Niagen Bioscience, Inc. Q4 FY2024 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to ChromaDex Corporation's Fourth Quarter of 2024 Earnings Conference Call. My name is Phil, and I will be your conference operator today. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded. This afternoon, ChromaDex issued a news release announcing the company's financial results for the fourth quarter of 2024. If you have not reviewed this information, both are available within the Investor Relations section of ChromaDex's website at www.chromadex.com. I would now like to turn the conference over to Ben Shamsian, Vice President of Lytham Partners. Please go ahead, Mr. Shamsian.

Thank you. Good afternoon, and welcome to ChromaDex Corporation's fourth quarter of 2024 results conference call. With us today are ChromaDex's Chief Executive Officer, Rob Fried; Chief Financial Officer, Ozan Pamir; and Senior Vice President of Scientific and Regulatory Affairs, Dr. Andrew Shao, who will join the call for Q&A. Today's conference call may include forward-looking statements, including statements related to ChromaDex's research and development and clinical trial plans and the timing and results of such trials, the timing of future regulatory filings, the expansion of the sale of Niagen products and ingredients in new markets, business development opportunities, future financial results, cash needs, operating performance, investor interest and business prospects and opportunities, as well as anticipated results of operations. Forward-looking statements represent only the company's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause ChromaDex's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These risk factors include those contained in ChromaDex's quarterly reports and Form 10-K most recently filed with the SEC, including results of operations, financial condition, cash flows, as well as impact of global markets and economic conditions on our business. Please note that the company assumes no obligation to update any forward-looking statements after the date of this conference call to conform with forward-looking statements, actual results or to changes in its expectations. In addition, certain financial information presented in this call reference non-GAAP financial measures. The company's earnings presentation and earnings press release, which were issued this afternoon and are available on the company's website, present reconciliations to the appropriate measures. Finally, this conference call is being recorded via webcast. The webcast will be available at the Investor Relations section of our website at www.chromadex.com. With that, it's now my pleasure to turn the call over to our Chief Executive Officer, Rob Fried.

Thank you, Ben, and welcome, everybody. In the fourth quarter, we delivered record revenues of $29.1 million, a 37% increase year-over-year and net income of $7.2 million. For the full year, we delivered net revenues of $99.6 million, a 19% growth year-over-year and net income of $8.6 million. We generated $12.1 million in positive cash flow from operations in 2024, and we ended the year with $44.7 million in cash and no debt. It appears that the world is finally catching on to the importance of NAD and the fact that Niagen is the safest and most effective way to increase NAD levels, particularly in damaged cells. In the fourth quarter, our e-commerce channel experienced robust organic growth with net sales of $17.3 million, a 30% increase year-over-year. Our food grade and pharmaceutical-grade Niagen ingredient business had net sales of $5.3 million, a 96% increase year-over-year. Tru Niagen distribution through our strategic partners, partners like Watsons, remained consistently solid. As the demand for NAD boosting products continues to grow, we're seeing a proliferation of companies entering the arena that pursue misleading and dangerous practices. There are companies that knowingly infringe on the hard-earned patents of others. There are companies that make false label claims, companies whose sloppy manufacturing processes introduce dangerous endotoxins, companies that claim to be science-based but have never conducted a single study. We're encouraged to see that Amazon and other marketplaces have taken some steps to police this activity. We do hope to see more. We need to see more action taken by the FDA and the FTC to prevent companies from deceiving consumers. And we'd also like to see the experts who give advice on podcasts and newsletters be more vigilant in screening brands. We plan to use our position as a leader in the industry to drive awareness of consumer safety and product excellence. To be candid, I personally would not take a supplement that did not say ChromaDex or Niagen on the label. Last August, we launched our Niagen Plus product line and introduced Niagen IV and injections at clinics through a compound pharmacy network. The launch started off very strong with pharmaceutical-grade ingredient quickly selling out. But due to issues in the supply chain, we were delayed two to three months in pharmaceutical-grade availability. We have now since resolved these issues. Today, Niagen IV is available in about 500 clinics nationwide. Niagen IV and Niagen injections are on pace for great growth in the second half of this year. Last year, ChromaDex initiated communication with the FDA as part of the company's effort to pursue an investigational new drug application for the use of NR in the treatment of ataxia telangiectasia, AT. We continue to work with the agency to address its comments and its feedback. With regard to the NO-PARK study for the use of NR in the treatment of Parkinson's disease, the last participant was enrolled last June. So we expect that the study will be completed by June of this year. We will not be able to see results for some time thereafter, but we very much look forward to sharing more updates on this and other pharmaceutical plans in the near future. In the coming weeks, we will be making an announcement that we are changing the company's name to better represent the evolution of the company and the strategic direction of the company. This has been a major undertaking internally, and we're excited to finally share the company name. I believe this past year marks an inflection point for this company and that it is the right time to change our name to better align with our mission. In summary, your company is healthy. Your company is growing, and your company is very well positioned for the future. Let's now turn it over to Ozan. Ozan?

