Announcement PDF Transforming health through the human microbiome Acquisition and Capital Raising Presentation 19 October 2023 Not for release to US wire services or distribution in the United States 1 | Disclaimer The following notice and disclaimer applies to this investor presentation ("Presentation" or "document") and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contained in this Presentation. By accepting this Presentation you represent and warrant that you are entitled to receive the Presentation in accordance with the restrictions, and agree to be bound by the limitations, contained within it. This Presentation has been prepared and is issued by Microba Life Sciences Limited ACN 617 096 652 ("Microba" or the "Company") and is dated Thursday, 19 October 2023 in relation to an Entitlement Offer comprising a 1 for 4 pro rata accelerated non-renounceable entitlement offer of new fully paid ordinary shares in Microba (New Shares) to certain eligible shareholders (Entitlement Offer) to raise up to $20 million (Entitlement Offer). This Presentation also contains detail with respect to the proposed acquisition (Acquisition) by the Company of 100% of the issued share capital in a United Kingdom registered company, Invivo Clinical Limited (registered in England and Wales with Company Number 06187743) (Invivo). The Entitlement Offer is being made without disclosure to investors under section 708AA of the Corporations Act 2001 (Cth) (Corporations Act) as modified by ASIC Corporations (Non-Traditional Rights Issues) Instrument 2016/84. Summary information - This Presentation contains summary information about the Company and its activities current as at 18 October 2023. The information in this Presentation is of a general nature and does not purport to be complete nor does it contain all information which a prospective investor may require in evaluating a possible investment in the Company or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act. The historical information in this Presentation is, or is based on, information that has been released to the ASX. This Presentation should be read in conjunction with the Company’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au. Any market and industry data that may be used in connection with this Presentation may have been obtained from research, surveys or studies conducted by third parties, including industry or general publications. None of the Company, its representatives or advisers have independently verified that market or industry data provided by third parties or industry or general publications. Statements made in this Presentation are made only as at the date of this Presentation. The information in this Presentation remains subject to change without notice. The Company reserves the right to withdraw the Entitlement Offer or vary the timetable for the Entitlement Offer without notice. Invivo Information – All information in this Presentation in relation to Invivo has been sourced from Invivo and its shareholders. Whilst steps have been taken to review that information, no representation or warranty, expressed or implied, is made as to its accuracy, completeness, fairness, correctness or adequacy by either Microba, Invivo, or any of their affiliates. Microba has undertaken a due diligence process in respect of the Acquisition, which relied in part on the review of financial and other information provided by Invivo. Despite making reasonable efforts, Microba has not been able to verify the accuracy, reliability or completeness of all the information that was provided to it. If any such information provided to, and relied upon by, Microba in its due diligence and in its preparation of this Presentation proves to be incorrect, incomplete or misleading, there is a risk that the actual financial position and performance of Invivo (and the financial position and performance of Microba following the Acquisition) may be materially different to the expectations reflected in this Presentation. You should also note that there is no assurance that the due diligence conducted on Invivo was conclusive, and that all material issues and risks in respect of the Acquisition have been identified and avoided or managed appropriately (for example, because it was not possible to negotiate indemnities or representations and warranties from Invivo to cover all potential risks). Therefore, there is a risk that issues and risks may arise which will also have a material impact on Microba (for example, Microba may later discover liabilities or defects which were not identified through due diligence or for which there is no contractual protection for Microba). This could adversely affect the operations, financial performance and/or financial position of Microba. Not an offer - This Presentation is not an offer or invitation to acquire New Shares or any other financial products and is not a prospectus, product disclosure statement or other offering document under Australian law (and will not be lodged with the Australian Securities and Investments Commission ("ASIC")) or any other law. This Presentation is for information purposes only and is not an invitation or offer of securities for subscription, purchase or sale in any jurisdiction. This Presentation is not and should not be considered an offer or an invitation to acquire the New Shares or any other financial products and does not and will not form any part of any contract for the acquisition of the New Shares. Any decision under the retail component of the Entitlement Offer to purchase New Shares in the Entitlement Offer (Retail Entitlement Offer) must be made on the basis of the information to be contained in a separate retail offer booklet to be