Investors

OptiBiotix Health plc (AIM: OPTI), a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes, announces its audited results for the period ended 31 December 2020.

Highlights

Financial

• Full year revenue of £1,523,247, a 104% increase in revenue from the 13 month reporting period in 2019 (2019: £744,883)
• A 124% increase in gross profit from £392,803 (2019) to £879,819 (2020) as increased sales volumes enabled us to renegotiate contract terms with commercial partners and increase margins
• A 27% reduction in other administration costs expenses from £2,204,216 in 2019 to £1,616,069 in 2020
• The Functional Fibres and Probiotic divisions achieving profitability at the EBITDA level after losses in the prior 13 month period
• A substantial increase in the value of our holding in SkinBioTherapeutics plc (‘SBTX’) during the year with an investment of approximately £700,000 in 2016, for a 51% pre-IPO holding, delivering an asset now worth circa £25m as of June 2021
• A 49% reduction in operating loss from £2,166,638 in 2019 to £1,111,393 in 2020. The increase in the value of the SBTX holding during the year resulting in a Group net profit for the year of £5,801,866 (2019: net loss £2,368,362)
• Total cash on the balance sheet at the year-end increasing by 90% to £864,680 (2019: £456,608).  Post period, the Company sold £900,936 worth of SBTX shares in March 2021

Commercial

• Launch of three SlimBiome® products with Holland & Barrett (H&B) in H1 2020 followed by product line extension in 2021 to eight H&B own brand SlimExpert products
• The launch of a products containing OptiBiome® under the Optislim® brand with Woolworths, ChemistWarehouse and on OptiPharm Pty Ltd's online store in Australia and New Zealand in October 2020.  The terms of this agreement were subsequently extended to include Europe in addition to Australia, parts of Asia, New Zealand, Middle East, Gulf States and North America allowing potential for future sales growth
• The launch in Italy by ALFASIGMA S.p.A. of a food supplement containing our proprietary cholesterol reducing LP_LDL® probiotic strain, providing an entry into the largest and fastest growing probiotic market in Europe
• A non-exclusive distribution agreement with Actial Farmaceutica Srl for the distribution of CholBiome® and CholBiome®_X3 in Australia, New Zealand, Indonesia and Thailand, under the VSL^#3® range
• An exclusive agreement in late 2020 with a US company for the large-scale manufacture and commercialisation of a number of SweetBiotix® products in return for upfront, milestone, launch and royalty payments. We are pleased to see this partner making strong progress in 2021 scaling up these innovative products to industrial scale

Regulatory and Scientific

• USA FDA authorisation of an Investigational New Drug (‘IND’) trial by our partner Seed Health of a probiotic containing LP_LDL®, to investigate the role of the gut microbiome in patients with Irritable Bowel Syndrome 
• Completion of two new human studies by ProBiotix Health on LP_LDL®. The first in partnership with Nutrilinea S.r.l., demonstrating that a new food supplement formulation containing can reduce high blood pressure (hypertension). The second, a placebo-controlled human studies on LP_LDL® in high cholesterol patients showing LP_LDL® when used alone can achieve similar reductions in total cholesterol and LDL (bad cholesterol) to statins, without side effects (submitted for publication)
• The Company has made significant progress in H1 2021 with its microbiome modulators with early data suggesting we have developed an approach to facilitate industrial scale production

Stephen O’Hara, CEO of OptiBiotix, commented: “This has been a pivotal year for OptiBiotix with doubling sales and a large reduction in costs enabling our Probiotic and Functional Fibre divisions to achieve profitability.  This is a substantive change from divisional losses of £467,704 for ProBiotix and £451,572 for the functional fibre division reported in 2019. This was particularly pleasing given the impact of the COVID-19 pandemic and global recession in key markets, with weight management markets experiencing a 9% decline in growth. The Company has also benefited from an increase in the value of OptiBiotix’s holding in SBTX which is making strong progress on its path to commercialising products.

“The Company is now in a position of having established the scientific, clinical and commercial viability of its first-generation products (LP_LDL® and SlimBiome®) with a network of internationally recognised partners who are extending product ranges and territories providing a solid basis for future growth.   We are also pleased to report commercial progress with our pipeline of exciting second-generation products with the industrial scale up of a range of our innovative SweetBiotix products and a number of large corporates signing Material Transfer Agreements as they develop applications containing SweetBiotix.

