OptiBiotix Health : Results Report

17 June 2021

OptiBiotix Health plc

("OptiBiotix" or the "Company" or the "Group")

Final Results for 12 months to 31 December 2020

Notice of AGM

OptiBiotix Health plc (AIM: OPTI), a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes, announces its audited results for the period ended 31 December 2020.

Highlights

Financial

• Full year revenue of £1,523,247, a 104% increase in revenue from the 13 month reporting period in 2019 (2019: £744,883)
• A 124% increase in gross profit from £392,803 (2019) to £879,819 (2020) as increased sales volumes enabled us to renegotiate contract terms with commercial partners and increase margins
• A 27% reduction in other administration costs expenses from £2,204,216 in 2019 to £1,616,069 in 2020
• The Functional Fibres and Probiotic divisions achieving profitability at the EBITDA level after losses in the prior 13 month period
• A substantial increase in the value of our holding in SkinBioTherapeutics plc ('SBTX') during the year with an investment of approximately £700,000 in 2016, for a 51% pre-IPO holding, delivering an asset now worth circa £25m as of June 2021
• A 49% reduction in operating loss from £2,166,638 in 2019 to £1,111,393 in 2020. The increase in the value of the SBTX holding during the year resulting in a Group net profit for the year of £5,801,866 (2019: net loss £2,368,362)
• Total cash on the balance sheet at the year-end increasing by 90% to £864,680 (2019: £456,608). Post period, the Company sold £900,936 worth of SBTX shares in March 2021

Commercial

• Launch of three SlimBiome® products with Holland & Barrett (H&B) in H1 2020 followed by product line extension in 2021 to eight H&B own brand SlimExpert products
• The launch of a products containing OptiBiome® under the Optislim® brand with Woolworths, ChemistWarehouse and on OptiPharm Pty Ltd's online store in Australia and New Zealand in October 2020. The terms of this agreement were subsequently extended to include Europe in addition to Australia, parts of Asia, New Zealand, Middle East, Gulf States and North America allowing potential for future sales growth
• The launch in Italy by ALFASIGMA S.p.A. of a food supplement containing our proprietary cholesterol reducing LPLDL® probiotic strain, providing an entry into the largest and fastest growing probiotic market in Europe
• A non-exclusive distribution agreement with Actial Farmaceutica Srl for the distribution of CholBiome® and CholBiome®X3 in Australia, New Zealand, Indonesia and Thailand, under the VSL#3® range
• An exclusive agreement in late 2020 with a US company for the large-scale manufacture and commercialisation of a number of SweetBiotix® products in return for upfront, milestone, launch and royalty payments. We are pleased to see this partner making strong progress in 2021 scaling up these innovative products to industrial scale

Regulatory and Scientific

• USA FDA authorisation of an Investigational New Drug ('IND') trial by our partner Seed Health of a probiotic containing LPLDL®, to investigate the role of the gut microbiome in patients with Irritable Bowel Syndrome
• Completion of two new human studies by ProBiotix Health on LPLDL®. The first in partnership with Nutrilinea S.r.l., demonstrating that a new food supplement formulation containing can reduce high blood pressure (hypertension). The second, a placebo-controlled human studies on LPLDL® in high

cholesterol patients showing LPLDL® when used alone can achieve similar reductions in total cholesterol and LDL (bad cholesterol) to statins, without side effects (submitted for publication)

• The Company has made significant progress in H1 2021 with its microbiome modulators with early data suggesting we have developed an approach to facilitate industrial scale production

Stephen O'Hara, CEO of OptiBiotix, commented: "This has been a pivotal year for OptiBiotix with doubling sales and a large reduction in costs enabling our Probiotic and Functional Fibre divisions to achieve profitability. This is a substantive change from divisional losses of £467,704 for ProBiotix and £451,572 for the functional fibre division reported in 2019. This was particularly pleasing given the impact of the COVID-19 pandemic and global recession in key markets, with weight management markets experiencing a 9% decline in growth. The Company has also benefited from an increase in the value of OptiBiotix's holding in SBTX which is making strong progress on its path to commercialising products.

