Item 1. Business
Item 1. Business
Unless otherwise indicated or the context otherwise requires, references to the Company, ChromaDex, we, us and our refer to ChromaDex Corporation and its consolidated subsidiaries.
Company Background
On May 21, 2008, Cody Resources, Inc., a Nevada corporation and a public company, (Cody) entered into an Agreement and Plan of Merger (Merger Agreement), by and among Cody, CDI Acquisition, Inc., a California corporation and wholly-owned subsidiary of Cody (Acquisition Sub), and ChromaDex, Inc. (Merger). Subsequent to the signing of the Merger Agreement, Cody merged with and into a Delaware corporation. On June 20, 2008, Cody amended its articles of incorporation to change its name to ChromaDex Corporation. ChromaDex Corporation was traded on the over-the-counter market under the symbol “CDXC.” On April 25, 2016, ChromaDex Corporation became listed on the Nasdaq Capital Market under the symbol “CDXC.”
ChromaDex, Inc., a wholly owned subsidiary of ChromaDex Corporation, was originally formed as a California corporation on February 19, 2000.
On March 12, 2017, ChromaDex Corporation acquired Healthspan Research LLC, a consumer product company offering TRU NIAGEN® branded products. This marked the strategic shift to become a global bioscience company dedicated to healthy aging. On September 5, 2017, the Company completed the sale of its operating assets that were used with the Company’s quality verification program testing and analytical chemistry business for food and food related products to Covance Laboratories Inc. On January 15, 2021, Healthspan Research LLC was dissolved. Prior to its dissolution, Healthspan Research, LLC contributed its assets and liabilities to ChromaDex, Inc.
Company Overview
ChromaDex is a global bioscience company dedicated to healthy aging. Our team, which includes world-renowned scientists, is pioneering research pertaining to nicotinamide adenine dinucleotide (NAD+) which is found in every cell of human bodies and levels of which decline with age.
NAD+ is an essential coenzyme, a key regulator of cellular metabolism and is required for mitochondria to function efficiently. Best known for its role in cellular energy production, NAD+ is now thought to play an important role in healthy aging. Many cellular functions related to health and healthy aging are sensitive to levels of locally available NAD+ and this represents an active area of research in the field of NAD+.
NAD+ levels are not constant, and in humans, NAD+ levels have been shown to decline by more than 50% from young adulthood to middle age. There are other factors linked to NAD+ depletion, including poor diet, excess alcohol consumption and a number of disease states. NAD+ levels may also be increased, including through calorie restriction, moderate exercise and supplementation with NAD+ precursors, such as nicotinamide riboside (NR). Healthy aging, mitochondrial health and NAD+ continue to be areas of focus in the research community. To date, there are over 450 published human clinical studies related to NAD+ and its impact on health. Areas of study include understanding NAD+’s role in Alzheimer’s disease, Parkinson’s disease, neuropathy, sarcopenia, liver disease and heart failure.
In 2013, we commercialized NIAGEN®, a proprietary form of NR, a novel form of vitamin B3. Data from numerous preclinical studies, and confirmed in human clinical trials, show that NR is a highly efficient NAD+ precursor that significantly raises blood and tissue NAD+ levels. NIAGEN® is safe for human consumption. NIAGEN® has twice been successfully reviewed under the United States (U.S.) Food and Drug Administration’s (FDA) new dietary ingredient (NDI) notification program, it has been successfully notified to the FDA as generally recognized as safe (GRAS), and has been approved by Health Canada, the European Commission and the Therapeutic Goods Administration of Australia. Clinical studies of NIAGEN® have demonstrated a variety of outcomes including increased NAD+ levels, altered body composition, increased cellular metabolism and increased cellular energy production. NIAGEN® is protected by patents to which we are the owner or have exclusive rights.
ChromaDex is among the world leaders in the emerging NAD+ space. We have amassed more than 245 research partnerships with leading universities and research institutions around the world including the National Institutes of Health, Cornell, Dartmouth, Harvard, Massachusetts Institute of Technology, University of Cambridge and the Mayo Clinic. Additional relationships are currently being developed.
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Our scientific advisory board is led by Chairman Dr. Roger Kornberg, Nobel Laureate Stanford Professor, Dr. Charles Brenner, one of the world’s recognized experts in NAD+ and discoverer of NR as a NAD+ precursor and chair of the Department of Diabetes & Cancer Metabolism at the City of Hope National Medical Center, Dr. Rudy Tanzi, the co-chair of the department of neurology at Harvard Medical School, Sir John Walker, Nobel Laureate and Emeritus Director, MRC Mitochondrial Biology Unit in the University of Cambridge, England, Dr. Bruce German, Chairman of food, nutrition and health at the University of California, Davis, Dr. Brunie Felding, Associate Professor, Department of Molecular Medicine at Scripps Research Institute, California Campus, and Dr. David Katz, the Founder and former director of Yale University’s Yale-Griffin Prevention Research Center; President and Founder of the non-profit True Health Initiative; and Founder and Chief Executive Officer of Diet ID, Inc.
