Investor presentation May 2017
BioGaia in Short Founded in 1990 The founders Peter Rothschild and Jan Annwall 115 employees Offices in Sweden (Stockholm, Lund, Eslöv), USA, Japan Products in 90 markets through distributors Contract manufacturing Holds 440 patents in 32 families Listed on the Nasdaq Stockholm (mid cap list) 2
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 aims to be the 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 3
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 4
BioGaia s partner network Local distributors with medical representatives who promote to health professionals Dietary supplement BioGaia BioGaia brand Sales through Pharmacies 5
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 6
BioGaia Brand Branding for Health professionals Sold in 60 countries 59% 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 2016 Build value, less dependence on distributors and patents 7
Intellectual Property Rights 440 issued patents in 32 families Trademarks in 66 countries + EU 70 Internet-domains www.biogaia.com 8
L. reuteri Protectis, Gastrus and Prodentis Clinically Proven Probiotics 9
Clinical trials supporting the use of BioGaia Probiotics Lactobacillus reuteri Protectis, Prodentis and Gastrus 174 completed clinical trials in 14,700 individuals 122 randomised, double-blind / blind, placebo-controlled studies in 11,000 subjects 52 open studies in 3,700 subjects 59 studies in 0-3y in 7,500 subjects 146 scientific articles and 12 doctoral theses 10 Updated March 2017
Clinical trials with all BioGaia probiotics in different age groups 163 completed clinical trials (48% children) in 14,031 individuals (71% children) 11 studies in 2,390 subjects 29 studies in 2,964 subjects 16 studies in 1,988 subjects 28 studies in 2,689 subjects 79 studies in 4,040 subjects Preterms Infants (0-12 mo, excl. preterms) Children (13-36 mo) Children (4-18 y) Adults (>18 y) 11 Updated Sep. 2016
BioGaia Probiotics and Indications PROTECTIS GASTRUS PRODENTIS 12 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
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 13
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 effects One 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 14
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 review L. reuteri Protectis the only probiotic with effect in FAP One Cochrane report supporting probiotic use in FAP 15
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 children Meta-analysis Significant reduction in the duration of diarrhoea ESPGHAN recommendation 2014 L. reuteri Protectis on the positive recommendation list for managing AGE 16
L. reuteri Gastrus in H. pylori therapy Two H. pylori related clinical studies showing significant effects: Reduced side effects and symptoms Reduced gastritis severity and activity Improved eradication rates 17
Clinical studies with L. reuteri Prodentis on Periodontitis Author, Year Teughels 2013 Tekcȩ 2015 Ince 2015 Szkaradkiewicz 2013 Vicario 2012 Vivekananda 2010 Results In patients with deep pockets supplementation of Lactobacillus reuteri Prodentis as an adjunct to SRP leads to significant reduction in the need for surgery In 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 Adjuvant probiotic therapy provides additional benefit over initial periodontal therapy on clinical and biochemical parameters over 180 days. L. reuteri induces in most of the patients with chronic periodontitis a significant reduction in proinflammatory cytokine response and improvement of clinical parameters L. reuteri supplementation in patients with initial- to-moderate chronic periodontitis resulted in significant improvements in clinical conditions compared with placebo. L. reuteri Prodentis is suggested as an addition to mechanical debridement and during the maintenance phase of periodontal treatment. 18
Clinical studies with L. reuteri Prodentis on gingivitis and otheroral symptoms Author, Year Results Schlagenhauf 2016 Kraft-Bodi 2015 Stensson 2013 Romani 2015 Keller 2012 Çaglar 2008 Supplementation of L. reuteri Prodentis significantly reduced inflammation and plaque compared to placebo in 45 pregnant women with gingivitis. Daily use of L. reuteri Prodentis reduces the prevalence of oral Candida in frail elderly patients. 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. L. reuteri Prodentis delays regrowth of caries-associated Streptococcus mutans after full-mouth disinfection. Daily use of L. reuteri Prodentis showed beneficial effect on oral malodour assessed by organoleptic scores. The probiotic lozenge containing L. reuteri Prodentis significantly reduced salivary Streptococcus mutans streptococci. 19
