Niagen Bioscience Inc (NAGE) 2015 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the ChromaDex Corp.'s first-quarter 2015 earnings conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Andrew Johnson, Director of Investor Relations. Please go ahead.

Thank you, Shannon, and good morning and welcome to ChromaDex Corp.'s 2015 first-quarter results conference call. With us today are ChromaDex's founder and Chief Executive Officer Frank Jaksch, and Chief Financial Officer Tom Varvaro.

On Thursday ChromaDex issued a press release announcing the Company's financial results for the first quarter of 2015 and filed our Form 10-Q. If you have not reviewed this information both are available within the Investor Relations section of ChromaDex' website at www.chromadex.com and the Form 10-Q is also available on the SEC's website.

Before I turn the call over to management, please remember that our prepared remarks and responses to questions may contain forward-looking statements. Words such as make, will, expect, intend, plan, believe, seek, could, estimate, judgment, targeting, should, anticipate, goal and variations of these words and similar expressions are intended to identify forward-looking statements.

Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors including but not limited to our ability to execute our business plan, announcements of technological innovations or new products by us or our competitors, our ability to upgrade and develop our systems and infrastructure to accommodate growth, loss of any strategic relationship, regulation by federal, state or local governments and general economic conditions as well as economic conditions specific to the healthcare industry. Our annual report on Form 10-K filed with the SEC on March 19, 2015, recent and forthcoming quarterly reports on Form 10-Q, recent current reports on Forms 8-K and 8-K amended and other SEC filings discuss some of the potential risk factors that may affect our business, results of operations and financial condition.

We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions we can give no assurance that expectations will be attained. The Company undertakes no obligation to update any forward-looking statement whether as a result of new information, future events or otherwise.

In addition, certain of the financial information presented in this call references non-GAAP financial measures. The Company's earnings release which was issued Thursday after the close and is available on the Company's website presents reconciliations to the appropriate GAAP measure and the explanation of why the Company believes such non-GAAP financial measures are useful to investors.

Finally, this conference call is being recorded via webcast. The webcast will be available on the Investor Relations section of our website at www.chromadex.com.

With that it is now my pleasure to turn the call over to Frank Jaksch and Tom Varvaro.

Thank you, Andrew. I appreciate all of you who have taken the time to join our first-quarter call. This is actually the first quarterly earnings call that we have ever done and we anticipate having quarterly conference calls going forward.

For those of you who are new to our story, ChromaDex was founded in 1999 and we began trading as a public company in 2008. To date we have built one of the largest catalogs of phytochemicals in the world.

What are phytochemicals? Phytochemicals are compounds that are naturally occurring in plants. And that's kind of what we focus on as a company, at least from the beginning.

In addition we have also grown to become a leading provider of chemistry and consulting services to the natural products industry including companies such as Nestle, Pepsi, Kraft and Cargill. As we have grown the Company over the past 15 years we have leveraged both our brand and industry relationships derived from our phytochemical, analytical and consulting businesses to acquire valuable intellectual property for several novel ingredient technologies.

Over the past five years we have commercialized four ingredient technologies under our brands NIAGEN, pTeroPure, PURENERGY and ProC3G. After reviewing the quarter results I'll provide a more detailed overview of ChromaDex as well as our business opportunities.

With that I will turn over the call to Tom so he can go through the Q1 2015 financial results.

Thank you, Frank, and good morning everyone. All of the following numbers are approximated due to rounding.

For the first quarter ended April 4, 2015 ChromaDex reported record net sales of $5.3 million, an increase of 71% as compared to $3.1 million for the first quarter of 2014 and a 24% sequential increase over Q4 2014. This marks the fourth consecutive quarter that we have reported record revenue.

The ingredients segment generated record net sales of $2.7 million for Q1 2015, an increase of 136% compared to $1.1 million for Q1 2014 and a 36% sequential increase over Q4 2014. The core standards and services segment also posted a 33% increase as it generated net sales of $2.3 million for Q1 2015 compared to $1.7 million for Q1 2014 and a 10% sequential increase over Q4 2014. The regulatory consulting segment net sales increased 39% from $200,000 for Q1 2014 to $280,000 for Q1 2015 and a 39% sequential increase over Q4 2014.

