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Cellectar Biosciences Inc CLRB Stock News

Cellectar Biosciences Inc (NASDAQ: CLRB)

Cellectar Biosciences is a Madison, WI based oncology company that is generating a tremendous amount of industry interest, with an increasing amount of attention being placed on the company’s Phosphopipid Drug Conjugate (PDC), a proprietary platform that enables delivery of diverse oncologic payloads through its phospholipid ether cancer-targeting vehicle. Importantly, not only does CLRB’s unique PDC platform provide a targeted therapeutic treatment, it also increases the therapeutic payload of the drug directly to cancer cells, which enhances effectiveness and reduces drug exposure to healthy cells, potentially reducing adverse events. These technological advantages within the company’s PDC platform may act as the “secret sauce” that can open tremendous opportunity for both the company and its investors.

Since first writing about CLRB, investors have pinged me on several occasions, asking for a review of the most recent phase I data of their Multiple Myeloma drug, CLR 131, and to provide some analysis as to where I believe the already impressive data may ultimately lead. But, if I were to do so, and not include the opinion that the PDC technology generating these impressive results was the most seducing part of the Cellectar Biosciences equation, I would be selling the investment world short. And short, by the way, is not a position that I would currently recommend in regard to CLRB stock ownership.

PDC, It’s Better Than A Basket Of Wings

With many investors wanting to skip through the appetizers and get straight to the meat and potatoes of an investment thesis, let me offer them this, which should build them with enough confidence to allow themselves to grasp a full appreciation of the absolute potential behind those results. Here it is, impatient friends: CLRB is providing striking results in treating both relapsed or refractory multiple myeloma, combined with a safety and tolerability profile that is extremely encouraging when compared to current standards of care. The overall survival rate and patient tolerability results already demonstrated with single, lower dose treatments, may ultimately put CLR 131 toward the top of the efficacy list.

With the essential basics out of the way, it’s time to dig deep into this PDC platform that Cellectar Biosciences is developing. It’s a crucial component to what they are doing, and while the PDC platform is currently being used to generate some mouthwatering results in its current clinical trials, the applications to which it can be applied are much broader than treating multiple myeloma, although such an accomplishment will be a great way to put an exclamation point on its proof of concept.

CLRB And Strategy

Cellectar is deep into the process of providing proof of concept for its PDC platform, continuing its CLR-131 franchise, and advancing early stage development chemotherapeutic conjugates so that when applied through the PDC process, they can achieve significantly higher therapeutic benefit to patients.

Unlocking the power that is exuding from the platform is the key, because once established as a breakthrough technology, its use in delivering a targeted therapeutic dose of treatment will be applicable through a wide range of cancer-targeting therapies. This is the “protein” within the company, and like all good high protein meals, it could make CLRB extremely strong.

The basis for the PDC delivery platform is to deliver a phospholipid ether cancer targeting vehicle, exploiting selective cancer and cancer stem cells, allowing for the uptake and prolonged retention in malignant cells. By being able to attach to a diverse set of oncologic payloads, the PDC platform may prove to have the ability to treat a broad range of cancer indications.

While I want you to take my word as to the platforms merit, it’s worthy to acknowledge the two peer reviewed publications that offered extensive research and scientific validation of PDC. In an article published by Nature Reviews Clinical Oncology titled, “Beyond The Margins: Real Time Detection of Cancer Using Targeted Fluorophores”, the review team evaluated the current use of fluorescent molecules in cancer diagnostics, as well as the fluorescence-guided surgical resection of tumors. The paper focused on the need for the use of targeted delivery of molecules to malignant tissue. The peer reviewed data in both reports was consistent in several conclusions, but one clearly stands out to benefit CLRB: both journals provided insight, review and validation of the unique potential and varied utility of Cellectar’s PDC platform. And, with this validation comes the increased likelihood of partnership and licensing opportunities as the company continues to mature the pipeline.

What Are PDC’s?

Okay, so some of the hard part is done, but not all of it. Many still don’t understand what the PDC platform is, and why it could be such a huge asset to CLRB in both the near and long term.

To break it down in simplest terms, the company’s product candidates are built upon its patented cancer cell-targeting and retention platform of optimized phospholipid ether-drug conjugates (PDC’s). The company was deliberate in designing its phospholipid ether carrier platform to be coupled with a variety of cancer fighting payloads, and to be both therapeutic and diagnostic in function.

The PDC pipeline includes promising product candidates for cancer therapy and cancer diagnostic testing, highlighted by its lead therapeutic agent, CLR131, which is currently being evaluated under an orphan drug designated Phase I clinical study in patients with relapsed or refractory multiple myeloma. In addition to that study, CLRB is planning to initiate a Phase II clinical study in the first quarter of 2017 to assess efficacy in a range of B-cell malignancies. To reach deeper into the 2017 initiatives, Cellectar Biosciences is further planning to develop PDC’s for targeted delivery of chemotherapeutics, advance its existing collaboration with Pierre Fabre and to expand its PDC pipeline through both in-house and collaborative efforts.

Basically, it’s as simple as this: CLRB can take a phospholipid ether, add a linking molecule, attach the specified drug to be delivered, and it becomes a PDC with the ability to deliver a fortified and targeted payload using fluorophores, radioisotopes, chemotherapeutic agents and potentially other classes of molecules.

Some have compared the PDC platform to ADC targeting and delivery, but the benefits of PDC still stand clear. The PDC’s method of delivery is through the cell cytoplasm and has no immunogenic properties, compared to ADC, which targets the cell surface and holds potential immunogenic qualities. This differentiating feature allows Cellectar Biosciences’ platform to exploit an unalterable metabolic pathway.

In fact, beyond those two measures, PDC offers a host of additional benefits by using its small molecule approach. The CLRB platform offers direct cancer targeting, cancer stem cell targeting, metastases targeting, ability to overcome resistance, and a solid safety profile. Additionally, PDC delivers a cytoplasm payload delivery that brings payload diversity, linking options, and a far easier method for manufacturing, improving cost efficiencies. The company is clearly fulfilling its mission step by step by using its PDC platform to represent a new class of cancer targeting and payload delivery system, one that is clearly demonstrating its benefit.

OK, Now The Science

While the company posseses a number of product assets, focusing in on its most advanced trial will work to demonstrate the potential throughout the entire pipeline. Remember, while the payload being delivered is certainly an integral part of the therapeutic process, it’s the platform that drives the results.

In addressing multiple myeloma, CLRB is demonstrating what many industry insiders consider to be toward the top of the class in terms of efficacy and safety with a single drug dose. In its Phase I trial targeting both relapsed and refractory multiple myeloma, CLR 131 demonstrated its targeted and precision radiotherapeutic value, along with the platform’s novel execution of action. Additionally, during its Phase 1 maximum dose study, CLR 131 provided early signs of both efficacy and patient tolerability.

CLR 131 demonstrated significant improvement from Cohort 1 to Cohort 2, with a progression free survival rate increase of 43%. Additionally, there were less adverse events at higher doses, and the average grade of adverse events overall increased only slightly. But, to be clear, even though there was a slight uptick in average grade of adverse events, these reported issues were not considered materially severe or unexpected.

The Phase II trial will initiate in the first quarter of 2017, advancing the development of the r/r multiple myeloma therapy and further expanding into other hematologic malignancies. Importantly, patients may receive two 25.0 mCi doses of CLR 131, at baseline and between day 75 – 180. Only one dose is being delivered in the Phase 1.

The decision to advance the CLR 131 trial is due to the benefits associated with delivering a potential best in class therapy. The current trial has demonstrated overall clinical success, and CLR 131 holds the potential to be used in combination with approved therapies and , in a multi-dose schedule to further improve performance.

Impressive Phase I Results

The Phase I trial was a multi-center, open label, dose escalation study initiated in the second quarter of 2015. The primary objective was to characterize safety and tolerability, with secondary objectives designed to establish a dosing regimen and to assess therapeutic activity. The study began with a single 12.5 mCi dose in Cohort 1 and progressed past 18.75 mCi to a single 25.0 mCi dose in Cohort 3, which represents a 100% increase in drug dose and potential therapeutic value from Cohort 1.

The participating patients’ had an average age of 68, 4 prior lines of treatment, including the latest approved drugs and 50% had also undergone stem cell transplant procedures representing a difficult to treat patient population. Theses demographics remained consistent through the initial two cohorts, which will serve to validate the consistency in the trial design and results.

Patient Overall Survival performance, likely the biggest factor in getting this therapy to market, was exceedingly impressive. As of 11-22-16, median overall survival in Cohort 1 was 11.9 months and Cohort 2 was already at 4.9 months. It’s important to note that all 8 evaluable patients from the first 2 cohorts are still alive and the overall survival duration continues to increase.

Equally impressive is the PFS. Patients receiving the 12.5 mCi Cohort 1 dose achieved 89 days of PFS and Cohort 2 patient PFS increased by 43% to 127 days.

Comparing Overall Survival Performance

Investors want to see the side by sides, especially when they are being exposed to a company that
may be laying claim to becoming best in class for therapeutic value. For the drugs most recently approved to treat multiple myeloma – Carfilzomib, Pomalidomide and Daratumumab, the mOS was 11.9, 11.9 and 18.6 months respectively.

Compare this to the CLRB’s CLR 131, whose Cohort 1, low dose results already surpasses two of the recently approved drugs, and is rapidly closing in on the third. The CLRB data listed is as of 11-22-16 and is increasing as all patients continuing to survive.

Progression Free Survival, which may be a marker for Overall Survival, has already cleared 127 days in cohort 2, and represents at least a 43% increase from cohort 1.

Overall survival is key, but the FDA looks at a host of additional factors prior to approval of a drug, and thankfully, I like the company’s chances even greater in this category. We know that the treatment is at least as equally effective to date, but how is the drug tolerated by patients?

The answer is simple. Strikingly well.

CLR 131 has a positive safety profile through 2 cohorts as well as an overall data set of 28 patients. Within the profile, there are no neuropathies, no nephrotoxicity and no cardiotoxicities. Additionally, CLR 131 has demonstrated no GI toxicities and no deep vein thrombosis. The therapy’s most common adverse events are hematological in nature.

Importantly, CLRB plans to provide cohort 3 results and PFS and mOS updates for cohort 1 and 2 in the first half of 2017.

CLRB Potential

Even with additional chapters still being written, the CLRB story is shaping up to be a tremendous value to investors who gauge the probability for imminent success. CLRB will be addressing a significant market upon treatment approval. There are approximately 90,000 multiple myeloma cases diagnosed per year in the U.S., with a potential market estimated to eclipse $22.4 billion in 2023. That is an estimated increase of 151% increase in global market opportunity within the next 10 years.

The benefits of an approved CLR131 extend to both patient and provider, with CLR 131 being considerably more cost effective, and allowing a patient to receive as little as one dose to achieve targeted results.

CLRB is in a strong position to capitalize on their momentum, with approximately $13.9 million on hand, as well as a fully diluted capitalization picture of only 22.6 million shares on a fully diluted basis. Currently, CLRB has roughly 11.5 million shares outstanding, with additional warrants and preferred stock options making up the difference. But, if investors exercise those options, it brings capital into the business, and while the company is financially stable at the moment, having arrows in the quiver to attract additional funding will provide security for investors.

Those who follow CNA Finance understand that we hold tremendous interest in finding emerging companies that may offer transformative and curative treatments in both the service and medical industries. While Cellectar does need a bit more time to generate its final phase 2 data, the results from the phase I trial are both compelling and remarkable from a therapeutic standpoint. With the stock trading at roughly $2.00 per share, investors may be facing down an opportunity to catch a rising star still in its intermediate development phase. Recall that Cellator, upon its buyout from Jazz Pharmaceuticals, went from $1.60 to over $30.00 in a matter of three months,based on an overall survival rate increase of slightly over 3 months. CLRB is in a similar position, whereby they are rapidly closing in on survival data that may serve to be equally, if not more, impressive. With a low share structure, combined with a solid balance sheet and extremely promising trial data in hand, the company possesses the right ingredients for investor consideration and action.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in CLRB within the next 72 hours.

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Actinium Pharmaceuticals Inc ATNM Stock News

Actinium Pharmaceuticals Inc (NYSEMKT: ATNM)

If you think that I wrote a presumptuous Actinium Pharmaceuticals headline to simply grab your attention, you are mistaken. After extensive analysis of the company, I hold a firm belief that ATNM has the potential to mimic the dramatic rise of Celator, which saw its market cap increase from roughly $50 million dollars in 2016 to $1.5 BILLION dollars, the price at which Jazz Pharmaceuticals paid to acquire the company. For Celator shareholders, this windfall came after the company provided clinical trial results that proved an increase in the survival rates of patients with AML by approximately three months. Celator stock went from around $1.60 in March of 2016 to over $30.00 by the end of May.

Celator did a great job extending patient survival, and additional survival time offers the potential to find a cure and ultimately create higher overall survival rates. Thus, the spike for Celator was merited. At the time, Celator focused on building upon the technology for combination therapy, utilizing older chemotherapy drugs in new directions, via liposomal nanoparticles that were intended to more efficiently target the delivery of the chemotherapeutic agents to the tumors.

