Healthcare ingredients developer OptiBiotix Health (OPTI:AIM) plans to spin-out its anti-infection creams business SkinBiotherapeutics. The latter will become a separately-listed AIM company that can independently raise growth funding from its own set of investors. The float is pencilled in for 5 April when SkinBiotherapeutics will seek to raise £3m of initial funding.
This is part of a strategy unveiled last summer by OptiBiotix that could see other intellectual property-backed healthcare technology operations spun-out into separate businesses.
The strategy
SkinBiotherapeutics will use its initial funding to drive the development of its SkinBiotix technology platform, and hopefully speed up commercialisation. Based on micro-organisms, or microbiome research, SkinBiotix is a way of extracting of friendly bacteria that can be fused into a cream or gel which can be applied directly to the skin.
The technology is designed to reduce moisture loss and help skin to repair itself. Other applications will be designed to prevent staphylococcus aureus, a type of bacterial infection, by stopping the bacteria from sticking to skin cells.
The new company will target the prevention of inflections often acquired by patients during hospital stays, such as MRSA. This market is worth an estimated $82bn a year. Other lucrative markets that will become a focus for the company include eczema (estimated $3.8bn a year) plus the enormous $121bn cosmetic skin care industry.
MRSA bacteria
Management plans to license the technology and partner with businesses to commercialise product, although first products are likely to take at least 18 months to become market ready.
Risky business
Like any early stage business in the biotech space, there are substantial risks for potential investors to weigh up. For a start, the clinical trials process is extensive and often takes far longer than original expectations. There is also the chance that tests fail altogether.
It is also an expensive business and SkinBiotherapeutics is likely to require far more funding than its initial £3m war chest. This means that regular cash calls are almost certain, potentially diluting original investment values.
Even presuming successful trials, commercialising products will need the right agreements being struck with the right partners.