Thank you, Rob. It is a pleasure to speak to our investors, partners and employees who are here with us today. Having joined ChromaDex just a few months ago, I've been deeply impressed by the team's dedication and the clear vision driving this company forward. It's a privilege to be part of a team that is so committed to innovation and excellence. 2024 was a strong year for ChromaDex as the company exceeded all targets on its financial outlook. As Rob mentioned, this past year was pivotal in building momentum for even greater success. In both the fourth quarter and full year of 2024, we delivered outstanding financial performance while advancing key strategic initiatives. Before diving into the details of the quarter, I want to take a moment to highlight our full year performance. For the full year, we delivered total net sales of $99.6 million, a 19% year-over-year increase. Gross margins of 61.8%, reflecting continued operational efficiency. Selling and marketing expenses down approximately 200 basis points as a percentage of net sales, an increase in R&D investments of $1.1 million and a decrease in general and administrative expenses of $6.6 million year-over-year, better than our outlook of down $1.5 million. And we achieved net income of $8.6 million, a sharp turnaround from a net loss of $4.9 million for the fiscal year 2023 and generated $12.1 million in operating cash flows. Our results are a testament to the company's strong financial discipline and focused execution. Through diligent cost management and strategic resource allocation, we have driven growth, improved profitability and enhanced operational efficiency, all while continuing to invest in innovation and the future of our business. Now let's review the fourth quarter financial performance. ChromaDex achieved total net sales of $29.1 million, up 37% compared to the fourth quarter of 2023. Our Tru Niagen-related sales increased by 29%, driven by a 30% growth in e-commerce and a 26% increase in combined Watsons and other B2B sales. Our total Niagen ingredient sales, including food grade and pharmaceutical grade, increased by 96%. Gross margins improved by 150 basis points to 62.5% compared to 61% in the fourth quarter of 2023. This improvement is attributable to changes in our product and business mix, driven by higher e-commerce sales and additional sales of pharmaceutical-grade Niagen to support the Niagen Plus expansion and driven by efficiencies in supply chain due to scale, improvements in operational fixed costs and other savings initiatives. Selling and marketing expense as a percentage of net sales improved 90 basis points to 29.9% compared to 30.8% in the fourth quarter of 2023 as we continue to make measured investments to grow our sales channels efficiently. Research and development expenses were largely stable year-over-year as we steadily advanced development of new NAD precursors. As reported, general and administrative expenses decreased by $4.4 million, driven by a $3.5 million reversal of royalties and fees related to our agreement with Dartmouth. In December 2024, we announced a supplemental agreement with Dartmouth that waived these obligations and a $1.3 million recovery of credit losses following the initial payment from the legal settlement with Elysium, recovering bad debt written off in 2019. The second and final payment is expected in the first quarter of this year. In the fourth quarter of 2024, we delivered operating income of $7.1 million versus a $200,000 operating loss in the fourth quarter of 2023. Total net income in the fourth quarter was $7.2 million or $0.09 earnings per share, a substantial increase from $0.1 million or approximately breakeven earnings per share in the prior year period. Moving to the balance sheet and cash flow. Our balance sheet is stronger than ever. As a result of this year's growth, our balance sheet reflects a higher cash balance of $44.7 million with no debt, lower liabilities and higher equity, reinforcing the financial stability and resilience of our business. For the full year 2024, our net cash provided by operations was $12.1 million, up from $7.1 million in the prior year. The increase was primarily driven by a $13.5 million improvement in net income, partially offset by a $3.5 million reversal of accrued royalties and $2.2 million in lower provisions for credit losses, reflecting the recovery of losses from the legal settlement rather than provisions as in the prior year. Additionally, various changes in working capital contributed to the overall improvement in net cash provided by operations. Finally, I would like to share our 2025 full year outlook. Detailed information on key financial metrics can be found in our earnings press release along with the slide presentation. As it relates to our full year 2025 net sales, we expect to maintain the momentum we built last year, projecting approximately 18% growth year-over-year. This outlook reflects continued expansion in our e-commerce business, growth in established partnerships and further progress in our pharmaceutical-grade ingredient business. We anticipate a modest improvement in gross margins as we continue to execute on supply chain optimizations and ongoing cost-saving initiatives. Selling and marketing expenses are expected to increase year-over-year in absolute dollars, but will remain stable as a percentage of net sales, which was 29.6% in 2024. As Rob mentioned, we will be announcing our company name change in the coming weeks with targeted marketing investments to support the rebrand. At the same time, we will continue investing in resources to drive sales growth while maintaining operational efficiency. R&D expenses are also expected to increase year-over-year in absolute dollars, while remaining stable as a percentage of net sales at 6% as we continue to invest in NAD precursor development to support our innovation pipeline. General and administrative expenses are expected to increase by approximately $5 million to $6 million, primarily due to investments in business growth and the absence of the reversal of royalties and fees related to Dartmouth that I mentioned earlier. In summary, 2024 was a defining year for ChromaDex, driving profitable growth through operational excellence and fiscal discipline. The company's financial position is stronger than it has ever been, and I'm confident that we can continue to carry the momentum into 2025 and beyond. As Rob mentioned earlier, we will soon be changing the name of ChromaDex to better align with the company's mission and strategic direction, and I look forward to joining him and the rest of the leaders here to share the exciting announcement in the coming weeks. Operator, we are now ready to take questions.

