Coming from the OTC Markets, Cure Pharmaceutical Holding will sell shares at the NASDAQ Capital Market under the symbol “CURR.” Network 1 Financial Securities is acting as the sole book-running manager. The transaction seems an opportunity to talk about this unknown name.
Established in 2011, the company researches and manufactures novel dosage forms to improve drug safety, efficacy, and patient adherence. The company casts its business activity with the following words in the S-1 form:
“Our mission is to improve lives by redefining how medications are delivered and experienced. Our business strategy is to develop products using our proprietary technology, license the product rights to partners responsible for clinical development, regulatory approval, marketing and sales and retain exclusive manufacturing rights.” Source: S-1
With shares being sold in the Nasdaq, the IPO could represent a good opportunity for Cure Pharmaceuticals. The transaction would mean not only more visibility for the products of Cure, but also more liquidity. Selling new equity should be easier from now on.
Having said that, Cure does not seem in great financial shape. In the nine months ended September 30, 2018, Cure reported revenues of $0.349 million, way better than $0.145 million reported in 2017. However, with total expenses of $6.5 million, the operating losses seem very significant. The net loss from operations was equal to $6.4 million, which is approximately the same as in 2017.
Cure will launch many new products from 2019 to 2022. Investors will be expecting the revenues from these new products, which could be a catalyst for the stock price. With that, the market should check if the company is able to report profitable income from operations. As of today, the products being sold are not returning profits to shareholders. It is the most detrimental feature of Cure Pharmaceuticals.
Regarding the financial shape, the picture is not better. In December 2018, the company has more liabilities than assets, which the market should not enjoy. After the IPO, Cure expects to have approximately $10 million in cash, which it expects to use for manufacturing, development, and designing of new products. The company expects the net proceeds from the offering to allow it to fund operations for up to 18 months.
After the sale of 2 million new shares, Cure expects to have approximately 28 million shares excluding warrants and the conversion of other convertible securities. At $6, the company expects to have a market capitalization of $168 million, which seems quite a bit. As of today, the company is not even making $1 million in revenues, so the market may have certain difficulties in explaining such a high valuation.
Disclosure: We hold no position in Cure Pharmaceutical Holding either long or short and we have not been compensated for this article.