STRATEGIC SHIFT TO GLOBAL CONSUMER PRODUCT COMPANY
In 2017, ChromaDex made the strategic decision to commercialize TRU NIAGEN® as a consumer brand for the product containing NIAGEN® ingredient. This marked our strategic shift from an ingredient testing company to a global bioscience company dedicated to healthy aging.
We began the international expansion of our TRU NIAGEN® brand with the launch in Hong Kong and Macau with our strategic partner, A.S. Watson Group, in 2017, followed by the launch in Singapore in 2018. In 2018, we also launched TRU NIAGEN® in New Zealand with retail partner Matakana Superfoods as well as in Canada by making it available at www.truniagen.ca and to healthcare practitioners at Fullscript Canada after receiving regulatory approval for sale as a natural health product from Health Canada. In 2019, we received approval from the Australian Therapeutic Goods Association (TGA) for use in listed complementary medicines. With TGA approval we extended our partnership with our New Zealand partner, Matakana Superfoods, to also include Australia. In 2020, we received approval of NR as a novel food ingredient for use in food supplements from the European Commission, which followed a positive opinion from the European Food Safety Authority in 2019. We are currently selling on Amazon in Canada, Japan, the United Kingdom, Germany, France, Italy, Spain, Poland, Netherlands and Sweden and selling cross-border in China on Tmall, JD.com and Wechat. Additionally, in June 2021, we began distributing Tru Niagen® in 3,800+ U.S. Walmart stores. We continue to focus on expanding marketing and distribution of our TRU NIAGEN® brand in new strategic international markets, domestic channels, and secure regulatory approvals needed to accomplish the same.
INGREDIENTS AND ANALYTICAL REFERENCE STANDARDS AND SERVICES BUSINESS SEGMENTS
Through our ingredients business segment, we will continue to sell NIAGEN® in ingredient form to our strategic partners, including Nestec Ltd. (Nestlé), a global leader pioneering quality science-based nutritional health solutions. In 2018, we entered into a supply agreement with Nestlé, pursuant to which Nestlé is our exclusive customer for NIAGEN® for human use in the (i) medical nutritional and (ii) functional food and beverage categories in certain territories. As consideration for the rights granted to Nestlé, we received an upfront fee of $4.0 million. In 2020, we received an additional one-time fee of $1.0 million, following the launch of the products in the United States.
We are a leading provider of research and quality-control products and services to the natural products and life science industries. Through our analytical reference standards and services segment, customers worldwide in the dietary supplement, food and beverage, cosmetic, pharmaceutical, and life science industries use our products, which are small quantities of highly-characterized, research-grade, plant-based materials, to ensure the quality of their raw materials and finished products. We have conducted this analytical reference standards and services business since 1999.
For the years ended December 31, 2021 and 2020, our net sales were approximately $67.4 million and $59.3 million, respectively. The following table summarizes total net sales for each of our business segments in the last two years. Please refer to Item 8 Financial Statements and Supplementary Data of this Form 10-K for additional financial information about each of our business segments.
Year Ended December 31,
(In thousands) 2021 2020
Consumer Products Segment $ 56,705 $ 47,090
Ingredients Segment 7,407 9,198
Analytical Reference Standards and Services Segment 3,337 2,969
Total net sales $ 67,449 $ 59,257
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Business Market
According to the data from Global Wellness Institute, the global wellness industry market was approximately $4.4 trillion in 2020 amidst the disruptions of COVID-19, which is down from $4.9 trillion in 2019. In 2020, the Personal care, beauty and anti-aging market was approximately $960 billion, healthy eating, nutrition and weight loss was approximately $950 billion and traditional and complementary medicine market was approximately $410 billion. The Global Wellness Institute projects the overall wellness economy to grow approximately 10% annually, or 60% in total, from 2020 to 2025, with most segments projected to exceed GDP growth.
According to the data from Grand View Research, the global dietary supplements market size was estimated at $140 billion in 2020, and is expected to grow at a compound annual growth rate of 8.6% to about $271 billion by 2028.
