with bolt-on acquisitions
• Transformational M&A in adjacencies

3

Continuous Productivity Improvements

• Strain development
• Focus on working capital efficiencies, cost improvements and free cash flow
• Group revenue synergies
• Bio-Informatics

• Balanced portfolio across markets

and technologies

• Breakthrough solutions for big challenges for

accelerated growth

• Key customer and application focus

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

9

Decision Metrics: New Business Development (NBD*)

Project Selection Criteria

1. Risk-sharingpartner
2. Commercial success chance
3. Technical success chance
4. Cost to Break-even-point
5. Time to Break-even-point
6. Strategic fit
7. NPV

Agile Pipeline & Project Management

1. Divide project into distinct phases
2. Define critical milestones
3. Project manager appointed
4. Regular update meetings (board, head R&D, head business development)
5. Clear decisions to proceed or not

Agile pipeline & project management with a clear path to commercialization

Market Communication on NBD

1. Dynamic pipeline with new candidates entering and mature candidates going to launch
2. Communicated time lines: time to first commercial launch
3. 1-5years: guidance on market potential, commercialization option, technology platform and traffic light project status
4. 5 years+: no precise guidance

*previously NPD

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

10

Focused New Business Pipeline**

Pipeline	Partners	R&D				Market
		3-5 years out	1-3 years out	In pre-launch
Natural fermented beverages 1
Salt taste enhancer 1.0	US-CPGC
Natural fermented beverages 2
JP.Bev
Perillic Active, Anti-Microbial	ND
Gold from waste streams

DOLCE Natural Sweet Solutions

Aurase

Market	Profit	R&D
Potential	Model	Platform	Project
*1	*2	*3	Status
Small	Prod, Fee,	M/O
MSP
Small	Fee, MSP,	B/A
Lic
Large	Prod,	M/O
MSP, Prof
Med	Prod, Prof	B/A
Med	Prod, Fee,	M/O
Prof
Large	Fee, MSP,	B/A, E/P
	Prof, Lic,Prod
Large	Fee,	E/P
	Prod, Prof

**

• Projects Green Metal Mining, Sweet Taste Enhancer and CO2 moved to TMS business, fully funded programs
• Projects Salt-E, Fresco shelved, searching for partners
• New enzymes now part of BioIndustrial regular product development, see page 12

• Programs without contractually bound partners are marked Red by default
• Green/Yellow indicates Phase 1 has been successfully completed but contract negotiations for the next development phase are progressing but not yet finalized

*1: BRAIN-Group NPV FCF+TV: Small< €5M , Medium €5M - €15M, Large: €15M+

*2: Prod: Product sales. Fee: Research Fee income. MSP: Milestone Payments. Lic: License/royalty payments Tec: Tech fees Prof: Entity formation or Profit participation

*3: B/A: BioActives,E/P: Enzymes and Proteins, M/O: Microorganisms/Starter cultures

ND: not disclosed

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

11

Enzyme Production: Specialists in Industrial Food Processing with high Growth Rates

Customized Novel Enzymes

From the Lab to Production

• Discovery
• Development
• Testing
• Regulation/Compliance
• Commercial Production

Enzymes

• Bio Tech Approach to Production
• Facilitate Reactions
• Solve Process Problems
• Prevent Waste
• Alcohol/Bioethanol, Cereal, Egg, Dairy, Diagnostics, Digestives Aids, Fruit, Meat, Protein, Vegetable
• Continuous new enzyme product pipeline

We cover the full value chain from lab to production

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

12

We will create Value Upside by Re-Shaping the Supply Model

Moving from a Purchase for Resale Model to own Production & Fermentation

Strong Position Today:

• Biocatalyts & WeissBioTech are strong production assets
• Biocatalysts has existing profitable fermentation business
• Well established sales channels
• Strong supply channels
• Core competence in customized enzymes
• Main focus formulation & blending

Creating Value Upside:

• Increased in-housecapacity and production
• Extend share of wallet and life-cycle harvesting
• Fermentation enjoys higher margins and strong barriers to entry
• Novel enzymes and fast copies
• Efficient production hosts

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

13

Additional Profit Realisation Models

Two Types of Deals can create Substantial Value outside of our Core Divisions

• Spin Out Model (like SolasCure):

Discovering a unique technology and spinning it out as a separate company

• • Pros: keeps BRAIN focused on discovery, creates a targeted team in the Newco, shares the commercialization financing burden with new investors, allows monetization at exit (e.g. IPO, Strategic Investor, PE)
• License Model:

Discovering a unique technology and selling the rights to a partner in exchange for fees plus license income down the line

• Pros: able to tap large new markets e.g. pharma, environmental, much of the downstream risk is with the partner, very substantial license fees possible

BRAIN Group has several pipeline projects beyond the feasibility phase which can deliver significant value upside between €10-100mio/project

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

14

Management & Employee Incentives

Since the IPO Brain AG's board as well as management compensation has been closely linked and aligned with shareholder interests

Executive Board

• fixed salary
• variable component based on individual quantitative & qualitative targets
• stock component, see ESOP

ESOP, Employee Stock Ownership Program

• Since June 2018
• Board, managers and employees
• Incentive and retainer
• Details: see appendix

