Announcement PDF A N N UA L R E PO R T 2024 The Microbiome Health Company Acknowledgement of Country We acknowledge the Wurundjeri people as the Traditional Owners on whose Country we are based. We pay respect to their Elders past, present and emerging and acknowledge their continuing connection to land, sea and community. We extend that respect to Traditional Owners throughout Australia where we work and operate. Biome aims to improve the health and quality of life of Australians suffering from some of the most common and chronic health conditions using evidence-based complementary medicines. As a microbiome health company that pursues clinical trials, Biome works at the intersection of the natural medicine and pharmaceutical world. Biome Australia develops, licenses, commercialises, and markets innovative, evidence-based live biotherapeutics (probiotics) and complementary medicines, many of which are supported by clinical research. In partnership with some of the world’s leading organisations in microbiome research and development, Biome produced several unique live biotherapeutic (probiotic) products with innovative delivery technologies that improve their stability and efficacy to create its flagship range of complementary medicines: Activated Probiotics. Supported by clinical research, including randomised, double-blind, placebo-controlled trials, Activated Probiotics help prevent and support the management of various health concerns, including low mood and sleep, bone density loss, iron malabsorption, mild eczema and irritable bowel syndrome (IBS). Through practitioner-only distribution, Biome is committed to educating health professionals on the newfound systemic health effects of the gut microbiota, helping them to provide innovative, evidencebased natural medicines for the management of some of humanity’s most prevalent and chronic health concerns. 4 Biome | The Microbiome Health Company Introduction Company timeline 06 Probiotics 101 08 The gut microbiome 10 Our offering 12 Letter to shareholders 14 Operations Report 16 Targeted products for targeted outcomes 18 Driven by clinical evidence 20 Sales & Education 22 Education & training 24 Sales 26 Key customer and distribution channels 28 Building our Brand 30 Pharmacy marketing 32 Practitioner marketing 34 Patient marketing 35 Growth strategies International market summary 36 38 Annual Financial Statements 40 5 Company timeline 20 18 20 19 20 20 JULY MARCH Biome Australia Founded Listing of 10 Medicines NOVEMBER 6 employees On the Australian Register of Therapeutic Goods Biome launches its condition-specific probiotic range Activated Probiotics Launch 20 23 JUNE Total of 17 Listed Medicines on the ARTG MARCH Biome Lift™ Clinical Trial Preliminary Results JUNE TerryWhite Chemmart Distribution Deal Activated Probiotics launches nationally with TerryWhite Chemmart $833k FY20 sales revenue 20 22 SEPTEMBER Priceline Pharmacy Activated Probiotics Product Launch JUNE $4.12m FY22 Sales Revenue 3000 Distribution Points On patients with subthreshold depression 20 24 JULY $7.23m FY23 Sales JULY Activated Probiotics Product Range Extensions At Priceline Pharmacy & TerryWhite Chemmart 6 DECEMBER Landmark deal for Biome is signed for novel probiotic strain JANUARY Activated Probiotics Launch into UK/Ireland Health Retail Biome | The Microbiome Health Company 20 21 NOVEMBER JANUARY FEBRUARY FEBRUARY Activated Probiotics launches into the UK Practitioner market Probone21 clinical trial using Biome Osteo™ commences in partnership with La Trobe University and Probi AB Activated Probiotics launches into the Australian practitioner market with Oborne Health Supplies and vital.ly Biome Daily Kids™ clinical trial commences in partnership with Federation University NOVEMBER JUNE MARCH MARCH UK Practitioner Market Launch B Corporation Certification Biome Osteo™ Clinical Trial $2.32M FY21 Sales Revenue Practitioner Market Launch Biome Lift™ Clinical Trial In partnership with La Trobe University and Probiotical S.p.A. JANUARY FY24 Forecast increased to $12.5m MARCH Biome Reaches Cashflow and EBITDA Positive Milestones MAY Initial products listed with Health Canada Biome Daily Kids™ Clinical Trial 2000 Distribution Points JUNE $13.01m FY24 Sales Revenue 5000 Distribution Points 7 Probiotics 101 “The gut microbiome can impact many aspects of human health, and how the health benefits of probiotics can go far beyond the digestive system.” Probiotics 101 Probiotics are living microorganisms that have been found to be beneficial to health when taken as a supplement. In the gut, probiotics that we take and the microorganisms that live there are alive with activity and interact with all kinds of cells in the digestive tract—including cells that are part of our immune system, hormone-secreting cells, nerve cells and more. They also turn our food into energy and produce bioactive compounds called metabolites in the process. We can absorb these metabolites