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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.

[Image Courtesy of Pixabay]

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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