CoPerBo, Corporate Performance Bonus

• Since FY 2015/16
• Applied for employees at Brain AG
• Partially share prices based
• Details: see appendix

Specific Incentives at Daughter Companies

• See appendix

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

15

Financial Highlights at a Glance

	9M	9M	Growth	Organic	Q3		Q3	Growth	Organic	Comment
			Growth				Growth
(in € thousand)	2019/20	2018/19			2019/20	2018/19
Revenues	29,554	27,934	5.8%	12.2%	9,625	9,415	2.2%	8.4%
										9M Milestones €581K
BioScience	10,476	7,620	37.5%	37.5%	3,642	2,440	49.3%	49.3%	(PY:€792K)
BioIndustrial	19,127	20,321	-5.9%	2.1%	6,025	6,977	-13.6%	-6.5%
Total operating
performance (1)	30,310	29,705	2.0%	8.1%	10,121	9,889	2.3%	9.3%
Adjusted EBITDA (2)	-553	-2,071	73.3%	71.9%	161	-398	140.5%	147.0%	€354K share-based comp
EBITDA	-907	-2,263	59.9%	58.0%	-38	-507	92.5%	91.5%
EBIT	-3,511	-6,205	43.4%	42.3%	-902	-3,000	69.9%	69.3%
Net Result	-6,108	-7,968	23.3%	21.9%	-1,555	-3,905	60.2%	59.5%
Operating Cash Flow	-5,734	-4,893	-17.2%	-16.8%	-1,593	-2,012	20.9%	19.3%

30.06.202030.09.2019

Cash	18,787	15,160	23.9%	24.8%
Number of Employees	275	281	-2.1%	2.2%
Material Expense Ratio	40.4%	42.3%	- 1.9%	Pt.	- 2.2%	Pt.
Adj. Personnel Expense
Ratio	44.4%	43.6%	0.8%	Pt.	0.5%	Pt.

1. Revenues + change in inventories + other income + R&D grants
2. The reconciliation from adjusted to unadjusted EBITDA can be found on slide 44

Major Events Q3:

• Group: so far no major negative Covid-19 effects materialized
• Very dynamic BioScience business
• BioIndustrial 9M EBITDA margin rising to 13.3% (PY:11.5%), despite low organic sales growth
• Significantly reduced net loss
• Successful cash capital increase, approximately:1.8mio shares and proceeds of EUR15mio
• Minority buy-out of WeissBioTech generates potential to accelerate synergies (signed June 30th , closing July 1st 2020)
• Manfred Bender, CFO, will leave BRAIN end of September
• Lukas Linnig new CFO from October 1st

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

16

Strong Revenue Growth Trajectory

**

• **

*purchase BioCatalysts Ltd. **divesture Monteil Cosmetics

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

17

Significantly Improving Adjusted EBITDA

Adjusted EBITDA 9M 19/20

	3,000	€				•
				2,553
					2,339
	2,000	€
	1,000	€
						•
	0	€
T. €	-1,000 €	-553
In
	-2,000 €				•
			-2,071
	-3,000 €
				-3,119
	-4,000 €				•
	-5,000 €		-4,411
			BRAIN Group	BioScience	BioIndustrial
			18/19 - 19/20	18/19 - 19/20	18/19 - 19/20

Group adj. EBITDA improved by 73.3%; especially the segment BioScience strongly contributed to an improved EBITDA

The BioIndustrial segment improved its adj. EBITDA Margin to 13.3% (11.5%) despite low organic sales growth

The overall BRAIN group grew organically by 12.2% YoY

Revenues in the segment BioIndustrial were negatively affected due delays in the commissioning of new production facilities. Organic growth amounted to 2.1%

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

18

Cash & Cash Flow

	9M	9M		Growth	Q3		Q3	Growth	Comment
(in € thousand)	2019/20	2018/19	2019/20	2018/19
Gross Cash Flow	-4,610	-4,897	5.9%		-1,145	-1,455	21.3%
Operating Cash Flow	-5,734	-4,893	-17.2%	-1,593	-2,012	20.9%	Strong working capital reduction PY
Investing Cash Flow	-4,548	-4,521	-0.6%		-76	-1,639	95.3%
Financing Cash Flow	13,914	-749	1958.5%		14,091	611	2205.6%	~14.6mln net proceeds CI
Net change in Cash & Cash Equivalents	3,632	-10,163	135.7%		12,422	-3,041	508.5%
	30.06.202030.09.2019
Cash	18,787	15,160	23.9%
Equity	25,909	17,091	51.6%

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

19

Stable Covid-19 Situation

Secure:Targets:Measures:

•	Health aspects	•	Safety of employees	•	Covid-19 task force
•	Supply chain	•	Business continuity	•	Hygiene concept
•	Operating business	•	Minimize disruptions	•	Personal safety supplies
•	Future pipeline	•	Fulfill customer contracts	•	Physical distancing
				•	Home office
				•	Strict travel restrictions
				•	Flex work
				•	Digitalize workflow

Disruptions: Solascure is facing delays in clinical trials as the relevant test centers have been closed for non Covid-19 patients. Lower sales volumes of enzyme products to ethanol and wine producers

