Matt Wright opened the call and handed the mic to the directors where Glyn stepped up:
Segment 1 - Glyn Denison's Overview
- OBJ are interested in developing our own skin care products.. Branding and distribution TBC
- OBJ has produced over 800,000 products to date incorporating micro array technology
- Wave I to be phased out in 2018-2019. A new product under development to replace the Wave I Eye Wand
- P&G have advised Wave II Booster to continue
- Magnemasks (largest volume to date). To continue in 2018 and launched in North America.
- Extra Magnemasks product to be launched early next year (I may have misheard this part, but I'm pretty sure this is what he said).
- Technology 2 consumer testing early next year
- If P&G don’t meet milestones regarding Tech 2, OBJ has the option to terminate agreement and take the technology to another partner
Segment 2 - Jeffrey Edward's Overview
- OBJ always been interested in developing our own products, three in particular:
1) Bodyguard (spoke about the difficultly of treating knee pain orally as opposed to locally)
Prototypes are being manufactured and to be distributed to several potential partners who are interested and will conduct their own internal programs to test/validate.
2) Surface Hygiene (at least two major multinational interested).
Internal testing has revealed 500% increase of bug kill. We are currently looking at working with existing cleaning compounds and combining it with OBJ tech.
3) Bathroom Mould – hydrogel and microarray tech internal testing results are looking very promising. This is a big problem in UK/Europe
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Glyn Denison then spoke for a couple of minutes on a couple of other points:
- A recruitment Agency has been consulted to replace Glyn (Glyn talked about this himself and did not seem salty or disillusioned about it but rather professional and welcoming to the change).
Glyn will stay on the board until he retires, which "is probably not too far away".
- Patents, Glyn mentioned the fact that patent activities have been increasing but OBJ's overall cost management is under control and going down.
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Bare with me on this section, the questions and answers are very condensed versions of the questions that were asked but I'm confident I got the important bits and the overall gist.
Segment 3 - Questions and Answers
Q1) When will new partnership (not P&G) to be announced?
- Probably the BodyGuard licensing agreement. Companies in USA, UK, Japan, Europe keen and waiting for final prototype.
- Surface Hygiene also a possibility but at this stage BodyGuard will probably be the next partnership announced.
Q2) Latest on Pfizer?
- Unable to discuss too much due to not having permission from Pfizer.
- Ibuprofen potential is huge and the ability to treat pain locally is very attractive proposition for many companies as Ibuprofen is a widely used drug/painkiller.
Q3) Surface Hygiene Update, Oral Healthcare and Shaving Updates?
- Surface hygiene moving towards validation programs with major international partners.
- Surface hygiene product could be launched in 2018-2019.
- Programs are going smoothly to date.
- Oral Healthcare programs have been stop / start.
- Spoke about the disappointment of GSK declining to proceed despite the clinical testing data being very positive and encouraging.
- Oral Healthcare program has been picked up by P&G (born2reign comment: Hell yeah!! Who said we wouldn't get any new, market-sensitive information on this call?) via the Oral B brand and program has been successful to date. Results and data has been provided to Oral B team and so far no technical objection to date, and progress has been encouraging and moving forward quickly
- Shaving has been disappointing, Jeff highlighted the shaving industry has been shaken up by Dollar Shave Club etc. Expressed his disappointment in achieving all required outcomes from P&G but not making much traction due to the industry being shaken up. Not expecting industry to stabilize for another 9 to 12 months and expects P&G to turn to OBJ when it’s ready to move forward with this program.
Q4) Question about R&D rebate and if the royalty rate being 3-5%
Glyn: This reeks of a dossandt question
Jeff: Is that HotCopper fruitloop is at it again?
Matt: Can you guys just buy every share up to 10c so he sells and goes away? His emails are doing my head in.
The actual answer here was something about R&D rebate is included in revenues and not cancelled and that 3-5% is the standard royalty rate of this industry.
Q5) Will OBJ be cash flow positive in Q1, 2018
- Glyn said: "We never said we will be cash flow positive but only said no more capital raisings in foreseeable future".
- Glyn suggested to look cash flows over 12 months not per quarter. As it stands now things are looking bright for the near future based on P&G forecasts.
Q6) Can directors provide revenue forecasts
- Glyn said he would love to but it’s far too early.
- There's only two products on the shelves, third product hitting the shelves now and the foorth product in the early new year.
- Too hard to provide any kind of reliable revenue forecast now.
- Very hard when being totally dependent on third party data, at least in the early stages of this relationship.
- Did get some good information from P&G meetings last week, but would like it to be internally validated first before sharing.
Q7) Can board provide an update commercializing microneedles.
- Jeff said the company is not working with any companies at the moment regarding microneedles.
- This was looking promising a couple of years ago but failed to gain traction to commercialize a microneedle product. Companies scared of manufacturing costs.
- Have redesigned a product that was originally intended for the micro needle space which has proven to be a suitable hot/cold patch product for an interested party.
Q8) How long will BG trial last for, how long until BG product on shelf?
- Difficult area to break into due to legalities and requirements in this space.
- Getting around this by working with respected partners.
- Jeff highlighted when getting approval for a drug based products can take years which is why OBJ worked in FMCG space until now.
