Oculus Innovative Sciences -- Q&A for BioMedReports Print
By Staff and Wire Reports   
Tuesday, 20 August 2013 22:31
BioMedReports sat down with CEO Jim Schutz and asked him about Oculus Innovative Sciences.

Q:  Oculus has seemed a company with enormous potential in light of its innovative Microcyn® antimicrobial technology, but yet has apparently disappointed investors in the past.  As of February of this year, you’ve taken over as CEO.  So the street wants to know, what are you going differently at Oculus so as to realize the company’s potential?

A:  Great question and probably the one I been asked most often since I’ve become CEO.  This answer is best framed in the context of the five major initiatives that the senior management team and I crafted in February as part of our transition plan.

The first was the creation of a separate, standalone company, Ruthigen, to focus on our new surgical drug candidate, RUT58-60.  We have a seasoned management team in charge and they are moving forward with a planned initial public offering having publicly filed their form S1-A on August 8.  Biotech IPOs, at the moment, seem especially strong.  As of last week, the 116 IPOs in 2013 have raised $25.2 billion and produced an average return of 31%. There have been 67 IPOs in the past 90 days, with total proceeds of $12.4 billion and an average return of 29%. The active IPO pipeline includes 100 companies looking to raise $32 billion.

We obviously can’t make any promises on timing or valuation of a Ruthigen IPO.   But as progress is made and it is appropriate, the market will be updated.   

I believe our second initiative addresses your question straight on.  In February, we deployed a strategic plan for Oculus future growth, which at its core includes a key mandate to control our expenses.  I will repeat a simple mantra, which our employees hear from me on a daily basis.  It is central to our ability to continue to grow revenues and become profitable at the earliest opportunity, thus:  1) New Products, 2) New Partners, and 3) New Territories.  Today, with over 100 product SKUs in 27 countries, all being marketed by partners and distributors, this is our roadmap to both increased revenues and expense control.  On nearly a weekly basis, we are expanding the SKU, partner/distributor and territorial count.  

Q:  But I have read that you’re also developing your own U.S. sales team?  How does this fit into your strategy?

A:  Actually, that is the third initiative in our strategy.  The building of our own U.S. sales team, which is to grow organically as it demonstrates return on investment, provides us with a cost-efficient U.S. alternative to partnering.  With a multi-disciplinary approach to sales—initially calling upon the advanced wound management, women’s health and diabetic markets—this team, now at 15 full-time salespeople, provides us the agility to move quickly relative to new market opportunities as our R&D team develops new products and new indications.  As well, it also provides us with a fallback position in the event a distributor or partner falls short of expectations.  We can rapidly add new products to our sales team’s bag and new call points to their rolodex without the long lead times sometimes required in a partnered situation.  

Q:  You mention the development of new products by your R&D team, which to date appear to all be based upon the Microcyn® Technology.  Do you have any plans for technologies beyond Microcyn?

A:  Absolutely.  When I took over as CEO in February, we began querying banks, universities, incubators and VCs for interesting new products that might fit into our U.S. sales force portfolio, as well as perhaps those of our international partners.  The response has been most positive.  We’ve examined a number of new opportunities.  Granted, several were too large, some not a good fit, but for a company our size we’ve been presented with some surprising and innovative opportunities.  I would simply say stay tuned.

And this actually dovetails nicely with the fourth initiative in our strategic plan.  Our board invited our former CEO and founder, Hoji Alimi, to operate our drug subsidiary, Ruthigen —which taps into his passion and expertise in R&D, clinical development and regulatory.  And on the Oculus side, they felt it was time that we transition our corporate focus from that of a visionary scientist to a more commercially focused CEO.  For those who know me, my background is in product licensing —both in-licensing and out —and mergers and acquisitions.  That is my passion and background, so stay tuned for more to come.

Q:  I have to ask the question.  Some shareholders have complained that in the past management salaries appeared high for a company that’s not yet profitable.  How are you addressing that?

A:  I understand our shareholders’ concerns.  And that is the fifth plank in our new strategy.  In June I took steps to right-size our management compensation program, including taking a voluntary salary cut myself.  Our intent is to reward our team and ourselves—handsomely we hope —but based upon the company’s performance and only after our shareholders realize the returns they expect and deserve.  

Q:  Can you identify upcoming projects and milestones that these shareholders can look forward to?

A:  I’ve already mentioned the Ruthigen opportunity as a near-term milestone.  I believe their execution on an IPO will bring significant short-term value to Oculus in the form of upfront cash as well as the potential for an increased Oculus stock price.

Second, our partners in Latin America, More Pharma, have been very successful in taking on the Microdacyn® product line with unit growth that has averaged over 50% over the last three quarters as compared to last year.  They have been—and continue to be—highly proactive in terms of expanding our territorial footprint, securing regulatory approvals and commercialization in Latin American countries where we previously didn’t have a presence.

Third, we are looking forward to an FDA clearance for our new scar treatment hydrogel, probably sometime in October of this year and then its subsequent commercialization by our dermatology partner, Quinnova Pharmaceuticals.  Quinnova has been a major factor in our continuing growth as evidenced by their success in commercializing our Microcyn-based atopic dermatitis hydrogel in the U.S. dermatology market.    

Finally, we anticipate our international sales, especially in Europe, to show very solid growth prior to the end of our fiscal year (March 31, 2014) as we add both new product SKUs and partners in this region.

Q:  Anything else you’d like to share with our readers?

A:  As I’ve identified, Oculus has an exciting number of irons in the fire.  This is truly a year of transition for our company.  Transitions can be tricky and change simply for change sake is not always productive.  But I believe our plan of change is based upon an intelligent, well-conceived focus that will evolve us from a company in transition to a company focused on executing a solid plan.   Not only expanding upon our Microcyn® Technology platform, but also moving along a path of diversification as we look to expand our technology portfolio.  And doing so in a manner that is financially prudent, aggressively growing the top line, but always with an eye on our expenses and sensitivity to our shareholders’ desire for nearer-term profitability.

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