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BIOME AUSTRALIA LIMITED (BIO) - Revolutionizing Complementary Medicine: Founder Blair Vega Norfolk on Vision 27 Growth Plan, International Expansion, and Groundbreaking Probiotics

September 02, 2024 • Andrew Musgrave

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Curious about how clinical research can revolutionize the complementary medicine industry? On this episode of ASX Briefs, we sit down with Blair Vega Norfolk, the visionary Founder and Managing Director of Biome Australia. Blair's inspiring journey from struggling with autoimmune diseases to establishing Biome in 2018 underscores his commitment to science-driven product development over fleeting industry trends. Learn how Biome has rapidly ascended to success with their ambitious Vision 27 strategic plan, aiming for substantial revenue growth through innovative distribution and educational initiatives. Blair also unveils their groundbreaking Biome Cholesterol Probiotic, emphasizing the critical role of clinical data in maintaining their competitive edge.

Discover how Biome Australia is setting its sights on the global stage, with promising ventures in the UK, Ireland, Europe, and North America. Blair offers valuable insights into their lean and cost-effective approach to international expansion. Additionally, get a sneak peek into the promising results from clinical trials for products like Biome Lift, Biome Osteo, and Biome Kids. With potential benefits ranging from improved mood to reduced bone density loss, these innovations are poised to bolster Biome's credibility and market presence. Tune in for an in-depth look at how Biome Australia aims to revolutionize the complementary medicine industry through clinically proven products and strategic growth initiatives.

Andrew Musgrave:

Welcome to another episode of ASX Briefs, and joining me today is Blair Vega Norfolk, the Founder and Managing Director of Biome Australia, a company that has seen remarkable growth and innovation, particularly with its flagship range, Activated Probiotics. The company's Vision 27 strategic plan aims for an ambitious revenue target over the next three years, signalling their intent to become a global leader in the complementary medicine industry. Blair, thanks for joining me today and welcome to the podcast.

Blair Vega Norfolk:

Thank you for having me. Pleased to be here today.

Andrew Musgrave:

Excellent. Now can we just start by getting an overview of the history of Biome.

Blair Vega Norfolk:

So Biome Australia was founded in July 2018. However, what many people don't know is the journey from founding. I suppose my time in this company and in the industry was back in 2013. So, after completing my MBA and doing some work consulting, I started to experience some of my own personal health challenges, working while dealing with autoimmune diseases. So after being diagnosed with my second one, I started looking into solving my own selfish problems, and that led me down the pathway of, you know, getting involved in clinical research rather than going back to university again. And off the back of that discovery journey and getting deeply involved in research, we founded Biome Australia and after many years already working in the nutraceutical space prior to Biome, we decided to move into the world of probiotics because that's where the research led us, not because of industry trends, because those products were most effective and seemed to have really meaningful benefits for patients that were currently not met by the existing pharmaceutical interventions or, I suppose, other complementary medicines. So Biome was founded off the back of clinical research.

Blair Vega Norfolk:

There is one story I love to tell. The first clinical trial we got dragged into was one a pediatric allergic asthma trial, so children with asthma, a specific strain of bacteria that we now use in our Biome Breathe, our asthma probiotic. It's called called lactobacillus lsr salivarius LSO1. I was put through a study on 440 children. 220 took the probiotic, 220 on placebo. We saw a 64 reduction in asthma attacks. So 64 less asthma attacks and the idea that you could potentially save a child's life. So for us we just went straight down the rabbit hole and saw this is too incredible to not look into more and to not continue to be a sort of a leader in the world of live biotherapeutics and probiotics. That fast forwarded us to 2019, when we launched our brand Activator Probiotics.

Andrew Musgrave:

Okay, and the company has set an ambitious revenue target as part of your Vision 27 strategic plan, which is a significant leap from the previous three-year plan. So can you walk us through the key components of this strategy and how you plan to achieve such remarkable growth?

Blair Vega Norfolk:

Well, I can and I can't. So we've got our Vision 27, which is our three-year strategic plan, that this is attached to, being released to the market this quarter. So that will come soon for people to be able to review. But what I can say is the last three years we've sort of averaged around 80% growth year on year. If you do the maths on that, you know this plan is fairly conservative based on growth numbers and the fact we've shared to the market. We expect to be able to continue delivering strong growth. So what I can give is a bit of a back of the envelope on where the business is at and where we expect to get to. So right now we have roughly 5 000 distribution points in australia, which is a mix of pharmacies and independent health practitioners which are either doctors or, say, naturopaths in private practice. We've developed about 25 to 30% of that market. So we believe we can three, three and a half or potentially four X our current revenue just by developing those accounts and spending more time doing education and training. We also have an opportunity to double down our addressable distribution market to about 80% of the Australian market, which would be about 10,000 distribution points, which again would show significant uplift and I would say would be well beyond the range of that cumulative 75 to $85 million three-year revenue target.

