Niagen Bioscience Inc (NAGE) 2018 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to ChromaDex Corporation Second Quarter 2018 Earnings Conference Call. My name is Kevin, and I'll be your conference operator today. (Operator Instructions) 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 2018. If you have not reviewed this information, both are available within the Investor Relations section of ChromaDex' website at www.chromadex.com.

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

Thank you. Good afternoon, and welcome to ChromaDex Corporation's Second quarter 2018 Results Investor Call. With us today are ChromaDex' Founder and Executive Chairman, Frank Jaksch; Chief Executive Officer, Rob Fried; and Chief Financial Officer, Kevin Farr.

Today's conference call may include forward-looking statements, including statements related to ChromaDex' research and development and clinical trial plans and the timing and results of such trials, the timing of future regulatory filings, the expansion of the sales of TRU NIAGEN in new markets, plans to add to the management team, future financial results, business development opportunities, future cash needs, ChromaDex' operating performance in the future, future investor interest and clinical study trials that are subject to risk and uncertainties related to ChromaDex' 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, the statements are inherently subject to risks and uncertainties. Many factors could cause ChromaDex' actually activities or results to differ materially from the activities and results anticipated in the forward-looking statements. These risk factors included those contained in ChromaDex' annual report on Form 10-K and 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 changes to 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 the appropriate GAAP measures, and an 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 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 Executive Chairman, Frank Jaksch.

Thank you, Andrew. Good afternoon, everyone, and thank you for joining our second quarter 2018 investor call. During the call, we will discuss how the science surrounding NIAGEN and the importance of NAD to aging in human health continue to expand and review the growth of our sales of TRU NIAGEN.

Rob and Kevin will take you through the details of this strong growth. But first, I will provide you an update on the continued expansion of the scientific research into the benefits of NIAGEN.

During the second quarter, the number of human studies on NIAGEN posted on clinicaltrials.gov has grown to a total of 22. The additional human studies investigating NIAGEN's role in some very exciting new areas of human health.

The University of Copenhagen published the results of the clinical trial that once again confirms NIAGEN safely increases NAD levels at the highest dose thus far published. This is the fourth published clinical study of NR, and the results of this study collaborate previous findings that not only does NR effectively raise NAD levels in humans without adverse effects, but more importantly, it showed that potential for improvement in liver health. The authors conducted a 12-week randomized double-blind placebo-controlled, parallel group clinical trial in 40 middle-aged obese men taking 2 grams daily of NIAGEN.

They observed that men taking NR had an average of 2% absolute reduction in liver fat content compared to a 0.2% absolute reduction in the placebo group. The authors also looked at the subset of men who started the trial with greater than 5% liver fat and they found that there was a trend that 69% of these men experienced a reduction in liver fat after 12 weeks of NIAGEN compared to only 39% of men taking the placebo.

We finished the quarter with the total of 156 signed research collaborations, and we look forward to learning more from these valuable independent collaborative studies as they progress.

As the foundation of science continues to build the pipeline of peer-reviewed publication should yield media attention and greater consumer awareness. I'd also like to take the time to highlight a few important published studies on NIAGEN that happened during the second quarter.

A June, 2018 publication in eLife titled "NAD is transported into mammalian mitochondria," Davila and coworkers demonstrated in a preclinical cell-based study that mitochondria are capable of importing NAD and NAD precursors, which provides additional further mechanistic understanding into the energy metabolism pathway.

In May, 2018, a publication in the Journal of Free Radical Biology Medicine titled "Administration of Nicotinamide Riboside Prevents Oxidative Stress and Organ Injury in Sepsis," Hong and coworkers demonstrated that in a preclinical mouse model that administration of NR present -- prevents damage and improves survival in sepsis models.

In June, 2018, a publication in Cell Reports titled "The NAD Precursor Nicotinamide Riboside Rescues Mitochondrial Defects and Neuronal Loss in Parkinson's Disease," mitochondrial damage is a key feature in Parkinson's disease. And Schöndorf and coworkers demonstrated in a preclinical mouse model that human stem cells and a fly model that NR boosted mitochondrial function in neurons.