prepared by Microba and lodged with the ASX (Retail Offer Booklet). Any eligible shareholder who wishes to participate in the Retail Entitlement Offer should read and consider the Retail Offer Booklet before deciding whether to subscribe for and purchase New Shares under the Retail Entitlement Offer. Anyone who wishes to subscribe for and purchase New Shares under the Retail Entitlement Offer will need to follow the instructions contained in the Retail Entitlement Offer and the Entitlement and Acceptance Form which will accompany it. This Presentation and its contents are provided on the basis that recipients will not deal in the securities or the financial products of Microba in breach of applicable insider trading laws. Investment risk - An investment in the New Shares is subject to investment and other known and unknown risks, some of which are beyond the control of Microba including loss of income and principal invested. The Company does not guarantee any particular rate of return or performance or any particular tax treatment. Persons should have regard to the Risk factors outlined in the Presentation. This presentation has been authorised for release by the Board. 2 | Disclaimer Not financial product advice - This Presentation does not constitute financial product or investment advice or any recommendation to acquire New Shares or accounting, legal or tax advice. It has been prepared without taking into account the objectives, financial or tax situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial and tax situation and needs and obtain legal and taxation advice appropriate to their jurisdiction. Microba is not licensed to provide financial product advice in respect of the New Shares or any other financial products. Cooling off rights do not apply to the acquisition of New Shares under the Entitlement Offer. Financial data - You should note that this Presentation contains: (a) historical financial information for Microba for the financial year ended 30 June 2023; (b) historical financial information for Invivo for the financial year ended 31 March 2023 (normalized to 30 June 2023); (c) pro forma historical information to show the impact of the Acquisition as if Invivo had been acquired on 30 June 2023 and the impact of the Entitlement Offer. The financial information in this Presentation is presented in an abbreviated form insofar as it does not include all of the presentation and disclosures required by the Australian Accounting Standards (AAS) and other mandatory professional reporting requirements applicable to general purpose financial reports prepared in accordance with the Corporations Act. You should consider the basis of preparation and assumptions underlying the financial information contained in this Presentation. Historical financial information of Microba contained in this Presentation has been extracted from the audited consolidated annual financial statements of Microba for the financial year ended 30 June 2023 as lodged with the ASX pursuant to Microba's continuous disclosure obligations. All financial information disclosed in this Presentation are on a post AASB-16 basis. Historical financial for Invivo contained in this Presentation has been derived from unaudited management financials for the year ended 31 March 2023 for the entities in Invivo operating in the United Kingdom and other financial information made available by Invivo in connection with the Acquisition. The pro forma financial information has been prepared by Microba in accordance with the recognition and measurement principles of AAS. The pro forma and forward looking financial information provided in this Presentation is for illustrative purposes only and is not represented as being indicative of Microba’s views on its future financial condition and/or performance or any scale benefits, synergies or opportunities that may be realised as a result of the Acquisition. The pro forma information has not been audited or reviewed by Microba's auditors. The pro forma financial information has been prepared on the basis set out on pages 32 of this Presentation. Microba and its affiliates expressly disclaim all liabilities in respect of, and take no responsibility for, financial information of Invivo, and proforma financial information of Microba inclusive of Invivo financial information, in this Presentation. Accordingly, you should not place undue reliance on any such information. You should be aware that certain financial measures included in this Presentation are ‘non-IFRS financial information’ under ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ published by ASIC and are not recognised under AAS and International Financial Reporting Standards (IFRS). The non-IFRS financial information include Enterprise Value, EBITDA, EBIT and others shown on several pages throughout this presentation. Such non-IFRS financial information do not have a standardised meaning prescribed by AAS or IFRS. Therefore, the non-IFRS financial information may not be comparable to similarly titled measures presented by other entities, and should not be construed as an alternative to other financial measures determined in accordance with AAS or IFRS. Although Microba believes these non-IFRS financial measures provide useful information in measuring the financial performance and condition of its business, you are cautioned not to place undue reliance on any non-IFRS financial information included in this Presentation. Financial Data – General – Unless otherwise stated, all dollar values in this Presentation are millions of Australian dollars (A$ million). All amounts in GBP are subject to an AUD/GBP FX conversion rate of 0.52. A number of figures, amounts, percentages, estimates, calculations