Niagen Bioscience Inc (NAGE) 2018 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to ChromaDex Corporation's Third Quarter 2018 Earnings Conference Call. My name is Shannon, and I will be the conference operator today. (Operator Instructions) And as a reminder, this conference call is being recorded. This afternoon, ChromaDex issued a news release announcing the company's financial results for the third quarter 2018. If you have not reviewed this information, both are available within the Investor Relations section of ChromaDex's website at www.chromadex.com.

I would now like to turn the conference call over to Brianna Gerber, Senior Director of FP&A and Investor Relations. Please go ahead, Ms. Gerber.

Thank you, Shannon. Good afternoon, and welcome to ChromaDex Corporation's Third Quarter 2018 Results Investor Call. With us today are ChromaDex's Chief Executive Officer, Rob Fried; founder and Executive Chairman, Frank Jaksch; and Chief Financial Officer, Kevin Farr. Today's conference call may include forward-looking statements, including statements related to ChromaDex's 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 sale of TRU NIAGEN in new markets; plans to add to the management team; future financial results; business development opportunities; future cash needs; ChromaDex's operating performance in the future; future investor interest and clinical trial studies that are subject to risks and uncertainties relating 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 the forward-looking statements. These risk factors include those contained in ChromaDex's 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 to change 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 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's now my pleasure to turn the call over to our Chief Executive Officer, Rob Fried.

Thank you, Brianna. Good afternoon, everyone, and thank you for joining our third quarter 2018 investor call. Our mission is to help solve the problem of metabolic aging by being the world's most trusted and science-based dietary supplement company. Research shows that metabolic aging is associated with the reduced cellular energy and accumulation of cell damage resulting from a reduction in NAD levels. Our approach to solving this problem is with the only product on the market today that scientific studies suggest most safely and effectively addresses this problem: NIAGEN. Our consumer brand is TRU NIAGEN, and our strategy is to make TRU NIAGEN an important global brand. NIAGEN is protected by a strong portfolio of patents and has twice been successfully reviewed under FDA's new dietary ingredient, NDI, notification program and has also been successfully notified to the FDA as generally recognized as safe. ChromaDex has invested many years and millions of dollars in toxicology studies, regulatory approvals, clinical studies and patent protections. Research on NIAGEN has presently been conducted by over 160 researchers and institutions worldwide, examining a wide range of health conditions. And this research increasingly shows the importance of NAD in human health. And that NIAGEN is safe and effective in raising levels of NAD.

Before discussing strategy and third quarter results, I will turn the call over to our executive chairman Frank Jaksch for an update on recent developments in scientific research. Frank?

Thank you, Rob. Since our last update, the science surrounding NIAGEN and the importance of NAD on human health continues to expand. The number of human studies on NIAGEN posted on ClinicalTrials.gov has grown by 2 to a total of 26. And we finished the quarter with over 160 signed research collaborations, approximately 10 more than last quarter. The additional human studies were focused on diabetes and cardiovascular health. And while these collaborative studies cover a wide range of research areas, the most prevalent today include neuro-protection and cognition, cardiovascular health, obesity and aging. Collectively, these areas represent over half of the total signed research collaborations. Not only does this research validate the efficacy of NR, it provides valuable insight that may translate into potential new benefit areas for NR with additional research. We also view this as a pipeline for future peer review publications, which could yield increasing scientific consensus on the benefits of NR, media attention and greater consumer awareness of NR.

Here are a few important highlights related to clinical studies since we last spoke. In August 2018, the NHLBI, a subgroup of NIH, completed a 2-year human clinical trial to determine if NR will have the same healthy effects on the immune system as fasting. And if those effects last even after eating again. The teams are actively analyzing the data. In September 2018, Dr. James Russell from the University of Maryland registered a new clinical trial that will investigate the use of NR as a potential treatment for diabetic neuropathy or nerve damage in subjects with type 2 diabetes or impaired glucose tolerance. Currently, there are no effective disease-modifying therapies for diabetic neuropathy. The study will measure the impact of NR on this progressive disease and also provide insight into treating neuropathic pain for the broader aging population. And just last week, another clinical trial from Dr. O'Brien from the University of Washington was registered. This is a pilot study in patients with advanced heart failure who are planning on receiving an elective left ventricular assist device or LVAD. The study is designed to determine the safety and feasibility for a planned larger study testing the hypothesis that NIAGEN will increase mitochondrial function in the heart. This is an important area of research since heart disease is the #1 cause of death in the U.S.

