Niagen Bioscience, Inc.

Hello, my name is Aisha and I will be your conference operator today. At this time, I would like to welcome everyone to the Chromadex second quarter 2023 conference call. All lines have been placed on mute to prevent any background noise after the speaker's remarks. There will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Press the star, followed by one again. Thank you, Kendall Kanish. You may begin your conference.

Thank you. Good afternoon, and welcome to Chromadex Corporation's second quarter 2023 results investor call. With us today are Chromadex's Chief Executive Officer, Rob Freed, Chief Financial Officer, Brianna Gerber, and Senior Vice President of Scientific and Regulatory Affairs, Dr. Andrew Hsiao, who will join in the call for Q&A. Today's conference call may include forward-looking statements, including statements relating 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, business development opportunities, future financial results, cash needs, operating performance, investor interests, 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 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 changes in its expectations. In addition, certain of the financial information presented in this call references non-DAP 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 gap 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 is now my pleasure to turn the call over to our Chief Executive Officer, Rob Freed.

Thanks, Kendall. Good afternoon, everyone, and thank you for joining us on today's investor call. We delivered another strong quarter with $20.3 million in revenue, a 21% increase year over year, positive adjusted EBITDA of $200,000, and positive operating cash flows of $3 million. For the first half of the year, revenues were up 26%, and we generated $6 million of cash flow from operations. We ended the second quarter with $26.4 million in cash and no debt. This marks the third consecutive quarter of revenues over $20 million and demonstrates our ability to deliver cash flow breakeven on a consistent basis. Our e-commerce business remains our largest and most consistent source of revenue. E-commerce net revenue was up 8% year-over-year in the second quarter as we focused on profitable growth. Specifically, we retargeted consumers who searched our true nitrogen brand during the Amazon homepage takeover last quarter while reducing top-of-the-funnel spend on that channel. Compared to last year, we have significantly reduced spend on search and social while revamping our creative campaigns and website landing pages. For the total company, sales and marketing expense was 29.6% of net revenues, which was down sequentially and a significant reduction from 47.9% in the prior year quarter. While we are pleased with the progress and adjustments made to date, we continue to look for ways to optimize our overall marketing investments with a focus on efficiency. Watson's remains a valued strategic partner. with second quarter revenues of $3 million, double the prior year period. They recently launched TrueNiogen Immune in Hong Kong with a robust marketing campaign in-store and online. Early sell-through is positive. Loyal TrueNiogen consumers are resonating with the concept of stacking, which involves combining TrueNiogen with TrueNiogen Immune and or TrueNiogen Beauty. especially in light of the increased awareness surrounding the importance of bolstering immune defenses during COVID-19 pandemic. Watson's also reported strong sell-through for our core TruNiagen product on the back of a new influencer campaign featuring a well-known award-winning actress in Hong Kong. Rounding out the portfolio, TruNiagen Beauty was awarded the Best Beauty Anti-Aging Supplement and Best Beauty Supplement for Skin, Hair, and Nails by Watson's at their 2023 awards ceremony. Outside of Hong Kong, Watson's China has been partnering with Sinopharm to expand sales in that region through cross-promotions and campaigns. China remains a strategically important market for Chromadex beyond the existing cross-border business, and we are redoubling our efforts on Blue Hat approval to sell Trunage in-country, which is taking longer than anticipated. China Farm and Watson's have a combined retail footprint of nearly 15,000 stores in China, and we fully recognize the importance of capturing this tremendous market opportunity. Additionally, I'd like to highlight one of our new strategic partners, iHerb, whose sales of TruNiagen are off to a solid start. As the number one platform for supplements worldwide, iHerb offers the best brands in the industry and established a strong international presence with nearly 90% of sales generated outside the United States. Of note, iHerb has 10 million active subscribers across more than 180 countries. By partnering with the leading e-commerce retailer in the health and wellness space, including its extensive distribution network and marketing budget, we aim to complement our own e-commerce business and expand our global reach. Our nitrogen ingredient business grew by 72% year over year in the second quarter. This was driven by strong trends for our longtime partner Life Extension, whose specialty retail expansion strategy has recently gained momentum. While not a large contributor to the current quarter results, H&H has future expansion plans for Niagen in its portfolio, and we continue to work with Nestle on their first multi-ingredient Niagen supplement launch later this year. Importantly, our business development pipeline continues to grow. Supported by Chromadex's reputation as the global authority in NAD and TruNiagen's reputation as a trusted brand. There's growing awareness of the importance of NAD in human health as we age. This began with the scientific community as evidenced by the over 100 published preclinical studies and 27 published clinical studies on nicotinamide riboside or Niagen. as part of our Chromadex External Research Program, CERP, which celebrated over a decade of award-winning excellence in uncovering the full potential of NAD through Niogen. We value and encourage strong scientific rigor behind our products, and our relationships with academic institutions help make this happen. CERP has produced over 70% of registered, ongoing, or completed NR trials listed on clinicaltrials.gov using Niogen, which is a testament to the tremendous value of this program. Last month, an article in Science Advances reviewed the body of published peer-reviewed clinical studies on NR over the last 10 years, concluding that nicotinamide riboside may play a role in the reduction of inflammatory states and has shown potential in the treatment of severe diseases in humans. Specifically, the authors found