Summary:

BRAIN Group: so far no major negative Covid-19 effects materialized

Travel restrictions and physical distancing make it more challenging to visit customers for new projects

Our business development team is working here with creative solutions and trying its best to keep effects on the commercial project pipeline as low as possible

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

20

Outlook & Current Management Focus

Outlook FY 19/20, Confirmed 

• Significant organic growth despite Covid-19
• Improvement of our EBITDA

• Some negative Covid-19 effects on SolasCure
• Enzyme volumes to bio-ethanol & wine producers negatively affected
• Q4 EBITDA will not match the very positive Q2/Q3 trend (board alignment, other operational effects)

Current Management Focus

• Prepare organization for future growth and profitability 
• Introduce new organizational structure 
• • Focus Business Development (Sales) 
• Business prioritization in the new business development pipeline 
• Build M&A pipeline
• Execute bolt-on value enhancing M&A transactions
• Enzyme host organism optimization & development
• Introduce group benchmarking and best-practice transfer
• Centralizing of corporate functions over the mid-term

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

21

Our Share Ownership*

• Current number of shares: 19,861,360

• Free float of ~ 45%

• Strong long-term investor base

• ∼ 8,000 shareholders

• WKN 520394 / ISIN DE0005203947

• Symbol BNN

• Prime Standard; Frankfurt/M

*End of June, 2020

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

22

Brain in the Media*

TV

• Tagesthemen (ARD), June 5th 2020, Minute 23:22: "From Ash to Gold", Green Mining from Waste Streams
• [w] wie wissen (ARD), May 2nd 2020, Sugar Replacement, "The Better Stevia", Brain Tongue Cells Technology
• [w] wie wissen (ARD), April 25th 2020 Minute 18:00, Gold Green Mining from electronic waste, BioXtractor

On our Webpage /Publications

• Analysis of Calcium Signaling in Live Human Tongue Cell 3D-Cultures upon Tastant Perfusion
• Biotechnological upcycling of plastic waste and other non-conventional feedstocks in a circular economy
• An Ustilago maydis chassis for itaconic acid production without by‐products
• Towards Novel Bioactive Antiperspirants for Cosmetic Applications
• Marker-freegenome editing in Ustilago trichophora with the CRISPR-Cas9 technology
• BRAIN BioXtractor: Biobased Metal Extraction for the Circular Economy
• In vitro skin three-dimensional models and their applications

Please visit also our Blog "News & Views"

• https://www.brain-biotech.com/news

*Please contact us, we are happy to provide the media links

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

23

Financial Calendar

ANNUAL REPORT

Publication of the annual report as of September 30th, 2020 (12M)

January 14th, 2021

QUARTERLY STATEMENT

Publication of the quarterly statement as of December 31st, 2020 (3M)

February 26th, 2021

ANNUAL GENERAL MEETING

Annual General Meeting (FY 2019/20)

March 10th, 2021

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

24

Thank you for your attention.

BRAIN Aktiengesellschaft

Darmstädter Straße 34-36

64673 Zwingenberg, Germany www.brain-biotech.com

Your contacts:

Michael Schneiders, Head of IR

+49 (0) [e-mail]

Martina Schuster, IR +49 (0) [e-mail]

@BRAINbiotech

BRAIN AG

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© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

25

Appendix

	Page
Strong sustainability contributions	27
Corporate Governance	28
High barriers to entry	29
NBD deep dive	30
Service business deep dive	32
Partnerships "Brain Inside"	32
Enzyme production, expression hosts	34
Enzyme value chain	35
SolasCure Ltd.	36
BioArchive	37
R&D/Technology Platforms	38
HR: People -- our core capital	39
Detailed management & employee incentives	40
Peers by business activity	41
Detailed financials
Detailed organic vs. reported	42
Cost ratios	43
Adj. vs reported	44
Financial debt vs. financial liabilities	45
Balance sheet	46
M&A criteria & history	47
Management CV	48
Our share	50
Analyst coverage	51
Glossary	52

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26

Strong Sustainability Contributions

Brain is empowering the biological transformation of the industry

• Industrial biotechnology is at the heart of the Bioeconomy
• Utilize natural raw materials efficiently
• Improve industrial manufacturing processes to become more sufficient
• Create new biobased products
• Make consumer goods healthier and more effective
• Move away from fossil raw materials towards sustainably produced natural resources
• Safe energy compared to chemical processes
• Significantly less CO2 emissions
• Focus areas: nutrition, health and the environment
• Powered by our proprietory BioArchive, driven by our deep R&D and process knowledge

Selected products and solutions

• Food: Reduce calorie density in foods by natural sweeteners while maintaining the taste profiles; reduce the salt content in food
• Good Health: functional probiotics, replace chemicals in cosmetics by natural compounds; treatment of chronicle wounds
• Water/Sanitation: replacing chemicals by biological metal extraction from e-scrap, incinerator bottom ash and other mineralic resources
• Industry Innovation: improving production efficiency; reducing CO2 emissions and using CO2 as a raw material
• Responsible consumption: reducing the perishability off food by bioactive antimicrobials to reduce food waste
• Climate Action: managing pollution, recycling phosphates, transforming waste streams into unprecedented value chains

