OptiBiotix Health PLC (LON:OPTI) Chief Executive Officer Stephen O’Hara caught up with DirectorsTalk for an exclusive interview to discuss the listing of SkinBiotherapeutics PLC onto the AIM market, what this means for shareholders and how it fits in with OptiBiotix Health’s overall strategy
Q1: We’ve just seen the launch of SkinBiotherapeutics PLC (LON:SBTX) separately on AIM, can you explain the rationale behind this?
A1: Yes, sure. Just after listing OptiBiotix in August 2014 it became clear to me that the microbiome space was developing very rapidly and there was a window of opportunity for OptiBiotix to capitalise on our first move advantage and acquire IP in other areas in the microbiome space. There were two areas of particular interest, one was the skin microbiome and the second was the role of the microbiome in cognitive health, that is in stress, anxiety, mood etc., now, we’re still exploring opportunities in cognitive health and we’ll update shareholders if that opportunity materialises.
Moving on to skin, in terms of the skin microbiome, I’ve spent 12 months identifying and accessing skin technology around the world before I finally met up with Professor Andrew McBain and Dr Catherine O’Neill in early 2015 at Manchester University. I was really impressed with Manchester University, I was impressed with their expertise, their facilities and their links to industry in particular the skin field and so I set about acquiring the rights to the technology. This took 12 months and in March 2016 we reached an agreement to acquire the IP from Manchester University for £250,000 and we set up a joint venture company called SkinBiotix Limited which OptiBiotix own 50%. However, it became clear to myself and the Board that the opportunity offered by Skin and its potential future value was not really transparent to shareholders in OptiBiotix and it’s not surprising really considering that as a young company, we’ve only been on the Stock Market for just over 2 years, we have quite a diversity of IP and quite a diversity of commercial relationships across a number of microbiome areas. There’s a reason for this, whilst this approach has complexity, it’s been designed to mitigate development risk in an evolving scientific field and provide a cost-effective way to build overlapping IP and exploit the many opportunities offered by the microbiome.
So, it terms of listing Skin, the listing of SkinBiotherapeutics materialises the value of this part of the business so it’s now transparent to shareholders in OptiBiotix. OptiBiotix now owns 41.9% of a company valued and listed at £11 million which was risen over the last few days, the first few days of trading, to be £16-17 million so this means that OptiBiotix shareholders now have a significant shareholding, 42%, in an appreciating asset. More importantly, SkinBiotherapeutics has £4.5 million worth of cash to build future value in the business from these development programmes, which, similar to OptiBiotix, have targeted a very large consumer markets. So, I think it’s a great opportunity in a very exciting space.
Q2: I think you’ve touched on this but what could this mean for OptiBiotix investors and is there any idea on the timing involved?
A2: So, our focus really is on developing Skin and building value from these development programmes, that’s the immediate focus. As the value of SkinBiotherapeutics increases, this will of course benefit OptiBiotix, as a major shareholder, as the share price in SkinBiotherapeutics goes up, the market cap goes up, OptiBiotix as the major shareholder will benefit from that. At some point, in the not so distant future, and we have stated this time and time again but just to restate it, we want to distribute value in SkinBiotherapeutics back to OptiBiotix Health shareholders, now, this is quite a complex process, and we’re working with our advisers on the fairest way of achieving this.
We can’t give exact timings on this because as I’m sure you can appreciate, this is market-sensitive information but we’ll probably link any distribution to shareholders over defined time periods for example, to shareholders who held shares continuously between two time points such as the start and end of a particular month. This overcomes the anomaly where a particular trader sells or holds a number of shares for a very short period of time and gains an undue benefit so mitigate the possibility of shareholders trading in OptiBiotix simply to gain a position in Skin, this time period will be retrospective so for example, if we were looking to distribute value in the Autumn then we’d link that to shares held over a period of time in the preceding Spring. So, just to reemphasise this is just an example, the mechanism, the timing of any distribution of value has yet to be determined and would depend very much on the SkinBiotherapeutics’ progress and market conditions. Our overall aim is to ensure the best long-term approach of building value in OptiBiotix to the benefit of all its shareholders.
Q3: How does this fit in with OptiBiotix Health PLC’s overall strategy?
A3: We announced this strategy back in July last year and the listing of SkinBiotherapeutics reflects a strategy to realise the growing value of each division which the Board believes is currently not being fully realised when viewed as a whole. So, typically, shareholders look at OptiBiotix Health and judge it on the basis of its products that are closer to market but as we’ve shown with Skin, which is quite early in its development, the value of that was not fully realised until we listed it on the Stock Market.
This strategy allows investors in OptiBiotix to build up a broad-based investment portfolio across a number of areas in the microbiome space, which diversifies risk, whilst offering shareholders multiple opportunities in this really exciting space. As each listed company grows in value, OptiBiotix shareholders will benefit from the appreciation of each asset and this is a really exciting and innovative business model which, over time, looks to give OptiBiotix shareholders a position in multiple companies which is a prospect of multiple returns. So, it’s a good time for OptiBiotix Health shareholders and we’re determined to, mentioned at the very beginning, to build value in Skin and to turn some of that value to shareholders as time goes on.