of value and fractions in this Presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this Presentation. Effect of rounding - A number of figures, amounts, percentages, estimates and calculations of value in this Presentation are subject to the effect of rounding Past performance - Investors should note that past performance and pro forma financial information given in this Presentation is given for illustrative purposes only and should not be relied on as (and is not) an indication of Microba' views on its future financial performance or condition including following the acquisition of Invivo Clinical. Prospective investors should note that past performance, including past share price performance, of Microba cannot be relied on as an indicator of (and provides no guidance as to) future performance including future share price performance. The historical information in relation to Microba included in this Presentation is, or is based on, information that has previously been released to the market. 3 | Disclaimer Future performance - This Presentation contains certain 'forward-looking statements' that are based on management's beliefs, assumptions and expectations and on information currently available to management. The words 'expect', 'anticipate', 'estimate', 'intend', 'believe', 'guidance', 'should', 'could', 'may', 'will', 'predict', 'plan' and other similar expressions are intended to identify forward-looking statements. Any indications of, and guidance on, future operating performance, earnings, financial position and performance or production are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements, including projections, guidance on future operations, earnings, estimates or production targets (if any), are provided as a general guide only and should not be relied on as an indication or guarantee of future performance. This Presentation contains statements that are subject to risk factors associated with Microba' business activities. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to earnings, capital expenditure, cash flow and capital structure risks and general business risks. No representation, warranty or assurance (express or implied) is given or made in relation to any forward-looking statement by any person (including Microba or any of its advisers). In particular, no representation, warranty or assurance (express or implied) is given that the occurrence of the events expressed or implied in any forward-looking statements in this Presentation will actually occur. Actual operations, results, performance, production targets or achievement may vary materially from any projections and forward-looking statements and the assumptions on which those statements are based. Any forward-looking statements in this Presentation speak only as of the date of this Presentation. Subject to any continuing obligations under applicable law or regulation (including the listing rules of ASX), Microba disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statements in this presentation to reflect any change in expectations in relation to any forward-looking statements or any change in events, conditions or circumstances on which any such statement is based. Disclaimer – The information in this Presentation has been obtained from or based on sources believed by Microba to be reliable. To the maximum extent permitted by law, Bell Potter Securities Limited ACN 006 390 772, Morgans Corporate Limited ACN 010 539 607 (Joint Lead Managers) and Microba, and their respective affiliates, related bodies corporate, directors, officers, employees, agents or advisers do not make any warranty, express or implied, as to the currency, accuracy, reliability or completeness of the information in this Presentation and disclaim all responsibility and liability, including without limitation for negligence or for any expenses, losses, damages or costs incurred by you as a result of the information in this Presentation being inaccurate or incomplete in any way for any reason, whether by negligence or otherwise. Neither the Joint Lead Managers, nor any of their affiliates, related bodies corporate, directors, officers, employees, agents or advisers have authorised, caused or permitted the issue, submission or despatch of this Presentation nor do they make any recommendation as to whether a potential investors should acquire New Shares. None of them makes or purports to make any statement in this Presentation and there is no statement in this Presentation which is based on any statement by them. Acknowledgements – You acknowledge and agree that: • determination of eligibility of investors for the purposes of the institutional or retail components of the Entitlement Offer is determined by reference to a number of matters, including legal and regulatory requirements, logistical and registry constraints and the discretion of each of Microba and/or the Joint Lead Managers; • each of Microba and each Joint Lead Manager and each of their respective affiliates disclaim any duty or liability (including for negligence) in respect of that determination and the exercise or otherwise of that discretion, to the maximum extent permitted by law; • the Joint Lead Managers may have interests in the securities of Microba, including by providing investment banking and debt services to Microba. Further, it may act as market maker or buy or sell securities or associated derivatives of Microba as principal or agent; and • the Joint Lead Managers will receive fees for acting in its capacity as lead manager to the Entitlement Offer. Trademarks - This Presentation may contain trademarks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, some of the trademarks, trade