OptiBiotix Health : Results Report

28 June 2024

OptiBiotix Health plc

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

Final results

Notice of Annual General Meeting

OptiBiotix Health plc (AIM: OPTI), a life sciences business developing compounds to tackle obesity, high cholesterol, diabetes and skin care announces its audited results for the 12 months ended 31 December 2023.

Highlights

• Revenue for the year of £644,000, a 41% increase over 2022 (£457,000). There were a further circa £62k of sales orders received in December 2023 which were delivered in 2024 and carried forward into 2024 accounts.
• A circa 30% reduction in administrative expenses (excluding non-cash items such as share- based payments and amortisation) to £1.78m (2022: £2.50m), reflecting cost saving measures, the removal of ProBiotix Health plc (PBX)'s costs after March 2022 and recovery of some of the doubtful debt provided in the 2022 accounts.
• An increase in sales of LeanBiome® to The Hut Group and sales of SlimBiome® to Holland & Barrett, albeit from a very low base in 2022.
• An increase in sales of SlimBiome® to Paradise Fruits, a German company producing gummies for Walmart and for sale online in China.
• Increased sales of our OptiBiome® prebiotic fibre (an alternative trademark to SlimBiome®) to Optipharm in Australia following the launch online of their Optislim and Optiman ready meal ranges incorporating a ready meal OptiBiome sprinkle and a significant new investment in marketing.
• A reduction in stock: there was 13.9 metric tonnes of SlimBiome® taken from stock held by two partners (Maxum and Cambridge Commodities) in 2023 compared to 2022 (up 39%) representing a value of approximately £417K based on retail price of £30 per kg. Once this stock overhang is depleted, the Company should see sales of SlimBiome to these partners contributing to future revenues.
• Recruiting four new partners for SlimBiome® in Asia through our partnership with Nutraconnect Pte, all of whom placed initial orders before the end of 2023 and which we expect to contribute revenues of £125,000 to £150,000 in 2024.
• Securing a license agreement with Tata Chemicals - part of the $300bn turnover Tata Group
  - to incorporate its proprietary Fossence® into our SlimBiome® and WellBiome® products for the Indian market. This brings the assurance and familiarity of a branded ingredient from a well-known and trusted local source to the attention of Indian consumers.
• Reaching a new distribution agreement for SlimBiome® in Australia and New Zealand with Ravenswood Ingredients, part of the Brenntag group which is a global leader in specialised food ingredients.
• One of our partners, Optipharm, securing an international listing for products containing SlimBiome® with CostCo, the fifth largest retailer in the world.
• Ongoing discussions with a leading US corporate on a global launch of SlimBiome® in 2025 in multiple territories.

Post period end

• The recovery in sales in 2023 has carried forward into 2024 with sales order in H1 approaching FY 2023.
• Launch of LeanBiome® in MuscleTech®, a leading sports nutrition brand.

• Partnership agreement with Morepen for SlimBiome® containing finished products.
• Manufacturing agreement with KAG Industries in India.
• Roehampton University submitting the results of a third human study on SlimBiome® for publication, which demonstrated statistically significant benefits to appetite and hunger regulation with no safety, compliance or tolerance issues reported by the participating volunteers. This study underlined the effectiveness of a single dose of SlimBiome® in delivering hunger-free weight loss by non-invasive means, and was timely in view of the growing consumer, media and pharmaceutical interest in this field.
• Successful placing to raise £1,350,500 through the issue of 6,752,500 new ordinary shares of 2 pence each in the Company in March 2024.

The Report & Accounts which will be shortly posted to shareholders contains a Notice of Annual General Meeting ("AGM") which will be held at 12 noon on 8 August 2024 at the offices of Peterhouse Capital Limited, 3rd Floor, 80 Cheapside, London EC2V 6EE.

Stephen O'Hara, CEO of OptiBiotix Health plc said: "2023 was a year where we restructured the senior management team and focused on restoring sales growth through more active management of existing accounts, broadening our partner base by securing a number of new corporate partners in key strategic markets like the USA and Asia, and investing in ecommerce channels, while reducing operating costs. We continue to see sales momentum building in 2024 with our highest ever single order of over £200,000 and sales orders in H1 approaching FY 2023.

With appetite suppression, gut health, sugar alternatives, and modulation of the human microbiome attracting ever-increasing interest, we look to the future with a high degree of confidence. With the Company's first generation products having multiple clinical studies and health claims we are now gaining commercial traction with large partners in key markets plus the excitement of bringing our industry changing second-generation products to market.

