Niagen Bioscience Inc (NAGE) 2016 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the ChromaDex Corporation second-quarter 2016 earnings conference call. My name is Vince and I will be the conference operator today. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded.

This afternoon, ChromaDex issued a news release announcing the Company's financial results for the second quarter 2016, and filed their Form 10-Q. If you have not reviewed this information, both are available within the Investor Relations section of ChromaDex's website at ChromaDex.com. And the Form 10-Q is also available on the SEC's website.

I would now like to turn the conference call over to Andrew Johnson, Director of Investor Relations. Please go ahead.

Thank you Vince, and good afternoon and welcome to ChromaDex Corporation's second-quarter 2016 results conference call. With us today are ChromaDex's founder and Chief Executive Officer Frank Jaksch, and Chief Financial Officer Tom Varvaro.

Today's conference call may include forward-looking statements, including statements related to ChromaDex's research and development and clinical trial plans, future financial results, business development opportunities, future cash needs, ChromaDex's operating performance in the future, future investor interest and analyst coverage of ChromaDex, the markets ChromaDex's products will address and the expected revenue growth of ChromaDex's products that are subject to risks and uncertainties related to ChromaDex's future business prospects and opportunities, as well as anticipated results of operations. Forward-looking statements represent only the Company's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause ChromaDex's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These risk factors include those contained in ChromaDex's annual report on Form 10-K and quarterly report on Form 10-Q most recently filed with the SEC. Please note that the Company assumes no obligation to update any forward-looking statements after the date of this conference call to conform with the forward-looking statements, actual results, or to changes in its expectations.

In addition, certain of the financial information presented in this call references non-GAAP financial measures. The Company's earnings release, which was issued this afternoon and is available on the Company's website, presents reconciliations to appropriate GAAP measure and explains 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 at 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. Despite the challenges we had in dealing with the short attack in June, I'm very happy to report another record quarter in Q2, which was a substantial improvement over what was a great result in Q1. NIAGEN continues to be the star performer, and we are still in the early stages of developing and commercializing this game-changing ingredient technology.

Now, before I get into the highlights of the business and a summary of Q2 and 2016, I'd like to turn over the call to Tom so he can provide you with details on our second-quarter 2016 financial results. Tom?

Thank you Frank, and good morning everyone. I'm very happy to report that, for the three months ended July 2, 2016, ChromaDex reported record net sales of $8.8 million, an increase of 45% as compared to $6.1 million for the three months ended July 4, 2015. This is also an increase of 20% over the $7.3 million reported for the three months ended April 2, 2016, Q1 2016.

The ingredients segment generated record net sales of $6.2 million for Q2 2016, an increase of 83%, compared to $3.4 million for Q2 2015. This represents a 35% increase over $4.6 million reported for Q1 2016.

The core standards and service segment also posted a 4% growth as it generated net sales of $2.5 million for Q2 2016 compared to $2.4 million for Q2 2015.

The scientific and regulatory consultant segment net sales decreased 64% from $318,000 for Q2 2015 to $113,000 for Q2 2016 as this segment put a further emphasis on intercompany work supporting our ingredients segment.

Our gross margin for the quarter was 47% versus 40% for Q2 2015. Net loss attributable to common stockholders for Q2 2016 was $83,000, or $0.00 per share, as compared to a net loss of $315,000, or $0.01 per share, for Q2 2015.

EBITDA adjusted for non-cash charges associated with share-based compensation, which is a non-GAAP measure for the quarter, was $496,000 as compared to $404,000 for Q2 2015. Cash on hand at the end of the quarter was $3.4 million, which will provide us with sufficient cash on hand to fund the operations through August 2017.

I next want to highlight some of the expenses incurred in Q2 that were discussed in our recent quarterly report filed with the SEC on our Form 10-Q. The Company incurred $752,000 in research and development expenses for Q2 2016, an increase of 330% compared to $175,000 for Q2 2015, and an increase of 62% as compared to $464,000 for Q1 2016. These charges include human clinical trial fees and new ingredient development costs. As revenue and available financial resources continue to grow, the Company plans to continue to increase research and development efforts with a focus on the ingredients segment.

For the six-month period ended July 2, 2016, our patent maintenance expenses increased to $343,000 compared to approximately $156,000 for the comparable period in 2015. As we continue to enhance our patent portfolio for our ingredients segment, we expect these expenses to continue to increase as well.

During Q2, the Company also retired the Hercules debt facility, which resulted in one-time additional nonoperating charges of $313,000 related to the difference between the net carrying amount and the payoff amount.

