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OptiBiotix Health plc: THE INVESTMENT CASE

OptiBiotix has high metabolism

If everyone could be as active as the York-based outfit there would not be such a pressing demand for its products.
OptiBiotix has high metabolism
INVESTMENT OVERVIEW: OPTI The Big Picture
High cholesterol is often obesity's companion, but are statins the answer?

Watching yet another TV series on the health issues associated with obesity, it is impossible not to conclude OptiBiotix (LON:OPTI) is in the right market.

The AIM-listed company is focused on altering the function of the human biome to tackle obesity, cholesterol and diabetes, and as one of the best performing shares of 2015 the market also clearly believes it is not only in the right market, it also has the right platform to address it.

OptiBiotix is developing unique sugars that will work to improve health rather than helping pile on the pounds.

They are designed to alter the human ecosystem, mainly found in the gut, called the microbiome. It consists of 10,000 microbial species and some 8mln protein encoding genes.

The life sciences firm only came to the market in August 2014 but if everyone was as active as the York-based outfit there would probably be a lot less demand for its products.

It has already struck five commercial deals, filed six new patents and completed human studies on its cholesterol reducing product.

In December it raised £1.5mln to develop its growing business further, with the company's ambitions revealed by chief executive Stephen O'Hara, who said the company already had sufficient funds to commercialise its existing platforms; the cash raised in the over-subscribed placing would be used to extend the technology platforms into new application areas, and pump the product pipeline, he said.

The slimming industry is certainly taking notice, with KSF Acquisition, the company behind the SlimFast brand in the UK, Ireland and Germany, agreeing to provide Optibiotix with the funding to  assess the benefits of using OptiBiotix's SlimBiome weight management product alongside KSF's weight management dietary programme.

SlimBiome contains ingredients clinically proven to reduce weight, Optibiotix says, and it is designed to act in three different ways: to affect appetite, metabolism, and what is termed as ‘energy harvest’.

The frequent companion to obesity is high cholesterol, and OptiBiotix's work in this area is particularly timely, given a recent report that casts doubt on the health benefits of statins, which around 12mln people in the UK take to reduce cholesterol.

The report suggested that statins might do more harm than good, contributing to a hardening of the arteries that could cause or worsen heart failure.

O'Hara explains how OptiBiotix's cholesterol product would work in conjunction with statins.

“Mechanistically, BSH-active bacteria (our strains) should work in a complementary fashion with statins to amplify LDL [low density lipoprotein] receptor activity and the clearance of serum cholesterol, as they increase bile salt deconjugation and reduce sterol absorption. This would suggest potential for a greater reduction in serum LDL-C when administering BSH-active pro-biotic bacteria concomitantly to statins, potentially allowing lower statin dosage, reducing cost whist limiting side effects and improving statin compliance."

 

The £62mln-valued company is not the only pharmaceutical company working in the area of targeting metabolic conditions via functional food ingredients, but house broker Hybridan argues it offers investors “better value than its limited universe of quoted peers, which have higher risk profiles and less obvious routes to market, for the most part focussing on early stage pharmaceutical candidates.”

One of those competitor companies is Seres Therapeutics, which listed on the Nasdaq exchange in late June, and which is valued at more than US$1bn.

Its main attraction is the drug candidate SER- 109 for recurring C.difficile infection (CDI), which is now in phase II clinical trials with results expected this year.

As Hybridan analyst Derren Nathan points out: “This is a competitive area with the likes of Merck, Shire, Sanofi, Pfizer and Novartis, as well as smaller, early-stage companies all pursuing the development of products, for the prevention of CDI.”

On the AIM market, 4d Pharma (LON:DDDD) is the only other comparator focused on the human microbiome.

Currently capitalised at £538mln it appears to be focused on developing treatments for multiple sclerosis, asthma and rheumatoid arthritis, rather than the areas on which OptiBiotix is concentrating. 

“For those looking to invest in this ground-breaking area of human health, OptiBiotix … offers a significantly lower entry point and yet has achieved a number of significant milestones and early deals, as well as having a unique twin pronged product generation platform, and a lower regulatory risk threshold,” the Hybridan analyst wrote back in July.

Since then, the shares have more than doubled, but with a chunky share of the £273bn functional food market up for grabs, the potential for further growth remains enormous.

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