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

27

Corporate Governance

Principles and policies defining Brain's responsible operations

• Dual German AG structure consisting of a management board and a fully independent supervisory board
• We comply with all statutory corporate governance regulations as well as the recommendations of the German Corporate Governance Code (DCGK) (exceptions specified and justified in the statement of conformity)
• BRAIN AG Code of Conduct
• BRAIN's Privacy Statement
• BRAIN's Disclosure Policy
• Quality, Health and Safety Policy
• Financial responsibility: Brain's operations produce added value to different stakeholders in the countries we operate. Financial
  benefits are shared between, among others, suppliers, personnel, owners and the public sector
• Internal compliance: qualified internal compliance officer, permanent risk assessment, audit committee, internal audit team and risk reporting
• Monthly reporting and audit meetings with the subsidiaries
• Member of the following associations: Bio Deutschland, Dechema, IWBIO, VCI

Brain's most important responsibility themes: healthy & natural, product safety, responsible business conduct, workplace safety

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

28

High Barriers to entry

Our novel products & solutions are based on:

• Proprietary BioArchive with >450 person years to reproduce
• Extensive patent portfolio, around 140 patents granted and around 60 patent families
• Trade secrets
• Broad and deep technology know-how in enzymes, microorganisms and bioactive natural compounds
• Ability to express target compounds in bacteria, yeast or fungi
• Full process capabilities from the lab to production
• Strong industry partner network with over 100 partner collaborations successfully completed
• Strategic alliances for new business development
• Strong scientific and university network
• State-of-the-arttechnology portfolio
• Our people: first class scientists and process specialists

Pioneering Bioproducts.

© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]

29

New Business Development (NBD), Deep Dive

		2026					10.27 bn US$
	Sugar Substitutes Market1	6.3% CAGR					6.35 bn US$
		2018
		2026						20.03 bn US$
	Advanced Wound Care Market 2	5.4% CAGR						12.84 bn US$
		2019

	2027				46.85 bn US$
Mining Chemicals Market 3	6.5% CAGR				28.13 bn US$
	2019

2025 1.54 bn US$

Salt Substitutes Market 4	7.8% CAGR		0.84 bn US$
	2019
Microbial Control	2026				15.94 bn US$
5.4% CAGR
Biocide Market 5
2019
				11.15 bn US$

• Fortune Business Insights; 05/2020, 2 Industry Research; 08/2020 3 Coherent Market Insights; 08/2020 4 Industry statsreport BMRC; 01/2020 5 Global Market Insights, 07/2020

Pioneering Bioproducts.

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30

Service Business Deep Dive

Programs with industry partners

• BRAIN AG has a long track record with dedicated contract R&D programs
• Monetization: tech-access, fees and milestone payments, royalties or entity formation/profit participation
• Non-cyclicalservice contract business with secular growth

Tailor Made Solutions (TMS)	Libraries Business
Novel natural products & solutions for the industry	BioArchive- industry leading collection of natural resources and
metagenome libraries

• Partnered projects with the industry
• Active NBD sales approach
• Cost-pluscontracts, milestones & license fees
• Cross selling of IP to non-exclusive areas
• Strong industry network with over 100 collaborations completed
• Deep and broad knowledge in enzymes, microorganisms and bioactive natural compounds
• Focus areas: nutrition, health and the environment
• From lab to production
• Multi-yearcontracts

• MetXtraTM: unique in silico enzyme selection (Biocatalysts)
• ABEL®: Activity-Based Expression Libraries (BRAIN)
• LIL®: Large Insert Libraries (BRAIN)
• METAGENOME®: substantial metagenome libraries (BRAIN)
• CompActives®: easily scalable compounds for bioactivity screenings (BRAIN)
• MEGx: world's most sustainable collection of purified natural products, isolated from plants (MEGxp) and microorganisms (MEGxm) (AnalytiCon Discovery

Strong link & interaction

Pioneering Bioproducts.

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Partnerships "Brain Inside"*

More than 100 exclusive partner collaborations successfully completed.

Enzymes	Microorganisms	Bioactive Natural
		Compounds

Industrial

Partner*

*confidential partnerships not disclosed

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Partnerships "Brain Inside"

Novel Solutions with high value added for our partners.

Enzymes	Microorganisms	Bioactive natural
		compounds

Product range

Beiersdorf

BRAIN inside	Low temperature	Flavorpro™ 786P	Optimisation	Skin anti-irritant
	detergent enzymes	flavor creation	of microbial strain for	Symsitive 1609
		in cheese processing	isomalt production

Industrial partner

#3 detergent	BRAIN	#1 European	#4 ingredients
business globally	subsidiary	sugar company	supplier globally

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Enzyme Production, Expression Hosts

For expression hosts, a wide variety of protein expression systems are available.

Enzymes can be expressed in cell cultures of bacteria or yeasts.