“We have continued to make progress since the beginning of the current financial year with strong sales growth and larger orders as existing partners extend their product range and territories.  Our focus remains on growing sales of first generation products with larger partners in key strategic markets like India, the USA, and China, and commercialising our pipeline of second generation products in the year ahead.

“With interest in the microbiome increasing, growing sales, increasing margins, reducing costs, and an exciting pipeline of industry disruptive second-generation products, the Company is in a strong position for future growth in this exciting area of healthcare.”

This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Chairman’s Report

I am pleased to report a further year of solid strategic, commercial and financial progress. The Group has achieved strong sales growth while reducing its already low-cost base, enabling both its Probiotic and Functional Fibre divisions to achieve profitability as planned. The successful commercialisation of our first-generation products with a range of internationally recognised partners confirms the effectiveness and scalability of our innovative, low risk business model, while our pipeline of exciting second-generation products gives us a strong base to deliver continuing growth in shareholder value.

Results

Group sales for the 12 months ended 31 December 2020 (prior period: 13 months ended 31 December 2019) grew by 104% to £1,523,247 (2019: £744,883) while other administrative expenses reduced by 27% to £1,616,069 (2019: £2,204,217). Despite the challenges presented by the global COVID-19 pandemic, both the Functional Fibres and Probiotic divisions achieved profitability at the EBITDA level, after losses in the prior 13 month period.

The Company received an additional £746,751 during the year from the partial disposal of its holding in SkinBioTherapeutics plc (‘SBTX’), which is not included in the Group revenue figures. As a result of the change in the Company’s shareholding in SBTX, it is now treated as an investment rather than an associate and the change in the value in the Company’s shareholding during the financial year will in future be reflected in the Group accounts. The increase in the value of the SBTX holding of £7,120,962 during the year results in a Group net profit for the year of £5,801,867 (2019: net loss £2,368,362).

The Group’s financial position remains strong, with total cash on the balance sheet at the year-end increasing by 90% to £864,680 (2019: £455,608).  Post period, the Company sold £900,936 SBTX shares in March 2021 to further strengthen its balance sheet.

Strategy

Optibiotix Health is a life sciences business founded on the development of prebiotic and probiotic compounds to tackle obesity, cardiovascular disease and diabetes: all conditions that are affecting growing numbers of people in all parts of the world.

Our proven, low risk growth strategy is to secure deals with multiple partners – manufacturers, formulators and distributors – in multiple territories around the world, ensuring that we retain control of the complete value chain for all the compounds we develop, and can extract value for our shareholders at each stage.

We have now established the scientific, clinical and commercial viability of our first-generation products (LP_LDL® and SlimBiome® / WellBiome®) achieving strong sales growth with internationally recognised retail and pharmaceutical partners. As we anticipated, this growth in volumes has enabled us to renegotiate contracts with our partners so as to reduce the cost of goods and deliver improved divisional margins, as noted in the financial report.

The next stage of our strategy will focus on the development and commercialisation of our second-generation platforms, which include SweetBiotix®, microbiome modulators to tackle a range of human health conditions, and drug biotherapeutics. All of these offer significant potential for long term growth.

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:

• Our agreement in August 2020 with Optipharm and product launch in October 2020 for the exclusive use of our OptiBiome® weight management ingredient in over 20 countries in its flagship Optislim brand, the leading weight management brand in Australia.
  
• The agreement with a US partner for the large-scale manufacture and commercialisation of a number of SweetBiotix® products announced on 15 September 2020.
  
• The USA FDA authorisation in October 2020 of an Investigational New Drug (‘IND’) trial by our partner Seed Health of a probiotic containing LP_LDL®.

Since the year-end, we have also achieved an important extension of our product range with Holland & Barrett, which has increased from three to eight the number of lines in its own SlimExpert range containing SlimBiome® as announced on 17 March 2021.

The Board

We continue to evolve the Board to ensure that we have the right mix of skills to lead the Group through the next stage of its strategic development, and to this end we have announced the appointment of two non-executive directors since the beginning of the new financial year.

