By HotStockRockets | Saturday 15 November 2014
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 announced positive results of trials of its anti-obesity compounds in fruit yoghurts in tests carried out by its Dutch partner Nizo. The trials showed clearly that adding the compounds did not impact on taste, texture, etc.
The next step is to ensure all patent filings are correct before discussing manufacturing deals with partners. In other words we are on the way to commercialisation. These deals could be big – certainly for a company which – at 14-14.25p is still only capitalised at £10 million and still has £3 million of cash.
To illustrate that point of what recent licensing deals for cholesterol reducing products – a similar market – are worth. Consider BioGaia licensing its Lactobacillus reuteri strain to Nestle for €50.8 million (Feb 2012) and Schiff Nutritions $40 million (2011) deal for Ganeden’s Bacillus coagulans BC30 strain.
For Optibiotix, we are aware that preliminary discussions with AB Bio, Du Pont, and Probiotics International suggest early commercial interest.
Other deals in the area of weight management if Optibiotix wants to go down the co-development route are Plandai’s £2 million upfront plus 5% of future revenues deal with Phyto Nutricare (April, 2013), and Trovita Healthcares product formulation licensing deal with Galen (Aug, 2013). Again we are told that preliminary discussions with ingredient manufacturers suggest early commercial interest.
Of course there are risks but with a strong balance sheet, a cracking management team and the news from Nizo you ca see the upside.
We tipped this at 9p a few months ago with an initial limit buy price of 12p and 24p target. We now increase the limit buy price to 15p and our target is now 30p. Buy ahead of the next news which we think is imminent.
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