Noting that “there is now an extensive growing body of research demonstrating direct links between the microbiome and the immune system, and consequently skin health”, SkinBioTherapeutics (SBTX) has announced initiation of a research programme with the University of Manchester. So what you say? The company says that the programme will run for two years and focus on how the microbiome can influence and rebalance the body's response to inflammation in skin health and skin disease. This is particularly pertinent amidst an increasing consumer preference for natural ingredients and indeed some need for such – with, for example, “in February 2019, the US FDA issued guidance to remove two common ingredients from cosmetics and sunscreens (aminobenzoic acid and trolamine salicylate), and is in the process of evaluating further safety data on 12 other widely used ingredients”.
The company notes, similarly to its approach with the AxisBiotix food supplement, it hopes to eventually bring immune-supporting microbiome formulations to market. It is still clearly at a very early stage with this, but there looks clear market potential and it says that it has already identified a number of inflammatory pathways of interest, and routes to target these pathways.
It is also noted it “is in the middle of a food supplement study and the potential modifying effect on skin conditions, such as psoriasis”. We previously noted, with the shares at 47.5p, strong initial data and that if partner Winclove eventually gets to just 25,000 customers a day then, with annual PLC costs going forward here of less than £2 million and without Croda, the shares (on a 15x earnings multiple) go up by 50%. The reference to Croda is re. a cosmetics programme with commercialisation on track for 2022 and, near 100% SkinBioTherapeutics margin, annual profit potential of up to £25 million.
There are also other applications being worked on and the company remains well-funded – noting “expanding the collaboration with the University was one of the areas of investment laid out by the company when it raised funds via placing and open offer in October 2020”. The shares have soared from our 17.75p offer price recommendation less than a year ago to a now around 60p. However, a £93 million market capitalisation still potentially looks very cheap based on the above and we continue to believe a 75p share price potentially fair value for Winclove alone. Still therefore, with Winclove news likely within two months and excitement set to mount ahead of that, at least hold on tight.
This first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website for a new share tip from Tom & Steve OUT JUST LAST FRIDAY AFTERNOON and a new shorting piece this week click HERE
Filed under: SkinBioTherapeutics, video shareshow, Gunsynd, [email protected] Capital, N50 website
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