Easton Pharmaceuticals Inc (OTCMKTS:EAPH) Just Told Markets Where Its Growth Is Coming From

Easton Pharmaceuticals Inc (OTCMKTS:EAPH) enjoyed a substantial run up throughout October, with the company's links to the medicinal marijuana space, and the pending ballot out of California that is expected to send the sector into overdrive if it comes out in favor of legalization, controlling sentiment.We've been watching another side of the company's operations for the last few months, however – the side that we see as being the primary growth driver across the coming half decade. The operations in question are a suite of women's health products, and specifically the development of a south and central American market for these products.We got a bit of an update to this end in September, but a major announcement just hit press; one that serves up some time frames to watch, and some top line figures to aim for going forward. The info offered up allows us to apply a much more solid valuation to Easton, and we think there's plenty of upside on the company's current market capitalization.The latest announcement relates to a distribution agreement that will see the company partner up with a company called Windsor Pharmaceuticals SA, with the latter set to start pushing three women's health products in a range of territories, to include Guatemala, El Salvador, Honduras, Panama, Costa Rica, Nicaragua, the Dominican Republic and Caribbean Islands, during the first quarter of 2017.Windsor is essentially a brand new entity, and it looks like it's been set up for the express purpose of distributing Easton's products. The release states the sell-into market has a population of around 58 million, but the products are aimed at women, so this is roughly translatable to a target market of circa 30 million. Whatever the total target, Easton expects the products in question will generate $3 million revenues full year during the second year of activity, with this number set to expand beyond year two as extra products are added to the mix. To add some perspective, Easton doesn’t currently generate any revenues on its portfolio, and holds a market capitalization (at current prices) of a little over $12.5 million.So what are the products?The three products targeted for sale as part of the latest distribution agreement are VagiSense, AmnioSense and Gynofit.VagiSense is a diagnostics test for a condition called bacterial vaginosis (BV) – a condition that affects nearly all women at one point or another during their lifetime, and a condition for which big names like Bayer AG (ADR) (OTCMKTS:BAYRY) and Prestige Brands Holdings, Inc.(NYSE:PBH) already sell millions of dollars' worth of the exact same product (branded under their respective monikers) in Europe and the US respectively.Gynofit is a treatment for BV, which we assume Windsor will offer as a follow up to the VagiSense diagnostic. This one is also already approved in Europe.AmnioSense is a patented amniotic fluid leak test. It's essentially a sanitary towel that pregnant women can wear to help them differentiate between urine and amniotic fluid leakage, which in turn can help them determine if their waters are breaking.The great thing about these products is that they are established products in the markets in which they are approved, and they fill a very large need. They generate revenues, and have a proven demand. All Easton is doing, by way of the Windsor agreement, is taking the products and introducing them to markets that are as-yet untapped.And that's just the first step.Beyond the above mentioned markets, Easton is in the process of pushing for a distribution deal close that will see it expand its products into the Mexican market. Discussions are ongoing with a so-called multinational pharma company specialized in Women's Health, which (the company believes) will result in sales kick-off come second quarter next year. These products are already regulatory approved in Mexico, so it's just a case of closing on the distribution terms. Mexico alone will double the market size, so the closing of this deal, and its execution, is going to be a major upside catalyst for Easton near term. We're seeing the company rise on the latest announcement, and there's no reason it shouldn't rise to a similar degree come Mexico close, which we expect before the end of this year.Our biggest (and only real problem) with Easton is its cash position. The company has essentially nothing by way of cash on hand, and there's a good chance we're going to see some dilution near term to account for operational capital demand. The distribution deal structure should dramatically limit any sales strategy drain on capital resources, but money is still going to need to be spent, and it's almost certainly going to have to be shareholders that foot this bill.With this said, if Windsor can execute on its sales strategy, the millions of dollars in revenues should initiate gains that offset any value-loss through dilution.We will be updating our subscribers as soon as we know more. For the latest updates on EAPH, sign up below!Disclosure: We have no position in EAPH and have not been compensated for this article.