While ATNM is not tracking the same scientific pathway as Celator, the results being demonstrated by the ATNM medical team may be equally impressive in many respects. To that end, Actinium Pharmaceuticals deserves a closer look by investors, as the potential for a Celator type spike is not out of the question. At the very least, the Celator deal defined the enormous value being given to leaders in the AML space, a market of which the company sits at the very core.

ATNM may very well be a victim of the decoupling that can occur between share price and a realistic and encompassing valuation. Most vulnerable are the companies like Actinium Pharmaceuticals, who have built an extraordinary clinical data set, but are unfortunately annihilated by investors that are nagged by the constant fear of a continued plan of stock dilution and convertible debt funding.

If current and potential ATNM investors are being spooked by either of those two specters, its time to exorcise those demons and come to the realization that the company is both financially and clinically sound. The $10 million cash raise in October and the lack of convertible debt provisions on the balance sheet should extinguish those investor concerns.

Actinium’s Clinical Advantage

Before getting to the Actinium Pharmaceuticals company fundamentals, the main interest of many short term investors, there needs to be a greater focus in vetting the company’s clinical and strategic progress, as well as evaluating the overall strategy and current clinical programs at the company. From that vantage point, ATNM investors should clearly be able to sight the overall leadership position in at least two advanced clinical stage programs that hold enormous potential in treating AML, in addition to a host of other targeted indications.

As a quick overview, ATNM currently has two clinical stage trials, Iomab-B (CD45) and Actimab-A (CD33), and in addition to this, the company is also strategically positioned to capitalize on its Proprietary Alpha Particle Immunotherapy (APIT) platform. The APIT platform is generating reliable data that is demonstrating its potential to deliver multiple cancer drugs and treatments, several that may have blockbuster potential. In addition to APIT, the company has also staked out a leadership position in linking alpha particles to antibody drug conjugates that are intended to generate new therapies for both liquid and solid tumors.

To accentuate the potential of the two clinical trials, Iomab-B is demonstrating the strength to position the company as a leading franchise in the field of bone marrow transplants (BMT), having the advantage of an expert team of professionals that possess both the vision and knowledge to advance the studies with the intent of creating innovative new therapies and enhancing shareholder value.

For its part, Actimab-A has the potential to become a best-in-class solution in CD33 applications. CD33 is a transmembrane receptor expressed on cells of myeloid lineage, a key component within ATNM trial design, with an emerging data set that may bring forward both partnership and strategic opportunities for the company.

While the previous and quick introduction includes a host of scientific acronyms and jargon that even savvy biotech investors may find difficult to follow, the following spelled-out explanation of what these ATNM compounds and trials are doing should be much easier to comprehend.

Iomab-B

CD45 is a molecule that is expressed on leukemia cells, bone marrow cells, and stem cells, and is active in targeting CD45. Iomab-B works to deliver a powerful radiation shock to the DNA of these CD45 cells, eradicating the leukemic cell and enabling a patient to proceed with a bone marrow transplant. In simplest terms, Iomab-B is the starting point intended to increase survival rates, but there is much scientific research that has built up the therapy.

The significant and driving force behind Iomab-B is that is used as an induction and conditioning agent to enable patients with relapsed or refractory acute myeloid leukemia to receive a bone marrow transplant. Iomab-B has become a possible life saving therapy, bringing potential for a BMT where one did not exist before.

Iomab-B is not a new therapy option. The drug was first developed at the Fred Hutchinson Cancer Research Center, a recognized and Nobel prize winning leader in the field of bone marrow transplants. Iomab-B has been studied in roughly 300 patients in several phase I and phase II clinical trials in cancer centers throughout the United States, targeting various forms of leukemia and lymphoma in physician sponsored trials. These trials are on-going and have demonstrated meaningful and impressive data in the fight against different forms of leukemia.

When targeted to CD45 expressing cells, Iomab B has resulted in effective induction and conditioning of the cell in preparation for a BMT, while being well tolerated and showing minimal patient reported side effects. In comparison to chemotherapy and/or radiation, the option may become a clear choice for patients, with potential to become a first line standard of care based on Iomab-B’s safety and tolerability profile compared to existing methods of BMT preparation.

Iomab-B Is A Pathway Toward Health

The best way to look at Iomab-B, from layman’s terms, is that it is the most efficient and well tolerated therapy to prepare a patient for a potential life saving BMT procedure. By targeting the “bad” CD45 cells in the bone marrow, its radioisotope payload works to deliver a knockout blow to the cells in the marrow, essentially eradicating all of the cells in the bone marrow and clearing a space for the newly transplanted cells.

Current methods of treatment that include repetitive rounds of chemotherapy come with a host of complications, as well as costs. The conditioning regimen in the chemotherapy process can take as long as 42 days to prepare a patient for transplant, at a cost approaching one million dollars. Unfortunately, due to the severe toxicity, complications, and side effects, not all patients will survive the regimen, and despite the arduous regimen, many of the patients will not have responded well enough to the treatment to prepare them to accept a BMT transplant.

In contrast, Iomab-B is showing tremendous efficacy results, with 100% of patients responding to the therapy. Additionally, 100% of the patients responded to cell engraftment by the 28th day of treatment. This important and differentiating factor is further demonstrated by the overall survival rate of patients, with only a 10% overall rate of survival for chemo patients compared to upwards of 30% survival in data taken from the Fred Hutchinson Cancer Research Center for Iomab-B phase I/II trials.

The supporting data from both FHCRC and the internally generated company trial data have allowed ATNM to progress to its Pivotal Phase III SIERRA Trial.

ATNM SIERRA Trial

The SIERRA trial is a study of Iomab-B in elderly relapsed refractory AML. As mutually agreed with the FDA, the trial design is a single pivotal study, with dependence on trial results to indicate direction, and is enrolling patients 55 years of age or older with relapsed or refractory AML. The study will have a control arm of the physicians choice, using conventional standards of care with curative intent. The primary endpoint is a durable and complete response after six months (180 days).

The trial is designed to efficiently provide distinguishable data sets, with 150 patients being randomly assigned into either the Iomab-B arm or the control arm of the trial. Between day 28-42 of the trial, there may be a crossover, whereby patients that have not enjoyed a complete response in the control arm may be subsequently treated with Iomab-B. All patients, irrespective of group, will be followed through to the 180 day evaluation period for final efficacy data and response measurement.

Because the control arm is being addressed with curative intent, the comparative analysis will be useful in determining the distinguishing affects of Iomab-B over current forms of treatment. The evaluation period will also extend 180 days from the start date, and evaluate safety, tolerability, efficacy, and other modalities and observations.

Taking Iomab-B Commercial

Assuming the data is convincing, ATNM then has to define its market. By all indications, the commercial market for Iomab-B is compelling. With a highly concentrated BMT market, whereby the top 30 centers perform over 50% of the AML BMT procedures in the United States, Actinium can position themselves to benefit from the current Prospective Payment System, whose exempt cancer centers perform over 20% of all AML BMT procedures. These PPS centers could be reimbursed immediately if Iomab-B is approved, increasing the likelihood of its use. Furthermore, with the reimbursement issue affably addressed, ATNM will also be in a position to benefit commercially from marketing Iomab-B independently and will retain full economic rights, enabling ATNM to entertain other strategic opportunities.

The potential financial benefit to Actinium Pharmaceuticals for an approved Iomab-B could be extremely lucrative. Transplant activity in the U.S. alone is estimated to exceed $4 billion by the year 2020, and with Iomab-B being studied in several phase II/III trials, inclusive of the SIERRA trial, the opportunities are broad, especially when additional therapeutic focus can be made toward MDS, ALL, NHL/HL and MM, different forms of leukemia that Iomab-B may be able to effectively treat.

Iomab-B has shown every indication of being a winner in treating and conditioning patients for a BMT. The market is craving an alternative to current standards of care, and the early data certainly supports the likelihood for a continued profile that exhibits strong safety and efficacy data. Investors can also anticipate an update from several near term data and value drivers expected from clinical programs and strategic initiatives. These drivers include Phase III trial investigator meeting updates, EU Orphan Designation updates, the completion of patient enrollment by the end of 2017, periodic data publication, and, importantly to investors, interim trial updates throughout 2017 and full top line data expected in the first half of 2018.

Identifying the potential in Iomab-B, inherent with its clinical successes and near term catalysts, offers less than half the story to be told by ATNM. And, therein lay the safety net for lofty investor prognostications.

Actimab-A, ATNM’s second clinical trial, holds just as much promise, and similar to Iomab-B, does not appear to be even remotely reflected in the share price.

Actimab-A And CD33

Actimab-A is a treatment for elderly patients that have been newly diagnosed with AML, and is a second and equally compelling reason behind the probable near and long term success for ATNM. Developed at the Memorial Sloan Kettering Cancer Center, Actimab-A is a second generation therapy from Actinium Pharmaceuticals’ HuM195-alpha program that has been studied in almost 90 patients in four clinical trials.

Actimab-A targets CD33, a molecule that is expressed on 90% of AML cells. Actinium-225, the radioisotope used in Actimab-A has strong cytotoxicity, which has been pointed out by some pundits as a point of vulnerability in its use. However, ATNM has been keen to demonstrate in explicit terms that even though there is cytotoxins present, they travel only a very small distance, and has demonstrated the toxicity profile to be benign.

This second generation therapy was born through Bismab-A, a therapy that showed a clear anti-leukemic effect, and was able to clearly demonstrate increased survival rates among patients. However, the isotope bismuth 213 was not a commercially viable product due to various reasons. But, the reason that the term “practicing medicine” is used to describe the profession is that the facilitators of both procedure and science are always in practice, receptive to learning the answers to questions that constantly present themselves.

Therefore, when Bismab-A proved itself to not be a commercially viable option, the evolution of the therapy developed into Actimab-A by utilizing the commercially viable isotope 225, which has not only shown a clear anti-leukemic effect, but also supports an excellent safety and tolerability profile. As for CD33, it has become a validated target in treating AML, and has earned strong interest from major pharmaceutical companies. This interest places ATNM in an enviable position to capitalize on their own clinical studies, as Actimab-A is one of the most advanced programs addressing CD33, and has the potential to be best in class in terms of therapeutic value.

While being best in class is a milestone, in and of itself, ATNM made a strategic addition to the management team by hiring Dr. Mark Berger as Chief Medical Officer, and plans to leverage upon his expertise to enhance the clinical development capabilities at the company. Dr. Berger brings to Actinium Pharmaceuticals over 20 years of drug development experience, highlighted by the FDA approvals of Mylotarg for AML, the only drug approved in AML in almost forty years, and Tykerb for breast cancer.

Dr. Berger’s skill and experience are a tremendous asset for the company, as they now have a key team member in place that can build a robust clinical development program to execute on the clinical progress of Iomab-B, Actimab-A, and future clinical programs.

CD33 Interest Invigorated

There is typically little argument when presented with the fact that ATNM is among the leaders in targeting CD33. While Pfizer at one time had a drug on the market, Mylotarg, it was so plagued with debilitating issues that it was withdrawn from the market in 2010. Although Pfizer pulled the drug due to issues unrelated to CD33 targeting, the issues that arose that demonstrated a link to cytotoxic agents, response rates of less than 30% in patients over the age of 60 years old, and serious side effects and tolerability issues reported by patients.

Actimab-A, on the other hand, is also a CD33 targeting radiomuunotherapy, addressing ADC- alpha emitters. The product is labeled with alpha emitting Actinium-225, offers a higher dose of energy and a focused range of therapeutic value. Unlike Pfizer’s failed product, Actinium’s next generation Actimab-A has shown significantly less toxicity and a far less degree of adverse side effect in patients. ATNM commenced its phase II trial in September of 2016.

Actimab-A, in its own right, is far more deserving of investor respect and value than it is currently realizing, especially when compared to other pharmaceutical companies in the CD33 target space. ATNM has a valuation that is dwarfed by its competitors, irregardless of the fact that ATNM is equal to the task of advancing through its phase II and III trials in relative short order. Immunogen, for instance, has a market cap of roughly $206 million dollars, significantly higher than the current valuation of $75 million dollars for ATNM. While not necessarily an apples to apples comparison, the stark difference in valuation is questionable, as Actinium Pharmaceuticals is further ahead in clinical trials than IMGN, is targeting New AML, and is utilizing the same ADC-alpha emitters. But, markets are rarely efficient when it comes to valuing small and emerging companies. While this is a detriment to ATNM now, it may play in favor of early adopting investors who can clearly see the value drivers behind the company’s platforms.

Actimab-A Phase II

The current phase II trial for Actimab-A has treated 18 patients to date, with patient age being 60 years or older. Where the phase I trial treated patients with relapsed/refractory conditions, the phase II trial is targeting newly diagnosed patients. The phase II trial is a dose escalating trial, using a fractionated dosing regimen, compared to the single dose treatment used in the phase I trial.

Safety and tolerability showed compelling and positive results, with no severe or unexpected reports of unfavorable effects. In addition to having a favorable safety and tolerability profile, much was learned from the phase I trial, which has led to a refined and more responsive approach in the phase II data.

The phase II data is showing that the fractionalized dosing of patients led to the hypothesis that peripheral blast burden can have a material impact on patient response. The data showed that fractionalized dosing led to corrections in peripheral blasts, which have led to higher patient response rates. Additionally, these response rates appear to be independent of patient population or severity of disease.

