In light of recent discussions surrounding pharmaceutical industry M&A, including but not limited to German pharmaceutical company Bayer's recent acquisition of nutritional supplement company Schiff Nutrition International for $1.2 billion, I think it entirely fair to examine the buyout potential for other nutritional supplement companies such as ChromaDex Corporation (CDXC).
In so doing, here are just a few things to consider when trying to access the investment potential of small and seemingly hard to predict companies such as CDXC.
1) The nature of biotech stock is such that prices tend to rise and fall following news of rercent drug trials and regulatory approvals.
2) Many such companies have no growth or products to speak of but rather drugs in the pipeline that could become blockbusters.
3) Small-cap pharma is a very difficult area to chase momentum in. The broader healthcare sector tends to really outperform only in highly volatile periods for equities overall, and the industry seems to be much more vulnerable to company-specific risk than many others.
4) Big pharmas are losing patent protection on their top-producing drugs and are in a mad scramble to secure patents from smaller companies to generate revenue down the road.
There is nothing in your post that elucidates, in any relevant manner, the prospects of this company being bought by a pharma or by any other company.
CDXC has no proprietary formulations or inventions in its possession. They have only a license from the USDA, which is currently under scrutiny, and which is of next to no value.
Even if the human clinical trial at that vulnerable institution in Mississippi had produced strong findings relative to pterostilbene's modulation of HDL, LDL, and plasma triglycerides, which is certainly did not, it was merely one small study, bought and paid for by the company, that might identify the compound as a potential candidate for development into a drug. This and $4 will buy you a coffee at your local Starbucks. The molecule itself can be purchased from a myriad of suppliers in China, India, and N. America, which is actually what CDXC does. They do not manufacture it.
The patent held by the USDA in no way controls the molecule itself, nor the ability of any company to sell it to the public, without benefit of their license, unless that company states that it is being sold specifically for the management of cholesterol. For example, company ABC can sell it as a dietary supplement with no claims, or other claims, and many other companies already do precisely this, and actually do it profitably, something the company has been unable to manage.
CDXC was by no means the first company to sell a pterostilbene product, nor are its versions in any way superior to some of the other products in the market.
The big pharmas are so far ahead of CDXC in identifying this and many thousands of other molecules with similar or greater potential that they have no need for CDXC, or its trivial intellectual property. They can, and normally do, simply develop a patentable form of the molecule that they can control in the marketplace.