Innovus Pharmaceuticals Inc. (INNV:OTCQB), a rapidly growing, San Diego-based pharmaceutical company that focuses on over-the-counter (OTC) medications, reported Q1/17 earnings of $2.2 million, an 865% increase over Q1/16, and a 28.7% increase from Q4/16.
Ajay Tandon, an analyst with SeeThruEquity, noted that "1Q17 growth was driven by the strong performance from the company's expanded sales distribution, and an increase in the number of commercial products to 18. Innovus continues to benefit from the performance of in-licensed products from Beyond Human and its BTH® sales and marketing platform—with Vesele, Sensum+, UriVarx, Zestra, RecalMax and BHT representing the majority of revenues."
He also stated that "the results demonstrated continued sales execution and place the company well on its way towards its guidance for $10mn–$15mn for the full year as it expands sales channels for its portfolio of 18 commercial products." He noted that the company's gross margins "remained at attractive levels, at 79%, allowing the company to cash burn and target profitability. . .INNV ended the quarter with cash on hand of $2.4mn and total debt of $2.3mn, with its balance sheet benefitting from an equity offering in which INNV raised $3.8mn."
Tandon expects FlutiCare, a generic reformulation of Flonase nasal spray, to provide growth, calling its launch "a key event to watch for 2018. . .FlutiCare™ is a fluticasone propionate nasal spray for allergic and non-allergic rhinitis ("hay fever"/"stuffy nose"), which Innovus has estimated represents more than a $1 billion market opportunity; it is the leading nasal steroid prescribed in the US, with 40mn units sold since 2014."
He reiterated that Innovus expects FlutiCare to "generate $10-15mn in revenue in its first year of commercial operations following full US distribution. Key to this view is the broad distribution plans for Fluticare™. This includes distribution in over 20,000 U.S. retail stores, including Walgreens, CVS, Rite Aid, Kroger, Target, and Safeway. FlutiCare™ will also be sold in the company's Beyond Human Sales & Marketing Platform, which has access to ~3,000 newspapers and magazines reaching 20–30 million consumers per month, two million current subscribers, access to over 140 of its websites, online retailers and Amazon."
"If management is able to meet its guidance in 2017 for $10mn to $15mn in revenue, the company could be looking at a breakout year in 2018 with the addition of $10mn–$15mn from FlutiCare™," stated Tandon.
"Management also indicated that it is targeting cash flow breakeven by the end of the year, which would reduce additional dilution risk from share issuances. We are targeting $14.7mn in revenue for 2017E and $25mn for 2018E, respectively," noted Tandon.
SeeThruEquity has set a target price of $0.65 per share for Innovus. Shares are currently trading around $0.11.
"We see Innovus as a high-risk / high-reward investment opportunity in the OTC pharmaceuticals space with a differentiated business model focused on men and women's health and vitality. We see several potential catalysts for the company over the next six to nine months stemming from its outlook for robust growth, and the upcoming launch of Fluticare™, which is now set for 4Q17," concluded Tandon.
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