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OptiBiotix Health - investors like what they see

The latest fundraiser underscores the fact the life sciences business is well supported in the City
In the last year, it has inked a deal with an offshoot of Premier Foods that makes Angel Delight

The fact its latest share issue was keenly priced and yet still over-subscribed, tells you all you need to know about OptiBiotix Health PLC (LON:OPTI).

Investors like the business, which is using its expertise in the human microbiome to develop food additives and pharmaceutical products that tackle ailments and diseases of our era – obesity, high cholesterol and diabetes.

Proceeds from the £1.5mln placing, conducted at a modest discount to last night’s close, will be used to super-charge progress.

It follows hard on the heels of a series of deals that will help propel the business forward commercially. And this progress is at the heart of why OptiBiotix is tapping investors for cash.

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One of the opportunities open to the business is to develop cholesterol buster LPLDL as a pharmaceutical as well as food additive. 

Potential partners are willing to fund regulatory submissions and clinical studies, but OptiBiotix will be required to invest in developing process controls and quality procedures.

The cash injection will also be used to fully exploit opportunities for sweetener SweetBiotix and to promote SlimBiome, its weight loss product.

"The company has received a high level of partner interest in its technology and products across new application areas and territories that have the potential for significant value uplift," said chief executive Stephen O'Hara.

"It has become clear that new opportunities, particularly the development of LPLDL into a pharmaceutical product, the high level of corporate interest in SweetBiotix across multiple applications, and the potential for listing a range of health and wellbeing products with major retailers are not achievable in the short term within current resources. 

No delay to opportunities 

"Rather than delay these opportunities until OptiBiotix has sufficient revenues to cover costs, the Board has decided to take additional funds to capitalise on these growth opportunities and build shareholder value. 

"Whilst the subscription was oversubscribed the company has limited the funds received to ensure a focus on value creation and has added new institutional investors to the share register."

As mentioned above, OptiBiotix is a pioneer in the human microbiome, which is essentially the bacteria that inhabits the gut and skin.

It has found, for instance, small changes to the gut flora can affect the way the human body processes food.

After spinning off its SkinBio business as a separately-listed entity last year, the group is now focused on three development areas referred to above – cholesterol, diabetes and weight loss.

Transition made

In the last year, it has inked a deal with an offshoot of Premier Foods that makes Birds Custard, Indian giant Tata and Seed Health in the US.

finnCap, the OptiBiotix’s corporate broker, has been impressed with progress made by CEO O’Hara and his expanded commercial team.

Analyst Mark Brewer in a note to clients pointed out the group has transitioned from being technology-focused to one that inked 16 commercial agreements last financial year and this.  

“This significantly de-risks the business,” he added Brewer.

“The focus for the current year will be to begin to convert these agreements into revenues; the timing and quantum of which remains difficult to forecast.”  

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