Factors for choosing an expression system

• Protein quality
• Functionality
• Regulatory
• Production speed and yield

Biocatalysts and WeissBioTech

• Use either bacteria or yeasts for the recombinant production of the enzyme being manufactured
• Have the ability to perform the fermentation process over a range from 250mL to 18m3 scale
• This makes it possible to efficiently optimize the production yield

Ongoing development & optimization of our expression hosts is key for the cost competitiveness of our products. In-licensing is also under consideration.

*

*

*source: Biocatalysts

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We Cover the Entire Enzymes Value Chain

All steps are underpinned by strong customer application knowledge.

Discovery	Protein and Enzyme	Expression/Secretion:	Large Scale	Formulation	Marketing and
	Engineering	Bioprocesses & scale-up	Fermentation	And Blending	Sales

BRAIN

Biocatalysts

Biocatalysts

WeissBioTech

Partners

CMO's and Partners

Distributors

Bolt-on M&A can help strengthen our offering

Pioneering Bioproducts.

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SolasCure Ltd.

Revolutionizing Chronic Wound Care through Biomimicry

For BRAIN:

• Discovering a unique technology and spinning it out in 2017 as a separate company
• 45,81% shareholding of Brain AG, at equity consolidated
• Created a targeted team at SolasCure Ltd.
• Share the commercialization financing burden with new investors
• Allows monetization at exit (e.g. IPO, Strategic Investor, PE)
• Aurase® IP stays with Brain AG, (patent estate, WO 2010/099955)

The Market:

• Chronic wounds effect about 40mln people and consume about 10% of health care expenditures
• Advanced wound care market CAGR expected at 6,5% '18-26* (aging, diabetes and obesity are the main growth drivers)
• Alternative to ineffective and painful surgical or autolytic debridement
• Current target market size ~€600mln

The Product:

• Aurase® is a hydrogel containing a safe, active, highly specific enzyme
• The enzyme has been isolated and cloned from medical maggots (green bottle fly)
• Currently phase 2 of clinical trials
• Aurase® to be produced in a GMP biotechnological process
• Santyl ® of S&N is currently the market leading drug for non-surgical wound debridement

Aurase® treatment

*allied market research '19

Pioneering Bioproducts.

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BioArchive - The Toolbox of Nature

53.000	13.000	43
Characterized		Plant fractions	Metagenome libraries
Microorganisms		available for isolation
		campaigns

450		11.700		231
Habitat collections	Samples derived from	Giga-bp DNA ready
and environmental		edible biomaterials	to screen
samples
464	49.500		300 Mio.
Gene libraries
	Natural and naturally	Reusable
available for		inspired compounds	ready-to-screen
screening				Metagenome clones

High Value

>450 person years to reproduce

~140 patents ~60 patent families

Powering TMS, NBD & product sales

Pioneering Bioproducts.

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R&D / Technology Platforms - Industrial Biotechnology Toolkit

Bio-based resources

BioArchive- industry leading collection of natural resources and metagenome libraries

• MetXtraTM: unique in silico enzyme selection (Biocatalysts)
• ABEL®: Activity-Based Expression Libraries (BRAIN)
• LIL®: Large Insert Libraries (BRAIN)
• METAGENOME®: substantial metagenome libraries (BRAIN)
• CompActives®: easily scalable compounds for bioactivity screenings (BRAIN)
• MEGx: world's most sustainable collection of purified natural products, isolated from plants (MEGxp) and microorganisms (MEGxm) (AnalytiCon Discovery

Product development

Microbial expression- large set of pro- and eukaryotic expression strains, termed chassis, for the economic production of enzymes and biocatalysts

Microbial strain development- tailor-made designer strains based on conventional methodologies, plus engineering novel synthetic pathways and artificial operons for high-value industrial production Gene and protein engineering- expression of genes and gene clusters for rationally redesigned production strains, including synthetic biology application, for customized enzymes and biocatalysts with optimized properties

Candidate discovery

High-throughputisolation- extraction and purification of natural products from variable biological resources (AnalytiCon Discovery)

Compound discovery- activity- and sequence-based screenings for application-driven research incl. biochemical and human cell-based assays

• screenline®: human cell-based receptor cell lines (BRAIN)

Structure elucidation- determination of molecular structure of (novel) natural compounds Sample provision- rapid production of selected enzyme samples for customer testing

• Research Grade Sample (RGS): small volume enzyme sample production platform (Biocatalysts)
• Design for Manufacture (DFM): selection principles of enzyme candidates to maximise the probability for high expression in vivo and production scale-up (Biocatalysts)

Production scale-up

Process development- establishment of up- and downstream processes for efficient and cost- effective microbial production

Process optimization- identification of optimal parameters for superior production results Product blending & formulation- superior knowhow for blending enzymes

Data evaluation

Analytics- state of the art equipment up to implementation of quality and stability control; covering proteins, metabolites and synthetic compounds

Bioinformatics- top-modern bioinformatic technologies for read-out of Next Generation Sequencing (NGS) results, Design of Experiments (DOE), big data analysis

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HR: People - Our Core Capital*

Brain is a Knowledge Driven Enterprise

Innovation is our Passion & Teamwork our Basis

•	Strong corporate culture	•	Global scientific and university network
•	Technology campus	•	BRAIN alumni platform

~39

years average age

54%

female employees

• 7%

Average fluctuation since '04

9

years average tenure

8

trainees

strong support for PhD and master theses

>60

different Professional Degrees

55%

Academics

23%

PhDs

=

equal pay policy

* numbers refer to BRAIN AG

Pioneering Bioproducts.