I'd also like to take the time to highlight a few important published studies that happened since our last update. The full list of studies can be found via a link in the Science section of our Investor Relations website. In August 2018, Vignier and Colleagues published an article in Human Molecular Genetics. In the mouse model that was studied, a gene mutation associated with muscle and electrical dysfunction of the heart eventually leads to heart failure. The study showed that NR administration increased NAD in the heart and improved left ventricular structure and function. In September 2018, a publication in Life Sciences entitled "Nicotinamide riboside induces a thermogenic response in lean mice" demonstrated that NR decreased fat accumulation without a change in body weight in lean mice. NR increased the thermogenic response by altering metabolism in brown adipose fat tissue. In October, the Journal of Biological Chemistry published a study on the effects of NAD and SARM1, a protein that when unregulated may lead to the development of Parkinson's and other neurodegenerative diseases. The result suggests that NAD may help up-regulate SARM1 and have a healthy impact on these neurodegenerative conditions.

In summary, we are seeing this growing body of scientific literature on the benefits of NR and its relationship to NAD as validation of our belief that NR is a game-changing wellness product that warrants additional human clinical trials.

With that, I'll pass the call back to Rob Fried. Rob?

Thank you, Frank. In the third quarter, total net sales were up 33% year-over-year, with NIAGEN related revenue accounting for 77% of our total net revenues. And TRU NIAGEN accounting for 84% of NIAGEN-related net revenue. TRU NIAGEN net sales were up 97% compared to the third quarter of 2017 and accounted for 64% of our total net revenues for the third quarter of 2018. For the first 9 months of 2018, total net sales were up 65%, with NIAGEN-related revenue accounting for 72% and TRU NIAGEN sales accounting for 74% of NIAGEN-related net revenues. TRU NIAGEN net sales more than quadrupled compared to the first 9 months of 2017 and accounted for 53% of our total net revenues for the year-to-date 9-month results. From the second quarter to the third quarter, eCommerce revenue grew 28%, and TRU NIAGEN sales overall increased by 40%. Our new Chief Marketing Officer, Lisa Bratkovich, started in June and has been assembling an excellent team of professionals who have been updating our systems and platforms in preparation for significant growth. They are developing exciting new campaigns that should launch in the coming months. TRU NIAGEN sales to Watsons grew 166%, sequentially, in the third quarter, as part of the extended and renegotiated agreement between the 2 companies. I will further comment on Watsons and our global progress in general shortly. We were very busy in the third quarter and achieved quite a few important accomplishments. We launched TRU NIAGEN PRO, bottles of which feature 300-milligram capsules, the highest dose of NR available in a single capsule. TRU NIAGEN PRO is available exclusively for sale through health care providers, including a partnership with Natural Partners Fullscript, which has an established network of over 40,000 HCPs, health care practitioners in the United States. We see the health care practitioner market as an opportunity to grow revenues. But most importantly, it's an important local influencer channel that will help spread the word on the importance of TRU NIAGEN.

Additionally, TRU NIAGEN earns certification from NFS International Certified for Sport Program. There is great interest in TRU NIAGEN in the sports community. We see this as a very big opportunity and are dedicated to realizing the potential. Globally, we announced an extension of our exclusive distribution contract with Watsons in Hong Kong and Macau for an additional 2 years through September 14, 2021. Watsons has committed to significantly grow sales in Hong Kong and Macau on an annual basis over the next 3 years. We continue to explore with Watsons opportunities to extend the distribution of TRU NIAGEN to other international markets and are still hopeful that we will soon receive regulatory approvals in Taiwan and more robust marketing health claim approvals in Singapore. In Turkey, economic conditions have worsened since we last spoke. This has led us to lower expectations on the launch timing. In addition, although nicotinamide riboside has been approved as an ingredient, we have not yet received approval for, and we are working diligent towards strong health claims and product registration of TRU NIAGEN. We did receive, on October 30, regulatory approval to sell TRU NIAGEN across all platforms in Canada, including brick-and-mortar retailers. We are in the early stages of execution here. But this is an important milestone in our geographic expansion strategy that opens up another large market. China. We announced signing a memorandum of understanding for the creation of a strategic partnership for aging research in the Jiangxi Province. This will include a new partnership between ChromaDex and First Affiliated Hospital of Nanchang University. We're taking a determined, yet deliberate approach to China, given the enormous opportunity this market represents. There are more than 300 million people over the age of 55 in China. The announcement with the province is a memorandum of understanding, not yet a definitive agreement. And we continue to actively seek FDA approval for TRU NIAGEN, which could take time. But this is potentially a very important step. We are also pursuing cross-border opportunities in China as well as other international territories.

