CEO: Hank Lambert,
WSA: Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Hank Lambert, the CEO for PURE Bioscience. The company trades on the OTCQB, ticker symbol is PURE. Thanks for joining us today, Hank.
Hank Lambert: Thanks Juan. It’s a pleasure to be with you.
WSA: Anytime. So starting off, please give us an intro and overview of the company for some of our listeners that are new to the story.
Hank Lambert: Sure, and it may be helpful to give a little bit of a brief history…PURE went public in 1996 and under prior management, attempted to commercialize our patented Silver Dihydrogen Citrate or SDC antimicrobial technology in a wide variety of markets and applications. This was more or less a shotgun approach that unfortunately resulted in very little traction in any particular area, and it basically put the company on the verge of failure. I was part of a new management team and board that stepped in in late 2013, and having built our respective careers in the food industry and seeing a very large need and a huge immediate market opportunity for PURE’s technology in the food market, the company has since been laser-focused on providing superior food safety solutions.
Since 2013, we have gained traction, revenue traction with our original product, EPA-registered PURE Hard Surface Disinfectant as an environmental and food contact surface disinfectant for restaurant chains and food manufacturers. We have obtained FDA and USDA approvals on a second SDC-based food safety product, PURE Control, a direct food contact processing aid for both produce and poultry, and we’re moving forward with commercialization of that product. Today, PURE is commercializing superior food safety solutions based on our patented SDC technology to food processors and restaurant chains. We’re providing solutions to the unmet needs of customers in very large markets and we have extensive competitive barriers in the form of 12 U.S. patents and our unique EPA, FDA and USDA approvals.
WSA: Appreciate it. And so could you bring us up to speed your recent news regarding PURE Hard Surface Disinfectant being used by some major restaurant chains and some of your other current activity.
Hank Lambert: Absolutely. In the past week in fact, we’ve had two announcements. First, we announced that we began shipping PURE Hard Surface to two national restaurant chains, a QSR (or Quick Service Restaurant) chain and a casual dining chain. In addition, PURE Hard Surface will be used system-wide on multiple food contact surfaces as well as other surfaces especially those susceptible to Norovirus contamination. PURE Hard Surface is uniquely effective against Norovirus both in eliminating it and preventing it. These chains recognize the value of PURE, providing safer food for their patrons as well as providing protection for their brand. We have initial orders in excess of $250,000 from these chains and estimate that they can generate over a million dollars in annualized revenues.
Second, we just reported on progress in the commercialization efforts of FDA approved PURE Control as a food safety solution for produce processors. Four leading produce processors are currently testing PURE Control and the initial results have been very compelling with pathogen reductions exceeding the processor’s goal for the test. So recent highly visible incidents as I’m sure you’re probably aware of, foodborne illness outbreaks, reported in the media are linked to produce processors and underscore the pressing need for effective pathogen reduction solutions like PURE Control.
WSA: Right. With that being said, what are the key trends that you’re focusing on right now in the sector and how is the company positioned to capitalize?
Hank Lambert: Well, an unfortunate trend in the food industry Juan, is the persistence of foodborne illness outbreaks which indicates that the antimicrobials presently used predominantly in the industry as food contact surface sanitizers and disinfectants as well as processing aids and interventions are not as effective as they should be. In addition, we have significant tightening of regulators requirements and oversight in the form of preventive controls implementation under the FDA’s Food Safety Modernization Act and the USDA’s Salmonella Action Plan as it pertains to holding processors accountable for reducing the percentage of Salmonella contamination in poultry sold to consumers. There’s also been an increase in research indicating that certain bacteria can build up a resistance to the disinfectants and interventions currently being used, rendering them ineffective.
So PURE’s position is to provide a solution to these challenges with our unique patented SDC technology that kills a broader range of pathogens faster with a nontoxic, environmentally friendly chemistry. We have demonstrated through extensive and compelling testing that PURE Hard Surface can generate a 90% plus improvement in pathogen reduction versus incumbent sanitizers, and PURE Control generates dramatic reductions in the most persistent pathogens in produce and poultry processing versus competitive chemistries. And we have proven that SDC mitigates bacterial resistance, so significant competitive advantages position us well to address the trends in the antimicrobial space.
WSA: Great. Well, you answered my next question but perhaps you want to elaborate a little bit more on it. What are the key factors that you feel make the company and your solutions unique from some of the other players in the sector.
Hank Lambert: Sure. We believe extensive testing has shown that PURE and SDC have many unique competitive advantages including first and foremost with PURE Hard Surface. Our product provides disinfectant level pathogen elimination as opposed to the less effective toxic sanitizers currently in use that only reduce pathogen levels. So we are providing a disinfectant level kill versus the sanitizer level reduction in pathogens.
As I mentioned previously, we do kill a broader range of pathogens faster than any other chemistry on the market including the leading causes of foodborne illness outbreaks those being Salmonella, Listeria, and E. coli. And we’re uniquely effective at eliminating and preventing norovirus, which is the leading cause of illness in restaurants. SDC is nontoxic, it’s EPA Category IV, where all of the other chemistries in use of food safety solutions today are highly toxic. There’s no requirement of rinsing food contact surfaces after the application of PURE Hard Surface.
