Company Interview / Biome's expanding ecosystem

Blair Norfolk, CEO of biotech company Biome (ASX: BIO), shares his views on the company's growth trajectory and future plans. He highlights that Biome (ASX: BIO) has grown from a $2 million company in FY 21 to a $13 million venture in just a couple of years, signifying a fundamental growth of 600%. Blair anticipates further growth opportunities, indicating the company's target for three years is up to $85 million in revenue.

Biome is transforming from a start-up into a high-growth and high-value company under a three-year strategic plan, Biome Vision 27. Blair underscores Biome's successful market expansion into the UK and Ireland and future plans for Canada. The company, he says, boasts a unique product range of clinically proven probiotics that can be prescribed alongside pharmaceutical interventions—a first in the market which they aim to continue capitalising on.

Finally, Blair outlines potential for further growth and market exploration beyond Australia. He identifies three core business opportunities: Australia and New Zealand, the European market, and North America. According to Blair, Biome's (ASX: BIO) robust growth indicates that it is well on its way to establishing a high-value and sustainable company. The details of Vision 27 will be rolled out within Q1, shedding more light on Biome's strategic plans.

Full unedited transcript:

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Well, our next company was a pick on one of our episodes of the flagship program, The Call, a couple of weeks ago. So David Kashi was joined by expert guest Henry Jennings from Marcus today and Michael Wayne from Medallion Financial, who gave their take on Bio tech or Code Bio. Here's just a bit of what they had to say. I think biome good run. Take bank some money because the market is kind of getting kind of random these days. It's gone. Gone up six fold. Yeah, that's a good effort in a year. So that's a good effort. You do get your money out. You invest it. Definitely. Then you just let the rest, right. Definitely. Why not? Yeah I mean it's pretty powerful. It's always good isn't it? You know, having a freebie is great. Yeah. It's not what I'd come across before until today's show, but they did have a revenue upgrade from 11.5 million expected to 12.5 million, which is a decent upgrade, but it's probably not enough to justify the rally that we've seen in the share price. They're targeting 20

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million revenue in sort of over the next three years. So it's a business that has a pretty attractive growth profile, but it's off a very low base.

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So we thought we should call the company to get a view on where that parabolic justification comes through in the plans going forward. Byam CEO Blair Norfolk joins me now. Hey, Blair. Welcome. So they have pointed out the share price performance of Biden. What do you make of it yourself?

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Um, I mean, to look at a chart is sometimes an oversimplistic view to understand a company. So I would say important to understand what the business does and where the business is going. So, uh, buying Australia is one of the world's first love biotherapeutics or target of biotech. As, uh, the guys pointed out that it is a low base, but we did come from $2 million in FY 21 up to 13 last year. So in a couple of years grown fundamentals, core of the business 600%. And from share price listing at $0.20 or 40 million, we're only up three times. So if anything you know, the growth in market cap has been very positive and very well received. I think there's still a great opportunity. Yeah, I don't think it's a I don't think that it's a mark against you that you've come off a low base considering that's how you build a business. Right. So I note that at the end of July. But that was just two days ago. You put out,

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you know, plan going forward sort of revenue targets, Market loves target. So talk to us about that.

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Um, so we've given a target for three years of up to $85 million. Important to note. We've never missed a number. We've beaten every number significantly. So we are very conservative. We'd love to, um, under-promise and overdeliver. We'll be putting out a three year strategic plan called Buying Vision 27. We've let the market know this will be coming this quarter. This is the first bit of information we've shared for this new plan. So we've achieved bringing the company from a startup with 2 million revenue to the highest growth complementary medicine brand in the market. That's in scan sales, pharmacy sales and consumers buying patterns, uh, to to turning over 13 million. The next phase of the company is now that we've reached profitability, we've generated three quarters of positive cash flow and positive EBITDA. Uh, there'll be an update on our financial performance in the full year. Accounts will be due later this month. We're now setting up for big growth. So the hardest bit's been done. Turning over that first, uh, gaining

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distribution, the first 5000 distribution points. Uh, we've got about 40% of the addressable market, and we've developed about 25% of it. So within the Australian market, we believe we can forex our revenue based on the existing distribution. We can double our distribution before we get anywhere close to the limits of what's possible in turnover. And we've got early stage successful markets going in the UK, Ireland and soon to be Canada. So this plan will, um, unveil a lot more detail over the next three years and how we build a really high growth, sustainable, high value company. Yeah. Where are you potentially going to bump up against the limitations? Is it in the commercialization? Is it in the manufacturing? You know, there has to be some challenges in growing market share that significantly. Well, look, we're we're opening up a new market. So we're the first mover in the targeted probiotic or the live biotherapeutics space. So if you

