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Nick Williams
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I believe we are in a period where many extraordinary opportunities are presenting themselves and I am constantly looking for small companies with immense growth potential.
  • Pure Bioscience Moving Fast To Conquer Multi Billion Dollar E.coli And Salmonella Problem 0 comments
    Dec 16, 2013 2:51 PM | about stocks: COST, PPC, SAFM, TSN, PURE

    Pure Bioscience, Inc. (OTCQB:PURE) spent years developing their patented Silver Dihydrogen Citrate, "SDC", for a solution to pathogens and the stubborn and growing multi-billion dollar foodborne illness problem. Now that they succeeded with a product that is unrivaled, the company shifted gears to commercialize their breakthrough and completely restructured management and its Board of Directors with a team rich in food industry experience and contacts enabling them to rapidly accelerate their products into the marketplace.

    In only 100 days into their mission, Pure Bio's new leadership has already demonstrated that they are a no-nonsense, results oriented team. Pure just announced strategic partnership deals with $12 billion Brenntag and Intercon Chemical, both leaders in chemical sanitation and personal care products. These partnerships are expected to produce significant revenues in this and coming years and at the same time allow the company to focus on the very large business of Food Safety Solutions.

    During a recent Pure Bioscience earnings and conference call, Hank Lambert, CEO, said, "We have a pipeline of 25 National Food companies, QSR's (Quick Service Restaurants) and food processors that are in various stages of evaluating and testing SDC in their operations. In each case, results have been very compelling with PURE surpassing between 90% and 200% in terms of level and speed of pathogen kill. We have already received orders from our first food processor. While initial orders are not expected to be large, they will be validating that our new business model is working (and they will be building)."

    "After initial testing at our QSR's, results were so compelling that PURE was asked to expand its' testing and these tests also have been successful. We expect to be getting opening orders from this chain in the first calendar quarter of 2014. Pure has retained a leading food safety scientist to guide the formulation, testing and regulatory submissions for SDC in direct food contact applications and expects to be in a position to commercialize SDC for these larger one billion dollar plus food applications in the next 12 months."

    SDC has been proven to work far better on contact surfaces than the industry standard of "Quaternary Ammonia" and is also now in further testing for FDA and USDA approval for broad use as a direct food contact to conquer dangerous pathogens like E.coli and salmonella that are found too frequently in meats and produce. The company estimates this market for Pure Bio to be between $1.5 and $2 billion.

    SDC has strong advantages over other direct food contact decontamination methods such as ammonia treated foods or pasteurization from heat, irradiation or high pressure. The most commonly used chemicals to decontaminate foods are ammonia, peroxide, chlorides or formaldehydes, but it is very important to know that they are all potentially harmful even if used in small amounts that are assumed to be safe. Pasteurization reduces pathogens, but also destroys large numbers of nutrients. There is strong evidence from many studies demonstrating SDC more effective than chemical treatments and pasteurization, and yet it is perfectly safe because it is as close to being all-natural as lemon juice. SDC is citric acid infused with tiny amounts of silver ions and is so safe that the EPA granted SDC their safest rating of Category IV and GRAS, "Generally Recognized As Safe". Also, SDC does not destroy nutrients from excess heat or pressure and is believed to extend shelf life because it destroys the bacteria associated with spoiling food.

    The financial impact of food recalls is very large and a solution to the salmonella and E.coli problem would save the food industry billions of dollars. Only two months ago, there was a salmonella scare resulting in the recall of chicken products at a Costco (NASDAQ:COST) unit that sent shares of Pilgrim's Pride (NYSE:PPC) tumbling 6.2% to $15.40, Tyson (NYSE:TSN) falling nearly 5%, and Sanderson Farms (NASDAQ:SAFM) losing 3% to $63.40. SDC can save the large food processing companies billions of dollars in future recalls and this is precisely why Pure Bio is targeting this industry.

    SDC is also an answer to decontaminating commonly touched surfaces at airports, in airplanes, buses, trains, elevators, supermarkets, malls, schools, hospitals, health clubs, restaurants and wherever there are breeding grounds to spread pathogens through public contact .

    Pure Biosciences has a superior product that is protected with long life patents and it has experienced and competent management, but it will need adequate capital to grow and there is no assurance that the company will be able to raise the required capital to remain an ongoing concern. The company has stated that it will require additional capital in the next 12 months and even though management has always been able to raise capital there is no assurance they will be able to continue to raise capital. There is also risk that management will fail to capitalize on SDC's potential and the market may not adopt SDC as a new entry.

    Pure Bioscience is a small company with fewer than 24 million shares outstanding having the potential to be impacted significantly if even only a small percentage of targeted sales occur. If Pure Bio is valued on sales and if sales achieve $200 million in the next few years, at a multiple of only 1.6, the same ratio as the S&P, shares could be valued at $13.00. If management executes to 50% of their targeted market, without considering any potential future dilution, Pure Bio has the potential to trade at prices approaching $100 in the next few years.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: COST, PPC, SAFM, TSN, PURE
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