Thank you. We will now begin the question-and-answer session. (Operator provided instructions to participants on how to ask questions.) Your first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.

Hello, Rob, Ozan. Thanks for taking our questions. Just a few on our end. Hey, Rob. So firstly, could you talk about the stick packs a little bit, as far as give us a sense of pull-through on Amazon or your website and a sense of what's the milligram size? And any comments as far as pricing?

It's 300 milligrams per stick pack. It also has inulin in it, so it actually has other fiber benefits. We haven't really emphasized the stick pack. It's interesting; it's very rare that people ask us about stick packs, but sales of stick packs have, over the last couple of quarters, begun to increase. So we expect in 2025 to initiate more of a marketing campaign behind it. We've noticed that the consumers for stick packs tend to be younger, and they also tend to be more in the exercise/workout cohort group.

Okay. Got it. That's helpful. Ozan, a quick one for you. The 1.3 adjustment on the royalties for the fourth quarter, you expect—you said the second and final in the first quarter, that will also be 1.3 as well?

So just to clarify, that's not a royalty adjustment. That's the Elysium settlement. The royalty adjustment relates to Dartmouth. We reversed $3.5 million in Q4 with regards to Dartmouth. That's not going to reoccur. However, the $1.3 million received from Elysium, the second payment of that we are expecting by the end of March. That's going to be again $1.3 million.

Okay. Perfect. That's helpful. Rob, on the NO-PARK study, should we expect a readout or some commentary from the company in the third quarter or the fourth quarter?

We really don't know. It's a double-blinded study. We expect them to share it with us, but we don't know for sure that they will once they have the data compiled. So if I gave you a rough estimate, it would probably be end of the third quarter, fourth quarter, beginning of the fourth quarter. But that doesn't necessarily mean we'd go public with it. There are factors like they may be submitting for publication and they may feel that it would impact their chances of getting published. So I don't want to really create expectations around when you will hear. The only thing we feel comfortable saying right now is the last participant will be completed in June of this year.

Got it. And then lastly for us, could you talk about the food grade Niagen segment sticking out because it's been extremely strong in the back half of 2024. So anything to call out there? Any sense of how that looks for '25 as a segment?

Yes, we expect it to continue to grow. We've added a couple of other partners. As you know, we're extremely selective about to whom we supply Niagen as an ingredient. There are a handful of very good companies to whom we supply, including Nestlé, H&H, Life Extension, and Thalia. We'll add one or two more. And those companies themselves are growing. We're seeing an increased awareness level of certainly NAD, but of Niagen in particular. So we expect the ingredient business, the food-grade ingredient business, to grow nicely in 2025.

Perfect. That's it for us. Thanks for taking the questions.

Thanks, Jeff.

Your next question comes from the line of Mitchell Pinheiro with Sturdivant. Please go ahead.

