YES - BioGaia

Investor presentation BioGaia AB
February 2016
1
BioGaia – a healthcare company
working with probiotics
Mission: BioGaia performs research and
development to provide clinically effective, healthful
and user friendly probiotic products.
Vision: BioGaia aim to be the groundbreaking
leader in probiotics through:
-  Innovative research
-  Unique formulation and packaging
-  Strong brand recognition
-  Excellence in IP
-  Global outreach
-  Attractive workplace
-  Social responsibility
2
BioGaia AB
•  Founded in 1990
The founders Peter Rothschild and Jan Annwall
•  105 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
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
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
Suppliers!
Contract
Manufacturing
Business model – three networks
Distribution partners
Sales force
Research
Pharmacies
Clinical
Physicians
Preclinical
Innovation & IPR
Product
strategies
Quality systems
Marketing support
Product
development
Indications
Research
Production
Food
supplements
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 55 countries
•  60% of sales 2015 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
152 completed clinical trials in 12 754 individuals
• 107 randomised, double-blind / blind,
placebo-controlled studies in 8 800 subjects
• 45 open studies in 2 900 subjects
• 52 studies in 0-3y in 6 100 subjects
133 scientific articles and 9 doctoral theses
Updated October, 2015
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
L. reuteri Protectis in infantile colic summary
Five treatment studies showing beneficial effects
Significant reduction of daily crying time
–  Significantly higher number of responders
–  Improved family quality of life
Five meta-analyses with the same conclusion
–  L. reuteri Protectis is the only probiotic proven effective in infantile colic
One treatment recommendation
Two prevention studies in healthy infants
–  Significant reduction of daily crying time
–  Fewer paediatric consultations
–  Reduction in both public and private costs for managing functional
gastrointestinal disorders
12
Savino et al. (2007, 2010, 2014a,b), Szajewska et al. (2012, 2014), Indrio et al. (2014), Sung (2013), Anabrees (2013),
Effect of L. reuteri Protectis in colic
confirmed by five studies
Change in
colicky
outcomes*
Mi
2015
Chau
2014
Savino
2007#
Szajewska
2013
Savino
2010
J Pediatr.
Pediatrics
Pediatrics
A. van
Leeuwenhoek
J Pediatr.
Reduction in crying
time by day 7
YES!
YES!
YES
NS
YES
Reduction in crying
time by day 21
YES!
YES!
YES
YES
YES
Responders by day
7
NA
NS
YES
YES
NA
Responders by day
21
YES##
YES
YES
YES
YES##
*Significant compared to placebo
#Significant compared to simethicone
##On day 28
NS: Non-significant
13
Responder: infant with
50% reduction in average duration of crying an fussing compared to baseline
NA: Not analysed
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
14
Cimperman et al, 2011
L. reuteri Protectis effective in
constipated adults
Bowel movements per week (mean)
6
p=0.023
5
5.3
4
3.9
Placebo (n=20)
3
2.9
L. reuteri Protectis (n=20)
2.7
2
1
0
Week 0
Week 4
Prevention?
16
Gutierrez - Diarrhea in Preschool Children and L. reuteri Protectis
L. reuteri Protectis (n=168)
Placebo (n=168)
17
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
•  with respiratory
tract infection
NA
NS
NS
18
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)
19
Conclusions
!  Preventive use of L. reuteri Protectis in healthy
newborns reduces onset of colic, regurgitation
and constipation
!  Preventive use of L. reuteri Protectis reduces
direct costs for both family and community
!  Preventive use of L. reuteri Protectis is proven
to be valuable for both infants, parents and the
society
20
Indrio 2014.
Attractive and unique formulations
and packaging solutions
21
BioGaia current products
ProTectis
ProDentis
Gastrus
Digestive Health
Oral Health
Stomach Health
ProTectis
ProTectis D3
ProTectis
ProTectis
Baby
Baby
Junior
Baby/Junior
Drops
Drops
Tablets
ORS
ProTectis
Tablets
ProDentis
Drops
ProDentis
Gastrus
Lozenges
Tablets
22
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
23
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
24
Cooperation with Nestlé
•  Agreement 2008 (Infant formula)
•  New licence agreement infant formula 2012 (EUR 50.8
million)
•  Drops in U.S and UK
•  Growing Up Milk for children above the age of one
(Royalty agreement 2013, launch end of 2014)
•  Extended collaboration (Royalty SEK 92.0 million over
three years from q2 2014) (New segment)
•  Other ongoing development projects
25
TwoPac AB (Manufacturing
company, 100% owned by BioGaia)
(90.1% owned by BioGaia)
•  Providing innovative packaging solutions
allowing the development of new unique
beverages
•  Exclusive LifeTop™ Cap and LifeTop™
Straw supplier
MetaboGen (27% owned by BioGaia) is creating new
opportunities for novel therapeutics and next
generation probiotics.
