The manufacturing and supply agreement furthers the Sacco relationship from Europe to the USA and beyond.
Companies: OptiBiotix Health PLC
Optibiotix (LON: OPTI) has strengthened its relationship with Sacco after the announcement today that the pair has signed a deal to manufacture and supply products to the USA and beyond.
OPTI, who develop compounds to tackle issues such as obesity and high cholesterol, already have an agreement with Italian manufacturer Sacco for the supply and distribution of its products in Europe, which was announced in March this year.
Today's deal goes beyond the European market to cover the USA, the world's largest consumer of probiotics, and the rest of the world (ROW). The US probiotic market alone is worth over $7bn per annum.
The agreement grants Sacco an exclusive licence to manufacture and supply OptiBiotix's LPLDL® cholesterol and blood pressure reducing strain in the US and ROW in return for 50% of the profit.
Sacco has an already established network in the dairy industry, in which OPTI will use to leverage their products into the global $35.5 billion probiotic dairy market.
Economies of scale will also be achieved, with CEO Stephen O'Hara commenting:
"This new agreement with Sacco significantly extends the scale of the commercial opportunity open to LPLDL® to new application areas and territories, and reflects growing confidence from both companies in LPLDL®'s market potential. We chose Sacco as we have been impressed by their ability to introduce LPLDL® to a global network of distributors and believe extending our partnership with them provides the best opportunity quickly building revenues and developing LPLDL® into a global brand."
Looking at the Group's figures, Optibiotix has not turned a profit in the five years to 2016, and revenue is yet to reach £0.3m in any of those years. With a market cap of £50m the market is clearly pricing in a lot of future earnings.
