Latest Results

Final Results

OptiBiotix Health plc (AIM: OPTI), a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes, announces its audited results for the year ended 30 November 2017.

The Company has made strong progress during this period as it continues its transition from a development company into a commercial business. This period has seen the company sign a number of commercial deals of increasing value across its product range as it builds multiple revenue streams from manufacturing, application and distribution partners across the world.

Download

To view a full version of the results in
PDF format click here

Highlights

  • Two agreements signed with Tata Chemicals - one for SlimBiome® for the Indian market, and the second to scale up and manufacture the companies cholesterol reducing prebiotic (LPGOS)
  • Global profit sharing agreement signed with Sacco S.r.l. to manufacture and supply LPLDL®
  • Two key Board appointments to support the commercialisation and global expansion of products.
  • European launch of SlimBiome® and LPLDL® products at the Vitafoods Europe tradeshow in Geneva in May 2017
  • A total of ten commercial agreements signed in the 12 month reporting period
  • Award winning publications and presentations delivered at major international conferences
  • Award for SlimBiome® as 'Best Functional Ingredient for Health and Wellbeing' at Food Matters
  • FDA registration for LP-LDL® and SlimBiome® product ranges allowing access to the US market
  • Admission of majority owned skincare subsidiary, SkinBiotherapeutics (formerly SkinBiotix), to AIM with an associated £4.5m institutional and private client fundraise in April 2017.
  • Profit after tax of £1.9m reflecting an adjustment of £4.1m for the change in value of the investment in SkinBiotherapeutics following the listing

Post-period end highlights

  • A US manufacturing, supply and profit sharing agreement with Cereal Ingredients, Inc for SlimBiome®
  • Completion of five successful human taste studies on its SweetBiotix® demonstrating high sweetness and low off flavours
  • An exclusive royalty bearing agreement with Fine Foods and Pharmaceuticals for the production and supply of five formulations containing OptiBiotix's LPLDL® strain in Europe
  • A five year distribution agreement with Trigen Pharma Internation (Pvt) Ltd to exclusively distribute and commercialise OptiBiotix's own label CholBiome® products in Pakistan
  • A non-exclusive distribution agreement with Cambridge Commodities Ltd to distribute SlimBiome® weight management technology in the United Kingdom
  • A five year agreement with Akums Drugs and Pharmaceuticals Ltd to exclusively manufacture and supply supplements and biotherapeutic products containing LP-LDL® in India
  • The appointment of Neil Davidson as Non-executive Chairman bringing sector expertise, a network of industry contacts, and over 30 years of operational and Board experience as Chairman and Chief Executive of FTSE 100, AIM and private companies.
  • Award for SlimBiome® as for Weight Management Ingredient of the Year at Vitafoods 2018 'Best Functional Ingredient for Health and Wellbeing' at Food Matters

Stephen O'Hara, CEO of OptiBiotix, commented: "OptiBiotix has made significant progress in the last 12 months which has seen a growing number of awards for our science and products and an increased deal flow. We anticipate both the rate and value of deal flow increasing as we develop new applications, take existing products into new territories, and leverage our technology platforms to develop new product opportunities. We are particularly excited by the interest from partners in developing our products into biopharmaceuticals and see this as an area of significant future development and potential value uplift. The last twelve months has been an exciting period of transition for the Company with new Board appointments, ten commercial agreements, and an FDA registration for SlimBiome® and LPLDL®. We have been pleased with the progress of SkinBiotherapeutics plc, which is making strong commercial progress and preparing for human studies, which if successful, should provide a substantive uplift in valuation. On behalf of everyone at OptiBiotix Health plc, we would like to thank our investors for their continued support and look forward to an exciting future in this exciting area of science which has the potential to revolutionise the future of health care."

This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).

 

Chairman's and Chief Executive Statement

We are pleased to present OptiBiotix Health plc's annual report and accounts for the year ended 30 November 2017.

OptiBiotix has made strong progress during this period in its strategy of developing compounds which modify the human microbiome, developing partnerships with industry, and broadening its position in the microbiome space. This period reflects the transition of OptiBiotix from a research and development company into a commercial business, with the appointment of a Commercial Director, Per Rehne, and Sales & Marketing Director, Christina Wood, who both joined us in March 2017. Since joining Per and Christina have led product launches of SlimBiome® and LPLDL® and concluded a total of ten commercial agreements with manufacturing, application and distribution partners. This period has also seen additions to OptiBiotix's intellectual property portfolio, FDA registration for the LPLDL® and SlimBiome® product ranges allowing access to the US market, expansion of products into new territories, and a pipeline of commercial agreements which will provide future revenue streams. As the promise of the microbiome materialises into products across an increasing number of OptiBiotix's platforms, and industry interest translates into multiple revenue streams from royalties and supply agreements, there is potential for a significant enhancement in the value of the Company.