Business Model
CONSUMER PRODUCTS SEGMENT
Our principal objective is to sell and increase awareness of TRU NIAGEN® to consumers worldwide. As one of the world leaders in the emerging NAD+ space and the science of healthy aging, we continuously strive to evolve our TRU NIAGEN® products with the aim of potentially improving consumers health by safely raising NAD+ levels. Further, we seek to continue exploration, discovery and enhancement of patented technologies. The TRU NIAGEN® brand is built on scientific evidence, trust and the direct impact to our consumers of aging better.
We intend to expand to the worldwide NAD+-related healthy aging market by entering into new international markets. We maintain our focus of obtaining additional regulatory approvals required to expand marketing and distribution efforts of our TRU NIAGEN® products in new international markets. We will utilize our proprietary e-commerce platforms, and the e-commerce and brick and mortar platforms of strategic regional and local partners. Our U.S. based business will continue to support our global operations through the following:
• Corporate development and strategy
• Research and development activities
• Global premium brand management and brand guidelines
• Multi-platform global marketing campaigns and know-how
• Propriety e-commerce platform and data analytics
• Global manufacturing and supply chain operations management
We expect to continue to supply our international operations with finished products manufactured in the U.S, and to continue to provide all our marketing materials and know-how to our international strategic partners.
INGREDIENTS SEGMENT
We intend to continue to sell NIAGEN® in ingredient form to our strategic partners. In addition, we expect to continue to identify, acquire and commercialize other innovative new proprietary ingredients and technologies. We have an experienced team that is capable of advancing products through development into commercialization with the required regulatory approval, safety, toxicology, clinical trials, supply chain management, manufacturing, and ultimately either directly selling the products or licensing to third parties.
ANALYTICAL REFERENCE STANDARDS AND SERVICES SEGMENT
We have taken advantage of both supply chain needs and regulatory requirements to build our analytical reference standards and services segment. We believe we create value throughout the supply chain of the dietary supplements, functional foods, life science research, personal care markets and associated analytical testing laboratories. We intend to capitalize on additional opportunities in product development and commercialization of various kinds of intellectual property that we have largely discovered and acquired through the sales process associated with this segment.
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Products and Services Overview
Current products and services provided are as follows:
CONSUMER PRODUCTS
• TRU NIAGEN® branded dietary supplements. We currently offer our NIAGEN® NR through our TRU NIAGEN® finished bottles and TRU NIAGEN® Stickpacks. We will continue to build TRU NIAGEN® as a global brand and offer TRU NIAGEN® to consumers worldwide.
INGREDIENTS
• Nicotinamide riboside NIAGEN® . We intend to continue to develop and sell NIAGEN® in ingredient form to strategic partners.
• Spirulina Extract Immulina ® . IMMULINA® is a spirulina extract and the predominant active compounds are Braun-type lipoproteins which are useful for supporting human immune function. These lipoproteins are present at much greater levels than those found within commonly used immune enhancing botanicals such as Echinacea and ginseng.
ANALYTICAL REFERENCE STANDARDS AND SERVICES
• Supply of reference standards and fine chemicals. We supply a wide range of products necessary to conduct quality control of raw materials and consumer products. Reference standards are used for research and quality control in the dietary supplements, cosmetics, food and beverages, life science, and pharmaceutical industries. In addition, we provide research services for customers exploring the frontier of natural product research and development. We assist by providing unique and well-characterized natural products, in the format of botanical libraries or as requested on custom “Scope of Work” requests.
Major Customers
For the years ended December 31, 2021 and 2020, we had one major customer which accounted for more than 10% of our total net sales. A.S. Watson Group, a related party, accounted for approximately 13.8% and 13.0% of our net sales for the years ended December 31, 2021 and 2020, respectively.
Generally, we do not depend upon a single customer, or a few customers, and the loss of any one or more would not have a material adverse effect on the Company. However, due to the volume of consumer products and ingredients we are selling in relation to the overall Company’s sales, we do expect that at times one or more of our customers may account for more than 10% of the Company’s sales.
Impact of COVID-19
The worldwide outbreak of COVID-19 continues to drive global uncertainty and disruption, which has created headwinds for our business. Authorities have imposed, and businesses and individuals have implemented, numerous measures to try to contain the virus or treat its impact, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, store closures and reduced operating hours, and vaccine requirements. These measures have impacted and may further impact our workforce and operations and those of our respective suppliers and partners.
In particular, we have experienced, and could in the future experience, global supply chain delays including challenges with transportation, logistics and production lead-times, as well as labor shortages and cost inflation. In the first quarter of 2021, we experienced delays due to global components and packaging shortages for our consumer products across our supply chain. These challenges were addressed in the second quarter and we have otherwise not encountered any major disruptions in our supply chain. It is our intention to maintain adequate safety stocks to support our growth and we currently believe we have adequate inventory on hand to meet current demands. We will continue to monitor the situation closely as conditions may become more challenging due to ongoing and uncertain economic factors. Additionally, our sales to partners in international markets have been impacted by the effects of COVID-19.