"The Company is now in a position of having established the scientific, clinical and commercial viability of its first- generation products (LPLDL® and SlimBiome®) with a network of internationally recognised partners who are extending product ranges and territories providing a solid basis for future growth. We are also pleased to report commercial progress with our pipeline of exciting second-generation products with the industrial scale up of a range of our innovative SweetBiotix products and a number of large corporates signing Material Transfer Agreements as they develop applications containing SweetBiotix.

"We have continued to make progress since the beginning of the current financial year with strong sales growth and larger orders as existing partners extend their product range and territories. Our focus remains on growing sales of first generation products with larger partners in key strategic markets like India, the USA, and China, and commercialising our pipeline of second generation products in the year ahead.

"With interest in the microbiome increasing, growing sales, increasing margins, reducing costs, and an exciting pipeline of industry disruptive second-generation products, the Company is in a strong position for future growth in this exciting area of healthcare."

This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

For further information, please contact:
OptiBiotix Health plc	www.optibiotix.com
Neil Davidson, Chairman	Contact via Walbrook below
Stephen O'Hara, Chief Executive
Cairn Financial Advisers LLP (NOMAD)	Tel: [phone]
Liam Murray / Jo Turner / Ludovico Lazzaretti
Cenkos Securities plc (Broker)	Tel: [phone]
Callum Davidson / Neil McDonald
Michael Johnson / Russell Kerr (Sales)
Walbrook PR Ltd	Mob: [phone]
Anna Dunphy

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures

(including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

Chairman's Report

I am pleased to report a further year of solid strategic, commercial and financial progress. The Group has achieved strong sales growth while reducing its already low-cost base, enabling both its Probiotic and Functional Fibre divisions to achieve profitability as planned. The successful commercialisation of our first-generation products with a range of internationally recognised partners confirms the effectiveness and scalability of our innovative, low risk business model, while our pipeline of exciting second-generation products gives us a strong base to deliver continuing growth in shareholder value.

Results

Group sales for the 12 months ended 31 December 2020 (prior period: 13 months ended 31 December 2019)

grew by 104% to £1,523,247 (2019: £744,883) while other administrative expenses reduced by 27% to

£1,616,069 (2019: £2,204,217). Despite the challenges presented by the global COVID-19 pandemic, both the Functional Fibres and Probiotic divisions achieved profitability at the EBITDA level, after losses in the prior 13 month period.

The Company received an additional £746,751 during the year from the partial disposal of its holding in SkinBioTherapeutics plc ('SBTX'), which is not included in the Group revenue figures. As a result of the change in the Company's shareholding in SBTX, it is now treated as an investment rather than an associate and the change in the value in the Company's shareholding during the financial year will in future be reflected in the Group accounts. The increase in the value of the SBTX holding of £7,120,962 during the year results in a Group net profit for the year of £5,801,867 (2019: net loss £2,368,362).

The Group's financial position remains strong, with total cash on the balance sheet at the year-end increasing by 90% to £864,680 (2019: £455,608). Post period, the Company sold £900,936 SBTX shares in March 2021 to further strengthen its balance sheet.

Strategy

Optibiotix Health is a life sciences business founded on the development of prebiotic and probiotic compounds to tackle obesity, cardiovascular disease and diabetes: all conditions that are affecting growing numbers of people in all parts of the world.

Our proven, low risk growth strategy is to secure deals with multiple partners - manufacturers, formulators and distributors - in multiple territories around the world, ensuring that we retain control of the complete value chain for all the compounds we develop, and can extract value for our shareholders at each stage.