Blair Vega Norfolk:

But to explain our business and how we will get there, we're not a marketing company. We do research and we do deep dive in education with health professionals. So our team of health qualified reps, or practitioner education consultants, go around in detail pharmacists, naturopaths, doctors, medical professionals. We gain their trust. We explain the clinical trials. We then essentially recruit them to be recommending these products to their patients and to consumers. And that recommendation of the roughly 20,000 health professionals working through those 5,000 distribution points is very, very powerful. You know it's trust and that recommendation tends to support very sticky revenue, repeat purchase. And you know we see a big growth opportunity left within the Australian market before we even talk about overseas.

Andrew Musgrave:

Okay, and the company has recently launched the Biome Cholesterol Probiotic, supported by strong clinical data. So what role does product innovation play in your growth strategy and how do you see this new product contributing to Biome's market position?

Blair Vega Norfolk:

It's a really good question. So you know, the first thing I'd go out and say is we have 18 products. I'd say about 14 are clinically proven products, which is something that doesn't exist in the market outside of Biome. So that is drug-style clinical research which is peer-reviewed, independently peer-reviewed and published on diseases and conditions. So that's a key point of difference of Biome. But because we have A10 products, not one product is going to be the significant driver of our sales. We like to share that. Our products range from anywhere from about 3.5% to 8% as a contributor to total sales. So it's a really good mix.

Blair Vega Norfolk:

Having said Biome Cholesterol, it is the biggest market for drugs. So the top three drugs on the PBS are all statins which are cholesterol-lowering or reducing medications. Looking at long-term heart health indications or support for Australians, it is the largest killer as well in Australia different heart diseases and heart conditions. So Biome Cholesterol has four published clinical trials. Two is the standalone, showing it significantly reduces um the forms of cholesterol you want reduced. And then two clinical trials used as an adjunct or alongside statins, reducing their side effects, improving their effectiveness in reducing cholesterol. So it is a really big market. We do expect this product to be successful. We think it'll be at least 5% of our total sales. You know one of 18 products, but there's a good chance it might be you know a top two or three product being. We do really work to promote the products being recommended by our health professionals alongside medications. So with that in mind, we expect big things from bone cholesterol.

Andrew Musgrave:

Okay, and the company has expanded internationally, with a presence now in the UK, Ireland and New Zealand. So what challenges have you faced during this expansion and what markets do you see as the next key opportunities for the company?

Blair Vega Norfolk:

Yeah, I think it's a really good question. So look, expanding overseas is usually a shock for Australian companies. You think you're trying to replicate what you do locally. So we've taken a very different approach. We've had the benefit of sitting from the sidelines the last five or six years, building our local business, watching some of the bigger complementary medicine companies albeit Swisse or Blackmores or others trying to develop international markets and having certain resistance on certain topics. So what we do is we go out and we do a very lean, low cost test market launch in these new countries. So I'll use the UK and Ireland as the example.

Blair Vega Norfolk:

About two and a half years ago we went out, we recruited a couple of sales and education reps on the road and they were reporting into head office in Melbourne. So what we do is we run a very lean model which is very much close to break-even, if not above break-even, in that market or in that territory, and we develop the professional market. We go and detail doctors, pharmacists, natural medicine professionals to gain their trust. Once we see enough sales volume and not until then, once it's been de-risked, then we consider going to health retail, which is, say, the pharmacies or the health food shops, which is a more expensive launch, rather than going in there day one. Say you know, imagine going to America and launching into Whole Foods or into CVS Pharmacy. You're looking at a you know, $30, $40 million market entry strategy with a lot of it going into marketing and sales support. Versus what Biome does is we're going just for the professional market. The marketing dollars are close to nothing. It's just a human resourcing update, and a fairly lean one in that we're only recruiting sales and education staff, with all the support and shared services coming from the Melbourne office. So we did that. Two and a half years in.

Blair Vega Norfolk:

We then decided to launch into health retail in the UK and Ireland, so that is pharmacies and health food shops. That early stage rollout being it's only seven months in is going well. We reported 95% growth in international markets for FY24. Future markets will be expanding through the rest of European territories. So we see Europe as obviously very unique sub markets through different countries, different cultures and different languages. But our head office in the UK will support small teams of sales reps across different pharmacy and practitioner markets around Europe. And then, as we shared with the ASX toward the end of FY24, we've now got our Health Canada approval. So while we haven't given an initial plan or market timeline launch, the writing's on the wall that that will be the initial North American launch plan for Biome.