Nestlé cooperation and Subsidiaries 20
Cooperation with Nestlé Agreement Infant formula 2008 New licence agreement infant formula 2012 (EUR 50.8 million) Sales of drops in the US and Australia Royalty agreement for the sales of Growing Up Milk for children above the age of one Extended collaboration (Royalty SEK 92.0 million over three years from q2 2014) Other on-going development projects 21
TwoPac AB (100% owned by BioGaia) Production of BioGaia drops and Easy dropper GMP certified Product development Laboratory 22
(90.1% owned by BioGaia) Providing innovative packaging solutions allowing the development of new unique beverages Exclusive LifeTop Cap and LifeTop Straw supplier 23
MetaboGen (36% 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. 24
25 Market and Competitors
Our Market: Global probiotic supplement market 2015 ($ 3.8 billion) 1,2 0,6 0,1 1,9 America EU Asia Pacific Rest of world 26 International Probiotics Association 2015, Euromonitor International 2015
Our Market: Global probiotic supplement sales (Sales 2015 projected to 2020) 6 5,4 5 4 3 2 1 2,6 3,8 0 2010 2015 2020 Sales ($ 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 27
BioGaia Competitors 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) 28
Importance of strain specificity 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 Different breeds have different characteristics and are suitable for different tasks VW Golf I and the VW Golf VI GTI, similar cars, but you do not expect the same output Try convincing your teenage daughter that an iphone 3 is just as good as an iphone 6 29
Sales Development and Market Presence 30
Sales 2012-2016 (Average growth: 11%) Sales 600 500 +25 % +11 % 400 300-8% +9 % +22 % Sales 200 100 0 2012*) 2013 2014*) 2015 2016 *) Excluding license revenue Nestlé Infant Formula 31
Sales and result per year (IBT excluded) (MSEK) 600 500 400 300 200 100 Total sales Gross profit Operating expenses (cost of goods excluded) Operating result Profit before tax 0 2012*) 2013 2014*) 2015 2016 *) Excluding license revenue Nestlé Infant Formula 32
Sales per segment (MSEK) Jan-Dec Jan-Dec Change Change 2016 2015 % % 1) Pediatrics 433,0 389,6 11% 10% Adult health 85,3 74,7 14% 10% Other 16,4 19,0-14% -14% Total sales 534,7 483,2 11% 9% 1) Excluding currency effect 33
Sales per geographical market (MSEK) Jan-Dec Jan-Dec Change Change 2016 2015 MSEK % Europe 348,2 284,7 63,5 22% USA and Canada 40,2 35,2 5,0 14% Asia 62,0 52,1 9,9 19% Rest of world 84,3 111,2-26,9-24% Sales per market 2016 534,7 483,2 51,5 11% Europe 65% (59) USA and Canada 7% (7) Asia 12% (11) Rest of world 16% (23) 34
Gross margin per business unit Jan-Dec Jan-Dec 2016 2015 Pediatrics 74% 68% Adult health 62% 70% Other 98% 96% Total sales 73% 70% 35
Income Statements - 2016 and 2015 (MSEK) Excl. currency 2016 2015 Change effect: Total sales 534,7 483,3 11% 9% Cost of goods sold -146,9-146,7 Gross profit 387,8 336,6 15% Gross margin 73% 70% Operating expenses BioGaia -192,8-165,5 16% Participation in associated companies result -1,2-0,1 Exchange gain/loss on operation 5,6 1,8 Operating profit 199,4 172,8 15% 14% Operating margin 37% 36% Exchange gain/loss on forward exchange contracts -4,7 5,1 Interest income 1,3 0,1 Profit before tax 196,1 178,0 10% Profit margin 37% 37% Deferred tax income 10,4 - Current Tax -47,1-40,6 Profit after tax from continuing operations 159,3 137,4 16% 36
Balance Sheet - 2016 and 2015 (MSEK) Dec, 31 Dec, 31 Assets 2016 2015 Intangible assets - 16,2 Tangible assets 82,4 83,9 Shares in Associated companies 10,8 8,0 Deferred tax asset 10,4 - Current assets 142,3 138,2 Cash and cash equivalents 243,1 226,9 Total assets 489,0 473,2 Equity and liabilities Equity attributable to owners of the Parent company 415,2 395,9 Non-controlling interests - - Total equity 415,2 395,9 Deferred tax liability 0,3 0,3 Interest-free current liabilities 73,5 77,0 Total equity and liabilities 489,0 473,2 37
Key events 2016 Separate listing of the prior subsidiary IBT Further investment in MetaboGen Agreement for sales of BioGaia ProDentis in Hong Kong Agreement for sales of drops, tablets, and ORS in Kenya, Nigeria and Ghana Major agreement for sales of BioGaia s Probiotics in Japan 38
Key events 2016 Clinical study: Meta-analysis confirms effectiveness of BioGaia ProDentis in periodontitis Clinical studies: Two meta-analyses confirm effectiveness of BioGaia ProTectis in infantile colic Clinical Study: BioGaia ProTectis effective in treating abdominal pain in children Clinical Study: BioGaia s ProDentis reduces pregnancy gingivitis 39