Key Achievements

During the period to date we have achieved a number of key objectives which continue to build shareholder value. These include: -

  • Two agreements with Tata Chemicals, one of India's leading suppliers of food ingredients, to develop weight management products containing SlimBiome® for the Indian market, and the second to scale up and manufacture the companies cholesterol reducing prebiotic LPGOS
  • The appointment of Per Rehne as Commercial Director, and Christina Wood as Sales & Marketing Director, to support the commercialisation and global expansion of OptiBiotix products
  • A global profit sharing agreement with Sacco S.r.l., one of Europe's leading probiotic manufacturers, to manufacture and supply OptiBiotix's cholesterol reducing strain, LPLDL®
  • Launch of OptiBiotix's SlimBiome® and LPLDL® products at the Vitafoods Europe tradeshow in Geneva in May 2017
  • The signing of ten commercial agreements: -
    • Two for the manufacture, supply and distribution of SlimBiome®
    • Seven for the manufacture, supply, and distribution of LPLDL®
    • One for the manufacture and supply of LPGOS
  • Presentation of OptiBiotix's science at international conferences including: the European MicroBiome Summit (November 2016); ProBiota (February 2017); the MicroBiome R&D and Business Collaboration: Asia (March 2017); International Scientific Conference on Probiotics and Prebiotics in Budapest (June 2017), and MicroBiome R&D and Business Collaboration (USA)
  • FDA registration for LP-LDL® and SlimBiome® product ranges allowing access to the US market.
  • The admission of OptiBiotix's majority owned skincare subsidiary, SkinBiotherapeutics (formerly SkinBiotix), to AIM with an associated £4.5m institutional and private client fundraise
  • A profit after tax of £1.9m reflecting an adjustment of £4.1m for the change in value of the investment in SkinBiotherapeutics following the listing on AIM in April 2017

Subsequent to the year end a number of further key agreements were reached which continue to build shareholder value: These include:-

  • A US manufacturing, supply and profit sharing agreement with Cereal Ingredients, Inc for SlimBiome®
  • An exclusive royalty bearing agreement with Fine Foods and Pharmaceuticals for the production and supply of five formulations containing OptiBiotix's LPLDL® strain in Europe
  • A five year distribution agreement with Trigen Pharma Internation (Pvt) Ltd to exclusively distribute and commercialise OptiBiotix's own label CholBiome® products in Pakistan
  • A non-exclusive distribution agreement with Cambridge Commodities Ltd to distribute SlimBiome® weight management technology in the United Kingdom
  • A five year agreement with Akums Drugs and Pharmaceuticals Ltd to exclusively manufacture and supply supplements and biotherapeutic products containing LP-LDL® in India

Research and Development (R&D) strategy

To exploit the diversity of opportunities, the Company has developed a number of pharmaceutical level technology platforms using different approaches to modulate the microbiome. These technology platforms have now moved through the development process of laboratory studies, independent human studies with world-renowned key opinion leaders and manufacturing scale up. These platforms provide a proven systematic approach to the development of products with the science winning awards at major international scientific conferences and the products they produce awarded industry prizes for innovation. The validation of these technology platforms has substantially reduced investor technical and clinical risk and created industry leading capability for the development of further products by OptiBiotix and its partners both.

OptiBiotix's R&D strategy has been designed to create technology platforms and intellectual property which provide multiple product and partnering opportunities both within each platform, and by combining platforms. For example, by combining our cholesterol reducing strain, LPLDL®, with galacto-oligosaccharides (LPGOS) produced from it, we can selectively enhance its growth and increase cholesterol reduction threefold. This means that for a limited amount of extra investment, we have the potential to create large amounts of additional value and expand the market opportunities. Whilst this approach has complexity, it has been designed to mitigate development risk in the evolving microbiome field and provide a cost-effective way to build overlapping intellectual property ("IP") and exploit the many opportunities offered by the microbiome.

The other advantage of this approach is that as these platforms are structured under separate divisions, each containing its own technology platform, IP portfolio and partner agreements, they could in due course become separate legal entities with the potential for investment or a public listing. This strategy allows investors in OptiBiotix to build up a broad-based investment portfolio across a number of areas in the microbiome space which diversifies risk, whilst offering shareholders ‎multiple opportunities in the microbiome space. Whilst each division has a different technological base they are united by a common theme of: -

  • Understanding the underlying science and mechanism of action in laboratory studies. This allows us to optimise our products and identify multiple application opportunities
  • Proving our products are safe and that they work in humans by carrying out independent clinical studies and publishing them in leading peer reviewed journals authored by leading academics well known to industry
  • Working with world renowned key opinion leaders who support the science behind our products

OptiBiotix's technology platforms have now moved through the development process of laboratory studies, human studies and manufacturing scale up and this has substantially reduced technical and clinical risk. This changes the risk reward ratio leading to both an increase in value and greater interest from corporate partners in the Company's technology, products and assets. Our deals with Tata Chemicals (December 2016 and July 2017) and Galenicum (October 2017) reflect this progression of our technology. These platforms have been designed around pharmaceutical drug discovery approaches creating the potential to extend existing products beyond functional ingredients into biopharmaceuticals and into the drug market.

OptiBiotix is rapidly transitioning from a product development company to the commercial stage of the Company's development. This started with the European launch of SlimBiome® at Vitafoods in May 2017 and continued with the USA launch in late September 2017 at Supply Side West. Since then, the Company has been developing a deal pipeline which we believe will build into significant revenues over time.

