What changed in this filing

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Item 1A. Risk Factors

2024-08-07 compared with 2024-05-08 · 69 added, 30 removed, 555 unchanged (15% of the section changed)

14 unchanged sentences

• Our future success largely depends on sales of our Tru Niagen® product.

• The success of our consumer product and ingredient business is linked to the size and growth rate of the vitamin, mineral and dietary supplement market and an adverse change in the size or growth rate of that market could have a material adverse effect on us.

• The success of our consumer product and ingredient business is linked to the size and growth rate of the wellness industry market and an adverse change in the size or growth rate of that market could have a material adverse effect on us.

• The future growth and profitability of our consumer product business will depend in large part upon the effectiveness and efficiency of our marketing efforts and our ability to select effective markets and media in which to market and advertise.

5 unchanged sentences

Risks Related to our Products:

• We rely on single supplier, W.R.

• We rely on a single supplier, W.R.

Grace, for NR and a limited number of third-party suppliers for the raw materials required to produce our products.

9 unchanged sentences

Risks Related to Regulatory Approval of our Products and Other Government Regulations:

• Changes in government regulation or in practices relating to the pharmaceutical, dietary supplement, food and cosmetic industry could decrease the need for the services we provide.

• Changes in government regulation or in practices relating to the pharmaceutical, dietary supplement, food and cosmetic industry could affect our ability to comply and the demand for our products and services.

• Compliance with stringent and changing global privacy and data security laws and regulations could result in additional costs and liabilities to us or inhibit our ability to collect and, if applicable, process data globally, and the failure or perceived failure to comply with such laws and regulations could have a material adverse effect on our business, financial condition or results of operations.

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We have a history of losses and may continue to incur operating and net losses for the foreseeable future.

We have recorded a net loss of approximately $0.5 million for the three months ended March 31, 2024.

We have recorded a net loss of approximately $0.5 million for the six months ended June 30, 2024.

We incurred net losses of approximately $4.9 million and $16.5 million for the years ended December 31, 2023 and December 31, 2022, respectively.

As of March 31, 2024, our accumulated deficit was approximately $191.0 million.

As of June 30, 2024, our accumulated deficit was approximately $191.0 million.

We have not achieved profitability on an annual basis.

Our net losses and history of negative cash flow have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital, and if we are not able to achieve and sustain profitability in the near future or at all our stock price may be depressed.

We expect to continue to incur increasing expenses as we develop our sales, marketing distribution and other commercial infrastructure and continue to develop and commercializing our products, including the cost of obtaining and maintaining regulatory approvals.

As of March 31, 2024, our cash and cash equivalents totaled approximately $27.6 million, of which $27.4 million was unrestricted, and we had no borrowings outstanding under our line of credit up to $10.0 million, subject to certain terms and conditions, with Western Alliance Bank.

As of June 30, 2024, our cash and cash equivalents totaled approximately $27.9 million, of which $27.7 million was unrestricted, and we had no borrowings outstanding under our line of credit up to $10.0 million, subject to certain terms and conditions, with Western Alliance Bank.

However, we may require additional funds, either through additional equity or debt financings, including pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B.

6 unchanged sentences

If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

If adequate financing is not available, the Company will delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations.

If adequate financing is not available, the Company will delay, postpone or

terminate product and service expansion and curtail certain selling, general and administrative operations.

The inability to raise additional financing may have a material adverse effect on the future performance of the Company.

Interruptions in our relationships or declines in our business with major customers could materially harm our business and financial results.

Watson Group, a related party, accounted for approximately 13.4% of our sales during the three months ended March 31, 2024.

Watson Group, a related party, accounted for approximately 14.9% of our sales during the six months ended June 30, 2024.

Any interruption in our relationship or decline in our business with this customer or other customers upon whom we become highly dependent could cause harm to our business.

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• our ability to continue to develop and launch new products that our customers feel meet their needs and requirements, with respect to cost, timeliness, features, performance and other factors;

• our ability to develop new sales and distribution channels for our new products;

• our ability to successfully develop relationships with clinics and other third-party providers of our pharmaceutical-grade products;

• our ability to provide timely, responsive and accurate customer support to our customers;

17 unchanged sentences

As a result, the market acceptance of Tru Niagen® is critical to our continued success, and if we are unable to expand market acceptance and increase consumer awareness of Tru Niagen® our business, results of operations, financial condition, liquidity and growth prospects would be materially adversely affected.

The success of our consumer product and ingredient business is linked to the size and growth rate of the vitamin, mineral and dietary supplement market and an adverse change in the size or growth rate of that market could have a material adverse effect on us.

