Biome Australia Limited ($BIO)

Good morning, everyone. Thank you for joining the Biome Australia webinar. My name is Blair Norfolk. I am the Founder and CEO of Biome. I've got Lauren Dwyer with me today, our CFO. Also joining is Dr. JB, Biome's Senior Scientific Officer, that's been with me on this journey for many, many years. So JB is here to support some of the Q&A that we get on the BMB18 strain, some of our IP development and clinical trials. So I will just get started as well. The webinar is being recorded. So there will be an opportunity for people to watch after if they can't stay right through or for any of your friends that have missed out. So jumping in right away. We like to always start on this slide. It's important to reinforce why the company exists and what our values are and why we do what we do because it's not just a set of numbers at Biome, all the things that go into bringing these incredible numbers to life are the clinical trials, the values, the mission, the patients that are taking our products that are receiving the benefits every day. So to prevent disease, improve health outcomes and quality of life, but also make our products accessible. They can't be too hard to get. I know we're a practitioner only and it's important to us to make sure the products are going through the right channel. They're not just retail products. However, they still need to be accessible. So it is a balance that we walk a fine line on. A bit of an update on the company. So -- sorry, I'll go back a slide. Just to reinforce, we are the #1 growth brand within all complementary medicine. That is vitamin products, probiotic products, other natural medicines. Within the pharmacy channel, we have been doing a very good job for a number of years now. H1, we'll do a quick recap on, but you've all seen that, but we had an incredible half last year. A number of clinical trials now supporting our products, 30 plus. I had a question from an analyst in Sydney yesterday about this and did another deep dive on our clinical trials. We have now more than 90 studies between in vitro clinical trials, RCT studies, meta analysis on our studies. There is a lot of research back in these products and a huge competitive advantage for Biome as we push further into that mission with BMB18. Scaling, we'll go into a little bit later, so I might glaze over that quickly. So a very quick recap of where we've come from. It's been an incredible journey. Some of you will have been here through the entire journey. Some of you may be new to Biome. FY '20 was the first year after launching Activated Probiotics into the Australian market. We did $830,000 that year. We then went on $2.1 million, $4.1 million, $4.2 million, $7.3 million, $13 million, $18.4 million, and now we're on for another record year in FY '26, which we'll be able to report to the market, hopefully, as soon as July. So incredible growth. We continue to achieve that growth and continue to deliver the numbers. But what I'm really excited about is the number of patients that are now coming back every month to get their Activated Probiotics. And one stat that we have shared in the past is from 1 of the largest health databases in Australia, the average patient or customer taking the Activated Probiotics products is purchasing 2.5 boxes per transaction. Those are monthly boxes, and they're coming back 7x a year on average. So that's more than 12 boxes in every 12 months, which is incredible. And it almost leans into that fact that while we're not a recurring revenue business, the practitioner model does present a very similar style and the patients have had this product recommended by a doctor, a naturopath or pharmacist, they're serious health products. They're not just a multivitamin. So as a result, people trust them, they rely on them and they're meaningfully improving health outcomes. Lauren, do you want do a quick recap on H1?

Yes, absolutely. So H1 was our strongest half year on record. And as you can see, a lot of really positive key metrics here. So our revenue of $12.4 million was 40% up on the previous corresponding period. Our adjusted EBITDA, excluding share-based payments, was $1.47 million, which was actually our eighth consecutive quarter of reporting growth in our EBITDA. And our net profit positive of $1.18 million, which was up 172% on the prior year, which we'll talk about in the following slides as well. Our gross margin, 61%. That really, obviously, we've been able to maintain a gross margin of above 60%, which speaks to our ability to scale without margin dilution, which is really important. And obviously, something that we take great pride in, is the fact that we haven't implemented price rises since formation of commercialization...

That's important to a lot of people.

Yes. So...

Certainly today.

