A recent article on San Diego Biotechnology Connection:

Cardium boosts energy supplement sales with national marketing muscle

Cardium Therapeutics’ purchase of To Go Brands and its nationwide marketing network is expected to boost energy supplement sales of Cardium’s MedPodium line, including Neo-Chill, which promotes relaxation without drowsiness and contains Suntheanine, a patented, proprietary L-theanine (an amino acid) also found in green tea.

By Rex Graham

Cardium Therapeutics (CXM), a biotech company and developer of a caffeine-rich energy supplement, has acquired a privately-held marketing company that has developed a larger and tastier line of fruit-based energy and nutritional products.

Cardium’s purchase of San Diego, Calif.-based To Go Brands was a bargain for Cardium: To Go Brands posted about $1.7 million in sales during the first six months of 2012, which is roughly the amount Cardium paid in the form of restricted common stock.

Cardium Therapeutics’ Neo-Carb Bloc contains a white kidney bean extract that has been shown to reduce the enzymatic digestion of dietary starches in many carbohydrate-rich foods. Photo: Cardium Therapeutics

Pharmaceutical companies also are diversifying their product lines with dietary-supplement products. Pfizer (PFE) in February 2012 acquired privately held Alacer Corp., the maker and distributor of Emergen-C, a vitamin C product. Schiff Nutrition International in March purchased Airborne, Inc., a leading provider of immune support products, including its health formula, which is a unique combination of vitamins, nutrients and proprietary blend of herbal extracts.

B vitamins, or niacin, are now a billion dollar product in the form of Abbott Laboratories’ (ABT) Niaspan, which has been designed to raise levels of good cholesterol in the body. However, Niaspan sales may be vulnerable after a recent study showed that Niaspan had no effect in lowering heart attacks.

GlaxoSmithKline (GSK) has a brand name prescription drug called Lovaza, which contains a combination of ethyl esters of omega 3 fatty acids that are designed as a dietary supplement to reduce triglyceride levels in patients with high triglyceride levels.

Cardium inexpensive purchase must have had the corporate taste of one of To Go’s newest products: VitaRocks vitamin snacks that pop and crackle in the mouth. Cardium’s three scientifically based supplements in its MedPodium product line are tasteless, while To Go’s 25 products are packed with fruity zest and low in sugar content.

To Go Brands has generated strong energy supplement sales of its Acai Natural Energy Boost, which the company says comes “without the crash and extra calories” of other highly caffeinated energy drinks.

Energy supplement sales

Under the terms of Cardium’s asset purchase agreement with To Go Brands, Cardium issued 8.4 million unregistered shares of common stock, or about 6.5 percent of outstanding shares after the acquisition, to be held in escrow for 6 months. An additional 1.2 million shares of common stock have been issued and will be held in escrow for an 18-month period.

Ladenburg Thalmann & Co. Inc., a Miami, Fla.-based equity research company, more than doubled its revenue estimates of Cardium’s own line of nutritional supplements from $2.5 million to $5.7 million in 2014. Ladenburg Thalmann increased its estimate of the net present value (NPV) of Cardium from $59.6 million and $0.50 per share on 119.6 million shares, to $64.6 million and $0.50 per share, reflecting the additional outstanding shares.

Cardium’s cost-effective purchase must have had the corporate taste of one of To Go Brand’s newest products: VitaRocks vitamin snacks that pop and crackle in the mouth. Cardium’s three scientifically based supplements in its MedPodium product line are tasteless, while To Go Brand’s products are packed with fruity zest and low in sugar content.

The focus on nutritional fun can be seen in the recent introduction of Centrum’s (Pfizer) new flavor burst chews adult multivitamins, and Vitafusion’s (Northwest Natural Products) adult vitamin gummies.

Diversification and opportunism

The acquisition of To Go Brands is part of Cardium’s opportunistic diversification strategy — balancing higher-risk, higher-return products with lower-risk products.

Cardium’s highest-tech product candidate, its gene-therapy candidate to treat heart disease is in late-stage clinical trials. The company’s FDA-cleared Excellagen, a lower-risk product, is an advanced wound-care product that has been commercialized and supports the healing of skin ulcers common among diabetics as well as other patients with dermal wounds.

Dietary supplement diamonds

“Consistent with our capital-efficient business model, we continue to actively evaluate new technologies and business opportunities,” Christopher J. Reinhard, Chief Executive Officer of Cardium, said in a news release.

Reinhard said the latest purchase made strategic sense for Cardium, because To Go Brands not only has established logistics and distribution capabilities, but it also has an e-commerce platform and an experienced management team with access to key U.S. retail channels.

To Go Brands has generated strong energy supplement sales of its Acai Natural Energy Boost, which the company says comes

Reinhard said the latest purchase made strategic sense for Cardium, because To Go Brands not only has established logistics and distribution capabilities, but also an e-commerce platform and an experienced management team with access to key U.S. retail channels.

5-hour energy effects

The National Business Journal said its 2012 Supplement Business Report, release Oct. 1, 2012, reports that the dietary supplements industry surpassed $30 billion in 2011 sales, up 7 percent from the previous year. Other studies have reported twice that rate of sales increase for energy drinks. The growth is a positive factor in the merchandise mix of grocery stores, drugstores and mass market retailers such as Wal-Mart.

“The success of products like 5-Hour Energy has shown that the nutraceutical space has the potential to generate billion-dollar products without the extensive regulatory and other hurdles biologics,” Reinhard said. “To play in this newly emerging space, products have to be healthy and taste great too, and that’s what To Go Brands is all about.”

To Go Brands portfolio includes 25 drink mixes, fruit, vegetable and vitamin products and its Trim Energy Green Coffee Bean supplement, which is designed to support healthy weight loss.

RELATED LINKS:

Cardium’s heart disease gene therapy advancing with new discoveries

Cardium Therapeutics MedPodium product line

To Go Brand products

DISCLOSURE:

Financial support was provided by Cardium Therapeutics to produce this story. High standards of objectivity, fairness and accuracy to the greatest degree possible are used in the production of this and every story published by San Diego Biotechnology Connection.

Cardium Therapeutics (CXM) Stock Quote and News:

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