OptiBiotix (LON:OPTI) is described as a “sweet opportunity” by the research house Hybridan, which recently started coverage of the AIM-listed company that is focused on altering the function of the human biome to tackle obesity, cholesterol and diabetes.
According to analyst Derren Nathan, its work to date merits a sum of the parts valuation of almost £40mln, which equates to 48.9p a share – a significant premium to the current price of 34.5p.
The clever word play in the Hybridan research note relates to the fact that 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.
What we are beginning to learn is this microbial genome affects immunity, cognitive heath and the metabolism.
And it is thought to be far easier to influence than the human genome – the key to treating disease.
All OptiBiotix’s work to date has been aimed at proving this thesis and developing novel compounds.
Last week the company inked an agreement with a renowned compound analysis centre in Madrid, called the Instituto de Química Orgánica Genera (IQOG), which furthers its work on developing novel sugars.
It will lead to human testing of novel oligosaccharides (carbohydrates that consist of a small number of sugars).
Hybridan points out the IQOG collaboration is one of a number helping to rapidly develop new health-promoting food additives.
The firm continues to work to bring its weight management formula to market via its joint venture with Nizo Foods of the Netherlands.
A cholesterol-reducing product is currently in human trials, with results expected this year and an option agreement signed in June with an unnamed multinational consumer goods company.
Meanwhile, OptiBiotix has also a letter of intent to partner with Venture Life, the consumer products group addressing the self-care needs of the ageing population.
“Having further reviewed the universe of companies (public and private) seeking to exploit advances in the microbiome we believe that OptiBiotix is unique in its focus and progress on product development to target metabolic conditions (diabetes, obesity, cholesterol etc.) via functional food ingredients,” Hybridan’s Nathan said.
“Arguably Optibiotix 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 tech exchange in the US two weeks ago and has doubled in size to almost £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 in next year.
But as Hybridan’s 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 £584mln it is yet to commence human trials on putative products from its pipeline.
This means it is “many years away from commercialisation with all the cost and risk that implies”, Nathan said.
“For those looking to invest in this ground-breaking area of human health, OptiBiotix, capitalised at £24.65mln, 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 concluded.