Niagen Bioscience, Inc. (NAGE) Earnings Call Transcript & Summary

Hello, everyone. Thank you for joining us, and welcome to the Niagen Bioscience Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Lauren Borzansky, Assistant Controller. Please go ahead.

Good afternoon, and welcome to Niagen Biosciences, Inc.'s Second Quarter 2026 Conference Call. Joining me today are our Chief Executive Officer, Rob Fried; Chief Financial Officer, Ozan Pamir; and Senior Vice President of Scientific and Regulatory Affairs, Dr. Andrew Shao. Dr. Shao will join the call for Q&A. Before we begin, I'd like to remind everyone that today's call may include forward-looking statements. These statements relate to, among other things, our research and development activities, clinical trial plans and timing, regulatory filings, expansion into new markets, business development opportunities and our expected financial and operating performance. These statements are based on our current expectations as of today and are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our most recent Form 10-Q and other filings with the SEC. We undertake no obligation to update these statements, except as required by law. In addition, we may reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found in today's earnings release and presentation, both available in the Investor Relations section of our website. With that, it's now my pleasure to turn the call over to our Chief Executive Officer, Rob Fried.

Thank you, Lauren, and good afternoon, everyone, and thank you for joining us today. This quarter marks another important milestone in the evolution of Niagen Bioscience. For many years, investors knew us primarily as the company behind Tru Niagen, the leading nicotinamide riboside, NAD supplement. Today, we are becoming something much broader, a science-driven platform company built around the biology of NAD with opportunities spanning consumer health, injectable and IV skin care, and pharmaceuticals. Our name, Niagen Bioscience reflects that evolution. It represents the company we are building and the opportunity we believe lies ahead. As we look at the progress we've made in 2026 in developing our platform, we see this year as our springboard for growth and for value creation. Our financial results this quarter demonstrate the resilience of our core business, while our strategic progress reinforces our confidence that we're building multiple long-term engines of growth. Today, Niagen Bioscience spans consumer supplements, branded ingredients, intravenous delivery through Niagen Plus, skin care and pharmaceutical development. These businesses are connected by a common scientific foundation and increasingly reinforce one another. The scientific discoveries guide our commercial path and the commercial adoption expands awareness of Niagen. Pharmaceutical development deepens our understanding of NAD biology while expanding the long-term value of our intellectual property. That integrated platform is what differentiates Niagen Bioscience. Global interest in NAD continues to accelerate. We estimate the worldwide NAD supplement market now exceeds $2 billion annually, while the IV and injection market has now grown beyond $500 million. We believe these markets remain in the early stages of their development, a scientific understanding of cellular NAD continues to expand. Looking forward, we believe additional opportunities in skin care, IV and injections, pharmaceuticals and other health care applications have the potential to substantially expand the overall addressable market. For more than a decade, Niagen has helped define this category through scientific leadership, regulatory excellence, intellectual property and what we believe is the industry's largest body of human clinical research supporting NAD and nicotinamide riboside. Those advantages continue to differentiate us as awareness of NAD grows around the world. Our core business continues to provide a solid foundation, and we expect our e-commerce business to continue to be the engine for consistent growth. During the quarter, Tru Niagen website sales increased 23% year-over-year, while Amazon sales increased 10%. We estimate Amazon growth would have been approximately 19%, absent a temporary platform issue during early June that has since been resolved. Within the ingredient business, purchases from life extension were lower than last year. affecting quarterly comparisons. We also continue to see competitive activity from NMN and NAD as a straight ingredient in certain channels. While we recognize these near-term challenges, our confidence remains grounded in our scientific leadership, intellectual property, regulatory position, manufacturing