Company presentation

1
Company presentation
Jean-Christophe Donck, Vice President Investor
Relations
2
Company Profile

• Headquarters Gent (Belgium)
• Employees 590
• Business Specialty Diagnostics Therapeutics
• Stock exchange Euronext Brussels (INNX)
• Index Next 150 and NextEconomy
• Outstanding shares 27.3 million
• Market capitalization approx. 350 million
• Shareholders Founder Solvay 27
• Free float 73

Innogenetics - key player in European Biotech
Top 15
3
Strategy
To develop two successful businesses A
sustainably growing and profitable Specialty
Diagnostics business and An expanding therapeutic
vaccines portfolio
Reduced risk
4
Todays situation

• Specialty Diagnostics
• Sustainably and fast growing revenues, vertically
  integrated, cash positive, and profitable
  business
• Substantial revenues gt 65 million in 2003
• High operating margin gt 10 in 2003
• Therapeutics
• Therapeutic vaccines for infectious diseases
  (HBV, HCV, HPV)
• Maturing product pipeline 3 programs in clinics
  by 2006
• Lead compound results of phase 2b in 2005
• Multiple partnering opportunities

Balanced business model with high upside potential
5
Intellectual property - a strategic asset
Number of granted patents
Multiple partnering opportunities
6
Current activities
Specialty Diagnostics
Therapeutics

• Infectious diseases
• Genetic testing
• Neurodegeneration
• Vertically integrated

• Therapeutic vaccines
• Hepatitis B
• Hepatitis C
• Human papillomavirus
• Other programs
• Wound care
• Immune disorders
• Development stage

7
Shareholders
7
20
Free float
Founder
Solvay
73
Stock exchange Euronext Brussels
(INNX) Index Next 150 and NextEconomy Outstandi
ng shares 27.3 million Market capitalization
approx. 350 million
8
Specialty Diagnostics
9
Speciality Diagnostics Revenue model

• Holder of key patents in infectious diseases and
  Alzheimers disease
• strong competitive position and high barriers
  to entry
• blue chip commercial partners
• Efficient distribution channels partners,
  direct, distributors
• Attractive revenue model
• product sales (increasing 2-fold over 1999-2003)
• license fees ( increasing 80-fold over 1999-2003)
  
• royalties (increasing 6-fold over 1999-2003)
• High margin products
• Boosting pipeline with new technology and
  products feeding future growth

Revenues expected to doubled by 2008
10
Diagnostics New Healthcare Paradigm
Diagnostics
Specialty Diagnostics
Diagnosis
Predisposition profiling
Diagnosis
Treatment
Treatment selection
Treatment
Outcome
Treatment monitoring
gt750m Growth 15-20
gt22bn Growth 4-6
Well positioned in a fast growing, high margin
market
11
Specialty Diagnostics Partnerships
Distribution HCV genotyping Bayer license
fee, RD funding, milestone payment,
transfer price Co-development rapid
microbiology Roche license fee, RD funding,
testing milestone payments,
royalties Out-licensing HIV-1 group
O Abbott license fee, royalties Bayer Roche
bioMérieux/O.T. Dade Behring HCV
genotyping Roche license fee, royalties
Strong partners secure fast market penetration
and sustainable revenues
12
Specialty Diagnostics - Portfolio

• Technology platforms and products in field of
• Infectious diseases hepatitis B, hepatitis C,
  HIV
• Genetic testing HLA tissue typing, cystic
  fibrosis
• Neurodegeneration Alzheimers disease
• Comprehensive range of diagnostics screening,
  confirmatory, genotyping, and drug-resistance
  tests
• Flagship technology
• LiPA (35 of sales with end-user price 25-100)
• LIA (20 of sales with end-user price 20-40)
• INNOTEST (10 of sales with end-user price
  1-10)

High-end diagnostic products for high margin
markets
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Specialty Diagnostics - Infectious diseases

• Market
• Virology Total market volume 2002 1.6bn
• Bacteriology Total market volume 2002 1.8bn
• Products for the Virology Market
• Hepatitis C virus (HCV) collaborations with
  Roche Bayer
• Hepatitis B virus (HBV) significant potential
  for future revenues
• Human immunodeficiency virus (HIV) growing
  royalty stream from HIV-1 group O patents
• Products for the Bacteriology Market
• collaboration with Roche to develop rapid
  molecular microbiology tests, a potential
  blockbuster market

