ChromaDex at Pivotal Juncture

Jul.20.11 | About: ChromaDex Inc. (CDXC)

VFC's Stock House has been monetarily compensated by JSDC LLC on 29 June to cover CDXC.OB for a period of 90 days. The fact that VFC has been compensated inherently indicates a strong bias on my behalf. The goal of this website and all articles published on my behalf is to provide investors with information, opinions, and starting points about various companies across many sectors. It's up to each individual investor to decide what he or she finds relevant.

ChromaDex Corp. (NASDAQ:CDXC) is at a pivotal juncture in the company's history, with the commercial launch of its first full product line, BluScience, set to hit GNC stores nationally in August. Earlier predictions had the line hitting GNC in July, but a minor manufacturing delay has pushed the launch back a few weeks.

The four BluScience products are based on the company's proprietary natural ingredient, pTeroPure. pTeroPure comes from pterostilbene, an ingredient that occurs naturally in blueberries and serves as a powerful antioxidant and defense system for the plant, but has also demonstrated the ability to do the same in humans. These benefits have been investigated in early research, and the results have shown that pTeroPure could be specifically beneficial to supporting a healthy heart. Third party research has indicated that pTeroPure may assist in blood pressure control and also reduce anxiety.

The BluScience line is ChromaDex's first wave of bringing the potential benefits of pterostilbene to market. HeartBlu, for healthy heart support (containing pTeroPure, blueberry extract and phytosterols), EternalBlu (containing pTeroPure and other anti-oxidants that support cellular health and minimize the effects of oxidative stress), TrimBlu (containing pTeroPure, jojoba and other vitamins and minerals to support metabolism), and Blu2Go (a melt containing pTeroPure and caffeine for energy support) will all be available in GNC stores and on the GNC website.

The commercial launch of the BluScience line, according to statements made by the company in a recent presentation posted to the ChromaDex website, will be followed by an aggressive marketing campaign that will highlight the products in print, television and Internet ads across the nation. National advertising will pick up in Q1 2012, when BluScience retail distribution has had a chance to gain a foothold.

It is also planned that the initial wave of the launch will then be followed by a potential push into national retailers such as Walgreens (WAG), Rite Aid (NYSE:RAD), CVS and Wal-Mart (NYSE:WMT), among others.

ChromaDex also owns exclusive rights relating to pterostilbene in the control of cholesterol, which further expands the claims of marketing pTeroPure as a healthy heart agent. The validation of these claims may come by the end of 2012, when the company expects to hear final word from the FDA regarding its request for a qualified health claim (QHC). Should the FDA grant this status, it would allow the company to make such claims as "lowers cholesterol" on its product labeling and be used during future marketing campaigns. A trial supporting the QHC is already underway.

Just as the first full commercial launch of one of its proprietary ingredients got underway, and a licensing agreement was announced with a major player in the food and beverage industry, ChromaDex also began making moves to boost the future pipeline potential of the company. In a press release last week, ChromaDex announced that it had licensed from Cornell University the exclusive worldwide rights to a novel manufacturing process for nicotinamide riboside (NR).

According to Frank L. Jaksch, Jr., CEO of ChromaDex, nicotinamide riboside

is a recently discovered vitamin found naturally in milk, and is a more potent version of the more commonly known niacin (vitamin B3). As such, this compound shows tremendous promise for human health. Like niacin, NR is a precursor to nicotinamide adenine dinucleotide (NAD), which is elevated by a calorie restricted diet. Increasing cellular NAD has demonstrated cell-protective and positive metabolic effects. In laboratory tests, NR has shown promise for improving cardiovascular health, glucose levels and cognitive function and has demonstrated evidence of anti-ageing effects.

This ingredient is not yet available as a dietary ingredient, althought the licensed technology will enable ChromaDex to potentially bring this ingredient to market on a scale comparable to pterostilbene.

The global trend towards "organic" and "all-natural" ingredients has ChromaDex positioned to take full advantage of that trend. The company's core business is designed around exploiting the benefits and ingredients that nature provides, and then commercializing those benefits in the mainstream.

GNC's national launch of BluScience and the recently-announced Cott (NYSE:COT) deal are examples of the power that ChromaDex has displayed in building a library of natural ingredients and manufacturing processes through early licensing deals. The nicotinamide riboside announcement indicates that this company is intent on bringing other natural ingredients to market.

As I've mentioned before, ChromaDex has a bold business plan for the next three to five years, aiming to increase annual revenue from $12 million to over $100 million during that timeframe. Thus far, it's my opinion that the plan has been backed by action earlyon. It's now time to see if that action translates into sales, once the commercial launch is in full effect.

Disclosure: I am long CDXC.