While the preliminary data from the phase II trial is encouraging, there is still work to be done. The phase II trial, which was initiated in September of 2016, will enroll a total of 53 patients. The FDA has agreed to allow the removal of LDAC (low dose cytrabine), which is expected to generate a more straight forward trial protocol. Additionally, ATNM will incorporate PB burden thresholds as part of the inclusion criteria, with a stipulation that hydroxyurea control of PB is allowed. To facilitate the trail in an expeditious and efficient manner, ATNM has planned on doubling the number of trial centers, and to expand the clinical development team. If the trials prove efficacious, there is potential to move into a pivotal trial based on reporting positive data to the FDA. Of further and welcome interest for investors, the open label trail design will allow for one or more interim data analyses and updates.

Drivers For 2017

While the science is often difficult to understand, the main questions that investors typically sift down to are related to the near term value drivers for a company. For ATNM investors, quite a few can be expected.

On the Iomab-B front, investors can expect updates and analyses from the phase III SIERRA trial, as well as information generated from the phase III SIERRA trial investigator meeting. Orphan Designation from the EMA was announced in 2016 , to compliment the already announced Orphan Designation from the FDA, and the company should be providing regular updates related to continuing enrollment and reports from the Data Monitoring Committee. Investors can expect top line data to be released in the second half of 2018, which will highlight data from the expected 150 patients enrolled in the trial.

Information from the Actimab-A trial is also expected to provide some key insight as to progress of that study. Investors can expect interim data in mid 2017 from the recently announced phase II trial, as well as to be informed of the developmental pathway for Actimab-A after the meeting with the FDA.

ATNM has a host of opportunities to leverage from, which is expected to lead to additional therapeutic indications and may also target additional clinical programs in 2017 and 2018, with ambitious plans to host four simultaneous clinical programs. Based on the position of the current trials, ATNM may be in a strong position to attract both partnership and licensing opportunities, as well as collaborative and strategic opportunities.

As of October 2016, ATNM had roughly 55.7 million shares outstanding, and approximately $25 million in cash. Liabilities totaled to roughly $3 million dollars, with some of that liability related to derivative liabilities.

Actinium In 2017

Investors that have been watching ATNM stock during the prior year may have not liked what they have seen from a valuation standpoint. But, from a clinical perspective, they should be excited for the future. In an investment world driven by short term motive and quick gains, investors too often get caught up in a current headline and forget the value in maintaining a disciplined and thought out investment strategy.

A company like ATNM deserves time to develop, as does any company that is working on developing best in class therapeutic treatments. Companies like ATNM are setting the bar for others to follow, and while it may take slightly longer than expected, once that bar is set it will be tough for competitors to clear. ATNM is well funded for the near and intermediate term and is well into the later stages of its clinical trials. With the stock trading at a paltry $75 million market cap, it is unjustly undervalued in relation to its peers.

Just several months ago, ATNM traded almost three times higher in price with data that was less compelling than what is being demonstrated today. While markets remain inefficient, they do ultimately correct, and it is likely that the share price may soon catch up with the fundamentals at ATNM.

With a full plate of data expected to be released in 2017 and 2018, exclusive of the anticipated additional trials planned by ATNM, the current share price may offer a compelling case for investors to take an early position and hold confidence that management will execute on its strategic mission. While no stock goes straight up, there does come a point when valuations for companies that are demonstrating proof of concept, coupled with a strong balance sheet, border on becoming ridiculously mispriced. Based on all of the action at ATNM, supported by strong data and concurrent phase II and phase III trials, calling the current pps “ridiculously low” is an understatement.

Finally, while it may be premature to call ATNM a potential “30 bagger”, as was the case for Celator, it is not unreasonable to project the potential for ATNM to enjoy a transformational rise in share price as they begin to release more robust data in the next several months. In the meantime, it may be fair to also infer that just about no value has been given to either Iomab-B or Actimab-A, two clinical trials that clearly deserve far more respect and consideration than they are getting.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in ATNM within the next 72 hours.

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DarioHealth Corp DRIO Stock News

DarioHealth Corp (NASDAQ: DRIO)

For investors seeking emerging growth investment opportunities, DarioHealth is worth a close look for investment selection. DarioHealth whose MyDario mobile data management platform is disrupting the multi-billion dollar diabetes monitoring industry within a unique, all-digital, patient-centric glucose monitor. Dario launched in the U.S. in March 2016 and has since ramped to close to 20,000 devices sold already. The business model is recurring revenue as approx. 80% of the users then order the strips (razor blade model at 75% gross margin) as they continue to use the MyDario. Dario’s marketing strategy is 100% digital/social media.

DRIO is gaining excellent traction with a revolutionary smart diabetes management solution that is mobile app-based and minimally invasive. Its business model encompasses“members” with a recurring revenue subscription with high margins. The Company is adequately funded for the next year of growth with $8M cash on hand.

Dario has developed a glucose monitoring suite that is centered around the smartphone. It proves to be potentially disruptive to the market as it not only uses the phone to physically take readings, but immediately sends the data to the cloud where it can be shared with medical professionals, loved ones, etc. Being referred to as the “fitbit of diabetes”, the software provides the user with a completely new experience, storing the data and manipulating it through proprietary,customize-able software, which is updated every quarter based on user feedback. From here, the user can begin to better understand how what he/she eats and his/her activity affects their glucose levels in real time.

Their business model follows that of the razor/razor blade. Proprietary test strips are delivered to subscribers at a cost that is comparable or below that of an insurance copay. Each subscriber, to date, has produced an average of $350 annually in revenue to the company. With gross margins in the 70-80% range, it will not take a large share of the half billion diabetics they have to market towards in order to take this company to the next level and beyond. Recently, Dollar Shave Club was acquired for $1B or 6.5X revenue derived from its “members”.

Finding these gems can be rewarding, evident by the Unilever purchase of Dollar Shave Club for one billion dollars, as well as Under Armour’s purchase of myfitnesspal for $475 million dollars.

Disruption has value, and it’s becoming apparent that it may be far less costly for large players to simply acquire these fast moving, tech savvy companies like DRIO, instead of trying to keep pace with their new generation business metrics that provide the capability to change direction and strategy in a quick fashion.

DarioHealth Meter MyDario

Disruption Wins

These days, being disruptive to an industry can be extremely beneficial to a company’s health. In decades past, product and service evolution was slow, which allowed companies time to mature and develop markets. Speed may have killed in the past ways of business, but in today’s market, it is the lifeblood to survival, becoming the prime differentiating factor in identifying which companies will be the survivors in a competitive landscape that is flush with aggressive and enterprising investors.

DRIO fits the “disruptive” definition to its core, capitalizing on a diabetes related glucose monitoring market that is expected to eclipse $24 billion dollars by the year 2020. Additionally, DRIO is not only looking to advance the next generations of its existing monitoring devices, applications and platform, they are also progressing almost seamlessly to secure a leadership role in the current $10 billion mobile health application market (mHealth). Further, DarioHealth is going to be well positioned to capitalize on the growth of the mHealth market, which is expected to generate in excess of $31 billion in potential revenue to those positioned to meet the needs of the market and its customers.

Although being the disruptive kid on the block is certainly a game changer in company specific terms, the importance of having a plan in place to maintain that market edge is equally important. With DRIO developing a strategically sound plan to benefit from a recurring revenue model, as well as from the boon in mHealth applications, their market position may become increasingly solidified in the next several years.

Measuring The Benefits

DRIO is looking to exploit the potential within a huge diabetes market. Each year over 1.4 million Americans are diagnosed with diabetes, and an additional 86 million people are diagnosed with pre-diabetic conditions. In addition to these developing cases, there is an estimated 30 million adults and children that have already been diagnosed with diabetes in the United States alone, with a staggering $322 billion being spent in 2012 to diagnose, treat, and provide preemptive treatment to monitor the disease.

For those who pay attention to commercial advertisements, enormous attention and financial resources are being focused toward the treatment of diabetes, with blood and glucose monitoring devices being marketed aggressively to a diverse market of customers that have become reliant on disease management in their daily lives. At DarioHealth, the mission is to address the maintenance of diabetes for patients through a three-pronged approach by improving medical outcomes for people with diabetes, providing a personalized patient centric healthcare platform, and minimizing patient cost to monitor and control the disease.

In 2017, DRIO plans to extend their position in the mHealth application market by delivering Native Mobile, DarioHealth’s smart-phone enabled complete diabetes monitoring solution. The solution benefits patients with a comprehensive method to manage diabetes by offering a highly specialized patient user app, a sync enabled blood glucose monitoring tool, and a cloud based storage program that allows patients to share information seamlessly through mobile and cloud based communication tools.

How DRIO Is Different

As stated earlier, DRIO has enough competitive ammunition to fend for themselves, making the job of an analyst relatively simple. When comparing DarioHealth’s products to its competition, the differentiation factor is magnified to such an extent that it may lead investors to wonder what the hold-up is in providing DRIO with a much greater company valuation.

Compared against current market heavyweights supported by Roche and other large pharmaceutical names, they each fall short in side-by-side comparison to DRIO. While each of the five largest suppliers of diabetic monitoring equipment can each check off several boxes of capability in a comparison, only DRIO is able to check off every box in a list of important attributes reflecting the capabilities most desired by patients. While five of the company’s largest competitors may be able to meet the needs of 2-3 features in the list below, DRIO is the only company that offers every item listed, making their device and application a superior choice in the market. DarioHealth offers an all-inclusive platform which includes:

  • An all-in-one meter, lancet and test strip solution
  • Pocket sized device
  • Powerless functionality
  • iOS smart-phone compatible
  • Records entire diabetes history
  • Ability to share information
  • Provides insulin recommendations
  • Offers a member and community platform
  • Offers patients actionable insights

Certainly, these enhancements not only serve to manage patient disease, but the DRIO platform is a useful tool to educate and connect patient and medical professionals into a user dialogue. The platform, beyond offering an enormous benefit package for its users, also delivers security, easy connectivity, education, and a consistent and well-organized method to track current and historical data.

Keeping in mind that diabetes is a disease that does limit certain activity, it does not need to be the defining characteristic for that person. For that reason, DRIO understands the importance to implement additional features into its monitoring, such as the ability to measure and record carb and insulin intake and physical activity. These measurements are comparable to a historical data set and can be easily shared with the patients support community, family, and medical staff. The Dario Smart is easy to use – a patient simply plugs in the device through an available auxiliary port on a phone or smart device, and then follows the easy to use platform to monitor and control daily results.

Revenue Model

With the groundwork laid to make the case as to why DRIO may emerge as a leader in the mHealth diabetes management space, it is also important that investors understand the multiple revenue streams that the company is addressing.

First, DRIO can generate the initial stages of revenue development through the sale of its MyDario device, which provides a Diabetes Lifestyle Management system for its users. Additional premium features that support the My Dario include specialized test strips, a subscription based product fulfillment service, and the sale of personalized service and value added features.

Next, the Dario Care platform offers a scalable disease management platform which provides meta-analysis for Payer’s and HMO’s, with additional information being made available to insurers. These revenue-generating services allow providers to obtain efficient data and management of its diabetic patient population, lowering cost of service for them and reinforcing the benefit of maintaining the relationship with the Dario Care platform.

Their business model follows that of the razor/razor blade. Proprietary test strips are delivered to subscribers at a cost that is comparable or below that of an insurance copay. Each subscriber, to date, has produced an average of $350 annually in revenue to the company. With gross margins in the 70-80% range, it will not take a large share of the half billion diabetics they have to market towards in order to take this company to the next level and beyond.

While each of these products and services add additional revenue streams, these should be viewed as value added components in addition to its products that are quickly penetrating the modern diabetic treatment landscape.

From core business, DRIO sold more than 18,500 Dario All-in-One Smart Glucose Meter devices in 2016. More than 8,500 were sold in the fourth quarter alone, increasing its market presence by 85% compared to the end of the third quarter. Complimenting those sales and proving the viability of the subscription based revenue models, nearly 95% of U.S. users have ordered test strips, driving fourth quarter consumable sales up by more than 65% quarter-over-quarter.

For all intents and purposes, DRIO is driving on all cylinders, delivering measurable results and building a strong portfolio of products and services designed to maintain the momentum.

DRIO By The Numbers

Ahead of the U.S. product launch, DarioHealth has been establishing a strong track record of revenue growth since Q1 of 2015. Since that time, DRIO has increased revenue by over 986%, with each quarter being sequentially higher in terms of revenue since Q1 of 2015. In 2016, DRIO has increased revenue by over 28% since Q1 and the forecast is strong going into the Q4 period, which may further bolster the sequential growth record.

DRIO is well funded and the capital structure is fundamentally sound. For the period ending on 9/30/2106, DRIO had roughly $3MM in cash and over $6.6MM in total assets, and has since raised an additional $5.1MM Liability to warrants is low at only $295K dollars, and the company has no short or long term debt. Shareholder equity has increased significantly to $4.3MM dollars in 9/30/2016, up from ($1.5MM) at year-end 2015.

Management is strong, led by Chairman and CEO Erez Raphael, who brings almost two decades of industry experience, also serving as Head of Business Operations for Nokia Siemens. Mr. Raphael is surrounded by equally capable and experienced management professionals, bringing a combined 60 years of business experience related to market development and product integration strategies.

