ChromaDex is betting hard on its flagship ingredient, Niagen, a branded form of nicotinamide riboside, which itself is a form of vitamin B3. Development costs for the ingredient along with lower sales were the prime reasons for the company’s renewed losses, Jaksch said.
In the earnings statement posted earlier this month, ChromaDex reported net sales of $5.0 million, a decrease of 20% as compared to $6.3 million for the third quarter of 2015. The ingredients segment generated net sales of $2.7 million for Q3 2016, a decrease of 36%, compared to $4.1 million for Q3 2015.
The core standards and services segment posted sales of $2.1 million for Q3 2016, an increase of 9% as compared to $1.9 million for Q3 2015. Net sales for the scientific and regulatory consulting segment, which had struggled recently, were $292,000, an increase of 10% as compared to $265,000 for Q3 2015. The scientific and regulatory consulting segment was able to complete more consulting projects for customers during the quarter.
Jaksch said that volatility in sales results is to be expected in the early stage of ingredient development, as ChromaDex is with Niagen.
Sales hiccup
“Given our early stage and market development for Niagen and are our current high concentration of sales to a small number of early adopting customers. Some fluctuation in quarterly sales of Niagen is to be expected. If you remember, this isn't the first time we've had variability in our quarterly revenue as the same thing happened last year in the fourth quarter,” Jaksch said in an earnings call with analysts.
Operating loss for Q3 2016 was $947,000, as the ChromaDex incurred $773,000 in research and development expenses for Q3 2016, an increase of 310%, compared to $189,000 for Q3 2015. ChromaDex said this steep increase is a planned part of the company’s long term strategy. As a result, net loss attributable to common stock holders for Q3 2016 was ($954,000) or ($0.03) per share as compared to a net loss of ($4,000) or ($0.00) per share for Q3 2015.
The company’s stock price continues to languish below $3 a share, trading at $2.60 yesterday. This is far off the company’s 52-week high point of $5.76 back in June, before the company had a run-in with a short-selling financial blogger. The stock plunged, then recovered somewhat, but then began a steady decline to where it stands today. Jaksch said part of the issue is that the company has chosen to fly under the radar somewhat as far as analysts are concerned, a strategy that has helped the company raise money at a lower cost but which has limited the “buzz” about the company in the markets.
“We're growing faster than our peers, and we're currently trading at a lower multiple than our peers. We’ve raised less money than our peers, and we have less debt than our peers. So, yeah, if you want my opinion of whether or not the stock is undervalued based on just simple fundamentals, absolutely,” Jaksch said.
Drug development
ChromaDex has continued to develop potential pharmaceutical applications for Niagen. The company has announced plans to a IND application on Niagen and to that end has completed a pre-IND meeting with the Food and Drug Administration. The IND will pertain to the use of Niagen to treat children suffering from Cockayne Syndrome, an orphan disease, is a rare fatal autosomal recessive neurodegenerative disorder characterized by growth failure, impaired development of the nervous system, abnormal sensitivity to sunlight (photosensitivity), eye disorders and premature aging.