Executive Summary / Key Takeaways

• Gelteq Limited ($GELS) is a clinical and science-based company specializing in white-label gel-based delivery solutions across nutraceutical, pet care, sports, over-the-counter (OTC), and pharmaceutical verticals. Its patent-pending gel technology offers distinct advantages in taste masking, customizable textures for dysphagia, and precise dosing, addressing significant unmet needs in oral delivery.
• The company recently bolstered its financial position with an Initial Public Offering (IPO) in October 2024, raising US$5.2 million, and secured an equity line of credit with Lincoln Park Capital Fund, LLC for up to US$12.00 million, significantly improving liquidity and mitigating prior "going concern" doubts.
• Strategic partnerships with Healthy Extracts Inc. (OTCQB: HYEX) for North American fulfillment, WPIC Marketing and Technologies for Asia Pacific distribution, and IDT Australia Limited (ASX: IDT) for dedicated manufacturing facilities are poised to accelerate market penetration and product scale-up.
• Gelteq forecasts substantial annual revenue growth, with projections of 259% in fiscal year 2026, followed by 117% in FY27, 86% in FY28, and 38% in FY29, driven by existing and new customer orders, and a strategic focus on the pharmaceutical/OTC vertical.
• While facing intense competition from larger, well-resourced players and inherent risks associated with regulatory approvals and market acceptance, Gelteq's unique technological differentiators and strategic market approach present a compelling long-term growth opportunity.

The Gelteq Vision: Reshaping Oral Delivery in Expanding Markets

Gelteq Limited is carving a niche in the vast and often undifferentiated oral delivery market with its innovative, white-label gel-based solutions. The company's core business model revolves around out-licensing its proprietary technology to other companies, enabling them to rebrand and sell gel-based products within their established markets, while Gelteq maintains manufacturing oversight. This strategy allows Gelteq to penetrate diverse sectors without the full burden of direct brand building and extensive sales infrastructure.

The company's product suite spans five key verticals: pets, sports, nutraceuticals, over-the-counter (OTC), and pharmaceutical products, all underpinned by its patent-pending multiple-ingredient gel dosage forms. These markets represent significant opportunities. The global nutraceutical market, for instance, is projected to grow from approximately US$140 billion in 2020 to US$270 billion by 2028. Similarly, the human oral drug delivery and diagnostics market, valued at approximately US$769 billion, is expected to reach US$1.227 trillion by 2027, growing at a Compound Annual Growth Rate (CAGR) of approximately 6.90%. The pet humanization trend is also fueling a burgeoning pet supplement market, which saw a staggering 116% growth in North America from 2019 to 2020 in new product development.

Despite the presence of numerous companies offering novel drug delivery systems like transdermal patches, oral films, and injectables, Gelteq asserts that its gel delivery system is unique within the pharmaceutical space, with no direct competitors currently offering a similar gel base. This distinct positioning is crucial as the oral drug industry seeks innovative solutions beyond traditional pills and syrups.

The Gelteq Technological Edge: Innovation in Delivery

Gelteq's foundational strength lies in its proprietary gel delivery system, a clinical and science-based innovation designed to enhance the tolerability and stability of active ingredients while maintaining efficacy. This patent-pending technology, utilizing agarose and alginate in specific ratios and pH ranges, forms gels of precise firmness to deliver multiple health ingredients or medicines in a single dosage form.

The tangible benefits of this technology are multifaceted and directly address long-standing challenges in drug and supplement administration. Firstly, Gelteq's gels possess significant taste-masking capabilities, moderating or concealing unpleasant flavors without altering taste receptors. This is a critical advantage over some competitor alternatives that blunt taste reception for several hours, potentially impacting subsequent meals. Secondly, the gelification process allows for customizable textures and viscosities, making it particularly beneficial for individuals with dysphagia (difficulty swallowing), children, seniors, and athletes. Monash University's Medicines Manufacturing Innovation Centre (MMIC) has validated the suitability of Gelteq's gel solutions for dysphagia management. Thirdly, the system ensures set dosages, providing accuracy and efficiency for end-users, which is a notable improvement over many liquid medicines requiring user preparation and prone to dosing errors. Furthermore, for its non-pharmaceutical verticals, Gelteq's products utilize Generally Recognized As Safe (GRAS) food-grade ingredients, streamlining regulatory pathways and reducing time-to-market. The gels can also be modified for fast or slow release, targeting optimal absorption areas within the digestive tract.

