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It begs the question, who keeps dumping stock in the low 5's....

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01/12/15

11:19

Post #: 16517887
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Originally posted by deangoddard ↑

Found it. Tom Boormans AGM update.

"Good Things Come to those who Wait
Having travelled to Perth for the OBJ AGM I thought it was an appropriate time to give a comprehensive update of progress that has been made in the last 6 months and my perception of the timelines and potential news flow in the next 12 months.
It continues to be my view that long term OBJ shareholders will have their patience rewarded.
Many investors understand the potential of OBJ's technology to comprehensively transform and improve various sectors in the fast moving consumer goods market, yet have been somewhat disappointed that it has taken so long for the technology to be monetised. The reality is however that the first product (SK-II Eye Wand) was released in record time for P&G and has created ripples through the behemoth organisation around what best practice should be in product delivery. OBJ's technical capability and experience has resulted in a successful product delivered in less than half the normal time.
Very large companies such as P&G are multi-layered and multi-product focussed with defined long term product development and marketing plans. They are far less nimble than a company such as OBJ. The good news is that with the success of the SK-II Eye Wand it is very apparent that P&G are becoming more focused on implementing OBJ's technology in other areas of their business. There are now eight work programs in place, including the Gillette brand and although not confirmed by OBJ, one would expect Olay. These two brands represent some of the largest product ranges by revenue for P&G.
Managing Director Jeff Edwards recently spent two weeks in Singapore supporting the product implementation of the SK-II Wave II device which is a new device that will be used for multiple SK-II products. I expect this revenue stream to be a game changer for the company. A licensing agreement for the Wave II and Wave III products has been expressed by the company as ‘imminent’ and I have formed the view that at least one of the two deals is likely to be announced by Christmas.
Once the SK-II Wave II is executed, there will be little doubt from my perspective that the company's future revenues will be will be relatively well defined and the probability of additional products and further revenue will increase dramatically. I believe that the SK-II Wave II product by itself will be enough to move OBJ well and truly into profitability. Timing unfortunately is never certain and not controlled by OBJ. It is possible that P&G could take as long as second half of CY2016 to release new products incorporating OBJ’s technology. In my opinion this would be a worst case scenario and I am more of the view that they could launch as early 1H2016.
The good news is that although the Wave II device is the most likely significant short term revenue opportunity, there are so many other product technology areas that are building steam that timing of this one product launch becomes less relevant to the value proposition of owning this company.
The current Eye Wand which was soft launched in 2015 will have a far more significant worldwide launch potentially in the lead up to Chinese New Year. Once again no guidance was given as any product launch is at the discretion of the P&G marketing teams and not within the control of OBJ. Although the Eye Wand didn't deliver the volume of revenue anticipated by some in the soft launch trial, I am of the view that this product with increased awareness and promotion can contribute revenues of US$250,000 to US$500,000 a quarter.
In terms of the other customer relationships, they all appear to be proceeding to plan although as previously mentioned at a pace that as an investor you always wish was faster.
The COTY Dermaportation wand prototypes have been delivered for final consumer evaluation (clinical evaluation has been completed) and I expect licensing should be imminent. I did ask Jeff what the possibility in his opinion that COTY would turn around and dump the program. His response was "almost zero". It was my perception that COTY have come too far and shown far too much interest to turn around now and not bring this new product to market. In my view a second company signing a product licensing agreement will dramatically derisk any investment in OBJ and substantially increases the likelihood that additional deals with other global companies will eventuate.
The Company’s long standing relationship with GSK is strong and continues to revolve around analgesics and oral health. The oral health program for the hand powered toothbrush is still alive but is not being prioritised by OBJ at this stage. Success with this product has the potential to deliver significant dividends for OBJ. The recent GSK/Novartis merger has also resulted in renewed interest from the Singapore division of GSK. It is important to note that Novartis own Voltaren, the world’s second largest selling topical pain relieving OTC cream. I have little doubt that OBJ’s technology can improve delivery of this substance and help GSK to market the advantage of using their product against competitors.
