ChromaDex Corporation

Ladies and gentlemen, thank you for standing by and welcome to Chromadex Corporation's first quarter 2021 earnings conference call. My name is Stephanie 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 first quarter of 2021. If you have not reviewed this information, both are available within the investor relations section at Chromadex's website at www.chromadex.com. I would now like to turn the conference over to Brianna Gerber, Vice President of Finance and Investor Relations. Please go ahead, Ms. Gerber. Thank you. Good afternoon and welcome to Chromadex Corporation's first quarter 2021 results investor call. With us today are Chromadex's Chief Executive Officer, Rob Freed, Founder and Executive Chairman, Frank Jacks, and Chief Financial Officer, Kevin Farr. Today's conference 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 TruNiagen in new markets, future financial results, business development opportunities, future cash needs, Chromadex's operating performance in the future, and future investor interests that are subject to risks and uncertainties relating to Chromadex's future 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 report on Form 10-Q, most recently filed with the SEC, including the effect of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows. 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 of the 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 and 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 at www.chromadex.com. With that, it's now my pleasure to turn the call over to our Chief Executive Officer, Rob Fried. Rob?

Thank you, Brianna. Good afternoon, everyone, and thank you for joining our first quarter 2021 investor call. This has been a very exciting time strategically for Chromadex. In the past few months, we added $25 million to the balance sheet. We announced important scientific research findings. We concluded three tentpole agreements with Walmart, H&H Group, and with Rho. and we added a talented chief marketing officer in Fadi Karan. Demand for TruNiagin continues to be strong and growing, but we did experience some supply chain issues that delayed shipments to Watsons in Hong Kong. Those issues have now been remedied and the future prospects look very good. Total company net sales for the quarter were $14.7 million. E-commerce sales continued to grow and were up 17% over the pre-COVID first quarter of 2020. Our gross margins were approximately 63%. And first quarter adjusted EBITDA, which we define as EBITDA excluded legal expense, was a loss of 0.7 million, a 0.4 million improvement from the prior quarter. The science behind Niagen continues to grow, validating its importance in several areas of human health. Frank will discuss this in a moment. But we have now signed over 230 research collaboration agreements on Niagen that we estimate represents over $75 million of investment funded by leading external research institutions, not by Chromadex. We will continue to support the growing scientific evidence behind Niogen, of course. But importantly, we will also continue to fiercely protect our intellectual property against infringers who see an opportunity to build their businesses on the back of our scientific and regulatory accomplishments. We encourage you to read last week's ruling from the federal judge in the California case against Elysium Health. The detail in the court order signals in part what the jury will hear at trial and reflects the behavior and character of our opponents. As we have said previously, Chromadex is proud to be in business with exceptional strategic partners like Nestle Health Science, and we are now proud to include H&H Group and Roe. H&H Group is a global leader in premium health, also human and pet nutrition, as well as personal care. Niagen will be available in the Swiss product, which is Australia's number one wellness brand and the number one brand on China's major cross-border e-commerce platforms, according to H&H's 2020 annual report. The exclusively formulated Niagen products will be the first NAD boosters in the Swiss portfolio and will expand their healthy aging category. H&H has already begun product developments and is enthusiastic about the potential for knowledge in their portfolio. And we look forward to sharing more about this in the future. Roe is a healthcare technology company that has built an impressive patient-centric platform to deliver a personalized end-to-end healthcare experience. Since 2017, Roe has facilitated more than 6 million digital healthcare visits in nearly every county in the United States. road plans to offer TruNiagen in a specially formulated product under its Roman brand. Last quarter, we announced that TruNiagen would be available in 3,000 Walmart stores in June. Walmart has since expanded the store count for our lower-dose, more accessibly-priced SKU to over 3,800 stores, signaling their commitment to the launch and to expanding their NAD supplements category with TruNiagen. An important development this quarter was the hiring of a talented chief marketing officer, Fadi Khurram. He complements our existing team's capabilities in digital marketing, creative earned media and marketplaces. Fadi brings deep brand building experience across traditional retail as well as e-commerce platforms. Prior to joining Chromadex, Fadi led the local brand portfolio for Nestle Waters North America with over $3 billion in annual revenues. He previously was in charge of the global Kit Kat brand, also at Nestle. Scotty is already an important contributor in our next phase of development, centered on building this great global brand. I'm increasingly optimistic about the future for Chromadex. Demand for true nitrogen is strong and growing. We have an experienced leadership team in place that knows how to scale this business. We have more deals in the pipeline. And we are continuing to think globally. And with that, I will pass the call over to our chairman, Frank Jacks, for an update on scientific research.

Frank? Thank you, Rob. As I mentioned in our last call, the research on nicotinamide riboside, or NR, continues to extend to important areas of human health. Since our last update, Chromadex deepened its connections with scientific experts in the field of NAD research and partners through its external research program with leading institutions to explore important areas of research on NR. In March, we announced the new research initiative with the Citrin Foundation to study the effects of NR in citrin deficiency. This is a rare life-threatening genetic disorder that can cause failure to thrive in children or later in life, causing a host of neurological problems, hyperlipidemia, and severely impaired liver function. The first study will be led by scientists at Duke University and the National University of Singapore. While there are no known cures, we understand that citrin deficiency impairs mitochondrial function and disrupts the NAD system. We are committed to understanding the role NR supplementation could play in this understudied disorder. Two new clinical studies registered in March, both investigating the potential impact of NR on patients with or recovering from COVID-19. First, A randomized placebo-controlled clinical study to investigate the impact of NR supplementation in 100 patients with persistent cognitive and physical symptoms at least two months after COVID-19 illness was registered. These long haulers will be studied by Dr. Edmarie Guzman-Velez at Harvard Medical School and Mass General Hospital. Researchers will assess how NR supplementation affects cognitive and neuropsychiatric, and physical function over a period of 22 weeks. We believe that it is important to deepen our understanding of the potential nutritional solutions to manage long haulers, and we look forward to the results from this new study. In addition, a clinical study was registered by the University of Texas Health Science Center at San Antonio. The study will measure the effect of NR on whole blood NAD levels and evaluate safety of supplementation in hospitalized patients with COVID-19 and acute kidney injury. It will include 100 participants who will be given a daily dose of 1,000 milligrams of NR for 10 days. Both studies are part of our Chromadex external research program. In reviewing the broader category of NAD precursors, a second clinical study on NMN was published in April in the journal Science entitled, Nicotinamide Mononucleotide Increases Muscle Insulin Sensitivity in Prediabetic Women. We believe there is a significant limitation with this study that calls into question the scientific validity of its conclusions, and we will follow up when appropriate. NMN remains inferior to NR across the board regarding published human science, regulatory approvals, and benefit to human health worldwide. I continue to believe that 2021 is shaping up to be an exciting year for Chromadex. Several clinical studies on NR have been recently completed, are in peer review, including studies examining NR's impact on muscle, cognitive, and liver function. Chromadex is committed to remaining a world leader in NAD and NR research, which has recently expanded to important areas of human health with large addressable markets. With that, I'll pass the call to Kevin Farr. Kevin?