Gelteq's commitment to innovation is evident in its robust intellectual property portfolio. Its first patent family, covering an oral glucose tolerance test gel for diabetes diagnostics, includes granted patents in the U.S. (10.98M), China, Australia, Europe, and India, with applications pending in Canada and Qatar. The second patent family, focused on multiple-health ingredient dosage forms, has received grants from the European Patent Office (3809877), Mexico, Israel, Hong Kong, and the UK, with pending applications in numerous other countries including the U.S. The company has also lodged several provisional patents in the UK since August 2022, addressing challenges with oil-based product delivery, nutritional health products for the dysphagia market, and pharmaceutical formulations for single and various Active Pharmaceutical Ingredient (API) textures. These R&D efforts, including a continued research partnership with Monash University, aim to expand the product suite and validate the technology across human and animal health.

For investors, these technological differentiators are paramount. They form a strong competitive moat, enabling Gelteq to target underserved markets with superior products. The ability to offer improved patient compliance, enhanced palatability, and precise dosing can translate into higher adoption rates, stronger customer loyalty, and potentially premium pricing, thereby contributing to higher gross margins and sustained revenue growth. The extensive patent portfolio also provides opportunities for patent life cycle management for pharmaceutical partners, a highly valuable proposition given the estimated US$198 billion worth of drugs whose patents expired between 2019 and 2024.

Strategic Execution and Market Penetration

Gelteq's strategy emphasizes maximizing commercial potential through a network of licensing and manufacturing partnerships. The company focuses on white-label and private-label manufacturing, leveraging the brand awareness and existing customer bases of its licensees to drive sales volumes.

Key strategic initiatives include:

• North American Expansion: An exclusive logistics and distribution agreement with Healthy Extracts Inc. (OTCQB: HYEX) in June 2025 positions Healthy Extracts as Gelteq's North American storage, shipping, and fulfillment partner. This partnership is expected to rapidly scale distribution across the U.S. and Canada, with initial products on track for market distribution by Q3 2025. Healthy Extracts' recent increase in its 2025 net revenue outlook from over $4.2 million to over $6.3 million, representing over 102% growth, underscores the potential synergy.
• Asia Pacific Growth: A December 2024 agreement with WPIC Marketing and Technologies Limited targets sales and distribution of Gelteq's SportsGel products across the Asia Pacific region, commencing with China. Four online stores are already operational in China, signaling early market entry.
• Manufacturing Backbone: Gelteq relies on third-party Contract Manufacturing Organizations (CMOs). Labixiaoxin Fujian Foods Industrial Co., Ltd. (LaBi) in China serves ASEAN markets with a lower cost base, while Wasatch Product Development LLC in the U.S. handles North American nutraceutical and OTC products. A significant development in July 2025 was the agreement with IDT Australia Limited (ASX: IDT) for a dedicated, locally based manufacturing facility. This partnership is critical for accelerating the development and scale-up of Gelteq's gel-based products across global pharmaceutical, nutraceutical, and animal health markets, leveraging IDT's extensive pharmaceutical expertise.
• Pharmaceutical Pathway: Gelteq is actively pursuing the 505b2 pathway with the FDA for an off-patent API for pain treatment, having completed dissolution studies and planning bioequivalence and safety trials. In December 2024, the company received FDA approval for a suitability petition for a new animal drug, a step that could significantly reduce the timeframe to potential approval by foregoing certain safety and effectiveness studies.
• Sales Pipeline: Gelteq has over 1 million units ordered from existing licensees, many of which are pilot programs with lower margins. These pilot sales are expected to increase market exposure and potentially lead to higher per-unit pricing and gross margins for future clients. The company plans a substantial advertising budget for fiscal year 2026, including increased sales staff and targeted online marketing.