Q9) Clarify the difference between the royalty between a partner and going a product alone
Glyn: Royalties with a partner is essentially profit sharing and going it alone can expect a larger percentage % due to having more control and taking on more of the costs / risks
Q10) The article linked on OBJ website about the 3-5% royalty estimate
- Jeff answered and said the article is a 3rd party article and not written by OBJ. The 3-5% estimate is the publishers point of view only.
- Jeff said OBJ has always maintained an estimate of 2-3% for most products. However 3-5% is not out of the question (more for internally developed products).
born2reign comment: Who cares what some person wrote in a 3rd party article. We wasted two questions out of 17 regarding this 3-5% estimated figure because some people got their knickers in a twist about somebody else's estimate / opinion.
Q11) Vitamins, Minerals and Supplements (VMS space) Update
Background context: Due to information provided by Jeff in 2016 (P&G, Reckitt) “I’d be surprised if this thing will stay still for very long”.
- Glyn: Cannot speak about other companies except P&G due to not obtaining permission to do so .
- Jeff: Discussed at a meeting with an accelerator in Singapore last week, which is closely aligned with P&G. Not related to BodyGuard but in the skin care market.
- There's another accelerator in Chicago (USA) interested in BG.
- Want to do their internal consumer testing once prototype available.
Q12) Update on Coty relationship
Jeff: Coty recently acquired a large range of brands from P&G earlier this year (over 12 billion dollar deal).
- Large change in management and R&D divisions which generally puts a halt on any new product developments.
- In recent months Coty has reached out again and we have met with their new R&D director and programs are slowly moving forward again.
- Meeting scheduled with Jeff and Coty in Singapore next week.
- The exclusive agreement on microarray technology with P&G is not applicable to Coty (I could have misheard this part, but from what I understood - any OBJ programs with the P&G brands that were sold to Coty are still in play and not limited by our exclusive microarray technology agreement with P&G).
born2reign comment: If I heard and understand correctly, this is a huge deal. If OBJ/Coty/P&G have gone through the legal effort to allow these new Coty brands to pursue any microarray workplans, then my guess is we have more than one workplan ongoing with one of these brands that Coty have picked up.
Q13) Update on the Nurofen tube applicator and OBJ's relationship with Reckitt Benckiser
- Jeff explained that this Nurofen tube applicator was a part of OBJ’s internal advance packaging internal testing, which was successful. There were 3 advanced packaging products.
- The first one was the advanced penetration tube (Reckitt has not advanced this program any further)
- Two other advanced packaging products were developed around this time and have been taken up by P&G, but Jeff didn't go into any details about this.
- Thus, we have commercial partners for 2 of the 3 products and in his opinion "the tube cap applicator will find a partner relatively soon".
Q14) When will the next Wave be launched? (I didn't catch if this was referring to Wave 3 or Wave 4)
- To be launched 1H of 2018 calendar year, will be a separate (not integrated) product.
- Jeff mentioned there is advanced plans of a launch featuring an integrated product with similar timelines for the above product
born2reign comment: Now that we know Magnemasks is not Wave III, I presume this above-mentioned product at the start of this Question 14 to be launched in 1H of 2018 is Wave III, the integrated product as just mentioned also approx 1H 2018 as Wave IV and also an additional Magnemasks product in early 2018 gives us 3 new products in the next 9 months or so.
Q15) Are OBJ any closer to getting a new chairman in?
Yes have engaged several partners and once replacement has been identified Glyn to move to a non-exec chairman
Q16) Performance Share Clarification (directors included or only employees?)
- Nothing to do with directors, only for benefit of employees.
Q17) Update about second technology and commericialation timelines
- Glyn: Second license agreement very close (with our legal team).
- Hopeful for agreement to be finalized prior to AGM. (born2reign comment: I think this is referring to the 2nd half of the 1st stage of the tech 2 agreement i.e. the completion of stage 1 and the additional 125k U.S $ payment).
- Part of the agreement with tech 2 is that a product needs to be on the shelf and OBJ receiving royalties within 30 months or OBJ can terminate the agreement.
- There's likely to be a 1000 person trial to test this second technology.
Segment 4 - Post Q&A Summary
-Glyn just summarized by saying we have two technologies being/in progress of being licensed, microarrays products and royalties will increase and currently signed up until 2021 with P&G.
-At some stage next year expecting revenue from the second technology.
-Surface Hygiene moving forward well.
- Looking to distribute our own "skin care and hair care products" in future (and not be so dependent on 3rd parties).
- Company is refreshing the board and setting up the company for growth.
- Aware of the need to get more partners and products and not being confined to one technology or one partner (earlier in the call he also acknowledged this is one of the current company risks).
- Things are looking postiive moving forward.
Jeff then talked about the overall scope of the company.
- Currently on the first step up from where we started.
- What OB is doing is unprecedented and going out to the world and convincing companies that we can improve products via physics rather than chemistry.
- The feedback from P&G is that the customers love the (microarray) products and repeated what Glyn said that there’s over 850,000 products either manufactured or shipped to P&G (born2reign comment: Glyn actually said 800,000 while Jeff said 850,000)
- Jeff has recently been able to present to other companies some other technology platforms and they really liked what they saw.
- Credited these new leads and opportunity to present to other companies to the success of the P&G relationship.
- Expects us to grow in leaps and bound in the future.
Glyn said OBJ will endeavor to do a conference call like this one more regularly in future.
Matt ended the call and said the recorded will be posted on the OBJ website ASAP
OBJ Price at posting:
3.8¢ Sentiment: Buy Disclosure: Held
(20min delay)