Innovus Pharma (INNV) Continues to Execute with Record Q3 ’16 Revenue
November 18, 2016 6:29 am ET
The clear majority of micro-cap pharmaceutical companies are years away from meaningful revenue, but Innovus Pharmaceuticals Inc. (OTCQB: INNV) is a notable exception to the rule with rapidly growing revenue and a robust pipeline. The management seems to be focused on generating sustainable revenues and achieving profitability. During the third quarter, the company reported a 947% year-over-year increase in revenue to a record $1.9 million, as management continues to prove that it can deliver significant shareholder value.
In this article, we will take a closer look at the company’s third quarter financial results and what investors can expect over the coming months.
Beyond Human Sales and Marketing Platform Propels Sales
Innovus Pharmaceuticals’ Beyond Human Sales and Marketing Platform has become the cornerstone of its revenue growth. Since acquiring Beyond Human in March 2016, the company has experienced 42% monthly growth and gross margins that exceed 80%. The platform reaches between 20 and 30 million potential customers monthly with Beyond Human Testosterone Booster®, Vesele®, Sensum+®, Zestra®, and RecalMax® products.
The Beyond Human platform enables the company to reach millions of potential customers each month and create subscriptions for their products. By doing so, the company can generate a steady flow of recurring revenue rather than one-time sales revenues. The platform also enables the company to cross-sell its other products to the same market and reach an immediate customer base with any future product launches.
“We are on track to meet our 2016 revenue guidance of $5 million and we continue to be focused on executing on our goals of expanding our product line, making our products commercially available, and achieving our projected 2017 goals of profitability and $15 million in revenue,” said Innovus Pharmaceuticals’ President and Chief Executive Officer Bassam Damaj in the company’s third quarter earnings press release.
Potential Catalysts Ahead
Innovus announced plans to initiate a pre-clinical and clinical program evaluating the safety and efficacy of its Vesele® product in combination with sildenafil for the treatment of erectile dysfunction. While PDE5 inhibitor-based prescription drugs (e.g. Viagra and Cialis) induce erections in patients, those patients still have issues in the maintenance and hardness of their erections. 50% of patients stop using those prescription products within 5 years of starting due to either lack of efficacy or not tolerating the side effects. Vesele® seems to be a unique and rare opportunity for Innovus to be potentially coupled with a leading ED prescription drug such as Viagra, and the combination could capture a significant portion of the $5 billion market. The management team members are worldwide experts on sexual dysfunction and have an outstanding track record of getting drugs approved for this indication such as Vitaros® (the only approved topical Alprostadil for erectile dysfunction).
The company also continues to prepare for the launch of FlutiCare™ in 2017 if the FDA approves it. Management remains confident in the prospect of an approval by the FDA by the end of the year and is working diligently on the launch plan and structure. These plans include both brick-and-mortar retail locations and sales through its Beyond Human platform that offers the potential to create subscriptions for life-long allergy sufferers.
Finally, the company announced an exclusive license agreement with Seipel Group for the rights to market Urox formulation under the name UriVarx™, which has been clinically proven to reduce urinary urgency, overactive bladder, and related conditions. Over the past year, the product has already sold over $1 million in the United States and it could add about $3 million in revenue after it is fully integrated into the Beyond Human Sales and Marketing Platform.
If the company continue its 42% compounded growth it might well exceed its anticipated $5M in revenue for 2016 and $15M in revenue for 2017 as it continues to launch new products. In addition, management aims to up-list to the NASDAQ, under the right market conditions, to open the door to institutional investments. After raising $3 million in July 2016, the company remains on solid financial footing when it comes to acquiring more products and increasing its marketing efforts to drive growth.
These dynamics could make the stock undervalued relative to many competitors in the space. For example, Viveve Medical Inc. (NASDAQ: VIVE) is a women’s health device company that trades with a market capitalization of nearly $70 million and revenue of about $5 million so far this year. By comparison, Innovus trades with a market capitalization of just $25 million and revenue of $3 million so far this year. If it were to trade at the same multiple, Innovus would be worth $42 million or $0.42 per share – a 68% premium to the current market price.
For more information, visit the company’s website at www.innovuspharma.com.