Yeah. Hey. Good afternoon.

Hi, Mitch.

Could you just expand a little bit on the drivers of your strong e-commerce performance in the fourth quarter?

Well, as you know, we've always done extremely well on Amazon. But we've also now seen a nice improvement in our Shopify performance. And you know for several quarters, we've been talking about it as an underperformer. But you can't really flip a switch and improve your website e-commerce performance. It's a function of many variables that take time to add up: SEO, search engine optimization, ads, localizing the ads. So it's a combination of us improving our performance on Shopify, general increased awareness of NAD in general, which is in large part because of the launch of our Niagen IV business and then a tremendous amount of publicity that ChromaDex and Tru Niagen have received over the last several months.

Okay. And then I always ask this, but was the growth driven by strong new customers, recurring? How would you characterize that?

There is a slight increase in recurring customers, but it's mostly new to brand.

Okay. And then obviously, the Niagen IV, the injectables, I'd love to learn a little more about maybe what you learned on your initial ramp, maybe where the pace of clinic additions throughout 2025, perhaps where you would expect to end roughly in the number of clinics? And then finally, how confident are you in your supply chain ability to keep up with demand? I know it had a little bit of a slower start. I'm just curious where—are we up to speed? Or are there always going to be risks related to supply chain?

I think there will always be risks. But you have to recognize that the pharma-grade supply chain is completely different than the food-grade supply chain. It's a different group of companies. The process is somewhat different. Everything has to be FDA approved and tested and sterilized and retested. So it's a new area for us, and we've now been working on it for actually several years. And we had a couple of hiccups. The hiccups that we had had nothing to do with the quality. We always reach the absolute tip-top highest level of purity and quality whenever we do the test. It had to do with things like having the appropriate license to warehouse the product before you ship it to a pharmacy or ship it to a clinic. These are technical things or filling out the right paperwork when you're transferring it from one place to another. And these are the kinds of things that have been a learning experience for us and have been frustrating for us because the demand is there. But we think we've resolved it. And so we expect in the second quarter, certainly by the third quarter, that we'll really get back going in terms of sales. I don't think that we will have a problem with supply. Right now, our manufacturing partners—in this case, it's Dr. Reddy's—and we have a nice rhythm going. And of course, we still have the relationship with W.R. Grace, who's also capable of doing pharma grade if needed. We think we smoothed out the difficulties and look at—we've been at it for a couple of years here. And we've ordered an ample amount for certainly for the next year or probably two years. So we think we're in pretty good shape in terms of supply. But yes, anything could happen. There could be problems. We try to anticipate as much as we can. We beefed up our internal staff in that area, putting much more focus on it. We expect that to be an important growth area for the company in the coming years.

And what have you learned with the clinics, the customers at the IV clinics? Is it an easy switch for people that were doing the NAD+ IV? Are people aware of your new product? Are they selling it in the clinics where you presently have product? I'm just curious what the learnings might be or do you need to step up marketing?

That's like a whole smorgasbord of questions loaded into one. I suppose I'll ask one question, Mitch. You have learned quite a bit. Yes, it is an easy transfer from NAD IV consumers to Niagen. In fact, I can tell you with confidence that anybody who has experienced NAD IV that then tries Niagen IV is hooked. They're used to taking hours to get the NAD IV infused and they're used to experiencing these terrible side effects—nausea, sweats. They take Niagen IV, it takes a few minutes with none of those side effects and much higher NAD levels. So over the next day or two, they experience a much greater level of benefits than they might with just pure NAD. We had announced back in November around 300 clinics. I think this morning, we announced that we're up to around 500. Our expectation is we'll be at least double that by the end of the year. There are plenty of clinics that are interested in this. One of the issues is what they call the BUD, the expiration date. That just takes time to make sure that when the pharmacy ships it to the clinic, the clinic has enough time to use it. So I think sometime in the second quarter there will be ample time for the clinics to sell through. Right now, they're somewhat reluctant to order. They generally will order once a patient comes in and requests it, but they don't want to inventory it because the expiration date is fairly short. But that will correct itself in the next month or two. Many of them are already quite aggressively marketing it to their patients. We work with these clinics. Our marketing department coordinates with some of these clinics like Restore, a franchise that has numerous clinics. We work with them to create some consumer marketing campaigns, and we expect to do more of that coming in the future. You may also have heard many people who have experienced NAD IV talking about it on podcasts or on social media—Whitney Cummings and Kathy Hilton, among others. There is a fertility clinic well-known podcaster called The Egg Whisperer who's written quite a bit about it, saying that her patients have benefited from taking Tru Niagen. So it's picking up a little bit of organic awareness even without us doing much marketing. But yes, we plan to market Niagen IV and the Niagen shots. In the coming months, we will be able to release an at-home version where people can inject a Niagen shot, a smaller dose subcutaneously at home. We are hopeful that that will hit a nice market. We know that the GLP-1 agonists are doing quite well. We think that most of these people who want to stay thin also want to stay young. So we think that there's space for Niagen IV as well.