An adverse change in the size or growth rate of the vitamin, mineral and dietary supplement market could have a material adverse effect on our business.

The success of our consumer product and ingredient business is linked to the size and growth rate of the wellness industry market and an adverse change in the size or growth rate of that market could have a material adverse effect on us.

An adverse change in the size or growth rate of the wellness industry market, particularly the dietary supplement market, could have a material adverse effect on our business.

The success of our new product line Niagen+ is dependent on the continued growth of the intravenous hydration therapy and spa markets and our ability to reach those markets.

Underlying market conditions are subject to change based on economic conditions, consumer preferences and other factors that are beyond our control, including media attention and scientific research, which may be positive or negative.

18 unchanged sentences

• our business costs, including increased costs as a result of inflation;

• the expenses we incur in developing and commercializing our products, including the cost of obtaining and maintaining regulatory approvals;

• the expenses we incur in developing and commercializing our products, including the cost of obtaining and maintaining regulatory approvals and developing new distribution channels;

• unanticipated general and administrative expenses.

12 unchanged sentences

In any of these events, our costs may increase, we may have significant charges associated with the write-down of assets or returns on new investments may be lower than prior to the change in strategy or restructuring.

For example, we may not be successful in developing our consumer product business for sales of Tru Niagen® products, and our sales may decrease despite us incurring increased costs related to marketing such products.

For example, we may not be successful in developing our consumer product business for sales of Tru Niagen® products or sales of our Niagen® IV product, and our sales may decrease despite us incurring increased costs related to marketing such products.

We face significant competition, including changes in pricing.

93 unchanged sentences

We depend on key personnel, the loss of any of which could negatively affect our business .

Our business depends greatly on the expertise and contributions of several key individuals, including Robert Fried and Brianna Gerber who are our Chief Executive Officer and Chief Financial Officer, respectively.

Our business depends greatly on the expertise and contributions of several key individuals.

Additionally, we rely on other critical team members, including professionals in scientific research and marketing.

30 unchanged sentences

Risks Related to Our Products

We rely on single supplier, W.R.

We rely on a single supplier, W.R.

Grace, for NR and a limited number of third-party suppliers for the raw materials required to produce our products.

Our dependence on a limited number of third-party suppliers or on a single supplier, and the challenges we may face in obtaining adequate supplies of raw materials, involve several risks, including limited control over pricing, availability, quality and delivery schedules.

Any failure by or loss of a third-party supplier could result in delays and increased costs, which may adversely affect our business.

Our dependence on a limited number of third-party suppliers or on a single supplier, and the challenges we may face in obtaining adequate supplies of raw materials, including NR, involve several risks, including limited control over pricing, availability, quality and delivery schedules.

We cannot be certain that our current suppliers will continue to provide us with the quantities of these raw materials that we require or satisfy our anticipated specifications and quality requirements.

Any supply interruption in limited or sole sourced raw materials could materially harm our ability to manufacture our products until a new source of supply, if any, could be identified and qualified.

Any supply interruption in limited or sole sourced raw materials, including supply shortages, supplier production disruptions, quantity issuers, or disruption to our suppliers, could materially harm our ability to manufacture our products until a new source of supply, if any, could be identified and qualified.

Additionally, our suppliers may fail inspection or have other compliance issues with regulatory authorities that, even if unrelated to our supply chain and materials, may impact or cause delays in their ability to deliver agreed upon supplies in a timely manner which can have negative impacts on our business plans.

We may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms.

6 unchanged sentences

There is no guarantee that we will be able to continue to contract with Grace for the supply of NR, or that such terms will be favorable to us.

Failure by outsourcing facilities that produce pharmaceutical-grade Niagen® to adequately perform their obligations could harm our business.

We will rely on contract manufacturers to manufacture pharmaceutical-grade Niagen® and 503B outsourcing facilities to compound and distribute pharmaceutical-grade Niagen® into intravenous, injectable and intravenous-push forms and then distribute the same.

We do not control or direct the compounding process used by these outsourcing facilities.

We will rely on those manufacturers and outsourcing facilities for compliance with the applicable regulatory requirements.

We will have no control over the ability of third parties to maintain adequate quality control, quality assurance and qualified personnel.

If the FDA or a comparable international regulatory authority does not approve these facilities for the manufacturing or compounding of these ingredients and products, respectively, or if it withdraws any such approval in the future, we may need to identify alternative manufacturing and compounding facilities, which would significantly impact our ability to meet consumer demand.

