PBX Probiotix Health Plc

25 September 2024

ProBiotix Health plc

("ProBiotix" or the "Company" or, together with its subsidiary, the "Group")

Response to General Meeting Requisition

ProBiotix Health plc (AQSE: PBX), the life sciences business developing probiotics to support cardiometabolic health is extremely disappointed to note the Requisition for a General Meeting which has been made by Platform Securities Nominees Limited, on behalf of Seneca Partners.

The Requisition sets out three ordinary resolutions to be proposed at the Requisitioned GM, which are set out below:

"Proposed Resolution 1: To remove Steen Andersen as a Director of the Company.

Proposed Resolution 2: To remove Frederik Bruhn-Petersen as a Director of the Company.

Proposed Resolution 3: To remove any person appointed by the Board, after the date of this notice, as a Director of the Company."

Having considered the proposals the Board (bar the Non-Executive Director Stephen O'Hara who it is believed is conflicted due to his position as Chief Executive of OptiBiotix) would like to confirm they are fully supportive of retaining Steen Andersen in his current position and appointing Frederick Bruhn-Petersen as a Non-Executive Director.

A summary of the views of the Board is as follows:

·    The proposed resolutions are not in the best interests of your Company and come at a critical time when ProBiotix is gaining commercial traction and is at an inflexion point in its growth trajectory. The financial results are improving and the future outlook for the Company remains positive.

·    The removal of Steen Andersen as Chief Executive of the Company would be hugely disruptive and would not only damage customer relationships but prove a disproportionately costly and wholly unnecessary exercise. He has carried out his role with professionalism and has never had grounds hitherto for any disciplinary procedure to take place. Mr Andersen was headhunted by the former Chief Executive of ProBiotix, Stephen O'Hara who has never aired any concerns previously or suggested a formal process in this regard be undertaken.

·    Following the recent share subscription by Holdingselskabet af 29.Juni 2010 Aps, the family office vehicle of successful Denmark based investor and entrepreneur, Frederik Bruhn-Petersen, the Company is now fully funded. To place his son, Frederik Bruhn-Petersen on the Board as a Non-Executive Director was felt to be a reasonable request in light of the significant investment in ProBiotix.

·    When Steen Andersen's appointment as Chief Executive was announced on 14 June 2022 (though there was a notice period for him to honour thereafter), Stephen O'Hara commented: "Steen's industry reputation, network of contacts, experience and track record of growing sales and profitability will help accelerate the growth and recognition of ProBiotix Health in its next phase of evolution." Steen Andersen joined the Company officially in January 2023 with the following comment made by Stephen O'Hara in the 2022 Annual Report: "This appointment was part of a long-planned strategy to appoint an experienced industry business leader to the Company to drive sales and profitability." There is nothing to suggest that these comments do not remain accurate and we fully endorse this view.

Funding Strategy

Earlier this year ProBiotix considered its options with regard to its funding requirement and sounded out potential investors to discuss the potential to raise further funds. At the time there was limited market appetite to inject fresh capital and, when approached, Seneca refused to participate. OptiBiotix were made aware of the possibility to invest but were also not forthcoming with funds. Subsequent to this, the Company announced its results (on 28 June 2024) for the year to 31 December 2023 and at which time it was flagged that there was an emphasis of matter with regard to cash and its potential future requirements.

In order to fund its growth aspirations ProBiotix was approached by successful Denmark based investor and entrepreneur Frederik Bruhn-Petersen with a view to making a significant investment in the Company. Given its previous unsuccessful attempt to raise money, the Board felt that by having a supportive shareholder with a long term focus it would enable the Company to be fully funded (and fulfil all its working capital requirements) and was a successful outcome for all stakeholders and represented the most efficient route to secure immediate funds.

With the new share subscription of £1,226,400 the Company made a significant saving in commission costs and crucially it has provided growth capital to fund future expansion.

Company Strategy

The Company continues to develop probiotics to tackle cardiovascular metabolic health and other lifestyle conditions which continues to affect increasing numbers of people across the world.

The short and medium-term focus of the business remains to build its customer acquisition in Europe and to establish a commercial platform in North America. ProBiotix has previously set out its strategy which details its belief that over the next five years it is on track to reach planned sales of £10m while shifting the balance of the business from bulk sales of LP_LDL to sales of finished products. 

Recent interim results for the six months to 30 June 2024 demonstrated the ongoing momentum in the business with turnover increasing 84% to £1.01m and gross profit margins rising significantly. It was also stated that current trading was showing continued good momentum.

Under the successful stewardship of Steen Andersen the Company has onboarded more than 10 new customers over the past two years and has established a strong sales pipeline with more than 30 active sales projects. Recent new strategic deals worth highlighting are new commercial partnership agreements in both China with DanCare Health and in Greece with Eifron SA. Further such agreements are currently in negotiation which would open up new channels.

The location of the Company

The Board believes that Seneca has concerns that ProBiotix might look to, over time, migrate its main business and operations to Denmark. This is fundamentally not something the Company is looking to do at this stage, or indeed at any point in the near future.

It is worth outlining to all shareholders that when Steen Andersen was recruited to his post of Chief Executive, by the outgoing Stephen O'Hara (who then held the same Board position) the employment contract clearly stated that he would be working from Copenhagen. As a Danish national, and with increasing plans to grow its sales footprint in Europe, it would be logical that Steen Andersen would look to expand his team in this location. Expansion beyond here is likely to be in the US and Asia.

The choice facing Shareholders

The Directors believe that Shareholders are faced with a stark choice. By voting for the proposed resolution to remove Steen Andersen from his post of Chief Executive it will place the Company in a vulnerable position which could also lead to the exit of other key personnel. His proposed departure would present a high risk that the Company would lose its strategic direction through the loss of sales projects and thus disrupt the strategy towards profitability.

Not only would the proposed resolution to remove Steen Andersen be costly due to the sums due to him under his employment contract, it would leave the Company without the leadership it needs and the ability to continue to negotiate new customer agreements at a highly critical stage in its development.

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