Infectious diseases account for 50 of product
sales
Source Clinica Reports 2002
14
Diagnostics Genetic testing

• Market
• Cystic fibrosis market 2004 60-70 million
  (CAGR 25)
• HLA tissue typing market 2004 65-80 million
  (CAGR 10)
• Products
• Three LiPA-based product ranges currently
  marketed in areas of
• HLA tissue typing (Abbott Laboratories)
• cystic fibrosis (mucoviscidosis)
• innate immunity - mannose lectin binding (MBL2)
• Distribution of Third Wave Technologies genetic
  tests in Europe risk factors in the areas of
  cardiovascular diseases, blood coagulation, and
  hearing disorders (potential 70 million)
• Significant further growth potential through
  development of new genetic tests

Genetic testing accounts for 17 product sales
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Diagnostics Neurodegeneration

• Market - Alzzheimers disease
• Prevalence of Alzheimers disease (AD) increases
  from 2-3 of 65-year-olds to 30-47 after the
  age of 85, doubling every 5 years(1)
• Total number of patients expected to grow
  worldwide from 9 million in 2000 to 15 million by
  2020(1)
• AD still commonly misdiagnosed, particularly in
  early stages
• Innogenetics is working to offer a complete panel
  of biomarkers to allow accurate early and
  differential diagnosis
• Industry evaluating ca 50 disease-modifying
  candidate drugs(2)
• Products
• LiPA- and INNOTESTTM-based products
• Strong intellectual property position in this
  field (Takeda)

As drug candidates progress, demand for
Innogenetics AD products will sharply increase
Source (1) US Consensus Bureau (2) iDDB3
database
16
Diagnostics Next Generation Technology

• PamGenes microarray technology for development
  of Innogenetics next generation nucleic acid and
  protein-based tests
• Exclusive license in the field of Infectious
  Diseases, Genetic Testing, and Neurodegeneration
  with optional extension in the field of Oncology
• Assessment of 400 different parameters in one
  sample run (10-fold increase versus Innogenetics
  current LIA and LiPA technology) speed,
  sensitivity, user-friendliness, accuracy and
  specificity
• First set of assays expected to reach market in
  2006

Cutting edge technologies will drive further
sales growth
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Diagnostics Growth strategy

• Expected growth to come from a number of areas
• Infectious diseases
• extend existing sales lines, particularly in HCV
  and HBV
• develop and manufacture tests for other
  infectious diseases
• exploit the bacteriology market
• Genetic testing
• develop new genetic tests
• Neurodegeneration
• develop Alzheimers and other products in new
  disease areas
• Out-licensing strong intellectual property
  portfolio
• PamGenes new multiparameter platform

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Specialty Diagnostics The success story
Turned around and poised for growth and
profitability
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Diagnostics - performance versus IVD market
IVD market Revenues (in billion)
22.6
22
18.6
Innogenetics Revenues (in million)
65
103
32
20
Therapeutics
21
Therapeutics Strategy

• Become a leader in therapeutic vaccine by
• Developing new therapeutic vaccines, focusing
  mainly on infectious diseases, up to completion
  of phase 2 clinical evaluation
• Building up broad therapeutic vaccine platform
• Three therapeutic programs in infectious diseases
  in clinical trials by 2006. Leverage Genencors
  program acquisition and partnership with
  Epimmune.
• Partnering non-core therapeutic programs

Maturing therapeutic vaccine portfolio will
increasingly add value, providing multiple
partnering opportunities
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Therapeutic vaccines
Acquisition of Genencor program and collaboration
with Epimmune
Vaccine Design
Evaluation Immunogenicity Preclinical
cGMP production
Clinical Trials
Research product
Product

• Recombinant proteins
• New expression systems
• Plasmid DNA
• Viral vectors

• Proteins
• CTL -HTL epitopes

Evaluation of humoralandcellular responses

• Recombinant proteins
• Plasmid DNA

Ongoing in Europe and USA

• Hepatitis C
• Hepatitis B
• Human papillomavirus

On track to become major player in therapeutic
vaccines
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Therapeutic vaccines
Clinical development strategies

• Antigen protein
• Continue E1 development
• Poly-epitopes
• Parallel assessment of different delivery
  systems, doses, and regimens to optimize response
  in preclinical, phase 1, and phase 2a clinical
  studies
• HBV, HCV, HPV
• Each indication likely to require different
  delivery, but CTL/HTL epitopes remain cornerstone
• Tolerance
• Early stage

