Small Company Champion & Lemming Investors Research and Newsletter Updates

Friday, 4 December 2020

SkinBioTherapeutics - FY 2020 Report Confirms No Adverse Covid-19 Impact

 



SkinBioTherapeutics plc (AIM: SBTX), a life science company focused on skin health, announces its full-year audited results for the year to 30 June 2020 today.

There is nothing in today's announcement we were not already aware of. However, it is important to note the company remains on track with both commercial partners; Croda plc for the antiaging cosmetic and Winclove for the psoriasis probiotic. The former is ahead of schedule despite Covid-19, which is reassuring

I note from the company's previous announcement the CFO Doug Quinn appeared to suggest revenues are likely to be towards the end of 2021. This conflicts directly with my understanding of possible revenues as early as summer 2021 from either partner, if not both. You can check this by listening to the podcast I did with the CEO Stuart Ashman by clicking on the Soundcloud icon.

I suspect Doug is simply sticking to the T&C within the original agreement which I presume has an estimated timeline contained within. My understanding of the Croda/Sederma agreement is this. I suggested a beauty pageant would be held for further mover adopters for the lysate contained in the cosmetic creams - I also presumed this would be at premium-grade royalties based on exclusivity. I was rather pleased to learn from Stuart my presumptions were all confirmed. 



Key highlights

· First commercial deals signed across two technology channels - skincare and food supplement

· Finalised formulation for food supplement to target psoriasis ready for human study and potential commercialisation

· Active skincare ingredient development on track with a partner, Croda plc, with commercialisation expected in 2022

· Cash as at 30 June 2020 of £2.2m (2019: £3.1m)

· Post-year-end: successful placing and open offer raising £4.45m

Stuart Ashman, CEO of SkinBioTherapeutics, said:

"This has been a year of considerable progress for SkinBioTherapeutics. At the beginning of the financial year, we identified and established the five strategic channels that we were going to advance, pivoting from a research focus into a commercial focus. We have been able to make considerable headway during the year, despite the COVID-19 pandemic.

"Our first two commercial deals with Croda and Winclove have hit important milestones either on or ahead of schedule. Our Croda partnership in skincare is going well, and the food supplement formulation has been finalised and is ready for a human study, which we are aiming to commence in early 2021. With our post-year-end placing along with robust cash controls, we are well placed to advance in a number of areas over the coming year."

SkinBiotix(R)

The Company completed its human safety study for the cosmetic application in early 2019 and having generated positive data, progressed its discussions with third parties interested in licencing the technology. This culminated in the agreement with Croda (RNS 20 November 2019).

Under the terms of the agreement, SkinBioTherapeutics' proprietary SkinBiotix(R) platform will be paired with Croda's expertise in the development and commercialisation of unique, sustainable, cosmetic ingredients, focusing specifically on the growing skincare actives market. Sederma, part of Croda International plc, is a specialist manufacturer of bioactive ingredients for the cosmetic industry and will be responsible for the development, manufacturing and commercialisation of the SkinBiotix(R) technology.

Croda will be creating a separate manufacturing line for the technology. As design and manufacture of the active ingredient are carried out, there will be concurrent testing in focused ingredient application areas which will be detailed in further, additional agreements.

Any licensed products resulting from these agreements will be sold to Croda's global portfolio of Personal Care customers, which amount to >12,000, some of which are the leading companies and brands in the market. SkinBioTherapeutics will be paid tiered royalties based on global sales revenues on any licensed products subsequently derived from the successful development of the partnership. Recognising the development activity required by Croda, the Company anticipates revenue generation to commence from these additional agreements during 2021.

Sales and distribution rights are for the cosmetic sector alone, leaving SkinBioTherapeutics to focus on further applications of its technology in other sectors. A key component of the Croda agreement is access to a reliable supply of material, and Croda will supply SkinBiotix(R) for the Company to be able to use in sectors outside of those covered by this agreement. 

This is the Company's core technology, and in November 2019 an agreement was signed with Croda Plc, an FTSE 100 company. Croda is a world leader in the field of active skincare ingredients for the cosmetic industry and sells ingredients for skin and hair care products to major cosmetic brands across the world.

Under the terms of the agreement, SkinBioTherapeutics' proprietary SkinBiotix(R) platform will be paired with Croda's expertise in the development and commercialisation of unique and sustainable, cosmetic ingredients, focusing specifically on the growing skincare actives market. Sederma, part of Croda, is a specialist manufacturer of bioactive ingredients for the cosmetic industry and will be responsible for the development, manufacturing and commercialisation of the SkinBiotix(R) technology. Croda will be creating a separate manufacturing line for the technology. As design and manufacture of the active ingredient are carried out, there will be concurrent testing in focused ingredient application areas which will be detailed in further, additional agreements.

Any licensed products resulting from these agreements will be sold to Croda's global portfolio of Personal Care customers, which amount to >12,000 companies and/or brands, some of which are leaders in their respective markets. SkinBioTherapeutics will be paid tiered royalties based on global sales revenues on any licensed products subsequently derived from the successful development of the partnership.

In July 2020 Sederma updated the Company on the progress of key milestones in the collaboration:

  • Successful replication of the lysate manufacturing process and achievement of the same performance from the SkinBiotix(R) technology as had been achieved by the Company - an essential first step in the process of the formulation; and
  • Commencement of activities to validate scale-up of the manufacturing process at different volume levels - an essential step to achieving commercial quantities.

The project is progressing in line with the original plan and has not been adversely impacted by COVID-19. Based on continued progress, the Company anticipates licensed royalty revenue generation to commence in 2022.

Sales and distribution rights are for the cosmetic sector alone, leaving SkinBioTherapeutics to focus on further applications of its technology in other sectors. A key component of the Croda agreement is to provide access to a reliable supply of material to SkinBioTherapeutics. Croda will supply SkinBiotix(R) for the Company to be able to use in other sectors outside of those covered by this agreement. 

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