The Female Health's (FHCO) CEO OB Parrish on Q2 2016 Results - Earnings Call Transcript

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The Female Health Company (FHCO) Q2 2016 Earnings Conference Call April 28, 2016 9:00 AM ET

Executives

OB Parrish - President and Chief Executive Officer

Mitch Steiner - President of Aspen Park Pharmaceuticals

Analysts

Peter Baker - Baker Investor

Peter McMullin - IPC Global

Joshua Horowitz - Palm Global

Eric Weinstein - Chancellor

Joshua Harwood - Palm Global

Operator

Good day, ladies and gentlemen, and welcome to The Female Health Company’s Second Quarter Fiscal Year 2016 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

The statements made on this conference call that are not historical in nature are forward-looking statements based including those regarding the outlook for the Company’s and those regarding proposed merger transaction between FHC and Aspen Park Pharmaceuticals and the integration of our two businesses. Such forward-looking statements reflect the Company's current assessment of the risks and uncertainties related to its business. The Company’s actual results and future developments could differ materially from the results or developments in such forward-looking statements.

Factors that may cause actual results or developments to differ materially includes such things as product demand and market acceptance; the timing of receipt and shipment of large orders, competition, the economic and business environment, and the impact of government pressures, currency risks, capacity, efficiency, and supply constraints, the ability to execute on new business strategies and other risks detailed in the company’s press release, shareholder communications and Securities and Exchange Commission filings. For additional information regarding such risks, the company urges you to review its 10-Q and 10-K SEC filings.

I would now like to turn the conference over to Mr. OB Parrish. Sir, please go ahead.

OB Parrish

Thank you, Joel. Welcome to The Female Health Company’s second quarter 2016 conference call. Michele Greco, our Executive Vice President and CFO, is here with me in our Chicago office.

This morning I’ll make two brief comments regarding the company’s strategic objectives, then I’ll cover the financial results, key factors that may impact future result. Finally, I’ll address the future outlook including the proposed merger with Aspen Park Pharmaceuticals. Mitch Steiner, President of Aspen Park Pharmaceuticals is participating today to assist in answering questions regarding the merger. As usual, when I refer to years, I am referring to the company’s fiscal year, which ends September 30th unless otherwise noted.

In July 2014, the company established two strategic objectives. First, diversifying its product line and second, increasing the market adversity too. The rational for diversification was based on the significant risk of continuing as a single product company, with increasing competition that tenants upon pausing conduit. The proposed merger with Aspen Park Pharmaceuticals will fulfill our diversification objective and provide a remarkable opportunity for current and future investors. I’ll address this in detail and discuss in the outlook.

Second, the board has approved FC2 commercials, consumer marketing program in the U.S. based on review of changes in the U.S. market and funding and submission of the detail creative probing on budget. We believe the proposed merger will enhance the FC2 consumer marketing opportunities.

Turning to financial results, we believe the results from the quarter and first half reflects the volatility of the public sector market and reference to the timing of tenders or shipments of major orders rather than they change basic demand. Unlike 2014, the company was awarded a record tender by Brazil for up to 50 million FC2 units. This resulted in orders of 40 million units, a significant portion was shipped in the second quarter of 2015 bringing a record second quarter and first half.

The primary differences in revenues and results between 2016 and 2015 were due to the comparison of shipments to Brazil. Specifically in the second quarter unit sales totaled 9.2 million, down 56% from the second quarter of 2015. Net revenues for the quarter totaled 4.8 million, a decrease of 57% from 11 million in the prior year quarter.

Gross profit decreased to 55% to 2.8 million from margin of 60% compared with $6.4 million or a margin of 53% in the prior year quarter. Operating expenses decreased $670,000 or 19% to $2.8 million from the prior year quarter.

It’s important to note that during the quarter the company incurred an investment expense with no current return related to the evaluation of the FC2 consumer program and diversification program, totaling $648,683.

Operating income for the quarter totaled $700,425, compared to $2.9 million in the prior year quarter. Net income totaled $350,045, down from $1.7 million in the second quarter of 2015. Earnings per share were breakeven, a decrease from the $0.06 per share in the prior year quarter.