just like nutrients, which then travel through circulation to other parts of the body. These actions are how the gut microbiome can impact many aspects of human health, and how the health benefits of probiotics can go far beyond the digestive system. It is well-established that probiotics can improve digestion and the health of our gastrointestinal tract, but the links between the digestive tract and the rest of the body allow probiotics to impact the health of our whole body. 8 Not all probiotic microorganisms offer the same health benefits. This is because different probiotic strains, even within the same species, perform very different biological functions in the human gastrointestinal tract and, as a result, offer vastly different health benefits. This is the key to targeting specific health concerns with probiotic supplements, and why it’s so important to know exactly which strains are present in a probiotic product. 9 The gut microbiome The gut microbiome Demonstrating the proposed links between an unhealthy gut microbiome, inflammation and increased risk of chronic disease. Scientific research has helped to reveal an additional organ system that has been invisible to the naked eye for much of human history: the gut microbiome. Just like we need lungs to breathe and a heart to pump blood around our bodies, we now know that the community of microorganisms living in our gut operates like a vital organ and is just as crucial for our health. When the gut microbiome is healthy, the whole body benefits. However, just like any other organ, the gut microbiome can become disrupted and negatively impact our health. This is referred to as ‘gut dysbiosis’ and it has now been associated with many chronic diseases, including irritable bowel syndrome, depression, asthma, acne, osteoporosis and countless others. Disruptions to the makeup of the gut microbiome is thought to negatively impact health through a number of different mechanisms. For example, an unhealthy gut microbiome triggers a breakdown of intestinal cell health and a phenomenon known as leaky gut which allows for the gut microbiome to interact with the underlying immune system. The immune system’s response to potentially harmful microbes from an unhealthy gut can create inflammation which travels from the gut to the rest of the body via 10 chemical messengers (e.g. cytokines) circulating in the blood. Chronically raised inflammation stemming from the gut is thought to impact the health of many different organ systems, and contribute to the increasing prevalence of chronic disease. The rise in gut dysbiosis (and its negative health effects) is thought to be due to several factors. Changing diets with lower intakes of fibre and unrefined plant foods, stressful lifestyles, low activity levels and increased use of antibiotics —these factors reduce the population and change the types of microorganisms found in the gut, creating gut dysbiosis. Fortunately, probiotics have emerged as a way to intervene. Beneficial probiotic bacteria represent a new generation of therapeutic agents which may be able to mitigate the negative effects of an unhealthy gut microbiome on different aspects of human health. In human clinical trials, specific strains of beneficial probiotic bacteria have now been shown to improve health outcomes in a number of chronic diseases. 1. Anwar, H., Irfan, S., Hussain, G., Naeem Faisal, M., Muzaffar, H., Mustafa, I., Mukhtar, I., Malik, S., & Irfan Ullah, M. (2020). Gut Microbiome: A New Organ System in Body. In Parasitology and Microbiology Research (pp. 1–20). IntechOpen Biome | The Microbiome Health Company DIETARY FIBRES TARGETED PROBIOTICS REDUCED RISK OF CHRONIC DISEASE ANTIBIOTICS WESTERN DIET + LIFESTYLE 11 Our offering 17 50,000+ Practitioner-only Elevating the credibility of Biome’s products through working with health professionals to support their active recommendation of Biome’s products. Activated Probiotics currently has 17 products in its portfolio which continue to grow as new products are developed. health professionals educated throughout FY24 by Biome’s education team. Expertise Clinically trialled The board and management has a strong local and global track record with existing professional networks across the healthcare industry in Australia, Asia and Europe. The expertise and passion of Biome’s team sets Biome apart and is a critical and unique differentiator. Biome Australia’s live biotherapeutic products are all supported by clinical evidence of efficacy at a strain level. Biome also has several live biotherapeutic products that are all supported by human clinical trials on the finished product, in many cases these products are first in the world. Three ongoing clinical trials • Biome Lift™ and subthreshold depression • Biome Osteo™ and osteopenia • Biome Daily Kids™ and children’s immune health 12 Biome | The Microbiome Health Company Condition specific Activated Probiotics has produced a range of conditionspecific live biotherapeutic probiotic products that may help to prevent osteoporosis, reduce the severity and frequency of asthma attacks, reduce depressive symptoms, reduce cholesterol and increase iron absorption. Probiotics as live biotherapeutic products Biome denotes probiotic bacteria that target specific therapeutic outcomes in disease states as ‘live biotherapeutics.’ 