Innovus Pharmaceuticals Inc. (fka INNV)

[Drugdoctor]

Earnings-CALL-REPLAY-and NOTES! Still-Available! To access the replay, dial 1-877-344-7529 domestically or 1-412-317-0088 internationally or 1-855-669-9658 for Canada and reference Conference ID: 10118224.

I encourage anyone who didn't listen to the conference call replay to listen... The CEO and the CFO repeated the 2018 Revenue target of 18 million dollars SEVERAL TIMES! They also showed that the GROWTH of REVENUES is progressing very well through their various sales channels..

I have printed some of the highlights of the call, imo, from the transcript of the call which can be accessed in its entirety at this link.. Bolding and underlining by Drugdoctor...

https://seekingalpha.com/article/4173956-innovus-pharmaceuticals-innv-ceo-bassam-damaj-q1-2018-results-earnings-call-transcript

In the first quarter, total company revenue was impressively increased by 91% from the previous quarter. This was driven by continued strength of our anchor brands, primarily UriVarx, Apeaz, Vesele and DiabaSens and by our continuously expanding and robust proprietary Beyond Human sales and marketing platform sales channels.

Our gross margin for the first quarter 2018 continued to increase to 81%, which is the highest we've experienced and our loss from operations has decreased by 49%. We now have all the ingredients needed to advance to our goal of profitability.



Ryan Selhorn

Thank you Bassam. For the three months ended March 31, 2018, we recorded net revenue of over $4.5 million, $4.54 million to be exact. Similar to the previous quarter, our core and anchor brands continue to deliver our growth with UriVarx contributing $2 million in net revenue for the three months ended March 31, 2018. We expect this product to generate between $6 million and $8 million in net revenue in 2018. We now have 7 core products or anchor brands, UriVarx, Vesele, Apeaz, Sensum Plus, ProstaGorx, FlutiCare and DiabaSens, which we expect would generate a large portion of the 2018 $18 million expected net revenue.

The first quarter of 2018 was our best quarter-to-date. Net revenue for the first quarter was over $4.5 million, which was an increase of $2.2 million or 91% on a sequential quarter-over-quarter basis as well as the $2.4 million or 109% increase when compared to the first quarter of 2017. This puts us at an annual run-rate of at least $18 million for 2018. The significant and continuous increase in revenues is attributed to three main pillars in our strategy namely one, our expanding Beyond Human sales and marketing platform. Two, our expanding commercial pipeline and three, our geographical expansion of our commercial presence, all of which will be discussed in detail by Dr. Damaj.

We have seen increased results due to our increased presence in new and existing sales channels in 2018 and a growth in revenue from products like UriVarx, Apeaz, and Diabasense and FlutiCare. Our newly established direct mailing sales channels increased to approximately 13% of net revenue in the first quarter of 2018 compared to 5% in 2017 and we expect this new channel to be a significant part of the source of our revenue for the company.

In addition, our online sales channel increased to 7% of net revenue in the first quarter of 2018, compared to 3% in 2017. And revenue from our international customers to 9% of net revenue in the first quarter of 2018, compared to 3% in 2017. The diversification of our revenue streams through our different sales channels in 2018 has enabled us to achieve a significant increase in our revenue from 2017 and we expect our revenue to continue to increase throughout 2018 as we expand our product lines in these three sales channels in addition to our existing print media advertising.

In regards to our international shipments, in the first quarter of 2018, we were able to generate approximately $382,000 in net revenue from international partners. The increase in ex-U.S. sales in the first quarter of 2018 was due to shipments of Zestra and UriVarx to our partners in South Korea, Canada, Europe and the MENA region. We expect our international sales to continue to increase as we have already received orders or expect to receive orders from the following partners, which we expect to ship in the second quarter of 2018.

We received $140,000 order from our partner, Sothema for Zestra and Zestra Glide which is expected to ship in the second quarter of 2018 and we expect an additional order for the new approval received in Algeria, Tunisia, Egypt and other countries in the coming months.

We expect to receive an initial order of $30,000 from our new partner Lavasta Pharma for sales of ProstaGorx in the Middle East and North Africa area in the coming months. We expect to receive an initial order from our partner, Luminarie for sale of Zestra in Australia and New Zealand, which was recently approved for commercialization of medical device for close to $90,000.

We shipped our first orders of 20-kilogram -- bulk of our products to our partners KLabs in India in the second half of 2017 to start local stability as required by the India FDA which is expected to take a few months after which we expect to receive the initial order from our partner. We are anticipating an additional order from our partners in Europe for over $100,000. We are anticipating our first order from our partner in Peru for close to $35,000. We are preparing to ship our first commercial order of Zestra to Indonesia, and we are also awaiting a second order from our partner in South Korea for Zestra.

Sales and marketing expense increased to $3.3 million for the 3 months ended March 31, 2018 compared to $2 million in the preceding quarter and $1.7 million in the first quarter of 2017. Sales and marketing expense as percentage of revenue decreased in the first quarter of 2018 to 73% compared to 77% in 2017.

As we move forward from the launch of our products, we believe that the sales and marketing expense as a percentage of revenue will continue to decrease as our newly launched products from 2017 and 2018 to-date have more sales history and we have sufficient data to better target our ad placements through our sales and marketing platform.

Also as more customers subscribe to our monthly shipment program, which currently represents approximately 30% of our net revenue generated, we believe this type of revenue stream will contribute to better ROI as it does not require any additional sales and marketing costs.

General and administrative expense remained consistent at $1.7 million in the 3-months ended March 31, 2018 compared to the same period in 2017. Loss from operations for the 3-months ended March 31, 2018 was $1.3 million, which included $280,000 of non-cash stock based compensation and amortization. This represents a decrease of $330,000 or 20% from the 3-months ended March 31, 2017. Our loss from operations for the first quarter of 2018 as a percentage of revenues has decreased by 49% from 2017.