Last quarter, ChromaDex appointed Matakana SuperFoods as the exclusive distributor of TRU NIAGEN in New Zealand. We have regulatory approval in this market and launched TRU NIAGEN on September 17 in Auckland. The initial consumer response and media coverage has been excellent. Regulatory approvals in opening new international markets is challenging, yet critical for growth, and we have made this a priority. We are excited about New Zealand, Canada, the partnership with Watsons and the potential with the Jiangxi Province. People around the world will know about this important brand and this important product.

We continue to strengthen our executive management team with 2 key hires who bring extensive brand building experience. We appointed Ms. Yan Chu as our Managing Director of Asia-Pacific to help us drive our international growth strategy, including our China market entry. Ms. Chu joins us from Comvita, an international health products company where she served as regional general manager and overseeing Hong Kong, Japan and Korea. Previously, she led sales and marketing functions in the Asia-Pacific market for Crocs, Adidas and The Body Shop. She will be responsible for our ongoing Watsons relationship as well as evaluation of new market opportunities and partnerships. We also announced the appointment of Matthew Roberts as Chief Scientific Officer and Senior Vice President. Having spent 2 years on the ChromaDex Scientific Advisory Board, Matthew was already quite familiar with the outstanding scientific and operations capabilities at the company. He also brings a wealth of knowledge and experience in consumer product development international regulatory approvals and general business strategy. We are proud to have him join our company. While we welcome Yan and Matthew to the ChromaDex executive leadership team, I also want to thank Troy Rhonemus for his 5 years of excellent service and dedication to the company. We announced his voluntary resignation last month, of which he will be staying on as a consultant to ensure a smooth transition.

Let me now say a few words about the litigation. On September 18, 2018, we announced that ChromaDex and Dartmouth College had filed a patent infringement lawsuit against Elysium Health. This is, of course, separate from legal actions against the Elysium for breach of supply contracts and misappropriation of ChromaDex's trade secrets. The patent litigation demonstrates how vigorously we will protect what the company has spent many years developing. We continue to feel very confident about the facts of these cases and expect to see a return on this litigation investment.

In summary, we know that NIAGEN is important and has the potential to impact the lives of hundreds of millions of people around the world. We have a responsibility to handle it well. We have key tent poles in place, and we added a few great ones this past quarter. I'm encouraged by the progress we made in the third quarter, and I continue to be enthusiastic about the future.

And now, I will pass the call over to our CFO, Kevin Farr. Kevin?

Thank you, Rob. Let's look at our financial results for the third quarter of 2018, which reflect continued progress against our key financial objectives. We continue to experience strong growth in sales, gross margin expansion, investments in marketing and discipline in operating expenses, especially when you exclude legal costs. For the 3 months ended September 30, 2018, ChromaDex reported net sales of $8.1 million, up 33% compared to $6.1 million from continuing operations in the third quarter of 2017.

Notably, our TRU NIAGEN business roughly doubled in revenues year-over-year. Breaking this growth down further, for the third quarter, NIAGEN-related revenues were $6.2 million, up 40% compared to last year's third quarter and represented 77% of third quarter sales compared to 73% in the third quarter of 2017. TRU NIAGEN sales were 84% of NIAGEN-related revenues in the third quarter of the year compared to 60% a year earlier. Sequentially, net sales increased by 4%, with total TRU NIAGEN sales up 40%, which was partially offset by expected declines in our ingredients and core businesses. We grew gross profits and continued operations for the third quarter by 50% compared to last year. Gross margins increased by 580 basis points to 53.7% for the third quarter of 2018, compared to 47.9% for the third quarter of 2017. We experienced better gross margins due to positive impact of TRU NIAGEN consumer product sales, which we anticipate will continue.

