Niagen Bioscience, Inc. Q3 FY2025 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the Niagen Biosciences, Inc. Third Quarter of 2025 Earnings Conference Call. My name is Tamika, and I will be your conference operator today. And as a reminder, this conference call is being recorded. This afternoon, Niagen Biosciences issued a news release announcing the company's financial results for the third quarter of 2025. If you have not reviewed this information, both are available within the Investor Relations section of Niagen Biosciences website. I would now like to turn the conference over to Kendall Knysch, Senior Director of Publicity and Public Relations. Please go ahead, Ms. Knysch.

Thank you. Good afternoon, and welcome to Niagen Bioscience, Inc.'s Third Quarter of 2025 Conference Call. With us today are Niagen Biosciences' Chief Executive Officer, Rob Fried; Chief Financial Officer, Ozan Pamir; and Senior Vice President of Scientific and Regulatory Affairs, Dr. Andrew Shao. Dr. Shao will join the call for Q&A. Today's conference call may include forward-looking statements, including statements related to the company'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 to the 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 Niagen Biosciences' actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These risk factors include those contained in Niagen Biosciences' quarterly report on Form 10-Q most recently filed with the SEC, including results of operations, financial condition, cash flows as well as global market 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 the forward-looking statements, actual results or to changes in its expectations. In addition, certain financial information presented in this call references non-GAAP financial measures. The company's earnings presentation and earnings press release, which were issued this afternoon, are available on the company's website, present reconciliations to the appropriate GAAP measures. Finally, this conference call is being recorded via webcast. The webcast will be available at the Investor Relations section of our website. With that, it is now my pleasure to turn the call over to our Chief Executive Officer, Rob Fried.