It is important to note that the company remained profitable despite a 56% decrease in revenues and funded investment expenses of $648,683 with no current return. Excluding this investment expenses, operating income totaled $719,108 with an operating margin of 14%.

Operating income excluding the investment expenses as a non-GAAP financial measure, we believe that this non-GAAP financial measure is useful for investors as a supplemental measure to evaluate our overall performance. A reconciliation of this appears along with our press release.

For six months, unit sales totaled $24.5 million, down 25% from the first six months of 2015. Net revenues totaled 13 million, a decrease of 26% from 17.6 million in the prior year period. Gross profit decreased 19% to 8.2 million, growing margin of 63% compared with 10.2 million from a margin of 58% in the prior year period.

Operating expenses for the first six months were 5.8 million, which was flat compared to the prior year. The investment expenses related to the evaluation of an FC2 consumer program and diversification totaled approximately $309,000 and $807,000 respectively, with a total of $1,116,000 million.

Operating income totaled $2.5 million, a decrease of 44% from 4.4 million from the prior period. The operating margin was 19% versus 25% in the first six months of 2015. Excluding the investment expenses of $1,116,000 million operating income was $3.6 million from operating margin of 28%.

Net income decreased 38% to $1,525,408 million with a margin of 12% from $2,472,491million from a margin of 14% in the first six months of 2015. Earnings per diluted share were $0.05 per share, a decrease of 44% from $0.09 per share in the prior year period.

Turning to the cash flow, cash flow from operations for the First half was a negative $1,311,679 million, which included the investment expense of $1.1 million and a negative change in operating assets of $4 million. Our Brazil receivable net of what we owe our distributor totaled $13.4 million.

The company has received significant orders from Brazil over a 10-year period. During this period, we have experienced delays in payments, but never looked lost. To date no defaults have been reported in reference to the current situation of Brazil.

Companies in Brazil and outside of Brazil are continuing to do business with the government. An important reason for this is Brazil has stronger liquidity position due to significant foreign currency reserves.

To date in 2016, the Brazilian economy and currency has actually strengthened. Based on advice we’ve had from consultants and our own opinion, we believe that we will be paid the outstanding receivable.

Turning to tax loss carry forwards, due to the fact that as of December 31, 2015, the evaluation allowance in company's deferred tax assets was fully reversed. The company no longer recognizes tax benefits on its P&L statements.

Although it is important to note that the net operating loss carry forwards will continue to be utilized to reduce cash payments for taxes charged. For the first six months of 2016, the company recorded tax expense of $801,629. However, we paid only $168,220 or just 21% of the total charge reported. This resulted in cash savings of $633,409 for the period.

As of March 31, the company had tax loss carry forwards of $12.6 million in state and $13 million unsettled in the U.S. and $61.9 million in the U.K., which may be used to significantly reduce future cash payments for taxes. The U.K. tax loss carry forwards don’t expire.

There are four key factors that may impact the company’s future results. First, is diversification, the proposed merger with Aspen Park Pharmaceuticals is an important element that will impact the future of the company.

I will cover this in more detail when we get to the outlook section. The second factor is that while we continue to be volatile, we expect the female condom markets to grow in the long-term for two reasons; first, for the prevention of HIV AIDS and other sexually transmitted infections and unintended pregnancies. HIV AIDS remains a leading cause of death among women 15 to 44 years of age worldwide, 50% or more of all people living with and new cases of AIDS are women. In the U.S. one in four, 18 to 24 year olds will contract a sexually transmitted infection annually. Unintended pregnancies caused American - [Audio Interruption]

The current Zika outbreak was first detected in Brazil and is now been reported in more than 40 countries. Women who are or become pregnant and are inspected with the virus may give birth to babies with microcephaly resulted in small head size. It is also been linked to Guillain-Barre Syndrome and potentially may cause other neurological disorders.

Male and female condoms are the only products that can concurrently prevent pregnancy and sexual transmission of the Zika virus. Female condoms are an ideal choice for prevention due to the unique impact of the virus on women. I would like to note that in Brazil, the Ministry of Health recently initiated a statement indicating pregnant women should use condoms, specifically mentioning the female condom to prevent the transmission of Zika.