quality and extensive body of clinical evidence supporting Niagen. Across every market in which we participate, we are seeing the same trend emerge. Organizations seeking the most scientifically validated approach to elevating NAD are increasingly choosing Niagen. And that trend is becoming particularly evident within skin care. Earlier this year, we completed a limited launch of our first branded skincare product, Niagen NanoCloud. The response exceeded our internal expectation and supports a broader commercial launch later this year. More importantly, we are now seeing growing validation from some of the world's most respected skin care companies recently published research demonstrating that nicotinamide riboside was more effective than niacinamide at increasing NAD levels and protecting against UV-induced depletion and human skin models. Presently, we are engaged in discussions with 2 global skin care companies that are evaluating the incorporation of Niagen into one of its established skin care brands. We're encouraged by the level of interest we are seeing from leading companies throughout the industry. IVN injection represents another exciting opportunity. During the quarter, we expanded the Niagen platform with the launch of our at-home injection kit, while continuing to grow relationships with clinic networks such as Restore Hyper Wellness. Perhaps most encouraging, several of the largest telehealth companies have approached us to explore adding Niagen injections as their NAD offering on their platform. Should these discussions ultimately lead to commercial partnerships they have the potential to meaningfully expand the reach of the Niagen platform. More importantly, they reinforce our belief that consumers are increasingly recognizing the advantages of Niagen over traditional NAD administration. Our newest business may ultimately prove to be our most transformational. Earlier this month, we formally launched NAD Pharmaceuticals, establishing a dedicated organization focused on developing therapies for rare genetic diseases and age-related disorders. Our lead development candidate, NB4168 has already received rare pediatric disease designation from the FDA and an orphan medicinal product designation from the European Medicines Agency for ataxia telangiectasia. Rare disease development provides an opportunity to address areas of significant unmet medical need. While leveraging our deep understanding of NAD biology, we intend to invest thoughtfully, remain financially disciplined and provide updates as we achieve meaningful scientific regulatory and clinical milestones. Ozan will discuss the economics in greater detail later in today's call. Scientific leadership remains the foundation that supports every business we operate. During the quarter, researchers reported encouraging findings, linking Niagen supplementation with reductions in measures of epigenetic age acceleration and improvements associated with mitochondrial biology. Additional independent studies explored potential applications in retinal disease, neurodegeneration, immune function and mitochondrial disorders. While many of these findings remain early stage and require further validation, they illustrate an important trend. Independent researchers around the world continue choosing nicotinamide riboside to investigate fundamental questions and cellular health, that expanding body of science benefits every segment of our business. As we look ahead, we believe Niagen Biosciences is entering one of the most exciting periods in its history. We have a profitable and cash-generating core business. We have a growing global consumer brand. We have a differentiated intellectual property portfolio. We have an expanding commercial opportunity across skin care and IV injections and the beginnings of a pharmaceutical pipeline addressing diseases with significant unmet need. We're building the world's leading NAD platform company. Our objective is clear: wherever consumers, physicians, researchers or pharmaceutical companies seek the most clinically supported approach to elevating NAD, we want Niagen to be their first choice. We remain disciplined in how we allocate our capital and resources and we remain realistic about the work still ahead. We're highly confident that the investments we are making today in our brand, in our science and in our pipeline are laying the foundation for a much larger company in the years ahead. This year will be our springboard for growth in 2027 and well beyond. With that, I'll turn the call over to Ozan to review our financial results, discuss our pharmaceutical strategy in greater detail. And then we'll open the call for your questions. Ozan?