Thank you, Kendall. Good afternoon, everyone, and thank you for joining us on today's investor call. For the third quarter, I am quite pleased to share that we delivered yet another record performance with $34 million in revenue, a 33% increase year-over-year and net income of $4.6 million compared to net income of $1.9 million last year. We ended the quarter with $64.3 million in cash and no debt. Our e-commerce business continues to anchor our growth, delivering net sales of $19 million, a 29% increase year-over-year. The distribution business grew 109% year-over-year with $7 million in revenue, while our Niagen ingredient business remained steady, bringing in $6.9 million. During the third quarter, we onboarded a new strategic partner with access to a network of over 8,000 medical and health care practitioners, strengthening the Tru Niagen distributor revenues. This partnership supports our ongoing mission to educate health care practitioners, patients, and consumers that Niagen is the most efficient, effective, and only legal and highest quality NAD booster available. It also expands our communications engine to amplify awareness of Niagen's 40 peer-reviewed published clinical studies, our new study results, and the healthy aging benefits of Niagen. Niagen Plus remains a key strategic focus for the company. In August, Niagen Plus at-home injection kits were launched, now only available to patients with a prescription from their practitioner, but we plan to expand distribution of the at-home injection kits via our own telehealth platform and leverage our e-commerce expertise to reach more patients. Last month, we announced that we added iCRYO to our clinic network and are currently in over 50 of their clinics nationwide. As of today, we have now onboarded more than 1,000 wellness and health care clinics across the United States to offer our Niagen Plus product line. As most of you may have noticed, the NAD market in general continues to expand quite rapidly, yet it still only meets a fraction of its potential. The supplement and injection markets are still in early stages, but there also remain considerable opportunity for NAD boosting innovations in skin care, cosmetics, food, beverage and of course, in drug applications. But it is critically important for everyone to understand that the NAD molecule itself is very large and is a nucleotide, meaning it cannot enter cells directly. It is therefore, ineffective at directly boosting NAD levels. One needs a precursor to enter the cell and then convert into NAD. And of course, the best precursor by quite a lot is Niagen NR. This is likely the reason why NAD IVs take hours to ingest, and they have significant unpleasant side effects. There are no studies that show that oral NAD supplementation increases cellular NAD. Yet, as you know, we have over 40 published peer-reviewed clinical studies in NR. Indeed, last month, the National Advertising Division, an independent advertising review arm of the Better Business Bureau, agreed with this position. Niagen Bio made a formal challenge against one particular company that was making false claims about its products that feature the NAD molecule. The National Advertising Division found that this company lacked human clinical evidence to support claims that NAD itself elevates NAD levels in the body since NAD itself is not bioavailable and there are no published human studies, oral or otherwise, demonstrating that it elevates cellular or tissue NAD. The National Advertising Division's decision affirms the importance of scientific substantiation for safety and benefit claims in an industry quite crowded with brands seeking to capitalize on this big trend. At the end of September, the FDA reversed a prior determination that nicotinamide mononucleotide, NMN could not be lawfully marketed as a dietary supplement. We believe this decision will face quite strong opposition, and we expect further challenges. But even when NMN was prohibited from being on the market, the companies that are selling it presently were selling it. They were ignoring the previous FDA decision anyway. And what we see in the month since the decision is the same companies are continuing to sell at a comparable pace. We also will note that we and others have tested many NMN products on the market and most do not meet product label claims. It's important to highlight that the businesses that have been and continue to sell NMN are likely infringing on existing NMN patents that are owned by Niagen Bioscience and another company throughout the global market. So technically, NMN continues to be illegal. While NMN as an NAD precursor does elevate NAD levels, Niagen is the superior scientifically validated, safe and most efficient and effective way to elevate NAD levels. Last quarter, I discussed two studies investigating the effects of NR supplementation on patients experiencing symptoms of long COVID. One study conducted by Harvard University examined the effect of NR supplementation on fatigue, depressive symptoms, sleep quality, and cognition. This study will be published later this month. There is also another study conducted in Norway that is undergoing peer review. We continue to make steady progress toward Parkinson's disease and ataxia telangiectasia or AT indications. As mentioned last quarter, the Phase III NOPARK clinical trial was completed in June, and we expect the results of that study to be published in early 2026. We are incorporating the FDA's feedback into our strategy for AT and continue to engage with the agency to prepare for an investigational new drug application. In an industry often marked by unverified claims and inconsistent quality, Niagen Bioscience stands apart for its scientific rigor, authenticity, integrity, transparency and innovation. While we maintain a portfolio of several NAD precursors, nicotinamide riboside patented as Niagen is the most efficient, effective and extensively researched NAD precursor, as we have said, supported by over 40 peer-reviewed clinical studies with more than 50 patents and used in over 300 research collaborations. I am and I remain proud of the team's commitment to the company's initiatives and of the progress we have made over the years. Our 25-plus year mission is rooted in one goal, delivering scientifically proven solutions to address one of life's greatest challenges, aging. I would like to hand the call over to Ozan to run through the quarter's financials and then on to Q&A and closing remarks.