Our operating expenses from the third quarter were up by $6.9 million to $13 million as compared to the third quarter of 2017 of $6.1 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 to support growth in our business. Compared to the third quarter of 2017, we invested additional $3.7 million in advertising and marketing to build out the TRU NIAGEN brand; increased R&D expenses by $0.3 million; incurred incremental legal cost of $1.2 million; and incurred additional noncash stock-based compensation expense of $0.6 million. Excluding legal expenses of $2.7 million and equity-based compensation expense of $1.1 million, general and administrative expenses were $3 million, which were up by $1.1 million as compared to $1.9 million in the third quarter of 2017. The net loss attributable to common stockholders for the third quarter of 2018 was $8.6 million or a loss of $0.16 per share as compared to a net loss from continuing operations of $3.2 million or a loss of $0.07 per share for the third quarter of 2017. The higher net loss in the third quarter was the result of the strategic decision to invest ahead of growth, including higher advertising and marketing, higher stock-based compensation expense related to the hiring of senior executives as well as higher legal fees, which was partially offset by higher sales volume and gross profits.

For the third quarter of 2018, the reported loss was negatively impacted by a non-cash charge of $1.3 million related to stock-based compensation, which compared to a charge of $500,000 in the third quarter of 2017. Adjusted EBITDA, a non-GAAP measure, was a negative $7.1 million for the third quarter of 2018, compared to adjusted EBITDA from continuing operations of a negative $2.5 million for the third quarter of 2017. ChromaDex defines adjusted EBITDA as net income or loss which is adjusted for income tax, interest, depreciation, amortization and non-cash stock compensation cost. The basic and diluted adjusted EBITDA per share for the third quarter of 2018 was a negative $0.13 versus a negative $0.05 from continuing operations for the third quarter of 2017. We ended the third quarter of 2018 with a solid balance sheet with cash of $28.2 million. In the third quarter of 2018, our net cash used in operating activities was a negative $5.2 million versus a $0.5 million in the prior year. Total cash outflows were $5.2 million in the third quarter compared to $7.6 million in the second quarter. The lower cash outflows this quarter primarily related to working capital, which was a $1.8 million source of cash in the third quarter compared to $0.5 million use of cash in the second quarter. For the full year, we continue to 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 fourth quarter, and 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 TRU NIAGEN in our U.S. eCommerce and Watsons international business as well as in certain international markets. The company will continue to invest efficiently in marketing expenses 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've implemented cost-cutting programs across the company to reduce our overall spending. As an example, R&D spending, we have much more targeted going forward. Investments in R&D will primarily support appropriate marketing claims that we expect to drive incremental sales to TRU NIAGEN and develop additional consumer products for NIAGEN.

Coming into this year, we had commitments related to pharmaceutical projects that we expect to moderate in 2019. We continue to focus on improving our management decision support tools for investments in marketing, advertising and selling expenses to drive better returns.

In summary, as we look to get the company into solid position of profitability, the key drivers will be the continued growth in sales of TRU NIAGEN, improved gross margins as a percentage of net sales, continued increases in the efficiency of our TRU NIAGEN marketing, advertising and selling expenses, leveraging fixed overhead spending and managing our legal costs as effectively as possible.

Operator, we're now ready to take questions.

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

This is actually Destiny on for Jeff. So I just have a couple of questions. Let me start with your current management team. I know that you added a couple of very important people this quarter. But I'm just curious, do you feel like your management team is fairly rounded out now, or are you pursuing other additions? And if so, what areas?

We feel the management team is fairly rounded out now.

Okay, got you. And I know you also mentioned pursuing CFDA approval. Do you have any idea of when you would submit a claim or submit anything or get regulatory approval et cetera, things like that? Are you not providing that currently?

Are you referring to CFDA China regulatory approval?

Yes, sorry, hopefully, my connection's not too bad. CFDA, yes.

No, we don't have any insights. There's quite a bit of transition going on in the China regulatory authorities right now. Obviously, the relationship is pretty strong with the Jiangxi Province. But in terms of the central government, we have no insights as to when that approval will be given, if at all.

Okay, got it. And then can you talk a little bit more about Turkey? I know you said there was some additional turbulence this quarter. And you were projecting for an approval by the end of the year. What are you looking at now? Early 2019, mid-2019, later?

Well because of the issues in the Turkey economy and even political issues with Turkey, Watsons feels that it's probably a good idea for us to hold off commercially on Turkey -- with Turkey for a few months. In terms of the regulatory approvals, as I said, we did receive regularly approval for the ingredient, nicotinamide riboside. We think that the product approval is short -- will happen shortly. The claims approvals may take also a few months. There -- it's not just receiving some claims approvals. It's claims approvals that we know would effectively market the product so it sells well in Turkey.