Thank you, Rob. It is a pleasure to once again address our investors, partners and team members today. As Rob stated, the NAD platform that we have built extends beyond our core consumer and our Niagen ingredient businesses. Those profitable cash-generated businesses provide the financial foundation for Niagen Plus, telehealth, skin care and pharmaceutical development. These opportunities are at different stages and are not yet fully reflected in our financial results. However, the strategic optionality they provide is tangible. As we advance these opportunities, we remain disciplined in allocating resources across marketing, research and development and operations. Our objective is to invest thoughtfully in long-term growth, while maintaining a strong balance sheet and financial flexibility to pursue the most attractive opportunities. We believe these investments will strengthen our foundation for growth and value creation beyond 2026. In the second quarter of 2026, we delivered $29.8 million of revenue with Tru Niagen bringing in $24.2 million, an increase of 6% or $1.5 million year-over-year. E-commerce was the primary driver of our consumer business, generating $20.5 million in revenue, up 14% or $2.5 million. Excluding the temporary marketplace listing issue experienced in June, we estimate our e-commerce business would have grown by 19% year-over-year. Our ingredient business generated $5.4 million in revenue comprised of $4.9 million in food grade Niagen and $400,000 in pharma-grade in ingredient. Gross margin was stable at 64.8% in the second quarter compared with 65% a year ago. The modest decline of 20 basis points primarily reflected changes in product and business mix. Selling and marketing expense represented 34% of net sales compared with 26.4% in the second quarter of 2025. This increase reflects investments in e-commerce growth, brand awareness, new product launches and our China cross-border business. China remains a meaningful growth opportunity for Tru Niagen. In fact, through May 2026, revenue from our China cross-border channel had already exceeded the revenues generated by that channel for the full year 2025. Research and development expense was $1.5 million, a slight decrease of $100,000 year-over-year. R&D spending can fluctuate with the timing of clinical studies and external research programs. We expect it to increase as we conduct targeted study supporting new claims and products and advanced preclinical and IND-enabling work for NB4168. General and administrative expense was $7 million, a decrease of approximately $300,000 from the prior year quarter, primarily due to lower royalties under our agreement with Queen's University Belfast. And finally, net income was $1 million or $0.01 per diluted share compared with $0.05 per diluted share in the second quarter of 2025. Turning to the balance sheet and cash flow. We generated $2.8 million in operating cash flow during the quarter. Cash used in financing activities was $2.5 million, primarily reflecting $2.8 million of common stock repurchases. We ended the quarter with $66.7 million in cash and no debt. Our balance sheet is stronger than ever, and we have $14.6 million of authorization remaining under our $20 million share repurchase program. I would now like to take a moment to discuss how we evaluate the potential economics of our drug development program around NB4168. The commercial opportunity is driven by NB4168's differentiation as a pharmaceutical asset. Compared with NRCL, NB4168 offers enhanced bioavailability and a potentially higher therapeutic index. It is also a novel molecule that is not naturally occurring or marketed as a dietary supplement, and it is protected by composition of matter intellectual property. These are attributes that could support stronger exclusivity, specialized rare disease pricing and greater strategic value to potential pharmaceutical partners. If NB4168 ultimately receives FDA approval and meets the applicable statutory requirements, it may also qualify for a transferable priority review voucher. Recent voucher transactions have generated proceeds of approximately $150 million, providing a meaningful potential source of value independent of product sales. We have completed a detailed risk-adjusted financial analysis of the ataxia telangiectasia opportunity, incorporating relevant assumptions around the addressable patient population development costs, regulatory timing, commercial adoption and pricing. Based on that work, we estimate that the AT indication alone could support a net present value of approximately $200 million to $400 million, excluding the potential value of the voucher. Additionally, our review of the precedent transactions involving differentiated rare disease assets that achieved regulatory approval demonstrate that successful programs can create multibillion-dollar strategic value. One relevant example is Biogen's $7.3 billion acquisition of Reata Pharmaceuticals following the approval of Sky Claris for Friedreich's ataxia. It's worth noting that the opportunity may also extend beyond AT. We are evaluating a basket-style development approach across diseases with shared underlying biology, including, but not limited to, citrin deficiency Werner syndrome, mitochondriumyopathy and Cockayne Syndrome. Subject to supporting evidence and regulatory alignment, this could broaden the potential clinical and commercial potential of NB4168. Our financial performance to date is supported by the combination of our consumer and ingredients businesses. For the full year 2026, we expect our e-commerce business to grow between 10% to 15% year-over-year. Our expectation of the rest of the consumer business remains unchanged. We do expect our Ingredients business to be lower than the prior year, given the more competitive landscape, but we expect to add more ingredient partners in the near term to continue to explore Niagen in different formats and formulations and in different markets. While Niagen Plus and our skincare initiatives are in early stages, we are seeing encouraging initial signs and believe it can become a meaningful contributor to the business over time. As we look beyond 2026, our revenue streams from these core verticals will be the foundation for our continued growth in 2027 and beyond. We expect operating expenses to increase as we execute on these strategic priorities. Selling and marketing expense will reflect our broader brand initiative, refresh creative assets and support for new and developing channels. R&D spending will increase as we advance NB4168 and continue research related to our topical and injectable opportunities. G&A expense is also expected to increase as we build the infrastructure needed to support these programs and our broader market expansion. We will phase these investments thoughtfully, measure their performance and maintain the financial discipline that has enabled us to generate positive cash flow and preserve balance sheet strength. This year is an important investment year as we allocate resources toward new market verticals, pharmaceutical development and greater brand awareness. We view 2026 as a springboard for faster growth and value creation, and we believe that we have created a business model setup for greater success. Our core business remains cash generative giving us the flexibility to invest selectively across the broader Niagen platform. We remain confident in our ability to strengthen the brand, advance Niagen Plus and NB4168 and create long-term value for our customers, partners and shareholders. Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from the line of Ram Selvaraju with H.C. Wainwright.