All right. Well, thanks for the answers. Much appreciated.

Thank you, Mitch.

Your next question comes from the line of Alec on for Susan Anderson with Canaccord Genuity. Please go ahead.

Hi. Good afternoon. Alec on for Susan. A question: every day, there's a new headline on tariffs. Any thoughts on how it might potentially impact sourcing or even parts of your international business like Watsons in Hong Kong? And if so, do you have any plans or what actions could you take to mitigate that?

It's possible that tariffs will have a small impact on the Watsons business and on the pharmaceutical-grade Niagen business. But we think we're talking about a very small amount and it won't have a meaningful impact on our business overall. The bulk of our material—the food-grade Niagen material—is made here in the United States, and the vast majority of our sales are also here in the United States.

And just to add to that: with regards to Canadian tariffs that were just passed today, if you look at the list of products that are having tariffs from the Canada side, supplements are not part of that list. So we don't expect any impact on our sales to Canada as well.

Got it. And then just a follow-up on innovation. You mentioned the future subcutaneous injection. Any other innovations that you're able to talk about planning for the year?

We do plan to either introduce one or two new formulations of supplements that are complementary to Tru Niagen or reformulate a couple of the formulations that we have, such as the Tru Niagen Immune product, and we do have a product that we refer to as Tru Niagen Beauty that we sell in Asia. So these are other product innovations that we're working on and expect to have updates on later in the year. Also, as noted earlier, the stick pack is another product variant we're focusing on.

That's very helpful. Best of luck.

Thank you.

Your next question comes from the line of Bill Dezellem with Tieton Capital Management. Please go ahead.

Thank you. Congratulations on a terrific quarter. A group of questions. Let's start with the food grade ingredient, if we could, being up over 60%, along with your e-commerce sales being very strong. Is this just another data point indicating that you're hitting that tipping point with awareness? Or were there some initial orders or one-off orders that popped into the fourth quarter that led to that larger growth on that line item?

It's more difficult to predict the ingredient business because it's a B2B business. The orders come in and you fill the orders. But this has been steadily going on now for several quarters. Our partners to whom we're supplying Niagen are doing quite well, and their forecasts for the year are pretty aggressive. So we expect this Niagen ingredient business to continue to grow.

Thank you. Then I want to talk a bit about the IV business for a moment. Has the shortage of the IV product accelerated interest at all? Sometimes scarcity is the single best selling point. Have you seen any of that take place?

Initially, we saw a little bit of that—people ordering it and clamoring for it and emailing about it saying they wanted it. But the problem we've experienced has been going on for a few months. So yes, at first, but not after a while. We needed to solve the supply chain problem and get back to marketing and selling a great product.

As for the supply chain problem, what was the impact in the fourth quarter and what would you anticipate in the first quarter from the supply chain issues with the IV?

The pharma ingredient business is part of the overall ingredient business, but we do break it out. You could see that in the third quarter and the fourth quarter in the area of about $1 million a quarter, maybe even a little less. My expectation is we'll probably be in that neighborhood in the first quarter or two. But then I think starting in the second quarter, maybe as late as the third quarter, you'll start seeing a more dramatic rise in sales of Niagen—pharma Niagen ingredient—to the IV space. So I think that growth will occur; it was just delayed by several months.

And I did hear you say that that is now completely behind you at this point?

With the exception of the BUD, the expiration date, which just takes time. It has nothing to do with the supply chain manufacturing process. We haven't experienced any supply chain issues in several weeks, and we have plenty of material now. So I think it's all behind us.

Great. Thank you and congratulations again on a great quarter.

Thank you, Bill.

Your next question comes from the line of Ram Selvaraju with H.C. Wainwright. Please go ahead.

Thank you so much for taking my questions and congrats on all the progress. Really impressive operational performance.

Thank you.