Our primary focus throughout the COVID-19 pandemic has remained ensuring the health and safety of our employees through office closures or implementing enhanced safety protocols to ensure the well-being of our employees. We have adapted to the new environment and been able to successfully conduct business virtually.
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The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including the duration and severity of the pandemic; surges related to new variants; the actions taken to contain the virus or treat its impact; other actions taken by governments, businesses, and individuals in response to the virus and resulting economic disruption; and how quickly and to what extent normal economic and operating conditions can resume. Additional impacts and risks may arise that we are not aware of or able to respond to effectively. We are similarly unable to predict the extent of the impact of the pandemic on our customers, suppliers, and other partners, but a material effect on these parties could also materially adversely affect us. The impact of COVID-19 can also exacerbate other risks discussed in this Risk Factors section and throughout this report.
Sales and Marketing Strategy
For our consumer products segment, we employ a variety of strategies to drive sales and consumer awareness of TRU NIAGEN®, including social media and internet advertising, managing affiliate marketing, influencers, paid spokespersons and talent, events and trade shows, e-mail, paid search, distribution of research publications and press releases. We also have a customer care department that handles day-to-day communications with our end customers addressing any needs or concerns related to our TRU NIAGEN® product.
For our ingredients segment and analytical reference standards and services segment, our strategy is based on a direct, technically-oriented model. We recruit and hire sales and marketing staff with appropriate commercial and scientific backgrounds.
United States of America:
For our consumer products segment, we distribute our TRU NIAGEN® products direct to consumers through our propriety e-commerce platform TRUNIAGEN.com, Amazon, Walmart.com and other established internet marketplaces. In June 2021, we began distributing Tru Niagen® in 3,800+ Walmart stores across the U.S. We also have specialty retailers and direct healthcare practitioners who are authorized resellers of TRU NIAGEN® in the United States.
For our ingredients segment and analytical reference standards and services segment, we use a direct marketing approach in the United States. to promote our products and services.
International:
For our consumer products segment, we utilize strategic partners on a regional or local country basis to expand our distribution of TRU NIAGEN® products. Our strategic partnerships include brick and mortar, e-commerce channels or a combination of both. With our strategic partners, we currently distribute TRU NIAGEN® products to the following international markets:
• Hong Kong (A.S. Watson Group);
• Macau (A.S. Watson Group);
• Singapore (A.S. Watson Group);
• New Zealand (Matakana Superfoods);
• Canada (Amazon, Fullscript Canada and www.truniagen.ca);
• Australia (Matakana Superfoods);
• China (Tmall, JD.com and Wechat);
• Japan (Amazon);
• United Kingdom (Amazon);
• Germany (Amazon);
• France (Amazon);
• Italy (Amazon);
• Spain (Amazon);
• Poland (Amazon);
• Netherlands (Amazon); and
• Sweden (Amazon).
We continue to focus on obtaining additional regulatory approvals required to expand marketing and distribution of our TRU NIAGEN® brand in new strategic international markets.
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For our ingredients segment, currently our customers are primarily based in the United States and Europe.
For our analytical reference standards and services segment outside of the United States, we use international distributors to market and sell to several foreign countries or markets.
Sales and marketing expense for the years ended December 31, 2021 and 2020, were approximately $28.4 million and $20.9 million, respectively.
Research and Development
The ChromaDex External Research Program (CERP) is an essential component of our research and development platform. CERP was established to advance the science of nicotinamide riboside and other ChromaDex products. We value and encourage strong scientific rigor behind our products and have cultivated relationships with academic institutions in pursuit of this. Thus far, CERP has achieved over 245 research partnership agreements with leading universities and research institutions around the world including the National Institutes of Health, Cornell, Dartmouth, Harvard, Massachusetts Institute of Technology, University of Cambridge and the Mayo Clinic. Additional relationships are currently being developed.
To date, over 200 peer-reviewed studies have been published on the science behind NR, including its NAD+ boosting properties. CERP has produced more than 45% of all peer-reviewed NR-focused publications and 70% of the peer-reviewed clinical NR publications so far. To date, 20 peer-reviewed human clinical trials have been published on our proprietary ingredient NIAGEN® demonstrating its safety and/or efficacy through CERP. No adverse effects have been attributed to NIAGEN® in any of the published clinical trials. In both 2015 and 2018, NIAGEN® was successfully notified to the FDA as an NDI. NIAGEN® was also successfully notified to FDA as Generally Recognized as Safe in August 2016.