5000+ Distribution points in Australia Highest growth complementary medicine brand in Australia *Pharmacy scan sales data (IVQIA Market Performance moving annual total to May 2024) This term has been adopted by the company to differentiate probiotic strains with general health benefits often used in fast-moving consumer goods and food supplements, and those that have clinical evidence supporting their therapeutic application in specific health conditions. Due to the increasing body of evidence supporting the therapeutic application of specific probiotic strains in disease states, live biotherapeutics are increasingly regarded as their own class of therapeutic goods. The U.S. Food and Drug Administration defines a live biotherapeutic product as a biological product that contains live organisms, such as bacteria, is applicable to the prevention, treatment or cure of a disease or condition of human beings, and is not a vaccine. Biome’s Activated Probiotics range is more aligned with the principles of live biotherapeutic products. Each of our products has been carefully formulated with specific clinically-trialled probiotic strains at doses known to target a particular health concern, creating a range of condition-specific probiotics products. We have products that target immune health, irritable bowel syndrome, infant colic, bone density, eczema, acne, dental health, muscle inflammation, mood and sleep, vaginal health, and more. 13 CEO letter to shareholders Letter to shareholders Dear fellow shareholders, The Managing Director and Company Chair are pleased to present Biome Australia’s FY24 Annual Report. FY24 was a foundational year for Biome, reaching major milestones in positive cash flow and EBITDA (H2 FY24) for the first time since Biome was founded in 2018. Through the year, sales revenue growth continued its momentum, closing the year with a record quarter of $3.81m in Q4, up 88% vs PCP and 18.8% vs Q3 and surpassing our forecast, achieving $13.01m at an increased gross margin of ~61%. The results achieved were also reinforced by strong support from the market, with Biome’s market cap surpassing $100m for the first time and liquidity significantly increasing throughout the financial year. While we are pleased with the results, it is how the team delivered this performance that is most encouraging. Biome’s flagship brand, Activated Probiotics, has been the key driver of the business’s success in FY24. The brand’s development has been highlighted through industry leading sales growth, increased ranging with key pharmacy banners and practitioners, and new distribution, reaching more than 5000 distribution points by the end of FY24. This was all achieved through providing one of the industry’s leading service, education and support offerings rather than the traditional deal and discount model. 14 As a leader in clinically proven probiotics, we offer something unique for our distribution partners in community pharmacy and independent practitioners. Biome has received feedback from the trade throughout the year on successful patient outcomes, with commercial success reinforcing our business model, allowing Biome to continuously improve it’s service and product offering for the next strategic period ahead. As Biome’s commercial success continues locally, the company’s international markets have enjoyed strong growth in FY24 of 95% to $894k. We have set strong foundations while minimising risk though a proven review and test market expansion model focussed initially on Europe with Canada under late-stage review. Our UK business has developed a strong foundational team, to support further business ambitions in Western Europe, a key component of the Vision 27 strategic plan that will be released to the market in Q1 FY25. Research and development continues to be the core foundational strength that underpins Biome’s success, with three new product launches into the Activated Probiotics range in FY24 and the development of a new clinically proven product, Biome Cholesterol™ Probiotic is set for launch in Q1 FY25 to support patients lowering their cholesterol with a safe and effective probiotic intervention. The existing clinical development pipeline is close to concluding, with all three existing studies on Biome Lift™ (mental health), Biome Osteo™ (bone loss) and Biome Daily Kids™ (paediatric immune health) all close to completion with results and at least one publication to follow in FY25. Biome will have updates on all existing studies throughout FY25 and aims to embark on new clinical