Imminent Reverse Merger Brings Windfall To Rafarma Pharmaceuticals Shareholders - RAFA Shares Could Surprise Big

• Rafarma Pharmaceuticals is a producer of pharmaceuticals for alternative medicine and a producer of industrial hemp for industrial uses. Rafarma reported $11.4 million in 2020 revenues
• Biocoagency owns "Krasfarma" the largest Russian chemical and pharmaceutical production company with more than 50 years of experience in the production of drugs that meet all national and international quality standards

• Biocogency reported 2019 revenues of $73 Million

• Rafarma announced Bio-cogency will acquire majority control of Rafarma upon completion of Biocogency's transition to GAAP reporting standards and finalization of acquisition agreements. Operations will be combined and reported under the ticker RAFA

• Upon impending completion of Reverse Merger, Rafarma shareholders will enjoy a financial windfall with no dilution that is expected to result in substantially higher Rafarma share price

About Rafarma Pharmaceuticals

Rafarma Pharmaceuticals, Inc., a multi-product pharmaceutical company, produces and sells drugs, generic antibiotics, and specialty pharmaceuticals in Russia. It offers cephalosporin-based products, antibiotics of non-Ã structure, and anti-cancer drugs in the form of injections, ampulla packaged products, child suspensions, tablets, and capsules. The company also provides drugs for accidental wounds, inflammatory eye diseases, and immunological disorders. The company has a collaboration agreement with PlantEXT Ltd. to research and manufacture the first medical cannabis suppositories for patients suffering from inflammatory bowel disease. Rafarma Pharmaceuticals, Inc. was formerly known as Johnston Acquisition Corp. and changed its name to Rafarma Pharmaceuticals, Inc. The company is based in Sandy, Utah with a manufacturing and distribution facility in Russia.

About Biocogency

Biocogency owns PJSC "Krasfarma", the largest Russian chemical and pharmaceutical production company with more than 50 years of experience in the production of drugs that meet all national and international quality standards.

The Company's activity aimed at meeting the growing needs of health care for high-quality, effective and safe medicines, as well as development and production of innovative pharmaceutical products, are carried out through a coordinated interaction of production, quality control department, commercial department, logistics service, and scientific information department and pharmacovigilance services.

Obviously, a rich history is not the most important thing in the modern pharmaceutical industry. To keep the quality of products on a permanently high level, a program of production modernization is being realized: investments in the company include new industrial lines, engineering systems and control systems, as well as new pharmaceutical products.

Safe and effective medicines of PJSC "Kraspharma", which are not inferior in clinical efficacy to the original, but sold at affordable prices, have won the trust of both doctors and patients.

Today PJSC "Kraspharma" is the undoubted leader in the production of:

• Antibiotics;
• tuberculosis drugs in injectable forms;
• Blood substitutes;
• infusion solutions;
• Preparations of other pharmacological groups.

Most of the drugs produced are included in Vital and Essential Drugs List (VED) approved by the Government of the Russian Federation.

The products of PJSC "Kraspharma" are sold in Russia, Eastern Europe, Central Asia and in the countries of the Asia-Pacific region.

Letter to Shareholders Regarding Rafarma Acquisition by R. & D. Biocogency Laboratories Inc.

Aug. 05, 2020, Rafarma Pharmaceuticals, Inc. presented the following letter to Rafarma shareholders from CEO Vladimir Dolgolenko: "To Our Shareholders:During these exciting times I wanted to reach out to our shareholders and clarify some questions I have received. As recently announced, there will be a change in control forthcoming for Rafarma. The change in control will not affect the current share structure of the company. There has been no dilution and there are no current plans for dilution or issuance of additional shares as part of this acquisition. Our acquirer, R&D Biocogency Laboratories Inc. ("Biocogency"), brings an enormous amount of potential and an already proven business model. As stated in our previous release, Biocogency's 2019 revenues were approximately $73 million with profits at approximately $17 million. We intend to both harness and grow these profits and further our expansion throughout Europe and Asia.Thailand operations are continuing as planned and will only be improved with this new infusion of capital and more research opportunities. Our strategic partners are extremely excited with the progress that has been made in recent months. This is also the first of what we believe will be several merger and acquisition activities. As we acquire additional companies and facilities, we believe shareholder value will increase immensely. As CEO I want to thank shareholders for their patience and their trust in Rafarma. I believe we are building a strong company with unlimited potential as we move forward. Kinds regards, Vladimir Dolgolenko, CEO, Rafarma Pharmaceuticals, Inc."

Market Comps

In order to gain perspective on potential share valuations when the merger is completed, 6 current market comps were selected and ranked from smaller to larger companies in similar industries. Average Sales Ratio of 56 to 1 was calculated and determined for this group of comp companies.

Infinity Pharmaceuticals (INFI: Nasdaq)

Share price 09/16/20 - $1.10

2019 sales - $3 million

Market cap – $65 million

Price to Sales Ratio – 21.6

Aveo Pharmaceuticals (AVEO – Nasdaq)

Share price 09/16/2020 - $6.25

2019 sales - $29 million

Market cap - $161 million

Price to Sales Ratio – 5.5

Idera Pharmaceuticals (IDRA: Nasdaq)

Share price: $2.68

2019 sales - $1.5 million

Market cap - $194 million

Price to Sales Ratio - 129

Heat Biologics (HTBX: Nasdaq)

Share price - $1.40

2019 sales - $3 million

Market cap - $221 million

Price to Sales Ratio – 73

Bluebird Bio (BLUE: Nasdaq)

Share price - $56.66

2019 sales - $44.7 million

Market cap - $3.75 billion

Price to Sales Ratio – 83.9

Agios Pharmaceuticals (AGIO;: Nasdaq)

Share price - $38.46

2019 sales - $118 million

Market cap - $2.65 billion

Price to Sales Ratio – 22.5

Average Price to Sales Ratio - 56

Potential RAFA share price based on current market comps of Price to Sales Ratio of 56 to 1 and combined 2019 sales exceeding $84,000,000 and 93.2 million shares outstanding is calculated to be $50.47 per share.

The trend to lower Sales to Price Ratio for larger companies suggests that as RAFA grows, the ratio will decrease accordingly and share price expectations will be adjusted accordingly.

When the RAFA and Biocogency reverse merger is concluded as announced and when sales are combined, then the potential and likelihood for substantially higher RAFA share prices approaching the current market comp of 56 to 1 is reasonable to expect. There is a wide divergence of Price to Sales Ratios for the Pharmaceutical / Biotech industry and as such, it is impossible to predict the exact ratio that RAFA will achieve. It could be lower. And it could be higher. This is only an indication.

Fair Market Value should not be expected to be achieved immediately upon the close of the merger, but will likely take some time for investors to learn about this compelling story and subsequent earnings reports. The time to realize estimated Fair Market Value is never known exactly and can be influenced by many factors outside the world of RAFA. That time is greatly determined by visibility in the investment world or in other words by "Investor Awareness.

Given the existing current market comps for the Pharmaceutucal / Biotech industry, and given the existing relative low valuations for RAFA, it appears RAFA shareholders are poised to reap a windfall of increased sales that is likely to translate to increasing share prices very soon.

 SOURCE: BioResearchAlert