Final Results

 

OptiBiotix Health plc (AIM: OPTI), a life sciences business developing compounds to tackle obesity, high cholesterol, diabetes and skin care announces its audited results for the 12 months ended 31 December 2021.

Highlights

Financial

  • Full year revenue of £2.2m a 45.3% increase on 2020 (£1.5m)
  • A 27.7% increase in gross profit from £879K (2020) to £1.1m (2021)
  • The Probiotic business increased sales by 34.0% to £1.1m (2020: £0.8m) with underlying year-on-year product sales (excluding a £250K milestone) increasing by 92.6%
  • The Prebiotic business increased sales by 59.3% to £1.1m (2020: £0.6m), with underlying sales (excluding milestone fees) growing by 122%
  • Both Probiotic and Prebiotic trading businesses profitable at EBITDA level, generating EBITDAs of £179K and £13K respectively
  • A substantial increase in the value of the Group’s holding in SkinBioTherapeutics plc (‘SBTX’) from £8.9m (2020) to £13.7m as of 31 December 2021. The increase in the value of this investment resulting in a Group net profit for the year of £6.3m (2020: £5.8m)
  • Total cash on the balance sheet at the year-end increased by 122% to £2m (2020: £0.9m) 

Commercial

  • René Kamminga appointed as Chief Executive Officer of our prebiotic business as part of a long-planned strategy to appoint experienced industry commercial leaders to run each part of the business
  • The signing of an agreement and launch of LeanBiome® in The Hut Groups (THG) Myprotein product range extending our reach in the sports nutrition market
  • The signing of agreements with large national partners, Apollo Hospitals in India and Nahdi Medical in Saudi Arabia
  • Launch by Arrotex Pharmaceuticals, Australia’s largest private pharmaceutical company, of a Very Low Calorie Diet (VLCD) weight management product containing SlimBiome®
  • Expansion of Holland & Barrett SlimExpert® own brand range weight management product range containing SlimBiome® from three to eight products
  • SlimBiome® winning best weight management product in the USA (Nutrition Industry Executive Award)

Regulatory and Scientific

  • Approval of SlimBiome® as a licensed product with health claims for weight management by Health Canada
  • The achievement of British Retail Consortium accreditation, confirming our compliance with the Global Food Safety Initiative (‘GFSI’) benchmark. This certification is one of the leading international food safety standards, accepted by most large retailers and their suppliers
  • The Company has made significant progress in 2021 with the manufacture of its SweetBiotix® and microbiome modulators

Post period end

  • Publication of a human study in a peer reviewed scientific journal showing LPLDL® can achieve similar reductions in total cholesterol and LDL (bad cholesterol) to statins, without side effects
  • Flotation of ProBiotix Health plc on the AQSE Growth Market in March 2022 with a distribution of approximately 0.55 ProBiotix shares for every OptiBiotix ordinary share held at close of business on 25 March 2022
  • New key appointments of Zac Sniderman as Business Development & Sales Director in North America, and Shiraz Butt as E-Commerce Director reflecting a focus on the US market and direct to consumer sales
  • Appointment of Steen Andersen as CEO of ProBiotix Health plc

Stephen O’Hara, CEO of OptiBiotix, commented: “The Company has achieved a second year of strong sales growth with a 45% increase in revenues, a 27.7% increase in gross profit, both ProBiotic and PreBiotic business’s EBITDA profitable, and a Group net profit of £6.3m (including the increase in the Group’s investment in SBTX). 

“With our products winning awards in several jurisdictions and an increasing number of large companies like The Hut Group, Holland and Barrett, AlfaSigma, Apollo Hospitals, and Nahdi Medical using our products, we are in strong position for further growth.

“The Company has invested substantially in building its senior commercial team reflecting our focus on commercialising products with larger partners, growing the US market, and developing our direct to consumer business. After a period of senescence due to COVID, we are pleased to report strong progress on our path to manufacture and distribute our second generation SweetBiotix® and Microbiome modulators.

“Post period-end, the Company successfully floated its formerly wholly-owned probiotic subsidiary, ProBiotix Health plc, returning a dividend to OptiBiotix shareholders. OptiBiotix shareholders now have a diversified interest in multiple areas within the microbiome space with the Group looking to accelerate bringing its second-generation technologies to market and acquire and/or develop new technologies to build the product pipeline and subsidiaries of the future. This strategy (RNS July 5 2016) reduces investor risk and offers the potential for significant value uplift through realisation of the Company’s assets by trade sale or IPO and the potential for multiple dividend returns for shareholders.

“With no debt, a healthy balance sheet, a growing reputation within the industry, second-generation products close to commercialisation, and growing consumer interest in the microbiome and gut health, the Company is in a strong position for continued growth in this exciting area of healthcare.”