24
Therapeutic vaccines - Pipeline
25
Hepatitis C
Market

• 1 in 30 people are chronically infected (approx.
  175 mio globally)
• 4-5x more widespread than HIV
• About 5 million infections in Europe, 4 million
  in the USA and 2 million in Japan, 70 caused
  by HCV type 1
• 3-4 million new infections per year
• 8,000-10,000 deaths per year in the USA
• Market size 3 billion in 2003 to grow to 10
  billion by 2010

Innogenetics therapeutic vaccines address unmet
needs in huge markets
Source Consensus Statement on Hepatitis C (1999)
EASL and Centers for Disease Control, Atlanta, USA
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Hepatitis C
A growing medical need for non-IFN based therapies
2.0
Millions of patients (US)
1.5
1.0
0.5
0
1996
2000
2005
2010
IFN Contra indicated
Mild Disease
IFN Non-Responders Cumulative
Adapted from Schering Plough, EASL 2002
27
Hepatitis C - phase 2a 3-year histology data
Significant regression of fibrosis
Observed (95 CI)
Expected natural progression
23 patients, 4 courses 36 months interval (March
2004)
0.99
- 0.43
-1,5
-1,2
-0,9
-0,6
-0,3
0
0,3
0,6
0,9
1,2
1,5
Mean Ishak fibrosis score change from
baseline (Paired scoring)
Ryder S. et al. Hepatology 200236(4 Pt. 2),
607 Ghany M. et al. Gastroenterology
200312497-104 (age subgroup 46-69 yr)
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Hepatitis C - E1 therapeutic vaccine
Ongoing phase 2 studies

• Total of 286 chronic hepatitis C patients at
  multiple sites in Europe currently under
  investigation
• Clinical study T2S-916 (E1-mammalian) ongoing
  and results expected by Q2 2005
• Clinical study T2S-918 (E1-yeast) enrollment
  completed and results expected by Q4 2005
• Objectives
• Confirm positive results obtained in the phase 2a
  study
• Assessment of liver inflammation and fibrosis
  progression under E1 treatment versus placebo
• Assessment of efficacy of E1-yeast and
  E1-mammalian

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Hepatitis C - E1 therapeutic vaccine
Next steps

• 2005
• Completion phase 2
• Development of process to commercial
  manufacturing level
• Preparation phase 3 registration studies
• 2006
• Start phase 3 clinical trial

30
Hepatitis B
Market

• Widespread disease despite effective prophylactic
  vaccines
• 10th leading cause of death worldwide
• 350 million chronic infections
• 2 billion people have been infected
• 80 of all cases of liver cancer associated with
  chronic HBV infection
• Treatment is the only option to prevent
  cirrhosis, liver cancer, and death in chronically
  infected patients

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Hepatitis B poly-epitope therapeutic vaccine
Preclinical study - conclusion (DNA vaccine)

• HBV-derived CTL and HTL vaccine candidate
  epitopes identified
• gt95 population coverage predicted
• Optimized poly-epitope construct designed
• Plasmid vaccine induces broad, potent immune
  responses in mice

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Hepatitis B poly-epitope therapeutic vaccine
Ongoing Phase 1 clinical study (DNA vaccine)

• Product candidate
• Optimized hTL/cTL polyepitope construct covering
  gt95 population
• Clinical
• Single-center study in healthy human subjects
• Under IND in the USA (Baltimore)
• Entered phase 1 trial in 20 healthy volunteers in
  Q1 2004
• Study report expected by Q1 2005
• Primary objective
• To evaluate the safety and tolerability
• 4 monthly i.m. injections
• Two dose levels 0.4 mg and 4.0 mg

33
Human Papillomavirus
Market

• Human papillomaviruses (HPV) are a group of over
  100 types of viruses. Over 30 HPV types are
  sexually transmittable
• HPV is the major cause of cervical cancer, the
  second most common cancer in women. HPV plays a
  role in other genital cancers, both in men and
  women
• There is no cure for HPV infection at present.
  Only surgical treatment of lesions induced by HPV
  infection.
• Cervical cancer (worldwide)
• prevalence 1 400 000
• incidence 470 600 p.a.
• deaths 233 000 p.a.

