RE: LGBCO7 Jan 2024 17:19
Recent Developments
Last Updated: 13/12/2023
We met founder/CEO Stephen O’Hara on 13 December for a catch up. Optibiotix had released a commercial update on 1 November, building on the July announcement of their Sweetbiotix additive product range, which created a certain amount of interest and was followed by a sharp rise in the share price.
The discussion added emphasis to some of the matters covered in the 1 November release, which gave (unusually for Opti) some numbers including a £116,000 order from a US sports nutrition brand, four new partners for Slimbiome who together are anticipated to provide £150,000 of revenues in 2024. O’Hara reiterated the planned Boots 2024 launch (previously suggested as for Q1), the product listing at Costco, and a US launch of own-brand products in 2024. He also mentioned ongoing discussions for products containing Slimbiome in India in 2024 – this came with forecast sales to Optibiotix of £1.2m in year 1 rising to £6.7m in year 5. The company in November mentioned its e-commerce plans saying that with investment (unquantified) the e-commerce channel “will…become a significant contributor to revenues in 2023 and beyond”- wording was not so emphatic today. He did stress the potential importance of the company’s unnamed US marketing partner, and the potential for DSM/Firmenich to step up production should discussions with companies such as Kellogg, Coca-Cola and Tate and Lyle come to fruition. FMCG manufacturers are very concerned about product stability over potential multi-year shelf lives and he revealed that they had had to reformulate to stop their product sedimenting out of a liquid (presumably Coca-Cola…).
Perhaps more importantly, O’Hara seems to have realised that the AIM market wants to see delivery and profitability, and said that he sees all the main pillars of the business becoming profitable over the next year and the whole company becoming profitable not so far behind. He insisted that there was no point making any sort of detailed guidance since he could not rely on his customers to provide meaningful forecasts of sales themselves – which is not unreasonable. However, until some of them start delivering meaningful numbers it will be hard to assess success.
In late October the company announced a licence agreement with Tata Chemicals to incorporate Tata’s Fossence into Slimbiome and LeanBiome for the Indian market, replacing an ingredient used elsewhere. Fossence is an established branded ingredient in India, so this will presumably help with marketing.
Half year results released on 27 September showed a 195% increase in sales YoY, but still only to £351,000. Admin expenses were cut by 17.3% and the company managed a gross profit of £158,000. Overall loss at the pretax level was £1.854m, which came out as 2.09p/ share. Cash stood at £893,000 so a further sell down of shares in one or both of the quoted subsidiaries seems likely. There was no gu
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