Delivra Corp. (TSXV:DVA) is well positioned with its growing revenues and could generate positive cash flow from operations in the near-term
SmallCapPower | January 30, 2018: Delivra Corp. (TSXV:DVA) is a specialty biotechnology company specializing in a transdermal delivery system platform. Its proprietary technology can shuttle pharmaceutical and natural molecules, through the skin, in a targeted specific manner. Some of the major benefits of transdermal therapeutics over traditional pills are that Delivra’s products are fast-acting, improved efficacy and target specific areas of the body (topical cream base). Delivra has a diverse range of natural topical creams with the proprietary transdermal delivery system platform under the LivRelief brand, for conditions such as joint and muscle pain, nerve pain, varicose veins, wound healing, and under the LivSport brand for sports performance. LivRelief products generate more than $5 million in revenue, and are available in brick and mortar shops, such as pharmacies, grocery chains, and independent health food stores across Canada, as well as through its own online website.
Investment Thesis
- Growing demand for products related to chronic pain
- Scope to license patented transdermal delivery technology platform
- Robust and diversified product portfolio
- Untapped market potential in Cannabinoid therapy
Growing demand for products related to chronic pain
Scope for the Company’s product is diverse. According to statistics provided by Health Canada, 1 in 5 Canadians from ages 12-44 suffer from chronic pain, representing a significant unmet medical need to improve treatments for patients. Delivra has significant potential to further penetrate this segment and become a household name in the Canadian market.
Scope to license patented transdermal delivery technology platform
Delivra has a mandate to license its patent-pending proprietary transdermal delivery technology platform to pharmaceutical companies globally, for the repurposing of pharmaceutical molecules transdermally to treat a broad range of conditions, along with licensing its over-the-counter products globally. If Delivra is successful in achieving this, it could open up a new revenue stream. Recently, ARA-Avanti Rx Analytics Inc., now a subsidiary of Nuuvera Inc. (TSXV:NUU), and Delivra entered into a strategic partnership to develop a unique suite of standardized natural and medicinal products for the medical pain-related research, development, and commercialization markets, using hemp.
Robust and diversified product portfolio
Delivra has a diversified Pharmaceutical and Over the Counter (OTC) portfolio with $5 million in annual revenue. The pharmaceutical portfolio has products related to Diabetic wound healing, Inflammatory Diseases, and Cannabis-based therapeutics. The OTC portfolio deals with pain management, varicose veins, and wound-healing products.
Untapped market potential in Cannabinoid therapy
Cannabinoid therapy is a rapidly-emerging field of medicine that is quickly demonstrating its applicability to a range of acute and chronic indications, in particular those related to pain management. Delivra has signed exclusive licensing deals to co-develop a portfolio of pharmaceutical-grade medical products in a mono-dose format. Health Canada approved the GMP-contract manufacturing facility for QA/QC testing. The agreement provides Delivra with double-digit royalties and initial cash payments. It can also be extended to develop Hemp, Terpene and Flavonoid products.
Financial Performance
Revenues came in 47% higher YOY for 3Q ‘17 and 21% for 9M ’17, on the back of continued growth in sales of the Company’s flagship pain and nerve products in Canada. The operating expenses came in 57% lower YoY in 3Q’ 17, and 37% YoY in 9M ‘ 17, due mainly to the reduction in S&M expenses, general and administration costs. As a result, the net losses per share narrowed for both 3Q ‘17 and 9M ‘17 at ($0.01) per share and ($0.03), respectively, from ($0.06) and ($0.11) in the comparable quarters. This financial performance has led us to believe that profitability could be achievable in the not-too-distant future.
Outlook and Valuation
Delivra is well positioned with its growing revenues and could generate positive cash flow from operations in the near-term. Recently, Delivra has been successful in curbing its operating expenses, which is a positive. Importantly, the licensing deals for the patented technology, growing acceptance and demand for cannabinoid therapy could drive its stock price higher in the medium term. Delivra trades at a Price to 2018 Sales multiple of 4.1x.
Company Statistics
- Shares outstanding – 43M
- Market Capitalization – $19.4M
- CEO – Joseph Gabriele
- VP Finance – Pascal Attard
Disclosure: Neither the author nor his/her family own shares in the company mentioned above.
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