With that, I will now turn the call back over to Frank so he can provide our Q2 2016 highlights. Frank?

Thanks Tom. As Tom highlighted, we had a very busy and productive quarter, and not just with our substantial revenue growth. In Q2, we saw a tremendous amount of significant peer-reviewed published research validating the importance of NAD and the effectiveness of NR. There was also an uptick in media attention to NR mainly related to these important scientific studies.

I'm also pleased to report in Q2 2016 that the activity in new business development remained robust as we continue to expect strong revenue growth in 2016. However, before we discuss that, I'd like to address the recent short attack against ChromaDex.

As all of you are probably aware, on June 20, Bleecker Street published a misleading and factually inaccurate article on SeekingAlpha. This whole short attack was a real what I will call eye-opening experience for me. This was the first attack that we have experienced like this since the Company became public in 2008. Personally, as a large shareholder and also as CEO of the Company, I was highly disappointed and I would say I was outraged by the fact that this is even possible for an anonymous party to blatantly publish a false and highly misleading article so short-sellers can profit from the decline in share price.

The good news is that we were able to move quickly and article was removed on June 29, and it was replaced by a message and an apology from the author. For all those -- all of you who may not be aware, this outcome was a tremendous success for the Company as it is extremely rare to get a retraction and apology like we got in this case.

We are going to keep a close eye on the current litigation against Bleecker Street and we will continue evaluating our legal options related to the matter. Although there is still some lingering damage to the stock, we will continue to focus on running and growing business and capitalizing on the tremendous opportunity we have with NIAGEN as that is ultimately what is going to create shareholder value.

As all of you know, we uplisted to NASDAQ in the second quarter. On April 25, 2016, ChromaDex, under our current ticker, CDXC, began trading on NASDAQ Capital Market. We are pleased to report that, since the listing on NASDAQ, we've seen a significant increase in average daily volume. Hopefully, that trend will continue during the course of 2016.

On Friday, May 6, we were honored to ring the opening bell at NASDAQ. Me and the team were there to ring the bell on that day. It was a great experience for the Company and I hope for some of our shareholders as well. The NASDAQ listing has already opened doors to a broader investor base for the Company.

Despite the short attack, ChromaDex was added to the Russell 2000, the Russell 3000, the Russell Microcap and the Russell Global Indices. As a result of being added to the Russell 2000 index, we have seen an increase in institutional ownership. The new NASDAQ listing and being added to several Russell indices has dramatically changed our institutional ownership, a trend we expect to continue during 2016. We expect analyst coverage in the very near term and we will continue to actively pursue additional analyst coverage in 2016.

Now, moving to NR, nicotinamide riboside, I want to start with a scientific update. Momentum continues to build for NR in the research community as we have now over 80 collaborative agreements in place. This is a substantial improvement over where we were earlier this year if you have been tracking where we have been going with that. Many of the earlier collaborative preclinical studies are now publishing and several of these are now transitioning into human clinical trials.

There has been a flood of peer-reviewed published studies over the past few months, primarily in top-tier journals, a trend we expect to continue for the rest of 2016. And just to highlight a few of the recent publications, yesterday, we announced a cover story publication in cell metabolism which demonstrated that NR restored muscle function that was lost during the aging process. There were three papers that were published in Science in June by Lenny Guarente, Johan Auwerx and Richard Goodman, all of which highlighted the importance of maintaining NAD as we age and the use of NR as a highly effective NAD precursor.

In June, there were also a couple new papers in cell metabolism by David Sinclair and Eduardo Chini, who further validated the decline of NAD during the aging process and the importance of restoring NAD. In May, Charlie Brenner and his team at the University of Iowa published in the Journal of Scientific Reports a nature publication that NR was successful at reducing fasting and non-fasting blood glucose levels as well as weight gain and was protective against diabetic nerve damage.

In April, Johan Auwerx and his team at EPFL in Switzerland demonstrated that NR had positive effects on aging stem cells, showing that NR restored aging organ function. The publication received a tremendous amount of media attention, including pickup in Newsweek, and there was a considerable amount of other follow-on pickup that resulted from that as well. So the momentum clearly seems to be building in the media regarding this NR, NAD precursor and aging story.

In early July, some of you may have seen the Wired magazine article about NR, NAD and aging which highlighted the story of one of our dietary supplement customers as well as the NR aging story. The author also touched on our pharmaceutical development plans for NR, including commentary from Will Bohr at NIH regarding our Cockayne syndrome orphan disease efforts.

