Chromadex: The Opportunity To Get In On The Ground Floor Of A Potential Multi-Bagger, Part III - The Results Are In

Sep.19.12 | About: ChromaDex Inc. (CDXC)

In my previous two articles on Chromadex (NASDAQ:CDXC) wherein I explained the company and the huge potential opportunity of getting long the stock (as well as the risk factors), I mentioned that the first human study of the firm's pTeroPure compound was going to be presented this Thursday at the American Heart Association's High Blood Pressure Research Conference. Well, luckily for you, I happened upon the official abstract of the presentation and the conclusions from the aforementioned study, and guess what?

Conclusion: Pterostilbene reduces blood pressure in adults.

This is just the beginning, the first human study and only included 80 participants, but it's still extremely promising, and will no doubt promote further study while generating even more interest in Chromadex's products and stock. Now that it's been scientifically proven that pTeroPure does, in fact, reduce blood pressure, that removes at least one risk factor I mentioned in my previous posts - that the firm's claims would be unfounded. The ingredient is already in Chromadex's own BluScience line as well as all of these 3rd party products. How many more supplement, food/beverage, and most importantly - pharmaceutical firms - are going to be calling to get pTeroPure now?

Let's try to put this in some context. The market potential for blood pressure treatment: Novartis' blood pressure drug, Diovan, brought in $5.7 billion (yes, with a B) in 2011. Pfizer's (NYSE:PFE) two main blood pressure drugs - Norvasc and Caduet - brought in $364 and $103 million in 2011, respectively (pdf, see pg 17). The entire blood pressure medication market is even larger. If Chromadex can get even a tiny fraction of the market - and just with pTeroBlue - the firm's future revenues should be much higher than the ~$8 million they were last year. The significantly higher top line should invariably translate into serious improvements across the rest of the firm's currently less than stellar financial statements.

So, to summarize: Investors still have a (now bigger) margin of safety from the legacy business AND we have our first conclusive proof of pTeroPure's efficacy in treating high blood pressure. I have no position in the stock, but I'd be full of it if I said I didn't really, really regret not initiating one back when I wrote my first post and the stock was around $0.70, now at $1.14 a mere 2 weeks later and no doubt heading higher given the results of the efficacy study. I've even had a few fund managers/PM's tell me they're banging their heads on their desks for not getting long, too. Whoops.

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

Business relationship disclosure: Stone Street Advisors’ company policy is to keep the bespoke, paid research and analysis we do for clients confidential. However, in certain circumstances – and only with a client’s explicit permission – we may share some or all of that research publicly. The above (the analysis/article) contains some of the research we performed for/with a client, however the opinions presented herein are those of Stone Street Advisors LLC. Neither Stone Street Advisors LLC nor any of its members has a position in ChromaDex, nor do we have any plans to initiate one in the immediate future. The information and opinions presented in this article are presented as-is, and do not constitute any offer, solicitation or investment recommendation. Stone Street Advisors LLC makes no representation as to the accuracy or completeness of the information contained herein and has no duty to update the information and opinion in the article. The content presented is not investment advice, nor is Stone Street Advisors LLC a Registered Investment Advisor.