Firstly, could you comment on potential tailwinds in 2025 from two areas in particular: one is Niagen IV uptake and the other is potential accession of NR adoption to what was previously the segment of the market that was being served by nicotinamide mononucleotide, or NMN?

We still do see some NMN in the market, but much, much less than we did. As you know, the FDA has been consistent about upholding its ruling that there is a drug preclusion for NMN and not a legal dietary supplement. There is a group that was selling NMN that has funded a lawsuit against the FDA, and the FDA has said that they will issue a final ruling on this in July. Both ChromaDex and the drug company that was the reason for the drug preclusion, Metro Biotech, have published statements to the FDA against the claims made by this group. We are confident that the FDA will maintain its position and continue to keep NMN out of the market as a dietary supplement. We're not seeing NMN as a major force in the marketplace presently. There are, though, as I alluded before, dozens of companies jumping on the NAD bandwagon these days. Some are blatantly infringing on patents, missing label claims and just selling the ingredient. There are companies out of Asia that claim to be selling some NAD precursor at cheap prices. We're seeing some egregious fraudulent acts in the marketplace from people trying to get a piece of this exciting and growing market. That's an issue for us, and we're working very hard to identify these bad actors and notifying companies inside the industry, regulatory authorities and retailers like Amazon to limit that. Some are taking action. We'd like to see more enforcement on platforms like TikTok Shop, which currently appears not to be policing many of these sellers. If investors or listeners want to help, writing to these platforms to point out the consumer risks could be helpful. Another issue we're seeing is companies selling 'NAD.' NAD itself is not bioavailable. There are no studies showing that swallowing NAD increases cellular NAD levels. It's too large a molecule and has a phosphate group blocking entry into the cell, so it doesn't work. In fact, NAD IV can produce inflammation and adverse side effects. One study we did comparing NAD IV to Niagen IV showed biomarkers of inflammation with NAD. So not only does swallowed NAD or NAD IV not reliably increase NAD inside cells, but it can also create inflammation. The fact is there's really only one trustworthy company in the NAD space that does studies, meets label claims, has top-shelf quality controls, regulatory approvals and intellectual property, and that company is ChromaDex. To the extent you can help us spread that message, it helps consumers.

Thank you. Two related things: firstly, could you comment on the potential market opportunity—the size of the total addressable market and what you expect to be possible upside scenarios if the Parkinson's disease study that's currently ongoing were to report positive data and what implications that might have for ChromaDex? Secondly, could you talk about future potential avenues to positioning NR as an Rx product—might that include a spinout, a pharmaceutical initiative of some kind, or indeed a broader corporate rebranding?

Yes. We are planning to do a corporate rebrand and expect to announce the new name in the next few weeks. Regarding Parkinson's, there are roughly 10 million people globally diagnosed with Parkinson's disease. If a Phase III clinical study from a reputable Parkinson's researcher were published showing that a dietary supplement had statistically significant therapeutic value and was completely safe and on the market, a notable percentage of that population and their physicians could adopt the product. Even a small percentage, such as 5%, would represent a very large number of users. That assumes the study is positive—and we have no knowledge of the results of the NO-PARK study, which is double-blinded—but earlier phase studies and preclinical data suggest there is a possibility of benefit. On Rx strategy: ChromaDex has a large portfolio of NAD precursors beyond nicotinamide riboside. We have other precursors, some of which are bioequivalent or even biosuperior and may be better candidates for drug approval. ChromaDex could conceivably pursue drug development with one of those molecules. Ataxia telangiectasia is another high-profile area for us; we have completed a Phase II clinical study in that orphan disease. On the question of a spinout: we've said in the past that we don't intend to dilute our investors by raising money to pursue drug approvals unnecessarily. If capital requirements to pursue drug approval exceed our ability to fund internally and we cannot secure a partnering or licensing deal, a spinout that raises capital separately could be an option. Some pharma companies prefer working with a distinct pharmaceutical entity rather than a supplement business, and that could be another reason to consider a spinout. So it's a possibility, but not something we are committing to today. Between Parkinson's, ataxia, the Rx strategy, the Niagen IV strategy, and increasing brand awareness for Tru Niagen, we have several potential avenues to create significant value while continuing to operate a healthy, cash-flow-positive business.

Thank you. Your next question comes from the line of Sean McGowan with ROTH Capital. Please go ahead.