Thanks, Rob. It is a pleasure to once again address our investors, partners, and team members today and present another quarter of exceptional results. As Rob highlighted, we delivered another quarter of record revenues and continued profitability. This performance we're seeing is a testament to our team's commitment to operational discipline and delivering on our key initiatives and to the growing general awareness of Niagen as a premier solution to boost NAD levels. In the third quarter of 2025, we brought in $34 million in revenue, an increase of 33% or $8.4 million from the same period last year. Tru Niagen revenue grew by 44% to $26 million, a $7.9 million year-over-year increase, driven primarily by e-commerce revenue of $19 million, which was 29% or $4.3 million higher. Our Niagen ingredient revenue was $6.9 million, up 4% or $300,000 year-over-year. Within the ingredients business, we delivered $6.4 million in food-grade Niagen sales to key partners and $0.5 million in pharma-grade Niagen sales. Tru Niagen distribution remains a key growth opportunity, both domestically and internationally. While we anticipate quarterly fluctuations with Watson's, we continue to work closely with them to strengthen Tru Niagen's brand presence in Hong Kong and to launch Tru Niagen in additional Asia Pacific markets. Domestically, we're focused on expanding our distribution through partners with access to health care practitioners and other key channels, which contributed to the growth in the third quarter. As Rob mentioned, our new partner will give us access to thousands of medical and health care practitioners, a key part of our efforts to reinforce that Niagen is the most effective, efficient and clinically validated NAD booster while amplifying awareness of the growing body of clinical research supporting it. Our gross margin improved to 64.5% in the third quarter, up 100 basis points compared to 63.5% a year ago. This improvement was driven primarily by changes in product mix, improvements in labor and overhead utilization and the use of lower-cost inventory purchases and production. While we expect that gross margins will improve year-over-year on a full-year basis compared to 61.8% in 2024, we expect that gross margins will normalize on a quarterly basis moving forward. Selling and marketing expense as a percentage of net sales improved to 25.8% compared to 27.5% in the third quarter of 2024, reflecting our continued investments in growing global brand awareness of Niagen and doing so efficiently. Research and development expense was $1.8 million, $0.5 million higher year-over-year. Science continues to be the cornerstone of our company as we continue to invest in research and innovation to further our studies and R&D projects. General and administrative expenses totaled $7.1 million, an $800,000 increase compared to the previous year. This increase is primarily driven by increased share-based compensation expense. And finally, our net income for the third quarter of 2025 was $4.6 million or $0.06 per share, a significant improvement compared to $1.9 million or $0.02 per share for the third quarter of 2024. Turning to the balance sheet and cash flow. Our balance sheet continues to strengthen. We ended the quarter with $64.3 million in cash and no debt. For the 9 months ended September 30, 2025, net cash provided by operations was $12.8 million compared to $3.5 million in the same period last year. This year-over-year increase was mostly driven by an $11.9 million increase in net income, along with other positive shifts in working capital, such as higher accounts payable, significantly improved collections on trade receivables, and increased share-based compensation expense compared to the prior year period. These were offset by increased inventory levels to support operational expansion. Regarding our full year 2025 outlook, detailed information on key financial metrics can be found in our earnings press release and presentation. Building on the strong momentum year-to-date, we recently revised our revenue growth guidance from 22% to 27% to 25% to 30% year-over-year. We remain confident in our updated full year guidance, supported by our strong e-commerce business and existing and new partnerships in the rapidly expanding NAD market. We're also revising our outlook for research and development expenses to decline as a percentage of net sales while still increasing in absolute dollars compared to our previous expectation of remaining stable as a percentage of net sales and increasing in absolute dollars. This adjustment reflects changes in timing of studies and projects. Finally, we are revising our outlook for general and administrative expenses. We now expect expenses to be up $8 million to $9 million in absolute dollars year-over-year compared to the previous expectation of a $7 million to $8 million increase. This change in G&A expectations is primarily driven by increased share-based compensation expense. One year into my tenure as CFO of Niagen Bioscience, I want to express how proud I am to be part of an organization that not only leads and defines the NAD category, but does so with integrity and professionalism. Looking ahead to 2026 and beyond, I'm confident in our ability to deliver significant returns to our shareholders.

Your first question is from the line of Jeff Cohen with Ladenburg Thalmann & Company.

This is Destiny on for Jeff. I'm curious with the new partnership for IV, I’m curious to know what the uptake is looking like, any feedback you've received from those clinics? And if you're getting any sense, which potentially no, but if you're getting any sense of what the number of patients they're treating per week or month, whatever clarity you have there is great.

It's a little early, Destiny, for that. They just made the purchase towards the end of the quarter. And so they've only just begun the process of reselling the material to their physician network and presenting it. So we don't have any direct feedback from them yet.

Okay. Got it. And then I'm curious about NAD, where does this fit in your marketing funnel? Is this something that a potential consumer would see early on? Or is this something that would maybe fall a little later further down the funnel prior to purchase? Just curious.

With regard to NAD? The AboutNAD website is something that we maintain, but it's an objective website. There are no... it's not... it's actually not in any way connected to or part of the purchasing funnel. It's just an information resource for journalists, investors, researchers, and people who are generally interested in the true up-to-date science of NAD, what are the actual published studies, clinical and preclinical. As you know, as a dietary supplement company, the rules are clear, and we stick to the rules that one cannot imply a claim for a disease state, even if your product cures a disease. So if one conducts a study on a disease and it's actually therapeutic or prophylactic, they're very limited in what they can do with the information. So AboutNAD is a great resource where we can publish all the studies, not just the Niagen studies, but all NAD-related studies. So people can go, go to the search bar, type in any disease indication that they are concerned about or want to know about, and we'll see the studies that have been published to date without any noise of commerce or any attempt to try to push a product.