The key to establishing the scientific maturity and credibility of our technology is the reporting and peer review of our data in scientific journals and at international conferences by independent key opinion leaders. The last twelve months has seen an increase in the number of these presentations and publications reflecting the maturity of our science. One of the most significant of these was the publication of our human studies on LPLDL®, in the peer reviewed scientific journal PLOS-One by Professor Glen Gibson, one of the world's leading authorities in this field. Another significant presentation was give by Professor Bob Rastall, an international key opinion leader and expert on prebiotics at the MicroBiome R&D and Business Collaboration (USA) in San Diego in November 2017. Professor Rastall presented the Company's research programme on its OptiBiotics® concept: a combination of a probiotic and a targeted prebiotic specifically designed to selectively enhance the growth rate and health benefits of probiotic products.

Following on from winning the best scientific abstract at ProBiota 2017 we were pleased to win the best scientific abstract at ProBiota 2018 for the identification and development of a prebiotic which selectively enhances the growth of Lactobacillus rhamnosus GG ("LGG®") in the gut. LGG® is contained within DSM's Culturelle® probiotic range which is the best-selling probiotic supplement brand in the world. These presentations and publications raise OptiBiotix's profile and reputation, attract commercial interest in our technology and products and provide the scientific evidence for sales and marketing literature in support of product commercialisation.

As the Company transitions from a technology company to a product company, it will continue to present its science at international conferences and in leading peer reviewed journals around the world.

OptiBiome® (SlimBiome®, CardioBiome, ImmunoBiome, WellBiome® and PsychoBiome)

OptiBiome® is a range of products developed as functional ingredients to help prevent and manage many of today's chronic lifestyle diseases. SlimBiome®, the first product in the range, is a patented weight management formulation scientifically formulated by experts in weight management to reduce hunger, leading to less snacking and easier weight loss. This is a new approach to weight loss and contrasts with existing 'diet' products which typically rely on customers' self-control to restrict calories and as a consequence have a high failure rate.

The ingredients in SlimBiome® are backed up by over one thousand publications and developed such that each of the ingredients work synergistically, in that they act at different parts of the gut in three different ways. These being:-

  • i. They make you feel full, and hence less likely to eat as much food, or to snack between meals.
  • ii. They control blood sugar peaks and troughs reducing sugar cravings.
  • iii. They increase the diversity of microbes (microbiome) in the gut which helps people loose weight more quickly and most importantly sustain this weight loss.

SlimBiome® is sold as an ingredient, in white label products, and in OptiBiotix's own brand of GoFigure® range of shakes and bars. We are pleased that Tata Chemicals, one of India's leading suppliers of food ingredients, signed an agreement in December 2016 to develop weight management products containing SlimBiome® for the Indian market. With India ranked second in the world with 30m overweight people and Tata's local knowledge, reputation and sales & distribution capability, this has the potential to develop into a healthy future revenue stream as Tata commercialises OptiBiotix's and its own label products across it developing B2C network in India.

Christina Wood is leading the commercialisation of SlimBiome® and has made strong progress since commencing her role as Sales and Marketing Director in March 2017. Christina has been working with manufacturers, application developers and retailers to expand the range of application opportunities. This has led to a profit sharing agreement with Knighton Foods (November 2017) a wholly owned subsidiary of Premier Foods plc, and Cereal Ingredients (December 2017), a speciality ingredients manufacturer based in the USA. Further developments are on-going with other partners to develop applications for breaded products, biscuits, dairy, gummies (children's products), muesli pots, porridge pots, healthy snacks, and a range of cereals in puff, flakes and crisp format. This creates the opportunity for multiple revenue streams from sales of ingredients to food manufacturers, white label products to large retailers, and branded products in multiple presentations to meet the needs of a diverse range of national and international markets. This is all part of a series of ongoing developments with a number of international partners and large retailers to extend SlimBiome® application into a broader range of 'Health & Wellbeing' food and beverage products. This is to coincide with increased consumer awareness of using functional natural ingredients as part of a healthy lifestyle to manage and reduce the risks of illness and disease.

In addition to the commercialisation of SlimBiome the Company is extending its OptiBiome® range beyond weight management (SlimBiome®) to include cardiovascular health (CardioBiome®), immune health (ImmunoBiome®), cognitive health (PsychoBiome), and general health (WellBiome®).

OPTISCREEN, CHOLESTEROL REDUCTION AND LPLDL®

OptiBiotix's first product developed using its OptiScreen® platform is a bacterial strain targeting cholesterol and blood pressure reduction. The strain, registered under international treaty's as Lactobacillus plantarum ECGC 13110402 and branded LPLDL®, was selected by OptiBiotix's proprietary OptiScreen® technology platform from over 4,000 candidate strains. The product has successfully undergone independent human studies showing high levels of efficacy for both cholesterol and blood pressure reduction. The reduction of both cholesterol and blood pressure is a significant advantage over existing cholesterol products as the ability to reduce both LDL cholesterol and blood pressure has a multiplicative effect in reducing cardiovascular risk.

