Q2 2020 Nattopharma ASA Earnings Call
Aug 11, 2020 (Thomson StreetEvents) -- Edited Transcript of Nattopharma ASA earnings conference call or presentation Wednesday, July 15, 2020 at 8:00:00am GMT
TEXT version of Transcript
* Kjetil Ramsøy
NattoPharma ASA - CEO
* Robert Schrama
NattoPharma ASA - CFO
Kjetil Ramsøy, NattoPharma ASA - CEO 
Hello, everyone. And welcome to this second quarter and first half financial results update from NattoPharma. My name is Kjetil Ramsøy, and I'm the CEO of the company. I will be joined today by Robert Schrama as well, who is our CFO. Robert is still in the Netherlands, so he will be joining us by audio link later in the call.
We'll start by the regular disclaimer and emphasize that what we are presenting here is, to some extent, reliant on future expectations, and those expectations can materialize and they can not materialize. So please be aware when you put reliance or not on the information that you are being provided in the presentation today.
The agenda today, we will first walk you through very high-level financial highlights. I will give a company update, and we will walk through some operational performance highlights and then some financial performance. And at the end, we will give you a little brief into the company outlook.
So to start with the financial highlights, our first half revenue is exceeding NOK 100 million. We are ending at around NOK 105 million, NOK 104.6 million to be exact, which is a growth compared to the first half of 2019 of 81%. In the second quarter stand-alone, we had NOK 48.4 million, which is up from NOK 30 million in the similar quarter last year. Our adjusted EBITDA is 6x higher in the first half compared to last year, which is a very good performance, we believe. In the second quarter, the EBITDA -- adjusted EBITDA is NOK 6.2 million. That's up from NOK 0.9 million in the same quarter last year.
On the financials, Robert will go through these in more details later in the presentation. So I will quickly move on now to a company update.
Over the last few months, I would say since beginning of 2020, we have gained a lot of new shareholders. We started the year with probably 400 fewer shareholders than we have as of today. So we find it opportune to just give a brief update on the company and also on the vitamin K2, what the vitamin K2 is, and why you should take vitamin K2 as a dietary supplement. We do this so that all our new shareholders also can learn a little bit more about what the company is and what we stand for.
So basically, NattoPharma is the leading vitamin K2 company in the world, and we have been so for the last 15, 16 years since we were first initiated or established in 2004. We have developed the brand MenaQ7 over the last year -- last 15 years, and it is perceived and it is recognized as the leading vitamin K2 brand in the world.
NattoPharma early on took a very clear position in being a clinical validator of the vitamin and has, through an extensive collaboration with the Maastricht University since 2006, been in the forefront of establishing the clinical science and data that supports vitamin K2 as a dietary supplement. We are continuing to do that, and we are already, as we speak, engaged in different discussions around new studies and research that will further establish vitamin K2 in the dietary supplement segment.
We are a global company, and we are represented in all regions of the world. Our presence in Norway as a headquarter is prominent, and it's because of the people starting the company back in 2004. But if you look at the sales, our sales is predominantly global and what we truly sell in Norway is just a fraction of our total revenue. So the U.S. being a significant market where we probably have around 70% of our 2019 revenue, and Europe and Asia and South America are also important markets and growing markets that we will continue to see highlighted in the years to come.
As a company, we have now in the last 12 months revenue of NOK 174 million when we closed the first half of 2020. Our compounded average growth rate over the last 6 years is 35%. And our last 12 months EBITDA -- adjusted EBITDA is almost NOK 25 million. That is a 14.3% EBITDA margin. And if you look into the report that we published earlier this morning, this is well within the guidelines that we now give as an updated guiding for the 2020 financial results.
It's also worth mentioning that NattoPharma as the leading vitamin K2 supplier in the world is also the only one with a full spectrum of products. We can deliver both a natural and a synthetic product, which is both state of the art. So for that reason, NattoPharma has continued to be perceived as the leader in the market.
So in a nutshell, we are engaged in clinical studies, and we have been driving that segment of the industry for many years. And there is no other vitamin K2 on the market with a number of publications that we can provide and show to reflected and supported by us.
We have spent a lot of money in the last few years on improving our supply and production capacities, and we believe now that we are in a very good position in terms of meeting the increased demand. You can see that by the inventory levels that we built up last year and which we are now sustaining during the increased levels of revenue during the first half of 2020. So despite the fact that the demand has increased rapidly in the last 6 months, our inventory levels are still the same as they were at the end of 2019.
