Optibiotix Health Share Discussion Threads

[rayrac] 09/11/2017 08:34

Prove it Parob. As you say, they are all assumptions...or vague dreams.

Feels like a re-run of bioprogress!

Beware!

[parob] 09/11/2017 07:09

The assumptions also don't include a deal with a pharma company and we know interest is increasing from such companies.More good news out of SBTX this morning.

[tjbird] 09/11/2017 06:37

Is Optis child CPT going to be allowed to kick the bucket?
Lookslike CPT is near empty oncash

[deeppockets] 09/11/2017 06:29

I am as optimistic as any but if any single product becomes a household name and market leader surely some of these valuations could be blown out of the water?!

[f3rdinand] 09/11/2017 06:21

And all of the above assumptions do not include any large retail listings which could be multi million each year alone! Exciting few years ahead!

[2350220] 08/11/2017 23:15

What an extraordinary piece of work by Novy kluk.
Wow, even being fairly conservative, he/she makes a great case.
Thanks for re-posting it on our board Parob.
John

[riskybusiness1] 08/11/2017 22:01

Chris your talking rubbish:'I was merely wondering re the blindness of the peer review i.e. did the famous reviewers know they were reviewing a submission by SOH in advance,did SOH know who the reviewers were in advance,did they know each other and so on.'A peer review in its very nature is blinded. The findings of scientific studies are sent off to be independently reviewed and verified by peers separately in order to validate the science. SOH commissioned the University of Reading to conduct the LPLDL study with prof Glen Gibson I believe who undertook and submitted the work.Chris it is very clear you are no expert. Give it up and stick to one username.

[aspex] 08/11/2017 20:49

Thanks Parob.So I will be a millionaire in 2020 from OPTI alone. Seriously though, a true growth company often gets a PE much higher than 20 though on a justified fall back on any earnings unevenness then your assumptions are reasonable. At some point the share price becomes difficult to manage. I cite a share that I bought 5 years back and in currently at 7 times the then price. The PE has risen to 45. Day by day fluctuations are often enough to make me want to sell a few, but then I am still too greedy, I guess.

[parob] 08/11/2017 20:10

Had to copy and paste this well thought out post from Novy kluk on the iii bb. I've actually met this chap at 2 investor presentations:

Subject: Crude attempt at a Target Price

During 2016 when OPTI was developing its science, it had no real revenues. Its share price "soared" however based on the anticipation of its tremendous potential. In those early days it was no doubt over valued in economic terms. During 2017 with the"risk off" attitude of most investors, its share price has been range bound, despite the growing number of significant deals struck with large "players". One might now consider the company is undervalued against its revenue potential from those deals currently in the public domain.

Its with that background I've attempted to make a crude target price calculation as a sort of "reality check" and to validate my own LTH in the company. I use the term "crude" calculations as a number of inputs are down to my own assumptions, and not all of those will be correct!

However the following information is in the public domain (not my assumptions) and understood to be from reputable third parties and authoritative;

* Each of the major contracts currently being announced will net OPTI between £250k and £500k per year.

* OPTI's operating costs are virtually fixed and change little with the number of deals struck. They currently stand at £1m per year.

* There are six LPLDL deals of substance already agreed, including the Galenicum LPLDL on 27th October. Apparently SOH had said publicly he expects another four to be agreed in the near future. This week's Supply and profit sharing agreement with Knighton Foods is for Slim Biome. So there are still a further 4 LPLDL deals expected to be announced in the short term. That will make ten LPLDL deals in place.

* OPTI are paid their royalty revenues either 3 months or 6 months in arrears.

* Some clients like Galenicum are fast off the mark and launch immediately a deal is struck. Other partners are slower. So it's possible that a deal signed today with a partner who has a "slow launch", will not generate any revenues for a year. But equally a deal could see revenues generated within three months.

It seems almost certain there will be more than the ten deals mentioned above and each worth between £250k and £500k to OPTI. And that's only from the LPLDL Stream. SlimBiome is gaining traction now and a further large deal with Tata is expected to be announced "soon". Given the size and scope of the Indian market, revenue of £1.0 million is suggested from that particular deal (if and when it happens). Then there is the Sugars Stream which SOH has in the past suggested will have the greatest potential!

Those are the inputs I've gathered in the public domain.

The following inputs are my own assumptions;

* Due to the "slow start" effect and quarterly or half yearly royalty payments, I've assumed no revenue is generated in the current year. i.e. The initial year a deal is struck. This is clearly incorrect. But I don't want to over state revenues and/or guess at partner start-up timings.

* The average net revenue from each deal will be £375k in year one of revenue, increasing 10% compound for subsequent years.

* The number of deals and revenues;

LPLDL Stream:

10 deals by end 2017. Due to "slow start" and royalty payments, assume no revenue in current year i.e. the year the deal is struck. So revenue in 2018 is £3.75 million.

7 additional deals during 2018. So revenue in 2019 is £6.750 million.

5 additional deals during 2019. So revenue in 2020 is £9.300 million.

