It has been a good start to the year for many micro andsmall cap biotech stocks with a few FDA approvals lifting the sector in general.With the prospect of an economic recovery, and investors looking for greaterreturns, many under-funded (and historically cheap) small biotech company'scould see an infusion of much needed capital this year.
I want to focus on one biotech sector in particular whichseems to be capturing investor�s imagination... botanical extraction.
In a nutshell, botanical extraction is the process ofextracting key ingredients from live plant material. These key ingredients arethen used to manufacture an array food and beverage, cosmeceutical,nutraceutical and pharmaceutical products.
There are many companies with the ability to extract liveplant material; however the great challenge for them all is bioavailability.
The FDA defines bioavailability as �the rate and extent towhich the active ingredient or active moiety is absorbed from a drug productand becomes available at the site of action�.
Currently the market standard for bioavailability is between1-10%, and has been for some time. Traditionally, technology in this area haslagged other biotechnology industries, despite the multi-billion dollar (andgrowing) nutraceutical, cosmeceutical and wellness industries.
However one publicly listed biotech company, PlandaiBiotechnologies, Inc (OTC:PLPL) has invented a process by which extracts haveshown in published USDA studies to have bioavailability of between 60-80%, farexceeding anything currently available.
Such ! signific ant advancements in extraction processes aresurely welcome to both manufacturers and end consumers alike. Given an agingpopulation and the rapid rise in diseases such as Diabetes type 1 and 2,products with a significantly higher bioavailability, at an affordable price, willbe forever increasing in demand.
According to Plandai Biotechnologies management, theypredict their income, arising from new extraction technology, to increase 9fold over the next five years.
Given the substantial growth of this industry (GlobalIndustry Analysts project the nutraceuticals market alone will exceed US$243billion by 2015), and new advancements in technology which will ultimately leadto significant increases in profitability, I believe investing in this industrycould potentially bring significant returns to those who identify thosepublicly listed companies that are at the forefront of finding new and improvedextraction techniques.
And while there are very few botanical extraction companieslisted on the major US exchanges to invest in, companies like PlandaiBiotechnology Inc, Stevia Corp and Sunwin Nutraceuticals may be worth a look at.
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About theAuthor
Tom Donnell has been investing in startup biotech companies for 23 years. Priorto investing and advising several small biotech startups, he was the founder ofthe Individual Investor Alliance, a non-profit organization which helps provideindividual investors with the relevant skills and knowledge required to makeprudent investment decisions. For more information, please visithttp://wallstreetequitiesresearch.com
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