BioGaia presentation March 2015 1
BioGaia a healthcare company working with probiotics BioGaia s vision is to improve the health of people around the world by offering first class probiotic products. BioGaia s business concept is to develop, market and sell well-documented probiotic products worldwide in the form of innovative and convenient formulations 2
BioGaia AB Founded in 1990 100 employees Officies in Stockholm, Lund, Eslöv, Raleigh, Hiroshima, Shanghai Listed on the OMX Nordic Exchange in Stockholm 1998 Products in 90 markets through distributors Contract manufacturing (TwoPac AB 100% owned) Holds 400 patents in 31 families The founders Peter Rothschild och Jan Annwall 3
Change of focus Oral Health Dietary Supplements Infant formula Functional Foods / Dairies Animal Health 1990 1995 2000 2005 2010 2015 4
BioGaia s global network Partners Pharma and Health Food companies BioGaia Product development, product strategies, research, Quality, market support Suppliers Contract Manufacturing Research Pre-clinical and clinical studies in hospitals and universities BioGaia Universities and hospitals where research is conducted. Manufacturing and Production Partners selling component products Partners selling finished goods 5
Business model three networks Distribution partners Sales force Pharmacies Physicians Product development Innovation & IPR Product strategies Research Quality systems Marketing support Indications Clinical Research Preclinical Food supplements Production Probiotic cultures 6
Distribution partner network Local distributors with medical representatives who promote to health professionals Dietary supplement BioGaia BioGaia brand Sales through Pharmacies 7
Bran Brand Branding for Health professionals Sold in 50 countries 61% of sales 2014 of finished products (incl. co-branding) Build value, less dependence on distributors and patents 8
Competition Strategy Engaged and competent personnel challenging existing solutions Clinical trials of high quality Attractive and unique formulations and packaging solutions Strong partner support 9
Clinical trials supporting the use of BioGaia Probiotics Lactobacillus reuteri Protectis, Prodentis and Gastrus 137 completed clinical trials in 11 700 individuals 97 randomised, double-blind / blind, placebo-controlled studies in 8 800 subjects 41 open studies in 2 900 subjects 45 studies in 0-3y in 6 100 subjects 108 scientific articles and 9 doctoral theses
Efficient BioGaia probiotics Functional gastrointestinal disorders Colic Regurgitation Constipation Functional abdominal pain Acute gastroenteritis Support of gastrointestinal health Antibiotic-associated side-effects Hp-infection Eradication treatment associated side-effects Gingivitis Periodontitis 11
Colic studies with L. reuteri Protectis Szajewska 2013 250 p=0.8 Placebo (n=40) L. reuteri Protectis (n=40) Reduction in median crying time after 21 days 200 150 100 50 p=0.002** p<0.0001 p<0.0001 p<0.0001 Ø Ø Ø Szajewska: 69% reduction with L. reuteri Protectis compared to 47% with placebo Savino: 90% reduction with L. reuteri Protectis compared to 70% with placebo Savino: 62% reduction with L. reuteri Protectis compared to 22% with simethicone 0 0 7 14 21 28* Savino 2010 Savino 2007 400 350 p=0.127 Placebo (n=21) L. reuteri Protectis (n=25) 200 p=0.987 p=0.005 Simethicone (n=42) L. reuteri Protectis (n=41) 300 250 200 150 p=0.082 150 100 p<0.001 p<0.001 p<0.001 100 50 p=0.099 p=0.022 50 0 0 7 14 21 0 0 7 14 12 21 28 * Follow-up 1 week after termination of intervention
Cimperman et al, 2011 84% reduction in diarrhoea incidence with L. reuteri Protectis compared to placebo Adults in hospital given a course of antibiotics were supplemented with L. reuteri Protectis or placebo for 4 weeks L. reuteri Protectis reduced incidence of diarrhoea by 84% compared to placebo 13
Prevention? 14
Gutierrez - Diarrhea in Preschool Children and L. reuteri Protectis L. reuteri Protectis (n=168) Placebo (n=168) 15
Study outcomes confirm previous results Reduced number of days: Gutierrez, 2014 (n=336) Weizman, 2005 (n=128) Agustina, 2012 (n=250) with diarrhoea with antibiotic use with fever NA absent from day care NA with respiratory tract infection NS NS 16
Indrio - Act and not React: Prophylactic use of L. reuteri Protectis in the Prevention of Colic, Regurgitation and Functional Constipation L. reuteri Protectis (n=238) Placebo (n=230) 17
Conclusions Ø Preventive use of L. reuteri Protectis in healthy newborns reduces onset of colic, regurgitation and constipation Ø Preventive use of L. reuteri Protectis reduces direct costs for both family and community Ø Preventive use of L. reuteri Protectis is proven to be valuable for both infants, parents and the society Indrio 2014. 18
Attractive and unique formulations and packaging solutions 19
BioGaia partner support Clinical trials Marketing and PR support BioGaia Academy Workshops www.biogaia.com Participation in medical congresses Speakers at symposiums Education of sales representatives Social media Customer support 24/7/365 21