Gross margin for the quarter was $1.9 million versus $1 million for Q1 2014, a 96% increase and a 36% sequential increase over Q4 2014. Net loss for the quarter was $1 million versus a net loss of $1.8 million in Q1 2014. EBITDA adjusted for non-cash charges associated with share-based compensation, which is a non-GAAP measure, improved this quarter to a loss of $310,000 as compared to a loss of $780,000 for Q4 2014 and a loss of $850,000 for Q1 2014.

Our cash on hand at the end of the quarter was $3.2 million versus $4 million at the end of Q4 2014. Total cash available was $5.7 million which includes an additional $2.5 million that is available from our Hercules facility.

With that I will now turn the call back over to Frank.

Thanks, Tom. Needless to say all of us at ChromaDex are thrilled having reported our fourth consecutive quarter of record revenue. These results speak to the momentum we are experiencing across all of our business segments.

As I mentioned at the top of the call I just wanted to use this opportunity to better describe our business segments as well as some of the exciting business opportunities out in front of us. I'm going to start with our ingredients segment as it's one of the most important growth segments of our business. The ingredient business is only four years old and over the past five quarters out ingredients segment has had exceptional growth both year over year and sequential growth and we expect that trend to continue.

Our phytochemical chemistry and consulting businesses continued to be a steady grower and generates positive cash flow for the Company. The ingredients segment is where we may be able to create the most substantial shareholder value and we are continuing to focus on growing our existing portfolio of branded ingredients as well as continually developing our new ingredients as well as keeping our pipeline of new licensed opportunities full. We believe there is additional substantial value not currently reflected in our valuation for several pharmaceutical applications for at least one of our ingredients, primarily nicotinamide riboside.

But let's start from the beginning and let's take a look at how do we find ingredients, the ones that we have in our portfolio right now. ChromaDex leverages market intelligence from a 15-year-old chemistry business primarily in the form of information coming from universities and research institutes. We get a very early access to information and then license highly valuable intellectual property to roll it out as a novel ingredient technology.

And most of these relationships are essentially coming from following university purchases from our phytochemical catalog but let's for example look at our NIAGEN ingredient. We first became aware of nicotinamide riboside in 2006 and that led to us at least putting it on our list of what we'll call following compounds. And after that we received a presentation from Cornell University about what the value of nicotinamide riboside was and that raised the bar in terms of our interest in this compound, nicotinamide riboside, which led to us to start formal discussions of licensing the compound in 2010 and essentially the rest after that is history.

So how do we choose which technology to license? There's a few key attributes and there is more than this but I'll just talk about a few today.

One is we look for compounds that address very large potential market opportunities. If they don't address large market opportunities it's not really going to be much of an interest for us.

And the second one is the strength of the intellectual property portfolio underlying that agreement under the ingredient. It has to have a strong portfolio because we don't want to have a compound; even if it has a large market, if it's not defendable intellectual property we don't want to get into a point where it's difficult to defend.

Technology licensing is a key catalyst you should look to continue in the future. The more technology we license, the more robust our future pipeline is going to be. We are currently in the process of licensing several new technologies and we are currently tracking at least a dozen other early stage developments and that's a trend that should probably continue under the business model.

This is a key component of our business model. And it would be difficult if not impossible to replicate this business model largely because it was a slow build over a 15-year period and we've built up a rather unique set of expertise that is basically the driver for continuing to bring in this new intelligence and how we find these ingredients.

With respect to sales, we have an in-house sales and marketing team which we've developed out over the past 15 years and now we have more of a focus also of a sales and marketing team that is in the ingredient space as well. We typically sell direct at this point to all the companies that we sell to and we're pursuing those that are obviously looking to include our ingredients into finished consumer products.

Typically when we start that sales process we're looking for the early adopters. And the earliest of adopters at least from a market perspective is the dietary supplement market and also the nutrition market. Over time we look to transition into a larger universe of customers with products in categories like food, beverage, medical food, meal replacements, sports nutrition, infant formula.

There's a wide range of different markets that we pursue. And we're also even starting to look at the pharmaceutical markets for these technologies as well. And I'll talk a little bit more about that later.

A very compelling aspect of the ingredient business is that there is it's a fairly long sales cycle, so it takes a little while before we actually get these products included or our ingredients included into finished products. So once the ingredient is incorporated into the finished product future sales relating to that finished product become a fairly strong recurring revenue generator for the Company which builds good stable revenue base in the ingredient space for us.

