OptiBiotix has signed a further agreement with Extensor, its exclusive partner in Poland for the distribution of GoFigure, granting Extensor exclusive rights to distribute SlimBiome in Poland for a period of 12 months with continued exclusivity subject to performance review.
In the east, OptiBiotix has signed an exclusive distribution agreement with Epic Ingredients to distribute SlimBiome in Malaysia and Singapore.
Epic Ingredients is a pharmaceutical service company with a focus on the distribution of active pharmaceutical ingredients, excipients (ingredients that aid the absorption of a drug) and nutraceutical raw materials providing complete distribution and warehousing facilities.
The AIM-listed company has also signed an exclusive distribution agreement with Supplemed Solution, a subsidiary of Epic Ingredients, to distribute OptiBiotix's own label GoFigure consumer weight management products in Malaysia and Singapore.
Both exclusivity agreements are subject to minimum order quantities and a requirement to place a first order within four months of signing the agreement.
Best Weight Management Ingredient of the Year for Asia 2019
OptiBiotix said the agreements for Malaysia and Singapore arise from the publicity and interest generated from SlimBiome Medical winning the NutraIngredients award for Best Weight Management Ingredient of the Year for Asia 2019.
Dr Fred Narbel, the managing director of OptiBiotix's prebiotics division, said Extensor had proven to be a very reliable commercial partner in Poland.
“This agreement recognises the early success of Extensor in selling GoFigure products in Poland and extends the agreement to SlimBiome as an ingredient to support further sale growth,” he said.
"We are also pleased with our partnerships with Epic Ingredients and their subsidiary Supplemed to service the Malaysian and Singaporean markets. These are important as they show the value of the awards the company has won over the past two years. It is important to note that these three agreements are for an initial period of one year and include sales targets to retain exclusivity,” Narbel said.
Long-term revenue growth cycle
In a note to clients, analysts at goetzpartners securities pointed that these deals “take the total number of commercial deals for SlimBiome to 20 and are an important step towards further expanding the product's geographical reach and hence sales.”
They said: “We expect revenues from SlimBiome to reach nearly £1m in FY2020E, which we believe is conservative, and >£11m by 2024E, driven by growing sales of existing deals and new deals.”
The analysts noted that Optibiotix is also generating revenues from its cholesterol-lowering probiotic LP-LDL and they expect two further products, SweetBiotix (calorie-free fibre for sugar replacement) and LP-GOS (prebiotic that enhances the effect of LP-LDL) to start generating first sales in 2020, yielding combined portfolio sales of more than £40mln in 2024.
The goetzpartners' analysts reiterated an ‘outperform’ rating and 97p target price on Optibiotix shares – currently trading at 49p - based on their view that the firm is “at the beginning of a long-term revenue growth cycle”.