 

Chairman’s Report

The Group continued to make excellent strategic, commercial, scientific and financial progress during the year, despite the challenging and uncertain trading environment created by the global Covid pandemic. Both the Probiotic and Prebiotic businesses achieved strong turnover growth and improved profits, as they successfully built sales of the first-generation ingredients developed by the Group, secured additional regulatory approvals, and reached new agreements with larger commercial partners to extend their global reach. Since the year-end the Group has successfully floated its formerly wholly-owned probiotic subsidiary, ProBiotix Health plc, as a separate company to maximise its growth potential and deliver increased value to Group shareholders, following the model set by the flotation of SkinBioTherapeutics plc in 2017. The Group’s financial strength provides it with an excellent platform to accelerate the commercialisation of first-generation products via partners and increasingly direct sales to consumers, and take to market its second-generation technologies which have the potential for sustained future growth.

Results

Group sales for the 12 months ended 31 December 2021 grew by 45.3% to £2.2m (2020: £1.5m). Administrative expenses (excluding non-cash items such as share-based payments and amortisation) increased by 32.4% to £2.1m (2020: £1.6m), largely due to one-off recruitment and consultancy costs, and investment in strengthening our commercial management team. Gross profit increased by 27.7% to £1.1m (2020: £0.9m). Both the Probiotic and Prebiotic divisions, which first achieved profitability in 2020, delivered substantially increased EBITDA.

The Company received an additional £2.9m (2020: £0.7m) during the year in proceeds from the sale of shares in SkinBioTherapeutics plc (SBTX), which is not included in the Group sales figures. As of 31 December 2021, the Company continued to hold 20.8% of the issued share capital of SBTX, valued at £13.7m (31 December 2020: £8.9m). The increase in the value of the continuing investment in SBTX resulted in a Group net profit for the year of £6.3m (2020: £5.8m).

The Group’s financial position remains strong, with total cash on the balance sheet at the year-end increasing by 122% to £2.0m (2020: £0.9m). Once R&D tax credits, recoverable VAT, and debtors and creditors are accounted for the balance is £3.2m (2020: £1.4m).

Strategy

Optibiotix Health is a life sciences business founded on the development of probiotic and prebiotic compounds which modify the microbiome to tackle obesity, high cholesterol, diabetes, and skincare: all markets offering strong growth potential in many parts of the world.

Our proven two-stage growth strategy has been to build the brand presence and early sales of our first-generation products (principally LPLDL® in Probiotics and SlimBiome® in Prebiotics) through deals with multiple partners in multiple territories around the world, while at the same time pursuing the development of our more innovative second-generation products that offer potentially larger future returns. This means that our partners cover the marketing and regulatory costs of entering new markets with new products whilst allowing us to build a brand presence.

This strategy has been designed with two separate legal entities (ProBiotix Health Ltd and OptiBiotix Ltd) focused on commercialising products, while the holding company OptiBiotix Health plc acquires and develops the novel technologies to build the new product pipeline, and provide the necessary scientific and clinical studies, publications and regulatory approvals.

We also have a significant shareholding in a third company, SkinBiotherapeutics plc, which was founded by our group CEO, and has delivered £4.3m of value to our shareholders through share sales since its IPO in 2017, and in which we retain a stake valued at £8.4m as at 1 June 2022.

OptiBiotix Health plc Overview: shareholding and key products

As we have always stated, this structure (see annual report for graph) gives our shareholders exposure to multiple opportunities within the emerging microbiome space, and affords the potential to deliver additional value through separate public listing of the divisions, as we have accomplished since the beginning of the new financial year with the flotation of ProBiotix Health plc. This has allowed ProBiotix Health to raise £2.5m to accelerate the commercial development of its products and has given our shareholders a direct stake in the business through the distribution of shares. The Company retains a substantial shareholding of 44% in its former subsidiary, which will in future be accounted for as an associate.

Business development

Among the many positive developments during the year, which the Chief Executive discusses more fully in his report, I would particularly like to highlight:

  • the significant strengthening and professionalisation of our business development and commercial management team, most notably through the appointment of René Kamminga as CEO of our Prebiotic business, OptiBiotix Ltd;
  • the conclusion of major new commercial agreements with market-leading partners in both the Probiotic and Prebiotic businesses, moving us towards our goal of having eight to ten large national or international partners for our first-generation products, and two to three partners for each of our second-generation technologies;
  • the publication of multiple scientific and clinical studies and industry reports affirming our position as an industry leader in understanding of the microbiome; and
  • further regulatory endorsements, including Health Canada approval of our SlimBiome® weight management product.

The Board and senior management

As noted in the last annual report, we significantly strengthened the Board through new appointments in the opening months of the financial year, ensuring that we have the right mix of skills to lead the Group through the next stage of its strategic development.

