Life sciences compounds developer OptiBiotix Health (OPTI) has announced results for the first of calendar 2021, emphasising “sales of LPLDL and SlimBiome of £1.076m, a 44.5% increase over H1:2020… pleasing given the continued uncertain global economic environment and challenges of the subsequent waves of COVID-19, particularly in countries like India and the USA”. The shares have currently responded slightly higher, to 50p to buy. There was still a, albeit slightly reduced, operating loss - £0.597 million, though the company noting £0.117 million of non-recurring recruitment costs and that, as in previous first half years, there was no substantive contribution from license or royalty payments which tend to be received in the second half of the year and increase margins. It also noted its scale increase is enabling it to renegotiate a number of agreements and an increased focus on selling final products, which again increase margins.
There is further encouragement from “new product launches in July 2021, the extension of territories with existing partners, the prospect of agreements with large partners in key strategic markets, and the growing realisation of our development pipeline” – that includes higher margin 'second generation' products, for example a US partner is bearing the costs for product manufacturing one type of SweetBiotix whilst paying annual royalty fees. It therefore states it “is in a strong position to meet or exceed its full year sales forecast”. That is with house broker Cenkos forecasting full year sales of £2.2 million and a £0.8 million operating loss.
We continue to believe they will indeed be exceeded and 3 year, £5 million+ profit potential from each of the LPLDL and SlimBiome 'first generation' products as operational gearing now really kicks in and longer-term much greater potential from the 'second generation' products. We expect real progress from the current £44 million market capitalisation as the company ushers in profitability within months and shows its operational gearing really start to take effect.
That is also with the half-year balance sheet showing current assets of £0.5 million more than total liabilities – and then £22.9 million of shares in spun-out SkinBioTherapeutics (SBTX), where we are also very optimistic about the future. As such, we expect OptiBiotix moving into profit and then clearly demonstrating it can increase that rapidly in the next year to spark the shares from these levels. We continue to target a 100p+ share price within a year for these shares we own and then much more as the above plays out. Buy.
This article first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve OUT THIS AFTERNOON and a new shorting piece this week click HERE
Filed under: OptiBiotix Health, Gerard Brandon, DeepVerge, ITM Power, Civitas, N50 website
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