Financial Performance and Liquidity: A Foundation for Growth

Gelteq has historically operated with losses, a common characteristic of early-stage, R&D-intensive companies. The company reported a loss after income tax of AUD3.55 million for the year ended June 30, 2024, and AUD3.30 million for the six months ended December 31, 2024. Revenue from contracts with customers was nil for both the year ended June 30, 2024, and the six months ended December 31, 2024, a decrease from AUD79,843 in the prior fiscal year. This revenue decline was attributed to customer cash flow difficulties, which have since been resolved, with outstanding orders shipped in the fiscal year ending June 30, 2025.

Despite these historical losses, Gelteq has made significant strides in strengthening its financial foundation and addressing liquidity concerns. The company's Initial Public Offering (IPO) on October 30, 2024, raised gross proceeds of US$5.2 million (approximately AUD7.95 million), providing a crucial capital injection. This was further augmented by a Purchase Agreement with Lincoln Park Capital Fund, LLC in March 2025, granting Gelteq the right to sell up to US$12.00 million in Ordinary Shares over a 24-month period. While only 4.00 million shares are currently registered for resale, this facility offers a flexible funding mechanism.

The company's working capital deficit improved from AUD3.56 million at June 30, 2024, to AUD1.34 million at December 31, 2024, largely due to the capital raise. Gelteq also proactively managed its debt, converting AUD822,184 of convertible notes into equity and repaying AUD772,136 of shareholder loans in March 2025. Remaining shareholder loans, initially due December 31, 2024, were extended to December 31, 2025, further alleviating short-term liabilities. New convertible notes approved in February 2025 are expected to raise up to AUD1.50 million, with AUD580,000 already received.

Operating expenses reflect the company's strategic focus. Research expenses decreased by approximately 58% in FY24 due to time spent establishing new laboratory facilities, but then surged by 212% in the six months ended December 31, 2024, as product testing and validation intensified. Corporate and administrative expenses saw a significant increase of AUD1.64 million in the latter half of 2024, primarily due to IPO-related costs, consulting fees, and finance costs. Management's impairment assessment of intangible assets as of December 31, 2024, concluded no impairment was required, supported by forecast models projecting substantial future revenue growth.

Competitive Positioning and Strategic Responses

Gelteq operates in a competitive landscape populated by large, established pharmaceutical companies and specialized drug delivery firms. Direct competitors offering novel delivery systems include Oramed Pharmaceuticals (ORMP), IntelGenx Technologies (IGXT), BioDelivery Sciences International, Lexaria Bioscience (LEXX), Taro Pharmaceuticals Industries (TARO), Catalent Inc. (CTLT), Insulet Corporation (PODD), Nutriband Inc. (NTRB), Virpax Pharmaceuticals Inc. (VRPX), and Hempfusion Wellness Inc. (CBDD). These companies often possess substantially greater financial, technical, and human resources than Gelteq.

However, Gelteq's core competitive advantage lies in its unique gel-based delivery system. While competitors offer various alternative delivery methods, Gelteq's specific gel formulation and its demonstrated benefits in taste masking, customizable textures for dysphagia, and precise dosing provide a differentiated offering. This allows Gelteq to target "blue ocean markets" where current solutions are inadequate, particularly in areas like pet care, nutraceuticals, and specific pharmaceutical applications where swallowing difficulties or taste are major compliance hurdles.

Qualitatively, Gelteq's financial performance, characterized by recurring losses and nascent revenue, lags significantly behind diversified healthcare giants like Johnson & Johnson (JNJ) and Pfizer (PFE), which boast robust revenue growth, strong profitability margins, and substantial cash flow from their broad portfolios. Even compared to generic drug specialists like Teva Pharmaceutical Industries (TEVA), Gelteq's operational scale and market penetration are still developing. Gelteq's current Price-to-Sales (P/S) ratio of 36.76 and Enterprise Value-to-Sales (EV/Sales) of 36.73 reflect a market valuation based heavily on future growth potential rather than current revenue. Its negative EBITDA and Net Income further highlight its early-stage financial profile.