research and development programs (on both new and existing probiotic products) in partnership with Australian universities Biome | The Microbiome Health Company and hospitals in FY25. Biome’s future clinical pipeline will support new applications for existing products as well as new product launches over the coming years. At the close of FY24, Biome set up a new advisory board, the Biome Consultative Committee (BCC). This advisory board, led jointly by the company’s Chief Scientist and Managing Director will provide a meaningful contribution to de-risking future initiatives. The BCC board’s foundational members are global leaders in probiotics manufacturing, research and development, regulatory environments, education, distribution and health. As Biome shares its Vision 27 strategic plan with the market, we look forward to continually growing our high impact, patient focussed business to become a leader in the complementary medicines market both locally and internationally. On behalf of Biome’s Management and Board of Directors, we would like to thank you for your ongoing support. Blair Vega Norfolk Founder & Managing Director Ilario Faenza Non-Executive Chair 15 Operations Report Aiming to be a global leader in premium evidence-based live biotherapeutic products Targeted products for targeted outcomes Biome aims to be a global leader in premium evidence-based live biotherapeutic products and complementary medicines. Biome is changing the probiotic space within the Australian, New Zealand, UK and EU markets through the release of live biotherapeutic products which each target a specific health concern and aim to improve patient health outcomes. In FY24, Biome Australia launched three new live biotherapeutic products, Biome Dental™, Biome Lax™ and Biome Recovery™ Probiotic. Biome also prepared one new product, Biome Cholesterol™ Probiotic, for launch in FY25. These products have clinical evidence to support their effectiveness for patients struggling with constipation, in Biome Lax™ Probiotic, dental health concerns with Biome Dental™ Probiotic and Biome Recovery™ Probiotic for muscle inflammation into the Activated Probiotics range. These new product launches will allow Biome to support new patient health categories and new types of health professionals and their patients. 18 Biome | The Microbiome Health Company NEW PRODUCT Biome Cholesterol™ Probiotic Cardiovascular diseases (CVDs) are the leading cause of death globally and are responsible for 1 in 4 deaths in Australia. With more than 4 million Australians reporting living with CVD, Biome is proud to be launching an evidence-based live biotherapeutic product that may help to address one of the major risk factors of CVD: high cholesterol. It is Biome’s hope that our latest product, Biome Cholesterol™ Probiotic, will be able to help the 1 in 3 Australians living with high cholesterol better manage their cholesterol levels and form part of the solution to this critical public health issue. Across a number of human studies, taking the specific combination of probiotic strains in Biome Cholesterol™ Probiotic once a day for 12 weeks with no other cholesterollowering medications has been found to significantly reduce low density lipoprotein (LDL) cholesterol by up to 20%,¹ total cholesterol by up to 19%1 and triglycerides by up to 16%.² 1. Espadaler, J., Audivert, S., Navarro-Tapia, E., & Buj, D. (2019). Demographic and clinical characteristics influencing the effects of a cholesterol lowering probiotic. Annals of Nutrition & Metabolism, 74(S1), 6. 2. Fuentes, M. C., Lajo, T., Carrión, J. M., & Cuñé, J. (2016). A randomized clinical trial evaluating a proprietary mixture of Lactobacillus plantarum strains for lowering cholesterol. Mediterranean Journal of Nutrition and Metabolism, 9(2), 125–135. STRAIN DEVELOPMENT PROGRAM Lactobacillus plantarum X (placeholder name) One of Biome’s key probiotic research and development partners completed preliminary identification, commercial validation and characterisation of a novel probiotic strain that will be solely owned by Biome. The strain is of the Lactobacillus genus and plantarum species and has been assigned the unique identifier name, Lactobacillus plantarum X. The transfer of ownership of Lactobacillus plantarum X to Biome will mark a significant milestone for the company as it opens the door for significant intellectual property development. Future research is planned in order to determine the strain’s more specialised characteristics and its potential to prevent or improve the management of specific health conditions. 