27 October 2020

LGB helps fund microbiome therapies for the skin

SkinBioTherapeutics plc, a company we have grown close to in the last 12 months, has announced that it has raised £4 million (before expenses) at 16p. SkinBioTherapeutics is also conducting a £500k open offer to shareholders at 16p with a 1:41 entitlement. It was a pleasure to be involved with SkinBioTherapeutics in cornerstoning this equity raise at a time when the company is moving swiftly to commercialising the first three columns of its five-column strategy.

SkinBioTherapeutics has a strong skin microbiome technology platform based upon leading academic research undertaken by Professor Cath O’Neill, the company’s founder, positioning it to be a leader in the probiotic skin health field. Importantly the company is transitioning from a research and development business to a commercial enterprise with a strategy to deliver near term revenues and longer-term value. 

The company has identified five commercial channels to generate revenues, incorporating both its core technology platform and other microbiome-based technologies.

  • The SkinBiotix channel is developing a topical probiotic lysate to be marketed as a cosmetic ingredient, targeting the c$3bn ingredients market. This channel has been partnered with Croda International, a global speciality chemical company with expertise in cosmetic ingredients. 
  • The AxisBiotix channel will develop an oral probiotic food supplement which will be designed to modulate the gut-skin axis and improve the skin health of patients suffering from psoriasis. SkinBioTherapeutics has partnered with Winclove Probiotics BV to develop the probiotic formulation. The NHS estimates that c2% of the UK population suffer from psoriasis. 
  • Building on the SkinBiotix channel, the MediBiotix channel aims to develop the technology into a medical device for the treatment of eczema (atopic dermatitis) and management of skin wounds. The atopic dermatitis market is expected to grow to over $10bn, while the advanced wound care market size is estimated at between $7bn and $9bn.
  • The CleanBiotix channel will explore the opportunity to develop the platform to reduce hospital-acquired infections, based on the potential for the core technology to prevent pathogenic bacteria from binding to surfaces. We note that healthcare-associated infections are estimated to cost the NHS around £1bn per year.
  • The final commercial channel aims to develop the core technology into a pharmaceutical product for various skincare indications. This channel will build on the AxisBiotix and MediBiotix channels but will require more extensive clinical trials.

SkinBioTherapeutics has signed two commercial agreements for its technologies covering the first two commercial channels. We see the signing of these commercial agreements as a clear validation of the company’s underlying technologies. While further development and testing work is required in both agreements, we believe the commitment to product development shown by both Croda and Winclove points to the future potential of the technology.

The company has highlighted the fact that one of the big benefits that SkinBioTherapeutics has is its short product development timeline due to the fact that it does not require the long and expensive process of clinical trials. Also, besides not having to invest in clinical trials, most of the cost of product development will be met by the channel partners like Croda Plc. There should be significantly less financing risk compared to biotech stock yet the addressable markets remain equally large for SkinBioTherapeutics.

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