REG - OptiBiotix Health - Commercial update

OptiBiotix HealthAnnouncement

20/08/2024 07:00

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RNS Number : 9946A  OptiBiotix Health PLC  20 August 2024

OptiBiotix Health plc

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

 

Commercial update

 

OptiBiotix Health plc (AIM: OPTI), a life sciences business developing
compounds to tackle obesity, cardiovascular disease and diabetes, provides the
following unaudited commercial update. This report provides a general update
of sales progress on the areas of commercial focus for 2024.  These are:-

 

1.    Increasing the number of partners and sales in the USA as the world's
largest economy

2.    Increasing the number of partners and sales in Asia recognising its
high growth rate and large and growing consumer markets with over 60% of the
world's population, with China (1), India (2) and Indonesia (4) forecast to
become three of the world's largest four economies by the 2050s

3.    Investing in e-commerce channels nationally, and subsequently
internationally to drive direct-to-consumer sales, reducing reliance on retail
partners and increase gross profit margins

4.    A trend towards selling more final branded or white label products
which include the Company's ingredients to partners.  This leads to two sales
streams: the ingredient which goes in the final product and the finished
product sale

 

This update will show progress in each of these areas and the investments in
India and the USA starting to deliver larger partners in key strategic markets
with large initial orders being placed and the potential for high volume
sales.

 

General

The recovery of sales activity in 2023 has continued into the current year,
helped by strong e-commerce sales, a number of new large partners placing
large orders for final products including Dr Morepen in India, a NASDAQ listed
USA e-commerce and direct selling company placing an order for a tomato soup
final product, the launch of LeanBiome® in Muscletech® at the start of 2024,
and continued growth in Asian markets.  As these partners build their brands
in their respective markets and grow sales they have the potential to
transform the business.

 

Sales orders for the first six months of the current year were under £600K
approaching the FY 2023 reported revenue of £644K which was subsequently
surpassed at the end of July 2024. These sales orders include confirmed orders
received in the first six months of the year and are provided as a general
update on progress. The figures will differ from reported revenue in the half
year accounts to 30 June 2024, which under IFRS 15 accounting rules are only
included when goods are accepted by the customer, even though prepayment may
have been received.  The difference reflects the success of attracting new
overseas corporate partners who have ordered final product and the longer
timescales this entails between placing an order for a new product launch and
the customer receiving goods.  Excluding milestone payments received in H2
2023, reported revenues in H1 2024 will be ahead of H2 2023.

 

Consumer Health and Ecommerce

OptiBiotix has made significant investments in its e-commerce business to
drive direct-to-consumer sales as a strategic move to reduce reliance on
retail partners and increase profit margins. The Consumer Health division has
the advantage of receiving online sales income immediately and allows more
control over the Company's brands and messaging whilst reducing reliance on
distributors.

 

The Consumer Health division continues to grow rapidly during the year with
sales to 30 June 2024 exceeding £200K, higher than the £185K achieved for
the whole of 2023.  The biggest contributor to sales was China, with
OptiBiotix online and Amazon UK making up the rest with a roughly equal split
with a small contribution from Amazon UAE which launched late in H1 2024. The
change from TikTok to Tmall reported in the annual accounts has led to less
sales as expected, but at a much lower marketing cost. OptiBiotix online, with
much lower marketing costs, has returned a net profit every month in 2024 to
date. Amazon UK has shown the highest growth rate but has been loss making
every month in 2024, reflecting the investment in marketing to grow
OptiBiotix's customer base on this platform. However, 25% of all Amazon
customers pay by monthly subscription as repeat customers. As the Company
grows its customer and subscriber base and increase sales from repeat
purchases, marketing costs tend to reduce as a percentage of sales which is
expected to lead to profitability. SlimBiome(®) remains among Amazon's top
sellers for appetite suppressants and achieved record sales during Prime month
in July 2024 and was awarded Amazon choice in Q1 2024.

 

After waiting many months for a European VAT certificate, the Company can now
sell through new Amazon channels in Germany with Amazon India expected to
follow in late September or early October 2024. As OptiBiotix increases the
number of countries it sells into via Amazon and optimises its product
offering in different markets, the Board anticipates continued sale growth
through 2024 and beyond.

 

North America

The Company was pleased to report at the start of the year the launch of
LeanBiome® in MuscleTech's Nitro Tech Ripped range, a premium protein powder
designed to support athletes who want to lose fat and build lean muscle.
MuscleTech defines itself as the No.1 selling Bodybuilding Supplement Brand in
America https://www.muscletech.ca/research/
(https://www.muscletech.ca/research/) .  The inclusion of LeanBiome(®) in a
leading global sports brand like Muscletech is a significant endorsement of
our product. Muscletech continues to fill its distribution network in Europe
with further orders for LeanBiome® anticipated in H2 2024.  LeanBiome(®) is
now included in two leading sports nutrition brands, Myprotein and MuscleTech,
across the world, a market worth $45.2bn in 2023, and expected to grow at a
CAGR of 7.5% per annum to 2030, (Grand View Research, 2023).

