OptiBiotix ("OPTI") has announced that Holland & Barrett, a global nutritional food and supplement retailer, has launched a new product range under the SlimBiome brand. The weight management products, which contain OPTI's proprietary weight management formulation, will initially be available on the Holland & Barrett website and physical stores in the United Kingdom, Republic of Ireland, Netherlands, Belgium and Sweden. The deal marks the 22nd commercial partnership for SlimBiome and the first with a major retailer, further validating SlimBiome's potential in the c.$25bn dietary weight management market. We note the significance of the SlimBiome brand being marketed by a global market player, further enhancing brand awareness among both consumers and other potential partners.
With 2018 revenues of just over £700m, Holland & Barrett is a leading global retailer of nutritional foods and supplements. We view the company's adoption of SlimBiome as a strong endorsement for the product and the science driven development process which OPTI has followed, enhancing the credibility of the product for consumers and increasing demand from potential partners. We expect this to be especially relevant in Holland & Barrett's home market in the UK where OPTI currently markets a range of products containing SlimBiome under the company's own Go Figure and SlimBiome Medical (CE marked medical device) brands.
Clinical validation differentiates SlimBiome in the heavily fragmented dietary weight management market. We expect revenues from SlimBiome to reach approximately £1m in FY2020E, which we believe is conservative, and >£11m by 2024E, driven by growing sales of existing deals and new deals. Critically, products sold under the agreement are sold under SlimBiome branding which, in the fiercely competitive retail market, helps to raise the profile of SlimBiome, reinforcing a positive association for consumers, and provides the potential to grow brand loyalty. A strong brand will also be critical for further geographic expansion by OPTI into markets such as China where western brands are high in demand and copycats are likely to flood the low end of the market.
OPTI discovers and develops targeted microbiome-modulating probiotics, prebiotics and other functional food ingredients for use in white label and own brand products. In addition to SlimBiome, the company also generates revenues through its cholesterollowering probiotic LP-LDL. We expect two late stage products, SweetBiotix (caloriefree fibre for sugar replacement) and LP-GOS (prebiotic that enhances the effect of LP-LDL) to start generating first sales in 2020E, contributing to total sales of more than £50m by 2025E. We value OPTI using a sum-of-the-parts ("SoTP") valuation that includes risk-adjusted net present values ("rNPVs") for LP-LDL (food and pharma applications), SlimBiome, SweetBiotix, LP-GOS, OPTI's 35.8% share in its former subsidiary SkinBiotherapeutics (SBTX) and net cash at YE2020E.