Probiotix Health PLC - Final Results

28 June 2024

ProBiotix Health plc

("ProBiotix" or the "Company" or the "Group")

Final results

Notice of AGM

ProBiotix Health plc (AQSE: PBX), a life sciences business developing probiotics to tackle cardiovascular disease and other lifestyle conditions, announces its audited results for the period ended 31 December 2023.

Highlights

á    Distribution agreement with Trans Chem for finished turnkey products in Australia and New Zealand

á    Appointment of Niels Peter Bak as Technical Product Manager

á    Launch of Cholbiome_CH a dual action bilayer tablet containing phytosterols and LP_LDL to increase opportunities in the US market

Post period end

á    Appiontment of Michael Litichevski as Head of Global Sales

á    Appointment of Mads Brandt as Global Supply Chain Director

á    Partner agreement with SymbioPharm

Investor presentation

The Company will host a presentation for investors via the Investor Meet Company platform on Wednesday, 10 July at 11am BST. The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9 July 2024 at 9am BST, or at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet ProBiotix Health plc  via: https://www.investormeetcompany.com/probiotix-health-plc/register-investor

Investors who already follow ProBiotix Health plc on the Investor Meet Company platform will automatically be invited.

Steen Andersen, CEO of ProBiotix, commented: "We have continued to develop a business on becoming a solutions provider of finished probiotic products in consumer formats, both under our own brands and partner private labels, with the objective of building ProBiotix into a £10m turnover company in the years ahead.  We look to the future with enthusiasm and high confidence in building a valuable company for shareholders."

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Chairman and Chief Executive's Report

This Annual Report presents the Company's inaugural full year results as a listed public company on the Aquis Stock Exchange. The Company demonstrates strong sales growth, significant commercial traction, continued R&D and organisational progress. In 2023, the Company implemented a new focussed 5-year growth strategy aiming at becoming a leading provider of turnkey private label probiotic dietary supplements within the preventative cardiometabolic health segment, taking off-set in the Company's principal proprietary probiotic strain LP_LDL. The positive progress to date is testimony to a successful implementation of the strategic plan, the uniqueness of the Company's products and a differentiated value proposition in a growing market for cardiometabolic health, probiotic and healthy aging products. The Board and Management are confident that the present market capitalisation of the Company reflects current public market conditions and not the progress of the Company

Strategic overview

ProBiotix is a life sciences company focused on linking probiotics with the human microbiome addressing aspects of cardiometabolic health and other lifestyle conditions occurring throughout the span of life. ProBiotix operates in the dietary supplement and prevention segment and taps into the cross field of healthy aging, cardiometabolic health and probiotic supplements.

 
ProBiotix's purpose is to provide consumers and industry world-wide with uncompromised supply and service of safe and scientifically validated probiotic-based microbiome product solutions for the improvement of human health. The Company aims to partner with scientifically driven dietary supplement, consumer health and OTC companies globally who have a strong strategic focus on the human microbiome and the use of probiotics. 

Every year, 20 million people die from cardiometabolic disease related issues globally - a trend which has risen by 50% over the past 30 years (Source: World Hearth Federation, Report 2023 + IHME 2019). It is estimated that approximately 80% of these deaths could be avoided by preventative treatment combined with life-style changes. Yet the category of dietary supplements with sufficient clinically documented efficacy remains limited.

  
The global consumer probiotics supplement market is forecast to reach $10.9 billion by 2028 (Fortune Business insights, 2023) at a CAGR of 7.9%. The market is driven by an increasing consumer awareness towards healthy living, disease prevention and focus on the importance of dietary supplementation as an assisting aid in the support of a good health throughout life. Cardiometabolic related diseases remain one of the top causes of death globally which puts the category on top of the agenda for many consumers and legislators and thus offers exceptional growth opportunities for the category, and especially probiotic-based solutions.

Alongside the fast growing probiotic supplement market, the preventative category within cardiometabolic health is estimated to reach a consumer market value of $16.2 billion by 2028 (www.precedenceresearch.com/cardiovascular-health-supplements-market).

ProBiotix is tapping into an attractive market with an estimated total consumer value of $27.1 billion by 2028 and with an outlook expected to have a relatively limited number of clinically backed probiotic-based dietary supplements available to cater for the consumer needs in the category. This allows ProBiotix an excellent opportunity to manifest the Company as a leading player in the field.

