Optibiotix Health (LSE:OPTI) — Commercial update

0:01 Good afternoon, and welcome to the OPTIBIOTIX HEALTH PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated on the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question you received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Steve Nohara. Good afternoon to you, sir.

0:32 Hi. Good afternoon. Good afternoon to, all our investors, and thank you very much for, joining this presentation. And I'm competing with the chancellor today, so hopefully, we'll have better financial news for you than the than the chancellor. And today, I'll be joined by Shira's butt. Shira's joined us in May earlier this year to help support the our movement towards ecommerce and direct to consumer sales. And Shira's will take has got a few slides at the back end of the presentation, which I think you'll find particularly interesting. So just to give you the outline of the presentation, I just want to set the scene really in the first instance in terms of the strategic overview just for for those new investors or for those who whose memories don't go back the last couple of years, and just talk about the strategy so you have the context right. Then I just wanna go direct to the challenges and opportunities that we've had during 2022 and where I see us going in the next couple of years. Then I wanna give you a a good update of what happened at Global Engage and Supply Side West.

1:44 So Global Engage was a conference that I attended a couple weeks or so ago, and Supply Side West is a an exhibition that I attended after Global Engagement. Both these are USA conferences or exhibitions, and we had some really good support and interest at those conferences and exhibitions. Then I know a lot of you have asked questions about our second generation products and they're important to you. And they're also important to me, and I'll I'll go through those particularly in terms of sweepbartics where we are and who we're working with and the microbiome modulators. Then a slide on OPTIX HEALTH because we introduced a some new technology a month or two ago. I just wanna give a bit of background behind that, the context to the RNS because often in the RNS, it's very it's very difficult to actually bring out the main points in the RNS. It's very vanilla because you have a lot of regulatory input.

2:44 Then I'll pass on to the star performer to Shiraz, he'll talk about direct to consumer online sales. So that's if you like the overview of the presentation. I hope that fits in with your needs and certainly fits in with the questions that I received to date. I And will try to cover off all the questions during the presentation. But if not, then please put your questions up on the q and a and I will try to deal with those as they go along at the end. So moving to the first slide then, I just really wanna talk through the the strategy just for the the context. Okay? And just to remind you that we're a a company that has really been created to develop a range of patented, okay, science backed clinically proven supplement and OTC pharma products.

3:33 Okay? We're not a pharma company. We're focusing very much on the OTC, the over the counter market and selling ingredients and products that are science backed and clinically proven. And I bring that out because it's quite important. When I entered this field, there was lots of and you'll find this yourself. There's lots of nonsense and lots of marketing in this particular area. And we had to differentiate and we differentiate in terms of science and clinically proven and also the patterns. And these are key areas that are real of real interest, the larger corporates. That's what we get a lot of interest in as as a as a company. And so we're really about trying to create those products that can impact upon the upon the microbiome. Then what I've tried to do, you have to remember the microbiome is a an area that's quite a new area. And as I've said to you many, many times before, there's a lot not known about the microbiome.

4:29 There's more not known about the microbiome. There's known about the microbiome. So there's a high degree of of investor risk. Now many of you will have realized that more recently with four d pharma. And with the other microbiome company on on AIM, of course, they've gone into liquidation. So you can see where the the risk is. They had a different model to OPTIBIOTIX, very very much much pharma based. We went down a different route as I said in the in the first bullet point. But also there's risk across each area because you're trying to enter a space where the science is is is unknown. You're trying to create products and you don't really know if the product's gonna work or not. So I've tried to have a a technology platform which is across the board. And that's something I used to work for three m. I'm the global director of health care for three m. And you're trying to make sure if you had a new technology area, you'd focus very much on trying to have a broad portfolio to spread your bets if you if you like. And that's also meant that as a company, we've got a lot of industry recognition because we're not just narrow. We cover a lot of areas.

5:33 And then as we develop those technology into products, the idea is that we bring in experienced industry leaders. So we brought in Rene last year, March of last year to run prebiotics And Steen Anderson who we interviewed and appointed during the year, but he had a a long period of garden leave. So he will start working for probiotics on January 23. So the second January of next year, Steen Anderson will join us. In that interim period, I've been running both probiotics as a as a business, but also being the group CEO for for OPTIBIOTIX. And the whole idea behind this is that we have commercial leads commercializing our products in each of those areas, and my focus then becomes very much along the the idea of developing the pipeline and making sure we commercialize the second generation products. We've, remember, got a fair degree of experience in this in building quite a number of companies, And many of you be familiar with what I teach with Skin Biotherapeutics where I got a license in some technology from Manchester University for a £250,000 and then turned that into a company which is today around about £40,000,000.

6:46 And I was a founder and of that particular company. So that's what I'm looking to do, looking for more skin biotherapeutics if you if you like. And then commercially, what we've what we've tried to do, and I think we've achieved in doing, is so when you build a business, you can spend an awful lot of time marketing your brands, marketing new ingredients from your product brands, and it takes an awful lot of money. So rather than do that, the strategy was to sell product sorry, sell ingredient b to b to other businesses. They then invest in marketing their particular products, your ingredients. And in doing so, you start to build a brand recognition of your ingredient.