In May 2018, a publication in the Annals of Laboratory Medicine titled "Rejuvenating Aged Hematopoietic Stem Cells through Improvement of Mitochondrial Function," Moon and coworkers demonstrated enhanced mitochondrial function in these muscle stem cells assert to independent manner.

In May 2018, a publication in the Journal of Endocrine Society titled "Targeting NAD in Metabolic Disease: New Insights into an Old Molecule," Lavery and coworkers published a review detailing the health potential of targeting NAD. These data will inform clinical study design to identify nutraceutical approaches for combating metabolic disease and the unwanted effects of aging.

Finally, in April, 2018, a publication in Circulation titled, "Nicotinamide Riboside Preserves Cardiac Function in Mouse Model of Dilated Cardiomyopathy." NAD is emerging as a metabolic target in a number of diseases including heart failure. Diguet and coworkers demonstrated in a preclinical mouse model that NR, nutraceutical was the most efficient NAD precursor and could be useful for treating heart failure.

We see this growing body of scientific literature on the benefits of NR and its relationship to NAD as a validation of our belief that NR is a game-changing human wellness product.

With that, I'll pass the call to our CEO, Rob Fried, who will provide further details on some of the scientific research and give an overview on the incredible growth that we have seen in TRU NIAGEN. Rob?

Thank you, Frank. Our mission at ChromaDex is to be the most trusted science-based dietary supplement company in the world. With a focus on TRU NIAGEN and its impact on cellular energy and cellular repair.

As Frank said, there's a large and rapidly growing body of scientific evidence that underscores the importance of NIAGEN. What is apparent after much research by dozens of institutions, looking at a wide range of health conditions, is that NAD is essential to human health and that NIAGEN is effective in the production of NAD.

Researcher has shown that when cardio cells, hearing cells, brain cells and neurons are in distress, they actually open a pathway called the NR kinase pathway -- nicotinamide riboside kinase pathway -- to try to increase levels of NAD. This pathway is the discovery of Dr. Charles Brenner, our Chief Scientific Adviser and is the essence of 2 of the important patents controlled by ChromaDex.

In other words, cells in distress, the kind of distress that comes from illness, general aging, trauma, lack of sleep, excess alcohol, sun exposure, poor diet, et cetera, cells in distress look for help and they actively seek nicotinamide riboside.

We've already shown that NIAGEN is important for increased cellular energy. But this is also a story of cellular repair. Specifically, helping cells to repair themselves. This is why we say TRU NIAGEN can help us age better. Aging is the accumulation of damage but it is also the diminished ability to repair that damage and TRU NIAGEN can help.

Now let's turn to a review of how the business is performing. In the second quarter, net sales were up 85%, with NIAGEN-related revenue accounting for 73% of our total revenue and TRU NIAGEN accounting for 66% of NIAGEN-related revenue.

TRU NIAGEN accounted for 48% of our total revenue for the second quarter. We expect this percentage to continue to grow. TRU NIAGEN is our growth engine. It is our brand and we expect it to continue to deliver strong growth. During the quarter, TRU NIAGEN direct-to-consumer sales in the U.S. continue to grow at a compounded rate of more than 25% per month.

Over time, this growth rate may slow as the size of the business gets larger, but we expect to see continued strong growth for the foreseeable future. Our TRU NIAGEN marketing was significantly more efficient in the second quarter compared to the first quarter.

Over time, we expect this efficiency to continue to improve dramatically, although there could be quarter-to-quarter fluctuations depending on the timing of branding or specific marketing campaigns.

Kevin will provide additional color on our sales, but the important point is that our strategy is working, and we have an exciting new product that continues to show dramatic growth.

TRU NIAGEN sales to Watsons in the second quarter were $260,000. Sell-through to consumers in Hong Kong and Macau increased during the quarter, but we continue to await regulatory approvals in Singapore and Taiwan.