Our current portfolio of patent ingredients is our lead ingredient which I've been talking about a little bit, NIAGEN, nicotinamide riboside, it's a vitamin metabolant naturally found in milk. We have pTeroPure, pterostilbene, this is actually the first ingredient that we licensed back in 2008 or so. It's an antioxidant naturally found in blueberries.

PURENERGY is our caffeine ingredient that is essentially a co-crystal combination of our pTeroPure ingredient with caffeine. And we have ProC3G which is an anthocyanin.

Today I'll focus on our lead and fastest-growing ingredient NIAGEN which is our single largest opportunity to create substantial shareholder value. NIAGEN, our brand of nicotinamide riboside, is also known as NR. NR is a naturally occurring vitamin B3 related metabolite which is related to niacin or also niacinamide.

NIAGEN is the only commercially available form of NR and is supported by five patents issued and several patents pending with exclusive worldwide patented rights acquired from Dartmouth, Cornell and Washington University. Published research has shown that NR is perhaps the most effective precursor to boost the coenzyme NAD.

As we age NAD levels drop which leads to a decrease in energy metabolism in mitochondrial health. This in turn leads to numerous age-related health issues. Low NAD levels limit the activity of a group of enzymes called sirtuins which are believed to play key roles in longevity.

Over the past 12 months there has been a tremendous increase in published data evaluating the effectiveness of NR as an NAD precursor. We expect a number of published studies on NR and NAD to accelerate over the next 12 to 24 months. These published studies could also continue to link NAD depletion to a wide range of age-related diseases.

We expect NAD depletion to be categorized as a significant nutritional deficiency. Compounds such as omega-3 fatty acids, DHA and EPA and now hopefully NR that have been linked to nutritional deficiencies are usually the very large ingredient markets. In February we announced the initial results of our first human clinical study demonstrating that a single-dose of NIAGEN resulted in statistically significant increases of NAD plus in healthy volunteers.

The study confirmed prior results from animal studies that NR is a highly effective NAD precursor. We are preparing for additional human clinical trials on NR to confirm that NR is an effective NAD precursor as well as monitoring other important therapeutic endpoints in a much longer trial. Since 2013 we have signed over 30 collaborative agreements with universities and research institutes all over the world that either currently or will soon be conducting studies surrounding various specific possible health benefits related to NR.

I have been doing this for more than 25 years now and I've never seen this much interest from the academic community regarding science and publication of a single compound. It's also important to note that ChromaDex is not paying for any of this research. It's largely being funded through either university funding and/or grant funding mechanisms.

Just to give you a few names of those MIT, Scripps, NIH, St. Jude Children's Hospital, the Mayo Clinic, the University of Iowa, Washington University, the University of Colorado, University of Copenhagen, University of Birmingham, just to name a few of the snapshot of at least a couple of those that are leading to published research. So many of these collaborations have already published preclinical studies validating the effectiveness of NR as an NAD precursor and are now moving to human clinical trials focused on specific areas of therapeutic benefit. And again it's important to note which I'll repeat is that a lot of these human studies that are coming as a follow-on to preclinical studies are also being funded through grant-funded mechanisms.

One of those we announced last year was a study with the University of Birmingham which is going to the clinic right now. These collaborative studies are looking at many different therapeutic endpoints such as weight loss or weight control, blood sugar control or diabetes, heart health, neuroprotection, healthy aging and longevity, muscle endurance, muscle recovery, improved energy metabolism, mitochondrial myopathy and Cockayne syndrome just to name a few.

It seems like there's a lot there but in reality a majority of those linked to one sort of key factors that all of them are around the center of this compound being an NAD precursor or the NAD being linked to these particular health problems. It's key to note that all the published research has linked depletion of NAD to health- and disease-related problems and the key to managing many of these conditions is increased NAD. NR does one thing exceptionally well and that is a highly effective NAD precursor and all these health benefits are coming from this increase of NAD.

In December 2014 the results of a preclinical study performed by NIH in collaboration with ChromaDex indicated that NR was an effective NAD precursor in not only restoring levels of NAD but also in rescuing mitochondria and other attributes of this devastating accelerated aging disease known as Cockayne syndrome. The researchers concluded that NR showed promise as a potential therapy for the disease as well as other age-related neurodegenerative conditions.