In addition, our inability to identify or enter into satisfactory arrangements with any such alternative manufacturing and compounding facilities may result in a material adverse effect on our business, financial condition and results of operations.

Further, our reliance on third-party manufacturers entails risks, including:

• inability to meet certain product specifications and quality requirements consistently;

• delay or inability to procure or expand sufficient manufacturing capacity;

• issues related to scale-up of manufacturing;

• costs and validation of new equipment and facilities required for scale-up;

• third-party manufacturers may not be able to execute necessary manufacturing procedures and other logistical support requirements appropriately;

• third-party manufacturers may fail to comply with current good manufacturing practice (“cGMP”) requirements and other requirements by the FDA or other comparable regulatory authorities;

• inability for us to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all;

• breach, termination or non-renewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us the clinics with which we partner;

• third-party manufacturers may not devote sufficient resources to our products;

• we may not own, or may have to share, the intellectual property rights to any improvements made by third-party manufacturers in the manufacturing process;

• operations of third-party manufacturers or our suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier;

• logistics carrier disruptions or increased costs that are beyond our control.

Any adverse developments affecting manufacturing operations may result in lot failures, inventory shortages, shipment delays, product withdrawals or recalls or other interruptions in the supply of these products, which could prevent their delivery to clinics or other third parties administering or distributing pharmaceutical-grade Niagen®.

We may also have to write off inventory, incur other charges and expenses to replace ingredients or dietary supplements that fail to meet specifications, undertake costly remediation efforts, or seek more costly manufacturing alternatives.

Any of these events could impact our ability to successfully commercialize any future products.

Some of these events could be the basis for FDA action, including injunction, request for recall, seizure, total or partial suspension of production, or issuance of a Form 483 or Warning Letter.

Unfavorable publicity or consumer perception of our products and any similar products distributed by other companies could have a material adverse effect on our business.

We believe the dietary supplement market is highly dependent upon consumer perception regarding the safety, efficacy and quality of dietary supplements generally, as well as of products distributed specifically by us.

We believe the dietary supplement and intravenous therapies market are highly dependent upon consumer perception regarding the safety, efficacy and quality of dietary supplements generally, as well as of products distributed specifically by us.

Consumer perception of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, national media attention, social media and other publicity regarding the consumption of dietary supplements.

8 unchanged sentences

We are subject to product liability claims if the use of our products is alleged to have resulted in injury.

Our products consist of ingredients classified as dietary supplements, or natural health products, and, in most cases, are not subject to pre-market regulatory approval in the United States.

Our products include ingredients classified as dietary supplements, or natural health products, and, in most cases, are not subject to pre-market regulatory approval in the United States.

Previously unknown adverse reactions resulting from human consumption of these ingredients could occur.

In addition, the products we sell are produced by third-party manufacturers.

In addition, the products we sell are produced by third-party manufacturers and outsourcing facilities.

As a marketer of products manufactured by third parties, we also may be liable for various product liability claims for products we do not manufacture.

17 unchanged sentences

• any products that are approved may not be accepted in the marketplace;

• we may not be able to partner with clinics willing to distribute our products;

• prescriptions for our pharmaceutical-grade products, which require a prescription, may not be available;

• we may not have adequate financial or other resources to complete the development or to commence the commercialization of our products or will not have adequate financial or other resources to achieve significant commercialization of our products;

77 unchanged sentences

Risks Related to Regulatory Approval of Our Products and Other Government Regulations

Changes in government regulation or in practices relating to the pharmaceutical, dietary supplement, food and cosmetic industry could decrease the need for the services we provide.

Changes in government regulation or in practices relating to the pharmaceutical, dietary supplement, food and cosmetic industry could affect our ability to comply and the demand for our products and services.

Governmental agencies throughout the world, including in the United States, strictly regulate the pharmaceutical, dietary supplement, food and cosmetic industries.

Changes in regulation, such as a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, or an increase in regulatory requirements that we may have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services.

Also, if the government makes efforts to contain drug costs and pharmaceutical and biotechnology company profits from new drugs, or if health insurers were to change their practices with respect to reimbursements for pharmaceutical products, our customers may spend less, or reduce their spending on research and development.

4 unchanged sentences

Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.

For example, the European Union’s General Data Protection Regulation (GDPR) and the United Kingdom’s GDPR (UK GDPR) imposes strict obligations on the processing of personal data, including, without limitation, personal health data.

For example, the European Union’s General Data Protection Regulation (GDPR) and the United Kingdom’s GDPR (UK

GDPR) imposes strict obligations on the processing of personal data, including, without limitation, personal health data.