As we announced earlier in the week, we have agreed to extend our exclusive distribution contract with Watsons in Hong Kong and Macau for an additional 3 years through September 14, 2021. Watsons has committed to significantly grow sales on an annual basis over the next 3 years.

As a result, we expect to see more consistent shipments with Watsons beginning in the fourth quarter of 2018.

Based on the successful launch of TRU NIAGEN in Hong Kong and in Macau, Watsons is interested in extending the distribution of TRU NIAGEN to other international markets. A.S. Watson group has over 14,100 stores in 24 markets worldwide. The pace of our expansion into new international markets is partly determined, of course, by our ability to obtain regulatory approvals.

Later this year, ChromaDex is expected to obtain regulatory approval to sell TRU NIAGEN in Turkey. Consistent with our strategy to build the TRU NIAGEN brand on a global basis and Watsons desire to extend the distribution of TRU NIAGEN to other international markets, the recent amendment included the exclusive rights for Watsons to distribute TRU NIAGEN in Turkey for a 2-year period, effective upon ChromaDex receiving regulatory approval. Watsons has 340 stores in Turkey.

As announced earlier this week, ChromaDex appointed Matakana Foods as an exclusive distributor of TRU NIAGEN in New Zealand. Matakana is an established dietary supplement manufacturer and distributor in New Zealand with national distribution in both online and off-line channels. The launch of TRU NIAGEN in New Zealand is expected in mid-September 2018.

Prior to receiving regulatory approvals in international markets, certain markets can be accessed through cross-border direct-to-consumer internet sales, which we are pursuing.

During the second quarter, we began offering TRU NIAGEN for sale through Amazon in the U.K., and we expect to add Amazon Germany in the second half of the year and may add certain Asian countries as well.

The executive management team strengthened this quarter with the addition of Lisa Bratkovich, our Chief Marketing Officer. Lisa spent 13 years at Guthy-Renker, where she served as Senior Vice President of marketing. Guthy-Renker is a multibillion enterprise including brands such as Proactiv, Perricone MD and Meaningful Beauty, each with hundreds of millions of dollars in annual revenue.

We also added David Byrne as VP of Marketing. David spent 17 years at Guthy-Renker, where he served as Vice President of Digital Acquisition.

Let me say a few words about the litigation. On June 29, 2018, we filed a fourth amended complaint against Elysium Health, asserting additional claims under the NIAGEN supply agreement and pTeroPure Supply Agreement as well as new claims for trade secret misappropriation of ChromaDex' information in documents. These new claims are based on very disturbing evidence that we uncovered during discovery.

As we look to 2019 and beyond, we see tremendous opportunity for growth. We have multiple efforts underway to open new markets and increase sales in existing markets. Factors that will influence how fast we grow include the pace of regulatory approvals, the completion of new strategic partnerships, expansion into additional markets and increased awareness of TRU NIAGEN domestically.

Before I pass the call over to Kevin, I'd like to talk a bit about our cash burn. There are 3 important reasons why the cash burn is higher today than I would like it to be. One is our investments in overhead and marketing ahead of growth, but as we pointed out, this is getting more efficient.

Second is that the company made R&D commitments in the past that we are honoring, but of course, our R&D spending is now much more focused today as we target our efforts on TRU NIAGEN.

And third, the litigation, which is expensive, but we believe is vital to protecting the company's prized intellectual property. We view this litigation as an investment and we expect to see a return on that investment. We expect the company will be generating a positive cash flow by the fourth quarter of 2019 or very shortly thereafter.

In summary, the plan is working. We're building the science, we're seeing rapid sales growth, we are building our team, and we are expanding into new markets.

And with that, I will pass the call over to Kevin Farr.

Thank you, Rob. Let's look at our financial results for the second quarter of 2018. For the 3 months ended June 30, 2018, ChromaDex reported net sales of $7.8 million, up 85% compared to $4.2 million from continuing operations in the second quarter of 2017.