Per Rehne is leading the commercialisation of LPLDL® and has made strong progress since commencing his role as Commercial Director. Since Per's appointment, LPLDL® has undergone rapid commercial development with the announcement of seven manufacturing, application and distribution agreements since its launch at VitaFoods in May 2017. Per has been working with partners to develop around 30 formulations containing LPLDL® which have the science, cost structure and synergistic mode of action to create a broad product range to meet the needs of international markets. This approach allows OptiBiotix to present product solutions to consumer health, pharmaceutical and retail companies to generate multiple revenue streams from ingredient sales, white label and own branded products. This is all part of a process of building multiple revenue streams using LPLDL® as the 'Intel inside' different presentations and formulations developed with industry partners to access consumer and pharmaceutical markets around the world.

We are pleased that Sacco S.r.l. ("Sacco"), one of Europe's leading probiotic manufacturers, signed a global profit sharing agreement with us to manufacture and supply OptiBiotix's cholesterol reducing strain, LPLDL®. We chose Sacco from a number of interested manufacturers due to their industry reputation, extensive global network of distributors and track record in building sales for what have become some of the world's best selling probiotic strains. The ability to supply competitively priced ingredients from a single manufacturer across world markets simplifies the supply chain and contract negotiations with corporate partners. Our agreement with Sacco extends LPLDL® into dairy applications leveraging Sacco's network to access the global $35.5 billion probiotic dairy market. Our agreement, an extension of an existing European agreement, was a strategic step to access the US probiotic supplement market, and to extend the opportunities offered by LPLDL® into dairy applications, with one of the largest and internationally respected supplier of probiotic ingredients.

Sacco produce LPLDL® as an ingredient which can be sold directly to companies or as the functional active within different formulations and presentations of both white label and branded products. One example of this is the non-exclusive agreement with Nutrilinea - one of Europe's fastest growing providers of food supplements- for the production and commercialisation of products containing OptiBiotix's LPLDL® strain in Europe. Under the terms of the agreement, Nutrilinea will produce, promote, market and commercialise OptiBiotix's CholBiome® and CardioBiome® products to their European network with the aim of maximizing the financial return for both parties. Similarly, Galenicum, one of Spain's leading pharmaceutical groups with an annual turnover of over €100 million and a year-on-year double-digit growth, have a non-exclusive license to commercialise Cardiocare™, a nutritional supplement containing OptiBiotix's LPLDL® strain in Spain, Chile, Peru and the Middle East. Galenicum has an international reputation for high quality innovative products and was awarded the prestigious European Business Award of "Business of the Year" in 2013/2014.

We believe that working with industry leading partners like Sacco, Nutrilinea and Galenicum provides the best opportunity of rapidly building LPLDL® into a leading global brand. We see LPLDL®, as the 'Intel' inside a range of products for cardiovascular health across both consumer and pharmaceutical markets. The overall aim is to achieve a multiple deal structure where we get revenues from manufacturers who produce LPLDL®, and application and formulation partners who formulate and package the product, as well as distributors who distribute the product. This creates the opportunity for multiple revenue streams from sales of the strain and white label and branded products to consumer and pharmaceutical companies around the world.

This division has a broad deal pipeline and we would anticipate further agreements with product formulation groups and distributors both within Europe and other territories in the forthcoming months.

MICROBIOME MODULATORS, OPTIBIOTICS®, AND SWEETBIOTICS®

The Company has made significant progress in its scientific programmes to develop compounds which modify the human microbiome to prevent, manage and treat disease and create natural high intensity sweeteners and sweet healthy fibres (SweetBiotix®).

These now cover three areas with each developing into a substantive opportunity in its own right: -

Microbiome modulators: OptiBiotix R&D teams have used gut models to demonstrate the ability to increase the growth rate, biological activity and health effect of specific microbial species in the human microbiome and in doing so, manipulate both the microbiome's composition and its function. This has now been demonstrated in multiple species, including OptiBiotix's cholesterol reducing LPLDL® strain and partner strains such as DSMs Lactobacillus rhamnosus GG (LGG®), contained within its Culturelle® range. The results of this study were reported with DSM as co-authors at ProBiota 2018 where it was awarded the prize for best scientific abstract. We believe this is the first reported publication of an optimised prebiotic for LGG®.

OptiBiotix reached an agreement with Tata Chemicals in September 2017 to scale up and exclusively manufacture galacto-oligosaccharide produced by OptiBiotix's LPLDL® strain (LPGOS) for the use in food and 'over the counter' (OTC) products. The agreement brought together Tata's expertise in the manufacture of galacto-oligosaccharides (GOS) with OptiBiotix's microbiome modulation expertise. LPGOS is heat resistant and stable during processing and has been shown to reduce cholesterol by up to 22% in gut models. OptiBiotix believes this creates opportunities to use LPGOS in a wide range of food products to help reduce cardiovascular risk factors and improve health.

The ability to develop designer prebiotics, which can modify both the microbiome's composition and its function, creates the potential for designer ingredients or supplements which can modify an individual's current microbiome to improve health and the potential for precision microbiome medicine. This is an area of growing scientific and commercial interest with increasing evidence that the microbiome plays an important role in how the body metabolises pharmaceutical products, influencing their effectiveness and the potential for adverse reactions. The ability to create designer ingredients which can modify an individual's microbiome to improve health places OptiBiotix at the forefront of global microbiome research and product development and has the potential to substantially increase the company's value.

