ChromaDex posts sales rise amid continued losses, sluggish stock price

ChromaDex posts sales rise amid continued losses, sluggish stock price

ChromaDex has reported a rapid rise in sales driven mainly by its Niagen ingredient.  But the company continues to post losses, and the stock price has failed to recover from a steep slide more than nine months ago.

ChromaDex, a company that markets ingredients and testing standards as well as providing contract lab services and regulatory consulting, has shown remarkable progress in the development of its flagship ingredient Niagen, a branded form of nicotinamide riboside.  CEO Frank Jaksch said in an earnings call with analysts Friday that sales of Niagen are being driven by the ingredient’s positive results from clinical studies.

Niagen science

“A team of researchers headed by Dr. Charles Brenner at the University of Iowa, demonstrated that NIAGEN, nicotinamide riboside increases production of the metabolic responsible for cellular energy production called NAD and that data was reported in both mice and humans, which indicate that single doses of NIAGEN can elevate the coenzyme NAD in the blood by as much as 2.7 fold, Jaksch said in the call which was posted in transcript form on the site seekingalpha.com. “We've only scratched the surface of the opportunities we have with Niagen.

ChromaDex’s ingredient sales advanced even though the company is locked in litigation with Elysium Health, its erstwhile largest customer for Niagen.  Jaksch noted that in addition to the ongoing research, ChromaDex achieved GRAS status for the ingredient in 2016 and also had a promising pre IND meeting with FDA on the development of Niagen as a drug to treat Cockayne Syndrome, a rare neurodegenerative disorder in children.

Earnings details

ChromaDex’s ingredient segment generated net sales of $3.3 million during the Q4 of 2016, an increase of 42% as compared to $2.3 million for Q4 2015. The core standards and service segment posted a 21% growth as it generated net sales of $2.3 million for Q4 2016 as compared to $1.9 million for Q4 2015. Net sales in the scientific and regulatory consulting segment declined sharply because according to CFO Tom Varvaro most of that division’s time is now being spent in inner-company work supporting the ingredients segment.

Among the other ingredients that ChromaDex has developed is pTeroPure, a synthetic form of pterostilbene, and PurEnergy, a caffeine/pTeroPure co-crystalline ingredient. Jaksch also highlighted a new ingredient during the call—AnthOrigin, an anthocyanin ingredient made from Suntava purple corn, which ChormaDex licensed in 2015.

For all of fiscal 2016, ChromaDex reported record net sales of $26.8, an increase of 22% as compared to $22 million 2015 (ChromaDex’s fiscal years roughly align with calendar years). The ingredient segment generated net sales of $16.8 million during 2016, an increase of 34% compared to $12.5 million for 2015.

As the company continues down the R&D path, losses continue to mount, too. The net loss attributable to common stock holders for Q4 2016 was $2.1 million or $0.06 per share as compared to a net loss of $1.4 million or $0.04 per share for Q4 2015. Net loss attributable to common stock holders for fiscal year 2016 was $2.9 million or $0.08 per share as compared to a net loss of $2.8 million or $0.08 per share for fiscal year 2015. Legal fees for the Elysium lawsuit were one of the reasons given for the 2016 losses, and the company said it will continue to devote a significant amount of cash to litigation in 2017.

Sluggish stock

Despite the good news on the ingredient development front, the stock price has yet to recover from a shock delivered in mid-June last year, when a posting on the Seekingalpha investment site alleged that the company’s Niagen sales were a mirage, and could be attributed primarily to a sweetheart deal with a company controlled by one of ChromaDex’s board members.  Those allegations were “baseless,” according to Jaksch, and the article was retracted in full. But the damage was done, and the company’s stock declined to $2.84 a share after trading at more than $5.50 a share in the weeks preceding the event. The company’s shares are trading at about $2.73 today after declining more than 3% following the earnings announcement in which top line revenue came in slightly below analyst estimates.

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