ProBiotix Health (AQUIS:PBX) — Results for the year ended 31 December 2024

0:00 Good morning, and welcome to the PROBIOTIX 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 via the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can 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. And I'd now like to hand you over to Steen Anderson, CEO. Good morning,

0:31 sir. Good morning. Thank you, everyone, and thank you very much for joining this morning's presentation on the 2024 results and a little bit of an outlook into 2025 as well.

0:46 Before we get started, let me introduce myself. My name is Steen Anderson. I'm CEO of PROBIOTIX HEALTH, and I've been working for the company since 2023. I'm a Danish national. I've been in the industry for thirty years, worked with several, large international ingredient nutraceutical

1:11 companies and built, businesses from startup structures to maturation. Mark, if you would be kind enough to maybe put a few words on yourself. Certainly. Good morning. My name is Mark Kullingborn. I'm the CFO. I've been with PROBIOTIX since 2021, and I'm helped with the launch of PROBIOTIX as a stand alone company in March 2022. I've got twenty plus years experience in PLCs, life sciences, small companies of all shapes and sizes, and looking forward to going forward with it.

1:53 Very good. Great. Thank you, Mark. So before we get started with the presentation, just have a brief look at our forward looking statement. So we have formalities in place.

2:09 The, today's presentation, as I said, will focus on the 2024 results and achievements as well as we will be providing a look into the progress we made so far in 2025. We'll start out with a brief recap of the strategy for anyone who might not be familiar with probiotics, health. So if, if we start out with our our overall purpose, this is, is this is linked to a very strong vision of using probiotic bacteria, what is known as healthy bacteria, as a way to provide consumers with a preventive product solution, which supports long term health improvements throughout the full lifespan.

3:06 So basically, we are in the prevention category, rather than in the cure, category. Our core values, they are built around delivering safe scientifically documented dietary supplements, which works when they are taken by consumers. Our our matter is really consumers should be able to feel a difference when taking our products. We have a business approach which is narrow and deep, meaning that we focus in a narrow indication, span of indication areas rather than going broad and generic like some other players in the probiotic field.

3:51 Our our business model is taking offset in, in our proprietary LPLDL strain, which is a bacteria we have protected by 26 patents and scientifically documented by five clinical trials and more in the pipeline to come. Our focus is exclusively on cardiometabolic health and more specifically on our LPLDL strength's ability to lower cholesterol and blood pressure when when taking on a regular basis. Our our business model, provides customers with two product offerings. One offering is sales of the bulk strain ingredient to to manufacturers of dietary supplements as and they will then use this ingredient in their own products.

4:50 A typical sell in cycle for a pure ingredient sale is nine to twelve months, of course, depending on customer and where they are in their process of developing new new products. The other, offering is a full turnkey solution primarily targeted brand owners. So it's a full turnkey private label solution where we provide our customers with the finished consumer product packed under their label. This model, it's still the products will still contain our LPLTL. But this model has a sell in cycle which is a little longer because of the longer manufacturing process to get to a full turnkey product.

5:39 And typically, the selling cycle for finished turnkey products will be eighteen to twenty four months. The final, customers are dietary supplement brands regardless of whether we sell bulk ingredients or the finished turnkey products. The the, the the final customer of ours are brand owners, global brand owners. And on the right hand side of the slide, you see just a selection. We're USA, seat in Germany, in The UK with our COPIONE brand, in China, in Greece and in many other countries. But basically, this is, this is our, our business model. If if I were to put a few or I have to put a few words, on the market potential, We're tapping into a really attractive market for cardiometabolic supplements, a market which is fast growing, which reached 20,000,000,000, dollars at a consumer level in 2024 and is set out to grow to 31,000,000 by 2029.

6:52 As a business to business company, we tap into approximately 25% of that total value creation. The market we're operating in is driven by an increased health consciousness among consumers combined with the with the demographic, development of living longer. Over the past thirty years, life expectancy has increased by more than six years. There's a mega trend, a mega consumer trend towards taking responsibility for own health and focusing on quality of life throughout the full lifespan. And as such, our our product offering in the cardiometabolic health area fits well into that mega or or consumer trend.

