investor presentation feb2018 - biogaia...biogaia in short • founded in 1990 • 124 employees •...

Investor presentation February 2018

BioGaia in short

• Founded in 1990

• 124 employees

• Offices in Sweden (Stockholm, Lund, Eslöv), USA, Japan

• Products in 100 markets through distributors

• Holds 440 patents in 32 families

• Listed on the Nasdaq Stockholm (mid cap list)

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The founders Peter Rothschild and Jan Annwall

BioGaia – a healthcare company working with probiotics Mission: BioGaia conducts research and development to provide consumers with clinically proven, health-promoting, patented and user-friendly probiotic products.

Vision: To be a groundbreaking leader in probiotics through:• Innovative research• Unique formulations and packaging• Excellence in IP• Global presence• Strong brand recognition• Social responsibility• Being an attractive workplace

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4

PartnersPharma andHealth Foodcompanies

SuppliersContract

Manufacturing

ResearchPre-clinical and clinical studies in hospitals and

universities

BioGaiaProduct development,

product strategies, research, Quality,

market support

BioGaia’s global network

BioGaia’s partner network

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BioGaia

Local distributors with medical

representatives who promote

to health professionals

Sales through

Pharmacies

BioGaiabrand

Dietary supplement

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BioGaia’s partner support

• Clinical trials• Marketing and PR support• BioGaia Academy• Workshops• Participation in medical congresses• Speakers at symposiums• Education of sales representatives• www.biogaia.com• Social media • Customer support 24/7/365

BioGaia Brand• Branding for Health professionals• Sold in 60 countries• 69% of sales of finished consumer products (drops, digestive health tablets,

oral health tablets, oral rehydration solution) were sold under the BioGaia brand, including co-branding, in 2017.

• Build value, less dependence on patents

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Protectis Protectis Gastrus Prodentis

BioGaia’s Intellectual Property Rights

• 440 issued patents in 32 families • Trademarks in 66 countries + EU• 70 Internet-domains

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www.biogaia.com

Clinical trials supporting the use of BioGaia Probiotics

184 completed clinical trials in 15,500 individuals

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159 scientific articles and 12 doctoral theses

Updated March 2017

10Updated: March 2017

CONFIDENTIAL

Clinical trials with L. reuteri Protectis in different age groups

Preterms Infants (0-12 mo,excl. preterms)

Children (13-36 mo) Children (4-18 y) Adults (>18 y)

137 completed clinical trials (66% children) in 12,829 individuals (82% children)

16 studies in 2 821 subjects





BioGaia Probiotics and Indications

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Protectis

Protectis

Gastrus

Prodentis

HP-infection

Eradication treatment associated side-effects

Functional gastrointestinal disorders

Colic

Regurgitation

Constipation

Functional abdominal pain

Acute gastroenteritis

Support of gastrointestinal health

Antibiotic-associated side-effects

Gingivitis

Periodontitis

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L. reuteri Protectis in infantile colic

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

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L. reuteri Protectis in functional constipation in children and adults

Three treatment studies showing beneficial effect

– Increased bowel movements – 100% “normalization” of stool frequency– Equally effective as lactulose, with less side

effectsOne systematic review

– L. reuteri Protectis the only probiotic with data on functional constipation in children

One prevention study in healthy infants – Significantly increased bowel movements when

used preventively

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L. reuteri Protectis in functional abdominal pain (FAP)

Three double blind, randomized controlled treatment trials showing•less stomach pain compared to placebo •reduced severity of abdominal pain •reduced frequency of abdominal pain

One published systematic reviewL. reuteri Protectis the only probiotic with effect in FAP

One Cochrane report supporting probiotic use in FAP

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L. reuteri Protectis in acute gastroenteritis (AGE)

Six treatment studies – Reduced duration and severity of acute diarrhoea– Less vomiting – Significant effects from the second day of treatment– Effects seen in both hospitalised and outpatient childrenMeta-analysis – Significant reduction in the duration of diarrhoeaESPGHAN recommendation 2014 – L. reuteri Protectis on the positive recommendation list for

managing AGE

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Two H. pylori related clinical studies showing significant effects:– Reduced side effects and symptoms– Reduced gastritis severity and activity– Improved eradication rates

L. reuteri Gastrus in H. pylori therapy

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Clinical studies with L. reuteriProdentis on Periodontitis

Author, Year Results

Teughels 2013In patients with deep pockets supplementation of Lactobacillus reuteri Prodentis as an adjunct to SRP leads to significant reduction in the need for surgery

Tekçe 2015In patients with deep pockets supplementation of Lactobacillus reuteri Prodentis as an adjunct to SRP leads to additional PD reduction of 1 mm at 1-year follow-up

Ince 2015Adjuvant probiotic therapy provides additional benefit over initial periodontal therapy on clinical and biochemical parameters over 180 days.