names and copyrights referred to in this Presentation may be listed without the © or ® symbols, but Microba asserts, to the fullest extent under applicable law, the rights of the applicable owners, if any, to these trademarks, trade names and copyright. International selling restrictions - This Presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in any jurisdiction. The distribution of this presentation and the offer of securities is restricted in jurisdictions outside Australia. See the section of this presentation captioned “International Offer Restrictions” for more information. Any failure to comply with such restrictions could constitute a violation of applicable securities laws. In particular, this Presentation may not be released to US wire services or distributed in the United States. This Presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or any jurisdiction in which such an offer would be illegal. The securities described in this presentation have not been, and will not be, registered under the US Securities Act of 1933 or the securities laws of any state or other jurisdiction of the United States. Accordingly, the securities described in this presentation may not be offered or sold in the United States except in transactions exempt from, or not subject to, the registration requirements of the US Securities Act and applicable US state securities laws. By accepting this Presentation you represent and warrant that you are entitled to receive the Presentation in accordance with these restrictions and agree to be bound by their limitations. 4 | Agenda Transaction Summary Page 6 – 7 Strategic Rationale Page 8 – 11 Invivo Overview Page 12 – 15 Microba Overview Page 16 – 29 Financials Page 30– 32 Catalysts & Offer Page 33 – 36 Risks & Other Page 37 – 49 Powering Precision Healthcare The Human Microbiome Company 5 | Acquisition Highlights Acquiring a leading UK microbiome company Microba to acquire 100% of UK based microbiome leader Invivo Clinical. Invivo is an established microbiome testing business which generated revenue of A$8.9m* in FY23. Invivo has built a strong brand and position in the UK market as a leader in delivering microbiome solutions to healthcare professionals and is well positioned for continued growth. The acquisition results in Microba’s pro-forma FY23 revenue significantly increasing to A$14.3m. Positions Microba for UK market dominance Together with Microba’s partner Sonic Healthcare, the Invivo acquisition provides Microba with deep access to the entire UK healthcare market spanning private practice and the public NHS environment. Providing a platform for entry for Microba’s market leading testing technology into the UK with an addressable customer base of >49,000 healthcare professionals. Global growth platform Through Microba’s technology and global partner footprint there is a range of synergistic growth opportunities. Invivo’s expanded microbiome test range spanning Oral, Vaginal and Urinary provides new growth opportunities through the Microba partner distribution network. Established UK presence Highly experienced team of 33 across two locations in the UK, with an engaged customer base of over 1,700 healthcare practitioners, and the ability to bolster in-market expertise and support for Microba’s partners across the UK and Europe. *AUDGBP FX conversion rate of 0.52, Invivo has a financial year-end of 30 March, this number is pro-forma to Australian financial year-end, 30 June. 6 | Transaction Summary • Establish a leading UK presence Overview of Invivo Strategic Rationale Acquisition Funding Microba Life Sciences has entered into a binding agreement to acquire Invivo Clinical Limited (“Invivo”) for a purchase price of A$12.5 million (A$9.6 million cash and A$2.9 million scrip) plus up to A$8.7 million in earn-out (up to A$2.9 million cash and A$1.4 million scrip at the end of both Year 1 and Year 2), representing a total consideration of up to A$21.1 million (the “Acquisition”)† o The purchase price represents a FY23 revenue multiple of 1.4x# and 1.6x#, including earn-outs • o Earn-outs for Year 1 and Year 2 are based on achieving a 20% revenue growth threshold for each year^ The Acquisition represents a unique opportunity to acquire a leading UK microbiome testing company with an existing customer base o It demonstrates a continued focus on accelerating international growth of Microba’s personal testing services towards Microba’s vision of its technology being the dominant global platform for microbiome testing o Establishes a UK base to support growth and capture of the UK and European markets • The Acquisition remains subject to customary closing conditions, which are expected to be satisfied by 31 December 2023‡ • Invivo is a leading microbiome test provider for healthcare professionals in the UK • The company has established a base of over 1,700 active healthcare professionals, and an engaged list of additional 5,800 prospective healthcare professionals • In addition to its Gastrointestinal microbiome testing services, Invivo has testing products spanning Vaginal, Oral and Urinary testing, together with a targeted set of evidence-based intervention formulations • The company has been self-funded from cashflow with no external capital and is currently operating cashflow positive. • With more than 20,000 microbiome tests sold since 2020, Invivo reported revenue of A$8.9* million for FY23 from testing and intervention product sales. • The acquisition of Invivo aligns to Microba’s core testing services growth strategy in expanding internationally into high value markets in the most capital efficient manner • Acquiring a market leading position, customer and geographical base in the UK - together with Sonic Healthcare provides deep access to the UK healthcare market spanning private practice and the public NHS environment • Product portfolio cross-selling opportunities that can be leveraged across the Microba partner network. • 1 for 4 Pro-Rata Accelerated Non-Renounceable Entitlement Offer (“ANREO”) to raise up to A$20.0m. • Sonic have committed to take up their pro-rata entitlement of ~A$4.0m under the ANREO. This acquisition is complimentary to the Sonic and Microba combined UK/EU strategy. • Funds raised will be used to fund the cash component of the acquisition of 100% of the issued capital of Invivo Clinical including earn-outs, international expansion, therapeutic program development, working capital and payment of transaction costs.