Element Nutritional Sciences (Ticker: CSE: ELMT \\ OTC: ELNS.F) mission is to employ plant-based technology alongside research-based nutritional science to develop world class products that will help their consumers live their life to the fullest and increase in their nutritional profile.
Their flagship brand is Rejuvenate, which is a patented product that is designed to help
prevent muscle loss as you age. This is Sarcopenia, which is the problem targeted by Rejuvenate. Their patented formulation has been built over 17 years, a $20 million spend, with 25 peer reviewed clinical studies. Rejuvenate is PATENT-PROTECTED, which not only surrounds the company with a competitive moat, but also detters competition.
This is a very large market estimated on $50 billion (last quarter earnings call) and growing. Their focus on plant-based products align with 63 percent of consumers looking to add more plant based foods to their diet. The adult protein beverage market is now at $1.6 billion in the United States and growing. So there is space to grow.
This is a Nano Cap stock with market capitalization of USD 30 Mill. In the last financing of the firm, where management raised capital to fund growth, happened at a price of CAD$0.60, or about USD$0.43, which means that today, you can buy this stock cheaper than what accredited investors with capabilities to conduct due diligence paid for not too long ago.
This product has 15 grams of plant-based protein in it, which is organic protein. It has no sugar, no artificial sweeteners. It’s only 100 calories. It’s gluten free, it’s dairy free and contains their patented Rejuvenate formulation. The main traditional brands in this segment (not plant-based protein) are Boost and Ensure.
The product is already in CVS, Sam’s Club and Walgreens. In total, the product is on shelves in nearly 20,000 stores. Their focus at the moment is to grow their distribution base, taking their current SKUs into that distribution and ramping that up. And as they build up
distribution base, they focus on building what’s called point-of sale data. And while doing that, continue innovating and getting new products ready to bring to market. Some of the current R&D is to expand in later years in the oncology and orthopedic markets.
If they start operating consistently in at least 16.000 stores, with 2 sales per week per store, they should be aaproaching $25 Mill in revenue (current market cap of $30 mill).
The founder of the company already exited with a $40M buyout in his last deal. The management team has experienced people in the field like Stephen Brown and Dean Pipher.
It took 18 years and $20M to develop Rejuvenate, yet the market cap is only $30M. It is priced almost like for ZERO GROWTH or liquidation, yet it just received its largest purchase order and expecting triple-digit sales growth. Is Element Nutritional Sciences a Nano Cap with a positive asymmetrical risk return tradeoff?