Szkaradkiewicz 2013L. reuteri induces in most of the patients with chronic periodontitis a significant reduction in pro-inflammatory cytokine response and improvement of clinical parameters

Vicario 2012 L. reuteri supplementation in patients with initial- to-moderate chronic periodontitis resulted in significant improvements in clinical conditions compared with placebo.

Vivekananda 2010L. reuteri Prodentis is suggested as an addition to mechanical debridement and during the maintenance phase of periodontal treatment.

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Clinical studies with L. reuteriProdentis on gingivitis and otheroralsymptoms

Author, Year Results

Schlagenhauf 2016 Supplementation of L. reuteri Prodentis significantly reduced inflammation and plaque compared to placebo in 45 pregnant women with gingivitis.

Kraft-Bodi 2015 Daily use of L. reuteri Prodentis reduces the prevalence of oral Candida in frail elderly patients.

Stensson 2013 Daily supplementation with L. reuteri from birth and during the first year of life is associated with reduced caries prevalence and gingivitis score in the primary dentition at 9 years of age.

Romani 2015 L. reuteri Prodentis delays regrowth of caries-associated Streptococcus mutans after full-mouth disinfection.

Keller 2012 Daily use of L. reuteri Prodentis showed beneficial effect on oral malodour assessed by organoleptic scores.

Çaglar 2008 The probiotic lozenge containing L. reuteri Prodentis significantly reduced salivary Streptococcus mutans streptococci.

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BioGaia Group

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BioGaia GroupThe microbiome partner

BioGaia AB

Capable Pharma Production

Antibiotic resistance Foundation

MetaboGen

36%

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BioGaia AB



Metabogen

36%

• Production of BioGaia drops, Easy Dropper, MiniPac and samples

• GMP pharma certified

• Product development

• Laboratory

BioGaia Production BioGaia ProductionGMP certified

• BioGaia Pharma AB is a subsidiary to BioGaia AB applying 25 years of probiotic experience to the research and development of new microbial therapeutic platforms.

• Through an established network of research institutions and companies, BioGaia Pharma’s mission is to match early research on candidates from the microbiome with unmet medical needs to develop drug platforms.

• Formed: June 2017

• Location: Stockholm, Sweden• www.biogaiapharma.com

• Areas of focus: infectious diseases; inflammatory and gastrointestinal disorders


BioGaia AB



Metabogen

36%

• Providing innovative packaging solutions allowing the development of new unique beverages

• Exclusive LifeTop™ Cap and LifeTop™ Straw supplier • Learn more at www.lifetop.eu

LifeTop™ Cap


BioGaia AB



Metabogen

36%

LifeTop™ Straw

Development of next generation probiotics• MetaboGen works to develop products from novel bacterial strains, targeted for precise indications and

derived from the human gut microbiome

• Products may be food supplements, or drugs, depending on the indication and the preference of future partners

• MetaboGen provides BioGaia with access to front-line development of next generation microbial products, including regulatory development in this emerging field

Fredrik BäckhedMetabolic diseaseR&D

Jens NielsenSystems Biology R&D

FULL METAGENOME ANALYSIS

STRAIN IDENTIFICATION

DISCOVERY, FINDING FUNCTIONAL RELATIONSHIPS

CLINICAL TRIALREGULATORY WORK

MARKETING

PRODUCTDEVELOPMENT

Performed in MetaboGen, includingunique technology for producing products of anaerobic strains Together with partners


BioGaia AB



Metabogen

36%

(36% owned by BioGaia)

A BioGaiaFoundation against Antibiotic Resistance

A BioGaia CSR initiative that supports research and education within the area of antibiotic resistance by:

Giving financial support to research and education that helps to prevent infections which reduces the use of antibiotics and the risk of antibiotic resistance. Activities• Twitter account (@ResResistance)• Monthly newsletter – Resist the resistance

• Meetings with companies, organizations, politicians to influence decision makers

• Articles in regional newspapers and appearances by BioGaia representatives in media

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BioGaia AB



Metabogen

36%

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Nestlé cooperation

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• Agreement Infant formula 2008

• New licence agreement infant formula 2012 (EUR 50.8 million,

recognised in 2012 and 2014)