7:31 If you like, you start to build the brand recognition of your intel inside. And that is a a low cost, low risk way of building a business. Otherwise, we've raised 8,300,000 in total, and the current valuation is, what, $1,718,000,000. And it has been obviously been a lot lot term a lot higher. The current valuation, as it all starts, very much impacted apart by the external environment. So the idea, as I say, to build to get our partners to invest in building our our brand through their own products. And the challenge with that, of course, is that if you got partners are responsible commercializing your products and can retain your ingredient, then it means that you may be to behold into them in terms of timescales. You may be to behold into them in terms of orders of of stock, etcetera.

8:22 So now we'll as we announced last year or maybe a a year and a half or so ago, we're trying to move away from that business to business approach more towards selling pharma product. And hence, we raised £2,000,000 last year to invest in growing our our team, particularly in The US, particularly in in ecommerce to actually put more particularly marketing to really start to move towards selling final product and particularly via direct to consumer. And the other idea is that we we really get our first generation products to market. They reach profitability. So just to remind everybody, in 2020 and 2021, both our businesses, so these are our probiotics and prebiotic businesses, they are profitable in both those years as independent entities.

9:12 When you add to the cost of PLC on top of it, then there wasn't a they they weren't the the whole group wasn't profitable, albeit it was in terms of the the the skin holding. But that's the idea behind. You get each of those businesses acting as independent units, getting the profitability. That then allows you the the opportunity to really to invest in bringing the second generation products to market and also subsequent pipelines. So that's what we achieved in 2020 and 2021. And we see, as I touched on earlier, building this ingredient model very much the stepping stone to final product solutions where we sell more and more final products to partners or direct consumer. And the reason for that is that if you sell ingredient, it's at a particular cost, but and margin. But if you sell final product, then you've got your ingredient inside that, so you get a double benefit. You're selling, you're getting the value from set from the ingredient and also the final product. And, course, your final product price is much higher than the ingredient price and your margin is much higher as well. So you get higher margins and you get higher final selling price, which really starts to to build the revenues. Okay?

10:23 So moving on to the next slide then. Just wanna just go through the structure, just to remind people of the structure, because I think it's quite interesting to review. The first thing to mention is that as a shareholding in OPTIBIOTIX, you've got shares not just in OPTIBIOTIX, but you've got shares in probiotics as part of your dividend and specie. And you've also got a holding, a 20.8% holding in skin biotherapeutics, and obviously got a 10% holding in prebiotics, okay, as well as your 44% holding in probiotics and dividends. So you've got a lot of interest in the microbiome space. The other interesting area is that our asset values, so we are currently have currently about £22,400,000 worth of assets.

11:11 That's actually a lot higher than our market capitalization today, which is about 17,400,000. And if you look at the the value of each of the subsidiaries in terms of skin just over 8,000,000 when I did this slide, probiotics just over 11,000,000, the value of our subsidiaries is actually when you bring those together, it's actually higher than the value of OPTIBIOTIX. So we really are as would be defined as in the market is a value share that our assets and our subsidiary values are greater than the the value of the subsidiaries. And so what what a Nestle chip does, it scans this whole area here. Okay? In slim biome, lean biome, OPTIX HEALTH, and particularly these new products, the sweetbiotics and microbiome modulators, where we see a large upside.

12:04 The other thing too worthwhile mentioning is I touched on it earlier is because we have got this broad portfolio of products and technologies, we are seen as a key player in the microbiome market. So we have lots of interesting technologies and interesting products across different parts of microbiome market. And in essence, just to sort of summarize the microbiome market, you have pharmaceuticals that you have supplements and ingredients and OTC products and they're all captured within these two areas, okay? Probiotics, hence probiotic health and prebiotics. So probiotics are bacteria that have a health benefit and prebiotics are ingredients that the bacteria feed on and then separately create a health benefit.

12:52 So then moving on to the next slide. I just really wanna go through here and be quite open with you. Many of you have seen the the trading update in terms of what's been the challenges and also the opportunities going forward in terms of 2022. Everyone's aware, people will will say the chance of statement today that we've been in a difficult period as a as a country and globally been difficult period. You know, we had had once in a generation challenge in terms of COVID, which impact global supply chains, impacted a whole range of areas. And prior to that, The UK had a Brexit.

13:38 And coming out of of COVID, of course, we then had the problems in terms of you the Russian invade in Ukraine. But this all has an impact, and it's unusual to have three events well after each other. But that's impacted on many, many companies across the world, it's had an impact upon us. Okay? I just wanna go through that, but you need to be clear about that. There has been an impact. I just wanna take you back to h two twenty twenty one. Okay? So we had in 2020 and 2021, the first half of twenty twenty one, a lot of issues in terms of COVID globally. Okay? Post COVID, just the the world started to open up. Okay? And we had a lot of product demand. Remember, during a COVID period, you're not gonna have much demand for your weight management products because people weren't going on holiday. People weren't getting beach ready for the for the summer. And there there weren't the the weddings and events where people reduced weight to to get ready for those events.

14:40 So post COVID, we had a lot of interest and really massive demand for our for our products. And all all our partners really started to stock up. Okay? So in the last quarter of twenty twenty one, we had orders of just under a a half million pounds. Okay? That's that's just for our prebiotic side. Okay? So the last quarter only 400 to 2,000. So lots of stock were were were was built up. In the first part of twenty twenty two, everything looked quite quite quite interesting. Then you had the Russian invasion of of Ukraine. And the global economy, particularly with the increased in gas prices and the oil prices, led to a number of partners to say, well, do know the launches that we plan to do in the first quarter or first half of twenty twenty two? You can't hold fire with them until we see what's happening in 2022.