In tough economic challenges and climates that we faced over a number of years, we've been able to hold that gross margin, and we've got some pretty exciting plans for our gross margin improvement as well, which we're going to talk about in the following slides. Our operating cash flow was $3.21 million turnaround at the half year relative to the previous corresponding period. So we had operating cash inflows of $2.09 million or $2.1 million, I should say, and our EPS of $0.53, which obviously speaks to shareholder value creation. Okay. So this slide is really, I guess, just harnessing on those key metrics of the revenue growth, which we're seeing as we expand our distribution points and the number of customers ultimately taking our products. But really, 1 of the headlines is that scalability and expansion of the net profit, which is compounding more than 4x faster than the revenue.

Yes. I will glaze over a few slides. I think you've all got access to it, and I'd rather use more time for Q&A today. So this is probably 1 of the most exciting points that we're going to talk about today, something that wasn't announced when we did announce this webinar. I'm really pleased that we have an opportunity to actually go through this because onshoring manufacturing [ for ], this is not just adding another manufacturing in our list of 5 or 6 manufacturers that we have registered around the world. This is a step change for the business. So I know some people will be excited about the margin improvement and the working capital improvement, and Lauren can talk to that in a moment. But from my perspective, this is a massive commercial opportunity for Biome to be able to really service our international markets, support scale, be able to run smaller, more frequent batches, improve our stock turn. There are so many advantages that we're going to be able to unlock through working with SPA in Australia beyond the obvious cash advantages and P&L advantages. But where I see this as a strategic partnership is Craig Silbery, the Founder [Technical Difficulty] was for those that are unaware, a very successful transaction in Australia. They sold that business for $680 million to By-Health in China only 5 years ago. And Craig has been a big supporter of Biome in Activated Probiotics and really wants to see us succeed in a similar way. So he will absolutely be helping us strategically to open doors and create new opportunities, whether that be for new product development, new relationships, commercial relationships locally and abroad.

Thanks. Yes. Super exciting. Obviously, I'll just speak to some of the key points in what we've flagged obviously in our announcement earlier this week is the gross margin uplift. So we do expect that in the next 18 months as we scale and transition onshore that we will be able to achieve 65% plus gross profit margin, which is obviously a key financial metric, and we do...

To be clear on that, we're saying that's FY '27.

Yes, over the next 18 months. So yes, from September 2026, when we start doing the production onshore. And yes, I guess, we do expect further to speak to that growth in the net profitability and continuing to expand and increase our bottom line for shareholder value. So in terms of working capital, obviously, this is a primary focus of ours and 1 of the key reasons that we need to actually bring this manufacturing onshore. So having shorter lead times and less working capital tied up in inventory, that's actually at sea. Currently, our manufacturers, we've got stock that's sitting on sea for anywhere between 8 to 11 weeks in the current climate. So having that cash available not tied off in inventory is paramount to this...

That's something we, together did an analysis on only a couple of months ago, just with the growth in the business with supporting that growth for the future, the amount of inventory that we're starting to see was creeping up to the point where I think at 1 point, there was more than $2 million sitting at sea in that time period, which is aging. It creates a strategic challenge for us as well with our customers. Some of them want a year -- a year or 1.5 years dating on their products. So for us to be able to do their smaller batch runs locally and have the pricing built in at an annual total volume rather than a larger or smaller batch volume is an incredible strategic advantage for Biome.

Yes, absolutely. I would also say with the forecasting as well. Obviously, at the moment, we're having to forecast very far out, and being at such high growth and wanting to continue on that trajectory, having shorter forecasting time will very much help.

