With $19.5 Million in Coffers from Asset Sale, Son

REDONDO BEACH, CA--(Marketwired - Jan 26, 2017) - SECFilings.com, a leading financial news and information portal offering free real time public company filing alerts, announces the publication of an article examining Sonoma Pharmaceuticals' ( NASDAQ : SNOA ) recent sale of Latin American and Caribbean assets, the company's resultant cash position, and the way forward toward breakeven.

Roughly two years into their turnaround plan, Sonoma Pharmaceuticals ended October with perhaps the most substantive move to date to meet its initial goal of commercial breakeven. The company said it sold its Latin American and Caribbean Microdacyn-related assets to Invekra S.A.P.I. de C.V. for $19.5 million plus a decade-worth of royalties. Invekra is the holding company for Laboratorios Sanfer, the Latin American distribution partner of Sonoma.

When Sonoma embarked on righting the ship late in 2014, selling off its stake in Ruthigen to Pulmatrix, changing leadership and revamping the sales model, the cornerstone of the game plan was to focus on the lucrative U.S. dermatology market. Instead of relying on partners to sell its products domestically, Sonoma introduced a small sales force of its own and spelled out intentions of continuously growing the sales team and adding new products to their sales bag.

The company is looking to get a bigger share of the ~$13 billion U.S. market that is comprised of about 14,000 dermatologists working at around 8,000 practices. Sonoma has been crystal clear in its multi-prong approach to grow its footprint in its core market, namely through a larger sales force, slow and steady prices increases, introducing at least four new products each year and using cash from non-core markets to build the higher-margin U.S. derm business.

Sonoma management hasn't wavered in its commitment or approach to greater market capture in America. After basically stripping U.S. sales to nothing to reboot the business model two years ago, product revenue during the latest quarter improved 74% from the year earlier quarter to $1.4 million. Sales have been bolstered by the launch of eight new products and a sales team that started with just a handful of people expanding to 22 seasoned industry vets.

The promise of Sonoma has been to reach the tipping point where product sales outweigh costs associated with building an in-house sales force and launching new products. This process can only be expedited with cash, which can be quite difficult to come by for a small specialty pharma, especially with a broad negative bias towards the healthcare sector in general for the last year. Sonoma previously guided that it would need another $6-$8 million to achieve commercial breakeven.

The sale of the Latin American assets not only relieves the company of the burden of trying to grow sales in a difficult market climate, but also provides the capital necessary for Sonoma to reach breakeven. Importantly, it was done in a non-dilutive fashion, without impeding new product development, launches or expansion of the sales team.

Please follow the link to read the full article: http://analysis.secfilings.com/articles/147-w...-breakeven

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