15:34 That meant in h one of twenty twenty two, we had large amounts of stock built up at the very end of 2021, and we had partners delay in launches. So we had a a poor h one in 2022. Now a lot of those partners now, as things have settled down, have started to come back and launch products, re and start to buy back in and restock. Maybe not to the same extent as previous, but starting to tentatively enter the the marketplace. We also, in h one, had some supply chain issues in terms of OPTI online. And the head group I know had some supply chain issues in terms of products for their particular their particular myprotein products that they've they've launched. And all our manufacturing times increase. Typically, it would take us four weeks to create some coal buying products or some steam buying products. Now it's typically sixteen weeks.

16:31 So that's that was the end of h two twenty twenty one and the beginning of h one twenty twenty two. Now as you're aware from our RNSs, we've got a follow of them have launched, okay, a range of different products. We've got our product registrations for Nardi in The Gulf States, and they'll be launching in in January. And so we're really now starting to look quite interesting in in the latter half of twenty twenty two and going to 2023. So I just wanna though look at those challenges, but then look at what we've learned from that. And much of this, what I've discussed previous in terms of our risk. So the first thing to to mention in terms of learnings is that if you look back at 2021, we had two major customers in on the prebiotic side. That was Holland, and OPTIVIOTIX PARTNERS, that was the HEALTH Group, that was Nadi, and that was Apollo in December 2021.

17:39 So they came in quite late. Then they they're the ones we had the issues were with in terms of launching. Okay? But what it tells you is that, you know, having two large customers initially and then only five customers with the addition of a Apollo, Nadia, and the head crew, it's not enough. Okay? We need to increase our our partners because if you have one of those which delays when they these larger customers, they tend to buy in large amounts, £250,000 or sometimes £500,000 each time, and it depends where it falls in terms of the the part of the year, how it impacts upon your your your revenues. So timing differences from a limited number of big partners can really impact on your h one or h two revenues.

18:29 So what we're trying to do now is increase those number of partners, particularly in The US and Asia. And that was the reason we went to The US, the Talk of Global engage and to present at the exhibition supply side west. Okay? We also need to increase our number of channels to market. So typically on the prebiotic side, we just had a slim biome in in weight management, and that'll be extended to sports nutrition with lean biome with the head group, and you'll see other opportunities being created in that area as we go forward. You've also been able to help the aging consumer products with WellBiome, that will come to market at the start of next year as consumer products ready and marketing the ingredient Wellbion.

19:17 We need to broaden slim buying product range. So we've done an awful lot of work on on that. And there's a couple of reason for that. It's because different markets have different requirements. And as we and the world enters a recession, you may get pressure on some of your products. So your premium products are are quite high high cost. So we need to start introducing suits. We need to start introducing shots. We need to be looking at breakfast options. We need to be looking at can you include slim buy ready meals. When I say we need to be dealing it, that's all taking place. Okay? So all those in the last six months or so and an awful lot of of time and energy creating parts. So these are crisps, creating Doritos, creating soups, creating shots. So shots, for example, is what we market particularly in in in India and in in a and in a The Gulf States and creating those breakfast options.

20:08 So all those are being shared with our partners. And once you do it for one partner, it's the same product then made with some slight flavor variations for other partners. Then you'll see those coming to the online store over the next six months or so. We need to invest in online direct to consumer sales. This is for all the reasons I touched on earlier. But if you go via a b to b approach, then you won't very much depend upon your product on your partners. Master partners, when they launch, when they restock, etcetera. If you invest in online direct to consumer sales, you have more control over what you're doing. Okay? You can control your marketing. You can control your your your stocking. You can control your product range. And so you really reduce your partner dependency.

20:54 And I mentioned earlier, you get a higher final sales price and margin. That's a big area of our investment going forward. But just to recap, we didn't do that earlier because if you did it too early, then you haven't got the market presence in terms of your brand recognition. So you've got to spend an awful lot of money on building your brand. We still need to build our brand, our product brand, but you'll find that many people will be aware of SlimBiome and will be aware of LPLDL, both our ingredient brands. Okay? And we also need to enter new territories. So go figure with the polypharmacies in India, new territory. Go figure NIJ Medical in The Gulf States and beyond in January 2023. USA, got a focus on the on The USA.

21:40 Okay? That's a big market. Typically, when you go to a US partner, their sales three to four times that you get with a European partner. They tend to be larger but sometimes take longer to bring on board. So it's sort of a

21:55 view in terms of the the opportunities. The other key area, many people will be really interested hopefully in this, is we have to commercialize our second generation products. Our second generation products are our sweetbiotics and our microbiome modulators. They are key to our strategy. But just to set the seed, so we have a range of these. Right? It's not a single product. Okay? And I'll cover them in a couple of slides later, but it's not a single product. And just as to you to understand, this this is really new science. Okay? There's nothing else like it out there. Okay? But from microbiome modulators and our sweetbiotics. And just to give you an idea, when I took on the technology from Manchester University for skin biotherapeutics, they had five years of studies and lots of publications on the skin biotherapeutics, skin biotics ingredient. Okay? And if you think that was 2017, we're five years on and they're commercializing with Croda, and we'll see that being launched next year. But you can see how long it takes. And in between, we had two COVID years whereby everything closed down. Okay? All our partners closed down there, particularly in The US, closed down their laboratories.

