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ChromaDex files successful NDI on Niagen; surging sales of ingredient helps firm near break-even mark

By Hank Schultz

17-Nov-2015
Last updated on 17-Nov-2015 at 17:49 GMT2015-11-17T17:49:27Z

Nicotinamide riboside is perhaps the most effective precursor to boost the co-enzyme NAD+ in the cell. NAD+ is arguably the most important cellular co-factor for improvement of mitochondrial performance and energy. Image © iStockPhoto / Dlumen
Nicotinamide riboside is perhaps the most effective precursor to boost the co-enzyme NAD+ in the cell. NAD+ is arguably the most important cellular co-factor for improvement of mitochondrial performance and energy. Image © iStockPhoto / Dlumen

ChromaDex has announced a successful New Dietary Ingredient notification on its Niagen ingredient. Strong demand for the ingredient has driven the company to a sixth consecutive quarter of record earnings and has helped ChromaDex near break-even territory after years of losses incurred while the company developed.

Niagen is a form of nicotinamide riboside (NR) that is supported by five patents with several pending, the company said.  The ingredient has potential sports nutrition and anti aging applications.

Published research has shown that NR is perhaps the most effective precursor to boost the co-enzyme NAD+ in the cell. NAD+ is arguably the most important cellular co-factor for improvement of mitochondrial performance and energy. In recent years, NAD+ has been shown to be essential in supporting healthy cellular metabolism including the efficient conversion of blood glucose into energy.

The company said research shows that as organisms age, NAD+ levels drop, which leads to a decrease in mitochondrial health; this in turn leads to age-related health issues.  Low NAD+ levels limit activity of a group of enzymes called sirtuins, which are believed to play a key role in longevity. NAD+ levels also can be depleted by lifestyle choices such as overeating and lack of exercise. By boosting NAD+, NR can increase mitochondrial health and induce creation of new mitochondria, according to ChromaDex.

Having a successful NDI notification in hand is an important part of reassuring potential customers, said CEO Frank Jaksch. Demand for the ingredient was part of what drove a 104% year-over-year sales growth in the company’s branded ingredient division in the third quarter that ended Oct. 3, 2015.

“Receiving NDI status from the FDA validates the safety dossier we have compiled for Niagen. Achieving NDI status is a significant milestone given that the FDA objected approximately 88% of NDI notifications in FY 2014. NDI status opens the door for the mainstream commercialization of Niagen in dietary supplements,” Jaksch said.

“The large players in the industry typically are not quick to include ingredients without NDIN status. So if you've been following all the recent activity regarding the New York Attorney General as well as the Oregon Attorney General, there has been a lot of pressure on large retailers such as GNC, Walmart, Target, Walgreens as well as some of the larger product manufacturers as well and most of that activity has pointed to the quality, safety and regulation of dietary supplement products that are in the market.” Jaksch added in his remarks on an earnings call with analysts.  The call has been posted in transcript form on the site seekingalpha.com .

Demand drives results

ChromaDex, which started its corporate history as an analytical lab and marketer of reference standards, moved into the ingredients business a number of years ago and now features pTeroPure, a nature-identical form of the polyphenol pterostilbene, and PureEnergy, a co-crystal of pTeroPure and caffeine, along with Niagen. It’s demand for Niagen that has driven the company’s continued earnings rise, Jaksch said.    

Recent deals with both P&G and CVS on the ingredient bode well for its future and the future of the company, Jaksch said.

“The development agreement provides P&G with exclusive rights to incorporate Niagen for use in very specific types of both new and existing P&G branded products, some of which are among the highest volume consumer products in the world today,” he said.

CVS also recently announced the launch of a private label anti aging product feature Niagen. Jaksch said it was a vote of confidence to some degree in the science behind the ingredient, as major chains are rarely out in front on product innovation until demand has been demonstrated.

“Usually not until there's a large market that exists for the ingredient (do we see) a company like CVS or Walgreens or any of those guys step in and market a product.  . . . So this tells us that at an early stage the NIAGEN story is really beginning to gain a lot of attention amongst the largest companies in the industry and that's a very good sign for the ingredient,” he said.

Earnings details

For the three months ended October 3, 2015, ChromaDex reported net sales of $6.3 million, an increase of 52% as compared to $4.1 million for the third quarter ended September 27, 2014. Leading the way was the ingredient segment which generated net sales of $4.1 million for Q3 2015, an increase of 104%, as compared to $2 million Q3 2014, and a 22% sequential increase over Q2 2015.

The core standards and services segment posted a 3% growth, generating net sales of $1.9 million for Q3 2015 compared to $1.8 million for Q3 2014. The regulatory consulting segment net sales were down slightly from $294,000 for Q3 2014 to $265,000 for Q3 2015.

Gross profit in 2015 grew 63% to $2.5 million versus $1.5 million for Q3 2014. ChromaDex posted a tiny net loss of $4,000 in the quarter, versus a loss of $660,000 in Q3 2014.

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