Exactly. It won't be sitting on 7 or 8 months now, which is a huge advantage for us. Not to glaze over as well, Australian made is a major point of difference in the global market, not just for China and the CBEC market. This is a material competitive advantage. Not to say Italian made is not a positive, but Australian made for an Australian company is something that we'll really be able to lean on as we continue to scale into different markets beyond the ones we're in today. And yes, so just to reinforce, this is an absolute step change for Biome, and we look forward to the numbers starting to flow through as well in FY '27. This is a question that I've had a little bit, and it came up on my roadshow this week. I've been up in Sydney the last 2 days with instos -- with a health investor show that Morgans just ran for a live group of investors the day before yesterday. The global probiotic market now is estimated at around $75 billion. So I want to be really clear on what all these numbers mean. So the global market, to get the data on that, a lot of that will be, potentially even half of that might be food-based products with probiotic ingredients. So specialized probiotic ingredients not necessarily health products, but they sit in that fringe category. Whereas the Australian probiotic market, this data, we have more granular data from scan sales and local organizations that we work closely with on data and data analysis. This is probiotic supplements. So that $600 million of scan sales, roughly 70% of that sits in pharmacy according to complementary medicine Australia's market analysis. Only about 15% or so sits in grocery, about 5% in e-commerce only. And then health food stores and other retailers make up the remaining balance. Obviously, community pharmacies, Biome's main business, and community pharmacy absolutely takes up the lion's share of that 70% of the market, which we are the leader in today with our probiotics and community pharmacy. I'm pleased to say we believe Biome Daily is now the leading product in community pharmacy. It was #2 in January when we looked at it. And looking at the decline of the leading products and the growth of our product, we believe we will just about have passed that and have the #1 product in pharmacy today. So where Biome is at, $20 million, $25 million, roughly our run rate, that gives us about 10% market share of the pharmacy channel, which is 70% of the market, which gives us incredible headroom to grow. So this isn't where we're getting to. We have a very significant base now. The brand is 1 of the strongest in the markets. If you walk into your local TerryWhite Chemmart, Priceline, Blooms The Chemist, you'll see a huge bay of Activated Probiotics behind the pharmacist. And if you do see 1 with the probiotic in front of the counter, please give me a call and let me know because we'd like to address that immediately. We like to take our compliance very seriously and protecting the brand is something that I see is 1 of my top few jobs. And -- but where we see this is the next 5 years, Biome has a huge opportunity to significantly grow beyond that current run rate to a much larger number that I'm not going to give a forecast on today. But when we release our Vision '30 strategic plan in FY '27, there might be a bit more context. So this is a point that I'd really like to spend or a slide I'd really like to spend a little bit of time on. So where we're at in the market in the broader sense is great, but how we're going to continue to grow and develop strategically is something that we need to spend some time. I want everyone to understand. So as most of you will be aware, we don't stock our product in the discount pharmacy chains, including the yellow one. At this stage, we see that it's not the strongest point for our brand to be in discount chains. We work in premium independent community pharmacy, which is the bulk of the market in Australia, contrary to what the media says about some of the discount chains taking over. Community pharmacy is the backbone, and it does represent 90% of the pharmacies in Australia. Within that, TerryWhite Chemmart is the largest pharmacy banner group by doors. They have now 650. Biome is the #2 brand to a multibillion-dollar market leader. And we are [ treading on their heals ], we believe, within the next 12 to 18 months to be the #1 brand within the entire TerryWhite network in terms of revenue, profitability, gross margin return on floor space, gross margin return on inventory, we're making their stores and their independent owners a lot of money. I've sat down top to top with TerryWhite over the last couple of months and we're discussing more of a strategic partnership. I can't get into the terms of that. But put it this way, they are very incentivized to keep Activated Probiotics, a premium specialty product to keep customers in their doors, and they're very motivated to double or triple our sales within their network, even though we've been there for 5 years, and we've already got a very advanced business. They're motivated to help us grow at a similar rate over the next few years. Similar with Priceline Pharmacy, we're a little bit newer into this network, I believe, we're probably about 3 years in. We're now a top 5 profitable brand in a very large network, which is a big volume chain. It's not far dissimilar to the type of foot traffic you get in the deep discounters. But a bit more of a premium in health positioning than you see in those other grocery or discount pharmacy chains. Priceline is also backed by Wesfarmers Health, and Wesfarmers Health are working with me directly as well on really reinforcing a strategy -- a joint operational strategy with Activated Probiotics to get it to be the #1 brand in their network. And they're also motivated incentivized to do so. So I'm quite excited to have those very powerful pharmacy organizations understanding that we're best-in-class and wanting