We expect to see more media attention similar to the Wired article coming over the next few months as peer-reviewed published science continues to build and validate the NR story. We have now exceeded 50% enrollment in our second human study. This trial is examining the effective dose range of NIAGEN to increase NAD and NAD metabolite concentrations in the body consistent -- with consistent use over an eight-week period. The study is a randomized double-blind placebo-controlled study in 140 healthy adults in the age range of 40 to 60. The study participants in the active group received the same dose that we used in our first study, the dose range 100, 300, and 1,000 milligrams per day. It's also important to note there are eight additional human studies that are actively underway in addition to our own trial which we have ongoing at KGK.

The University of Colorado has a randomized double-blind placebo-controlled crossover study in 26 subjects looking at healthy aging in the age group of 50 to 75, and they are evaluating several different therapeutic areas -- cardiovascular, cognitive function, muscle mobility. Another study at the University of Copenhagen, which is also a randomized double-blind placebo-controlled study in 40 patients, is looking at pre-diabetes and weight management. The University of Washington has a 30-subject study looking at clinically stable systolic heart failure, so it's a cardiovascular function related trial.

Another NIH related program at NHLBI is another 30-patient study mainly looking at the obesity related in flamizome or immune function related to obesity, and that trial is populating right now as well.

The University of Birmingham is a patient in 12 healthy elderly males. They're going to be looking at similar area that we have just saw publication come out this week, so they are looking at mitochondrial function and skeletal muscle NAD. Elysium's trial, which is actually a combination of nicotinamide riboside and Pterostilbene, a 120-subject study looking at mobility, quality of life, quality of sleep, so a lot of different aging related parameters. The University of Helsinki is 10 patients. They're looking at what I will call BMI discordant twins. So what that means is they are looking at a pair of identical twins. One of those twins is normal weight; another one may have developed obesity. And they are looking at the differences in metabolic effects between the different twin sets, which can be fairly important for us.

And last but not least, the Mayo Clinic University of Minnesota study is a study that's going to be evaluated in looking at nicotinamide riboside for impact on what I will call cognitive function or brain function in football athletes. I stop short of calling it a concussion study but in reality what they are looking at is the potential protective effects of the compound in that what I will call contact sport environment.

We are seeing a tremendous amount of success with our preclinical collaborative studies, and we are happy to see many these transitioning into actual human clinical studies. And I have highlighted eight of those, above that really came from that collaborative process and now have transitioned. We expect approximately four additional studies to begin sometime over the next six to nine months, again following the same process transitional studies that were collaborative studies that are moving into human studies as well.

Peer-reviewed published science demonstrating the effectiveness of NR is what will drive media attention. Media attention is what's going to be driving consumer awareness. So, with that being said, driving these collaborative preclinical and human clinical studies will continue to be a top priority for the Company because ultimately that's what we're going to need to drive, not only scientific awareness in the community but also consumer awareness.

On the marketing or our sales and marketing front, we have been very happy with the growth that we've been showing over the past two years with NIAGEN. And it's very important for me to note as well that most of the growth that's been coming has largely been coming from the dietary supplement market, or sales within the dietary supplement market. We expect NIAGEN revenue growth to continue in the dietary supplement space with the addition of new products as well as the growth of existing products that are already in the market.

As I mentioned before, NIAGEN is a platform ingredient that we expect to garner tremendous interest in other markets beyond the dietary supplement space. And we have been actively working on what I will call business development activity in the food market, the beverage market, sports nutrition, in fit nutrition, medical or clinical nutrition and also in skincare. The supplement market will ultimately be only one channel for monetizing NIAGEN, and as of now, all our NIAGEN revenue is coming from the supplement market. As the business development in other channels occurs, it should accelerate our revenue growth. As we -- I view that the other markets are largely -- will most likely be the largest revenue-generating categories. They may just take a little bit longer to get there.

Business development activity for NR has been very robust over the past few months. And we've seen an uptick in new activity, especially with new large Fortune 500 companies that are now at the table evaluating NR. But as I noted before, it's important for me to say that these deals that we are working on with these larger Fortune 500 companies, on a much longer sales cycle, we expect the majority of our revenue growth to come from the expansion of the dietary supplement ingredient business in the near term.

We have received several questions asking for updates or more details on the discussions we are having with these Fortune 500 companies. However, because of the sensitive nature of these relationships, we do not make it a practice to comment on these deals or the timelines involved.

