Giving Birth to a Profitable Company (OTC:IVOB)

August 22, 2009

INVO BioScience Inc

(Public, OTC:IVOB)

The following company analysis has been contributed by a StocksHaven Investments affiliate and member, Eric Sebastien. He is an entrepreneur with solid investment experience totalling fifteen years, and specializes in the small cap bio-tech field.

About

INVO BioScience Inc. (INVO Bioscience), formerly Emy’s Salsa Aji Distribution Company, Inc., is engaged in providing its INVOcell technology to help infertile couples have a baby. It has one principal product, the manufacturing and distribution of the INVOcell technology. The Company invoiced its first sales of the INVOcell selling 215 units along with 16 INVO Blocks during the year ended December 31, 2008. Further, it has signed contracts for the purchase of INVOcell devices in various countries, such as Turkey, Peru, Pakistan and Canada. On December 5, 2008, INVO Bioscience completed a reverse merger with Emy’s Salsa AJI Distribution Company, Inc. (Emy’s). In connection with the reverse merger, INVO Bioscience acquired control of Emys.

Target Market

INVOcell is currently priced at $75-225 to distributors in developing countries and $125-300 in Europe and U.S.

For South America:

“These agreements will allow INVO to begin the process of treating over 9 million estimated infertile couples in South and Latin America. INVO Bioscience’s goal is to develop this untapped market and treat 5% of this population over the next 5 years,” said INVO Bioscience CEO Kathleen Karloff.

Using a simple formula to do the calculation: take the number of estimated infertile couples potentially treated with INVOcell (5%), multiply by the average number of attempts which is 3 and the average price sale to distributors in South America (75$ to 225$) lets take the median of this, which turns out to be 150$.

So we now have 5% of 9 000 000 = 450 000 couples

An average of 3 attempts = 450 000 X (3 X 150$) = 20 250 000$

For World Market:

“We are thrilled by the positive response from distributors to assist INVO Bioscience in launching the INVO procedure in South America. The availability of the INVO procedure in both stand-alone centers and existing IVF centers reaffirms that this breakthrough does not compete with IVF, but instead is a new option that will greatly increase access to treatment to the 150 million infertile couples worldwide,” said Karloff.

We can once again apply the simple formula to do the calculations for the entire world market: take the number of estimated infertile couples potentially treated with INVOcell (5%), multiply by the average number of attempts which is 3 and the average price sale to distributors in Europe and U.S (125$ to 300$) lets once again take the median so 212.50$.

We are now left with 5% of 150 000 000 = 7 500 000 couples

At an average of 3 attempts = 7 500 000 X (3 X 212.50$) = 4 781 250 000 $

These are not your eyes deceiving you, that is roughly more than 4 billions$ in revenue.

In fact, these numbers are quite conservative, with only 5% of the market, we don’t incur much risk. Moreover, the first investor of Invo stated few months ago that the market is estimated to be $ 66 B dollars .

“With an addressable global market in excess of $66 billion, limited competition, massive profit margins and a management team that is second to none, Invo Bioscience is the perfect storm in regards to an investment opportunity,” said Esposito of Lionshare.

Presently, there is a market cap of $15 M, well let’s say that’s a really beautiful gift at this price, until investors realize what a gem this company is.

FDA Product Clearance

While IVOB penetrates the infertility markets in Europe, Canada, and select developing countries, the Company has also completed the first step for medical device companies who manufacture Class 2 devices with the filing of a Premarket Notification 510 (k) submission with the FDA. Technically, the FDA does not “approve” Class 1 and 2 medical devices for sale in the U.S. as the Agency issues “clearance” for them to be sold and marketed. IVOB hopes to receive U.S. marketing clearance by 2010 upon completion of its clinical trial.

IVOB as no debt and has had a positive income since Q2; it is a profitable company already, unlike many small cap biotechs presently in the market.
The INVOcell has already received European CE Mark approval and began selling units in late 2008 in select countries outside the United States. INVO Bioscience, Inc. is pursuing U.S. Food and Drug Administration clearance for the INVOcell.

It is important to note that, the Food and Drug Administration does not need to grant approval because INVOcell is a class 2 device, the grant marketing clearance after IVOB meets the 510k submission requirements. The predicate device is the Petri dish. The device is a clean, non toxic, sterile piece of plastic that does not go into the blood stream; it simply fits in an orifice.

Key Infertility Statistics

One in six couples is infertile. In 40 per cent of cases the problem rests with the male, in 40 per cent with the female, ten per cent with both partners, and in a further ten per cent of cases, the cause is unknown.
Fertility problems strike one in three women over 35.
One in 25 males has a low sperm count and one in 35 is sterile.
The chance of conceiving in an IVF cycle is on average around 20 per cent (but varies due to individual circumstances).

Estimated Target Price

IVOB was at 1.80$ few months ago, and this was without the latest developments and the distribution contract signed early in August. The stock should stand at this level again or even more. We should have a market cap of roughly 100 Million$ at least with the FDA 510K coming for early 2010.

For more information and updates on INVO BioScience, see their Investor Relations Presentation, or visit them on Twitter

Author Bio

Eric Sebastien is a 32 year old, French Canadian, IT engineer, well on his way to starting his own company which can be found at, www.klinkoo.com. He is presently in talks with a Venture Capital firm.

Eric has 15 years experience in the stock exchange market, having been through the IT bubble of 1999-2000, he won a lot of money but lost a lot. Since then he has learned a lot, and now invests strictly in the biotech field and only with small caps with great product and high potential.

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Disclosure: Eric has a short position in IVOB

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