The increase in the second quarter was driven by the growth in sales of TRU NIAGEN. For the second quarter, NIAGEN-related revenues were $5.7 million, up 168% compared to 2017, which represent 73% of second quarter sales as compared to 50% in the second quarter of 2017.

TRU NIAGEN sales were 60% of NIAGEN-related revenues in the second quarter of this year compared to just 7% in the prior year.

Gross profits for the second quarter grew by 82% compared to last year. Gross margins remained relatively flat at 49.3% for the second quarter compared to 50% for the prior period.

In 2018, we elected comp for shipping and handling activities as cost of sales and not as sales adjustments. The impact of this selection on second quarter was approximately $0.4 million, which had a negative impact of 290 basis points on our gross margin rate.

Excluding the impact that election account for shipping and handling activities as the cost of sales, we experienced better gross margins due to positive impact of TRU NIAGEN sales, which we anticipate will continue.

For the balance of the year, we expect the gross margin rate, including the impact of shipping and handling activities, to improve versus the prior quarters and to exceed 50% of net sales.

Our operating expenses for the second quarter were up $7 million to $11.8 million as compared to the prior period of $4.8 million from continuing operations.

Consistent with our expectations, we made incremental investments in sales and marketing expenditures, research and development and general and administrative expenses.

Compared to the second quarter of 2017, we invested a incremental $2.8 million in advertising and marketing to build the TRU NIAGEN brand.

Increased R&D expenses by $0.5 million. Incremental legal cost of $1.3 million and incurred additional stock-based compensation expense of $1.4 million.

Excluding legal and equity-based compensation expenses, general and administrative expenditures were $2.9 million, which were up by $1.5 million as compared to the prior year of $1.4 million.

The net loss attributable to common stockholders for the second quarter of 2018 was $8.1 million or a negative $0.15 per share as compared to a net loss from continuing operations of $2.7 million or a negative $0.06 per share for the prior period.

The higher losses in the second quarter were the result of the strategic decision to invest in marketing and overhead ahead of growth, higher legal spending and higher stock-based compensation expense, partially offset by higher sales volume and gross profits.

For the second quarter of 2018, the reported loss was negatively impacted by a noncash charge of $1.8 million related to stock-based compensation.

Adjusted EBITDA, a non-GAAP measure, was a negative $6 million for the second quarter of 2018 compared to adjusted EBITDA of a negative $2.1 million for the prior period.

ChromaDex defines adjusted EBITDA as net income or loss, which is adjusted for income tax, interest, depreciation, amortization and noncash stock compensation.

The basic and diluted adjusted EBITDA per share for the second quarter of 2018 was a negative $0.11 versus a negative $0.05 for the prior period.

In the second quarter of 2018, our net cash used in operating activities was a negative $6.5 million versus $5.5 million in the prior year. We ended the second quarter of 2018 with a solid balance sheet with cash of $33.4 million.

Looking more closely at our cash flows, the cash outflows in the second quarter were $7.6 million compared to $4.4 million in the first quarter.

The higher cash outflows in the second quarter versus the first quarter primarily related to working capital, which was a $3 million source of cash in the first quarter versus a $0.5 million use of cash in the second quarter.

For the second half of the year and the full year, we currently expect working capital to be a positive source of cash of $3 million to $5 million for the full year as we expect our net losses to moderate in the second half of the year and as we continue to tightly manage working capital for the balance of the year.

Looking forward, the company expects the revenue growth to be driven by our U.S. e-commerce business and Watsons' international business as well as the launch of TRU NIAGEN in certain new international markets.

The company will continue to invest efficiently in marketing expenditures to build out the TRU NIAGEN brand and new capabilities to support growth.

In addition, as necessary, we'll continue to invest in legal costs to protect our intellectual property. At the same time, we're implementing cost-cutting programs across the company to reduce our overall spending.

With respect to R&D spending going forward, most of our expenditures will be much more targeted to support the appropriate marketing claims to drive incremental sales of TRU NIAGEN.

