Saturday, 3 October 2020
Regular readers of this blog will be aware of OptiBiotix Health Plc (OPTI) being my largest holding, many will have experienced the same rollercoaster ride and frustrations I have over the past years as the company transitions from an R&D with high-risk IP across several technology platforms designed to treat some of the world ills, like obesity, diabetes, skin care, cardiovascular deceases and modulation, designer targeted healthcare.
SOH says he sees real value in using LP-LDL as a combo with statins to reduce the dose and side-effects some patients experience.
As I tried to elude to over the weekend. SOH seems to agree. "The key change is a sentiment as most investors can see we are at a tipping point where our products are proven, our distributors are starting to deliver growing sales from a scalable business model, and we have some class-leading innovation (drug biotherapeutics, SweetBiotix and microbiome modulators) to come. We call it steak and sizzle – where the steak delivers the fundamental, and the sizzle brings that bit extra. The IND approval helped investors understand the opportunity in pharma and why we invested so much last year in GRAS and GMP. Lots more to come from LPLDL.”
Some investors, including myself, failed to realise the long and protracted B2B route has taken longer than we thought but supported by the B2c model which has also been a useful shop window for product and innovation while generating low-cost revenues resulting in reduced investor dilution. It should have been obvious, after all, you can't just add new science into new next-generation products without jumping through some regulatory hoops. There was always the small matter of proving the science does what the company claims, and this has proved a revelation. The two key drivers of the commercial traction have been multi-award-winning SlimBiome weight management platform and award-winning peer-reviewed LP-LDL, both gaining commercial traction in some 170 countries, and more recently, zero calories sweet fibre, SweetBiotix.
The early years have laid solid foundations for the commercial development for the company, and to see all three major technologies develop to commercial realism is quite astonishing. It is clear to those that can look at the company objectively, it has switched gears and is about to do so again.
Several rather large recurring revenue streams are adding significant organic growth from a low-cost base and very much insulated from Brexit and macro events because of its global reach and with production facilities in various countries around the world, this reduces macro and tariff risks which also improve margins.
At the risk of appearing to jump onto the COVID-19 bandwagon, OptiBiotix is one of a few companies that should benefit from the horrible impact this pandemic will have had on people. There is an increased need for health and wellbeing products, and OptiBiotix has genuine solutions to the obesity crisis, cholesterol and hypertension issues, and offers further hope for mental health and IBS, the latter through what we hope will be a revolutionary drug with LP-LDL inside, which has recently been given FDA backing on two fronts.
I do not think we are too far off the mood music changing for those of us that have kept the faith through hard times and uncertainties in the wider market and over expectation of the buildup of revenues. Visibility is not too far off as you can see below. I am expecting a big boost to recurring revenues in H2, this will continue at pace in H1, 2021 by much bigger production launches in at least 20 countries, plus an exciting comment about Holland & Barratt at 13:40ish during the Zeon presentation. Clearly, a significant development, which nobody appears to have picked up on.
Mike McGeever's buy embargo is to be lifted by 5th of November, so hopefully, this may result in a different set of fireworks.
As the company grows and supplants itself in various countries around the world, it has developed a turnkey offering in multiple languages to partners, which in turn makes for a much quicker and smoother product launch. One such example is for a new OptiBiome launch by CTC Group - a particular turnkey offering is in Columbia.
Looking further ahead, probably early 2021, the company is planning a duel NASDAQ listing, a much-needed move from the AIM cesspit and poor broker support and coverage. This move should further boost the share price as well as the image and profile of the company.
- Multiple technology platforms of different levels of development challenges designed to reduce investor risk and create multiple investor opportunities (shots on goal) in large markets (cardiovascular health, obesity, diabetes)across multiple channels (e.g. supplement, dairy, food, pharma, biopharma) where there is an unmet need
- Invest heavily in science, human studies, regulatory approvals (GRAS, GMP), and double IP (patents and trademarks) in early years to establish a strong position in the microbiome field and differentiate from tradition market-driven products. Enhance credibility with independent peer-reviewed publications and launch Medical device (e.g. SlimBiome Medical) and pharma products (e.g. Ezimega 3, DS-01) to highlight differentiation and enhance products credibility in other markets
- Sign agreements with multiple partners in multiple territories across all areas of the value chain (manufacture, formulation, distribution) to control and extract maximum value. This limits risk for any individual deal, product, or territory
- A scalable business model. This means that once products and brands are proven in early markets, the time and costs of taking products to other markets are much reduced. As products are established and patents granted IP and R&D costs reduce creating a position of growing sales and reducing costs
- As the need for innovation reduces bring in experienced each division and
- Rapidly growing sales against a low and reduced cost base.
- Strong balance sheet (H1: £1.68m)
- Acceleration in year on year sales growth (H1 2018: 7.7%; H1 2019: 84%; H1 2020: 400%)
- First-generation products (SlimBiome, LP-LDL etc.) established with proven science, humans studies, multiple peer-reviewed publications, granted patents in multiple territories, excellent customer reviews, multiple industry awards and a growing brand presence.,
- A global network of manufacturers, formulators, and distributors established.
- Divisional leads to growing sales and taking divisions towards profitability.
- The commercialisation of next-generation products (SweetBiotix, Microbiome modulators, drug biotherapeutics) building momentum
- LP-LDL used in a which has been authorised by the FDA to undergo evaluation
- Scale sales of first-generation products by expanding geographies, products range, and applications areas (crank handle)
- As volumes increase renegotiate COGS to increase margins
- Build US presence of brands, microbiome modulation opportunities, and SweetBiotix, leveraging interest in the microbiome, healthy snacking, and health and well being
- Accelerate the commercialisation of second-generation products (SweetBiotix, Microbiome modulators, drug biotherapeutics)
- Evolve board and management team to support the next stage of the companies development by bringing in pharma expertise and financial experience with investors in international, and in particular the US market.
- Explore acquisition opportunities to grow the company beyond the organic growth rate