1February 2013

BioGaia – a healthcare company in probiotics

Vision: BioGaia´s vision is to improve the health of people around the world by offering first class probiotic products.

Business concept: BioGaia´s concept is to develop, market and sell well documented probiotic products worldwide in the form of innovative and appealing dietary supplements and food products.

Probiotics: Live microorganisms which when administered in adequate amounts confer a documented health benefit.

2

BioGaia

• Founded in 1990• Probiotics (strains of Lactobacillus reuteri)• 79 employees (Stockholm 31, Lund 23, Eslöv 16, Raleigh 2,

Hiroshima 6, Shanghai 1)• Two segments: Finished consumer products/Component products• More than 100 clinical studies• Products in 60 markets through distributors• Contract manufacturing• TwoPac (50% owned)• Holds over 200 patents in 25 families

3

Change of focus

Functional Foods / Dairies

Animal Health

Dietary Supplements

Infant formula

1990 1995 2000 2005 2010

4

5

Business model – three networks

6

Distribution partner network

BioGaia Brand

• Branding for Health professionals• Sold in over 40 countries• 45% of sales of finished products (incl. co- branding 51%)• Build value, less dependence

on distributors and patents

7

Competition Strategy

• Clinical trials of high quality• Attractive and unique formulations and

packaging solutions• Strong partner support

8

Scientific network

9

Completed clinical trials Nov. 2012

• 108 trials in 8600 individuals whereof:

• 76 randomised, double-blind / blind, placebo-controlled studies in

6 800 subjects• 32 open studies in 1 770 subjects• 35 studies in 0-3y in 3 900

subjects

Clinical trials supporting the use of BioGaia Probiotics with L. reuteri – including the strains L. reuteri Protectis, Prodentis and Gastrus

Results are published in 67 scientific articles and 5 doctoral theses

Feeding tolerance

Neonatal Intensive Care

Necrotising Enterocolitis

Product Indications OverviewBioGaia ProTectis (82*)

BioGaia ProDentis (22*) BioGaia Gastrus (2*)

Functional abdominal Pain (FAP)

Gut Motility

Regurgitation

Infantile colicConstipation

Diarrhoea

Prevention

Acute GastroenteritisAntibiotic AssociatedDiarrhoea (AAD)

Gingivitis/plaque

Periodontitis

Gum Integrity

H. Pylori infection/inflammation

H. pylori side effects

Stomach Health

L. reuteri DSM 17938 (ATCC 55730)

L. reuteri DSM 17938 & L. reuteri ATCC PTA 5289L. reuteri DSM 17938 & L. reuteri ATCC PTA 6485

* Number of completed clinical studies by Nov 2012

Weizman et al., Pediatr 115; 5-9 (2005)

Children (4-10 m) with increased risk for infection

12 weeks supplementation in baby formula

Health protection by L. reuteri Protectis in children

12

Health economics of L. reuteri Protectis supplementation

Children (4-10 m) with increased risk for infection

12 weeks supplementation in baby formula

Weizman et al., Pediatr 115; 5-9 (2005)13

L. reuteri Protectis prevents antibiotic- associated diarrhoea

Cimperman et al. ASPEN meeting February 2009

Adults in hospital on antibiotics

Supplemented with L. reuteri Protectis or placebo for 4 weeks

14

L. reuteri Protectis reduces infantile colic

**

***

***

***

*****

p < 0.01p < 0.001

Days of supplementation

Savino et al. Pediatr Res 58: 411 (2005)Savino et al. Pediatr, in press (2006)

Cry

ing

time

(med

ian;

min

s/da

y)

15

Attractive and unique formulations and packaging solutions

16

TabletsDrops Drops

ProTectisDigestive Health

ProDentisOralHealth

GastrusStomach Health

ProTectis D3

Baby

ProTectis

Baby

ProTectis

Junior

ProTectis

Baby/Junior

ProTectis ProDentis ProDentis Gastrus

Drops Lozenges TabletsORS Tablets

BioGaia product portfolio

Strong partner support

• Clinical trials• Marketing and PR support• BioGaia Academy• Web site• Participation in conferences• Speakers at symposiums• Education of sales representatives

18

Competitors

Culture suppliers• Chr Hansen• Danisco• Institut Rosell Lallemand

(France)

Probiotic strains• Valio (Finland)• Probi (Sweden)

Functional Foods• Danone• Yakult

Pharma • Merck (Germany)• Novartis• Sanofi Aventis• Ferrosan (Pfizer)

Other• P&G• Local competitors

19

Launches and planned launches

20

- Drops: Launched in 56 countries (contracts but not launched in 15 countries)

- Tablets: Launched in 47 countries (contracts but not launched in 20 countries)

- ORS: Launched in 6 countries (contracts but not launched in 7 countries)

- Oral health products: Launched in 19 countries (contracts but not launched in 4 countries)

Key events 2012

21

• BioGaia extends collaboration with Nestlé• Agreement with Gerber for sales of drops

and ORS in United States• Agreement with Nestlé for sales of drops in

Mexico• Agreement for oral health products in Czech

Republic, the Benelux countries, South Africa, Singapore and Israel

• Agreement for tablets and drops in Taiwan and Pakistan

Key events 2012 (cont’d)

22

• Study in type 2 diabetes started

19 Published studies:For example:• Study on reduction of diarrhoea in children• New confirming study on colic• Two studies on NEC in premature infants• Study on Periodontitis

Nestlé Agreement

23

• Sale of licence for EUR 50.8 (EUR 40 million paid and accounted for in q1 2012)

• Further projects will be announced closer to launch (USA and Mexico)

• Revenue from Nestlé is estimated in 2012 (excluding the up-front payment) to 50% of sales during 2011, in 2013 close to 2011 level and from 2014 and forward more than 2011

Sales development (excl. licence revenue 2012)

24

Average growth: 24%

2008 2009 2010 2011 2012 0.0

 50.0

 100.0

 150.0

 200.0

 250.0

 300.0

 350.0

Sales per year

Sales

Year

Milj

oner

kro

nor

+40%

+16%

+36%

+33% -8% *)

*) Excluding licence revenue of SEK 356 million from Nestlé

Sales development Finished consumer products

25

2008 2009 2010 2011 20120

50

100

150

200

250

Sales of component products

Sales of component products

+12%

+30%

Average growth: 27%

+46%

+39%

+10%

Income statement 2012 vs 2011

26

Licence Licence income incl. income excl.