CFO Zvi Ben-David has over 25 years of experience in corporate and international financial management and previously served as CFO of multiple public and private companies, including Given Imaging, which was acquired by Covidien for $860 million in 2014

Currently, DRIO holds a market cap of approximately $25 million based on its most recent closing price of $3.25 a share. The capital structure is attractive for new investors, with DRIO having only 7.5 million shares outstanding and no dilutive financing covenants weighing in the background. As mentioned, DRIO has approximately $8MM in cash and no debt. DRIO recently secured an investment from OurCrowd Qure, an Israeli digital health specialized fund, of $2.5MM dollars in exchange for a 12% equity stake in the company.

Revenue ramp thru Q3 2016:

DarioHealth DRIO Revenue

Finding Their Niche

DRIO has found a niche, allowing them to expediently take advantage of a market that is subject to rapid and intense technological change. For DRIO, they have remained a leader in the movement to offer services to a new generation of patients, while at the same time maintaining the right product and service mix to not alienate those that may be less tech savvy and reluctant to electronically generated results.

Banking on a diversified strategy to increase revenue streams from multiple channels, DRIO is building the foundation to benefit in both near and long-term growth of the diabetes treatment market. Buffed by a strong balance sheet and an honest and clean capital structure, DRIO is a company that investors
may find attractive on several levels.

Certainly, when looking at recent acquisitions that provided strong multiples for acquisition purposes, DRIO may benefit from the precedent being set in the market. Although shareholders should hope that management continues to build out the platforms well before considering either a partnership or acquisition, shareholders may be comforted by the fact that DRIO, even during its relative infancy in the U.S., does offer significant value to companies that do not have the focus or managerial ability to quickly change strategy or corporate direction.

For investors that are mining for disruptive emerging growth, DRIO may become a discovered gem. But for now, investors may have a short window to vet the company and decide if the future for DRIO aligns with their investment style. In my view, DRIO offers a sensible investment into a company that addresses a significant and targeted market, has a well balanced strategic plan, and has the funds and professional relationships in place to advance the company to the next level, a level which could very well increase both shareholder and company valuation significantly.

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AzurRX BioPharma AZRX Stock News

AzurRX BioPharma Inc (NASDAQ: AZRX)

As a goal, I strive to find emerging companies that are hidden gems in an industry: ones that are in a position to cause a paradigm shift in technology, benefiting not only investors, but also rewards recipients of that technology with a better method of treatment or service.

For AzurRx, the door to opportunity may have just been widened to a point that may place AZRX into the enviable position of being the leading company in a race to effectively treat EPI caused by chronic pancreatitis and cystic fibrosis. EPI caused by CP and CF are seriously debilitating diseases that cause severe pain and emotional distress, and the commercial market is in demand for an approved product that can effectively treat both diseases.

For those who did not follow the clinical trial results published by Anthera in December, the company did not meet expectations. ANTH stated that they “barely missed” their primary endpoint in its SOLUTION phase III trial, but this does not nullify the fact that this setback will likely cause ANTH to have their studies pushed back at least twelve months, perhaps longer based on an inquiring FDA. This leaves AzurRx in a prime position to capitalize on the published weaknesses of Anthera’s SOLUTION trial, as we think AZRX has already demonstrated greater levels of patient tolerability in regard to treatment. Additionally, while the disappointment at ANTH may bode in favor to less challenge on the competitive front for AZRX, the differences involved in the technology and approach to treatment is what investors should truly focus upon. Only then can investors truly appreciate and understand the revolutionary development of treatment that AZRX is working diligently to bring to the market.

Anthera Failed – Not A Surprise

While ANTH was aggressively targeting a treatment for EPI caused by CF using bacterial sourced lipases to compete with the currently marketed porcine (pig pancreas) based compounds, many professionals in the space were not entirely convinced that the science being tested would ultimately prove to be a viable candidate to treat the disease. To many, there were glaring holes in the thesis behind using bacterial based compounds, as they lacked a stable lipase activity profile in an acidic environment such as the gut. As ANTH pointed out on their conference call, one of the reasons for the lack of response in patients with CF was likely related to patients’ intestines being more acidic than expected. In other words, as ANTH continues to test their product in humans in phase 3 studies, it was clear that they underestimated the importance of having a drug that could withstand the acids within the human gut. Thus, while ANTH failed to meet its primary endpoints in its phase III SOLUTION trial, the benefit to AZRX is that the scientific community may now readily accept the data that demonstrates the superiority of using a compound stable at low pH (acidic environment) to treat EPI will be the best path forward for drug approval. As a reminder, the AZRX compound is derived from yeast and appears to show its optimum efficacy in a mildly acidic environment.

Here’s The AZRX Difference

As CNA Finance had covered just two weeks ago, AZRX is developing a platform to treat EPI caused by CF and CP in a manner that could potentially transform the way that the disease is treated. The market is huge, with an estimated $1.5 billion dollar global market for the company that can deliver the best treatment. If AZRX continues on track to deliver additional positive results from its MS1819-SD trials, physicians will surely shift their new prescriptions towards the superior product from AZRX, especially when the prime competitor has been clinically shown to have potentially severe adverse side effects. Although ANTH has suggested that an increase in their dosing regimen may ultimately prove to deliver better results, it is not unreasonable to believe that increasing a dose may lead to further aggravating, adverse events.

As noted earlier, beating down an already deflated stock is not in anyone’s best interest. What is, however, is informing investors about the differences and opportunity that is now available for the taking at AzurRx.

AZRX is currently progressing through an on-going phase II trial, in partnership with Mayoly Spindler, for MS1819-SD. The question is, what is AZRX doing differently to raise interest and excitement in the field of gastrointestinal disease? It’s simple. Although its early, AZRX is on track to prove that their non-porcine approach to treating EPI caused by CF is a far better and safer alternative to any current treatment available to patients.

AZRX MS1819-SD Trial

AZRX has announced the enrollment of the first three human patients in the MS1819-SD trial, with an expected 12-15 total patients being recruited for the trial that is expected to be completed in the first half of 2017. The dose escalation trial will further evaluate safety and tolerability, but will have an additional secondary focus on efficacy in a dose escalating trial. Unlike Anthera, the MS1819-SD compound being developed has shown no serious or adverse events during its pre-clinical animal models or its Phase I trial. Upon successful results, AZRX is looking to grab a huge portion of the available market, with an estimated 100,000 patients being affected in the United States with EPI caused by CP and an additional 30,000 with EPI caused by CF.

The medical and scientific team appear to have been spot on in their assessment that their yeast based lipase product will be be able to stand up to the formidable challenges imposed in the human gut, namely the acids and bile salts and thus will remain stable when treating human patients.

Since pig pancreas extracts were first used in the 1930’s to treat the disease, MS1819-SD cuts clearly away from the now antiquated porcine based technology, using a recombinant enzyme that is entirely vegan in makeup which is derived from the yeast Yarrowia lipolytica, a 100% non-animal compound. Earlier studies performed by AZRX have demonstrated that this yeast based compound can produce a treatment profile that can compensate for the pancreatic lipase deficiency that is common in CP patients.

While the market may have been focused on the potential being offered by ANTH and either their bacterial solution to the current pig pancreas, their lack of robust responses and poor safety profile does position AZRX into the forefront to bringing a meaningful treatment to patients inflicted with the disease. Even when recognizing that the data from AZRX is slightly less mature to call their concept a transformative approach to treating EPI caused by CF or CP, the road to bringing a revolutionary advancement to the market is well within sight.

Expanding On MS1819-SD

Investors understand that AZRX is committed to delivering shareholder value through short-term, a lower risk development pathway. In doing so, AZRX is developing a broad pipeline of non-systemic biologics to treat gastrointestinal (GI) and infectious disease.

The phase I trial for MS1819-SD not only showed safety and tolerability, but it also demonstrated the potential for patients to reduce a staggering daily pill burden of up to 40 pills per day down to 4-6 pills per day. And, in doing so, they may improve efficacy substantially in the process. Now, in the phase II trial, AZRX wants to drill down and investigate the dose response in patients by analyzing the coefficient of fat absorption and its change from the baseline score. This is a prime area where AZRX believes that they can prove an efficacy and convenience advantage over existing pig derived agents.

Early results using MS1819-SD indicated strong efficacy over a placebo group, with a 16% increase in coefficient of fat absorption (CFA). In regard to safety, AZRX treated test animals with 70,000 times the optimal therapeutic dose and punctuated its mark for delivering no severe or adverse side effects or events. Clearly, the path for AZRX is being bolstered on several fronts and patients are in need for a better treatment.

AZRX Beyond MS1819-SD

While AZRX may have been pushed to the forefront for its yeast based MS1819-SD compound, AZRX is also advancing additional biologics to prevent hospital acquired bacterial infections. Once again focused on the gut, AZRX is developing AZX1101 to block the activity of a broad spectrum of antibiotics from acting within the GI tract, intent on preventing toxicity of intravenously delivered antibiotics to the gut and the associated complications that could arise from the “healthy biome” in a patient’s gut from being disrupted.

Similar to the EPI market, the commercial opportunity for treating hospital acquired bacterial infection is substantial, with the CDC estimating that over 1.7 million cases are reported annually, causing or contributing to the cause of death of over 100,000 patients per year with an associated cost to treat patients running in excess of $11 billion dollars per year.

Investors may expect that AZRX will file an IND application for AZX1101 by the end of 2017, with a primary focus on preventing a broad range of antibiotic gastrointestinal adverse events, primarily focused on Clostridium difficile (C. diff) infection.

Investors Focus

Moving forward into the immediate future, investors should be clearly focused on the opportunities at AzurRx and MS1819-SD to treat EPI caused by CP and CF. The science and technology being developed by AZRX should rightfully begin to earn more visibility as the AZRX approach may now be sitting as the best and most viable treatment to combat EPI.

Analyzing the clinical results published by AZRX offers investors clear insight into how the acid and lipase stable compounds are in a position to become the treatment of choice by physicians. Improving administration and producing a clean safety profile is a major milestone in and of itself, however, the efficacy data is also supporting the science that even at modest doses, the response rates are already showing greater efficacy than competitor trials.

Analysts have also weighed in on the value of AZRX, with WallachBeth Capital initiating coverage with a “BUY” rating and a $7.00 price target. Additionally, AzurRx is well funded for the near and intermediate term, completing an IPO that raised over $5.3 million dollars in cash by issuing 960,000 shares to investors. The strong balance sheet provides the company the ability to aggressively pursue clinical validation for MS1819-SD and to take advantage of a market that is supported by strong patient advocacy groups that can add additionally leverage to nurture drug approval.

With only 9,631,088 shares outstanding, inclusive of shares sold in its IPO, AZRX may provide less liquidity than other emerging biotech stocks. This, though, is not a bad thing, especially with AZRX facing what may be a transformative time for the company.

Investors may also be wise to the potential of partnership opportunities that may come the way of AZRX, compounding the benefits already being recognized through partnerships with Mayoly Spindler is the TransChem deal, where AzurRx licensed proprietary transition state chemistry technology. With this, AZRX may next tackle bacterial biofilms on humans with the first market being H.pylori, the major offender in stomach ulcers. This alliance with TransChem moves AZRX even closer to positioning itself as a major player in non-systemic therapies for gastrointestinal and infectious disease.

With ANTH stumbling, the future for AZRX has brightened tremendously. Backed by strong data and an innovative and proprietary approach to treating EPI, AZRX should soon become a recognized figure in the fight against these debilitating diseases. And, if the market interprets the AZRX advances correctly, they should be considered the leader.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

While I seek to uncover emerging companies that I feel have true value and potential, it’s important that investors assign an appropriate time horizon to each of their investments, understanding that emerging companies need time to mature.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I have no position in any stock mentioned and no plans to initiate any positions within the next 72 hours.









[Image Courtesy of Pixabay]

IEG Holdings IEGH Stock News

While many lenders in the quick service, on-line lending sector have seen a relative slowdown in customer acquisition rates due to the prolific rise in the competitive landscape, IEGH is proving its ability to buck that trend.

IEG Holdings, leveraging off of the strength of their “Mr. Amazing Loans” product has not only experienced tremendous growth during the previous twelve months, but they have also put into place a corporate strategy to attract quality customers, capitalizing not only off of its competitive and consumer friendly loan products, but from the high level of consumer satisfaction and reviews that IEGH has received from its expanding customer base.

As it stands, IEG Holdings is one of only a small handful of on-line lenders that currently boasts an A+ rating with the Better Business Bureau. Yet, having strong reviews is only one part of the IEGH profile, having a better consumer product is the essential element to their emerging success.

“Mr. Amazing Loans” and IEGH, Far From Ordinary

First and foremost, it’s important to distinguish what IEG Holdings does differently from its competitors, factors that clearly define the strengths and opportunities that lay within the company’s business and strategic vision. In that process, several aspects emerge that point to the IEGH model as one that may lead to continued strong growth in the U.S. market.

It’s fair to note that on-line lending may have somewhat of a dubious past, with a substantial number of lenders flooding the market with deceptive, predatory and misleading loan products, counting on the consumers lack of initiative in reading the fine print when executing documents. IEG Holdings, however, is clearly not following their lead. And, to be entirely fair, with the company’s loan products being relatively new to the U.S. market, making a comparison between IEGH and its market competitors may be quite erroneous. Simply put, IEGH is different.

