Regular readers will be well aware of OptiBiotix Health Plc (OPTI) is my largest holding. The fact the company features more than any other company has nothing to do with this fact, the 78 agreements signed in some 120n countries should be an indicator of why the company features so often.
I report today on a rare event - Group chairman, Neil Davidson, being wheeled out for a Proactive interview. Short and Sweet, if you excuse the pun. During the interview Neil emphasised the next exciting stage for the company in 2021, this being the ''next generation'' products. The emphasis being SweetBiotix, not forgetting the modulation part of the business which is looking very exciting for the future because of the ability to ''target health'' issues through microbiome modulation. For now, well, 2021, ''SweetBiotix in particular'' appears to be the next exciting stage. With a bulk manufacturing agreement now in place and 11 potential partnerships at the table, it is just a matter of time now before we see the holy grail of sugar inside regular everyday products using SweetBiotix as a replacement healthier functional fibre lower calorific products - a major issue globally and one company are coming under increasing pressure to solve by both governments and the consumers.
Neil suggests ''profitability by the end of this year.'' I am going to be cautious and assume he means FY 2020 and not the end of 2020, although there is cause to assume the latter and not the former given the emotional language he used when speaking of the pre and probiotic first-generation products; LP-LDL and SlimBiome, WellBiome, etc.
Neil described sales for the prebiotics as being ''massive' and probiotic as being ''really exceptional.'' This did make me chuckle somewhat because Stephen O'Hara and I were discussing emotional language in interviews last week, and Stephen always uses statistical language to get the message across as a means of managing investor expectations. Clearly, there are competing emotions expressing the direction and development of the company, which looks to be very exciting. That said, how do we measure the tone Neil uses? Either FY 2019 of record H1 2020, which compared with FY 2019. The latter clearly indicated the direction the company is going, more so as we still need to keep royalties revenues as H2 weighted at this stage - so a multiplier of 3 times £740,000 of H1 is not too much of a stretch on a conservative level given the difficult conditions companies are working in with Covid-19. That said, Neil did say it has not been massively impacted, which does seem to be an odd phrase considering his earlier comments related to pre, probiotic sales.
As Stephen says, we need to manage expectation, after all, we don't want a repeat of FY 2018. Investor expectations were too high, but even so, did not seem too outlandish. Nevertheless, we have not recovered from this yet. Hopefully, Neil's language has not set us up for a fall.