Diabetes Microcap #1: Nutrition 21, Inc. (NASDAQ: NXXI)

When we in the beginning discovered Nutrition 21, the company was dwelling in the doldrums and had in recent times received a delisting notification from the NASDAQ for failure to meet the $1.00 minimum share price requirement according to NASDAQ Marketplace Rule 4310c. The price of Nutrition 21 stock responded accordingly and a new 52 week low was soon established as one would expect. This is what we would call Blood in the streets. As we mentioned in our introduction to the diabetes section of this chapter, we are of the opinion that diabetic treatment stocks have massive potential. As such, Nutrition 21 piqued our interest.

Nutrition 21 is a little biotech firm that derives most of its revenue from products that target the diabetic marketplace. The Nutrition 21 products Chromax and Diachrome are the company's flagship offerings. Both Chromax and Diachrome are patented Chromium based formulations as their names imply. According to the company, 12 published studies involving over 1,500 subjects have demonstrated that dietary supplementation with Chromax improves glycemic control. Similar results have been found with Diachrome. As a matter of fact, a June 2006 study found that Type 2 diabetic patients who took Diachrome had significantly better long term control of their blood sugar.

A unique aspect of Nutrition 21 is the fact that the company markets many of its products as nutritional supplements instead of pharmaceutical drugs. This tactic allows the company to use the Dietary Supplement Health and Education Act (DSHEA) regulatory pathway. Nutrition 21 avoids the costly and time consuming process that the Food and Drug Administration (FDA) imposes on pharmaceutical medications because the company classifies its products as dietary supplements. We find this to be a refreshing tactic. If you have ever owned a biotech stock, you are probably all too familiar with the endless waiting for drugs in the R&D pipeline to effectively navigate multiple phase clinical trials and the nightmarish possibility of a potential drug failing to¹ show clinical benefits. Nutrition 21's utilization of the DSHEA regulatory pathway avoids these problems.

Nutrition 21 has enjoyed a tremendous recovery as retail stores such as Rite Aid, Albertsons, and Duane Reade have signed on to sell the company's products over the past year.

Wellmed, a company owned by physicians that has 10 clinics and provides management services to 18 additional clinics in the San Antonio, Texas area has additionally signed a 5 year contract to supply its Type 2 Diabetic patients with Nutrition 21 products. The fact that medical professionals who specialize in the treatment of Diabetes have selected to include Nutrition 21 products in their treatment repertoire speaks volumes. They recognize the benefits of Nutrition 21 products. The best part is that these products are not drugs, they are supplements. One does not require a prescription!

These products can be purchased over the counter like Flintstone vitamins. Most diabetics take gigantic steps in an effort to control their blood sugar levels. As word spreads of the benefits of Nutrition 21 supplements, it is a pretty safe bet that many diabetics may use Nutrition 21 products.

We noticed that other people in the investment community were beginning take note of NXXI at about one month previous to the publication of this article. An independent, non-compensated research report on Nutrition 21 placed a price target that was significantly higher than the stock's current position in June of 2006. Furthermore, about two weeks previous to the publication of this article, Nutrition 21 was added to the prestigious Russel Microcap Index.

Beginner Money Investing Diabetes Related Stocks Diabetes Stocks in Market Diabetes Research & Treatment Diabetes Microcap #1: Nutrition 21, Inc. (NASDAQ: NXXI)