Through our research and development laboratory in Longmont, Colorado, we intend to develop and evaluate products that we plan to take to market as well as explore cost saving processes for existing products. Research and development costs for the years ended December 31, 2021 and 2020, were approximately $3.8 million and $3.4 million, respectively.
Working Capital
ChromaDex’s working capital as of December 31, 2021 and 2020 was approximately $8.4 million and $4.9 million, respectively. We measure working capital by adding trade receivables and inventories, and subtracting accounts payable. Our working capital is primarily comprised of assets and liabilities related to our consumer products segment and ingredients segment as the operations require a large amount of inventory on hand. As the consumer products segment and ingredients segment grow, more working capital will likely be needed to support the operations.
Government Regulation
Some of our operations are subject to regulation by various U.S. federal agencies and similar state and international agencies, including, but not limited to, the FDA, the Federal Trade Commission (FTC), the Department of Commerce, the Department of Transportation and the Department of Agriculture. These regulators govern a wide variety of production activities, from design and development to labeling, manufacturing, handling, selling and distributing of products. From time to time, federal, state and international legislation is enacted that may materially increase our cost of doing business or may limit or expand our permissible activities. We cannot predict whether or when potential legislation or regulations will be enacted, and, if enacted, the effect of such legislation, regulation, implementation, or any implemented regulations or supervisory policies would have on our financial condition or results of operations. In addition, the outcome of any litigation, investigations or enforcement actions initiated by state or federal authorities could result in required changes to our operations and increased compliance costs.
U.S. FDA Regulation
In the U.S., dietary supplements and food are subject to FDA regulations under the Federal Food, Drug and Cosmetic Act (FDCA). Areas addressed in these regulations include:
• product safety;
• product testing;
• ingredient testing;
• documentation process, batch records, specifications;
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• product labeling;
• manufacturing facility registration;
• product manufacturing and storage;
• product claims, advertising and promotion;
• product sales and distribution; and
• product post-market surveillance.
The FDCA has been amended several times with respect to dietary supplements, most notably by the Dietary Supplement Health and Education Act of 1994 (DSHEA). DSHEA established a new framework for governing the composition and labeling of dietary supplements. Generally, under DSHEA, dietary ingredients that were marketed in the U.S. before October 15, 1994, may be used in dietary supplements without notifying the FDA. However, an NDI (a dietary ingredient that was not marketed in the U.S. before October 15, 1994) is subject to an NDI notification that must be submitted to the FDA unless the ingredient has previously been “present in the food supply as an article used for food” without being “chemically altered.” An NDI notification must provide the FDA with evidence of a “history of use or other evidence of safety” establishing that the use of the dietary ingredient “will reasonably be expected to be safe.” An NDI notification must be submitted to the FDA at least 75 days before the initial marketing of the NDI. There can be no assurance that the FDA will accept the evidence of safety for any NDIs that we may want to commercialize, and the FDA’s objection to such evidence could render products containing such dietary ingredients to be adulterated. The FDA is in the process of finalizing guidance for the industry that will aim to clarify the agency’s interpretation of the NDI notification requirements, and this guidance may raise new and significant regulatory barriers for NDIs.
For any new ingredient developed by us to be used in conventional food or beverage products in the U.S., the product either must be approved by the FDA as a food additive pursuant to a food additive petition or be generally recognized as safe (GRAS). The FDA does not have to approve a company’s determination that an ingredient is GRAS. However, a company can voluntarily notify the FDA of its own self-determination. There can be no assurance that the FDA will approve any food additive petition for any ingredient that we may want to commercialize, or agree with our determination that an ingredient is GRAS, either of which could impact the marketing of such ingredient.
U.S. Advertising Regulations
In addition to FDA regulations, the FTC regulates the advertising of dietary supplements, foods, cosmetics, and over-the-counter drugs. In recent years, the FTC has instituted numerous enforcement actions against dietary supplement companies for failure to adequately substantiate claims made in advertising or for the use of false or misleading advertising claims. These enforcement actions have often resulted in consent decrees and the payment of civil penalties, restitution, or both, by the companies involved. We may be subject to regulation under various state and local laws that include provisions governing, among other things, the formulation, manufacturing, packaging, labeling, advertising and distribution of dietary supplements, foods, cosmetics and over-the-counter drugs.