Competitors Culture suppliers Chr Hansen DuPont (Danisco) Institut Rosell Lallemand (France) Probiotic strains Valio (Finland) Probi (Sweden) Functional Foods Danone Yakult Pharma Merck (Germany) Novartis Sanofi Aventis Ferrosan (Pfizer) Bayer (USA) Other P&G Local competitors 22
Cooperation with Nestlé Agreement 2008 (Infant formula) Agreement 2012 (EUR 50.8 million) Drops in Mexico, U.S and UK Powder formula for children above the age of one Extended collaboration (SEK 92.0 million over three years from q2 2014) (New segment) Other ongoing development projects 23
Sales development 5 years Average growth: 14% Sales 450.0 400.0 +22% 350.0 300.0 +33% -8% +9% 250.0 +16% 200.0 Sales 150.0 100.0 50.0 0.0 2010 2011 20121) 2013 20141) 1) Excluding licence revenue from Nestlé of 356 MSEK / 95,4 MSEK 24
Sales per geographical market 2014 Europe 67% (69) USA and Canada 8% (7) Asia 10% (13) Rest of world 15% (11) 25
Income statement 2014/2013 Excluding Excl Licence rev. currency 2014 2014 2013 effect: Net sales Paediatrics 313,7 313,7 238,6 31% 27% Net sales Adult Health 69,5 69,5 75,6-8% -12% Net sales other 3,2 3,2 1,7 Licence revenue 95,4 - - Total sales 481,8 386,4 315,9 22% 18% Cost of goods sold -131,3-131,3-101,7 Gross profit 350,5 255,1 214,2 19% Gross margin 73% 66% 68% Operating expenses BioGaia -154,7-154,7-134,3 15% Operating expenses IBT -6,6-6,6 - Exchange gain/loss on operation 7,7 7,7 1,8 Operating profit 196,9 101,5 81,7 24% 13% 1) Operating margin 41% 26% 26% Operating margin excl IBT 42% 28% 26% Exchange gain/loss on forward exchange contracts -6,6-6,6-2,9 Interest income 2,2 2,2 5,0 Profit before tax 192,5 97,1 83,8 16% Profit margin 40% 25% 27% Tax -44,5-23,5-19,6 Profit after tax 148,0 73,6 64,2 15% 1) 21 % excluding IBT expenses and currency effects 26
Balance sheets (MSEK) Dec, 31 Dec 31, Assets 2014 2013 Intangible assets 6,1 - Tangible assets 72,8 60,3 Other financial assets 4,0 - Current assets 122,0 88,8 Cash and cash equivalents 210,7 234,3 Total assets 415,6 383,4 Equity and liabilities Equity attributable to owners of the Parent company 344,5 317,3 Non-controlling interets 0,1-0,5 Total equity 344,6 316,8 Deferred tax liability 0,2 0,1 Other provisions 3,9 - Interest-free current liabilities 66,9 66,5 Total equity and liabilities 415,6 383,4 Proposed dividend: SEK 5.00 per share 27
5 years development (2012 and 2014: excluding licence revenue from Nestlé) 450 400 350 300 250 200 150 Total sales Gross profit Operating expenses (cost of goods excluded) Operating result Profit before tax 100 50 0 2010 2011 2012*) 2013 2014*) 28
Key events 2014 Publication of study showing that colic can be prevented No significant differences in BioGaia s diabetes study New extended agreement with Nestlé Publication of study showing that it is possible to prevent common infections in children Agreement for the sale of drops in the UK and India Decision to extend production plant in Eslöv Publication of study showing that infants with colic cry less with BioGaia s drops Publication of study showing that BioGaia Protectis tablets are effective in constipated adults Investment in MetaboGen AB 29
Board of Directors 2014 Paula Zeilon Stefan Elfving Chairman David Dangoor Jörgen Thorball Ingrid Holmström Jan Annwall Jan Litborn Brit Stakston 30
Major Shareholders 31 December, 2014 A shares B shares Share capital No. of votes Capital Votes SEK 000's 000's % % 000's 000's 1 Annwall & Rothschild Inv. AB 741 759 1 500 8 166 8,7% 34,1% 2 Sebastian Jahreskog 1 263 1 263 1 263 7,3% 5,3% 3 Fjärde AP-fonden 693 693 693 4,0% 2,9% 4 JPM Chase NA 689 689 689 4,0% 2,9% 5 David Dangoor (inkl bolag) 569 569 569 3,3% 2,4% 6 Nordea Investment Funds 550 550 550 3,2% 2,3% 7 Handelsbanken Fonder AB 533 533 533 3,1% 2,2% 8 Banque Pictet & CIE, W8IMY 509 509 509 2,9% 2,1% 9 Six Sis AG W8IMY 426 426 426 2,5% 1,8% 10 State Street Bank & Trust com., Boston 415 415 415 2,4% 1,7% Other shareholders 10 124 10 124 10 124 58,6% 42,3% Total: 741 16 530 17 271 23 937 100% 100% Total number of shareholders 31 December, 2014: 7,136 Foreign owners: 47% of capital (34% of votes) 31
Probiotic supplements global market 5.0 4.5 Probiotic supplements historic global sales and projections (in billions $) 4.3 4.0 3.5 3.0 2.8 2.5 Probiotic supplements global sales 2.0 1.8 1.5 1.0 0.5 0.0 2007 2012 2017 Euromonitor International 2013 32
Launches - Drops: Launched in 71 countries - Tablets: Launched in 57 countries - ORS: Launched in 14 countries - Oral health products: Launched in 22 countries 33
Growth potential existing products 3 or more products from our product line launched in only 21 countries out of 70 countries Drops per new-born (from 3% up to 434%, average 105%) Contract but not launched: UK, India, China, South Korea White spots: Vietnam, Myanmar, Thailand, Netherlands 34
Present focus US, UK and India Launch of new packaging solutions Development program for fermentation and freeze-drying A number of projects, studies and product developments with Nestlé Manufacturing process, planning for Phase 2 trial and financing for NEC-product TwoPac to be GMP qualified opens some Asian markets Strategic planning for MetaboGen 35