We are also in possession of a lot of patents that will help us market and promote vitamin K2. We have bone patents for claims, and we have cardiovascular patents. And we use these actively when we are promoting the product. And I think there is no argument saying that due to what we have done in the last 10 to 15 years, NattoPharma is perceived as the leader.
We are selling through sales channels, which is mostly our B2B segment. So we sell to brand owners or co-packers that sell to brand owners or produce for brand owners that eventually then puts the product into the consumer shelves. We do that in conjunction with also marketing very actively together with our B2B partners so that we educate the consumers at the same time. So we recognize that K2 is still a fairly young ingredient in the supplements industry, and we need to educate consumers so that they understand the importance of taking vitamin K2 in your diet. And when the consumer is going to the store, online or brick-and-mortar, and they want to buy K2, they should always recognize MenaQ7 as the product they are looking for.
So what is vitamin K2 then? And why should you take it? Well vitamin K2 has 2 very distinct benefits. So it regulates calcium. So it takes calcium to the places in your body where calcium should be and takes it away from where calcium shouldn't be. So it's specifically 2 proteins that are important in this segment -- or in this structure, and that's the osteocalcin, which is the protein that enables the calcium to go into your bone matrix; and it's the Matrix Gla protein, which prevents it from going into your soft tissues and cardiovascular system. And these 2 in conjunction, they are functioning as a kind of a road guard or directing the calcium into the places where you should have it in your body.
Again, looking at vitamin K2, and there is a difference. People think about vitamin K without separating between the vitamin K1 and the vitamin K2. And vitamin K1 is known as the blood clotting vitamin and operates predominantly in the liver. But vitamin K2 is absorbed also outside of the liver, and it has a different function as it directs calcium into your bone matrix and prevents it from going into the -- in the soft tissues, as we discussed.
Looking at vitamin K2 and the reason why you should take it as a dietary supplement, it's because the existence of vitamin K2 in your diet today is low. Going hundreds of years back in time, it was more common to have fermented food, and you preserved food in a different way than you do today. Industrialized food is low on vitamin K2, and the food that you had hundreds of years ago had a different composure (sic) [composition]. So the influence of K2 there was higher. And you see now that there is a deficiency in K2.
And to remain your K2 levels at the recommended levels, you have to eat a lot of different products. So as you can see represented here on the slide, take beef, for instance, you have to eat up to 4 kilos of beef a day to remain what you should be, having as a 45-microgram daily dosage. So it just signifies the fact that unless you are eating a vast amount of these kind of different food types, you should have a dietary supplement that supports it.
And there are studies around now documenting that in the Western community and the people with a Western diet, there is a vast deficiency in the population. And for that reason, the supplementation is more critical. And we also see that taking vitamin K2 in the early stages is very supportive to your growth phase. So when you are a kid and you build your bone muscles or bone strength, you should take vitamin K2 to add to the strength.
So that was a quick walk-through of NattoPharma and the vitamin K2 market and segment in particular. I'll now give you some operational highlights from first half, and we'll start with the COVID-19 impact.
And when we closed the first quarter, we did see that there was a tendency, especially in March, of quite aggressive buying. So we did allocate some of the growth in the first quarter to what we define as hoarding. That effect has faded out during the second quarter. And looking at the first half as a whole, I wouldn't say that any of the growth that we see in the first half is specifically attributed to hoarding. So on the sales side, the COVID-19 hasn't really impacted that much.
The supply side has been impacted slightly. In the first, it was very impacted by just a lockdown of international freight. Now we see that there are pockets still of lockdowns and India as being one of them. And that is, to some extent, slowing down, but it's not stopping. So we still have ample supply, and we don't see that the current situation is at any risk in terms of having ample supply for the period that comes. Now we have to take the disclaimer there, and that is any unforeseen increase or elevation of COVID-19 impacts will, of course, have an -- have impact to this statement as well. But I would say, based on everything we know now, there shouldn't be a significant impact.
We see that the highest relative growth is now in Asia. It has been for the last couple of quarters. And albeit the Americas are still contributing highest value, the relative growth is highest in Asia and, to some extent, also in Europe. So we are eager to see how that continues. The U.S. has been a strong country for us now for a long time, and we are now actively trying to reach the same growth in other regions.
Our new ingredient. As we communicated in early May when we launched our first quarter, we were impacted by COVID-19. And specifically the clinical trials that we were conducting at the time, they were halted and suspended. And that puts uncertainty to time line for when we can actually go out and launch the product. And as of today, as we write in the report today, out of the 3 studies that we had ongoing, we have actually been able to finish 1 with preliminary results. The results are not yet tested and verified. So for that reason, we haven't gone public with the information. We just see that the data that we can read now is compelling. And we are building on gathering the evidence and securing the results so that we can follow our pathway and when we launch the product, it is a clinically validated and proven product. That's what we have as a backbone, and we wouldn't launch it until we are secure on the product.