23:08 So it's taking longer than I would like, but who anticipated COVID? But we're there or thereabouts now, and I'll cover that in a bit more detail in a couple of slides later. We need to in license more technologies, and that's why we've taken on board OPTIX HEALTH So lots of challenges in h one, less challenges in in h two. We're starting to see all our planning coming to to place and big opportunities for 2023. So looking quite interesting for OPTIBIOTIX in a market that is really starting to consolidate in pre and probiotics. So moving on to the next slide. Okay. I just wanna cover Global Engage and Supply Sideways. I mentioned it earlier. So Global Engage is a a scientific and business conference.

24:06 It's what I really like because I I've met up with Seed Health. I met up with Nestle. Met up with Tata in in Global Engage. And so you get a lot of the vice presidents and presidents of various companies at Global Engage. So the whole idea behind going to Global Engage Supply Side West was really to increase awareness and interest in OPTIBIOTIX and probiotic products. Okay? So for example, in with a dual stand between OPTIBIOTIX and probiotics, we shared the cost. And it's part of that focus I mentioned earlier in the previous slide that we wanna really start bringing some American partners as we go forward. So at Global Engage, we had two posters and two oral presentations.

24:52 I presented on the LPLDL. Okay? And I also presented on microbiome modulators linked into LPLDL. And Sofia, our R and D director, Sofia Kolida, reported on some really good data now on SlimBiome, a new study which we'll publish shortly, which is able to show that if you take SlimBiome, you can you can reduce hunger and cravings, and we link that to the hormonal response. We link that to the insulin response. So really create an awful lot of interest. Okay? And the whole idea was that an etch actually was quite an interesting conference and exhibition. Cause what we've seen is that the industry initially was focused on gut health and health and well-being. What we saw with COVID, and this is where you get a downside and upside, the upside was people starting move beyond gut health and beyond health and well-being into immune health in terms of probiotics.

25:47 And that then started moving people outside gut health. Now gut health and general health and well-being, particularly on the probiotic side, is a very mature market. There's no growth in it. So what we've started to see was many companies coming to us and saying, well, look, we're interested in both probiotics outside gut health and general health and well-being. And we're interested in symbiotics where we can use a prebiotic that to create to enhance our existing probiotic and in doing so gives real protoefferic differentiation. So we really are in the right place at the right time with the right products. And you will see a lot of that materializing into agreements and other activity over the next twelve months. And a lot of that has been taking place the last month or or ever since we've got back, and we've been sharing lots of information to lots of follow-up meetings.

26:38 So just going to supply side west very, very briefly. Shared stand, four of us, Rene, me, Sofia, and and Zach. So Zach is our US business director. We shared the cost, 18,000 delegates. And it really is quite quite interesting because on day one, we had about 30 people around the stand, so we couldn't cope with them all. So we'd ask them to come back maybe later on the day. So lots of interest in what we're doing for the very reason I outlined earlier that the interest now for a lot of the major partners in moving outside gut health into other areas of health, like cardiovascular health, like symbiotics, because that's the only way they're gonna sustain growth in the in the future. We've got 60 plus contacts from from that at that meeting, both those meetings.

27:27 We've had follow-up discussions with a with information sent for a lot of 10 to 20 over the last two weeks or so. And we've got a number of meetings taking place in in the next few weeks and also in December with a visit to several of these companies. So things are progressing quite quite quickly in quite a a busy market. The other thing just to mention just more broadly, if you look at probiotics twenty twenty three, you will see the industry areas they've identified for their conference next year, which we'll be attending. And those areas are non gut health probiotics and symbiotics. So this is not me telling you this. Look at industry compensation, you'll see that movement outside the gut health probiotic and into symbiotic. So symbiotic's a combination of a pre and a probiotic where the prebiotic had to benefit the probiotic, you know, spotting that area.

28:22 Okay? And so, you know, it was really good series of meetings and a lot of interest from it. But the key to all of this, and I'll say this time and time again, we've had a share price that's been depressed for a period of time. It's been a difficult market. What we have to do is drive revenues, and we have to drive particularly the commercialization of our second generation products. That will really start to drive the the share price. K? So that's got to be our focus going forward. Okay. And that brings us on onto sweetbiotics. So just to to recap, so they're sweet prebiotic fibres. So they have sweetness, they have no calories, and they have a prebiotic effect, which means they have a health benefit. Okay? So it's totally in contrast to sugar, which has a and fructose, which has a health disbenefit.

29:12 Okay? It caused you harm. Okay? We started with a couple, and now we've built a whole portfolio because if we started working with partners, then we had lots of particular interest in what we're doing, and partners said, well, could you put it into beverages? Could you put it could you put it into yogurts and dairy products? And we developed a whole range, and that's why it's taking some some time. So where do we stand commercially? Okay? You know, where we've got a manufacturing agreement with a part that we signed in 2020, one part, one series of products, all that scale up now has been complete. They had to optimize it because initially when they created the the product, they had very poor recovery. So you have a substrate and simple to the substrate, enzyme accept, and you have the the product, and then you have a whole range of other products, which I'd call waste products. And they had too many waste products, and that what what that meant was that there's a cost to removing that waste product and disposing that waste product, and it also meant it was an efficient process.

30:17 So they had to spend time optimizing that process to make sure you had more of the sweet varieties compared to the other other ingredients. And that's what they've achieved. So we'll get those products now in December. They're coming to us and produce those, and we'll get those in December of this year. I'm looking forward to receiving those from our our partner and our partner manufacturer and and tasting those and having a little and sharing those with some of our partners. And I think many of you know because I announced in the RNS sort of milestone payments we get on an annual basis, and then we get royalties. Alongside working with manufacturing partners, we've been working in various ways either through a a material transfer agreement, an NDA. So these are all things that you don't have to disclose to the the stock market in terms of an RNS.