Andrew Musgrave:

Okay, and the company is currently running several clinical trials, including studies on Biome Lift, Biome Osteo and Biome Kids. So how important are these trials in reinforcing the credibility of your products and can you share any preliminary findings?

Blair Vega Norfolk:

Okay, look, you're very well read on our company. I'll have to give you that compliment. But yeah, so these three clinical trials have been underway for some time. First point I'll add is all of those three products Biome Lift, Biome Osteo and Biome Daily Kids are already selling on market and have been for several years, so we don't need these clinical trials. These clinical trials are a value add. It's not a, it's not a binary event. If they failed we wouldn't have a problem. Obviously, we don't want them to fail, we want them to go very well. The Biome Lift clinical trial has concluded. That's the third clinical trial on Biome Lift.

Blair Vega Norfolk:

The reason why we did this is we had an opportunity with La Trobe University in Melbourne who were very interested in studying depression, or sub-threshold depression in this case. That product had already been clinically proven to improve depressed mood, anger, stress and fatigue in healthy people. Initially it was studied by looking at medical students going through their exams, so a stressful period in a healthy population. The follow-up study on that was in the US. We looked at anxiety and that had really strong results. That's since been published and the third trial is concluded. We have preliminary results. We're just waiting for publication. So when that's published, hopefully any day now we'll be sharing that with the market.

Blair Vega Norfolk:

Biome Osteo that's the second follow-up study on the first. That was hugely successful. So the first study on Biome Osteo showed a 78% reduction in the rate of bone density loss in postmenopausal females. So that's the high-risk population for developing osteoporosis in later life. That was since peer-reviewed and published by the Lancet for Rheumatology, if not one of the world's leading medical journals. The follow-up study on that. It's a later stage of population on osteopenia. So people that are no longer healthy, that are halfway to osteoporosis. If we can show a really good outcome in that study which we should have some preliminary findings this financial year, if not final findings this financial year it'll be a really, really strong case for looking at that product, possibly as a drug one day, but if not, at least with further data to support medical professionals using this as a prevention and also acute care for patients alongside their pharmaceutical medications.

Blair Vega Norfolk:

Finally, Biome Daily Kids Study with Federation University. This one has completed. We're just awaiting final results as well. So this was completed by a PhD candidate looking at children in childcare centres. So again, it's our second best-selling product. It already works. It's got great market acceptance for kids with gastrointestinal challenges, immune health support in winter and also supporting tummy bugs, gastrointestinal bugs and also cold administration with antibiotics. This was looking to elevate this product to a clinically proven status. It was one of our more generalist products and now it's clinically proven, so we'll look forward to sharing the final results on that soon. I don't have a final date, but I know the trial is being written up at the moment so we'll have final on that. Then there are another three or four studies we haven't announced yet which we'll be able to share with the market soon.

Andrew Musgrave:

Okay, and just to wrap things up, what are some of the things that excite you most about the future of Biome over the next one to two years?

Blair Vega Norfolk:

Look, Biome's an impact-driven business, Like we generally, you know, believe and we have data to show that our products are helping people and in some cases even saving lives. So you know we love what we do. We're a passionate group. We have close to no competition, certainly no direct competition, at a product level. We've got, you know, we've reached scale in pharmacy and the brand Activated Probiotics has become a household name.

Blair Vega Norfolk:

You know, a year and a half ago our brand or our sales were completely driven by health professional recommendations and it's great that we could achieve that. But at some point, you know, the goal, the dream, was for people to be coming in and asking for it and we're pleased to say, over the last year and a half, the growth of our market cap and share price has been consistent with the growth of our, you know, customers walking into a pharmacy and asking for the product. So international growth, introducing the brand and the products to new markets and helping new patient populations, new research, is what we're passionate about because it helps us have a competitive advantage and solve new problems. And now that we are above break even cash flow and EBITDA are looking forward to, you know, continuing maintaining that to build a sustainable, high-growth, profitable business that really adds value for our shareholders.

Andrew Musgrave:

Okay, Blair. Well, thanks for your time today. It's been great to chat and it's been a fantastic update on the company, and we look forward to further updates from Biome in the upcoming months.

Blair Vega Norfolk:

My pleasure. Thanks for having me today.

Andrew Musgrave:

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.