† • This capital raise sees Microba funded to execute its growth strategy. † Subject to the receipt of all necessary shareholder approvals and the successful completion of the acquisition of Invivo Clinical ‡ Shareholder approval will be sought at the 2023 AGM for the issue of the Consideration Shares and Earn-Out Shares; ‡ The Entitlement Offer raising a minimum of the Australian dollar equivalent of £5.0 million. * AUDGBP FX conversion rate of 0.52, Invivo has a financial year-end of 30 March, this number is pro-forma to Australian financial year-end, being 30 June. # Revenue multiple based on Upfront Payment/FY23 Revenue (1.4x) and Maximum Possible Consideration/FY25 Revenue + 100% achievement of earn out target (1.6x) ^ A significantly lower earn-out is also achievable should only 15% year on year growth be achieved. 7 | Strategic Rationale 8 | Taking a leading position in the UK market Invivo together with our Sonic Healthcare partnership provides Microba with deep access to the entire UK healthcare market spanning private practice and the public NHS environment UK TARGET HEALTHCARE MARKET 2k Capturing the integrative healthcare market Driving broad adoption into general practice, specialists & hospitals 8k • Leading microbiome testing company targeting integrative healthcare practitioners >49k • Est. 10k integrative healthcare professionals in the UK* 10k • Growth market – more people seeking out private health services in the UK healthcare professionals • Leading medical diagnostics company in the UK • Preparing to deliver MetaXplore and MetaPanel • Addressable UK target practitioners: - 25k General Practitioners^ - 10k Clinical dieticians^ - 4.7k Specialists positioned to adopt microbiome testing^ 25k 5k • Customers positioned to adopt Microba’s MetaXplore testing GP Specialists Dieticians Nutritionist Integrative GP * British Association for Nutrition and Lifestyle Medicine has 3,500 practicing members, Association of Nutrition has 4,400 nutritionist members, and there are an estimated 2,000 practicing integrative Medical Doctors in the UK 9 on file. ^ 4,702 specialists covering Infectious Disease, Gastroenterology, Clinical Oncology, Transplant, Nephrology and Intensive care. 27,246 General Practice Doctors minus 2,000 estimated integrative General Practitioners. Approximately 10,000 registered dieticians. References | Invivo acquisition provides strong UK customer base FY23 Key metrics 7,300+ tests sold Engaged customer base 17% penetration into the UK integrative healthcare professional market and well positioned to accelerate growth 1,700+ ordering HCPs^ 94% of revenue driven by repeat customers# 51% A$8.9m revenue* Gross Profit Margin 10,000+ sample biobank Remaining market Invivo customer Invivo engaged lead * *AUDGBP FX conversion rate of 0.52, Invivo has a financial year-end of 30 March, this number is pro-forma to Australian financial year-end, 30 June. # 55.5% of healthcare practitioners (HCP) ordered more than once in the last twelve months, these repeat customers are responsible for 94% of HCP revenue ^ HCPs is an abbreviation of Healthcare Professionals 10 | Acquisition aligns with global growth strategy Establish a leading UK presence Leverage product cross-selling & Microba network Advance financial scale and market position Significant growth potential Consistent with strategy • The UK is a key market in the next phase of Microba’s international testing services growth strategy. • The acquisition supports strong entry into the UK by acquiring an active customer base of over 1,700 HCPs and an engaged list of 5,800 additional HCPs, driving acceleration of UK commercialisation and revenues for Microba. • 33 specialised and experienced staff across 2 sites. • Together with Sonic Healthcare provides deep access to the UK healthcare market spanning private practices and the public NHS environment. • Established platform for launching Microba’s MetaXplore test into the UK integrative healthcare professional market. • Invivo’s additional microbiome testing products spanning Vaginal, Oral and Urinary testing provides a platform for Microba to embed the company’s technology and open new markets for Microba and the company’s partners. • The acquisition will significantly increase the Microba pro-forma FY23 revenue to A$14.3m. • Attractive acquisition multiple of approximately 1.4x*, and 1.6x* including earn-outs. • Healthy gross profit margins at ~51%. • Efficient operation, operating cashflow positive and in position to grow to deliver strong returns on invested capital. • Significant growth opportunities for Invivo through supporting their current growth trajectory. • Growth acceleration through leveraging Microba’s technology and synergies through the Microba distribution partner network. • The transaction is executing on the company’s personal testing growth strategy through a targeted and synergistic. acquisition, that enhances top-line revenue and positions the company for fu