OptiBiotics®: OptiBiotix's R&D teams have demonstrated that by combining our cholesterol reducing strain LPLDL®, with galacto-oligosaccharides produced from it, we can selectively enhance its growth and increase cholesterol reduction threefold. Work in the last 12 months has led to the development of new high throughput carbohydrate screening platforms which have allowed the extension of these concepts to other probiotic genera and species. To the best of our knowledge, our presentations at international conferences and partner discussion lead us to believe we are one of the world's leaders in this field. We see the development of species or genera specific prebiotics which can selectively enhance the growth and health benefits of existing probiotic products as a growing area of interest to the probiotic industry, a market expected to be worth more than $46.5bn by 2020 (Markets and Markets)

SweetBiotix®: SweetBiotix® are an innovative concept with the potential to address a global requirement, addressing international concerns over the impact of sugar on obesity, with the prospect of replacing 'unhealthy' sugars in existing products with non-digestible, low calorie, healthy SweetBiotix®. These sweet natural healthy sugars are not digested in the human gut and hence calorie free. In the last 12 months, we have accelerated our development programmes in this area and carried out five successful independent human studies in which OptiBiotix's products and commercially available comparator samples were tested by an expert panel of 11 panellists who rated 11 products attributes (e.g. sweetness, aftertaste, off- flavour, bitterness etc) compared to sucrose as a benchmark. OptiBiotix's products were created by two development programmes which showed: -

i. Natural high intensity sweeteners with improved flavour profile and microbiome modulating functionality. Independent human studies have demonstrated these have a good flavour profile and sweetness of between 140x and 223x of sucrose at equivalent concentrations.

ii. Sweet natural healthy fibres being developed as potential bulk sugar replacements which are not digested in the human gut, and hence calorie free. Human studies have demonstrated these sweet fibres had the highest sweetness and lowest off-flavours when compared to a wide range of existing sugars and fibres and sucrose.

With growing concerns over traditional sugars and artificial sweeteners these results create the prospect of SweetBiotix® replacing 'unhealthy' sugars in existing products with non-digestible, low calorie, healthy SweetBiotix®. Given that the global sweetener market, currently dominated by sugar, is forecast to reach $112bn by 2022 (Mordor Intelligence, 2017), the Company believes these developments have the potential to greatly enhance shareholder value. Publication of the results on our human studies and accompanying media report in national newspapers such as The Times has stimulated high industry interest and we anticipate further developments and announcements in this area in the future.

SKINBIOTHERAPUETICS PLC

In April 2017, OptiBiotix's majority owned skincare subsidiary, SkinBiotherapeutics (formerly SkinBiotix), was admitted to AIM with an associated £4.5m fundraise, supported by institutional investors. This is part of OptiBiotix's strategy of building value in each of its divisions with some of this value, when realised, being returned to shareholders and reinvesting some of the gains to develop other divisions so they, in due course, can become separate legal entities with the potential for a separate public listing.

The admission to AIM of SkinBiotherapeutics plc attributes value to a part of the business in which a 52% stake was acquired for £250K in March 2016 and 12 months later listed at a valuation of £11m, with OptiBiotix® owning a 41.9% shareholding. OptiBiotix believes that there is potential for substantive future value enhancement in SkinBiotherapeutics using the £4.1m raised at listing allowing it to fully exploit the potential of this exciting technology.

As SkinBiotherapeutics plc grows in value, OptiBiotix shareholders will benefit from the appreciation of this asset. This is an innovative business model which over time looks to give OptiBiotix shareholders a position in multiple companies, and with it the prospect of multiple returns.

SkinBiotherapeutics plc is at an early stage in its development, similar to the beginnings of OptiBiotix in August 2014, and continues to make solid progress building relationships with potential commercial partners and progressing towards the start of human studies, which if successful, should provide a substantive uplift in valuation. The Board remain optimistic on the future of SkinBiotherapeutics plc as it has good technology and is targeting multi-billion dollar global markets, where there is a real need for new science.

Results

OptiBiotix results for the 12 months ended 30 November 2017 are set out in the Consolidated Statement of Comprehensive Income. Administrative expenses were £2,244,169 (2016: £1,765,736) including a number of non-recurring costs associated with listing SkinBiotherapeutics in April 2017.

The accounts show a profit after tax of £1.9m following the successful listing of SkinBiotherapeutics plc. The income statement includes an adjustment of £4.1m for the change in value of the investment in SkinBiotherapeutics immediately following the listing. This is an accounting adjustment and as an unrealised profit on the investment is not taxable. Since that time the value of SBTX shares and thereby OptiBiotix's holding in SBTX has increased representing a valuable current and future asset.

After accounting for the adjustment, operating loss for the period is £2.13m (2016: £1.52m). Following the listing of SkinBiotherapeutics and the diluting of Optibiotix plc's shareholding, the company now has to account for its share (41.9%) of future profits and losses. As this is an accounting adjustment, there is no impact on the Groups cash balance. Cashflows remain tightly controlled, with a focus on building shareholder value through investment in R& D, IP and in-licensing opportunities. The Groups cash position remains strong at £1.25m at the year end.

