Biome Australia : Quarterly Activities & Cashflow Report

ASX ANNOUNCEMENT 20 April 2022

Quarterly Activity Report Q3 FY22

• ● Record quarterly sales of $924,698 up 58% versus the previous corresponding period (PCP)

• ● YTD (March) sales up 82.6% versus PCP

• ● Distribution points increased by more than 500 to 2,500+ in Australia

• ● Two new clinical studies validate Biome's product efficacy and ethics approval received for a third study

• ● Successful launch and rapid take-up by distributors of Biome Acne™ Probiotic

• ● Cash balance of $6.61 million at as 31 March 2022

Microbiome health company Biome Australia Limited (ASX: BIO) ('Biome' or 'the company') is pleased to provide its Appendix 4C and activity report for the quarter ended 31 March 2022.

Sales continue to grow strongly. Biome recorded increased net sales to $924,698 in Q3 FY22, up 58.4% on the previous corresponding period.

The Board regards the increase in quarterly revenue versus the previous corresponding period as an encouraging indicator of the company's growth trajectory, as the March quarter is traditionally the weakest performing quarter for sales due to the post-Christmas effect and school holiday period.

Total sales revenue for the three quarters to March 2022 was $2,727,310 up 82.6% on the previous corresponding period.

The Company continues to receive a very positive response from retailers and distributors, and has increased its Australian distribution network of pharmacy and health practitioners by more than 500 since IPO, taking total Australian distribution points to over 2,500.

Independent practitioners accounted for 29% of sales, up from 24.1% in H1 FY21 driven by the increasing numbers of practitioners recommending the Activated Probiotics range to their patients. Biome's community pharmacy sales channel currently represents 67.5% of sales. This percentage breakdown of channel sales is in line with the company's expectations.

Biome has experienced a strong start to the current quarter with increased sales to existing retail distribution partners, and a significant pipeline of near term sales opportunities currently under negotiation. While it is still early in the quarter, the level of sales momentum gives the Board confidence that Biome will finish the financial year well, with June quarter expected to be another record quarter for sales revenue.

Product launches

Following the publication of independent clinical trial results, Biome successfully launched Biome Acne™ Probiotic into its existing network of over 2500 pharmacies and practitioners across Australia late in the quarter.

First shipments to fill pre-launch orders were sent to wholesale customers, which include distributors Symbion, API, Oborne Health, Rener and Ariya. Biome Acne ™ Probiotic is the newest addition to the Activated Probiotics® brand and was showcased successfully at the Australian Pharmacy Professional Conference (APP) in late March 2022.

Clinical Study Success

During the quarter, the successful results of the Probiotics in Pediatric Asthma Management (PROPAM) study were published in the Journal of Immunology Research, expanding the published evidence of efficacy for the company's Biome BreatheTM Probiotic (Ref ASX announcement 2 February 2022).

Additionally, a successful clinical study on the use of specific probiotic strains in acne was published in the Journal of Dermatology and Therapy which supported the release of Biome AcneTM Probiotic (Ref ASX announcement 9 & 14 February 2022).

The company will continue to drive its growth strategy by supporting the launch of products that address specific public health concerns with clinical research to demonstrate the efficacy of those products in alleviating targeted health conditions.

Further progressing its clinical development, Biome received ethics approval for its Biome Daily KidsTM clinical trial from the Federation University School of Health. The trial aims to demonstrate the product's efficacy for improving immune health and reducing absenteeism from childcare centres.

The product was initially developed in 2019 to lessen the burden of respiratory and gastrointestinal infection transmission in children by reducing symptoms and severity. The product generated revenue of $279,246 in FY21. Results from the trial are expected in early 2023.

Company Financial and Corporate Overview

Cash at the end of the quarter was $6.61 million (31 December 2021: $7.74 million). The Company received $711,104 (previous quarter $983,000), in cash receipts from customers in Q3 FY22. Sales in Q3 are weighted heavily towards the end of the quarter, resulting in almost half of the Company's sales generated in the last month of the quarter. This resulted in higher receivables of $755,948 (unaudited) at the end of March which are subject to our standard payment terms.

Net cash outflow from operating activities for the quarter was $1.11 million (previous quarter net cash outflow of $710,000) reflecting the seasonal trend of slower sales at the beginning of the March quarter. Business activities expenditure totalled $1.82 million for the March quarter (decrease of 5% from the previous quarter of $1.92 million), consisting of advertising and marketing of $204,000 (previous quarter $221,000), operating costs of $789,000 (previous quarter $859,000) and research and development of $51,000 (previous quarter $23,000) with the balance being administration and staff costs of $775,000 (previous quarter $797,000).

The table on the following page illustrates the expenditure comparison against the Company's 'Use of proceeds table' in the Prospectus dated 19 October 2021:

Use of proceeds	Amounted budgeted in Prospectus	Actual amount spent to date
Inventory	$2.4 million	$0.3 million
Sales & Marketing	$2.15 million	$0.6 million
New Product Development	$0.5 million	$0.1 million
Administrative & Working Capital	$1.95 million	$0.14 million
Costs of the Offer	$1 million	$1.07 million
Total	$8 million	$2.21 million

Table 1: Use of funds

The Company notes in the March 2022 quarter, the Company paid $138,000 to Directors of the Company in fees, salaries and superannuation.