We believe there's an immediate opportunity to pursue NR as a pharmaceutical therapy for Cockayne syndrome or CS. For those of you who may not know that much about CS it's a rare pediatric orphan disease caused by a genetic abnormality that causes extreme accelerated aging in these kids.

That accelerated aging condition has been linked to a massive NAD depletion. For several months now ChromaDex has been working closely with the researchers at NIH as well as a key advocacy group for CS and we are working through the next steps in getting NR into the clinic for CS including filing an application for orphan drug designation with the FDA.

ChromaDex has also recently announced two significant publications from Washington University and the Scripps Research Institute linking neuronal cell death to NAD depletion. Whereas the NAD depletion was caused by some form of a neurodegenerative disease such as Alzheimer's or some form of neuronal trauma such as traumatic brain injury or concussion resulting from a contact sport in both studies the treatment with NAD or an NAD precursor such as NR blocked the neuronal degradation and the cell death. We believe that NR may have promises in effective NAD precursor in both managing neurological disorders as well as in neuroprotective for contact sports, related concussions or head trauma.

In summary, we see an enormous market opportunity for our NIAGEN nicotinamide riboside as an NAD precursor in multiple markets. And as a vitamin-related, B3 vitamin-related metabolite it's a very large market, addressable market that we will be able to serve with this compound.

I'm going to jump to pTeroPure now. PTeroPure again was our first ingredient and so I just wanted to touch very quickly on a few developments with our first ingredient here, pTeroPure pterostilbene, which we launched in September 2010.

This is based on technology we've licensed from the University of Mississippi and the US Department of Agriculture. We completed an 80-patient Phase 2 study human clinical trial in 2013 at the University of Mississippi which showed statistically significant results for its ability to lower blood pressure.

In another note, we also announced I think last year that we released some of the data from that study that also showed that we had some trending towards weight loss in that study as well. And more of that in the future.

We believe pTeroPure's most significant potential is going to be in the topical or oral application for both skincare as well as sun protection. Two independent studies, one by researchers at University of California Irvine and another one at the University of Valencia in Spain, have pushed us in the direction of accumulating some intellectual property around the use of the compound for skincare or sun protection and we are currently in advanced discussions with several Fortune 50 consumer product companies regarding topical applications of pterostilbene. And we believe that the topical or the skincare section of pterostilbene and have known for several years now that this is probably going to be the most exciting category for the compound and we're finally getting to a point of actually starting to look at monetizing that as well.

So jumping away from the ingredients section I'm going to transition into our natural products chemistry and consulting business. This business is comprised of three main segments. We have our phytochemical catalog, we have the chemistry services and we also have a consulting, both regulatory and GMP consulting business.

Over the past 15 years we've built a strong list of several marquee customers such as Procter & Gamble, Nestle, Cargill, Estee Lauder just to name a few. We have several thousand customers that are currently under that business and that business has been generating cash flow for the Company for a long time, definitely for the past 15 years. The annual growth rate has been fairly consistent at about 12% for more than five years now, but the rate of growth has accelerated and we've made some investments in new business areas and those investments are starting to pay off as evidenced by our growth in the first quarter.

These businesses are critical to our business model. We need the market intelligence and that's how we gain the market intelligence; by operating these businesses it gives us a first glance at early stage research and our primary focus there is early stage research at either universities or research institutes. And this is the primary driver for what will be the future pipeline for the Company.

Several of you or almost all of you probably have seen the recent action regarding the New York State Attorney General's office which accused four major retailers in February of selling fraudulent and potentially dangerous herbal supplements and actually pushed to remove those products from the shelf. And that got significant national news and, yes, ChromaDex was not in the middle of it directly but we were indirectly involved in that. The AG conducted tests on several top-selling store brands at retailers such as GNC, Target, Walgreens and Wal-Mart and they found that four out of five of those products didn't contain the herbs that were supposed to be on the label.

So on that as well last week I was actually invited in Washington, DC as a speaker and I spoke as an expert in the Congressional Dietary Supplement Caucus briefing about the challenges in manufacturing and testing dietary supplements. ChromaDex will continue to get this type of exposure as an invited speaker because we are recognized as probably one of the primary experts in this space.

So you may be wondering as well how and I've been getting a lot of questions from investors or shareholders as well about well how does this New York AG action impact ChromaDex's business? And negative press like this has historically been a driver for business for ChromaDex and this case appears to be no different. As a matter of fact it seems to be a little bit more exacerbated.