Firstly, I was wondering if you could provide us with any update on the lawsuit filed against the FDA and when you anticipate any potential further progress on that front and the possibility of some decision in that proceeding. Secondly, I was wondering if you could comment on the outlook for the Asia Pacific business, particularly the partnership with Watsons. And then lastly, with respect to any future initiatives or endeavors in the Rx or pharmaceutical space. I wanted to see if you could give us some insight into how many additional novel analogs of nicotinamide riboside you may have in addition to the disclosed one and if you have any pharmaceutical development initiatives intended for these analogs as well as whether you have any plans to move into other areas of the space in between supplements and wellness products and the Rx space, like, for example, wellness peptides.

Does that count as one question? Thank you, Ram. Those are good questions and very relevant. Let me address. First of all, with regard to the FDA, the FDA had filed a motion to dismiss several months ago. We replied to that. We expect the judge to rule on that motion to dismiss within the next 2, maybe 3 months. We feel very confident about that and the facts overall in the case. With regard to Asia Pacific and Watsons, also another great and relevant question. Watsons is back and making purchases, and they've sold through the excess inventory that they had at the end of last year and looking quite strong. So we're very confident with Watsons. We've, as you know, been launching some new SKUs here in the U.S. and Watsons is interested in carrying those as well, NanoClouds, Beauty, et cetera. We also expect to be expanding into other countries with Watsons. We're hoping to receive regulatory approval soon in Taiwan and Korea, and we hope to pursue those channels with Watsons. We recently received regulatory approval for skin care product in Mainland China, which could be a significant opportunity, and we hope to pursue that with Watsons as well. With regard to the Rx pharma analogs, there are actually quite a few, as you know. And we have conducted studies on several of those, and there's reason to believe that they may actually even be more potent than NB4168 and our chloride in elevating NAD. So we are excited about developing those for potential therapeutic use as well, and we have had discussions with certain larger companies in the pharma space about those other molecules. The space in between dietary supplements and pharmaceuticals for us is what we call Niagen Plus, the IV and the injection business. We are more bullish on that Niagen Plus business today than we have ever been. As you know, Ram, Niagen is significantly superior to NAD. We believe that the NAD IV injection market is about $500 million, probably a bit more, and it's almost all in the United States at this point. This is a market for people who self-inject NAD or who get IVs of NAD either through their physician or at clinics. But we've done head-to-head comparisons. We know Niagen is superior. It takes several hours to get an IV of NAD. It takes minutes to get Niagen. That's because NAD is not bioavailable. People who get the NAV IVs, it often takes 3, 4 hours for them to invest. They have stomach pains. They have sweats, they have fevers. There are side effects that do not exist when you do NIAGEN, but perhaps most importantly, Niagen is far more effective at elevating NAD. So we see this as a significant opportunity. And as you know, Ram, we've spent years developing this business. We got on the Category 1 list of the FDA for compound pharmacy. We've produced pharmaceutical-grade Niagen that we make available. And we've developed the commercial infrastructure and supply chain for serving this market. The reason Niagen hasn't yet taken over that $500 million market is related to price. It's -- Niagen is more expensive than NAD. And if you go to the clinic and get and Niagen IV, it's priced not to meet the average consumer. It really just focuses on the very wealthy or on the extreme biohackers at this point. And as you know, we've discussed this in the past, one of the reasons why we added Olympia as a second compound pharmacy to Wells, who has done very good work with us, was to create a little bit of price compression. We believe that we have solved the pricing problem, but we don't believe it will be solved for the next 2 or 3 months. We think that within the next 2 or 3 months, we will be able to reduce the price to the clinics and still make it satisfactory for the compound pharmacies and for Niagen and its shareholders to make plenty of profit and bring the price down to the average consumer. So this is one of the reasons that we are expecting the big revenue push in the Niagen Plus categories happen in 2027 and not in the second half of 2026. But we are very excited. In fact, some of these clinics, a couple of these large clinic franchises have contacted us and said if we could get the price down to a certain level that they would like to make Niagen the flagship ingredient in the entire chain, not just instead of NAD, but overall as their flagship ingredient. And we've been contacted by several of the larger telehealth companies that are presently selling NAD as an at-home injection product or are contemplating that. So we expect some good things for Niagen Plus next year, and we're developing these things. But we don't expect it to hit its stride in 2026.