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 and adviser, FTSE 350 company director and chairman.

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

Peter Wennström retired as a non-executive director on 1 January 2021, with our thanks for his contribution to the development of the Company and particularly for his valuable advice on brand strategy and the positioning of our first-generation products in international markets; I am pleased that his expertise remains available to us as an adviser.

René Kamminga joined as Chief Executive Officer (“CEO”) of OptiBiotix Ltd, a wholly owned subsidiary of OptiBiotix Health plc, on 6 April  2021. We are confident that his experience and track record of growing sales, and his network of new industry contacts within the pharmaceutical and nutraceutical industries, will help OptiBiotix in its next phase of development as we look to extend the range of applications for our award-winning SlimBiome® and LP_LDL® ingredients, and to commercialise our second generation SweetBiotix®, microbiome modulating, and LP_LDL® drug products.

Following René’s appointment Dr Fred Narbel, has moved to a more strategic role within the business as a non-executive director of OptiBiotix Ltd. We are grateful to Fred for his contribution over the previous two years in building the sales of our first-generation products, expanding our network of production partners around the world, securing commercial launches of products containing SlimBiome® with retailers in numerous countries, and in setting up the Functional Fibres division’s quality system, and we look forward to his continued support in his new role.

We have also strengthened our senior executive team below the main Board, as the Chief Executive reports below.

Outlook

We have made a strong start to the current year, continuing to expand sales of our proven first-generation products whilst building the scientific and clinical evidence base needed to de-risk our highly innovative second-generation products and maximise their commercial potential in the future. Our new products open up significantly larger market opportunities, which we are well placed to exploit through an established, low overhead, sustainable business model that has demonstrated its ability to deliver a rapid increase in scale.

Already this year we have been able to report agreements and product launches that secure increased SlimBiome® sales in the UK, USA, Africa, India and wider Asia; the extension to two new territories in our agreement with Actial Farmaceutical for the distribution of CholBiome® and CholBiome®_x3; and success in long term stability studies that assure the shelf life of SlimBiome® Medical, CholBiome® and CholBiome®_x3, which will allow OptiBiotix and its partners to place larger orders for these products, so reducing the cost of goods and increasing margins. Our manufacturing partner is making strong progress with the first industrial scale production of SweetBiotix®, and we have begun to explore the full potential of LP_LDL® as a drug biotherapeutic.

Although the COVID-19 pandemic has presented some significant challenges over the last year in diverting commercial, medical and governmental attention away from the markets we address and delaying decision-making by some partners, we are confident that the issues of obesity, high cholesterol and diabetes will remain key areas of concern worldwide in the years ahead, and that the pandemic experience will drive increased interest in science-based products to address these challenges.

The strengthening of our Board and senior management since the beginning of the year give me confidence in our ability to continue to grow the business, and to deliver growing value for our shareholders in the longer term.

N Davidson

Chairman

16 June 2021

Chief Executive Officer’s Report

OptiBiotix offers investors a unique opportunity to participate in the growth potential afforded by one the most progressive and exciting areas of biotechnological research: the modulation of the human microbiome. The Company develops unique, innovative products protected by an extensive and growing international portfolio of patents and trademarks. Our two-stage strategy and low-cost business model are designed to maximise the earning potential of each of our products while limiting our investors’ risk, achieving global access to fast-growing markets by working with a range of local partners who are recognised and respected as leaders in their fields.

STRATEGIC DEVELOPMENT

We are successfully progressing a two-stage strategy that is delivering as planned, with our first-generation products, LP_LDL® and SlimBiome®, generating rapid revenue growth against a low and decreasing cost base enabling us to achieve profitability in our two principal Probiotic and Functional Fibre divisions. This was a substantive change from divisional losses of £467,704 for ProBiotix and £451,572 for the functional fibres division reported in 2019.   The second stage of our strategy is delivering on the huge potential of our second-generation products: the SweetBiotix® family of functional fibres that act as low calorie, prebiotic sweeteners; microbiome modulators; and drug biotherapeutics. 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 and shareholder value.