We also said in early May that we are going to be more -- I think actually, we already said it in February. We are going to be more aggressive and more active in taking a position when it comes to development of products and categories. We have hired a new senior product development person to supporting that, and we are building more around that structure.
We have also been successfully awarded a grant from the Norwegian Research Council, where we have launched a project that we will perform over the years to come together with SINTEF, which will also be a very interesting project to monitor and complete to further build on the success that we have seen in the last few years.
Late May, 28th of May to be exact, Kappa Bioscience, one of our competitors in the industry, they announced an interest in NattoPharma. And they announced that they were contemplating to extend their voluntary offer to buy all shares outstanding in NattoPharma at a share price of NOK 12.75. That was contingent to some conditions being met, one of them being allowed to perform a due diligence on NattoPharma as a confirmatory action before they would be able to or willing to put in the offer.
In conjunction with that, they also placed an unconditional offer to purchase around 2.15 million shares. And the Board in NattoPharma, when this was announced, sat down and assessed the offers or the contemplated offer and see that the offer is not representing the values as the Board in NattoPharma see in the company. And hence, on May 29, the Board issued a press release saying that it recommends all shareholders not to sell the shares to Kappa at the price that they offered.
At the same time, NattoPharma appoints ABG Sundal Collier as a financial adviser to support in a strategic review. That review is still ongoing, and we are now going to how we can position NattoPharma going forward. And as we speak, it's not completed, and the results of the strategic review will be communicated at the time it's possible to do so.
The next that happens in this case is that Kappa on June 11 sent a letter to NattoPharma with an allegation of potential infringement of their patents or soon-to-granted patents. Again, the Board in NattoPharma has reviewed the situation, and based on all information available, including the information related to the patent applications that Kappa has filed, we don't see that there is any material risk for NattoPharma, and we are in a constructive dialogue with Kappa to demonstrate that, that is the fact.
Then on June 26, Kappa announces that they have acquired more than 5% of NattoPharma. And then subsequently, just after, they withdrew their offer to unconditionally buy the 2.15 million shares. Kappa do that at the same time as they say that they still see NattoPharma as a good strategic fit with Kappa. To the best of our knowledge, nothing has happened on their side with this potential offer afterwards.
The trading in the NattoPharma share has been very positively impacted by this, and it has helped us to create new light on the possibilities and opportunities within the company. And we are confident that when we are able to communicate more related to the strategic review, we will provide a path line for the company that will support the momentum that we see in the market.
We have also, in last month, signed up for an agreement with KD Nutra. So this agreement is an agreement to develop a new product category. As we said, we have been talking about moving into other product categories and improve our position in terms of new products, and this is one of them. And this will be done in conjunction and in cooperation with KD Nutra and their global sales team for the omega-3 products, the high-concentrate products.
As this is a new market, it's a new segment, the product hasn't been in the market before, it's early days in terms of saying too much about the volumes. But what we can say is that the launch that we have seen now the last 3 to 4 weeks has provided some very positive feedback. So we will update on the impacts of this in future updates as well. But as it is a new segment, it's hard to be exact and accurate for a moment. But we do have really high hopes for this as a combined product.
Over the next few slides, I want to show you something that has impact because we as a company, as all companies, have been impacted by the COVID-19 and the change in how to do business. We would normally, by this time in a year, have been at 3 to 5 different trade shows, face-to-face meetings with customers and discussions. Because of what happened in early May where the world basically shut down, you have to start doing something else.
We have been doing something else for a very long time, and I would say that there is no other company in the K2 segment that can provide the same history when it comes to visibility and attention in the market media and segment media. We have been very active for so many years sending out and providing clinical articles in journals in the industry, and we have continued doing so also in the period after COVID-19. We have built on that also by being more focused on different channels and expanding from where we have been operating in the past. And we are doing so to continue demonstrate the importance of vitamin K2.
There's no other company that has taken upon themselves in this industry to really demonstrate that an RDI is an important measure for K2 in the future. Today, there is a recommendation on vitamin K, but it's not specific to vitamin K2. We strongly believe and we will continue to demonstrate that, that RDI is important. So an RDI is the recommended daily intake, just to be specific.
So through the efforts that we have been contributing to in the Horizon 2020 programs, we have had people, we have had students, PhD candidates helping us providing evidence and articles to support the RDI effort. And we will continue doing so. To establish an RDI is going to be a time-consuming process, but we will be in the forefront and support that effort.
