Nutritional Growth Solutions (ASX:NGS) - nutritional supplement formulae for children


by Melissa Darmawan

Nutritional Growth Solutions Limited (ASX:NGS) Chairman Brian Leedman talks about the science behind the company's nutritional supplement formulae for children, which are designed to promote height and weight.

Melissa Darmawan: Hello. Melissa Darmawan for the Finance News Network. Joining me from Nutritional Growth Solutions (ASX:NGS) is Chairman Brian Leedman. Brian, welcome to FNN.

Brian Leedman: Thank you for having me.

Melissa Darmawan: You're welcome. You listed late last year on the ASX. Tell us what the company does.

Brian Leedman: Well, we're a nutritional company with a number of products that are for sale in the United States and now entering into the Chinese market. And we're focused on nutritional development for children. And we have a product that's clinically proven to actually accelerate their height gain, without an increase in BMI index. And that was conducted in clinical trials in Israel. And so it's a unique product and it has a huge market.

Melissa Darmawan: And how many kids are short, or underweight, and how do you define this?

Brian Leedman: So, basically, all children, when they're born, they're actually split into quartiles. And children who fall into the lowest quartile of growth tend to be shorter kids. So we conducted a clinical trial in Israel, and that's where the product was developed. And there were 200 children involved in that study, and they all fell into the lowest quartile of growth. And so, for a 12 month study, where they're taking the product every day, they actually grew, on average, 30 per cent taller than the placebo group.

So I do often get asked: will children end up being taller than they would otherwise ultimately become? My answer to that is probably not. I don't know, because we only conducted the study for 12 months. And will it work on children who would fall outside the lowest quartile of growth? Again, I don't know the answer to that because the children involved in the study were in the lower quartile. But certainly the product is safe. It may well be for benefit for all children. But 25 per cent of the children's global market is still a very large market.

Melissa Darmawan: Now let's talk about the business, the products, what markets you're in. Let's start off with the science.

Brian Leedman: So, well, the science, as I just explained, it's all clinically proven. And we've got other products that we've been developing, they're undergoing clinical trials, for teenagers going through puberty. We also have a sports product as well. So there is a suite of products that we've been developing. And Healthy Height is the one that is already for sale, and that's the one that we're focused on. And also entry into the Chinese market.

Melissa Darmawan: And are you distributing into any other markets outside of China?

Brian Leedman: So, we started off selling the product through Amazon in the United States, and we've been generating excellent sales through that approach. But it's also obviously being sold online. We have recently signed an agreement with the largest private pharmacy chain in the United States. So, it's a group of independent pharmacies. And so we are now selling the product on the shelves there. That's just been a recent initiative.

And going into China, that's going through the Tmall Global store, with is through Google. And also there's a retail market that we're also focusing on there as well. And we recently announced the partnership with Yoola, which is effectively a talent agency for internet celebrities. And so we will be announcing a partnership with a young man who is going to become the face of Healthy Height in China, and we'll focus on sales there. And we're looking into going into other markets, including Europe as well. So we're very much at the beginning stage of what we hope is a very steep sales curve, commencing now.

Melissa Darmawan: Let's have a look at financials and strategy. The December quarterly report is out. What can you tell us?

Brian Leedman: So what I can say is that we only recently listed, as you mentioned. We're well-funded, so we've got the funding to accelerate our sales campaign. That's really the reason why we IPO'd when we did, because the company is already generating decent sales. In order to get to the next level, that's where the capital expenditure is. So it's effectively a marketing exercise. So we are expanding our platform from just online sales, but also to retail sales, on shelves, and expanding into new markets.

So we're well-funded. We don't have a particularly high cash burn. So we're well-funded, for a considerable period of time, to accelerate our sales. And I think in these uncertain times with the markets, that companies such as ours, that are well-funded, are certainly more investible.

Melissa Darmawan: And where do you see the company moving forward? I know that you have touched on a couple of things in regards to distribution and marketplace.

Brian Leedman: Well, it's an interesting space, the nutritional space. Because when I go to the supermarket or the pharmacies, like many of your listeners, the shelves are dominated by products by companies like Blackmores, Swisse, Nature's Own. But they all have certain commonality to them. They're all safe, but none of them actually have done any clinical trials to actually prove the benefits of their product. And a company like ours, we could have gone into the Healthy Height product and making claims around increasing children's height without having done any clinical trials. And I bet you there would be a decent sales for it.

What I thought was rather important, for me, particularly, wanted to be involved in this company, is to differentiate ourselves from all those products out there that make various spurious claims without any clinical trials to back them up. So I think a clinically proven product such as ours has the opportunity to be a major player in this market, in the children's healthy growth market, because of the claims that we're able to make through those clinical trials.

So I think that we have a very strong future ahead. It's really a marketing exercise. And you can see from the initiatives that we've made, that we will be promoting ourselves as a product that can actually accelerate a child's height in the ages of, say, between three and nine -- which is where the clinical trials were done -- for children that are typically shorter than most. And I think that there's a tremendous market opportunity, particularly in China for that.

Melissa Darmawan: Last question, Brian. Is there anything else you'd like to add?

Brian Leedman: Only that we're relatively new to the stock exchange. We've had a pretty decent start. We were three times oversubscribed when we did our IPO. And the share price is sitting proudly above our $0.20 IPO price. I think that the market should be very much focused on where to from here in terms of actually delivering on the marketing campaigns, particularly our partnership with Yoola, our partnership with the large independent pharmacy chain in the United States, and new initiatives to move into other markets, and the new products that we have coming out. So I think that there's going to be a lot of news flow going forward that's going to keep investors very excited about this company. And I'm very proud to be chairman of it, and I've got a great team behind me. And we're looking forward to delivering strong returns for our investors.

Melissa Darmawan: Brian Leedman, thank you for the introduction to the company.

Brian Leedman: And thank you for having me, again. Thank you.