We have also received several questions regarding updates on the progress with many of our dietary supplement customers, and it is important for everyone to understand that we are an ingredient technology company supplying materials, in this case such as NR, to our customers to include them in consumer products. As a general business practice, we do not comment or provide specific details related to the nature or performance of our customer relationships.

Now to move into a different area regarding the pharmaceutical development of nicotinamide riboside, we've been continuing our pharmaceutical development efforts on NR and NAD precursors. And we are on track to file our first IND in orphan designation for NR for Cockayne syndrome before the end of this year. As a result of the successful collaborative preclinical study, we have started working on a second IND for NR in a new area we believe to be a significant unmet therapeutic need. As we move this along, we will provide more details about this development.

As these existing pharmaceutical opportunities for NR and NAD precursors advance, as we continue to find and add new NR-related drug development opportunities, ChromaDex has been and will continue to put more resources into these programs. We have also begun evaluating more efficient, strategic options for funding and managing these potentially lucrative drug development opportunities for NR, and other NAD precursors.

So, in conclusion, for those of you who may be new to our story, I would recommend that you read a letter to shareholders that we distributed in January. It outlines the NR/NAD story as well as the magnitude of the opportunity we have with NR. In light of all the new publications in Q2, I am more convinced than ever that we have extraordinary opportunity to create tremendous value for our NIAGEN nicotinamide riboside. A new vitamin of this magnitude is the type of opportunity that comes along once maybe every 25 years, and all the important pieces of the puzzle, peer reviewed science, media attention to the NAD story, the rise of the treatment of aging as a disease, are creating a perfect storm for NIAGEN or nicotinamide riboside to become the next nutritional health and wellness story, and we look forward to that as it develops and as it has been developing over the past few years.

So before we open the call for a few questions, I'd like to address some common questions that we have been receiving over the past few weeks just to sort of kickstart this. Question number one, is the Board of Directors actively looking for someone to fill the position left vacant by the departure of Bill Smithburg? The answer to that is yes. ChromaDex -- the ChromaDex board is currently looking for and evaluating candidates. And most of you that have been following what we have been doing over the past few years, in the past two years, we've added several new board members, Steve Allen who is now the Chairman, Rob Fried and Jeff Baxter are all new to our board over the past couple of years.

Our Board of Directors in its nominating and governance committee has been and will continue to evaluate not only the structure of our board, but also its composition. As we continue to expand and grow the Company we recognize that we will need to add individuals with additional areas of expertise to increase the diversity of the available skill set of the board. So that's basically a brief update on where we are with the board.

The second question is can you update us in terms of the timeline for publishing your first human clinical trial result in a peer-reviewed scientific magazine? We have a manuscript that has been accepted by a leading peer reviewed publication and we expect this data to be published sometime before the end of the third quarter, so we are not too far away at this point.

Question three, can you explain the advantages of NR as an NAD precursor over other forms of vitamin B3, in particular NAM? NAM by the way is niacinamide. We've also seen some chatter out there implying that NR is nothing more than expensive NAM, so let me address both of these points.

There are numerous publications that clearly point to the advantage of NR over NAM. NR and NAM are both part of the existing energy metabolism path. That's true. The cell metabolism study that we announced yesterday clearly validates the differentiation of NR as an NAD precursor. It's differentiated, very much differentiated, from NAM, and the data in that study clearly supports that. We are expecting several new publications over the coming months in highly credible peer-reviewed journals that will further demonstrate NR superiority over NAM, as well as other precursors that you may be hearing about.

So, from our perspective, it's not really much of a story. I think the scientific community is fairly well aligned on the clear advantages that NR has mechanistically over the other NAD precursors, including NAM, and the data should continue to support that.

So, with that, I'll close the call, and we will open the call to handle a few questions.

(Operator Instructions). Ram Selvaraju, Rodman & Renshaw.

Can you hear me now? Is this okay? Can you hear me? Sorry about that, my apologies. So I have two quick questions.

Firstly, can you give us some color as to what percentage of the R&D expense associated with the second quarter were directly related to clinical trial expenditures, and what specifically those clinical trial activities were? And secondly, as a furtherance to that, do you have a better sense now of what is likely to be the clinical development path forward in Cockayne syndrome specifically? Just give us a sense of what your discussions may have been with regulators regarding what that clinical development pathway might look like, how large the trials might be, what the evaluation period might consist of, what the endpoints might represent. Thank you.

