Oxford Nutrascience – could be worth a chew

The latest newcomer to AIM is Oxford Nutrascience, a consumer health company that placed 62.8 million shares at 1.75p to raise £1.1 million before expenses. The company says the money, raised through broker Zimmerman Adams, will be used to drive organic growth as well as to provide the funds for future research and development.

This health-related concern, which has a market value of £8.1 million, specialises in prebiotic soluble fibres for use in the ‘delivery’ of approved medicinal actives. It says that a combination of the prebiotic fibres can improve the ‘delivery’ and taste of over-the-counter(OTC)medicines, vitamins or supplements, as well as stimulating bacteria growth in the gastrointestinal tract, a health benefit that the company says is unlike any OTC medicine delivery system currently on the market. Combinations of the prebiotic fibres form the basis of the company’s technology.

Dysphagia, or difficulty swallowing, is particularly prevalent among children and seniors and is expected to drive the demand for “more pleasant and easier-to-take formats” of OTC medicine and food supplements, says the company. To meet the demand, it is developing a range of oral gels, syrups, and suspensions that are generally used for children’s analgesics, cough and cold medicines. It is also developing chewable tablets for allergy treatments and digestive aids. Oxford Neuroscience’s medicine development work is currently focused on ibuprofen suspension and chewable allergy tablets incorporating loratadine.

For the time being, Oxford Nutrascience is a one-product player in the OTC self medicinal market. Its revenues have been solely derived from sales of Ellactiva calcium chews, a bone health food supplement for women, through high street retailer Boots Alliance in the UK and Hauora Products in the Middle East. The IP and patent family for this calcium supplement were acquired for an undisclosed sum from Superfoods in 2008. Nonetheless, it is set to launch more chews later this year, as well as continuing to develop a range of chewy tablet-based supplements.

It’s still early days for the Oxford start-up, which managed to increase turnover slightly from £43,000 in the 11 months to 31 December 2008 to £36,000 in the eight months to 31 August 2009, but losses have risen from £120,000 to £174,000 during the same period. In spite of this, its interim results showed a healthy cash balance of some £844,000 at 31 August 2009.

Oxford Nutrascience was incorporated in February 2008 by entrepreneurial duo Marcelo Bravo and Nigel Theobald. Bravo, who has a background in chemistry and chemical engineering, and completed stints at Procter & Gamble and Alliance Boots, chairs the company with Theobald as the Chief Executive. The ambitious CEO previously worked for Alliance Boots where he held senior commercial roles in OTC medicines and healthcare product development.

The company’s life span is relatively short. In 2008, it secured an investment of £75,000 to cover the costs of the acquisition of IP and patent family related to Ellactiva. It subsequently received a cash injection of just over £1 million in early-stage funding from private investors, including ORA Capital Partners, an offshore company that invests in technology, financial services and resources (renewable energy). 

Since this time, it has grown rapidly and now boasts an IP portfolio of patent applications covering both OTC medicines and food supplements. With the exception of its Ellactiva calcium chews, the portfolio doesn’t comprise granted patents but two applications filed in the UK for patents that are pending. The granting of these patents pending is crucial to the success of the AIM venture going forward, and the company says it is currently conducting ongoing development to extend its portfolio.

Steered by Theobald, the company’s corporate mission is to commercialise its IP by launching further vitamins to add to its calcium chew and selling its products directly to consumer health companies and distributors that are mostly in the vitamins sector as well as to establish licences for its technology with major pharmaceutical brands in the UK and globally.

Although the company has been trading at a loss since 2008, Theobald argues that its delivery technology will be sought after by the big brands in the OTC and prescription pharmaceutical sectors as they look to make their products more convenient, portable and easier to use.

His theory is that more people will self-medicate and that the OTC self-medicinal market,  particularly in developed economies, can only grow. The global market for Chewitab and liquid suspension delivery system sales (analgesics, indigestion preparations and cough and cold medicines) totalled some $38 billion in 2008, according to the Datamonitor 2008 Global OTC report.

Theobald says that the global market for vitamins and minerals, which is the target market for the company’s chewy confectionery delivery system, is also vast, totalling some £13 billion in 2008.

Following the placing and admission, Oxford Nutrascience is sitting pretty on a pile of cash. The chewable table and confectionery chew company says the £1.5 million (post fundraising net cash position) will be used for future research and development, and to expand its IP portfolio. However, only time will tell whether it will manage to get its teeth into the global market before the money runs out.