|Consumer Reports investigation should fuel Inergetics, Inc. (OTC: NRTI) shares|
|Monday, 28 June 2010 07:56|
A damning Consumer Reports investigation threatens to cripple two of the leading brands in the $2.7 billion sports nutrition marketplace according to a report from CNBC's Darren Rovell. That news could bode very well for penny stock, Inergetics, Inc. (NRTI.OB), whose medically designed and scientifically tested nutritional drinks include products in that same sports nutrition vertical.
The report, released earlier this month online and in its July issue, reveals that lab tests of both EAS Myoplex and Muscle Milk products had more than trace levels of arsenic, lead and cadmium. This is a direct hit against the market leaders in protein drinks which alleges that these brands that had the highest concentration of toxic elements. This could be a big opportunity for NRTI to step in and push their Surgex sports drink line as a strong competitor to Muscle Milk; which is a strategy the company has been quietly working on and preparing for over two years.
Already, many NBA teams have been using NRTI's breakthrough Surgex drink, which was specifically developed and scientifically tested to help athletes rebuild muscle and "bounce back" much faster than those other nutritional drink supplements available on the market.
At the end of March, Mark C. Mirken, President and Chief Operating Officer of NRTI told us: "Our sports product, Surgex, is an independently, medically validated product with a banned substance control group of athletes that is manufactured by us. It is used in the NBA and the NFL and it's success comes from the work that went into developing it with strength and conditioning coaches and that product is about to have a significant commercial debut- predicated on a relationship that we are creating with one of the largest powdered drink manufacturers in the world in maximum human performance."
Rutgers University supported NRTI's claims by publishing two articles about the sports drink product which substantiated the product's efficacy in athletes. Other reports and scientific publications are said to be following shortly.
Perhaps even more intriguing is the fact that the U.S. Government has taken an interest in several of the company's drink verticals and that NRTI may see substantial purchase orders for both Surgex and some of the company's other nutritional vertical products in the very near term. "Orders from government agencies and military academies will be much bigger than anyone has anticipated," said one source familiar with the situation. "One federal emergency response agency seems particularly interested in stocking up with the nutritional product and it makes sense that they would be."
Is the biggest challenge for NRTI still credibility? Consider for a moment that they are a company still in its infancy and listed on the OTCBB exchange. While the company continues to show us that it is working aggressively behind the scenes to move the stock to a bigger exchange “in a shorter than expected time frame," half the battle for today's investors is trying to figure out which of these bulletin board companies are real and which are virtual ATM machines for the people who run them. That's a reality in these smaller exchanges, but also a sad growing reality on some of the larger exchanges as well.
Still, when we start seeing real movement and players with known reputations getting involved in "baby biotechs," like NRTI, we can't help but take notice.
Given the news and recent developments, the company has been attracting attention from major players in the sports and nutritional drinks industry. They are said to also be attracting the attention of hall of fame sports figures- one of them is rumored to be not only signing on as a spokesman, but also as a major investor. While the company is not commenting on the rumor, our sources tell us that we may hear news about this well known star and that his new relationship with NRTI as soon as this week.
The company’s sports drink vertical appears just about ready for blast off.
"The marketplace is definitely waiting for this," said Mirken. "We know that because of the calls we constantly get from a number of the teams, from strength and conditioning coaches and that there is no product on the market that has the proven ability to be able to generate the 'recovery reaction' that we are able to in the blood through the use of our proprietary superoxide dismutase- the body's primary antioxidant defense enzyme. If an athlete can work out and recover quickly and then work-out and recover quickly, his ability to optimize his performance is really the key to making this product a global success."
As an investor, one also has to appreciate the fact that the management team of the upstart bio-nutraceutical company is focused on the swift, but efficient execution of their business plan. Since we first covered them a couple of months ago, the company has been working on it's re-branding (they changed from Millennium Biotechnologies to Inergetics, Inc. [OTC: NRTI] and the banking/finance team has "been busy getting it's financial house in order" as it prepares to move quickly into the commercialization phase.
What we like most, however, is that shares of this bio-nutraceutical company can still be had for next to nothing. We've seen this before. When BioMedReport's Vinny Cassano started tracking another biotech drink company- Celsius Holdings (Nasdaq: CELH)- in 2008 when it was still listed on the bulletin board exchange and trading at just under $.03 cents. By mid-April of this year, shares were trading above $4 per share. Now, just as we saw with Celsius back then, we recognize that the upside for NRTI is much higher than the downside. Especially at these prices. In fact, we feel a "strong buy" rating is in order given the shaky state of the market and the very friendly share prices.
Our sentiment grows even stronger given the fact that the management team has now successfully rebranded the company. The team changed the name and reduced their debt- first by $2.6 million and then by an additional $700,000. Now with well over $3 million in liabilities off the balance sheet the company finds itself with 61% less debt (which was $18 million approximately one year ago).
NRTI has re-surfaced both its Surgex and Resurgex product websites. There you will find a re-launch of the company's "long term care" and "sports" verticals with new product designs.
We are told that the company is in process of building out inventory of their powder formulation on the sports side (Surgex).
For those of you who have asked about the ability to sample the drink, consumers should be able to order directly from the website within the next 30 days. Already, many NBA teams have been using the breakthrough drink, known for helping athletes rebuild muscle and "bounce back" much faster than other nutritional drink supplements available on the market.
Sources, including Merken, have BioMedReports that the company is extremely focused on producing revenue and profits. We see evidence of that when we hear of scheduled meetings which are to take place early this week with two mega-nutrition sector outlets, GNC and Vitamin Shoppe. The sole purpose of those meetings is to procure purchase orders.
The fact that the company has been actively courting a new Chief Financial Officer additionally points to the start of the commercialization phase for the company. This is not a stock awaiting multi phase trial results or FDA approval process. The company has paid its dues in the laboratory formulating and testing their products, now we sense that some very positive business dealings will start to move things along quickly for Inergetics.
We also anticipate a few pleasant surprises as the company starts to push product through some direct marketing channels. One group is reportedly close to entering into a relationship to purchase, re-sell and pay for all the marketing expenses relating to their direct to consumer campaigns. A publicly announced large purchase order for product would signal a successfully consummated business deal with that company.
Add this still intriguing development to what Merken told us:
"One of our board members, Ken Sadowsky [whom we are told also invested substantial money into the company], sat on the board of Vitamin Water when it was sold to Coke and he has been shifting us through the process and we're now (still) in discussions with two of the largest bottling companies in the world who are looking for a product such as this in the functional beverage category, so as you step back and look at us, we are a company that has at least three engines: One in oncology and immunocompromised... One in long term care and assisted living. [the company recently announced a relationship with a billion dollar pharmaceutical company which is expanding their reach into the long-term care space]... Finally, one in the Sports product which is about to be commercialized... We expect some significant success..."
We're will continue alerting readers to both pending and current developments and fully expect that when NRTI announces the company's new spokesperson, investors will see the news as one more key piece of credibility falling into place. If executed properly, share prices should continue to rise given the anticipated excitement and news items- both of which should start to stream in during the coming weeks and months ahead.
Disclosure: Long NRTI