Okay, that makes sense. And you also mentioned expanding into some new territories, can you provide a little more color on which one you are interested in now and you would pursue in the near term?

Well, we're certainly interested in Canada. We are pursuing regulatory -- FX regulatory approval in the EU. And that would encompass, obviously, quite a few countries. And throughout Asia, there are some other countries that we are pursuing. But each country has its own regulatory approval process. Some are quick, most are not. Some are very slow. So it's a painstaking process that we take one country at a time, but we are employing a very aggressive strategy for all major countries around the world.

All right. Got it. And then speaking of Canada, what is the landscape like there now? Are you seeing similar interests as you would in the U.S.? And then additionally, I know you said you have a brick-and-mortar, but will you also employ an eCommerce strategy there as well?

Yes, we are already actually selling into Canada via Amazon. We will soon have a cross-border Canada strategy with our website. And we are in discussions with numerous distributors and retailers in Canada. But a deal is not -- with any of them is not imminent. There is also the potential for a television strategy in Canada that we are examining.

Okay. And then, I believe I just have one more related to your cost of goods sold. I know last quarter, you guys included shipping and handling in those costs. Did you do that again this quarter? And will you continue to do that going forward?

Yes, that's part of our revenue recognition policy and with regard to cost of goods sold, we made the election to include shipping, and that will be consistently applied quarter-after-quarter since it is an accounting election.

Our next question comes from Jeff Van Sinderen with B. Riley.

First, let me say congratulations on the growth in the quarter. I guess you know one thing we were looking at and trying to get a better sense of is you do have new marketing talent with you for a few months now. Just wondering if there's any more you can tell us on some of the marketing plans you're working on, maybe it's too early for some of those but anything you care to share there? Maybe how you go after the health care providers? And now that you do have NSF certification, just thinking about how you might go after the sport segment.

In the past, TRU NIAGEN has singularly pursued the demographic of, I would say, women over a certain age. But we have discovered that the audience or the potential market for TRU NIAGEN is actually quite broader than that. So we have been exploring other segments, younger males, the sports market and the health care practitioner market, as you mentioned. Now when one explores a new market, there are always some costs involved in testing that market and throwing the wide net out to see who responds. But we have seen in our experiments, in our marketing experimentation that there is, indeed, quite a bit of interest in TRU NIAGEN beyond what has been the traditional TRU NIAGEN demo. Sports, in particular, seems to be a very big opportunity for us. And we know that there are quite a few notable athletes that are already taking TRU NIAGEN. And we have -- we are pursuing this particular area very aggressively. As you mentioned, we have a new Chief Marketing Officer, Lisa Bratkovich began in June. In the last few months, Lisa has been assembling a team of very impressive marketers. They have also been working hard on our systems and platforms to ensure that they are sufficiently scalable for the type of growth that we expect. They've also been developing some interesting new creative campaigns and new channels for communicating our message. We are not rushing campaigns into the market, we are not rushing new channels into the market. But we are very encouraged by what we are seeing, and we are hopeful and indeed expect that in the coming months, these efforts will bear fruit.

Okay, good. And then I know -- I think you mentioned NIAGEN PRO or TRU NIAGEN PRO and so wondering maybe if you can update us on kind of the plans or happenings around new products, derivative products, maybe some of the status of those efforts that are in the works there.

So we do see that there is a demand for other delivery methods of NIAGEN. And we have been aggressively developing those. In fact, we've announced in the past a deal with 2 companies, Bulletproof Coffee and Pressed Juicery. And we will be shortly announcing a new product in conjunction with those 2 entities that we see as a test market, that we think has a lot of potential beyond the capsules that we're selling presently. There are other product types that we have been exploring, other forms of delivery that are very promising, and we hope to be able to announce those as being available in the marketplace also in the coming months.

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

This is Julian on for Ram Selvaraju. First, I was just wondering if you could elaborate more on the status of the TRU NIAGEN rollout via the Watsons relationship, specifically total number of stores, countries in which it has been launched and evolution of pricing would all be very helpful.

Do you want to do that? [You want to] go ahead and take that?

I believe it's in 360 stores, presently.

It's 230 stores in Hong Kong and about 100 stores in Singapore.

330.