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Detailed Management & Employee Incentives

• Since the IPO Brain AG's board as well as management compensation has been linked and aligned with shareholder interests

Executive Board	variable component based on individual quantitative & qualitative targets
(Fix + performance based bonus)	stock component, see ESOP

CoPerBo

Corporate Performance Bonus

• Since FY 2015/16
• For all employees without personal targets
• Annual bonus based on basic salary
• Three factors, 1/3 each
• • Total operation performance BioScience
  • Adj. EBITDA BioScience
  • Absolute share price performance in FY
• Payout range between 0-30% of basic salary

ESOP

Employee Stock Ownership Program

• Since June 2018
• Board, managers and employees
• Incentive and retainer
• 1 Option = 1 Share at exercise price
• Strike price €20,67 and €10.64 from ESOP 2017 and 2018
• Beneficiary needs to still be employed
• Earliest exercise day, 4 years after grant
• Caps partially in place
• Monte Carlo model applied for fair value calculation
• 437,600 options outstanding as of Sept.30th
  2019

Specific Incentives at Daughter Companies

• Growth equity program Biocatalysts Ltd.
• • Incentivize and retain managers
  • Share program without voting or dividend rights
  • Put option based on reporting Sept. 30th, 2022
  • Growth incentive with pre-defined EBITDA multiples
  • Cash settled, €17.07 value/share as of September 30th, 2019
• Employee share scheme, AnalytiCon Discovery
• • Put options for employees and management until February 2020
  • Remuneration in 3 tranches
  • Ownership now at 100%

Pioneering Bioproducts.

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Peers by Business Activity

Brain AG

BioScienceBioIndustrials

Solutions&Services	Customized Products	Advanced Wound Care
Own R&D
Brightseed	Amyris	Smith&Nephew
Codexis	Christian Hansen	(Santyl)
Dyadic	Evolva
Evotec	Kerry Group
MorphoSys	Novozymes
	Pure Circle
	Symrise
	Treatt

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Detailed Financials - Organic vs. Reported

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Detailed Financials - Cost Ratios

*adj. for ESOP and employee share scheme, AnalytiCon Discovery

Pioneering Bioproducts.

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Detailed Financials - Adjusted vs. Reported

For a like-for-like comparison Brain AG adjusts its EBITDA for its employee stock ownership program, performance based numeration in daughter companies and acquisition & integration costs

(in € thousand)	9M 19/20	9M 18/19
EBITDA	-907	-2,263
Personnell expenses from the employee share schema at AnalytiCon Discovery GmbH	0	-35
Share-based employee compensation	-354	-136
Acquisition and integration costs incurred in the expansion of the BRAIN Group	0	-20
Adjusted EBITDA	-553	-2,071

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Detailed Financials - Financial Debt vs. Financial Liabilities

For or a detailed analysis of our EV calculation, our financial liabilities include:

€thousands	Sept 30th, 2019	Comment
Liabilities from put option rights	14,373	Biocatalysts Ltd. Call/Put options '23/'24, earlier exercise possible, currently 65.5% ownership
Non-controlling shareholders' put option rights	1,658	AnalytiCon Discovery, exercised Q2 '19, now 100% ownership
Contribution by silent partners	4,500	€1.5mln Hessen Kapital I GmbH, €3,0mln Hessen Kapital II GmbH, Hybrid Instruments (silent participation)
Sum I	20,531
Loans	5,988	€5,665mln secured by Brain AG, Biocatalysts & L.A. Schmitt land charges
Finance Lease Liabilities	1,351	mostly plant & equipment
Derivatives	494	mostly FX hedging
Other	14
Sum II	7,847
Total	28,378
Cash, 9M	18,787

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Detailed Financials - Balance Sheet

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M&A Criteria & History

Qualitative mid-term M&A criteria			Quantitative mid-term M&A criteria
•	B2B only				•	Bolt-on character
• Clearly focused on the product business			• Profitable or at least break-even
•	Niche applications and producers			• Value accretive within 1-2 years post synergies
• Europe focused, US might be an option			•	Realize economies of scale
Purchase	2009	2012	2013	2014		2018

Change

Disposal

20192020

Minority Buy-Out

Minority Buy-Out

2019

	Brain AG M&A Transactions
	Purchases
	Target		Time		Description		Comment
	L.A.Schmitt		2009		B2B cosmetics
	Monteil Cosmetics		2012		B2C cosmetics
	AnalytiCon Discovery		2013		Library, TMS, R&D
	WeissBioTech		2014		enzyme design & production
	Biocatalysts		2018		enzyme design & production		65.55% owned, put/call options in place
	Disposals
	Asset		Time				Comment
	Monteil Cosmetics		2019		B2C cosmetics		refocus of Brain on the B2B segment
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Management CV -- Executive Board

Adriaan Moelker

(CEO)

• Master of Business Administration
• Year of birth 1964
• Joined BRAIN in Feb. 2020
• 20+ y of professional experience in industrial biotechnology innovation
• Successful in terms of innovation & revenue
• Extensive global experience in all key industrial enzyme segments

Manfred Bender

(CFO, until Sept.)