Due to the accelerated use of female condoms FC2 in Brazil, as a result of Zika, a new tender for female condom is under consideration. Inflation - 800 that they would have to pay during receivables outstanding, in addition the World Bank has considered funding such [indiscernible].

The third factor that will impact the future is a U.S. consumer marketing of FC2. As noted the board approved the U.S. consumer promotion based on the evaluation of recent changes in the market. These changes include the fact that female condoms are now reimbursable under Obamacare, the increased focus on preventing unintended pregnancies and sexually transmitted disease among young women, and increased interest in non-hormonal birth control.

The increased role of social media and marketing, increased U.S. drug retailer interest and contributing to health care, the increased online purchasing such products, it is estimated 33% of male condoms are purchased online. We believe the consumer promotion will compliment public sector promotion and increase the overall awareness and revenue the U.S.

The fourth factor that will impact the future is competition and education and training. The company has head competition in the global public sector for more than three years. The first competitive product was cleared by WHO in 2012, this year two additional competitive products were cleared by WHO.

The outlook marketed by HLL and the women’s condom marketed by PATH. The FHCs FC2 remains the only female condom with FDA approval. I should mention that [indiscernible] has made of latex and unlike FC2 was organic [ph] and more likely to rip and tear. PATH product is made of polyurethane and is significantly more expensive than FC2.

To date the competition hasn’t enabled to obtain a significant market share. The role of education and training is a key factor here. The product specific education and training increases the number of available products substantially used reducing the cost for protective sex act. The public sector is beginning to focus on the cost protective sex act.

The company is the only company currently providing significant education and training for these products. I believe the four factors that I just reviewed will net a positive to the future of the company.

Now, I would like to turn to the outlook. I believe the long-term outlook for FHC is excellent three reasons. First, changes in the U.S. market that provided excellent opportunity for FC2 consumer promotion; second, the fact that the female condoms market will continue to grow. The United Nations joint program on AIDS estimates the essence the beginning of the epidemic condoms have averted 50 million new cases of HIV AIDS and have called for the availability of 20 billion male and female condoms per year by the year 2020.

And there is the impact for the Zika Virus on the market and reflecting those the company has shipped over 500 million female condoms and has an average annual compound unit sales growth rate for 10 years of 16%. Third and most important, is the proposed merger with Aspen Park Pharmaceuticals. The merger is transformative, if completed, it will provide the potential for a long-term growth and enhance shareholder value for five reasons.

First, it results the high potential multiple product portfolio; second, it provides proprietary product positions, therefore subject to the potentially less risky, less costly and expedited 505 (b)(2) FDA regulatory approval process. As a result this provides substantial reality real time revenue and cash flow. Third, the merger of complement and enhance FC2s consumer market opportunities. Fourth, the multiple product portfolios may capitalize on company’s public healthcare status and provide the substantial for increase in investor opportunities and fifth, it brings an experienced and excellent management team for the new company.

The FHC Board approves the merger, after the committee had reviewed more than 100 nutritional opportunities and it completed the scientific financial property, legal and financial due diligence process. My personal support of the merger is based on two things; first, my own experience in the pharmaceutical industry, which is expensive.

For those who may not know at Pfizer I was Divisional VP for pharmaceutical marketing in the US at one time, later I managed to U.S. pharmaceutical visions and then I was EVP of the international position where I was responsible for multiple [indiscernible] countries and pharmaceutical marketing outside of the U.S. Later seriously I was the head of the Global Pharmaceutical Group, involving more than 7,000 people and 44 countries and 25 manufacturing facilities in 15 countries.

My second personal reason is based on my perspective of the opportunity as a significant shareholder.

In summary, I support the fist merger for three reasons that provides a remarkable opportunity to mitigate the risk associated with the single product company. Second, the considerable health side potential of products and development, including products subject to potentially lower risk, 505(b)(2) FDA regulatory approval process. And the third it comes with an experienced management team specifically Mitch Steiner, who had helped to lead the company for the long-term.

