ChromaDex has announced the largest deal in its history, a $62 million agreement with nework marketing company 5LINX that covers its Niagen and Purenergy ingredients.
ChromaDex, a company that provides testing and consulting services as well as proprietary ingredients to the dietary supplement industry, will supply Niagen, a branded form of nicontamide riboside, and Purenergy, which is a formulation of caffeine and the company’s pTeroPure bioidentical pterostilbene ingredient for products to be sold through 5LINX's marketing channels.
Even though the deal announced yesterday dwarfs anything so far in the history of ChromaDex, CEO Frank Jaksch said it represents just the tip of the iceberg.
“I would say this is a start. Even though it’s a large deal and the largest deal we’ve ever done this is really just the start for us,” Jaksch told NutraIngredients-USA.
Getting in at the ground floor
5LINX, founded in 2000 in Rochester, NY, is a network marketing firm that up to now has been concentrating on selling business telecommunications services, later branching out into energy, security and other services. The company was ranked no. 76 on the 2012 ranking of biggest network marketing firms by Direct Selling News, which quoted the company’s 2011 annual revenues at $81 million. The ChromaDex deal is the company’s first foray into nutrition, and that was one of the selling points, Jaksch said.
“That’s one of the reasons why we chose them. They have a long track record and they have a strong network in place but they are transitioning into the health and wellness space. I liked that because we are getting in at the early stage.
“(With a more established company) we would be just one product lost among a host of other stuff. Would they really devote the time and energy to our products? Probably not,” Jaksch said.
Jaksch also said the relative inexperience in the health and wellness space means that the ChromaDex's depth of experience and capabilities can be more influential.
“They’ve come to appreciate that we have a certain level of expertise in this space. Everything from the testing, to the regulatory, to the science that needs to be built up to support everything they are doing. They are going to listen to everything we say and to us that’s important,” Jaksch said.
Details of the deal
5LINX has been granted marketing rights for ChromaDex’s recently launched patented Niagen Nicotinamide Riboside (NR) for use in dietary supplements exclusively in the network marketing sales channel in the United States, Canada and Philippines. Under the terms of the agreement, 5LINX must purchase from ChromaDex $2.1 million of Niagen in 2014, and an aggregate of $46 million of Niagen from 2015 through 2017. Niagen is the first and only commercially available brand of NR, which is found naturally in trace amounts in milk and other foods and is a more potent, no-flush version of Niacin (vitamin B3). Published research has shown that NR is a potent precursor to NAD+ in the mitochondria of animals. NAD+ is an important cellular co-factor for improvement of mitochondrial performance and energy metabolism.
5LINX has also been granted marketing rights for ChromaDex’s recently launched patented Purenergy ingredient for use in dietary supplements, with select exclusively in the network marketing sales channel in the U.S., Canada and Philippines. Under the exclusive network marketing channel agreement, 5LINX® must purchase from ChromaDex $520,000 of Purenergy in 2014 and an aggregate of $14 million of Purenergy from 2015 through 2017. Purenergy is a patented co-crystal ingredient comprised of caffeine and ChromaDex's pTeroPure pterostilbene, a potent anti-oxidant found in blueberries. Data shows the ingredient delivers 30% more caffeine, stays in the blood stream longer, and is absorbed more slowly than ordinary caffeine, which will allow formulators of energy products to reduce overall caffeine concentrations, the company says.
Jaksch said ChromaDex is free to pursue other opportunities beyond the network marketing channel such as online or brick-and-mortar opportunities in the US and overseas. Last year, the company sold to a Canadian company its direct to consumer supplement line, BluScience, which featured pTeroPure as the signature ingredient. And it also announced a deal with Thorne Research for supplements featuring Niagen in the practitioner channel.