Nutrition 21 aims to make chromium as well-known as calcium
chromium picolinate in retail outlets, with a major marketing
planned for the summer, but the first fruit of commercialization is
yet to be seen in its financial results.
In January the company secured national distribution for Chromax in Wal-Mart, CVS/pharmacy, Rite Aid, Albertsons, Kroger and Duane Reade, but sales only began in Q4 2006, from the start of April.
In Q3, reported yesterday, Nutrition 21 saw worse losses than the same three months of fiscal 2005 - $2.3m or -$0.06 per diluted share, compared to $1.9m or $0.05. Sales of Chromax as an ingredient were up slightly $100,000 to $2.5m.
Paul Intlekofer, recently elected president and CEO, attributed the losses to a reallocation of resources to support retail sales in Q4. Selling, general and administrative expenses rose to $2.6m from $2.2, but the main change in the statement of operations was in the interest expense line, which rose from $4,000 last year to $0.7m.
However Intlekofer is confident that Q3 is merely paving the way for great things ahead. Under his leadership and as it builds on its earlier intense period of R&D, Nutrition 21 is aiming to make chromium picolinate as recognisable a mineral for insulin health end-benefit as calcium is for bone health.
If it achieves this, the rewards will be considerable: "In the US alone, calcium accounts for $1bn in retail stand-alone sales," said Intlekofer.
The potential lies largely with the aging population and obesity, factors that can contribute to an increased risk of heart disease and type-2 diabetes.
Not that it is wasting time in pushing the product. The company hopes that Chromax will be in 90 percent of food, drug and mass outlets nationwide by the end of the summer.
Retailers are seen as key partners in raising awareness of chromium picolinate, and parallel to this a consumer-facing marketing and advertorial campaign will kick off in June.
In Q1 2007 the company intends to start shipping private label chromium picolinate, manufactured for food, drug and mass retailers.
In September 2005 the FDA's Center for Food Safety and Applied Nutrition concluded that there is credible evidence to support the qualified health claim that "one small study suggests that chromium picolinate may reduce the risk of insulin resistance, and therefore possibly may reduce the risk of type 2 diabetes".
The FDA added that the existence of such a relationship between chromium picolinate and either insulin resistance or type 2 diabetes is highly uncertain. The FDA also declined to permit other qualified health claims that were proposed by the company.
Nonetheless, Nutrition 21 sees the ruling as an important breakthrough.
"The FDA's initial response, while a starting point, is an important milestone in our company's effort to communicate the health benefits of our products," said Gail Montgomery, then president and CEO.
Chromium is an essential trace mineral that occurs naturally in small amounts in some foods, including brewer's yeast, lean meat, cheese, pork kidney and whole grain bread and cereals. It is poorly absorbed by the human body but is known to play an important role in the metabolism of carbohydrate, fat and protein.
A study presented at a meeting of the Federation of American Societies for Experimental Biology in San Diego last April indicated that chromium picolinate is better absorbed by humans than other forms of the mineral.
Nutrition 21 also has a commitment from CVS/pharmacy and Duane Reade for Diachrome, its Chromax and biotin non-prescriptive insulin sensitizer for people with type-2 diabetes. Endorsements and pharmacy recommendations are seen as key to marketing of this product.