As the proposed merger with Aspen Park Pharmaceuticals is completed, we believe FHC will become a high growth company with multiple high potential product and continue to be the female condom market leader. I am enthusiastic and fully support the merger and recommend the support as of all FHC shareholders.

Now we’ll take some questions.

Question-and-Answer Session

Operator

Okay. Ladies and gentlemen at this time we will begin a question-and-answer session [Operator Instructions] The first question comes from Peter Baker from Baker Investor. Please go ahead.

Peter Baker

Thank you. Thank you for taking me questions. As you know the Zika Virus epidemic has been around for probably months now and it appears that based on today’s earnings call that new orders are not really materializing even for the public sector. The revenues reported for the past quarter which is adjusted some other pricing and competition and global issues facing the FC2 beginning to materialize. HLL, an Indian company has the capacity and they are making basically a latex version of FC2 at a cheaper price. Not to mention the other two global competitors out there. It appears that they must be taking some of the orders that are otherwise Female Health Company should be getting. Given these earnings result, frankly I’m very worried that if this merger with Aspen Park does not go through there will be very little left if anything of the Female Health Company. So I just have two questions, where are the new orders for FC2 that are a response to Zika Virus? And other is, how many orders were awarded to HLL and your other comps instead of Female Health Company?

OB Parrish

In reference to your first question, in the public sector it takes a while for them to react and reference the funding for those. For example, Obama proposed that $ 1.9 million be allocated to the Zika Virus. Congress has been looking at it and just recently after spending some time looking at it agreed to provide expedited clearance through the congress. Of that $1.9 million, $335 million is to be allocated to USAId, which purchases products including female condoms male condoms. Other groups have also volunteer to do provide funds, the World Bank, $150 million and the World Bank is considering funding a new tender for Brazil. So while it takes time, I think there will be substantial orders from the, for the Zika Virus.

Secondly, in reference to the competition, well it’s there, one of the competitors has been available since - for the three years and they have nominal orders in terms of any total orders from - on female condoms, certainly was 10% of the total. To date we haven’t seen any HLL orders. That doesn’t mean they won’t receive them, but there are number of issues including the educational and training that are factors on that. I think, certainly we have to take any consideration the aspect of competitors, but I think that female condom will continue to be leading female condoms.

Peter Baker

All right. Well, thank you OB for that and while I understand where you’re coming from, I’m just - it’s just very clear to me that I just - I truly believe that the Female Health Company needs to complete this deal with Aspen Park. Really in order to survive, I mean it just shows how vulnerable the company is with just a single product, but that’s just my opinion.

OB Parrish

I would disagree with this single product.

Peter Baker

Thank you very much.

Operator

The next question comes from Peter McMullin from IPC Global. Please go ahead.

Peter McMullin

Hi, OB, I have got two questions for you today. It seems like mostly your sales are being financed into accounts receivable, is there any chance that trend will change? And second question would be what’s happening with South Africa where you got a portion of the order, are you able to increase you market share on that order?

OB Parrish

Well, in reference to the first question, as I mentioned we believe the Brazil receivable repay and two aspects are the fact that the Brazilians are considering issuing a new tender because of the Zika Virus issue in Brazil. If they do that [indiscernible] they would have to pay us and may be that the Zika Virus issue and this need for additional condoms will actually help us to get paid. And in addition the World Bank has considered funding a condom program in Brazil, if they did that it would not necessarily mean we get paid receivable and we certainly would get paid from World Bank. We’ve had no other problems with other receivables what so ever, we’ve less than 1% bad debts over the last five years.

Peter McMullin

Does that mean that most of the sales in the quarter went to Brazilian?

OB Parrish

This quarter or last quarter?

Peter McMullin

Yep, this quarter

OB Parrish

Somewhat to Brazil with significantly less than before.

Peter McMullin

Okay thanks and South Africa?