19 Operations Report Driven by clinical evidence Biome’s Activated Probiotics range includes complete product formulations and specific probiotic strains which are backed by a high level of clinical evidence, including many randomised double-blind placebo-controlled clinical trials. As part of our ongoing efforts to strengthen our existing body of evidence, collaboration with key worldleading research partners has continued throughout FY24. Over the past financial year, three of our probiotic formulations have been the subject of ongoing clinical trials that aim to build upon their existing evidence of efficacy. These trials will help to extend their current body of evidence, while also investigating their efficacy in new applications. These research projects are currently investigating the application of Biome Lift™ Probiotic for subthreshold depression, Biome Daily Kids™ Probiotic for absenteeism and immune health in children in 20 daycare, and the probiotic strains within Biome Osteo™ Probiotic for women with osteopenia. This past year has been highly significant for the development of Biome Lift™ Probiotic, with the completion of the Biome Lift™ trial and receival of positive pre-publication results. These results have reinforced the positive findings of the two previous studies on this formulation, and provide additional evidence for the effectiveness of Biome Lift™ Probiotic in reducing the severity of depressive symptoms in patients with subthreshold depression. Improvements observed in inflammatory, metabolic and stressrelated biomarkers (including serum hs-CRP, glutathione, fasting glucose, and salivary cortisol) are of particular note and provide important insights into the mechanisms underlying the actions of Biome Lift™ on mood and sleep-related outcomes. Enhancing the performance of probiotic products with innovative manufacturing and packaging Microencapsulation technology Activated Probiotics uses an innovative microencapsulation technology to protect its probiotic bacteria from the harmful effects of stomach acid, allowing up to 5x more probiotic bacteria to survive transit through the stomach and reach the colon alive, compared to traditional uncoated probiotics. Pharmaceutical grade blister packaging Fast-melt formulations for children Activated Probiotics capsules are individually sealed in pharmaceutical-grade blister packing. This packaging ensures each serve remains individually sealed until the moment before consumption and better protects probiotic bacteria from the damaging effects of environmental moisture, oxygen and UV light compared to alternative forms of packaging, such as bottles. Activated Probiotics single-serve sachets in products intended for children over the age of two contain a fast-melt formula that dissolves in the mouth without the need for water. With natural sweeteners and vanilla flavouring, this combination creates an enjoyable experience for children taking Activated Probiotics products. Flow cytometry enumeration Activated Probiotics uses the latest flow cytometry technology to more accurately count the number of living and metabolically active bacteria found in its products, when compared to traditional plate count measures or colony forming units (CFUs). Flow cytometry technology analyses bacteria one-by-one using fluorescent dyes and lasers, ensuring only viable bacteria are counted in the final tally of ‘billion live bacteria’ (BLB). 21 Sales & Education Be the leader in education & provide evidence-based live biotherapeutic probiotics Sales & Education Education and training It’s been another huge year for education by Biome Australia! Sharing knowledge is integral to the Education team’s mission, which is to be recognised by healthcare professionals as the best informed and most trustworthy source of information on probiotics and the microbiome. Biome’s team of Practitioner Education Consultants (PEC) provide education and training of an exceptional standard, sharing knowledge with pharmacists, naturopaths, dental health professionals, doctors, chiropractors, and other healthcare practitioners. FY24 was a busy year of conferences, presentations, webinars, and a very successful hop across the Tasman to provide education for healthcare professionals in New Zealand. One of the standout education successes this year has been the engagement the team has been having with dental health professionals. Biome Dental™ Probiotic, Biome’s first probiotic for the oral microbiome, was released towards the end of 2023, and sparked a huge amount of interest from oral health providers. The oral microbiome was the subject for FY24’s practitioner masterclass series, with Director of Education Rebecca Edwards presenting a two hour seminar on the oral microbiome and its link to whole body health in six locations across Australia and New Zealand. Feedback from an attendee of the Melbourne masterclass: “Any time I hear that Rebecca Edwards from Activated Probiotics is presenting I know that my probiotic knowledge is about to have a massive upgrade. The Oral Microbiome Masterclass did not disappoint! As a naturopath with a gut health focus, the information I learned in the masterclass has already changed the questions I ask my clients and the way I approach their treatment.” 