to back the great results we've already got to continue growing. So practitioner only, I haven't mentioned this. And for those that might be new to the business, I probably should also mention the products and the research of what we do. I think I've got that on the next slide. But what does practitioner only mean and why do we do it? Why don't we just make our product easy to get? Why don't we put it on Amazon or put it in the discount change or grocery? Wouldn't we get more revenue? Sure, we would. But also what would happen to our brand in a year or 2, it's a race to a bottom and our margin would erode, discounts would pop up very quickly. We'd be on every e-commerce store within months, and it would be removing the product from solutions, quality, supporting patients with health conditions and would become just a race on price. The practitioner in the market is something that was developed by a company called Metagenics in the '80s in the U.S.A. It was a model that they built to go directly to doctors and health professionals to pitch them on a higher-quality product, traditionally a natural medicine or a probiotic or a herbal product, to be able to support their patients and also make a margin. So traditionally, doctors didn't make a margin on this type of product, but they opened up this concept and have built a $3 billion business. And turning over, we estimate about AUD 1 billion. And the largest market outside the U.S.A. is Australia. So practitioner only model is very much aligned to a pharmaceutical calling model, you've got health qualified reps that are going to go in detail clinical trials, explain the mechanism of action to health professionals, really build trust. And in turn, for that trust, health professionals will then recommend your product. This is a model that we built very successfully based on the clinical trials that we have in our product, which is our competitive moat or point in difference. The Activated Probiotics range is mostly clinically proven on different conditions, and I'll talk to those conditions in a moment. But what this model does is it essentially unofficially recruits health professionals to be part of our sales team and those 20,000 or 30,000 health professionals in the Australian market that are recommending our product every day gives us a huge competitive advantage over marketing brands that just have billboards, price and discounts to promote their brand. So it's trust, it's quality, and it also leads to the repeat purchase that we see that we enjoy that I spoke to earlier. So the 2 brands, Activated Probiotics, which is 1 of the leading probiotic brands in the Australian market, certainly the #1 practitioner only probiotic range. We launched this in 2019. We have now 19 SKUs or 17 different products with 2 multi sizes in the range. The products range from general digestive support with Biome Daily and Biome Daily Kids, our 2 best sellers, that support digestion immunity backed by clinical trials. And then we have a range of roughly 50% of our sales is across conditions or preventative -- disease preventative products as well like Biome Lift that you can see on the page there. So Biome has the world's leading gut brain or mental health probiotic in Biome Lift, the 1 I just mentioned, with 3 randomized placebo-controlled double-blind studies on, firstly, depressed mood, stress and sleep. Secondly, we looked at anxiety with very strong p-values and great outcomes. And then third, we did just study with Latrobe University, which only concluded about a year ago. Looking at subthreshold depression. So moving from the healthy patients with depressed mood and stress, all the way through to subthreshold depression. The other 1 you can see on the slide there is Biome Cholesterol. This is our #1 growth product this year. I believe it was up about 75%, 76%, 77%. Biome Cholesterol has 5 clinical trials supporting it reducing LDL cholesterol, which is the type of cholesterol that doctors are asking people to really manage and support for their general cardiac health. So Biome [indiscernible] clinical trials, which is used as an adjunct or support product alongside statin medications. Where that gets really interesting for Biome is statins are the #1 and #2 drug on the PBS by volume, with our product position in the dispensary as a professional product, it's a great opportunity to see how we can have these products recommended alongside those medications safely, appropriately leading to a better outcome for that patient. We have had stories of people reporting that Biome Cholesterol has helped them manage their statins better. And with their doctors' advice, they've been able to even look at where that long-term picture goes with their statins. Activated Therapeutics, last but absolutely not least, this is our new brand that we launched in July last year. Activated Therapeutics is an opportunity for Biome to move beyond the world of probiotics, but still stay in the Microbiome world there, where we live, where we love doing our research in the space that we're beginning to really own in Australia and abroad. So this range has got health adjacent products that we'll be able to support Activated Probiotics with, firstly, with Synbio-GOS, the product you can see on here, which is a gut repair probiotic. This is the type of product for people that may have never taken a probiotic. There might not be a probiotic customer but it's a gut healing product for maybe, say a man that's coming into a pharmacist saying, I've got gut issues. I don't know what it is. I'd like as quick solution. It's a product that heals the digestive lining, and with its mix of GOS fiber, which is clinically proven to support the digestive tract and 2 probiotic strains with the matching study that we've completed, it's a really nice entry-level product. Macro-PRO, which you can see next to it is supporting GLP-1 patients. It's something that we just can't stop talking