By HotStockRockets | Saturday 29 October 2016
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.
OptiBiotix Health (OPTI) has served up an update which is good but not the sort of fireworks investors were hoping for. As a result the shares closed at 61.5p-63p on the day which is, to say the least, disappointing. They are now 63p-66p which is better but still both disappointing and far too low.
At a scientific level the company claims "significant progress" notably showing that its cholesterol reducing microbes actually work in humans. The company insists that this gives the opportunity to tap into telephone number sized markets. But we knew that did we not? So what of actual commercial progress?
We are told "The publication of results from our successful human cholesterol study and scientific studies demonstrating our products mechanism of action will support the launch of a range of cardiovascular products to reduce LDL cholesterol, blood pressure, and cardiovascular risk, anticipated for the spring of 2017. These studies, once published, provide the scientific evidence for sales and marketing literature to provide product differentiation and support higher margins."
Will = jam tomorrow.
We are told that Optibiotix is building an extensive IP portfolio. Yadda yadda yadda and we are reminded that "Christian Hansens recent acquisition of a single microbial strain (LGG) from Valio for US$82m demonstrates the potential value the industry places on a recognised brand (LGG), supporting science and commercial sales. "
Right so Manchester United are good but that does not ( sadly) make West Ham United good.
What investors wanted to hear was a) details and a timing on the Skinbiotix demerger and how it will enhance shareholder value and b) how discussions and deals with folks such as P&G are going to translate into actual sales - hard financials. The update gave none of this and hence the reaction of the market being a bit of a wet day in Rotherham.
But...the potential is there. And if you look at the valuation of firms such as 4D Pharma then the good news which we really do expect to come before Christmas is far from discounted in the current share price.
Stephen O'Hara, CEO of OptiBiotix, commented:
"OptiBiotix has made significant progress in the last six months in developing its science, building its IP portfolio, and gaining commercial traction with steadily growing revenues from partnerships and products sales. OptiBiotix's weight management division is now profitable with growing sales of GoFigure products and great consumer feedback and reorders. This announcement provides shareholders with a scientific and commercial update on its cardiovascular product range which has been the subject of multiple ongoing discussions with partners across the supply chain. The aim of these discussions is to ensure OptiBiotix derives the maximum value for shareholders across the broad range of interlinked product opportunities which span both consumer and pharmaceuticals. OptiBiotix believes building the science and IP, and developing the brand across multiple products opportunities creates the potential for risk diversification and high shareholder return."
We underline a few points. So we know that Optibiotix is monetizing its IP in a material way but the big cracker of a commercial deal or several deals is not yet concluded. When ( not IF) it is concluded the shares will rocket. We continue to expect to sell our shares at well over 100p each and do not expect to wait too long for that.
Hence the shares are a buy at up to 80p.
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