that NR was consistently shown to increase NAD and related metabolites in whole blood and occasionally in white blood cells. We agree the collection of clinical studies published to date demonstrate great consistency with respect to oral NR supplementation to boost whole blood NAD levels and reduce inflammation, a known risk factor for many age-related diseases. The NR research to date is exciting progress for a novel ingredient and follows the research path of other proven blockbuster ingredients, which typically begin with a series of preclinical studies followed by extensive clinical safety studies. We hope this article on the state of NR research serves as a call to action for researchers to further advance the science. We continue to support NR research through SERP, and there are over 40 additional clinical studies underway. At Chromadex, upholding scientific integrity to the highest standards is of paramount importance. As a testament to this commitment, over 95% of studies conducted via SERP are entirely independent, investigator-initiated, and funded by third parties. By adopting this approach, we foster a significant level of trust in the research, in contrast to the skepticism around industry-funded research in the dietary supplement industry. Of note, an independent article by Labiotek, the leading online media outlet for the biotech industry in Europe, named clinical research published on NR in Parkinson's and Alzheimer's disease through SERP among the top recent scientific advances in those diseases over the past year. Additionally, an article in Alzheimer's and Dementia Weekly titled B3 Blocks Alzheimer's Boosts Memory and Mood also mentioned NR. It's a true testament to the work SERP is doing to uncover the full potential of Niagen that our ingredient has been featured alongside promising therapeutics for consumers suffering from these diseases. At Chromadex, NAD is in our DNA. Through SERP, we support the research behind Niagen, the most efficient NAD precursor on the market, and have developed a deep intellectual property portfolio to protect our competitive position. We knew early on that rolling out our products to global markets with the mission to improve as many lives as possible was a priority for us and wanted an IP portfolio to match that. Two of our scientists were recently featured in Longevity Technology in an article titled, A Strong Patent Portfolio Delivers a Competitive Edge in the Longevity Space. The article discussed Chromedex's impressive array of over 60 owned or licensed patents protecting Niagen and other related NAD precursors. These include a range of the key patents including methods of manufacturing, methods of use, and composition of matter patents. The latter among the strongest and most enforceable patents both domestically in the U.S. and internationally in markets such as China, Europe, Australia, and Canada. Collectively, these patents provide strong protection for NR through the next decade, allowing Chromadex to launch future innovations with confidence in the moat around our business. And to remain a trusted leader in the NAD space, we feel it's important to defend the inventions that we've worked so diligently to protect and take action to prevent infringement. Recently, we've seen awareness of the benefits of NAD supplementation and other delivery mechanisms like IV therapy for overall healthy aging has extended to more consumers. Just last month, there were four articles mentioning TruNiogen in the context of healthy aging supplements, including popular media outlets such as Time Business News and Harper's Bazaar UK, with almost 50 such editorial mentions in 2023 to date. One of these was a piece in Eat This, Not That, the world's number one nutrition website, and one of the top five food media outlets in the U.S. discussing how celebrities such as Kendall Jenner and Hailey Bieber flipped to NAD boosting to prevent aging. The article focused on NAD IV therapies showcased that NAD IV can be uncomfortable and take hours to inject and highlighted TruNiagen for those who preferred an alternative and accessible NAD supplement. The same publication later ran an article about celebrities who are biohacking to live longer, which featured our longtime true believer, Brooke Burke, discussing the benefits of elevating NAD with true nitrogen as we age. While overall awareness and sales in NAD products are growing, one NAD supplement, NMN, was banned by the US FDA. Reputable retailers, including Amazon and Walmart, are no longer selling NMN. Yet, certain NMN companies continue to sell on their own websites. Consumers should carefully consider if they want to buy a supplement from a company that is knowingly selling an illegal product in the United States. In contrast, Niagen, the ingredient in true Niagen, stands apart with third-party testing, extensive safety data, compliance with proper regulatory notifications, and its superior efficiency as a precursor compared to NMN. Data continue to accumulate, which reinforce what we've known for years, that when NMN is supplemented, it cannot directly cross the cell membrane and must be first converted into NR. This was once again demonstrated in a recent publication from the group led by the late Anthony Sabe, which demonstrated that isotopically labeled NMN administered to mice is converted to nicotinamide riboside and nicotinamide before being utilized for NAD synthesis. This is the latest in an expanding list of studies that showed definitively NMN must be converted to NR, and NR is thus superior. Importantly, NR or Niagen is readily available today, legally, for consumers who want to elevate NAD levels. We are seeing some benefit on our sales from the removal of NMN on a platform like Amazon, but the shift to direct sales by NMN companies is currently still limiting the upside potential. As we look to the future, we see several near-term opportunities to extend our market. We have diligently worked on several initiatives that are expected to materialize later this year or early next year, and they represent the culmination of years of effort. Our overarching mission as the NAD company is to improve as many lives as possible. This mission extends beyond human health and nutrition through supplementation into new categories and new precursors. All of these market expansion opportunities are supported by the foundation we have built over the last 10 years as the global authority in NAD science and a trusted partner to leading researchers and regulatory authorities. We look forward to sharing more on future updates. And I would now like to turn the call over to Brianna to discuss the quarter's results in more detail, and then on to Q&A and closing remarks. Brianna?