During 2020 we reached a turning point with our first-generation products gaining a commercial position and brand recognition in over 120 countries. These products were designed with a low development risk with the aim of establishing the Company’s industry credibility, and testing our business model in the market. This has been achieved with the conclusion of multiple deals with large retail and pharmaceutical partners including Alfasigma, Agropur, Holland & Barret, and Optipharm, with OptiBiotix increasingly being identified as a key player in the microbiome space in industry reports. Holland and Barrett and AlfaSigma launched products in the first quarter of 2020 and Optipharm in the last quarter. Whilst retail agreements typically have lower margins, they enhance the credibility and consumer awareness of our products, and with it, confidence in our brand.

The fact that our products are now increasingly becoming associated with internationally recognised retail and pharmaceutical partners and established brands creates a virtuous circle of further interest from other potential partners and markets.

FINANCIAL RESULTS

As the Chairman has noted, Group sales for the 12 months ended 31 December 2020 (prior period: 13 months ended 31 December 2019) more than doubled to £1,523,247 (2019: £744,883). This 104% increase in revenues would have +placed OptiBiotix Health among the top ten growth companies in the UK during 2020 (The UK’s Top Ten Fastest Growing Companies Revealed, Forbes August 2020).

Both our principal divisions contributed to this strong sales performance and transitioned to profitability during the year.

The Functional Fibres division (SlimBiome®, OptiBiome® and WellBiome®) grew sales by 151% to £557,539 (2019: £222,235) despite the challenging trading environment created by COVID-19, which limited our partners’ ability to innovate, formulate and launch new products during the year. The division delivered positive EBITDA of £67,271, compared with an EBITDA loss of £451,572 in the previous period.

The Probiotic division, our wholly owned subsidiary Probiotix Health Ltd (LP_LDL®), increased sales by 107% to £821,126 (2019: £397,831), despite a number of customers postponing product launches or temporarily shifting their focus to immune health products in response to the Coronavirus pandemic. The division generated positive EBITDA of £88,762, compared with an EBITDA loss of £467,704 in 2019.

Our smaller Consumer Health division, operating our own online store, grew sales by 17% to £137,024 (2019: £117,560). This business continues to serve as a valuable shop window for testing new products with consumers, and has helped us to achieve successful product launches with partners including Holland & Barrett and Alfa Sigma.

Group administrative expenses, excluding non-cash items such as share-based payments and amortisation, reduced by 27% to £1,616,069 (2019: £2,204,217) as increased sales volumes enabled us to renegotiate contract terms with our commercial partners to deliver improved margins.

As the Chairman has noted, the Group’s net profit includes the benefit of a substantial increase in the value of our holding in SkinBio Therapeutics plc (‘SBTX”) during the year. SBTX is making strong progress towards commercialising its products and we believe that it will prove to an appreciating asset for our shareholders in the future. It is worth noting that our initial investment of approximately £700,000 in this business in 2016 has delivered an investment asset now worth circa £25m as at 1 June 2021. We are pleased that our strategy of developing divisions as separate legal entities with the potential for a trade sale or separate public listing has helped create such a valuable asset to OptiBiotix shareholders.

We will continue to consider other opportunities which capitalise on growing investor interest investment in the microbiome space in both the UK and international markets where they provide scope for enhancing shareholder value.

COMMERCIAL UPDATE

We signed a total of 27 new commercial agreements during the year ended 31 December 2020: 18 for SlimBiome® and related products in the Functional Fibres division, and 9 for LP_LDL® in ProBiotix Health.

Of note were deals with Holland and Barrett, Optipharm, and US partners that open up retail opportunities in the UK, Australia, parts of Asia, the Middle East, and North America. Announcing such deals increases industry awareness of OptiBiotix’s brands within the industry, and changes the nature of partner discussions as the commercial benefits are established in more territories.  Growing brand awareness increases the value of a product, and ultimately shareholder value, and is particularly important and valued by large corporates. This is in line with our strategic aim of growing the awareness of our ingredient and finished product brands around the world. Deals with Genuine Health (Canada/USA), Granja Pocha (Dairy: Uruguay) and Ayalla (Brazil),  and at the end of the year, UITC (Singapore) support this approach and open up markets of strategic importance in the USA, South America, and Asia. Having products and brand presence in multiple territories is really important for corporate partners or potential corporate  acquirers as it shows our products have international reach and appeal to customers around the world, and are not restricted to national markets.  This is a major value enhancer as not all products are able to  cross international boundaries.

