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NEPTUNE TECHNOLOGIES & BIORESSOURCES INC. (symbol NTB on Toronto; www.neptunebiotech.com), makes omega-3 dietary supplements using a patented process for extracting oil from krill. (Krill are shrimp-like deepwater invertebrates that range in length from half an inch to two-and-a-half inches.)
Omega-3 fatty acids reportedly help lower cholesterol and blood pressure when used as a dietary supplement.
The company sells its supplements as bulk oil to a network of distributors who package and sell them under their own labels to customers who are mainly in the U.S., Europe and Australia.
Neptune’s subsidiaries, Acasti Pharma and NeuroBioPharm, are pursuing opportunities in the medical, food and pharmaceutical markets using a highly purified omega-3 concentrate derived from krill oil. Acasti focuses on the treatment of cardiometabolic conditions (diabetes, heart disease and stroke), and NeuroBioPharm focuses on neurological disorders.
The company first sold shares to the public at $1 and began trading on Toronto in May 2001.
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Investing advice: New share issue generates cash to sustain company as it loses money
On November 8, 2012, an explosion destroyed Neptune’s only plant, in Sherbrooke, Quebec. While the company rebuilt the facility, it generated revenue by selling krill oil it had acquired through short-term arrangements, as well as through a manufacturing and supply agreement signed with Rimfrost USA, LLC, in October 2013.
These arrangements, along with price concessions, let Neptune maintain a significant portion of its pre-explosion revenue. The company announced that it had resumed production at its Sherbrooke plant in June 2014.
In the three months ended May 31, 2014, Neptune’s sales fell sharply, to $3.7 million from $6.1 million a year earlier. The company lost $4.3 million, or $0.06 a share, compared to a loss of $5.4 million, or $0.07.
After a share issue in March 2014, Neptune holds cash of $51.9 million, or $0.70 a share. Its $10.2 million of debt is a low 6.4% of its $159.7-million market cap.
The company’s high cash balance will help sustain it as it continues to lose money. But in order to become profitable, Neptune will need to re-establish and expand its customer base and increase its sales.
Meanwhile, it faces competition from other natural food supplement suppliers, as well as products developed by the pharmaceutical industry that have proven scientific credibility.
We don’t recommend Neptune Technologies & Bioressources. If you own the stock we think you should sell.
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Every Monday we feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. 