We have now established the scientific, clinical and commercial viability of our first-generation products (LPLDL® and SlimBiome® / WellBiome®) achieving strong sales growth with internationally recognised retail and pharmaceutical partners. As we anticipated, this growth in volumes has enabled us to renegotiate contracts with our partners so as to reduce the cost of goods and deliver improved divisional margins, as noted in the financial report.

The next stage of our strategy will focus on the development and commercialisation of our second-generation platforms, which include SweetBiotix®, microbiome modulators to tackle a range of human health conditions, and drug biotherapeutics. All of these offer significant potential for long term growth.

Business development

Among the many positive developments during the year, which the Chief Executive discusses more fully in his report, I would particularly like to highlight:

• Our agreement in August 2020 with Optipharm and product launch in October 2020 for the exclusive use of our OptiBiome® weight management ingredient in over 20 countries in its flagship Optislim brand, the leading weight management brand in Australia.

• The agreement with a US partner for the large-scale manufacture and commercialisation of a number of SweetBiotix® products announced on 15 September 2020.
• The USA FDA authorisation in October 2020 of an Investigational New Drug ('IND') trial by our partner
  Seed Health of a probiotic containing LPLDL®.

Since the year-end, we have also achieved an important extension of our product range with Holland & Barrett, which has increased from three to eight the number of lines in its own SlimExpert range containing SlimBiome® as announced on 17 March 2021.

The Board

We continue to evolve the Board to ensure that we have the right mix of skills to lead the Group through the next stage of its strategic development, and to this end we have announced the appointment of two non- executive directors since the beginning of the new financial year.

Christopher Brinsmead CBE joined the Board as a non-executive director on 1 January 2021, bringing to us more than 30 years of experience in the pharmaceutical and healthcare sectors as a senior executive and adviser, FTSE 350 company director and chairman.

Stephen Hammond MP joined the Board as a non-executive director on 2 March 2021, further complementing our skillset through his experience during a successful career in fund management and investment banking prior to entering Parliament in 2005, and his subsequent senior roles in government.

Peter Wennström retired as a non-executive director on 1 January 2021, with our thanks for his contribution to the development of the Company and particularly for his valuable advice on brand strategy and the positioning of our first-generation products in international markets; I am pleased that his expertise remains available to us as an adviser.

René Kamminga joined as Chief Executive Officer ("CEO") of OptiBiotix Ltd, a wholly owned subsidiary of OptiBiotix Health plc, on 6 April 2021. We are confident that his experience and track record of growing sales, and his network of new industry contacts within the pharmaceutical and nutraceutical industries, will help OptiBiotix in its next phase of development as we look to extend the range of applications for our award-winning SlimBiome® and LPLDL® ingredients, and to commercialise our second generation SweetBiotix®, microbiome modulating, and LPLDL® drug products.

Following René's appointment Dr Fred Narbel, has moved to a more strategic role within the business as a non- executive director of OptiBiotix Ltd. We are grateful to Fred for his contribution over the previous two years in building the sales of our first-generation products, expanding our network of production partners around the world, securing commercial launches of products containing SlimBiome® with retailers in numerous countries, and in setting up the Functional Fibres division's quality system, and we look forward to his continued support in his new role.

We have also strengthened our senior executive team below the main Board, as the Chief Executive reports below.

Outlook

We have made a strong start to the current year, continuing to expand sales of our proven first-generation products whilst building the scientific and clinical evidence base needed to de-risk our highly innovative second- generation products and maximise their commercial potential in the future. Our new products open up significantly larger market opportunities, which we are well placed to exploit through an established, low overhead, sustainable business model that has demonstrated its ability to deliver a rapid increase in scale.

Already this year we have been able to report agreements and product launches that secure increased SlimBiome® sales in the UK, USA, Africa, India and wider Asia; the extension to two new territories in our agreement with Actial Farmaceutical for the distribution of CholBiome® and CholBiome®x3; and success in long term stability studies that assure the shelf life of SlimBiome® Medical, CholBiome® and CholBiome®x3, which will