As we continue to look at different ways to control operating costs increased ROI in our advertising spend and bring more processes in-house to reduce our operating costs, we believe this trend of decreasing our loss from operations shows our progress to reach our goal of profitability.

Lastly, at March 31, 2018, our cash balances were $4.9 million and our cash used from operations for the 3-months ended March 31, 2018 was $663,000.

Bassam Damaj

Thank you, Ryan. As you have indicated the company has been able to almost double revenues in 2017 and is now on track to double revenues again in 2018, continue to increase its gross margin, increase its cash position, reduce expenses, manage its capital widely, cut losses and increase its drive to profitability to maximize shareholders value. And I would like to start with discussing our Beyond Human sales and marketing platform as it is the main drive for our growth.

Our Beyond Human sales and marketing platform continues to grow and deliver and currently has grown to multiple sales channels, which include one, our print arm consisting of editorials and close to 3,000 newspapers, magazines in the U.S. reaching between 20 million to 30 million potential consumers on a monthly basis. The second arm is our direct mail arm, which consists of reaching between 1 million to 2 million preselected consumers on a monthly basis, based on their purchase history and habit.

And here I am pleased to announce that we have successfully implemented our Beyond Human sales and marketing platform in Canada and we launched UriVarx partnership with Acerus, Apeaz and Xyralid and we are experiencing an outstanding response from Canadian consumers and we look forward to launching all of our non-partnered approved product in Canada under our platform and report back to you the excellent sales results we are experiencing over the second quarter of this year. The success in Canada has led us to start evaluating -- expanding our platform to Europe starting with the United Kingdom.

Thus, as we are moving forward, now we are moving forward to a more balanced sales channel approach, by decreasing our reliance on print media and instead increasing our efforts in direct mailing and in house fulfillment and postcards and tear sheets on online sales and on international sales.

In addition, we are considering other marketing and sales channels that we will actually expand to in order to continue the expansion of our sales channel and continue to profit from our products in to newer sales channels.

The second pillar of our success is attributed really to our valuable pipeline offer. The success of our product is due not just to efficacy of the product but also to our ability to develop and patent them and fend off any generic or infringing products. Thus the company has invested now, a lot of money into our IP, and currently we have 14 patents, 11 patents applications, 48 trademarks, and 54 trademark application, and we will continue actually to push for more patents in our products to keep the protection and more trademarks on our products.

I think it's important to know that once we go out of the U.S. [ph], Europe and Canada, the patents don't actually have much more weight anymore. And it is actually the trademark of the product that have the most weight and this is what actually consumers follow. So we are putting a lot of efforts on our trademarks outside those countries.

And now we're going to actually as I mentioned, we're going to move to the questions that we received from the shareholders by phone or by email. The first quarter is coming out from Gerald, how many short term warrants are left from the last round of financing.

Thank you for the question Gerald, as we disclosed our filings all but approximately 6.7 warrants were exercised from the short term warrants from the FDA financing at $0.15 a share. I think it's I worth noting the fact that the funds that exercise their warrants at the market price which mean they have confidence in the company's performance and they do not want to lose the opportunity to have a long term position in the company that benefits from our continuous growth. And I think we reported that from our close to $5 million in cash position actually we had a $1.9 million in notes and the rest were actually from warrants that were exercised.
Fluticare sales. Questions, we have here multiple shareholders asking the same questions as you asked.is Fluticare performing as the company hold. So one thing which is important for Fluticare. We are very confident that FIuticare will actually become a strong core product for the company this year. So as I mentioned it is taking a little bit longer time because of the pushback we're getting because of the reimbursement that's ability ongoing for the RX side of the business we are hoping will continue to -- will decrease and disappear overtime and then we can get the full potential of that. But definitely this is product for us that's a big priority products, that's a product that we are preparing for the second batch, to order second batch from our partner and we see that actually for us becoming a very strong products adding more to our revenues.

Amazon, the third question is Amazon revenues, what is the percentage of revenues that the company earns from Amazon and what would that percentage to be in the future. I mean our revenues for the first quarter of 21018 from our online businesses were approximately $288,000 or 6.7% of our first quarter net revenue. We are averaging now close to $150,000 and net revenues from our online for the months and that's growing at the rate of 15%. So which would put our Amazon sales at close to $4 million on an annual run rate.

So this is actually becoming a very strong business. and I can tell you that our online Amazon sales online Amazon sales are strongly driven by the sales of FlutiCare. FlutiCare is doing extremely well. It was Amazon's choice on there -- on our online channels. So we are -- the way the really its contributing a lot of from my our online sales.

Earnings guidance 2017, what is your earnings guidance for the year and why? So I mean our Q1 numbers to $4.5 million just speak for themselves. So I mean there is a tremendous growth in the company that we're experience. And we are just assuming we do flat another $4.5 million in this rest of the quarter, we will do at least $18 million in revenue. I mean, as I mentioned before, our goal really is to double and more our revenues on a yearly basis. And I think we've shown that we can do that for two years in a row. And we will actually to pursue that. So, we are very actually confident about our results for that.

And with this -- this is the last questions that I have. And with this I would like to thank you all for your support. As I mentioned before we're extremely excited about this year, I think this is the year that Innovus Pharma will breakout. Our revenues for the first quarter are solid beyond our expectations, I think beyond the market's expectation.

We were continuing to execute and perform to continue to increase our sales quarter-over-quarter and move towards our goal of profitability hopefully very soon.

And with that, thank you all for your support and have a great day.