LP_LDL®

Sales of LP_LDL® as an ingredient or final product grew by 107% during the year. We have developed the science, carried out human studies to confirm product safety and efficacy, protected our commercial interests with a broad IP portfolio comprising some 30 patents, and built a supply chain of licensed partners to manufacture, formulate, and distribute this product around the world. We now have partners commercialising LP_LDL® in over 60 countries including the world’s largest probiotic market (USA: Seed Health) and second largest (Italy: AlfaSigma). The next stage of our strategy is to grow sales with existing partners, extend territories and applications, and continue to sign up new partners. In addition to growing sales, the Company is renegotiating contracts as volumes increase to reduce the cost of goods. The renegotiation of our contract with Sacco Srl from a profit sharing to a manufacture supply agreement where we buy from Sacco and then sell product to partners ourselves has significantly improved margins. 

Particularly noteworthy developments during the year were the successful launch of AlfaSigma’s Ezimega 3 product and the commercial growth of Seed Health’s Daily Synbiotic. These achieved strong early growth despite the emerging COVID-19 pandemic which impacted on sales in the second half of the year. The signing of an agreement with Actial Farmaceutica Srl for the distribution of CholBiome® products was a significant commercial achievement and brought further credibility to the LP_LDL® brand.  Actial is the developer of one of the world’s best-known probiotic brands - VSL^#3® - and their products have a reputation for their strong science and clinical studies amongst hospital clinicians, GPs and pharmacists.

The Company has now published six studies on LP_LDL® in peer reviewed journals or as abstracts at international scientific conferences. These cover the safety and performance of LP_LDL® in human studies, the three mechanisms of action by which LP_LDL® reduces blood lipids, and LP_LDL®’s antimicrobial activity against a wide range of clinically important human and/or animal pathogens including Campylobacter, Shigella, Salmonella, E.coli O157, and Clostridium difficile. The results of two published independent human studies in different countries show significant reductions in both blood pressure and cholesterol and the product to be safe and well tolerated.

Publications and presentations help to differentiate LP_LDL® from products which are sold solely on marketing and reduce the risk of commoditisation and price erosion.

LP_LDL® has been determined as Generally Recognized As Safe (“GRAS”) by the US Food and Drug Administration (FDA) and has pharmaceutical GMP manufacture designation. This, together with the presence of a scientific and clinical evidence base, gives it major points of differentiation from other probiotics. These designations increase the market attractiveness of LP_LDL® to pharmaceutical partners either used by itself, or as combination treatment to help lower the dose and potential side effects of statins.  This extends its potential beyond the traditional supplement market into broader therapeutic opportunities within pharmaceutical consumer health businesses or as a drug biotherapeutic with pharmaceutical partners.

SlimBiome®

Sales of SlimBiome® as an ingredient or final product grew by 151% during the year. This was largely driven by partners in the UK, Australia and the USA launching new retail products, or building stock levels for the launch of products. Of particular note is the extension of SlimBiome® into everyday foods like muesli and porridge and the development of healthy snacks like fruit and fibre gummies under the SnackSmart® brand. The launch of WellBiome® during the year reflects the growing interest from partners in a science backed Health and Wellbeing microbiome product which taps into a global trend for Health & Wellness, a market estimated to be worth US$4.2 trillion in 2019 with the digestive health segment accounting for US$60 billion.

SweetBiotix®

SweetBiotix® is a family of products based on the concept of creating a low calorie sweet fibre that has a low glycaemic index, which enhances the microbiome. The concept uses new science, new manufacturing processes, and represents a step change from existing products on the market or 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 has to be assessed in terms of flavour optimisation, stability, dosage, safety, tolerance, health benefits, and the final product cost profile.

The agreement signed with a US partner in the second half of 2020 represented a significant milestone in the commercialisation of SweetBiotix® products. The agreement, for 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. In return, we will receive upfront, annual and product launch royalties from our US partner, plus royalties on all future product sales. We have also negotiated enhanced royalty payments on sales of SweetBiotix® products by our partner to 11 application / innovation partners.