We use the microbiome to understand more about health
and disease.
(94.5% owned by BioGaia)
•  IBT has a drug development program for the prevention of
necrotizing enterocolitis.
•  IBT intends to develop a live bacterial therapy for the prevention of NEC in
premature infants in accordance with all pharmaceutical regulations.
•  IBT plans to start a Safety & Tolerability study in the beginning of 2016,
followed by a Pivotal trial in 2017-2018.
•  NEC is the leading cause of death among all preterm infants.
•  Mortality rates ranging between 10% to 50% with the highest mortality
rates are seen in infants born less than 1500 g.
•  There is no definitive prevention or treatment for NEC. Surgical
intervention is used to treat 20-40% of infants with NEC but this can lead
to significant, life-long, morbidity.
Sales development – 5 years
Average growth: 15%
Sales
600
+25%
500
+22%
400
+33%
300
-8%
+9%
Sales
200
100
0
2011
2012*)
2013
2014*)
2015
*) Excluding licence revenue from Nestlé of 356 MSEK / 95,4 MSEK
30
Sales per business unit
Pediatrics
Adult health
Other
2015
389,6
74,7
19,0
Total sales
483,2
Change Change
20142)
%
% 1)
301,2
29%
19%
69,4
8%
2%
15,7
21%
21%
386,4
25%
16%
1)  Excluding currency effects
2)  Excluding licence revenue of SEK 95.4 million
31
Sales per geographical market (MSEK)
(excl. Licence revenue)
Europe
USA and Canada
Asia
Rest of world
2015
284,8
35,2
52,1
111,1
2014 Change
257,8
27,0
30,3
4,9
38,8
13,3
59,5
51,6
483,2
386,4
96,8
Change
%
10%
16%
34%
87%
25%
Europe 59% (67)
USA and Canada 7% (8)
Asia 11% (10)
Rest of world 23% (15)
32
Income statement 2015/2014
Excl. Licrevenue
2014 Change
301,2
29%
69,4
8%
15,7
20%
386,4
25%
-131,3
2015
389,6
74,7
19,0
483,2
-146,7
2014
301,2
69,4
15,7
95,4
481,7
-131,3
336,6
70%
350,4
73%
255,0
66%
32%
-165,4
-20,6
-0,1
1,7
-154,6
-6,6
7,7
-154,6
-6,6
7,7
7%
152,2
31%
36%
196,9
51%
42%
101,5
26%
28%
50%
5,1
0,1
-6,6
2,2
-6,6
2,2
Profit before tax
Profit margin
157,4
33%
192,5
40%
97,1
25%
Tax
-36,1
-44,5
-23,5
Profit after tax
121,3
148,0
73,6
Net sales Paediatrics
Net sales Adult Health
Net sales other
Licence revenue
Total sales
Cost of goods sold
Gross profit
Gross margin
Operating expenses BioGaia
Operating expenses IBT
Participattion in assosciated companie´s result
Exchange gain/loss on operation
Operating profit
Operating margin
Operating margin excl IBT
Exchange gain/loss on forward exchange
contracts
Interest income
62%
65%
33
Excl
currency
effect:
19%
2%
20%
16%
34%
Balance sheet (MSEK)
Dec, 31
Dec 31,
Assets
2015
2014
Intangible assets
16,2
6,1
Tangible assets
83,9
72,8
8,0
4,0
Current assets
138,2
122,0
Cash and cash equivalents
226,9
210,7
Total assets
473,2
415,6
395,9
344,5
-
0,1
395,9
344,6
0,2
0,2
-
3,9
77,1
66,9
473,2
415,6
Shares in Associated companies
Equity and liabilities
Equity attributable to owners of the Parent company
Non-controlling interest
Total equity
Deferred tax liability
Other provisions
Interest-free current liabilities
Total equity and liabilities
Proposed dividend: SEK 5.00 per share
and the Company´s shares in IBT, corresponding to SEK 4.72 per share
34
Cash flow (MSEK)
2015
2014
Operating activities
Operating profit
Depreciation/Amortisation
Other non-cash items
Taxes paid
Gain/losses on forward exchange contracts
Interest received and paid
152,2
6,5
-0,8
-50,1
2,2