about at the moment because the amount of people buying these peptides online or going to doctors for weight loss, diabetes and all sorts of other reasons to be taking these peptides, particularly GLP-1. Macro-PRO is being designed to firstly support sarcopenia in the elderly with muscle loss, but also that same patient on the GLP-1s that are experiencing rapid muscle loss is to support them going through that process. So it's an N1 or an adjunct product. One other product I'd love to talk about in that range, which you can't see here is called Pepti-BIOTIC. Pepti-BIOTIC is a gastric reflux, so GORD or GERD product. It's a delicious watermelon drink. It's also clinically proven. It's a specially fermented soy product with a postbiotic, which was a prebiotic but heat killed, and that product supporting patients around pharmacies with their reflux needs, and it's providing a really unique alternative possibly against long-term PPI use, which no pharmacist or health professionals like patients. Just to lead on from the Biome Cholesterol, conversation a moment ago. This is a bit of an overview of some of the adjunct medication opportunities that the Activated Probiotics range has. So as I said, condition -- as they're condition-specific, clinically proven on these different conditions, in the dispensary in the pharmacy, it's a perfect opportunity for us to work with health professionals, whether that be a doctor, a medical specialist, a pharmacist or even a dispensing tech behind the dispensary in the pharmacy to grab 1 of the Activated Probiotics, for example, Biome Osteo, which is clinically proven to reduce bone loss and could be sold alongside osteoporosis medication. Biome Breathe, my favorite product. This product was studied to reduce asthma exacerbations or asthma events by 64%. And Biome Lift, that I mentioned earlier as well, could be recommended alongside anxiety or other mental health medications as well. So this is the opportunity for Biome to really grow beyond the probiotic market, which we spoke about earlier. We already have our products, in most cases, positioned as category expanders, not just taking market share from the other brands, but this takes us a step further into the adjunct prescribing alongside the 330 million prescriptions that are on the PBS currently. Every one of those prescriptions is an opportunity for 1 of our products to be recommended, and we do not believe there's another brand that can even compete in this space. A very quick overview of BMB18, as I know, I think we're getting through time very quickly. BMB18 is Biome's first own strain. We do have a number of strains on exclusive license. But what this is, is a step change for Biome into IP ownership. Of the initial in vitro studies we've done on the strain, it's 1 of the strongest results we've seen, certainly, mechanistic data around immune support, on inflammation, and we also believe it's a great candidate for neurodegenerative diseases, and that will be an opportunity for future clinical research. The first study, which we've already released 240 participants double-blind placebo-controlled randomized study with La Trobe University, we mentioned in an update just last week that, that's now been expanded to Athens University as well. And so now we'll have a multi-dose multicenter study with 240 participants, and we'll be expecting that we'll be able to show some really material p-values and results within the next 12 months on gut health and also mental health. So watch this space for more on the BMB18 study. But it is really material for Biome, because this will further protect our products, we'll be able to add our strain as a hero to some of our existing lines that are doing large volume, which adds value to the IP as well as people look to how to understand Biome Australia as a valuation perspective, not just on brand, not just on growth but also on IP that has sales behind it. And it will also create a very unique opportunity for us to do new product development into areas where we have no competition at all. So where we're at right now. We've announced we have 7,500 distribution points in Australia. The addressable market is estimated at around 12,000. But what I want to reinforce is about half of those 7,500 have not really been developed to the point where we see them as top Biome accounts. So our model has always been to be the #1 profit driver in each independent pharmacy. We work with them to be able to develop the understanding of the product, to understand that it's unique. It's keeping the customer in their ecosystem. They can't go buy it on Amazon or the supermarket or the discounters. And the gross profit, the margin that they're making on this product is a lot stronger than other products in the category. Not to forget the point that these products actually work and the patients are coming back to buy them again. So while yes, we're at 7,500 out of 12,000, there is a huge opportunity still over the next few years to develop, and we'll look forward to giving you a report on same-store sales growth in the coming periods. International markets, I know everyone is waiting for a material update on this, and there will be 1 coming with the end-of-year report. Australia is established, but still growing fast. We have already mentioned, I believe, that Canada, we are seeing all the early signs that we'd like to see in an early market, and I'm very positive about what's happening with full script and Ecotrend in Canada. Ireland and the U.K., Ireland has become the crown jewel of Europe, and I look forward to reporting on that. Ireland, we have a partnership with Uniphar, and Uniphar also own about 40% of the pharmacies in Ireland. And as we keep delivering results, they are unlocking more pharmacies for our products to be ranged in. Road map, I don't need to go over this. We can gloss over. Near term, I think we've spoken about most of this. Happy to hand over to questions.

