REG - OptiBiotix Health - Trading update

OptiBiotix HealthAnnouncement

24/08/2022 07:00

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RNS Number : 9892W  OptiBiotix Health PLC  24 August 2022

OptiBiotix Health plc

("OptiBiotix" or the "Company" or "the Group")

 

Trading Update

 

OptiBiotix Health plc (AIM: OPTI), a life sciences business developing
compounds to tackle obesity, cardiovascular disease and diabetes, provides the
following unaudited trading update ahead of the Group's half year results for
the six months ended 30 June 2022. These results are for the Group's new
structure following the listing of ProBiotix Health on the AQSE Growth Market
in March 2022.

 

Overview

Having established the credibility of its science and brands of its
first-generation products through an initial emphasis on smaller partners, the
Company set out its strategy in 2021 to focus on a smaller number of large
partners in key strategic markets, increasing the ratio of final product to
ingredient sales by growing direct to consumer sales, and extending its
technology platforms into new channels (e.g. sports nutrition with
LeanBiome®) and new product areas (e.g. WellBiome®). This was supported by a
significant investment in growing the commercial, online, and business
development team. The aim was to expand the scale of the opportunity by moving
from ingredient sales to selling more final products either direct to consumer
or with larger partners who can offer the opportunity to develop volume sales
in key strategic growth markets like the USA and Asia. To support these aims,
the Company listed its formerly wholly owned probiotic subsidiary, ProBiotix
Health plc ("PBX"), on the AQSE Growth Market in March 2022 raising £2.5m and
returning a circa £10.24m dividend to OptiBiotix shareholders who now own
approximately 40% of the ProBiotix business.

 

This gave OptiBiotix shareholders an interest in multiple areas within the
microbiome space and allowed the management team to focus on building the
prebiotic business and bring its second-generation technologies to market.

 

Financials

The listing of PBX on AQSE means that it is now considered an associate for
accounting purposes with its revenues and costs removed and only OptiBiotix's
(44%) proportion of its profit and loss included in the Company's accounts.
This makes year on year comparisons challenging. Based on initial figures, we
expect current sales in the Group's new structure to be materially lower than
expected, at around £120K, with sales normalising in H2 but insufficient to
make up the H1 deficit and returning to healthy growth in 2023.  We believe
the difference in sales is partly a timing issue with a couple of larger
partners delaying restocking due to uncertainty in the economic environment,
and Apollo Hospitals and Nahdi Medical postponing launches until H2 as a
result of regulatory approvals taking longer than expected.  These regulatory
approvals have now been received and we expect launches to take place in the
next couple of months. Larger partners offer scale and place fewer but much
larger orders throughout the year and consequently any delays in orders can
have a material impact on revenue in the early stages of a company. The
Company is progressing discussions to increase the number of larger partners
to mitigate this risk in future years.

 

The listing of ProBiotix on AQSE has materialised a previously unrecognised
asset allowing the Company to report a circa £13.8m profit before dividends
largely from the gain on this investment offset by a loss on revaluation of
the SkinBioTherapeutics plc shares. The Company has a healthy balance sheet
with gross assets of £22m (H1 2021: £28m) with circa £1.5m (H1 2021:
£993K) cash at the end of June 2022.

 

Outlook

Despite the challenging trading environment, the Company believes it is in a
strong position with a healthy balance sheet, a stronger cash position
compared to H1 2021, growing sales in its online direct to consumer business,
and the forthcoming launch of GoFigure products in India with Apollo Hospitals
and in the Kingdom of Saudia Arabia with Nahdi Medical. The Company has
recently signed a deal with Firmenich, the world's largest privately-owned
fragrance and taste company, which will positively impact on its ability to
bring SweetBiotix® to large markets. The three commercial agreements we
signed at the end of 2021 with well-known national and international brands
and the joint development agreement with Firmenich are indicative of the
future direction of the Company as we move to focus on fewer and larger
business partners.

 

This is undoubtedly a very difficult trading environment for all companies,
and this has impacted on H1 revenues.     Despite this we remain focused
on our aims of increasing the number of large partners in key strategic
markets, growing direct to consumer sales, and extending our products into new
channels (e.g LeanBiome®) and new application areas (WellBiome®), and
bringing our second-generation products to market. This will broaden the
product and partner base and reduce the risks associated with partners
delaying launches or timing differences in restocking from impacting future
revenues.

 

Stephen O'Hara, CEO of OptiBiotix, commented: "The Company has invested in
expanding its commercial and business development team in key strategic
markets like the USA and Asia and as part of its drive to build its
direct-to-consumer sales. We hope to see the return on this investment later
this year and more significantly in FY 2023.

 

"The aim for the second half of the year is to focus on growing sales with
existing partners, building the online direct to consumer business, and launch
GoFigure products in India with Apollo Hospitals and in the Kingdom of Saudia
Arabia with Nahdi Medical.  We will also be looking to attract more larger
partners, particularly from the USA, and in-license or acquire additional
technologies to ensure a continuous pipeline of solutions to strengthen our
position as one of the leading companies in the rapidly growing microbiome
space.

 

"We are fortunate in having a healthy balance sheet and £1.5m cash in the
bank to continue to invest in building the business.  We also retain exposure
to the growth potential in probiotics and skincare through the Group's
shareholdings in ProBiotix Health plc and SkinBioTherapeutics plc."

 

This announcement contains inside information for the purposes of UK Market
Abuse Regulation and the Directors of the Company are responsible for the
release of this announcement.

 

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders and
prospective security holders not to place undue reliance on these
forward-looking statements, which reflect the view of the Company only as of
the date of this announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the statements are
made. The Company will not undertake any obligation to release publicly any
revisions or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of this
announcement except as required by law or by any appropriate regulatory
authority.

 

For further information, please contact:

 

 OptiBiotix Health plc                             www.optibiotix.com (http://www.optibiotix.com/)
 Neil Davidson, Chairman  Contact via Walbrook below
 Stephen O'Hara, Chief Executive

 Cairn Financial Advisers LLP (NOMAD)              Tel: 020 7213 0880
 Liam Murray / Jo Turner / Ludovico Lazzaretti

 Cenkos Securities plc (Broker)                    Tel: 020 7397 8900
 Callum Davidson / Neil McDonald
 Michael Johnson / Russell Kerr (Sales)

 Walbrook PR Ltd                                   Mob: 07876 741 001
 Anna Dunphy

 

About OptiBiotix - www.optibiotix.com (http://www.optibiotix.com)

 

OptiBiotix Health plc (AIM: OPTI), which was formed in March 2012, brings
science to the development of compounds which modify the human microbiome -
the collective genome of the microbes in the body - in order to prevent and
manage human disease and promote wellness.

 

OptiBiotix has an extensive R&D programme working with leading academics
in the development of microbial strains, compounds, and formulations which are
used as active ingredients and supplements. More than twenty international
food and healthcare supplement companies have signed agreements with
OptiBiotix to incorporate their human microbiome modulators into a wide range
of food products and drinks.

 

OptiBiotix is also developing its own range of consumer supplements and health
products. The Company's current areas of focus include obesity, cardiovascular
health, and diabetes.

 

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