Board and Management

We continue to evolve the Board in line with the Company's development. The last 12 months has seen a number of Board additions to reflect the increased commercial focus.

We were pleased to announce the appointment of Per Rehne as Commercial Director and Christina Wood as Sales and Marketing Director, who joined us in March 2017. Both come with a wide network of contacts in the food industry and a track record of working with manufacturers, distributors and retailers to rapidly grow sales revenues in international markets. Per has taken responsibility for leading the commercialisation of LPLDL®, and Christina responsibility for SlimBiome®. Their addition to the Board increases the company's capacity and capability to better exploit the opportunities created by our growing pipeline of products in international markets. We anticipate seeing the benefit of these appointments in the next six to 12 months.

We believe with the addition of Per and Christina, we have a well-balanced Board with scientific and commercial expertise in the founder and Chief Executive Stephen O'Hara and market expertise in Non-Executive Director Dr Gareth Barker and Peter Wennström, one of the world's leading experts in functional food innovation and marketing. Dr Sofia Kolida as Director of Research and Development brings specialised expertise in prebiotics. They are complemented by our CFO Mark Collingbourne and Adam Reynolds as our interim Chairman.

At the end of the accounting period we announced Adam Reynolds would step down as Non-Executive Chairman on 31 December 2017 and be replaced by Neil Davidson. This was part of a strategy to supplement the existing Board with sector specific commercial leadership. Neil brings a network of industry contacts and over 30 years of operational and Board experience as Chairman and Chief Executive of FTSE 100, AIM and private companies in both an executive and non-executive capacity.

We anticipate further additions and changes to the management team and the Board as we extend the global reach of our products and in-line with the continued growth and expansion of the Company.

Outlook

OptiBiotix is continuing its strategy of developing microbiome modulators for large markets (>£100m) where there are high growth opportunities (CAGR >10%), and a large unmet need.

The last 12 months has seen the transition of OptiBiotix® from a research and development Company to a commercial business, with the appointment of a commercial team, product launches of SlimBiome® and LPLDL® at Vitafoods and Supply Side West, followed by the signing of 11 commercial agreements. This is all part of a commercial strategy based on closing out deals across multiple levels of the value chain, starting from manufacturing agreements such as the profit sharing agreement signed with Sacco for the production of LPLDL® and Knighton Foods for the production of SlimBiome. This is complemented by royalty bearing license deals with formulation partners for the supply of white label and branded products to food producers and consumer health companies, and distribution agreements directly with retailers. Whilst this strategy takes longer to develop than single license deals, this multi-channel approach enables OptiBiotix to maximize the income potential of each product, whilst limiting the risk related to any individual deal. This approach also allows OptiBiotix to operate on a very asset-light infrastructure. Product manufacturing, regulatory approvals, and costly sales and marketing infrastructure are funded by OptiBiotix's partners meaning that license and royalty fees are largely cost free and enter the bottom line. This is a low risk, low cost approach to accessing multiple consumer healthcare and pharmaceutical markets around the world, and if successful, has the potential to cumulatively generate substantive revenues and profitability in the forthcoming years.

Key to this commercial strategy is the appointment of industry leading partners like DSM, Tata, Sacco, Nutrilinea and Galenicum who provide the best opportunity of rapidly building our products into global brands. We were pleased at the high level of interest in both LPLDL® and SlimBiome® at Vitafoods and Supply Side West and hope the rich deal pipeline we have created will translate into material revenue growth in the next financial year against a continued lean cost base.

As we extend our reach into new application areas and new territories, the scale of the opportunity enlarges. The US is one of the largest and fastest growing probiotic markets in the world, with supplements alone accounting for US$2.06bn sales, and a projected 55% growth to US$3.3bn by 2021. The extension of our products into other application areas reflects a growing confidence in our products and the scale of the opportunity. We would hope to see the expansion of territories and application areas leading to announcements of deals with a number of national and international partners in the forthcoming months.

Whilst initial products are targeted at the ingredient and supplement markets, the gaps between neutraceuticals and pharmaceutical is narrowing. Given OptiBiotix's products have been developed using pharmaceutical platforms and our clinical studies have been designed to be consistent with phase 1 and phase 2 pharmaceutical studies, OptiBiotix has received partner interest to license LPLDL® to extend our products into biotherapeutics. This is a path OptiBiotix has explored provided the substantive investment in the development of a biopharmaceutical was supported by a suitable pharmaceutical partner. If this is achieved this has the potential to create significant value uplift given the high value deal structure typical in drug development and pharmaceutical industries. The deal announced with Akums in May 2018 is an early example of such a deal whereby the partner provides all funding for drug registration, phase 3 and 4 clinical studies, in return for exclusivity and royalty payments based on future product sales. We anticipate future high value deals for use of LPLDL® as a biotherapeutic in other territories in the month and years ahead.

