Sonoma Pharmaceuticals, Inc. (NASDAQ:SNOA) announced today the termination of its Exclusive Supply and Distribution Agreement with EMC (NYSE:EMC_old) Pharma, LLC. The agreement, which was originally established on March 26, 2021, granted EMC exclusive rights to sell and distribute Sonoma's prescription dermatological and eye care products in the United States.
The contract required EMC to meet specific minimum product purchase quantities and to pay a quarterly royalty to maintain their exclusive rights. The initial term of the agreement was five years with the option for mutual extension. However, due to EMC's failure to fulfill the minimum purchase requirements, Sonoma Pharmaceuticals exercised its right to terminate the agreement after a 30-day cure period, effective today.
Sonoma Pharmaceuticals will not face any penalties due to the termination of the contract. Following the termination, the company will resume direct sales of its prescription products, including Acuicyn®, Celacyn®, Epicyn®, Lasercyn®, and Levicyn® in the United States market.
The company's forward-looking statements indicate its intention to continue advancing its commercial and technological initiatives, while also maintaining a focus on financial performance. These statements reflect expectations for the future and are subject to risks and uncertainties that could cause actual results to differ. Sonoma Pharmaceuticals emphasizes that these forward-looking statements are based on current expectations and projections about future events.
In other recent news, Sonoma Pharmaceuticals has gained FDA clearance for its Microdacyn® Hydrogel, a product designed for various wound care applications. The company also received FDA approval for its over-the-counter Microcyn technology-based solution, expanding its dermatology product range. In addition, Sonoma has announced an amended Equity Distribution Agreement with Maxim (NASDAQ:MXIM) Group LLC, allowing for the continued sale of its common stock.
In partnership with EMC Pharma, Sonoma has expanded its eye care product line, introducing a redesigned Ocucyn® Eyelid & Eyelash Cleanser. The company also implemented a 1-for-20 reverse stock split to regain compliance with Nasdaq's minimum bid price requirement. Sonoma Pharmaceuticals has entered into significant distribution agreements with Medline Industries and a global healthcare distributor, extending the reach of its wound care products across the U.S.
Sonoma Pharmaceuticals has also introduced its MicrocynAH® animal health line to Menards® home improvement stores nationwide and expanded its Microcyn® Negative-Pressure Wound Therapy (NPWT) Solution in the U.S. market. Lastly, a recent study underscored the potential of Sonoma's product, Microdox®, in treating urinary tract infections in children with bladder dysfunction.
InvestingPro Insights
Sonoma Pharmaceuticals' decision to resume direct sales of its prescription products in the U.S. market comes at a critical time for the company. According to InvestingPro data, SNOA's revenue growth has been positive, with a 31.05% increase in quarterly revenue as of Q2 2025. This growth could potentially be accelerated by the company's move to take control of its product distribution.
However, investors should note that SNOA is currently facing financial challenges. An InvestingPro Tip indicates that the company is "quickly burning through cash," which aligns with the reported operating income of -$4.28 million over the last twelve months. This cash burn rate could be a concern as SNOA transitions back to direct sales, potentially requiring additional resources.
On a positive note, another InvestingPro Tip highlights that SNOA "holds more cash than debt on its balance sheet," suggesting some financial flexibility as the company navigates this strategic shift. Additionally, with a price-to-book ratio of 0.73, the stock may be undervalued relative to its assets, which could be attractive to value-oriented investors.
For those interested in a deeper analysis, InvestingPro offers 5 additional tips for SNOA, providing a more comprehensive view of the company's financial health and market position.
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