INTELLECTUAL PROPERTY

There has been a rapid increase in the number of patents filed in the microbiome space in the last 10 years, and OptiBiotix and Probiotix Health have together filed numerous patents to protect their commercial interests and create first mover advantage in this evolving field.  This is being supported by a large investment – typically of over £250,000 per year - in patents and trademarks to broaden protection in international markets

Our Intellectual Property (‘IP’) strategy has been based on 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 some 70 patents worldwide. In addition to these patents, we have registered over 68 trademarks to provide what is called ‘double IP’ – a combination of patents and supporting trademarks which allows OptiBiotix to build its trademarked brands supported by its patents.  This approach further reduces risk and in combination creates a valuable IP portfolio in the microbiome field. 

KEY ACHIEVEMENTS

During the period to date we have signed new agreements, launched new products, extended our agreements with existing partners and completed successful human studies on the effectiveness of our products, and the highlights of the year were as follows:

New agreements

• Concluding an agreement with Optipharm, whose flagship brand Optislim is Australia’s leading weight management brand, for the exclusive use of our OptiBiome® weight management ingredient in over 20 countries including Australia, parts of Asia, New Zealand, Middle East, Gulf States and North America
• Signing a three-year distribution agreement with a subsidiary of Pierce Group Asia granting it exclusive rights to import and commercialise OptiBiotix's SlimBiome® and LP_LDL® and to manufacture, develop, and sell a wide range of finished products to China and Hong Kong
• Granting MAXCARE Inc exclusive rights to commercialise OptiBiotix's SlimBiome® proprietary weight management technology in Taiwan
• The signature of a licensing agreement with Granja Pocha S.A. for the inclusion of ProBiotix's patented probiotic strain LP_LDL® into a functional yogurt product in Uruguay, South America
• Conclusion of a new licensing agreement with Velinoff Pharma Ltd for the distribution of ProBiotix's products CholBiome® and CholBiome®_X3, which contain OptiBiotix's patented probiotic strain LP_LDL®, in Bulgaria
• Reaching a one year exclusive distribution agreement with Prosperous Pharma, based in Lebanon, to distribute and commercialise OptiBiotix's SlimBiome® Medical to the Gulf Cooperation Council States and the Levant region
• A non-exclusive distribution agreement with Actial Farmaceutica Srl for the distribution of CholBiome® and CholBiome®_X3 in Australia, New Zealand, Indonesia and Thailand, under the VSL^#3® range
• An exclusive agreement with a US company for the large-scale manufacture and commercialisation of a number of SweetBiotix® products in return for upfront, milestone, launch and royalty payments
• An exclusive distribution agreement granting United Italian Trading Corporation (Pte) Ltd exclusive rights to distribute SlimBiome® Medical, CholBiome® and CholBiome®_X3 in Singapore
• The grant of a non-exclusive LP_LDL® license to Genuine Health Inc for a cardiovascular health product in Canada and the USA

Product launches

• The launch of a branded SlimBiome® product range with Holland & Barrett, the first agreement with a major retailer to market our proprietary weight management technology
• The launch in Italy by ALFASIGMA S.p.A. of a food supplement containing our proprietary cholesterol reducing LP_LDL® probiotic strain, providing an entry into the largest and fastest growing probiotic market in Europe
• The launch of SlimBiome® in the North American market by Agropur, following our grant to them in 2019 of an exclusive licence to manufacture, supply and distribute our SlimBiome® weight management technology in the USA, Canada and Mexico
• The launch of SlimBiome® containing products in Walmart and Costco in the USA and Canada through US partners Smart For Life and Evolution 18
• The launch of WellBiome®, a patented supplement to improve gut health; this is a proprietary blend of prebiotic functional fibres, functional dietary fibres and minerals optimised to promote the diversity of the gut microbiome, and is an evolution of our proven SlimBiome® functional ingredient formulated to support weight loss and weight management
• The launch of a range of meal replacement shakes and bars containing our OptiBiome® proprietary weight management technology under the Optislim® brand with Woolworths, ChemistWarehouse and on OptiPharm Pty Ltd's online store in Australia and New Zealand in October 2020