• Diploma in Business Administration
• Year of birth: 1965
• Joined BRAIN in 2018
• 20+ y of finance leadership experience as CFO and CEO in listed companies
• Successful in market cap & revenue growth
• Asset management, M&A

Lukas Linnig

(CFO, from Oct.)

• B.S. in Economics, CFA
• Year of birth: 1993
• Joined BRAIN in 2015
• 7+ y leadership experience in finance, controlling and legal
• Successful in implementing

finance

controlling systems

• Prior to Brain: VC and consulting
• Advisor during the IPO

Pioneering Bioproducts.

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Management CV - Selected Senior Management

Dr.-Ing. Ute Dechert

(Unit Head HR&Processes)

• Doctor of Engineering (Biochemistry)
• Joined BRAIN in 1996
• 20+ y of professional experience in project management, grant management, HR, organization
• • processes
• Active ASIIN, Dechema, University of Esslingen, VBU

Dr. Michael Krohn

(EVP, Head of R&D)

• PhD Molecular Biology
• Joined BRAIN in 1997
• 20+ y of leadership experience in BioActives, functional ingredients, contract research, business development
• Coordination NatLifE 2020
• Since 2013 member of the Brain AG executive committee

Dr. Martin Langer

(EVP, Head of Business Development)

• PhD, Molecular Biologist & Biochemist
• Joined BRAIN in 1995
• 25+ y of professional experience in business development, marketing, communication and
  VC
• Since 2013 member of the Brain AG executive committee

Pioneering Bioproducts.

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49

Our Share*

FY 2015/16

16.11.16 € 15.12

DOLCE

23.09.16	26.09.16
€ 11.50
€ 11.80
Changes
06.10.16

29.02.16 Managementboard€ 11.60

€ 9.89	29.08.16
3M
€ 10.37
	DOLCE 31.08.16

€ 10.01 9M

10.02.16

€ 9.00	31.05.16
	€ 8,35
	6M	14.06.16
		€ 7.33

FY 2016/17

27.01.17 € 24.49

31.05.17

• 18.00
  6M

28.02.17

• 16.30
  3M
• • 
    09.03.17
  • 15.90 AGM

12.07.17

• 18.00 DOLCE

			FY 2017/18
		29.01.18
		€ 27.50
		28.02.18
		€ 24.65
26.10.17		3M	08.03.18
€ 21.95 15.02.18		€ 24.50
Green	€ 23.55		AGM

Mining	Ad Hoc 3M
	07.03.18
	€ 23.05
	DOLCE

19.03.18 € 23.95 Biocatalysts30.05.18

€ 20.65

15.12.176M

€ 21.80

31.08.17

12M

• 17.88
  9M

FY 2018/19

20.06.18

• 23.10 CyPlus

	22.08.18
	€ 21,75
07.08.18	SolasCure
€ 22.05		30.08.18
CFO
	€ 20.40 DOLCE
Goebel
31.08.18
€ 19.30 9M	02.10.18
		€ 17.94

10.10.18

• 17.30

06.09.18 CBO Roedder

€ 17.00

22.10.18 € 14.96

CFO	10.01.19
Bender	€ 12.80
	AR
	07.03.19
26.11.18	€ 10.56
AGM	29.05.19
€ 11.80
	€ 10.16
Suntory
	6M
14.12.18
€ 11.90	28.02.19
12M	€ 10.64	25.06.19
3M
	€ 9.70

Monteil

FY 2019/20

02.10.19

€ 13.32	14.01.20

€ 11.20

18.12.19 AR

€ 10.64 Production

	Capacities	27.02.20		04.06.20
30.08.19		€ 8.84		€ 8.43
	Ad Hoc		Ad Hoc Capital
€ 8.56
	Marquart	increase
9M
	28.02.20
	02.12.19 € 8.88 3M
	€ 9.40	05.03.20
	Ad Hoc
13.08.19	€ 9.02	07.05.20 29.05.20
Eck/		€ 8.62
	€ 9.12
€ 7.88	AGM
Moelker	Change 6M

CFO

17.03.20 € 5.64

*from the IPO until June 30, 2020 (9M FY 19/20)	Source: Finanzen.net (Xetra; Close)
Pioneering Bioproducts.	© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]			50

Analyst Coverage

Bank	Analyst	Target Price	Recommendation
	Laura López Pineda
	Markus Mayer	17.50 €	Buy
	Falko Friedrichs	12.00 €	Buy
	Dennis Berzhanin	15.10 €	Buy
	Peter Spengler	N/A €	Change of Coverage
	Dr. Christian Ehmann	15.00 €	Buy

