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Optiobiotix Interims – text upbeat: read it carefully and Buy ( target raised)

By HotStockRockets | Saturday 29 August 2015

Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

The numbers for the six months to May 31 from Optibiotix (OPTI), the AIM listed developer of compounds to tackle obesity, high cholesterol and diabetes matter far less than the supporting text. If you can buy at 40.5p or below (the spread is now 39-40.5p) do so as we see a September whoosh for the shares.

For what it is worth, on nil revenue the company recorded a loss of £514,000. But thanks to the ongoing exercise of warrants from a placing two years ago, cashburn was just £400,000 and period end cash was almost £2.5 million. Expect more warrant exercises during the second half.

The key here is the progress to prove up and monitise technology. In the company’s own words:


•    The appointment of Jim Laird as Commercial Director to the Board to increase commercial capacity and capability

•    The completion of preclinical studies and ethics approval received to enable human clinical studies to begin for the Company's cholesterol lowering product

•    Expansion of the OptiBiotic® platform to a wider range of microbial species broadening the number of product and partner opportunities

•    The filing of four new patents

•    Creating a joint venture with Nizo Food Research to develop, manufacture and distribute weight management yoghurts to global markets


Post-period end highlights

•    Announcement of an option agreement with a multinational consumer goods company for the cholesterol lowering product

* Alliance with Venture Life

* Agreement with Spanish National Research Council 


 What will the kickers be in September?

1. Firstly that bloody stock overhang from fund manager David Newton is now almost gone. The sod continues to dribble out shares at 40p despite there being assurances he would not but he is now almost out. We would expect that a few more days of his dribbling and this is over. Without his helpful intervention the shares would already be closer to 50p. Without that 1 big seller there are no sellers just an increasing retail fan base who are buying.

2. Trial results. Again read the statement: “Our cholesterol product is in human studies designed to establish product safety, consumer compliance and the extent of its cholesterol lowering potential in this group of volunteers is now complete.  We anticipate reporting on this in September 2015 as originally planned.”

3. More commercial partnerships. Again back to the statement: “The Company will continue to leverage its existing relationships and develop new relationships with research, development, and industry partners to support the commercialisation of our technology and products.  This activity will be greatly enhanced by the commercial and corporate expertise of Jim Laird, who joined us in March 2015 from Premier Foods. In the last six months we have made good commercial progress securing a joint venture agreement with Nizo for the weight management product and an option agreement with a global corporate partner for our cholesterol product.  Discussions with partners suggest there is growing interest in the microbiome and we anticipate further announcements in the coming year.”

In other words you will see a hectic news flow in the coming weeks and months which will take this company to a rapid monetisation of its technology. And with a stock overhang cleared this will see the shares race ahead.

Our target price is increased to 50p to sell, at up to 40.5p BUY

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  1. This seems crazy – this company has so much potential- why recommend it as a 50p sell target ? Didnt a broker note a short while ago give 150p+ target ? Isn’t there a comparable company with market cap of £200m+ while OPTI is still at £29m Much better recommend short term target 80p – buy up to 55p

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