Impact Biomedical Preparing A Potential Spinoff — What Does This Mean For Investors Of Holding Company DSS, Inc (NYSE American: DSS)?

Impact Biomedical, a biotechnology company focused on developing innovative treatments for a wide range of diseases and conditions and one of the key businesses in the DSS Inc. DSS portfolio, is preparing for a potential spinoff that could also have implications for the pharmaceutical industry at large.

The success of this spinoff could present significant growth opportunities for the company. It looks to help expand the company’s ownership of a suite of antiviral and medical technologies, which was valued at $390 million in 2019 by Destum Partners, a global leader in investment and advisory services.

The total global pharmaceutical market was estimated at $1.48 trillion in 2022 alone, and as the sector continues to experience an upward trend, Impact Biomedical could expect to see growth opportunities.

But one may ask, what is the fuss about the company spinning off? A spinoff occurs when a company splits off a portion of its business into a separate company and distributes shares of the new entity tax-free to the parent company’s shareholders.

Some prominent companies that have pursued spinoffs recently include 3M Co. MMMGeneral Electric Company GE, and Johnson & Johnson JNJ.

The good news is such a spinoff can increase Impact Biomedical’s valuation — and the value of DSS. In May 2020, Impact Biomedical revealed it had received a valuation of $933 million for a suite of technology from a different independent valuation firm. The valuation may go even higher, possibly presenting exciting opportunities for investors.

Overall, the spinoff, which is still in the works, may enhance Impact Biomedical’s research leading to breakthroughs in the development of new treatments for a wide range of diseases, from cancer to infectious diseases. It is anticipated that it will enable the company to focus on its core research and development activities without any distractions resulting in faster innovation and more precise targeting of specific disease pathways.

By establishing a new, independent company focused exclusively on its research and development efforts, the spinoff would enable Impact Biomedical to attract new funding and investment to pursue a more aggressive growth strategy as it continues to develop its cutting-edge technologies and groundbreaking research.

The spinoff could warrant a close watch, especially as the company says it has established a reputation and loyal following among investors and healthcare professionals.

DSS completed the acquisition of Impact BioMedical in August 2020. In September last year, the company dropped hints of the impending spinoff with reports suggesting that the company was expected to file an amended S-1. DSS said it aimed to IPO Impact Biomedical this year, with the  valuation to be determined by the investment bankers and market demand.

What could be exciting for shareholders is that the company plans to keep at least 50% of the spinoff entity, while shareholders will get a certain percentage. A number of shares will be newly issued to raise capital to support the growth of the newly public company.

Since 2019, the company has embarked on a major transformation journey evolving into a multinational business operating within nine divisions with over 40 subsidiaries. The divisions and subsidiaries are meant to offer innovative, flexible, and real-world solutions that not only provide mutual benefits for businesses and their customers but also create sustainable value and opportunities for transformation; Impact Biomedical is an opportunity for an innovative biotech pure play, and DSS is a way to access Impact and other opportunities.

The company has reported developing strong footings in biotechnology, product packaging, direct marketing, commercial lending, securities and investment management, alternative trading, digital transformation, secure living and alternative energy.

Impact Biomedical’s Products And Development Pipeline

Impact Biomedical drives mission-oriented discovery and development to pursue new products and treatment options in specialty biopharmaceuticals and consumer healthcare. The company reports that its biopharmaceutical technologies have the potential to advance treatment in oncology, neurology, and immunology.

A closer look at the current products and development pipeline as reported by Zacks Small-Cap Research:

LineBacker: Multi-faceted therapeutic platform intended for metabolic, neurologic, cancer and infectious diseases. In July last year, the company executed a license agreement with ProPhase Labs Inc. PRPH for its Linebacker portfolio (LB-1 and LB-2), two patented small molecule PIM kinase inhibitors with significant potential across multiple therapeutic indications.

Equivir: A compound in antiviral infection treatments. Equivir/Nemovir is a novel blend of FDA Generally Recognized As Safe-eligible natural compounds which have potential antiviral effects with additional potential applications as health supplements or medication. These compounds are sourced from fruits, vegetables, and other natural substances.

In June of 2022, Impact BioMedical signed a license agreement with ProPhase Labs to produce and distribute Equivir, which has shown potential as a treatment to limit the occurrence of or reduce the risk or severity of viral outbreaks.

Laetose: Laetose technology is derived from a unique combination of sugar and other compounds, which demonstrates the ability to inhibit the inflammatory and metabolic response of sugar alone. It is a sugar alternative that can potentially lower human glycemic indexes.

The company believes it is a breakthrough alternative sugar that could combat diabetes. Using Laetose in a daily diet, compared to sugar, could result in lower sugar consumption and lower glycemic index/load.

3F: 3F is a unique formulation of specialized ingredients from botanical sources with the potential effect as an insect repellent and an antimicrobial. It can be used either as a standalone repellent or as an additive in detergents, lotions, shampoo, and other substances to provide mosquito protection. The formulation can also be used as a standalone antimicrobial or as an additive in detergents, lotions, shampoo, fabrics, and other substances.

With a successful IPO and spin off of Impact Biomedical, DSS shareholders would begin to realize the benefits of the company’s strategy of building shareholder value by distributing stock dividends through periodic spin offs.

Featured Photo by National Cancer Institute on Unsplash

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