We expect to expand into other countries, particularly Taiwan and then Turkey. First, Taiwan, when the regulatory approval comes in, we are eagerly hopeful that, that will come in, in the coming months. It's difficult to control these things. We don't know. We've made a couple of submissions. They've given us some responses, we've addressed their responses. As of today, we do not have that regulatory approval, but we are hopeful that we'll soon get it. It's important to note that in most countries, there are 3 stages to the regulatory process: there's the ingredient stage; there's the product stage; and then there are the claims stage. And those claims need to be sufficient that one can successfully market the product. In Singapore, we have 2 -- we have the first 2, and we have some health claims approved but not enough for Watsons or us to feel that we can aggressively market the product in the country. Notwithstanding that, sales seem to continue to grow in Singapore, even without marketing. The number of stores in Taiwan are -- is approximately equal to the number of stores in Hong Kong and Singapore combined. Watsons themselves are extremely interested in expanding TRU NIAGEN into other countries. And we are working with them to identify the countries for which we are aggressively seeking approval so that we can roll out in those individual countries. Watsons has also expressed a strong interest in our developing additional products for them to distribute in their existing Watsons stores, and that is something we are exploring.

Okay, got it. My second question, are there any, I guess, clinical indications you expect to generate proof of concept efficacy data over the next couple of years on an internal basis? And if so, are you able to talk about those at this time?

Yes, but Frank is on. I'll defer to you, Frank.

So there are a number -- okay, I'm on. Sorry I was on mute. The -- could you repeat the question again?

Yes, sure. So I was wondering if there are any clinical indications that you expect to generate proof of concept data on over the next couple of years on internal basis? And if so, can you talk about those at this time?

Well, I mean, most of the -- we -- our own study is going to be publishing coming up, and we don't have a timeline for that yet. And that's just another study or data that's going to further confirm the ability -- nicotinamide riboside successfully raises NAD. And we've only released the top line on that so far, but this should provide further data regarding nicotinamide riboside's ability to raise NAD. The other studies are all the ones that are really posted on ClinicalTrials.gov. And as we stated in the call, there's sort of a wide range of areas, but the ones that are probably the most prominent lately have been surrounding cardiovascular health and in cognition or neurodegenerative -- associated with neurodegenerative diseases.

Yes, there are a series of studies being done on neuroprotection, which we're very excited about and encouraged about and think that they will have a significant impact. It seems as though neurological-related conditions is where the industry seems to be pursuing us the most aggressively. But there are also studies on sleep and there's also studies on, as Frank said, cardiovascular as well as muscle-related indications.

Okay, great. That's helpful. And for my last question regarding the ongoing dispute with Elysium Health. When should we expect the next court action? Are you able to talk about that?

There is a scheduled trial for March for the California case, and we hope that Elysium sticks to it and that the trial begins at that time.

Our next question comes from Barry Kitt with Pinnacle Fund.

My questions were asked and answered already. But I did have one question. I've heard that there are 2 different ex-pro football players who came down with CTE, the -- what is it, chronic traumatic encephalopathy. And I've heard that they were taking TRU NIAGEN, and that it was basically stopping the symptoms that they were experiencing. Have you had any experience with that?

Well, we've had numerous football teams and players contact us. And we have many anecdotal communications with people who have -- not just from CTE but other neurological issues. But we have no scientific studies published such that we could make a health claim to that effect.

Are there any studies ongoing, third-party studies that would go in that direction?

Yes, there are several. There is one in San Antonio, there's one at the Mayo Clinic. Harvard Medical School has proposed one to us. Their head of neurology is eager to do a study on NIAGEN, specifically on CTE and also on Alzheimer's. And I believe there's 1 or 2 others. But perhaps, Frank, you know.

Of course, there are numerous preclinical mice studies that have been published on neurological disorders, traumatic brain and Alzheimer's, all of which have showed a very positive effect.

And there's also studies related to -- several studies that have shown impact on hearing loss. And there's a correlation between hearing loss and neuronal damage -- axonal neuronal damage, and it's also sort of a proxy for the potential impact it will have on those same areas. So -- And hearing loss is one of them that you can actually measure. So I think you're going to see focus on hearing loss and other areas like TBI concussion or other areas associated with neuronal or axonal damage.

That is all the time we have for questions. I would like to turn the call back to Brianna Gerber for closing remarks.

Thank you, Shannon, and thank you all for joining us today. There will be a replay of this call available beginning at 7:30 p.m. Eastern Time tonight. The number to call for the replay is (855) 859-2056, and the passcode is 7066529. Thanks again.

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