So we've had a couple of questions come through. The first one, can you talk us through BMB18 and what [indiscernible] into the Biome.

Maybe I'll talk to it and then JB, I might ask you to give a bit more background since you've had a very long career in IP discovery and even drug discovery. So from Biome's perspective, it's not just that step change in ownership, but BMB18 is really the next generation of probiotics as well. So having that strain commercially would be an opportunity should we choose to license it out. We could do a deal with 1 of the major probiotic manufacturers in the world that we have very close relationships with, people I sit on the IPA board with. There are optionality that Biome will be able to identify. But JB, could you explain from your perspective, what does this patent mean that we've lodged in? How do you see this is valuable for Biome?

Well, thanks, Blair. I think that, honestly, it's probably, for me as Chief Science Officer, the most exciting thing we've done, I'm always very happy to see the financial success. But to me, this absolutely catapults Biome into the realm of being a biotech company. And it's a fantastic step in that direction because if you look at how much biotech companies are valued around the planet and how much good they do, it's nice to be in that sector. As far as BMB18 specifically is concerned, it really is a fantastic step forward for us, gives us that point of difference. Very, very powerful strain. We lucked out with our first choice. It really, I think, is going to be a strain with extraordinarily broad utility and that will allow us to use it in many, many products and use it specifically as a stepping off point for new product development. As we understand more about BMB18 and what it can do, it will give us a pathway into condition-specific probiotic formulations, including BMB18, and other strains that can address new unmet needs. And that's really exciting for me. Having been in the drug development and drug discovery area for closing on 40 years now, it's probably the biggest step forward that we can make as an organization. But in the same way, it's just the first step in a whole new realm of strain discovery, being able to go in new directions and really leverage the fact that we have such a good competent capability in terms of bringing these things to market to really deliver some, I think, exciting products into the future. So I think...

Thank you, JB. We're very careful to ask you to not say too much more because we've got to be -- consider our continuous disclosure as well. And also I love the reference to biotech. The value of biotech without the spend of biotech. So it's important to note, we've managed to develop this strain for the best part of about $300,000. It's been done through the relationships that we've got that we're able to leverage that a biotech wouldn't be able to do. So we're able to develop these very high-value assets without burning cash. So it is exciting that we can continue to look at this IP portfolio over the coming years.

And I think to that point, this is a model for biotech going forward. Increasingly, the huge amounts of money that many of the large ones are throwing at the work that they're doing is not resulting in the sort of outcomes that we've got for an absolute fraction of that spend. So I think we're showing some real leadership in that field.

Next one come through. Can you determine what percentage of your sales are being generated from the adjunct market opportunity?

Very reasonable question, very difficult question to answer. So we do get scan sales in the pharmacy market. It's very hard to determine exactly what percentage it is. But the best way that I look at it is looking at a specific product. So Biome Cholesterol that I mentioned, up 77%, that's the obvious product alongside Biome Advance, which is prescribed with antibiotics, which is 1 of the high-volume co-prescribing products in a pharmacy. So we know it's working, but we have to trust the feedback from the pharmacists. We have several programs, I believe, 7 or 8 programs with different pharmacy chains where the products are actively in the dispensary point-of-sale system. So if a certain medication gets scanned, a product will pop up. So for example, if it's a medication for a UTI Biome Her might pop up as an N1 or a recommendation to sell or recommend to that patient alongside the antibiotics for UTIs. So a difficult question to answer. We are working on different methodologies to track it, but we do see certain groups doing sales volumes higher than we expect. And then that is pointing to the direction that it is absolutely working.

Just circling back to another question on BMB18. Can it be used to improve or leverage off existing probiotic products?