We have achieved this with minimal shareholder dilution, no debt, a strong balance sheet (circa £9.4m as at 31 December 2023) and significant exposure to the considerable growth potential of the microbiome through our shareholdings in PBX and SkinBioTherapeutics PLC (SBTX).

On behalf of the Board, I would like to thank our valued shareholders for their patience and ongoing support, and we look forward to continuing on an upward trajectory for the remainder of 2024 and beyond."

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.

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward- looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as

of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

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
Peterhouse Capital Limited (Broker)	Tel: [phone]
Duncan Vasey / Lucy Williams
Walbrook PR Ltd	Mob: [phone]
Anna Dunphy

About OptiBiotix - www.optibiotix.com

OptiBiotix Health plc (AIM: OPTI), which was formed in March 2012, brings science to the development of compounds which modify the human microbiome - the collective genome of the microbes in the body - in order to prevent and manage human disease and promote wellness.

OptiBiotix has an extensive R&D programme working with leading academics in the development of microbial strains, compounds, and formulations which are used as active ingredients and supplements. More than twenty international food and healthcare supplement companies have signed agreements with OptiBiotix to incorporate their human microbiome modulators into a wide range of food products and drinks.

OptiBiotix is also developing its own range of consumer supplements and health products. The Company's current areas of focus include obesity, cardiovascular health, and diabetes.

Chairman's Report

This year has seen the Group successfully returned to sales growth under the renewed leadership of its founder Stephen O'Hara, who returned to the role of CEO of OptiBiotix Limited in March 2023. In that time we have secured a number of new corporate partners to help develop sales of our first- generation products in key strategic markets like the USA and Asia, increased direct to consumers sales through ecommerce channels and reduced operating costs. Our second-generation products are now approaching commercialisation, offering potential additional future growth for the Company. The positive trajectory re-established during the year has continued into 2024. With new corporate partners in new territories, strong ecommerce growth, reduced SlimBiome® ingredient stock levels held by Maxum and Cambridge Commodities, a strong balance sheet (circa £9.4m at 31 December 2023) and a successful fundraise in 2024, the financial strength of the Group provides shareholders with a robust platform for growth going forward.

Strategy and business development

From the outset, the business has had a clear strategic focus on developing unique products with functional benefits in high growth markets around the world, and balancing risk and reward by building sales of first-generation products while developing more innovative second-generation products with greater potential.

The CEO reports in detail below on the actions we have taken during the year to restore the Group to sales growth through more active management of existing key accounts, increasing the number of partners in key strategic markets, and investing to increase direct sales to customers through ecommerce channels in the UK and subsequently internationally.

Results

The results show that after a very poor start to 2023 management changes in spring led to a 41% increase in sales and a 30% decrease in costs in 2023, despite one off termination costs of £153k. With improved sales and tighter financial control operating losses for 2023 reduced by 33% from £2.4m to £1.6m.

The Board

As noted in the last annual report Rene Kamminga, who was appointed CEO of OptiBiotix Ltd in March 2021, and joined the Board of the Group in July 2022, left the business in February 2023 when Stephen O'Hara resumed the role of CEO at OptiBiotix Ltd. As outlined in the CEO report the Company took the opportunity to streamline its board and reduce advisor costs to move the business towards profitability. To support the management team Graham Myers joined the Board on 1 December 2023 as Finance Director, a part-time role in which he works closely with the OptiBiotix team to focus on driving each business unit to profitability.

Outlook

The recovery of sales established in 2023 have continued into the current year with the agreement with Morepen in India, encouraging discussion with a number of US corporates, and strong e- commerce growth, any of which having the potential to transform the business in 2024 and beyond. As the Chief Executive reports in more detail below, we have secured additional agreements to grow sales of our first-generation products in a number of key strategic markets (e.g. USA, Asia), successfully broadened our product portfolio, and reached an exciting stage in the commercialisation of our second-generation sugar replacement SweetBiotix® and MicroBiome Modulators.

The actions we took during 2023 have put the Group back on a firm growth path and the Company looks forward to reporting further progress in the year ahead. We also look forward to realising the substantial potential value of our second-generation SweetBiotix® family of products and microbiome modulators as these achieve commercialisation.