We have also gained a lot of interest in other industry media and journals. One on the right side here is the nutraingredients-usa.com. They had an editorial blast to their base early summer where just gathered significant NattoPharma articles that have been published over a time period, and they blasted that out to their whole base. That's an initiative that is done purely as an editorial by this magazine and is not something that we are asking them to do other than we are supporting them with all the materials that they need. So it again shows the prominence of NattoPharma and how we are visible and how we are perceived in the marketplace. As the leader, we'll always be the leader.
We also had the pleasure of being allowed to work on the ingredients insights magazine, Vitafoods, one of the big trade shows both in Europe and in Asia, are publishing now in conjunction with Vitafoods that was planned to be held in Geneva in May. The magazine has been published, and in there, there is an article on vitamin K that is provided by the World Health Organization, and NattoPharma has been picked up and placed together with that article as a contribution to the vitamin K2 industry. So another evidence of our position in the world.
We are also represented in different webinars and webcasts where we talk with both retailers and B2B companies. And as a consequence of the trade shows now being kind of suspended or canceled, we have also started to engage in more direct webinar activities. So in September, we will host our first of 2 live webinars that will be tailored to us and where we will be presenting in front of a group of 100 -- or 50 to 150 attendees, and that should be -- that will be highly qualified attendees in the B2B market.
We have also decided to go into a kind of an early venture in promoting our products on Alibaba. Alibaba is -- of course, as you know, it's a competitor to Amazon, and Alibaba is aggressive now in the U.S., trying to increase their footprint. We take advantage of that by getting favorable, I would say, pricing to get in there with our product offering. I don't believe that this is going to be an enormous sales channel for us. It's too specialized for that, but it gives us valuable insight in how to do online sales and online marketing. So for that reason, this is what I would say a kind of a very cheap, low-priced entry into an activity and channel that we haven't been pursuing actively before.
So with that, I'm going to hand over to Robert. Robert will be connecting through audio from the Netherlands. So Robert?
Robert Schrama, NattoPharma ASA - CFO 
Yes. Thank you, Kjetil, and good morning, everyone. Am I audible? Yes. My turn to talk you through the financial and give you an update on the financial performance over the last quarter and the first 6 months of 2020. I will start with the revenue growth breakdown, and there's a couple of items, I think, that are worth highlighting.
As Kjetil mentioned earlier, our growth year-to-date compared to the same first 6 months of '19 has been 81%, and I think gratifying to see is that actually 59% of that 81% is actually contributed to organic growth. So nearly 60% of that is returning volume. The other part, what we see is that the Norwegian kroner is still weak, and we see an FX impact compared to last year, which is about a 22% or 1/4 of the growth.
If we look at the volumes, we see the volumes are up with about 65% on a 1,000 ppm equivalent. And it's also like we see that the growth is in all segments and all product categories that we offer. We continue to see that Natural is actually taking the overhang, the same as we saw in Q1. There is a very strong demand for Natural at the moment compared to what we've seen in 2019 so the current split on the Natural versus synthetic is 60-40, whereas last year we saw 40-60. And if we then quickly look ahead, and we'll touch more on it when we go to the guiding at Q3, we expect to be a little bit softer, whereas we'll -- we expect still a very strong Q4 for the rest of the year.
Then if we go into the income statement in more detail. And we'll just talk you through some of the key metrics. As said, like our revenues for the first half have been up 81%. And if we look at the second quarter specifically, it was 61% growth compared to the same quarter last year.
I think impressive is that when you look in the diagram on the right corner in the top, it illustrates that in the first 6 months of 2020, we've reached the same revenue levels as year-to-date November in 2019. So in other words, we are -- we have now delivered the same revenue in 2020 in just 6 months, which took us in 2019 nearly 11 months. And I think that's really a remarkable achievement from the entire team in NattoPharma.
Equally gratifying or even more gratifying is to see the impact that it has, the revenue growth, on our EBITDA levels and our adjusted EBITDA margin. So if we look at that, the 81% increase on the first half revenue actually reflects a change of 233% on our margins. And as Kjetil said earlier, if you look at it in absolute terms, we've actually -- our EBITDA is nearly 6x higher than the same period of 2019.
The growth in revenue we see in all regions, and Kjetil mentioned Asia is leading, but we still also see very strong growth in the other areas, and the U.S. remains our largest market.
In order to receive -- or in order to achieve the EBITDA levels, we obviously keep very close eye on our spend and on our operating expense levels. And looking at it for the first half of 2020, we see that we actually come in at 25% of revenue as OpEx spend, which is good, and we'll continue to focus on that.
