Rayno Small Caps Outperform: New Long Idea- Imprimis Pharmaceuticals (IMMY)

Look for Growth in Emerging Small Cap Drug  Stocks

Many stocks were in the red Monday with healthcare a lagging sector down 1%. Many investors await economic data later this week and the mid-December meeting for the FED.  Biotech stocks are also weak today with the (IBB) down almost 2% with large caps underperforming. But biotech especially small cap biopharma did well in November. We are still recovering from September lows in a bear market with a choppy rally through September and October.

  • Sell-off on Monday could be negative sentiment returning from drug pricing concerns OR just profit taking from traders who did well in November.
  • Overall market is choppy and listless and biotech trading volume is a bit on low side.
  • We need to hold upward move in a downward channel:IBB above 330, XBI above 70 near SMA 20.
  • Over YTD and one month the (XBI) small cap weighted ETF beat the (IBB) large cap weighted ETF..
  • Here is a summary of the Rayno Biopharmaceutical Portfolio.

Most of our most recent small cap picks have done well so if you have more appetite for speculation beyond your core life science portfolio emerging small cap growth is the hot space. See our previous articles on biotech ETFs and our favorite XBI.

Here is a summary of our recent small cap focus stocks including Imprimis Pharmaceuticals:

Rayno Small Cap Biopharma

 11/30
Company Ticker Initial Initial Date Current Market Cap
Price Price $M
Array Biopharma ARRY 7.7 5/26/2015 3.96 576
Curis, Inc. CRIS 1.98 10/27/2015 2.74 354.4
Fibrocell Science FCSC 3.7 6/11/2014 5.9 263
Geron Corp. GERN 3.5 10/27/2015 5.1 710.4
GlycoMimetics GLYC 6.74 10/16/2015 6.98 129.5
Ignyta,Inc RXDX 10 4/7/2015 14.7 426.5
Imprimis Pharma IMMY 6.73 11/30/2015 6.73 71.26
Ocera Therap OCRX 3.42 10/27/2015 3.57 76.4

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Imprimus Pharmaceuticals – Customized Novel Medicines

Focused in Ophthalmology, Urology and Sinus Drugs Using Compounding Pharmacies

Today we added a new small cap speculative pick, Imprimis Pharmaceutical (IMMY), an emerging pharmaceutical Company focused on developing and commercializing proprietary compounded, customized drug therapies to physicians and patients in the US. The Company has a portfolio of combination formulations in ophthalmology and urology. Its lead product is TRi-Moxi an anti-inflammatory and anti-bacterial, compounded formulation used as in injection in ocular surgery as well as an eye drop in pre- and post- ocular surgery.

A proprietary aspect of Imprimis formulations is patent pending SSP Technology which allows active pharmaceutical ingredients that ordinarily do not mix to solubilize into a micronized particle suspension and optimized for ophthalmic use as an eye drop or injection. This trade mark “Dropless Therapy” for treatment of surgical infection and inflammation are unique injectable compounded formulations that reduce or eliminate the end for eye drop regimens that can be confusing to patients or even cause compliance issues. Dropless Therapy TM could provide potential savings to Medicare, Medicaid and patients upwards of $13B. Over 400 ophthalmologists are prescribing the product since the launch in 2014. Recent acquisitions and new facilities will position the Company for growth in January 2016.

In 2015 a proprietary line of eye drops were launched called “Less Drops” which require up to 50% fewer drops with potential savings of 75% compared to current traditional post surgical eye drop treatments. Four treatments will be initially available as combination topical eyedrops for patients following LASIK, cataract and ocular surgeries.

The potential global market for ophthalmic drugs is expected to reach $21.6B by 2018. Cataract surgery is one of the most common surgical procedures with 22 million globally and 3.2M in the US. Also 43 million Americans are candidates for vision correction with refractive surgery. 700,000 LASIK procedures are performed in the US.

The Company also has products in urology, sinus and integrative medicine.

Financial Summary

Market Cap $65M, Price $6.73, 52 Week Range $4.94-8.79

Income Statement

Third Quarter Revenues were $2.683M compared to $0.4 M for the same period in 2014. EBIDTA was $(2.4)M or (0.25) EPS. Cash position was $6.7M not including recent financings. 2015 Revenue is expected to be in the range of $9-11M. Two analysts expect revenue to grow to the $18-$20M level in 2016.

The Company has funding through debt and equity financing which should carry them through  2016 assuming the sales estimates are achieved.

Institutions own 17.9% of the stock.

Caution: small cap thinly traded stocks are quite volatile and can be difficult to trade.

Disclosure: long ARRY, FCSC, IMMY, RXDX.

 

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