OB Parrish

South Africa? That’s a very good question because one of the issues there relates to education and training. Actually one competitive product was distributed there and it wasn’t highly used. And so we were contacted by officials there, they asked to integrated help to provide education and training and the use of the competitive product which we wouldn’t do, we would do it for our product, but it goes to the point I was making Peter that, if you have education and training you may get low rate as the products available. In other words if you distribute a 1000 and only 200 were used, the cost for protected sex have to be significant, if you distribute a 1000 and 800 are use its much less and we just seen an example of that in South Africa.

Peter McMullin

So does that mean your market share for that order is perhaps -

OB Parrish

We have received more than our original allocation was.

Peter McMullin

Thank you.

Operator

The next question comes from [indiscernible]. Please go ahead.

Unidentified Analyst

Hi OB, how are you today?

OB Parrish

Great.

Unidentified Analyst

As you know I was not entirely thrilled when we cut the dividends several years ago, but that’s water under the bridge. So I understand your decision to diversify because it makes sense for public company to have more than just one product. So I’m calling in just to let you know there is a large shareholder with over almost 2.3 million shares that I am very much behind this merger with Aspen Park Pharma and frankly very impressed with the fact that you are able to come up with a partners here that can bring four or five new products instead of just one. That’s - I was afraid of just going to be one, this gives you a lot more many more shots and into specifically large potential market. So congratulations on that front and the question that I have and I am not sure that you are legally even able to say anything about this but assuming the merger goes through can give us a guess of when do you think the first product might make it to market, that’s one question and the other is tax loss carry forward in the UK, do you have a strategy to be able to set up a company over there and maybe even get approvals faster to be able to run it through the UK and use of that tax loss carry forward.

OB Parrish

Well I will answer the second question. Certainly the tax loss carry forward continue to, it will not be loss as a result of the merger with a successful and there maybe a number of opportunities that could be developed to use that tax laws carry forward Steve. Mitch maybe you could answer the question on the timing for the first product.

Mitch Steiner

I will be happy to and Mr. [indiscernible] thank you for calling in and good news is we have been out on the road talking to folks and they share the same sentiment you do about Female Health Company and Aspen Park merger and so we are very, very excited about the potential. You raised a good point, although we have you know five products, the one that is most closest to potential approval is BPH product because essentially it is an extreme 505(b)(2), meaning that the expectations is due one by equivalency study comparing the proprietary new formulation which is a powder to the table or capsule. And so the expectation is that we will do the bio-equivalency study starting the end of this year, beginning of 2017 and then at that point it is quickly has become with FDA and filed the NDA, so the expectations to file NDA in 2017 which is you know next year and then we wait for the FDA which you know 10 months later you are launching a product, it doesn’t require your sales team. So you know that shows you how near term that is and the cost for that BE study is and everything leading to BE studies is about 2.8 million. So that is not a lot of dollars as people like to associate with bio-tech. This is not bio-tech, this is measured products that have a history of efficacy and safety that we can leverage, that somebody else paid the money in time for and how do we turn that into big opportunity that we can take advantage of and our focus which is men’s health and women’s health.

Unidentified Analyst

Did you say you did not a sales force for the -

Mitch Steiner

That’s correct, because it is a different formulation as you can focus on patients that are unable to swallow and this can become what we call it pharmacy switch strategy meaning that the pharmacist can ask the patient that can you swallow tablets or not. And also it turns out there are about GPOs group purchasing organizations that control about 90% of nursing homes and so we focus in long term care first and this can be done contracted with these folks and these position in the nursing homes and the pharmacies can make a decision with patients with stroke Parkinson’s et cetera would benefit from getting their medicines as pattern so they get an efficacious dose versus not, so that would be the first margins. As you know the market is big, I mean the market for [indiscernible] is in the order of 3 plus billion dollars and we are not asking to go out and get 50% market share, 70% of the market share. If we can get 3% to 5% market share dwarflike we are getting revenue wise with the female condom.

OB Parrish

Okay. That also reuses [indiscernible] not only do you have those a little cost very soon, development of the product but you also have lower marketing cost when you go out.

Unidentified Analyst

Yeah all of that is good stuff. Okay thank you.

Mitch Steiner

Thank you.

