OptioBiotix Health PLC (LON:OPTI) has signed a manufacturing deal with Sacco, one of Europe’s leading probiotic manufacturers and raw ingredients suppliers.
Sacco has been granted an exclusive licence to manufacture and supply OptiBiotix's cholesterol reducing strain, LPLDL, in Europe.
OptiBiotix will receive 50% of the profit from the goods and has ensured a minimum price per kilogramme is written into the contract to secure against discounting.
Sacco will promote and expand the supply of LPLDL throughout Europe.
It will supply LPLDL as a raw ingredient to food, beverage, consumer healthcare and pharmaceutical partners to be incorporated into a wide range of final formulations and presentations.
These will be subject to separate licence agreements creating the opportunity for multiple revenue streams, OptiBiotix said.
The Aim-listed company said the agreement with Sacco is the first step in a business-to-business (B2B) strategy of introducing OptiBiotix’s science into a partner’s brand portfolio, capitalising on the partner’s market penetration.
“We chose Sacco due to their industry reputation, extensive European network and track record in building sales for what have become some of the world's best-selling probiotic strains,” revealed Stephen O’Hara, chief executive officer of OptiBiotix.
“We believe that OptiBiotix's strong supporting science, and growing industry awareness of our LPLDL cholesterol and blood pressure reducing strain, has created a high level of interest in using LPLDL as a functional component in a wide range of consumer healthcare and pharmaceutical products,” he added.
“We believe working with Sacco, and similar partners around the world, provide the best opportunity of building LPLDL into a global brand. Discussions are progressing with corporate partners for the manufacture and supply of products containing LPLDL in the US, Asian and other international markets," O’Hara revealed.
House broker finnCap noted Sacco has extensive European selling networks and a track record of building sales by supplying raw materials to more than 2,500 businesses across Europe.
The broker said OptiBiotix is set to receive royalties of between 5% and 15% on sales of products manufactured by Sacco that incorporate LPLDL ingredients.
It added that the profit-sharing aspect of the arrangement should serve as a benchmark for future worldwide licence agreements.
Shares in OptiBiotix were up 2p to 73p in late morning trading.