Present focus Leverage on our existing distribution network by extending our product line with current partners Increase our presence and develop our business in selected focus markets Further develop our key opinion leader and researcher network Further develop ProDentis and Gastrus distribution network Continue the launch of EasyDropper Continue internal process development and strengthening of the organization 40
Board of Directors Stefan Elving Chairman David Dangoor Inger Holmström Jan Annwall Anthon Jahreskog Margaretha Gadnell 41 Ewa Björling Brit Stakston
Major Shareholders 31 March, 2017 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 8,6% 33,8% 2 Öhman Bank S.A 1 389 1 389 1 389 8,0% 5,8% 3 Swedbank Robur fonder 1 285 1 285 1 285 7,4% 5,3% 4 Fjärde AP-fonden 1 032 1 032 1 032 5,9% 4,3% 5 Clearstream Banking S.A 534 534 534 3,1% 2,2% 6 Mingdale Company 462 462 462 2,6% 1,9% 7 CBNY Norges Bank 457 457 457 2,6% 1,9% 8 SSB and Trust company, Boston 356 356 356 2,0% 1,5% 9 Nordea Investment Funds 345 345 345 2,0% 1,4% 10 State Street Bank & Trust com., Boston 343 343 343 2,0% 1,4% Other shareholders 9 765 9 765 9 765 55,9% 40,5% Total: 741 16 727 17 467 24 133 100% 100% Total number of shareholders 31 March 2017: 8,073 Foreign owners: 42% of capital (30% of votes) 42
43 Quarter 1 2017
Sales per segment (MSEK) Change Change April 2016 April 2015 Change Change q1 2017 q1 2016 % % 1) -Mar 2017 -Mar 2016 % % 1) Pediatrics 110,8 108,1 3% -1% 435,8 382,3 14% 12% Adult health 26,5 21,1 26% 24% 90,7 76,0 19% 15% Other 3,8 4,7-19% -19% 15,5 19,9-22% -22% Total sales 141,1 133,9 5% 3% 542,0 478,2 13% 11% 1) Excluding currency effects 44
Gross margin per segment April 2016 April 2015 q1 2017 q1 2016-March 2017 -March 2016 Pediatrics 75% 71% 75% 69% Adult health 72% 64% 64% 68% Other 100% 94% 100% 96% Total sales 75% 71% 74% 70% 45
Sales per geographical market (MSEK) Change Change 12 months 12 months Change Change q1 2017 q1 2016 MSEK % March 17 March 16 MSEK % Europe 90,0 93,3-3,3-4% 344,9 286,0 58,9 21% USA and Canada 11,4 9,9 1,5 15% 41,7 39,0 2,7 7% Asia 22,7 13,5 9,2 68% 71,2 52,0 19,2 37% Rest of world 17,0 17,1-0,1-1% 84,2 101,2-17,0-17% 141,1 133,8 7,3 5% 542,0 478,2 63,8 13% Sales per market roll 12 March 2017 Europe 64% (60) USA and Canada 8% (8) 46 46 Asia 13% (11) Rest of world 15% (21)
Income statements q1 (MSEK) Excl. currency q1 2017 q1 2016 Change effect: Total sales 141,1 133,9 5% 3% Cost of goods sold -35,4-39,1 Gross profit 105,7 94,8 12% Gross margin 75% 71% Operating expenses BioGaia -48,5-42,3 15% Participation in associated companies result -0,5-0,2 Exchange gain/loss on operation -0,9-0,9 Operating profit 55,8 51,3 9% 3% Operating margin 40% 38% Exchange gain/loss on forward exchange contracts 0,3-0,5 Interest inet -0,1-0,1 Profit before tax 56,0 50,7 10% Profit margin 40% 38% Tax -13,1-12,0 47 Profit after tax from continuing operations 42,9 38,7 11%
Income statements rolling 12 months (MSEK) Excl q2 2016- q2 2015- currency q1 2017 q1 2016 Change effect: Total sales 542,0 478,2 13% 11% Cost of goods sold -143,2-144,7 Gross profit 398,8 333,5 20% Gross margin 74% 70% Operating expenses BioGaia -198,9-162,8 22% Participation in associated companies result -1,5-0,3 Exchange gain/loss on operation 5,6-2,6 Operating profit 204,0 167,8 22% 18% Operating margin 38% 35% Exchange gain/loss on forward exchange contracts -3,9 1,4 Interest net 1,2-0,1 Profit before tax 201,3 169,1 19% Profit margin 37% 35% Deferred tax income 10,4 - Current Tax -48,2-39,1 48 Profit after tax from continuing operations 163,5 130,0 26%
Balance sheet (MSEK) March 31 Dec 31 Assets 2017 2016 Tangible assets 87,9 82,4 Shares in Associated companies 10,3 10,7 Deferred tax asset 10,4 10,4 Current assets 134,6 142,3 Cash and cash equivalents 320,6 243,1 Total assets 563,8 488,9 Equity and liabilities Equity attributable to owners of the Parent company 458,0 395,9 Non-controlling interests - - Total equity 458,0 395,9 Deferred tax liability 0,3 0,3 Interest-free current liabilities 105,5 77,0 Total equity and liabilities 563,8 473,2 Proposed dividend: SEK 7.50 (5.00) per share 49
Key events first quarter 2017 Agreement for BioGaia products in the area of paediatrics and gastroenterology in Thailand Agreement for drops in Australia Key events first quarter 2017 Oral health products to be launched in three new markets (Canada, Philippines and Vietnam) 50