0,1
196,9
5,7
-0,9
-66,8
-1,2
2,2
Cash flow from operating activites before changes in working capital
Changes in working capital
Cashflow from operating activities
Cashflow from investing activities
Cashflow from financing activities
Cash flow for the period
110,1
7,4
117,5
-31,9
-70,5
15,1
135,9
-11,5
124,4
-28,5
-120,9
-25,0
Cash at beginning of year
Exchange difference in cash
Cash at end of year
210,7
1,1
226,9
234,3
1,4
210,7
35
Sales and result per year (MSEK) (excl licence revenue from
Nestlé 2012 and 2014)
600
500
Total sales
400
Gross profit
300
Operating expenses (cost of
goods excluded)
Operating result
200
Profit before tax
100
0
2011
2012*)
2013
2014*)
2015
*) Excluding licence revenue from Nestlé
36
Key events 2015
Agreement on rights to sell drops in Vietnam, drops and tablets in Sri Lanka and
oral health tablets in Mexico
Nestlé launched Growing Up Milk with BioGaia’s probiotic
Publication of study showing that Lactobacillus reuteri Prodentis is effective in
patients with dental implants
Publication of a Chinese study showing the efficacy of BioGaia’s drops for infant
colic
BioGaia invests further in IBT and investigates the possibility of a separate listing
Publication of a study showing that Prodentis reduces Candida in elderly patients
TwoPac GMP approved.
Study shows that Protectis promotes growth and prevents recurrent diarrhoea.
BioGaia appoints new Managing Director.
Further investment in MetaboGen.
37
Key events after fourth quarter 2015
IBT has US IND open and Swedish CTA approved for clinical
study.
New meta-analysis confirms effectiveness of
BioGaia Protectis for infant colic.
Proposal for distribution and separate listing of IBT.
38
Board of Directors 2015
Paula Zeilon
Stefan Elfving
Chairman
David Dangoor
Ingrid Holmström
Anthon Jahreskog
Jan Annwall
Ewa Björling
Brit Stakston
39
Major Shareholders 31 December, 2015
1 Annwall & Rothschild Inv. AB
2 Banque Öhman
3 Fjärde AP-fonden
4 Handelsbankens Fonder AB
5 David Dangoor (inkl bolag)
6 Livförsäkringsaktiebolaget Skandia
7 CBNY Norges Bank
8 Mingdale Company
9 State Street Bank & Trust com., Boston
10 Swedbank Robur fonder
Other shareholders
Total:
A
B Share
shares shares capital
SEK
000's
000's
000's
741
759
1 500
1 271
1 271
775
775
651
651
569
569
532
532
494
494
462
462
436
437
395
395
10 252 10 252
741
16 596
17 337
No. of
votes Capital
Votes
000's
8 166
1 271
775
651
569
532
494
462
436
395
10 252
%
8,6%
7,3%
4,5%
3,8%
3,3%
3,1%
2,8%
2,7%
2,5%
2,3%
59,1%
%
34,0%
5,3%
3,2%
2,7%
2,4%
2,2%
2,1%
1,9%
1,8%
1,6%
42,7%
24 002
100%
100%
Total number of shareholders 31 December, 2015: 7,272
Foreign owners: 49,1% of capital (35,5% of votes)
40
Probiotic supplements global market
Probiotic supplements – historic global sales and
projections (in billions $)
5.0
4.3
4.5
4.0
3.5
3.0
2.8
2.5
2.0
Probiotic supplements global sales
1.8
1.5
1.0
0.5
0.0
Euromonitor International 2013
2007
2012
2017
41
Launches
-  Drops: Launched in 73 countries
-  Tablets: Launched in 59 countries
-  ORS: Launched in 15 countries
-  Oral health products: Launched in 24 countries
42
Present focus
•  Japan, US, UK, China and India
•  Extend product line with partners
•  Oral health and Gastrus roll-out
•  Launch of new packaging solutions during
the year
•  IBT, separate listing, new share issue and
licensing
43