Allocation: 4
Initiating Price: $3.10
18-24 Month Price Target: $7.25
In addition to the above core competencies, the Company has spent the past several years acquiring, permitting/licensing and otherwise preparing a number of facilities for what they intend to be a significant foray into the generic pharmaceutical (prescription drugs) business. Becoming a provider of generic pharmaceuticals is a highly complex endeavor, as it involves a variety of qualifications that include raw material procurement, science/formulary aptitudes, FDA and other regulatory approvals, legal challenges with respect to providing generic alternatives to drugs for which patents are expired or are expiring and a host of others. Having spent considerable time and money across that entire landscape of hurdles, the Company is just now beginning to market its first products into the generic pharmaceutical space, and success therein could provide a considerable growth catalyst for the Company. The needs to reduce medical costs in general are becoming more and more acute, and the growing availability of generic pharmaceuticals is viewed by many as an integral part of that pursuit. As a result, while the barriers to entry for participation in the generic pharmaceutical space are considerable, the resulting markets are large, growing and in many instances involve attractive margin opportunities. As a result, the Company’s pharmaceutical business is one of the cornerstones of my enthusiasm for the Company as well as being the major basis for the timing of this research, as I believe the next 18 to 24 months will provide critical verification of the Company’s ability to either succeed or fail in the space. Obviously, that notion perhaps encompasses a great deal of both the opportunity and the risk associated with the story.
Lastly, the Company recently announced the acquisition of the worldwide patent rights for a diagnostic technology for early stage detection of ovarian cancer via urine samples. While it is far too early to tell what impact this might have on the Company, I believe it represents a potential wild card in the story, yet current valuations do not reflect (perhaps appropriately at this particular point) any value for that potential. This is clearly a portion of the story that will be worth keeping an eye on.
The bulk of the Company’s manufacturing facilities are located in or around their corporate Headquarter of Largo, Florida, with the exception of American Antibiotics, which is located in Baltimore, Maryland.
DISCLAIMER STATEMENT
The information contained in this report has been written by David Lavigne of EdgeWater Research Partners LLC ("Edgewater") and has been derived from sources considered reliable, but cannot be guaranteed by us. Edgewater and Lavigne are not aware of any material conflict of interest known at the time of the publication of this report. Financial projections and estimates herein represent our independent analysis based upon information in conjunction with the Company's publicly available financial statements. Edgewater and Lavigne may maintain positions in the securities referenced, which may change at any time without notice. Edgewater does not receive fees, warrants or any other compensation from issuers in connection with its research. It does however, encourage issuers and it representatives to subscribe to Edgewater's research, and from time to time, issuers and or their representatives may also purchase individual copies of Edgewater's research products. Edgewater and Lavigne may own options, rights or warrants to purchase any of the securities of the Company. This report is for informational purposes only and is not to be construed as specific investment advice or recommendations, nor as an offer to sell or a solicitation of an offer to buy any securities. The securities referenced are speculative in nature and may not be suitable for your specific investment objective. For specific investment advice or recommendations, please consult with your investment representative.
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