1. Davidson Chairman
   28 June 2024

Chief Executive's Report

Since the restructuring of our senior management team in Spring 2023, the Group has focused on restoring sales growth and working towards profitability through the more active management of existing accounts, broadening its partner base, and investing in ecommerce channels, while reducing costs. This is all part of a plan to take multiple products in the microbiome space to a global marketplace. Our first-generation products now enjoy widespread acceptance in international markets, helping us to reach new agreements with a number of well-known corporate partners and to launch new products in more territories expanding our customer base. Our online sales are growing strongly, particularly in China and we are looking to replicate this approach in other high growth territories such as India in 2024. We have also reached an exciting stage in the commercialisation of our second-generation products SweetBiotix® as a bulk sugar replacement and in finished products and seeing growing interest in our microbiome modulators. The Group remains financially robust with a strong balance sheet (circa £9.4m at 31 December 2023) and no debt. We believe that the Group is now at a strategic inflection point having made strong progress in 2023 and early 2024 on its stated aims of establishing sales in major international markets like the USA, China, and India. As partner and ecommerce sales in these territories grow, we launch new products like WellBiome® with existing partners, add new partners in the USA and India, and bring our second generation products to market, we have a number of opportunities, any one of which would be transformational for the Company and shareholders alike, and collectively change the future of the business.

Strategic overview

OptiBiotix Health PLC (OPTI) is a life sciences business founded on the development of prebiotic and probiotic compounds to tackle obesity, cardiovascular disease, diabetes and skincare: all markets offering strong growth potential in every part of the world. The Company has built an extensive portfolio of microbiome assets in this field including prebiotic products like SlimBiome®, WellBiome®, SweetBiotix® and Microbiome modulators within its core business, skincare through SkinBioTherapeutics PLC (SBTX) and probiotics through ProBiotix Health plc (PBX). These are both separately listed companies in which OptiBiotix has a shareholding. These create a diverse portfolio of opportunities in an emerging area of healthcare which is of growing interest to consumer markets around the world.

Our strategic approach has been to target global markets with highly differentiated, clinically proven and patented products. Whilst ambitious, more costly and time consuming than commercialising in local markets it recognises the potential scale of the opportunity. The strategy has been designed to reduce risk and maximise opportunities for investors by recognising the challenges inherent in bringing new technologies and products to a naturally conservative global food market, where consistency and risk avoidance are key, and the acceptance of new products is notoriously slow.

In addition to founding and developing three distinct companies, we have layered our development portfolio by creating both first-generation products (SlimBiome® and WellBiome® in prebiotics and LPLDL® in probiotics) and second-generation products (SweetBiotix® and Microbiome modulators). This has allowed us initially to build sales and awareness of the Company and its functional ingredients through its first-generation products while developing the riskier and more innovative second- generation products that offer potentially greater upside for investors.

The development of three distinct companies (OPTI, SBTX and PBX) with similar fundamental science but different applications and markets provides investors with multiple plays in the emerging microbiome market, both reducing their risk and providing significant potential gains if one or more new products is successfully brought to market.

Placing these companies separately on public markets creates tangible assets which can potentially be disposed of to pay shareholders an ad hoc dividend, as with the £10.25m dividend issue to OPTI shareholders on the listing of PBX in March 2022, or the £5.4m of share sales in SBTX by OPTI since its listing in 2017, which has reduced the need to fundraise for the continued development of OPTI and avoided dilution for our own shareholders.

As a result, OPTI today has a strong balance sheet (circa £9.4m at 31 December 2023) with no debt, and multiple plays providing scope for profitable development in different areas of the emerging microbiome space.

The annual accounts for 2020 and 2021 showed that each of OPTI's businesses was profitable at the EBITDA level, with the Group as a whole attaining profitability by virtue of the increased value of its SBTX asset. In 2022 we faced a most challenging year in the wake of the COVID-19 pandemic and the global economic uncertainty that followed the Russian invasion of Ukraine, and increased costs and reduced sales following the appointment of a new CEO.

We took decisive action to address this through the departure of the CEO of the prebiotic business under OptiBiotix Ltd in Spring 2023 and a series of measures to reduce Board, management and advisory costs. Since implementing these measures and under the renewed leadership of Stephen O'Hara as CEO, we have enjoyed three quarters of increased sales. This growth has continued into 2024.

Action has also been taken to reduce commercial risk in the business by increasing the number of large partners in key strategic markets, particularly the USA and Asia Pacific, with new relationships with Brenntag, Tata, Iovate/Muscletech, and in 2024 an agreement with Morepen.

Equally importantly, we have made significant investments in our ecommerce business to drive our direct-to-consumer sales, reducing reliance on retail partners and increase our profit margins. While sales through retail partners offer potential benefits in generating volume, and increase the awareness and credibility of OPTI products, margins are lower and the uniqueness of our formulations and their functional benefits are often lost to retail staff and consumers among the many competing brands on offer.

