(OTCBB: IVOB)

World Health Organization statistics imply that infertility and sterility will be the third most serious diseases in the 21st century after cancer and cardiovascular diseases, according to a Life Times report.

InvoBioscience is engaged in providing its InvoCell technology to help infertile couples have a baby. It has one principal product, the manufacturing and distribution of the InvoCell technology.

InvoBioscience has rapidly conquered many countries with a big market potential. Distributor contracts have been signed all over the world; registration process for clearance when it is needed has been started as well. Their strategy to focus on other countries first rather than the classic USA FDA path was very well done. InvoBioscience’s incomes have started to growth on each part of the world.

While InvoBioscience has many distribution agreements coming up or already signed for many countries, this article focuses here only on the biggest markets potential.

Chinese Market

Couples in China, the world’s most populous nation, are having difficulty conceiving. Infertility in the country has risen from 12.5 to 15 percent but that number could climb quickly to about 20, according to a report released recently at a forum in Beijing.

However the price tags are prohibitive for most people – worth several or many times their annual salary – but an increasing number of Chinese families are now able to afford the treatment.

“Actually more than 10 million Chinese families need artificial fertilization”, according to Xinhua news agency.

Professor Lu Bodong, vice president of the Second Hospital of Zhenjiang Chinese Medical University in Hangzhou, east China’s Zhejiang Province, attributes rising infertility rates to stressful and unhealthy lifestyles that include excessive drinking and smoking, over-indulgence, and also environmental problems, all of which are side effects of China’s dramatic social and economic changes.

“Now, more and more people are becoming open to fertility treatment. There are more than 200 reproduction centers in China, but this is not enough to meet the demand.”

“The industry is believed to be huge in China.” says Zhao Lixin, deputy director of the reproduction center in east China’s Shandong Province Hospital.

InvoBioscience has signed a distributor contract with The Progressive Group; they are one of the larger med device and equipment distributors in this area. The registration process has been started with Chinese FDA authorities; INVO is waiting to know if a trial will need to be done in China or if the FDA will look to the European guidelines of acceptance and grade InvoCell as a Class II med device.

Indian Market

India has a population of 1.15 Billion people with an estimated 14 million infertile couples. India has power infrastructure issues throughout most of the country therefore traditional IVF is not widely available and unreliable to support. InvoCell’s lack of reliance on electric power will make infertility treatment an option that most of the population does not currently have.

India does NOT need any sort of regulatory clearance.

InvoBioscience is working with potential distributors and has trained and most likely continue to train doctors in India over the next few months.

Brazil Market

In Brazil, with a current population of more than 182 million, the 2000 census indicated more than 15 million people of reproductive age had difficulty procreating.

“Each day we are more convinced that environmental factors are contributing to the reduction of spermatozoids, and also affecting the fertility of women,” the centre’s director, Edson Borges Junior, said in a Tierramérica interview.

The declining fertility rate is a global problem, but especially in the industrialised countries, and is getting worse, said Maria do Carmo Borges de Souza, president of the Brazilian Assisted Reproduction Society.

A direct relationship between atmospheric contamination and human reproduction was identified in a recent study by the medical school at the University of Sao Paulo, which found that the greater presence of particulate matter in the air reduces the number of births of male offspring.

InvoBioscience is in the process of registering their products in Brazil and hopefully will be cleared to train and distribute in the first half of this year. Daxley Group is the local distributor; they cover almost all the South American countries such as Ecuador, Panama, Argentina, Uruguay, Chile, and Brazil as well.

Russian Market

Russia is losing approximately 7% of their population and has one of the highest infertility rates in the world. The Russian government is giving incentives to couple to have children and is looking for a low cost infertility treatment.

The Washington Post headline said it all: “Russians Feel Abortion’s Complications: Used as Birth Control in Soviet Times, Practice Has Led to Widespread Infertility.” Indeed, the number of abortions is incredible and the ramifications are nothing short of staggering.

According to the Post, “About 5 million–or 13 percent–of Russian married couples are infertile, and doctors report that diagnoses of infertility are on the rise. In nearly three out of four cases, infertility is attributed to the woman, typically because of complications from one or more abortions, according to Vladimir Serov and other health experts.”

