Sign up United Kingdom
Proactive Investors - Run By Investors For Investors
Why invest in SBTX?

SkinBioTheraputics “significantly undervalued” despite having demonstrated significant progress

In a note to clients initiating coverage on SkinBio, the joint ‘house’ broker noted that, as the skin microbiome group operates in a new therapeutic area, there is little market data in the sector
Skin beauty
Northland noted that SkinBio is an early entrant in the new and potentially high growth market of probiotic skin health

Northland Capital believes that SkinBioTheraputics PLC (LON:SBTX) is “significantly undervalued” amongst its peers despite having demonstrated significant progress since its IPO almost exactly a year ago.

In a note to clients initiating coverage on the microbiome skincare company, the joint ‘house’ broker noted that, as SkinBio operates in a new therapeutic area, there is little market data in the sector.

WATCH: 'Huge milestone' for SkinBioTherapeutics with cream formulation success

As a result, Northland said it has compiled a basket of comparable peers operating in the microbiome space, or in the cosmetic goods sector.

The broker noted that, with an average market capitalisation of £73mln for the basket, SkinBio - currently valued at £13.65mln - is significantly below that level.

SkinBio floated on AIM on April 5 last year at 9p a share, which valued the business at around £6mln, after raising £4.5mln from a placing of 50mln new ordinary shares, and the stock has risen by 50% to 12p currently.

Northland noted that SkinBio is an early entrant in the new and potentially high growth market of probiotic skin health.

It added that since 2010, microbiome companies have attracted around US$840mln in equity investments globally.

The firm’s proprietary probiotic platform, SkinBiotix, has completed three toxicity tests with no safety issues, clearing a hurdle in the regulatory process and further de-risking the pathway to commercialisation.

WATCH: SkinBioTherapeutics 'making very good headway' in development of three key programmes

The company intends to conduct and complete a volunteer study for the cosmetic application of SkinBiotix in 2018, and positive data should permit labelling of the cosmetic as ‘dermatologically tested’.

Northland pointed out that cosmetic studies are shorter than drug trials, providing a shorter path to commercialisation.

The company operates a semi-virtual business structure and focuses on developing commercially-ready technology to be licensed to larger companies for marketing of the end-product.

It has already signed a material transfer agreement with an unnamed global consumer goods company which demonstrates the level of interest from potential partners and the commercial prospects of the SkinBiotix platform.

READ: SkinBioTherapeutics says global consumer goods company is looking at its technology

The broker noted that the microbiome is a growing area and is attracting significant interest from large cosmetic and consumer goods companies, including L’Oréal, Procter & Gamble and Johnson & Johnson.

Dr Cath O’Neill, CEO of SkinBio, in collaboration with Professor Andrew McBain of the University of Manchester, first began investigating the role of the microbiome in skin health.

Their proof-of-principle research focused on the use of probiotics, beneficial bacteria, to improve skin wellbeing, including barrier strength, wound healing and infection control.

In 2016, AIM-listed OptiBiotix Health PL (LON:OPTI) – an healthcare company developing nutraceuticals which modulate the human microbiome - recognised the commercial potential of O’Neill’s research and acquired the technology and associated IP from the University of Manchester.

OptiBiotix subsequently chose to spin-out SkinBio as a separate entity to crystallise the value in the business.

Northland concluded that, in its view, SkinBio’s market capitalisation has not risen to reflect the progress in operations demonstrated by the year’s milestones. Therefore, the broker thinks, the company is significantly undervalued.

View full SBTX profile View Profile

SkinBioTherapeutics PLC Timeline

Related Articles

surgeons working
September 03 2018
Chief executive Steve Couldwell also told investors the regenerative medicines specialist had identified a number of potential new commercial opportunities it was “actively pursuing”
Following the disappointment of its DMD treatment over summer, Summit is leveraging its Discuva platform to develop new antibiotics, which doctors are in desperate need of
couple in bed
March 14 2018
MED2002 is a rapid onset gel designed for those men where the current pill-based treatments aren’t appropriate, or carry significant side-effects

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use