With our first generation products gaining traction in the USA, China, and India and the upcoming launch of our second-generation products, OPTI is well placed to become a major player in the expanding microbiome market.

Commercial and scientific overview

During the year we have focused on driving sales growth through the more active management of existing key accounts; increasing the number of partners in key strategic markets, particularly the USA, China, and India; and investing to increase direct sales to customers through ecommerce channels in the UK and subsequently internationally.

Key developments during the financial year included:

Active management of existing key accounts:

• An increase in sales of LeanBiome® to The Hut Group for inclusion in its Myprotein range.

• An increase in sales to Holland & Barrett health and wellbeing retail and online business in the UK, albeit from a very low base in 2022.
• An increase in sales of SlimBiome® to Paradise Fruits, a German company producing gummies for Walmart and for sale online in China.
• Increased sales of our OptiBiome® prebiotic fibre (an alternative trademark to SlimBiome®) to Optipharm in Australia following the launch online of their Optislim and Optiman ready meal ranges incorporating a ready meal OptiBiome sprinkle and a significant new investment in marketing.
• An increase in the number of Apollo pharmacies in India and Nahdi pharmacies in Saudi Arabia selling GoFigure® products.
• A reduction in SlimBiome® stock held by partners: there was 13.9 metric tonnes of SlimBiome® taken from stock held by two partners (Maxum and Cambridge Commodities) in 2023 compared to 2022 (up 39%) representing a value of approximately £417K based on retail price of £30 per kg. The Company has commenced manufacture of replacement stock for Cambridge Commodities as it anticipates most of this stock will be used for existing orders planned for delivery in the first half of 2024.

Increasing the number of new partners, particularly in the USA and India:

• Recruiting four new partners for SlimBiome® in Asia through our partnership with Nutraconnect Pte, all of which placed initial orders before the end of 2023 and which we expect to contribute revenues of £125,000 to £150,000 in 2024.
• Securing a license agreement with Tata Chemicals - part of the $300bn turnover Tata Group
  - to incorporate its proprietary Fossence® into our SlimBiome® and WellBiome® products for the Indian market. This brings the assurance and familiarity of a branded ingredient from a well-known and trusted local source to the attention of Indian consumers
• Reaching a new distribution agreement for SlimBiome® in Australia and New Zealand with Ravenswood Ingredients, part of the Brenntag group which is a global leader in specialised food ingredients.
• One of our partners, Optipharm, securing an international listing for products containing SlimBiome® with CostCo, the fifth largest retailer in the world.
• Ongoing discussions with a leading US corporate on a global launch of SlimBiome® in 2025 in multiple territories.

Investing in ecommerce channels:

• The Company has made significant investments in new ecommerce channels, including Amazon in the UK, Walmart in the USA, and Tmall.com in China, to increase the proportion of our sales made direct to consumers. This has generated strong growth in turnover, with total ecommerce sales up approximately threefold in 2023 from 2022 and continued growth in Q1 2024 which we hope will continue as more channels come on line.

• Successfully launching new products including our reformulated gut and digestive health WellBiome® functional fibre and mineral blend, which has been selling strongly through both our own website and Amazon UK.

Other developments:

• A shift in our commercial focus to selling SlimBiome® Medical sachets in Europe and SlimBiome® shots in India and the Gulf states. These have been developed to help users manage their weight by reducing hunger and food cravings. This is a highly differentiated product which leverages growing market interest in anti-obesityGLP-agonist drugs like Semaglutide which work by reducing appetite. SlimBiome® compares favourably with these drugs and offers a healthy, natural and safe approach to weight management, with no observed side effects in multiple human studies. GLP-agonists have a number of reported common adverse effects and potentially serious side effects in some groups. SlimBiome® can be used with any weight management or calorie restriction plan and so complements rather than competes in a crowded marketplace. The product enjoys high margins and became a top-selling line within its market segment on Amazon UK in 2023.
• Roehampton University submitting the results of a third human study on SlimBiome® for publication, which demonstrated statistically significant benefits to appetite and hunger regulation with no safety, compliance or tolerance issues reported by the participating volunteers. This study underlined the effectiveness of a single dose of SlimBiome® in delivering hunger-free weight loss by non-invasive means, and was timely in view of the growing consumer, media and pharmaceutical interest in this field.
• Securing a grant from the Biotechnology and Biological Science Research Council to fund a research project by the University of Leeds into the impact of WellBiome® on the gut microbiome throughout the digestive tract. This is expected to provide further substantiation of existing health claims for WellBiome® in international markets.
• Hull University securing NHS Ethics approval as part of a large programme grant (£2.7 million) amongst which is the proposal to explore WellBiome® impact post-surgery. This is a project independent of OptiBiotix in which Hull University have purchased WellBiome® to explore its impact on post-surgical recovery times.