• Sales of drops in the US and Australia

• Royalty agreement for the sales of Growing Up Milk for children

above the age of one

• Collaboration agreement (Royalties of total 92 MSEK over 2014-

2018)

• Other on-going development projects

Cooperation with Nestlé

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Market and Competitors

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Our Market: Global probiotic supplement market 2015 ($ 3.8 billion)

1,9

1,2

0,6

0,1

America EU Asia Pacific Rest of world

International Probiotics Association 2015, Euromonitor International 2015

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2,6

3,8

5,4

0

1

2

3

4

5

6

2010 2015 2020Sales ($ in billion)

From 2015 to 2020, CAGR of 7,4% assumed according report from Global Market Insight

International Probiotics Association 2013 & 2015, Global Market Insights 2016

Our Market: Global probiotic supplement sales (Sales 2015 projected to 2020)

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R&D Fermen-tation

Manu-facturing

B2B marketing

Brand owner

B2C marketing

Strong IPHigh quality & competitively priced culture

Innovative dosage formats

Consumer and HCP loyalty

Distribution channels

What defines a probiotic supplement leader?

• BioGaia IP, R&D and Product Development have enabled development of the BioGaia pediatric brand with unrivaled global distribution channels

• BioGaia does not have in-house fermentation manufacturing capabilities

• BioGaia has focused less on B2C marketing

R&D Fermen-tation

Manu-facturing B2B marketing Brand

owner B2C marketing

The BioGaia Benchmark

• Companies developing, producing, and selling probiotics (Chr. Hansen)

• Well studied probiotic strains (L.GG from Valio)

• Non probiotic products / drugs (Imodium, Simethicone)

• Probiotic products with strong brands (Enterogermina)

• Pharma companies (Sanofi)

• Functional Food (ProViva)

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BioGaia Competitors

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Probiotic bacteria Car

Group Lactic acid bacteria German car

Genus Lactobacillus Volkswagen

Species Lactobacillus reuteri VW Golf

Strain L. reuteri Protectis VW Golf 2.0 Turbo

VW Golf I and the VW Golf VI GTI, similar cars, but you do not expect the same outputTry convincing your teenage daughter that an

iPhone 3 is just as good as an iPhone 6

Different breeds have different characteristics and are suitable for different tasks

Importance of strain specificity

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Major shareholder and Board of Directors

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Major Shareholders 31 December, 2017 (source: Euroclear)

Total number of shareholders 31 December 2017: 8,566Foreign owners: 46% of capital (33% of votes)

A shares B sharesShare

capitalNo. of votes Capital Votes

000's 000's SEK 000's 000's % % 1 Annwall & Rothschild Inv. AB 741 509 1 250 7 916 7,2% 33,0% 2 Swedbank Robur fonder 1 626 1 626 1 626 9,4% 6,8% 3 Öhman Bank S.A 1 354 1 354 1 354 7,8% 5,6% 4 Fjärde AP-fonden 1 243 1 243 1 243 7,2% 5,2% 5 Clearstream Banking S.A 538 538 538 3,1% 2,2% 6 Banque Pictet &CiE 478 478 478 2,8% 2,0% 7 CBNY Norges Bank 456 456 456 2,6% 1,9% 8 Ålandsbanken ABP, Bank of Åland LTD 421 421 421 2,4% 1,8% 9 SSB and Trust company, Boston 346 346 346 2,0% 1,4%

10 Tredje AP-fonden 316 316 316 1,8% 1,3% Other shareholders 9 309 9 309 9 309 53,7% 38,8%

Total: 741 16 596 17 336 24 002 100% 100%

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MargarethaGadnell

Inger Holmström

Stefan Elving

Jan Annwall

ChairmanDavid Dangoor

Brit StakstonEwa Björling

Anthon Jahreskog

Board of Directors

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Sales and Profit 5 years Development

Sales – 5 years development

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0

100

200

300

400

500

600

700

2013 2014*) 2015 2016 2017

Sales

Sales

+15%

9%22%

+25%+11%

Average growth: 16%

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Sales and result per year (IBT excluded) (MSEK)

*) Excluding license revenue Nestlé Infant Formula

0

100

200

300

400

500

600

700

2013 2014*) 2015 2016 2017

Total sales

Gross profit

Operating expenses (costof goods excluded)

Operating result

Profit before tax

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2017 and q4

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1) Excluding currency effects

Sales per segment (MSEK)

Q4 Q4 Change Change Jan-Dec Jan-Dec Change Change2017 2016 % % 1) 2017 2016 % % 1)