                                                Source:                 Fortune Business insights, 2023

                                                                www.precedenceresearch.com/cardiovascular-health-supplements-market

The Company has completed four independent clinical studies with human volunteers as well as one partner-driven study with 434 subjects which all consistently show that ProBiotix's principal probiotic strain, Lactobacillus plantarum ECGC13110402 (LP_LDL), has the ability to reduce key cardiovascular risk markers, such as total cholesterol, LDL (bad) cholesterol, and Apolipo protein B (biomarker of atherosclerosis), by up to 34.2 per cent, 28.4 per cent and 28.6 per cent, respectively.

ProBiotix commercialises a unique range of proprietary private label turn-key dietary supplements, all based on LP_LDL under the Company's business-to-business umbrella of YourBiotix.

 
The Company has defined a focussed strategy to develop the business and explore the market opportunities through geographical expansion, development of new and attractive dosage formats combined with broadening the clinical use of LP_LDL and other proprietary strains in the pipeline. In 2023, the YourBiotix portfolio comprised of four unique products:

YourBiotix_CH 
A capsule formula which contains LP_LDL as the only active ingredient to focus on healthy cholesterol maintenance.

YourBiotix_CH InstaMelt
An innovative direct dose stick formula which contains LP_LDL as the only active ingredient to focus on healthy cholesterol maintenance.

YourBiotix_BP 
A blood pressure-reducing tablet formula that combines four science-backed natural ingredients - LP_LDL, Thiamine (Vitamin B1), L-arginine and CoEnzyme Q₁₀ - to provide a multi-targeted mechanism approach for aiding hypertension and improving cardiovascular health.

YourBiotix_VH  
A vascular health capsule formula that combines three specialised ingredients in a triple layer tablet. Consisting of LP_LDL, Thiamine and Vitamin K2 Vital (from Kappa Bioscience) to provide a multi-targeted mechanism to work against the build-up of lipid and calcium deposits in the blood vessels.

In addition to representing ready to market solutions, the YourBiotix product portfolio provides a unique springboard to create customised formulations as a door opener to individual customers and the widest possible range of opportunities within international markets, such as North America.

Key milestone achievements

Strategy

In early 2023, a new ambitious 5-year growth strategy was implemented focused on becoming a provider of full turnkey private label finished probiotic dietary supplements. Moving towards final product formats allows ProBiotix to strengthen the differentiated value proposition of the Company by de-bottlenecking the customer challenges when handling sensitive live probiotic strains in their own manufacturing. The strategy increases customer loyalty and builds barriers around the business, driving revenue growth and profitability potential.

Commercial

2023 set a landmark for the Company's continued double digit growth rates. Several new products were launched in Germany, China, Taiwan, and Malaysia and the Company also experienced continued growth from existing products on the market in USA, Italy, and other European countries.

á    Launch of YourBiotix in Germany in partnership with Germany's third largest pharmacy brand under their Symbiolact brand umbrella. The launch is part of Symbiopharm's long term strategy to further build their leading position within the preventative cardiometabolic health segment through introduction of clinically backed supplements in the cardiometabolic space.

á    Successful growth in Germany and expansion into China through a long-standing commercial German partner. The geographical expansion of the brand is expected to continue to hold significant growth potential with the potential opportunity to launch line extensions for the Chinese market once the first product has successfully established a position in the market.

á    Significant investment in rebranding by Italian commercial partner to allow for further growth of their existing brand outside the practitioner category by tapping into the attractive Italian consumer health segment and mega consumer trend within healthy aging.

á    Continuation of robust growth by US-partner driven by diversification into new sales channels and distribution platforms combined with strong consumer advertisement.

á    Product launch by Taiwanese partner with a strong focus on online sales of products within the cardiometabolic area. Additional SKUs anticipated launchingduring 2025, once the first product has successfully settled in the market.  

    
In the middle of 2023, a distribution agreement was entered with leading Australian distributor TransChem allowing for exploration of business opportunities in Australia/New Zealand, South-East Asia and cross-border sales into China. YourBiotix has been introduced to leading brands in the region which has led to several commercial projects with significant potential commercial value already underway.

Our sales pipelines in Europe and USA were lifted to the next level of robustness with a doubling of active sales projects including a number of strategic projects with leading brands moving towards a 2025 or 2026 launch.

Operations

The Company expanded its network of strategic contract manufacturers in both Europe and North America during the course of 2023 with the objective of being ready to absorb the significant trajected sales growth throughout the planning period. Alongside focus shifting from bulk strain sales to sales of finished turnkey solutions, there will be an increasing need for flexibility to cater for product customization needs, focus on supply security and risk mitigation as well as a desire to capture the value created by economy of scale alongside the trajected volume growth. 

