Article in Informed Investor on Galagen by R.J. Young.
Note: Editorials are the sole opinion of their authors. Neither Kostech Corporation nor Informed Investor endorses any statements made by the authors.
Over the course of the past seventeen years, I have had the opportunity to listen to - read about - kick the tires of - investigate and interrogate hundreds of emerging growth companies. All told me they had "the greatest thing since sliced bread", and their stock should be worth $20.00 (in the 80's) and $50.00 (in the 90's), although they were trading at $1.00 - $8.00 at the time. I began to assemble a score card of what I call RED FLAGS for the - I don't think so's and INSURANCE POLICIES, for the - Could be's.
Certain rules of wisdom to live by according to the files of Young, Smith & Associates in seeking the "diamond in the rough":
- If you fall in love with a company - it better be the right one.
- It only takes one winner to make you a winner.
- They say, "The company will go from $2-$4 per share when it closes
the deal so buy now and double your money; We say, "wait until
they close the deal. $4.00 with the deal is better than $2.00
without.
- Sell on good news and buy on bad news.
- If I don't understand it don't get involved.
- "A" management and a "B" product is better than "B" management and
an "A" product.
I recently came across a company that has scored very well - GalaGen, Inc. NASDAQ Symbol: GGEN.
The Company was a wholly owned subsidiary of Land 'O Lakes, which is
the large dairy manufacturer and distributor of food products. In 1992 Land 'O Lakes spun the company off, and it sold two million shares to the public at $10.00 per share for the purpose of developing biopharmaceuticals for severe life threatening infections, including complications of AIDS. Over $40 million was invested in developing the current technology, and the Company has positioned itself for substantial growth in rapidly growing new markets: Nutraceuticals, Functional Foods and Clinical Nutrition markets.
Nutraceuticals is a term coined in the early 90's to describe nutrition products with drug like benefits that encompass both dietary supplements in pill and powder form and traditional food products. Functional Foods refer to foods that have health benefits beyond their nutritional value. Both terms are used interchangeably and refer to a growing, exciting market that is coming close on the heals of the exploding dietary supplement market that grew from $1.6 billion in early 1990 to $6-10 billion today. The current estimated market for the clinical nutrition industry is estimated to be $3 billion.
GGEN has developed an orally ingested immune strengthening and building base technology called Proventra Brand Natural Immune Components. Proventra is the standardized natural ingredient that GGEN produces from colostrum for use in making functional foods, nutraceuticals and clinical nutrition products. Natural immune components in colostrum are live antibodies, or infection fighting proteins. When ingested, the antibodies immediately go to work binding to the "bad guys" that exist everywhere in our environment. GGEN produces antibodies that target specific pathogens infecting the human gastrointestinal tract, including bacteria and their toxins, parasites, fungi and viruses in addition to ear and throat infections in children and yeast infections dominant in women.
The first product to contain GGEN's Proventra technology is a smoothie beverage called Basics Plus currently on the market in several US cities distributed by Lifeway Foods of Chicago. The Company recently entered into an agreement with Land 'O Lakes to develop and distribute a line of Preventra based yogurt products that target women.
GGEN announced Wednesday (September 2, 1998) that it has entered the
billion dollar Clinical Nutrition Market through an Asset Purchase
Agreement with Nutrition Medical, Inc. (NASDAQ Symbol: NMED) to
acquire NMED's developed line of critical care enteral nutrition products and formulas. The products were recently introduced and are being sold to the hospital and home healthcare industries. Sales of the products for NMED were on track to generate approximately $1.1 million in 1998 and GalaGen will commence recording revenue immediately.
HIGHLIGHTS
- Strong science-based proprietary technology
- Over $40 million was invested to complete the current technologies
- Proventra - Unique ingredient with multiple health benefits
- Positioned (not positioning) in very large rapidly growing markets
- Strong strategic partners - including industry giants like Land 'O
Lakes
- Ideal blend of science and marketing access for position as market
leader
- Multiple products available nationwide in 1999
- Entrance into the clinical nutrition market this week, September 2,
1998, with 8 products and over 500 home health and hospital
customers.
Rebecca J. Young is the founder and Partner of Young, Smith & Associates, investor relations, financial consulting firm headquarterd in Los Angeles, California. Ms. Young possess over 17 years of experience in corporate management, investor relations and finance. Prior to Young, Smith and Associates, Ms. Young served as a Director and Executive Vice President for Thrifty Tel, Inc. a publicly traded long distance telephone service company. Ms. Young formerly was a Partner at the financial consulting firm of Hamilton Partners, Incorporated located in Marina Del Rey, California and the Director of Business Development for the Chartwell Group, Incorporated. |