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Glossary

Anti-Bitter	BRAIN development program to mask bitter tastes for healthier foods and to reduce sugar and
	salt
Aurase®	Enzymatic agent as part of an innovative gel-based medical device for the biotherapeutic
	treatment of chronic wounds
Bioactive natural compounds	Used to develop products for the food, beverages, skin care, cosmetics and chemical industries
BioArchive	Unique collection of comprehensively characterized culturable microorganisms, characterized
	natural substances and fractions of edible plant material as well as a multitude of new enzymes
	and metabolic pathways from organisms that were previously unculturable
Bio-based	Bio-based products are goods manufactured from renewable raw materials
Biocatalysts	Enzymes that act as catalysts to accelerate (bio)chemical reactions
Biocatalysts Ltd. and	BRAIN subsidaries based in UK (Headquarter Cardiff, Wales) and subsidary in US (Illinois);
Biocatalysts Inc	Global distributor network e.g. Korea, Australia, New Zealand
	Key player in the specialty enzyme business
Bioeconomy	Mega-trend that encompasses the transformation from industries based on fossil raw materials
	to a more sustainable form of economic activity that mainly uses biological resources and
	processes
BioIndustrial	Development and marketing of the company's own products along the value chain; one of
	BRAIN's two business segments
Biologization of industry	Use of biological processes in an industrial setting with the aim of creating a more sustainable
	economy
BioScience	Cooperation business set up with globally operating industrial partners; one of BRAIN's two
	business segments
Biotechnology	Application-orientedsub-sector of biology that includes insights and methods of microbiology,
	genetics and biochemistry as well as those of technical chemistry and process engineering

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Glossary

BioXtractor	BRAIN demonstration plant for next-generation metal extraction in the fields of green and urban
	mining based on microorganisms
Bulk enzymes markets	Volume-driven mass markets for enzymes sold in large volumes. In contrast there is a
	high-margin business with specialty enzymes
Business-to-Business (B2B)	Form of the market in which the offer and provision of services is made by companies to
	companies (= Business relations between at least two companies)
Circular economy	Concept for the complete recovery of raw materials used, beyond the life cycle of a commodity
	through to new production processes; component of the bioeconomy
Clone	Identical copy of a DNA molecule
Compliance	Alignment of companies with laws and directives, as well as voluntary codes
Development pipeline	Total number of BRAIN Group development projects for New Business/Product Development
Development projects	R&D projects of the BRAIN Group for New Business/Product Development
DNA	Deoxyribonucleic acid: biomolecule that carries genetic information (genes)
DOLCE	Strategic partnership initiated by BRAIN for the development of natural sweeteners and sweet
	taste enhancers
Enzymes	Effective catalysts for biochemical reactions
FRESCO	BRAIN development program for bio-based freshness and product stability
Giga-bp DNA	Sequence length in numbers of giga base pairs

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Glossary

	GRAS status	Generally Regarded as Safe: declaration of safety for the use of substances to manufacture
		foodstuffs; GRAS organisms can be used without restriction in biotechnological production
	Green mining	Sustainable mining, e.g. ore treatment to extract gold, silver or copper using microorganisms
		instead of chemicals
	Habitat	The natural environment of an organism
	High-performance	Biotechnologically developed microbial cell factories
	microorganisms
	HTC technology	Human Tongue Cell technology patented by BRAIN, based on immortalized human tongue cell
		lines
	Industrial biotechnology	Also known as white biotechnology; drives innovation for a paradigm shift away from petroleum-
		based towards biological processes and bioeconomy products
	Library	A collection of DNA fragments that is stored and propagated in a population of micro-organisms
		through the process of molecular cloning
	Metagenome	All the genomic information present in all the microorganisms of a specific community
	Microorganism	Microscopically tiny unicellular creature
	New Business Development	Systematic further development of existing and development of new business opportunities
	(NBD)	including f.e. R&D and marketing activities
	New Product Development	R&D activities that aim to develop product candidates for the BRAIN Group's own market
	(NPD)	offerings
	Peptides	Usually linear, sometimes annular chain of molecules composed of two or more amino acids
	Product sales	Sales of products in the form of merchandise, technologies or biotechnological system
		solutions; can be achieved via direct B2B business of the BRAIN Group or through joint product
		developments with industrial partners and corresponding licensing agreements; scalable-
		product business option offered by the BRAIN Group (see also R&D cooperation partnerships)
	Pioneering Bioproducts.	© BRAIN Aktiengesellschaft Zwingenberg Germany www.brain-biotech.com [phone]		54

Glossary

R&D	Research & development
SALT-E	BRAIN development program for healthier foods through salt reduction
Santyl	Collagenase SANTYL Ointment is used to remove damaged tissue from chronic skin ulcers and
	severely burned areas
SDG-UN	United Nations Sustainable Development Goals
Specialty chemicals	Specific chemical products with a broad range of activities that a large number of other
	industrial sectors depend on
Specialty enzymes market	Markets for high-margin specialty enzymes business
Stage-gate process	Standardized process model for developing product innovations with the aim of assuring
	process quality
Tailor-Made-Solutions	Dedicated contract R&D programs for Industry
TMS	Compensation: fees and milestone payments or royalties
Urban mining	Sustainable extraction of valuable substances from secondary streams and waste streams to
	keep them in value chains in the long term
White Biotechnology	Includes the application of modern biotechnology in industrial production processes. Chemical
	starting materials are converted by enzymes and cells into products suitable for further
	processing
	Also known as industrial biotechnology

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