OptiBiotix ("OPTI") has had a strong start to 2020, with partners Agropur (US), Holland & Barrett (UK) and most recently Alfasigma (Italy) launching new products containing the company's microbiome-modulating functional ingredients. As an increasing number of products move to market, we remain positive as to the commercial potential of OPTI's functional ingredients as consumer awareness grows. The recent launches indicate growing momentum into 2020, when we expect existing agreements to start delivering substantial revenue streams and further demand for OPTI's products. We reiterate both our OUTPERFORM recommendation and 97p target price, based on our view that OPTI is at the beginning of a long-term revenue growth cycle.
OPTI has two marketed functional food ingredients, cholesterol lowering probiotic LPLDL and weight-loss ingredient SlimBiome. So far in 2020, 3 large partners have launched products which contain these products: (1) the UK's leading retailer of food supplements, Holland & Barrett, launched a new weight loss range under the SlimBiome brand; (2) SlimBiome is also now distributed by global dairy giant Agropur; and (3) Alfasigma, which has exclusive rights to market LP-LDL in Italy (the world's largest probiotic market), launched a probiotic supplement to be commercialised through the company's extensive clinical network of general practitioners, cardiologists and pharmacists. All three of these partners are major players in the food and supplements industries, both domestically and abroad, with annual revenues of around $1bn.
Having signed 52 commercial deals since 2017, with each having the potential to run over a ten-year span, OPTI is laying the foundations for sustained, long-term revenue generation. We model nearly 320 cumulative deals for all existing products by 2030E. Revenues for each deal typically start within 1 - 2 years after signing and should take 5 - 6 years to peak in a range of £100k and £1m and is typically a function of the size and annual revenues of the partner company. With pipeline products SweetBiotix and LPGOS expected to start generating early revenues in the next year, we anticipate increased growth in both the total number of deals and associated revenues.
A year-end update provided preliminary revenue for FY2019, revealing a 57% increase to £808k (vs. £514.6k in FY2018). This is below our estimate of £942k, however, with existing deals beginning to generate revenues and a healthy flow of new agreements being entered into, we continue to believe that this growing sales momentum will continue into 2020E and beyond. We model revenues of £1m per year at peak from each agreement with large partners such Agropur and Alfasigma and note the potential for these product launches, having launched after year end, to make a significant contribution to FY2020E sales. We will provide further commentary upon the release of the full financial results expected in Q2/2020E.