Instead of being typical to the current on-line lending process, the company is breaking from the industry norm, differentiating its “Mr. Amazing Loans” product by providing a transparent and simple approach to lending. Understandably, for many consumers it’s hard to break the pre-conceived notion that on-line lenders are in the market to squeeze the pennies out of a desperate consumer. While that may be true for some lenders whom rely on high risk, low credit score candidates to build its loan portfolio, IEG Holdings is different, focusing on a diverse market and strategy.

The “Mr. Amazing Loans” product provides an offering to consumers that rewards credit worthy candidates the ability to secure a quick cash loan of between $5,000 -$10,000 dollars. Even more appealing is that a “Mr. Amazing Loans” product is typically funded on the same business day that the application is submitted, and in some cases funding can occur within an hour of completing the application. The agreements are fully transparent, with no hidden fee’s or “fine print” costs designed to dupe consumers into making additional and unintended payments.

According to the Consumer Financial Protection Bureau, although many people are working full time, they still remain literally one or two paychecks away from enormous financial stress. IEGH, through its “Mr. Amazing Loans” brand, is working to fill that void, offering a service to credit worthy consumers that may require quick access to cash. Focusing on the reality that even the most successful people often find themselves in a bind, having a product available to them that offers speed, reliability and instant access to cash is a valuable resource.

As many people who have tried to access capital may know, going to a bank for traditional funding can be a logistical nightmare, and unless a customer can provide immediate and liquid collateral, the chances for loan approval is low. While the traditional banking system has remained stubborn against the small consumer in regard to capital access, the likelihood that that same credit worthy customer will receive approval from IEGH’s, “Mr. Amazing Loans”, may be highly probable.

“Mr. Amazing Loans” Application Process

Breaking away from the traditional methods of both brick and mortar and on-line loan processes, “Mr. Amazing Loans” has built a seamless application model designed to efficiently and thoroughly screen applicants who have applied for a cash loan.

Using a streamlined method of internal metrics that evaluate the risk associated in providing customer specific loans, “Mr. Amazing Loans” adheres to just a few basic guidelines to start the application process, and if a customer can meet these initial requirements, funding is generally approved.

First, rather than preying on those most susceptible to loan default, IEGH focuses on clients that have a minimum FICO credit score of 600, with most loans being provided to customers with a FICO score in a range between 600-750. In addition to attracting a worthy credit candidate to start the process, “Mr. Amazing Loans” does have some additional requirements intended to minimize default risk in a loan.

The applicants must be 21 years of age and reside in one of 19 licensed states, show proof of regular employment, have a minimum gross income of $40,000 dollars and have an established checking account with the ability to make weekly payments from an approved financial institution. While the qualifications may appear simplistic from a credit evaluation risk standpoint, “Mr. Amazing Loans” also employs internal metrics that further evaluate and qualify a potential customer, minimizing investor risk from losses due to excessive loan defaults.

From a business and marketing standpoint, the application process, from start to finish, offers customers with one of the quickest turn-around times in the industry, with few competitors able to match the same day funding advantage that “Mr. Amazing Loans” can provide.

And, this process has not gone unnoticed by customers, with the vast majority of them providing excellent reviews on “Mr. Amazing Loans” transparent lending practices, fee’s and simple on-line conveniences.

IEGH and “Mr. Amazing Loans” Investor Prospective

While IEGH is offering a product and service that is clearly gaining market momentum, evident by the growth of its loan portfolio, investors want the assurance that an investment into the company is prudent. And, while investors can clearly take comfort in the fact that IEG Holdings only provides loans to vetted and credit worthy customers, that benefit is only a single component to building investor confidence.

Beyond the credit profiles, there is great value in the fact that IEGH is fully and properly licensed in 19 states, with a goal of becoming fully licensed in 25 states by mid 2017. While some investors may shrug off the company’s licensing advantage, it’s important to point out that many competitor on-line lenders operate on the fringes of legality, taking advantage of current loopholes and loose regulation that provide little more than a legal interpretation for them to operate freely in a given market. And, history has shown that there is great risk when relying upon interpretation rather than substance. In some instances, regulators have shut down loosely licensed lenders, causing forfeiture of large loan portfolios and making collection efforts unenforceable. This is not the case at IEG Holdings.

Absent the fact that the company does not operate with a brick and mortar concept, the company is certain to remain strictly compliant with all state law, adheres to explicitly stated lending practices and does not run the risk of jeopardizing its loan portfolio due to a tenable business operation. To the contrary, IEGH offers investors the assurance that they are complicit with each state’s consumer lending mandates, insulating themselves and its loan portfolio from potential regulatory action.

The “Mr. Amazing Loans” Return on Equity

IEGH has completed a thorough reorganization for both its corporate profile and capital structure. Coming off a share restructure in November of 2016, IEGH has positioned itself for long term growth with an aggressive and streamlined focus on controlling expenses, while at the same time building a performing loan portfolio founded on prudent and proven strategies.

IEG Holdings, due to its lack of brick and mortar presence, relies on direct mail, on-line and social media advertising to attract its potential client base. “Mr. Amazing Loans” offers a consumer up to $10,000 dollars in same day cash with an interest rate of between 19.9%-29.9%. In doing so, the company provides extensive disclosure with no hidden loopholes or agenda to snag customers in a never ending spiral of debt payment. Rather than treating clients as a one-time prospect, where they are then spun into an abyss of relentless payments and penalties, IEGH looks at each client as offering the potential for a long term relationship. IEGH accomplishes this goal by offering refinance tools and incentives to repay loans without pre-payment penalty, exorbitant late fee’s, incidental charges such as “check processing” fee’s or other self-serving incidentals, items that contribute to low customer satisfaction and less product loyalty.

Taking advantage of technology, IEG Holdings can keep expenses to a minimum. Customer acquisition rates amount to less than 2% of loan revenue, and combined with the competitive interest rates being received, provides IEGH with a net equity return on loans of approximately 20%. Additionally, the company has proven the benefit from direct mail marketing, with a robust conversion rate which contributes to the company’s low customer acquisition costs. IEGH estimates that a well targeted mailing holds the potential to be converted into millions of dollars in loan volume. IEG Holdings also has a mechanism in place to sell off loan leads that do not meet company specific targets, providing additional revenue.

With IEGH incorporating each component of their corporate strategy into a single seamless model by offering attentive customer service and a credible loan product, IEGH and “Mr. Amazing Loans” currently boasts its A+ rating with the Better Business Bureau and maintains an internal goal to re-finance up to 80% of its loans made, creating long term value and building a loyal customer base.

IEGH Turning Profitable

In December of 2016, IEG Holdings reported financial results that proved that their strategy to streamline costs and target credit worthy customers is working. The company not only reiterated its profitable Q1 guidance for 2017, but also recorded record loan volumes for the period. Since January of 2015, IEGH has seen its loan portfolio increase by over 154%, rising from $5.5 million dollars to over $14 million dollars as of December 13, 2016.

With IEGH now turning profitable, the likelihood that IEG Holdings can remain profitable in the near term is probable, based on an anticipated rise in both loan and revenue growth. And, IEGH management may be expecting more of the same, with two planned initiatives focused on creating shareholder value.

Turning profitable, and combined with disciplined cost control and a proven lending strategy, IEGH management has declared that a cash dividend will be paid in April of 2017. Further, based on management’s visibility to anticipate future profitability, the company intends to institute regular quarterly dividends that are expected to commence in 2017. Additionally, management has further stated that the company will investigate opportunities to repurchase shares in the open market, providing support to the stock on an on-going basis. With IEGH being thinly traded for the time being, having a mechanism in place to provide bid support can be an attractive feature for current and future shareholders.

IEG Holdings Seeks To Expand Loan Portfolio

With much of the capital and corporate restructure behind them, IEGH has launched a private offering of up to $10 million dollars in aggregate principal amount for its 12% senior unsecured notes due December 31, 2026. IEG Holdings is underwriting the offering on its own and intends to utilize the net funds to increase the size of its loan book.

This non-dilutive offering maintains the outstanding share count at roughly 9.7 million shares, with a trading float much smaller at an estimated 2.75 million shares. As noted previously, with IEGH being thinly traded and with both the outstanding share count and trading float being low, the trajectory of the stock going forward on improved profitability and fundamentals may be extremely rewarding.

Even though prior financial results should not be relied upon to predict the future, for a business like IEG Holdings, once the formula for profitability is established and proven, the likelihood for continued and consistent performance is enhanced. Although no guarantees are in place, if IEGH successfully completes the $10 million dollar notes offering, the company may have the ability to increase its loan portfolio by over 60% from current levels, driving additional revenue from interest earned. Additionally, with the cumulative effect of newly raised funds intended to increase the loan portfolio, coupled with the revenues currently being generated through interest payment receivables, the IEG Holdings share price begins to look undervalued at current levels from a sector based, multiple valuation point of view.

IEGH Outlook for Investors

While the on-line lending industry may regularly be faced with the challenge of presenting themselves differently from unpopular public perception, IEGH, in practicing a departure from industry standard, has set a high and reputable bar in a field that has enormous barriers to entry.

Progressing methodically to remain strictly compliant in all regulatory aspects, the company is on the path to reach their stated goal of becoming fully and properly licensed in 25 states prior to mid 2017. Upon doing so, IEGH will be well positioned to promote the “Mr. Amazing Loans” suite of products to a market that is clearly receptive to being provided a viable alternative to traditional lending.

For investors, IEG Holdings may be a compelling investment candidate in that they have already reached the profitability milestone. While some investors work tirelessly to find emerging companies that are working towards positive cash flow and hopeful profitability, IEGH already offers investors both of those components, along with a capital structure that may be conducive to increasing shareholder value.

Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

While I seek to uncover emerging companies that I feel have true value and potential, it’s important that investors assign an appropriate time horizon to each of their investments, understanding that emerging companies need time to mature.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in IEGH within the next 72 hours.

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AzurRX BioPharma AZRX Stock News

AzurRX BioPharma, Inc (NASDAQ: AZRX)

AzurRx has been generating a lot of attention lately. And, while many emerging companies tend to get some early nods from investors and analysts, the focus on AZRX has strong fundamental underpinnings.

AzurRx is developing a broad pipeline of non-systemic biologics to treat gastrointestinal (GI) and infectious diseases. Importantly, for AzurRx investors, the company is working to provide near term shareholder value by focusing on short-term, lower risk development pathways. More specifically, AZRX recently announced initial patient enrollment for its phase II “MS1819-SD” trial, which sets the stage for a robust 2017.

AZRX Pipeline – MS1819

AzurRx BioPharma’s lead agent, MS1819-SD, is a yeast based recombinant lipase intended to treat exocrine pancreatic insufficiency (EPI), a disease of the pancreas, that is related to chronic pancreatitis (CP) and cystic fibrosis (CF). The company has an on-going phase II trial of MS1819-SD and is currently recruiting and treating patients in Australia and New Zealand, with initial efficacy results expected to be released in the first half of 2017. On Decemebr 21st, AZRX announced that it has, in fact, enrolled the first three patients in this phase II trial at two sites in New Zealand.

The phase I trial not only produced strong safety and tolerability results, it also demonstrated the potential to provide a materially improved efficacy profile and dramatically reduced pill burden. Currently, patients may be prescribed up to forty pills per day to treat EPI, an issue that AzurRx BioPharma is confronting head on. With MS1819-SD, the company aims to reduce the pill burden, down to 4 to 6 capsules per day, while potentially improving efficacy versus the existing standard of care.

AzurRx Advances Phase II Trial For MS1819-SD

The ongoing Phase II study of MS1819-SD, conducted in a partnership between AzurRx BioPharma and its European partner Mayoly Spindler, is an open label, dose escalation study that is being conducted outside of the United States, in Australia and New Zealand. The company expects to fully enroll between 12-15 patients with EPI caused by CP within the next few months, with data being released in the first half of 2017, although AZRX may provide regular updates as warranted and consistent with the study protocol.

While the primary focus of this Phase II trial is to evaluate the safety and tolerability of MS1819-SD dose escalation, the secondary objective is to investigate the efficacy and dose response in patients by analyzing the coefficient of fat absorption and its change from the baseline.

The enrollment of the initial patients in this Phase II trial is a significant milestone for AZRX and furthers the path for MS1819-SD to more fully demonstrate its therapeutic potential, with the goal of improving or eliminating many of the devastating and painful conditions affecting EPI patients.

Unlike the current standard of care which is derived from the pancreas of pigs, MS1819-SD is a recombinant enzyme that is derived from the yeast Yarrowia lipolytica, which makes it non-animal based and entirely vegan compound. In earlier studies tested on animals, MS1819-SD demonstrated an outstanding profile to compensate for the pancreatic lipase deficiency that is common among CP patients. Replacing the activity of this enzyme can alleviate greasy diarrhea, fecal urge, weight loss and could ultimately alleviate malnutrition.

Upon successful trial results, AZRX will look to address a lucrative market, with potential to treat over 100,000 patients in the United States with EPI caused by CP and an additional 30,000 patients with EPI caused by CF. Currently, the standard of care is treatment with porcine (pig) derived replacement pills and in 2015, that market was estimated to be $820 million in the United States alone, and $1.5 billion globally, according to both the National Pancreas Foundation and analysts on Wall Street that cover the sector.