Research & Development

In 2023, ProBiotix launched a new innovate and groundbreaking direct dosage stick format - YourBiotix InstaMelt - to accommodate the need for innovation and differentiation requested by our partners. This new dosage holds the key to opening an attractive market segment with consumers suffering pill fatigue or inability to take tablets or pills. The product is a first of its kind within cardiometabolic health probiotic supplements and offers a unique experience of melting directly in the mouth. The InstaMelt stick has a global appeal and plays a vital role in the Company's strategy for penetration of the APAC region. The InstaMelt technology will support building additional entry barriers around the business and position ProBiotix as an innovator and industry disruptor.

A comprehensive retrospective study was published on the use of the AlfaSigma brand Ezimega3 containing LP_LDL, as the key active ingredient. The study included 434 Italian subjects and is the largest to date of its kind on LP_LDL containing commercial products. The 434 subjects included measurement in several demographic subgroups and captured the reduction in LDL cholesterol (bad cholesterol) as well as perceived wellbeing after 3-6 months' intake of Ezimega3. The study resulted in very positive and consistent results and once again confirmed the in-vivo efficacy of LP_LDL by showing an average lowering of LDL cholesterol of 15.8% - 21.8% and improved the perceived wellbeing by 14.4% - 33.0% depending on sub-group. The result of the study opens additional commercial opportunities for the use of LP_LDL within new consumer segments like peri-menopausal women and individuals with an active lifestyle.

In 2023, the Company  also commenced  its  fourth own clinical study, which is a multicenter, double-blind, placebo-controlled, randomized clinical study on the efficacy of YourBiotix in combination with stanols and sterols in improving blood lipid profiles in hypercholesterolaemic adults with coeliac disease diagnosis conducted in Italy (University of Salerno) and the UK (University of Roehampton). With the Italian cohort of twenty-nine volunteers completed, results are aligned with previous studies showing statistically significant and biologically relevant improvements in total cholesterol, LDL-cholesterol and apolipoprotein B, all recognized risk biomarkers for coronary heart disease. The results for the Italian cohort were presented at Probiota Milan 2024 in DATE. The UK cohort Is currently being recruited

Results

Sales for the year showed an increase of 27.8% to £1.67m (2002:£1.31m)  with a gross profit of £872k (2022:£739k).  Administration costs rose during the year to £1.55m  (2022: £800k)  as part of the plan to build a strong platform in order to implement the 5 year growth strategy. After administrative costs  and share based payments expenses  there was a loss before tax of £769K, (2022:£262k)

The Group ended the year in a very strong financial position with cash balances totalling £1.51m. (2022:£1.74m).  

Board and Management

In 2023, as a pivotal part of securing the foundation for a strong strategy implementation, the Company has been focussing on building the organisational platform and successfully onboarded a strong and experienced team to support the business.As a result, the Company has benefitted from several senior management appointments which collectively bring to the Company more than 100 yearsÕ industry and market experience.

á    Appointment of Mr. Niels Peter Bak as Head of Product Management was announced in July 2023.  Niels Peter joined the management team in September 2023 as a cornerstone in securing diligent executing of the Company's strategy to focus the business on finished supplement dosage formats, further accelerating product formulation development and increasing the responsiveness to individual customer requirements for customisation. Niels Peter is a talented industry veteran with a proven track record in strategy execution, business to business product management, product development and technical marketing. Niels Peter has held senior technical and commercial positions with Chr. Hansen, ADM, Deerland Probiotics & Enzymes, Bifodan and LactoBio.

á    Mr. Michael Litichevski was appointed Head of Global Sales in late 2023 and joined the Company on 1 January 2024. The onboarding of Michael is part of the Company's strategy to build a strong commercial team and local market presence to support the long-term growth, build sales pipeline and increase customer access. Michael has contributed with over 25 years' experience in building B2B sales, of which more than 11 years specifically within commercialisation of innovative and high quality probiotic dietary supplements. He has previously held positions like VP of Sales at Deerland Probiotics & Enzymes, VP sales of Bifodan and has worked in commercial positions for large organisations such as Orkla Health and Nycomed Pharma.

á    Mr. Mads Brandt was appointed Head of Global Supply Chain in October 2023 and started working in the Company in December 2023. The hiring of Mads is a key anchor point in building a strong infrastructure to support the supply of product to the increasing number of customers and order lines arising from the strategy execution. Mads has held several senior supply chain and operations positions with companies like Leo Pharma, Dako, Unomedical as well as having acted as management consultant assisting several leading pharmaceutical, medical device and nutrition companies with supply chain and operation strategy and optimisation.  