Thanks. So, to answer the first question, I don't have an exact percentage for you in terms of what it represents of the $700,000 plus budget that we had for Q2. A majority of it was most likely related to the clinic trial that we are running currently at KGK. And I would expect, moving forward, that a big chunk of our R&D budget is going to be allocated towards the clinical development path, not only on the types of trials, in this case the KGK trial, which is a 140 person double-blind placebo-controlled study -- is a -- most of that should be -- we are about just over 50% of the way not only enrolled but we are actually about 50% of the way through. So the rest of the payments will stage out as we move towards getting towards the end of that trial. So, I would expect that there is still additional spend that's related to that that we'll budget out as we progress through that trial over the course of 2016.

The balance really of the spend was associated with new, what I will call new ingredient development. We have a lot of new technology development related not only to NR, but also related to other new ingredient technologies as well.

Okay, that's very helpful. And with respect to Cockayne syndrome, do you have any additional details for us there regarding what the clinical development path could look like and what you will be using as evaluatory endpoints?

Sure. Right now, we are still going through what I will call the IND process with NIH. As a matter of fact, we had -- our guys were at NIH this week working on that. We're trying to get through the rather cumbersome pathway of getting to what we will have as a final IND for submission to the FDA. And right now, that's where a majority of the time is.

And most of the clinical side of it, it's going to be a small first trial. Well, there's two pieces to it. One, we're going to have to do a small -- or we will do a small pharmacokinetic study which is really going to be more of a dose range finder in that -- in the kids in that particular disease. And that will be followed by what I will call a Phase 2 trial. And the Phase 2 is going to be larger considering that it's a small population. We're probably looking at 40 to 60, approximately, kids that will participate in the trial, just based on the relative small size of the disease in this case.

And the primary endpoint right now, we're trying to focus on what I will call more measurable endpoints in areas where we know that there's already some good supporting data on nicotinamide riboside and its affect as an NAD precursor. And that I would say is going to be focusing on hearing loss and measuring impact on hearing loss, which is a measurable endpoint. That's also a good proxy for the effect that it is going to have in the cognitive area.

Two of the main problems with Cockayne's kids is that they show neurodegenerative type symptoms at a very early age, and they start showing symptoms of hearing loss at a very early age. And we have been giving guidance that that's probably one of the more measurable routes to go to demonstrate some benefit. So, there's probably more to it than that, but at least that's a quick summary for you.

Okay, thank you. Two very quick minor items. Can you comment on the mix of customers, how many customers there were, what the percentage breakdown was, specifically in the ingredients segment? And then give us a sense of what contribution you expect from non-cash compensation going forward relative to the difference between adjusted and GAAP earnings.

What I'll do is -- Tom should be on the phone. And I'll hand that question over to Tom real quick if he can handle that. Tom, are you on?

Yes, I am. From a customer -- I'll take it in two parts. From a customer standpoint, on the ingredient side, we have a variety of customers, and our sales and marketing team right now is continually ramping on new customers. And we expect, as we continue to penetrate the market throughout the end of 2016 and 2017, for the number of those customers to grow. So we can't comment on the number of customers or where the concentrations are. But suffice it to say that our -- we have more than five or six large customers, and we expect that number to continue to grow on the ingredient side.

From a difference between the EBITDAS number and net loss net income number, as far as the difference going forward, again, we haven't given any guidance on that, but historically you can go and look at where our expenses have been. We expect the 2016 and 2017 to be in line with our historicals.

Okay, thank you, very helpful. I'll jump back in the queue. Thanks.

Chris Gallo, JPMorgan.

Yes, I had a question in reference to the $5.25 million registered directed offering that took place on June 6 of this year. You referenced in the press release that one existing shareholder had purchased $5.25 million of the Company's common stock. And I know that the SeekingAlpha article has since been retracted, but was that one particular investor Barry Honig, and does ChromaDex have investments or other dealings with Barry Honig?

I'll answer. Barry Honig is still an active investor of the Company. He has been actively involved as an investor since they did a -- there was a deal that was done with a group of investors back in 2010. So the answer is yes, he is still actively involved only as an equity holder. He is an investor and a long-term holder of ChromaDex stock, and we expect him to continue to be a long-term holder of the stock largely because I hope he believes in where we are going with it. But he dropped off the board more than a year and a half ago, and has not been actively involved outside of the fact that he is a shareholder.

But he was not the individual shareholder that purchased the stock in that one transaction?

We haven't disclosed the investor that was involved in that single transaction that we did back in June.

Okay, thank you.

[Michael Kay, Kay Associates].