Gelteq's strategic response to this competitive environment is to leverage its intellectual property and focus on out-licensing and partnerships. This approach allows it to tap into the existing distribution networks and brand recognition of larger partners, mitigating the need for extensive direct sales infrastructure that would be costly and challenging to build against established players. The 505b2 regulatory pathway for pharmaceuticals is another strategic move, aiming for faster market entry for certain drug formulations compared to a full New Drug Application (NDA) process.

Outlook and Growth Trajectory

Gelteq's management has outlined an ambitious growth trajectory, projecting significant revenue increases in the coming fiscal years. The company forecasts annual revenue growth of 259% for the financial year ending June 30, 2026, followed by 117% in FY27, 86% in FY28, and 38% in FY29. These projections are underpinned by identified potential customers for FY26 and FY27, along with expected increased market penetration in existing nutraceutical, pharmaceutical, and animal nutraceutical markets.

Gross margins are anticipated to improve, rising from 52% in calendar year 2025 to 58% by calendar year 2029 and beyond, reflecting expected scale benefits from increased manufacturing volumes. While EBITDA is projected to remain negative in the near term (-98% in CY25, -15% in CY26), it is expected to turn positive, reaching 16% in CY27, 28% in CY28 and CY29, and stabilizing at 29% thereafter, aligning with industry averages for mature companies.

Operationally, Gelteq plans to prioritize research and development in its pharmaceutical/OTC vertical in FY26, recognizing the stricter regulatory requirements but also the significant market potential. The company also intends to onboard an additional three sales managers in FY26 to support its revenue targets. Management believes that the proceeds from the recent IPO and the Lincoln Park Purchase Agreement, combined with ongoing operational adjustments, should be sufficient to fund its forecasted operations, though additional financing may be considered if sales volumes or growth opportunities fall short of expectations.

Risks to the Investment Thesis

Investing in Gelteq Limited carries a high degree of risk, as highlighted by the company's own disclosures. A primary concern is the "substantial doubt about our ability to continue as a going concern," stemming from a history of operating losses and an excess of current liabilities over current assets. While recent capital raises have improved liquidity, sustained profitability remains a critical challenge.

Market acceptance of Gelteq's novel gel products is not guaranteed, and slower-than-expected adoption could significantly impact revenue generation. The company also faces intense competition from larger, better-resourced players in the pharmaceutical and drug delivery markets. Regulatory approval for pharmaceutical products, particularly the 505b2 pathway, involves inherent uncertainties, potential delays, and increased costs if additional trials or data are required.

Furthermore, future sales of Ordinary Shares, including those by the selling shareholder Lincoln Park, could lead to substantial dilution for existing shareholders. Geopolitical conditions, such as the Russia-Ukraine and Israel-Hamas conflicts, also pose risks to global supply chains, commodity prices, and capital markets, potentially affecting Gelteq's operations and ability to raise capital. Finally, the company has acknowledged past material weaknesses in its internal control over financial reporting, and while remedial measures are in place, there is no assurance of maintaining effective controls.

Conclusion

Gelteq Limited stands at a pivotal juncture, transitioning from an R&D-focused entity to one poised for commercialization in high-growth markets. Its patent-pending gel-based delivery technology offers a compelling value proposition, addressing critical unmet needs in taste masking, ease of swallowing, and precise dosing across diverse verticals from pet care to pharmaceuticals. The company's strategic pivot towards out-licensing and partnerships, coupled with recent capital injections from its IPO and the Lincoln Park equity line, provides a much-needed financial runway to execute its ambitious growth plans.

While the path to sustained profitability is fraught with the inherent risks of an early-stage company operating in competitive and regulated environments, Gelteq's technological differentiators and strategic market entry points offer a unique investment thesis. The forecasted revenue growth and improving gross margins signal management's confidence in scaling operations. For discerning investors, Gelteq represents a high-risk, high-reward opportunity, where successful execution of its technological roadmap and strategic partnerships could unlock significant long-term value in the evolving landscape of drug and supplement delivery.