In the announcement of the agreement, made before market open this morning, ChromaDex said that Li, called by Bloomberg News as “Hong Kong’s richest man,” will purchase up to $25 million in common stock in a private placement. This will amount to a major shift in the ownership structure; according to Yahoo Finance, ChromaDex’s market capitalization this morning was $110.3 million. With this investment Li’s investment firm Horizon Ventures will now be the company’s largest shareholder. The stock will be sold at $2.60 per share in three tranches of approximately $3.5 million, $16.4 million and $5.1 million, respectively. The first and second phases are expected to be completed within 30 days, and the third is subject to shareholder approval, according to a preliminary 8K form filed by the company this morning. In connection with the investment, Li will get to nominate two additional board members to bring the total to nine.
Li is no stranger to investing in North American companies, including those focused on human nutrition. According to ChromaDex, through Horizon Ventures Li has in recent years invested in Facebook, Spotify, DeepMind, Siri, Impossible Foods and Modern Meadow. With Horizons Ventures’ strong global presence, the new investment will be able to support future ChromaDex developments in the global marketplace, the company said.
ChromaDex’s flagship ingredient is Niagen, a branded form of nicotinamide riboside that the company acquired the rights to in 2013. The ingredient has been studied for its effects in boosting NAD+, a key element in the cell’s energy production pathway in the mitochondria. ChromaDex first began delving into Niagen’s potential in the anti aging arena with a study published in 2015 that validated the NAD+ story. The ingredient’s anti-aging potential was a lynchpin in the deal with Li, said ChromaDex CEO Frank Jaksch.
China is still the world’s most populous country, at about 1.3 billion, though India is expected to surpass this figure in the next decade. But the legacy of the country’s decades of pursuing a one-child policy means that the population is rapidly aging. The size of the country’s population aged 60 and above is forecast to increase by 100 million in just 15 years (from 200 million in 2015 to more than 300 million by 2030).
Science drives story
“The published science, the clinical studies underlying nicotinamide riboside is something we have been patiently building up for the past three or four years. That is now reaching an inflection point,” Jaksch told NutraIngredients-USA.
“This investment helps validate that. We have more than 100 collaborative agreements [for the study of Niagen] in place, and that’s just in the past three years. That is an incredible amount. A normal outcome might be five or six agreements in three years. And these studies are getting published in places like Nature, Science and Cell Metabolism. For us, science is the ultimate driver of the story,” he said.
“This is investment from Horizon Ventures is going to help us broaden the foot print for nicotinamide riboside not only in the U.S. but looking abroad to other markets, especially Asia,” Jaksch concluded.
This is not the first major institutional investment that ChromaDex has received. In 2013, DSM Ventures, the investment arm of Dutch materials and ingredients giant Royal DSM, poured $2.5 million into the company.