Christopher Brinsmead CBE joined the Board as a non-executive director on 1 January 2021, bringing to us more than 30 years of experience in the pharmaceutical and healthcare sectors as a senior executive FTSE 350 company director and chairman. Chris was Chairman of AstraZeneca Pharmaceuticals UK and President of AstraZeneca UK and Ireland from 2001-2010, and President of the Association of the British Pharmaceutical Industry (ABPI) from 2008-2010. 

Stephen Hammond MP joined the Board as a non-executive director on 2 March 2021, further complementing our skillset through his experience of a successful career in fund management and investment banking with Dresdner Kleinwort Benson and Commerzbank Securities prior to entering Parliament in 2005, and his subsequent senior roles in government.

René Kamminga joined us on 6 April 2021 as Chief Executive Officer of our wholly owned subsidiary OptiBiotix Ltd. We are already seeing the benefits of his long experience and track record of growing sales of speciality ingredients and products, and his extensive network of industry contacts. 

Since the year-end we have significantly strengthened our senior executive team below the main Board, as the Chief Executive reports below.

Outlook

Following the restructuring of the Group through the successful flotation of ProBiotix Health plc, we are focused on the development of our exciting prebiotic business OptiBiotix Ltd, while retaining a substantial stake in the continuing growth of ProBiotix Health as an associate.

The three commercial agreements we signed at the end of 2021 with well-known national and international brands are indicative of the future direction of the Group as we move to focus on fewer and larger business partners. This long-planned strategic shift creates the potential for extending our global reach, enhancing the reputation of our products and generating substantial volume sales, though it should also be recognised that these larger partners tend to operate on longer timescales than the smaller and quicker-to-market enterprises with which we forged our initial commercial agreements. It also means that we will receive fewer but much larger orders for our products than in the past, so that revenues will accrue less evenly through the year, and our results for future financial periods may reflect such timing differences.

We have invested substantially in building a stronger professional commercial management team that is well qualified and equipped to lead the business in this next phase of its development, as we look to launch more new products and focus increasingly on selling finished products direct to consumers, while continuing to develop sales of our first-generation ingredients to businesses and working to realise the commercial potential of our development pipeline.

British Retail Consortium accreditation, achieved at the beginning of the new financial year, demonstrates our compliance with an internationally recognised food safety standard that will allow us to greatly accelerate the development and sales of finished products to consumers through the retail channel.

Although the war in Ukraine and global inflationary pressures have created an undoubtedly challenging trading environment for many companies including our own, I am confident that we have the right structure, strategy, management skills, technologies and commercial partners to deliver growing value for our shareholders and an exciting long-term future for the Group.

 

 

N Davidson
Chairman

27 June 2022

 

Chief Executive Officer’s Report

OptiBiotix offers investors a unique opportunity to participate in the growth potential afforded by one of the most progressive and exciting areas of biotechnological research: the modulation of the human microbiome. This is a market projected to grow at a CAGR of 31% between 2023 and 2029 (Markets and Markets, 2022). The Group develops unique innovative products across multiple areas of the microbiome that are protected by an extensive and growing international portfolio of patents and trademark underpinned by strong science and clinical studies. Products are transferred for commercial exploitation to trading divisions which have the ability to deliver additional shareholder value through the achievement of separate listings or exits. Everything we do is designed to maximise the earning potential of each of our products while maintaining tight cost control and limiting investor risk.

STRATEGIC DEVELOPMENT

We are successfully progressing a two-stage strategy that continues to deliver for our investors as planned. In the first stage of development, our two independent trading businesses have built a strong recurring revenue base and achieved profitability through the development of business-to-business sales of our first-generation functional ingredients: principally LPLDL® in Probiotics and SlimBiome® in Prebiotics. The Group has also benefited substantially from our investment in SkinBioTherapeutics plc (SBTX).

Our business model has been designed to maximise the income potential of each of our products while limiting investment risk and managing costs by securing appropriate business partners in a wide and growing range of territories.

Having established our scientific and brand credibility through an initial focus on smaller partners that were able to bring products quickly to market, we are now able to develop a smaller number of relationships with larger partners that offer the opportunity both to increase volume sales in existing markets, and to extend our geographical reach.

As anticipated, the increasing association of our products with internationally recognised retail and pharmaceutical partners and established brands (e.g. MyProtein, OptiSlim) has created a virtuous circle of further interest from other potential partners and markets. As we engage with an increasing number of larger partners, the Company will have to manage competing interests for product and territory exclusivity. 

Now we have established a strong financial base and brand credibility through our business-to-business sales, we are increasing our efforts on developing higher-margin final product sales, including direct sales to consumers in strategic markets. This direct sales strategy will have a mutually beneficial effect in also driving sales of ingredients included in final products we sell direct to consumers.