7:44 Facts are that twenty million people die annually from cardiovascular disease of which out of which four million deaths can be directly linked to high cholesterol. And and that number is still on the rise. Luckily enough, a lot of the, of the incidents could be up to eighty percent could be prevented through lifestyle changes, which includes diet change, exercise, and also includes the right supplementation of your diet with products like ours. So a unique opportunity to that we are tapping into a a fast growing attractive business area with relatively few players active in the space at this time.

8:33 The strategic focus is to keep a our strategic focus is to keep a lean and agile organization as possible. And as such, we are focusing on the front end and the back end of the value chain. So we focus on strain development, clinically document these strains, do product development into finished format products, capsules, tablets, sticks. And then, obviously, we have a significant focus on commercial execution. We have taken the decision to outsource manufacturing activities, to strategically select the contract manufacturing partners as, as this will allow us and and does allow us to tap into their existing expertise and avoid by us finding capital in manufacturing, setup.

9:34 From a commercial execution perspective, we are applying a phased strategy with,

9:44 taking a step by step approach to different parts of the world with a focus on where the highest market potential and the highest potential for return on investment exists. So phase one is North America and Europe, where that is a perfect fit, between the consumer needs and the consumer's desire for cardiometabolic health products and our value proposition. In the APAC region, we are taking a selective approach on China, Korea, Australia and New Zealand and have recently chosen to accelerate these activities to potentially mitigate any delays that could come from penetration of The US market caused by by future trade barriers.

10:38 Latin And South America, hosts a, an attractive potential, but is considered to be the most difficult region to enter at the moment because of complex regulation and also a, less developed dietary supplement structure in in in that part of the world. If we move on to highlights, for '24. We, in '24, we continue to drive towards reaching our 10/20 aspiration by the end of twenty twenty eight, meaning 10,000,000 in revenue and 20% in EBITDA. So 2024 focused on commercial execution with existing customers, line extension with existing customers.

11:31 It focused on closing ongoing sales projects and continued to build the sales project pipeline. In parallel, we, expanded geographically with the focus on North America where we established a commercial platform, to to to penetrate the market. We completed the internal organization towards securing future scalability of our activities. And we took steps to optimize the supply chain, preparing for implementation of long term profitability improvements as well. If we look at the execution of the strategy, we further executed on our strategy to become less dependent on fewer customers.

12:20 Since 2023, we have grown our geographical presence from seven to 14 countries. And in the same period, we have expanded our customer portfolio from nine to 23 customers, providing robustness to the business and spreading the risk through less dependency of few customers. We we are we are lucky that we have, really good partnerships established with a number of fast growing customers, while we at the same time are materializing our strategy to become less independent on these few customers and expand with a broader portfolio. Our customers, when once they are onboarded, we are typically experiencing a high degree of loyalty with an extremely low churn.

13:16 In 2024, we realized 0%, churn. So so once customers are onboarded, they are loyal and they are staying with us for the year for the long term. On the organizational side, we concluded building the team, putting a strong sales structure, into place covering Europe through mister Casper Hoffensetz. North America, we employed a a senior profile with really strong, links into the industry, Murphy Young. And in the APAC Region, we have, mister Michael Litichevsky who has,

13:55 many, many years of experience dealing with that region commercially. We also secured future scalability, commercial support and execution agility within the, internal value chain through and engaging an experienced product management and marketing team, mister Nilspeter Berg, and mister Katherine, Davis,

14:21 both having many years of experience in the probiotic field. We strengthened the R and D team through onboarding Feresta Dahmet and HEALTH PLC as

14:35 part time employees with the company while they're still working as associated professors at the university they they are engaged with. We established a strong supply chain function headed by mister Mass Brand who has twenty years of supply chain experience.

14:56 Altogether, And the team represents more than a hundred and fifty years of experience in probiotics and microbiome. This this concludes the structure of the team and sets us up for really further expansion and provide scalability to the activities we have implemented and allows us to, successfully onboard the new customers we have in the pipeline. We

15:21 closed five commercial partnerships in Denmark, China, Greece, Ukraine and Mexico, all with significant growth potential.