As the Company enters the next stage of its development, we will need to evolve the structure to fully exploit the expanding range of opportunities and maximise revenue. Currently the Company is structured around technology platforms, such as Optiscreen® and OptiBiotics®, which creates a scientific focus. The transition from a technology to product company requires a different focus and skill set and restructuring of our website. The appointment of Per Rehne (Commercial Director), and Christina Wood (Sales Director), who were appointed in January 2017 and joined us in March 2017, was the start of this process and has delivered an increase number of quality in deal flow. OptiBiotix's technology platforms are being developed into self-sustaining business units with a commercial focus lead by directors who have the business development, sales skills and experience to fully exploit the revenue potential of the products. As these develop, we will separate them into wholly owned separate legal entities with the potential for an independent exit by a trade sale or listing separately or collectively in UK or the US, depending on market conditions. The benchmark for this is seen with the transition of SkinBiotix Limited as a technology platform within OptiBiotix to a high value public company with £4.1m cash allowing it to fully exploit the potential of this exciting technology. This allows OptiBiotix shareholders to benefit from the appreciation of this asset plus any dividends which may be returned in recognition of this value uplift. This is consistent with our strategy of providing investors a broad based investment portfolio across a number of areas in the microbiome space which diversifies risk, whilst offering shareholders ‎multiple opportunities in this exciting space.

The Board believes OptiBiotix is at the leading edge of one of the hottest areas of healthcare innovation which is forecast to become one of the world's fastest growth areas. Over the last 12 months, we have continued our progress of building a broad based microbiome business with a strategy which best maximizes the value in each division and a diversity of IP and commercial relationships which provides shareholders with multiple opportunities. The next stage of the process involves the continued development of new application areas and extending our products into new territories and application areas, such a biotherapeutics, with suitable partners. We believe the Company has now significantly de-risked scientific, clinical and manufacturing risk across its platforms. This changes the risk reward ratio leading to an increase in value and the Company and its assets becoming an attractive proposition for corporate partners. This has led to a number of approaches from potential acquirers interested in assets in specific divisions.

The Board anticipates further scientific and commercial interest in the Company's technology and products and a future where microbiome products will make a significant contribution to the prevention, management and treatment of disease. We are pleased that our strategy of developing microbiome products with a strong scientific and clinical evidence base with key opinion leader support has provided clear product differentiation and stimulated high commercial interest. We look forward to converting this interest into a growing number of revenue generating deals, of increasing value and in a wider range of territories.

The last twelve months have seen a growing number of awards for our science, industry awards for our products, and increased deal flow. We anticipate both the rate and value of deal flow increasing as we develop new applications, take existing products into new territories, and leverage our technology platforms to develop new product opportunities.

OptiBiotix has made strong progress in the last twelve months and now looks to build on its scientific innovation, product success, and commercial interest to build a diverse microbiome business with significant value for shareholders.

On behalf of everyone at OptiBiotix Health plc, we would like to thank our investors for their continued support and look forward to an exciting future in this exciting area of science which has the potential to revolutionise the future of health care.

 

N Davidson and S OHara
22 May 2018

 

Consolidated Statement of Comprehensive Income

    Year ended
30 November
2017
Year ended
30 November
2016
    £ £
       
Revenue   191,073 288,119
       
Cost of sales   (73,706) (38,214)
    ─────── ───────
Gross Profit   117,367 249,905
       
Administrative expenses   (2,244,169) (1,765,736)
    ─────── ───────
Operating loss   (2,126,802) (1,515,831)
       
Finance cost   (6,154) -
Finance income   142 165
    ─────── ───────
    (6,012) 165
       
Share of loss from associate   (294,278) -
Profit on disposal of subsidiary   4,116,286  
    ─────── ───────
Profit/(loss) before Income tax   1,689,194 (1,515,666)
       
Income tax   228,447 174,544
    ─────── ───────
Profit/(loss) for the period   1,917,641 (1,341,122)
       
Other comprehensive income   - -
    ─────── ───────
Total comprehensive income for the period   1,917,641 (1,341,122)
    ═══════ ═══════
       
Total comprehensive income attributable to:      
   Owners of the company   1,907,441 (1,297,871)
   Non-controlling interests   10,200 (43,251)
    ─────── ───────
    1,917,641 (1,341,122)
    ═══════ ═══════
       
Profit/(loss) per share      
Basic profit/(loss) per share - pence   2.43p (1.67)p
Diluted profit/(loss) per share - pence   2.17p -
    ═══════ ═══════

 

