Street Calls of the Week
MELBOURNE - Gelteq Limited (NASDAQ:GELS), a micro-cap company with a market value of $12.35 million, has entered into a Product Development and Profit Share Agreement with Melbourne Health to develop new gel-based products incorporating high-amylose maize starch butyrylated (HAMSB), the company announced Thursday. According to InvestingPro data, the company maintains a healthy gross margin of 53.66% despite being in early development stages.
The collaboration aims to create a ready-to-consume product utilizing HAMSB, a compound that has shown potential to reduce bowel polyp growth which could lower the risk of bowel cancer. The development will leverage Gelteq’s proprietary gel-based oral delivery platform.
Melbourne Health, which operates The Royal Melbourne Hospital, will contribute research expertise on HAMSB, which has been studied in conjunction with the Commonwealth Scientific and Industrial Research Organisation (CSIRO). A recent Australian study presented at Digestive Disease Week 2024 demonstrated HAMSB’s effects on polyp initiation.
"This collaboration with Melbourne Health marks a pivotal step in translating cutting-edge clinical research into a potentially commercially viable product," said Nathan Givoni, CEO of Gelteq, in the press release. The announcement comes as the company faces financial challenges, with InvestingPro analysis showing negative EBITDA of $1.44 million in the last twelve months and a concerning current ratio of 0.79, indicating potential liquidity constraints.
According to the agreement, Gelteq will handle manufacturing, marketing, and commercialization activities at its research facility in Clayton, Victoria. Melbourne Health will receive a share of net profits from future product commercialization.
Bowel cancer is the fourth most common cancer diagnosis in Australia, affecting up to 1 in 20 people by age 85, according to Cancer Council Australia. In the United States, the Colorectal Cancer Alliance identifies colorectal cancers as the second leading cause of cancer deaths.
Gelteq specializes in developing gel-based oral delivery solutions for prescription drugs, nutraceuticals, pet care, sports nutrition, and other applications. While the stock has shown strong momentum with a 41.91% gain over the past six months, InvestingPro analysis suggests the company is currently trading above its Fair Value. Subscribers can access 6 additional ProTips and comprehensive financial metrics to make more informed investment decisions.
In other recent news, Gelteq Limited has made significant strides in its business operations. The company announced that its proprietary gel technology has entered the U.S. nutraceutical market through product launches by Healthy Extracts, Inc. This marks a transition from research and development to active commercialization in the United States. Additionally, Gelteq plans to start a preclinical bioequivalence study to evaluate its gel-based formulation of an antihistamine, with the potential for human clinical trials pending successful results. This study will be conducted by Adgyl Lifesciences and aims for U.S. FDA approval through the 505(b)(2) pathway. Furthermore, Gelteq has entered into a memorandum of understanding with IDT Australia to establish a dedicated manufacturing facility. This partnership is intended to support the scale-up and commercialization of Gelteq’s gel-based delivery solutions across various markets globally. These developments highlight Gelteq’s ongoing efforts to expand its product offerings and market presence.
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