2012 2012 2011Net sales Finished consumer products 237,6 237,6 215,5 10%Net sales Component products 50,6 50,6 97,7 -48%Net sales Other products 1,1 1,1 1,8 -39%Licence revenue 356,0 - -Cost of goods sold -88,2 -88,2 -98,7

Gross profit 557,1 201,1 216,3 -7%Gross margin 86% 70% 69%

Operating expenses -126,6 -126,6 -113,4 12%Exchange gain/loss on operation -2,4 -2,4 0,3

Operating profit 428,1 72,1 103,2 -30%Operating margin 66% 25% 33%

Exchange gain/loss on forward exchange contracts 5,7 5,7 2,5Interest income 8,5 8,5 3,2

Profit before tax 442,3 86,3 108,9 -21%Profit margin 69% 30% 35%

Tax -112,4 -22,6 -29,3

Profit after tax 329,9 63,7 79,6 -20%

Balance sheet 31 December 2012 (MSEK)

27

Assets Dec 31, 2012 Dec 31, 2011Intangible assets - 0,3Tangible assets 49,2 24,2Current assets 92,8 83,8Cash and cash equivalents 375,0 171,5Total assets 517,0 279,8

Equity and liabilitiesEquity attributable to owners of the Parent company 453,3 229,8Non-controlling interets 3,5 0,6Total equity 456,8 230,4

Deferred tax liability 24,7 0,2Interest-free current liabilities 35,5 49,2Total equity and liabilities 517,0 279,8

Sales per segment (MSEK) (License revenue excluded) quarter 4 and 2012

28

q4 q4 Change     Change

2012 2011 % 2012 2011 %

Finished consumer products 65,6 57,5 14% 237,6 215,4 10%

Component products 6,8 24,5 -72% 50,6 97,8 -48%

Other products 0,0 0,4 -100% 1,0 1,8 -44%

           

Total net sales 72,4 82,4 -12% 289,2 315,0 -8%

Gross margin per segment

Finished consumer products 71% 75% 72% 71%

Component products 19% 57% 59% 62%

Other products - 75% 90% 94%

       

Total gross margin 66% 69% 70% 69%

Quarterly development q1 2009- q4 2012 (rolling 12 months) (MSEK) (License revenue excluded)

29

Q1 200

9

Q2 200

9

Q3 200

9

Q4 200

9

Q1 201

0

Q2 201

0

Q3 201

0

Q4 201

0

Q1 201

1

q2 20

11

q3 20

11

q4 20

11

q1 20

12

q2 20

12

q3 20

12

q4 20

120

10

20

30

40

50

60

70

80

90

Net sales

Gross profit

Operating expenses (Cogs excl)

Operating profit

Sales per segment q1 2009- q4 2012 (rolling 12 months) (MSEK) (License revenue excluded)

30

q1 20

09

q2 20

09

q3 20

09

q4 20

09

q1 20

10

q2 20

10

q3 20

10

q4 20

10

q1 20

11

q2 20

11

q3 20

11

q4 20

11

q1 20

12

q2 20

12

q3 20

12

q4 20

12 0.0

 10.0

 20.0

 30.0

 40.0

 50.0

 60.0

 70.0

Finished consumer productsComponent products

Sales per geographical market (MSEK)

31

     Diffdec-12 dec-11 Diff %

Europe 203,3 234,5 -31,2 -13%USA and Canada 28,4 17,8 10,6 60%Asia 32,4 37,1 -4,7 -13%Rest of world 25,1 25,6 -0,5 -2%

       289,2 315,0 -25,8 -8%

Europe 70% (74)USA and Canada 10% (6)Asia 11% (12)Rest of world 9% (8)

The Board

Thomas Flinck

Jörgen Thorball

David DangoorChairman

Inger Holmström

Stefan Elving

Paula Zeilon

Jan Annwall

Major Shareholders 31 December 2012

Total number of shareholders 31 December 2012: 7,384Foreign owners: 43% of capital (31% 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 1 259 2 000 8 666 11,6% 36,2%2 Sebastian Jahreskog 1 144 1 144 1 144 6,6% 4,8%3 David Dangoor (inkl bolag) 569 569 569 3,3% 2,4%4 Futuris 530 530 530 3,1% 2,2%5 Handelsbankens fondbolag RE JPMCB 510 510 510 3,0% 2,1%6 Pictet & CIE, W8IMY 506 506 506 2,9% 2,1%7 Swedbank Robur fonder 416 416 416 2,4% 1,7%8 Handelsbanken Fonder AB RE JPMEL 415 415 415 2,4% 1,7%9 Skandinaviska Enskilda Banken S.A. 407 407 407 2,4% 1,7%10 AMF-Försäkring och fonder 387 387 387 2,2% 1,6%

Other shareholders   10 387 10 387 10 387 60,1% 43,4%

Total: 741 16 530 17 271 23 937 100% 100%

• Continued focus on BRIC-countries and US

• A number of development projects with Nestlé

• Business model for Oral Health

Present focus

34