Disclaimer : I don't have a position on this stock as the stock market is going too well to take what are in my opinion unnecessary risky positions. That being said, I'm bored and unemployed and while the market is going up significantly, there's not so much to do right now other than watching your green portfolio. This research is made for you and for me if I feel like the market slows down. Also, not financial advice. Also, english not native language and english hard.
Presentation
Chromadex is in the business of "dietary supplement, food, beverage, skin care and pharmaceutical markets". For the most part, their products revolve around anti-aging by creating or boosting the production of nicotinamide adenine dinucleotide (NAD+). Their flagship product is Niagen, which is "the world’s first and only FDA-safety reviewed form of nicotinamide riboside (NR)". They also have another product called Immulina.
Products
Niagen : their flagship product
"NIAGEN®, also known as nicotinamide riboside (NR), is a unique member of the vitamin B3 family. Cells can use NR to create nicotinamide adenine dinucleotide (NAD+), which is an essential molecule found in every living cell."
NAD+ "is involved in redox reactions, carrying electrons from one reaction to another. [...] It is also used in other cellular processes, most notably as a substrate of enzymes in adding or removing chemical groups to or from, respectively, proteins, in posttranslational modifications".
NAD+ is therefore really important for our metabolism and that's why a lot of biotech companies are trying to synthetize it. Chromadex being one of them.
NAD+ is important in a cellular level. It's also responsible for the aging process.^[1] ^[2] So if you want to prevent aging or treat any neurodegenerative diseases such as Alzheimer's and Parkinson's disease, this is the thing that you should study.
Niagen does not pretend to treat any of those diseases. However, it can safely and effectively increase NAD+ in your body. And it's the first FDA-safety reviewed form of NR (vitamin B3).
Anti-aging is a growing market. And the problem that it's trying to tackle is something that rich people are heavily invested in. Also, more generally, people concerned for their health might want to check those supplements. Not to mention that the food supplement industry has been insanely profitable for years now.
Also, a few days ago, they mentioned in an article that "a new clinical study published in Cell Press Sneak Peek finds nutritional protocol including nicotinamide riboside (NR) significantly decreases liver fat, improves liver function".
Immulina : Yeah they have that too
Ok that one is less promising but is still worth talking about. It's a lipoprotein to boost the immune system.
From their website, "IMMULINA™ is a spirulina extract and the predominant active compounds are Braun-type lipoproteins which are useful for improving 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."
But...hum... I can't find any new update since 2018 and I'm not really sure why.
Financials
For this, I'm taking their latest 10-Q available dated at 11/04/2020.
Their trailing 9-months gross profits went from roughly 18 milions in sept-19 to 25 millions in sept-20.
For the same time-period, their sales and marketing expenses have increased whereas their R&D expenses have decreased.
They have approximately $15.5 million in cash. They think that it will be sufficient to fund their long-term plans for the next 12 months but they may seek for additional capital in the next year or so.
Note that Covid-19 had and will continue to have an impact on their sales.
Risks
Covid is a big one : their sales are impacted due to stores closing.
They're still operating at a loss and they expect to continue like that in the near future.
Although they're confident that they have enough cash to keep their company afloat for at least a year, they may need influx of capital and with the pandemic, this may not happen.
Their credit might deteriorate leading to increase cost for capital and they might need to issue more shares.
Conclusions
I think this is a promising company. It already has a commercial product and is slowly focusing on selling and reducing their R&D expenses. Their product is in a fast growing market that can target rich people as well as athletes or even for people concerned for their health.
^[1] : https://www.sciencedirect.com/science/article/pii/S2468501118300063
^[2] : https://www.nature.com/articles/s41580-020-00313-x