Additionally, state attorney's general and private plaintiff attorneys also regulate the advertising of dietary supplements, foods, cosmetics, and over-the-counter drugs through enforcement of state consumer protection laws. State attorney’s general and, to a larger extent, private lawyers specializing in consumer class action litigation have instituted numerous enforcement actions against dietary supplement companies for failure to adequately substantiate claims made in advertising, for the use of false or misleading advertising claims, for underdosed products that don’t meet label claims and allegations related to product safety. These actions have often resulted in consent decrees and the payment of civil penalties, restitution, or both, by the companies involved. We are not aware of, or party to, any action by a state attorney general or consumer class action involving our products.
Further, The National Advertising Division of the Council of Better Business Bureaus reviews national advertising for truthfulness and accuracy. The National Advertising Division of the Council of Better Business Bureaus uses a form of alternative dispute resolution, working closely with in-house counsel, marketing executives, research and development departments and outside consultants to decide whether claims have been substantiated.
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International Regulations
Our international sales for the consumer products segment and ingredients segment are subject to foreign government regulations, which vary substantially from country to country. Most countries, in particular major markets, have established regulations for (a) authorizing the introduction of novel ingredients to market in the food and/or dietary/food/health supplement sectors and (b) for allowing finished goods to be placed on the market for consumer access. Typically, novel ingredients must go through an extensive safety review process (similar to the NDI notification process in the U.S.) by a regulatory or scientific authoritative body. Finished products typically must either be notified or registered (a limited approval process) with the relevant authorities. In some cases, new products can be brought to market without notifying the authorities.
The time required to obtain approval by a foreign country may be longer or shorter than that required for the FDA notification process, and the requirements may differ. We may be unable to obtain on a timely basis, if at all, any foreign government approvals necessary for the marketing of our products abroad.
Regulation of foods/food supplements in Europe is exercised primarily through the European Union, which regulates the combined market of each of its member states. Other countries, such as Switzerland, have voluntarily adopted laws and regulations that mirror those of the European Union with respect to novel foods or new dietary ingredients.
Regulation in other major and established markets, including Canada, Japan, Brazil and Australia all maintain and enforce a clear regulatory framework for novel ingredients and dietary supplements (or their equivalent).
Competitive Business Conditions
For our consumer products segment, we are in direct competition with Elysium Health who offers a similar product to TRU NIAGEN® and other providers of NAD+ boosting supplements. There are also a few resellers of NIAGEN® as consumer products that are our customers. We believe these resellers are focused on specific channels that we feel are complementary to our business.
We also face strong indirect competition from other ingredient suppliers who may supply alternative ingredients that may have similar characteristics to ingredients we offer. Below is a list of some of the competitors for our ingredients segment.
Ingredients Business Segment Indirect Competitors
• Royal DSM (the Netherlands)
• Glanbia plc (Ireland)
• BASF (Germany)
• Lonza Group Ltd (Switzerland)
• Sabinsa Corporation (India/U.S.)
For the analytical reference standards and services segment, we face competition within the standardization and quality testing niche of the markets we serve. Below is a current list of certain competitors. These competitors have already developed reference standards or services or are currently taking steps to develop them. Of the competitors listed, some currently sell fine chemicals, which, by default, are sometimes used as reference standards, and others are closely aligned with our market niche to reduce any barriers to entry if these companies wish to compete.
Analytical Reference Standards and Services Segment Competitors
• MilliporeSigma (U.S.)
• LGC Standards Ltd. (U.K.)
• US Pharmacopoeia (U.S.)
• Extrasynthese (France)
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Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration
We currently protect our intellectual property through patents, trademarks, designs and copyrights on our products and services. Our business strategy is to use the intellectual property harnessed from our analytical reference standards and services segment as the basis for providing new proprietary ingredients to our customers. Our strategy is to develop these proprietary ingredients on our own as well as to license our intellectual property to companies who will commercialize it.