Extensions of product range or territories with existing partners

• Signing a new global manufacturing and supply agreement for LP_LDL® with Sacco S.r.l., extending our existing agreement with them until 2023 and changing our original profit-sharing terms to allow us to benefit from lower prices for LP_LDL® as sales increase
• Extension of the existing terms and territories for our partners CTC Group and Cambridge Commodities for the distribution of SlimBiome®, SlimBiome® Medical and GoFigure®
• Extension of the territories with Extensor to distribute our GoFigure® consumer weight management products in Ukraine, Estonia, Lithuania, Latvia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Armenia, Azerbaijan, Georgia, Belarus, Moldova and Russia
• Extension of our existing terms to include WellBiome® with Draco Ingredients GmbH in Germany; Agropur MSI LLC in the USA, Canada and Mexico; Maxum Foods in Australia and New Zealand; and CTC Holdings BV in the Philippines, Vietnam, Indonesia, Colombia, the Dominican Republic and Guatemala
• Extension of the terms, territories, and products covered by our existing distribution with CTC Holding BV for the sale of CholBiome_X3 to include LP_LDL® as a bulk ingredient and three additional products: CholBiome, CholBiome_BP  and CholBiome_VH,, and to extend coverage from the Philippines to include non-exclusive distribution rights for Vietnam, Indonesia, Colombia, the Dominican Republic and Guatemala
• Extending the terms of our original exclusive licence agreement for OptiBiome® with OptiPharm Pty Ltd. ("OptiPharm") to include Europe in addition to Australia, parts of Asia, New Zealand, Middle East, Gulf States and North America

New human studies

• Completion of a successful human study by ProBiotix Health, in partnership with Nutrilinea S.r.l., demonstrating that a new food supplement formulation containing LP_LDL® can reduce high blood pressure (hypertension)

New drug trial authorisation

• USA FDA authorisation of an Investigational New Drug (‘IND’) trial by our partner Seed Health of a probiotic containing LP_LDL®, to investigate the role of the gut microbiome in patients with Irritable Bowel Syndrome 

MANAGEMENT

There were no changes to the Group Board during the year, though as the Chairman has reported we have made a number of important new executive and non-executive appointments since the beginning of the new financial year.

We have also made a number of senior appointments below the level of the main Board. In January 2021 Aneta Zlotokowska joined us from Tesco as Head of Quality & Operations, with a remit to ensure that we meet the quality and regulatory requirements of our growing network of corporate and retail partners around the world. Dr Taru Jain joined us in March 2021 to focus on business development and sales growth in the strategically important Indian and Asian markets, and Christopher Nother joined us in January 2021 on a 6 month part-time consultancy basis to explore the potential for LP_LDL® in pharmaceutical markets as a live biotherapeutic or consumer health product. The Company now has more opportunities, with an increasing number of larger partners, than it is able to meet within its existing capacity and will continue to evolve the team to fully exploit the opportunity within the window of opportunity.

As noted in the interim report, Steve Prescott left his position as CEO of ProBiotix Health Ltd by mutual agreement at the end of May 2020, since when I have acted as CEO of the division with the support of Mikkel Hvid-Hansen in the expanded role of Commercial Director.

OUTLOOK

Our two-stage strategy is delivering as planned, with our first-generation products, LP_LDL® and SlimBiome®, generating revenue growth and profitability in our two principal divisions.  The company is now in the strongest position it has ever been in with an exciting technology pipeline, broad intellectual property portfolio in the microbiome, a number of clinical studies showing product safety and efficacy, growing international brand presence, strong sales, forward orders, and balance sheet. This provides the base of a sustainable business on which to grow the business.

The second stage of our strategy is delivering on the huge potential of our second-generation products: the SweetBiotix® family of functional fibres that act as low calorie, prebiotic sweeteners; microbiome modulators; and drug biotherapeutics.