Your next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann.

I guess, firstly, Rob, can you talk a little bit more about PRV and a potential priority review for the NB4168? Do you have to request that now? Or does that request come later and just prior to an NDA or BLA? When will we hear about or know more about the clarity on that pathway?

Jeff, I'll take that question. So the priority review voucher is a program that's dedicated for rare pediatric diseases and orphan drugs. Once you receive those designations and you receive approval by the FDA for that drug, there's no reason for the company to not receive that voucher. And once the company receives that voucher, it is exchangeable for money. And the recent transactions we're seeing, it's ranging between $150 million to $180 million for that voucher. It essentially is a voucher to incentivize pharma companies to develop drugs for rare diseases and create instant value and you can recover your R&D cost through that mechanism and make a profit.

Okay. Got it. That's helpful. And I guess as a follow-up, could you talk a little bit more about NanoCloud and preparations and work that you'll be doing in the back half of this year prior to more of a full-blown launch into the marketplace?

So as I think you know, Jeff, one of the properties of Niagen, which makes it challenging in certain markets is that it's highly sensitive water. So we need to solve the problem of putting it in a water-based team. NanoCloud is one solution to that problem where it's essentially pillows the covering of which are made out of hyaluronic acid. And we sell them as individual little discs, we call them pillows or NanoClouds, which when combined with liquid, a cream or water can then be applied to the face and is stable. So we developed it as an experiment to see if it worked and if it was stable and we've done numerous user studies to see if consumers liked it, they do a lot. And then we tested it on the market. We only made 3,000 or 4,000 of these things, but they sold out very quickly. And what else is encouraging is that many of the customers that bought them repeat purchase and asked when it will be back on the market. So we're encouraged by this. Those aren't gigantic numbers, but those are numbers that indicate that there's real demand in real interest. One of the things that we also found interesting about NanoCloud, it was a very high percentage of new-to-brand customers. It wasn't necessarily customers who are already buying through Niagen that bought it. So all of these data points suggest that there's a market here for skin care for us. So we're also developing other skin care products under the Tru Niagen brand name that do come in sort of a combined oil-based cream. We expect to launch the additional NanoCloud that we are making right now in October. It might be November depending on when they get delivered and there'll be a marketing campaign associated with that. And of course, as you know, the way our business model works. We develop our own consumer brands and our own consumer products, but at the same time, we supply the ingredients, other quality brands. And there are several of the best-known skin care brands globally who have expressed, I would say, very strong interest in -- including Niagen and some of their well-known brands.

Your next question comes from the line of Susan Anderson with Canaccord Genuity.

I guess I just wanted to follow up on the skin care business. I guess, how are you thinking about it longer term? Do you think it's selling the ingredient to beauty companies, which sound very interested in will be bigger than your own products at some point? Or do you think it will be more balanced? And then I think you had mentioned in the past that you're looking at another topical, I guess, is that still...

Yes. Thank you, Susan. It really is an economic question. At least 1, perhaps 2 of these skin care companies are very, very large companies and have expressed interest in a significant exclusive deal. The economics would have to be very, very significant for us to agree to something like that. And of course, it would be subject to some studies that we would have to conduct. And then there's the possibility of co-exclusive. We made a deal with them and the only other brand that could exist would be ours. So at this point, it's too early to say. But we think that one way or the other, the skin care market looks fairly substantial for us in the long term. What was the second question? The second question was the second product.

Yes, exactly.

I expect that second product to be launched around April of next year.

Okay. Great. Great. That sounds good. And then maybe just another follow-up I think you guys have talked about bringing the supplement to retail. Maybe you had moved into a club, I thought, maybe I just wanted to get an update on that. And then on the marketing expense, I guess, should we think about this as a new -- the selling and marketing, a new benchmark going forward? Or is it 1 quarter? Or how should we think about that?

Well, the first question, we are expanding into certain selected retail outlets. We just went into Sam's Club, I think, a couple of months ago and several others. We're in GNC, Vitamin Shoppe, Sams, Cloud Sprouts, and we're in discussions with a few other retails. It's too early for us to say how it's doing at this point. But we are planning a brand campaign with a series of celebrities to support our retail distribution presently. So we expect that to happen towards the -- probably in the fourth quarter. What was the second part of that question?

It was on the selling and marketing expenses, we should expect that to kind of -- that run rate kind of the rest of the year, the 34%.