24 Rebecca Edwards Director of Education After receiving extremely positive feedback from dental health professionals in attendance at our Oral Microbiome Masterclass series, we made the decision to host our first masterclass event developed exclusively for dental professionals. Held in Melbourne at the stunning Curae Health, one of Australia’s leading providers of dental services, the seminar was attended by around 50 dentists, dental hygienists, and oral health therapists. Engagement with New Zealand practitioners has been a special highlight this FY. The appointment of Biome’s first PEC in New Zealand has paved the way for greater communication with the strong practitioner community of Aotearoa. Rebecca spoke at the Naturopaths and Medical Herbalists of New Zealand (NMHNZ)’s symposium in August, presenting an education session on the gut-bone axis. The session proved such a hit that Rebecca was invited back as keynote speaker for NMHNZ’s 2024 symposium. Building on the success of this event, members of the Education team visited Auckland in May to present the first New Zealand Activated Probiotics masterclass, providing New Zealand naturopaths, nutritionists, pharmacists, and dentists with the opportunity to learn about the oral microbiome. Alongside our own events, professional association events are key dates in the Education team’s yearly calendar. FY24 saw a number of education conferences and events put on by various professional associations within the complementary health community. Other ways in which the education team provides ongoing engagement and support in the practitioner channel include: Biome | The Microbiome Health Company • Rebecca appearing as a guest expert on a number of podcasts which are widely listened to throughout the practitioner community • Holding special education webinars for cohesive groups of practitioners. Examples include Metabolic Balance Australia, a group of nutritionists and dietitians; the Complementary Medicine Association, a professional association for naturopaths and nutritionists • Delivering regular training sessions to the practitioners on the staff of Mr Vitamins • Ongoing training with Biome’s distribution partners, serving to both maintain the strong relationships between the Biome team and the distributors and ensure distributor staff members are aware of Biome’s unique products and their features when servicing their accounts Biome continues to enjoy success in the pharmacy channel in Australia. The PEC team is crucial to this success, continuously providing the high quality education and training in-store for which they are famous. The Education team supports the PEC’s access to pharmacists and their staff through targeted presentations at key pharmacy events throughout the year, as well as providing special education events for important pharmacy banner partners. The crowning event of pharmacy education is undoubtedly the annual Australian Pharmacy Professionals (APP) expo held on the Gold Coast every March. Building on the success of last year’s invitation-only dinner event, where the results of La Trobe University’s clinical trial on Biome Lift™ Probiotic were presented, Biome again threw a tremendously successful industry event, inviting key pharmacy figures to an exclusive dinner. Along with the presentation of the results of the recent trial on Biome Daily Kids™ Probiotic carried out by Federation University, attendees were treated to a fascinating expert panel discussion. The panel was composed of pharmacists Catherine Bronger and Amanda Bryce, pharmacy student McKinley Nolan, and Biome’s MD Blair Vega Norfolk. Hosted by Rebecca, the panel discussed issues pertinent to community pharmacy, and offered education from a different angle. institutions in the field of natural medicine in Australia. Students of pharmacy have also been catered for: members of the PEC team attended the annual National Association of Pharmacy Students (NAPSA) congress in January, with Rebecca delivering an education session on the use of strain-specific probiotics in pharmacy. Chiropractors represent a promising audience of healthcare practitioners for Biome education. Rebecca presented a webinar for Australian Chiropractic Association members on irritable bowel syndrome. Following the success of niche education and events this financial year, we look forward to continuing to engage with specific modalities by developing educational opportunities that are highly relevant to their specialty. A key part of Biome’s education strategy has always been and remains to prioritise engagement with students and recent graduates across the fields of pharmacy, naturopathy, dietetics and nutritional medicine. Over FY24 this was achieved across multiple events. Nationally, members of the PEC and education team attended career networking breakfasts held by Endeavour College of Natural Health and Torrens University, the two educational 25 Sales & Education $13.01M 75% ~61% 95% FY24 same store