AZRX Pipeline – AZX1101

AZRX’s second initiative, AZX1101, is a proprietary complex biologic being developed to prevent hospital acquired bacterial infections. AZX1101 works by blocking the activity of a broad spectrum of antibiotics from acting within the GI tract. In doing so, AZX1101 may prevent the toxicity of intravenous antibiotics to gut bacteria and the complications that would come from the “healthy biome” in a patient’s gut from being disrupted. The commercial market can be substantial, with the CDC estimating that over 1.7 million hospital associated infections are reported each year, either causing or contributing to death in about 100,000 patients a year, with the annual cost to treat the infections running as high as $11 billion.

AzurRx intends to file an Investigational New Drug (IND) application for AZX1101 by the end of 2017, with a primary development focus on preventing Clostridium difficile (C. diff) infection. However, beyond C. diff, AZRX expects that AZX1101 may demonstrate broad utility in the prevention of antibiotic associated gastrointestinal adverse events.

AZRX Creating Shareholder Value Through Expertise

Behind AzurRx’s pipeline advancement is a strong management team and accomplished advisory board. AzurRx’s core management and scientific team has over 60 years of experience covering hepato-gastroenterology and infectious diseases, clinical practice, basic scientific research and translational medicine, pharmaceutical R&D and university board leadership. This team is focused on creating shareholder value through optimizing clinical milestones, several of which are expected during the next six to twelve months.

AZRX – Word On The Street And Partners

With AZRX focused on both developing and expanding its clinical pipeline, Wall Street analysts are also beginning to take note of the potential in the company. Analysts at WallachBeth Capital have initiated coverage on AZRX shares with a “BUY” rating and a twelvemonth price target of $7.00 per share, representing potential upside of 71% from the current share price.

Coming off of its recent IPO, priced at $5.50 per share, AZRX raised over $5.3 million by issuing 960,000 shares to investors. The proceeds place AZRX in a stable cash position for the near- and intermediate-term, allow AZRX to aggressively pursue clinical validation trials for MS1819-SD, and provide ample resources for working capital and general corporate expenses. The funds will also be used to advance the IND application AZX1101, planned for 2017.

As of November 22, 2016, AZRX had only 9,631,088 shares outstanding, inclusive of the shares sold in its IPO. The low share count provides shareholders significant leverage with positive clinical milestones. AZRX is actively pursuing business development. In December, AzurRx announced a promising deal with TransChem, Inc. that will enable AZRX to license TransChem’s proprietary transition state chemistry technology for MTAN inhibition. AzurRx management believes that this partnership will enable the company to tackle one of the major frontiers in medicine, the impact of bacterial biofilms on humans with its first potential market being the ability to impact h.pylori, the major culprit in stomach ulcers. This partnership with TransChem is expected to move AZRX even closer to becoming a significant player in non-systemic therapies for gastrointestinal and infectious disease.

Understanding AZRX In Simplest Form

Once all of the scientific language is absorbed and investors try to distinguish between a gastrointestinal disease and a GI tract infection, AZRX can be broken down to simplest terms by going to the root of AzurRX BioPharma’s existence.

AZRX management describe the company as “business led, science driven, and clinically advanced.” While this sounds simplistic in nature it drives home the basic mission at AzurRx, to provide shareholder value by developing technologies that can deliver the highest quality therapies to treat patients afflicted with gastric disease.

Secure with a global presence, AZRX is well positioned to advance on multiple fronts, aiming at potential drug approvals outside of the United States, and expanding its geographic footprint. With AZRX having a basic research presence in France and a clinical presence in countries such as Australia and New Zealand, management appears to be aiming at expedited international approvals as well as the United States.

That said, investors should understand that they are on a mission alongside AZRX, one that may produce some truly revolutionary clinical outcomes. If the phase II trial results with MS1819-SD can confirm what has already been demonstrated in prior trials, the science at AZRX can be quickly thrown into the mainstream.

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Vitality Biopharma Inc VBIO Stock News

Vitality Biopharma Inc (OTCMKTS: VBIO)

Beginning in 2014, marijuana stocks were in vogue. Investors were scrambling the markets to find almost any stock that promoted themselves as an emerging player in the cannabis industry. The drawback in that investment strategy, however, was that many investors were too preoccupied with finding a company with a catchy name, rather than a company that actually had some substance.

While many investors were drawn in by the myth that millions would be made by investing in the companies that purportedly planned to cultivate and sell medical and leisure based marijuana, they should have been focused on investing in companies that are intent on utilizing the plant’s cannabinoid properties, which are consistently demonstrating extraordinary benefit in treating a host of medical conditions.

With that said, if investors had only remained diligent on seeking realistic and lucrative potential through cannabis pharmaceuticals, Vitality Biopharma would not have been overlooked. In fact, VBIO is one of only three cannabinoid related companies that I see as actually being able to produce any meaningful revenue within the next few years.

The Difference In Vitality Is VBIO

The so called “green rush” that began in 2014 led investors to a host of penny stock names, many of whom misled investors with pipe dreams of securing a position in the emerging multi-billion dollar marijuana market that has developed through the relaxation of marijuana laws throughout the United States and abroad. In fact, while many of these penny stock lottery tickets were pumping out press releases touting the potential in their future, only three stocks were actually working on initiatives that can lead to actual long term shareholder value and a dominant market position in both the near and long term.

Vitality Biopharma, VBIO, is one of those three.

Investors need to separate themselves from the nonsense being promoted by companies that are looking to cultivate and sell the product. Despite what they say, once Big Tobacco decides that it’s time to enter the market, these small time entrepreneurial bud houses will be pushed out of business faster than a bee to a beetle. For those investors betting a small fortune on any of these penny stock names, consider saving your money while you still can. The real money will be made in cannabinoid pharmaceuticals (CP), and VBIO has carved out a respectable niche.

VBIO is one of only a few cannabinoid drug companies that can point towards meaningful clinical data that shows cannabis has been useful for its lead drug indication, IBD. They are now undertaking proof of concept and efficacy studies that promote the benefit of using cannabinoids to treat a long list of disease and medical conditions. Two other companies, GW Pharmaceuticals and Zynerba Pharmaceuticals, are also working on extracting the benefits of cannabis in order to address targeted medical applications. While both are formidable contributors in the space, each is targeting a different portfolio of specialization, keeping the market for VBIO essentially free from any near term competition. In fact, with the extensive barriers of entry associated to the CP space, VBIO may enjoy certain exclusivity for the foreseeable future.

VBIO Targeting NBS And IBD

VBIO is intensely focused on treating Narcotic Bowel Syndrome (NBS) and Inflammatory Bowel Disease (IBD).

In the case of NBS, it’s been reported that up to 81% of opiate users have functional bowel disorders, with more than 58% reporting chronic abdominal pain during an independently conducted study. From this set of patients, over 6% will ultimately develop NBS. The symptoms associated with NBS can be devastating, and it has been reported that the downward spiral related to quality of life issues has been associated with 61% of all drug overdose deaths. Thus, the need for VBIO.

VBIO is answering that call, working to develop an alternative treatment to opiate prescribed therapy. It has been formally noted that amongst patients that are on an opiate controlled pain management plan, the opiate use often disguises the actual medical condition, leading to misdiagnosis of illness, escalating dosages of the opiate and eventual drug dependence if the pain management program is not appropriately managed.

VBIO’s response to developing a viable and well tolerated cannabinoid solution can eliminate both the prolonged use of opiates as well as to eliminate the potential for opiate drug dependence. In that respect, VBIO is conducting its VB100 trial, with phase I/II studies expected to be advanced in 2017. By leveraging off of clinical data that has previously demonstrated the effectiveness in using cannabis to treat NBS and IBD, VBIO has essentially been provided a springboard to getting the VB100 therapy to market. This saves VBIO both time and money.

The VB100 trial will seek to provide proof of concept data designed to proffer initial drug approvals. These same initiatives will further provide additional proof-of-concept detections in large market disease indications. VBIO’s “first in human” clinical study of cannabinoid gylcosides, termed “cannabosides” is the proprietary edge that VBIO will be exploiting, allowing them to focus their efforts in treating multiple clinical indications from the technology.

These phase I/II trials for both NBS and IBD will examine the use of multiple cannabinoid agents for initial evaluation of the pharmacokinetics and systematic relief of the chronic pain and cramping associated with NBS and IBD. Along with the preliminary importance of a stellar safety and tolerability profile, VBIO will further attend to secondary endpoints as part of its trial design, details of which will be forthcoming.

A prime advantage for VBIO is that they can quickly advance these trials by relying on the development of proprietary molecules and manufacturing processes that have been developed internally. This ability provides Vitality Biopharma insulation from technology poachers and adds an additional layer of exclusivity in treating targeted diagnoses. VBIO already has the manufacturing capability to enable large scale development of small molecule drugs by using the process of enzymatic biosynthesis, and by having this part of the infrastructure already in place, the need for additional funding to build out the manufacturing structure is minimized.

VBIO Has A Targeted Prodrug Delivery Method

VBIO utilizes its proprietary cannaboside prodrug, which allows VBIO to deliver a targeted and specific dose of its cannabinoid compound. In prior, non-related studies, cannabinoids have proven the ability to effectively treat Crohn’s disease patients, with over 40% of the patients having had the disease put into remission. These prior results, though unrelated to Vitality Biopharma, do have the potential to open additional regulatory pathways for expedited approval, with both 505(b)1 and 505(b)2 filings potentially available to VBIO.

VBIO has shown itself to be a revolutionary presence in the CP field, developing a new class of cannaboside prodrugs that can provide a potent site-specific method of delivery to render local therapeutic effect, while at the same time reducing or eliminating the systemic delivery into the bloodstream and brain of THC, the chemical compound within the plant that causes a psychoactive response. Utilizing the fortified strength of the prodrug, the company is in the unique position of providing patients with an extremely potent dose of the active cannabosides that induce the response. This is a huge differentiating factor for Vitality Biopharma, because as others may potentially be progressing through pre-clinical and clinical trials, the amount of cannabinoid that can be used by them is significantly reduced due to the effects of the excess THC that is sent to the brain. This makes the proprietary VBIO prodrug an exceptionally important component of the company’s clinical trials, and offers more promise than its competitors in getting a product quickly to market.

Cannabinoid Prodrugs At VBIO

VBIO’s stable of novel cannabinoid prodrugs has shown reliable improvements in both drug solubility and stability within the cannabosides. These betterments have led to over twenty patent pending cannabinoid compounds that will not only bolster the VBIO intellectual property portfolio, but can also provide additional revenue generating resources for Vitality Biopharma. While the prodrug technology itself is not a new concept, VBIO’s novel compositions of matter, including its glycoside prodrugs of THC, CBD and CBDV related compounds are, and each may help to secure an enormous competitive advantage, especially with the potential that each compound may enjoy patent protection through the year 2035.

Independent clinical trials have already demonstrated the benefits of using cannabis compounds to treat both Crohn’s and IBD. In fact, the results have shown that at least 75% of patients reported improvement and relief from visceral and abdominal pain. Capitalizing off of the promise of these independent results, VBIO is advancing its clinical initiatives to target the 1.4 million Americans that are affected by IBD, with most being diagnosed prior to the age of 30 years old.

From a targeted revenue perspective, the market for VBIO can be substantial, with current classes of drugs available to treat IBD alone, including anti-inflammatories, immuno-suppressants and antibiotics projected to generate over $9.6 billion dollars in revenue in 2017. While these drugs may contribute to controlling and easing the painful symptoms of NBS and IBD, Vitality Biopharma is searching for a way to actually control the disease and to stop its progression. While large pharma seeks to manage pain, VBIO is looking to control the disease.

With cannabinoids being proven to have a far higher degree of therapeutic effect over opiates in certain applications, VBIO’s prodrug technology offers the best of both worlds. First, it could provide enormous and systematic relief in abdominal pain in the patient. And second, it may allow patients to refrain from using potent and addictive opiates that often lead to misuse and additional exasperating complications that include constipation, inflammation of the intestinal tract and psychoactive symptoms that include nausea, fatigue and restless sleep.

VBIO’s prodrug, in sharp contrast to current methods of treatment, enables the selective delivery of therapeutic value to specific tissues or organs, including the gut and brain, enabling the compound to have a more targeted and therapeutic effect. VBIO, with its prodrug, is in select company, with only about 15 prodrugs being classified as potential blockbusters, those drugs classified as being able to generate in excess of $1 billion dollars of revenue per year. With a $9.6 billion dollar market potential, VBIO can quickly join the club.

VBIO Pipeline Broadens

While VBIO is targeting NBS and IBD as a primary clinical initiative in 2017, the company is also making significant progress to treat additional medical needs. With the NBS and IBD human trials set to begin its phase I/II trials in 2017, the company also plans to advance an additional phase I study in 2017, VB210, to treat neuropathic pain, irritable bowel syndrome, opiate induced bowel dysfunction, muscle spasticity and Multiple Sclerosis.

Additionally, VBIO will be initiating pre-clinical studies to advance drug indications where cannabis has already proven itself to be useful, which can lead to shortened clinical trial time, less cost and less regulatory burden.

Regulatory Changes Benefit VBIO

While VBIO is essentially isolated from much of the legal confusion that is being generated between Federal and State enforcement of marijuana laws, the company is actually a benefactor of the ongoing referendums that have been pushing the legalization of marijuana in at least 26 states. And, although the legalization may not directly impact Vitality Biopharma from a clinical standpoint, the trend toward acceptance of the drugs use has also enlightened many people to the tremendous medicinal benefit of the drug.