So we saw a significant increase in the chemistry business in the first quarter. And we expect that the continued push by the New York AG should be a good growth driver for us moving forward as well. Immediately after the whole news broke on that we were contacted by a number of supplement companies to review their quality and testing policies within the first 24 to even 72 hours of that story breaking.

And then we also had something that came out right around that same time. As a matter of fact on the same day that the news broke on the New York Attorney General we launched our first ChromaDex Quality Verified Seal program.

And just to give you a little highlight of what that is we've been working on this program for several years now. And it was a little uncanny how the timing worked out on this on our launch of the program with this New York Attorney General action. But what we do is we do supply chain facility audits and inspections to verify compliance with cGMP or good manufacturing practices as specified by the FDA.

And then we also employ the use of a comprehensive identity testing program for raw materials and finished products and finished product testing for potential contaminants such as microbiological, heavy metals or residual solvents. And then we also have an ongoing monitoring program that's part of this program by design and on that day when we announced the program we announced our first customer in that program back in February which was the sports nutrition supplier BPI Sports. They were the first company to contract with ChromaDex for a third-party verification program, primarily of the BPI protein products.

Protein products have been a controversial area because there's actually quite a bit of adulteration of protein products. So BPI saw this as a means of differentiating their products from the rest of the clutter on the shelf.

So the ChromaDex Quality Verified Seal will be added to the entire line of BPI products over the course of the next year or so. And we expect that visibility within that space is going to continue to drive new customers like BPI into this program as there's more what I'll call increased scrutiny not only from attorney generals or also the FDA but as the consumers start to make decisions based on these things hopefully they will start to look for quality verified seal programs like the one that we're offering now with BPI.

So we believe that the action from the New York Attorney General office actually is going to be transformational regarding supplement companies either voluntarily or involuntarily having to secure either independent third-party testing or some form of label verification. And ChromaDex is in a great position right now to secure a significant portion of that business as it moves forward.

Switching gears a little bit more towards both our scientific advisory board and also our Board of Directors, last year we announced the formation of our first scientific advisory board. The SAB's mission is to assist the Company's management team in maximizing the value of ChromaDex's portfolio of patent ingredients. And they advise us on matters such as just in general the science and research, clinical studies, safety and regulatory, commercialization opportunities and assessing new potential ingredient technologies as well.

And we were fortunate and honored to have at least appoint our chair of the SAB and Nobel laureate Roger Kornberg. And on an interesting twist Dr. Kornberg's father, the late Arthur Kornberg, was awarded a Nobel Prize as well for physiology or medicine in 1959 and he was actually one of the first to investigate nicotinamide riboside more than 60 years ago at NIH. So there's an interesting connection there and we're grateful to Dr. Phil Frost, ChromaDex's largest shareholder, for introducing us to Dr. Kornberg and helping us facilitate that relationship.

Just to mention a couple of other names as well, Charlie Brenner who is at the University of Iowa, one of the inventors of our nicotinamide riboside technology, is also a member of the SAB. And we're going to continue to focus on adding additional SAB members. Right now it stands at four and we're going to look if we need to add more we may continue to add more depending upon skillset we may need.

We've also had several recent changes to the Board of Directors. In March former Nestle executive Steve Allen was named as our Chairman of the Board. He's already taken on the leadership position in Board meetings and he will be an incredible asset to the Company as we move forward as well.

And in April we appointed Jeff Baxter, an experienced successful biopharma executive who brings 19 years of pharma experience at GlaxoSmithKline or GSK. Jeff is going to be instrumental in advising both the management team and the Board of Directors on mergers and acquisitions, out licensing arrangements as well as potential partnerships and strategies surrounding therapeutic and pharmaceutical applications of our ingredient. And we're very glad to have Jeff as an addition to our Board of Directors and he's going to be a valuable asset for us moving forward.

So with that I'd like to thank everyone for joining our first quarterly earnings call. I know it was a little long but we wanted to take this opportunity to introduce the Company at a higher level. With that I'd like to turn the call back over to the operator so we can take a few questions.

(Operator Instructions) Scott Jackson, Ravenwood Capital.

Yes, hi guys. Great job on the quarter.

So there's been quite a bit of news on the, as you mentioned, he numerous studies coming out on the health benefits of nicotinamide. Just want to know how you view the recent news and studies like the most recent one from Washington University's medical school impacting ChromaDex's pipeline going forward? Thanks.

