Reverse Merger of
Substantial Unrealized Shareholder Value
November 17, 2020 -- InvestorsHub NewsWire -- via BioResearch Alert
Biocogency with $73
million 2019 sales recently acquired majority control and merged
all operations into Rafarma Pharmaceuticals
There was no dilution to
Rafarma shareholders and all operations and assets of both
companies will be combined and reported under the ticker
The merger increased
Rafarma Pharmaceuticals 2019 revenues from $11.4 million to $84
Elite accounting firm,
Soldinger is retained
to perform audited financials
industrialist, Ilya Shpurov is now Chairman of the Board of Rafarma
- With 2019 combined sales
of $84 million, current market cap of $131 million, extraordinary
strong growth, and share price of $1.69, market comps point to
share price valuation several multiples higher than current
Many OTC stocks
are easily overlooked because they don't get the coverage of peers
traded on national exchanges and consequently very few investors
have the opportunity to know about them. A perfect example is the
recent closing of a reverse merger increasing sales by over 700%
and adding sizable international
operations of private Biocogency
RAFA) where the RAFA share price has not yet reflected the new
On October 19,
2020, the merger of Biocogency
announced and went unnoticed.
important metrics to determine share valuations have soared as a
result of the merger, the share price has not
up reflecting the new increased valuations
simply because nobody knows about it yet. As word is
soon, the share price is expected
to begin climbing to more fair and reasonable market
valuations that could exceed
Inc., a multi-product pharmaceutical company, produces and
sells cannabis health-related
products and specialty pharmaceuticals. The company
formerly known as
Johnston Acquisition Corp. changed its name to
Inc. and is based in Sandy, Utah with
a manufacturing and distribution facility in Russia.
largest Russian chemical and pharmaceutical production company with
more than 50 years of experience in the production of drugs that
meet all national and international quality standards.
The Company helps
meet the growing needs of health care for high-quality, effective
and safe generic pharmaceuticals as well as development and
production of innovative pharmaceutical
products. Production systems with a strong emphasis on safety are
carried out through a coordinated interaction of
control department, commercial department,
logistics service, and scientific information department
rich history is
not the most important thing in the modern pharmaceutical industry.
To keep the quality of
products on a permanently high level, a program of production
modernization is being realized: investments in the company include
new industrial lines, engineering systems and control systems, as
well as new pharmaceutical products.
PJSC "Kraspharma", which are not inferior in
clinical efficacy to the original, but sold at affordable prices,
have won the trust of both doctors and patients.
"Kraspharma" is the Eastern Europe and
Russia undisputed leader in the production
drugs in injectable forms;
other pharmacological groups.
Most of the drugs
produced are included in Vital and Essential Drugs List (VED)
approved by the Government of the Russian Federation.
The products of
PJSC "Kraspharma" are sold in Russia, Eastern
Europe, Central Asia and in the countries of the Asia-Pacific
transformative merger starts by restating Rafarma 2019 sales from $11.4 million
to $84 million and delivers impressive growth rates
Russia-based drug companies
Kraspharma and industrial firm
Slavich. Bebig is focused on developing
therapies and diagnostics for cancer care in the Russian markets,
including supplying microsources
for the treatment
of prostate cancer using low-dose brachytherapy.
Russia's largest chemical and pharmaceutical production company
(and crown jewel of the merger), and Slavich, a manufacturer of a variety
of products including packaging goods, materials for
microelectronics and photo materials, are both steeped in corporate
history going back half a century or more in Russia.
leadership committed to growing value as measured by the fact the
deal was structured to be non-dilutive to existing RAFA
shareholders. To that point,
Shpurov has assumed the position of
Chairman of the Board, bringing decades of entrepreneurial – and
biotech – success to RAFA.
it for RAFA? An Immediate Spike in Revenue and Profits
is a game changer
for RAFA operations and the top and bottom lines. Consider that in
2019, RAFA generated revenue of approximately
$11.4 million and gross profit of $3.4
million. In the latest quarter, ended July 31, 2020,
$5.3 million and gross profit of $3.1
million, according to filings with OTC Markets Group.
Those results are
going to get an immediate shot of adrenaline.
2019, the Biocogency
unaudited consolidated earnings of $73 million and gross profits of
$17 million. As a course of becoming fully reporting and planning
to uplist, the financial results are
being audited and adjusted to meet GAAP standards.
Using the results
from 2019, it is easy to extrapolate pro forma revenue of $84.4
million and gross profit of $20.3 million for the combined company.
It is those type of financials that will underpin a move to the
Nasdaq or NYSE.
More on how the
price to sales ratio stacks up to industry comps are discussed
here. Several Pharmaceutical market
comps point to Rafarma share prices that are many
multiples higher than the current price of $1.69.
When it comes to
value, it certainly bears mentioning the investments that
has put into its
pipeline and platforms since 2012, which management pegs at more
than $120.0 million. Much of this investment has been directed
by Shpurov since he bought the
outbreak of the global financial collapse in 2008 for the purpose
of restoring and expanding production volumes post-recession while
establishing a high-tech GMP pharmaceutical manufacturer in
accomplished. Today, Kraspharma
is a leading
producer of wide swath of generic drugs and pharma products
spanning antibiotics, blood substitutes, infusion solutions,
tuberculosis and preparations for other pharmacological groups.
Sales channels extend throughout Russia, Eastern Europe and the
The plan is for
vertical growth by expanding the existing channels while leveraging
RAFA relationships for horizontal growth through entering the
lucrative North American markets.
Russia alone can be a company maker. A huge net importer of
medicine, the Russian government is pushing for national security
in the supply chain as outlined in the Pharma 2030 Strategy. With
that in mind, Statista
forecasts the Russian pharmaceutical
industry will grow 147% between 2017 and 2030.
During Q1, the
Russian pharma market surged 125% year-over-year to about 320
billion Russian rubles (US$4.2 billion). Generic drugs typically
dominate the prescription market,
the category in 2017, meaning Kraspharma
is in a strong
Given the sheer
volume of people, Asia is another tremendous market. The Rx market
in China alone is forecast to reach
$160 billion by 2022, highlighting the
market opportunity. With respect to the Asian drug development
compound annual growth to reach
$62.46 billion by 2026.
Still, the U.S.
is the Holy Grail as the biggest pharmaceutical market in the
world, weighing in at a whopping
$484.4 billion in 2018.
With the reverse
merger now closed, the newly created Rafarma Pharmaceuticals that now
boasts fast-growing operations well in excess of $100 million for
2019 is decidedly undervalued when compared to industry valuations
for similar companies. Management plans for uplisting and higher investor awareness
programs are soon in the future which will help bring the
the forefront resulting in substantially higher prices and trading
The current price
has not yet appreciated to reflect the newly increased sales and
valuations and therefore presents an opportunity to astute
investors who act now before the story becomes more commonly