Absolutely. I'm not sure if I had already addressed that or not. But BMB18 is intended to be added to our high-volume products, which further protects our IP, the company from competition and adds a strategic point of difference from a scientific lens as well. So I would like to see BMB18 coming into our products within FY '27, that's a goal of mine. We're still working through that with our manufacturers and teams. But we have already done a commercial batch. We validate it. We've got the safety. We've got the research. It's ready to go. So it's just working through that process of getting it into the production cycle now. In terms of our launch products just on BMB18 for different health topics or new areas, that might be a little bit longer as we continue to do the clinical research. But optimistically, we'll get some results within FY '27 of the first study as well. So as we get those, we'll report where we think we can take that with innovation.

And just a note on that, BMB18 actually turns out to be a rather robust and not particularly difficult probiotic to make at scale. That's not always the case with newly discovered probiotic. Some of them are quite finicky, this 1 is not. So...

You're right, JB. And very quickly, that's probably a good point for me to touch on as well. So the commercial development is equally as important as the scientific development. And this is where, I guess, some of the biotechs in live biotherapeutics probably fall down as well. So being able to develop a living bacteria within a small testing environment, the challenge is, how will it scale up once you develop it. So we have probiotic strains that might cost anywhere from $100 up to $4,000 or $5,000 a kilogram. And that depends on the yield that you're producing. And even being an expert producer or commercializer of the fermentation process, you still have to be able to select the right strain because it might not ever get a commercial yield that could be affordable. So we want these things to be high value, but we don't want them to create products that are going to be $500 a month because they just won't be accessible for people.

Do you have an early view or strategy for the Chinese market? And can your newly announced onshore production be scaled up to sort of a massive market such as China?

Really good question. Look, a lot of the big Australian vitamin companies have had their success and failure in China. I sit on the complementary medicine in the Australia Board with the CEOs of Swisse and Blackmores. We share many dinners talking about this specific topic. And the pains that they're currently having on the specific topic, there was -- I got to be careful what I share what isn't public knowledge with the CMA, but there has been a recent issue with China and Australian manufacturers. None of the ones that we're working with, but some have actually lost their license recently and are fighting to get them back. The CBEC market, that cross-border market, that's been the main route for Australian brands into China is also under review by the Chinese government. So there is a lot of risk in the market at the moment. I'm actually on the ground in China from next Sunday for a week. Austrade have invited me over with 1 of 5 brands, including Blackmores to being in Australia Pavilion, which is going to be a very interesting experience. The first time the company has officially been in China. Our strategy for right now is we will always assess for our local partners on the ground. We don't believe it's the right time or the right market for us right now to go and it is very generic. It is very low quality still and the copycat issues are not -- are real problems to solve. So our strategy has always been look at the developed markets. The markets are more advanced. We think North America presents a very real opportunity with the practitioner only market, whereas China is still a little bit early stage, but I will report back after my trip next week.

When will you be able to buy in the U.K.?

Immediately.

Now?

Yes. So Biome launched in the U.K. and Ireland initially through the practitioner market about 2 years ago. The retail market in Ireland is more advanced. As I mentioned earlier, we have the partnership with Uniphar, but there is a list of health food and pharmacies today that you can certainly within London and the [ M25 ring ], which if someone wants to send us an e-mail to [email protected], we can direct them to a stockist to be able to get the products.

Okay. Maybe just a couple more. What is your -- what is behind your the new 2-year arrangement with probiotic?

I actually got this question when I was on the road this week from an instos. So why did we sign a 2-year agreement on our 5-year agreement? So this is very intentional. My preference is actually for it to be a shorter period of time. The reason being Biome has many supply chain partners now, and we're constantly reviewing and optimizing those supply chain partners and what they provide us. We want to make sure we have the highest quality product. We also want to manage our cost base and our margin and our route to market long term as well with the right partners. So the next agreement with that partner, we are in discussion, negotiation on a new 5-year agreement. It needs to meet Biome's terms. It needs to fit our business as we grow and scale, and we have given a list of things that we would like them to be able to support us with. We also have a list of other very significant IP companies and probiotic manufacturers that would desperately like Biome's business. So we're just reviewing what will be best for Biome as we move forward. And that 2 years gives us an ample window to be able to complete that project and then continually report on what will be best for Biome's IP, Biome's product and Biome's margin.

