Bactolife A/S

Ledelsesberetning

Key activities Bactolife is a Danish biotech company that specializes in developing innovative food and feed ingredients using its unique Binding Protein technology. These ingredients are made to enhance the health of the gut microbiome and promote gastrointestinal wellness. Bactolife's platform involves selecting and producing Binding Proteins that can safely neutralize toxins without impacting the growth of beneficial bacteria. The company’s breakthrough ingredients have the potential to benefit all of us, but they are specifically tailored to mothers and children, the elderly, immune compromised, travelers and deployed, and even for the well-being of animals. Letter from the Chairman, Jørgen Rugholm Jensen, and CEO, Sebastian Søderberg, 2023 Funding secured and commercial validation. 2023 marked a significant year for Bactolife, as the company secured EURm 30 (DKKm ~226) in Series A financing, including EURm 25.5 (DKKm ~190) in fresh capital. This funding reaffirms the support of existing investors and introduces ATHOS as a new shareholder. Additionally, a USDm 5 (DKKm ~36) convertible note from the Bill & Melinda Gates Foundation in 2022 was converted into equity to support Bactolife’s innovative technology, following the USDm 2 (DKKm ~15.2) grant in 2022. The Bill & Melinda Gates Foundation funds are earmarked the enhancement of Bactolife’s Binding Proteins for the Mothers & Children platform, and the acceleration of the upscaling and manufacturing capabilities. Bactolife believes that the Series A financing not only accelerates the commercialization of Binding Proteins but also underscores the global relevance and impact of the technology. Bactolife has entered a JDA with Novonesis A/S (previously Novozymes A/S, now merged with Chr. Hansen A/S) to commercialize Ablacto+ for post-weaning diarrhea in piglets. Under this agreement, Novonesis A/S will oversee the manufacturing, registration, and commercialization of Ablacto+, with market entry anticipated in 2026. This collaboration will yield innovative biosolutions that stabilize the gut of piglets, increase productivity, and substantially reduce antibiotic usage among pigs. Moreover, Bactolife has in 2024 secured a separate agreement to supply a Binding Protein component of Ablacto+ for a fast-tracked human health project, E-defend, which will further accelerate the commercial strategy in human health applications. **Investment of DKKm 40 in R&D**. The investments were primarily targeted towards the priority projects within Piglets, Athletes, Travelers, Elderly and the Mothers and Children platform. Specifically, the investments were directed towards discovery, initiating tox safety studies for the first products and manufacturing development. In addition, one scientific publication was accepted and published early 2023 on “Orally delivered single-domain antibodies against gastrointestinal pathogens” and two scientific manuscripts were submitted on specific binding proteins targeting piglets postweaning diarrhea and toxin B from Clostridiodes difficile. **Employee growth and facility expansion**. Employee development and facility enhancement were pivotal for Bactolife's progress. Throughout 2023, the company grew from 28 full-time employees (FTEs) concluding the year with 38 FTEs. The majority of these new employees were allocated to crucial departments such as Research and Development, Manufacturing, and the Commercial Team. Moreover, a significant milestone was achieved with the inauguration of the 1st floor expansion at the Roennegade 8 facility, providing an additional 770 m2 of office and laboratory space. The expansion was instrumental in accommodating future growth initiatives. Furthermore, in 2023, the newly established Quality Control (QC) laboratory was fully outfitted and commenced operations, further enhancing the company’s operational capabilities. ESG strategy Bactolife. **Environmental Commitment** **Antibiotic use reduction**: By reducing incidence of gastrointestinal infections in humans and animals with its Binding Protein platform, Bactolife can reduce the use of antibiotics globally in a OneHealth approach. In industrial pig production alone, approximately 1,000 tons of antibiotics are used annually. The Ablacto+ trials in over 5,000 piglets have already demonstrated a 20% reduction in antibiotic use. By achieving an estimated 10% global market penetration, Bactolife aims to reduce annual antibiotic usage by 33 tons by 2030. Management believes that Bactolife’s Binding Proteins can play an important role in the fight against Antimicrobial Resistance (AMR). **Agriculture CO2 emissions reduction**: Gut dysbiosis in