Operator

The next question comes from Joshua Horowitz from Palm Global. Please go ahead.

Joshua Horowitz

Thank you, Mitch could you review again the math on how you get to the $300 million opportunity for the BPH product.

Mitch Steiner

I will be happy to and that is based on IMS data and so the IMS data that I am referring to is from March of 2014 to March of 2015, looking at the entire class for BPH. And if you look at the entire class the market is about $4.1 billion and if you look at Tamsulosin which is the version that we are making. The new formation is of the active which is Tamsulosin or the generic product and that market according to IMS data is about $3.475 billion. Long term care if you got all of it which is 13.43% total market share it is about $336 million. We are assuming is that we are not going to be a generic price, what we slightly higher than we basically closer to the branded price and that we think we will get significant portion of long term care but the upside would be in the 15% of men over the age of 60 that are unable to swallow and so that is another market. And so if you look at so just 10% of the total market, that would get you to a generic sized market will get you to close to 300 million but we are not going to be a generic price so we think we can be less than that and still get close to that at peak.

Joshua Horowitz

So just to understand, if your price what would your price be, what percentage of Flomax.

Mitch Steiner

Flomax again this is all subject to change based on where we in year and half from now but the assumption is that the market generic price and the branded price for Tamsulosin is closer to $5 and we would take a percentage of that, let’s say 70% and these are individual packs, we will have the own NDC code and we will be on the compendium which means that they are not considered a AB radio generic, this would be a solution to a problem and so rather than be quoted generic it would be 70% of our branded price because it is in new formulation and is a 5-0-5 B2 as supposed to an ANTA.

Joshua Horowitz

Understood thank you.

Mitch Steiner

Thank you.

Joshua Horowitz

I guess I’m just having hard time reconciling if this opportunity is so math of and takes capital to get you know over the goal post, why give away half of your company to get it done.

Mitch Steiner

Because the view is not give away half of our company. If you look at just today versus where we want to be, we want to be a big company. And a big company means you need to have earlier revenue generating products that will fuel the rest of the pipeline. So if it is a one off which is not what we are interested in. We are interested in building a real company. This would be a perfect company to jump start all the other products that we have so we can move towards self-funding which is a different concept and bio-tech it is not self-funding. Bio-tech who out there is just raising money every time you can raise money and dilute the shareholder, this is a different model. And so you hit the exactly the nail on the head and that is we wanted to have a serious revenue product, if it turns out that we are half wrong, with so big market. So I am not looking at where we are today and I am looking at where we want to go.

Joshua Horowitz

Thank you.

Operator

The next question comes from Eric Weinstein from Chancellor. Please go ahead.

Eric Weinstein

Oh, thanks. It is disconnect at least to me between this proceed viability by the Female Health Company as a standalone versus its ability to fund diversification and there are many ways to go buy that classification there is you know, the one way to do what I supposed is to trade some product diversification risk, for product development risk, it seems like we got a lot of that, there are other ways you know you could look beyond life sciences and use the assets to leverage something else that would be more comparable when in the wheel house had think of existing company. But I am trying to understand the disconnect between the procedure ability of the company to success and understand basis right now what’s proceeded value of it and it is ability to fund the development of new drugs. The new drug portfolio, some may work, some may not. It may be 5-0-5 B2 that’s riskier than a bio-tech nutritional sense but in the scheme of risky assets this is still at the very operational ones. So I guess I just can’t really put the pieces together between a decline in company and the decline in company that actually has the ability to fund a large drug portfolio that would still take many years to come to market but may or may not succeed. I just can’t put the two together if you can help with that I appreciate it.

OB Parrish

I will make one comment and let Mitch make one. I think The Female Health Company is a standalone business would continue, but we still have a single product company and we are first in that and we also have a volatility and competition and we have the dependence up on government funding which is volatile for the company is profitable and it does provides some cash flow and with that I think Mitch you might be able to [indiscernible] useful cash and the funding of the development.