PURE Hard Surface provides 24-hour residual protection on food contact surfaces, which no sanitizer can claim. As previously mentioned, bacteria cannot build up a resistance to SDC. PURE Control does not have any negative organoleptic impact, no off odors or discoloration unlike other toxic interventions. So overall, we believe we deliver superior efficacy in a user and environmentally friendly chemistry.
WSA: And what are the key goals and milestone that you’re hoping to accomplish over the course of next 12 months?
Hank Lambert: Well over the next 12 months, we’re targeting and want to clearly, number one, gain the final USDA approval that we need for use of PURE Control during online reprocessing of poultry. Secondly, we want to build PURE Control adoption as a processing aid by leading produce and poultry processors and we’re well on the way towards that. Third, we want to expand PURE Hard Surface usage as an environmental and surface disinfectant by food processors and restaurant chains. Fourth, we want to obtain regulatory approval for use of PURE Control in beef and pork processing and we’ll be working on that in the latter half of 2017. And we’re also targeting in the next 12 months to uplist our stocks from the OTC Bulletin Board to a national exchange.
WSA: Sounds good. And so perhaps, you could talk to us about your background and experience, Hank, and provide a background of the management team over at PURE.
Hank Lambert: Sure. My 35-year career is in the food industry. I’ve run both retail and food service operating companies for Heublein, Nabisco, and Pinnacle Food. Immediately prior to joining PURE, I was running and had started up the food safety business for Underwriters’ Laboratories or UL in Chicago. Our Chairman, Dave Pfanzelter, has also spent over 30 years in senior executive positions in the food industry, running and operating companies for Oscar Mayer, Kraft, Keebler, and Kellogg.
We built our leadership team with deep food industry and food safety experience. And similarly, our board reflects our strategic focus and includes Dr. David Theno, who is a renowned food safety scientist and expert who is credited with saving the Jack in the Box brand after their E. coli crisis in the ’90s, and Bill Otis who heads up operations for Smithfield Foods. We also have a scientific advisory board headed up by Dr. James Marsden, also a renowned food safety scientist. Dr. Marsden was recently named Executive Director of Food Safety at Chipotle to address the food safety challenges that they are faced with.
WSA: Right. As far as investors and the financial community are concerned, Hank, as you guys are presenting at the Rodman and Renshaw Conference here in New York, what are some of main drivers that you wish investors better understood about the company and what is the key message you’re trying to drive home?
Hank Lambert: Great question. If we look at both the historic and the current performance of a stock, I think it’s fair to say that because of prior managements’ historic failure to deliver on commitment to leverage and commercialize the powerful SDC technology because it has taken us, frankly, about a year longer than we had expected due to regulatory delays. I’m not sure [if] the financial community is fully convinced of the opportunity and our ability to deliver on it. However, we will demonstrate and clearly convey that the opportunity is truly large.
We are now delivering on what we have said we would do. The produce and poultry processing markets combined provide us with a $650 million plus U.S. addressable market for PURE Control. That does not include the $400 million plus U.S. markets for beef and pork processing aids using PURE Control which we expect to enter later next year. Then there’s the one billion dollar plus addressable market for PURE Hard Surface Disinfectant, which is presently generating over $2 million in annualized revenues from restaurants and food manufacturers and processors as we execute on the plan that we have put forward to investors.
So I believe investors should understand that we are a unique breakthrough technology providing a much needed solution in the food industry’s constant battle to reduce foodborne illness outbreaks. We’re on the cusp of generating broad adoption and strong revenue momentum and that will be the message that I am delivering at the Rodman conference.
WSA: Good, and so once again, joining us today is Hank Lambert, the CEO for PURE Bioscience, which trades on the OTCQB ticker symbol PURE, currently trading at $1.04 share, and the market cap is about 66 million. Before we conclude here, Hank, to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Hank Lambert: Well today Juan, as you know, PURE stock is selling at somewhat of a depressed price. We believe that’s largely because of the regulatory-related delays in bringing PURE Control to the food safety market. As a result, investors may have lost some focus or confidence. Fact of the matter is that we are about to generate our first revenue in the $300 million plus U.S. produce processing market and revenue from the $350 million plus U.S. poultry processing market will not be far behind. Both of these markets have very serious consumer health problems that we are uniquely positioned to help solve.
In addition, our first product, PURE Hard Surface is gaining excellent traction with the addition of several national restaurant chains using the product. Food processors are increasingly adopting PURE Hard Surface due to a superior effectiveness in eradicating Listeria, a very prevalent and persistent problem for them. The bottom line is that while it was a long time coming, I believe an investor will find it was well worth the wait.
WSA: Well, we certainly look forward to continuing to track the company’s growth and report on your upcoming progress. And we’d like to thank you for taking the time to join us today, Hank, and update our investor audience on PURE Bioscience. It was great having you guys on.
Hank Lambert: Thanks Juan, our pleasure.