Our products continue to gain endorsement from scientific studies, industry awards and regulatory approvals. We were particularly pleased that SlimBiome® won first place in the Weight Maintenance Category of the US Nutrition Industry Executive Awards in 2021 and was approved as a licensed product with strong health claims for weight management by Health Canada, which is renowned as one of the world’s most demanding regulators. We believe these are substantive achievements for early-stage products.

Following the separate flotation of our Probiotic business as ProBiotix Health plc in March 2022, we are now strongly placed to focus on the growth potential of our Prebiotic business, OptiBiotix Ltd, through our new CEO, René Kamminga. The conclusion of three new commercial agreements with market-leading partners in the UK, India and Saudi Arabia at the end of the year have delivered an important extension of our geographic reach for SlimBiome® in the main markets of Europe and Asia, while the launch of new lean muscle mass ingredient, LeanBiome® provides us with a point of entry to the lucrative and fast-growing sports nutrition market.

After COVID-19 delayed product development we are making good progress with the commercialisation of our second-generation prebiotic products: the growing SweetBiotix® family of functional fibres that act as low calorie, prebiotic sweeteners; and Microbiome Modulators to target a range of human diseases. These products carry higher development risks than our first-generation products but address much larger market opportunities, affording very substantial potential for future growth in revenues and profits.

FINANCIAL RESULTS

As the Chairman has noted, Group sales for the 12 months ended 31 December 2021 grew by 45.3% to £2.2m (2020: £1.5m), despite difficult global trading conditions. 

The Probiotic business, contained within our wholly owned subsidiary ProBiotix Health Ltd, increased sales by 34.0% to £1.1m (2020: £0.8m). However, income for the prior year included a £250,000 milestone payment for the development of LPLDL® into a pharmaceutical, so that underlying product sales growth year-on-year was 92.6%. The division delivered a 104% increase in EBITDA to £179K (2020: £88K).

The Prebiotic business, within our wholly owned subsidiary OptiBiotix Ltd, increased sales by 59.3% to £1.1m (2020: £0.6m), with underlying sales (excluding licensing fees) growing by 122%, with an EBITDA of £13K (2020: £36k).

Group administrative expenses (excluding non-cash items such as share-based payments and amortisation) increased by 32.4% to £2.1m (2020: £1.6m), largely due to one-off recruitment and consultancy costs, and investment in strengthening our management team.

As the Chairman has noted, the Company received an additional £2.9m (2020: £0.7m) during the year from the sale of shares in SkinBioTherapeutics plc (SBTX), which is not included in the Group sales figures. As of 31 December 2021, the Company continued to hold 20.8% of the issued share capital of SBTX, valued at £13.7m (2020: £8.9m). The increase in the value of the continuing investment in SBTX resulted in a Group net profit for the year of £6.3m (2020: £5.8m).

SBTX continues to make progress commercialising its products. It is worth noting that our initial investment of approximately £700,000 in this business in 2016 has delivered £4.3m of value to OptiBiotix shareholders through share sales to date (a multiple of 6.1 of our initial investment). If OptiBiotix had raised funds via a placing rather than sold SBTX shares this would equate to an additional 9.7m shares (11.1%) and associated shareholder dilution. The Company’s continuing interest in SBTX is valued at approximately £8.4m as of 1 June 2022.

PROBIOTICS: ProBiotix Health plc

The cornerstone of our Probiotic business is LPLDL®, a unique probiotic for cardiovascular health, the sales of which, either as an ingredient or final product, grew by 34% during the year, or as direct comparison by 92.6% when excluding the £250K milestone payment received in 2020.

The Group developed the science, carried out human studies to confirm product safety and efficacy, and protected its commercial interests with a broad IP portfolio comprising some 36 patents. In line with our strategy, ProBiotix Health then took responsibility for commercialising the product by building a supply chain of licensed partners to manufacture, formulate, and distribute LPLDL® around the world.

By the end of 2021 we had partners commercialising LPLDL® in over 60 countries including the world’s largest probiotic market, the USA, in partnership with Seed Health. Four new commercial agreements were concluded in 2021, of which the most significant was the signing in August of a new agreement with Seed Health expanding its territories from the US to include Europe, Oceania (Australia, New Zealand etc.) and Asia (excluding India) for the supply of LPLDL® in Seed’s DS-01 multi-strain synbiotic product.

We reached new agreements with Compson Biotechnology in Taiwan, INSCOBEE Inc in South Korea and Bioscience Marketing in Malaysia, all covering both LPLDL® and our own branded CholBiome® range containing it, designed to build the reputation and brand awareness of our own label products across Asia.