Mitch Steiner

Yeah and I have spoken directly with Eric before and I appreciate him taking the time to listen and so to answer that. You are actually right, you know having a female condom there is able to generate cash on a regular basis would be wonderful due to the matter is, it’s a single product company, you are seeing a quarter, this quarter that’s the reason you don’t know when next quarter is going to look like and you look at the past and they are competitors out there. So you can, yeah there is inherent risk here in the US, we still don’t know what’s going to happen. So but with that said you got to believe that if it stays where it is, that and given the cash resources which is via account receivables plus cash, plus potentially credit facility and we are smart about how we spend the money and add people. So in other words we had a headcount of six to seven, not 67 but six or seven individuals that are basically incredibly smart project managers. Is drug development risky? Absolutely, is it less risky in a 505(b)(2) yes, why. Because you are leveraging which already seen with this drug for efficacy and safety from literature or with a partner who has done and spent their money and does it take more years, yes. Some of them will take you know three to five years and some would take 18 months. And then we have in our pipeline of product will take longer than that. But the idea is not to start spending all of the money at first, the idea is to focus on two things, focus on the BPH product which we can file an NDA next year, we shall have the patient data which will hopefully bring enterprise value and the prostate cancer product which once you are in phase one which the goal is to be phase one next year with end points that you can see the drug is working with PSA, you will increase value. I mean today there is no fees putting almost $10 billion bid for a company called Medovation, who did a deal with [indiscernible] in an early phase 2 asset and prostate cancer. And if we got back and look at it wasn’t many years ago. Maybe it is five years, some like that four years. So if you want significant growth, I don’t think there is a disconnect, if you want single product company and follow that along and think that $40 million or $50 million valuation, you are going to be able to get, what kind of product today versus product we invest some money. You know, you have an opportunity first and pick up side. So from our standpoint Aspen Park we look at this as a combined deal where having some resources come in and help us to self-fund and the public markets have the ability as the products do well to be opportunistic if the stock price reflects that.

Eric Weinstein

Yeah I mean there are many ways to approach de-risking product company just when it seems a bit off the deep end for number of reason but just a follow up, sitting there all those well with product development, you know when would you hit breakeven assuming no incremental financing?

Mitch Steiner

So breakeven, so the idea would be that we would file the NDA in 2017 and then in 2018 we think we are making revenue and so hoping we are going to be pretty close to flat or cash positive with the existing product as long as we are careful of the resources. So I think initially we want to be careful and try to show when before start spending money on other opportunities that again take more money. So I think it is part of strategy, the good news is we have access because you have to go buy those assets and you have to collect assets and each asset has value. And so we have a collection of assets and now the question is move the one that is closest to the finish line first and use that to self-fund the rest. So if just The Female Health Company product you won’t be able to do it. If it is Female Health Company product plus the BPH product we are going to be in good shape in short time. That’s the difference between pharmaceutical revenue versus a device or in this case the female condom which is basically device revenue, it is just different.

Eric Weinstein

Okay thank you.

Mitch Steiner

Thank you, appreciate the question.

Operator

The next question comes from [indiscernible]. Please go ahead.

Unidentified Analyst

Yeah, talking about the quarter million shares of the stock, rounded off and over the years and I have been in the brokerage business 48 years and around hedge, market cap value hedge funds for 22 years. You all had a valuation of $80 million and then the deal was announced. Now we have got a valuation of 40 million and of course I’m - I will be voting for this deal and then you are going to be origin with the company that, if we get 55% of the company, what was their valuation on their last raise?

OB Parrish

Mitch you want to answer to that?

Mitch Steiner

Yeah and so we make sure we have the same numbers, I think at the time we announced the deal the price of the stock was $1.74 and as of yesterday the stock was about $1.50. So just

Unidentified Analyst

It was $2.70.

Mitch Steiner

No, $1.70. I know that day well, sorry.

Unidentified Analyst

In March it had a high of $2.75.

Mitch Steiner

I agree with that.