If we dive a little bit more into the details of what's behind the OpEx numbers because in absolute numbers we have seen an increase, and it's the FX that plays the same role as we've seen on the revenue level. So it's about 25% of our OpEx -- higher OpEx was due to FX. And other parts that play a role in there is we have slightly more personnel and we spent quite a bit more money on R&D-related cost but have been lucky to spend less on marketing and travel during the first 6 months of 2020.
And if we go into the balance sheet, we also see changes on the balance sheet this quarter and especially on the composition of how our asset side looks on the balance sheet. So in -- on June 30, we did a debt-to-equity conversion for part of the loan outstanding with Kaydence, which has actually changed our control situation with Kaydence, and I will get back in a little bit more detail in one of the next slides. But at least, it has resulted in the loan to associate actually being now more or less changed to intangible assets. So now we see the underlying value of the patents coming into the balance sheet of NattoPharma Group, of which Kaydence Pharma AS is now part.
Our inventory levels, as mentioned, they keep at a steady level despite that we are turning -- our turnover has significantly increased.
Our equity position has strongly improved compared to the end of last year. So we're now actually showing a nearly 75% equity ratio compared to 63% at the end of 2019. And obviously, our strong performance is the main driver there. And there's also some impact from the -- from what do you call -- I said the Kaydence acquisition, the debt-to-equity conversion that we did.
Then just quickly on the working capital items. If we look at the receivables, our trade receivables are at NOK 36.6 million at the end of Q2 out of the total of nearly NOK 50 million in receivables. We still put a lot of effort behind the collections, and we strongly believe that we don't have any issues in recovering the outstanding amounts. If we look at the payables side then, out of the nearly NOK 40 million, there's NOK 28.5 million that relates to regular trade receivables -- our trade payables, sorry, that's -- those are the outstanding positions with our main suppliers.
And a quick note on the borrowing. As mentioned during the first quarter presentations, that we were granted a loan as part of the Payroll Protection Program (sic) [Paycheck Protection Program], which is one of the COVID-19 support programs in the U.S., and we've been able to get a loan of close to $180,000, i.e., NOK 1.8 million.
Then the cash flow, very important, obviously, and also very gratifying to see that our cash position has strongly improved. At the end of the second quarter, we have a cash balance of -- in excess of NOK 23 million, where we started the quarter with nearly NOK 12 million and we started the year with just NOK 6 million in the bank.
A few highlights there. Obviously, it's our operational performance that's driving the cash inflow. If we look at the second quarter specifically, we've seen a very positive operational cash flow of NOK 14 million coming in, and this is driven by, on the one hand, like the good collections but also the high position of our payables, where we have, I would say, quite favorable terms with some of our key suppliers.
The other part that helped us quite a bit in our current cash position, obviously, is the fact that we did the private placement early January of NOK 9.2 million. But also, throughout the second quarter, we've been -- or some options have been exercised, so we've placed new shares. And that was mainly 2 of our Board members that, yes, have a profound belief in NattoPharma and exercised their options, which, I think, is an excellent testament to what it is -- what we're doing as a company.
And then if we look at the CapEx, where we -- in the first quarter, we barely had nothing. Then in the second quarter, we actually saw spend of around NOK 2.2 million, which is mainly related to the completion of our synthesis development project. And there are some small items. So the loan I've mentioned and also as part of the acquisition of Kaydence or the debt-to-equity conversion, which led to consolidation. We also have some acquired cash, very limited.
But overall, a very strong and -- performance on the cash flow side, and I think we have sufficient cash levels for working capital purposes in the period.
Then the next slide is a little bit more technical from an accounting side, but I thought it would be helpful just to quickly talk you through what the impact was of the debt-to-equity conversion that we did at June 30.
So when we -- before June 30, we had -- NattoPharma was holding 46% of the shares. And after the -- and was classified as an associate in the accounts of NattoPharma. And with the conversion, we actually obtained the position of -- or an interest of 54%, which, under the IFRS standards, puts you in the classification of the subsidiary and then the next step by default is consolidation. So that means that in the NattoPharma accounts, you will see 100% of the Kaydence assets and liabilities reflected, offset with a 46% noncontrolling interest, which is close to NOK 20 million and is part of equity. So when you look into the half year report, you can actually find those figures.
Just to highlight like what has happened. So we said we did the debt-to-equity conversion. But at the same time, we also assumed the Board positions, Kjetil and myself being in the Board of Kaydence Pharma going forward.