In the past, including the first half of 2018, we had made commitments coming into this year that related to pharmaceutical projects. We will be no longer investing in this area.

We continue to focus on improving our management decision support tools for investment and marketing expenditures to drive better returns. As Rob said, we saw a significant improvement in the efficiency of our marketing expenditures in the second quarter, and we expect to see continued improvement over time.

As I said, we expect our overall net losses and cash outflows to moderate in the second half of the year, and we will continue to tightly manage working capital for the balance of the year.

As we look to get the company into a solid position of profitability, the key drivers will be the continued growth in sales of TRU NIAGEN, continued increases in the efficiency of our TRU NIAGEN marketing expenditures, leveraging fixed overhead spending and managing our legal cost as effectively as possible.

For 2019, we currently expect the company will generate positive cash flows by the fourth quarter or very soon thereafter. Based upon our current outlook, we have plenty of cash to fund operations in 2018 and beyond to get to the point of generating positive cash flow.

Operator, we're now ready to take questions.

(Operator Instructions) Our first question comes from Jeffrey Cohen with Ladenburg Thalmann.

Can you hear me okay?

Yes.

Perfect. So firstly, can you go back through those numbers? I know that Rob ran through them the first time and then Kevin followed up with them as far as what was after the annual percent on the top line when you alluded to the $5.7 million NIAGEN and as a percentage in TRU NIAGEN, and then there is another number there as well.

Yes, let me go ahead and give those to you. I think if you return to the investment deck that we sent to you. Can you turn to Page 10? We said the sales were up 85% to $7.8 million, TRU NIAGEN was basically 60% of NIAGEN-related sales. And NIAGEN-related sales grew 168% compared to Q2. And NIAGEN-related sales in Q2 2018 were 73% of total sales, whereas last year, it was 50% in Q2 2017.

Okay, perfect. So should we infer from that, that we're no longer going to see a revenue breakout by ingredients, consumer products, core standards and scientific and regulatory consulting?

No, I don't think so. I think within the deck, that is broken out on Page 9, with regard to net sales, it gives you both information for 2016, '17 and for the first and second quarter of 2018.

Okay, so you'll have no change to that going forward, in the short term at least?

At this point, no, I don't see any change in it.

Okay, perfect. And then could you talk a little bit about the shipping and its relation to the margins? You talked about -- so you're including the shipping and the net effect was 290 basis points or $4 million for the quarter.

That is correct. So we made the election last year to treat shipping costs as a cost of goods sold. And in the quarter, if you exclude that, that, essentially, our gross margin rate was negatively impacted by 290 basis points. So if you add that to the 49.3%, it actually was higher than last year, which was at 50%. And I think I said in the call in my prepared remarks that as we look at the balance of the year, and we include net shipping in cost of goods sold, we should see year-over-year increase in gross margins in each of the next 2 quarters as well as it should be above 50%, which is very consistent with -- if you take out the 290 basis points and add it back, it's above 50% this quarter, substantially, obviously.

Okay. So a bit better than we thought. And then, can you walk through kind of the general thought process as far as the G&A did go through the ramifications of what it was this quarter as far stock compensation expense, legal expense and maybe give us a little bit of color on how that looks for the back half if it's coming off in a pronounced fashion or not? Or going to be level and give us a little more color on at least currently what you're expecting on the legal expense and stock-based compensation for Q3 and Q4 if you could?

Okay, well, I'm going to comment on the quarter with regard to what occurred in the quarter. It was $1.8 million of equity-based compensation. Total legal costs were about $2.1 million. And if you exclude legal costs and the incentive comp related to equity from both years, that we tightly managed G&A, that was up by about $1.5 million, which is very similar to what it was in the first quarter.

It's hard to predict the legal expenses. So I can't really give you a direction there, although, we are trying to tightly manage that proactively. And second, I think for the full year, you can expect the equity compensation to be $6 million to $7 million, and that will occur through the balance of the year and it shouldn't be too much different than the $1.8 million that we've expensed this quarter.