We have developed our own unique range of patented and proprietary food supplements containing LPLDL® under the CholBiome® brand, comprising CholBiomex3 to reduce cholesterol, CholBiomeBP to lower blood pressure and CholBiomeVH to promote vascular health. This gives us a product portfolio which allows us to create different formulations to allow us to enter international markets around the world. This is important as regulatory conditions vary widely across the world. For example, Monacolin K is used extensively across Asia but prohibited in food supplements in North America and has restricted dosage in Europe. Our CholBiome product range has been developed to meet existing and anticipated regulatory requirements in international markets.

Actial Farmaceutica Srl, with which we announced an agreement in July 2020 for the distribution of CholBiome® products, is taking longer to launch products than originally planned due to COVID-19 delays impacting on regulatory approvals. However, ProBiotix Health hopes to announce progress on this in the months ahead.

Whilst ProBiotix Health’s focus is on commercialising products into the supplement and over the counter pharma markets there is potential for the further development of LPLDL® in drug biotherapeutics. This is a complex area where regulatory pathways are not fully established, timescales are long and investment costs and development risks are high. As such, this is being progressed with partners with the necessary skills and expertise to take drug products to market who pay milestones and royalties.

As part of our exploration of potential additional applications for the product, we announced in January that we are jointly funding a PhD studentship and clinical study into the role of the microbiome in stress, anxiety and sleep disorders with the Universities of Southampton and Trento. We hope to have some early data at the start of 2023.

LPLDL® has been determined as Generally Recognized As Safe (‘GRAS’) by the US Food and Drug Administration (FDA) and has pharmaceutical GMP manufacture designation. Post period we began to see the benefits of achieving GRAS with our partner in Uruguay, Grancha Poncha, launching a yoghurt, Yo-Life®, with a cholesterol health claim. This is a significant milestone, as it extends the use of LPLDL® into functional dairy foods with a health claim which may be replicated in other territories and other functional foods on a global scale. The launch follows over two and a half years of product development to ensure the addition of LPLDL® to yoghurt does not change its taste, texture, or shelf life, and provides an active dose in milligram amounts and a cost advantage over stanols or sterols which typically require doses of 2gms.

With the dairy sector accounting for over 85% of the global probiotic market, we believe that this is an area with potential for significant future growth.

PREBIOTICS: OptiBiotix Ltd

Our Prebiotic business continues its focus on growing sales of its first-generation prebiotic weight management ingredient SlimBiome®, and on continuing to progress the commercialisation of more innovative second-generation products including SweetBiotix® and Microbiome Modulators.

SlimBiome®/LeanBiome®

Despite the global slump in the weight-management sales during the COVID-19 pandemic (Nutritional Outlook, 24, 4) sales of SlimBiome® and LeanBiome® as an ingredient or final product grew by 122% during the year, aided by significant new product launches such as THG and range extensions in the UK and Oceania. 

Our established UK partner Holland & Barrett expanded their SlimExpert® own brand range of weight management products containing SlimBiome® from three to eight products in March 2021, with the range now including powdered beverages, shakes and porridge. 

In July 2021, Arrotex Pharmaceuticals, Australia’s largest private pharmaceutical company, launched a Very Low Calorie Diet (VLCD) weight management product containing SlimBiome®, Bioslim VLCD, through pharmacies and online across Australia.

Also, in July 2021 our existing customer Optipharm expanded their portfolio of products containing SlimBiome® with the launch of the Optiman brand, sold exclusively through the Chemist Warehouse online pharmacy.

In October 2021 we extended our market reach by entering the sports nutrition market with LeanBiome® a scientifically formulated sports nutrition ingredient which supports athletes seeking to increase lean muscle mass to change their body composition.  

In December 2021 we signed a number of significant new commercial agreements with large partners Apollo Hospitals in India and Nahdi Medical in Saudi Arabia which extended the geographic reach of the business and will hopefully lead to important new product launches in 2022.

In January 2022, The Hut Group’s Myprotein launched the Impact Diet Lean (IDL) product range containing LeanBiome®, developed to build lean muscle mass faster. IDL shakes were launched into the main markets of Europe and Asia during Q1 and will be followed up by product range extensions throughout the year.

SweetBiotix®

Our second-generation SweetBiotix® family of products is based on the concept of creating a sweet fibre that has a low glycaemic index, which enhances the microbiome. The concept uses recent advances in science, requires new manufacturing processes to be developed, and represents a step change from existing products on the market or to the best of our knowledge and partner discussions, known to be under development. Our aim is to build a broad range of products suitable for a wide range of application areas which can meet the needs of multiple partners, on applications as diverse as dairy, cereals, and hot and cold beverages. Each of these must be assessed in terms of flavour optimisation, stability (typically 12 months with 24 months preferred), dosage, safety, tolerance, health benefits, and the final product cost profile.

We are progressing the commercialisation of SweetBiotix® on a number of fronts. Following the agreement we signed in the second half of 2020, our US manufacturing partner has successfully manufactured SweetBiotix® using an industrial scale process and is now optimising yields and reducing wastage. Our agreement, covering only one part of the SweetBiotix® portfolio, grants an exclusive licence in return for our partner making a significant investment to cover all the manufacturing, marketing and commercialisation costs, while paying annual royalties to OptiBiotix.