Your next question is from the line of Susan Anderson with Canaccord Genuity.

Great job on the quarter. I have a follow-up regarding the at-home injection. Are they available in all the physician offices where patients can also receive the injection in person? Additionally, how should we view the rollout? Will there be expansion into other distribution channels? You also mentioned plans to incorporate them into your telehealth platform, so could you elaborate on that? How do you envision that process getting started, and will it be linked to your direct-to-consumer platform as well?

Yes, that's an important series of questions. Thank you, Susan. We do believe that the at-home kits are important for our future. But we are doing it like most things that we do carefully and slowly. And although there is an at-home kit available in the market, one needs to go to a clinic to purchase it at this point in time. And we're still working on the user experience to make sure that it's optimized. So it will be several months at least before it is available on our website. We are developing our own telehealth capability where one could go to truniagen.com or niagenplus.com and get a prescription from a physician online, much like the classic telehealth companies, and it would be delivered to their home via a pharmacy. But that... we don't expect that functionality to be available for maybe 2 quarters probably, middle of next year. We do expect that some of the existing telehealth companies that are out there right now will be making it available to their customers. There are studies being done presently on Niagen injection as a potential complement to GLP-1. As you know, one of the leading side effects for these GLP-1s are muscle loss. And we believe that there is a benefit to getting NAD with Tru Niagen or with Niagen Plus to muscle density. So we hope that the results indicate that. And if that's the case, we expect to see some of the existing telehealth companies to offer it either in addition or as a complement to their GLP-1 products or as a separate stand-alone anti-aging at-home injection product. We expect that also to be somewhere in the middle of next year.

Okay. Great. That was actually going to be my next question. So I assume you're already in conversations with them. And I guess, are there multiple other telehealth platforms that you're talking to?

Yes.

Okay. Great. I guess just looking at Tru Niagen, I'm curious since the FDA's announcement on NMN, have you seen any change in purchasing behavior by consumers, I guess, in your own products, whether that's higher or lower or just changed behavior at all since the announcement? Or do you think it was really kind of a nonevent?

Yes. It's only been 5 or 6 weeks, and we haven't noticed anything yet. We've seen basically the sellers that never stopped selling and continuing to sell it, maybe 1 or 2 new brands that we never heard of. None of the existing established reputable play by the rules brands have entered the space, probably mostly because they know that there's a very good chance that the FDA will reverse this reversal again and because there are patents. And most of the well-managed reputable companies in dietary supplements don't blatantly go against existing patents. The ones that play in the space, the main beneficiaries of that rule are these Chinese manufacturing companies. It's all coming out of China and the smaller earlier-stage dietary supplement companies that generally don't really care much about the rules anyway. And as you know, we've tested many of the existing NMN products on the market and very few of them actually met label claims. Some of them had actually no NMN at all. We think NMN has in its purest form, an ability to elevate NAD, not as well as Niagen, obviously, but it still does it. It's still an effective way to elevate NAD. But at this point in time, we're not seeing any meaningful impact from the change in that rule.

Your next question is from the line of Raj Selvaraju with H.C. Wainwright.

Hear me?

Yes, we got you.

Sorry about that. A couple of technical difficulties. Just wanted to ask about two aspects here. Firstly, I wanted to see if you would be in a position at this juncture to elaborate on the possibility of establishing a stand-alone entity to pursue pharmaceutical Rx applications of nicotinamide riboside, particularly in the context of Parkinson's disease, but not limited to Parkinson's disease. And if you could maybe talk through some of the key decision-making factors that are likely to influence the timing and the nature of the manner in which you might go about establishing a stand-alone entity or venture to pursue those initiatives.