The following table sets forth our existing patents and those to which we have licensed rights:
Patent Number Title Filling Date Issued Date Expires Licensor
7,205,284 Potent immunostimulants from microalgae 7/10/2001 4/17/2007 3/9/2022 Licensed from University of Mississippi
7,776,326 Methods and compositions for treating neuropathies 6/3/2005 8/17/2010 6/24/2026 Licensed from Washington University
7,846,452 Potent immunostimulatory extracts from microalgae 7/28/2005 12/7/2010 7/28/2025 Licensed from University of Mississippi
8,106,184 Nicotinyl Riboside Compositions and Methods of Use 11/17/2006 1/31/2012 9/20/2027 Licensed from Cornell University
8,114,626 Yeast strain and method for using the same to produce Nicotinamide Riboside 3/26/2009 2/14/2012 1/5/2026 Licensed from Dartmouth College
8,133,917 Pterostilbene as an agonist for the peroxisome proliferator-activated receptor alpha isoform 10/25/2010 3/13/2012 8/18/2025 Licensed from the University of Mississippi and U.S. Department of Agriculture
8,197,807 Nicotinamide Riboside Kinase compositions and Methods for using the same 4/20/2006 6/12/2012 11/19/2026 Licensed from Dartmouth College
8,252,845 Pterostilbene as an agonist for the peroxisome proliferator-activated receptor alpha isoform 2/1/2012 8/28/2012 8/18/2025 Licensed from the University of Mississippi and U.S. Department of Agriculture
8,383,086 Nicotinamide Riboside Kinase compositions and Methods for using the same 4/12/2012 2/26/2013 4/20/2026 Licensed from Dartmouth College
8,809,400 Method to Ameliorate Oxidative Stress and Improve Working Memory Via Pterostilbene Administration 8/8/2011 8/19/2014 10/2/2028 Licensed from the University of Mississippi and U.S. Department of Agriculture
8,841,350 Method for treating non-melanoma skin cancer by inducing UDP-Glucuronosyltransferase activity using pterostilbene 5/8/2012 9/23/2014 5/8/2032 Co-owned by ChromaDex and University of California
8,889,126 Methods and compositions for treating neuropathies 5/28/2010 11/18/2014 6/3/2025 Licensed from Washington University
9,000,147 Nicotyl riboside compositions and methods of use 1/17/2012 4/7/2015 11/17/2026 Licensed from Cornell University
9,028,887 Method improve spatial memory via pterostilbene administration 5/22/2014 5/12/2015 6/10/2028 Licensed from the University of Mississippi and U.S. Department of Agriculture
9,295,688 Methods and compositions for treating neuropathies 10/10/2014 3/29/2016 6/3/2025 Licensed from Washington University
9,321,797 Nicotyl riboside compositions and methods of use 11/17/2014 4/26/2016 11/17/2026 Licensed from Cornell University
9,439,875 Anxiolytic effect of pterostilbene 5/11/2011 9/13/2016 12/11/2031 Licensed from the University of Mississippi and U.S. Department of Agriculture
9,975,915 Crystalline forms of nicotinoyl ribosides, modified derivatives thereof, and phosphorylated analogs thereof, and methods of preparation thereof 11/10/2017 5/22/2018 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex
10,000,519 Methods of Preparing Nicotinamide Riboside and Derivatives Thereof 7/24/2014 6/19/2018 7/24/2034 Licensed from The Queen’s University of Belfast
10,000,520 B-vitamin and amino acid conjugates of nicotinoyl ribosides and reduced nicotinoyl ribosides, derivatives thereof, and methods of preparation thereof 3/16/2017 6/19/2018 3/16/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex
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Patent Number Title Filling Date Issued Date Expires Licensor
10,183,036 Use of nicotinic acid riboside or nicotinamide riboside derivatives, and reduced derivatives thereof, as NAD+ increasing precursors 4/20/2017 1/22/2019 4/20/2037 Owned by ChromaDex
10,280,190 Nicotinic acid riboside or nicotinamide riboside compositions, reduced derivatives thereof, and the use thereof to enhance skin permeation in treating skin conditions 3/16/2016 5/7/2019 5/31/2036 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex
10,688,118 Nicotinamide riboside compositions for topical use in treating skin conditions 10/30/2014 6/23/2020 4/6/2035 Owned by ChromaDex
10,689,411 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 11/10/2017
6/23/2020
11/10/2037
Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex
10,815,262 Methods of preparing nicotinamide riboside and derivatives thereof
2/27/2018
10/27/2020
7/24/2034
Licensed from The Queen’s University of Belfast
10,857,172
Use of nicotinamide riboside, nicotinic acid riboside, and nicotinamide mononucleotide, reduced nicotinyl compounds, and nicotinoyl compound derivatives in infant formula for healthy development
4/14/2017
12/8/2020
4/14/2037
Owned by ChromaDex
10,934,322 B-vitamin and amino acid conjugates of nicotinoyl ribosides and reduced nicotinoyl ribosides, derivatives thereof, and methods of preparation thereof
5/11/2018
3/2/2021
3/16/2037
Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex
11,033,568 Nicotinamide riboside compositions for topical use in treating skin conditions
6/3/2020
6/15/2021
10/30/2034
Owned by ChromaDex
11,071,747 Use of NAD precursors for breast enhancement
11/29/2017
7/27/2021
11/29/2037
Licensed from University of Iowa
11,214,589 Crystalline forms of nicotinoyl ribosides and derivatives thereof, and methods of preparation thereof
12/10/2019
1/4/2022
8/16/2040
Owned by ChromaDex
11,242,364 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof
5/18/2021
2/8/2022
11/10/2037
Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex
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Manufacturing
We currently utilize third-party manufacturers to produce NR, encapsulate and bottle NR sold as a dietary supplement and produce and supply other ingredients, products, and services. Following the receipt of products or product components from third-party manufacturers, we inspect and ensure conformance of each product and product component to our specifications. We will also consider manufacturing certain products or product components internally, if our capacity permits, when demand or quality requirements make it appropriate to do so.