31:11 But where we have got a formal agreement like with firm and echo with AgriPearl, with all that we have have disclosed. But these are all companies we've working with to help develop applications. So we've given them sweetbiotics in its earlier form created in the laboratory so they can play with

31:29 it and start checking out in their formulation to check out shelf life, to check out a whole range of things. So what we try to do is rather than do things in sequence whereby we create the product and then speak to partners, we try to create the product and then in parallel work with application partners to make sure that when we have final product produced that they can in large scale, that they can take the product and put it into their as an ingredient into their products and commercialize as soon as possible. That's looking particularly exciting for 2023. You also know that we've got a agreement with Flubrinet. This is a fabulous agreement with a major company. They've got so much expertise in this area and we've got a lot of expertise in prebiotics and the microbiome.

32:19 So a really good combination of different skill sets. So we've got the manufacturing going to in place, that product's been initiated, we're going through a process of transferring the technology to them, transferring to that manufacturer. Along the way, we get payments for our market approvals and we'll be looking because they're moving very, very quickly. They are moving at lightning speed, really are. And they're pushing us more than we're typically, it's us pushing the partner, but they're pushing us more than and we're pushing them. So really, really good opportunity for for us. And I think the way they're going, we should get product from the second partner, okay, Commercialized late in 2023 or maybe h one twenty twenty four. So all these now are starting all the hard work and the pain and the that we put in for the preceding years it start the contribution. So it's looking quite nice and we're checking those for the whole range of different product types.

33:19 Yeah, out of interest, you may want to look at supplant. This might give you an indication as potential value of this area. Supplant is a company, it was formerly Cambridge Glycosciences. There is 24,000,000 in March 2021. They're valued around a 150,000,000, but they're a private company, so that valuation is open to debate. But what they've done is just taken a a range of fibers, broken those down to replace sugar, and they have a degree of sweetness. They're not sweet sweet fibers. Okay? And they're not prebiotics. Okay? So we've got something very, very different. But it gives you an idea in terms of the if if you like, they are very much secondary to what we're doing. We're very nowhere near the degree of science or degree or degree of, more importantly, the the differentiating benefits. So but useful as an indicator in terms of where the valuation of this could could be. So hope that answers some of the questions you sent through in on SweetBartics.

34:26 Obviously, I I have to be careful what I disclose. I'll disclose as much as I can in this slide to give you an update in terms of the groups we're working with and where we are. And what I'd hope will happen now is that we'll have more news flow as we go into 2023 and 2024, particularly the HEALTH product that I mentioned earlier arriving in December will be fabulous to taste and share and put it in our tea and coffee and see how that how that works out and share with our partners. An exciting time for OPTIBIOTIX and particularly on the sweetbartic side. Then just moving on then to microbiome modulators. Now I've said this a number of times that I think microbiome modulators are equally as exciting as sweetbartics. And the reason for that is we're creating a product for the future. Okay? So going back to when we started the company, the microbiome we touched on earlier, there's lots not known about it.

35:22 But now we're starting to understand it better and we're starting to understand that certain strains and species of bacteria have certain benefits. And then what I've tried to do is predict that and move ahead and say, well, you know, if the future of health care is the microbiome and it all relates to different species, then if we can create the ability to actually position engineer the microbiome by creating products that can target those particular species, so those species grow far more quickly than anything else, then we got a massive opportunity here. And that's what we've achieved. Okay? We've shown that. I presented that last last week at sorry, before last at Global Engage. And what we've been able to show is that we can increase. So in the gut, okay, we can increase the growth rate of these particular bacteria. So we can create a prebiotic for a probiotic, which increases the growth rate, increases its activity, but most importantly, it increases the biological effect. So imagine if you're a probiotic producer, okay, you've got a product that works particularly well and you want to enhance its benefits. You can use our prebiotics to enhance its benefits, okay. Or if you want to, you can reduce the amount of probiotic put into the product because in in doing so, you get an enhanced benefit from less amount. So this is a massive opportunity. Okay?

36:43 And so in terms of where we see the opportunity, we can use it to change the microbes in the gut, which I think has lots of opportunities. We can add it to probiotics to enhance their their benefits. So where are we? So we've did a lot of work in this area for a number of years, got some really good data. We've got our IP filed, and then we spent about two and a half years, again, largely damaged by by by COVID trying to scale up, and we struggled to scale up. Okay? You know, trying to have a methodology that could could scale up was was really, really difficult because what we're doing, we're creating these in these products in quite small amounts amongst a vast mixture of other organisms and other ingredients.

37:29 And so what we had to do was try to optimize it that described earlier in terms of mang factor and scale up. We've now achieved that. Okay? We've now created a methodology whereby we can we can manufacture. So we've got a manufacturing process in place that can be scaled up to allow us to create these particular processes, microbiome modulators. And actually, even more importantly, we'd be able to create a method by we can actually change the approach and in doing so create a range of different microbiome modulators. So we've got a additional benefit. So we can actually change the structure using this technique and then change it as part of the manufacturing process and in doing so, change its functionality.