15:32 Three out of these five have already made their first repurchase, which is a strong sign of a successful, introduction of their brands in the market. And the remaining two, are to follow very shortly. We we accomplished to expand our sales pipeline to more than 100 leads and thus creating significantly increased robustness of,

16:00 of opportunities feeding into, feeding into our future, sales growth. We opened more than 20 new active sales projects, increasing the total portfolio to more than 30, all projects with the potential of making a significant and sustainable contribution to our growth aspirations, keeping in mind that there is a selling cycle of, let's say, between nine and twenty four month. So, Mark, this is, the time to hand over to you and, let you go through the, the results from last year, if you would, please. That's no problem. Thank you very much. Right.

16:47 Obviously, as you all know, we published our, results this morning. And what we have is we have and our net sale the sales for 2024 were at 1,800,000, which is up 13% on the previous year. That or 1,900,000 rather. The sales before discount were over 2,000,000, which is, as it says in the slide, which is very commercially successful year. Also, which is very pleasing to see is the gross margin continues at 50 over 50 for the second year in a row. And, when you look at the EBITDA loss, the EBITDA loss is slightly higher than it was at this time last year.

17:34 But, also, we have approximately a £116,000 of nonrecurring fees within that. So overall, it was a very successful year if you want to Yeah. Yeah. And then what we've got is as far as the balance sheet goes, we started off we we started off at $1.51500000 at the end of last year, the end of December twenty twenty three. We have sales revenue, sales costs, admin costs, and, obviously, our one off one off costs. And in the middle of the year, we'd raised we'd raised money, some fixed assets, debtors, creditors, etcetera, and we end up with a very healthy balance at the end of December twenty four of 1,600,000.

18:25 And it also say in the r and s this morning, it says we've had a solid solid start to 2025. Quarter one's on track. And we've also mentioned in the r and s this morning, we have new agreements with CHEMEN and TOPHEALTH in the first quarter and sufficient cash through to profitability. Thank you, Mark. Let's let's continue and look a little bit into the future and what has been accomplished already this year and what we are looking at accomplishing for the remainder of the year. Mark, you already alluded to the fact that we had a very strong start to the year with 50% year on year revenue growth in Q1.

19:17 The Korean market has been opened through an exclusive partnership with Top Health, which I will get back to in a second. We signed, early this year a material commercial agreement with Kimen in China. I will also get back to a little further details on that later on. Life extension, a leading U. S. Online and brick and mortar brand have just launched a product in The U. S. Market, which is expected to be also very successful.

20:03 We anticipate minimum one more U. S. Product launch scheduled for later in 2025. We are on target to close two, three late stage European sales project in second half of this year. And as I already mentioned, we have accelerated our market penetration in the APAC region. We have a significant new clinical trial on LPLGL with 50 subjects scheduled for initiation later in 2025, which will further support the clinical documentation and the strength of our strain.

20:49 We at Vita Foods, a huge fair or the leading European fair for the industry. We launched a few weeks ago two new women's health cardio metabolic menopause products, which we already see a huge interest from customers on. We are scheduling or planning to launch two additional new products within the healthy aging category later in H2. So, so all in all, on track with a number of positive growth indicators that will support our long term growth and us achieving our 2028 goals.

21:42 I would like, as I said, just to spend the last two slides before the Q and A on giving a little bit more insight into the to the Kemin agreement and to the top health partnership. Kemin is a global ingredient company. It's US owned, has a billion dollar revenue, 3,000 employees, 15 manufacturing sites, and sales in a 120, countries. We entered into a partnership agreement with Kemen China. This is in many ways an it is an ideal partnership. Kemen is building a strategy to become positioned as a leading player within the probiotic space in China and are looking for partners to to provide them with scientifically documented, strains that they can position with their customers.

22:38 Longer term, there's a potential to expand the cooperation further into other countries if everything is successful in China. We get access Kemen gets access to our clinically documented strain. We get access to the vast Chinese market, through working with a leading ingredient provider who is already strongly positioned in the so the agreement has been concluded after twelve months of negotiations. It's a seven year exclusive agreement. It's a sale of bulk strain in China, Hong Kong, and Macau. We All right. To to to to sell the finished products in into Mainland China.