Pediatrics 139 119 16% 20% 493 433 14% 13%Adult health 31 16 95% 104% 116 85 36% 39%Other 1 4 -85% -85% 6 16 -62% -62%

Total sales 170 139 23% 27% 615 535 15% 15%

4343

22%

Sales per geographical market (MSEK)

Q4 Q4 Change Jan-Dec Jan-Dec Change

2017 2016 % 2017 2016 %

EMEA 115 93 24% 393 376 5%

Asia Pacific 35 13 161% 95 56 72%

Americas 20 32 -38% 126 103 23%

170 139 23% 615 535 15%

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Current Regional sales split

Americas

20%

Europe, Middle East & Africa

64% Asia Pacific

16%

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Gross margin per segment

Q4 Q4 Jan-Dec Jan-Dec

2017 2016 2017 2016

Pediatrics 78% 77% 77% 74%

Adult health 71% 54% 67% 62%

Other 93% 99% 99% 98%

Total sales 77% 75% 75% 73%

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Profit & Loss (MSEK)

Jan-Dec Jan-Decq4 2017 q4 2016 Growth 2017 2016 Growth

Sales 170 139 23% 615 535 15%Gross profit 131 104 26% 463 388 19%

Operating expenses -69 -57 21% -225 -193 17%Other income/expenses 3 -1 -5 4

Operating profit (EBIT) 65 46 40% 234 199 17%EBIT MARGIN 38% 33% 38% 37%

Profit after tax 48 47 3% 180 159 13%EPS 2,79 2,71 3% 10,42 9,19 13%

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Balance sheet (MSEK)

Dec 31 Dec 31Assets 2017 2016Property, plant & Equipment 103 82Shares in Associated company 10 11Deferred tax asset 9 10Current assets 148 142Cash and cash equivalents 306 243Total assets 576 489

Equity and liabilitiesEquity attributable to owners of the Parent company 464 415Non-controlling interests - -Total equity 464 415Deferred tax liability 1 -Interest-free current liabilities 111 73Total equity and liabilities 576 489

Proposed dividend: 9.00 SEK per share (total 156 MSEK) and 2.7 MSEK to Foundation

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Cash flow (MSEK)

Q4 Q4 Jan-Dec Jan-Dec2017 2016 2017 2016

Cash flow from operating activities before changes in working capital 53 41 191 155

Changes in working capital 16 6 32 -7Cash flow from operating activities 69 48 223 148Cash flow from investing activities -2 -6 -27 -10Cash flow from financing activities -2 - -132 -124Cash flow for the period 66 42 64 14

Cash at beginning of period 240 202 243 227

Cash at end of period 306 243 306 243

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• Start of BioGaia Pharma, a new subsidiary for the development of probiotic drugs

• Agreement for the sales of BioGaia´s products in Thailand• Agreement for the sales of BioGaia Protectis drops in Australia• Agreements for sales of BioGaia ProDentis lozenges in Canada, South

Korea, Vietnam and the Philippines• Launches of BioGaia BioGaia Protectis drops in Australia, Kenia,

Philippines and Kosovo• Launches of BioGaia Protectis tablets in Colombia, Finland (new flavour),

Germany, Honduras, Mexico and Thailand• Launches of BioGaia Prodentis lozenges in Philippines and Vietnam• Launch of Yoghurt with BioGaia Prodentis bacteria culture in Japan• Launch of BioGaia Protectis tablets with 20 microgram of Vitamin D in Italy

and Canada• Launch of BioGaia Gastrus tablets in Hong Kong• Launch of LifeTop Straw in Singapore

Key events 2017

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• Clinical study published: BioGaia Protectis shown to promote growth and prevent recurrent diarrhea.

• Clinical Study: Lactobacillus reuteri reduced bone loss in older women.

Key events 2017 (cont’d)

Key events after the end of 2017

• Two new meta-analyses confirm the effectiveness of BioGaia’s probiotic in infant colic.

• BioGaia Protectis with vitamin D to be launched on the Swedish market.

• Agreement with Abbott for the rights to sell BioGaia Protectis tablets in China.

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Present Focus – BioGaia Strategic Drivers

My personalengagement is a prerequisite

for BioGaia’s success We are innovative and

action-oriented

We are business-minded and deliver on our

promises

We are honest, respectful, and selfless in

what we do and say

Operational Efficiency SustainabilityInnovationCustomer focusGrowth

investor presentation feb2018 - biogaia...biogaia in short • founded in 1990 • 124 employees •...

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