Thanks, Scott. That's a good question. We continue to put out if you notice over the past couple of years we do put out press releases regarding certain science landing in publications and these publications are critical to the Company.

And I've said this over the past couple of years but from a catalyst standpoint having these types of studies especially on nicotinamide riboside published is critical to the Company. We need this stuff to publish and that the sheer number of publications that come out and there's been a substantial amount of these that have come out of the past two years and we expect more to come out over the next 12 to 24 months as well. But the more visibility we get in terms of the science, the higher the more potential there is in terms of this really starting to show some pickup.

And that's going to be critical because consumer awareness is critical to the size or the potential of a compound like nicotinamide riboside and science is usually the driver towards that. So the more of these publications that come out which we're really moving in that direction of trying to facilitate this through these collaborative agreements like I talked about. But these are critical for the Company and continuing to see more of those at least from ChromaDex putting up press releases identifying that is going to be like I said a very important catalyst for the Company moving forward.

[Robert Levy], Morgan Stanley.

Last week I saw a report about the positive effects on avoiding skin cancer by using niacinamide. How does this relate to ChromaDex?

Another good question, sort of picks up well after the last one. But yes, I've received hundreds of emails since last week from family and shareholders and investors and other people within the industry. There was a study that published, it was a clinical study about the use of a compound niacinamide.

Niacinamide of course is a related metabolite to nicotinamide riboside but yet they are slightly different. Niacinamide has been out in the market and fairly ubiquitous in the market for a long time. But they published some data about the use of the compound for prevention or somehow moving the needle in terms of skin cancer and non-melanoma-related skin cancer and we've been tracking that actually on our own for the past couple of years in terms of some studies that we have done.

Visibility that publication that really got a lot of media attention last week brought a lot of visibility to ChromaDex over the past week or so. Although we've been very busy with our earnings it's still important to have studies like that come out and not only prove that vitamin B3-related compounds like nicotinamide riboside or niacinamide for that matter actually work. But our expectation is that nicotinamide riboside at least based on data that we have right now is going to perform better than niacinamide and again like I said we're on top of that and it's good to have visibility regarding any niacinamide or B3-related vitamin out there.

Thank you.

(Operator Instructions) [Steve Levy, Steve Levy Consulting.]

Hi, Frank. How many entities have we signed up for quality testing assurance under our new program?

So far we've only signed up one and that's BPI. We started that discussion with them probably last October and it took us about three or four months to iron out the details regarding the sign up of that program. But that was the first official rollout of a program.

Since we launched that program a couple of months ago we've been in several other discussions with other companies as well to evaluate implementing that type of program with those companies. Each company is slightly different in terms of their complications in terms of how we're going to plug those programs in.

So it does take a little while to get new ones but we expect to have new companies like a BPI out there. And right now we're slow-moving some of them because we really want to get that relationship with BPI fleshed out and really let them build some visibility for the program before we start pushing a lot of the other ones. But again it's a little bit of a long developmental cycle but we expect other ones to come on as well.

Thank you.

[Chris Drixon], Retail Investor.

Thanks for holding this call. I really appreciate it.

I heard you mention the potential pharmaceutical opportunities of NIAGEN earlier on in the call. I was wondering if you could talk about the potential for that to become a drug in the future and maybe elaborate on the timeframe. Thanks.

Sure. Another good question. The pharmaceutical angle which I touched on I think what we're going to do is we're going to take a very sort of we'll call a strategic approach towards moving in this case nicotinamide riboside forward as a drug.

We're focused right now on more what I'll call low-hanging fruit based on data that we have. We already have existing preclinical data on the use of nicotinamide riboside for treating Cockayne syndrome.

And as I mentioned before it's a rare pediatric orphan disease. It's a very small population. We are already in touch with the key advocacy group as well as NIH and we believe we're going to be able to probably fund this entire study through NIH, but we're still working through those details right now.

But the reason why this study is important it's not just for moving in the direction of getting a drug approval but it's a great proxy. If we can affect or move the needle on NAD and the cause of the accelerated aging in this particular disease is in fact related, directly related to NAD or massive depletion of NAD that causes the accelerated aging.

These kids die by the time they are 12 years old and they essentially die of old age.