The Company anticipates implementing further changes to the Board, Management, and organisation as needed to successfully progresses the execution of the growth strategy of becoming a leading solutions provider of finished probiotic supplements within metabolic health and healthy aging and to capitalise on the opportunities created by the Company's promising growing sales pipeline and customer portfolio.

Outlook

ProBiotix has started 2024 continuing the strong trade from 2023. The current order holding, the maturity of the sales project pipeline with both new and existing customers combined with the increased traction in our two key markets - EMEA and NA Ð lead Management to have a positive outlook for the year.

Our efforts to establish a strong commercial presence in USA, which the Company started up in early 2023, is showing first indications of successful implementation through manifestation of several new sales projects with leading regional brands having an anticipated planned product launch for 2025 or 2026. There is a strong consumer movement in the Healthy Aging space in the USA, and consequently, the leading brands are showing an increased interest in the cardiometabolic prevention area. Our YourBiotix portfolio, and especially LP_LDL,  has proven to hold a strong position as offset for executing the required customisation driven by the US market needs, leading to a significant increase in the number of new sales projects being started. 

The instrumental approach and increase in the commercial activities in Europe focussing on specific selected markets such as Germany, France, Spain, and UK/Ireland has already this year manifested itself in a significant expansion of the sales project pipeline and is expected to pave the way for continued positive and steady growth of our revenue generated out of this region over the years to come.

The initial - but very promising - steps have been taken to form the strategic approach for the APAC region. In 2024, we have started testing our value proposition in China and South Korea as these markets have a high affinity to our value proposition which resonates well with both industry and consumer trends. Management believes that the initial positive interest from these markets is a strong indicator for the future potential once the second phase of the strategy plan will be rolled out in early 2026.

 
Our new InstaMelt stick has been introduced at the annual global Health & Nutrition exhibition Vitafoods in Geneva in May 2024 with more than 100 relevant leads generated in total. A significant number of promising leads are linked to the new InstaMelt stick based on which it is our assessment that the innovative product concept resonates well with our business-to-business customers as well as with consumers. InstaMelt will be showcased at North America«s largest Health & Nutrition exhibition Supply Side West in late October. 2024 The product concept is anticipated to receive the same level of positive interest as was observed at Vitafoods. Based on the positive traction of the InstaMelt stick thus far, we are confident that the technology will  be a lever to open the attractive North American market and a perfect fit with the attractive multilevel marketing segment. Together with the rest of the products in our portfolio, InstaMelt is believed to provide differentiation and ability to create the foundation for a robust expansion of the North American sales project pipeline and customer base.

 
Our short- and medium-term focus will remain on building the customer acquisition in Europe, establishing the commercial platform in North America alongside further maturing the organisation to be able to respond to the continued growth of the business. We will maintain focus on developing turnkey consumer solutions and continue the transitioning from sales of bulk ingredients to finished formats. As part of our focus on finished products, we will continue to expand our range by developing new dosage formats such as chewable tablets and develop new and improved packaging formats to extend shelf-life. In research and development, we will increase focus on developing or in-licensing new probiotic strains to cater for expansion of our product offering to additional indication area within the mega consumer trend of Healthy Aging and sustain the robustness of our cardiometabolic health claims on LP_LDL. 

This strategy represents a clear five-year pathway to lay the ground for ProBiotix to reach the aspiration level of building annual sales of £10 million while shifting the balance of the business from bulk sales of LP_LDL to sales of finished products.

By the additions to the management team in 2023, the organisational foundation has been established. In order to support strategy execution and ensure ability to deliver our targeted results, we will need to make further adjustments to the internal structure of the business and recruit additional personnel within sales, quality, and regulatory areas. Additional staffing costs mean that, whilst we expect sales to continue to grow positively in 2024, the additional investment will negatively impact profitability in 2024 and 2025 but will form a much stronger platform for delivering growth and shareholder value in the medium and longer term.

We will continue to work with Aquis and explore opportunities within other markets, including AIM, to increase liquidity in the ProBiotix shares.

The Company sees 2024 as a year of opportunity with a potential for accelerated growth whilst in parallel building the Company team to support the structure to drive continuation of growth.    

The scale of the market opportunity in probiotics and cardiometabolic health, the proven efficacy of our products, the substantial scope for expansion of our range and geography, the quality and experience of our management team and organisation, the clarity and distinctiveness of our future strategy, all allow us to look to the future with confidence and enthusiasm.

A Reynolds

Chairman

26 June 2024

S Andersen

Director

26 June 2024