Q&A with Milton Cohen of Safe Rx

Our locking prescription vials, or "LPVs" for short, cut off the number one source for teen drug abuse in the country.

Pilfering, sneaking a few pills at a time in secret, from family medicine cabinets is both the number one source for teen drug abuse in the United States, and an index source of the opioid epidemic. Our locking prescription vials (LPVs) have been proven to cut off pilfering as a source, and given their impact, are supported by leading experts from Johns Hopkins, Yale, Vanderbilt University Medicine & other institutions as a key solution to the epidemic.

By eliminating pilfering as a source of initiation and abuse, locking prescription vial (LPV) dispensing of opioids is estimated to return over $92 billion to the healthcare system and economy, while preventing approximately 7 million teens from initiating abuse over a ten-year-period.

As a result of the reduced initiation of abuse on the front end, and the accompanying savings in treatment costs on the back end, locking prescription vial (LPV) dispensing generates a 740% return on investment in the first year of implementation to the healthcare system and an over 2,000% return on investment overall.

The market for locking prescription vials (LPVs) is over a billion units annually in the U.S. alone, representing an over $1.25 billion domestic revenue opportunity for us as a Company. While we compete in the safe storage product category with our retail SKU product line, our LPVs are the only products on the market that were designed specifically for the point of dispensing. None of the other products in the safe storage category could compete with us on the two primary competitive factors in the market - cost, and impact to pharmacy workflow and fill-time. We have an over 8x manufacturing cost advantage versus our next closest competitor from the safe storage category, and 10 issued patents on the lowest cost locking cap & closure mechanism. Separately, our impact on direct fill time is all of approximately 8 seconds for a trained pharmacist or tech on average.

This is a great question and part of the reason we were selected for Arthur’s program and Family Office Insights. So far, we’ve raised over $3.5 million in three successive oversubscribed rounds since 2016, with participation from pharmacy sector executives, colleagues of mine from the Young Presidents Organization and selected HNW and smaller family office investors. Right now, we’re just raising a small top-off to our last round. We originally targeted $500,000 for the round, but have pledged that we’d do as much as $1 - $1.25 million to accommodate some larger investors and existing investors that want to invest more. But we’re also seeking to develop relationships with mission-aligned family offices for an institutional equity round later this year or in first quarter 2020. As a mission-focused company, we’re taking the time to find the partner with the best fit, as opposed to focusing on valuation and terms, and have a strong rationale for partnering with families as opposed to VCs. Unlike VC firms, family offices match our long-term corporate strategy. Once we’ve grown our locking prescription vial (LPV) business to scale, we expect to license our intellectual property into other product categories where for public health reasons, packaging requires more security than the current child resistant packaging standards, with examples in household goods, drugs & supplements, cannabis, liquid nicotine and others. As a result, over time we expect the business to assume a royalty cash flow profile, and if we can preserve our LLC pass-through structure, we can distribute proceeds without double taxation. Family offices, unlike VCs, typically have passive losses elsewhere in the portfolio that can be used to offset those distributions.