LON:IDP | Innovaderma - Not Delivering On Marketing Spiel

8th Mar '18 by Dearg Doom

5 comments 3059 reads

Innovaderma (LON:IDP)

Share price: 143p (-24% today)

Bid/Offer 141p/145p

Market cap: £17.2.m Normal Market Size 2,000

About The Company

The company provides anti-ageing, body contouring, hair loss treatment and wellbeing products. The two main products are Skinny Tan for self-tanning and more recently Roots for hair loss treatment. Skinny Tan is the star peformer and Roots is their next promising product among their brands.

Trading Statement released at 10:00 a.m. March 8th, 2018

https://www.investegate.co.uk/...

The late morning release of Trading Statement certainly gets investors annoyed. In any case, the company's revenue will grow but at a slower rate than previously stated, due to it main customer, the retailer Superdrug reducing the size of their order. The company's 2nd main product is their Roots haircare range which apparently is growing revenue very fast.

second half year to outperform the first half significantly, however, revenue growth for the year will now be less than anticipated at the time of the interim results.

lower than expected orders placed by Superdrug for Skinny Tan

Roots, the Company's haircare range continues to deliver strong growth

The Group expects revenues to be substantially higher than last year. The profit before tax is now expected to be similar to FY17 due to the significant investment made across the business over the last six months.

Interim Results 15th February, 2018

https://www.investegate.co.uk/...

Revenue grew a respectable amount at the interim stage by 31%, but revenue growth rate from today's trading statement has since declined.

Operational Highlights 15th February 2018.

· Very successful launch of the new hair loss treatment and hair care brand, Roots Double Effect

· Successful launch of the men's skincare brand Charles + Lee into Australia's largest department

· Skinny Tan brand's transition from self-tanning into a beauty brand progressed further with the launch of multiple new brand and product extensions

So much positive news in the operational highlights would have enticed some serious investors.

Share Price Chart

Following the 50-day moving average (green line) would have helped some investors get out of the stock, but then again what about the mid-January 2018 breakout above…

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nicobos

1st May '18

Smiling dick (yes I didn't make that up!), a product for premature ejaculation has just been launched in the US and Australia and FDA approved.

Appears to be quite a unique product (from the marketing spiel) and those are very large markets.

Shares are flying and could go a lot higher given the small market cap of Innovaderma (LON:IDP) (vs perception of the opportunity).

I have absolutely no idea what the value of this product is and pricing, margins, expected profits etc so any views greatly appreciated. Will be very interesting to see what the brokers forecast as could be a catalyst for re-rating of the shares.

Dearg Doom

2nd May '18

Innovaderma #IDP

Share Price 166.5p

Bid/Offer 166p/167p NMS 2,000

RNS news about Prolong product (Premature Ejaculation Medical Device) was already known in January 2018. The company not known normally for missing a marketing opportunity missed it. The company saw Prolong in February 2018 as only giving incremental revenue. No mention of transformational product compared to its tanning products offered.

The RNS released 3:42 p.m. yesterday changed all that. The share price jump by circa 50%.

Today, even after yesterday's steep rise, the share price continues to find support on speculation. The company's market cap is small and Prolong could be a game changer for a marketing driven company for this and its other products. That's the way at least the company will play it from now on.

Some purely academic additional research threw up this information. Innovaderma acquires IP rights to Prolong for £1million plus royalty commitment.

Chance here to meet Richard in the company's promotional video. Smiling Dick - Company Promotional Video

Given the relatively small size of market cap. I would expect any newsflow speculation will continue to boost the share price upwards. The share price had been headed towards 90p as stated in original article. All changed now!

The company has always talked up prospects in the past. The shares were above 400p back in July 2017.

Expect additional funds to be raised to fuel marketing campaigns and spiel etc.

Regards

@MyDeargDoom

PS (No current position held.)

pgs501

Hi nicobos,

Thanks for pointing me to this RNS yesterday. I had a look at the new website last night and I must say I was impressed. This is a very large market however there is a huge social stigma to get past to link this prolong product to potential customers. Getting past someone's feeling of shame (I do not use that term lightly, I think it is probably the best way to describe such a persons feelings about premature ejaculation) to sell them a product has to be done very carefully indeed.

The positives from the website are:

- A name that is dead easy to remember. If you see an advert somewhere in public it is not like you will need to note down the name of the website whilst in public.
- They managed to turn what is often a very difficult to talk about topic into something that was normal and kind of funny (their use of emoji's and innuendo was genuinely clever and removed a lot of awkwardness of looking around such a website).
- It was also at the same time very informative and walked potential customers through the process (a 6 week course)
- They made their USP's really clear: only FDA approved on the market, scientific study backing this product, no visits to doctors, complete the course and you should not need to keep doing it (you would be "cured")
- Very much an online store. You would not need to go into a physical shop and ask a shop assistant or anything. I think a lot of potential customers would not be keen to face such an interaction and as such would not otherwise buy.

I do feel that if this website is followed up with some intelligent advertising to drive traffic to it they will make sales. The point made in the RNS that 1:3 men in Australia & 1:2 men in the US are affected by this shows that if this gains any kind of traction it could be seriously valuable.

One thing that really surprised me is that they are pricing this at $300, and I did feel that will turn many people away when first looking at it. However on further thought I think this would be one of the least price sensitive customer groups out there; these are men (and their partners) who would pay potentially anything to stop this problem which will have seriously affected their confidence throughout their life. I think these guys would pay even more if they believe it would work. In addition to pay once and "fix" the problem would not look so expensive compared to a lifetime of pills & sprays.

From a valuation perspective I think this product is binary, it will either become worth multiple times the current market cap of Innovaderma (LON:IDP) or it will just not take off and be worth next to nothing. From a company valuation perspective you do have a floor due to the rest of the business: if we take Dearg's analysis above as a fair value (caveats and all) then even if this product is worth nothing we still have a floor of 90p per share. In addition having the rest of the business will mean that there are revenues and profits that can enable more advertising for this product if it has positive responses.

I decided to take a bit of a punt on this with a small position as I think this is a product where there is a clear need with a potentially enormous market and it is unique in its scientific basis; it works (according to the marketing info & the FDA) and you do not have a lifetime of pills/sprays to bother with.

As always, more than happy to hear opposing views. I do not advise looking at this website on work computers though!

Pete

ezlifeme

$300 ! - You will be telling me next that £1,000 Mobiles will be a mainstream product and will be bought

Pete - a good summary and I too have come to similar conclusions. Whether the product is successful or not, we won't know for a good while yet but the shares are tightly held with limited free float and have the potential to increase further on the back of speculation of the true 'value' of this product.

I can't help feeling that there will either be a fundraise round the corner to accelerate marketing or otherwise partnering up with Pharma Company would be the best way to get the product to market in successful manner (with a buy-out the end goal - surely a product like this could be worth £50m+ to a cash rich pharma company!?).

Worth a small punt and if you managed to buy in this morning, you'll already be doing very well!

The trick is to de-risk before we actually find out if the product has been successful or not !

Innovaderma - Not Delivering on Marketing Spiel

Innovaderma (LON:IDP)

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Dearg Doom

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Innovaderma #IDP

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