livestock leads to inefficient feed conversion, contributing significantly to CO2 emissions. Bactolife’s interventions have the potential to reduce these emissions by approximately 500 tons annually if adopted by just 10% of the global pig population, translating to a reduction in nitrogen excretion and associated environmental pollution. **Environmental Risks**: The large-scale use of microbial fermentation and potential biowaste from production processes pose potential environmental risks. Bactolife is committed to maintain strict compliance with environmental regulations to mitigate these risks and actively seek to do so. Social Commitment **Employee Welfare and Diversity**: At Bactolife, diversity, inclusion, and collaboration are fundamental to its culture. The diverse team of 13 nationalities brings a global perspective to the compnay’s operations. Bactolife continuously improves employee benefits, recently adding pension schemes, sports initiatives and equipment to the facility in Copenhagen. The company’s flat organizational structure enhances transparency, drives performance and enables meaningful contributions from all employees. Recognizing the importance of gender diversity, especially in leadership roles, the company is actively working towards increasing female representation. Bactolife’s Leadership Team, consisting of six, has an equal gender representation. These efforts align with Bactolife’s core values of equality and respect, affirming the company’s commitment to innovation and equitable workplace practices. **Community Engagement**: While Bactolife primarily focuses on advancing its solutions towards the market, the company is committed to community engagement through advocacy and awareness initiatives. Bactolife sponsors organizations like the Peggy Lillis Foundation to promote awareness of Clostridiodes difficile infections. Additionally, Bactolife actively uses platforms like LinkedIn to educate and engage the public on gastrointestinal disorders, the microbiome, and antimicrobial resistance, emphasizing its commitment to the One Health approach. **Social Impact and Global Health**: Bactolife’s global social impact is achieved through partnerships with NGOs and organizations like the Bill & Melinda Gates Foundation, aiming to deliver its health solutions to low- and middle-income countries (LMICs). In these regions, diarrheal diseases severely impact child health and nutrition, leading to over 40 million Disability-Adjusted Life Years (DALYs) lost annually. The broader effects of these diseases, including infections, stunted growth, and long-term health issues, contribute to an additional 16 million DALYs lost. Bactolife’s initiatives, such as the Mothers & Children platform and Gastroguard – a project for Cholera control, directly address these challenges. This initiative supports the UN's Sustainable Development Goal 3: Good Health and Wellbeing, by targeting critical health issues like antimicrobial resistance (AMR). Relevant sub-targets include 3.2 (reducing mortality in children under five years old), 3.3 (ending epidemics of water-borne and communicable diseases), and 3.d (strengthening the capacity of countries to manage national and global health risks). **Governance**Integrity is a cornerstone of Bactolife's ethos, deeply embedded in its leadership and governance practices. The Leadership Team and Board consistently uphold transparency, engage in open collaboration, and rigorously adhere to all applicable laws. Bactolife is dedicated to continuous improvement and actively participate in governance enhancement. This includes regular progress updates essential for maintaining stakeholder trust and optimizing operations. The governance framework integrates ethical considerations, aligning with the mission to manage global health risks and advance sustainable practices. Outlook 2024 Bactolife will continue to expand in 2024 and the funding raised in 2023 allows Bactolife to increase investments in the project pipeline, technology platform, organization and upscaling capabilities. Further, it will enable Bactolife to accelerate partnering efforts with world-leading companies and move towards commercialization of the first product concepts for humans and animals. Despite risks and market uncertainty, Bactolife remains confident that the combined efforts and constant drive to deliver on the company’s targets will provide a strong market position with leading product offerings and commercially competitive price points. This will not be possible without the dedicated employees who put in an enormous effort to constantly develop Bactolife’s and the technology’s offerings to enable worldwide health.