 We have continued to make strong progress since the beginning of the current financial year with strong sales growth and larger order sizes as existing partners extend their product range.  Significant developments in the year to date include:

• The extension of Holland & Barrett (“H&B”)’s range of their own brand SlimExpert products containing SlimBiome® from three to eight, including meal replacement and porridge lines, as direct result of H&B tasting and testing our own finished product applications sold through our online store
• The launch of SlimBiome® and OptiBiome® products in Asia, through partners in Thailand, Taiwan and Singapore expected to contribute revenues in the current financial year and act as a stepping stone to the larger China market
• ProBiotix Health Ltd, entered a deal for LP LDL® with Compson Biotechnology Inc. in Taiwan, one of the largest distribution platforms in South East Asia
• The signing of a new agreements with Dipromed for the sale of SlimBiome® Medical and CholBiome® products in Morocco and Algeria
• Expansion of SlimBiome® sales in India through extension of Anthem Biosciences’ Metalite Pro product range and the launch of the ZeoSlim range of meal replacements by Zeon Lifesciences.  This is a country of strategic importance to our growth plans and we anticipate reporting further news in this region
• The launch of Dietworks Appetite control gummies containing SlimBiome® in the USA through online and retail channels across the USA opening up another point of access to the large US market
• Extension of territories with Actial Farmaceutica Srl to distribute CholBiome® and CholBiome®_X3 under the VSL#Cardio® range to France and Malaysia in addition to their existing territories of Australia, New Zealand, Indonesia and Thailand, with further territory extensions and product launches expected in the course of the current year
• Good progress by our SweetBiotix® manufacturing partner in the production of products on an industrial scale, paralleled by the release of a number of independent peer-reviewed publications  ®
• Exploration of the potential to use LP_LDL® in the pharmaceutical sector as either an ‘over the counter’ product or a drug biotherapeutic in markets outside the USA. We hope to be shortly publishing placebo-controlled human studies which demonstrate show that LP_LDL® can achieve similar reductions in total cholesterol and LDL (bad cholesterol) to statins, without any side effects

Investor and consumer interest in the human microbiome continues to grow, presenting us with a market opportunity that is large and expanding. OptiBiotix is ideally placed to exploit this opportunity, with the Company having first generation products which have won multiple awards, published studies in peer reviewed journals, granted patents, doubling sales, and a number of partners increasing both their product range and territorial reach. We are seeing a growing number of deals in Asia as we build brand awareness and product reputation in countries like Taiwan and Singapore to help open up opportunities for the larger Asia markets.   We believe that each of these first generation products have the potential for £10-20m sales per annum which on a 10X multiple would value each of these businesses at £100m to £200m each. 

Our exciting second-generation SweetBiotix® products offer huge potential as healthy alternatives to sugar and sweeteners whilst our microbiome modulators create the potential to precision engineer the microbiome to positively impact specific human health conditions.    We are pleased to see our SweetBiotix® manufacturing partner making strong progress scaling up these exciting products to industrial scale. Our partner agreed to make a six-figure payment on signing the agreement and at 12 monthly intervals until product launch when they will pay royalties on sales.  This is unusual in the food and beverage industry and highlights the value our partner places on this product. We are also pleased to note that Seed Health, has received FDA Investigational New Drug (IND) approval to undertake a human clinical trial with its multi-species probiotic product containing OptiBiotix’s LPLDL in patients with irritable bowel syndrome.  This has the potential to be a significant value enhancing step if this study is successful and the product is approved as a drug. OptiBiotix has also made significant progress with its microbiome modulators with early data suggesting we have an approach which allows us to manufacture these at scale.  If confirmed, this is a major step forward in the commercialisation process and when reported should enhance the commercial appeal of these products to corporate partners.

The strong growth in our revenues, the achievement of divisional profitability, the continuing flow of new agreements and product launches, the strength of our development pipeline, and the strengthening of our Board and senior executive team allow me to look forward with confidence to the further progress of the Company in the current year and beyond.

Stephen O’Hara

Chief Executive

16 June 2021

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

* The prior years figures have been restated, refer to notes 7 and 12

These financial statements were approved and authorised for issue by the Board of Directors on 16 June 2021 and were signed on its behalf by:

S P O’Hara

Director

Company Registration no. 05880755

Consolidated Statement of Changes in Equity

* The prior year’s figures have been restated, refer to notes 7 and 12

Consolidated Statement of Cash Flows