Then if we look at the accounting impact in more detail, we looked at the underlying -- as first step, we looked at the underlying values in Kaydence, which has led us to actually reverse the impairments that have been previously recognized and which gave us a gain this time of nearly NOK 22 million. And then with the consolidation, the underlying value of the patents comes to NOK 43.3 million, and that's also round about the update that you see in intangible assets compared to last quarter.
Then the next part's on the guiding. I think Kjetil already made -- pointed out various times the caveat there and -- on the uncertainties that we see on the COVID-19 situation and the impact it has to our business. And I just want to emphasize that there is a significant risk that we can't control at this point. But looking ahead, for the full year guiding, we -- on the top line, we expect a 50% to 60% growth. So if you look at our current year-to-date growth on the organic side, we come in just within that bandwidth at the moment. So we expect to continue the same growth more or less on the volume side. And if you look at adjusted EBITDA, then we expect between 13% and 18% for the full year.
So I guess, Kjetil, it's back to you to discuss the company outlook.
Kjetil Ramsøy, NattoPharma ASA - CEO 
So I will just briefly go through some slides. And we will end then with kind of an outlook for the next couple of years and where the company -- where we see the company in that period.
I want to first say what I forgot to say in the beginning. There is a Q&A at the end. And everyone listening in online, you can now ask your questions through the webcast that is there, and then we will go through the questions once we are going through the whole slide deck.
So I want to start by putting the vitamin K2 development into context of another prominent vitamin, which is vitamin D3.
Vitamin D3 has, in a period in and around 2010, seen an explosive growth. And that growth is coming from several factors, one of them being the establishment of an RDI in 2010. The other is a steep increase in scientific articles in the -- that is published in PubMed and other areas. And these together, they are fueling the interest for the vitamin, and consumers start to really see why and how.
So if you transpose that into vitamin K2, we have said now for some time -- and this is a repetition for those that has been following us for a long time, we have said now that we see the same trend in vitamin K2, and maybe I will be saying that the first half of 2020 is kind of an evidence of this now really being -- coming to fruition. But the spike we have seen in the citations in PubMed, for instance, for vitamin K2 in the period from 2013/'14 until now is significant, and we know that the wave of consumer awareness is coming a little bit later than the spike in the scientific articles. We see also that growth on vitamin K2 searches on Google, for instance, is steadily growing year by year.
NBJ, which is one of the bibles in the supplement category, they predict that growth in the general supplement market to be around 8% of a compounding average over the next 5 to 7 years.
Vitamin K2 is a young ingredient in the specialty market for the moment, and we expect that the growth in this category alone, stand-alone, will be much higher than that. That's also supported by other industry reports that is publicly available online, where you can see that the expectation is between 25% and 35% annual growth. So we still believe that there is a lot of market momentum in the vitamin K2 industry that will support the continued growth in NattoPharma.
These numbers that we are using as reference for 2018 and 2025 are approximate numbers. It's estimates, so this is just reflecting a relation between what was and what will be.
And in 2018, the estimates that we can pick up from market watchers and analysts is that it was around $70 million in global value on the vitamin K2 market in 2018. We would say that we would be in a 20% market share. If you look into the growth trajectory into 2025, in 2025 it should be around NOK 300 million. And we believe that we are strongly positioned to keep our market share and even grow it. And that's something that will be evident now as we already have seen this year and which we will continue to see in the years to come. So the market is in its early stages, and it will gradually now develop.
This is kind of a repetition of what we already have been through, but it's just showing you the strong growth that we have had since the company really started to transform in early 2016. The decision that was made in terms of making the company a more commercially driven company at the same time as we take care of our backbone, which is a clinical validation, has really proven good results and will continue to do so because of the scalability we have built into the model. Volume is key here. And as we see in the first half, we outgrow revenue. We outgrow revenue compared to OpEx and we outgrow revenue compared to volume. So it's absolutely a model that we can build on in the years to come.
Just to highlight a couple of areas where we see that growth can be generated. First of all, of course, it's the current operations. We have done now for the last 5 years, 4 years a tremendous job, the whole NattoPharma team. I give kudos to every single one that has participated in terms of making this company where we are today. Today, we can proudly go out there and deliver on our promises, and we can serve our customers to their needs. We do that with an operational model that is working very well.
We are in process of launching a new ingredient. We are, unfortunately, a little bit delayed because of the COVID-19, but we are still working on being able to launch that as soon as possible.
At the same time, we are looking at other ingredients as well. We are not -- we have launched that we will launch one -- or we have announced that we will launch one. But we are in the background looking at other ingredients as well and we hope to be able to come to the market with that as well in the future. If that's going to be in the second half this year or first half next year, it's hard to say because, again, we are back to the clinical validation that we are always striving for. We don't want to be putting products in the market that we can't stand behind as a serious company.