Okay. Next question. Why are you not reporting a revenue figure for Q3? I'm happy to take this one. So the Appendix 4C is a quarterly cash flow report, that's an ASX requirement. And that doesn't encompass revenue. There are 2 different things. And those metrics or cash flow and revenue don't necessarily always correlate in lockstep, particularly for our business. We consider a single quarter's revenue in isolation. It doesn't tell you a lot about our business. And Q3 also has the impact of seasonality and cyclicality, which further could distort any read. Rather than, I guess, input a number on its own, we would rather now move to a model where we give you, I guess, the complete picture each half year reporting period. So at the interim for -- at 31 December and also at the full year, come, 30 June, and report revenue alongside gross margin, EBITDA and net profit. That timing should come straight after the Q4 close for the full year and the cadence will actually then reflect, I guess, more transparency on how the business actually performs over the full year and half year period. So nothing -- I guess it's worth probably touching on it. Nothing has actually changed in the trajectory even though we didn't report Q3 revenue, which was a change. This is more about the quality of ongoing reporting and making sure that we're reporting on metrics that actually are operationally focused. So yes, we look forward to reporting on the Q4 results next month.

And this was a decision that the Board didn't take lightly. It was debated a great detail in January. So it wasn't a last-minute decision that we decided to allay any concerns. I note as well, there's been questions around this around our cash receipts as well as a proxy for revenue, which cash receipts is not a proxy for revenue. There is a lot of distortion on timing with some of our partners being on 60-day terms. And even looking at a PCP basis, January is the last month of the year. So it's not a direct correlation. So from that question around timing, we are absolutely happy to give a transparent report ahead of our final audit, and we will do but we're very happy with how the business is tracking. We have reinforced that we're on track for our Vision '27 plans. And we certainly have not fallen off a cliff in the last couple of months after the best half we've ever achieved.

Yes, absolutely. I think just to further sort of comment on that with those working capital shifts as well. Obviously, the biggest drivers of that are our cash receipts from customers and the timing that we have is around different trading terms. So with the cyclicality of the business as well, again to circling back the cash receipts isn't necessarily a great proxy for revenue and also the timing of our stock build. Obviously, we've spoken about the challenges that we have with inventory and working capital being tied up at sea, but also stock build for the cyclicality in our business as we go into our peak season of the immune health months here in Australia. So, yes, I guess, kind of speaks to some of the movements that you may see if you look at things quarter-on-quarter.

Yes. Another one on just sort of the corporate program for Biome. I mean, I probably can't talk too much about what's going on other than there is a lot of interest in the company globally. And the share price, I know it's been a tough year for healthcare. I spoke at a Healthcare Conference this week in Sydney, and the opening remark from the Head Analyst from Morgans was "healthcare across the board is down 50% in the last 12 months." So what this is, is the market that we're in has been less favorable. AI has been stealing all the noise and a lot of the capital. It will be really interesting to see what happens with the AI market. From our perspective, it's actually supercharging our business. It's allowed us to really enable more granular reporting to liken that of a much larger business, which will be able to enable our sales teams using these type of tools into next year. But from the share price perspective, obviously, all we can do is keep delivering, and we will keep delivering. We'll report well, we'll communicate and the results will come through. It's been a much better week on market. And I think we're seeing a bit of a step change in people understanding that Biome has really taken that leap forward with this move to onshore manufacturing. The IP development and the clinical trials on top of the growth that we're already delivering. I want to reinforce the company is cash flow positive or profitable. Certainly, we reported that last year, and we expect to this year as well and we're now building on a foundation for a very large, very successful business in Australia and abroad. So I'll look forward to seeing what that corporate picture tells over the next year or 2 because there certainly is a lot of interest from different types of funds, different types of private equity firms, which we're certainly not engaged with at the moment, but the interest is there because the business is very high quality.

Okay. We're right on time. We've covered up all the questions.

Okay. Thank you all for joining. I appreciate your ongoing support.