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This is not your typical biotech story. This is not a company waiting for a phase three study or an FDA decision in order to become profitable. This is now a commercial story with a company that is being very aggressive in their pursuit of additional revenues and a solid balance sheet.

For me, this isn't an extreme trade opportunity. It's an extreme investment reality.

After interviewing Hoji Alimi, the CEO and founder of Oculus Innovative Sciences (NASDAQ:OCLS) three days ago, he made it abundantly clear to me that armed with their latest FDA approval, they have moved to the next stage.

The "magic" of the product captured the attention of the investment community and speculators moved in. Shares traded as high as $11 in 2007 and in the $4 range as recently as last June.

Scientific studies showed time and again that their product has the ability to eradicate bacteria, spores and viruses but it's the safety of the product that makes it fascinating. One can put it anywhere on one's body and it will go to work without causing harm to living tissue or cells.

The techology has been tested on more than 1 million patients world wide and at least 28 clinical studies have been conducted. The results have always been consistent in showing safety and efficacy. Thousands of doctors who use the product on their patients agree.

After being vilified by one particular writer for not having the appropriate FDA clearance to legally speak about their claims in the U.S., the company can now speak more openly about the anti-microbial effectiveness of their Microcyn® Skin and Wound Cleanser product.

The next product that is coming to the market is Oculus' Microcyn Skin & Wound HydroGel which is a medical insurance reimbursable product. That makes product much easier to adapt from a financial standpoint where hospitals, medical facilities and healthcare providers are concerned. It also means additional and steady revenue streams for the company.

Oculus is also currently sampling the new professional Microcyn Skin & Wound HydroGel formulation to U.S. medical professionals.

"Hospitals are running a business, so they're looking for technologies that are not only going to protect and treat their patients, but also these technologies have to make sense financially," explains Alimi. "When a product is reimbursable, it means that the government and states are willing to pay for either a portion or the full amount of the treatment. For biotech companies to be able to achieve that status for a product is very important- especially in the U.S. That makes the HydroGel formulation important to us. Not only that, but it also gives us two separate products that can be used by patients and medical professionals... You can clean with the liquid and then you can protect the wound by applying the gel."

The products are approved for both the OTC (Over the Counter) and RX (Hospital) markets.

The company is in serious discussion with several partners to use their distribution platforms in order to get the product onto shelves all over the U.S., and announcements should follow in the near term.

The OTC version of the HydroGel product will be available to consumers beginning October 2009.

Until now, most of the company's revenue has come from Mexico, where they move an average of over 35,000 units a month (approximately $5 to $6 million in revenue per year from just sales south of the border).

Using the market and usage indication data from that market, the company is preparing plans for expansion into Europe and China as well. That makes an investment in this company quite an interesting proposal.

Especially as investors consider the potential revenues which may come from the new additional sales in the U.S., and beyond. And that's a point not missed by Alimi.

"Look at the population of China, for example. That's a population ten times the size of Mexico. We have an approval. We have a partnership with the largest drug company in China."

In addition to all the products for human use, earlier this year, the company announced that it had entered into a definitive agreement with a strategic partner in the veterinary space., VetCure Inc.

VetCure and its affiliates made a $3 million investment in return for the exclusive rights to distribute and sell the company's Vetericyn Wound Care products for animals in the United States

All of those efforts were made with a single goal on record.

"The company is looking at cash break-even by March of 2010 followed by plans for earnings per share after that," says Alimi.

What makes this opportunity really resonate for long term investors is the fact that the product has potential in ophthalmology, dermatology and in upper respiratory applications. Each of those are multi-billion dollar markets and the company is fully aware of that potential. They are looking at raising money as effectively as possible in order to take advantage of those opportunities and have been very open and transparent about their plans with investors.

"The newly raised funds aren't going to be used for survival. They are going to be used specifically for the development of additional formulations that can be moved into commercialization."

Disclosure: I am now long OCLS

Source: Oculus's New Product Can Tap into Several Billion Dollar Markets