Cardax markets an astaxanthin supplement branded a ZanthoSyn, a nature identical synthesized form of astaxanthin.
Most of the astaxanthin in the market that is being sold as dietary supplements is derived from the algae species Haematococcus pluvialis. There are other natural sources, such as deriving the carotenoid from Phaffia yeast.
Then there are synthesized versions. DSM has had a synthetic astaxanthin product on the market for a number of years that was sold primarily as a food additive for fish feed to give farmed salmon and trout the appealing red or pink hues to their flesh.
More recently DSM started to market the ingredient for dietary supplement applications, arguing that the food additive process it had to go through to get it approved as a feed additive was more than ample proof of the ingredient’s safety.
Cardax was originally vague about the source of its ingredient, but after a lengthy back and forth with NAXA it finally admitted it is using DSM’s material in its finished products.
Cardax has pursued a brick and mortar strategy for the sale of the supplement and has had it on the shelves in some GNC stores in Hawaii and on the mainland for several years.
In its most recent earnings statement, Cardax said GNC, which is struggling with its own sales issues, has been reducing inventories. As a result, Cardax recorded only $45,000 in revenue in the second quarter that ended on June 30. The company recorded $230,000 in revenue for the first six months of its fiscal 2019. Those figures compared to $272,000 and $585,000 for the same periods a year previously. Cardax lost about $1 million in the second quarter and $2 million for the first six months of 2019, which was about the same amount of money it lost in same periods a year previously.
Market remains healthy
The market for astaxanthin has flattened out from the heady days after a mention of the ingredient on the Dr Oz show in 2011. But Scott Steinford, CEO of NAXA, told NutraIngredients-USA last year that the association is confident that the global market for the ingredient has hit at least $100 million and that it was recording solid single digit growth rates.
So Cardax’s troubles come against a backdrop of a healthy, if not booming market. The company claims in its recent earnings release that sales at GNC have rebounded, but the sales swoon leaves the company critically short of cash. So the day that it filed its earnings report the company also filed a S-1 Form with the Securities and Exchange Commission to sell more shares to raise an additional $15 million.
The company said the cash infusion would be used to fund ongoing drug development and to conduct a clinical trial with its dietary supplement.
Since its inception as a public company in 2016, Cardax has always traded in the penny stock range. The company’s high point in terms of share price was achieved in late September of 2017 when it traded at 45 cents or more per share. In recent months the company’s share price has hovered between 10 and 15 cents.