SlimBiome Stream:

Whilst there are a couple of Slimbiome deals in 2017, assume effectively they are in 2018. So

Assume 10 deals during 2018. But one is expected to be with Tata where the revenue is thought more likely to be £1.0 million. So due to "slow start" etc no revenues are assumed in 2018. But revenue in 2019 is £4.375 million

5 additional deals during 2019. But I assume one deal is in the USA where I assume revenue is likely to be £1.0 million. So revenue in 2020 is £7.312 million.

Sugars Stream:

Assume 10 deals during 2018. Revenues only start in 2019. So revenue in 2019 is £3.75 million

Assume a further 10 deals in 2019. So revenue in 2020 is £7.875 million.

* No revenues are assumed from OPTI's 42% stake in SkinBiotheraputics.

At UK Investor (April 2017) I was told that first product(s) would launch in 18 months time. So first product(s) possibly in October 2018. Revenues only likely from H2 2019. But are likely to be significant, particularly in 2020!

* No revenues are assumed from OPTI's planned Internet on-line direct sales. Though that will generate revenues when it's eventually launched.

* No revenues assumed from the cross selling opportunity from the JV with Bened. Though again there will be revenue from that source at some stage.

* OPTI's cash currently stands at £1.6 million. So with costs of £1.0 million/year and cash starting to flow in, cash should not be an issue unless a further acquisition is considered. But if there were a cash call for such an acquisition, logically it would be earnings accretive.

* It seems very logical that once OPTI's income streams become established, the P/E multiple for a such a growth company with such predictable earnings, will be quite substantial. Possibly 25 or 30? For my calculations I have assumed a constant P/E of 20 for all years. Though I think that will prove very conservative with a 2019 P/E of say 23 and for 2020 a P/E of 26 being more likely. Do the numbers - it makes a very big impact!!

So from the above (Using a £1.0 million/year cost figure) the net earnings numbers become:

2018 - £3.75m - £1.0m = £2.75m. OPTI has 78.793 million shares in issue. So with a P/E of 20, the target price is 70p. (Market Cap of £55m)

So the current market price is at last justified with economics (next year), rather than the anticipation on which it was driven during 2016.

2019 - £13.875m total net earnings. Price becomes 350p. (Market cap of £276m)

2020 - £23.487m total net earnings. Price target becomes 596p. (Market cap of £470m)

Comments and intelligent critique welcomed!

GLTA NK

[parob] 08/11/2017 18:38

From Knighton Food's LinkedIn page:About usWe are a leading UK based producer of a wide range of high quality, value adding, functional powdered foods and ingredients for use in the Retail, Out of Home and Ingredients sectors. From luxurious beverages and calorie controlled meal replacements to agglomerated starches and spray crystallised chocolates, our unique suite of technologies can help you add real value to your product offering. Whether you are looking for ways to save cost, improve functionality or stretch your existing brands into a different product or market sector, we have the knowledge and experience to enable you to achieve your goals. We fully understand the need to protect and develop your brands and will work with you to create relevant, 'on message' innovations to increase consumer penetration and grow that all important Brand Share. With an entrepreneurial spirit of 'free thinking and fun', we endeavour to put the customer at the heart of everything we do and deliver a truly exceptional business experience.

[chrisg11] 08/11/2017 16:04

Wow for two reasons.

Adnan and I agree re results interpretation from uzbek's reading and secondly I am more bullish and impressed.

Its likely that the ratio is the most important figure with regard to Cardiovascular risk and this is a big drop 3.6 to 2.6!!

Now assuming all other factors are roughly equal even I am impressed.

Now..Where is that spread bet?

[loungeact] 08/11/2017 13:59

Fingers crossed those selling now miss out on the Sweetbiotix spin-off. :)

[judijudi] 08/11/2017 13:49

Somebody still trying to keep a lid on it

[colinzeal] 08/11/2017 13:45

trying to get rid of the old stock before the new, updated products come on stream?

[rafboy] 08/11/2017 11:46

Elrico, thanks for your thoughts. Much of what you say makes a lot of sense; especially, about being ahead of the curves and how trustworthy SOH is.

Adnan, that all sounds positive, hope you had a good holiday.

[elrico] 08/11/2017 11:46

Adnan - I sent you a PM a couple of weeks ago. SOH would like to have a chat. Can you PM with details please.

[adnanwolf] 08/11/2017 11:40

HiThat's a 15% reduction in your bad cholesterol which is very good. And an increase in your good cholesterol HDL. Considering your cholesterol was not that bad to begin with that's an excellent result overall. I have just come back from holiday. Continued My LPLDL having ordered a further 6 months worth. Will recheck in 3-4 weeks. Diet not great on holiday but will ease up on the deserts etc hopefully :) I think will have more data after another test see what kind of percentage reduction I am maintaining. BP remains as before Good luck to all LTHAdnan

[rafboy] 08/11/2017 11:37

Some buys going through on NEX.

[bouncingbean] 08/11/2017 11:31

Blimey somebody's buying some :-)

[incanus] 08/11/2017 11:21

Chris, excuse me. you must be double blind. You have been given the names of the reviewers at least four times and the rns was clear, it was a double blind with a placebo trial over 0, 6, 12 weeks. SO here we have it confirmed, you were not really interested you were on a mission of your own to fudge data and attempt to throw mud at a certain bull. Most people realised this so filtered you, you call it bullying while ignoring your bullying tactics.