The ensuing infertility epidemic, in turn, has compounded the impact of an already dangerously low birth rate: “On average, Russian women now bear just more than one child,” the Post reported.

The InvoCell is currently being registered in Russia by a distributor. The clearance process by local authorities might take up to 6 months and InvoBioscience will be able to enter the huge Russian Market. With Russian government funding up to 9000$ to help infertile couples having baby, it is a huge potential market here for InvoBioscience.

FDA Status in USA

INVO Bioscience is planning on starting the process of FDA clearance in 2010. The product development, testing, and pre clinical work required to support the 510 (k) is complete and INVO has an open IDE to start a clinical study to support the 510 (k). While InvoBioscience is preparing to start the clinical study, INVO also focus on developing sales in other parts of the world. INVO targets early 2011 for clearance of the InvoCell device in the United States of America.

Financing

On October 28, 2009 INVO Bioscience signed an agreement with AGS capital for a Reserve Equity Financing for up to $10,000,000 over a period of two years, “Many different forms of financing were evaluated during the process and the financing chosen was deemed the least dilutive for the INVO stock holders.” says Katie Karloff CEO of InvoBioscience. INVO Bioscience filed a S-1 Registration Statement on December 21, 2009 and it was declared Effective by the SEC on December 30, 2009. With the Registration Effective it cleared the way for the Company to start drawing funding from AGS Capital.  INVO put in its first request into AGS Capital on December 31, 2009 to purchase 65,000 shares of common stock.

Conclusion

Among the InvoCell benefits there are some points that needed to be mentioned and understood by investors; almost all the infertile couples will prefer the InvoCell procedure rather than the lab incubation because it is a “natural way”. Women will feel more comfortable and more confident by looking after this incubation period by themselves.

Another point to consider is that a multiple pregnancy seems to be avoided with the use of InvoCell device. When it may be good news of having multiple babies in one time, it seems that parents yet prefer to have one baby at a time.

InvoBioscience will be a major actor in the infertility treatment. With a unique product with already a successfully pregnancy rate proven, and a worldwide potential market in increasing demand, InvoBioscience is already embarking on these enormous markets such as India, China, Brazil and Russia; even with just a few countries to do just a few thousand procedures a year; it would be millions in revenue. InvoBioscience has a bright future in a tremendous potential worldwide market; there is no doubt that this company is a good long term investment.

Disclosure: No positions

(Public, OTC:IVOB)

The following company analysis has been contributed by a StocksHaven Investments affiliate and member, Eric Sebastien. He is an entrepreneur with solid investment experience totalling fifteen years, and specializes in the small cap bio-tech field.

About

INVO BioScience Inc. (INVO Bioscience), formerly Emy’s Salsa Aji Distribution Company, Inc., is engaged in providing its INVOcell technology to help infertile couples have a baby. It has one principal product, the manufacturing and distribution of the INVOcell technology. The Company invoiced its first sales of the INVOcell selling 215 units along with 16 INVO Blocks during the year ended December 31, 2008. Further, it has signed contracts for the purchase of INVOcell devices in various countries, such as Turkey, Peru, Pakistan and Canada. On December 5, 2008, INVO Bioscience completed a reverse merger with Emy’s Salsa AJI Distribution Company, Inc. (Emy’s). In connection with the reverse merger, INVO Bioscience acquired control of Emys.

Target Market

INVOcell is currently priced at $75-225 to distributors in developing countries and $125-300 in Europe and U.S.

For South America:

“These agreements will allow INVO to begin the process of treating over 9 million estimated infertile couples in South and Latin America. INVO Bioscience’s goal is to develop this untapped market and treat 5% of this population over the next 5 years,” said INVO Bioscience CEO Kathleen Karloff.

Using a simple formula to do the calculation: take the number of estimated infertile couples potentially treated with INVOcell (5%), multiply by the average number of attempts which is 3 and the average price sale to distributors in South America (75$ to 225$) lets take the median of this, which turns out to be 150$.