38:16 So we think this is another really, really big area. And many people will say I'm cautious. What I'm trying to say to you about sweet politics and microbiome modulators is that this is the big opportunity now. We've been, you know, working it for five, six years, and now we're starting to get to a point because they're really starting to look really, really exciting. Okay? So in terms of next steps, we've we scaled up the products and functionality. That's ongoing. Okay? We started the marketing in this month. That's why we're out with Global Engage and Supply Side West, and we're doing something similar probiotic next year. We really had strong interest from at least two big partners that has very strong interest. You know, they wanted further information. They wanted to talk about exclusivity.

39:07 So, yeah, really quite quite interesting. But, you know, a deal is not a deal until it's signed, so that will take a little bit more time in terms of getting the detail done. But that's looking quite quite interesting. And if we get that right, we will probably have some kind of licensing deal with either milestones or revenues from royalties and with sales in 2023. So that's what we're focused on now. So the total focus is, as I said earlier, commercializing our second sorry, our first generation products so we get more and more sales by selling more products to more territories, extending our extending our pipeline, but also commercializing our second generation products. That's got to be our focus. Okay? Then moving on, I can so many questions coming through. I'll try and pick those up at the end.

39:56 I just wanna finish up some of these. Just a little bit now on this. And a couple of things. So many of you will know, I I I think about what could happen in the industry many, many years before it actually happened. So people will know if they know my background that I created a technology to detect health care acquired infections back in 2000 and sold to three m 2007 when health care acquired infections became really quite a a hot topic. Same things happening here. Okay? We did some work in 2017, 2018 with DSM where we actually used this source. So this is zoloylcosaccharide that we we use we could spot that there were a number of new prebiotics that were coming through, Sellebio, gentle oligsaccharides, and xalo oligosaccharides, which had some real benefits against over existing projects. We could see the prebiotic market really growing. Okay? And rather than take an existing prebiotic and copy it, we decided to go and look at the evolving prebiotics and work with those. There's a risk to that. You never really know how long it will take for these new prebiotics to come to market. But we think we seem to got it right. So what what the science showed back in 2017, 2018, if you took Xos, this saloyl or saccharide, you combined it with the world's best selling and most valuable probiotic strain, LGG,

41:28 which is a rhinosis, then you created a a product that grew more quickly and had more benefits than if than if you didn't include it. Okay? So this is a, if you like, a a so a simpler version of a microbiome modulator for one particular species of a bacteria. We built the IP around this, and that allows them to go out and say to people who were developing OPTIX HEALTH and commercializing OPTIX HEALTH for, you know, you can't really use it in a particular area. So this this this IPs were far this IPs patent so far back in two thousand eighteen, nineteen, that's how far you've got, I think, ahead. And now we've got this license deal, and we think there'll be some really interesting products coming from this. And we already had some early sales of this particular product.

42:16 And what we're looking at is selling ingredients to brand owners of food and beverage supplements and probiotic producers. But we also think there's potential because this is a a prebiotic that is effective at a low dose just over a gram. So you can actually put it into powder formulations. So we've put it into WellBiome and you can put it into capsules, you can put it into gummies. So we see a really big opportunity here in in this area. So you've got sweetbiotics, you've got microbiome monitors really, really big, but also we've got OPTIX HEALTH. It won't be as big because it's not as revolutionary, but it's a, you know, a good opportunity to add to our portfolio. So I think now we're coming to an end of my time. And what I'm gonna do now, I will pass you over to Shira's buzz. So Shira's, as I mentioned earlier, appointed in in May of this year. And since she's joined us, she's been doing tremendous work with direct to consumer sales, which is part of her overall strategy to grow the business and gain more control over sales.

43:20 So I'll pass over to Shiraz now who'll introduce himself, give bit more detail, and talk you through the strategy just for the direct to consumer side. K? Over to you, Shiraz. Thank you, Steven. Good afternoon, everyone. Just a bit of background. My name is Shiraz Butt. I've previously worked for brands owned by Walgreens Boots Alliance called PhD Nutrition, The Protein Works, and I've grown them businesses from zero to the millions in some cases, and they were then acquired by the likes of SIS for 32,000,000. After progressing with them, I worked with a company a large company called in Canada, and they were owned and still are owned by Zhiyuan Foods, who acquired them for 730,000,000, and their goal was to then grow them from an ecommerce aspect. I my remit was to look after The UK, Europe side of the business, and then I grew them globally in Asia, UAE, and then it grew themselves to 15,000,000 before I departed from there.

44:13 So working with OPTIBIOTIX, I am on that trajectory to try and grow the same from a D2C perspective and a marketplace. And due to my experiences, I'm able to see that the opportunity is here. So we have five year business goals that I would like to achieve, and we would like to aim by the end of year five approximately 10,000,000 in sales. And the question really is how do we do that? And there's three pillars to that strategy. So the first pillar here is to grow multiple ecommerce channels. With with my previous history, it's a case of we have our bread and butter, which is first and foremost the OPTIBIOTIX D2C UK site, and we need to ensure that the customer journey is good for the consumer. They are finding the right products that they want to find. They're not bouncing off the web website because they came to a page that wasn't really relevant.

44:58 So it's various aspects of that that we're trying to improve the website and have done. Other areas also is to increase our awareness, the brand awareness as well. So Steven touched upon that we've got great awareness with SlimBio. But in fact, with the products that we've got from Go For Good, that's an area that we need to improve on the awareness. So once you're present on the likes of Amazon, there's already millions of people on those kind of platforms. So currently, we're going through a process listing our products and ensuring that we are ready to attack that in 2023. Tmall is owned by Alibaba. So Alibaba is huge in China, many of you might know that already, and we've successfully launched on that platform now. Last month, I think it was four weeks ago, and we've got all positive reviews at the moment from customers who are trying the products. We are also on the equivalent of Instagram, an app called Red, getting a lot of attention as well for GoFigure.