We work with manufacturing companies that can meet the standards imposed by the FDA, the International Organization for Standardization and the quality standards that we require for our own internal policies and procedures. We monitor and manage supplier performance through a corrective action program developed by us. We believe these manufacturing relationships can minimize our capital investment, help control costs, and allow us to compete with larger volume manufacturers of dietary supplements, phytochemicals and ingredients.
W.R. Grace & Co. -Conn. (Grace) is the Company’s exclusive manufacturer for the supply of NR. Effective as of August 2, 2021, we entered into a Seventh Amendment (Seventh Amendment) to the Manufacturing and Supply Agreement (such agreement as amended, the “Grace Manufacturing Agreement”), originally effective in January 2016 with Grace. In January 2019, Grace was issued patents related to the manufacturing of the crystalline form of NR. Pursuant to the Seventh Amendment, the Grace Manufacturing Agreement expires on June 30, 2023, subject to its further renewal to be negotiated by the parties.
Sources and Availability of Raw Materials
For all three business segments, and subject to the risks related to our Company and our business recited below, we believe that we have identified reliable sources and suppliers of ingredients, chemicals, phytochemicals and reference materials that will provide products in compliance with our guidelines.
Environmental Compliance
We incur significant expense in complying with Good Manufacturing Practices and safe handling and disposal of materials used in our research and manufacturing activities. For the years ended December 31, 2021 and 2020, these expenses totaled approximately $1.7 million and $1.5 million, respectively. We do not anticipate incurring additional material expense to comply with federal, state and local environmental laws and regulations.
Backlog Orders
For our consumer products segment where we ship products internationally to distributors, we may have a backlog from time to time as the production of TRU NIAGEN® finished bottles require up to three months lead time by our third-party contract manufacturers. As of December 31, 2021 we did not have any significant backlog orders from the distributors that have not been shipped. For products that are directly shipped to consumers, we have minimal backlog orders as we carry inventory on hand to ship upon the receipt of order.
For our ingredients segment, we also have minimal backlog orders as we carry inventory on hand for most of the products we offer and we ship upon the receipt of customer’s order.
For our analytical reference standards and services segment, we normally have a small backlog of orders. These orders amount to approximately $20,000 or less. Because we list over 3,000 phytochemicals and 300 botanical reference materials in our catalog, we may not always have the items in stock at the time of customers’ orders. These backlog orders are normally fulfilled within two to four weeks.
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Culture and Workforce
We’re a company of curious, talented, and passionate people who are devoted to health, well-being, and improving the way people age. We embrace collaboration and creativity and encourage the iteration of ideas to address complex challenges in all aspects of our business.
We believe our people are critical for our success. We are dedicated to providing an environment where ChromaDex employees can have fulfilling careers, and be happy, healthy and productive. We offer attractive wage and benefit packages to take care of the needs of our employees and their families. Our competitive compensation and dynamic culture help us to attract and retain top candidates. We continue to invest in recruiting and rewarding talented people.
ChromaDex and its employees are dedicated to diversity, inclusion, and fairness. We celebrate personal authenticity and expression as a catalyst to advance human health and innovation. We support healthy, open dialogue and we communicate information about the company through multiple internal channels to our employees . As of December 31, 2021, ChromaDex had 115 full-time employees.
Facilities
For information on our facilities, see “Properties” in Item 2 of this Form 10-K.
Available Information
Our website address is www.chromadex.com . Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K. We make available, free of charge, on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practical after we file such material with, or furnish it to, the SEC. This information is also available in print to any stockholder who requests it, with any such requests addressed to ChromaDex Corporation, 10900 Wilshire Blvd. Ste 600, Los Angeles, CA 90024. Certain of these documents may also be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, and other information regarding issuers that file electronically with the SEC at www.sec.gov . We also make available, free of charge, on our website our Code of Business Conduct and Ethics, and the Charters of our Audit Committee, Nominating and Corporate Governance Committee, and Compensation Committee of our Board of Directors.
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