PetVivo Holdings Inc. (PETV:NASDAQ) is a small, and on the outside, unassuming biomedical device company based in Minnesota. Yet, its CEO John Lai is not the typical prototype executive you would expect to be running a biomedical company. John had a successful career on Wall Street, identifying companies with good products or services that held massive opportunities for a better-than-average return on investment. His unique skillset led John to start his own firm, where he was introduced to the PetVivo story.
After his due diligence, Lai recognized that PetVivo’s all-natural products could provide comfort to millions of pets suffering from osteoarthritis. It had the science, patent protection, and a huge addressable market. It all looked well and good, so John decided to join PetVivo and take the company.
Two Setbacks on the Path to Success
However, this did not come without its setbacks. After a series of unfortunate circumstances—including a four-year audit involving the medical device company that PetVivo merged with to become a publicly-traded company—the stock price suffered, leading to a series of reverse splits.
PetVivo has been on a rough road, and the company has faced some significant challenges. Under Lai's leadership and his and his team's passion, I would suggest that the company has positioned itself to excel in the months and years to come.
Still, Lai and PetVivo did not give in and leave with their tails between their legs. Instead, they took an unexpected turn in the right direction. John used his background in the capital markets and did not allow the company to do any death spiral financings. John, and a few believers in his abilities and PetVivo's value proposition, stepped up and made an awe-inspiring move to support the company and get through the tough times without blowing up the cap table. In the end, PetVivo completed the lengthy process of a four-year audit without any material changes occurring.
PetVivo's executive team focused on building up their manufacturing capabilities to bring them in line with the projected demand. It also helps that PetVivo is not reliant upon foreign entities for its products. There are no supply chain issues to be concerned over. All its manufacturing needs can be met and expanded with a minimal cap-ex spend at its facility in Minneapolis, Minnesota. The PetVivo ISO certified clean room facility currently has the capacity for 500k doses annually.
Yet, on its road to success, PetVivo had to face another hurdle. Covid-19 struck in 2020, causing another setback that impacted the progress of achieving scale and significant sales growth. Due to quarantine, PetVivo was limited in its ability to meet with veterinarians to educate them on these new Osteoarthritis solutions.
Why PetVivo?
While they had to overcome many difficulties, PetVivo has a plethora of benefits that aid in its upward mobility. For one, PetVivo's "Spryng with OsteoCushion" product has been given to hundreds of horses and dogs through a single injection to treat joint pain due to the loss of cartilage. What makes the product extremely compelling is that it is an all-natural solution. According to their website, "Spryng is a comprised of two naturally derived proteins (collagen and elastin) and one carbohydrate.”
Osteoarthritis affects approximately 14 million adult dogs and 1 million horses. It causes pain and inflammation from degenerated cartilage of stressed joints. Eventually, lameness worsens from the ongoing loss of cartilage and the inflammation present in the joint. While there are medications to manage this, the current solutions treat the symptoms rather than manage the cause.
The Optimal Osteoarthritis (OA) Solution: Spryng With OsteoCushion Technology
Spryng provides a biocompatible lubricious cushion, which reinforces the cartilage barrier between the bones to protect the remaining cartilage and bone and improve joint function. It does this by using similar components/functions found in natural cartilage (i.e., collagen, elastin, and heparin). Spryng particles are injected into the synovial space with standard intra-articular injection technique; multiple joints can be injected simultaneously.
Case studies indicate long-lasting (e.g. ~12 months or longer) improvement in lameness. Spryng also avoids NSAIDs side effects by minimizing their use, making it an effective and economical solution for managing OA.
The anecdotal evidence that Spryng has received has been overwhelmingly positive compared to the other potential solutions on the market today. However, to effectively get the veterinarians to prescribe Spryng, PetVivo needs more than anecdotal evidence; they need to conduct animal studies with documented results. Covid-19 played a role in delaying the data to be provided from the animal studies as well as making it more difficult to speak with veterinarians about this solution.
These setbacks are discouraging for investors that have been involved since the beginning. Still, I don’t suggest we fret yet. The good news is that with Covid-19 no longer being a severe enough issue to shut down the economy, businesses are getting back to a more normalized work environment, and Lai refused to spend the downtime sitting around.
During the halt, Lai managed to assemble an all-star team of executives to help execute his vision for the company. The level of talent that has decided to join the company would not be jumping on board unless there was something they felt has the real promise of success in the portfolio.
Potential Catalysts on the Horizon
Statistically significant results should be presented within the next two quarters with the independent animal studies back on track. Those results will help validate PetVivo's Spryng therapy, priced at a much lower cost to the consumer than today's alternative treatments. There is potential for new distribution partnerships and pet insurance coverage as well. A much larger pet care company could also be interested in acquiring PetVivo at the current depressed price levels.
The Spryng treatment, because of its natural ingredients, could open up a whole new way of potentially preventing the onset of Osteoarthritis by performing the injection ahead of complete deterioration of the cartilage, especially for horses and large-breed dogs.
PetVivo has been on a rough road, and the company has faced some significant challenges. Under Lai's leadership and his and his team's passion, I would suggest that the company has positioned itself to excel in the months and years to come.
Technically, the stock price seems to have found significant support in the $1.25 area. There will likely be resistance in the two dollars and $2.50 areas. The big area to take out would be the $3.00 range. If the share price were able to close above that level, I could easily see a run to $5.00 on any meaningful fundamental news. If the share price were to close below $1.25, it could see a flush below $1.00.
However, without any significant fundamental news to justify that drop, I would view that as an opportunity to get aggressive in building my position. With just around 10 million shares outstanding and around 6 million in the float, insider support/participation, and no debt. I believe the risk-reward is favorable at these levels.
For more information, click the link to watch my full interview with PetVivo CEO John Lai.
Tim Weintraut is the CEO of Alpha Wolf Trading, whose mission is to help new and struggling day traders, swing traders, and long-term investors achieve sustainable success.
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