North America

We have a strong sales pipeline in North America and the USA made up of small, medium size, and a number of large US corporates (including a £9bn Multi-Level Marketing company -MLM) that offer opportunities for sales growth in 2024 and beyond. The Company was pleased to receive a first order of £116k from Muscletech in 2023, a leading weight management and sports nutrition brand in the USA. This is a major sports nutrition brand who are making a significant investment in LeanBiome® as a key differentiator in the protein market and, if successful on launch could have a material impact on future revenues.

The Company reported at the start of 2024 the launch of LeanBiome® in MuscleTech's Nitro Tech Ripped range, a premium protein powder designed to support athletes who want to lose fat and build lean muscle. LeanBiome® is now included in two leading sports nutrition brands, Myprotein and MuscleTech, across the world, a market worth $45.2bn in 2023, and expected to grow at a CAGR of 7.5% pa to 2030, (Grand View Research, 2023). The Company sees the sports nutrition market as an area of growing interest and opportunity for its LeanBiome® brand with the scientific evidence

increasingly showing that optimising an athletes gut microbiome could improve an athletes' stamina, lower inflammation, and support physical fitness(Frontiers | Editorial: Nutrition to support gut health and the microbiome in athletes (frontiersin.org). Having two major global sports nutrition brands making a significant investment in LeanBiome® highlighting it as a key science based differentiator should provide investors a good indication to the potential opportunity developing within the sports nutrition market. If successful, this could have a material impact on future revenues and open up further opportunities in sports nutrition around the world. The Company continued to advance projects and expand the pipeline of opportunities with large North American companies and exhibited its SlimBiome®, LeanBiome®, and Wellbiome® products at Supply Side West, USA, in November 2023. Our focus is on companies committed to science and strong storytelling, especially in weight management, wellness, and sports nutrition with a special emphasis on e-commerce,direct selling, and retail brands.

The Company is hopeful that further announcements with corporate partners in the USA and Canada in 2024 will be made in due course.

OptiBiotix Health India

OptiBiotix Health India (OHI) was formed in November 2021 as a mid- to long-term strategic investment in the world's most populous nation of 1.4bn consumers, forecast to have a middle-class population of 475 million by 2030 and the world's largest cohort of medium to high level income customers by 2035. With obesity prevalence currently measured at 40.3%, India represents a huge area of opportunity for weight management products.

The formation of OHI has helped OPTI to avoid high import taxes and to control the purchase and sale of both ingredients (SlimBiome®) and finished product (GoFigure®, Morepen) manufactured and sold in India.

After a slow start following the launch of products with Apollo Pharmacies in September 2022, momentum built during the year resulting in GoFigure® products being sold through approximately 1,000 stores by the year-end.

Apollo's own consumer survey showed an 87% customer return rate among purchasers of GoFigure® products and 23% of new customers visiting their pharmacies who just bought GoFigure® products. This feedback is consistent with that from THG, who gained 40% new customers with the introduction of LeanBiome® to their Myprotein range. Such results create a positive platform for commercial discussions with potential new partners, demonstrating the consumer appeal of our products and their ability to attract both new and returning customers.

The licence agreement we secured with Tata Chemicals in October 2023 to incorporate its proprietary Fossence® into our SlimBiome® and WellBiome® products for the Indian market which is anticipated to increase their appeal to Indian consumers. In Q1 2024 we announced a major new partnership agreement to sell products containing SlimBiome® under the well-known and trusted Dr Morepen brand. This is an established, well known, and trusted brand in the Indian market and represents a material step forward for our products in the Indian market. OptiBiotix will receive revenue for both the ingredient and BTB product sales with first orders placed for launch in Q3 2024. Based on Morepens current forecasts this agreement could contribute in the region of £6-7 million revenue per annum to OptiBiotix in the next four to five years (see announcement March 2024).

Thanks to the work of the Department of Business and Trade and our Business Development Director, Dr Taru Jain, we have high industry awareness of OptiBiotix and its products throughput India. This has created a strong pipeline of opportunities with emerging and leading players in weight