Finished product sales push ChromaDex's revenue higher, but losses rise steeply, too
In unaudited figures released this week, the company said it expects to post fourth quarter 2017 revenue of approximately $7.5 million, up 69% from the same period a year earlier. The company said the increased revenues were the result of sales growth for its Tru Niagen finished product brand, built on Niagen, the company’s flagship ingredient. Niagen is a branded form of nicotinamide riboside, which itself is a form of vitamin B3 or niacin.
ChromaDex has been developing the ingredient over a period of years, and until recently has sought to be a supplier to finished goods brands. That strategy changed when the company had a major falling out with a key customer, Elysium Health. The breach of that agreement is the subject of an ongoing lawsuit.
In the wake of the collapse of the Elysium agreement, ChromaDex received a $25 million investment from Hong Kong businessman Li Ka-Shing, which was aimed at commercializing an anti-aging finished product in Hong Kong and mainland China. Much of the heavy marketing spend in the fourth quarter was aimed at building out that business, said CEO Frank Jaksch. Despite the drain on the company’s bottom line (ChromaDex says when the final figures are in the fourth quarter, loss will be in the $8.5 million to $9.5 million range), the strategy is starting to bear fruit, he said.
“We expected to see our new business model accelerate growth in revenues and gross profits, and this is exactly what we saw in the fourth quarter,” said Frank Jaksch, Jr., CEO and co-founder of ChromaDex. “We look forward to continued validation of our science in the coming months and years.”
ChromaDex puts the highlights of the year in perspective this way:
- Revenue from Tru Niagen made up the majority of revenues from the Niagen ingredient as ChromaDex exits the supply business; brand revenue to a majority of total Niagen related revenues in the second half of the year;
- Continued international expansion of the Tru Niagen brand with the launch in Hong Kong and Macau in 2017, followed by a first quarter 2018 launch in Singapore;
- Sale of the laboratory business in 2017 for $7.5 million;
- The raise of $48 million from investors, including from an affiliate controlled by Li;
- And, reaching a total of 11 scientific publications on Niagen.
Higher legal costs relating to the ongoing Elysium litigation contributed to the company’s reported loss. Another contributing factor was higher stock compensation for executives.