 

In line with the Company's strategy of selling more final product and
expanding its interests in the USA, the Company continues to advance sales
opportunities with a number of large North American companies.  As announced
on 29 July 2024, the Company was pleased it receive its first order from one
of these, a NASDAQ listed USA e-commerce and direct selling company, for a
tomato soup final product which is expected to be launched in January 2025.

 

The Company continues to have ongoing discussions with a number of large US
partners to include its ingredients in partner final products. These include
SlimBiome® and SweetBiotix® (which has been developed in a finished product
for a large global partner), and our microbiome modulators. The Company is
hopeful that further announcements with corporate partners in the USA will be
made in due course.

 

OptiBiotix Health India

This area of the business has seen a material transformation in outlook with
the announcement of the agreement with Morepen (announced on 13 March 2024) to
sell products containing SlimBiome(®) under the Dr Morepen brand. This is an
established, well known, and trusted brand in the Indian market and represents
a material step forward for the Company's products in the Indian market.
OptiBiotix will receive revenue for both the ingredient and final product
sales with the first order received in May 2024 of over £175K for delivery
and launch in Q3 2024. The initial launch planned for Q3 2024 will involve
five products with subsequent launches later in the year and at the start of
2025. Based on Morepen's current forecasts this agreement could contribute in
the region of £6-7 million revenue per annum to OptiBiotix in the next four
to five years as announced on 13 March 2024.

 

The Board believe these agreements, plus other partner launches planned for
Autumn 2024, the upcoming launch of products with Morepen, and reorder of
products with Apollo pharmacies could contribute significant revenues and
bring profitability to this part of the business in 2024.

 

Asia

In 2023, OptiBiotix signed agreements with four new partners in Asia for
SlimBiome® and have received just under £80,000 worth of initial orders.
These include Nasol Pharma International (Vietnam), Bonanaza Neutra
(Thailand), Colorinda Chemtra (Indonesia), and NexusWise (Malaysia and
Singapore). These are all well-known specialist distributors in their field of
expertise who work with local manufacturers and brands to launch products
containing SlimBiome®.  The Board believes this is a strategic investment in
high growth markets that are anticipated to grow slowly but has the potential
to deliver significant revenues in the future.

 

Outlook

This commercial update shows the Company has made good progress in H1 2024 on
its stated aims of securing a number of commercial agreements for the sale of
its products with large partners in key strategic markets (USA, and Asia),
growing direct to consumer sales, and selling more finished products. Whilst
working with large partners takes longer and tends to be subject to more
stringent confidentiality, the size of some of the first orders and the
potential for high volumes sales merits the investment. The key now is to
ensure as these products launch with new partners in new territories, the
Company supports its partners with training and marketing assets to ensure
sales growth and repeat orders.  If successful, given the scale of the
opportunity, success with one or more of these partners will be
transformational for the Company.

 

The Company has a high level of corporate interest in its second-generation
products and is in discussion with a wide range of industry partners over
product application and launch timescales, some already announced and some
with new potential partners. The Board are pleased with the progress being
made by DSM-Firmenich and its preliminary forecast for SweetBiotix(®) of
>100,000 metric tonne per annum, demonstrating its intent and potential
scale of the opportunity.  The Company asks shareholders to respect the need
for confidentiality and will make further announcements once these have been
concluded.

 

The fundamentals of the Company's marketplace remain very exciting with recent
market reports (announced on 29 July 2024) highlighting that products across
all of OptiBiotix's portfolio have potential to meet growing market trends as
a solution to a wide and growing range of lifestyle-related health challenges.
Given the high customer ratings and industry awards for its products if
OptiBiotix can leverage this market interest by increasing customer awareness
of its products either directly through social media channels or indirectly
through its partners, the Company has the potential to build a successful and
profitable business.

 

Stephen O'Hara, CEO of OptiBiotix Health plc said: "We have made real progress
this year in progressing our commercialisation strategy of broadening our
partner base by securing a number of new corporate partners in key strategic
markets like the USA and Asia, investing in e-commerce channels, and selling
more final product. We continue to see sales momentum building in 2024 with
sales orders received in H1 2024 approaching FY 2023 reported revenue and in
July 2024 surpassing it.

 

"Having spent a number of years carrying out clinical studies to gain health
claims on our first generation products, we are now gaining commercial
traction with large partners in key markets. We anticipate this trend will
continue in 2024 and hope to add to this, other partners who are interested in
our potentially industry changing second-generation products.

 

"With appetite suppression, gut health, sugar alternatives, and modulation of
the human microbiome attracting ever-increasing interest, we look to the
future with a high degree of confidence."

 

This announcement contains information which, prior to its disclosure, was
considered inside information for the purposes of the UK Market Abuse
Regulation and the Directors of the Company are responsible for the release of
this announcement.

 

 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

 Peterhouse Capital Limited (Broker)                                 Tel: 020 7220 9797
 Duncan Vasey / Lucy Williams

 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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