So we now have 5% of 9  000 000 = 450 000 couples

An average of 3 attempts = 450 000 X (3 X 150$) = 20 250 000$

For World Market:

“We are thrilled by the positive response from distributors to assist INVO Bioscience in launching the INVO procedure in South America. The availability of the INVO procedure in both stand-alone centers and existing IVF centers reaffirms that this breakthrough does not compete with IVF, but instead is a new option that will greatly increase access to treatment to the 150 million infertile couples worldwide,” said Karloff.

We can once again apply the simple formula to do the calculations for the entire world market: take the number of estimated infertile couples potentially treated with INVOcell (5%), multiply by the average number of attempts which is 3 and the average price sale to distributors in Europe and U.S (125$ to 300$) lets once again take the median so 212.50$.

We are now left with 5% of 150 000 000 = 7 500 000 couples

At an average of 3 attempts = 7 500 000 X (3 X 212.50$) = 4 781 250 000 $

These are not your eyes deceiving you, that is roughly more than 4 billions$ in revenue.

In fact, these numbers are quite conservative, with only 5% of the market, we don’t incur much risk. Moreover, the first investor of Invo stated few months ago that the market is estimated to be $ 66 B dollars .

“With an addressable global market in excess of $66 billion, limited competition, massive profit margins and a management team that is second to none, Invo Bioscience is the perfect storm in regards to an investment opportunity,” said Esposito of Lionshare.

Presently, there is a market cap of $15 M, well let’s say that’s a really beautiful gift at this price, until investors realize what a gem this company is.

FDA Product Clearance

While IVOB penetrates the infertility markets in Europe, Canada, and select developing countries, the Company has also completed the first step for medical device companies who manufacture Class 2 devices with the filing of a Premarket Notification 510 (k) submission with the FDA. Technically, the FDA does not “approve” Class 1 and 2 medical devices for sale in the U.S. as the Agency issues “clearance” for them to be sold and marketed. IVOB hopes to receive U.S. marketing clearance by 2010 upon completion of its clinical trial.

IVOB as no debt and has had a positive income since Q2;  it is a profitable company already, unlike many small cap biotechs presently in the market.
The INVOcell has already received European CE Mark approval and began selling units in late 2008 in select countries outside the United States. INVO Bioscience, Inc. is pursuing U.S. Food and Drug Administration clearance for the INVOcell.

It is important to note that, the Food and Drug Administration does not need to grant approval because INVOcell is a class 2 device, the grant marketing clearance after IVOB meets the 510k submission requirements. The predicate device is the Petri dish. The device is a clean, non toxic, sterile piece of plastic that does not go into the blood stream; it simply fits in an orifice.

Key Infertility Statistics

• One in six couples is infertile. In 40 per cent of cases the problem rests with the male, in 40 per cent with the female, ten per cent with both partners, and in a further ten per cent of cases, the cause is unknown.
• Fertility problems strike one in three women over 35.
• One in 25 males has a low sperm count and one in 35 is sterile.
• The chance of conceiving in an IVF cycle is on average around 20 per cent (but varies due to individual circumstances).

Estimated Target Price

IVOB was at 1.80$ few months ago, and this was without the latest developments and the distribution contract signed early in August. The stock should stand at this level again or even more. We should have a market cap of roughly 100 Million$ at least with the FDA 510K coming for early 2010.

For more information and updates on INVO BioScience, see their Investor Relations Presentation, or visit them on Twitter

Author Bio

Eric Sebastien is a 37 year old, French Canadian, IT engineer, well on his way to starting his own company which can be found at, www.klinkoo.com. He is presently in talks with a Venture Capital firm.

Eric has 15 years experience in the stock exchange market, having been through the IT bubble of 1999-2000, he won a lot of money but lost a lot. Since then he has learned a lot, and now invests strictly in the biotech field and only with small caps with great product and high potential.

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Disclosure: Eric has a short position in IVOB

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By reading StocksHaven Investments you agree to the disclaimer, and thereby will not hold Michael Vlaicu accountable for any transactions or decisions you make. It is up to you to do your own due diligence.