34
Human Papillomavirus
Next steps

• 2005
• Final poly-epitope construct
• Clinical grade material available
• Preclinical toxicity/safety testing
• 2006
• Start of clinical evaluation

35
Therapeutics Other programs

• Innogenetics has developed a valuable portfolio
  of other therapeutic programs
• These will be partnered-out to suitable partners
  before entering into clinical evaluation

36
Financials
37
Revenues and cash

million
2001
2002
2003
2000
1999
38.9
31.9
Product sales
41.1
47.6
53.0
0.5
0.0
Licence fee income
9.4
5.1
7.9
0.7
Royalty income
3.0
2.8
4.3
1.3
41.7
32.7
Revenues (pre-RD)
53.5
55.5
65.2
4.6
RD income
5.6
6.9
7.3
3.9
37.4
Total revenues
59.1
62.4
72.5
45.6
20.6
Cash
57.7
39.1
43.5
39.0
according to US GAAP
38
Financials Income statement

1999
2000
million
2001
2002
2003
32.7
Revenues
53.5
55.5
65.2
41.7
(15.1)
Cost of sales
(19.9)
(21.9)
(23.4)
(17.0)
52.7
57.4
Gross margin
51.6
54.0
55.9
17.6
Gross income
33.6
33.6
41.8
24.7
4.6
3.9
RD income
5.6
6.9
7.3
(23.2)
(21.5)
RD expenses
(24)
(28.7)
(32.7)
(29.3)
(29.8)
Operating expenses
(26.6)
(28.1)
(30.2)
(30.2)
Operating result (EBIT)
(11.3)
(16.3)
(13.8)
(22.7)
(24.8)
EBITDA
(4.5)
(8.8)
(7.0)
(16.1)
according to US GAAP
39
Income statement by Business Segment

million
Diagnostics
Therapeutics
2002
2003
2002
2003
Revenues
64.7
0.5
0.3
55.2
0.1
Gross income
41.5
0.3
33.4
2.6
RD income
4.4
3.0
4.4
(16.6)
RD expenses
(12.9)
(19.8)
(12.1)
(3.5)
Operating expenses
(25.8)
(4.4)
(24.6)
(17.5)
Operating result (EBIT)
7.1
(20.9)
1.1
Operating margin
11
n/a
n/a
2
EBITDA
11.8
(18.8)
(15.2)
6.4
40
Revenues and cash
First semester

million IFRS
2003 H1
2004 H1

Product sales
27.5
28.2
2.5
Royalty income
0.7
2.0
License fee income
1.4
2.0
Revenues (pre-RD)
29.6
32.2
8.9
RD income
4.0
2.9
Total revenues
33.6
35.2
4.8
Cash
27.4
29.5
41
Financials Income statement
First semester

million IFRS
2003 1H
2004 1H
29.6
Revenues
32.2
(12.5)
Cost of sales
(11.8)
54.5
Gross margin
58.3
17.1
Gross income
20.5
4.0
RD income
2.9
(15.9)
RD expenses
(16.8)
(15.3)
Operating expenses
(16.1)
(10.1)
Operating result (EBIT)
(9.5)
(6.9)
EBITDA
(6.3)
42
Income statement by Business Segment
First semester

million IFRS
Diagnostics
Therapeutics
1H 2003
1H2004
1H 2003
1H 2004
Revenues
32.0
0.2
0.3
29.4
0.2
Gross income
20.4
0.1
16.9
1.7
RD income
1.5
1.4
2.3
(9.5)
RD expenses
(5.9)
(11.0)
(6.3)
(2.2)
Operating expenses
(13.8)
(2.3)
(13.1)
(9.8)
Operating result (EBIT)
2.2
(11.8)
(0.3)
Operating margin
6.9
n/a
n/a
(1.0)
EBITDA
4.2
(10.6)
(8.9)
1.9
43
Outlook for 2004 - maintained

• Diagnostics further enhanced profitability
• Revenues growth at least 15
• Product sales growth at least 10
• RD expenses increase 15
• Other operating expenses increase 5
• Operating losses reduction versus 2003
• Revenues include product sales, royalty income
  and license fee income.

44
Conclusion
45
Conclusion

• Proven track record in managing a sustainably
  growing and increasingly profitable Specialty
  Diagnostics business
• Assemble one of the most promising platforms for
  therapeutic vaccine development in the field of
  Infectious Diseases
• Maturing therapeutic portfolio provides multiple
  partnering opportunities and increasingly adds
  value
• Dual business model providing a reduced risk
  profile with high upside potential