Additionally, we are working with one of the world’s leading companies specialising in taste and sweetness on jointly developing, scaling up and commercialising another group of SweetBiotix® products. A number of corporates with leading positions in the food and beverages markets have also signed Material Transfer Agreements to develop applications for SweetBiotix®.

Microbiome Modulators

The Company has developed an innovative approach to allow it to precision engineer the microbiome.  This is one of the most exciting areas of microbiome therapeutics as it creates the potential for targeted treatment of a range of human diseases. Development work was slowed by COVID-19 reducing access to Universities and Contract Research Organisations in 2020 and early 2021. This work has now progressed and we have achieved the production of Microbiome Modulators using a process suitable for industrial scale-up. Work is ongoing to optimise the process and test whether the functionality has been retained before initiating full scale-up and commercialisation.

This is a really exciting area of development which, if successful, could revolutionise the use of the microbiome therapies in healthcare, potentially allowing the creation of precision prebiotics which can engineer the gut microbiome to prevent, manage and treat human diseases. We will be increasing our investment in Microbiome Modulators to accelerate the development activities currently taking place.

INTELLECTUAL PROPERTY

Our Intellectual Property strategy has been based of building a portfolio of overlapping patents to protect our commercial interests and reduce the risk of any particular patents failing to grant or being opposed by a competitor. This means that we have multiple composition, application, and process patents to protect each area of our business. Whilst this approach is more costly, it reduces our future commercial risk. As patents are granted in key territories (typically the US, Europe, Canada, Japan, Australia, India) the Group has been able to refine its patent portfolio to reduce IP costs whilst continuing to protect its commercial interests.

Our strategy and investment have enabled the Group to build an extensive and valuable intellectual property portfolio of more than 100 patents worldwide: 36 in ProBiotix Health and 73 in OptiBiotix. In addition to these patents, we have registered approximately over 80 trademarks (21 in ProBiotix Health and 62 in Optibiotix) providing ‘double IP’ – a combination of patents and supporting trademarks which allows the Group to build its trademarked brands supported by its patents. This approach allows the Group to protect its commercial interests and limit competitors from launching similar products and in combination creates a valuable IP portfolio in the microbiome field. We are constantly reviewing and updating our patent and trademark portfolio according to commercial needs.

MANAGEMENT

As the Chairman has reported, we substantially strengthened our Board and senior management team through new non-executive and executive appointments in the early months of the financial year under review. I am pleased to note that a number of these new senior colleagues have demonstrated their commitment to the Group, and their confidence in our future prospects, by making personal investments in the Company’s shares. It is also pleasing to note that other members of the Board and senior management team took the opportunity to invest in OptiBiotix during 2021.

Since the beginning of the new financial year, we have made a number of senior appointments below the level of the main Board. Paul Cannings joined us in January 2022 as Head of Operations & Quality, and in March 2022 we announced the appointments of Zac Sniderman as Business Development & Sales Director North America, Shiraz Butt as E-Commerce Director, and Karl Burkitt as Marketing Director. These new additions will ensure that we continue to meet the quality and regulatory requirements of our growing network of commercial partners around the world; maintain our drive to expand ingredient sales, particularly in the large North American market; and develop the sales of final products containing our unique ingredients both to businesses and direct to consumers.

PROSPECTS

We have continued to make good progress since the beginning of the current financial year, despite the challenging global trading environment.

Significant developments in the year to date include:

  • The achievement of British Retail Consortium accreditation, confirming our compliance with the Global Food Safety Initiative (‘GFSI’) benchmark. This certification by one of the leading international food safety standards, accepted by most large retailers and their suppliers worldwide, is an important support to our commercial strategy of increasing our sales of final product solutions to partners in the retail channel.
  • Our entry into the sports nutrition market with the launch of LeanBiome®, a scientifically supported dietary fibres and a trace mineral, developed to support athletes increase lean muscle mass and to improve metabolism, gut health and satiety. Our new distribution agreement with leading e-commerce retailer The Hut Group, signed in December 2021, saw LeanBiome® launched in January 2022 in its Impact Diet Lean product as part of its My Protein range in the UK, with territorial expansion across Europe, Asia and the USA planned in the course of the year.
  • The reformulation of WellBiome®, our functional fibre and mineral blend, with new ingredients that will allow us to make new health claims for the products. The new WellBiome® will form the basis for a science-based health and wellness platform offering a range of products to improve cognitive, immune, bone, digestive and cardiovascular health to support healthy ageing.
  • Publication in January 2022 of a third human volunteer study on the medical efficacy of LPLDL®, demonstrating through a placebo-controlled trial that LPLDL® delivered large and statistically significant reductions in total cholesterol, LDL-C (bad) cholesterol and Apolipoprotein B (widely accepted as the most important causal agent of atherosclerotic cardiovascular disease), with no compliance, tolerance or safety issues. The results of this and other studies suggest efficacy similar to many statins and other treatments more typically associated with pharmaceuticals, suggesting considerable potential in high value pharmaceutical and OTC markets for the use of LPLDL® in individuals who are unwilling or unable to tolerate other treatments.
  • Publication in February 2022 of a consumer study undertaken among purchasers from our own e-commerce website of CholBiomex3, our proprietary food supplement containing LPLDL®, which confirmed its effectiveness in reducing cholesterol with no reports of side-effects or any tolerance issues.
  • Admission of ProBiotix Health plc to the AQSE Growth Market on 31 March 2022, raising £2.5m for the further development of our former Probiotic subsidiary through a placing and subscription of new shares, while giving our own shareholders a dividend in specie of 0.554673 ProBiotix share for every OptiBiotix share held.
  • Good progress in the development of OptiBiotix Health India, the new subsidiary whose formation we announced in November 2021. This gives us much improved access to a huge, rapidly growing and increasingly prosperous market of 1.3bn people. India is expected to account for the majority of the world’s middle-class consumers by 2035. With high levels of cardiovascular disease and obesity already prevalent in the country, we see excellent opportunities to improve engagement with our local manufacturing partners and to develop sales of both ingredients and higher-margin final products in the years ahead.
  • The appointment of Steen Andersen as Chief Executive Officer of ProBiotix Health plc. This is part of a long-planned strategy to appoint experienced industry business leaders to each part of the business allowing me, as Group CEO to focus on identifying and developing the new technologies that will provide the Group with a pipeline of products to deliver future growth and market value.

As the Group matures, we are moving on from a period when we announced very frequent news reports on our progress in developing the science behind our products and in growing our global network of relatively small business partners. The focus now is on building our sales by extending product ranges and territories, gaining regulatory approvals for health claims, migrating to larger partners, and developing sales of final products direct to consumers. This will lead to us reporting less news, but of a more substantive nature. It also means, as the Chairman has noted, that our future financial results will reflect fewer but much larger sales to a smaller number of big partners and consequently revenues reported less evenly through the year.

The strong growth in revenues and profits in 2021 despite the difficult global environment is testimony to the effectiveness of our strategy. We continue to make good progress against our stated aims of focusing on a smaller number of large partners in key strategic markets and grow our direct-to-consumer sales, the benefits of which we expect to begin realising in the current year. There is an exciting opportunity for growth as we bring the second-generation products to market, while we retain exposure to the growth potential in probiotics and skincare through the Group’s shareholdings in ProBiotix Health plc and SkinBioTherapeutics plc.

Our strong financial position has allowed us to invest in expanded sales and marketing capabilities that will help us to increase our sales of final products direct to consumers through retail channels. We hope to see the return on this investment later this year and beyond. It also gives us the capability to in-license or acquire additional technologies that will ensure a continuous pipeline of solutions to deliver diversified growth for the Group and strengthen our position as one of the leading companies in the rapidly growing microbiome space.

 

Stephen O’Hara
Chief Executive
27 June 2022

 

Consolidated statement of comprehensive income  

 
 Notes Year ended
31 December
2021
Year ended
31 December
2020
  £ £
Revenue from contracts with customers  2,212,932 1,523,247
     
Cost of sales  (1,089,589) (643,428)
   ─────── ───────
Gross Profit  1,123,343 879,819
Share based payments  (60,288) (127,248)
Depreciation and amortisation  (288,455) (247,895)
Other administrative costs  (2,139,915) (1,616,069)
     
 Total administrative expenses 6  (2,488,657) (1,991,212)
 ─────── ───────
Operating loss  (1,365,314) (1,111,393)
     
Finance cost 5  (47,600) (44,954)
Finance income 5  122 98
   ─────── ───────
   (47,478) (44,856)
     
Share of loss from associate 11  - (303,448)
Gain on disposal of an associate 11  - 4,165,223
Gain on investments 11  7,500,681 2,955,739
Profit on disposal of investments 11  88,618 48,967
   ─────── ───────
Profit/(Loss) before tax  6,176,507  5,710,232
     
Corporation tax 7  84,523 91,635
   ─────── ───────
Profit/(Loss)for the period  6,261,030 5,801,867
   
Other comprehensive income  - -
 ─────── ───────
Total comprehensive income for the period  6,261,030 5,801,867
   ═══════ ═══════
Total comprehensive income attributable to:    
    Owners of the company  6,261,030 5,801,867
    Non-controlling interests  - -
   ─────── ───────
   6,261,030 5,801,867
   ═══════ ═══════
Earnings per share from continued operations    
Basic profit/(loss) per share - pence 8  7.15p 6.65p
Diluted profit/(loss) per share - pence  6.55p 6.07p
   ═══════ ═══════

