A Summary of Neptune's Conference Call

Neptune Technologies & Bioressources
TSX: NTB - NASDAQ: NEPT
Basic Shares: 48.2 million
Fully diluted: 53.9 million
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At 4:30pm ET today (January 17th), Neptune Technologies held an investor conference call to discuss Q3/F12 quarterly results and to discuss a number to items on the minds of investors.

The call was hosted by Henri Harland, President & CEO of Neptune Technologies & Andre Godin, CFO.

Here’s a summary of the call.

Sherbrooke, Quebec Plant Expansion:
The Company stated Phase I of the plant expansion will cost approximately $14 million.

• It is expected that $6.5 million of that amount will come from debt financing, $3 million will be covered by an interest-free loan, $2.5 million will be covered by a grant and the remaining $2 million will come from Neptune’s cash flow. Details of the different groups supporting this project will be released as part of a news conference to be held in February or March of this year.
• The new expansion will include new production capacities and improved extraction technologies, which will increase krill production.
• Phase I, which is expected to be completed by the first quarter of 2013, will double current plant capacity to 300,000 kg/yr. It will increase to 500,000 kg/yr by the end of Phase II by the end of the following year.

Sales & Marketing:
The Company identified the continuation of expansion in new emerging markets in strategic locations worldwide, the full penetration of the North American market with its nutraceutical products and ensuring that NKO & EKO can be found on the shelves of all major retail stores as the primary focus for the coming months.

• Neptune has recently increased its sales and marketing team. Sales representatives who now cover South America, Asia and the Middle East. The Company has also hired a Director of Sales exclusively for the United States.
• During this year Neptune has signed major US distribution deals with companies that represent more than 50% of the Omega-3 dietary supplement market.
• Neptune has also signed a distribution agreement with the largest supplier dealer in Canada.

Functional foods:
Both Yoplait and the Nestle studies are complete. Neptune has the data, however further analysis is necessary to determine the next steps.

• For Yoplait, Neptune expects to have to conduct an additional clinical study in order to meet Yoplait’s requirements. Although Neptune has "interesting and positive achievement"; there was a technical mistake made by the European Clinical Research Organization during the recruitment phase of the study. Neptune management is currently in regular communications with Yoplait in order to define the next steps.
• In regards to Nestle, the analysis of the data is still underway. The results will be made available when Nestle is prepared to disclose them.
• Neptune expects to provide the market with additional information before or during the summer of 2012.

Chinese JV Partner – SKFC:
Neptune management will be returning to China in February to finalize details with SKFC.

• The location of the production facility has not yet been determined; however the company is looking at several locations close to Shanghai.
• Construction of the production facility is expected to begin in late 2012/early 2013.
• Because SKFC is a Chinese government owned company, Neptune expects minimal complications with roll out and the Company expects to begin seeing revenues in 2014.

Neptune’s R&D Program:
Neptune is currently undertaking clinical studies for “claims” in Europe. In order to be able to make certain health statements on packaging in Europe, those claims need to be supported by specific clinical studies.

• The company is expecting the clinical study and the regulatory process to be active through 2014.
• Neptune is also investing in the development of a new marine biomass product, which will include pre-clinical studies. The Company expects to be able to release new data from the new biomass sometime this year.

Patent:
Management summarized the information already public on its US patent covering omega-3 phospholipids.

• The Company expressed that in regards to the re-examination process currently underway, “As 95% of “inter parties” requests for re-examination are granted, Neptune and its US patent lawyers had anticipated the USPTO’s reactions and the grant. As such, Neptune is well prepared to defend and re-submit all the necessary arguments for the re-examination process and welcome this opportunity to reconfirm the validity of its patent with the US patent Office.
• Typically the time frame for a re-examination is between 2 to 3 years.
• Neptune also talked about its recent “Continuation applications” – “These additional protections will not only reinforce Neptune’s position in the US market, but will create an entry barrier to competitors in the krill oil market.
• Management believes that competitors will have to pay a fee when all of the issues are resolved.

NeuroBioPharm spinoff:
According to management, the Company is committed to providing a dividend of NeuroBioPharm units (shares and warrants) to existing Neptune shareholders.

• Due to regulatory delays, the process has taken much longer than anticipated.
• Neptune expects a conclusion to the process in the coming months.

Acasti:
Currently conducting two clinical Phase II studies, one double blind and one open label.

• The Company expects to be able to publish initial results from the open label clinical study during the coming months.

Q3 Results:
The revenue for the quarter was $5.12 million. This is an increase of 20% compared to the third quarter of fiscal 2011. The increase can be attributed to the global IP strategy in light of the new patent in the United States and infringement cases against competitors. It is also attributed to the new sales force team in place and to the rollout of the Companys NKO and EKO krill oil products in the United States, specifically through its major distribution partners.

• Neptune krill oils can now be found in Walgreens, Walmarts, CVS Pharmacies and a number of other retailers.
• After completion of the roll out, Neptune krill products will be available in 20 thousand stores.
• Neptune’s nutraceutical sales maintained a gross margin of 50%, and recorded a positive EBITDA of $1.1 million and a profit of $900,000.
• The consolidated group, including Acasti Pharma and NeuroBioPharm resulted in a loss of $1.4 million due in most part to the subsidiaries’ R&D programs, including the Phase II clinical studies that started several months ago in Acasti Pharma. Acasti Pharma and NeuroBioPharm R&D expenses amounted to $3 million for Q3.
• As the roll-out is recently underway, it is expected Q1/F13 will show accelerated revenues in keeping with the Company’s aggressive North American push. As a result, the Company expects the fourth quarter of fiscal 2012 ending February that the revenues and EBITDA will be at a minimum in the same range as Q3 2012.
• Neptune’s working capital is over $24 million and its cash on hand over $17 million and also since Neptune nutraceutical is cash flow positive, Neptune has sufficient funds to support all its activities and projects.

The encore version of the conference call will be available tomorrow, January 18, 2012, please visit http://www.neptunebiotech.com/.