Volume is a key, as we have said. It's growing and making sure that we are pushing more volume through an organization that doesn't have to grow at the same pace. The synthetic investments that we did last year in our process will certainly prove that in the years to come.
On the Natural side, volume will also be a key driver as long as we can continue driving volumes up, as we see in the first half. Natural has really taken a spike and is driven by, I would say, a very strong interest for Natural both in Asia and the U.S. And as the volumes go up, we will see that the price points for that is also going down, and that will be -- that will help us be more competitive and continue to defend our position in marketplace.
And then we have the other one which we have been vocal about, which is the direct-to-consumer opportunities. In February when we did our Q4 release for 2019, we, for the first time, came out and said something about the B2C approach, and we did at that time say that it would be specific to the new ingredient. And we are maintaining that as the strategy for the moment. We will be hesitant to go for a direct-to-consumer strategy for K2. Especially since we are so strong and so tightly connected with our B2B customers in that market, it would require a significant effort to go out there and sell in a B2C or D2C operation without being perceived as competitor to your current customers.
So we will be careful doing that, and we will, therefore, focus much more on the new ingredient, an ingredient where we currently do not have significant B2B customers and we can more easily develop our D2C market ourselves.
When we see that, that is successful, other ingredients can follow. But we will still learn slowly and methodically, and then we will see how that goes. But we will first launch it in the B2B, and then we will start with plans for the D2C for active launch. We are still -- we are looking at it and we are planning it, but we are not executing on it.
So the final slide then is just putting a yardstick out there and say where do we believe that we are going to be in 2022. And this year's guiding is now giving us a window of revenue between NOK 190 million and NOK 205 million in 2020 full year, estimated revenue, with an EBITDA between NOK 13 million and NOK 18 million and not including late sales or late revenue in this year coming from a potential launch of the new ingredients.
Looking at that and putting the yardstick into 2022 -- end of 2022, we believe firmly that a revenue of NOK 350 million with a 20% adjusted EBITDA margin is absolutely reachable, and we had no problem putting our names behind that. So that signifies a little bit of the growth that we are looking for in the next 2 years. To continue looking into the next 3 years after that and have a 5-year plan, I think it's too early.
Let's now go through the strategic review that we have initiated together with ABG. And once we have been able to complete more of that, we will also see if we are able to share more of the longer-term strategy, meaning the 5- or 10-years plans that we can have.
So with that, I think we are going over to the Q&A.
Questions and Answers
Kjetil Ramsøy, NattoPharma ASA - CEO 
And as always, please post your questions on the webcast, and I will go through them and try to answer as good as we can.
I see there has been quite a few questions coming in, so I will start with a few that I have already received on an email earlier today. It's related to the new ingredient first. And as I have said, the launch is still pending, and we don't want to be vocal until we see the outcome of the current ongoing studies and the validation and the verification of those.
We do believe, though, that Q3 is a reachable time line for the soft launch and the launch to select customers. As we have said, already starting in the fall of 2019, we have presented this product to certain customers, but we are still waiting for the validated results of the clinical trials until we really start the selling activity with them. So they have been provided information, and they have been assessing the information. And now we are waiting to provide our part, which is the validation.
There was a question if we are able to confirm if there is any interest in NattoPharma as an acquisition target beyond Kappa's interest. That's a question I can't answer for the moment. That's something that we will come back to if or when something happens, and we will update the stock market immediately when that is required.
Through the discussions we have with ABG and the strategic review, I think we have been vocal on that in the report today. We are looking at all opportunities from A to Z in terms of what is the best way to maximize the values for our shareholders and make sure that NattoPharma continues as a strong company into the future.
So I will try to go through some other questions. One question is if we have 100% of our revenue from MenaQ7 or do we have also revenue from unbranded K2 vitamins. We do not have revenue from unbranded. We are selling MenaQ7 as the product.
Another question on competition. "Could you comment on competitors? Who are the biggest? And how are they different to NattoPharma?"
Biggest is difficult to say because NattoPharma is probably the only K2 company in the industry that is public. So for us, every competitor to us can easily see what we are doing financially, and they can read our data online. That's not as easy for the others as they are private.
What differs us from them is easier to answer because we are definitely the driver behind the category from early stage in 2004. We are the clinical validator of the category. We are the company that has spent most money on developing the clinical validation and evidence for vitamin K2 in cooperation with organizations like the Maastricht University, other universities around, also supported by Horizon 2020 grants.