So if we can move the needle in a genetic abnormality that causes a severe, the most severe form of an NAD depletion then it's a great proxy for us in terms of what this is going to do in terms of the normal what I'll call the normal aging population and the importance of NAD being linked to aging itself and/or longevity. And we expect more data to come out on that in general but in this case it's going to be a strong supporter of that.

The other side of it as well Cockayne syndrome isn't the only disease that we're currently looking at. There are other similar diseases as well that are linked to NAD depletion.

And some of them are starting to get visibility like mitochondrial myopathy is another one and we've been looking at that opportunity for a while and I'm not going to go into a lot of detail about that right now. But mitochondrial myopathy from another orphan drug standpoint is another one that we have our eye on as well because it's again linked to NAD depletion as well.

And there is one other one that we're looking at an and I'm not going to even mention the name of this one because we're currently in the middle of several discussions regarding a clinical study on that, it's a little sensitive at the moment. But it's another disease or condition that's related to NAD depletion.

And again you'll notice the common thread there is anything that there is a potential link to NAD depletion we have a potential shot of looking at, either NIAGEN or nicotinamide riboside as a standalone or the potential of combining nicotinamide riboside with other existing therapy where NAD depletion may be problematic with the effectiveness of another treatment. So we've got a little ways to go but the pharmaceutical angle right now I'd say is at least in my mind is a considerable amount of untapped value that we have with this compound. And as you guys probably know or the ones that have been following us for a while, the omega-3 fatty acid category is a strong success story there in terms of what I'll call more of a dietary supplement or a food ingredient that also is sold as a script in the form of a compound called Lovaza that GlaxoSmithKline sells.

Thank you very much.

Barry Kitt, Pinnacle Fund.

Hi there. So if we wanted to take NR, what's the best way for us to get it? I notice and I also notice on your website there is no links to anybody selling any of your any of the products made from your products.

Right. So the best way to take it, right now a majority of the products that are sold are direct-to-consumer products that you can find on the Internet, there are several of those. There is Elysium Health, there's a product from Live Cell Research, there's a product from HPN called NR.

There is a Life Extension Foundation product that's out there. And now there are several other new products, those are just at least a few that I went through the list on that you can largely acquire or purchase online.

There's going to be an expansion into retail coming up fairly soon. We haven't disclosed the details yet of the companies and/or the first products that are going to be launched in terms of retail but retail products on the likes of like CVS or Rite Aid, Walgreens are going to be those outlets we'll continue to expand in those. But right now it's primarily through Internet direct-to-consumer side.

As you know, we don't sell consumer product ourself. And we're not necessarily pushing specific clients of ours in terms of their products. So we're trying to remain a little agnostic on that front.

Yes, it's very difficult to figure out where to buy these products so I didn't write those down. I guess I'll listen to the replay so I can get that information.

Yes, we'll expand that category. It's fairly normal in terms of the pickup. The direct to physician is usually one of the first markets that launches product and Thorne Research launched a product last year at about this time.

And then the other markets that are more the direct-to-consumer usually the second ones to come in, we've had several in that category. And the next on the expansion is retail and that's really what we're working on right now.

So you couldn't have some kind of marketplace on your website where any clients who use your ingredients could advertise or essentially list their products as available?

Well, it's not normal as an ingredient technology supplier to do that. And we tried to -- we don't want to somehow look like we're promoting one product over another one. Our job is to try to get nicotinamide riboside included into as many different types of products as we can.

That makes sense. I would just think if it's agnostic you're not pushing any specific company, just anybody who uses your product can list their product as being available. I don't know if that makes any sense or not but that's just seems like it could be easier to find these products.

I think eventually we will have more representation similar to what we do with our pterostilbene. But I think at some point we will have more of a consumer facing website at least at some point in the future. Right now the website ChromaDex's website focuses more not so much towards the consumer but more towards the trade that we're trying to represent the material to and I think that's a good comment, a fair comment.

Okay, thank you for your time.

Thank you. This concludes the Q&A session. I would like to turn the call back over to Frank Jaksch for closing remarks.

Again thanks everybody for joining our first call. Again we had a lot to say over this initial call.

But and if anybody has a follow-on questions feel free to reach out to Andrew Johnson, ChromaDex's internal IR representative, or Bob Prag as well who also is a representative of the Company. And so if you have any questions that go beyond the ones that were just mentioned we will always listen and try to respond as much as we can. So with that thanks everyone and I look forward to our next call.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.