OptiBiotix Health PLC (LON:OPTI) Chief Executive Officer Stephen O’Hara caught up with DirectorsTalk for an exclusive interview to discuss the recent share price movement, their deal pipeline, the 39 potential RNS’s that could be announced in the following months & what this all means for investors
Q1: Just recently, there’s been a fall in OptiBiotix Health’s share price, how would you explain the share price performance?
A1: There has been some volatility in the share price, the first thing I wanted to do was to reassure investors that there’s nothing wrong. If you look back at where we are now to where we were say 12 months or so ago, the share price was higher 12 months or so ago but undoubtedly, we’re in a stronger position today than we were when the share price was trading at 80p. Even more importantly, if we look towards the future, there are a lot more opportunities we are progressing which are at a later stage, we touched on in previous RNS’s, and are entering the commercialisation phase. We do recognise there is uncertainty in small caps in general, and that’s across the board, and we do have a large retail investor base so we will get peaks and troughs, some shareholders just take profit and there’s also some uncertainty in the external environment which means that some retail investors start to take a shorter view.
I would say that if you look at where we are with the company, we’ve just entered a commercialisation and I believe this next stage of growth, there’s a potential for share growth which will come when we gain commercial traction with our products. Based on the high level of interest and lots of ongoing discussions, this look extremely promising and investors who attended my investor share results presentation earlier on in the year will recognise we have a structured plan and that’s the reason we appointed a new Commercial Director, Per Rehné and a new Sales Director in January 2017. They joined us at the end of March and as planned, we launched products in May and as I reported in previous RNS’s, there’s been a lot of interest, extensive interest, from our launch of Vitafoods in the middle of May, we’ve been working hard to close out deals from those discussions.
We have closed out 2 deals, one with HLH and one with Pharmabiota, both these are privately-owned pharmaceutical companies so they are far quicker in decision making. As people are also aware, HLH they had an initial order of 100,000 and last week they ordered another 200,000 units so you can see that it’s not just signing deals, HLH for example signed a deal, put the products on the market and now re-ordered twice the number of units they ordered initially. We have a number of agreements in our pipeline, 4 private companies like HLH and Pharmabiota but also some larger corporates, we hope to see these agreements start to close out after the summer break.
Q2: You mentioned the deal pipeline, when can investors expect to see these cross the line?
A2: OptiBiotix Health do have a strong deal pipeline, it’s very difficult to give accurate timelines for deals because, as I’m sure investors can appreciate, it’s a two-way negotiation and once any partners suspect you’re working to a time limit, this can give them leverage in any negotiation. You’ve just got to think of situation where you’re trying to buy and sell a car, if you’re trying to sell your car very quickly, the price changes.
However, to give our investors flavour of the amount of interest in OptiBiotix Health, we’ve had large interest since Vitafoods but a number of discussions prior to Vitafoods. As a team, we review the potential news flow going forward and we estimate that there are 39 opportunities for RNS’s between August of this year and the end of year so that’s an awful lot of opportunities. Now, not all of these will turn into RNS’s, as often there are 2–3 companies looking for deals in the same territory, investors will note that our deals with Pharmabiota and HLH are non-exclusive deals so that creates opportunities for maybe 2 or 3 companies in the same territory. Generally speaking, particularly with larger corporates, they want a single territory or a single continent so it would exclude others but hopefully those sort of numbers, we’re sitting on opportunities that we’re looking at, maybe not all of them will develop but it gives investors flavour about the amount of activity taking place and the scale of the opportunity.
So, there’s an awful lot going on, that in itself creates a challenge of the breadth of capability within the team, particularly over these summer months when people are on holidays but we hope to be closing out a number of deals as we exit the summer holidays.
Q3: Can you tell me what all this means for OptiBiotix Health investors?
A3: I think it looks very promising for investors and of course, I am probably the largest single private investor and my family have a large stake holding in the company, many of those bought at 75p and we’re below that now. So, as I said at the start of this interview, I want to reassure investors that the fluctuation in share price don’t worry me but in terms of what it means for investors, you need to look at this across the board.
We’re in a really exciting space, the microbiome, we’re building not just a single product technology platform but we’re developing a number of product platforms and these are at different stages of development and I created this purposely as it spreads investor risk across a number of opportunities. Of course, those earlier platforms, the SlimBiome and the OptiScreen platform that creates the cholesterol product LPLDL, they’re now entering the commercial phase of development with the launch of Vitafoods in mid-May of this year so early stage of commercialisation. As mentioned earlier, these products have stirred up a lot of commercial interest and I think there’s a number of times now, that this is probably the greatest interest I’ve had in any product and we hope that these will come to fruition in the next few months.
Investors should also note, if they look up Biopharma or Pharmabiota, these companies have a very good reputation for investing in scientifically validated products which they sell into the high-value pharmaceutical market. It’s the growing trend in both small and large companies in Pharmabiota products of this type so these are products that are natural products, that have a strong clinical evidence base and a lot of science behind them.
From OptiBiotix Health’s point of view, we are establishing early sales in these pharmacies and this helps build credibility in the science and consumer acceptance as pharmaceutical products. This opens up opportunities then to larger retailers to maybe recognise the opportunity there in terms of the science behind these products and the traction in the pharmacies will then build into their sales pipelines going forward.
I just hope investors can start to see the momentum building up as we create multiple partnerships across multiple territories with each partner starting to contribute small amounts but incrementally increasing to grow revenue. We see this as a very low risk, low cost approach to accessing multiple healthcare markets and pharmaceuticals markets across the world which, if we’re successful in this, we can generate 7-figure revenues in the forthcoming years.
So, we can see a lot of opportunities with the early stage and that early stage development, as I touched on earlier, creates the opportunity for substantive share growth. So, initially, we we’re in early stage of scientific development and now we’re in the early stages of commercial development and there’s a lot of activity taking place which have the potential to create substantial value. Now, we hope that investors will see that and stick with us as we go forward.