Also, from a simpler differentiation, we are the only one that can actually provide both a Natural and a synthetic product. So Kappa that was trying to make a launch here for a hostile takeover, I would say, earlier this year, they only have synthetic. We see that the growth this first half has been higher in Natural than synthetic. Kappa can't compete in that one. They don't have that product.
So we have some other questions. "Why do you believe the COVID-19 situation is boosting demand for vitamin K2? While some effect may have been due to stockpiling in Q1, what do you believe is the main driver in the strong demand growth for Q2?"
I think it's a multifaceted answer to that question. And the general recognition of health and being in a generally good, healthy situation has increased by the population after COVID-19 impacting the world. The study that came out in the Netherlands early May shows that there is a correlation between the general health and the outcome of your COVID-19 disease patients. And the stronger general health you have, the leaner your impact on your COVID-19 is. So not only K2, but I think also the whole broad supplement category is seeing a spike in 2020. I think that's also supported by the NBJ's predictions of the demand for the year, where you see now that it's a pre-COVID-19 and then post-COVID-19 expectation on growth. And the post-COVID-19 expectation on growth has increased in general, not only for K2. But K2 being a specialty ingredient is proven to grow faster because it's still small compared to other big vitamins as C and D and E and those likes.
"What is the main swing factors in the EBITDA margin guidance? Reasons why you could end up in a high versus low end of the guidance?"
It's predominantly volume. So it's very linked to top line guiding because EBITDA is heavily impacted by 2 factors. One is, of course, the gross margin and the other is the OpEx level. And the OpEx level, we have firm control over. We control and we operate on that side very well. The volume is impacting the revenue, and we can grow volume significantly without growing our operating expenses.
With volume growth, there is a certain pressure on price. So the gross margin is then coming down slightly. But the quick answer to the question is volume, volume, volume. The higher volume, the more impact it will have on our EBITDA.
"Are you targeting additional senior hires this year? And how should we think about personnel cost going forward?"
Good question, and thank you for doing that because I forgot actually to mention that under our marketing section on the operational highlights. We are currently seeking a global marketing manager, and that is to support an increased marketing activity globally, where we want to take what we have done so excellently over the last few years or many years in the industry segment journals and media outlets, and we want to take that also into the new media and be much more active in how we communicate with our B2B customers but also our consumers because in the end, it's consumer-driven sales which is then driving our sales with the B2B community.
So we are going to add a little bit to the workforce. It is necessary. And we are doing that controlled, and we are doing it with the objective of spiking growth. So if we see that, that spike in growth is slowing down or not happening, then we will always be agile and reverse any action that might have adverse effect.
"Does the long-term 2020 guidance include the new ingredient?" Yes, to some extent. We have included some of the revenue expectations for 2021 and 2022. But I have to say we are conservative. I think people that has now learned to know the company over the last 2 years have taken notice of a slightly conservative guiding approach, and we are trying to be conservative and then deliver on our promises.
Another question here is, "When do you expect to start paying out dividends?" Oh, that's a good question. That depends on when and how much we need in -- how fast we grow and how much we need in working capital. Dividend is something that every company should start to pay regularly. NattoPharma has been, for so many years, a growth company and development cash or -- sorry, working capital has been prohibiting us to actually do dividend payments. I can't promise that it's to -- being done next year, but I can assure the shareholders that this is being considered as well in terms of the needs in the future for cash.
Another question. "How is your capacity at the moment? Can we handle higher volume without significant CapEx?"
The short answer is yes, we can. Working capital will be needed, though, because we will need to build inventory. We have now maintained an inventory level over the last 6 months in the range of NOK 30 million. That's being built up from an early 2019 inventory of around NOK 10 million. So we have added a lot, but we need to add more. So the investment in inventory will require working capital but not CapEx as such.
On the CapEx side, I also want to mention what we said about a grant that was received from Norwegian Research Council together with the project together with SINTEF. The grant is covering basically, yes -- in percentage, I can't say exactly how much, but it's the majority of external cost. So the CapEx that you will see there is going to be in the balance sheet, but it's not going to be significant beyond what we would have incurred as internal cost shouldn't the project have been started. So from that perspective, that project is very well financed, I would say, with positive feedback and support we got from the research council.
So I think that would be the questions for the moment. Other questions that haven't -- hasn't or haven't been read so far, I think, has been properly addressed during the presentation. So my apologies to anyone if you believe that you haven't been properly answered on the questions. But I think all in all, that we should have been through everything now.
So with that, I want to thank everyone for listening in today, and I wish you all a great day. Thank you very much.