23:27 We we get access to a population of 4,100,000,000, and it's a committed agreement with minimum volumes. And if we look at an index level, there is a potential for a 20 times revenue growth from this year and over the next five years. So it's really a huge and potentially very, very interesting partnership with a strong partner who has committed to invest to grow the business significantly in China. So a really we are really the board management is really pleased with being able to having entered this partnership agreement.

24:19 The other the other commercial cooperation I would like to allude to is with Top Health in Korea. This is a privately owned marketing company, which is focused on the health and nutrition supplement space in Korea. They have grown to become a market leader in probiotics over the last seven years. And their business model is really to align with quality European product manufacturers and take their product into the high quality focused Korean market. They have an extremely strong position with the in e commerce as well as brick and mortar. But e commerce is really the presents the attractive opportunity here in this collaboration.

25:16 They commercialize on their own brand, private label and also under third party brands and sell the products to third party brands. Are by the cooperation, we have entered with with the with the top health. We are gaining access to probably the world's fastest growing influencer market through top health cooperation with Korean based leading pharmacist influencer company called pBrush as well as their access to the fast growing online portal iHerb. So we're tapping into a market of 52,000,000 potential consumers.

26:08 And this year relationship is forecasted or anticipated to deliver or potentially deliver around 20 times revenue growth for us over the next five year period in time. So basically, I think this concludes the official part of the presentation and basically leads us to the Q and A session. Steen, Mark, if I may just jump back in then. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab situated on the right hand corner of your screen. As you can see, we have received no more questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end?

27:02 Yep. Okay. So, we have a question. Do you intend to raise additional funds to reach profitability? Mark, would you be kind enough to take that one? I think you might already have answered it, but can you Yes. Certainly. I'd certainly. In my presentation, I said we've got cash through to profitability. I would reemphasize what we said in the 09/04/2024 about cash through to profitability, and there is no change to that view from the board. So we don't we have no plans to raise additional funds. Thank you, Mark. Here's another question for you. Do you have any plans to get off Aquis market to somewhere more liquid?

27:49 Yeah. I I think this this is this is one that comes up, fairly regular. We we don't have any plans at the moment because, obviously, to move from Aquis to another market is very expensive and would take up a a lot of management time. But I hope the board do keep this under review, of ongoing review. Okay. Thank you, Mark, for that answer. There's a third question, which I think goes for you as well. The Board has provided long term hope for revenue and profit forecast through to 2028. But what are they forecasting in revenues, profit before tax and earnings for the intervening years of 2025, 2026, and 2027?

28:42 At at the moment, the board the board have obviously published the sort of 10/20 target for 2020, and we've got sort of staged approach over those years. But, we've we haven't published we we don't tend to publish forecast '25, '26, '27. We're aiming for 2028 to hit that target. Thank you. Then there's a question. When is management going to buy significant monetary value or shares at previous communications have implied? I can answer that. During 2024, we have been through a number of closed periods due to significant announcements of new partnerships, which has made it difficult for management to enter and buy shares.

29:43 And this year, we have so far been in a closed period until the release with the release as well of the chemin and the top health corporations as well as with the annual report. But I think you will see that now as we are out of the close period, there will be a number of management members starting to buy shares in the company. So hopefully that answers that question. Let me see. Then there's a question, have there been any product launches that haven't been announced publicly via RNS?

30:33 I think the short answer to that is no, there hasn't. Then there's a question why have the quarterly updates stopped? I would say we are trying to keep the market informed on a regular basis. And as we promised, last year, we have worked on improving communications with the market. So as such, there's no strategy or no on purpose stopping any communication. We will continue to provide information to the market, when we have relevant information to share.

31:24 Okay. I think that actually ends the list of questions that we have received. Steenmark, thank you for answering all those questions you can from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Stien, could I please just ask you for a few closing comments? Absolutely. I would like to thank all our investors for their commitment, their belief in probiotics health, our strategy, our ability to deliver return to investors. So thank you a lot for being committed and having faith and trust in us.

32:12 We will continue to keep the market updated, and we will continue to share the positive progress, which we hopefully have been able to convey through the presentation today. So thank you very much. Steenmark, thank you for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of PROBIOTIX HEALTH PLC, we'd like to thank you for attending today's presentation, and good morning to you all.