With the public, and regulators, finally recognizing the enormous medicinal benefit of cannabinoids, VBIO is taking advantage of the sentiment, seeking both DEA and FDA approval for its cannabis pharmaceuticals, utilizing the low cost, low risk prodrug strategy that was discussed earlier.

And, if VBIO can demonstrate that their proprietary glycosylation platform can enable existing drugs to be tailored for selective delivery to the brain and gut, substantial partnership opportunities may arise from large pharmaceutical companies that are working to comply with an FDA that is struggling to curb the opiate abuse in the United States.

VBIO- The Stock

VBIO has seen a steady rise in trading volume during the past few weeks, with investors apparently coming out of their shell to recognize the potential that VBIO has to offer the cannabinoid based pharmaceutical market.

While VBIO trading has become active, the price volatility has remained fairly flat. This, though, is not necessarily a bad thing for investors. With an outstanding share count at roughly 14.3 million shares and with an associated trading float of less than 11 million shares, the more it churns at current levels the tighter the springs may become for an upside move. The exchange of VBIO shares from weaker to stronger hands, perhaps traded by some who are taking advantage of end of year strategies, may create a short lived opportunity for investors at these levels.

With two key trials set to advance in 2017, VBIO has set the stage for at least two catalysts that investors can expect to occur in the near term. In addition,VBIO will be providing interim data from the ongoing trials and will further educate investors as to how the cannabinoids are faring against neurological disorders in their pre-clinical studies.

VBIO has virtually no debt and does produce revenue, separating itself from the early stage companies that are years away from producing even a penny of revenue. With only 14.3 million shares outstanding, raising funds will not be a materiel detriment to investors. And, if VBIO catches up to the share price that more directly reflects its current clinical position, raising funds at levels in excess of $2.00 a share may not be materially dilutive to shareholders.

As I said at the onset, too many investors took their eye off of the fundamentals of the emerging cannabis players and did not take the time necessary to speculate on where the real money in this industry will be made. Now, many are holding stocks at sub penny levels with little hope to recover losses in the future.

In sharp contrast, VBIO offers investors an opportunity to invest in a cannabis company with real infrastructure and a data set that provides a compelling argument for its continued success. Too often, stocks are simply missed by the market, and once the market finally recognizes them, the moves can be swift to the upside.

In the case for VBIO, the low float, coupled with the catalyst driven potential in 2017, makes VBIO an attractive investment opportunity for any speculative investor.

Disclosure: I have no position in any stock mentioned and no plans to initiate any positions within the next 72 hours.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.








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Long Island Iced Tea LTEA Stock News

Long Island Iced Tea Corp (NASDAQ: LTEA)

While many small and emerging companies have tried to navigate their way into the multi-billion dollar RTD beverage space, only a tiny fraction have been able to advance significantly beyond their local grocery store, a welcomed community gesture that can make a local flavor famous.

Long Island Iced Tea Corp., on the other hand, is an early and emerging success story that is brewing success on both a local and national level, well on their way to becoming a stapled brand on the Eastern corridor, with a strategic vision to stake a national claim within the multi-billion dollar beverage industry. To capitalize upon these aggressive ambitions, LTEA is leveraging upon its professional expertise, and by engineering multiple strategic and managerial initiatives that are designed to capture a sizable national footprint for their ready to drink tea and beverage products.

LTEA, The Brand

The first, and perhaps the most important strategic accomplishment from a branding standpoint, was to successfully trademark the iconic name “Long Island Iced Tea”. No easy task, by the way, with legal teams working for over four years before being officially granted the exclusive rights and privilege to use the name. The trademark allows for LTEA to become the only ready to drink iced tea and beverage company to legally use, in any non-alcoholic product mention, the reference to Long Island Iced Tea.

While some may argue that a name is just that, a name, industry experts who have a keen sense of brand and market development will argue that LTEA, with this trademark, has essentially been provided a tremendous shortcut to massive name and product recognition, the first major hurdle for emerging retailers to clear. The product name, in and of itself, has immediate name recognition on a national level, allowing LTEA to take advantage of a preconceived brand and to differentiate themselves from a market that is becoming saturated with mimicked bottles and colorful but non-specific labeling and design.

With the brand in place, LTEA then focused on assembling a top notch, well respected management team that has demonstrated a history of generating market demand and product dominance in this competitive industry. This was major accomplishment number two.

Top Management At LTEA

For those with entrepreneurial roots, they know that building a brand from the ground up is no easy task. Typically, ideas begin at the entrepreneurial level, where they develop a product and plan intent on making it big in the marketplace. From there, they work hard to generate brand recognition and to generate product placements in as many locations as they can, as fast as they can. If successful in that regard, the company success becomes so prolific that, in more cases than not, they can no longer keep pace with demand. In a nutshell, their success becomes their failure. It happens more times than not with early stage projects. Despite the revenue and phenomenal product placement, they ultimately crash and burn because they did not have the managerial infrastructure in place to direct the pace of growth and chart the proper strategic course.

This clearly is not the case at LTEA. Senior management at Long Island Iced Tea is comprised of a “who’s who” of business talent combining over 100 years of beverage and consumer goods experience. Philip Thomas, CEO, leads an all star cast of talent that features key industry figures from Independent Liquor, Snapple and Cadbury Schweppes, Arizona Beverage and a COO that has over 30 years of experience in building iconic brands and developing products for Keebler, Coca Cola and Thomas’ English muffins.

Combined, the management team at LTEA is a powerhouse lineup, each proficient at key and strategically important aspects of not only building the brand, but having the capability to scale the business quickly and without the usual hiccups associated with brand development and segment penetration.

Most any company would be happy to get just one leader of this caliber, but the company has gone a few steps further, securing a vastly talented arsenal of experience, setting Long Island Iced Tea up for rapid growth in both the near and long term.

But, lets face it, a managerial team is a huge asset, but if they don’t have a great product to present to the market, eventually the magic wand runs out of juice. That won’t be the case at LTEA, however.

Knocking Down Barriers

It’s apparent that customers are showing a taste for LTEA products, evidenced by the extraordinary product trajectory that the company is currently experiencing. As stated earlier, its relatively common for a local market to provide the first few product placements to maintain the community relationships, however, its quite a different story once the company moves outside of their hometown markets.

Long Island Iced Tea has been on a swift pace in securing product placement, with products already available in over 26 state’s within the U.S.A. What makes the placement expansion that much more appreciable is that the LTEA team has been successful in aggressively penetrating one of the most competitive markets in the food and beverage industry. LTEA’s ability to quickly and efficiently expand placements is where the strength and depth of management at LTEA will continue to play a significant role as the company plans its 50 state roll-out.

Consumer demand is in place to support aggressive expansion by LTEA. The ready to drink tea segment (RTD) is expected to eclipse $55 billion dollars by the year 2019. With that market already significant, it gets even larger when accounting for the steady change in consumer demand that is demonstrating a consistent shift in preference toward non-carbonated, non-cola style beverages. Industry estimates predict an approximate 6% rise in compounded annual growth for the RTD beverage category. This market, and its cumulative growth, plays well into LTEA’s strategy of securing a 3.5% market share in each of the product segments that they intend to serve. This 3.5% share is already being realized in its existing market placements, making the initial goal of 3.5% share in a national market quite achievable.

Long Island Iced Tea has already placed the brand in over 1000 Food Lion stores, who will be stocking the shelves in December. According to senior management, the initial sale to Food Lion is the largest single sale in the company’s history and sets the stage for exponential growth in the coming earnings reports that are filed with the SEC on a quarterly basis. The Food Lion sale alone will send revenues soaring year over year, however, with the company aggressively building relationships for a quick surge in placements, LTEA may very well be on the verge of announcing several strategic developments in the near future.

The LTEA Difference

Ultimately, product makes the difference. Hence, having a great product can make a great difference. LTEA is well aware of that concept, which is perhaps why the company is focused on using only top quality ingredients in all of its beverages. The company uses only real cane sugar, non-GMO products and includes no artificial additives of any kind in it’s formulations. Additionally, for its diet beverage alternatives, Long Island Iced Tea uses a Splenda based sweetener, standing clear from aspartame and its increasing decline in consumer preference.

Utilizing the best ingredients and remaining focused on product freshness and regional accessibility, LTEA clearly understands the market well enough to develop the best products to place in specific markets and regions throughout the country.

For instance, although it may seem obvious, LTEA management is focused on ensuring that a consumer gets what they desire. They understand that from a quality standpoint, when serving a customer who desires a sweet beverage, then by all means give them the best option, clean and delicious pure cane sugar.

Isn’t it ironic that within a multi-billion dollar industry, many RTD company executives still take the consumers preference for granted and continue to concoct formulations that are full of chemicals and artificial sweeteners? These execs are clearly ignoring the trends and shift in taste.

Not true at LTEA. Management clearly recognizes the shift and is addressing the changes head on to meet both changing demand and consumer preference.

I don’t mean to belittle the senior management that will be competing against the LTEA product line, but it just seems that the longer some of these guys stay in place, the less creative they become. Maybe that lends good reason as to why the company has been able to assemble the caliber of talent that they have, being committed to meeting and exceeding customer demand without the need to save a few pennies as an obstacle.

Even the slim, 18oz. bottle tells a story of distinction. With a beverage market now saturated with either the generic vita-water bottle or the flimsy bottled water replica, LTEA has designed a unique bottle design that offers ease in handling and provides easy consumption while on the move. Let’s face it, most people are on the go these days, and they eat and drink on the fly. Creating a package design is about more than good looks, it needs to offer form and function that is suitable to the product. And, I believe that the Long Island Iced Tea team has hit a home run on both fronts.

These guys recognized some design issues early on during the development phase of the brand and undertook an extensive evaluation process to design and implement its new labeling and packaging designs in 2016. The labels are crisp and fresh, promoting healthy images and vibrant colors that promote a healthy and natural image for the product.

The fantastic part of the new labeling and design is that it can have a global reach, with easily understood graphics and symbols of quality.

Global Reach For LTEA

Since I touched on global, it’s fitting that I mention the fact that LTEA recently purchased Alo Juice brands, in an all stock, earn out deal. The company will be relying on the expertise of Julio Ponce, who will serve as the VP of Southeast and Latin American sales. While Alo Juice is clearly a popular beverage that is gaining momentum throughout the United States, the primary target market for LTEA as it begins its aggressive roll out, will target the Latin customer, embarking on a mission to seize upon a revenue target of between $5 million and $10 million dollars for the Alo and Long Island Iced Tea beverages in that region alone. If that primary sales goal were reached, it would represent an increase of over 300% from total company sales in 2016 alone, and when the additional counts are tallied from the remaining regions throughout the country, the growth rate for LTEA can be extremely impressive.

Talking about growth is just chatter, but LTEA has the distribution channels to back up the rhetoric. The company has product or near product placements with Food Lion, Menards, ACME, Ingles and SuperMax, just to name a few in the U.S. Market. From their foreign interests and channels, they utilize the agreements and distribution channels built through Unique Foods in Canada, Tres Mojitas in Puerto Rico and has similar arrangements for product distribution in Bermuda and Honduras. The good news in all of these channels is that Long Island Iced Tea is just now becoming aggressive in taking advantage of every inch of shelf space available that makes both economic and strategic sense to develop. Thus, the growth in these markets is not anywhere near being fully matured.

National And Global Reach Brews Revenue

From the revenue perspective, LTEA is delivering exceptional growth. Since the company formally launched its product sales in 2014, the company has generated year over year growth in excess of 214% as of the 3Q of 2016. This takes into account the seasonal fluctuations within the RTD tea segment, yet, at the end of the day, the trend line is strong and is clearly moving from the lower left corner of the chart higher to the top right corner. And, with the company poised to add additional product placement in the coming weeks and months, the chart may have a blow out to the upside once the company is able to report the progress.

With just under 8 million shares outstanding, it won’t take much in the way of buying pressure to drive the current $4.71 per share price substantially higher. Take into consideration the $1.7 billion dollar, all cash deal, that Dr. Pepper Snapple paid to Bai Brands, providing a 7X multiple to expected 2017 revenues. That deal was backed up by another high multiple deal when Pepsi paid KeVita roughly $250 million dollars to take over its $60 million dollar company, providing them with a 4.2X price against revenue. These deals demonstrate two things. First, the market is still hungry for acquisition targets and two, the multiples being paid are quite healthy.

If we look at these two case studies as examples, LTEA is already trading under its relative value if they were to be acquired today. However, if the projected revenue of between $10-$25 million dollars is reached by LTEA within the next two years, the share price becomes grossly undervalued.

Long Island Iced Tea Making Its Presence Known

Already, LTEA is making its presence known in several local markets in the Eastern region, commanding a 3.5% market share in the chain stores that currently market the LTEA brands.

Suggesting that the Long Island Iced Tea team can continue to generate the same 3.5% market share, which is their short term goal, LTEA can generate revenue in excess of over $180 million dollars in the U.S. alone and over $270 million dollars on a global scale. Then provide the 4X multiple if a suitor came hopping toward LTEA headquarters and the price tag for the company could well exceed $80 dollars per share. These hypotheticals are based on a 3.5% market share of the $55 billion dollar market.

Listen, this is not a pie in the sky number. The company is generating both sales and momentum. Then, once that momentum is coupled with a seasoned and deeply experienced management team, the goal of meeting a 3.5% penetration rate is a very manageable goal.

