On March 8, 2017, the emerging consumer goods pharmaceutical company Innovus Pharmaceuticals (OTCMKTS: INNV), headquartered in San Diego, communicated that it had received a notification to commercialize Sensum+® in the EU. In addition to this good news, on March 2, 2017, the company received the CPNP notification number to commercialize Zestra® in the EU. Finally, we saw good news for this company after investors dumped the share price from $8 in 2012 to $0.11 as of today. The share price rose 41% the following day, when the market received the good news.
Can we play the turnaround here? The company has received some good news lately, which could have a good effect on the share price. In this article, we will tell you more.
Products
The notice of intention was celebrated by Dr. Bassam Damaj, the President & CEO, with the following words:
"Now that we have received the CPNP notification numbers for Sensum+® and for Zestra®, which we announced last week, Innovus has two products ready to be commercialized in the European Union, and therefore, expanding our ability to enter into additional commercial partnerships" Source
We agree that this is a big step, but let's further analyze its total portfolio of products and the company as a whole. Innovus Pharma is already in a commercial stage. It operates thirteen commercial products for the treatment of men's and women's health and respiratory diseases. These products are normally acquired once they generate revenues. Take a look at some of the products that the company sells:
I also found a video, wherein we can see Dr. Bassam Damaj, the CEO & President, explaining the activity of its company. He actually explains his skills turning around companies. Take a look:
Recent Accounting events and shares outstanding
Apart from the analysis of the products, it is always important to check the accounting issues, which the company may have, the shares outstanding and the revenues. On March 22, 2017, the company communicated that it had reduced the current debt obligations by approximately $1.3 Million through the redemption of convertible notes, which is a big positive.
"With the redemption of the convertible notes, the Company has reduced its current debt obligation by approximately $1.3 million and eliminated approximately $0.3 million in derivative liabilities relating thereto." Source
On March 16, 2017, the company issued warrants and shares. The total offering was 25,666,669 shares of common stock at $0.15 per share. In addition to these shares, the shareholders received two warrants. It is very well explained in the press release:
"For each share purchased, investors will receive one one-year warrant to purchase one share of common at $0.15 and one five-year warrant to purchase one share of common at $0.15." Source
It is important for the shareholders to understand that these warrants are dilutive and increase the number of shares outstanding. This is something to monitor closely. However, we believe that the capital raise is necessary if the company wants to do an actual turnaround. According to another press release, the use of the capital raised was said to be for the following reasons. Take a look:
"Innovus intends to use the net proceeds from this offering primarily for the commercial launch of FlutiCare™, if approved by the FDA, working capital and general corporate purposes, including sales and marketing activities, product development, capital expenditures, the repayment of certain debt of the Company and product acquisitions and product licenses. Source
Conclusion
The CEO of Innovus, Dr. Bassam Damaj, is trying to turnaround the company, registering new products in Europe and raising capital from investors. We cannot really say whether the company will succeed, but the company is giving the markets a clear sign that it's working on a turnaround. Overall, we see INNV as an attractive turnaround play and at current levels, the upside is much greater than any downside. We will be updating our subscribers as soon as we know more. For the latest updates on INNV, sign up below!
The author does not own shares of the company. Insider Financial was not compensated for the release of this article.
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