Consolidated Statement of Financial Position

    As at
30 November
2017
As at
30 November
2016
ASSETS   £ £
Non-current assets      
Intangibles   1,927,226 2,195,646
Property, plant & equipment   6,561 11,755
Investments   4,189,022 -
    ─────── ───────
    6,122,809 2,207,401
    ─────── ───────
CURRENT ASSETS      
Inventories   8,890 26,625
Trade and other receivables   106,122 194,230
Current tax asset   183,951 120,000
Cash and cash equivalents   1,247,431 3,115,366
    ─────── ───────
    1,546,394 3,456,221
    ─────── ───────
TOTAL ASSETS   7,669,203 5,663,622
    ═══════ ═══════
EQUITY      
Shareholders' Equity      
Called up share capital   1,586,628 7,196,010
Share premium   6,279,718 6,144,357
Share based payment reserve   474,517 417,585
Merger relief reserve   1,500,000 1,500,000
Accumulated deficit   (2,795,147) (10,345,513)
Non-controlling interest   - 90,692
    ─────── ───────
Total Equity   7,045,716 5,003,131
    ─────── ───────
LIABILITIES      
Current liabilities      
Trade and other payables   239,395 253,805
    ─────── ───────
    239,395 253,805
    ─────── ───────
Non - current liabilities      
   Deferred tax liability   384,092 406,686
    ─────── ───────
    384,092 406,686
    ─────── ───────
TOTAL LIABILITIES   623,487 660,491
    ─────── ───────
TOTAL EQUITY AND LIABILITIES   7,669,203 5,663,622
    ═══════ ═══════

 

Consolidated Statement Of Changes In Equity

  Called up
Share
capital
Retained
Earnings
Share
Premium
Non
Controlling
interest
Merger
Relief
Reserve
Share-
based
Payment
reserve
Total
equity
  £ £ £ £ £ £ £
Balance at 30 November 2015 7,117,315 (9,047,642) 3,863,687 - 1,500,000 383,435 3,816,795
               
Loss for the year - (1,297,871) - - - - (1,297,871)
               
Issues of shares during the year 78,695 - 2,280,670 - - - 2,359,365
               
Share options and warrants - - - - - 34,150 34,150
               
Non controlling Interest - - - 90,692 - - 90,692
  ────── ─────── ─────── ─────── ────── ────── ───────
Balance at 30 November 2016 7,196,010 (10,345,513) 6,144,357 90,692 1,500,000 417,585 5,003,131
               
Profit for the year - 1,917,641 - - - - 1,917,641
               
Issues of shares during the year 23,343 - 135,361 - - - 158,704
               
Share options and warrants - - - - - 56,932 56,932
               
Non controlling Interest - - - (90,692) - - (90,692)
               
Cancellation of shares during the year (5,632,725) 5,632,725 - - - - -
  ────── ─────── ─────── ─────── ────── ────── ───────
Balance at 30 November 2017 1,586,628 (2,795,147) 6,279,718 - 1,500,000 474,517 7,045,716
  ══════ ═══════ ═══════ ══════ ══════ ══════ ═══════

Share capital is the amount subscribed for shares at nominal value. Share premium represents amounts subscribed for share capital in excess of nominal value, net of expenses.

Merger relief reserve arises from the 100% acquisition of OptiBiotix Limited on 5 August 2014 whereby the excess of the fair value of the issued ordinary share capital issued over the nominal value of these shares is transferred to this reserve in accordance with section 612 of the Companies Act 2006.

Retained earnings represents the cumulative profits and losses of the group attributable to the owners of the company.

Share based payment reserve represents the cumulative amounts charged in respect of unsettled warrants and options issued.

 

Consolidated Statement of Cash Flows

    Year ended
30 November
2017
Year ended
30 November
2016
    £ £
Cash flows from operating activities      
       
Cash utilised by operations   (1,895,285) (1,398,181)
Interest received   142 165
Taxation   141,902 151,950
    ────── ──────
Net cash outflow from operating activities   (1,753,241) (1,246,066)
       
       
       
Cash flows from investing activities      
Purchases of property, plant and equipment   (1,804) (10,551)
Purchase of intangible assets   (43,381) (162,213)
Investment in subsidiaries   - 133,943
Disposal of subsidiary net of cash balances   (228,212) -
    ────── ──────
Net cash inflow from investing activities   (273,397) (38,821)
    ────── ──────
Cash flows from financing activities      
Share issues   158,703 2,359,365
    ────── ──────
Net cash outflow from financing activities   158,703 2,359,365
    ────── ──────
       
       
       
Increase/(decrease) in cash and equivalents   (1,867,935) 1,074,478
       
Cash and cash equivalents at beginning of year   3,115,366 2,040,888
    ────── ──────
Cash and cash equivalents at end of year   1,247,431 3,115,366
    ══════ ══════

 

Earnings per Share

Basic earnings per share is calculated by dividing the earnings attributable shareholders by the weighted average number of ordinary shares outstanding during the period.

Reconciliations are set out below:

Basic and diluted EPS Earnings 2017
Weighted average
Number of shares
Profit per-share
  £ No. Pence
       
Basic EPS 1,907,641 78,586,791 2.43
Diluted EPS 1,907,641 87,831,953 2.17
  ══════ ════════ ══════

 

  Earnings 2016
Weighted average
Number of shares
Loss per-share
  £ £ Pence
Basic and diluted EPS      
Earnings attributable to ordinary shareholders (1,297,871) 77,683,891 1.67
  ══════ ════════ ══════

As at 30 November 2017 there were 7,845,237 (2016: 10,345,237) outstanding share options and 1,399,925 (2016: 1,983,709) outstanding share warrants, both are potentially dilutive.

The Company's Report and Accounts for the year ended 30 November 2017 will be posted to shareholders shortly and may be downloaded from the Company's website at www.optibiotix.com

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

Page last updated: 23 May 2018