Unidentified Analyst

So people maybe knew about the deal and may have sold -

Mitch Steiner

No, I hope not. That will not be the case. But with that said, the real question you are asking is what is the valuation of the Aspen Park. When we hit publically in our call last time, the last round of financing we had a $100 million valuation. The Female Health Company also did a fairness opinion independent of Aspen Park and independent of The Female Health Company and came up with a valuation close to that. We are taking 8% of a company as supposed to money or cash and the reason we are doing that is because we believe in the future growth of the company and not looking at what the company looks like today, if the company is, whether it looks like today, I don’t think any of us are going to be excited about the stock. I mean you really have to believe by having this engine called the female condom and being able to come into the US and taking our products including PREBOOST which over the counter FDA approved ready to go now and it would bring some incremental sales. So we can see money sooner or rather than later and then all of a sudden have a pipeline of pharmaceutical products with pharmaceutical multiples. So multiples shots on go, so that you can really have some upside first half it has been flat and so that’s the thinking at least from the Aspen Park stand point and I know having spoken with OB that he feels the same. OB, do you want to comment?

OB Parrish

I think it is exactly right. The question is a successful [indiscernible] and I believe the PPH product will come out and perhaps in the 2018, that presently the multiple and that type of product in terms of the impact and their market will be significant on itself. And if you - there was an additional potential of the other products? I think it’s remarkable and that’s, I’m major shareholder that one of the main reason I’m here for.

Mitch Steiner

And the appreciate you, we appreciate—

Unidentified Analyst

And it is said that, [indiscernible] market of two plus two, two plus is a fair situation that you have got one - asset sales in lower conservative ones got a little bizarre and Aspen Park is an area where you can have pretty high multiples with our earnings with all and the way the assets gotten down elevator. One last question where there - was there ever any evaluation done on female health has a - say, if somebody were acquiring the company?

OB Parrish

We certainly haven’t. Looking for this we went through a 100 possibility. We didn’t take care of the table, but we have evaluations done in female health and of course it’s a public company so the evaluation from the market.

Unidentified Analyst

Okay OB. Thank you very much.

Operator

The next question comes from Joshua Harwood from Palm Global. Please go ahead.

Joshua Harwood

Actually the similar question from last caller, but on the other side the coin, Mitch did you look to do anything with Aspen other than growth with female health and I believe less than $ 4 million of total capital even, when - has been and you have turn that into a 10x multiple here. Would you unable to get even higher offers on bench anybody else?

Mitch Steiner

Yeah, so, great question and so, you’re saying we put $ 4 million into end of their-- towards $4 million that’s an unfair statement. We collected before assets of which can go into five indications including an over the counter product, any one of those, can do us $ 4 million evaluation. What we bought to the table is creativity going out and sniffing out after 20 years of experience, opportunities that can be patented and protected that’s why we used our money for. So we created assets, if you find an oil well, does that mean that you spent $2 million dollars, you shouldn’t have the value within the ground, now, and so yes we spent 4 million, where options six months ago, we were considering going out and doing the fund raise, instead we got a phone call from Tovega [ph] partners which is the bank that representing the Female Health Company. And after six months I’m going back in fourth, I has a CEO and President and with our board we had a discussion on this, what if you were able to get a similar cash raise and a product and go public and be able to make one plus one equals 10 or 15, how many steps you stop, so I would always snatches the valuation benefit. It is also a benefit access in the public market from the standpoint of valuing your stock with these opportunities we are able to take these opportunities and to this assets and get out there and explain these assets to the institutions that will buy stock in the combined company. There is going to be a lot of valuation created at this point now The Female Health Company by itself has about 6% institutional coverage that’s small and this whole thing is undervalued and adding whole thing be in female health Company undervalued - valued at putting it together. But if you look it today, then that does not really reflect what we think we’re going to be, we saw there was today just only do a cash grab, we would have taken money and if we are trying to do a grab for the future percentage and we grow it together. And that’s really how we sort about the deal Josh.

Joshua Harwood

Thank you for that.

Operator

[Operator Instructions] Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

OB Parrish

Thank you, Dino. I would like to thank everybody for their participation and all the questions that were asked, they were good questions and I would like to reiterate my support for the merger, I think it will be an outstanding opportunity for the current investors and future investors. I’m enthusiastic and I fully support it. Thanks so much for your participation.

Mitch Steiner

Thank you.

Operator

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