The GDPR and UK GDPR set out extensive compliance requirements, including providing detailed disclosures about how personal data is collected and processed, demonstrating that an appropriate legal basis is in place or otherwise exists to justify data processing activities;

10 unchanged sentences

We continue to execute contracts involving the transfer of personal data outside of the European Economic Area with the Standard Contractual Clauses in the ordinary course.

As supervisory authorities issue

further guidance on personal data export mechanisms, including updates to the Standard Contractual Clauses, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we or third parties we work with are otherwise unable to transfer personal data between and among countries and regions in which we conduct business.

As supervisory authorities issue further guidance on personal data export mechanisms, including updates to the Standard Contractual Clauses, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we or third parties we work with are otherwise unable to transfer personal data between and among countries and regions in which we conduct business.

Following the United Kingdom’s withdrawal from the EEA and the EU, we also have to comply with the UK-specific requirements related to data protection, including with respect to transfer of personal data outside of the UK, which increases our regulatory compliance burden.

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For example, any failure by a third-party processor to comply with applicable law, regulations, or contractual obligations could result in adverse effects, including inability to operate our business and proceedings against us by governmental entities or others.

If we fail, or are perceived to have failed, to address or comply with obligations related to data privacy and security, we could face government enforcement actions that could include investigations, fines, penalties, audits and inspections;

fail, or are perceived to have failed, to address or comply with obligations related to data privacy and security, we could face government enforcement actions that could include investigations, fines, penalties, audits and inspections;

additional reporting requirements and/or oversight;

11 unchanged sentences

Failure to comply with these regulations could subject us to fines, penalties and additional costs.

Some of our operations are subject to regulation by various United States federal agencies and similar state and international agencies, including the Department of Commerce, the FDA, the FTC, the Department of Transportation and the Department of Agriculture.

These regulations govern a wide variety of product activities, from design and development to labeling, manufacturing, handling, sales and distribution of products.

These regulations govern a wide variety of product activities, from design and development to labeling, manufacturing, handling, sales, distribution of products, and promoting and advertising products.

If we fail to comply with any of these regulations, we may be subject to fines or penalties, have to recall products and/or cease their manufacture and distribution, which would increase our costs and reduce our sales.

We will rely on outsourcing facilities for compounding our pharmaceutical-grade Niagen® ingredient.

The bulk drug substances must appear on the FDA’s “interim” list of bulk substances that may be used in compounding under Section 503B which are those bulk drug substances for which the FDA has determined there is a clinical need.

Provided certain conditions are met, the FDA will exercise enforcement discretion concerning use of “interim” Category 1 substances pending evaluation of the substances for inclusion on the FDA’s final list of bulk drug substances for which there is a clinical need.

If the substances used in manufacturing and compounding our products are removed from this interim list or if the FDA determines not to place NRC on the final list of bulk drug substances for which there is a clinical need, it may subject us and our third-party partners to additional regulatory scrutiny.

We are in the pre-investigational new drug (IND) phase with respect to the potential for Niagen® to be used as a treatment for Ataxia telangiectasia (AT), a rare disease with less than 200,000 cases diagnosed in the U.S.

per year, and have obtained Orphan Drug Designation (ODD) and Rare Pediatric Disease (RPD) designation from the FDA.

There is no guarantee that our IND application will be successful, or that we will be able to successfully complete clinical trials or a new drug application for FDA approval for the use of Niagen® as a treatment for AT.

We are also subject to various federal, state, local and international laws and regulations that govern the handling, transportation, manufacture, use and sale of substances that are or could be classified as toxic or hazardous substances.

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Future sales of these shares could adversely affect the market price of our common stock.

As of March 31, 2024, we had outstanding options for an aggregate of approximately 13.8 million shares of common stock at a weighted average exercise price of $3.22 per share and unvested restricted stock units of approximately 0.9 million shares.

As of June 30, 2024, we had outstanding options for an aggregate of approximately 12.9 million shares of common stock at a weighted average exercise price of $3.08 per share and unvested restricted stock units of approximately 0.8 million shares.

The holders may sell many of these shares in the public markets from time to time, without limitations on the timing, amount or method of sale.

3 unchanged sentences

During fiscal year 2022, we entered into an agreement to form a joint venture to expand the Company’s market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan.

Operating activity under the joint venture was not material during the three months ended March 31, 2024.

Operating activity under the joint venture was not material during the three and six months ended June 30, 2024.

Our participation in the joint venture in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China.

75 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors