Tom Winnifrith Tip30 Dec 2020 09:05
Between December 24 and January 3, the entire team here at ************* is serving up our tips of the year (22 in total). No 8 is a collaborative buy from Tom Winnifrith & Steve Moore on their N50 website.
This is a company we consider likely to make 2021 a breakthrough year, life science company focused on skin health SkinBioTherapeutics (LSE:SBTX).
Why will 2021 be such a big year? First up, there is a planned first quarter human study for AxisBiotix™ targeting psoriasis and then, secondly and subject to a positive readout, commencing commercialisation and FTSE-100 Croda continuing to progress the pathway of the SkinBiotix® technology as a cosmetic ingredient.
The psoriasis study is following partner Dutch company Winclove having developed the blend as a probiotic food supplement, with currently mild-to-moderate psoriasis mainstay therapies tending to be steroid-based which cannot be used long term and have side effects. The potential here is hinted at with “the worldwide market for psoriasis treatments was valued at approximately $30bn in 2018 and is expected to grow to $47bn in 2022 with a CAGR of 11.5%”.
There’s then also the Croda deal, with the potential emphasised by that Croda is to create a separate manufacturing line for the technology and to sell into its global portfolio of Personal Care customers – more than 12,000 companies/brands including market leaders. Continued progress should see licensed royalty revenue generation to commence in 2022 but as this comes closer into view next year, expect some share price excitement. Remember that Croda has committed to building a manufacturing plant for this project at a cost of £5 million so it is a believer.
There is then other potential, and we recently noted the company is now cashed-up and, following chats with the CEO, we believe that the Croda deal alone could generate annual profits of £25 million per annum. With the shares at a 15.5p offer price, capitalising the company at not far above £24 million, this is one that could rocket on just one deal making headway this year. But we expect both Croda and Winclove to serve up good news and a pathway to very large and very real profits derived without Skin having to provide any cash for working capital or capex. And its IP has other applications and we’d expect other big name deals for them to arrive in 2021.
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