Oculus Innovative Sciences Inc. has a market cap of $50.9 million; its shares were traded at around $1.94 with and P/S ratio of 6.9. OCLS is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:In the fourth quarter of 2007, we completed a Phase II randomized clinical trial, which was designed to evaluate the effectiveness of Microcyn in mildly infected diabetic foot ulcers with the primary endpoint of clinical cure or improvement in signs and symptoms of infection according to guidelines of Infectious Disease Society of America. We used 15 clinical sites and enrolled 48 evaluable patients in three arms, using Microcyn alone, Microcyn plus an oral antibiotic, and saline plus an oral antibiotic. We announced the results of our Phase II trial in March 2008. In the clinically evaluable population of the study, the clinical success rate at visit four (test of cure) for patients treated with Microcyn alone was 93.3% compared to 56.3% for the Levofloxacin plus saline-treated patients. This study was not statistically powered, but the high clinical success rate (93.3%) and the p-value (0.033) would suggest the difference is meaningfully positive for the Microcyn-treated patients. Also, for this set of data, the 95.0% confidence interval for the Microcyn-only arm ranged from 80.7% to 100.0% while the 95.0% confidence interval for the Levofloxacin and saline arm ranged from 31.9% to 80.6%; the confidence intervals do not overlap, thus indicating a favorable clinical success for Microcyn compared to Levofloxacin. At visit three (end of treatment) the clinical success rate for patients treated with Microcyn alone was 77.8% compared to 61.1% for the Levofloxacin plus saline-treated patients.
Revenue in Mexico decreased 17% from the prior year period with unusually high sales last year, caused by the swine flu epidemic in Mexico. Unit sales of our 240-milliliter presentation, which is primarily sold to pharmacies in Mexico, decreased 40% from the prior year to a monthly average of 34,195 units compared to 56,692 in the same period last year. Sales to hospitals increased 8% with price increases offsetting a decline in units sold. We believe that during the quarter ended June 30, 2009, the swine flu epidemic in Mexico resulted in sales of $300,000 to $350,000 higher than normal.
We reported gross profit from our Microcyn products business of $1,349,000, or 66% of product revenues, during the three months ended June 30, 2010, compared to a gross profit of $1,040,000, or 66%, in the prior year period. The flat gross margins represent higher margins in U.S. and Europe and Rest of World, offset by lower gross margins in Mexico. The higher margins in the U.S. are due to improved product mix for certain U.S. sales. Mexico s margins were 73% during the quarter ended June 30, 2010, compared to 82% in the prior year period due to the high volume last year caused by the swine flu epidemic.
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