 

 All activities relate to continuing operations

 

Consolidated statement of financial position

 
  Notes As at
31 December 2021
As at
31 December 2020
ASSETS £ £
Non-current assets    
Intangibles 9  2,640,672 2,735,621
Investments 11  13,650,927 8,962,564
   ─────── ───────
 16,291,599 11,698,185
 ─────── ───────
CURRENT ASSETS    
Inventories 12  101,877 184,236
Trade and other receivables 13  1,552,490 645,823
Current tax asset 7  191,249 310,435
Cash and cash equivalents 14  2,007,448 864,680
   ─────── ───────
 3,853,064 2,005,174
   ─────── ───────
TOTAL ASSETS  20,144,663 13,703,359
   ═══════ ═══════
EQUITY    
Shareholders’ Equity    
Called up share capital 15  1,758,812 1,758,812
Share premium 16  2,537,501 2,537,501
Share based payment reserve 16  927,595 867,307
Merger relief reserve 16  1,500,000 1,500,000
Convertible debt - reserve 16  92,712 92,712
Retained Earnings 16  11,319,998 5,058,968
Non-controlling interest 16  35,782 35,782
   ─────── ───────
Total Equity  18,172,400 11,851,082
 ─────── ───────
LIABILITIES    
Current liabilities    
Trade and other payables 17  600,904 518,995
   ─────── ───────
   600,904 518,995
   ─────── ───────
Non - current liabilities    
Deferred tax liability 18  552,000 561,523
Convertible loan notes 19  819,359 771,759
   ─────── ───────
   1,371,359 1,333,282
   ─────── ───────
TOTAL LIABILITIES  1,972,263 1,852,277
 ─────── ───────
TOTAL EQUITY AND LIABILITIES  20,144,663 13,703,359
   ═══════ ═══════

 

These financial statements were approved and authorised for issue by the Board of Directors on 27 June 2022 and were signed on its behalf by:

 

S P O’Hara
Director
Company Registration no. 05880755

 

Consolidated statement of changes in equity

  
Called up
Share capital
 
 
Retained Earnings
 
 
Share
Premium
Non-Controlling
interest
 
Convertible
Debt
Reserve
 
Merger Relief Reserve
Share-based
Payment reserve
 
 
Total
equity
 £ £ £ £ £ £ £ £
Balance at 31 December 2019 1,708,811 (742,899) 1,646,873 35,782 92,712 1,500,000 740,059 4,981,338
         
Profit for the year - 5,801,867 - - - - - 5,801,867
         
Issues of shares during the year 50,001 - 950,003 - - - - 1,000,004
 
Share issue costs
 
-
 
-
 
(59,375)
 
-
 
-
 
-
 
-
 
(59,375)
 
Share options and warrants
 
-
 
-
 
-
 
-
 
-
 
-
 
127,248
 
127,248
         
         
 ────── ─────── ────── ────── ───── ────── ────── ───────
Balance at 31 December 2020 1,758,812 5,058,968 2,537,501 35,782 92,712 1,500,000 867,307 11,851,082
         
Profit for the year - 6,261,030 - - - - - 6,261,030
         
         
         
Share options and warrants - - - - - - 60,288 60,288
         
 ────── ─────── ────── ────── ───── ────── ────── ───────
Balance at 31 December 2021 1,758,812 11,319,998 2,537,501 35,782 92,712 1,500,000 927,595 18,172,400
 ══════ ═══════ ══════ ══════ ═════ ══════ ══════ ═══════
         

 

Consolidated statement of cash flows

 Notes Year ended
31 December  2021
Year ended
31 December 2020
 
   ££
Cash flows from operating activities    
     
Cash utilised by operations 1  (1,759,446) (928,061)
Tax received  194,664 -
Interest received  121 98
   ────── ──────
Net cash outflow from operating activities  (1,564,661) (927,963)
     
   
     
Cash flows from investing activities    
     
Purchase of intangible assets  (193,506) (350,345)
     
   ────── ──────
Net cash outflow from investing activities  (193,506) (350,345)
   ────── ──────
Cash flows from financing activities    
Share issues  - 940,629
Disposal of investments  2,900,936 746,751
     
   ────── ──────
Net cash inflow from financing activities  2,900,936 1,687,380
   ────── ──────
     
   
   
Increase/(decrease) in cash and equivalents  1,142,769 409,072
     
Cash and cash equivalents at beginning of period  864,680 455,608
     
   ────── ──────
Cash and cash equivalents at end of period 2  2,007,448 864,680
   ══════ ══════
   

 

 

Page last updated: 28 June 2022