Recently the company filed a new patent for its Dynamically Configurable Emulsions technology (DCE). This DCE technology essentially layers the active ingredient in emulsions and allows for multiple compounds to penetrate the skin in a specific order or in a pre-designated way. We understand this new technology is attracting interest from multiple global Pharma companies and enhances the value of the OBJ analgesics program as well as being applicable to various medicated skin care applications. OBJ have shown with their SK-II bottle designs, many of which were on display at the AGM, that they have the design capability to deliver a measured dose of active ingredient that can dramatically improve the delivery of the product.
Due to the slow moving nature of their customers, OBJ implemented a program many years ago to develop their own product line. This resulted in the BodyGuard platform, ConnectBeauty and Surface Hygiene.
BodyGuard is by far the most developed of the three but may not be the first to be commercialised. It seems that the ConnectBeauty mobile app has gathered a great deal of momentum and I understand Jeff Edwards is heading to Paris in the next fortnight to meet with a world leading skin care brand to further discuss this technology. The ConnectBeauty app offers the potential for a large skin care company to circumvent the retail high street and sell direct to the consumer as well as engage with their target market at a more involved level. OBJ has patented the platform and the key services that will be delivered on the app. Its competitive advantage will be giving a consumer the ability to personally design their own skin program into their device which will respond with the most appropriate treatments given the inputs. For example, it may take into account weather conditions, humidity, skin dryness, skin colour and then direct a consumer to the most appropriate cream or product to use, and then syncing these settings with the powered OBJ applicator. Although this may seem a little gimmicky, I have little doubt that companies are looking for new ways to interact with their consumers and the ability to drive a message about personalising skin care and creating an effective marketing channel is a major requirement for any Skin Care company. Not to mention the valuable data/analytics about customers’ skin care and purchasing habits that can be collected.
For me BodyGuard has always held a soft spot in my heart. Having a few issues with my joints I see the potential for this product as unparalleled in the OBJ pipeline. The ability to deliver a range of natural healing ingredients directly into the joint has never been effectively achieved. If success is shown in the soon to be completed double blinded trial, OBJ will be the first company in the world to have a product that actively rebuilds a joint rather than just treating the pain. Joint pain and sports care is a multi-billion dollar market and as many people with joint pain know, the current treatments are pretty underwhelming. A product released by a company as big as P&G or GSK, with their distribution channels and global marketing reach, could easily reach 10% of the global joint pain market. As OBJ has taken this product and formulation much further along the development pathway it could be possible to achieve a 20-30% share of product sales. I expect that we will find out the results of the trial during the first quarter of 2016. P&G have first rights to negotiate a deal which will last for 30 days from receiving the data pack. Many other companies have shown interest in the results and I expect competition to distribute this product to be heavily contested if the trial is successful.
Recently OBJ released a study of their surface hygiene program which delivered results which showed OBJ could drive a 100% increase in the effectiveness of the active ingredient in comparison to using an ordinary cloth. In a passing comment Jeff Edwards believed that these results could be dramatically improved with additional product development. There is once again a large number of potential distributors for a product such as this. P&G is global player in the home hygiene market and have their own range of surface hygiene brands (e.g. Swiffer). The nice thing about surface hygiene is that there is no regulatory bodies whatsoever to consider and therefore the path to market should be quicker than some of OBJ’s existing programs. There will undoubtedly be a good deal more news on this at some point in 2016.
The important take away for me from the AGM is that P&G appears to have dramatically increased efforts to engage with OBJ since the soft launch of the Eye Wand. P&G appear committed to implementing the technology across various areas of their business. It is apparent that P&G view OBJ as a very effective way of driving innovation; reducing manufacturing costs; upgrading their current products with new designs; inexpensively improving product effectiveness for consumers; and ultimately increasing market share and sales in a highly competitive market. The BodyGuard trial will be the biggest individual news story of the first half and could catapult the share price higher. Failure will be disappointing but not be devastating as the P&G relationship will yield significant income in 2016. With a good number of other relationships heating up I expect more consistent news flow in the year ahead and the significant possibility of a dramatically increased share price.
Regards,

Tom Boorman B.Com (Corp Fin)
Equity Advisor"

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It begs the question, who keeps dumping stock in the low 5's. Supressed accumulation or that 'spite' seller is still in force? B&Y are clearly not ready for the price to go up.

OBJ Price at posting: 5.3¢ Sentiment: None Disclosure: Held
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