Okay. That seems clear. And Rob, your commentary is probably -- call it, 6 quarters away approximately, at which point you believe that the firm will be throwing off cash, cash flow positive end of -- let's say end of '19?

I believe so. We're shortly thereafter.

Okay. And in general sense, as far as how you are thinking about that and as it relates to the top line, is it kind of safe to say that's

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So we'll get more scale and then we continue to look at cost savings programs. I talked a little bit about that in my prepared remarks. We are going through our cost structure and looking for opportunities to reduce spending overall. We're also looking to reallocate expenses to drive sales of NIAGEN. And finally, we talked a little bit about this more focused spending in R&D or areas that we're looking at. We have identified specific cost-savings programs for the balance of 2018 and those initiatives have been implemented or are in the process of being implemented. And then there is an ongoing effort for the balance of 2018 to look for more cost savings as well as continuing to look near term or 2019 and beyond for additional savings. So I think those are going to be the key drivers to get to cash flow positive by the fourth quarter of 2019 or shortly thereafter.

Okay, got it. And then lastly, what should we expect in the public domain to hear about on the legal front? As far as what you may believe may happen or occur in the coming 6 months or anything in particular that we should look for as far as dates or any specific documentation?

There's a decision scheduled to come out of New York but we don't -- we've been waiting for that for months, it could come at any time. There's motions that we're waiting from there. But we don't have anything right now that we're certain is going to come out in the next few months.

Our next question comes from Raghuram Selvaraju with H.C. Wainwright.

So when might TRU NIAGEN be rolled out across the entire range of Watsons stores in Asia? By the way, this is Karthik on for Ram.

The issue there has to do with regulatory approvals in each individual country. So we are working very hard to get approval of nicotinamide riboside to be sold as a supplement in many countries presently. And we are also working to get approval of marketing materials, health claims that could be made in those countries. And until you get both, you can't sell directly into the country, certainly not in stores. In some cases, you can sell across border, internet sales into those countries, and we are exploring those opportunities as we speak.

Great. And regarding the Watsons, what specific promotional activities are being conducted to spur uptake of the product?

Well, Watsons, as you know, has done an excellent job of promoting TRU NIAGEN in Hong Kong and their sales have been extremely successful. It -- their campaign has been a combination of promotional campaigns, there's been a lot of outdoor advertising, there's been press. There's been a fair amount of online campaigns and a lot of in-store promotional campaigns. They also did a tie-in with one local celebrity endorser. And we are aware of many plans that they are developing over the next month to continue to promote the sales of TRU NIAGEN.

Okay. And I know Frank spoke about the studies revolving around liver health earlier in the call. But could you provide more color on some more probable initiatives in the near term that will study nicotinamide riboside in the context of liver health?

Well, there are additional studies that are looking at liver health. Liver health is definitely one of the areas of interest right now, fatty liver in particular. And you'll see that if you check out the postings that are listed on clinicaltrials.gov, kidney health is another one that you'll start to notice an area of interest. There's 2 studies now that are focused on kidney. So liver and kidney right now are 2 of those, but there's quite a few other areas. Heart health has been one of the earliest ones where you're starting to see issues, I mean, or studies that we're posting and a lot of those studies were kind of further along in -- fatty liver, I think, is definitely one of the areas that is of interest in the read that we got out of the Copenhagen study. I think it's going to provide more fuel for additional studies that are going to focus or look at that target as well.

(Operator Instructions) Our next question comes from Bill Dezellem with Tieton Capital.

A couple of questions here. And the first one is relative to your marketing efficiency. You've mentioned that it improved in the second quarter. I was hoping you could detail why you felt that it happened and what more you can do on that front?