45:47 So we have huge aspirations of growing revenue on those channels as well. So as Steven alluded, you know, when we increase our portfolio, not only would we sell on the D2C sea site, we have other avenues to grow those revenue streams with the likes of Amazon and Tmall. And in in terms of those focus areas as well, we have to optimize these online marketing ecosystems and drive those visitors to a conversion. That is the key to it already. And also improve customer service. So when I came into the business, you you look at how you can improve those areas. Customers, first and foremost, love the products. That isn't even a concern with OPTIBIOTIX. By the time it's looking at making sure the customers are receiving the products on time and they are and they are happy that the items are tracked, etcetera, we've made those kind of improvements now, which I'll I'll touch upon soon. And, of course, for anything, there's KPIs to all this kind of performance. And the beauty of D2C is those KPIs are quite easy to obtain. You know? So when we look at, like, on-site traffic and conversions, year on year, we've seen an increase now of a 120% on traffic direct traffic as well. So when you look at direct traffic, these are consumers that would typically type in OPTIBIOTIX and want to go to OPTIBIOTIX directly. So that isn't a cost to the business because you have thought of the name OPTIBIOTIX and you want to reach out to our website. And then overall as a business, including paid traffic, we've grown by 216%, and revenue has grown by 83% on this channel already.

47:07 And when we refer to search rank for organic, that is typically where you want to rank organically in the system. So we are starting to rank for terms like meal replacement shakes. It's a very, very competitive market, you know, in terms of likes of Myprotein, but we are starting to rank amongst them now, which is really good. So we will be seen on the top pages. And, also, key performance indicator is increasing our customer database. Once you increase that customer database, it's much more easier to retain that customer at a lower price. And increasing our subscriptions. The best thing about OPTIBIOTIX based on my previous experiences, would say, there's a lot of loyalty. And reason being is these are patents and products, very unique. They have that USP. The market can be saturated with other brands, and in essence, it's more so the marketing that you do to to get your consumers to buy your products.

47:55 Now if you look at the second pillar over here, where we're trying to expand the consumer base and build a brand, this is where we have low brand recognition at the moment for the likes of GoFigure, but people recognize the name Slimbion. So in essence, it's trying to get that transition for the consumer to understand that we have an offering as well from a d to c perspective, and you can buy directly off us, which is obviously gonna be at a higher margin for us as well. We are looking into various ways to grow that, whether that be through media advertising or pay per click that we've done on Google. So on the pay per click side of the business on d two c, we've already noticed an increase in 660% sessions based on us doing that kind of advertising already. And we've noticed that the bounce rates have dropped by 74%. Bounce rates are typically when a customer comes to your website and then they just leave, so they bounced off in effect. We've noticed a drop in 74% of that happening, which is a is a is a is a huge benefit because what it means is you're actually attracting the right customers. They're more valuable to you. So it's working, and it's showing that there is a demand for OPTIBIOTIX now from an online perspective as well as just the b to b side of the business.

49:02 Other areas now, because as many of you will be aware of, is heavily led now in terms of influences in the social media area. And we have now launched our social media channels, and now we're gonna start looking at recruiting influencers and try and increase the awareness on our behalf. And there will be strategies implemented there to motivate them to promote our brands, whether it's discount codes or incentives of how to lose weight, blogs, etcetera. Another focus area as well is although our customers are very loyal to us that we've noticed, we need to extend the brand portfolio. This includes maybe even providing indulgent flavors. So at the moment, we have for a flapjack, we're have apple and blueberry. It's a case of appealing to those customers who might like something like cookies and cream, for instance. It's trying to expand into those areas and bring those into the into our brand and then showing them a wider range of products and increasing their AOV. AOV basically means average order value.

50:00 If we increase the AOV on the website, it means more margin for us as a business. And, again, when we're talking about KPIs on this front for marketing, it's the number of impressions. How many people are actually setting their eyes on OPTIBIOTIX, the followers and engagements we're getting, bad brand penetration in terms of how many of of that market we are actually penetrating, and then a return on advertising spend. Because, course, we need to return to all this. So marketing is one of those areas where it's becoming a bit more smart in terms of we can track what is happening with our spend, how many people have come to the website. This is the big benefit of d two c. We can track all this. And if something's working, we we move along with it furthermore. And the third pillar is building a profitable business. And we want to invest for the future, from a D2C perspective. So we are working on a a new house of brands website, which basically enables the website to illustrate all the various brands that we've got. When I've said to you that we're advertising on Google and it links to our website, it allows the consumer to come to a website that's very easy to use and shows this is our ingredients. This is the kind of various products that we have.

51:02 And and based on what are your personal needs, whether you're young or from an older generation or you've got weight problems, etcetera, we will have the solution for you under this branding website. And to build a profitable business, excuse me, we will also improve on our retention, which is the CRM channels, you know, your customer relationship management. Excuse me. Sorry. And that is done through email campaigns. And once you've already got them enticed, as I said, they will keep buying a few as I've seen working on the DTC channel since May. Now to build that profitable business, I've already touched upon SKU rationalization extension. If certain SKUs aren't working, we won't go with them, and they will extend other areas. And particularly in the high margin products because we we even products like Stim Biomedical that we sell on the website, it's doing quite well, and it's an area that has a 80% plus margin.