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look at the probiotic market or the complementary market that we operate within, complementary medicine market in Australia is valued about 6 billion. So if you look at it from that perspective, we've got huge amount of growth whereby is really unique in the blue sky is there's 330 million prescriptions in pharmacy in every year in Australia, where the first company that's been able to start to unlock the value of those prescriptions for the pharmacist and for the patient. What I mean by that is we have clinically proven products, the close to perfect safety profile that can be prescribed alongside pharmaceutical interventions or medications. This hasn't really been done successfully in the past, because a lot of other complementary medicines don't have strong safety profile when used alongside medications, they're contraindicated. Probiotics are not. They're safe alongside almost all medications, if not all medications. And we believe there's a huge blue sky opportunity to tell a Blackmores side story if we can

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unlock that piece over the coming years. So there is no real cap to our or bottleneck to our growth, because we are growing a category and growing a new market. And then there is a huge amount of opportunity outside of Australia, which we've we've started to, uh, in a really conservative way. Test, test the waters. Yeah. Interesting. So there's nobody doing what you're doing in in Canada, the UK.

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No. So, uh, buying Australia's brand activated probiotics, which is the highest growth complementary medicine brand and probiotic brand in Australia. We're GMP certified, so we produce everything at pharmaceutical grade, uh, GMP conditions. So that means that we get to access markets that other brands would not be able to. So there's a very high barrier to entry to the Canadian market and to other markets that we operate in around the world that require GMP pharmaceutical quality products. And um, and Canada is one of those. So Health Canada system was based off the Australian TGA. And we see that as a really nice low risk entry into North America with with further further countries to explore beyond Canada. Yeah. Interesting. Okay. And um, does do probiotics in your therapeutics work alongside alternative medicines such as CBD, CBD oil, you know, medicinal marijuana.

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There's nothing that you can't take a probiotic alongside. But biomes are key point of difference is we have conducted clinical trials as standalones on diseases. So for example, we have the world's first probiotic that reduces asthma attacks by 64% in a placebo controlled, randomized double blind trial. We have three clinical trials on our biome live probiotic for mental health from depressed mood, anger and anxiety all the way through to subthreshold depression. So we also study our products alongside pharmaceutical drugs. So we're soon to launch our most recent product buying Cholesterol Probiotic. Um, later next month I believe. So in August. And that product has been clinically trialed in four different studies, two as an adjunct to statins so used alongside cholesterol reducing medication, largest medication class in Australia and is a standalone to reduce cholesterol. So we see this really nice niche between probiotics and pharmaceutical drugs where we can improve

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patient outcomes, make more money for the pharmacist and add value to, you know, the whole chain,

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your founder. So we always call you, you know, managing director, CEO. But, um, you know, you're the founder of this company. I mean, what what's the holy grail for you? Would that be the US?

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The holy Grail in the general market is China in the US, because that's the volume. But from buyers perspective, they are less sophisticated markets with consumers that don't have as much understanding or knowledge on a targeted probiotic. So the Australian market, the Italian, the German, the Irish, the Scandinavia, Canadian market have really well educated consumers that are interested in alternative therapies than just following pharmaceutical drugs or adjunct therapies, where we sort of sit in a nice middle ground. So the US is definitely of interest. The reason being, it's the leading market in the world for integrative health professionals. You've got 80,000 integrative doctors that work in the US prescribing drugs and natural therapies, probiotics, for example. And we see that long term a great a great opportunity in the US market. Although you know, we don't we are not relying on that opportunity. We believe we can build a massive market in Australia. Uh, we're

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far well, well away from our cap in doing that and the amount of patience founder we believe we're going to support in improving their health outcomes through our probiotic products. We barely scratched the surface in that addressable market. So to answer your question, North America are critically important. But if we fast forward ten years from now, and I'd love to be sitting in this chair at that point in time, there's three core business opportunities. There's Australia, New Zealand, there's the European market and there's North America. And we'd like to execute really well in all three. Okay. So we've got this revenue target vision 27 strategic plan. No doubt we'll speak about it again. But when will we get further details. Just remind me within this quarter. So it will be coming out within Q1. So not too long to wait.