Thank you. Hi, guys. A couple of questions. Ozan, could you just clarify on the G&A expectation for the year? Do you mean $5 million to $6 million higher than the reported GAAP number for full year 2024?

Yes. Let me clarify. We reported almost $18.4 million in G&A expenses. That includes the $3.5 million reversal of Dartmouth royalties and the receipt of $1.3 million from Elysium. If you adjust for those items, then the increase for normal operations would be about $1 million to $2 million. The $5 million to $6 million figure referenced was relative to the reported number that included those adjustments.

Right. It turned out to be a lower full-year increase for '25 than I had expected, so I'm pleased. On the Dartmouth royalty thing, is there going to be any effort to recover any prior paid and booked royalties? Or is that water under the bridge at this point?

The Dartmouth royalties that had been previously accrued have been reversed, and we're no longer accruing royalties. We're not going to pursue recovering any royalties that were previously paid. That's not our goal.

Understood. In terms of relative margin contribution, I believe Niagen IV is higher margin than the overall average. Is that right?

Correct.

And would the at-home Niagen injectable be comparable to Niagen IV?

It will probably be lower margin than the clinic Niagen IV.

That's helpful. Any timing specifics on when the home injection kit would be available?

We didn't give a hard date, but we're circling the third quarter.

And one last question: can you comment on the frequency of people doing Niagen IV? What portion are coming back? Are they coming back once a month? Any update would be helpful.

We were able to make a small amount of pharma-grade material for Niagen and sold well for the first 2.5 months starting in September, but then we ran out of material. Because we didn't have material to supply to the clinics consistently, we don't yet have reliable data on repeat usage. So we really can't answer that question definitively right now.

Okay. Fair enough. That's it for me. Thanks.

Thanks.

Your next question comes from the line of J.P. Mark with Farmhouse Equity Research. Please go ahead.

Hi, Rob, Ozan. Thanks very much for taking my question. And congratulations on a great quarter. I'm wondering about the possibility of a partnership with a clinical lab for NAD+ testing. My thought was that maybe there's no direct financial upside, but having more data from lots of patients who were taking NAD+ or doing infusions could be helpful. Have you looked into partnerships with clinical labs for doing blood testing and checking NAD levels? Is that something on your agenda?

Are you talking about NAD or Niagen?

I guess NAD+ levels—the NAD measurements.

It's important for people to understand that NAD itself is not very bioavailable. People getting NAD IV or taking NAD by mouth show a small increase in NAD levels because the NAD molecule breaks down in the bloodstream into smaller molecules, and one of those is NR. A small amount of NR can then get taken up into the cell. But that process can create inflammation and other issues. You see a lot of companies emerging talking about NAD levels in the blood. We do, in fact, have a kit that we sell to some people who ask what their NAD levels are. The problem with measuring NAD in blood is that it isn't a great indicator of cellular NAD levels. You really want to measure NAD in tissues and in damaged cells, which is very difficult to do in humans unless you're doing biopsies. It's easier in animal studies. You can measure NAD in the brain with MRI, and we've done that. That's one of the reasons we're focused on neurodegenerative diseases like ataxia, Parkinson's and Alzheimer's—because you can measure NAD in the brain with imaging and measure therapeutic effects. We could conceivably partner with clinics in the NAD IV business, but we're not very confident in the quality of data that would be produced in many cases. It might be more of a marketing exercise than a science exercise.

I think Rob covered it well. The challenge is the availability of the technology to measure tissue NAD noninvasively. It's noninvasive in the case of MRI brain measurements, but the technology is relatively expensive and not widely available today. So availability and affordability are the main constraints.

So to summarize: if someone had an MRI and funds were no object, they could get useful information on brain NAD levels. That's theoretically possible, but expensive and not broadly available. Is that right?

Yes. The group in Norway doing the Parkinson's research has implemented that technology to measure brain NAD levels in smaller studies. It's not broadly implemented in every study, but it's used in certain research contexts.

Okay, great. Thanks so much. I appreciate you taking my long-winded question.

Thanks for the questions.

And that concludes our question-and-answer session. I will now turn the conference back over to Ben Shamsian for closing remarks.

Thank you, operator. There will be a replay of this call beginning at 7:30 p.m. Eastern Time today. The replay number is 1 (800) 770-2030, and the replay ID is 858-4242. Thank you, everyone, for joining us today and for your continued support of ChromaDex.

This concludes today's conference call. You may now disconnect.

Thank you.