Well, the vast majority of the marketing that we have done has been internet, digital-based marketing. And generally speaking, when you do that, you begin a campaign or a series of campaigns by prospecting large swaths, reaching out to large groups of people in order to get interest at the very top of the funnel. And then what you do is you work to convert those prospected potential customers. So we have done that and there is a large number of people who are interested and who are visiting our site and learning more about TRU NIAGEN, and what we have been doing lately is converting them, and we have been very successful. All of the underlying metrics have improved, things like conversion rate and acquisition cost, et cetera. Now, we may launch other campaigns in the future that are brand based or prospecting campaigns that cast an even wider net. And if we do that, we'd expect that our relationship between marketing spend and revenue might go up a bit during that period.

But always -- it's always an accretive type of investment system. In other words, you set the net, and then you expect to convert. And what we have seen is over a period of time, our conversion metrics have gotten better and better, and better and better with each program.

At some point, we may contemplate doing off-line advertising that you'd see much more of in traditional media, television or radio or magazines. We haven't really done that yet but we expect to at some point in time. Again, that would be casting a very wide net. But then we would be working shortly thereafter to convert those prospective customers.

That's helpful, Rob. And then relative to Watsons, what was the sell-through in the quarter?

Yes. I think if you look at the sell-through in the quarter from the perspective of where it was versus our average amount of bottles that we sell. It was up double-digits in the quarter -- in the second quarter sequentially versus the first quarter.

That's helpful, Kevin. And what was the amount relative to the $200,000 plus of sell-in?

It would be much more than that. So yes, I mean, I think, we've seen reorders be slower. But I think overall, for the 2018, it is -- we are seeing really good sell-through.

Great. Congratulations. And then lastly you had mentioned that Singapore and Taiwan both are requiring a regulatory approval. What more needs to be done on that front or is it simply a waiting game at this point?

In the case of -- well, they are different in each one of those countries. Singapore, it's mostly marketing materials-related and that's more of a waiting game. In Taiwan, it is -- the regulatory thresholds in Taiwan are slightly unique, and we think we're okay, and we think we should be getting that approval relatively soon. But it's further away in the process than is Singapore. We still need, in Taiwan, to get nicotinamide riboside approved as a supplement. In Singapore, we're at the marketing-material stage.

All right. And do we have time for me to ask a couple of more questions or shall I step back in the queue now?

No, you can ask a couple more.

Great. So relative to Turkey, why was that the next spot that you chose to go with Watsons? What are the dynamics of that market?

There are number of factors. One is that we believed that Turkey would be easier to get regulatory approvals. So second is that Watsons was -- had stores in Turkey and wanted to expand into Turkey. So even though Turkey itself may not be as larger market as some others, relative ease of entry and Watsons interest in exploiting that territory were the reasons why we went there next. There are a number of countries that we are pursuing right now. It's hard to know on any given day, which one's going to notify us and say you're good. We got that phone call from Turkey a little earlier than others.

So you do have the regulatory approval now then?

Preliminarily. There are some technical details still to be worked out. But obviously, we got to the point where we are comfortable enough to say it.

Great. That is helpful. And then, how did you choose New Zealand, and I guess, relative to your partner there, what other countries or locations do they have maybe a natural extension for you to continue on and stick with them?

No, we're only interested in them for New Zealand. We thought New Zealand was interesting for a number of reasons. One is again, like Turkey, we were able to get regulatory approval there. And be able to sell-in and we happen to have a relationship with this company, which is an excellent company in New Zealand and one that we thought would be good to do business in. But third, we see New Zealand as an excellent opportunity to learn. It is the neighboring country to Australia year, which is a very, very important country. 90% of the Australian population purchases some sort of a vitamin, consumer vitamin every day. We thought New Zealand would be an interesting place for us to learn and test that market and see how it goes from there.

That concludes...

Okay -- yes, go ahead.

That concludes the Q&A session today, I'd like to hand the call back over to Andrew Johnson for closing.

Thank you, operator. As a reminder, there will be a replay of this call via webcast. The webcast link can be found on our Investor Relations section of our website at www.chromadex.com. Thank you, everyone, for participating on today's call. Have a great day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.