My analysis leads me to believe that no member of this management team would be willing to make a career move that brings with it the potential for years of development processes and trial and error placement decisions. LTEA management came together on this venture because they have a fantastic product with exceptional growth potential for worldwide development, acquisition and licensing deals for several of its unique brands.

The immediate potential for Long Island Iced Tea is to take advantage of the low hanging fruit, that being the RTD tea and Alo beverages. Beyond that, I expect that the company will further advance its product lineup to include alcoholic beverages in their product mix within the next twelve to eighteen months. That figure alone, based on industry estimates of over $200 billion a year in “ready to drink” sales, can undoubtedly add explosive revenue to an already blossoming revenue base. While the addition of alcoholic beverages may not be too far down the road, investors should clearly focus on the undervalued proposition that LTEA offers investors at these current levels. Then, consider the addition of alcohol based products a windfall.

Until I see a reason to expect otherwise, I am giving this seasoned team more than the benefit of the doubt that they will be successful on targeted strategic fronts and will deliver substantial shareholder value to investors.

While no investment should be made with the expectation that short term results will lead to an overnight run in the stock price, investors should be aware that LTEA has such a tiny public float of shares, that if LTEA does surprise on an earnings front, the laws of supply and demand can easily take the stock price significantly higher.

And, if investors focus on a 4X revenue multiple that has been paid to two similar companies in 2016, they can remain grounded to what an appropriate valuation may be and react to trading that provides either under or over valuations. Hence, if LTEA delivers revenue results in excess of $20 million dollars in 2018 and can maintain its outstanding share count at 10 million shares or less, LTEA should be able to almost double in price from its current level. However, if management executes on its aggressive placement strategy, the revenue numbers can far exceed the $20 million dollar full year 2018 target that I believe LTEA can already reach.

Investors need to stay focused as to what is transpiring at the company headquarters and should pay close attention to revenue reports, forward guidance and additional vendor relationships that I believe may soon be announced. Although I only know as much as the next shrewd investor, I know a little about reading between the lines and doing the diligence required to catch a rising star before it makes it to full orbit.

With LTEA having an outstanding product line, boosted by a significantly talented management team that has proven their ability to get things done on schedule, the window for investors to catch LTEA at these levels may soon be closing. From the public documents that I have read, I expect some significant announcements within the next three to six weeks, ones that will demonstrate the power and capability of both brand and management.

And, if I am correct in my prognostications, LTEA investors may fare very well in the near to medium term.

Disclosure: I have no position in any stock mentioned and no plans to initiate any positions within the next 72 hours.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.





[Image Courtesy of PEXELS]

Ecoark Holdings Inc EARK Stock News

Ecoark Holdings Inc (OTCMKTS: EARK)

For the millennial generation, holding the latest technological advances in the palm of their hands has become commonplace. Middle school children with iPhones, most owning smart tablets, are now part of an inter-connected social community that is taking far more personal action to bring about social change and to promote personal responsibility as citizens of the “world” than ever before.

Within that movement, there are a handful of select companies that are also taking on a leading role to endorse and incorporate more socially conscious methods of conducting business, with a goal of promoting sustainability, eliminating substantial amounts of waste and streamlining business processes with the intent to keep these savings perpetual.

Ecoark Holdings (EARK), for instance, is introducing an approach, through its subsidiary, Zest Fresh, that can literally save millions of tons of food per year, provide logistical solutions that can save fossil fuel resources and provide an important solution within the farm to market supply chain that can ensure quality, freshness and safety in the foods and commodities that consumers purchase.

What Is Zest Fresh And What Does It Have To Do With EARK?

Zest Labs is a subsidiary of Ecoark, a company that is piloting a supply chain enhancement system to address the significant challenge of reducing fresh food waste throughout the world. In the United States alone, estimates indicate that over $165 billion dollars worth of food makes it to the trash cans instead of hungry mouths. Part of the issue is simply irresponsible purchasing by consumers and businesses, other causes include inefficient expiration dates provided on packaging, often leading to spoilage due to the inaccurately calculated shelf life of perishable food items.

Contributing to the system wide inefficiencies and product waste factor is that preceding the emergence of the EARK “Zest Fresh” system, there have been very few, if any, products or systems that have had the capability to enable the tracking of perishable food products throughout the supply chain cycle. Prior to Zest Fresh, the food supply chain from farm to market was predominantly manifested by hand written documentation and loosely enforced safety inspections. Zest Fresh, though, can offer an immediate solution at every level of the supply chain, providing precise information as to how that food was handled, processed, transported and eventually put to sale to the end consumer.

Ironically, despite the enormous waste of valuable food and resources, EARK is one of the first companies to actually introduce a viable product and system that can immediately translate to increased freshness for the consumer, streamlined efficiencies to locate and eliminate failed processes that lead to waste, and specific and direct suggestions necessary to boost profitability for those in the supply cycle. In a multi-billion dollar market, EARK is the pioneer to offer a fully integrated, user friendly platform specifically designed to address two key drivers….be socially responsible to eliminate food waste and to allow its users to become streamlined, efficient and profitable.

A Simple Tool That Does All The Work

Zest Fresh, to put it in simplest terms, puts in place a mechanism that encourages both supplier and retailer to adhere to best practices and remain cognizant to quality and freshness guidelines. Or, they can go it alone and risk the chance that an entire shipment of product can be refused by the purchaser due to the lack of quality control and subsequent poor product quality.

The EARK tool provides both companies and workers with real-time tools and alerts that not only improve operational efficiency, but can also serve to demonstrate that the products being purchased from that company have the highest probability of being top grade, properly handled products. In other words, the Zest Fresh system can offer large quantity customers a high degree of confidence that what they will be receiving will be shelf ready and remain fresh for an extended period of time. And, for a retailer, that’s the perfect recipe for an increasing profit.

Not surprisingly, when a supplier knows that they are being “watched”, they will typically do the right thing every time. However, Zest Fresh is no “big brother”, it’s a tool designed to bring material and positive change to a business and industry, intended to reduce unnecessary waste and eliminate the loss of potential revenue by reducing waste.

Is Zest Fresh, Accountable To Freshness

The concept is relatively simple, however, the science, data and technology behind the Zest Fresh system will be difficult for any potential competitor to duplicate. Taking into consideration the strong IP portfolio at EARK and the barriers to entry get even higher after Zest Fresh is introduced.

The system works by placing a small sensor based transmission device onto a pallet of food. This device stores, records and transmits, in real time, the logistical journey of that product. The EARK system will provide the purchaser with vital information about the purchase.

Zest Fresh can identify if the critical temperature zone has been breached, record in exact time how long the product was in transit and provide additionally important information as to whether the items have been moved or stored in an unacceptable staging area. With these measures in place, a customer is treated to better quality product with a historical manifest to ensure its safety.

The Benefits Of The EARK System Are, Well, Systemic!

Not only does the customer benefit, the seller does as well. The Zest Fresh system offers both the production and transportation companies with a logistical “first in first out program” for the product, replacing the antiquated eyeballing of pallets with the hope that conscientious employees rotate the product. To that end, the Zest Fresh system dictates which pallet should be loaded first, which should be sold first and manifest deliveries to maximize quality by delivering product in a “freshness sequence” that provides top grade product to both wholesale and retail sellers.

The transmission tag uploads real time data to a hand held computer or tablet, providing instantaneous information at each level of the supply chain. The software that drives the system can use predictive analytics to predict product failure or can be used to predict when a product will fail, or lose freshness. Ultimately, the goal is to extend shelf life for food, maximize efficiency in how the food is handled through environmental factors and then use the analytical tools to predict how many days of freshness the product has remaining. Having this knowledge leads to more products on the shelves, which translates to more dollars in the register.

The beauty of the Zest Fresh system is that it is applicable at every stage in the supply chain, allowing for broad industry adoption. Here’s how it can work.

Farmer Uses Zest Fresh

A farmer can often be the party blamed for inferior quality products. Without Zest Fresh, he has little defense. With the system, however, he can monitor the flow of delivery for each of the products sold. He can ensure that appropriate measures were in place at all times to maintain the products quality and freshness. He can remain fully appraised of the best storage and transportation processes and become aware if the product was detoured from its intended path.

From a business perspective, EARK is helping to save money with Zest Fresh by cutting waste, refines the pre-harvest season and defines a portrait of quality for his products. If the farmer knows the customers are watching, you can bet that he will perform even better for them. The farmer also remains part of the information loop to provide valuable insight and information as to how or why the vendor is seeing waste in the purchase. Maintaining a streamlined and accurate line of analytical communication builds increased confidence in the grower and vendor relationship, building trust that each are committed to preserving the quality and integrity of the products being sold to consumers.

The Wholesaler

The next value added component of using Zest Fresh technology takes place at the wholesaler level. These are the entities that sell to retail outlets or sometimes directly to consumer. For the wholesaler, quality is crucial to remaining successful in a business that is not short of competition.

Vendors use Zest Fresh to track real time data related to product temperature, time traveled and product variance due to storage facilities that can affect a products freshness. But more importantly, wholesalers can utilize the systems analytical tool that can predict the length of product freshness as a key driver to promote sales and storage efficiency within their own sales channel.

While the FIFO method of selling goods is still commonly recognized, the Zest Fresh system will provide a wholesaler with information specific to a product pallet, allowing them to shuffle product sales as necessary to take advantage of the data provided by Zest Fresh, which analyzes product characteristics as well as purchase date. Simply because a pallet is first in does not make it an automatic first out, this is where Zest Fresh provides significant customer benefit.

The wholesaler also has the benefit of tracking temperatures and logistics, in real time, to ensure the safe transfer of all food product, isolating themselves from potential liability in food borne illness cases that are beginning to permeate the industry landscape. In any business, information is power, and owning a data set that memorializes the journey from farm to consumer can be a critical component to not only protecting their business, but to build and maintain strong relationships with clients.

Consumer Benefit

The consumer receives the ultimate benefit, at least from a freshness standpoint. While the retailer may find a benefit to sharing the logistical data with the customer, the consumer ultimately provides their endorsement by purchasing the food. It is not unreasonable to imagine several of the organic and whole foods based grocery chains demonstrating their commitment to quality by offering the Zest Fresh information as a guarantee of freshness and quality.

With produce being a commodity item, except by looking at the outer leaves or skin of a product, consumers must take the word of the retailer that the product has been handled properly and safely throughout the supply chain. Too often, these days, restaurants are in the news because of food borne illness related to lettuce, tomato and other commodity items. These occurrences are not only costly for the customers who get ill, the headlines associated to the illness can cost millions of dollars in lost product due to recalls and can cost tens of millions in market cap to publicly traded companies that may have served the food.

Once again, information is power…but, it can also be protection.

Ecoark Capital Structure

Here’s the way I see it. EARK is offering investors an opportunity to take advantage of a multi billion dollar industry that is need of bottom up efficiency, that is, from the farm to market. If Zest Fresh can save the food industry a small percentage of its current waster, it is a vast opportunity for the food industry and EARK.

From a capital perspective, EARK is well positioned, with a small amount of debt and only 36.7 million shares currently outstanding and approximately 41 million shares on a fully diluted basis. From that, the trading float is relatively small with only about 10 million shares being traded in the open market. While EARK may experience some growing pains and potential dilution to raise capital, management appears to be focused on building the company through innovation and implementation, rather than by outright share dilution.

Zest Fresh Potential For EARK

It’s worthy to repeat, for customers that use Zest Fresh, information becomes power. But, even more than that, Zest Fresh can also provide a farmer or distribution company with credibility. The use of the system demonstrates the willingness of the seller to take the extra step to provide exceptional service and uncompromising quality. Perhaps more significant, it also demonstrates the willingness of the seller to allow the buyer to peek behind the company screen, unafraid of what the buyer may see.

While technology continues to advance at tremendous speed, the reality in business is that people still make the difference. I spent over twenty five years in the restaurant business and remained with the same vendor and salesperson for that entire period. I did so because we built a relationship on mutual trust and confidence that each of us would fulfill our role in being responsible customers to each other.

Even though the Zest Fresh will never replace a person, it will certainly work to boost the level of trust in a mutually beneficial relationship. While many restaurants are fine with commodity grade products, many are explicit in regard to quality specifications and supply chain handling.

With patent protected technology, Zest Fresh is in a position to capitalize on a three tiered strategy, providing crucial information from ground to consumer. And, while freshness and quality is always a prime concern, the many millions of dollars that can be saved by modeling best practices from the data provided by the Zest Fresh system, the amount of food and resources saved in just a single year would be enough to feed millions of people a month.

Thus, from a social, economic and financial standpoint, the Zest Fresh system may be the most beneficial tool that has been brought to market in the food and hospitality industry in quite a long time. The benefit from farm to table is enormous, and in a world that is beginning to get squeezed by population growth, maximizing output and reducing waste will be crucial for the coming generations.

The EARK solution offers the best of all worlds for both the environmentally conscious and the business savvy…sustainability of resources and bottom line profitability. And, in which ever order gets priority, it still delivers a win/win proposition for all involved.





[Image Courtesy of Wikipedia]

Thought Leader Discussions

Gevo, Inc. GEVO Stock News

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Gevo, Inc. (NASDAQ: GEVO) Before we get into this interview, I'd like to extend a special thanks to my friend Joey who both set up the...