Hello, thank you very much. Prior to all of the good news about NR, there was a lot of studies and good news about pterostilbene, and you hardly mentioned it in your report. I was wondering -- and I have been seeing more and more studies coming out about the efficacy of blueberries, blueberry powder, for increased cognitive function. So I'm wondering, could you comment upon the sales of pterostilbene? And do you think that pterostilbene, resveratrol and NR, if they were put together in a formula, you would get positive synergistic effects that you wouldn't get if you just had one of the ingredients separately?

It's hard to say. Synergistic effects from combinations of ingredients is definitely something that we definitely support and definitely have seen through things -- through data. And there are actually some clinical trials going on with combinations of ingredients. There's a clinical trial ongoing right now which is a combination of nicotinamide riboside and pterostilbene as an example. So the answer is yes, we do look at that, and we are actually now looking at combinations of all of our ingredients, including nicotinamide riboside obviously being the primary one, to look at ways of combining it with something that would potentially modulate or improve the benefit by using it in combination with something else, which is largely -- the importance of that is for the dietary supplement market, because the dietary supplement market in general like to use combinations of ingredients in some cases rather than just single stand-alone ingredients. And of course there's the ability for additional intellectual property that can come from the combination of various ingredients in some cases as well. So, we're going to continue to look at that not only in light of just nicotinamide riboside, other NAD precursors we are looking at, and also other new ingredients where we think that there's going to be potentially significant benefits through that combinatorial effect through those. So, that's a very valid point.

And also, does the Company -- do you have other products? I once read on your PowerPoint slides a type of curcumin which has advantages in terms of bioavailability regarding other brands, and also some type of rice. You know, could you give an update on those other products?

Sure. On the curcumin, we haven't really done much with the curcumin, especially since NR has taken off. We did have a high purity version of curcumin, basically a synthetic version of curcumin that was high purity. And essentially that curcumin offers significant advantages over what I will call just regular turmeric extract curcumin. However, the problem there is it's kind of a saturated market. There's a lot of competition in the space. And quite frankly, our efforts were better from our R&D in a developmental standpoint. We are better focused on other areas where we have better sort of control, in this case NR. So that's essentially why we'll just focus more on stuff like NR and the developments where we can get more benefit out of it.

But ANTHORIGIN is the latest ingredient that we're -- and that's our anthocyanin-related ingredient that's based on purple corn. And we are still in the early stages of rollout of ANTHORIGIN, and the ANTHORIGIN anthocyanin that we have from purple corn is going to be a pretty big focus for us as we continue to scale up the compound. Right now, I would say primarily most of our revenue on that is coming from really just a single customer who takes everything that we have, so we haven't been out there really talking about that very much, but we plan on doing that as we expand with that brand.

Is there research indicating some benefits of this purple corn that the other substances don't have?

The advantage of purple corn is that it's a more cost-effective way of delivering an anthocyanin. The traditional anthocyanin sources are typically berries, berry biomass, blueberries or cranberries or great for these other -- those are not what I will call exactly inexpensive fruit biomass.

And so we are trying -- this is what I will call the start of an anthocyanin program for us. And we do -- we are working on other new technologies in the anthocyanin space. We are a huge believer in that anthocyanin is an under-tapped and underserved market right now, and that's largely because of cost issues associated with the production of high purity anthocyanin, and that's an area that we think can be leveraged.

If you take a parallel market, the carotenoid market, beta-carotene, lycopene, lutein, just to name a few, that's a more than $1 billion, $1.5 billion supply market just on the ingredient supply side of things. And that's a plant pigment story as well. And that was an underserved category that got tapped. And we believe the anthocyanin one is the next big category because a lot of health benefits you read about coming from these pigmented fruits is coming from these compounds. And clinical research without high purity -- the availability of high purity materials, it is difficult to do clinical research. So we have to start with that. The same thing with NR. It was difficult to find milligrams of NR until we launched the stuff. And then we launched it and then the clinical research and preclinical research of course took off after we did that, and we expect similar things to happen hopefully with anthocyanin.

Thank you very much for a very detailed and substantive response to my question.

Thanks for asking.

I can't see any other calls getting picked up here, so I guess we'll close it off. Thanks, everybody, for taking the time to participate in our call. We are very pleased with our quarter, Q2. We are very pleased with the results that we've been seeing not only with the growth of not all of our businesses, but especially with nicotinamide riboside. And again, we are still at the very early stages of what we see with NR and the development of NR. And I look forward to future quarterly calls with everyone.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.