51:50 These are the kind of SKUs that we wanna push. Another area to improve our profitability, which has already been implemented, is we've moved to a new three p l, which is a third party logistics company. This is to ensure that our products are fulfilled to the end consumer. They can track the orders, so we've gone with better couriers. So not only is the end customer benefited from this new transition, we also benefit on on our bottom line. Another key KPI we need must look at is from year two onwards, we will be able to improve our gross margin further. Year one, we're trying to get the customers aware of us and buy us in the first place. But year two is where we will see the improved gross margin because they will already be loyal to us. So my question, why will they be be more loyal to us? It's simply because we have that USP with the parts of the ingredients, and it works. I'll go on to the next slide.

52:38 So when you when you're thinking about D2C opportunity based on my previous experience, and I've I've told you I've grown business from zero to the millions, I foresee that we could hit 5,000,000 sales in three years from a conservative strategy where you can see here the level of investment that's required. You might even be asking, well, Shiraz, why is the investment sort of dropping off actually? The reason why the investment will drop off is because this is a different brand compared to the likes of Peach Nutrition, where I worked at Ivy, where it's saturated, and there is no loyalty in essence. That's why you're constantly spending more to market. Once we've but our retention rate is one of the highest I've actually seen in my history of ecommerce. So what that tells me is you need less money to retain that customer once they're actually in, and their lifetime value will grow. So to hit these kind of numbers that we're talking about, like five years of to reach 10,000,000, is also subject to the likes of marketing support. We need to grow the awareness of the likes of GoFigure. Is there potentially any store presence for GoFigure?

53:31 And then the extension of the current portfolio. And on the right side, I've illustrated an aggressive strategy where you can hit 38,000,000 at the end of five year sales potentially. So in a nutshell, there's there's huge potential for OPTIBIOTIX. We're seeing everything in the green numbers now in terms of growth from the DC channels. And we're also going to be exploring other marketplace area as well to really grow the awareness along with the sales. And I've worked very closely with the likes of Amazon head offices in Germany, UK, America. And, typically, that's what they've always said is they they wanna work with the brands that have that USP. Otherwise, it's in essence, it's a free for all on the websites and who's got the lowest price. We don't want to be that kind of a company. We wanna be the company with the premium pricing, but you're gonna get results.

54:16 So based on my experience, with similar products, I do feel that with product availability, product range extension, and marketing spend, we should be able to attain these numbers. Thank you. Stephen, Shiraz, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the Q and A tab situated on the top right hand corner of your screen. As you can see, we received a number of questions throughout today's presentation. And, Steven, if I could just hand back to you to read out those questions and give responses where it's appropriate to do so. I'll pick up from you at the end. Sure. There's quite a few questions. I'd rather read out individually. A lot of them relate to Sweetbartix, and they are based around two aspects really.

55:01 Should we have commercialized earlier with different partners and not be so picky? And I guess the other aspect then relates to it in terms of when we would get revenues from those particular partners. So if I deal with those as a a group, in terms of have we been too picky with partners, well, we probably have been a bit picky. But but if you have something that's really special, the last thing you want to do is give it to a partner who doesn't have the capability to develop it as you see fit, to manufacture it, who doesn't really have the ability to commercialize it because you miss your opportunity. Now I built businesses many, many times, and you'd aware that I built a business and sold it to three m. And you've gotta get your partners right. Okay? And everyone wants to have revenues early, but the the plan was, just to repeat what I said in the first couple of slides, was build your revenues to cover your cost by your first generation products. That takes the pressure off you to allow you to really focus on getting your second generation products right.

56:07 Now I think where shareholders have become a little bit frustrated is that it's taken longer than it they it's was expected, and I would agree with that. But then we didn't anticipate COVID, as I said as I said earlier. And I I think the other aspect of it is that we broaden the portfolio, as I said earlier, to cover more types of sweetbartics. And then just then in terms of revenue projections, we are getting revenues from these partners, but we're getting them in terms of milestone payments. But, you know, they are they are important revenues. Okay? And remember, these guys are investing a lot of money in manufacturing scale up for these particular products. And so they are investing in building a business for us, not using shareholder money, paying us for it. At the end of it, we'll have a product that we can commercialize.

56:58 And I honestly can't divulge anything more than that. I've divulged as much as I can, and you have to be respectful of the partners and the and the NTA requirements. If you're not, then you don't last long in this industry because it's quite a closed industry. So so just sort of after the main points what I try to get across in the presentation, difficult global market, stroke in the first half of the year, started to build nicely in the second half of the year. We've got a number of processes in place to increase the number of products, to increase our channels, particular focus in terms of, online channels as, shares has just explained, focusing on getting our second generation products to market. And if you get all those things right, we'll have a very big and very profitable business and will really impact on the share price subject to no other chaos on the the global economy.

57:55 But I've got another presentation now at 01:00. So I just wanna thank all our shareholders for listening, and thank you for supporting us for the last x number of years depending on when you invested. But this is a a good business with, as you just heard, Shiraz, with his experience, good products, and that's our focus on turning those good products into good sales and then really building the business. So thank you very much. Stephen Shiraz, Shiraz, thank you very much for updating investors today. And, of course, the company will review all questions submitted today and will publish those responses on the investor meet company platform. Could I please ask investors not to close this session as you'll now be redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few minutes to complete, but I'm sure be greatly valued by the company.

58:42 On behalf of the management team of OPTIBIOTIX HEALTH PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.