Thank you. It is likely that we will set up a stand-alone entity to manage the pharmaceutical pursuits. As you know, the two primary indications at this point are Parkinson's disease and ataxia, AT, telangiectasia. There are other disease indications for which we've been doing studies. Some have been early stage have been published, others are ongoing. But at this point, we're waiting for some of these studies to be completed so that we can see the results. And we've had conversations with a number of pharma companies. And I think that the results of those studies and the results of those discussions will dictate when we exactly set up that separate entity and put all those rights into that entity. We might begin segment reporting in the next quarter or two.

That's very helpful. I wanted to ask more broadly about your thoughts on the applicability of Niagen Plus, specifically Niagen Plus IV, in relation to the increasing availability of GLP-1 medications and the ongoing presence of compounded versions of those drugs. Additionally, could you quantify how large the segment is, considering you mentioned in your press release that the product is available in over 1,000 clinics? It would be great to get an idea of the total number of clinics the product could potentially reach and the time frame for achieving steady-state maximum penetration in this segment.

We view that segment as consisting of two main groups, which have further subgroups. One group is the injection market and the other is the IV market, each being distinct. The IV product is capable of delivering a much higher dose, while the injection market delivers smaller doses directly into the bloodstream, usually over time. We believe that both injections and IV treatments are accessible in clinics, estimating there are about 2,000 to 3,000 IV or wellness clinics across the U.S. Additionally, many thousands of physicians perform NAD IVs or injections in their offices. This is part of why we partnered with a third-party company to reach these physicians' practices for administering IVs and injections. Between both markets, we also see the potential for a third market related to Botox clinics, which could involve around 10,000 individual offices in the clinic sector, encompassing both IVs and injections. Pursuing this business differs significantly from the dietary supplement sector, despite using a similar molecule; it involves a pharmaceutical-grade molecule with unique supply chains, manufacturing, and approval processes. We've also applied for support patents in the Niagen Plus business and our supplement lines. When we entered this market, we hadn't anticipated the at-home injection market for GLP-1s, which took us about five years to reach our current position in that area. We've now recognized that millions are interested in self-injecting to manage their weight, and we hope many will also prefer self-injecting to remain youthful or to complement the GLP-1 products. Currently, the injection market seems to be a much larger potential market compared to the clinic or IV markets. Another aspect we underestimated was the telehealth sector, which we started exploring before COVID. This market is expanding rapidly and offers consumers integrated physician prescriptions alongside convenient and affordable medications delivered to their homes, which presents a significant opportunity for Niagen. Players in both the telehealth and clinic markets seem to acknowledge this potential too. However, a challenge we've encountered involves a partner in the compounding pharmacy sector who produces Niagen and sells it at a high price to clinics, which then mark it up even more for consumers. Consequently, the current consumer prices for these IVs are quite steep, positioning them akin to a luxury product. We believe until prices decrease to more reasonable levels, the volume won't reach its potential. Right now, our pharmaceutical ingredient business related to Niagen Plus isn't substantial, and we don't expect significant growth until two things happen: first, the injection market, particularly in telehealth, adopts it, and second, the overall pricing in clinics and physician offices decreases significantly.

Your next question is from the line of Sean McGowan with ROTH Capital Partners.

A couple of questions. Maybe first, circling back on the impact of the FDA decision you've talked a little bit about it not apparently having much impact. But has there been any discussion with customers about pricing in any way? Is it having any impact on your ability to hold price where it is?

So you mean the FDA decision on NMN? Most of them understand that those companies are not really that interested in anything other than Niagen. They're always asking us to cut our prices, though, regardless of there's FDA or not. So...

Why waste a good crisis, right?

Exactly.

Yes. The gross margin in the quarter was largely influenced by the remaining lower-cost inventory and an improved product mix. Once we clear out that lower-cost inventory, we expect it to normalize. However, we have also raised our outlook; it was previously a slight improvement, and we are now anticipating a better performance than last year, although we cannot specify a percentage.

At this time, there are no further questions. I will now hand the call back over to our presenters for closing remarks.

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

This concludes today's call. Thank you for joining. You may now disconnect your lines.